UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended April 30, 2013

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from __________ to __________

000-52452
Commission File Number

DUSSAULT 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.)

1885 Shore Drive South, South Pasadena, FL	33707
(Address of principal executive offices)	(Zip Code)

(727) 902-2594
(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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 [ ]No [ X ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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 [ ] 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 ]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant 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 ISSUERS

353,444,347 shares of common stock issued and outstanding as of June 5, 2013

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

DUSSAULT APPAREL INC.

TABLE OF CONTENTS

		Page
	PART I – Financial Information
Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	5
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	7
Item 4.	Controls and Procedures	7

	PART II – Other Information
Item 1.	Legal Proceedings	10
Item 1A.	Risk Factors	10
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	10
Item 3.	Defaults Upon Senior Securities	10
Item 4.	Mine Safety Disclosures	10
Item 5.	Other Information	10
Item 6.	Exhibits	11
	Signatures	12

ITEM 1. FINANCIAL STATEMENTS

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 210 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature. Operating results for the six month period ended April 30, 2013, are not necessarily indicative of the results that may be expected for the fiscal year ending October 31, 2013. For further information refer to the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2012 as filed with the Securities and Exchange Commission on March 6, 2013.

	Page
Unaudited Financial Statements
Balance Sheets	F-1
Statements of Operations	F-2
Statements of Cash Flows	F-3
Notes to Financial Statements	F-4 to F-11

DUSSAULT APPAREL INC.

Balance Sheets

	April 30, 2013 (Unaudited)			October 31, 2012 (Audited)
ASSETS
Current assets
Cash	$	769		$	7,151
Accounts receivable		3,070			5,484
Other receivable		716			4,016
Total current assets		4,555			16,651

Total assets	$	4,555		$	16,651

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued liabilities	$	98,103		$	42,669
Accounts payable – related parties		17,500			42,327
Sales tax payable		-			2,670
Demand loan		4,975			-
Convertible note liabilities		-			8,400
Derivative liabilities		-			11,100
Total current liabilities		120,578			107,166

Other Liabilities
Loan payable – related party		12,320			12,243
Convertible note liabilities, net		25,333			21,533
Derivative liabilities		42,900			42,000
Total Liabilities		201,131			182,942

Shareholders’ Equity
Common stock - $0.001 par value, authorized 1,050,000, 000 shares; 353,444,347 and 316,217,207 shares issued and outstanding as at April 30, 2013 and October 31, 2012, respectively		353,444			316,216
Additional paid in capital		12,123,025			12,136,933
Accumulated deficit		(12,686,020	)		(12,632,415	)
Accumulated other comprehensive income		12,975			12,975
Total Shareholders' Deficit		(196,576	)		(166,291	)
Total Liabilities and Shareholders' Deficit	$	4,555		$	16,651

The accompanying notes are an integral part of these financial statements

F-1

DUSSAULT APPAREL INC.

Statements of Operations and Comprehensive Loss

	Three Months ended April 30,						Six Months ended April 30,
	2013			2012 (restated)			2013			2012 (restated)

Revenue	$	2,460		$	3,485		$	4,278		$	22,129
Gross Profit		2,460			3,485			4,278			22,129

General and Administrative Expenses
Professional Fees		13,900			2,413			24,500			25,255
Consulting		10,642			648			19,437			3,078
Depreciation		-			857			-			1,662
Other Administrative Expenses		5,366			20,645			9,678			40,177
Total Expenses		29,908			24,563			53,615			70,172

Operating Income (Loss)		(27,448	)		(21,078	)		(49,337	)		(48,043	)

Other Income (expense)
Change in fair value of derivative liabilities		-			-			(325	)		(700	)
Trademark impairment charge		-			-			-			(7,468	)
Interest expense		(2,299	)		(21,205	)		(4,598	)		(40,935	)

Net Income (Loss)	$	(29,747	)	$	(42,283	)	$	(53,610	)	$	(97,146	)

Loss Per Common Share, basic	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

Weighted Average Number of Common Shares		353,444,347			183,530,198			346,954,790			182,426,496

The accompanying notes are an integral part of these financial statements

F-2

DUSSAULT APPAREL INC.

