**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


WASHINGTON,
      D.C. 20549








**FORM
      10-QSB**







QUARTERLY
      REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934




FOR
      THE
      QUARTERLY PERIOD ENDED **September 30, 2007**








**000-50526**


(Commission
      File Number)








**ALL
      AMERICAN PET COMPANY, INC.**


(Exact
      name of registrant as specified in its charter)








**MARYLAND**
            
            **91-2186665**(State
                or Other Jurisdiction of Incorporation or Organization)
            
            (I.R.S.
                Employer Identification No.)








**110
      S. FAIRFAX AVENUE**


**SUITE
      A-1125**


**LOS
      ANGELES, CALIFORNIA 90036**


(Address
      of principal executive offices including zip code)








**(310)
      277-4887**


(Registrant's
      telephone number, including area code)








**16501
      VENTURA BOULEVARD**


**SUITE
      514**


**ENCINO,
      CALIFORNIA 91436**


(Former
      Name or Former Address, 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 Exchange Act 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 is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes
 ̈   **No
      x**








Transitional
      Small Business Disclosure Format (check one): Yes
 ̈   **No
      x**








As
      of
      November 13, 2007 the Registrant had 16, 216, 439 shares outstanding of its
      $.001 par value common stock.











**ALL
      AMERICAN PET COMPANY, INC.**






**QUARTERLY
      REPORT ON FORM 10-QSB FOR THE PERIOD ENDED** SEPTEMBER 30, 2007






**TABLE
      OF CONTENTS**




**Page****Part
                I. FINANCIAL INFORMATION**Item
                1. Financial Statements
            3Condensed
                Balance Sheets as of September 30, 2007 (unaudited) and December
                31,
                2006
            3Condensed
                Statements of Operations (unaudited) for the Nine Months ended September
                30, 2007 and 2006
            4Condensed
                Statement of Shareholders' Deficit for the Nine Months ended September
                30,
                2007 (Unaudited) and the Year ended December 31, 2006
            5Condensed
                Statements of Cash Flows (unaudited) for the Nine Months ended September
                30, 2007 and 2006
            6
                -
                7Notes
                to Condensed Financial Statements (unaudited)
            8 -
                16Item
                2. Management's Discussion and Analysis or Plan of
                Operation
            17Item
                3. Controls and Procedures
            22**Part
                II. OTHER INFORMATION**Item
                2. Unregistered Sales of Equity Securities and Use of
                Proceeds
            23Item
                6. Exhibits
            23Signatures
            24











-
            2
            -





**PART
      I**




**ITEM
      1. FINANCIAL STATEMENTS**





**ALL-AMERICAN
      PET COMPANY, INC.**


CONDENSED
      BALANCE SHEETS




**September
                  30,**
              
              
              **December
                  31,****2007**
              
              
              **2006****(Unaudited)****Assets**Current
                  Assets:Cash
                  and cash equivalents
              
              $
              16,297
              
              
              $
              -Accounts
                  receivable
              
              
              6,674
              
              
              
              115,620Inventories
                  (net)
              
              
              84,286
              
              
              
              189,818Total
                  current assets
              
              
              107,257
              
              
              
              305,438Machinery
                  and equipment, net
              
              
              199,941
              
              
              
              244,857Deferred
                  offering costs
              
              
              -
              
              
              
              289,721Other
                  assets
              
              
              10,260
              
              
              
              24,166**Total
                  assets**
              
              $
              317,458
              
              
              $
              864,182**Liabilities
                  and Shareholders' Deficit**Current
                  Liabilities:Bank
                  overdraft
              
              $
              -
              
              
              $
              5,244Accounts
                  payable
              
              
              1,404,582
              
              
              
              1,021,717Accrued
                  officer salaries
              
              
              138,461
              
              
              
              118,270Accrued
                  payroll and employee benefits - other
              
              
              709,062
              
              
              
              339,245Short-term
                  notes payable
              
              
              285,000
              
              
              
              325,000Short-term
                  notes payable - related party
              
              
              412,095
              
              
              
              450,000Short-term
                  notes payable - officer
              
              
              10,038
              
              
              
              15,000Current
                  portion of capital lease obligations
              
              
              56,566
              
              
              
              49,981Accrued
                  slotting fees
              
              
              181,403
              
              
              
              277,014Other
                  current liabilities
              
              
              166,648
              
              
              
              115,131Dividend
                  Payable
              
              
              90,400
              
              
              
              45,200Total
                  current liabilities
              
              
              3,454,255
              
              
              
              2,761,802Capital
                  lease obligations, net of current portion
              
              
              28,981
              
              
              
              72,268**Total
                  liabilities**
              
              
              3,483,236
              
              
              
              2,834,070Shareholders'
                  Deficit:Preferred
                  stock, $0.001 par value, 10,000,000 shares authorized
              
              
              -
              
              
              
              -Series
                  A Preferred stock, 56,500 shares issued and outstanding: 8% cumulative
                  dividend redeemable by the Company at $10 per share plus one share
                  of
                  common stock and any unpaid dividends
              
              
              565,000
              
              
              
              565,000Common
                  stock, $0.001 par value, 50,000,000 shares authorized;16,216,439
                  issued and outstanding September 30, 200711,660,667
                  issued and outstanding December 31, 2006
              
              
              16,217
              
              
              
              11,661Additional
                  paid-in capital
              
              
              3,061,367
              
              
              
              2,198,480Accumulated
                  deficit
              
              
              (6,808,362
              )
              
              
              (4,745,029
              )**Total
                  shareholders' deficit**
              
              
              (3,165,778
              )
              
              
              (1,969,888
              )**Total
                  liabilities and shareholders' deficit**
              
              $
              317,458
              
              
              $
              864,182




**See
        accompanying notes to the condensed financial
        statements.**





-
          3
          -


**ALL-AMERICAN
      PET COMPANY, INC.**


CONDENSED
      STATEMENTS OF OPERATIONS


**(Unaudited)**





**For
                the Nine Months Ended****September
                30,**
            
            
            **September
                30,****2007**
            
            
            **2006**Sales,
                net of discounts
            
            $
            43,382
            
            
            $
            87,718Slotting
                and sales incentive fees
            
            
            25,000
            
            
            
            8,924Net
                sales
            
            
            68,382
            
            
            
            96,642Cost
                of goods sold
            
            
            216,321
            
            
            
            166,335Gross
                (Loss) Profit
            
            
            (147,939
            )
            
            
            (69,693
            )Operating
                expenses:Sales
                and marketing
            
            
            242,507
            
            
            
            225,943General
                and administrative
            
            
            1,504,808
            
            
            
            1,274,611Research
                and development
            
            
            0
            
            
            
            25,609.00Other
            
            
            27,612
            
            
            
            6,226Total
                Operating expenses
            
            
            1,774,927
            
            
            
            1,532,389Loss
                from operations
            
            
            (1,922,866
            )
            
            
            (1,602,082
            )Other
                expensesInterest
                expense
            
            
            (94,467
            )
            
            
            (90,161
            )Income
                (loss) before income taxes
            
            
            (2,017,333
            )
            
            
            (1,692,243
            )Provision
                for income taxes
            
            
            800
            
            
            
            -Net
                loss
            
            
            (2,018,133
            )
            
            
            (1,692,243
            )Preferred
                stock dividend
            
            
            45,200
            
            
            
            45,200Net
                loss attributable to common stockholders
            
            $
            (2,063,333
            )
            
            $
            (1,737,443
            )Net
                loss per share-common (basic & diluted)
            
            
            (0.14
            )
            
            
            (0.16
            )Weighted
                average number of common shares outstanding (basic and
                diluted)
            
            
            14,053,631
            
            
            
            10,771,111







**See
      accompanying notes to the condensed financial statements.**





-
          4
          -


**ALL-AMERICAN
      PET COMPANY, INC.**


CONDENSED
      STATEMENT OF SHAREHOLDERS' DEFICIT


FOR
      THE
      NINE MONTHS ENDED SEPTEMBER 30, 2007 (UNAUDITED) AND THE YEAR ENDED DECEMBER
      31,
      2006





**Common**
            
            
            
            
            
            
            
            
            **Additional**
            
            
            
            
            
            **Total****Stock**
            
            
            
            
            
            
            
            
            **Paid-in**
            
            
            **Accumulated**
            
            
            **Shareholders'****Common
                Stock**
            
            
            **Subscribed**
            
            
            **Series
                A Preferred Stock**
            
            
            **Capital**
            
            
            **Deficit**
            
            
            **Equity****Shares**
            
            
            **Amount**
            
            
            
            
            
            **Shares**
            
            
            **Amount**
            
            
            
            
            
            
            
            
            **(Deficit)****Balance
                at December 31, 2005**
            
            
            7,500,000
            
            
            
            7,500
            
            
            
            100,000
            
            
            
            56,500
            
            
            
            565,000
            
            
            
            443,004
            
            
            
            (2,186,563
            )
            
            
            (1,071,059
            )Stock
                issued through private placement
            
            
            3,094,000
            
            
            
            3,094
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            1,324,038
            
            
            
            -
            
            
            
            1,327,132Common
                stock issued previously subscribed
            
            
            750,000
            
            
            
            750
            
            
            
            (100,000
            )
            
            
            -
            
            
            
            -
            
            
            
            99,250
            
            
            
            -
            
            
            
            -Beneficial
                conversion feature on convertiblenotes
                payable
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            25,000
            
            
            
            -
            
            
            
            25,000Warrants
                issued with convertible notes payable
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            9,089
            
            
            
            -
            
            
            
            9,089Conversion
                of notes payable to common stock
            
            
            316,667
            
            
            
            317
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            124,683
            
            
            
            -
            
            
            
            125,000Additional
                contribution from shareholdersfrom
                forgiveness of accrued salaries
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            190,616
            
            
            
            -
            
            
            
            190,616Series
                A Preferred Stock Dividends
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (45,200
            )
            
            
            (45,200
            )Reclassification
                of prior year convertible note
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (17,200
            )
            
            
            -
            
            
            
            (17,200
            )Net
                loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (2,513,266
            )
            
            
            (2,513,266
            )**Balance
                at December 31, 2006**
            
            
            11,660,667
            
            
            $
            11,661
            
            
            $
            -
            
            
            
            56,500
            
            
            $
            565,000
            
            
            $
            2,198,480
            
            
            $
            (4,745,029
            )
            
            $
            (1,969,888
            )Stock
                issued through private placement
            
            
            2,213,990
            
            
            
            2,214
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            504,786
            
            
            
            -
            
            
            
            507,000Stock
                unissued through private placement
            
            
            2,080,000
            
            
            
            2,080
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            292,920
            
            
            
            
            
            
            
            295,000Series
                A Preferred Stock Dividends
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (45,200
            )
            
            
            (45,200
            )Conversion
                of notes payable to common stock
            
            
            261,772
            
            
            
            262
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            65,181
            
            
            
            
            
            
            
            65,443Net
                loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (2,018,133
            )
            
            
            (2,018,133
            )**Balance
                at September 30, 2007**
            
            
            16,216,429
            
            
            $
            16,217
            
            
            $
            0
            
            
            
            56,500
            
            
            $
            565,000
            
            
            $
            3,061,367
            
            
            
            (6,808,362
            )
            
            $
            (3,165,778
            )






See
      accompanying notes to the condensed financial statements.





