UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-K





(Mark One)[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended October 31, 2011[   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from __________ to __________





000-52452Commission File NumberDUSSAULT APPAREL INC.(Exact name of registrant as specified in its charter)Nevada
98-0513727(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)1308 Factory Place, Suite 311, Los Angeles, CA
90013(Address of principal executive offices)
(Zip Code)(323) 843-2186(Registrant’s  telephone number, including area code)





Securities registered pursuant to Section 12(b) of the Exchange Act:Title of each class
Name of each exchange on which registeredn/a
n/a





Securities registered pursuant to Section 12(g) of the Exchange Act:Common StockTitle of  class





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.





Yes
[   ]
No
[X]





Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.





Yes
[   ]
No
[X]





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.





Yes
[X]
No
[   ]










ndicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).





Yes
[X]
No
[   ]





Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.





Yes
[   ]
No
[X]





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.





Large accelerated filer
[   ]
Accelerated filer
[   ]Non-accelerated filer
[   ]
Smaller reporting company
[X](Do not check if a smaller reporting company)





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).





Yes
[  ]
No
[X]





The aggregate market value of voting and non-voting common stock held by non-affiliates of the registrant was approximately $218,790  based on the closing price of $0.0018 on April 29, 2011  (the last business day of the registrant’s most recently completed second quarter), assuming solely for the purpose of this calculation that all directors, officers and greater than 10% stockholders of the registrant are affiliates. The determination of affiliate status for this purpose is not necessarily conclusive for any other purpose.





APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY


PROCEEDINGS DURING THE PAST 5 YEARS:





Indicate by check mark whether the issuer has filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.





Yes
[   ]
No
[   ]





APPLICABLE ONLY TO CORPORATE REGISTRANTS





Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.





183,530,198 shares of common stock issued and outstanding as of January 25, 2012





DOCUMENTS INCORPORATED BY REFERENCE





List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g. Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933. The listed documents should be clearly described for identification purposes.





None


2


TABLE OF CONTENTS





PagePART IItem 1
Business
5Item 1A
Risk Factors
9Item 1B
Unresolved Staff Comments
14Item 2
Properties
14Item 3
Legal Proceedings
14Item 4
(Removed and Reserved)
14PART IIItem 5
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
15Item 6
Selected Financial Data
16Item 7
Management’s Discussion and Analysis of Financial Condition and Results of Operations
17Item 7A
Quantitative and Qualitative Disclosures About Market Risk
19Item 8
Financial Statements and Supplementary Data
19Item 9
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
20Item 9A
Controls and Procedures
20Item 9B
Other Information
21PART IIIItem 10
Directors, Executive Officers and Corporate Governance
22Item 11
Executive Compensation
24Item 12
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
25Item 13
Certain Relationships and Related Transactions, and Director Independence
26Item 14
Principal Accounting Fees and Services
28PART IVItem 15
Exhibits, Financial Statement Schedules
29SIGNATURES
31


3





Forward Looking Statements





This Annual Report on Form 10-K (“Annual Report”) contains forward-looking statements.  These statements relate to future events or our future financial performance.  A number of important factors could cause our actual results to differ materially from those expressed in any forward-looking statements made by us in this Form 10-K.  In some cases, you can identify forward-looking statements by terminology such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," or "continue" or the negative of these terms or other comparable terminology.  These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors" and the risks set out below, any of which may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.




Such risks include, among others, the following: international, national and local general economic and market conditions: demographic changes; the ability of the Company to sustain, manage or forecast its growth; the ability of the Company to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other factors referenced in this and previous filings.





Forward looking statements are made based on management’s beliefs, estimates and opinions on the date the statements are made and we undertake no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change.  Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.





The safe harbors of forward-looking statements provided by Section 21E of the Exchange Act are unavailable to issuers of penny stock. As we issued securities at a price below $5.00 per share, our shares are considered penny stock and such safe harbors set forth under the Private Securities Litigation Reform Act of 1995 are unavailable to us.





Our financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.





In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to "common stock" refer to the common shares in our capital stock.





As used in this Annual Report, the terms "we," "us," "Company," "our" and "Dussault" mean Dussault Apparel Inc., unless otherwise indicated.





4


ITEM 1.   BUSINESS




Background





The address of our principal executive office is 1308 Factory Place, Suite 311, Los Angeles, CA 90013.  Our telephone number is (323) 843-2186.  The Company’s web-site is www.dussaultapparel.com.





Our common stock is quoted on the OTCMarketsQB under the symbol "DUSS".




Corporate History




We were incorporated on October 1, 2006 in the State Nevada under the name Release Your Lease Inc. Our initial business plan was to create a web-based service for buyers and sellers of leased automobiles. Our stock was listed for trading on the OTC Bulletin Board on March 14, 2007 under the symbol “RLYL”. A decision was made by new management, to change the corporate direction of the Company and to pursue opportunities in the retail fashion industry.




Effective June 11, 2007, we completed a merger with our wholly subsidiary Dussault Apparel Inc. As a result, we changed our name from “Release Your Lease Inc.” to “Dussault Apparel Inc.” We changed the name of the Company to better reflect the anticipated direction and business of the Company. On June 11, 2007, our symbol changed to “DUSS”. The subsidiary was created solely for the purpose of the merger and change of name.




Effective June 11, 2007 we effected a fourteen (14) for one (1) forward stock split of our authorized, issued and outstanding shares. As a result, our authorized capital increased from 75,000,000 shares of common stock with a par value of $0.001 to 1,050,000,000 shares of common stock with a par value of $0.001. Our issued and outstanding share capital increased from 3,060,000 shares of common stock to 49,000,000 shares of common stock.




On November 8, 2007, we opened our first retail location on Melrose Avenue, Los Angeles, California. Our Melrose location featured women’s and men’s Ready-To-Wear collections as well as jewelry, luggage and headwear. On October 31, 2008, we elected to close our store located on Melrose Avenue in Los Angeles, California and ceased all operations relating to this location. Given the losses associated with our Melrose location, and the current market circumstances for retailers, management was of the view such closure was necessary to prevent further losses and conserve working capital.




On April 15, 2009, the Company entered into an assignment of royalty with Jason Dussault. The assignment of royalty provided for the payment by Jason Dussault of 5% of the royalties received by him pursuant to a merchandising license agreement with Gene Simmons Company and USPA Accessories LLC for the license of “Moneybag” intellectual property and related products, pursuant to and in accordance with the terms and conditions of a merchandising license agreement. Jason Dussault agreed to provide sales and design services under a merchandising license agreement in consideration for royalty payments from 4.5% to 7.5% of gross income from sales derived under a merchandising license agreement. From any royalty payments that may become due and payable to Jason Dussault, Mr. Dussault has agreed to assign to our company 5% of the gross income and has agreed to assign to the Company his rights, title and interest in and to the amount of the royalty. We have been advised that the underlying license agreement with Gene Simmons Company and USPA Accessories LLC has been terminated. As a result we will not be receiving any assigned royalty payments.




Between May 15, 2009 and July 10, 2009, we entered into consulting agreements with four (4) consultants, wherein, each of the consultants agreed to provide consulting services to the Company. Pursuant to the terms of the consulting agreements, we have agreed to issue an aggregate of 2,750,000 restricted shares of our company’s common stock.




On October 31, 2009, the Company entered into a merchandising license agreement with USPA Accessories, LLC, wherein, we agreed to provide design services under a merchandising license agreement in consideration for royalty payments of 10% of the gross income from the sales derived under a merchandising license agreement. Our head ware collection, “Decuce”, is distributed pursuant to this agreement with USPA Accessories, LLC, doing business as Concept One.


5




On November 10, 2009, the Company entered into a distribution agreement with EHM Holdings for a term of two years, wherein, EHM Holdings holds distribution rights to Deuce Custom Ink brand throughout Canada. Our Deuce collection is distributed pursuant to this agreement with EHM Holdings, pursuant to which we split the gross profit margin from the product sales with them.




On April 9, 2010 our Company entered into an Asset Acquisition Agreement with Open Sundaes Ventures Ltd. (“Open Sundaes”) for the acquisition of certain assets relating to the business of the production and development of beauty and bath products including inventory, intellectual property and business knowhow. In consideration for the acquisition of these assets, our company paid $43,860 and agreed to issue an aggregate of 4,000,002 shares of its common stock to the shareholders of Open Sundaes. The Asset Acquisition Agreement was approved by the shareholders of Open Sundaes at a special meeting held on April 22, 2010.




On January 10, 2011, we announced that we would create a custom design wrap, embroidered interior, and custom metal work for a champion towboat offered by Centurion World Championship Towboats and distributed through award-winning boat dealer, Breakwater Marine. The custom design wrap was unveiled during day one at the 2011 Vancouver International Boat Show, returning February 9th to 13th at its new venue, the Vancouver Convention Centre in Vancouver, British Columbia. The custom one-of-a-kind Dussault Centurion ENZO watercraft, valued at $150,000.00, was sold to the highest bidder at the end of the Show, with partial proceeds benefiting Canuck Place Children's Hospice and the Make A Wish Foundation. As part of the design project, Jason Dussault also created two custom life jackets and a custom surfboard wrap. These items were on display throughout the show and then awarded to show attendees through a random draw.




Currently, the Canadian reality TV series "Dussault Inc." is being broadcast on networks in Canada and was picked for broadcast in New Zealand by TVNZ.  TVNZ are playing 'Dussault Inc.' in prime time and they have our promo materials on their website, which management hopes will increase sales. The TV series is not owned by Dussault Apparel Inc and the Company receives no payment from the TV series..




Our Current Business




Our current business is primarily limited to licensing our Deuce Collection of apparel such as hats and t-shirts , we also will continue to produce limited collections of our Dussault luxury hoodies and Dussault Headwear when deemed economically viable. We also design skateboards and swimwear for promotional events, we outsource the manufacturing of promotional items to third parties.We have also begun selling limited edition prints of our artwork when available through our company website . Any limited collections of Dussault hoodies and headware are only produced based upon demand. We outsource the manufacturing of these orders to third parties. Upon submission and receipt of the order the client / retailer is required to prepay 50% of the order, with the balance payable on delivery. When we place the order with a manufacturer for production, we pay for the manufacturing costs upon completion. We do not have any agreements in place for manufacturing, given this model. Given this order by order business model, we can function without maintaining large inventories and reduced warehousing of products. We do incur costs of sample production. Our design functions are carried out at our head office location. Any Dussault hoodies that are produced are manufactured in Canada, licensed products are managed entirely by our license partners we only incur cost of design and sampling the license tee shirts are manufactured in the United States, Canada and China, our licensed head ware is manufactured in China.




We do have distribution agreements in regards to our "Deuce" collection in Canada, and for our head ware collection in the United States as follows:




·
On November 10, 2009, our company entered into a distribution agreement with EHM Holdings for a term of two years, wherein, EHM Holdings holds distribution rights to Deuce Custom Ink brand throughout Canada. Our Deuce collection is distributed pursuant to this agreement with EHM Holdings, pursuant to which we split the gross profit margin from the product sales with them.




·
On October 31, 2009, our company entered into a merchandising license agreement with USPA Accessories, LLC, wherein, our company agreed to provide design services under a merchandising license agreement in consideration for royalty payments of 10% of the gross income from the sales derived under a merchandising license agreement. Our head ware collection is distributed pursuant to this agreement with USPA Accessories, LLC , doing business as Concept One,




Both of the foregoing distribution/merchandising agreements are non-exclusive.




6


Distribution Methods Of Our Products




Our products are sold in Canada through retail stores, upscale retailers, boutiques and specialty stores and our company’s website.




At present, our products are available in approximately 100 retail locations primarily across Western Canada, through approximately 40 different retailers. Given that such retailers only carry on an order by order basis, we can provide no assurances that such retailers will continue to purchase and carry our products on any ongoing basis. Our products are also available online through our company’s website.




As we are in the development stage of our business, our vision is to redefine the premium apparel experience and fulfill the lofty desires of fashion-conscious customers worldwide. Our target market is broad as our brand appeals to customers anywhere between the ages of 15-50. The younger clientele appreciate the forward fashion, and trend setting edginess while our customers in their 30’s and 40’s love the quality and throwback style of the old rock generations.




