UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



Form 10-Q







xQUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the quarterly period ended March
31, 2011



 ̈TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934







Commission file number 001-33300



ALL
AMERICAN PET COMPANY, INC.

(Exact name of registrant as specified in
its charter)



|Nevada                                                         |  | 91-2186665                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|1880 Century Park East, Suite 1402       |  |           
|---------------------------------------- |  | ----------
|Los Angeles, California                  |  | 90067     
|(Address of principal executive offices) |  | (Zip Code)



(310)
432-9032

(Registrant’s telephone number, including
area code)



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

YesxNo ̈

[Company has not yet filed all reports; if it has been subject
to filing requirements last 90 days, should check no]; DESPITE THIS BEING FOR 3/31/11

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

Yes ̈No ̈



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



|Large accelerated filer  ̈                                             | Accelerated filer  ̈        
|--------------------------------------------------------------------- | ---------------------------
|                                                                      |                            
|Non-accelerated filer  ̈ (Do not check if a smaller reporting company) | Smaller reporting company x



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

Indicate the number of shares of outstanding of each of
the Registrant’s classes of common equity, as of the last practicable date: As of September 21, 2012 the Registrant had
outstanding 614,734,834 shares of Common Stock, no shares of Preferred Stock, and warrants exercisable for 5,000,000 shares
of Common Stock.













ALL AMERICAN PET COMPANY, INC.

FOR THE THREE MONTHS ENDED

March 31, 2011



Index to Report on Form 10-Q



|        | Page                                                                                                         
|------- | -------------------------------------------------------------------------------------------------------------
|PART I  | FINANCIAL INFORMATION                                                                                        
|        |                                                                                                              
|Item 1. | Condensed Consolidated Financial Statements (unaudited)                                                      
|        | Condensed Consolidated Balance Sheets as of March 31, 2011 and December 31, 2010                             
|        | Condensed Consolidated Statement of Operations for the three months ended March 31, 2011 and March 31, 2010. 
|        | Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2011 and March 31, 2010.
|        | Notes to Condensed Consolidated  Financial Statements                                                        
|Item 2. | Managements’ Discussion and Analysis of Financial Condition and Results of Operations                        
|Item 3  | Quantitative and Qualitative Disclosures about Market Risks                                                  
|Item 4  | Controls and Procedures                                                                                      
|        |                                                                                                              
|PART II | Other Information                                                                                            
|        |                                                                                                              
|Item 1  | Legal Proceedings                                                                                            
|Item 1a | Changes in Risk Factors                                                                                      
|Item 2  | Unregistered Sales of Equity Securities and use of proceeds                                                  
|Item 3  | Defaults Upon Senior Securities                                                                              
|Item 4  | Mine Safety Disclosures                                                                                      
|Item 5  | Other Information                                                                                            
|Item 6  | Exhibits                                                                                                     
|        | Signatures                                                                                                   
|        | Certifications                                                                                               



2







PART I – FINANCIAL INFORMATION



Item 1. Financial Statements.



ALL AMERICAN PET COMPANY, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)



|                                            |  | March 31, 2011 |             |   | December 31, 2010 |  
|------------------------------------------- |  | -------------- | ----------- | - | ----------------- | -
|ASSETS                                      |  |                |             |   |                   |  
|Current Assets:                             |  |                |             |   |                   |  
|Cash                                        |  | $              | -           |   |                   | $
|Inventory                                   |  |                | 98,894      |   |                   |  
|Prepaid expenses                            |  |                | 160,769     |   |                   |  
|Total current assets                        |  |                | 259,663     |   |                   |  
|Machinery and equipment, net                |  |                | 125,730     |   |                   |  
|Other assets                                |  |                | 42,300      |   |                   |  
|TOTAL ASSETS                                |  | $              | 427,693     |   |                   | $
|                                            |  |                |             |   |                   |  
|LIABILITIES & STOCKHOLDERS' DEFICIT         |  |                |             |   |                   |  
|Current Liabilities:                        |  |                |             |   |                   |  
|Bank overdraft                              |  | $              | 100,775     |   |                   | $
|Accounts payable                            |  |                | 1,972,853   |   |                   |  
|Accounts payable due to former officer      |  |                | 131,912     |   |                   |  
|Current portion contest prize               |  |                | 68,333      |   |                   |  
|Settlement and judgments payable            |  |                | 227,159     |   |                   |  
|Current portion capital lease obligation    |  |                | 36,176      |   |                   |  
|Share guarantee liability                   |  |                | 600,000     |   |                   |  
|Accrued officers salaries                   |  |                | 125,769     |   |                   |  
|Deferred rent                               |  |                | 2,217       |   |                   |  
|Accrued payroll taxes                       |  |                | 789,946     |   |                   |  
|Notes payable, net of debt discount         |  |                | 336,665     |   |                   |  
|Accrued interest                            |  |                | 195,323     |   |                   |  
|Total current liabilities                   |  |                | 4,587,128   |   |                   |  
|Long-term liabilities:                      |  |                |             |   |                   |  
|Net present value contest prize obligation  |  |                | 294,438     |   |                   |  
|Employee settlement payable                 |  |                | -           |   |                   |  
|Employee severance payable                  |  |                | -           |   |                   |  
|Capital lease obligation                    |  |                | 51,375      |   |                   |  
|Total long-term liabilities                 |  |                | 345,813     |   |                   |  
|TOTAL LIABILITIES                           |  |                | 4,932,941   |   |                   |  
|                                            |  |                |             |   |                   |  
|COMMITMENTS AND CONTINGENCIES               |  |                |             |   |                   |  
|Stockholders' deficit                       |  |                |             |   |                   |  
|Common stock, $0.001 par value              |  |                |             |   |                   |  
|Authorized 250,000,000 shares               |  |                |             |   |                   |  
|Issued and outstanding March 31, 2011       |  |                |             |   |                   |  
|(230,854,866) and Decemeber 31, 2010        |  |                |             |   |                   |  
|(221,213,571)                               |  |                | 230,855     |   |                   |  
|Additional paid-in capital                  |  |                | 15,462,670  |   |                   |  
|Common stock payable                        |  |                | 78,000      |   |                   |  
|Common stock receivable                     |  |                | (142,000    | ) |                   |  
|Accumulated deficit                         |  |                | (19,787,048 | ) |                   |  
|Non-controlling interest                    |  |                | (347,725    | ) |                   |  
|Total Stockholders’ deficit                 |  |                | (4,505,248  | ) |                   |  
|TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT |  | $              | 427,693     |   |                   | $



See Accompaniyng Notes to Consolidated Financial
Statements.