-
          5
          -


**ALL-AMERICAN
      PET COMPANY, INC.**


CONDENSED
      STATEMENTS OF CASH FLOWS


(Unaudited)





**For
                the Nine Months Ended****September
                30**
            
            
            **September
                30****2007**
            
            
            **2006****Cash
                flows from operating activities:**Net
                loss
            
            $
            (2,018,133
            )
            
            $
            (1,692,243
            )Adjustments
                to reconcile loss to net cash flows used in operating
                activities:Depreciation
                and amortization
            
            
            44,916
            
            
            
            41,601Deferred
                offering costs
            
            
            289,721
            
            
            
            -Non-cash
                interest recorded due to warrants issued
            
            
            -
            
            
            
            39,818Non-cash
                debt conversion expense
            
            
            26,117
            
            
            
            -Modification
                to capital lease
            
            
            
            
            
            
            -(Increase)
                decrease in:Accounts
                receivable
            
            
            108,946
            
            
            
            9,500Other
                receivable
            
            
            -
            
            
            
            -Inventories
            
            
            105,532
            
            
            
            (137,228
            )Due
                from officers
            
            
            
            
            
            
            (21,590
            )Prepaid
                expenses
            
            
            -
            
            
            
            -Other
                assets
            
            
            13,906
            
            
            
            1,801Increase
                (decrease) in:Accounts
                payable
            
            
            382,865
            
            
            
            371,582Accrued
                officer salaries
            
            
            20,191
            
            
            
            62,000Accrued
                payroll and employee benefits
            
            
            369,817
            
            
            
            49,760Accrued
                slotting fees
            
            
            (95,611
            )
            
            
            (110,912
            )Other
                current liabilities
            
            
            51,517
            
            
            
            180,721**Net
                cash used in operating activities**
            
            
            (700,216
            )
            
            
            (1,205,190
            )**Cash
                flows from investing activities:**Purchases
                of machinery and equipment
            
            
            -
            
            
            
            (28,000
            )**Net
                cash used in investing activities**
            
            
            -
            
            
            
            (28,000
            )**Cash
                flows from financing activities:**Bank
                overdraft
            
            
            (5,244
            )
            
            
            (23,195
            )Net
                proceeds (payments) from (on) short-term debt
            
            
            (82,867
            )
            
            
            177,500Principal
                payments on capital lease obligations
            
            
            (36,702
            )
            
            
            (99,126
            )Deferred
                offering costs
            
            
            
            
            
            
            (199,121
            )Collection
                of common stock subscription receivable
            
            
            -
            
            
            
            50,000Proceeds
                from sale of commons stock
            
            
            841,326
            
            
            
            1,327,132**Net
                cash provided by financing activities**
            
            
            716,513
            
            
            
            1,233,190Increase
                (decrease) in cash and cash equivalents
            
            
            16,297
            
            
            
            -Cash
                and cash equivalents:Beginning
                of period
            
            
            -
            
            
            
            -End
                of period
            
            $
            16,297
            
            
            $
            -







See
      accompanying notes to the condensed financial statements.




-
          6
          -






ALL-AMERICAN
      PET COMPANY,
      INC.


CONDENSED
      STATEMENTS OF CASH FLOWS (cont'd)


(Unaudited)





**For
                the Nine Months Ended September 30,****2007**
            
            
            **2006****Supplemental
                disclosure of cash flow information:**Cash
                paid during the period for interest
            
            $
            6,338
            
            
            $
            10,400Cash
                paid during the period for income taxes
            $
            800
            
            
            $
            800Non-cash
                financing and investing activities:Contribution
                of accrued compensation toadditional
                paid-in capital
            
            $
            --
            
            
            $
            205,616Conversion
                of notes payable to common stock
            
            39,266
            
            
            
            125,000Warrants
                issued to convertible debt holders upon conversion
            
            --
            
            
            
            9,089Dividends
                payable on Series A Preferred stock
            
            (45,200
            )
            
            
            --Beneficial
                Conversion feature on convertible debt
            
            (40,000
            )
            
            
            25,000


See
        accompanying notes to the condensed financial statements.




-
            7
            -


**ALL
      AMERICAN PET COMPANY, INC.**


**Notes
      to the Condensed Financial Statements**


September
      30, 2007


(Unaudited)


**1.           ORGANIZATION
        AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
 
 **Organization
        and Nature of Operations**
 
 All-American
        Pet Company, Inc. was incorporated in New York in 2003 as a Subchapter S
        Corporation under the Internal Revenue Code of 1986. The Company produces,
        markets and sells premium dog food primarily through supermarkets and grocery
        stores under the brand name Bowwow Breakfast Cereal (Bowwow Breakfast) in
        the
        United States. The Company developed the first line of commercial dog food
        specifically targeted for the morning meal.
 
 On
        January 27, 2006, All-American Pet Company Inc., a New York corporation,
        merged
        with and into All American Pet Company, Inc., a Maryland
        corporation.  Prior to the merger, the Company amended the shareholder
        agreements to accommodate new investors.  In addition, two of the four
        shareholders at December 31, 2005 converted their common shares into Series
        A
        preferred stock (see note 12).
 
 Unless
        the context otherwise requires, references in these financial statements to
        the “Company” refer to All American Pet Company, Inc., a Maryland corporation,
        and its predecessor, All American Pet Company Inc., a New York corporation.
        All
        financial statements give effect to this reincorporation as if it occurred
        at
        the beginning of the period.
 
 **Estimates**
 
 The
        preparation of financial statements in conformity with accounting principles
        generally accepted in the United States of America requires management to
        make
        estimates and assumptions that affect the reported amounts of assets and
        liabilities and disclosure of contingent liabilities at the date of the
        financial statements and the reported amounts of revenues and expenses during
        the reporting period. Actual results could materially differ from those
        estimates. Management believes that the estimates used are reasonable.
        Significant estimates made by management include estimates for bad debts,
        excess
        and obsolete inventory, coupon liabilities and other trade spending
        liabilities.
 
 **Cash
        Equivalents**
 
 Cash
        equivalents consist of highly liquid investments with maturities at the date
        of
        purchase of 90 days or less.
 
 **Fair
        Value of Financial Instruments**
 
 The
        carrying amounts of the financial instruments, including cash and cash
        equivalents, accounts receivable, bank overdraft, accounts payable, accrued
        payroll and employee benefits, accrued slotting fees and other current
        liabilities, approximate fair value due to the short maturities of these
        financial instruments. The notes payable and capital lease obligations are
        also
        considered financial instruments whose carrying amounts approximate fair
        values.
 
 **Accounts
        Receivable and Allowances for Uncollectible Accounts**
 
 Credit
        limits are established through a process of reviewing the financial history
        and
        stability of each customer. The Company regularly evaluates the collectibility
        of our trade receivable balances by monitoring past due balances. If it is
        determined that a customer will be unable to meet its financial obligation,
        the
        Company records a specific reserve for bad debts to reduce the related
        receivable to the amount that is expected to be recovered.  As of
        September 30, 2007 (unaudited) and December 31, 2006, the Company determined
        that no allowance for uncollectible accounts is necessary. If circumstances
        related to specific customers deteriorate, our estimates of the recoverability
        of receivables associated with those customers could materially
        change.
 
 **Inventories**
 
 Inventories
        consist of raw materials, packaging and supplies and finished goods and are
        valued at the lower of cost (first-in, first-out (FIFO) method) or
        market.
  **Machinery,
          Equipment and Leasehold Improvements**
 
 Machinery
          and equipment are stated at cost. Significant improvements are capitalized
          and
          maintenance and repairs are expensed. Depreciation and amortization are
          provided
          using the straight-line method over the estimated useful lives of the
          assets.  Machinery and equipment are reviewed for impairment whenever
          events or circumstances indicate that the carrying amount of assets may
          not be
          recoverable in accordance with Statement of Financial Accounting Standards
          (“SFAS”) No. 144 “Accounting for the Impairment or Disposal of Long-Lived
          Assets.” The Company evaluates recoverability of property, plant and equipment
          to be held and used by comparing the carrying amount of an asset to estimated
          future net undiscounted cash flows to be generated by the asset. If such
          assets
          are considered to be impaired, the impairment to be recognized is measured
          as
          the amount by which the carrying amount of the assets exceeds the fair
          value of
          the assets.
 Estimated
            useful lives are as follows:
 
 Computer
            equipment and software 3 - 5
            years
 Machinery
            and
            equipment                         
3 - 7 years
 Office
            furniture and
            equipment              
   3 - 5 years
 -
            8
            -
  **ALL
          AMERICAN PET COMPANY, INC.**
 **Notes
          to the Condensed Financial Statements**
 September
          30, 2007
 (Unaudited)
  **Significant
        Customers and Vendors**
 
 During
        the period ended June 30, 2007, three customers accounted for approximately
        71%
        of gross sales, and during the period ended June 30, 2006, two customers
        accounted for 100% of gross sales. During the periods ended June 30, 2007,
        two
        vendors accounted for approximately 100% of gross purchases, and during the
        period ended June 30, 2006, two vendors accounted for 82% of gross
        purchases.
 
 **Revenue
        Recognition, Sales Incentives and Slotting Fees**
 
 In
        accordance with Staff Accounting Bulletin No. 104, Revenue Recognition (“SAB
        104”), revenues are recognized upon passage of title to the customer, typically
        upon product pick-up, shipment or delivery to customers. The Company’s revenue
        arrangements with its customers often include sales incentives and other
        promotional costs such as coupons, volume-based discounts, slotting fees
        and
        off-invoice discounts. These costs are typically referred to collectively
        as
“trade spending.” Pursuant to EITF No. 00-14, EITF No. 00-25 and EITF No. 01-09,
        these costs are recorded when revenue is recognized and are generally classified
        as a reduction of revenue. Slotting fees refer to oral arrangements pursuant
        to
        which the retail grocer allows our products to be placed on the store’s shelves
        in exchange for a slotting fee. Given that there are no written contractual
        commitments requiring the retail grocers to allocate shelf space for twelve
        months we expense the slotting fees at the time orders are first shipped
        to
        customers. During the period ended June 30, 2006, the Company settled with
        a
        major customer for previously accrued slotting fees. The customer had been
        acquired in December 2005 and after merger it was unable to deliver the shelf
        space and outlets originally contemplated by the original agreement. The
        previously agreed obligation of $219,535 was adjusted due to this change
        in
        circumstance. The adjustment was recorded as a reduction to slotting fees,
        resulting in slotting income of $144,535 for the period ended June 30,
        2006.
 
 **Shipping
        and Freight Charges**
 
 The
        Company incurs costs related to shipping and handling of manufactured products,
        which amounted to $3,416 and $19,522 for the periods ended September 30,
        2007
        and 2006, respectively. These costs are expensed as incurred as a component
        of
        sales and marketing expense. The Company also incurs shipping and handling
        charges related to the receipt of raw materials, which are recorded as a
        component of cost of goods sold. Payments received from customers for shipping
        and handling costs are included as a component of net sales upon recognition
        of
        the related sale.
 
 **Advertising
        Costs**
 
 Advertising
        costs, including media advertising, design and printing of coupons, and other
        advertising, which are included in sales and marketing expense, are expensed
        when the advertising first takes place. Advertising expense was approximately
        $176,650 and $52,250 during the periods ended September 30, 2007 and 2006,
        respectively.
 
