SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended December 31, 2006	Commission File Number 000-26887
FRANCHISE CAPITAL CORPORATION (Exact Name of Registrant as Specified in Its Charter)

UNITED STATES

Nevada	98-0353403
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)
43180 Business Park Drive, Suite 202 Temecula, CA	92590
(Address of principal executive offices)	(Zip Code)
(951) 587-9100 Issuer's telephone number, including area code N/A (Registrant's Former Name and Address)

SECURITIES AND EXCHANGE COMMISSION

Check 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)Washington, ~~and (2) has been subject to such filing requirements for the past 90 days~~D. ~~Yes [~~C. ~~] No[ X ]~~ 20549

~~Indicate~~FORM ~~by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non~~10-~~accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):~~Q

~~Large~~x QUARTERLY ~~accelerated~~REPORT ~~filer~~UNDER ~~[ ]~~SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~Accelerated~~For ~~filer [ ]~~the quarterly period ended September 30, 2008

~~Non-accelerated~~¨ TRANSITION ~~filer [~~REPORT XUNDER ]SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~Indicate~~Commission byfile ~~check mark whether the registrant is a shell company (as defined in Rule 12b~~number:000-~~2 of the Exchange Act).~~ 26887

~~Yes~~AERO ~~[ ]~~PERFORMANCE ~~No[~~PRODUCTS, XINC. ](Exact Name of Registrant as Specified in Its Charter)

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY


Nevada	98-0353403
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)
14553 S. 790 W. Suite B, Bluffdale, Utah 84065
(Address of principal executive offices)
(801) 495-0882 Issuer's telephone number, including area code 10288 S. Jordan Gateway Suite F, South Jordan, Utah 84095 (Former name, former address and former fiscal year, if changed since last report)

~~PROCEEDINGS~~Indicate ~~DURING~~by ~~THE~~check ~~PRECEDING~~mark ~~FIVE~~whether ~~YEARS:~~the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant ~~has~~is ~~filed~~a ~~all~~large ~~documents~~accelerated ~~and~~filer, ~~reports~~an ~~required~~accelerated tofiler, bea ~~filed~~non-accelerated ~~by Sections 12~~filer, ~~13,~~ or ~~15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under~~ a ~~plan~~smaller ~~confirmed~~reporting ~~by a court~~company. ~~Yes [ ] No[ ]~~

~~APPLICABLE~~Large ~~ONLY~~accelerated TOfiler ~~CORPORATE~~¨ ~~ISSUERS:~~Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company x

Indicate ~~the~~by ~~number~~check ofmark ~~shares~~whether ~~outstanding~~the ofregistrant ~~each~~is ofa ~~the~~shell ~~issuer's~~company ~~class~~(as ofdefined ~~common~~in ~~stock,~~Rule as12b-2 of the ~~last~~Exchange ~~practicable date~~Act). Yes ¨ No x

Class	Outstanding at May 23, 2007
Common Stock, $0.0001 par value	922,903,389 shares

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of November 8, 2008, the issuer had 2,344,457,804 shares of its common stock issued and outstanding.

PART I – FINANCIAL INFORMATION

~~FRANCHISE~~Item ~~CAPITAL~~1. ~~CORPORATION~~Financial Statements

~~FINANCIAL~~AERO ~~STATEMENTS~~PERFORMANCE PRODUCTS, INC.

~~December~~CONSOLIDATED ~~31,~~FINANCIAL ~~2006~~STATEMENTS

Franchise Capital Corporation
Statement of Assets and Liabilities
	December 31,			June 30,
	2006			2006
	(Unaudited)			(Audited)
ASSETS:
Cash and cash equivalents	$	26,623	$	-
Controlled Affiliated Issuers at fair value		-		432,377
Total Assets		26,623		432,377
LIABILITIES:
Bank overdraft	$	-	$	16
Accounts payable and accrued expenses		186,933		177,478
Debentures payable (See Note 4)		-		220,927
Total Liabilities		186,933		398,421
NET ASSETS	$	(160,310)	$	33,956
NET ASSETS consist of:
Common Stock, 920,472,640 outstanding	$	92,048	$	7,207
Preferred Stock		118		118
Stock payable		56,820		-
Paid-in capital		9,947,662		7,214,755
Accumulated deficit		(10,256,958)		(7,188,124)
TOTAL NET ASSETS	$	(160,310)	$	33,956
Shares Outstanding (5,000,000,000 of $0.0001 par value common stock authorized)		920,472,640		72,062,852
NET ASSET VALUE PER SHARE	$	(0.00017)	$	0.0005

September 30, 2008

~~The accompanying notes are an integral part of these financial statements.~~ 2

Franchise Capital Corporation
AERO PERFORMANCE PRODUCTS, INC
Statements of Changes in Net Assets (Unaudited)
Consolidated Balance Sheet
		For the six months ended
	September 30,
			December 31,		December 31,
	2008
		2006		2005
	(Unaudited)
OPERATIONS:
ASSETS
Net investment loss		$	(2,636,457)	$	(225,543)
CURRENT ASSETS:
Financing expense			-		(137,473)
Cash and cash equivalents	$	32,953
Dividend to shareholders			(432,377)		-
Accounts receivable, net		68,664
Loss from discontinued operations			-		(463,526)
Inventory		236,282
Net decrease in net assets resulting from operations			(3,068,834)		(826,542)
Total Current Assets		337,899
SHAREHOLDER ACTIVITY:
OTHER ASSETS:
Stock sales and conversion			2,874,568		620,249
Intangible Assets		76,065
NET INCREASE (DECREASE) IN ASSET VALUE			(194,266)		(206,293)
Fixed Assets, net		26,686
NET ASSETS:
Total Other Assets		102,751
Beginning of Period		$	33,956	$	347,309
TOTAL ASSETS	$	440,650
End of Period		$	(160,310)	$	141,016
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	1,570,336
Accrued interest		170,358
Accrued derivative liability		136,661
Notes Payable		1,802,914
Total Current Liabilities		3,680,269
TOTAL LIABILITIES		3,680,269
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock, Authorized 30,000,000 Shares, $.0001 Par Value, 0 Shares Issued and Outstanding		-
Common Stock, Authorized 5,000,000,000 Shares, $.0001 Par Value, 2,220,878,822 Shares Issued and Outstanding		222,088
Paid-in capital		19,003,748
Accumulated deficit		(22,465,455)
Total Stockholders' Equity (Deficit)		(3,239,619)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	440,650

The accompanying notes are an integral part of these consolidated financial statements.