3







ALL AMERICAN PET COMPANY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)



|                                                            |  | Three Months Ended March 31, |            
|----------------------------------------------------------- |  | ---------------------------- | -----------
|                                                            |  | 2011                         |            
|                                                            |  |                              |            
|Revenue                                                     |  | $                            | 59,726     
|Slotting fees                                               |  |                              | (141,313   
|Net sales                                                   |  |                              | (81,587    
|                                                            |  |                              |            
|Cost of goods sold                                          |  |                              | 58,994     
|GROSS LOSS                                                  |  |                              | (140,581   
|                                                            |  |                              |            
|OPERATING EXPENSES                                          |  |                              |            
|Sales and marketing                                         |  |                              | 292,155    
|General and administrative                                  |  |                              | 717,503    
|TOTAL OPERATING EXPENSES                                    |  |                              | 1,009,658  
|                                                            |  |                              |            
|LOSS FROM OPERATIONS                                        |  |                              | (1,150,239 
|                                                            |  |                              |            
|OTHER EXPENSE/(INCOME)                                      |  |                              |            
|Gain on forgiveness of debt                                 |  |                              | -          
|Interest expense                                            |  |                              | 33,412     
|Debt discount amortization                                  |  |                              | 36,458     
|TOTAL OTHER EXPENSE                                         |  |                              | 69,870     
|                                                            |  |                              |            
|LOSS BEFORE TAXES                                           |  |                              | (1,220,109 
|                                                            |  |                              |            
|Provision (benefit)                                         |  |                              | -          
|NET LOSS                                                    |  |                              | (1,220,109 
|                                                            |  |                              |            
|Net income attributable to non conctrolling interest        |  |                              | 150,376    
|                                                            |  |                              |            
|NET LOSS ATTRIBUTABLE TO ALL AMERICAN PET COMPANY, INC.     |  | $                            | (1,069,733 
|                                                            |  |                              |            
|BASIC LOSS PER COMMON STOCK                                 |  | $                            | (0.01      
|                                                            |  |                              |            
|WEIGHTED AVERAGE NUMBER OF COMMON STOCK OUTSTANDING (BASIC) |  |                              | 227,008,907



See Accompanying Notes to Consolidated
Financial Statements.



4







ALL AMERICAN PET COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH
FLOWS

(UNAUDITED)



|                                                                                   |  | Three Months Ended March 31, |           
|---------------------------------------------------------------------------------- |  | ---------------------------- | ----------
|                                                                                   |  | 2011                         |           
|CASH FLOWS FROM OPERATING ACTIVITIES                                               |  |                              |           
|Net loss                                                                           |  | $                            | (1,220,109
|Adjustments to reconcile net loss to net cash flows  used in operating activities: |  |                              |           
|Provision for income taxes                                                         |  |                              | -         
|Depreciation and amotization                                                       |  |                              | 246       
|Amortization of contest prize                                                      |  |                              | 5,254     
|Amortization of debt discount                                                      |  |                              | 36,458    
|Common stock issued for services                                                   |  |                              | 677,646   
|(Increase) decrease in:                                                            |  |                              |           
|Inventory                                                                          |  |                              | 37,912    
|Prepaid expenses                                                                   |  |                              | -         
|Other assets                                                                       |  |                              | -         
|Increase (decrease) in:                                                            |  |                              |           
|Accounts payable and other liabilities                                             |  |                              | 243,513   
|Accrued officer/consulting salaries                                                |  |                              | 85,144    
|Accrued payroll taxes                                                              |  |                              | 25,611    
|Deferred rent                                                                      |  |                              | (843      
|Accrued interest                                                                   |  |                              | 16,134    
|Employee severance                                                                 |  |                              | (40,145   
|Other currrent Liabilities                                                         |  |                              | 46,719    
|NET CASH USED IN OPERATING ACTIVITIES                                              |  |                              | (86,460   
|                                                                                   |  |                              |           
|CASH FLOW (USED) FROM INVESTING ACTIVITIES                                         |  |                              |           
|Equipment purchases                                                                |  |                              | -         
|NET CASH FLOW USED BY INVESTING ACTIVITIES                                         |  |                              | -         
|                                                                                   |  |                              |           
|CASH FLOWS FROM FINANCING ACTIVITIES                                               |  |                              |           
|Bank overdraft                                                                     |  |                              | 9,279     
|Proceeds from notes payable-others                                                 |  |                              | 75,000    
|Repayment of notes payable-other                                                   |  |                              | -         
|Repayment of notes payable-officers                                                |  |                              | -         
|Payment settlement obligation                                                      |  |                              | -         
|Proceeds from sale of common stock                                                 |  |                              | 2,067     
|NET CASH PROVIDED BY FINANCING ACTIVITIES                                          |  |                              | 86,346    
|                                                                                   |  |                              |           
|Decrease in cash and cash equivalents                                              |  | $                            | (114      
|Cash at beginning of period                                                        |  |                              | 114       
|CASH AT END OF PERIOD                                                              |  | $                            | -         
|                                                                                   |  |                              |           
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                  |  |                              |           
|Interest                                                                           |  | $                            | -         



See Accompanying Notes to Consolidated
Financial Statements.



5







ALL AMERICAN PET COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS



1.  ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES



Organization and Nature of Operations



All American Pet Company, Inc. (“AAPT”)
is a developer and marketer of innovative pet wellness products including super premium dog foods and antibacterial wipes. In 2010
and 2011, AAPT produced, marketed, and sold two super-premium dog foods under the brand names Grrr-nola®Natural Dog Food and
Chompions®. BothGrrr-nola®Natural Dog Food and Chompions®
were the first dog food products that were formulated for canine heart health and endorsed by a veterinary cardiac surgeon. The
Company has launched, its line of PawtizerTM pet wipes and spray, the pet care industry’s first alcohol-free anti-bacterial
dog cleaner. The Company has also announced and is preparing to market its MuttTM Great Food for Great Dogs super premium
dry kibble dog food, and its Nutra BarsTM line of portable, convenient and functional, super premium 4 ounce dog food bars
.. Each 4 ounce bar has a kcal equivalent of 8 ounces of super premium dry dog food.



All American Pet Company, Inc. was initially
organized under the laws of the State of New York (“All American Pet Company, Inc. NY”) in February 2003. In January
2006, All American Pet Company, Inc. NY merged into All American Pet Company, Inc. a Maryland corporation (“All American
Pet Company, Inc. MD”). In June 2012, All America Pet Company Inc. merged into a Nevada Corporation, (“All American
Pet Company, Inc. NV”). The Company has formed a number of wholly owned subsidiaries to provide for accountability of each
of its operations. All American PetCo, Inc. was formed in January 2008 to provide corporate infrastructure and management services.
All American Pet Brands, Inc. was formed in April 2009 to be the Company’s manufacturing and warehousing operation. In September
2009 the Company signed a license and distribution agreement with AAP Sales and Distribution Inc. a third party company that obtained
the rights to manufacture and sell certain of the Company’s products on a non-exclusive basis. AAP Sales and Distribution
Inc.’s operations have been consolidated with All American Pet Company, Inc. based on accounting guidelines for Variable
Interest Entities.



Unless the context otherwise requires,
references in these financial statements to the “Company” or “AAPT” refer to All American Pet Company,
Inc., a Nevada corporation and its subsidiaries, and its predecessors, All-American Pet Company Inc., MD, a Maryland Corporation
and All-American Pet Company Inc., NY, a New York corporation. All financial statements give effect to this reincorporation
as if it occurred at the beginning of the period.



6







Basis of Presentation



The accompanying unaudited condensed financial
statements have been prepared in accordance with the United States generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required
by United States generally accepted accounting principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial positions,
results of operations and cash flows for the interim periods presented have been included. These financial statements should be
read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report
on Form 10-K.