 **Normal
        Spoils Costs**
 
 Expenses
        for spoils that are incurred after our products are received by our customers
        are recorded as a reduction in gross sales. Expenses for spoils that are
        incurred while raw materials are stored pending orders are included in costs
        of
        good sold. The Company incurred $11,820 and $24,396 for spoils incurred after
        our products were received by our customers during the nine months ended
        September 30, 2007 and 2006, respectively. In addition, the Company incurred
        $2,297 and $24,396 for spoils that occurred while our raw materials were
        stored
        pending orders during the periods ended September 30, 2007 and 2006,
        respectively. The Company regularly evaluates the cost of spoils in relationship
        to sales to determine if its allowance is adequate. As of the nine months
        ended
        September 30, 2007 and 2006, the Company had not booked an allowance for
        these
        costs.
  **Research
          and Development Costs**
 
 Research
          and development costs are expensed as incurred.
 **Distribution
            of Free Products**
 
 In
            order
            to generate interest in the Company’s dog food products, the Company sends
            sample products to investors, prospective buyers and consumers. The costs
            related to these samples are expensed as sales and marketing expenses.
            During
            the periods ended September 30, 2007 and 2006, the Company expensed $2,922
            and
            $9,126, respectively related to samples.
  **Net
              Loss Attributable to Common Shareholders**
 
 Net
              income (loss) per share is calculated using the weighted average number
              of
              common shares outstanding for the period and diluted income (loss)
              per share is
              computed using the weighted average number of common shares and dilutive
              common
              equivalent shares outstanding. There were 11,660,667 common stock shares
              outstanding for 30 days 11,992,667 for 28 days, 12,278,667 for 30 days,
              13,874,667 for 63 days and 15,374,667 for 42 days, 15,454,667 for 32
              days,
              15,654,667 for 18 days and 16,216,439 for 30 days for the period ended
              September
              30, 2007. This resulted in a weighted average number of common stock
              shares
              outstanding of 14,053,631. Net income (loss) per share and diluted
              net income
              (loss) per share are the same for all periods presented because common
              equivalent shares of 942,031 and 937,031 for the periods ended September
              30,
              2007 and 2006, respectively, were not used in the computation of net
              loss per
              share because the results would be anti-dilutive. The common equivalent
              shares
              are a result of warrants issued for convertible debt.
 -
            9
            -
  **ALL
        AMERICAN PET COMPANY, INC.**
 **Notes
            to the Condensed Financial Statements**
 September
            30, 2007
 (Unaudited)
  **Comprehensive
        Income Reporting**
 
 SFAS
        No.
        130, “Reporting Comprehensive Income” establishes standards for reporting and
        displaying comprehensive income and its components in a full set of general
        purpose financial statements. The objective of SFAS No. 130 is to report
        a
        measure of all changes in the equity of an enterprise that result from
        transactions and other economic events of the period other than transactions
        with owners. Comprehensive loss did not differ from currently reported net
        loss
        in the periods presented.
 
 **2.
        BASIS OF PRESENTATION**
 
 The
        condensed financial statements as of September 30, 2007 and for the nine
        months
        ended September 30, 2007 and 2006 are unaudited. In the opinion of management,
        such condensed financial statements include all adjustments (consisting of
        normal recurring accruals) necessary for the fair presentation of the financial
        position and the results of operations. The results of operations for the
        periods presented are not necessarily indicative of the results to be expected
        for the full year. The interim condensed financial statements should be read
        in
        conjunction with the audited financial statements of the year ended December
        31,
        2006 appearing in Form 10-KSB filed on July 16 2007.
 
 The
        condensed financial statements have been presented on a going concern basis,
        which contemplates, but does not include adjustments for the realization
        of
        assets and satisfaction of liabilities in the normal course of business.
        The
        Company has a limited operating history and limited funds. As shown in the
        financial statements, the Company incurred a net loss of $1,870,508 and a
        negative cashflow from operations of $753,121 for the period ended September
        30,
        2007, and had a working capital deficit of $3,199,373 and a stockholders’
deficit of $3,018,153 as of September 30, 2007. These factors raised substantial
        doubt about the Company’s ability to continue as a going concern. The condensed
        financial statements do not include any adjustments that might result from
        the
        outcome of this uncertainty. The Company believes that it is appropriate
        for the
        condensed financial statements to be prepared on a going concern
        basis.
 
 The
        Company is dependent upon outside financing to continue operations. It is
        management’s plans to raise necessary funds via a private placement of its
        common stock to satisfy the capital requirements of the Company’s business plan.
        There is no assurance that the Company will be able to raise necessary funds
        or
        that if it is successful in raising the necessary funds, that the Company
        will
        successfully operate its business plan. The Company’s continuation as a going
        concern is dependent on the Company’s ability to raise additional funds through
        a private placement of its common stock sufficient to meet its obligations
        on a
        timely basis and ultimately to attain profitable operations.
 
 Certain
        reclassifications have been made to the previously reported amounts to conform
        to the Company’s current period presentation. Effective March 31, 2006, the
        Company elected to reclassify certain expenses from cost of goods sold to
        sales
        and marketing expense to conform to this period’s income statement. The effect
        of this reclassification increases gross profit from $170,947 to $175,947
        for
        the period ended September 30, 2006.
  **3.
          NEW ACCOUNTING PRONOUNCEMENTS**
 
 References
          to the "FASB", "SFAS" and "SAB" herein refer to the "Financial Accounting
          Standards Board", "Statement of Financial Accounting Standards", and the
          "SEC
          Staff Accounting Bulletin", respectively.
 Effective
          January 1, 2007, the Company adopted
          Financial Accounting Standard Board Interpretation No. 48, “Accounting for
          Uncertainty in Income Taxes (“FIN 48”), an interpretation of FASB Statement No.
          109, Accounting for Income Taxes.” The Interpretation addresses the
          determination of whether tax benefits claimed or expected to be claimed
          on a tax
          return should be recorded in the financial statements. Under FIN 48, we
          may
          recognize the tax benefit from an uncertain tax position only if it is
          more
          likely than not that the tax position will be sustained on examination
          by the
          taxing authorities, based on the technical merits of the position. The
          tax
          benefits recognized in the financial statements from such a position should
          be
          measured based on the largest benefit that has a greater than fifty percent
          likelihood of being realized upon ultimate settlement. FIN 48 also provides
          guidance on derecognition, classification, interest and penalties on income
          taxes, account in interim periods and requires increased disclosures. At
          the
          date of adoption, and as of September 30, 2007, the Company does not have
          a
          liability for unrecognized tax benefits.
  The
            Company files income tax returns in the U.S. federal jurisdiction and
            various
            states. The Company is subject to U.S. federal or state income tax examinations
            by tax authorities for years after 2006. During the periods open to examination,
            the Company has net operating loss and tax credit carry forwards for
            U.S.
            federal and state tax purposes that have attributes from closed periods.
            Since
            these NOLs and tax credit carry forwards may be utilized in future periods,
            they
            remain subject to examination.
 
 The
            Company’s policy is to record interest and penalties on uncertain tax provisions
            as income tax expense. As of September 30, 2007, the Company has no accrued
            interest or penalties related to the uncertain tax positions.
  In
            September 2006, the FASB issued SFAS No. 157,
            "Fair Value Measurements," which provides enhanced guidance for using
            fair value
            to measure assets and liabilities. SFAS No. 157 provides a common definition
            of
            fair value and establishes a framework to make the measurement of fair
            value in
            generally accepted accounting principles more consistent and comparable.
            SFAS
            No. 157 also requires expanded disclosures to provide information about
            the
            extent to which fair value is used to measure assets and liabilities,
            the
            methods and assumptions used to measure fair value, and the effect of
            fair value
            measures on earnings.
 -
            10
            -
  **ALL
            AMERICAN PET COMPANY, INC.**
 **Notes
            to the Condensed Financial Statements**
 September
            30, 2007
 (Unaudited)
 SFAS
        No.
        157 is effective for financial statements issued in fiscal years beginning
        after
        November 15, 2007 and to interim periods within those fiscal years. The Company
        is currently in the process of evaluating the effect, if any, the adoption
        of
        SFAS No. 157 will have on its results of operations, financial condition,
        cash
        flows or disclosures through June 30, 2007.
 
 In
        September 2006, the Securities and Exchange Commission issued Staff Accounting
        Bulletin ("SAB") No. 108, "Considering the Effects of Prior Year Misstatements
        when Quantifying Misstatements in Current Year Financial Statements". SAB
        No.
        108 was issued in order to eliminate the diversity in practice surrounding
        how
        public companies quantify financial statement misstatements. SAB No. 108
        requires that registrants quantify errors using both a balance sheet (iron
        curtain) approach and an income statement (rollover) approach then evaluate
        whether either approach results in a misstated amount that, when all relevant
        quantitative and qualitative factors are considered, is material. SAB No.
        108 is
        effective for fiscal years ending after November 15, 2006. The Company has
        adopted the bulletin during 2006. The adoption did not have a material effect
        on
        results of operations, financial position, or cash flows through September
        30,
        2007.
 
 In
        February 2007, the Financial Accounting Standards Board (FASB) issued FASB
        Statement No. 159, “The Fair Value Options for Financial Assets and Financial
        Liabilities, Including an amendment of FASB Statement No. 115” (FAS 159). FAS
        159, which becomes effective for the company on January 1, 2008, permits
        companies to choose to measure many financial instruments and certain other
        items at fair value and report unrealized gains and losses in earnings. Such
        accounting is optional and is generally to be applied instrument by instrument.
        The Company does not anticipate that elections, if any, of this fair-value
        option will have a material effect on its financial condition, results of
        operations, cash flows or disclosures.
 
