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Dussault Apparel Inc.
0001383756
10-Q
2011-07-31
false
--10-31
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<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><b>Note 1 – Basis of Presentation
and Nature of Operations</b></p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">These interim financial statements
as of and for the nine months ended July 31, 2011 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.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">These interim financial statements
should be read in conjunction with the Company’s financial statements and notes thereto included in the Company’s fiscal
year end October 31, 2010 report. The Company assumes that the users of the interim financial information herein have read, or
have access to, the audited financial statements for the preceding period, and that the adequacy of additional disclosure needed
for a fair presentation may be determined in that context. The results of operations for the nine month period ended July 31, 2011
are not necessarily indicative of results for the entire year ending October 31, 2011.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><u>Organization</u></p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">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.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">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.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><u>Current Business of the Company</u></p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">The Company moved operations
to Vancouver in 2009. In the spring of 2011 its design 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.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Note 2 – Summary of Significant Accounting Policies</b></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><u>Use of Estimates</u></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0 0 6pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt"><u>Foreign Currency Translation</u></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 “<i>Foreign Currency Translation</i>” as follows:</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 48px; font: 10pt/115% Symbol; text-align: right">·</td>
<td style="font: 10pt/115% Times New Roman, Times, Serif; text-align: justify">Revenue and expense items at the average rate of exchange in effect on the transaction date;</td></tr>
</table>
<p style="font: 11pt Calibri, Halvetica, Sans-Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 48px; font: 10pt/115% Symbol; text-align: right">·</td>
<td style="font: 10pt/115% Times New Roman, Times, Serif; text-align: justify">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</td></tr>
</table>
<p style="font: 11pt Calibri, Halvetica, Sans-Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 48px; font: 10pt/115% Symbol; text-align: right">·</td>
<td style="font: 10pt/115% Times New Roman, Times, Serif; text-align: justify">Monetary assets and liabilities at the exchange rate at the balance sheet date.</td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><u>Fair value of financial instruments</u></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Financial Accounting Standards Board issued
ASC (Accounting Standards Codification) 820-10 (SFAS No. 157), <i>“Fair Value Measurements and Disclosures"</i> 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:</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 48px; font: 10pt/115% Symbol; text-align: right">·</td>
<td style="font: 10pt/115% Times New Roman, Times, Serif; text-align: justify">Level 1: Quoted prices in active markets for identical assets or liabilities.</td></tr>
</table>
<p style="font: 11pt Calibri, Halvetica, Sans-Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 48px; font: 10pt/115% Symbol; text-align: right">·</td>
<td style="font: 10pt/115% Times New Roman, Times, Serif; text-align: justify">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.</td></tr>
</table>
<p style="font: 11pt Calibri, Halvetica, Sans-Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 48px; font: 10pt/115% Symbol; text-align: right">·</td>
<td style="font: 10pt/115% Times New Roman, Times, Serif; text-align: justify">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.</td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The carrying amounts of the Company’s
financial instruments as of July 31, 2011, reflect</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 48px; font: 10pt/115% Symbol; text-align: right">·</td>
<td style="font: 10pt/115% Times New Roman, Times, Serif; text-align: justify">Cash: Level One measurement based on bank reporting.</td></tr>
</table>
<p style="font: 11pt Calibri, Halvetica, Sans-Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 48px; font: 10pt/115% Symbol; text-align: right">·</td>
<td style="font: 10pt/115% Times New Roman, Times, Serif; text-align: justify">Loans Receivable, Loans Payable: Level 2 based on promissory notes and terms.</td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0 0 6pt">  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 6pt"><u>Loss Per Share</u></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Net loss per share is calculated in accordance
with FASB ASC 260, <i>Earnings Per Share</i>, 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.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><u>Recent Accounting Pronouncements</u></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><u>Going Concern</u></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 July 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.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><u>Development-Stage Company</u></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company was considered a development-stage
company until the current fiscal year, having demonstrated consistent ability to generate sales.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><u>Reclassification</u></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Certain prior years amounts have been reclassified
for consistency with current period presentation.   These reclassifications had no effect on reported results of
operations.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Note 3 - Trademark</b></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.  On December 14, 2010, the Company issued a
total of 1,026,841 shares pursuant to the asset acquisition agreement.  As at the date of these financial statements,
the Company has provided the transfer agent with a treasury order to issue the remaining 2,973,161 shares for the acquisition,
which would bring the total shares issued pursuant to this agreement,  4,000,002 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 and agreed to be paid
between the parties.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The Company recorded the fair value of Trade Mark based on the fair
value of shares issued and cash payments. The total value of the trade mark was $193,239 as of July 31, 2011.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">We assess the Trade mark for impairment when events or circumstances
indicate that the carrying value may not be recoverable, or, at a minimum, on an annual basis.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><b>Note 4 - Inventory</b></p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Inventory was moved to the Vancouver