Going Concern



These financial statements have been prepared
in accordance with generally accepted accounting principles applicable to a going concern which contemplates the realization of
assets and the satisfaction of liabilities and commitments 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 $1,069,733,
used $86,460 cash for operations in the three months ended March 31, 2011, had a working capital deficit of $4,327,465 and total
stockholders’ deficit of $4,505,248 as of March 31, 2011. These factors raise substantial doubt about the Company’s
ability to continue as a going concern. The accompanying financial statements do not include any adjustments relating to the recoverability
and classification of recorded asset amounts or amounts and classification of liabilities that might result from the outcome of
this uncertainty.



The Company is dependent upon outside financing
to continue operations. Management plans to raise 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 obtain the necessary funds
through continuing equity and debt financing to have sufficient operating capital to execute the Company's business plan. If the
Company is able to obtain necessary funds, there is no assurance that the Company will successfully implement its business plan
or raise sufficient capital to complete the execution of 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 equity or debt securities
or other borrowings sufficient to meet its obligations on a timely basis and ultimately to attain profitable operations.



Significant Accounting Policies



Use of 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.



7







Revenue Recognition, Sales Incentives
and Slotting Fees



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 ASC Topic 605, these costs are recorded when revenue is recognized and are generally classified as a reduction of revenue.
Slotting fees refer to 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 fee at the time orders are first shipped to customers.



Earnings Per Share

Net loss per share is calculated using
the weighted average number of common stock outstanding for the period and diluted loss per share is computed using the weighted
average number of common stock and dilutive common equivalent stock outstanding.  The weighted average number of common
stock outstanding was 227,008,907 and 97,546,341 for the three months ended March 31, 2011 and 2010, respectively. Net loss per
share and diluted net loss per share are the same for all periods presented.



2. VARIABLE INTEREST ENTITY



Following is a description of our financial
interests in a variable interest entity that we consider significant, those for which we have determined that we are the primary
beneficiary of the entity and, therefore, have consolidated the entity into our financial statements.



On August 12, 2009, we entered into a License
Agreement with AAP Sales and Distribution, Inc. (“AAPSD”). Under the terms of the agreement, AAPSD has the non-exclusive
right to manufacture and market certain products of the Company. The duration of the agreement is for a period of five years.  AAPSD
is the primary beneficiary of the Company because of the relatively significant financial support provided to AAPSD in the
form of the production and distribution and deferred payment arrangements between AAPSD the Company.



AAPSD owes the Company payments for product
purchased and for royalties at the stated rate of 18.5% of net revenues, which are due and payable within five business days of
receipt of funds by AAPSD from any sale when good funds are received from the sale.  The 18.5% license payments will
be applied to all minimum guarantee payments. The minimum guaranteed royalties, as amended, are due based within the 12-month period
following the time at which AAPC has delivered 3,000,000 pounds of finished product.  AAPSD does not owe the Company
any royalties until AAPSD has recouped any costs of marketing or placement fees. All Royalty payments due from sales are accumulated
and are applied toward to the minimum royalty payment for the year.  If the 18.5% royalties are less than the minimum
then AAPSD is obligated pay us the difference between what was paid during the 12 month period and the required minimum.  Minimum
royalty payments are due in the normal course of business as AAPSD has ten days at the end of each quarter to report any sales
and royalties due and AAPC has the right to review the reports and agree on what amounts are owed based on sales and a statement
of any minimum guarantees that may be due and payable.  All payments are to be made in the normal course of business
as agreed at the time of the annual royalty report’s acceptance by AAPC.



8







We have determined that we are the primary
beneficiary of AAPSD as our interest in the entity is subject to variability based on results from operations and changes in the
fair value. During the three months ended March 31, 2011 and 2010, all operations of AAPSD are included in the consolidated financial
statements. Therefore, for the three month period ending March 31, 2011, sales of $59,726 to AAPSD are offset by $141,313 of slotting
fees, resulting in negative net sales of $81,587 as a result of the consolidation.



The results of operations for AAPSD have
been included in the financial statements of the Company. The unaudited financial position of AAPSD at March 31, 2011 is as follows:



|Total Assets                |  | $ | -        |  
|--------------------------- |  | - | -------- | -
|Total Liabilities           |  |   | (347,725 | )
|Total Stockholders’ Deficit |  |   | 347,725  |  
|                            |  |   |          |  



3. INVENTORY



Inventory consists of the following:



|                |  | March 31, 2011 |        |  | December 31, 2010 |  
|--------------- |  | -------------- | ------ |  | ----------------- | -
|                |  |                |        |  |                   |  
|Raw materials   |  | $              | -      |  |                   | $
|Work in process |  |                | -      |  |                   |  
|Finished goods  |  |                | 98,894 |  |                   |  
|                |  | $              | 98,894 |  |                   | $



4. MACHINERY AND EQUIPMENT



Machinery and equipment consists of the following:



|                                |  | March 31, 2011 |         |   | December 31, 2010 |  
|------------------------------- |  | -------------- | ------- | - | ----------------- | -
|Computer equipment and software |  | $              | 27,094  |   |                   | $
|Warehouse                       |  |                | 122,450 |   |                   |  
|Total                           |  |                | 149,544 |   |                   |  
|Less: Accumulated depreciation  |  |                | (23,814 | ) |                   |  
|                                |  | $              | 125,730 |   |                   | $



Depreciation expense for the three months ended March 31, 2011and
2010 was $246 and $246, respectively.



5. PAYROLL TAXES



The Company was delinquent on certain filings
and payments of required federal and state payroll taxes. The Company has provided an estimate for any possible penalty assessments
and interest.   The amount of payroll taxes and interest due at March 31, 2011 and March 31, 2010 totaled $789,946 and
$672,867, respectively.



9







6.  NOTES PAYABLE



Notes payable consists of the following:



|                                                             |  | March 31, 2011 |         |   | December 31, 2010 |  
|------------------------------------------------------------ |  | -------------- | ------- | - | ----------------- | -
|                                                             |  |                |         |   |                   |  
|Notes Payable – Non-Related Parties. Interest at 10% per     |  |                |         |   |                   |  
|annum. Interest and principal due on demand                  |  | $              | 150,000 |   |                   | $
|                                                             |  |                |         |   |                   |  
|Note payable, other – In Default, interest at 15% per annum. |  |                | 50,000  |   |                   |  
|                                                             |  |                |         |   |                   |  
|Convertible 8% Note Payable due March 17, 2011               |  |                | -       |   |                   |  
|                                                             |  |                |         |   |                   |  
|Convertible 8% Note Payable due May 31, 2011                 |  |                | 9,336   |   |                   |  
|Convertible 8% Note Payable due September 8, 2011            |  |                | 64,000  |   |                   |  
|                                                             |  |                |         |   |                   |  
|Convertible 8% Note Payable due November 14, 2011            |  |                | 128,000 |   |                   |  
|                                                             |  |                |         |   |                   |  
|Total Notes Payable                                          |  | $              | 376,336 |   |                   | $
|Less: Debt Discount                                          |  |                | (64,671 | ) |                   |  
|Notes payable, net of debt discount                          |  | $              | 336,665 |   |                   | $



Convertible Debt



On June 15, 2010, the Company entered into
an unsecured, convertible promissory note with an unrelated third party for $30,000.  The loan bears interest at 8% per
annum and a balloon payment of principal and accrued interest is due on March 17, 2011.  At any time 180 days after the
date of the note, the lender can convert the principal and accrued interest into shares of the Company’s common stock at
a 45% discount based on the average of the lowest three trading prices during a ten day period ending one day prior to the conversion
date.  On January 3, 2011, $10,000 of the principal balance was converted into 1,098,901 shares. On January 13, 2011,
$10,000 of the principle balance was converted into 1,162,791 shares. On January 19, 2011, $10,000 of the remaining principle balance
and $1,200 in interest was converted into 1,454,545 shares and the note was deemed paid in full.