Statements of Cash Flows

	For the six months ended April 30,
	2013			2012 (restated)
Cash flows from operating activities:
Net (loss)	$	(53,610	)	$	(97,146	)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation		-			1,663
Change in fair value of derivative liabilities		(325	)		700
Accrued interest contributed to additional paid in capital		2,624			-
Accrued interest on the notes		798			2,951
Amortization on the debt discount		3,800			37,984
Impairment on trademark		-			7,468
Change in operating assets and liabilities:
Accounts receivable		2,421			14,928
Account payable		32,229			(21,629	)
Sale tax receivable		629			521
Net cash flows used by operating activities		(11,434	)		(52,560	)

Cash From Investing Activities:
Net cash (used by) investing activities		-			-

Cash flows from financing activities:
Proceeds from demand loan		4,975			-
Loan payable		-			63,000
Net cash flows from financing activities		4,975			63,000

Effect of exchange rates on cash		77			(37	)

Net increase (decrease) in cash		(6,382	)		10,403
Cash and equivalents, beginning of period		7,151			8,449
Cash, end of period	$	769			18,852

Supplemental cash flow disclosures:
Cash paid for interest	$	-			-
Cash paid for income taxes	$	-			-

Non cash transactions:
Purchase trademark by issuance of common stock	$	-		$	7,468
Stock issued to settle convertible notes, including interest expense		10,820			-
	$	10,820		$	7,468

The accompanying notes are an integral part of these financial statements

F-3

DUSSAULT APPAREL INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2013

(Unaudited – prepared by Management)

Note 1 – Basis of Presentation and Nature of Operations

These unaudited 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 was designing apparel for its licensing partner, the Company continues to market over the internet a very limited line of apparel. Our samples are manufactured by our licensing partner in North America. The Company has transitioned from being a manufacturer–wholesaler to licensing of its trademark to other wholesalers in the primarily in the Canadian market, while promoting its marque. The Company also purchased the trademark of a cosmetics line. Currently no sales, production or sampling of the cosmetic line has occurred or is planned. The Company recently renegotiated its licensing agreement and is receiving royalty income only for its designs with one current manufacturer. In July, 2012, the Company had a further change in management and operations were moved to Florida. The Company is currently reviewing its business and is seeking other acquisitions, as sales have declined year over year.

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-4

DUSSAULT APPAREL INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2013

(Unaudited – prepared by Management)

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 following are the major categories of liabilities measured at fair value on a recurring basis as of April 30, 2013 and October 31, 2012, using quoted prices in active markets for identical liabilities (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3):

			April 30, 2013				October1, 2012
Derivative liabilities	Level 3		$	42,900			$	53,100

F-5

DUSSAULT APPAREL INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2013

(Unaudited – prepared by Management)

Note 2 – Summary of Significant Accounting Policies (continued)

Derivative Liabilities

Fair value accounting requires bifurcation of embedded derivative instruments, such as ratchet provisions or conversion features in convertible debt or equity instruments, and measurement of their fair value. In determining the appropriate fair value, the Company uses the Black-Scholes option-pricing model. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.

Once derivative liabilities are determined, they are adjusted to reflect fair value at the end of each reporting period. Any increase or decrease in the fair value is recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such as warrants, are also valued using the Black-Scholes option-pricing model.

Loss Per Common 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.

Royalty Income

The Company receives royalty income from licensing third parties to use its intellectual property. Previously we received a royalty of 50% of the total sales, net of all costs of goods, returns, marketing expenses, shipping costs and fees. Subsequent to the fiscal year end October 31, 2013, the Company and the licensee of its trademarks and intellectual property renegotiated the royalty agreement so that retroactive to August 1, 2012 the Company would receive a 4% royalty based on top line gross sales as opposed to a royalty of 50% of the total sales, net of all costs of goods, returns, marketing expenses, shipping costs and fees. (ref Note 6 – Distribution agreement)

Recent Accounting Pronouncements

ASU 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment is applicable to fiscal years beginning after December 15, 2011. Early application is permitted. The Company does not expect this ASU has a material impact on its financial position or carrying value of its intangible assets at this time.