 In
        December 2006, the FASB issued a Staff Position (“FSP”) on EITF 00-19-2,
“Accounting for Registration Payment Arrangements (FSP 00-19-2”). This FSP
        specifies that the contingent obligation to make future payments or otherwise
        transfer consideration under a registration payment arrangement, whether
        issued
        as a separate agreement or included as a provision of a financial instrument
        or
        other agreement, should be separately recognized and measured in accordance
        with
        SFAS No. 5, “Accounting for Contingencies”. If the transfer of consideration
        under a registration payment arrangement is probable and can be reasonably
        estimated at inception, the contingent liability under the registration payment
        arrangement is included in the allocation of proceeds from the related financing
        transaction (or recorded subsequent to the inception of a prior financing
        transaction) using the measurement guidance in SFAS No. 5. This FSP is effective
        immediately for registration payment arrangements and the financial instruments
        subject to those arrangements that are entered into or modified subsequent
        to
        the issuance of the FSP.  For prior arrangements, the FSP is effective
        for financial statements issued for fiscal years beginning after December
        15,
        2006 and interim periods within those years. The Company has adopted the
        FSP and
        determined that it has no material impact on its financial condition, results
        of
        operations, cash flows or disclosures.
  **4.
          INVENTORIES**
 
 Detail
          of
          inventories at September 30, 2007 (unaudited) and December 31, 2006 is
          as
          follows:
 
 **2007**
                
                
                **2006**Raw
                    materials
                
                $
                67,439
                
                
                $
                57,807Packaging
                    and supplies
                
                
                84,286
                
                
                
                89,515Finished
                    goods
                
                
                80,186
                
                
                
                42,496$
                231,911
                
                
                $
                189,818Allowance
                    for Spoilage
                
                
                (147,625
                )Inventories,
                    Net of Allowance
                
                $
                84,286
                
                
                
                189,818
  As
          of September 30, 2007, the company has been
          allowed no access to its manufacturing warehouses or inventories. Since
          the
          finished goods are questionable, we have made an allowance for the entire
          inventory, including raw goods and finished product, to reflect management’s
          supposition that the current inventories and raw materials on hand are
          unsalvageable.
  **5.
            MACHINERY AND EQUIPMENT**
 
 Detail
            of
            inventories at September 30, 2007 (unaudited) and December 31, 2006 is
            as
            follows:
 
 **2007**
                  
                  
                  **2006**Computer
                      equipment and software
                  
                  $
                  66,023
                  
                  
                  $
                  66,023Furniture
                      and fixtures
                  
                  
                  4,146
                  
                  
                  
                  4,146Packaging
                      equipment
                  
                  
                  288,484
                  
                  
                  
                  288,484358,653
                  
                  
                  
                  358,653Accumulated
                      depreciation
                  
                  
                  (158,512
                  )
                  
                  
                  (113,796
                  )$
                  199,941
                  
                  
                  $
                  244,857
 -
            11
            -
  **ALL
            AMERICAN PET COMPANY, INC.**
 **Notes
            to the Condensed Financial Statements**
 September
            30, 2007
 (Unaudited)
   Included
        in machinery and equipment was $269,984 As of September 30, 2007 (unaudited)
        and
        December 31, 2006, of assets acquired under capital leases. Accumulated
        depreciation for these assets was $109,279 and $80,352 at September 30, 2007
        and
        December 31, 2006, respectively.
 
 Depreciation
        expense for the nine months ended September 30, 2007 and 2006 was $44,917
        and
        $41,601, respectively.
 
 **6.
        DEFERRED OFFERING COSTS**
 
 Deferred
        offering costs mainly consist of legal and accounting fees related to the
        filing
        of the Company’s Registration Statement on Form SB-2 (the “SB-2”). The Company’s
        SB-2 became effective in January 2007, and accordingly, the “Deferred Asset” of
        $289,721 was expensed for the period ended March 31, 2007.
 
 **7.
        OTHER ASSETS**
 
 Other
        assets include the following at September 30, 2007 (unaudited) and December
        31,
        2006:
 
 **2007**
              
              
              **2006**Prepaid
                  assets
              
              $
              --
              
              
              $
              11,181Deposits
              
              
              9,260
              
              
              
              12,985Travel
                  Advances
              
              
              1,000
              
              
              
              --$
              10,260
              
              
              $
              24,166
  **8.
        OTHER CURRENT LIABILITIES**
 
 Other
        current liabilities include the following at September 30, 2007 (unaudited)
        and
        December 31, 2006:
 
 **2007**
              
              
              **2006**Interest
                  payable
              
              $
              116,986
              
              
              $
              55,264Deferred
                  rent
              
              
              25,875
              
              
              
              26,070State
                  taxes
              
              
              800
              
              
              
              800Accrued
                  financing reimbursement
              
              
              --
              
              
              
              3,375Other
              
              
              22,987
              
              
              
              29,622$
              166,648
              
              
              $
              115,131
 
 **9.
        COMMITMENTS**
 
 **Operating
        Leases**
 
 The
        Company leases its corporate offices under a non-cancelable operating lease
        expiring May 2010. The Company was unable to make regular lease payments
        for
        part of 2006 and much of 2005 and was in default of the lease. The Company
        reached an agreement in October 2006 to pay $10,000 bi-weekly until lease
        payments are current. There were no penalties assessed as a result of the
        default, however the Company is charged a monthly late fee, which is immaterial,
        on the lease payments in arrears. There were no penalties assessed as a result
        of the default, however the Company is charged a monthly late fee, which
        is
        immaterial, on the lease payments in arrears. Approximately $58,317 of lease
        payments payable is included in accounts payable as of September 30,
        2007.
 
 **Capital
        Lease Obligations**
 
 The
        Company leases certain equipment under agreements classified as capital leases.
        The leases were recorded to reflect the present value of the net minimum
        lease
        payment, at acquisition date, using an interest rate of 16.62%. In March
        2006,
        one of the leases was restated with slightly modified terms resulting in
        a
        reduction of the liability by approximately $9,000. As of September 30, 2007,
        the Company has total lease obligations of $85,547.
  -
              12
              -
  **ALL
              AMERICAN PET COMPANY, INC.**
 **Notes
              to the Condensed Financial Statements**
 September
              30, 2007
 (Unaudited)
 **10.
        NOTE PAYABLE, RELATED PARTY LOAN AND CONVERTIBLE NOTES
        PAYABLE**
 
 At
        June
        30, 2007 (unaudited) and December 31, 2006, outstanding debt consisted of
        the
        following:
 
 **September
                  30,**
              
              
              **December
                  31,****2007**
              
              
              **2006**(a)
              Note
                  payable, in default, interest accrued at 10% and due upon
                  demand
              
              $
              204,500
              
              
              $
              219,500(b)
              Note
                  payable to related party, interest at 20% and due on December 26,
                  2007
              
              
              30,000
              
              
              
              50,000(c)
              Convertible
                  note payable, interest at 6%, due on March 14 and March 28,
                  2007
              
              
              20,000(d)
              Notes
                  payable to related parties, interest at 15% per annum. Interest
                  and
                  principal due on demand
              
              
              445,038
              
              
              
              415,000(e)
              Notes
                  payable, interest at 15% per annum. Interest and principal due
                  on
                  demand
              
              
              60,500
              
              
              
              85,500760,038
              
              
              
              770,000Less
                  current portion
              
              
              (760,038
              )
              
              
              (770,000
              )Long-term
                  portion
              
              $
              --
              
              
              $
              --
 
 **(a)
        Note Payable**
 
 On
        April
        27, 2004, the Company entered into a note payable agreement with an individual
        to borrow $150,000 at 10% interest per annum. The note was payable on April
        27,
        2005. As a condition of entering into the note, the Company was also required
        to
        pay additional fees totaling $50,000 upon maturity of the note. The Company
        considered this amount to be additional interest and, accordingly, recorded
        it
        as an expense using the effective interest method over the term. The Company
        paid $1,000 of interest during the note term and on April 27, 2005 the note
        was
        amended to require a five-month repayment of all accrued principal and interest
        and an additional $30,000 of fees. The additional fees were also accrued
        as
        interest expense using the effective interest method. The Company made payments
        aggregating $18,000 during the new term and on September 30, 2005 became
        in
        default of this obligation. All accrued interest as of September 30, 2005
        was
        recorded to reflect the total unpaid principal obligation of $232,000 at
        December 31, 2005. Accrued interest in the amount of $44,150 and $28,258
        is
        included in interest payable at September 30, 2007 and December 31, 2006,
        respectively. The Company made principal payments of $15,000 and $12,500
        for the
        period ended September 30, 2007 and the year ended December 31,
        2006.
  **(b)
        Related Party Notes**
 
 On
        October 25, 2005, the Company entered into a related party loan with a relative
        of a shareholder in the amount of $50,000. The loan accrues interest at 20%
        per
        annum and is due in a lump sum of principal and accrued interest on maturity.
        The original due date of this note was April 26, 2006, which was subsequently
        extended for 60 days until June 26, 2006. On June 26, 2006, this note was
        extended again for an additional 18 months until December 26, 2007. On September
        28, 2007, the Company converted $20,000 of the principal balance and all
        accrued
        interest of $19,266 into 261,772 shares of common stock. The debt was converted
        at $.15 per share when the market value on September 28, 2007 was $.25 per
        share. This 40% discount resulted in an expense for the Company of $26,177.
        Accrued interest in the amount of $0 and $11,863 is included in interest
        payable
        at September 30, 2007 and December 31, 2006, respectively.
 
 **(c)
        Convertible Notes Payable**
 
 On
        September 15, 2005, the Company commenced a private placement offering of
        convertible notes to raise up to $500,000. Pursuant to this offering, on
        each of
        September 15 and September 29, 2005, the Company issued a convertible debenture
        for $10,000. The September 15 debenture was due on March 15, 2007, and accrued
        interest at an annual rate of six percent, with the interest to be due and
        payable annually in arrears on December 31, 2005, December 31, 2006 and March
        15, 2007. The September 29 debenture was due on March 28, 2007, and accrued
        interest at an annual rate of six percent, with the interest to be due and
        payable annually in arrears on December 31, 2005, December 31, 2006 and March
        28, 2007. Each note holder has the option at any time to convert the principal
        amount of each note into shares of common stock at a conversion price at
        $0.65
        per share. In addition, the conversion price is subject to adjustment in
        the
        event the Company issues additional shares of common stock for less than
        $0.65
        per share. In connection with the issuance of each note, each note holder
        received a warrant to purchase 7,692 shares of common stock at an exercise
        price
        of $1.00 per share.  The Company is now in default on these
        obligations. There were no penalties assessed as a result of the default.
        Accrued interest in the amount of $2,449 is included in interest payable
        at
        September 30, 2007.
 
 **(d)
        Related Party Notes**
 
 On
        August
        29, 2006, the Company entered into a related party loan with an
        officer/shareholder in the amount of $25,000. The loan accrues interest at
        15%
        per annum and is due on demand. The Company made principal payments of $4,962
        and $10,000 for the period ended September 30, 2007 and the year ended December
        31, 2006. Accrued interest in the amount of $2,569 and $1,259 is included
        in
        interest payable at June 30, 2007 and December 31, 2006,
        respectively.
  -
              13
              -
  **ALL
              AMERICAN PET COMPANY, INC.**
 **Notes
              to the Condensed Financial Statements**
 September
              30, 2007
 (Unaudited)
 During
        the fourth quarter of 2006, the Company entered into related party loans
        with a
        shareholder in the aggregate amount of $400,000. The loans accrue interest
        at
        15% per annum and are due on demand. Accrued interest in the amount of $53,507
        and $8,630 is included in interest payable at September 30, 2007 and December
        31, 2006, respectively.
 
 On
        December 26, 2006 the Company borrowed additional funds of $25,000 from two
        individuals who became investors in 2007. The loans accrue interest at 15%
        per
        annum and are due December 26, 2007. Accrued interest in the amount of $2,856
        and $52 is included in interest payable at September 30, 2007 and December
        31,
        2006, respectively.
 
 On
        January 24, 2007, the Company entered into a related party loan with a
        shareholder in the amount of $10,000. The loan accrues interest at 15% per
        annum
        and is due on January 23, 2008. Accrued interest in the amount of $1,019
        is
        included in the interest payable at June 30, 2007.
 
 **(e)
        Notes Payable**
 
 During
        2006, the Company borrowed additional funds of $62,500 from two unrelated
        individuals to fund current operations. The notes are due on October 13,
        2007
        and accrue interest at 15% per annum. The Company made payments of $2,000
        during
        the period ended December 31, 2006. Accrued interest in the amount of $10,437
        and $3,650 is included in interest payable at September 30, 2007 and December
        31, 2006, respectively.
 
 On
        February 21, 2007, the Company borrowed additional funds of $22,500 from
        an
        unrelated individual to fund current operations. The note, which was due
        March
        1, 2007, was paid in full February 27, 2007. The Company issued 5,000 warrants
        for this short term loan.
 