On August 27, 2010, the Company entered
into an unsecured, convertible promissory note with an unrelated third party for $30,000.  The loan bears interest at
8% per annum and a balloon payment of principal and accrued interest is due on May 31, 2011.  At any time 180 days after
the date of the note, the lender can convert the principal and accrued interest into shares of the Company’s common stock
at a 45% discount based on the average of the lowest three trading prices during a ten day period ending one day prior to the conversion
date.  On March 8, 2011, $10,000 of the principal balance was converted into 1,639,344 shares. On March 22, 2011, $15,000
of the principal balance was converted into 4,285,714 shares. As of March 31, 2011, the principal amount due is $5,000. Accrued
interest in the amount of $1,210 is included in interest payable at March 31, 2011.



10







On February 11, 2011, the Company entered
into an unsecured, convertible promissory note with an unrelated third party for $75,000, less a $3,000 fee.  The loan
bears interest at 8% per annum and a balloon payment of principal and accrued interest is due on September 8, 2011.  At
any time 180 days after the date of the note, the lender can convert the principal and accrued interest into shares of the Company’s
common stock at a 40% discount based on the average of the lowest three trading prices during a ten day period ending one day prior
to the conversion date.  As of March 31, 2011, the principal amount due is $75,000.  Accrued interest in the
amount of $692 is included in interest payable at March 31, 2011.



7. RELATED PARTY TRANSACTIONS



As of March 31, 2011 and December 31, 2010,
the balance of accrued officers’ salaries, totaled $125,769 and $40,625, respectively. At March 31, 2010, the balance of
accrued officers’ salaries was $188,544.



8. STOCKHOLDERS’ 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. In June 2012, All-American Pet Company Inc., Maryland, merged with and into All American Pet Company,
Inc., a Nevada corporation



Increase in Authorized Common Stock

Concurrent with the June 11, 2012 re-domicile
to a Nevada corporation, the shareholders voted to increase the number of authorized shares of $0.001 par value common stock to
1,000,000,000. The shareholders voted on February 26, 2011 to increase the number of authorized shares of $0.001 par value common
stock to 500,000,000. Authorized shares were increased from 50,000,000 to 250,000,000 in 2009.



Private Placement of Common Stock

During the three months ended March 31,
2011, the Company commenced a private offering of up to 40,000,000 shares of stock at $0.01 per share. During the three months
ended March 31, 2011, the Company received and accepted subscriptions for 1,500,000 shares of common stock at $0.01 per share for
a net capital increase of $15,000, less offering costs of $12,933, additionally, three consultants, collectively, earned a total
of 4,300,000 common shares valued at $63,000. The Company recorded a $78,000 common stock payable on its books at March 31, 2011
to reflect the value of the common shares not yet issued.



11







Conversion of Preferred Stock to Common
Stock

On February 27, 2009, the Company entered
into an agreement with the two preferred stockholders to convert all 56,500 shares of Series “A” Preferred shares held
by them in exchange for 5,000,000 shares of the Company’s common stock.  The delivery of the common stock to the
preferred stockholders took place in March 2009 and the Company was released by the stockholders (the Releases) from any and all
future claims and liabilities. The preferred stockholders have the ri ght to sell the common stock at a rate of 1,250,000 in the
aggregate every 90 days starting May 15, 2009 and the right to sell at will after March 31, 2010. The Company has agreed that the
total value of the shares sold over the Liquidation Period, which is defined as the period from May 15, 2009 to April 30, 2010,
to be at a minimum of $800,000 or market value of 5,000,000 shares at $0.16 per share. If the value of the shares sold during the
Liquidation Period is less than $800,000, then the Company will have the right to purchase any unsold shares at a price of $0.16
per share. If the gross proceeds from all sales is still less than $800,000 then the Company shall have the right and not the obligation
to make up the difference by making a cash payment on or before May 31, 2010.  In addition, no later than June 15, 2010,
the Company is obligated to issue an additional 3,000,000 shares of the common stock in total to these stockholders if the sales
proceeds and any additional payments made by the Company is less than $800,000. This agreement was extended on May 25, 2010 to
August 31, 2010 with an agreement to issue an additional 1,000,000 shares as compensation for the extension and 3,000,000 were
issued on May 26, 2010 based on the terms of the original agreement that called for the shares to be issued if the value was not
paid on or before June 15, 2010.  During the year ended December 31, 2010, the Company recorded $1,000,000 as share guarantee
expense to account for the obligation described above.  The June 1, 2010 amendment to the March 7, 2009 agreement was
amended to extend the liquidation period to achieve the $800,000 guaranteed liquidation amount to March 31, 2011.  The
Company issued an additional 2,000,000 shares of Common stock as the fee for this extension at $0.06 per share for a total of $120,000.
As of March 31, 2011, the share guarantee liability remained at $600,000.



Warrants Outstanding

A summary of the Company’s outstanding warrants and activity
as of March 31, 2011 and December 31, 2010 is as follows:



|                                 |  | Number of  Units |           |  | Weighted-Average  Exercise Price  per Share |  
|-------------------------------- |  | ---------------- | --------- |  | ------------------------------------------- | -
|                                 |  |                  |           |  |                                             |  
|Outstanding at December 31, 2010 |  |                  | 6,800,000 |  |                                             | $
|                                 |  |                  |           |  |                                             |  
|Granted First Quarter 2011       |  |                  | -         |  |                                             | $
|                                 |  |                  |           |  |                                             |  
|Expired in First Quarter 2011    |  |                  | 1,800,000 |  |                                             | $
|Outstanding at March 31, 2011    |  |                  | 5,000,000 |  |                                             | $





Common Stock Receivable

On April 6, 2010, the Company settled litigation
with a former controller in which the former controller agreed to return 400,000 shares of Company stock valued at $52,000 in exchange
for $8,000 and payments of $1,571 per month over a 27 month period. The Company made two payments totaling $3,242 in the three
months ended March 31, 2011. The escrow agent will return all of the shares to the Company once all of the payments are made to
the former employee.  The balance of the settlement payable and common stock receivable at March 31, 2011 was $31,432
and $52,000, respectively. See Item 9 - Litigation and Judgments below.