The Company does not expect the adoption of any other recent accounting pronouncements will have a material impact on its financial statements.

F-6

DUSSAULT APPAREL INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2013

(Unaudited – prepared by Management)

Note 2 – Summary of Significant Accounting Policies (continued)

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 April 30, 2013 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.

Note 3 – Restatement

A prior period adjustment was made to the April 30, 2012 financial statements for an accounting error. An embedded derivative in a convertible note payable had not been identified under ASC 815-40. The effect of disclosing the derivative liability was recorded as a prior period adjustment to Deficit and to accumulated expense amounts in the current year. The note payable was also reclassified in the restatement. (ref Note 6 – (a))

For the three months ended April 30, 2012 Item	As Originally Reported ($)		As Restated ($)			Effect on Earnings ($)			Effect on Net Equity ($)

Statement of Operations
Derivative loss		-		-			-			-
Interest expense on amortization		-		(1,900	)		(1,900	)		(1,900	)
							(1,900	)		(1,900	)

For the six months ended April 30, 2012 Item	As Originally Reported ($)		As Restated ($)			Effect on Earnings ($)			Effect on Net Equity ($)

Statement of Operations
Derivative loss		-		(700	)		(700	)		(700	)
Interest expense on amortization		-		(3,800	)		(3,800	)		(3,800	)
							(4,500	)		(4,500	)

F-7

DUSSAULT APPAREL INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2013

(Unaudited – prepared by Management)

Note 4 - Trademarks

On April 9, 2010 the Company entered into an asset acquisition agreement (the “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 9,000,002 shares of its common stock to the shareholders of Open Sundaes and certain creditors. The Agreement was approved by the shareholders of Open Sundaes at a special meeting held on April 22, 2010. As of October 31, 2011, the Company had issued a total of 6,424,697 shares pursuant to the Agreement, 1,424,697 shares to the shareholders of Open Sundaes and 5,000,000 shares to a creditor of Open Sundaes in settlement of certain debt related to Open Sundaes that was agreed to be paid between the parties. The Company recorded the fair value of Trade Mark based on the fair value of shares issued and cash payments, which amount totaled $197,000. 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. On January 17, 2012, the Company issued the remaining 2,575,305 shares pursuant to the Agreement, fully satisfying the terms of the acquisition. As at the date of these financial statements, the Company has issued a total of 9,000,002 shares; 4,000,002 shares to the shareholders of Open Sundaes and 5,000,000 shares to a creditor of Open Sundaes.

The Company capitalized the fair value of the 2,575,305 shares issued on January 17, 2012 in the amount of $7,468. On October 31, 2012, in accordance with corporate policies, the Company assessed the Trademark value for impairment and determined to fully impair the $12,254, including a total of $4,786 on the balance sheet as at October 31, 2011.

Note 5 – Convertible Promissory Note and Derivative Liabilities

(a)Perati Finance Corporation

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 3%. The loan is convertible to common stock with conversion price is the greater of $0.01 or 50% of the average closing bid prices for the ten trading days immediately preceding the conversion date.

In our evaluation of the financing arrangement, we concluded that the conversion features were not afforded the exemption as a conventional convertible instrument and it did not otherwise meet the conditions set forth in current accounting standards for equity classification. Accordingly, they do not meet the conditions necessary to obtain equity classification and are required to be carried as derivative liabilities.

Since equity classification is not available for the conversion feature, we were required to bifurcate the embedded conversion feature and carry it as a derivative liability, at fair value. Derivative financial instruments are carried initially and subsequently at their fair values.

We estimated the fair value of the compound derivative on the inception dates, and subsequently, using the Black-Scholes Merton valuation technique, adjusted for the effect of dilution, because that technique embodies all of the assumptions (including, volatility, expected terms, and risk free rates) that are necessary to fair value complex compound derivate instruments.