Franchise Capital Corporation Portfolio of Investments December 31, 2006 (Unaudited) From July 1, 2006 through December 31, 2006, the Company liquated all of its portfolio assets and effectively ceased operations. As of December 31, 2006, the Company had no portfolio assets.3

The accompanying notes are an integral part of these financial statements.


AERO PERFORMANCE PRODUCTS, INC.
Consolidated Statements of Operations
(Unaudited)
		For the Three Months Ended
	September 30,			September 30,
	2008			2007

REVENUES
Revenues	$	207,303		$ 168,626
Cost of goods sold		118,836		86,128
Gross margin		88,467		82,498

EXPENSES:
Outside services		68,792		44,231
Advertising and marketing		9,691		82,954
Professional and legal		19,552		101,104
Rent		23,042		25,325
Salaries		30,849		77,040
G&A expenses		82,069		102,248
Total Expenses		233,995		432,902

TOTAL LOSS		(145,528)		(350,404)
OTHER INCOME (EXPENSE)
Derivative Expense		(21,296)		-
Interest expense		(51,210)		(121,598)
NET INCOME (LOSS)	$	(218,034)	$	(472,002)

WEIGHTED AVERAGE SHARES		2,162,878,822		729,534,511

NET LOSS PER SHARE	$	(0.0001		$ (0.0006)

Franchise Capital Corporation Statements of Operations
(Unaudited)
		For the six months ended,				For the three months ended,
	December 31,		December 31,			December 31,	December 31,
	2006		2005			2006	2005
INCOME:
Consulting income	$	-	$	1,750	$	-	$	1,750
Total Income		-		1,750		-		1,750
EXPENSES:
Accounting fees		125		63,209		-		47,209
Administrative expense		10,000		-		10,000		-
Contracted labor		16,000		77,936		-		48,468
Interest expense		-		39,022		-		2,402
Legal and professional fees		18,159		15,806		2,000		7,036
Settlement costs		2,578,766		-		2,578,766		-
G&A expenses		13,407		31,320		12,439		24,722
Total Expenses		2,636,457		227,293		2,603,205		129,837
NET LOSS		(2,636,457)		(225,543)		(2,603,205)		(128,087)
OTHER INCOME (EXPENSE)
Financing expense		-		(137,473)		-		-
Dividend to shareholders		(432,377)		-		(432,377)		-
Loss from discontinued operations		-		(463,526)		-		(461,731)
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	(3,068,834)	$	(826,542)	$	(3,035,582)	$	(589,818)
WEIGHTED AVERAGE SHARES		72,062,852		47,854,009		72,062,852		47,231,044
NET LOSS PER SHARE		(0.043)		(0.017)		(0.042)		(0.012)

The accompanying notes are an integral part of these consolidated financial statements.

~~The accompanying notes are an integral part of these financial statements.~~4

Franchise Capital Corporation
AERO PERFORMANCE PRODUCTS, INC.
Statements of Cash Flows
Consolidated Statements of Cash Flows
(Unaudited)
	For the six months ended
	For the Three Months Ended
	December 31,	December 31,
	September 30,	September 30,
	2006	2005
	2008	2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	$ (38,~~068,834~~034)	$ (~~826~~472,~~542~~002)
Adjustments to reconcile net loss to net cash used
by operating activities:
Dividends paid	432,377	582,053
Depreciation	5,674	-
Financing costs	-	137,473
Derivative liability	21,296	-
Settlement costs	2,578,766	-
Shares issued for debt	67,527	-
Prepaid expenses	-	5,497
Decrease in accounts receivable	17,120	43,267
Accounts payable and accrued liabilities	9,455	(49,734)
Increase in inventory	(21,275)	(55,708)
Net Cash Used by Operating Activities	(48,236)	(151,253)
Increase in accounts payable and accrued liabilities	59,842	111,755
(Decrease) increase in accrued interest	(720)	121,598
Net Cash Used by Operating Activities	(68,570)	(251,090)
CASH FLOWS FROM INVESTING ACTIVITIES
Cash invested in portfolio companies	-	-
Purchase of fixed assets	-	(1,849)
Net Cash Provided by Investing Activities	-	-
Net Cash Used by Investing Activities	-	(1,849)
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issued for cash	18,055	345,472
Bank overdraft	(7,310)	-
Bank overdraft	(16)	5,781
Proceeds from issuance of notes payable/net	108,833	224,276
Proceeds from stock payable	56,820	-
Net Cash Provided by Financing Activities	101,523	224,276
Proceeds from notes payable and convertible debentures	-	(200,000)
INCREASE (DECREASE) IN CASH AND EQUIVALENTS	32,953	(28,663)
Net Cash Provided by Financing Activities	74,859	151,253
CASH AND EQUIVALENTS, BEGINNING OF PERIOD	-	56,511
INCREASE IN CASH AND EQUIVALENTS	26,623	-
CASH AND EQUIVALENTS, END OF PERIOD	32,953	27,848
CASH AND EQUIVALENTS, BEGINNING OF PERIOD	-	-
CASH AND EQUIVALENTS, END OF PERIOD	$ 26,623	$ -
Non-Cash Financing Activities:
Common stock issued for debenture conversions	$ 220,927	$ 137,229
Stock issued for extinguishment of debt	$ 67,527	$ -

The accompanying notes are an integral part of these consolidated financial statements.

