On October 4, 2007, the Registrant, Franchise Capital Corporation, a Nevada corporation (“Franchise Capital”) exchanged, pursuant to a Share Exchange Agreement with TTR-HR, Inc. (d/b/a Aero Exhaust, Inc.) (“Aero”) (the “Share Exchange Agreement”), an aggregate of 1,114,285,700 shares of its common stock for all of the issued and outstanding common stock of Aero.
In connection with the Share Exchange Agreement, the Registrant entered into a Commercial Revolving Line of Credit (the “Line of Credit”) under which it advanced a total of $1,875,000 to Aero. The terms of the Line of Credit called for any unpaid balance to be converted into shares of Aero common stock immediately prior to the Closing of the Share Exchange Agreement. Aero’s shareholders accepted the redemption of the Line of Credit payable to Registrant as part of the Share Exchange Agreement, which resulted in Registrant’s historic shareholders holding 600,000,000 shares of Registrant’s issued and outstanding common stock.
Immediately following the Closing, there were 1,714,285,700 shares of the Registrant’s common stock outstanding and Aero became a wholly-owned subsidiary of the Registrant. The business, operations, management and other material information concerning Aero is set forth below in this Item 2.01. All references to the “Company,” “Aero,” “we” or “us” refer to the now combined operations of the Registrant and Aero.
On October 4, 2007, the Company and Aero concluded the Share Exchange. As a result of the transaction, the Company agreed to issue a total of 1,114,285,700 new shares of restricted common stock, bringing the total number of shares of issued and outstanding common shares to 1,714,285,700. The shares are being issued in exchange for 6,745,456 shares of Aero common stock, representing 100% of the total issued and outstanding shares of Aero, and the satisfaction of Aero debt of $4,458,519. As of October 11, 2007, 1,977,814 shares of Aero (representing 15%) had not been tendered for exchange and continue to be held by minority shareholders. This resulted in 166,407,263 shares of the 1,114,285,700 new shares of the Company’s common stock being placed in an escrow for the future exchange of the remaining Aero stock.
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