Marketing




Our main focus of marketing our company is the reality television show "Dussault Inc.", produced by Paperny Films. Filming for Season One of the show was completed and aired in Canada on the Biography Channel. The show follows the daily life of designer Jason Dussault and the staff of Dussault Apparel.  The second season has been filmed and the first show of the second season was aired on the BioChannel on January 14, 2012.   As well, "Dussault Inc." was picked up in November, 2011 for broadcast in New Zealand by TVNZ.




Our other method of marketing is viral. From short films to animations and music videos and collaborations with manufacturers of products that tie in with the premium apparel experience demographic our company is targeting. We are constantly developing and airing branded videos on YouTube.com, Facebook.com and communicated through twitter and blogs. The viral marketing method allows us to cost-effectively reach a wider market on an ongoing basis.




Our products have been featured on several television shows such as Gene Simmons’ Family Jewels and Criss Angels Mind Freak. Family Jewels has dedicated entire episodes to our brand, covering events and parties that we have hosted with some of Los Angeles hottest celebrities.




Our hoodies are being promoted through fashion shows, concerts, and industry parties. The cost incurred for this type of marketing is through merchandise and marketing materials give aways.




Competition




We face intense competition in the apparel industry from other established companies. A number of our competitors may have significantly greater financial, technological, manufacturing, sales, marketing and distribution resources than we do. Their greater capabilities in these areas may enable them to better withstand periodic downturns in the apparel industry, compete more effectively on the basis of price and production and more quickly develop new products. In addition, there are low barriers of entry into this industry and new companies may enter the markets in which we compete, further increasing competition in the industry. We believe that our ability to compete successfully depends on a number of factors, including the style and quality of our products and the strength of our brand name, as well as many factors beyond our control. We may not be able to compete successfully in the future, and increased competition may result in price reductions, reduced profit margins, loss of market share and an inability to generate cash flows that are sufficient to maintain or expand our development and marketing of new products, which would adversely impact the trading price of our common stock.




Government Regulation and Supervision




Our operations are subject to the effects of international treaties and regulations such as the North American Free Trade Agreement (NAFTA). We are also subject to the effects of international trade agreements and embargoes by entities such as the World Trade Organization. Generally, these international trade agreements benefit our business rather than burden it because they tend to reduce trade quotas, duties, taxes and similar impositions. However, these trade agreements may also impose restrictions that could have an adverse impact on our business, by limiting the countries from whom we can purchase our fabric or other component materials, or limiting the countries where we might market and sell our products.




7


Labeling and advertising of our products is subject to regulation by the Federal Trade Commission. We believe that we are in substantial compliance with these regulations.




Research and Development




We do not currently have a formal research and development effort but we plan to continue to develop new products.




Purchase of Significant Equipment




We do not intend to purchase any significant equipment over the twelve months ending October 31, 2011.




Corporate Offices




Our principal office is currently located at the offices of Jason Dussault at Suite 311, 1308 Factory Place, Los Angeles, California, 90013.  We believe that this space is sufficient to meet our present needs and do not anticipate any difficulty in securing alternative or additional space, as needed, on terms acceptable to us.




Employees




Currently, our only employees are our directors and officers, who include Jason Dussault, our president, chief executive officer, secretary, treasurer and sole director, Robert Mintak, our chief operating officer and chief financial officer and Jason Sundar, our VP corporate finance.




We do not expect to hire new employees over the next 12 month period.




Intellectual Property




We own and operate the following registered internet domain names:




·
www.dussaultapparel.com;




·
www.dussualtink.com; and




·
www.deuceink.com




·
www.dussaultjeans.com,




We own and operate the following trademark:




·
Dussault Custom Ink Trademark.




·
In addition, we acquired all rights to the tradename “Open Sundaes.” As of the date of this report no formal filing reserving this tradename has been made, but it is anticipated that applicable filings will be undertaken in the very near future in order to perfect our rights to this tradename.




We do not have any subsidiaries.





Other than as set out herein, we have not been involved in any bankruptcy, receivership or similar proceedings, nor have we been a party to any material reclassification, merger, consolidation or purchase or sale of a significant amount of assets not in the ordinary course of our business.




8





Available Information





Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports that we file with the Securities and Exchange Commission, or SEC, are available at the SEC's public reference room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding reporting companies.





ITEM 1A.  RISK FACTORS




An investment in our securities should be considered highly speculative due to various factors, including the nature of our business and the present stage of our development. An investment in our securities should only be undertaken by persons who have sufficient financial resources to afford the total loss of their investment. In addition to the usual risks associated with investment in a business, the following is a general description of significant risk factors which should be considered. You should carefully consider the following material risk factors and all other information contained in this Annual Report before deciding to invest in our common stock. If any of the following risks occur, our business, financial condition and results of operations could be materially and adversely affected. Additional risks and uncertainties we do not presently know or that we currently deem immaterial may also impair our business, financial condition or operating results.




Risks Relating to our Company




We have had minimal cash flows from operations and if we are not able to obtain further financing we may be forced to scale back or cease operations or our business operations may fail.




To date we have had minimal cash flows from operations and we have been dependent on sales of our equity securities to meet our cash requirements. As of October 31, 2011, we had working capital deficit of $43,276. We do not expect positive material cash flow from operations in the near term. We have estimated that we may require up to $400,000 to carry out our plan in regards to retail fashion during the twelve month period ended October 31, 2012. However, there is no assurance that actual cash requirements will not exceed our estimates.




We depend on third parties for significant elements of our sales and distribution efforts. If these third parties do not continue to assist us in our sales and distribution, our revenue could decrease, which would have an adverse impact on our business.




We have limited marketing efforts. We depend substantially upon third parties for several critical elements of our business including, among other things, sales and distribution activities. There can be no assurance that we or these third parties will be able to establish or maintain adequate sales and distribution capabilities, that we will be able to enter into agreements or relationships with third parties in additional territories on financially acceptable terms or that any third parties with whom we enter into such arrangements will be successful in selling or distributing our products.




If they are not, our business could be negatively impacted. Also, if we are unable to maintain our relationships with these sales agents and distributors or if these sales agents and distributors begin selling our competitors products, then our ability to generate revenues through the sale of our products could be negatively impacted.




Changes to government regulation and supervision could have an adverse effect on our business.




Any negative changes to international trade agreements and regulations such as NAFTA or any agreements affecting international trade such as those made by the World Trade Organization which result in a rise in trade quotas, duties, taxes and similar impositions or which has the result of limiting the countries from whom we can purchase our fabric or other component materials, or limiting the countries where we might market and sell our products, could have an adverse effect on our business.




9


Changes in trends may cause uncertainties with respect to the growth of our company and can affect our ability to generate revenues.




Our ability to generate revenues in the future is dependent on whether we successfully develop our products and create a marketable product and license or otherwise commercialize our products. We cannot predict whether or when this may happen and this causes uncertainty with respect to the growth of our company and our ability to generate revenues.




Our revenues are influenced by general economic cycles, diminished consumer spending may have an adverse effect on our business and financial condition.




Apparel is a cyclical industry that is dependent upon the overall level of consumer spending. Our wholesale customers anticipate and respond to adverse changes in economic conditions and uncertainty by reducing inventories and canceling orders. As a result, factors that diminish consumer spending and confidence in any of the regions in which we compete, particularly deterioration in general economic conditions, increases in energy costs or interest rates, housing market downturns, and other factors such as acts of war, acts of nature or terrorist or political events that impact consumer confidence, could reduce our sales and adversely affect our business and financial condition. For example, the price of oil has risen in the recent past. A continued or sustained rise in oil prices could adversely affect consumer spending and demand for our products and also increase our operating costs, both of which could adversely affect our business and financial condition.




Intense competition in the worldwide apparel industry could reduce our sales and prices and adversely affect our business and financial condition.




We face a variety of competitive challenges from streetwear and casual apparel marketers, fashion-oriented apparel marketers, vertically integrated specialty stores and retailers of private-label products. Some of these competitors have greater financial and marketing resources than we do and may be able to adapt to changes in consumer preferences or retail requirements more quickly, devote greater resources to the building and sustaining of their brand equity and the marketing and sale of their products or adopt more aggressive pricing policies than we can. As a result, we may not be able to compete as effectively with them and may not be able to maintain or grow the equity of and demand for our brand. Increased competition in the worldwide apparel industry — including from international expansion of vertically integrated specialty stores, from department stores, chain stores and mass channel retailers developing exclusive labels, and from well-known and successful non-apparel brands expanding into jeans and casual apparel — could reduce our sales and adversely affect our business and financial condition.




We rely on contract manufacturing of our products. Our inability to secure production sources meeting our quality, cost, working conditions and other requirements, or failures by our contractors to perform, could harm our sales, service levels and reputation.




We source our products from independent manufacturers who purchase fabric and other raw materials. As a result, we must locate and secure production capacity. We depend on independent manufacturers to maintain adequate financial resources, secure a sufficient supply of raw materials, and maintain sufficient development and manufacturing capacity in an environment characterized by continuing cost pressure and demands for product innovation and speed-to-market. In addition, we do not have material long-term contracts with any of our independent manufacturers, and these manufacturers generally may unilaterally terminate their relationship with us at any time.




Our dependence on contract manufacturing could subject us to difficulty in obtaining timely delivery of products of acceptable quality. A manufacturer's failure to ship products to us in a timely manner or to meet our quality standards could cause us to miss the delivery date requirements of our wholesale customers. In addition, any interference with our ability to receive shipments from those manufacturers, such as conditions at ports or issues that otherwise affect transportation and warehousing providers, could cause delayed delivery of product. Additionally, if we experience a significant increase in demand, or if we need to replace any of the manufacturers that we currently use, we may have to expand our third party manufacturing capacity. We cannot assure you that this capacity will be available to us, or available on terms that are acceptable to us. Failing to make timely deliveries may cause our customers to cancel orders, refuse to accept deliveries, impose non-compliance charges through invoice deductions or other charge-backs, demand reduced prices or reduce future orders, any of which could harm our sales and margins.




10




Our success depends on the continued protection of our trademark and other proprietary intellectual property rights.




Our trademark and other intellectual property rights are important to our success and competitive position, and the loss of or inability to enforce trademark and other proprietary intellectual property rights could harm our business. Despite any precautions we may take to protect our intellectual property, policing unauthorized use of our intellectual property is difficult, expensive and time consuming, and we may be unable to adequately protect our intellectual property or determine the extent of any unauthorized use, particularly in those foreign countries where the laws do not protect proprietary rights as fully as in Canada or the United States. Our efforts to establish and protect our trademark and other proprietary intellectual property rights may not be adequate to prevent imitation or counterfeiting of our products by others or to prevent others from seeking to block sales of our products for violating their trademarks and proprietary rights. Unauthorized copying of our products or unauthorized use of our trademarks or other proprietary rights may not only erode sales of our products but may also cause significant damage to our brand names and our ability to effectively represent ourselves to our customers. Also, we cannot assure you that others will not assert rights in, or ownership of, our trademarks and other proprietary rights, that our proprietary rights would be upheld if challenged or that we would, in that event, not be prevented from using our trademarks, any of which could have a material adverse effect on our financial condition and results of operations. Further, we could incur substantial costs in legal actions relating to our use of intellectual property or the use of our intellectual property by others. Even if we are successful in these actions, the costs we incur could have a material adverse effect on us.




The loss of our Chief Executive Officer or other key management personnel would have an adverse impact on our future development and could impair our ability to succeed.




Our performance is substantially dependent upon the expertise of our Chief Executive Officer, Jason Dussault, and other key management personnel. It may be difficult to find qualified individuals to replace Mr. Dussault or other key management personnel if we were to lose any one or more of them. The loss of Mr. Dussault or any of our key management personnel could have a material adverse effect on our business, development, financial condition, and operating results. We do not maintain "key man" insurance with respect to Mr. Dussault or any of our other key management personnel, and any of them may leave us at any time, which could severely disrupt our business and future operating results.




Our licensees may not comply with our product quality, manufacturing standards, marketing and other requirements.