 During
        the period ended March 31, 2007, two note holders also became investors.
        As a
        result, $25,000 in short-term notes payable at December 31, 2006 was reclassed
        to short-term notes payable related party.
 
 **(f)
        Money Transferred**
 
 At
        the
        end of September, management withdrew corporate funds to pay cash for certain
        accounts payable and to make corporate purchases. Part of the funds were
        used to
        pay key management payroll.  After September month end, management
        deposited the remaining funds back into the corporate bank account.
  **11.
        INCOME TAXES**
 
 The
        Company accounts for income taxes under SFAS No. 109, “*Accounting for Income
        Taxes.”*Deferred income tax assets relate to net operating loss
        carryforwards incurred while the Company filed tax returns as a Subchapter
        S
        Corporation under the Internal Revenue Code of 1986 and are not considered
        material. A Subchapter S Corporation’s operating results pass through to
        shareholders, therefore no deferred tax accounting was appropriate when the
        Company had this structure. Effective January 11, 2006, the Company no longer
        qualified as a Subchapter S Corporation when a second class of stock was
        created. All operating loss carryforwards prior to January 11, 2006 are not
        available to offset future taxable earnings of the Company. There is no
        provision for federal income taxes because the Company has incurred operating
        losses. The Company has recorded a state income tax provision of $800, which
        represents the minimum Franchise Tax Fee in the State of California. The
        minimum
        Franchise Tax Fee cannot be offset with loss carryforwards. Realization of
        deferred tax assets is dependent upon future earnings, if any, the timing
        and
        amount of which are uncertain. Accordingly, the Company has recorded an
        aggregate $1,877,867 valuation allowance against its deferred federal and
        state
        tax assets, since it is believed that such assets do not meet the more likely
        than not criteria to be recoverable through projected future profitable
        operations in the foreseeable future. The loss carryforwards will begin to
        expire in 2026 and 2012 for federal and state, respectively.
 
 The
        significant components of the Company’s deferred tax assets are as
        follows:
 
 **Deferred
                  Tax Assets as of September 30, 2007**(unaudited)Federal
              
              
              StateNet
                  operating loss2006
              
              $
              2,513,266
              
              
              $
              2,512,4662007
              
              
              1,870,508
              
              
              
              1,869,7084,383,774
              
              
              
              4,382,174Tax
                  rate
              
              
              34.00
              %
              
              
              8.84
              %1,490,483
              
              
              
              387,384Valuation
                  allowance
              
              
              (1,490,483
              )
              
              
              (387,384
              )$
              --
              
              
              $
              --
  -
              14
              -
  **ALL
              AMERICAN PET COMPANY, INC.**
 **Notes
              to the Condensed Financial Statements**
 September
              30, 2007
 (Unaudited)
 **12.
        SHAREHOLDERS’ DEFICIT**
 
 **Capital
        Stock**
 
 All
        American Pet Company, Inc. was formed under Maryland law on January 4, 2006
        with
        50,000,000 authorized shares of common stock and 10,000,000 authorized shares
        of
        preferred stock. On January 27, 2006, All-American Pet Company Inc., A New
        York
        corporation, merged with and into All American Pet Company, Inc., a Maryland
        corporation.
 
 Prior
        to
        the January 27, 2006 merger into the Maryland corporation, the Company entered
        into the first of three amendments of shareholder agreements to accommodate
        new
        investors, the first of which occurred on November 5, 2004. This agreement
        was
        amended on February 8, 2005 and again on March 1, 2005 to reduce the number
        of
        new investors and increase the commitment of certain investors.
 
 On
        November 30, 2005, the Company signed a letter of intent to enter into a
        transaction with Nortia. The transaction resulted in (i) the Company
        recapitalizing to reflect total common shares outstanding being 7,500,000
        common
        shares (ii) Nortia and or Nortia assignees acquiring 750,000 shares of newly
        issued common stock of the newly recapitalized company for an aggregate sales
        price of $100,000 of which $50,000 was paid during the year ended December
        31,
        2005 and $50,000 was reflected as a subscription receivable at December 31,
        2005, and received in January 2006 (iii) Nortia received 500,000 warrants
        to
        purchase an additional 500,000 shares of common stock at an exercise price
        of
        $0.50 per share.
 
 **Private
        Placement of Common Stock**
 
 During
        the year ended December 31, 2006, the Company raised $1,327,132 (net of costs)
        and issued 3,844,000 shares of common stock from private placement. As a
        result,
        the Company issued a total of 342,480 warrants at an exercise price of $0.50
        per
        share. An additional 79,167 warrants at an exercise price of $0.50 per share
        were issued with the conversion of $125,000 of notes payable into 316,667
        shares
        of common stock.
 
 During
        the nine months ended September 30, 2007, the Company raised $802,000 and
        issued
        4,294,000 shares of common stock from private placement.
  **Conversion
        of Shares of Common Stock into Preferred Shares**
 
 As
        an
        additional condition of the December 28, 2005 private placement and
        recapitalization in Maryland, two of the four existing shareholders entered
        into
        an agreement to convert their common shares into 56,500 shares of preferred
        stock designated Series A. The tendered shares of common stock were reallocated
        to the other two founding shareholders such that the total number of issued
        and
        outstanding shares of common stock will not change. This recapitalization
        was
        recorded retroactively to inception. As a result of the recapitalization,
        the
        number of shares authorized was increased and as such, the common stock
        previously subscribed but not issued in 2005 was recorded as issued as of
        December 31, 2005.
 
 The
        Series A Preferred Stock is entitled to cumulative dividends of 8% per annum
        and
        is payable on March 1st of each
        year
        beginning in 2006. Once issued, the Company will have the right, by agreement,
        to redeem the outstanding shares of Series A Preferred Stock at their
        liquidation value at anytime. For each share of Series A Preferred Stock
        that is
        redeemed, the holder also shall receive one share of the Company’s common stock
        in addition to the liquidation value. At June 30, 2007 and December 31, 2006,
        $90,400 and $45,200, respectively, is included in dividend payable in the
        accompanying condensed balance sheet. The liquidation preference, which includes
        the unpaid dividends, is valued at $655,400 and $610,200 at September 30,
        2007,
        and at December 31, 2006, respectively.
 
 **Warrants
        Issued with Debt**
 
 The
        Company raised $20,000 in 2005 from convertible notes. As a result, the Company
        issued warrants for 15, 384 shares at an exercise price of $1.00 per share.
        A
        Black Scholes calculation determined the value of the warrants was $57 at
        December 31, 2005. The Black Scholes calculation takes into consideration
        the
        following assumptions: 15,384 as number of shares, a stock price of $0.50,
        an
        exercise price of $1.00, a five year term, volatility rate of 13.3%, discount
        rate of 3.94%, a one day vesting period and a contractual term of five
        years.
 
 The
        Company commenced a private placement offering of convertible notes payable
        and
        raised $25,000 in 2005 and an additional $100,000 in 2006. The notes were
        converted in the first quarter of 2006. As part of the conversion election,
        the
        note holders received warrants to purchase an additional 79,167 shares of
        common
        stock at an exercise price of $0.50 per share. As a result, the Company recorded
        additional interest expense of $9,089 related to these warrants using a Black
        Scholes calculation. The Black Scholes calculation takes into consideration
        the
        following assumptions: 79,167 as number of shares, a stock price of $0.50,
        an
        exercise price of $.50, a four year term, volatility rate of 13.3%.
 
 On
        November 30, 2005 the Company signed a letter of intent to enter into a private
        placement transaction in which Nortia Capital Partners, L.P. (“Nortia”) received
        500,000 warrants to purchase an additional 500,000 shares of common stock
        at an
        exercise price of $0.50 per share. The Company recorded the fair value of
        these
        warrants of $51,000 using a Black Scholes calculation. The Black Scholes
        calculation takes into consideration the following assumptions: 500,000 as
        number of shares, a stock price of $0.50, an exercise price of $.50, a two
        year
        term, volatility rate of 13.3%, discount rate of 3.94%, a one day vesting
        period
        and a contractual term of two years.
 
 During
        the period ended September 30, 2006, the Company concluded a private placement
        transaction resulting in the Company issuing a total of 342,480 warrants
        at an
        exercise price of $0.50 per share. A Black Scholes calculation determined
        the
        value of the warrants was $39,521 at December 31, 2006. The Black Scholes
        calculation takes into consideration the following assumptions: 342,480 as
        number of shares, a stock price of $0.50, an exercise price of $0.50, a four
        year term, volatility rate of 10.9%, discount rate of 4.51%, a one day vesting
        period and a contractual term of four years.
  -
              15
              -
  **ALL
              AMERICAN PET COMPANY, INC.**
 **Notes
              to the Condensed Financial Statements**
 September
              30, 2007
 (Unaudited)
 On
        February 21, 2007, the Company received a loan from an unrelated individual
        to
        fund current operations. For the short term loan, the Company issued 5,000
        warrants to purchase an additional 5,000 shares of common stock at an exercise
        price of $0.50 per share. A Black Scholes calculation determined the value
        of
        the warrants was $134 at March 31, 2007. The Black Scholes calculation takes
        into consideration the following assumptions: 5,000 as number of shares,
        a stock
        price of $0.50, an exercise price of $0.50, a ten month term, volatility
        rate of
        10.9%, discount rate of 5.05%, a one day vesting period and a contractual
        term
        of ten months.
 
 **Warrants
        Outstanding**
 
 A
        summary
        of the Company’s outstanding warrants and activity for the nine months ended
        September 30, 2007 is as follows:
 
 Number
                ofUnits
              
              
              Weighted
                  Average Exercise Price Per ShareOutstanding,
                  Beginning of Period
              
              
              937,031
              
              
              $
              0.51Granted
              
              
              5,000
              
              
              
              0.50Forfeitures
              
              
              --
              
              
              
              --Outstanding,
                  End of Period
              
              
              942,031
              
              
              $
              0.51Exercisable,
                  End of Period
              
              
              942,031
              
              
              $
              0.51
 
 The
        weighted-average remaining contractual life of the warrants outstanding at
        December 31, 2006 was 2.5 years.
 
 **13.           SUBSEQUENT
        EVENT**
 
 On
        October 28, 2007 a related party converted approximately $50,000 of debt
        into
        common stock, based on a discount of 40% of the closing market price of the
        stock, resulting in a decrease in notes of $50,000 for approximately 311,000
        shares of common stock.
  -
              16
              -




**ITEM
      2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATION.**





The
      statements contained in this report that are not purely historical are
      forward-looking statements. “Forward-looking statements” include statements
      regarding our expectations, hopes, intentions, or strategies regarding the
      future.  Forward-looking statements include: statements regarding
      future products or product development; statements regarding future selling,
      general and administrative costs and research and development spending, and
      our
      product development strategy; statements regarding future capital expenditures
      and financing requirements; and similar forward-looking
      statements.  It is important to note that our actual results could
      differ materially from those in such forward-looking statements.