office after the retail outlet in Los Angeles was closed in November, 2008.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">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. Current inventory at July 31, 2011 is $40,251.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><b>Note 5 - Note Receivable</b></p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">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.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">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. As of July 31, 2011, the balance of the note receivable is $74,898.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Note 6 - Notes Payable</b></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 July 31, 2011 is $38,000 plus
accrued interest which is reflected in accounts payable of $3,518.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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:</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 48px; font: 10pt/115% Symbol; text-align: right">·</td>
<td style="font: 10pt/115% Times New Roman, Times, Serif; text-align: justify">November 30, 2010 - $8,000 was converted by the issuance of 1,739,130 common shares at a deemed price of $0.0046</td></tr>
</table>
<p style="font: 11pt Calibri, Halvetica, Sans-Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 48px; font: 10pt/115% Symbol; text-align: right">·</td>
<td style="font: 10pt/115% Times New Roman, Times, Serif; text-align: justify">January 3, 2011 - $10,000 was converted by the issuance of 3,448,276 common shares at a deemed price of $0.0029</td></tr>
</table>
<p style="font: 11pt Calibri, Halvetica, Sans-Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 48px; font: 10pt/115% Symbol; text-align: right">·</td>
<td style="font: 10pt/115% Times New Roman, Times, Serif; text-align: justify">January 10, 2011 - $4,000 was converted by the issuance of 1,379,310 common shares at a deemed price of $0.0029</td></tr>
</table>
<p style="font: 11pt Calibri, Halvetica, Sans-Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 48px; font: 10pt/115% Symbol; text-align: right">·</td>
<td style="font: 10pt/115% Times New Roman, Times, Serif; text-align: justify">February 15, 2011 - $10,000 was converted by the issuance of 3,030,303 common shares at a deemed price of $0.0033</td></tr>
</table>
<p style="font: 11pt Calibri, Halvetica, Sans-Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 48px; font: 10pt/115% Symbol; text-align: right">·</td>
<td style="font: 10pt/115% Times New Roman, Times, Serif; text-align: justify">March 15, 2011 - $10,000 was converted by the issuance of 4,347,826 common shares at a deemed price of $0.0023</td></tr>
</table>
<p style="font: 11pt Calibri, Halvetica, Sans-Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 48px; font: 10pt/115% Symbol; text-align: right">·</td>
<td style="font: 10pt/115% Times New Roman, Times, Serif; text-align: justify">April  30, 2011 - $5,000 was converted by the issuance of 6,250,000 common shares at a deemed price of $0.0008</td></tr>
</table>
<p style="font: 11pt Calibri, Halvetica, Sans-Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 48px; font: 10pt/115% Symbol; text-align: right">·</td>
<td style="font: 10pt/115% Times New Roman, Times, Serif; text-align: justify">May 17, 2011 - $3,000 was converted by the issuance of 5,000,000 common shares at a deemed price of $0.0006</td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The difference of $77,434 between the market
value of shares and the deemed price of shares are recorded as an interest expense.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As at July 31, 2011, the balance owing on this
note was $3,000 plus accrued interest which is reflected as accounts payable of $ 3,035.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">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.  The
balance on this note as at July 31, 2011 is $40,000 plus accrued interest of $1,748 which is  reflected in accounts payable.</p>
<p style="font: 11pt Calibri, Halvetica, Sans-Serif; margin: 0"> </p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Note 7 – Prepaid Expenses</b></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.
The Company had previously recorded the consulting services as a prepaid expense in the amount of $32,200 effected on October 1,
2010. During the period ended April 30, 2011, the Company recorded $32,200 as consulting fees, thus eliminating the prepaid expense.
The Company issued 2,000,000 shares of common stock on January 31, 2011 to Roger Agyagos.</p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On November 1, 2010, the Company entered a
consulting agreement with Sam Pearlman whereby Sam Pearlman has 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. The Company
had previously recorded the consulting services as a prepaid expense in the amount of $10,000 effected on November 1, 2010. During
the period ended April 30, 2011, the Company recorded the $10,000 as consulting fees, thus eliminating the prepaid expense. The
Company issued 1,000,000 shares of common stock on December 14, 2010 to Sam Pearlman.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><b>Note 8 – Common
Stock</b></p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">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.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">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.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">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.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">On May 17, 2011, Asher Enterprises,
Inc. converted the amount of $3,000 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.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">On May 1, 2011, the Company
approved the issuance of the remaining 2,973,161 shares of common stock related to the asset acquisition agreement between the
Company and Open Sundaes Ventures Ltd. described above under Note 3 – Trademarks. On June 13, 2011, the Company provided
the transfer agent with a treasury order requesting the issuance of the shares.  Of the 2,973,161 shares issued, a total
of 2,961,858 will 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. As of the date of this financial statement
the shares remain un-issued.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><b>Note 9 – Related
Party Transactions</b></p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">During the three month period
ended January 31, 2011,  the President of the Company, Jason Dussault advanced funds in the amount of $15,959 (CAD$16,696)
to the Company for working capital.  The Company has repaid $4,011 (CAD$4,196) to Jason Dussault, leaving $11,948(CAD$12,500)
on the balance sheet as loan payable – related parties.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><b>Note 10 – Subsequent
Events</b></p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">On August 15, 2011, Asher
Enterprises, Inc. converted $4,500 pursuant to their May 12, 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.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">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.</p>
<p style="margin: 0pt"></p>