We license our trademarks to third parties for manufacturing, marketing and distribution of various products. While we enter into agreements with our licensees covering product design, product quality, sourcing, manufacturing, marketing and other requirements, our licensees may not comply fully with those agreements. Non-compliance could include marketing products under our brand names that do not meet our quality and other requirements or engaging in manufacturing practices that do not meet our standards. These activities could harm our brand equity, our reputation and our business.




Violation of labor laws and practices by our licensees or suppliers could harm our business.




We require our licensing partners and suppliers to operate in compliance with applicable laws and regulations. While our code of conduct promotes ethical business practices, we do not control our licensees or suppliers or their labor practices. The violation of labor or other laws by any of our licensees or suppliers, or divergence of a licensee's or supplier's labor practices from those generally accepted as ethical in Canada or the United States, could interrupt or otherwise disrupt the shipment of our products, harm the value of our trademarks, damage our reputation or expose us to potential liability for their wrongdoings.




Our quarterly sales and operating results fluctuate as a result of a variety of factors, including seasonal fluctuations in demand for premium apparel and related categories, and accessories, delivery date delays, recognition of stock-based compensation and potential fluctuations in our annualized tax rate, which may result in volatility of our stock price.




Our quarterly sales and operating results have varied significantly in the past and can be expected to fluctuate in the future due to a number of factors, many of which are beyond our control. For example, sales of our products have historically been somewhat seasonal in nature with the largest sales generally occurring in the second half of the year. Delays in scheduling or pickup of products by our licensing partners wholesale customers could negatively impact our revenues and results of operations for any given quarter. As a result of these specific and other general factors, our operating results will likely vary from quarter to quarter and the results for any particular quarter may not be necessarily indicative of results for the full year. Any shortfall in sales or net income from levels expected by securities analysts and investors could cause a decrease in the trading price of our common stock.




11




We are subject to new corporate governance and internal control reporting requirements, and our costs related to compliance with, or our failure to comply with existing and future requirements, could adversely affect our business.




We may face new corporate governance requirements under the Sarbanes-Oxley Act of 2002, as well as new rules and regulations subsequently adopted by the SEC and the Public Company Accounting Oversight Board.  These laws, rules, and regulations continue to evolve and may become increasingly stringent in the future.  In particular, under rules proposed by the SEC on October 6, 2006, we are required to include management’s report on internal controls as part of our annual report pursuant to Section 404 of the Sarbanes-Oxley Act.  We strive to continuously evaluate and improve our control structure to help ensure that we comply with Section 404 of the Sarbanes-Oxley Act.  The financial cost of compliance with these laws, rules, and regulations is expected to remain substantial.  We cannot assure you that we will be able to fully comply with these laws, rules, and regulations that address corporate governance, internal control reporting, and similar matters.  Failure to comply with these laws, rules and regulations could materially adversely affect our reputation, financial condition, and the value of our securities.




We depend on our officers and directors and the loss of these individuals could adversely affect our business.




Our Company is completely dependent on our officers, Jason Dussault, who is also our sole director and Robert Mintak and Jason Sundar.  We currently have no employees and the loss of any of these individuals could significantly and adversely affect our business, and certainly the loss of all three individuals on or about the same time could result in a complete failure of the Company. We do not carry any life insurance on the any of our directors or officers.




Risks Relating to an Investment in our Securities




We may, in the future, issue additional common shares that would reduce investors’ percent of ownership and may dilute our share value.




Our Articles of Incorporation authorize the issuance of up to 1,050,000,000 common shares, $0.001 par value. The future issuance of common shares may result in substantial dilution in the percentage of our common shares held by our then existing stockholders. We may value any common shares issued in the future on an arbitrary basis. The issuance of common shares for future services or acquisitions or other corporate actions may have the effect of diluting the value of the common shares held by our investors, and might have an adverse effect on any trading market for our common shares.




Market for penny stock has suffered in recent years from patterns of fraud and abuse and our stock has been volatile.




Stockholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include: (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced salespersons; (iv) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and, (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequential investor losses.




Our management is aware of the abuses that have occurred historically in the penny stock market. The occurrence of these patterns or practices could in the future increase the volatility of our share price.




Our common shares are subject to the “penny stock” rules of the SEC, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.




The SEC has adopted regulations that generally define a “penny stock” to be any equity security other than a security excluded from such definition by Rule 3a51-1 under the Securities Exchange Act of 1934, as amended. For the purposes relevant to our Company, it is any equity security that has a market price of less than $5.00 per share, subject to certain exceptions.


12




Our common shares are currently regarded as a “penny stock”, since our shares are not listed on a national stock exchange or quoted on the NASDAQ Market within the United States, to the extent the market price for its shares is less than $5.00 per share. The penny stock rules require a broker-dealer to deliver a standardized risk disclosure document prepared by the SEC, to provide a customer with additional information including current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, monthly account statements showing the market value of each penny stock held in the customer's account, and to make a special written determination that the penny stock is a suitable investment for the purchaser, and receive the purchaser's written agreement to the transaction.




To the extent these requirements may be applicable, they will reduce the level of trading activity in the secondary market for the common shares and may severely and adversely affect the ability of broker-dealers to sell the common shares.




FINRA sales practice requirements may also limit a stockholders ability to buy and sell our stock.




In addition to the penny stock rules promulgated by the SEC, which are discussed in the immediately preceding risk factor, FINRA rules require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit the ability to buy and sell our stock and have an adverse effect on the market value for our shares.




Our common stock may experience extreme rises or declines in price, and you may not be able to sell your shares at or above the price paid.




Our common stock may be highly volatile and could be subject to extreme fluctuations in response to various factors, many of which are beyond our control, including (but not necessarily limited to) (i) the trading volume of our shares; (ii) the number of securities analysts, market-makers and brokers following our common stock; (iii) changes in, or failure to achieve, financial estimates by securities analysts; (iv) actual or anticipated variations in quarterly operating results; (v) conditions or trends in our business industries; (vi) announcements by us of significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments; (vii) additions or departures of key personnel; (viii) sales of our common stock; and (ix) general stock market price and volume fluctuations of publicly-traded and particularly, microcap companies.




Investors may have difficulty reselling shares of our common stock, either at or above the price they paid for our stock, or even at fair market value. The stock markets often experience significant price and volume changes that are not related to the operating performance of individual companies, and because our common stock is thinly traded it is particularly susceptible to such changes. These broad market changes may cause the market price of our common stock to decline regardless of how well we perform as a company. In addition, there is a history of securities class action litigation following periods of volatility in the market price of a company’s securities. Although there is no such shareholder litigation currently pending or threatened against the Company, such a suit against us could result in the incursion of substantial legal fees, potential liabilities and the diversion of management’s attention and resources from our business. Moreover, and as noted below, our shares are currently traded on the OTCBB and, further, are subject to the penny stock regulations. Price fluctuations in such shares are particularly volatile and subject to manipulation by market-makers, short-sellers and option traders.




We have not and do not intend to pay any cash dividends on our common shares and, consequently, our stockholders will not be able to receive a return on their shares unless they sell them.




We intend to retain any future earnings to finance the development and expansion of our business. We have not, and do not, anticipate paying any cash dividends on our common shares in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them.




A decline in the price of our common stock could affect our ability to raise further working capital, adversely impact our ability to continue operations and may cause us to go out of business.


13


A prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital. Because we may attempt to acquire a significant portion of the funds we need in order to conduct our planned operations through the sale of equity securities, or convertible debt instruments, a decline in the price of our common stock could be detrimental to our liquidity and our operations because the decline may cause investors to not choose to invest in our stock. If we are unable to raise the funds we require for all our planned operations, we may be forced to reallocate funds from other planned uses and may suffer a significant negative effect on our business plan and operations, including our ability to develop new products and continue our current operations.  As a result, our business may suffer, we may not be successful and we may go out of business. We also might not be able to meet our financial obligations if we cannot raise enough funds through the sale of our common stock and we may be forced to go out of business.





ITEM 1B.           UNRESOLVED STAFF COMMENTS





None.





ITEM 2.              PROPERTIES




Our principal office is located at the offices of our President and CEO at 1308 Factory Place, Suite 311, Los Angeles, CA .   We also have warehouse space in North Vancouver, British Columbia and we are invoiced $2000,00 per month from our President and CEO for provision of this space.   We believe that this space is sufficient to meet our present needs and do not anticipate any difficulty in securing alternative or additional space, as needed, on terms acceptable to us.




ITEM 3.               LEGAL PROCEEDINGS





We know of no material, active or pending legal proceedings against our Company, nor of any proceedings that a governmental authority is contemplating against us.





ITEM 4.               [REMOVED AND RESERVED]




14


PART II





ITEM 5.              MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES





Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters





Market Information




The Company's common stock is currently quoted on the OTCMarketsQB (OTCQB) under the trading symbol “DUSS.”  Following is a report of high and low closing bid prices for each quarterly period for the fiscal years ended October 31, 2011 and October 31, 2010.





Quarter
High ($)
Low ($)4th Quarter ended 10/31/2011
0.014
0.0013rd Quarter ended 7/31/2011
0.0026
0.0012nd Quarter ended 4/302011
0.009
0.00131st Quarter ended 1/31/2010
0.01
0.0054th Quarter ended 10/31/2010
0.025
0.0083rd Quarter ended 7/31/2010
0.044
0.0152nd Quarter ended 4/30./2010
0.06
0.0151st Quarter ended 1/31/2009
0.055
0.021





The above information was provided by OTC Markets.  The quotations provided may reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.





Holders





As of December 11, 2011, there were 28 record holders of the Company’s common stock (which number does not include the number of stockholders whose shares are held by a brokerage house or clearing agency, but does include such brokerage houses or clearing agencies as one record holder).





Dividends





We have never declared or paid dividends on our common stock.  We intend to retain earnings, if any, to support the development of our business and therefore do not anticipate paying cash dividends for the foreseeable future. Payment of future dividends, if any, will be at the discretion of our board of directors after taking into account various factors, including current financial condition, operating results and current and anticipated cash needs.





Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities





Recent Sales of Unregistered Securities





On December 2, 2010 the Company issued a promissory note to Asher Enterprises, Inc., a Delaware corporation, for $40,000. The Company issued the following securities pursuant to the terms of the promissory note.





On September 19, 2011 Asher Enterprises, Inc. converted $4,000 pursuant to their December 2, 2010 convertible promissory note into a total of 6,666,667 common shares at a deemed price of $0.0006;





On September 21, 2011 2011 Asher Enterprises, Inc. converted $5,000 pursuant to their December 2, 2010 convertible promissory note into a total of 7,142,857 common shares at a deemed price of $0.0007;





On September 26, 2011 2011 Asher Enterprises, Inc. converted $4,000 pursuant to their December 2, 2010 convertible promissory note into a total of 6,666,667 common shares at a deemed price of $0.0006;


15








On October 3, 2011 Asher Enterprises, Inc. converted $13,000 pursuant to their December 2, 2010 convertible promissory note into a total of 6,842,105 common shares at a deemed price of $0.0019;
 On October 4, 2011 Asher Enterprises, Inc. converted $6,500 pursuant to their December 2, 2010 convertible promissory note into a total of  2,954,545 common shares at a deemed price of $0.0022;





On October 6, 2011 Asher Enterprises, Inc. converted $3,000 in principal and $1,600 in accrued interest pursuant to their December 2, 2010 convertible promissory note into a total of 1,393,939 common shares at a deemed price of $0.0033.





The Company claims an exemption from the registration requirements of the Securities Act of 1933, as amended, for the issuance of shares to Asher Enterprises, Inc. pursuant to Section 4(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transaction does not involve a public offering, the purchasers are “accredited investors” and/or qualified institutional buyers, the purchasers have access to information about the Company and its purchase, the purchasers will take the securities for investment and not resale.





On January 19, 2011 the Company issued a total of 2,575,305 shares to an offshore party completing the required stock issuance for the acquisition of the Open Sundaes trademark.