Franchise Capital Corporation
Financial Highlights (Unaudited)
Per Unit Operating Performance:
	For the six months ended
	December 31, December 31,
	2006				2005
NET ASSET VALUE, BEGINNING OF PERIOD	$	0.00004		$	0.00479
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss		(0.00286)			(0.003110)
Financing expense		-			(0.001890)
Dividend to shareholders		(0.00600)			-
Loss from discontinued operations		-			(0.006390)
Total from investment operations		(0.00883)			(0.00660)
Net increase in net assets resulting from stock sales		0.00312			0.008550
NET ASSET VALUE, END OF PERIOD	$	(0.005704)		$	0.001950
TOTAL NET ASSET VALUE RETURN		(15,563.45)	%		(59.40)	%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period	$	(160,310)		$	141,016
Ratios to average net assets:
Net expenses		0.36	%		1.61	%
Net investment loss		(0.36)	%		(1.60)	%

~~The~~AERO ~~accompanying~~PERFORMANCE ~~notes~~PRODUCTS, ~~are an integral part of these financial statements~~INC.

~~FRANCHISE~~Notes ~~CAPITAL~~to ~~CORPORATION~~Consolidated Financial Statements

~~NOTES~~For TOThe ~~FINANCIAL~~Period ~~STATEMENTS~~Ended September 30, 2008

~~FOR~~NOTE ~~THE~~1 ~~PERIOD~~- ~~ENDED~~ORGANIZATION ~~DECEMBER~~AND ~~31,~~BASIS ~~2006~~OF PRESENTATION

~~NOTE~~Aero 1Performance -Products ~~ORGANIZATION~~Inc. ~~AND~~(“Aero” ~~BASIS~~or OFthe ~~PRESENTATION~~“Company”), formerly Franchise Capital Corporation, a Nevada corporation, was incorporated on July 6, 2001. Effective December 24, 2004, the Company became as an internally managed, closed end investment company electing to be treated as a business development company under the Investment Company Act of 1940, as amended.

~~Franchise~~As ~~Capital~~a ~~Corporation~~business ~~(the~~development company (“~~Company~~BDC”) ~~a Nevada corporation~~, ~~was~~the ~~incorporated~~Company onintended ~~July~~to 6,provide ~~2001.~~long-term ~~The~~debt ~~Company~~and ~~was~~equity ~~formerly~~investment ~~named~~capital ~~Cortex~~to ~~Systems,~~support ~~Inc. In~~the ~~December~~expansion of ~~2004~~companies in the ~~Company~~casual, ~~changed~~fast ~~its~~food ~~name~~restaurant toindustry. The ~~Franchise~~Company ~~Capital~~served ~~Corporation,~~as toa ~~more~~holding ~~accurately~~company ~~reflect~~for its ~~business~~wholly ofand ~~developing~~majority ~~and~~owned ~~franchising~~operating ~~casual~~portfolio ~~dining~~investments: Fathom ~~restaurants.~~Business ~~The~~Systems, ~~Company~~Inc. ~~acquired~~(“Fathom”), ~~the~~Comstock ~~rights~~Jake’s toFranchise ~~four~~Company, ~~franchise~~(“Comstock’s”), ~~concepts. Effective~~Kokopelli ~~December~~Franchise 24Company, ~~2004~~(“Kokopelli”), ~~the~~Cousin Vinnie’s Franchise Company ~~became~~(“CV”), asand anKirby ~~internally~~Foo’s ~~managed,~~Asian ~~closed~~Grill ~~end~~Franchise ~~investment~~Company ~~company~~(“Kirby”). The ~~electing~~Company toowned be100% ~~treated~~of asFathom aand ~~business~~Kokopelli ~~development~~and ~~company~~had ~~under~~ownership ~~the~~interests ~~Investment~~in ~~Company~~Kirby ~~Act~~of approximately 97.5%, 72.5% of ~~1940~~Comstock Jake’s, asand ~~amended~~50% of CV.

In August 2006, the Company abandoned its business model and ~~liquidated~~commenced liquidating all of its investment holdings. On March 13, 2007, the Company held a shareholder meeting at which the Company’s shareholders voted to withdraw the Company’s election to be a business development company as defined by the 1940 Act. On March 14, 2007, the Company filed for N-54C to formally withdraw the Company’s BDC status.

On ~~January~~October 124, 2007, ~~the~~Aero ~~Company~~consummated ~~executed~~ a ~~definitive~~ share exchange ~~agreement~~ with ~~TTR~~Franchise ~~HP,~~Capital ~~Inc.~~Corporation (~~dba~~ “~~Aero Exhaust~~FCCN”), ~~Inc~~a publicly-held Nevada corporation.”) As ~~pursuant~~a toresult ~~which~~of the ~~Company~~transaction, FCCN agreed to ~~exchange~~issue a total of 1,114,285,700 new shares of ~~its~~restricted common stock toin ~~acquire~~exchange for 6,745,456 shares of Aero common stock, representing 100% of the total issued and outstanding ~~stock~~shares of Aero, and the satisfaction of Aero debt of $7,070,358. ~~Once~~Since FCCN was essentially a non-operating shell immediately prior to the share exchange ~~is complete~~, the Company ~~anticipates~~has ~~that~~treated the ~~shareholders~~transaction ofas ~~Aero~~a ~~will~~reverse ~~become~~merger ~~the~~for ~~majority~~accounting ~~shareholders~~purposes. Accordingly, all financial information presented prior to the date of the ~~Company~~share exchange is that of Aero exclusive of FCCN operations or assets. The equity and share ~~exchange~~information presented is ~~expected~~that of Aero and all share information has been adjusted to bereflect ~~consummated~~the share exchange rate (approximately 84:1). In addition, shares held by FCCN shareholders at the ~~end~~time of the ~~second~~share ~~quarter~~exchange ofhave ~~2007~~been treated as shares issued by Aero.