**Summary
      of the Company and its Current Status**





The
      Company produces, markets and sells super-premium dog food primarily through
      supermarkets and grocery stores under the brand name BowWow Breakfast CerealTM,
      which we refer to in this Form 10-QSB as BowWow Breakfast. The Company has
      never operated at a profit and is currently under significant financial strain
      because as of November 2, 2007, it had under $1,000 in operating funds. The
      Company’s total sales for the first nine months of 2007 were approximately
      $57,176. The lack of significant sales results from the fact that the Company
      does not have the funds necessary to manufacture any of its products, and it
      does not have any funds to market its products or to pay any other costs
      necessary to place its products in stores where they can be sold. Without an
      immediate capital infusion in the near future, and without a significantly
      substantial additional infusion of capital within a short time thereafter,
      the
      Company may be forced to limit its operations severely, and it may not be able
      to survive.





**The
      Company’s Business Model**





We
      produce, market and sell super-premium dog food primarily through supermarkets
      and grocery stores under the brand name BowWow Breakfast CerealTM, which we
      target specifically for the morning meal.  Our product forms and
      packaging are designed as a breakfast cereal, and we currently offer three
      breakfast cereal products under the BowWow Breakfast brand.





If
      we are
      successful in attracting enough additional capital in the form of equity and
      or
      debt, then we plan to formulate a variety of other product concepts in addition
      to the BowWow Breakfast brands. We intend to expand by offering additional
      packaging alternatives with our existing flavors. Although we have initially
      focused on commercializing existing product concepts, we also intend to explore
      opportunities to expand within existing product categories and to create new
      product lines. Each of these new initiatives will require substantial capital
      to
      undertake and implement, and as of this time we have not identified or received
      commitments from any sources of capital.





We
      contract with one non-affiliated dog food manufacturer and one non-affiliated
      box packager to prepare our products in accordance with strict quality assurance
      and quality control standards. We currently maintain arrangements with parties
      that have experience producing and warehousing dry pet food products, and we
      require that these parties use strict ingredient and processing standards for
      the production of our brands. When we produce the BowWow Breakfast brands,
      one
      of our employees is present at the manufacturing facility to supervise
      production, and to test the quality and ingredients of the dog
      food.





We
      intend
      to generate revenue in the future from the sales of super-premium dog food
      products to big box and mass merchants which we refer to in this section as
      mass
      merchant customers, as well as our existing supermarket and grocery store
      customers, where slotting has been paid, which we refer to in this section
      as
      retail customers. Our revenue arrangements with mass merchant customers do
      not
      include sales incentives and other promotional costs such as coupons,
      volume-based discounts and off-invoice discounts. In addition, we do not
      anticipate paying “slotting fees,” which are fees paid based on an oral
      arrangement with a retail customer to have our products placed on its shelves.
      Slotting fees are a one-time fee paid to a retail customer. Additional slotting
      fees may be incurred with a retail customer in the future if additional products
      are sold through that retail customer. As we continue to build out our
      distribution network, we anticipate incurring additional slotting fees. We
      record slotting fees as a reduction of gross sales. We currently do not have
      sufficient funds to pay the slotting fees necessary to shelve our products
      with
      most retail customers at a level necessary to sustain our operations or to
      generate revenue.





**Results
      of Operations for the nine months ended September 30, 2007 compared with
      the nine months ended September 30, 2006**





The
      following discussion of the results of operations should be read in conjunction
      with our condensed financial statements and notes thereto for the nine months
      ended September 30, 2007 included in this Form 10-QSB.





There
      was
      an increase in the cost of products shipped for the nine months ended September
      30, 2007 as compared to the period ended September 30, 2006. The increase was
      mainly due to a $5,000 addition in product purchases during the period ended
      September 30, 2007 compared to the period ended September 30, 2006. In addition,
      a significant amount of exterior packaging was recycled due to a change in
      product ingredients resulting in an increase in inventory shrink of $2,300.
      There was an inventory allowance established during the period ending September
      30, 2007 of $147,625 due to the fact that management was locked out of the
      storage facility and management does not know if the inventory is
      saleable.





Our
      other
      operating expenses consisted of:





·
            Sales
                and marketing expenses, which includes shipping costs related to
                manufactured products and advertising
                costs;


·
            spoils
                expenses related to manufactured
                products;


·
            general
                and administrative expenses;


·
            interest
                expense; and


·
            depreciation
                and amortization expense.




-
          17
          -






Net
      sales
      for the nine months ended September 30, 2007 were $68,382, compared to net
      sales
      of $96,642 in the comparable period in 2006. Net sales consist of sales, net
      of
      discounts, offset
      by
      slotting and sales incentive fees. Sales, net of discounts, decreased in the
      nine months ended September 30, 2007 to $43,488 from $87,718 in the comparable
      period in 2006.  This decrease occurred due to a longer than expected
      delay in delivering our products onto the shelves of supermarkets and post
      delivery spoilage costs of approximately $11,800. Slotting fees, which normally
      decrease net sales, resulted in an increase of net sales by $25,000 for the
      nine
      months ended September 30, 2007 compared to an increase of $8,924 in the
      comparable period in 2006. The increase for the nine months ended September
      30,
      2007 is due to the reversal of a prior year adjustment. The increase for the
      comparable period in 2006 was the result of a settlement due to a customer’s
      inability to provide shelf space.





Cost
      of
      goods sold was $216,321 for the nine months ended September 30, 2007, compared
      to $166,335 in the comparable period in 2006. The increase in cost of goods
      sold
      was due to decreased sales volume, resulting in the Company’s inability to keep
      costs for products shipped as low as in prior periods, as well as the allowance
      for the spoilage of all the finished goods and raw materials.





The
      components of cost of goods sold for each period are as follows:





**September
                30,****2007**
            
            
            **2006**Freight
            
            
            
            
            
            4,465Fulfillment
            
            
            3,416
            
            
            
            14,500Cost
                of products shipped
            
            
            62,983
            
            
            
            147,370Spoilage
            
            
            149,922
            
            
            
            9,0365Total
                cost of goods sold
            
            
            216,321
            
            
            
            166,335





Operating
      expenses were $1,774,927 for the nine months ended September 30, 2007 compared
      to $1,532,389 in the comparable period in 2006.  Of this increase,
      general and administrative expenses were $1,504,808 for the nine months ended
      September 30, 2007 versus $1,274,611 in the comparable period in
      2006.  The increase in these expenses during the period ended
      September 30, 2007 is primarily the result of recognizing deferred offering
      costs, additional costs associated with the hiring of new sales and office
      personnel, payment of salaries accrued in 2006 and new costs for SEC
      filings.





Also
      included in our increased operating expenses between the quarter ended September
      30, 2007 and the quarter ended September 30, 2006 was an increase in our sales
      and marketing costs, from $158,111 for the period ended September 30, 2006
      to
      $232,932 for the period ended September 30, 2007. This increase is primarily
      the
      result of our increased marketing and sales efforts in retail promotions, print
      and radio ads in 2007. During the period ended September 30, 2007, we exerted
      significant efforts to advertise, market and sell our product, in trade
      magazines for retail customers to carry the BowWow Breakfast brand.





**Liquidity,
      Capital Resources and Going Concern**





For
      the
      nine months ended September 30, 2007, the Company incurred a net loss of
      $2,018,133 and a negative cash flow from operations of $700,216 as compared
      to a
      net loss of $1,692,243 and a negative cash flow from operations of $1,205,190
      for the corresponding period in 2006.  In addition, the Company had a
      working capital deficiency of $3,136,797 and a stockholders’ deficiency of
      $3,165,778 as of September 30, 2007, compared to a working capital deficiency
      of
      $1,897,620 and a stockholders’ deficiency of $1,969,888 as of December 31, 2006.
      These matters raise substantial doubt about our ability to continue as a going
      concern.





Our
      principal sources of liquidity have been sales of equity securities and
      borrowings. To meet our current requirements to operate, the Company is
      currently attempting to undertake the sale of some of its common shares to
      raise
      additional funds. There are currently no commitments or other known sources
      for
      this funding. If these funds are obtained, our principal uses would be to
      complete and fund our operations, to pay for expanded marketing, advertising
      and
      promotional activities, for mass merchant customer placement as well as retail
      customer placement, where store placement fees (slotting allowances), have
      been
      paid and for working capital purposes, including accounting, audit and legal
      expenses for SEC filings and other matters. As of September 30, 2007, we had
      cash and cash equivalents of $16,297. Until cash generated from operations
      is
      sufficient to satisfy our future liquidity requirements, we are investigating
      purchase order and slotting funding from different sources. In addition, we
      will
      be looking to seek additional funds through the issuance of additional equity
      and debt with another round of funding. There are currently no commitments
      or
      other known sources for this funding.  If these funds are obtained, it
      would result in additional dilution to our stockholders. Financing may not
      be
      available in the future in amounts or on terms acceptable to us, if at
      all.





At
      September 30, 2007, the Company had operating funds of $16,297, and it is in
      need of substantial, immediate funding in order to continue operating. If the
      Company does not receive immediate capital infusions by the beginning of the
      fourth quarter of 2007, the Company will at least have to limit its operations
      severely, and it may not be able to survive.





-
          18
          -






**Debt
      Service**





On
      April
      27, 2004, the Company entered into a note payable agreement with an individual
      to borrow $150,000 at 10% interest per annum. The note was payable on April
      27,
      2005. As a condition of entering into the note, the Company was also required
      to
      pay additional fees totaling $50,000 upon maturity of the note. The Company
      considered this amount to be additional interest and, accordingly, recorded
      it
      as an expense using the effective interest method over the term. The Company
      paid $1,000 of interest during the note term and on April 27, 2005 the note
      was
      amended to require a five-month repayment of all accrued principal and interest
      and an additional $30,000 of fees. The additional fees were also accrued as
      interest expense using the effective interest method. The Company made payments
      aggregating $18,000 during the new term and on September 30, 2005 became in
      default of this obligation. All accrued interest as of September 30, 2005 was
      recorded to reflect the total unpaid principal obligation of $232,000 at
      December 31, 2005. Accrued interest in the amount of $44,150 is included in
      interest payable at September 30, 2007. The Company made principal payments
      of
      $15,000 for the nine months ended September 30, 2007.





On
      September 15, 2005, the Company commenced a private placement offering of
      convertible notes to raise up to $500,000. Pursuant to this offering, on each
      of
      September 15 and September 29, 2005, the Company issued a convertible debenture
      for $10,000.  The September 15 debenture was due on March 15, 2007,
      and accrued interest at an annual rate of six percent, with the interest to
      be
      due and payable annually in arrears on December 31, 2005, December 31, 2006
      and
      March 15, 2007. The September 29 debenture was due on March 28, 2007, and
      accrued interest at an annual rate of six percent, with the interest to be
      due
      and payable annually in arrears on December 31, 2005, December 31, 2006 and
      March 28, 2007. Each note holder has the option at any time to convert the
      principal amount of each note into shares of common stock at a conversion price
      at $0.65 per share. In addition, the conversion price is subject to adjustment
      in the event the Company issues additional shares of common stock for less
      than
      $0.65 per share. In connection with the issuance of each note, each note holder
      received a warrant to purchase 7,692 shares of common stock at an exercise
      price
      of $1.00 per share. The Company is now in default on these obligations. Accrued
      interest in the amount of $2,449 is included in interest payable at September
      30, 2007.