The 2,575,305 shares issued above were issued  in compliance with the exemption from the registration requirements found in Regulation S promulgated by the Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended. The offer and sale to the purchasers was made in an offshore transaction as defined by Rule 902(h). No directed selling efforts were made in the U.S. as defined in Rule 902(c). The offer and sale to the purchasers was not made to a U.S. person or for the account or benefit of a U.S. person. The following conditions were present in the offer and sale: a) The purchaser of the securities certified that it is not a U.S. person and did not acquire the shares for the account or benefit of any U.S. person; b) The purchaser has agreed to resell the securities only in compliance with Regulation S pursuant to a registration under the Securities Act, or pursuant to an applicable exemption from registration; and has agreed not to engage in hedging transactions with regard to the securities unless in compliance with the Securities Act; c) The purchaser has acknowledged and agreed with the Company that the Company shall refuse registration of any transfer of the securities unless made in accordance with Regulation S, pursuant to a registration statement under the Securities Act, or pursuant to an applicable exemption from registration; and d) The purchaser has represented that it is acquiring the shares for its own account, for investment purposes only and not with a view to any resale, distribution or other disposition of the shares in violation of the United States federal securities laws. Neither the Company nor any person acting on its behalf offered or sold these securities by any form of general solicitation or general advertising. The shares sold are restricted securities and the certificates representing these shares have been affixed with a standard restrictive legend, which states that the securities cannot be sold without registration under the Securities Act of 1933 or an exemption therefrom.





There were no other unregistered securities to report which were sold or issued by the Company without the registration of these securities under the Securities Act of 1933 in reliance on exemptions from such registration requirements, within the period covered by this report, which have not been previously included in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.





Purchases of Equity Securities by the Issuer and Affiliated Purchasers





During each month within the fourth quarter of the fiscal year ended October 31, 2011, neither we nor any “affiliated purchaser,” as that term is defined in Rule 10b-18(a)(3) under the Exchange Act, repurchased any of our common stock or other securities.




Securities Authorized for Issuance Under Equity Compensation Plans




The Company does not currently have any equity compensation plans and thus no securities have been issued.




ITEM 6.               SELECTED FINANCIAL DATA.





As a “smaller reporting company”, we are not required to provide the information required by this Item.


16


ITEM 7.              MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION





The following discussion should be read in conjunction with our audited financial statements and the related notes that appear elsewhere in this Annual Report.  The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs.  Our actual results could differ materially from those discussed in such forward looking statements.  Factors that could cause or contribute to such differences include those discussed below and elsewhere in this Annual Report.





Our financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.





Background




We were incorporated on October 1, 2006 in the State Nevada under the name Release Your Lease Inc. Our initial business plan was to create a web-based service for buyers and sellers of leased automobiles. A decision was made by new management, to change the corporate direction of the Company and to pursue opportunities in the retail fashion industry and effective June 11, 2007, we completed a merger with our wholly subsidiary Dussault Apparel Inc.   We current operate in the retail fashion industry.





Liquidity & Capital Resources




As of October 31, 2011, our cash balance was $8,449, which is a decrease from our cash balance of $30,833 as of October 31, 2010.  We also have an increase to accounts receivable of $16,089 as compared to Nil in October 2010, other receivables of $4,016 which is unchanged from October 2010, and a tax receivable of $5,711 which is increased from Nil in the prior fiscal year.  During the fiscal year ended October 31, 2011 we obtained and used loans totaling $90,000 to pay various operating expenses related to the ongoing management of the Company, which amount in full, including accrued interest was repaid by the issuance of shares of the Company’s common stock.





Presently, our revenues are not sufficient to meet our operating and capital expenses.  Our capital requirements are difficult to plan in light of our current strategy to limit our operations and our products.   However based on our expenditures from prior years we have estimated that we will require $400,000 over the next twelve months to pay down our existing liabilities and to continue to grow our operations.  Since our inception, we have been dependent on investment capital as an important source of liquidity. Our operations presently are generating negative cash flow, and we do not expect positive cash flow from operations in the near term. We need to secure additional working capital in the short-term in order to sustain our operations and execute our business plan. We have incurred operating losses since inception, and this is likely to continue into the fiscal year ending October 31, 2012.  There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis should it be required, or generate significant material revenues from operations, we will not be able to meet our other obligations as they become due and we will be forced to scale down or perhaps even cease our operations.





Our ability to meet our financial commitments is primarily dependent upon the continued issuance of equity to new stockholders, the ability to borrow funds, and ultimately upon our ability to achieve and maintain profitable operations. There are no assurances that we will be able to obtain required funds for our continued operations or that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms.  If we are not able to obtain the additional financing on a timely basis, we will not be able to meet our other obligations as they become due and we will be forced to scale down or perhaps even cease the operation of our business.





There is substantial doubt about our ability to continue as a going concern, as the continuation of our business is dependent upon obtaining further short and long-term financing and achieving a profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholder. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.




17


Results of Operations





The discussion and financial statements contained herein are for our fiscal year ended October 31, 2011 and October 31, 2010.  The following discussion regarding our financial statements should be read in conjunction with our financial statements included herewith.





We have suffered recurring losses from operations. The continuation of our Company is dependent upon us attaining and maintaining profitable operations and raising additional capital as needed. In this regard, we have successfully raised additional capital through equity offerings and loan transactions in the past and presently believe we will be able to do so in the future, though we can offer no assurance of this outcome as no specific arrangements are in place.





Comparison of the Fiscal Year Ended October 31, 2011 and October 31, 2010





During the fiscal years ended October 31, 2011 and 2010, we earned gross revenues of $32,046 as compared to $216,815, with gross loss of $19,512 in the current fiscal year as compared to profit of $31,454 for the year ended October 31, 2010.  We experienced a substantial decline in overall sales, and a reduction to profit margin from 15% to (60%) during the current fiscal year.





For the fiscal year ended October 31, 2011, our loss from operations decreased substantially to $342,191, from $1,047,189 in the prior year.  This decrease was mainly due to a substantial reduction in salaries and wages from $350,732 for the fiscal year ended October 31, 2010 to Nil in the current fiscal year, as well as a substantial decrease in consulting fees from $369,161 (2010) as compared to $65,617 in the current fiscal year, as our overall operational activity was substantially decreased.  As a result, our costs for advertising declined from $12,512 (2010) to $2,863 and general and administrative expenses also declined from $179,887 (2010) to $126,566 in the current fiscal year.





Professional fees reflect a slight increase from $50,729 in the fiscal year ended October 31, 2010 to $53,577 for the year ended October 31, 2011.





During the current fiscal year the Company recorded a total of $13,408 to write down the value of obsolete inventory with no comparative entry in the prior fiscal year.  In addition we recorded a bad debt expense of $75,346 in the current year, as compared to $109,735 in the prior fiscal year ended October 31, 2010 with respect to a note receivable that the Company has determined to be unrecoverable.





Other income and expenses reflect a trademark impairment charge of $192,214 in the current fiscal year with no comparative entry in the fiscal year ended October 31, 2010, as the Company evaluated its capitalized trademark costs for recoverability and determined the recoverability of the asset to be impaired. In addition we recorded loss on conversion expenses of $230,456 in the current fiscal year, as compared to Nil in the fiscal year ended October 31, 2010 as a result of certain loans which were settled by the issuance of shares of common stock at a discount to market price on the date of issue. At the same time, the Company royalties’ income increased substantially to $33,955 from $18,663 in the prior year.





During the fiscal year ended October 31, 2011 the Company recorded a net loss of $756,768 as compared to a net loss of $1,028,400 in the prior fiscal year ended October 31, 2010.





Critical Accounting Policies and Estimates





The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments which are based on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of their evaluation form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions and circumstances. Our significant accounting policies are more fully discussed in the Notes to our Financial Statements.





Off- Balance Sheet Arrangements





The Company presently does not have any off-balance sheet arrangements.


18




ITEM 7A.           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





As a “smaller reporting company”, we are not required to provide the information required by this Item.





ITEM 8.               FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.





19


DUSSAULT APPAREL INC.


(A Development Stage Company)





REPORT AND FINANCIAL STATEMENTS





October 31, 2011


(Stated in US Dollars)








PageAudited Financial StatementsReport of Independent Registered Public Accounting Firm
F-2Balance Sheets
F-3Statements of Operations
F-4Statements of  Changes in Stockholders’ Equity
F-5Statements of Cash Flows
F-6Notes to Audited Financial Statements
F-7 to F-13


F-1


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM







To: The Board of Directors and Shareholders
 Dussault Apparel Inc.
 Vancouver, B.C., Canada
 
 I have audited the accompanying balance sheet of Dussault Apparel Inc. as of October 31, 2011 and 2010 and the related statements of operations, of shareholders’ equity (deficit) and of cash flows for the years ended October 31, 2011 and 2010 These financial statements are the responsibility of the Company’s management.  My responsibility is to express an opinion on these financial statements based on my audit.
 
 I conducted my audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  I believe that my audit provides a reasonable basis for my opinion.
 
 In my opinion, based on my audit, the financial statements referred to above present fairly, in all material respects, the financial position of Dussault Apparel Inc. as of October 31, 2011 and 2010  and the results of its operations and its cash flows for the years ended October 31, 2011 and 2010 in conformity with United States generally accepted accounting principles.
 
 The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  The Company as at October 31, 2011 had not established an ongoing source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern.  These factors raise substantial doubt concerning the Company’s ability to continue as a going concern.  Its ability to continue as a going concern is dependent on the successful stimulation of sales in order to fund operating losses and become profitable.  If the Company is unable to make it profitable, the Company could be forced to cease development of operations.  Management cannot provide any assurances that the Company will be successful in its operation.  The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern
 
 The Company has determined that it is not required to have, nor was I engaged to perform, an audit of the effectiveness of its documented internal controls over financial reporting.
 
 /s/John Kinross-Kennedy
 
 John Kinross-Kennedy
 Certified Public Accountant
 Irvine, California
 February 9, 2012


F-2


DUSSAULT APPAREL INC.


BALANCE SHEETS


AUDITED





October 31,

2011


October 31,

2010ASSETSCurrent assetsCash

$
8,449


$
30,833Accounts receivable


16,089



-Other receivable


4,016



4,016Inventory


-



41,548GST receivable


5,711



-Total current assets


34,265



76,397Notes Receivable


-



112,127Property and Equipment, net


2,489



6,552Trademark


4,786



183,859Damage deposits


1,933



1,933Total assets

$
43,473


$
380,868LIABILTIES  AND STOCKHOLDERS’ DEFICIENCYCurrent liabilitiesAccounts payable and accrued liabilities


77,555



13,972Total current liabilities


77,555



13,972Other LiabilitiesLoan  payable  - related party


12,603



-Loan payable


38,000



88,000Total Liabilities


128,158



101,972Shareholders’ EquityCommon stock - $0.001 par value, authorized 1,050,000,000 shares;180,954,893   and 111,990,000 shares issued and outstandingas at October 31,2011 and October 31, 2010, respectively


180,954



111,990Additional paid in capital


12,163,327



11,845,352Accumulated deficit during the development stage


(10,656,773
)


(10,656,773
)Deficit


(1,785,168
)


(1,028,400
)Accumulated other comprehensive income (loss)


12,975



6,727Total Stockholders’ Equity


(84,685
)


278,896Total Liabilities and Stockholders’ Equity

$
43,473


$
380,868





The accompanying notes are an integral part of these financial statements.





F-3


DUSSAULT APPAREL INC.


Statements of Operations and Comprehensive Loss





Year ended October 31,2011


2010Revenue

$
32,046


$
216,815Cost of Sales


51,558



185,361Gross Profit


(19,512
)


31,454General and Administrative ExpensesProfessional Fees


53,577



50,729Consulting


65,617



369,161Salary & wages


-



350,732Advertising


2,863



12,512Write down inventory


13,408



-Bad debts


75,346



109,735Depreciation


4,814



5,887Other Administrative Expenses


126,566



179,887Total Expenses


342,191



1,078,643Operating Income (Loss)


(361,703
)


(1,047,189
)Other Income (expense)Royalties


33,955



18,663Trademark impairment charge


(192,214
)


-Loss on conversion


(230,456
)


-Interest expense


(6,350
)


126Net Income (Loss)

$
(756,768
)

$
(1,028,400
)Loss Per Common Share, basic

$
0.006


$
(0.01
)Weighted Average Number of Common Shares


137,187,267



81,992,186Comprehensive lossLoss

$
(756,768
)

$
(1,028,400
)Foreign currency translation adjustment


6,248



48,681Comprehensive income (loss)

$
(750,520
)

$
(979,719
)





The accompanying notes are an integral part of these financial statements.