~~Following the share exchange, the Company’s business will be that of~~ Aero ~~Exhaust. Aero~~ designs and manufactures performance exhaust systems for both street and race applications. Aero Exhaust has been issued U.S. and Australian patents on its innovations and development in the exhaust industry, and its mufflers are available worldwide through major retailers, mass merchant centers, automotive aftermarket supply stores and wholesalers. Aero Exhaust mufflers are an exclusive National Association for Stock Car Auto Racing (NASCAR) Performance product and carry the NASCAR brand on product, packaging and related media. The Company is headquartered outside of Salt Lake City, Utah.

Going Concern - The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred material operating losses, has continued operating cash flow deficiencies, has defaulted on several loan agreements and has working capital deficit ~~at December 31, 2006~~. These factors raise substantial doubt about the Company’s ability to continue as a going concern. ~~The~~ Company believes that the share exchange with Aero Exhaust will be successful and result in the Company’s achieving profitability in the short term; however, the Company has not consummated this transaction and there is no guarantee that Aero’s operations will prove profitable. The accompanying financial statements do not include any adjustments that might result from this uncertainty. . These financial statements should be read in conjunction with the Company’s annual report for the year ended June 30, ~~2006~~2008 as filed on Form 10-K.KSB

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

~~Franchise~~Basis ~~Capital Corporation changed to a Business Development Company, effective December 24, 2004. Therefore, the prior periods are no longer directly comparable. Notwithstanding the withdrawal~~ of ~~the~~Presentation ~~BDC~~and ~~election~~Principles ~~in March 2007, the Company was still operating under the guidelines~~ of ~~the~~Consolidation ~~Investment Company Act of 1940 as of December 31, 2006. Accordingly, the accompanying financing statements have been prepared to represent those of an investment company.~~

AsThe ~~required~~accompanying byfinancial ~~ASR~~statements ~~118,~~represent the ~~Board~~consolidated ofoperations ~~Directors~~ of ~~the~~Aero ~~company~~Performance isProducts, ~~required to assign a fair value to all investments~~Inc., Toformerly ~~comply~~Franchise ~~with~~Capital ~~Section~~Corporation, ~~2(a)(41) of the Investment Company Act~~ and ~~Rule 2a~~TTR-4HP, ~~under~~Inc. ~~the~~(DBA ~~Investment~~Aero ~~Company Act~~Exhaust), itits iswholly ~~incumbent~~owned ~~upon~~subsidiary. All ~~the~~intercompany ~~board~~accounts ofand ~~directors~~transactions ~~to satisfy themselves that all appropriate factors relevant to the value of securities for which market quotations are not readily available~~ have been ~~considered~~eliminated ~~and~~in ~~to determine the method of arriving at the fair value of each such security~~consolidation. Since ToFCCN ~~the~~was ~~extent~~essentially ~~considered~~a ~~necessary,~~non-operating ~~the~~shell ~~board~~immediately ~~may~~prior ~~appoint persons~~ to ~~assist them in~~ the ~~determination~~share ~~of such value~~exchange, ~~and to make~~ the ~~actual~~Company ~~calculations~~has ~~pursuant~~treated to the ~~board's~~transaction ~~direction.~~as ~~The~~a ~~board~~reverse ~~must~~merger ~~also,~~for ~~consistent~~accounting ~~with this responsibility~~purposes. Accordingly, ~~continuously~~all ~~review~~financial ~~the~~information ~~appropriateness~~presented ofis ~~the~~that ~~method used in valuing each issue~~ of ~~security~~Aero inexclusive ~~the company's portfolio. The directors must recognize their responsibilities in this matter and whenever technical assistance is requested from individuals who are not directors, the findings~~ of ~~such~~FCCN ~~intervals must be carefully reviewed by the directors in order to satisfy themselves that the resulting valuations are fair~~operations.

Fair market value is determined on at least a quarterly basis. Where there are material changes in portfolio operations, fair market value is re-examined as such material changes occur. In the event the stock trading price is within 10% of Net Book Value, and the Company wishes to sell stock, fair market value is calculated on a monthly basis to ensure that stock is not sold below NBV.6

~~The~~Cash ~~value of loans~~ and ~~lines~~Cash ofEquivalents ~~credit~~– ~~are~~Cash ~~adjusted~~and ~~down~~cash ifequivalents ~~there~~include isall ashort-term ~~reasonable~~liquid ~~expectation~~investments that ~~the~~are ~~Company~~readily ~~will~~convertible ~~not be able~~ to ~~recoup~~known ~~the~~amounts ~~investment~~of or if there is reasonable doubt about the investment’s ability to continue as a going concern. Additionally, where available, the Board reviews other relevant factors affecting repayment including historical cash ~~flows,~~and ~~material~~have ~~contracts,~~original ~~collateral,~~maturities ~~debt~~of ~~maturity,~~three ~~alternate~~months ~~financing~~or ~~resources, etc~~less.