F-8

DUSSAULT APPAREL INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2013

(Unaudited – prepared by Management)

Note 5 – Convertible Promissory Note and Derivative Liabilities (continued)

(a)	Perati Finance Corporation (continued)

As a result of the application of ASC No. 815 in period ended April 30, 2013 and October 31, 2012, the fair value of the conversion feature is summarized as follows:

Derivative liabilities, October 31, 2012	$	42,000
Fair value mark to market adjustment		900
Derivative liabilities, April 30, 2013	$	42,900

The Company recorded the debt discount to the extent of the gross proceeds raised, and recorded the derivative expense immediately the remaining value of the gross proceeds as it exceeded the derivative liabilities. The Company recorded a derivative expense of $900 during the six month period ended April 30, 2013.

The fair value at the commitment and re-measurement dates for the Company’s derivative liabilities were based upon the following management assumptions as of October 31, 2012 and April 30, 2013:

	Commitment Date			Re-measurement October 31, 2012			Re-measurement April 30, 2013
Expected dividends		0	%		0	%		0	%
Expected volatility		293.92	%		317.54	%		339.39	%
Expect term	5 years			3 years			2.62 years
Risk free interest rate		2.35	%		0.38	%		0.32	%

Amortization of the $38,000 discount over the three and six month period ended April 30, 2013 was $1,900 and $3,800 respectively (2012- $1,900 and $3,800), which amount has been recorded as interest expense and is reflected on the Company's balance sheet as Convertible Note Liabilities, Net. The unamortized discount of $12,667 will be expensed in future periods.

During the six month period ended April 30, 2013, the Company accrued interest expenses of $565.

(b) Asher Enterprises Inc.

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 matured July 27, 2012 and accrued interest at 8% or alternately 22% in the event of default. The loan was convertible to common stock at a conversion price of 58% of the market price.

F-9

DUSSAULT APPAREL INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2013

(Unaudited – prepared by Management)

Note 5 – Convertible Promissory Note and Derivative Liabilities (continued)

(b) Asher Enterprises Inc. (continued)

During the year ended October 31, 2012, the Company converted debt totaling $54,600 into 132,687,009 shares of common stock resulting in a loss on conversion of $78,087, which was recorded as additional paid in capital, leaving $8,400 of convertible notes matured without conversion.

During the period ended December 26, 2012, the Company converted the remaining $8,400 of convertible notes with $2,520 accrued unpaid interest into 37,227,140 shares of common stock resulting in a loss on conversion of $12,500, which was recorded as additional paid in capital, with the $2,624 balance of unpaid accrued interest contributed to additional paid in capital.

As a result of the application of ASC No. 815, the fair value of the conversion feature is summarized as follows:

Derivative liabilities, October 31, 2012	$	11,100
Fair value market to market adjustment		(1,225)
Reclassification to additional paid in capital for financial instruments that ceased to be a derivative liability		(9,875)
Derivative liabilities, April 30, 2013	$	-

Note 6 – Distribution Agreement

On March 13, 2013, the Company and the licensee of its trademarks and intellectual property renegotiated the royalty agreement so that effective August 1, 2012 the Company would receive a 4% royalty based on top line gross sales as opposed to a royalty of 50% of the total sales, net of all costs of goods, returns, marketing expenses, shipping costs and fees. The term of the agreement is beginning August 1, 2010 ending July 31, 2013 with three years renewal option beginning August 1, 2013 ending July 31, 2016.

Note 7 – Demand Loan

During the six month period ended April 30, 2013, the Company received funds in the amount of $4,975 from a third party lender. The amount is unsecured, bears interest at 10% per annum, and is due on demand.

Note 8 – Common Stock

On November 12, 2012, $4,900 of the remaining balance of a Convertible Promissory note entered into on October 25, 2011 was retired by the issuance of 13,243,243 common shares at a deemed price of $0.00037.