F-4


DUSSAULT APPAREL INC.


Statements of Stockholders’ Equity





Accumulated


AccumulatedOther


Deficit





TotalCommon Stock


Additional


Compre-


during the





Shareholders'Number of





Paid-In


hensive


Development





EquityShares


Amount


Capital


Income


Stage


Deficit


(Deficit)Inception: August 1, 2006

-

$
-

$
-

$
-

$
-

$
-

$
-Aug. 31, 2006: issued stock for cash at $0.02 per share

1,500,000


1,500


13,500











15,000Oct31, 2006: issued stock for cash at $0.02 per share

1,550,000


1,550


29,450











31,000Net loss for period January 12 - October 31, 2006













(2,154
)




(2,154
)Balances at October 31, 2006

3,050,000

$
3,050

$
42,950

$
-

$
(2,154
)
$
-

$
43,846Nov. 8, 2006: issued stock for cash at $0.02 per share

450,000


450


8,550











9,000Balances before 14 for 1 forward common stock split

3,500,000


3,500


51,500





(2,154
)




52,846Jun 11, 2007: 14 for 1 forward common stock split

45,500,000


45,500


(45,500
)










-Balances after 14 for 1 forward common stock split

49,000,000

$
49,000

$
6,000

$
-

$
(2,154
)
$
-

$
52,846Aug31, 2007 issued stock for services at $1.00 per share

5,272,000


5,272


5,266,728











5,272,000Aug. 31, 2007 issued stock for cash at $1.00 per share

2,215,000


2,215


2,212,785











2,215,000Net loss for year ended October 31, 2007













(5,921,650
)




(5,921,650
)Balances at October 31, 2007

56,487,000

$
56,487

$
7,485,513

$
-

$
(5,923,804
)
$
-

$
1,618,196Nov. 23, 2007: stock returned to Treasury

(13,000,000
)

(13,000
)

13,000











-April 30, 2008 contribution of Vancouver office assets







667,242











667,242Apr. 28, 2008 issued stock for cash at $1.00 per share

1,275,000


1,275


1,273,725











1,275,000Oct. 7, 2008 issued stock for cash at $1.20 per share

6,925,000


6,925


1,378,075











1,385,000Net loss for the year ended October 31, 2008










(21,194
)

(4,158,068
)




(4,179,262
)Balances at October 31, 2008

51,687,000

$
51,687

$
10,817,555

$
(21,194
)
$
(10,081,872
)
$
-

$
766,176Overcontribution of Vancouver assets







(445,966
)










(445,966
)Oct. 14, 2008 stock surrendered to Treasury and cancelled

(1,500,000
)

(1,500
)

1,500











-Nov. 13, 2008 issued stock for cash at $0.01 per share

8,600,000


8,600


77,400

$
(8,493
)







77,507Nov. 14, 2008 stock surrendered to Treasury and cancelled

(500,000
)

(500
)

500











-Nov. 24, 2008 issued stock for services at $0.01 per share

425,000


425


3,825











4,250Nov. 26, 2008 issued stock for services at $0.01 per share

600,000


600


5,400











6,000Feb. 2, 2009 issued stock for services at $0.01 per share

2,900,000


2,900


26,100











29,000Feb 28, 2009 issued stock for services at $0.006 per share

5,000,000


5,000


25,000











30,000Net loss for the year ended October 31, 2010










(12,267
)

(128,935
)




(141,202
)Balances at October 31, 2009

67,212,000

$
67,212

$
10,511,314

$
(41,954
)
$
(10,210,807
)
$
-

$
325,765December 4, 2009 stock surrendered to Treasury

(1,972,000
)

(1,972
)

1,972











-May 18, 2010 issued stock for cash at $0.005 per share

15,000,000


15,000


60,000











75,000May 18, 2010 issued stock for compensation at $0.027 per share

13,000,000


13,000


338,000











351,000May 18, 2010 issued stock for services at $0.027 per share

12,750,000


12,750


331,500











344,250July 9, 2010 issued stock for trademark at $0.028 per share

5,000,000


5,000


135,000











140,000September 9, 2010 issued stock for services at $0.0226 per share

1,000,000


1,000


21,600











22,600October 31, 2010: prior period adjustment (note 3)







445,966





(445,966
)




-Net loss for the year ended October 31, 2010










48,681





(1,028,400
)

(979,719
)Balances at October 31, 2010

111,990,000


111,990


11,845,352


6,727


(10,656,773)


(1,028,400
)

278,896November 30, 2010 issued stock for loan conversion at $0.0046 per share

1,739,130


1,739


15,652











17,391December 14, 2010 issued stock for trademark at $0.0075 per share

1,413,394


1,414


9,186











10,600December 14, 2010 issued stock for services at $0.0097 per share

2,250,000


2,250


19,625











21,875January 3, 2011 issued stock for loan conversion at $0.0029 per share

3,448,276


3,448


29,311











32,759January 10, 2011 issued stock  for loan conversion at $0.0029 per share

1,379,310


1,379


12,414











13,793January 31, 2011 issued stock for services at $0.0151 per share

2,000,000


2,000


30,200











32,200February 15, 2011 issued stock for loan conversion at $0.0033 per share

3,030,303


3,030


25,152











28,182March 14, 2011 issued stock for loan conversion at $0.0023 per share

4,347,826


4,348


10,869











15,217April 20, 2011 issued stock for loan conversion at $0.0008 per share

6,250,000


6,250


6,250











12,500May 17, 2011 issued stock for loan conversion at $0.0006  per share

5,000,000


5,000


5,000











10,000June 13, 2011 issued stock for trademark at $0.001 per share

11,303


11


-











11August 15, 2011 issued stock for loan conversion at $0.0007 per share

6,428,571


6,429


4,500











10,929September 19, 2011 issued stock for loan conversion at $0.0006 per share

6,666,667


6,667


20,000











26,667September 21, 2011 issued stock for loan conversion at $0.0007 per share

7,142,857


7,143


25,714











32,857September 26, 2011 issued stock for loan conversion at $0.0006 per share

6,666,667


6,667


34,666











41,333October 3, 2011 issued stock for loan conversion at $0.0019 per share

6,842,105


6,842


44,474











51,316October 4, 2011 issued stock for loan conversion at $0.0022 per share

2,954,545


2,955


17,727











20,682October 6, 2011 issued stock for loan conversion at $0.0033 per share

1,393,939


1,394


5,436











6,830Accrued interest expense contributed to additional paid in capital







1,797











1,797Net loss for the year ended October 31, 2011










6,248





(756,768
)

(750,520
)Balances at October 31, 2011

180,954,893


180,954


12,163,327


12,975


(10,656,773
)

(1,785,168
)

(84,685
)





The accompanying notes are an integral part of these financial statements.


F-5


DUSSAULT APPAREL INC.


Statements of Cash Flows




October 31,2011


October 31, 2010Cash flows from operating activities:Net (loss)

$
(756,768
)

$
(1,028,400
)Adjustments to reconcile net loss to net cash used by operating activities:Stock issued for services


54,075



366,850Stock issued for intellectual property


10,611



140,000Stock issued for compensation


-



351,000Stock issued to settle loans payable, including interest expense


320,456



-Depreciation


4,063



4,873Write down inventory


13,408



-Write down note receivable


75,346



109,735Impairment charges – trademark


192,214



-Occupancy fee against loan receivable


36,781



-Allowance for doubtful accounts


-



(11,204
)Change in operating assets and liabilities:Accounts receivable


(16,089
)


48,461Account payable


63,583



(86,579
)Inventory


28,140



4,566GST receivable


(5,711
)


-Deposits


-



40,001Customer Deposits


-



(5,986
)Net cash flows used by operating activities


20,109



(66,683
)Cash From Investing Activities:Common stock issued for cash


-



75,000Purchase of trade mark


(13,679
)


(183,859
)Net cash  (used by) investing activities


(13,679
)


(108,859
)Cash flows from financing activities:Proceeds from related party loan


16,132



-Repayments of related party loan


(3,529
)


-Proceeds of loan receivable


-



16,703Loans payable


(50,000
)


88,000Net cash flows from financing activities


(37,397
)


104,703Effect of exchange rates on cash


8,583



48,681Net increase (decrease) in cash


(22,384
)


(22,158
)Cash and equivalents, beginning of period


30,833



52,991Cash, end of period

$
8,449


$
30,833Supplemental cash flow disclosures:Cash paid for interest

$
-


$
-Cash paid for income taxes

$
-


$
-Non cash transactions:Stock issued for services

$
54,075


$
366,850Stock issued for intellectual property

$
10,611


$
140,000Stock issued for compensation

$
-


$
351,000Stock issued to settle loans payable, including interest expense

$
320,456


$
-




The accompanying notes are an integral part of these financial statements


F-6


DUSSAULT APPAREL INC.


NOTES TO THE FINANCIAL STATEMENTS


FOR THE FISCAL YEAR ENDED


OCTOBER 31, 2011


(Audited)





Note 1 – Basis of Presentation and Nature of Operations





These audited financial statements reflect all adjustments which, in the opinion of management, are necessary to fairly state the Company’s financial position and the results of its operations for the periods presented in accordance with the accounting principles generally accepted in the United States of America. All adjustments are of a normal recurring nature.





Organization





The financial statements presented are those of Dussault Apparel Inc. (the Company). The Company was incorporated under the laws of the State of Nevada on August 1, 2006 as Release Your Lease Inc. Business operations had not commenced when in May, 2007, control of the company changed hands. Jason Dussault bought 1,500,000 common shares of the majority shareholder and assumed the offices of President, CEO, CFO, Secretary and Treasurer, and a Director.





On June 11, 2007 Release Your Lease Inc. effected a reverse forward merger with Dussault Apparel, Inc., a Nevada shell company. The name was changed to Dussault Apparel Inc. The Company changed its orientation toward the retail fashion clothing business. The Company opened a retail clothing and accessory store on Melrose Avenue in Los Angeles in November, 2007. Designs were produced in the Vancouver, Canada office, manufactured in China and warehoused in Los Angeles. The Company closed this store in November, 2008 in the wake of declining sales and deteriorating economic conditions.





Current Business of the Company




The Company moved operations to Vancouver in 2009. In the spring of 2011 its design and head office moved to Los Angeles California where it now primarily designs apparel for its licensing partner, the Company continues to wholesale in very limited collections its luxury apparel to retail outlets and to individuals in Canada. Our Apparel is designed in Los Angeles and samples manufactured by our licensing partner in North America. The Company has transitioned from being a manufacturer–wholesaler toward licensing its trademark to other wholesalers in the primarily in the Canadian market, while promoting its marque. The Company also entered into an agreement to purchase the trademark of a cosmetics line. Currently no sales, production or sampling of the cosmetic line has occurred or is planned.




Note 2 – Summary of Significant Accounting Policies





Use of Estimates





The preparation of financial statements in accordance with generally accepted accounting principles in the United States of America requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Company’s financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions and could have a material effect on the reported amounts of the Company’s financial position and results of operations.


F-7


DUSSAULT APPAREL INC.


NOTES TO THE FINANCIAL STATEMENTS


FOR THE FISCAL YEAR ENDED


OCTOBER 31, 2011


(Audited)





Note 2 – Summary of Significant Accounting Policies (continued)





Foreign Currency Translation





The functional currency of the Company is the Canadian Dollar. The Company uses the United States dollar as its reporting currency. All transactions initiated in Canadian Dollars are translated to U.S. Dollars in accordance with ASC 830-10-20 “Foreign Currency Translation” as follows:





·
Revenue and expense items at the average rate of exchange in effect on the transaction date;


·
Non-monetary assets and liabilities at historical exchange rates, unless such items are carried at market, in which case they are translated at the exchange rate in effect on the balance sheet date;  and


·
Monetary assets and liabilities at the exchange rate at the balance sheet date.





Adjustments arising from such translations are deferred until realization and are included as a separate component of stockholders’ equity (deficit) as a component of comprehensive income (loss). Therefore, translation adjustments are not included in determining net income but reported as other comprehensive income.