Accounts Receivable- The Company ~~liquidated~~recognizes ~~all~~a ofreceivable ~~its~~upon ~~portfolio~~shipment ~~assets~~of inits ~~August~~product ~~2006. The~~and ~~Company~~reviews ~~recorded~~the anaccounts ~~unrealized~~periodically ~~loss~~for onpotential ~~discontinued~~write ~~operations~~offs. ~~associated~~The ~~with~~Company ~~this~~has ~~write~~established ~~off~~a asreserve of ~~June 30~~$60,000 ~~2006~~for doubtful collections.

~~NOTE~~Inventory- 3Inventory -consists ~~INVESTMENT~~of ~~PORTFOLIO~~finished product and parts valued under the FIFO method using the lower of cost or market pricing module.

AsRevenue aRecognition ~~business~~– ~~development~~The ~~company under the Investment~~ Company ~~Act~~recognizes ofrevenue ~~1940,~~upon ~~the~~shipment ~~Company's investments must be carried at either market value or fair value as determined by our Board~~ of ~~Directors~~its ~~for~~product, ~~investments~~ which doessentially ~~not~~are ~~have~~transportation ~~readily~~mufflers ~~determinable market values. All of the Company’s investment assets were acquired in privately negotiated transactions~~ and ~~have~~related ~~no readily determinable market values~~parts. ~~These securities have therefore been carried at fair value as determined by the Board of Directors under our valuation policy~~.

AtIncome ~~June~~taxes ~~30,~~- ~~2006,~~The ~~the~~ Company’s ~~management~~provides ~~determined~~for ~~that~~income taxes based on the ~~business~~provisions ~~model~~of inStatement ~~effect~~of ~~was~~Financial ~~not~~Accounting ~~sustainable~~Standards ~~and~~No. ~~voted~~109, toAccounting ~~liquidate~~for ~~the~~Income ~~Company’s~~Taxes, ~~investment~~which ~~portfolio. From~~among ~~July~~other 1things, ~~2006~~requires ~~through~~that ~~December~~recognition ~~31,~~of ~~2006,~~deferred ~~the~~income ~~Company~~taxes ~~sold~~be ~~100%~~measured by the provisions of ~~its~~enacted ~~portfolio~~tax ~~assets~~laws ~~and~~in ~~effectively~~effect ~~ceased~~at ~~operations~~the date of financial statements.

AsUse of ~~December~~Estimates ~~31,~~- ~~2006,~~The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the ~~Company~~reported ~~had~~amounts noof ~~portfolio~~assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

~~NOTE~~Income 4(Loss) -Per ~~CONVERTIBLE DEBENTURES~~Common ~~PAYABLE~~Share – Basic income per share is computed using the weighted average number of shares of common stock outstanding for the period. .

~~During~~Property ~~the~~and ~~year~~Equipment ~~ended~~and ~~June~~Intangible ~~30,~~Asset ~~2004,~~– ~~the~~Consists ~~Company~~primarily ~~issued~~of aoffice ~~2-year~~equipment ~~7.5%~~and ~~convertible~~furnishings ~~debenture~~and ~~amounting~~patent tocosts ~~$250,000 with interest payable monthly~~ and ~~maturing~~is ~~June~~generally ~~25,~~stated ~~2006. The debenture also included non-detachable warrants for 2,500,000 shares of common stock. The debenture was convertible~~ at ~~the~~cost ~~option~~less ofaccumulated ~~the holder into common shares of the Company~~depreciation. ~~The~~ ~~conversion~~Depreciation ~~price~~is ~~was~~recorded ~~the~~on ~~lesser~~a ofstraight-line ~~$0.25~~basis orover ~~80% of~~ the ~~average~~estimated ofuseful ~~the~~lives ~~five lowest volume weighted average price during the 20 trading days prior to the election to convert. Upon conversion, the holder must simultaneously purchase shares~~ of the ~~Company’s~~assets ~~common~~ranging ~~stock~~from in3 ~~a dollar amount equal~~ to 105 ~~times~~years ~~the~~for ~~dollar~~fixed ~~amount~~assets ofand ~~the~~20 ~~debenture~~years ~~converted. The purchase price~~ for ~~such shares was the same as the debenture conversion price~~patents. ~~The~~Depreciation ~~value~~and ofamortization ~~the~~expense ~~beneficial~~was ~~conversion feature of~~ $2120,~~212~~040 ~~was~~for ~~recorded as a discount to~~ the ~~principal~~year ~~balance~~ended ofJune ~~the~~30, ~~debenture and amortized immediately as interest expense because the debenture is convertible at any time at the option of the holder~~2008.

~~The~~Recently ~~Company~~Issued ~~defaulted~~Accounting onPronouncements the interest payment provisions in the debenture. Consequently, the principal amount due under the debenture became immediately due and payable in cash plus a default penalty of $42,500 plus any and all accrued interest. The default penalty of $42,500 was expensed as interest and financing costs in the prior year.