12







On February 3, 2011, through mediation,
the Company and a Federal Bankruptcy Trustee settled litigation with a former salesperson in which the former employee would return
750,000 shares of Company stock valued at $90,000 in exchange for payments totaling of $92,069 over a 14 month period. The Federal
Bankruptcy trustee will return all of the shares to the Company once all of the payments are made to the Bankruptcy Trustee.  The
Bankruptcy Trustee received $2,069 in the three months ending March 31, 2011 from monies levied by the Los Angeles County Sherriff.
The Company has recorded $90,000 as a common stock receivable for the shares being held by the bankruptcy trustee. See Item 9 -
Litigation and Judgments below.



9. LITIGATION AND JUDGMENTS



The Company was and is involved in
various litigation involving trade creditors, professionals and former employees. A videographer filed suit in Small Claims
Court in Mercer, New Jersey for $2,000 and received a default judgment in November of 2007.  The Company has
contacted the plaintiff in this matter but no settlement agreement has been concluded. A materials handling company was
granted a judgment for $3,654 by Superior Court of California on January 18, 2008.  There has been no further
collection activity on this account.  A media company filed a suit to collect unpaid fees dating from October 30,
2007 of $71,033. The media company was granted a judgment for $71,033 by Los Angeles Superior Court on April 6, 2010, which
is still owed by the Company. There have been no efforts on the part of the media company to collect the judgment and the
Company believes that it will be able to settle the amount for a reduced final payment.   Three former employees
hold judgments for unpaid wages in the amounts of $9,274, $15,600 and $16,995 from labor board judgments in 2008. With
penalties and accrued interest, the three labor judgments amounted to $56,208 as of March 31, 2011. An internet marketing
company filed suit against the Company and agreed to arbitration which was settled for $20,000 in October of
2010.  There have been no payments made on this settlement.  A public relations firm obtained a judgment
in the amount of $44,323 on April 9, 2010 for fees owed for services. There has been no collection activity and the Company
intends to negotiate a reduced settlement of the final balance owed. An accounting firm that provided services to the
company obtained a judgment through arbitration that was confirmed by the Circuit Court in West Palm Beach for $150,000
on August 25, 2010.  A grocery services company filed to substitute attorneys on its filing to collect $22,000 in
fees for advertising services on February 22, 2011.  The Company believes it will be settled for a nominal amount
if anything based on the age of the payable. On March 11, 2011, a judgment of $2,068, plus costs of $80, was entered in small
claims court in Beverly Hills, California against the Company and Mr. Schwartz and Ms. Bershan for animal training services.
The dispute was settled in full for $500 on July 24, 2012.



On April 6, 2010, the Company settled litigation
with a former controller in which the former controller agreed to return 400,000 shares of Company stock valued at $52,000 in exchange
for $8,000 and payments of $1,571 per month over a 27 month period. The former controller delivered the shares to an escrow agent
and the escrow agent will return all of the shares to the Company once all of the payments are made to the former employee.  The
Company has recorded $52,000 as a common stock receivable for the shares in escrow. The Company made two payments totaling of $3,342
in the three months ended March 31, 2011. The balance of this settlement at March 31, 2011, was $31,432. See "Common Stock
Receivable" above.



13







On February 3, 2011, through mediation,
the Company and a Federal Bankruptcy Trustee settled litigation with a former sales person in which the former employee would return
750,000 shares of Company stock valued at $90,000 in exchange for payments totaling $92,069 over a 14 month period. The Federal
Bankruptcy trustee will return all of the shares to the Company once all of the payments are made to the Bankruptcy Trustee.  The
Bankruptcy Trustee received $2,069 in the three months ending March 31, 2011 from funds levied by the Los Angeles County Sherriff.
The Company has recorded a $90,000 liability to the former sales person and a $90,000 common stock receivable for the shares being
held by the bankruptcy trustee as of March 31, 2011. See "Common Stock Receivable" above.



On August 9, 2012, the Company settled
litigation with the holder of a $150,000 note bearing interest at 10% which was in default at March 31, 2011. Under the terms of
the settlement, the Company will pay the note holder $300,000 with 8% interest accruing on the unpaid balance. The Company made
 two payments of $25,000 on August 13, 2012 and will make 9 additional quarterly payments of $30,000 commencing on October
1, 2012 and continuing through October 1, 2014. A final payment of $4,265 is due on January 1, 2015. In the event of any default
of this settlement agreement, the note holder can enter a stipulated judgment against the Company, CEO Barry Schwartz and President,
Lisa Bershan, as individuals, in the amount of $1,197,190.



10. CUTEST DOG COMPETITION



In May 2009, the Company finalized plans
to host a nationwide viral marketing contest known as the “Cutest Dog Competition”. The contest started on August 1,
2009, allowing every dog owner in America to have the opportunity to submit a picture of their dog. The Company announced the winner
of the “Cutest Dog Competition” on its website as well as at a major venue on Thanksgiving Day. Prizes were distributed
for regional winners, and three top regional winners received a $5,000 prize each, qualified as finalists for the final event.  Regional
winners from all over the country then competed for the title of the “Cutest Dog Competition” and that winner was awarded
the $1 million prize. On November 2009, the winner was announced.



The present value of the $1,000,000 obligation
payable over 30 years at 7.5% present value is $336,500.  The discount of $663,500 is being amortized over 30 years with
an annual cash payment of $33,333.  The Company did not make any payments in the three months ending March 31, 2011.
As of March 31, 2011 and December 31, 2010, $362,771 and $341,754, respectively were recorded as prize liabilities.



ITEM 2. Management’s
Discussion and Analysis of Financial Condition and Results of Operations



Overview



All American Pet Company, Inc. (“AAPT”
or “The Company”) is a developer and marketer of innovative pet wellness products including super premium dog foods
and antibacterial dog wipes. In 2010 and 2011, AAPT produced, marketed, and sold two super-premium dog foods under the brand names
Grrr-nola®Natural Dog Food and Chompions®. BothGrrr-nola®Natural Dog Food and Chompions®
were the first dog food products that were formulated for canine heart health and endorsed by a veterinary cardiac surgeon. The
Company has launched, its line of PawtizerTM pet wipes and spray, the pet care industry’s first alcohol-free anti-bacterial
dog cleaner. The Company has also announced and is preparing to market its MuttTM Great Food for Great Dogs, a super premium
dry kibble dog food and its Nutra BarsTM line of portable, convenient and functional super–premium functional 4 ounce
dog food bars. Each 4 ounce dog food bar has a kcal equivalent of 8 ounces of super premium dry dog food.



14







Summary of the Company and its Current
Status



All American Pet Company, Inc., was initially
organized under the laws of the State of New York (“All American Pet Company, Inc. NY”) in February 2003. In January
2006, All American Pet merged into All American Pet Company, Inc. a Maryland corporation (“All American Pet Company, Inc.
MD”). In June of 2012, All America Pet Company Inc. merged (the “Merger”) into a Nevada Corporation (“All
American Pet Company, Inc. NV”). The Company has formed a number of wholly owned subsidiaries to provide for accountability
of each of its operations. All American PetCo, Inc. was formed in January of 2008 to provide corporate infrastructure and management
services. All American Pet Brands, Inc. was formed in April of 2009 to be the Company’s warehousing and manufacturing operation.
In September of 2009 the Company signed a license and distribution agreement with AAP Sales and Distribution Inc. a third party
company that obtained the rights to manufacture and sell certain of the Company’s products on a non-exclusive basis. AAP
Sales and Distribution Inc.’s operations have been consolidated with All American Pet Company, Inc. based on accounting guidelines
for Variable Interest Entities. As used in this report, the terms “The Company” and “AAPT” refers to All
American Pet Company, Inc. NY and All American Pet Company, Inc. MD before the Merger, and to All American Pet Company, Inc. NV,
All American Pet Company, Inc. and its wholly owned subsidiaries and Variable Interest Entities after the Merger.



