All American Pet Company Inc (AAPT)

[Andy3077]

Holy cow!!! Look at this letter.

"January I 0, 2013"
"Dear Fellow Shareholder,"
"Although I wholeheartedly believe that All American Pet Company, Inc. has developed"
"quality products and could grow into a profitable company, I regrettably, must now"
"inform you that I do not believe that the Company will ever be successful with the current"
"Board of Directors. I hereby solicit your support in demanding the immediate removal of CEO and Director, Barry Schwartz and President and Director, Lisa Bershan."
"I have initiated this action because the current Board of Directors has misused investor"
"funds, failed to properly govern the affairs of All American Pet Company, made false and misleading statements to shareholders and the public at large. Additionally, Schwartz and Bershan have managed the Company incompetently, negligently and dishonestly."
"Mr. Schwartz and Ms. Bershan have a history of failed businesses, bad debts, allegations of fraud and incompetent management that have preceded their tenure at All American Pet Company. You may be shocked to learn that neither Mr. Schwartz nor Ms. Bershan currently have a any bank accounts in their own name(s) because both Bershan and Schwartz each have so many bad debts, liens and judgments against them, that any money in their name would be immediately confiscated. Since they do not posses their own bank accounts, they have repeatedly moved monies raised from investors into a Nevada ""shell"" corporation called Starr Queens. This improper conversion of money"
"funded from shareholders and improperly converted into personal assets of Mr. Schwartz"
"and Ms. Bershan has severely damaged All American Pet Company's cash position and its ability to execute its business plan, and these self-interested actions have been to the detriment of shareholders."
"As documented in the All American Pet Company, Inc's SEC filings in 2012, Mr."
"Schwartz and Ms. Bershan, together, issued themselves salary advances of $371 ,117 as of"
"September 30, 2012. This amount represents approximately 96% of their combined"
"annual base salaries. Surprisingly, loans from the Company to Directors are expressly precluded as stated in Article II, Part 7 of All American Pet Company, Inc.'s bylaws, thus All American Pets only two Directors, are enriching themselves in direct violation of Company policy. Additionally, the bylaws require a minimum of3 directors (there are only two presently) and an annual shareholder meeting. There was no shareholder meeting in 2012."
"Most of the $371,117 of monies were loaned/advanced to Schwartz and Bershan occurred"
"during the second and third quarters of 2012. The use of investor proceeds for loans and advances to corporate Officers and/or Directors was not identified or disclosed in any of the private placement memoranda or offering solicitations that were circulated in the same time frames. This is clearly a gross misuse of investor funds and it is extremely"
"heinous for the Director's of a public company to advance themselves one year of salaries in violation of the Corporate Bylaws, when this use of funds was not disclosed to investors. The monies advanced to Directors and Officers were not repaid in a timely manner, and now the Directors are presently asking investors for additional investments"
"and forcing employees to work with limited or no compensation. Three employees were"
"fired already in 2013 and each of them had 3 to 5 weeks of past due wages at the time of their terminations. Ten of the 15 former employees that were employed by All American Pet from 2006 to 2011 have claimed unpaid wages and 8 have won judgments against the Company. The outcomes of the two other cases are currently pending."
"As ofthe date of this Jetter, very few recent vendors have been paid and the business is"
"not able to function properly. As of January 8, 2012, 100% of all non-officer employees of All American Pet Company are owed three to five weeks of salary. Several employees, including those that have been terminated, have also not been reimbursed for their travel and other business expenses. Again, Directors Schwartz and Bershan continued to take salary advances while the entire staff is not being paid their full wages."
"In the process of raising money, Mr. Schwartz and Ms. Bershan have made numerous"
"false and misleading public statements to the public. On August 20, 2012, a Company press release announced sufficient production capacity to produce I ,000,000 Nutra Bars per month. On September 27, 2012, the Company's press release touted 1,000,000 Nutra Bars per week. As of January 8, 2012, the Company did not have sufficient production capacity to completely produce a single Nutra Bar. Less than 115,000 Nutra Bars have been produced and inventoried as of January 8, 2012. All of the Nutra bar production was performed by outside contractors except for the final wrapping process which was done in Kansas. The extrusion equipment necessary to produce Nutra Bars has not yet been secured as of this date. On September 24, 2012, the Company's press release stated that Nutra Bars would be distributed by Central Pet Distribution. As of January 8, 2012, the Company had no distribution agreement with Central Pet. The September 27, 2012 press release also stated that ""the sales team keeps closing accounts like the $1.2B SSI, Inc distribution company"". As of January 9, 2012, the Company did not have any contracts with SSI and did not make any sales whatsoever to SSI or its affiliated companies. The Company only made 3 separate one-time sales to commercial accounts in 2012 and total commercial account revenues were less than $27,000."
"Mr. Schwartz and Bershan have also made false and misleading statements to our"
"shareholders in the pursuit of capital. I can provide many examples of lies, exaggerations and other falsehoods that were made by Mr. Schwartz and Ms. Bershan, including fa lse and misleading statements regarding the number of stores that will be offering Nutra"