For foreign currency transactions, the Company translates these amounts to the Company’s functional currency at the exchange rate effective on the invoice date.  If the exchange rate changes between the time of purchase and the time actual payment is made, a foreign exchange transaction gain or loss results which is included in determining net  income for the period.





Fair value of financial instruments





The Financial Accounting Standards Board issued ASC (Accounting Standards Codification) 820-10 (SFAS No. 157), “Fair Value Measurements and Disclosures" for financial assets and liabilities. ASC 820-10 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. FASB ASC 820-10 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. FASB ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value:





·
Level 1: Quoted prices in active markets for identical assets or liabilities.


·
Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.


·
Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.





The carrying amounts of the Company’s financial instruments as of October 31, 2011, reflect





·
Cash: Level One measurement based on bank reporting.


·
Loans Receivable, Loans Payable: Level 2 based on promissory notes and terms.


F-8


DUSSAULT APPAREL INC.


NOTES TO THE FINANCIAL STATEMENTS


FOR THE FISCAL YEAR ENDED


OCTOBER 31, 2011


(Audited)





Note 2 – Summary of Significant Accounting Policies (continued)





Loss Per Share





Net loss per share is calculated in accordance with FASB ASC 260, Earnings Per Share, for the periods presented. Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. The Company has potentially dilutive securities in convertible loans payable; however the conversion would be anti-dilutive and is not considered in the calculation.





Recent Accounting Pronouncements





In April 2010, the FASB codified the consensus reached in Emerging Issues Task Force Issue No. 08-09, “Milestone Method of Revenue Recognition.” FASB ASU No. 2010-29 “Revenue Recognition – Milestone Method (Topic 605)” provides guidance on defining a milestone and determining when it may be appropriate to apply the milestone method of revenue recognition for research and development transactions. FASB ASU No. 2010 – 17 is effective for fiscal years beginning on or after June 15, 2010, and is effective on a prospective basis for milestones achieved after the adoption date. The Company does not expect this ASU has a material impact on its financial position or results of operations at this time.





Going Concern





The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company as at October 31, 2011 had not established an ongoing source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern.





As shown in the accompanying financial statements, the Company continues to incur losses. Its ability to continue as a going concern is dependent on the successful stimulation of wholesale sales or in other areas in order to fund operating losses and become profitable. If the Company is unable to make it profitable, the Company could be forced to cease development of operations. Management cannot provide any assurances that the Company will be successful in its retail operation. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.





Development-Stage Company





The Company was considered a development-stage company until the current fiscal year, having demonstrated consistent ability to generate sales.





Note 3 - Trademarks





On April 9, 2010 the Company entered into an asset acquisition agreement with Open Sundaes Ventures Ltd. (“Open Sundaes”) for the acquisition of certain assets relating to the business of the production and development of beauty and bath products including inventory, intellectual property and business knowhow. In consideration for the acquisition of these assets, the Company paid $43,860 and agreed to issue an aggregate of 4,000,002 shares of its common stock to the shareholders of Open Sundaes. The asset acquisition agreement was approved by the shareholders of Open Sundaes at a special meeting held on April 22, 2010.  As at the date of  these financial statements, the Company has issued a total of 6,424,697 shares pursuant to this agreement, 1,424,697 shares to the shareholders of Open Sundaes pursuant to the agreement and 5,000,000 shares to a creditor of Open Sundaes in settlement of certain debt related to Open Sundaes and agreed to be paid between the parties.


F-9


DUSSAULT APPAREL INC.


NOTES TO THE FINANCIAL STATEMENTS


FOR THE FISCAL YEAR ENDED


OCTOBER 31, 2011


(Audited)





Note 3 – Trademarks (continued)





The Company recorded the fair value of Trade Mark based on the fair value of shares issued and cash payments. The total recorded value of the trade mark was $197,000 as of October 31, 2011. On October 31, 2011, in accordance with corporate policies, the Company assessed the Trademark for impairment and determined the book value was no longer recoverable.  As a result we have recorded a loss on impairment relating to the Trademark of $192,214, leaving a value of $4,786 on the balance sheets of the Company as at October 31, 2011.





Note 4 - Inventory





Inventory was moved to the Vancouver office after the retail outlet in Los Angeles was closed in November, 2008.





Inventories are stated at the lower of cost or market value. Market value represents net realizable value. Inventory is priced according to the FIFO “first in first out” method, and counted periodically. As at the fiscal year ended October 31, 2011 the Company evaluated remaining inventory for recoverability and determined to write down the inventory on hand to reflect market value.   The inventory markdown totaled $13,408. Concurrently the Company sold the inventory for a total of $2,017, which amount is included in Account Receivable.  As at October 31, 2011 the Company had no inventory on hand.





Note 5 - Note Receivable





On April 16, 2008 the Company entered into a bridge loan agreement under a promissory note from Dayton Boot Co. Enterprises Ltd. of Vancouver, Canada for $300,000 in Canadian funds. The terms of the note were that the principal amount, plus 6% simple interest, would be due and payable on the earlier date of  a merger transaction concluding between the two parties, or December 31, 2008. The note is accompanied by restrictions on Dayton Boot regarding the acquisition of stock or votes or control of the Company or selling its stock to the Company.





The anticipated merger did not take place. By mutual agreement the requirement to pay interest will not be enforced, and the note is being amortized by monthly rent charged in the amount of CAD$4,000 by Dayton for Company offices at Dayton premises. Management analyzed the note for impairment and decided to write down the note by $109,735 or approximately 50% to $112,127 based upon the expected recovery of the note through rent charges during the fiscal year ended October 31, 2010.  During the current fiscal year the note receivable was reduced by a total of $36,781 (CAD$40,000) with respect to the application of monthly rent for a period of 10 months up to and including August 2011.  As at October 31, 2011 Management determined the note receivable was no longer recoverable, and the remaining total of $75,346 has been written down.





Note 6 - Notes Payable





On April 1, 2010 the Company issued a promissory note to Perati Finance Corporation for $38,000. The note matures in five years and accrues interest at 8%. The loan is convertible to common stock at a conversion price of 58% of the market price. The balance on this note as at October 31, 2011 is $38,000 plus accrued interest totaling $3,805, which is reflected in accounts payable and accrued liabilities.





On May 12, 2010 the Company issued a promissory note to Asher Enterprises, Inc., a Delaware corporation, for $50,000. The note matured February 14, 2011 and accrues interest at 8% or alternately 22% in the event of default. The loan is convertible to common stock at a conversion price of 58% of the market price.   Pursuant to the terms of the convertible note, Asher Enterprises, Inc. issued the following conversion notices during the period covered by this report:





·
November 30, 2010 - $8,000 was converted by the issuance of 1,739,130 common shares at a deemed price of $0.0046


·
January 3, 2011 - $10,000 was converted by the issuance of 3,448,276 common shares at a deemed price of $0.0029


·
January 10, 2011 - $4,000 was converted by the issuance of 1,379,310 common shares at a deemed price of $0.0029





F-10


DUSSAULT APPAREL INC.


NOTES TO THE FINANCIAL STATEMENTS


FOR THE FISCAL YEAR ENDED


OCTOBER 31, 2011


(Audited)





Note 6 – Notes Payable (continued)





·
February 15, 2011 - $10,000 was converted by the issuance of 3,030,303 common shares at a deemed price of $0.0033


·
March 15, 2011 - $10,000 was converted by the issuance of 4,347,826 common shares at a deemed price of $0.0023


·
April  30, 2011 - $5,000 was converted by the issuance of 6,250,000 common shares at a deemed price of $0.0008


·
May 17, 2011 - $3,000 in principal and $2,000 in accrued interest was converted by the issuance of 5,000,000 common shares at a deemed price of $0.0006





The difference of $79,842 between the market value of shares and the deemed price of shares was recorded as loss on conversion expense. The unpaid interest in the amount of $986 was contributed to the additional paid in capital account.





On December 2, 2010 the Company issued a promissory note to Asher Enterprises, Inc., a Delaware corporation, for $40,000. The note matures September 1, 2011 and accrues interest at 8% or alternately 22% in the event of default. The loan is convertible to common stock at a conversion price of 58% of the market price.  Pursuant to the terms of the convertible note, Asher Enterprises, Inc. issued the following conversion notices during the period covered by this report:





·
August 15, 2011 - $4,500  was converted by the issuance of 6,428,571 common shares at a deemed price of $0.0007;


·
September 19, 2011 - $4,000 was converted by the issuance of 6,666,667 common shares at a deemed price of $0.0006;


·
September 21, 2011 - $5,000 was converted by the issuance of 7,142,857 common shares at a deemed price of $0.0007;


·
September 26, 2011 - $4,000 was converted by the issuance of 6,666,667 common shares at a deemed price of $0.0006;


·
October 3, 2011 - $13,000 was converted by the issuance of 6,842,105 common shares at a deemed price of $0.0019;


·
October 4, 2011 - $6,500 was converted by the issuance of 2,954,545 common shares at a deemed price of $0.0022;


·
October 6, 2011 - $3,000 in principal and $1,600 in accrued interest was converted by the issuance of 1,393,939 common shares at a deemed price of $0.0033;





The difference of $150,614 between the market value of share and the deemed price of the shares was recorded as loss on conversion expense. The unpaid interest in the amount of $811 was contributed to the additional paid in capital account.





As at October 31, 2011 the notes payable to Asher Enterprises, Inc. were fully settled.





Note 7 – Common Stock





On October 1, 2010, the Company entered into a consulting agreement with Roger Agyagos whereby Roger Agyagos agreed to provide the Company with media relations and marketing services for a six month period. Under the consulting agreement the Company was required to issue 2,000,000 restricted common shares. During the period ended April 30, 2011, the Company recorded $32,200 as consulting fees. The Company issued 2,000,000 shares of common stock on January 31, 2011 to Roger Agyagos.





On November 1, 2010, the Company entered a consulting agreement with Sam Pearlman whereby Sam Pearlman agreed to provide the Company with marketing services for a six month period. Under the consulting agreement the Company was required to issue 1,000,000 restricted common shares. During the period ended April 30, 2011, the Company recorded the $10,000 as consulting fees. The Company issued 1,000,000 shares of common stock on December 14, 2010 to Sam Pearlman.


F-11





DUSSAULT APPAREL INC.


NOTES TO THE FINANCIAL STATEMENTS


FOR THE FISCAL YEAR ENDED


OCTOBER 31, 2011


(Audited)








Note 7 – Common Stock (continued)





On November 30, 2010, Asher Enterprises, Inc. converted the amount of $8,000 pursuant to their May 12, 2010 convertible promissory note into a total of 1,739,130 common shares of the Company at a deemed price of $0.0046 per common share.





On December 14, 2010, the Company issued a total of 1,413,394 shares of common stock related to the asset acquisition agreement between the Company and Open Sundaes Ventures Ltd. described above under Note 3 – Trademarks.  The shares were issued at market value of $0.0075 per share or $10,600.  A total of 2,586,608 shares remained allocated but unissued with respect to the agreement.





On December 14, 2010 the Company issued a total of 1,250,000 shares of common stock for total value of $11,875 to a consultant for services provided.





On January 3, 2011, Asher Enterprises, Inc. converted the amount of $10,000 pursuant to their May 12, 2010 convertible promissory note into a total of 3,448,276 common shares of the Company at a deemed price of $0.0029 per common share.





On January 10, 2011, Asher Enterprises, Inc. converted the amount of $4,000 pursuant to their May 12, 2010 convertible promissory note into a total of 1,379,310 common shares of the Company at a deemed price of $0.0029 per common share.





On February 15, 2011, Asher Enterprises, Inc. converted the amount of $10,000 pursuant to their May 12, 2010 convertible promissory note into a total of 3,030,303 common shares of the Company at a deemed price of $0.0033 per common share.





On March 14, 2011, Asher Enterprises, Inc. converted the amount of $10,000 pursuant to their May 12, 2010 convertible promissory note into a total of 4,347,826 common shares of the Company at a deemed price of $0.0023 per common share.





On April 20, 2011, Asher Enterprises, Inc. converted the amount of $5,000 pursuant to their May 12, 2010 convertible promissory note into a total of 6,250,000 common shares of the Company at a deemed price of $0.0008 per common share.