The Company has never operated at a profit
and is dependent upon additional financing to remain a going concern. The Company has obtained substantial new equity capital and
continues to seek new equity capital to sustain operations. The Company remains under significant financial strain primarily because
of its low level of sales and limited operating funds. The limited amount of operating capital may preclude the Company’s
ability to execute its manufacturing, marketing, and distribution objectives or to continue operations. No assurance can be given
that the Company will secure adequate funds to sustain operations or that it will continue as a going concern.



Our executive offices are located at 1880
Century Park East, Suite 1402, Los Angeles, California 90067 and our telephone number at that location is (310) 432-9032.  Our
websites are www.allamericanpetcompany.com and www.Pawtizer.Com. The information
on our websites are not, and shall not be deemed to be, a part of this report or incorporated by reference into this or any other
filing we make with the Securities and Exchange Commission (the “SEC”).



LIQUIDITY AND CAPITAL RESOURCES



Our liquidity requirements arise principally
from our working capital needs, including the cost of goods and marketing costs. In the future we intend to fund our liquidity
requirements through a combination of cash flows from operations and external financings.



15







For the three months ended March 31, 2011,
the Company incurred an operating loss of $1,069,733 on negative revenues of $81,587 as slotting fees exceeded gross sales. Our
ability to initiate our plan of operations and continue as a going concern is currently dependent on our ability to introduce products
into the marketplace that gain consumer acceptance, build our customer base, and achieve profitable operations. Until these objectives
are realized, the Company will be dependent upon external financings to sustain operations. Due to our stock being thinly traded
and the current state of our balance sheet, including a lack of hard assets against which to borrow, we believe that it will be
very difficult to obtain any form of debt financing with or without equity conversion terms. We are concerned about the ability
to raise any capital in the future at terms that would be in the shareholders' best interest or at all.



In the three months ended March 31, 2011
the Company raised $15,000 before offering costs.  We are currently seeking additional sources of funding.



Results of Operations for the Three
Months Ended March 31, 2011 compared with the Three Months Ended March 31, 2010



The following discussion of the results
of operations should be read in conjunction with our financial statements and notes thereto for three month period ended March
31, 2011 and March 31, 2010 included in this Quarterly Report as well as the statements included in our Form 10-K for the year
ended December 31, 2010.



For the three months ended March 31, 2011,
gross sales increased by $59,726 as bothGrrr-nola®Natural Dog Food and Chompions®
had not been introduced into the marketplace in the three months ending March 31, 2010. Net sales declined from $0 in the three
months ended March 31, 2010 to ($81,587) in the three months ended March 31, 2011 as slotting fees increased from $0 in the three
months ending March 31, 2010 to $141,313 in the three months ending March 31, 2011. Cost of goods sold increase from $0 to $58,944
in the three months ending March 31, 2011 as products were not shipped in the three months ending March 31, 2010.



For the three months ended March 31, 2011,
sales and marketing expenses increased by $189,884, from $102,271 in the three months ending March 31, 2010 to $292,155 in the
three months ending March 31, 2011, The increase is attributable to an increase of $185,546 of consulting and research, an increase
of $15,573 in advertising and promotion, a decrease of $8,513 in product and package development and a net decrease of $2,722 in
other sales and marketing activity. General and Administrative expenses were decreased by $716,307 from $1,433,810 in the three
months ended March 31, 2010 to $717,503 in the three months ended March 31, 2011. This amount consisted of a decrease of $673,543
in consulting expenses, a decrease of $45,834 in legal/trademark services, a decrease of $23,804 in legal and accounting, a decrease
of $26,375 in payroll and payroll taxes, a decrease of $21,635 in bonuses, an increase in facilities expense of $31,217, an increase
in officer salaries of $7,980, a decrease in insurance expense of $16,712 and a net increase of $52,399 in other general and administrative
expenses.



Liquidity, Capital Resources and Going
Concern



On February 11, 2011, the Company entered
into an unsecured, convertible promissory note with an unrelated third party for $75,000, less a $3,000 fee.  The loan
bears interest at 8% per annum and a balloon payment of principal and accrued interest is due on September 8, 2011.  At
any time 180 days after the date of the note, the lender can convert the principal and accrued interest into shares of the Company’s
common stock at a 40% discount based on the average of the lowest three trading prices during a ten day period ending one day prior
to the conversion date.  As of March 31, 2011, the principal amount due is $75,000.  Accrued interest in the
amount of $692 is included in interest payable at March 31, 2011.



16







Because of our lack of funding and limited
ability to adequately market our products, the Company has experienced slotting fees in excess of gross sales, and incurred high
costs in manufacturing and marketing our products. As a result, we have experienced large operating losses and negative cash flow.
At March 31, 2011 and 2010, we had a working capital deficit of $4,327,465 and $2,746,429, respectively, and a stockholders' deficit
of $4,505,248 and $2,921,613, respectively. We have funded our operations primarily through the issuance of equity securities and
debt. Additional capital infusions will be needed to manufacture, distribute and promote our products, sustain operations and make
payments and settlements of existing debts and obligations. We believe that our future profitability will depend on the commercial
and consumer acceptance of our products, effective marketing strategies, efficient production and proper execution of our business
plan. Additionally, success with our external financing strategies will be needed to effectuate our business objectives. Our limited
operating history makes it difficult to evaluate our prospects for success and our revenue and profitability potential, particularly
for newly introduced products, is unproven. Furthermore, there can be no assurance that our external financing strategies will
yield any capital or the amount of capital necessary to execute our business plan.



The Company incurred a net loss of $1,069,733,
and cash used from operations of $86,460 for the period ended March 31, 2011. These matters raise substantial doubt about our ability
to continue as a going concern. In their report in connection with our 2010 financial statements, our independent registered public
accountants included an explanatory paragraph stating that, because we incurred a net loss of $7,439,775 and a negative cash flow
from operations of $2,116,774 for the year ended December 31, 2010, and had a working capital deficiency of $3,154,575 and a stockholders
deficiency of $3,365,717 at December 31, 2010, there was 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 has sold common stock
and is currently attempting to undertake the sale of additional equity securities. As new funds are obtained, our principal uses
of capital would be to meet our operating requirements, production, marketing and advertising expenditures, and make investments
in inventory. Additional cash could be used to reduce past due taxes and other debts and payables. Until cash generated from operations
is sufficient to satisfy our future liquidity requirements, we will be investigating purchase order and accounts receivable funding
from different sources, as well as other sources of capital. We will also be looking to seek equity capital through the issuance
of additional common stock with other round(s) 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. As of March 31, 2011, there are no commitments or other known sources
for this funding.



17







Off-Balance Sheet Arrangements



We have no off-balance sheet arrangements
that have or are likely to have a current or future effect on our financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources.