On November 30, 2012, $3,400 of the remaining balance of a Convertible Promissory note entered into on October 25, 2011 was retired by the issuance of 12,592,593 common shares at a deemed price of $0.00027.

On December 26, 2012, $100 of the remaining balance of a Convertible Promissory note entered into on October 25, 2011 with accrued interest of $2,520 was retired by the issuance of 11,391,304 common shares at a deemed price of $0.00023. As at April 30, 2013, there were a total of 353,444,347 shares issued and outstanding.

F-10

DUSSAULT APPAREL INC.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2013

(Unaudited – prepared by Management)

Note 9 – Related Party Transactions

On June 1, 2012 the Company entered into a month to month consulting agreement with Rodhan Management and Consulting Services (“Rodhan”) for the provision of administrative, consulting and website maintenance services. The agreement provided for services to be charged based on work performed during each month at an hourly rate. Mr. Robert Mintak, the Company's prior Chief Financial Officer and Chief Operating Officer, also provides consulting services to Rodhan and acts as their Chief Financial Officer. On December 31, 2012, the Board of Directors received the resignation of Mr. Robert Mintak as Chief Financial Officer and Chief Operating Officer of the Company. During the period ended December 31, 2012, Rodhan Management invoiced $ 3,154 (CAD$3, 154) plus applicable taxes for services rendered. The Company did not make any cash payments, leaving $6,544 (CAD$6,640) (October 31 2012 - $3,213) on the balance sheet as accounts payable.

On July 11, 2012, Ms. Natalie Bannister was appointed as a Director of Dussault Apparel Inc. (the “Corporation”).On October 4, 2012, with the resignation of Mr. Jason Dussault as an officer and director of the Company, Ms. Bannister consented to act as Chief Executive Officer, President, Secretary and Treasurer in addition to her role as a director.

During the six month period ended April 30, 2013, Ms. Bannister charged the Company $15,000 for consulting fees. The Company made cash payments in the amount of $5,000 against outstanding fees due to Ms. Bannister as at April 30, 2013, leaving a balance owing of $17,500 (October 31, 2012 - $7,500) which is reflected on the balance sheets as accounts payable – related party.

Note 10 – Subsequent Events

Subsequent to the six month period ended April 30, 2013, the Company received notice from the licensee of its trademarks and intellectual property of the exercise of the option as specified in the distribution agreement dated March 13, 2013, in which the option begins August 1, 2013 and runs for a term of 3 years, ending July 31, 2016 with all terms and conditions remaining the same as the distribution agreement dated March 13, 2013.

F-11

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q contains forward-looking statements relating to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "intends", "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 which may cause our or our industry's actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements.

Such factors 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.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or performance. 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.

Given these uncertainties, readers of this Quarterly Report on Form 10-Q and investors are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.

All dollar amounts stated herein are in US dollars unless otherwise indicated.

The management’s discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The following discussion of our financial condition and results of operations should be read in conjunction with our audited financial statements for the year ended October 31, 2012, together with notes thereto.

As used in this quarterly report, the terms "we", "us", "our", and the "Company" mean Dussault Apparel Inc.

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 currently operate in the retail fashion industry. Management is currently seeking other acquisition opportunities to build additional revenue streams for the Company, if possible, and to increase stockholder value.

Liquidity & Capital Resources

As of April 30, 2013, our cash balance was $769, which is a decrease from our cash balance of $7,151 as of October 31, 2012. This decrease was due to the Company retiring a portion of its outstanding accounts payable. We have a small decrease in accounts receivable to $3,070 as at April 30, 2013 as compared to $5,484 in October 31, 2012 as we continued to collect fees under our licensing agreement, but with renegotiated royalty percentage terms, retroactive to August 1, 2012; other receivables decreased to $716 as at April 30, 2013 ascompared to $4,016 in October 31, 2012 as a result of the collection of certain government tax refunds. During the period ended April 30, 2013, the remaining balance of $8,400 due and payable under a convertible loan with Asher was converted to shares of the Company's common stock, reducing the amounts due under convertible loans payable and retiring in full the Asher convertible loans.