On
      October 25, 2005, the Company entered into a related party loan with a relative
      of a shareholder in the amount of $50,000.  The loan accrues interest
      at 20% per annum and is due in a lump sum of principal and accrued interest
      on
      maturity. The original due date of this note was April 26, 2006, which was
      subsequently extended for 60 days until June 26, 2006. On June 26,
      2006, this note was extended again for an additional 18 months until
      December 26, 2007. On September 28, 2007, the Company converted $20,000 of
      the principal balance into 133,333 shares of common stock, leaving a balance
      of
      $30,000. Accrued in amount of $19,266 is included in interest payable at
      September 30, 2007. The note was paid in full by the issuance of common stock.
      See "Item 2. Unregistered Sale of Equity and Use of Proceeds."





On
      August 29, 2006, the Company entered into a related party loan with an
      officer/shareholder in the amount of $25,000. The loan accrues interest at
      15%
      per annum and is due on demand. The Company made payments of $10,000 during
      the
      year ended December 31, 2006. Accrued interest in the amount of $2,569 is
      included in interest payable at September 30, 2007.





During
      the fourth quarter of 2006, the Company entered into related party loans with
      a
      shareholder in the aggregate amount of $400,000. The loans accrue interest
      at
      15% per annum and are due on demand. Accrued interest in the amount of $56,507
      is included in interest payable at September 30, 2007.





On
      December 26, 2006, the Company borrowed additional funds of $25,000 from
      two individuals who became investors in 2007. The loans accrue interest at
      15%
      per annum and are due December 26, 2007. Accrued interest in the amount of
      $2,856 is included in interest payable at September 30, 2007.





On
      January 24, 2007, the Company entered into a related party loan with a
      shareholder in the amount of $10,000. The loan accrues interest at 15% per
      annum
      and is due on January 23, 2008. Accrued interest in the amount of $1,019 is
      included in the interest payable at September 30, 2007.





During
      2006, the Company borrowed additional funds of $62,500 from two unrelated
      individuals to fund current operations.  The notes are due on October
      13, 2007 and accrue interest at 15% per annum. The Company made payments of
      $2,000 during the year ended December 31, 2006. Accrued interest in the
      amount of $10,437 is included in interest payable at September 30,
      2007.





On
      February 21, 2007, the Company borrowed additional funds of $22,500 from an
      unrelated individual to fund current operations. The note, which was due
      March 1, 2007, was paid in full February 27, 2007. The Company issued 5,000
      warrants for this short term loan.





During
      the period ended September 30, 2007, two note holders also became
      investors.  As a result, $25,000 in short-term notes payable at
      December 31, 2006 was reclassed to short-term notes payable related
      party.





**Historical
      Trends**





*Cash
      Flows from Operating Activities.*We used $700,216 of cash flows from
      operating activities during the nine months ended September 30, 2007 compared
      to
      $1,205,190 in the comparable period in 2006. Cash flows were primarily used
      for
      additional product purchases; recycling exterior packaging due to a change
      in
      product ingredients; prepaid inventory, other assets and deposits; sales and
      marketing expenses of, which includes shipping costs related to manufactured
      products and advertising costs; spoils expenses related to manufactured
      products; $230,197 in general and administrative expenses; and $5,244 in bank
      overdraft.





*Cash
      Flows from Investing Activities*. There was no cash flows used or from
      investing activities during the nine months ended September 30, 2007 and $28,000
      during the comparable period in 2006.





-
          19
          -






*Cash
      Flows from Financing Activities*. Cash provided by financing activities
      totaled $841,326 and $1,327,132 for the nine months ended September 30, 2007
      and
      September 30, 2006, respectively. The primary sources of cash for the nine
      months ended September 30, 2007 were proceeds from sale of common stock of
      $841,326.





**Capital
      Expenditures**





As
      of
      November 2, 2007, the Company had under $1,000 in operating funds and is in
      need
      of substantial, immediate funding in order to continue operating. If the Company
      does not receive immediate capital infusions by the beginning of the fourth
      quarter of 2007, the Company will at least have to limit its operations
      severely, and it may not be able to survive. The Company intends to use all
      of
      the capital it receives in the future to complete and fund its operations,
      to
      pay for expanded marketing, advertising and promotional activities, for
      additional grocery store placement fees (slotting allowances) and for working
      capital purposes, including accounting, audit and legal expenses for SEC filings
      and other matters. These items indicate our present estimate of our use of
      any
      capital we raise, however, we may reallocate the proceeds or utilize the
      proceeds for other business purposes.  The actual expenditures may
      vary from these estimates because of a number of factors, including whether
      we
      obtain additional funding, what other obligations we have incurred, the amount
      of sales of our products and other matters. The amount of capital that we will
      need in the future will depend on many factors, including:





·
            our
                relationship with manufacturers and
                customers;


·
            the
                market acceptance of our products;


·
            the
                levels of promotion and advertising that will be required to launch
                our
                new products and achieve and maintain a competitive position in the
                marketplace;


·
            expansion
                of our business;


·
            price
                discounts on our products to our
                customers;


·
            our
                pursuit of strategic transactions, including acquisitions, joint
                ventures
                and capital investments;


·
            the
                levels of inventory and accounts receivable that we maintain;
                and


·
            our
                entrance into new markets.





The
      Company leased its corporate offices under a non-cancelable operating lease
      expiring May 2010. The Company was unable to make regular lease payments
      for part of 2006 and much of 2005 and was in default of the lease. Approximately
      $35,365 of lease payments payable is included in accounts payable as of
      September 30, 2007.





The
      Company leases certain equipment under agreements classified as capital
      leases.  The leases were recorded to reflect the present value of the
      net minimum lease payment, at acquisition date, using an interest rate of
      16.62%.  In March 2006, one of the leases was restated with
      slightly modified terms resulting in a reduction of the liability by
      approximately $9,000. As of September 30, 2007, the Company has total lease
      obligations of $98,289.





**New
      Accounting Pronouncements**





References
      to the “FASB,” “SFAS” and “SAB” in this Prospectus refer to the “Financial
      Accounting Standards Board,” “Statement of Financial Accounting Standards,” and
      the “SEC Staff Accounting Bulletin,” respectively.





Effective
      January 1, 2007, the Company adopted FASB Interpretation No. 48,
“Accounting for Uncertainty in Income Taxes (“FIN 48”), an interpretation of
      FASB Statement No. 109, Accounting for Income Taxes.”  The
      Interpretation addresses the determination of whether tax benefits claimed
      or
      expected to be claimed on a tax return should be recorded in the financial
      statements.  Under FIN 48, we may recognize the tax benefit from an
      uncertain tax position only if it is more likely than not that the tax position
      will be sustained on examination by the taxing authorities, based on the
      technical merits of the position. The tax benefits recognized in the financial
      statements from such a position should be measured based on the largest benefit
      that has a greater than fifty percent likelihood of being realized upon ultimate
      settlement.  FIN 48 also provides guidance on derecognition,
      classification, interest and penalties on income taxes, account in interim
      periods and requires increased disclosures. At the date of adoption, and as
      of
      June 30, 2007, the Company does not have a liability for unrecognized tax
      benefits.





The
      Company files income tax returns in the U.S. federal jurisdiction and various
      states. The Company is subject to U.S. federal or state income tax examinations
      by tax authorities for years after 2006.  During the periods open to
      examination, the Company has net operating loss and tax credit carry forwards
      for U.S. federal and state tax purposes that have attributes from closed
      periods.  Since these NOLs and tax credit carry forwards may be
      utilized in future periods, they remain subject to examination.





The
      Company’s policy is to record interest and penalties on uncertain tax provisions
      as income tax expense.  As of September 30, 2007, the Company has no
      accrued interest or penalties related to the uncertain tax
      positions.





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,”
which provides enhanced guidance for using fair value to measure assets and
      liabilities. SFAS No. 157 provides a common definition of fair value and
      establishes a framework to make the measurement of fair value in generally
      accepted accounting principles more consistent and comparable.  SFAS
      No. 157 also requires expanded disclosures to provide information about the
      extent to which fair value is used to measure assets and liabilities, the
      methods and assumptions used to measure fair value, and the effect of fair
      value
      measures on earnings.  SFAS No. 157 is effective for financial
      statements issued in fiscal years beginning after November 15, 2007 and to
      interim periods within those fiscal years. The Company is currently in the
      process of evaluating the effect, if any, the adoption of SFAS No. 157 will
      have
      on its results of operations, financial condition, cash flows or disclosures
      through September 30, 2007.





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          20
          -






In
      February 2007, the FASB issued FASB Statement No. 159, “The Fair Value
      Options for Financial Assets and Financial Liabilities, Including an amendment
      of FASB Statement No. 115.”  FAS 159, which becomes effective for the
      Company on January 1, 2008, permits companies to choose to measure many
      financial instruments and certain other items at fair value and report
      unrealized gains and losses in earnings. Such accounting is optional and is
      generally to be applied instrument by instrument. The Company does not
      anticipate that elections, if any, of this fair-value option will have a
      material effect on its financial condition, results of operations, cash flows
      or
      disclosures.





In
      December 2006, the FASB issued a Staff Position (“FSP”) on EITF 00-19-2,
“Accounting for Registration Payment Arrangements.” This FSP specifies that the
      contingent obligation to make future payments or otherwise transfer
      consideration under a registration payment arrangement, whether issued as a
      separate agreement or included as a provision of a financial instrument or
      other
      agreement, should be separately recognized and measured in accordance with
      SFAS
      No. 5, “Accounting for Contingencies.” If the transfer of consideration under a
      registration payment arrangement is probable and can be reasonably estimated
      at
      inception, the contingent liability under the registration payment arrangement
      is included in the allocation of proceeds from the related financing transaction
      (or recorded subsequent to the inception of a prior financing transaction)
      using
      the measurement guidance in SFAS No. 5. This FSP is effective immediately for
      registration payment arrangements and the financial instruments subject to
      those
      arrangements that are entered into or modified subsequent to the issuance of
      the
      FSP. For prior arrangements, the FSP is effective for financial statements
      issued for fiscal years beginning after December 15, 2006 and interim
      periods within those years. The Company has adopted the FSP and determined
      that
      it has no material impact on its financial condition, results of operations,
      cash flows or disclosures through September 30, 2007.





**Critical
      Accounting Policies and Estimates**





Our
      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. The
      preparation of these financial statements requires us to make estimates and
      judgments that affect the reported amount of assets and liabilities and
      disclosure of contingent assets and liabilities at the date of the financial
      statements and the reported amount of revenues and expenses for each period.
      The
      following represents a summary of our critical accounting policies, defined
      as
      those policies that we believe are: (a) the most important to the portrayal
      of our financial condition and results of operations, and (b) that require
      management’s most difficult, subjective or complex judgments, often as a result
      of the need to make estimates about the effects of matters that are inherently
      uncertain.





**Accounts
      Receivable and Allowances for Uncollectible Accounts**





Credit
      limits are established through a process of reviewing the financial history
      and
      stability of each customer. The Company regularly evaluates the collectibility
      of our trade receivable balances by monitoring past due balances.  If
      it is determined that a customer will be unable to meet its financial
      obligation, the Company records a specific reserve for bad debts to reduce
      the
      related receivable to the amount that is expected to be recovered. At September
      30, 2007, the Company determined that no allowance for uncollectible accounts
      is
      necessary. If circumstances related to specific customers deteriorate, our
      estimates of the recoverability of receivables associated with those customers
      could materially change.