Forward Looking Statements



This Quarterly Report contains forward-looking
statements. These forward-looking statements include, but are not limited to, predictions regarding:



| | • |  | our business plan;
| | - |  | ------------------



| | • |  | the commercial viability of our products;
| | - |  | -----------------------------------------



| | • |  | the effects of competitive factors on products;
| | - |  | -----------------------------------------------



| | • |  | expenses we will incur in operating our business;
| | - |  | -------------------------------------------------



| | • |  | our liquidity and sufficiency of cash;
| | - |  | --------------------------------------



| | • |  | the success of our financing plans; and
| | - |  | ---------------------------------------



| | • |  | the outcome of pending or threatened litigation.
| | - |  | ------------------------------------------------



You can identify these and other forward-looking
statements by the use of words such as “may”, “will”, “expects”, “anticipates”,
“believes”, “estimates”, “continues”, or the negative of such terms, or other comparable terminology.
Forward-looking statements also include the assumptions underlying or relating to any of the foregoing statements.



Our actual results could differ materially
from those anticipated in these forward-looking statements as a result of various factors, including those set forth below under
the heading “Risk Factors”. All forward-looking statements included in this document are based on information available
to us on the date hereof. We assume no obligation to update any forward-looking statements.



The information contained in this Quarterly
Report is as of March 31, 2011, unless expressly stated otherwise.



As used in this report, the term Company
refers to All American Pet Company, Inc., a Nevada corporation and its 100% owned subsidiaries, All American Pet Brands Inc. a
Nevada corporation, and All American PetCo, Inc. a Nevada Corporation, and its Variable Interest Entity, AAP Sales and Distribution,
Inc., a Nevada Corporation.



Item 3. Quantitative and Qualitative
Disclosures about Market Risks



As a smaller reporting company, All American
Pet Company, Inc. is not required to provide the information required by this item



18







Item 4(T). Controls and Procedures



Our management, with the participation
of the Company’s Principal Executive Officer and Principal Financial and Accounting Officer, has evaluated the effectiveness
of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. In designing
and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well
designed and operated, can only provide reasonable assurance of achieving the desired control objectives and management is required
to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on such evaluation,
the Company’s Chief Executive Officer and Principal Financial and Accounting Officer has concluded that as of March 31, 2011,
the Company’s disclosure controls and procedures were not effective, at the reasonable assurance level, in recording, processing,
summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files
or submits under the Exchange Act and in ensuring that information required to be disclosed by the Company in the reports that
it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the Chief
Executive Officer and Principal Financial and Accounting Officer, as appropriate to allow timely discussions regarding required
disclosure; due to the material weaknesses described below.



In light of the material weaknesses described
below, we performed additional analysis and other post-closing procedures to ensure that our financial statements were prepared
in accordance with generally accepted accounting principles. Accordingly, we believe that the financial statements included in
this report fairly present, in all material respects, our financial condition, results of operations, changes in stockholders’
equity and cash flows for the periods presented.



Management Report on Internal Control
Over Financial Reporting



The Company’s management is responsible
for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) and 15d-15(f)
under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies
and procedures that:



| | 1. | Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on our financial statements.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



19







All internal control systems, no matter
how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable
assurance with respect to financial statement preparation and reporting. Also, projections of any evaluation of effectiveness to
future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.



A material weakness is a control deficiency
(within the meaning of Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard No. 5) or combination
of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial
statements will not be prevented or detected on a timely basis.



Under the supervision and with the participation
of our management, including our Chief Executive Officer and Principal Financial and Accounting Officer, we conducted an evaluation
of the effectiveness of our internal control over financial reporting as of the period covered by this report based on the framework
in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(“COSO”). Based on the results of management’s assessment and evaluation, our Chief Executive Officer and Principal
Financial and Accounting Officer concluded that our internal control over financial reporting was not effective due to the material
weaknesses described below.



Material Weaknesses



| | 1. | The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of March 31, 2011. In making this assessment, the Company’s management used the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission in “Internal Control – Integrated Framework.” Based on this assessment, management concluded that, as of March 31, 2011, the Company’s internal control over financial reporting were not effective based on this framework.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Management evaluated the impact of ineffective
control over financial reporting and concluded that the control deficiency represented a material weakness.



| | 2. | In connection with the audit of our consolidated financial statements for the year ended December 31, 2010, our independent registered accounting firm, De Joya Griffith & Company, LLC, reported to the Company’s Board of Directors that they observed inadequate review and approval of certain aspects of the accounting process that they considered to be a material weakness in internal control.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



After a review of the Company’s current
review and approval of certain aspects of the accounting process, management concluded that the inadequate review and approval
process represented a material weakness.



Attestation Report of the Independent
Registered Public Accounting Firm



This annual report does not include an
attestation report by the Company’s registered public accounting firm regarding internal control over financial reporting,
because Management’s report in the annual report was not subject to attestation by the Company’s independent registered
public accounting firm, pursuant to temporary rules of the SEC that permit the Company to provide only management’s report
in this annual report.



20







Inherent Limitations on the Effectiveness
of Controls



Management does not expect that our disclosure
controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control
system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of
the control systems are met. Further, the design of a control system must reflect the fact that there are resource constraints,
and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in a cost-effective
control system, no evaluation of internal control over financial reporting can provide absolute assurance that misstatements due
to error or fraud will not occur or that all control issues and instances of fraud, if any, have been or will be detected.



These inherent limitations include the
realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or mistake. Controls
can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override
of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events,
and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become
inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.



Changes in Internal Control over
Financial Reporting



There have not been any changes in the
Company’s internal control during the three months ended March 31, 2011 over financial reporting (as such term is defined
in Rules 13-15(f) and 15d-15(f) under the Exchange Act) during the period covered by this report that has materially affected,
or is reasonably likely to materially affect, the Company’s internal control over financial reporting.



Evaluation of Disclosure Controls and
Procedures



As of March 31, 2011, the Company carried
out an assessment under the supervision and with the participation of our Chief Executive and Principal Financial and Accounting
Officer, of the effectiveness of our disclosure controls and procedures (as defined in the Exchange Act Rules 13a-15(1) and I 5d-15(1)).
Our Chief Executive and Principal Financial and Accounting Officer concluded that the Company's disclosure controls and procedures
were not effective as of March 31, 2011.



Material Weaknesses and Related Remediation
Initiatives



Set forth below is a summary of the various
significant deficiencies which caused management to conclude that we had the material weaknesses identified above. Through
the efforts of management, we have developed a specific action plan to remediate the material weaknesses.  We expect to implement
these various action plans during 2012 and anticipate that all control deficiencies and material weaknesses will be remediated
by December 31, 2012.