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 source other potential business opportunities while continuing with our existing 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. We have incurred operating losses since inception, and this is likely to continue into the fiscal year ending October 31, 2013. 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.

The Company is currently seeking other business opportunities that may be financed or are in cash flow to increase its asset base. Should the Company identify such acquisitions they may be required to undertake a restructure of the Company which would impact on the existing stockholders of the Company.

Results of Operations

The discussion and financial statements contained herein are for the three and six month periods ended April 30, 2013 and April 30, 2012. The following discussion regarding our financial statements should be read in conjunction with our financial statements for our fiscal year ended October 31, 2012 as filed with the Securities and Exchange Commission on March 6, 2013.

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 Three Month Periods Ended April 30, 2013 and 2012

During the three month periods ended April 30, 2013 and 2012 respectively, we earned gross revenues and gross profits of $2,460 as compared to $3,485.

For the three months ended April 30, 2013, our general and administrative expenses increased from $20,645 from April 30, 2012 to $29,920 as at April 30, 2013. This increase was mainly due to a substantial increase in professional fees from $2,413 for the three months ended April 30, 2012 to $13,900 for the three months ended April 30, 2013. The increase was due to the requirement to change auditors and to re-audit the prior fiscal year. Other administrative expenses decreased to $5,366 for the three months ended April 30, 2013 as compared to $20,645 for the three months ended April 30, 2012 due to a slowdown in operational activities.

Interest expenses for the three months ended April 30, 2013 decreased to $2,299 from $21,205 for the three months ended April 30, 2012 as loans were converted thus resulting in a decrease in interest.

During the three month period ended April 30, 2013, the Company recorded a net loss of $29,737 as compared to a net loss of $42,283 for the three month period ended April 30, 2012 due to a reduction in operational costs.

Comparison of the Six Month Periods Ended April 30, 2013 and 2012

During the six month periods ended April 30, 2013 and 2012 respectively, we earned gross revenues and gross profits of $4,278 as compared to $22,129. Sales of our products decreased substantially period over period due to no new designs being launched in the period.

For the six months ended April 30, 2013, our general and administrative expenses decreased substantially to $53,615, from $70,172 for April 30, 2012. This decrease was mainly due to a substantial reduction in other administrative expenses from $40,177 for the six months ended April 30, 2012 to $9,678 for the six months ended April 30, 2013 as our overall operational activity was substantially decreased.

Interest expenses for the six months ended April 30, 2013 decreased to $4,598 from $40,935 for the six months ended April 30, 2012 as loans were converted thus resulting in a decrease in interest. In addition, we recorded trademark impairment charge of $7,468 for the six months ended April 30, 2012, with no comparable impairment for the six months ended April 30, 2013.

During the six month period ended April 30, 2013, the Company recorded a net loss of $53,610 as compared to a net loss of $97,146 for the six month period ended April 30, 2012 due to a reduction in operational costs.

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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

A smaller reporting company is not required to provide the information required by this Item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, under supervision and with the participation of the Company’s Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures, as defined under Exchange Act Rule 13a-15(e). Based upon this evaluation, the Principal Executive Officer and Principal Financial Officer concluded that, as of April 30, 2013, because of the material weakness in our internal control over financial reporting (“ICFR”) described below, our disclosure controls and procedures were not effective.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that required information to be disclosed in our reports filed or submitted under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that required information to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined under Exchange Act Rules 13a-15(f) and 14d-14(f). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

All internal control systems, no matter how well designed, have inherent limitations and may not prevent or detect misstatements. Therefore, even those systems determined to be effective can only provide reasonable assurance with respect to financial reporting reliability and financial statement preparation and presentation. In addition, projections of any evaluation of effectiveness to future periods are subject to risk that controls become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control over financial reporting as of April 30, 2013. In making the assessment, management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on its assessment, management concluded that, as of April 30, 2013, our internal control over financial reporting was not effective and that material weaknesses in ICFR existed as more fully described below.