In ~~November~~July 2006, the ~~Company~~FASB ~~agreed~~issued toFASB ~~settle~~Interpretation ~~litigation~~(FIN) ~~with~~No. ~~Golden~~48, ~~Gate~~“Accounting ~~Investors~~for onUncertainty ~~the~~in ~~past-due~~Income ~~convertible~~Taxes—An ~~debenture~~Interpretation ~~which~~of ~~had~~FASB aStatement ~~principle~~No. 109” ~~balance~~(FIN ~~due of $220,927~~48). ~~Under~~ ~~the~~This ~~terms~~Interpretation ofclarifies the ~~settlement,~~accounting ~~the~~for ~~Company~~uncertainty ~~placed~~in ~~850,000,000~~income ~~shares~~taxes ofrecognized ~~its~~in ~~restricted~~a ~~common~~company’s ~~stock~~financial ~~into~~statements. anFIN ~~escrow~~48 ~~account~~requires ~~for~~companies ~~satisfaction~~to ofdetermine ~~the~~whether ~~debenture. Golden~~it ~~Gate~~ is ~~allowed~~“more tolikely ~~withdraw~~than ~~the~~not” ~~shares from escrow provided~~ that ~~their~~a ~~overall~~tax ~~holdings~~position inwill ~~the~~be ~~Company~~sustained doupon ~~not~~examination ~~exceed 4.9% of all issued and outstanding common stock. The debenture obligation is reduced~~ by ~~80% of~~ the ~~average~~appropriate oftaxing ~~the~~authorities ~~five~~before ~~lowest~~any ~~closing~~part ~~bid prices~~ of the ~~Company’s~~benefit ~~common~~can ~~stock~~be ~~over~~recorded ain ~~90-day period prior to~~ the ~~share~~financial ~~withdrawal multiplied by the number of shares being withdrawn~~statements. AsIt aalso ~~result~~provides ofguidance ~~this~~on ~~transaction,~~ the ~~Company~~recognition, ~~has~~measurement ~~recorded~~and ~~the~~classification ~~issuance~~ of ~~the~~income ~~shares~~tax ofuncertainties, ~~common~~along ~~stock~~with ~~and~~any ~~written~~related ~~off~~interest ~~the~~and ~~balance of the debenture payable~~penalties. ~~The~~ ~~difference~~FIN ~~between~~48 ~~the~~will ~~value~~also ofrequire ~~the~~significant ~~shares~~additional ~~issued~~disclosures. ~~into~~This ~~escrow~~Interpretation ~~and~~will ~~the~~be ~~value~~effective offor ~~the~~fiscal ~~debenture~~years ~~payable~~beginning ~~was~~after $2December 15,~~578,766~~ ~~and~~2006. ~~has~~We ~~been~~will ~~recorded~~implement asthis ~~settlement~~Interpretation ~~costs~~ in the ~~accompanying~~first ~~financial~~quarter ~~statements. As~~ of ~~December~~2007 ~~31,~~on ~~2006,~~ a ~~total~~prospective ofbasis. ~~21,055,185~~We ~~shares~~are ~~had~~currently ~~been~~evaluating ~~released~~the ~~from~~potential ~~the~~impact ~~escrow~~this ~~and~~Interpretation ~~the~~will ~~principal~~have ~~balance~~on ~~had~~our ~~been~~financial ~~reduced~~position toand ~~$216,902~~results of operations.

~~NOTE~~In 5September -2006, ~~STOCKHOLDERS’~~the ~~EQUITY~~FASB issued SFAS No. 157, “Fair Value Measurements” (SFAS 157) , which provides guidance on how to measure assets and liabilities that use fair value. SFAS 157 will apply whenever another US GAAP standard requires (or permits) assets or liabilities to be measured at fair value but does not expand the use of fair value to any new circumstances. This standard also will require additional disclosures in both annual and quarterly reports. SFAS 157 will be effective for financial statements issued for fiscal years beginning after November 15, 2007, and will be adopted by us beginning in the first quarter of 2008. We are currently evaluating the potential impact this standard may have on our financial position and results of operations, but do not believe the impact of the adoption will be material.

In November 2006, the Company agreed to settle litigation with Golden Gate Investors on the past-due convertible debenture which had a principle balance due of $220,927. Under the terms of the settlement, the Company placed 850,000,000 shares of its restricted common stock into an escrow account for satisfaction of the debenture. Golden Gate is allowed to withdraw the shares from escrow provided that their overall holdings in the Company do not exceed 4.9% of all issued and outstanding common stock. The debenture obligation is reduced by 80% of the average of the five lowest closing bid prices of the Company’s common stock over a 90-day period prior to the share withdrawal multiplied by the number of shares being withdrawn. The difference between the value of the shares issued into escrow and the value of the debenture payable was $2,578,766 and has been recorded as settlement costs in the accompanying financial statements. Under the terms of this settlement, as of December 31, 2006, 21,055,185 shares have been released from escrow and the debenture balance has been reduced to $216,902. 7

In ~~connection~~September ~~with~~2006, the ~~debenture~~SEC ~~settlement~~staff ~~with~~issued ~~Golden~~Staff ~~Gate,~~Accounting ~~Golden~~Bulletin ~~Gate~~(SAB) ~~entered~~No. ~~into~~108, a“Considering ~~stock~~the ~~purchase~~Effects ~~agreement~~of ~~which~~Prior ~~required~~Year ~~Golden~~Misstatements ~~Gate~~when toQuantifying ~~purchase~~Misstatements ~~$100,000~~in ofCurrent ~~the~~Year ~~Company’s~~Financial ~~restricted~~Statements” ~~common~~(SAB ~~stock~~108). ~~for~~SAB ~~every~~108 ~~$10,000~~was issued in ~~debenture~~order ~~redeemed~~to ~~through~~eliminate the ~~escrow. As~~diversity of ~~December~~practice ~~31,~~in ~~2006,~~how ~~the~~public ~~Company~~companies ~~sold~~quantify 50misstatements of financial statements,~~275~~ ~~shares~~including misstatements that were not material to prior years’ financial statements. We will initially apply the provisions of ~~restricted~~SAB ~~common~~108 ~~stock~~in ~~under~~connection with the ~~agreement~~preparation of our annual financial statements for ~~proceeds~~the ofyear ~~$50~~ending December 31,~~275~~ 2006. ~~The~~ ~~Company~~We ~~also~~have ~~received~~evaluated ~~$74,875~~the ~~from~~potential ~~Golden~~impact ~~Gate~~SAB as108 anmay ~~advance~~have on ~~future~~our ~~stock~~financial ~~purchases~~position ~~under~~and results of operations and do not believe the ~~agreement~~impact of the application of this guidance will be material.