On May 17, 2011, Asher Enterprises, Inc. converted the amount of $3,000 in principal and $2,000 in accrued interest pursuant to their May 12, 2010 convertible promissory note into a total of 5,000,000 common shares of the Company at a deemed price of $0.0006 per common share.





On May 1, 2011, the Company approved the issuance of the remaining 2,586,608 shares of common stock related to the asset acquisition agreement between the Company and Open Sundaes Ventures Ltd. described above under Note 3 – Trademarks. The Company provided the transfer agent with a treasury order requesting the issuance of the shares.  On June 13, 2011 the transfer agent issued 11,303 shares under the treasury order which shares were valued at market price on the date of issue, or $0.001, leaving a total of 2,575,305 shares to be issued in respect of the transaction.  The remaining shares were requested to be issued to a related party, Jason Sundar, who is an officer of the Company.  Mr. Sundar will hold the shares in trust to be distributed to various shareholders of Open Sundaes Ventures Ltd.  Subsequent to the year ended October 31, 2011 the transfer agent issued the remaining 2,575,305 shares.





On August 15, 2011, Asher Enterprises, Inc. converted $4,500 pursuant to their December 2, 2010 convertible promissory note into a total of 6,428,571 common shares of the Company at a deemed price of $0.0007 per common share.





On September 19, 2011 Asher Enterprises, Inc. converted $4,000 pursuant to their December 2, 2010 convertible promissory note into a total of 6,666,667 common shares at a deemed price of $0.0006;


F-12


DUSSAULT APPAREL INC.


NOTES TO THE FINANCIAL STATEMENTS


FOR THE FISCAL YEAR ENDED


OCTOBER 31, 2011


(Audited)








Note 7 – Common Stock (continued)





On September 21, 2011 2011 Asher Enterprises, Inc. converted $5,000 pursuant to their December 2, 2010 convertible promissory note into a total of 7,142,857 common shares at a deemed price of $0.0007;





On September 26, 2011 2011 Asher Enterprises, Inc. converted $4,000 pursuant to their December 2, 2010 convertible promissory note into a total of 6,666,667 common shares at a deemed price of $0.0006;





On October 3, 2011 Asher Enterprises, Inc. converted $13,000 pursuant to their December 2, 2010 convertible promissory note into a total of 6,842,105 common shares at a deemed price of $0.0019;





On October 4, 2011 Asher Enterprises, Inc. converted $6,500 pursuant to their December 2, 2010 convertible promissory note into a total of  2,954,545 common shares at a deemed price of $0.0022;





October 6, 2011 Asher Enterprises, Inc. converted $3,000 in principal and $1,600 in accrued interest pursuant to their December 2, 2010 convertible promissory note into a total of 1,393,939 common shares at a deemed price of $0.0033.





As at October 31, 2011 there were a total of 180,954,893 shares issued and outstanding.





Note 8 – Related Party Transactions





During the year ended October 31 2011, the President of the Company, Jason Dussault advanced funds in the amount of $16,132 (CAD$16,696) to the Company for working capital.  The Company has repaid $3,529 (CAD$4,196) to Jason Dussault, leaving $12,603 (CAD$12,500) on the balance sheet as loan payable – related parties.





Note 9 – Subsequent Events





On November 10, 2011 Asher Enterprises Inc. funded a promissory note executed by the Company on October 25, 2011 in the total amount of $63,000. The note matures July 27, 2012 and accrues interest at 8% or alternately 22% in the event of default. The loan is convertible to common stock at a conversion price of 58% of the market price.





On January 19, 2012, the Company issued the remaining 2,575,305 shares pursuant to the agreement with Open Sundaes.  This issuance completed the issuances required under the agreement with Open Sundaes.





The Company has evaluated subsequent events from the balance sheet date through the date that the financial statements were issued and determined that there are no additional events to disclose.


F-13


ITEM 9.              CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE





In the fiscal years ended October 31, 2011 and 2010, there have been no changes in the Company’s accounting policies, nor have there been any disagreements with our accountants.





ITEM 9A.           CONTROLS AND PROCEDURES




Changes in and Disagreements With Accountants on Accounting and Financial Disclosure





There were no disagreements with our accountants related to accounting principles or practices, financial statement disclosure, internal controls or auditing scope or procedure during the two fiscal years and subsequent interim periods.





Item 9A. Controls and Procedures




Management’s Report on Disclosure Controls and Procedures




We maintain disclosure controls and procedures that are designed to ensure that the information disclosed in the reports we file with the Securities and Exchange Commission under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our president (our principal executive officer) and our chief financial officer (our principal financial and accounting officer), as appropriate, to allow timely decisions regarding required disclosure.




Management, including our president (our principal executive officer) and our chief financial officer (our principal financial and accounting officer), evaluated the effectiveness of our disclosure controls and procedures, as of October 31, 2011, in accordance with Rules 13a-15(b) and 15d-15(b) of the Securities and Exchange Act of 1934, as amended are effective to ensure the information required to be disclosed by us in the reports that we file or submit under the Securities and Exchange Act of 1934, as amended is recorded, processed, summarized and reported within the time period specified in SEC rules and forms.




Our management, including our president (our principal executive officer) and our chief financial officer (our principal financial and accounting officer), do not expect that our disclosure controls, and procedures or internal controls will prevent all possible error and fraud. Our disclosure controls and procedures are, however, designed to provide reasonable assurance of achieving their objectives, and our president (our principal executive officer) and our chief financial officer (our principal financial and accounting officer) have concluded that our financial controls and procedures are effective at that reasonable assurance level.




Management’s Report on Internal Control over Financial Reporting




Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of control procedures. The objectives of internal control include providing management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management’s authorization and recorded properly to permit the preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States. Our management assessed the effectiveness of our internal control over financial reporting as of October 31, 2010. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control-Integrated Framework. Our management has concluded that, as of October 31, 2010, our internal control over financial reporting is effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with US generally accepted accounting principles. Our management reviewed the results of their assessment with our Board of Directors.




This annual report does not include an attestation report of our company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit our Company to provide only management’s report in this annual report.




20




Inherent limitations on effectiveness of controls




Internal control over financial reporting has inherent limitations which include but is not limited to the use of independent professionals for advice and guidance, interpretation of existing and/or changing rules and principles, segregation of management duties, scale of organization, and personnel factors. Internal control over financial reporting is a process which involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a timely basis, however these inherent limitations are known features of the financial reporting process and it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.




Changes in Internal Control over Financial Reporting




There have been no changes in our internal controls over financial reporting that occurred during the year ended October 31, 2010 that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.




Item 9B. Other Information




None.




21


PART III





ITEM 10.             DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE





Executive Officer and Directors




The following individuals serve as the directors and executive officers of our company as of the date of this annual report.




Name
Position Held with Our Company
Age
Date First Elected or

AppointedJason Dussault
Chief Executive Officer, President, Treasurer, Secretary and Director
38
May 10, 2007Robert Mintak
Chief Operating Officer and Chief Financial Officer
49
July 17, 2007Jason Sundar
Vice President of Corporate Finance
35
July 11, 2007





Our Board of Directors consists of only one class. All of the directors will serve until the next annual meeting of stockholders; until their successors are elected and qualified; or until their earlier death, retirement, resignation or removal. There are no family relationships among directors and executive officers. There are no arrangements or understandings between any director or executive officer and any other person(s) pursuant to which a director or executive officer was selected. Our executive officers are elected by our Board of Directors and hold office until their death, resignation or removal from office





Our Board of Directors believes that all members of the Board and all executive officers encompass a range of talent, skill, and experience sufficient to provide sound and prudent guidance with respect to our operations and interests. The information below with respect to our directors and executive officers includes each individual’s experience, qualifications, attributes, and skills that led our Board of Directors to the conclusion that he or she should serve as a director and/or executive officer.





We know of no pending proceedings to which any director, member of senior management, or affiliate is either a party adverse to us, or our subsidiaries, or has a material interest adverse to us or our subsidiaries.





None of our executive officers or directors have been involved in any bankruptcy proceedings within the last five years, been convicted in or has pending any criminal proceedings, been subject to any order, judgment or decree enjoining, barring, suspending or otherwise limiting involvement in any type of business, securities or banking activity or been found to have violated any federal, state or provincial securities or commodities law.




Business Experience




The following is a brief account of the education and business experience during at least the past five years of each director, executive officer and key employee of our company, indicating the person’s principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.




Jason Dussault, Chief Executive Officer, President, Treasurer, Secretary and Director




Creating and collaborating with several companies over the past 15 years, Mr. Dussault has worked to take small start-up companies public, accessing financing from U.S., Canadian and European sources and providing corporate guidance. In 2005, after successfully raising hundreds of millions of dollars in capital for his client companies, he finally decided to pursue his ultimate passion. From that first inspired leap, Dussault Apparel Inc. was born. A year later, his first line of fashions sold out almost immediately, establishing his company and launching Dussault Custom Apparel. As our company’s creative visionary, he works with Head Designer Peter Tsang to expand on a unique style, honing his creations through an intimate connection to some of the world’s leading celebrities and elite from the worlds of entertainment and sports.




22


Robert Mintak, Chief Operating Officer





Mr. Robert Mintak has over 25 years of experience in the retail and wholesale industries. His track record in management includes five years with the Robinson Group, which was named one of the 50 best managed companies in Canada in 2005, and ten years of management experience in retail. Over the past 7 years Mr. Mintak has worked providing internet technology services and researchfor several companies.




Jason Sundar, Vice President, Corporate Finance




Mr. Sundar began his career working for the British Columbia Attorney General’s office, where he developed and promoted youth programs to protect high-risk youth. At 20 he became the youngest facilitator of corporate training programs for Peak Performance Systems — a Brian Tracy International Network focused on the psychology of achievement, goal setting, professional selling skills, advances selling skills and B2B selling skills. Among their numerous clients were Yorkton Securities and Crown Packaging. By the age of 23, Mr. Sundar was the top performer for investor relations specialists PCMI. Leaving that position, he partnered with Olivia Communications, raising over five million dollars and taking the organization from three people to a staff of 24. Since founding Sundar Communications Group in 2002, he has personally raised over $50 million for his clients worldwide.




Code of Ethics




Effective January 24, 2008, our company’s board of directors adopted a Code of Business Conduct and Ethics that applies to, among other persons, members of our board of directors, our company’s officers including our president (being our principal executive officer) and our chief financial officer (being our principal financial and accounting officer), contractors, consultants and advisors. As adopted, our Code of Business Conduct and Ethics sets forth written standards that are designed to deter wrongdoing and to promote:




(1) honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;




(2) full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submit to, the Securities and Exchange Commission and in other public communications made by us;




(3) compliance with applicable governmental laws, rules and regulations;




(4) the prompt internal reporting of violations of the Code of Business Conduct and Ethics to an appropriate person or persons identified in the Code of Business Conduct and Ethics; and




(5) accountability for adherence to the Code of Business Conduct and Ethics.




Our Code of Business Conduct and Ethics requires, among other things, that all of our company’s personnel shall be accorded full access to our president with respect to any matter which may arise relating to the Code of Business Conduct and Ethics. Further, all of our company’s personnel are to be accorded full access to our company’s board of directors if any such matter involves an alleged breach of the Code of Business Conduct and Ethics by our company officers.




In addition, our Code of Business Conduct and Ethics emphasizes that all employees, and particularly managers and/or supervisors, have a responsibility for maintaining financial integrity within our company, consistent with generally accepted accounting principles, and federal, provincial and state securities laws. Any employee who becomes aware of any incidents involving financial or accounting manipulation or other irregularities, whether by witnessing the incident or being told of it, must report it to his or her immediate supervisor or to our company’s President. If the incident involves an alleged breach of the Code of Business Conduct and Ethics by the President, the incident must be reported to any member of our board of directors. Any failure to report such inappropriate or irregular conduct of others is to be treated as a severe disciplinary matter. It is against our company policy to retaliate against any individual who reports in good faith the violation or potential violation of our company’s Code of Business Conduct and Ethics by another.




We will provide a copy of the Code of Business Conduct and Ethics to any person without charge, upon request. Requests can be sent to our company at the address on the cover of this annual report.




23


Nominating Committee





There have been no material changes to the procedures by which security holders may recommend nominees to the Company's board of directors.