"Bars, the likelihood, size and timing of anticipated customer orders, the Company's ability to fill orders and the true demand for the Company's products. The actual number of false and misleading statements is extensive. Mr. Schwartz and Ms. Bershan also knowingly told investors that restrictive legends could be removed from their stock certificates pursuant to SEC rule 144, after legal counsel had advised them that the Company had not yet met all ofthe requirements pursuant to SEC Rule 144."
"In considering the removal of Mr. Schwartz and Ms. Bershan as Directors of the"
"Company, I ask for you to evaluate their long term track record of managerial performance. As shown in the attached schedule comprising data extracted from public records (SEC Form lOK 's), CEO Barry Schwartz and President Lisa Bershan generated"
"only $208,000 of sales in the seven year period commencing January 1, 2005 and ending"
"December 31, 2011. During this same seven year period, the Company lost $19,911,984. Also in this 2005 to 2011 period , All American Pet Company had either zero or negative gross profits in every year other than 2008, when a write-off of slotting fees resulted in a gross profit of $174,884, a year that had $0 in gross sales. Total cumulative losses were"
"$20,993,116 in as of December 31, 2011. Despite this performance, Mr. Schwartz and Ms. Bershan collectively reported $2,439,752 in compensation during the same period. It is possible that different auditors may have reported higher levels of compensation."
"A few specific examples of dishonest and incompetent management include:"
"1) The illegal dilution of preferred stockholders in 2009 which resulted in a"
"liability of $800,000 as of September 30, 2012."
"2) The Cutest Dog Competition in 2009 which generated no benefit to the"
"Company and resulted in over $300,000 of expenses and $403,000 in liability as of September 30, 2012."
"3) The Company is defaulting on a $300,000 settlement agreement that will result"
"in a $1,197,000 liability, after paying $80,000 of investor capital towards the settlement in 2012. The use of $80,000 in investor monies for debt repayment was not disclosed in any investor solicitation."
"4) Criminally failing to remit payroll taxes withheld from employee paychecks,"
"and spending these monies, which resulted in costly penalties and interest and other liabilities totaling $872,000 as of September 30, 2012. The Company was delinquent in both Corporate and Payroll tax filings from 2006 through most of"
"2012 and I am anticipating a criminal tax evasion investigation to commence imminently."
"5) The Company defaulted or failed to defend in several civil and legal actions"
"resulting in judgments against the Company in excess of $550,000 as of September 30, 2012. The judgments include actions initiated by 10 ofthe 15 employees (not named Bershan or Schwartz) from 2006 to 2011, with each of these employees alleging non-payment of wages earned, failure to pay services rendered by accountants and media professionals, and other routine and non­ routine vendors"
"6) There are also over $2.2 million of trade payables on the Company's books as"
"of September 30,2012. Schwartz and Bershan routinely purchase goods and services and fail to make full payments or no payments at all."
"Additionally, Barry Schwartz, the CEO of our fledgling pet products company is actively"
"pursing a personal injury claim against Petco, Inc., the nations second largest pet retailer. Shouldn't CEO Schwartz be focused on selling our products to Petco instead of suing them for an injury allegedly sustained in a store?"
"As the controller of the Company, I am appalled by the behavior of Mr. Schwartz and"
"Ms. Bershan who have advanced themselves approximately 1 year of salaries while employees continue to wait for their wages. Even when new monies come in, Schwartz and Bershan continue to transfer monies to their shell corporation while their employees wait for payments. Additionally, they spend Company monies on expensive meals, personal autos (including their housekeepers vehicle), vacation travel and other non­ business items. A review of the Company's books and records in 2012 will reveal over"
"$111,000 in such expenses paid by the Company in addition including over 200 individual meal purchases."
"I would welcome your own due diligence or independent investigation in these matters"
"and I am confident that you will easily come to the same conclusion. Please feel free to demand answers from Mr. Schwartz or Ms. Bershan. The cell phone number of Mr. Schwartz is [phone] and Ms. Bershan's cell phone is (31 0) 210-3468. Their home address is 10742 Sunset Blvd, Los Angeles, CA 90077. The new office number is (310)"
"689-7355."
"Since I anticipate being terminated as the controller of All American Pet Company for"
"making this request for the immediate removal of Mr. Schwartz and Ms. Bershan as Directors, I may not be reachable at the office in the future. Should you care to reach me, you may contact me at [e-mail]. My cell phone is [phone]. I hereby pledge to support all of the above statements with tangible proof and provide honest and open testimony at any future proceedings that this letter may bring."
"If you believe that you were mislead into making an investment in All American Pet"
"Company, please vote in favor of the removal of the current Board of Directors on the enclosed form and mail or email your response to as soon as possible to:"
"Aaron Grunfeld"
"The law Offices of Aaron Grunfeld"
"1100 Glendon Ave, Suite 850"
"Los Angeles, CA 90024"
"[e-mail]"
"If you invested in this Company after being misled by Schwartz or Bershan, I would"
"suggest you contact Joseph Gormley at FINRA. Finra is a leading self-regulatory organization responsible for surveillance of the securities markets and enforcement of Federal Securities Laws. Mr. Gormely has already commenced a review of All American Pet Company. The contact information is:"