21









We did not effectively implement comprehensive
entity-level internal controls and did not maintain a sufficient level of resources within our accounting department, as discussed
below:





| | · | Financial Close Process.  The Company only prepares financial statements on a quarterly
basis which increases the potential that any unusual activities or transactions will not be detected on a timely basis.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Cash Disbursement Process.   Payments to related parties and costs incurred by
the Company were not subject to review and approval by independent parties which increased the potential that any improper distributions
would not be detected on a timely basis.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Reporting Deficiencies.  We did not perform timely and sufficient internal or external
reporting of our progress and evaluation of prior year material weaknesses or the current fiscal year internal control deficiencies.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Remediation of Internal Control Deficiencies
and Expenditures



It is reasonably possible that, if not
remediated, one or more of the material weaknesses described above could result in a material misstatement in our reported financial
statements that might result in a material misstatement in a future annual or interim period. We are developing specific action
plans for each of the above material weaknesses. We are uncertain at this time of the costs to remediate all of the above listed
material weaknesses, however, we do not believe these costs will be significant and we expect to ratably incur the remediation
costs during the year. We cannot guarantee that the actual costs to remediate these deficiencies will not exceed this amount.



We believe that we are addressing the deficiencies
that affected our internal control over financial reporting as of March 31, 2012. Because the remedial actions may require hiring
of additional personnel, and relying extensively on manual review and approval, the successful operation of these controls for
at least several quarters may be required before management may be able to conclude that the material weaknesses have been remediated.
We intend to continue to evaluate and strengthen our internal control over financial reporting systems. These efforts require significant
time and resources. If we are unable to establish adequate internal control over financial reporting systems, we may encounter
difficulties in the audit or review of our financial statements by our independent registered public accounting firm, which in
turn may have a material adverse effect on our ability to prepare financial statements in accordance with GAAP and to comply with
our SEC reporting obligations.



Changes in Internal Control Over Financial Reporting



There has been no change in our internal
control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the
most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.



22







PART II. OTHER INFORMATION



Item 1. Legal Proceedings



The Company was and is involved in various
litigation involving trade creditors, professionals and former employees. A videographer filed suit in Small Claims Court in Mercer,
New Jersey for $2,000 and received a default judgment in November of 2007.  The Company has had no contact with the plaintiff
in this matter and expects to not anything of this judgment amount. A materials handling company was granted a judgment for $3,654
by Superior Court of California on January 18, 2008.  There has been no further collection activity on this account.  A
media company filed a suit to collect unpaid fees dating from October 30, 2007 of $71,033. The media company was granted a judgment
for $71,033 by Los Angeles Superior Court on April 6, 2010, which is still owed by the Company. There have been no efforts on the
part of the media company to collect the judgment and the Company believes that it will be able to settle the amount for a reduced
final payment.   Three former employees hold judgments for unpaid wages in the amounts of $9,274, $15,600 and $16,995
from labor board judgments in 2008. With penalties and accrued interest, the three labor judgments amounted to $56,208 as of March
31, 2011. An internet marketing company filed suit against the Company and agreed to arbitration which was settled for $20,000
in October of 2010.  There have been no payments made on this settlement.  A public relations firm obtained
a judgment in the amount of $44,323 on April 9, 2010 for fees owed for services. There has been no collection activity and the
Company intends to negotiate a reduced settlement of the final balance owed. An accounting firm that provided services to
the company obtained a judgment through arbitration that was confirmed by the Circuit Court in West Palm Beach for $150,000 on
August 25, 2010.



A grocery services company filed to substitute
attorneys on its filing to collect $22,000 in fees for advertising services on February 22, 2011.  The Company believes
it will be settled for a nominal amount if anything based on the age of the payable. On March 11, 2011, a judgment of $2,068, plus
costs of $80, was entered in small claims court in Beverly Hills, California against the Company and Mr. Schwartz and Ms. Bershan
for animal training services rendered. The Company believes this dispute will be settled for a nominal amount.



On April 6, 2010, the Company settled litigation
with a former controller in which the former controller agreed to return 400,000 shares of Company stock valued at $52,000 in exchange
for $8,000 and payments of $1,571 over a 27 month period. The former controller delivered the shares to an escrow agent and the
escrow agent will return all of the shares to the Company once all of the payments are made to the former employee.  
The Company made two payments totaling of $3,342 in the three months ended March 31, 2011. The balance of this settlement at March
31, 2011, was $31,432.



On February 3, 2011, through mediation,
the Company and a Federal Bankruptcy Trustee settled litigation with a former sales person in which the former employee would return
750,000 shares of Company stock valued at $90,000 in exchange for payments of $92,069 over a 14 month period. The Federal Bankruptcy
trustee will return all of the shares to the Company once all of the payments are made to the Bankruptcy Trustee.  The
Bankruptcy Trustee received $2,069 in the three months ending March 31, 2011 from monies levied by the Los Angeles County Sherriff.
The Company has recorded a $90,000 liability to the former sales person and a $90,000 common stock receivable for the shares being
held by the bankruptcy trustee as of March 31, 2011.



23







Item 1a. Change in Risk Factors.



There are no changes in Risk Factors from
the Form 10-K for year-end December 31, 2010 filed on July 7, 2011.



Item 2. Unregistered Sales of Equity
Securities



During the three months ended March 31,
2011, the Company commenced a private offering of up to 40,000,000 shares of stock at $0.01 per share. During the three months
ended March 31, 2011, the Company received and accepted subscriptions for 1,500,000 shares of common stock at $0.01 per share
from two accredited investors that were German Nationals. As of March 31, 2011, there were 230,854,866 shares outstanding.



During the three months ended March 31,
2011 the two sales of equity securities resulted in a net capital increase of $15,000, less offering costs of $12,933. Additionally,
three consultants, collectively, earned a total of 4,300,000 common shares valued at $63,000. The Company recorded a $78,000 common
stock payable on its books at March 31, 2011 to reflect the value of the common shares not yet issued.



The Company sold the shares without registration
under the Securities Act of 1933, as amended, or state securities laws, in reliance on the exemptions provided by Section 4(2)
of the Securities Act of 1933 and/or Regulation D promulgated thereunder  There were no more than 35 purchasers of the common
stock, appropriate financial and business information was provided to the purchasers in accordance with Rule 502(b), there was
no form of general solicitation or general advertising relating to the offer and the Company exercised reasonable careto
assure that the purchasers of the common stock were not underwriters within the meaning of section 2(a)(11) of the Securities Act.
Based on information received, the Company believes that each purchaser of shares is an accredited investor within the meaning
of the federal securities laws. The shares have not been registered. The shares may not be offered or sold by the investors absent
registration or an applicable exemption from registration requirements, such as the exemption afforded by Rule 144 under the Securities
Act of 1933.



Item 3. Defaults Upon Senior Securities



There were no defaults on Senior Securities.



Item 4. Mine Safety Disclosures



None



Item 5. Other Information



None.



24







Item 6 Exhibits



|               |  |                                                                 |  |                |  | Incorporated by reference
|-------------- |  | --------------------------------------------------------------- |  | -------------- |  | -------------------------
|Exhibit Number |  | Exhibit Description                                             |  | Filed Herewith |  | Form                     
|31             |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act |  | X              |  |                          
|32             |  | Certification pursuant to Section 906 of the Sarbanes-Oxley Act |  | X              |  |                          



25







SIGNATURES



Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.



ALL AMERICAN PET COMPANY, INC.

(Registrant)



|By: | /S/ Barry Schwartz                          | 
|--- | ------------------------------------------- | 
|    | Barry Schwartz, CEO                         | 
|    | (On behalf of the registrant and as        
|    | Principal Financial and Accounting Officer)



Date:  October 2, 2012



26