**Inventories**





Inventories
      consist of raw materials, packaging and supplies and finished goods and are
      valued at the lower of cost (first-in, first-out (FIFO) method) or
      market.





**Revenue
      Recognition, Sales Incentives and Slotting Fees**





In
      accordance with Staff Accounting Bulletin No. 104, Revenue Recognition,
      revenues are recognized upon passage of title to the customer, typically upon
      product pick-up, shipment or delivery to customers. The Company’s revenue
      arrangements with its customers often include sales incentives and other
      promotional costs such as coupons, volume-based discounts, slotting fees and
      off-invoice discounts. These costs are typically referred to collectively as
      “trade spending.”  Under EITF No. 00-14, EITF No. 00-25 and EITF
      No. 01-09, these costs are recorded when revenue is recognized and are
      generally classified as a reduction of revenue.  Slotting fees refer to
      oral arrangements under which the retail grocer allows our products to be placed
      on the store’s shelves in exchange for a slotting fee.  Given that there
      are no written contractual commitments requiring retail grocers to allocate
      shelf space for twelve months, we expense the slotting fees at the time orders
      are first shipped to customers.  During the period ended December 31,
      2006, the Company settled with a major customer for previously accrued slotting
      fees.  The customer had been acquired in December 2005 and after the
      merger it was unable to deliver the shelf space and outlets originally
      contemplated by the original agreement. The previously agreed obligation of
      $219,535 was adjusted due to this change in circumstance. This adjustment was
      recorded as a reduction to slotting fees, resulting in slotting income of
      $144,535 for the period ended September 30, 2006. The Company recorded slotting
      income of $25,000, rather than an expense for the nine months ended September
      30, 2007 due to the reversal of a prior year adjustment.





**Spoils
      Costs**





Expenses
      for spoils that are incurred after our products are received by our customers
      are recorded as a reduction in gross sales. Expenses for spoils that are
      incurred while raw materials are stored pending orders are included in costs
      of
      good sold. The Company incurred $11,820 and $24,396 for spoils incurred after
      our products were received by our customers during the nine months ended
      September 30, 2007 and 2006, respectively. In addition, the Company incurred
      $2,297 and $9,036 for spoils that occurred while our raw materials were stored
      pending orders during the periods ended September 30, 2007 and 2006,
      respectively. The Company regularly evaluates the cost of spoils in relationship
      to sales to determine if its allowance is adequate. As of the nine months ended
      September 30, 2007, the Company booked an allowance for these costs of $147,625
      because of a dispute with the landlord of the location holding inventory. The
      owner has not allowed representatives of the Company to examine the remaining
      inventory, so management established the allowance.





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          21
          -






**Off-Balance
      Sheet Arrangements**





We
      do not
      have any off balance sheet arrangements.





**Going
      Concern**





The
      report of our independent registered public accountants on our audited financial
      statements for the year December 31, 2006 contains an explanatory paragraph
      regarding our ability to continue as a “going concern.” At that time, we had
      only a limited amount of assets and no capital commitments. Although we raised
      a
      net amount of approximately $841,326 in private placements to accredited
      investors between December 31, 2006 and October 2007, we are still in need
      of substantial immediate funding in order to continue operating, and if we
      are
      unable to raise significant substantial infusions of capital within the near
      future, the Company will be forced to limit its operations severely, and it
      may
      not be able to survive. Ultimately, our ability to continue to finance our
      operations and research and development efforts, as well as profitability,
      will
      depend on our ability to generate sufficient revenue from the sales of our
      products.





**ITEM
      3. CONTROLS AND PROCEDURES.**





This
      Form
      10-QSB Report does not include a report of management's assessment regarding
      internal control over financial reporting or an attestation report of the
      Company's registered public accounting firm due to a transition period
      established by rules of the Securities and Exchange Commission for newly public
      companies.





Our
      Chief
      Executive Officer is responsible for establishing and maintaining disclosure
      controls and procedures for the Company. As required by Securities and Exchange
      Commission Rule 13a-15(b), we carried out an evaluation, under the supervision
      and with the participation of the Company's management, including our Chief
      Executive Officer, of the effectiveness of the design and operation of our
      disclosure controls and procedures as of December 31, 2006. The CEO has
      concluded that the design and operation of the Company's disclosure controls
      and
      procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act
      of
      1934) do not adequately meet intended objectives and are not effective as of
      the
      end of the period covered by this report. This deficiency consists primarily
      of
      inadequate staffing and supervision that could lead to the untimely
      identification and resolution of accounting and disclosure matters and failure
      to perform timely and effective reviews. However, the size of the Company
      prevents us from being able to employ sufficient resources to enable us to
      have
      adequate segregation of duties within our internal control system. We understand
      the importance of strong internal controls and procedures and are currently
      in
      the process of developing a plan to address these issues. We intend that the
      basic framework of our plan will encompass the following processes:





**Maintaining
      a strong internal control environment.**  Prior to December 31,
      2007, we intend to design and implement written internal control policies and
      procedures. We will monitor these internal controls through self assessments
      conducted by senior management, and if necessary we will take appropriate action
      to correct any identified control deficiencies.





**Executing
      financial stewardship.** We intend to establish and maintain internal
      control polices that will be communicated to all employees to ensure that
      employees understand their fiduciary responsibilities to shareholders. This
      ongoing effort will encompass financial discipline in strategic and daily
      business decisions, and will bring particular focus on the maintenance of
      accurate financial reporting and effective controls through process improvement,
      skill development and oversight.





**Encouraging
      strong and effective corporate governance from our Board of Directors.**
      By December 31, 2008, we intend to establish a board of directors that meets
      applicable independence standards, and we intend to establish an audit committee
      comprised of independent directors with sufficient financial knowledge and
      experience. The Company intends to review significant accounting policies,
      financial reporting and internal control matters with this committee, and will
      encourage this committee to have independent discussions with our external
      auditors.





**Communicating
      expectations to employees**. Every employee will receive a copy of the
      Company’s Employee Handbook (the “Handbook”), which sets forth the Company’s
      commitment to high ethical standards, and every employee will receive training
      regarding the information in the Handbook. All employees will be held
      accountable for compliance with the policies set forth in the Handbook, and
      will
      be informed of the methods through which they can report any perceived
      violations of such policies.





**Changes
      in Internal Control**. We maintain a system of internal controls designed
      to provide reasonable assurance that transactions are executed in accordance
      with management’s general or specific authorization; transactions are recorded
      as necessary to permit preparation of financial statements in conformity with
      Generally Accepted Accounting Principles (“GAAP”) and maintain accountability
      for assets. Access to assets is permitted only in accordance with management’s
      general or specific authorization.





It
      is the
      responsibility of our management to establish and maintain adequate internal
      control over financial reporting.  The material weakness identified
      relates to an insufficient number of personnel having adequate knowledge,
      experience and training to provide effective oversight and review over our
      financial close and reporting process. This is the result of limited financial
      resources. These control deficiencies in the aggregate did not result in any
      misstatements in the interim condensed financial statements. Management is
      in
      the process of remedying the material weakness described above.





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          22
          -






**PART
      II – OTHER INFORMATION**





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





On
      October 25, 2005, a relative of an affiliate of
      the Company (the "Noteholder") loaned $50,000 to the Company evidenced by a
      promissory note (the "Note"). Between September 29 and October 30, 2007, the
      Company issued 444,446 shares of its common stock to the Noteholder in full
      satisfaction of all moniues owed pursuant to the Note, including principal
      and
      interest. The affiliate of the Company disclaims any beneficial interest in
      the
      Note or the common stock issued to the Noteholder.




**ITEM
      6. EXHIBITS.**




The
      following is a complete list of Exhibits filed as part of this periodic
      report.






**Number**
              
              **Description**2.1+
              
              Agreement
                  and Plan of Merger of All American Pet Company Inc., a New York
                  corporation and All American Pet Company, Inc., a Maryland corporation,
                  effective as of January 23, 20063.1+
              
              Certificate
                  of Incorporation filed with the New York Secretary of State on
                  February
                  14, 20033.2+
              
              Certificate
                  of Amendment To The Certificate of Incorporation filed with the
                  New York
                  Secretary of State on January 26, 20063.3+
              
              Articles
                  of Incorporation filed with the State of Maryland Department of
                  Assessments and Taxation on January 4, 20063.4+
              
              Articles
                  Supplementary filed with the State of Maryland Department of Assessments
                  and Taxation on January 11, 20063.5+
              
              Certificate
                  of Merger filed with the New York Secretary of State on January
                  27,
                  20063.6+
              
              Articles
                  of Merger filed with the State of Maryland Department of Assessments
                  and
                  Taxation on January 27, 20063.7+
              
              Bylaws4.1
              
              Specimen
                  Common Stock Certificate4.2
              
              Specimen
                  Series A Preferred Stock Certificate (to be filed at a later
                  date)4.3+
              
              Agreement,
                  effective November 30, 2005, by and between Nortia
                  Capital  Partners,  Inc., a Nevada corporation and All
                  American Pet Company Inc., a New York corporation10.1+
              
              Equipment
                        Lease Agreement by and between Bev-Lin Enterprises, Inc.
                  and All American
                  Pet dated March 8, 200610.2+
              
              Form
                  of Subscription Agreement10.3+
              
              Letter
                  Agreement with L. Phillips Brown10.4+
              
              Lease
                  Agreement for rental of office premises dated January 18,
                  200510.5*
              
              Lease
                  Agreement for rental of warehouse space dated March 6,
                  200610.6+
              
              Loan
                  Agreement, dated as of April 27, 2004, by and between the Company
                  and
                  George LaCapra10.7+*
              
              Broker
                  Agreement between Crossmark, Inc. and All American Pet Company,
                  Inc. dated
                  August 1, 200610.8**
              
              Loan
                  Agreement dated as of August 29, 2006 by and between the Company
                  and Barry
                  Schwartz10.9**
              
              Loan
                  Agreement dated as of October 10, 2006 by and between the Company
                  and
                  Eckard Kirsch10.10**
              
              Loan
                  Agreement dated as of October 27, 2006 by and between the Company
                  and
                  Eckard Kirsch10.11**
              
              Loan
                  Agreement dated as of November 7, 2006 by and between the Company
                  and
                  Eckard Kirsch10.12**
              
              Loan
                  Agreement dated as of November 21, 2006 by and between the Company
                  and
                  Eckard Kirsch10.13**
              
              Loan
                  Agreement dated as of December 27, 2006 by and between the Company
                  and
                  Eckard Kirsch31.1
              
              Rule
                  13a-14(a) / 15d-14(a) Certifications32.1
              
              Section
                  1350 Certifications


+
      Incorporated by reference from the Company's Form SB-2, file number 333-135283,
      filed on June 23, 2006


*
      Incorporated by reference from the Company's Amendment No. 3 to Form SB-2,
      File
      Number 333-135283, filed on December 28, 2006 **Incorporated by reference from
      the Company's Annual Report filed on Form 10KSB, filed on July 17, 2007.




-
          23
          -






**SIGNATURES**





In
      accordance with the requirements of the Exchange Act, the registrant has caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.








**All
      American Pet Company, Inc.**


Registrant





Date:
                November 19, 2007      By: **/s/ Barry
                Schwartz**
              Barry
                Schwartz
              Chief
                Executive Officer, Chief Financial
              Officer
                and Principal Accounting Officer












-
          24
          -