As defined by Auditing Standard No. 5, “An Audit of Internal Control Over Financial Reporting that is Integrated with an Audit of Financial Statements” established by the Public Company Accounting Oversight Board (“PCAOB”), a material weakness is a deficiency or combination of deficiencies that results in more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected. In connection with the assessment described above, management identified the following control deficiencies that represent material weaknesses as of April 30, 2013:

Lack of an independent audit committee or audit committee financial expert, and no independent directors. We do not have any members of the Board who are independent directors and we do not have an audit committee. These factors may be counter to corporate governance practices as defined by the various stock exchanges and may lead to less supervision over management;

Inadequate staffing and supervision within our bookkeeping operations. We have a consulting firm involved in bookkeeping functions. The fact that the accounting staffs providing bookkeeping functions are all from the same firm of consultants prevents us from segregating duties within our internal control system. The inadequate segregation of duties is a weakness because it could lead to the untimely identification and resolution of accounting and disclosure matters or could lead to a failure to perform timely and effective reviews. This may result in a failure to detect errors in spreadsheets, calculations or assumptions used to compile the financial statements and related disclosures as filed with the SEC;

Outsourcing of our accounting operations. Because there are no employees in our administration, we have outsourced all of our accounting functions to an independent firm. The employees of this firm are managed by supervisors within the firm and are not answerable to the Company’s management. This is a material weakness because it could result in a disjunction between the accounting policies adopted by our Board of Directors and the accounting practices applied by the independent firm;

Insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.

Changes in Internal Control over Financial Reporting

As of April 30, 2013, management assessed the effectiveness of our internal control over financial reporting. Based on that evaluation, it was concluded that during the quarter ended and to date, the internal controls and procedures were not effective due to deficiencies that existed in the design or operation of our internal controls over financial reporting. However, management believes these weaknesses did not have an effect on our financial results. During the course of their evaluation, management did not discover any fraud involving management or any other personnel who play a significant role in our disclosure controls and procedures or internal controls over financial reporting.

Due to a lack of financial and personnel resources, we are not able to, and do not intend to, immediately take any action to remediate these material weaknesses. We will not be able to do so until, if ever, we acquire sufficient financing and staff to do so. We will implement further controls as circumstances, cash flow, and working capital permits. Notwithstanding the assessment that our ICFR was not effective and that there were material weaknesses as identified in this report, we believe that our financial statements contained in our Quarterly Report on Form 10-Q for the period ended April 30, 2013, fairly present our financial position, results of operations, and cash flows for the periods covered, as identified, in all material respects.

Management believes that the material weaknesses set forth above were the result of the scale of our operations and intrinsic to our small size. Management also believes that these weaknesses did not have an effect on our financial results.

During the quarter ended April 30, 2013, there were no changes (including corrective actions with regard to significant deficiencies or material weaknesses) in our internal controls over financial reporting that occurred that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None

ITEM 1A. RISK FACTORS

A smaller reporting company is not required to provide the information required by this Item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable

ITEM 5. OTHER INFORMATION

ITEM 6. EXHIBITS

NO.	IDENTIFICATION OF EXHIBIT
3.1	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, 2007
10.1	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.
10.2	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.
10.3	Distribution Agreement between the Company and JX Apparel Ltd.	Incorporated by reference from our Quarterly Report on Form 10-Q filed on March 25, 2013.
10.4	Renewal Agreement between the Company and JX Apparel Ltd.	Incorporated by reference from our Report on Form 8-K filed on June 3, 2013.
31.1	Certification of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
31.2	Certification of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
32.1	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 herewith

SIGNATURES

Pursuant to the requirements 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:	June 14, 2013	By:	/s/ Natalie Bannister
		Name:	Natalie Bannister
		Title:	Chief Executive Officer and President (Principal Executive Officer) 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:	June 14, 2013	By:	/s/ Natalie Bannister
		Name:	Natalie Bannister
		Title:	Chief Executive Officer and President (Principal Executive Officer) Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

Dussault Apparel Inc. 10-Q