NOTE 6 3- ~~SUBSEQUENT~~FIXED ~~EVENTS~~ASSETS AND INTANGIBLE ASSETS

On January 12, 2007, the Company executed a definitive share exchange agreement with TTR HP, Inc. (dba “Aero Exhaust, Inc.”) pursuant to which the Company agreed to exchange shares of its common stock to acquire 100% of the total issued and outstanding stock of Aero. Once the share exchange is complete, the Company anticipates that the shareholders of Aero will become the majority shareholders of the Company. The share exchange is expected to be consummated at the end of the second quarter of 2007. Following the share exchange, the Company’s business will be that of Aero Exhaust. Aero designs and manufactures performance exhaust systems for both street and race applications. Aero Exhaust has been issued U.S. and Australian patents on its innovations and development in the exhaust industry, and its mufflers are available worldwide through major retailers, mass merchant centers, automotive aftermarket supply stores and wholesalers. Aero Exhaust mufflers are an exclusive National Association for Stock Car Auto Racing (NASCAR) Performance product and carry the NASCAR brand on product, packaging and related media.


Fixed Assets consist of:
Furniture Fixture and Equipment	$ 89,642
Accumulated Depreciation	(62,956)
Net	$ 26,686

Intangible Assets consist of :
Patents	$ 95,434
Accumulated Amortization	(19,369)
Net	$ 76,065

AsNOTE ~~part~~4 of– ~~the~~NOTES definitive agreement between the Company and Aero Exhaust, the Company agreed to extend a line of credit to Aero in the amount of $1,500,000. Under the terms of the line of credit, any unpaid principle and interest on the line of credit will be converted into shares of Aero Exhaust common stock immediately prior to the share exchange. The net effect of this transaction will be an increase in the overall position that the Company’s existing shareholders will have in the Company subsequent to the share exchange. The rate at which the line of credit will be converted into Aero Exhaust stock has yet to be determined; however, the price per share will be equal to the price per share Aero had sold stock in its most recent private placement. As of May 23, 2007, the Company had advanced a total of $1,500,000 to Aero under the line of credit. PAYABLE

~~Between~~Notes ~~February~~payable ~~and~~at ~~April~~September ~~2007~~30, ~~the~~2008 ~~Company~~consisted ~~converted 100%~~ of the Series C Preferred Stock into shares of common stock. This conversion resulted in the issuance of 1,232,500 shares of restricted common stock. As of May 23, 2007, there were no shares of preferred stock issued or outstanding.following:


1. Note payable to two individuals, past due, interest at 6%	$ 23,250
2. Convertible note to a fund, converted at a 30% discount over the average market price, past due interest at 8%	201,509
3. Note payable to a corporation, 8% past due	138,831
4. Note payable to an individual, past due interest at 6%	475,000
5. Convertible note to an individual with interest at 8%, past due converted at a 30% discount to market	50,000
6. Note Payable to an individual with interest at 15%, past due	914,324
Total	$ 1,802,914

InAccrued ~~connection~~interest ~~with~~payable the debenture settlement with Golden Gate, Golden Gate entered into a stock purchase agreement which required Golden Gate to purchase $100,000 of the Company’s restricted common stock for every $10,000 in debenture redeemed through the escrow. Subsequent to the quarter ended December 31, 2006, the Company received $1,980,669 from Golden Gate as an advance on ~~future stock purchases under~~ the ~~agreement,~~above ofat ~~which~~September 130,~~290,769~~ ~~shares~~2008 ofis ~~restricted common stock were subsequently purchased for~~ $1170,~~290,769, leaving a total stock payable as of May 23, 2007 of $689,900~~358.

~~ITEM~~NOTE 2.5 ~~MANAGEMENT'S~~- ~~DISCUSSION~~DERIVATIVE ~~AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION~~LIABILITY

~~GENERAL~~The Company is accounting for the conversion option in the Convertible Note of items 1 and 5 above, and the conversion price in the Securities Purchase Agreement and the associated warrants, as derivative liabilities in accordance with SFAS 133, “Accounting for Derivative Instruments and Hedging Activities” and EITF 00-19 “Accounting for Derivative Financial Instruments Indexed to and Potentially Settled in a Company’s Own Stock” due to the fact that the conversion feature and the warrants both have a variable conversion price.

The ~~statements~~fair ~~contained~~value inof ~~this~~the ~~Quarterly~~Convertible ~~Report~~Note onwas ~~Form~~determined ~~10-Q~~utilizing ~~that~~the ~~are not historical facts may contain forward~~Black-~~looking~~Scholes ~~statements~~stock ~~that~~option ~~involve~~valuation ~~a number of known and unknown risks and uncertainties that could cause actual results to differ materially from those discussed or anticipated by management~~model. The ~~Potential~~significant ~~risks~~assumptions ~~and~~used ~~uncertainties~~in ~~include,~~the ~~among~~valuation ~~other factors, general business conditions, government regulations, manufacturing practices, competitive market conditions, success of~~ are: the ~~Company's~~exercise ~~business~~price ~~strategy,~~as ~~delay~~noted ofabove; ~~orders, changes in~~ the ~~mix~~stock ofprice ~~products~~as ~~sold, availability~~ of ~~suppliers,~~September ~~concentration of sales in markets and to certain customers~~30, ~~changes~~2008; inexpected ~~manufacturing~~volatility ~~efficiencies, development and introduction~~ of ~~new~~66%; ~~products,~~risk ~~fluctuations~~free ininterest ~~margins,~~rate ~~timing~~ of ~~significant~~approximately ~~orders,~~4.50%; and ~~other~~a ~~risks~~term ~~and~~of ~~uncertainties~~six ~~currently unknown to management~~months.