Audit Committee





At this time, the Company is not required to have an audit committee. Further, since there no independent members of the Board it is not feasible at this time to have an audit committee. The Board of Directors performs the same functions as an audit committee. The Board of Directors in performing its functions as an audit committee has determined that it does not have an audit committee financial expert.





Section 16(a) Beneficial Ownership Reporting Compliance





Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, executive officers, and stockholders holding more than 10% of our outstanding common stock, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in beneficial ownership of our common stock.  Executive officers, directors and greater-than-10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file.





Based on a review of Forms 3, 4, and 5 and amendments thereto furnished to the registrant during its most recent fiscal year ending October 31, 2011, there were no late filings.





ITEM 11.  EXECUTIVE COMPENSATION.




The particulars of the compensation paid to the following persons:




·
our principal executive officer;


·
each of our two most highly compensated executive officers who were serving as executive officers at the end of the years ended October 31, 2011 and 2010; and


·
up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as our executive officer at the end of the years ended October 31, 2010 and 2009,




who we will collectively refer to as the named executive officers of our company, are set out in the following summary compensation table, except that no disclosure is provided for any named executive officer, other than our principal executive officers, whose total compensation did not exceed $100,000 for the respective fiscal year.




SUMMARY COMPENSATION TABLENameand Principal

Position
Year
Salary

($)
Bonus

($)
Stock

Awards

($)
Option

Awards

($)
Non-Equity

Incentive Plan

Compensation

($)
Change inPension

Value andNonqualified

DeferredCompensation

Earnings

($)
All

Other

Compensation

($)
Total

($)Jason Dussault(1)

Chief Executive

Officer, President, Treasurer, Secretary and director
2011

2010
Nil

Nil
Nil

Nil
Nil

216,000
Nil

Nil
Nil

Nil
Nil

Nil
Nil

Nil
Nil

216,000Robert Mintak(2)

Chief OperatingOfficer

and ChiefFinancial Officer
2011

2010
Nil

Nil
Nil

Nil
Nil

Nil
Nil

Nil
Nil

Nil
Nil

Nil
Nil

Nil
Nil

NilJason Sundar(3)

VP Corporate

Finance
2011

2010
Nil

Nil
Nil

Nil
Nil

Nil
Nil

Nil
Nil

Nil
Nil

Nil
Nil

Nil
Nil

Nil


24


Outstanding Equity Awards at Fiscal Year-End





None





Option Grants and Exercises





We do not currently have any stock option plans.  There were no other option grants during fiscal 2011 or 2010.





Employment Agreements





We have not entered into employment agreements with our directors and officers.





Compensation of Directors




During the most recent fiscal year, no directors were provided any compensation.





The Company has made no arrangements for the cash remuneration of its directors, except that they will be entitled to receive reimbursement for actual, demonstrable out-of-pocket expenses, including travel expenses, if any, made on the Company’s behalf.





Compensation Committee





We do not currently have a compensation committee.  Should our officers become compensated in the future, the Principal Executive Officer’s executive compensation will be approved by our Board of Directors. For all other executive compensation contracts, the Principal Executive Officer will negotiate and approve the contracts and compensation.





ITEM 12.            SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.





Security Ownership of Certain Beneficial Owners





The following table sets forth information, as of January 25, 2012, with respect to the beneficial ownership of the Company’s Common Stock by each person known by the Company to be the beneficial owner of more than 5% of the outstanding common stock. Information is also provided regarding beneficial ownership of common stock if all outstanding options, warrants, rights and conversion privileges (to which the applicable 5% stockholders have the right to exercise in the next 60 days) are exercised and additional shares of common stock are issued.








Title of Class
Name and Address of Beneficial Owner
Amount and Natureof Beneficial Ownership
Percentage of Class (1)Common Stock
Jason Dussault

#606-1155 N. La Cienega Blvd

West Hollywood, CA 90069
16,000,000 shares held directly
8.718%





(1)Beneficial ownership is determined in accordance with SEC rules and includes voting or investment power with respect to securities. All shares of common stock subject to options or warrants exercisable within 60 days of January 25, 2012 are deemed to be outstanding and beneficially owned by the persons holding those options or warrants for the purpose of computing the number of shares beneficially owned and the percentage ownership of that person. They are not, however, deemed to be outstanding beneficially owned for the purpose of computing the percentage ownership of any other person. Subject to the paragraph above, the percentage ownership of outstanding shares is based on 183,530,198shares of common stock outstanding as of January 25, 2012.


25


Security Ownership of Management





The following table shows, as of January 25, 2012, the shares of the Company’s common stock beneficially owned by each director (including each nominee), by each of the executive officers and by all directors and executive officers as a group. Information is also provided regarding beneficial ownership of common stock if all outstanding options, warrants, rights and conversion privileges (to which the applicable officers and directors have the right to exercise in the next 60 days) are exercised and additional shares of common stock are issued.





Title of Class
Name of Beneficial Owner

Amount and Nature

of Beneficial Ownership


Percentage of Class (1)Common Stock
Jason Dussault

16,000,000 shares held directly



8.718
%Common Stock
Robert Mintak


-0-



0
%Common Stock
Jason Sundar

298,957 shares held directly



0.163
%All Officers and Directors as a Group


16,298,957



8.881
%





(1)Beneficial ownership is determined in accordance with SEC rules and includes voting or investment power with respect to securities. All shares of common stock subject to options or warrants exercisable within 60 days of January 25, 2012 are deemed to be outstanding and beneficially owned by the persons holding those options or warrants for the purpose of computing the number of shares beneficially owned and the percentage ownership of that person. They are not, however, deemed to be outstanding beneficially owned for the purpose of computing the percentage ownership of any other person. Subject to the paragraph above, the percentage ownership of outstanding shares is based on 183,530,198shares of common stock outstanding as of January 25, 2012.





Changes in Control





There are no existing arrangements that may result in a change in control of our company.





Securities authorized for issuance under equity compensation plans.





None




ITEM 13.            CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE





Certain Relationships and Related Transactions





During fiscal year ended October 31, 2011, Hector Francisco Vasquez Davis, a shareholder of the Company and previously our sole director, made advances totaling $4,301 to the Company, which amount is unsecured, bears no interest and is payable on demand.





As at October 31, 2011, Mr. Davis has advanced to us an aggregate amount totaling $34,358, which amounts bear no interest, is unsecured and payable on demand.  In addition, the director has made contributions to capital of $19,500 in the form of expenses paid on our behalf.





Review, Approval or Ratification of Transactions with Related Persons





We do not currently have any written policies and procedures for the review, approval or ratification of any transactions with related persons.





Promoters and Certain Control Persons





None


Parents





None




26




Director Independence





As of the date of this Annual Report, we do not have any independent directors.





We have developed the following categorical standards for determining the materiality of relationships that the directors may have with the Company. This information is not available on our Web site because such site is currently under development.





A director shall not be deemed to have a material relationship with the Company that impairs the director's independence as a result of any of the following relationships:





1.
the director is an officer or other person holding a salaried position of an entity (other than a principal, equity partner or member of such entity) that provides professional services to the Company and the amount of all payments from the Company to such entity during the most recently completed fiscal year was less than two percent of such entity’s consolidated gross revenues;2.
the director is the beneficial owner of less than five (5%) per cent of the outstanding equity interests of an entity that does business with the Company;3.
the director is an executive officer of a civic, charitable or cultural institution that received less than the greater of one million ($1,000,000) dollars or two (2%) per cent of its consolidated gross revenues, as such term is construed by the New York Stock Exchange for purposes of Section 303A.02(b)(v) of the Corporate Governance Standards, from the Company or any of its subsidiaries for each of the last three (3) fiscal years;4.
the director is an officer of an entity that is indebted to the Company, or to which the Company is indebted, and the total amount of either the Company's or the business entity's indebtedness is less than three (3%) per cent of the total consolidated assets of such entity as of the end of the previous fiscal year; and5.
the director obtained products or services from the Company on terms generally available to customers of the Company for such products or services. The Board retains the sole right to interpret and apply the foregoing standards in determining the materiality of any relationship.





The Board shall undertake an annual review of the independence of all non-management directors. To enable the Board to evaluate each non-management director, in advance of the meeting at which the review occurs, each non-management director shall provide the Board with full information regarding the director’s business and other relationships with the Company, its affiliates and senior management.





Directors must inform the Board whenever there are any material changes in their circumstances or relationships that could affect their independence, including all business relationships between a director and the Company, its affiliates, or members of senior management, whether or not such business relationships would be deemed not to be material under any of the categorical standards set forth above. Following the receipt of such information, the Board shall re-evaluate the director's independence.


27
  ITEM 14.             PRINCIPAL ACCOUNTANT FEES AND SERVICES




The aggregate fees billed for the most recently completed fiscal year ended October 31, 2011 and for the fiscal year ended October 31, 2010 for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included in our quarterly reports on Form 10-Q and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:




Year EndedOctober 31, 2011

$
October 31, 2010

$Audit Fees
6,000
8,300Audit Related Fees
7,000
1,200Tax Fees
-
3,000All Other Fees
-
1,500Total
13,000
14,000




Our board of directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by the board of directors either before or after the respective services were rendered.




Our board of directors has considered the nature and amount of fees billed by our independent auditors and believes that the provision of services for activities unrelated to the audit is compatible with maintaining our independent auditors’ independence.







28





PART IV





ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES




Exhibits:


NO.
IDENTIFICATION OF EXHIBIT3.1
Articles of Incorporation
Incorporated by reference from our Registration Statement on Form SB-2 filed on January 11, 2007.3.2
Bylaws
Incorporated by reference from our Registration Statement on Form SB-2 filed on January 11, 2007.3.3
Articles of Merger
Incorporated by reference from our Form 8-K filed on June 16, 2007.3.4
Certificate of Change
Incorporated by reference from our Form 8-K filed on June 16, 200710.1
Employment Agreement dated June 22, 2007, between our company and Terry Fitzgerald
Incorporated by reference from our Form 8-K filed on June 25, 200710.2
Letter of Intent dated June 25, 2007, between our company and Dussault Jeans Inc.
Incorporated by reference from our Form 8-K filed on July 2, 200710.3
Letter of Intent dated November 5, 2007 between our company and Dussault Jeans Inc.
Incorporated by reference from our Form 8-K filed on November 5, 2007.10.4
Consulting Agreement dated July 19, 2007, between our company and Jason Sundar
Incorporated by reference from our Annual Report on Form 10-KSB filed on February 13, 2008.10.5
Consulting Agreement dated July 19, 2007, between our company and Robert Mintak
Incorporated by reference from our Annual Report on Form 10-KSB filed on February 13, 2008.10.6
Bridge Loan Agreement dated July 19, 2007, between our company and Dussault Jeans Inc
Incorporated by reference from our Form 8-K filed on August 1, 2007.10.7
Bridge Loan Agreement dated April 16, 2008, between our company and Dayton Boot Co. Ent. Ltd.
Incorporated by reference from our Form 8-K filed on April 23, 2008.10.8
Distribution Agreement dated November 10, 2009, between our company and EHM Holdings.
Incorporated by reference from our Quarterly Report on Form 10-Q filed on March 22, 2010.10.9
Merchandising License Agreement dated October 31, 2009, between our company and USPA Accessories, LLC.
Incorporated by reference from our Quarterly Report on Form 10-Q filed on March 22, 2010.31.1
Certification of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Filed herewith31.2
Certification of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Filed herewith32.1
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Filed herewith32.2
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Filed herewith




29







Financial Statements.




The following financial statements are included in this report:




PageAudited Financial StatementsReport of Independent Registered Public Accounting Firm
F-2Balance Sheets
F-3Statements of Operations
F-4Statements of  Changes in Stockholders’ Equity
F-5Statements of Cash Flows
F-6Notes to Audited Financial Statements
F-7 to F-13




30


SIGNATURES





Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.





DUSSAULT APPAREL INC.Date:
February 13, 2012
By:
/s/ Jason DussaultName:
Jason DussaultTitle:
Chief Executive Officer and President (Principal Executive Officer)By:
/s/ Robert MintakName:
Robert MintakTitle:
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)








Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.





Date:
February 13, 2012
By:
/s/ Jason DussaultName:
Jason DussaultTitle:
President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)




31