~~CRITICAL ACCOUNTING POLICIES~~8

~~The~~NOTE ~~Company's~~6 financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States of America ("GAAP"). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported. These estimates can also affect supplemental information contained in the external disclosures of the Company including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We review valuations based on estimates for reasonableness and conservatism on a consistent basis throughout the Company. Primary areas where financial information of the Company is subject to the use of estimates, assumptions and the application of judgment include acquisitions, valuation of long-~~lived~~ ~~and~~STOCKHOLDERS’ intangible assets, and the realizability of deferred tax assets. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. EQUITY

~~Valuation~~During Ofthe ~~Long-Lived~~quarter ~~And~~ended ~~Intangible~~September ~~Assets~~30, 2008 the company issued 116,000,000 shares of stock for a reduction in debt of $67,527

~~The~~NOTE ~~recoverability~~7 of long lived assets requires considerable judgment and is evaluated on an annual basis or more frequently if events or circumstances indicate that the assets may be impaired. As it relates to definite life intangible assets, we apply the impairment rules as required by SFAS No. 121, "Accounting for the Impairment of Long-~~Lived~~MAJOR Assets and Assets to Be Disposed Of" as amended by SFAS No. 144, which also requires significant judgment and assumptions related to the expected future cash flows attributable to the intangible asset. The impact of modifying any of these assumptions can have a significant impact on the estimate of fair value and, thus, the recoverability of the asset. VENDOR

~~Income~~Included ~~Taxes~~in Accounts Payable is an amount to one vendor which represents approximately 73.8% of the total amount owing.

WeNOTE 8 ~~recognize~~-COMMITMENTS ~~deferred~~AND tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities. We regularly review our deferred tax assets for recoverability and establish a valuation allowance based upon historical losses, projected future taxable income and the expected timing of the reversals of existing temporary differences. As of December 31, 2006, we estimated the allowance on net deferred tax assets to be one hundred percent of the net deferred tax assets.CONTINGENCIES

~~COMPANY~~The ~~OVERVIEW~~Company is obligated under one rental agreement for warehouse and office space totaling approximately 10,000 square feet ending in January 2011. Minimum future amounts per year under the agreement are as follows

Franchise Capital Corporation (“The Company”) was formed as a Nevada corporation on July 6, 2001 under the name Cortex Systems, Inc. They were originally a development stage company that intended to establish memory clinics in several different locations in North America. Unfortunately, the Company was unable to successfully execute its business plan. In July of 2003, the Company changed its name to BGR Corporation. Along with the name change came a new management and ownership team. The intention of management is to acquire new innovative fast-casual restaurant concepts, develop them into a profitable working design, and franchise them across the country. The Corporation's partner, American Restaurant Development Company, is a professional restaurant designer, franchiser, and restaurant management company where principles have extensive experience in the industry. In December of 2004 the Company changed its name to Franchise Capital Corporation. The names “Franchise Capital Corporation”, "we", "our" and "us" used in this report refer to Franchise Capital Corporation.


Year end June 30, 2009	$59,400
Year End June 30, 2010	$59,400
Year End June 30, 2011	$34,650
Total	$153,450

On December 23, 2004, the company elected to be regulated as a Business Development Company (BDC) as outlined in the Investment Company Act of 1940 by filing a Form N-54A. As a BDC, the Company focused on investing and developing restaurant franchise companies and made several investments (discussed below). During the fourth quarter of 2006, the Company abandoned its business model and liquidated all of its investment holdings. On March 13, 2007, the Company held a shareholder meeting at which the Company’s shareholders voted to withdraw the Company’s election to be a business development company as defined by the 1940 Act. On March 13, 2007, the Company filed for N-54C to formally withdraw the Company’s BDC status.Litigation:

OnThe ~~January~~company ~~12,~~is ~~2007, the Company executed~~ a ~~definitive~~defendant ~~share~~in ~~exchange~~three ~~agreement~~lawsuits ~~with~~arising ~~TTR~~out ~~HP,~~of ~~Inc.~~the ~~(dba~~normal ~~“Aero~~course ~~Exhaust,~~of ~~Inc~~business.”) ~~pursuant~~While ~~to which~~ the ~~Company~~eventual ~~agreed~~outcome ~~to exchange shares~~ of ~~its~~litigation ~~common~~is ~~stock~~hard to ~~acquire~~predict, ~~100% of~~ the ~~total~~Company ~~issued~~believes and ~~outstanding~~has ~~stock~~been ofadvised ~~Aero. Once the share exchange is complete, the Company anticipates~~ that ~~the~~any ~~shareholders~~settlement ofor ~~Aero~~result will ~~become~~not ~~the~~have ~~majority~~a ~~shareholders~~negative ofimpact ~~the~~on ~~Company~~it. ~~The share exchange is expected to be consummated at the end of the second quarter of 2007.~~

Following the share exchange, the Company’s business will be that of Aero Exhaust. Aero designs and manufactures performance exhaust systems for both street and race applications. Aero Exhaust has been issued U.S. and Australian patents on its innovations and development in the exhaust industry, and its mufflers are available worldwide through major retailers, mass merchant centers, automotive aftermarket supply stores and wholesalers. Aero Exhaust mufflers are an exclusive National Association for Stock Car Auto Racing (NASCAR) Performance product and carry the NASCAR brand on product, packaging and related media.9

~~Investment~~FORWARD-LOOKING ~~Strategy~~STATEMENTS

~~During~~This ~~the~~document ~~quarter~~contains ~~ended~~“forward-looking ~~December~~statements” ~~31,~~within ~~2006,~~ the ~~Company~~meaning ~~operated~~of asthe aPrivate ~~Business~~Securities ~~Development~~Litigation ~~Company~~Reform ~~(“BDC”). As~~Act aof ~~BDC,~~1995. ~~the~~All ~~Company~~statements ~~was~~other ~~required~~than tostatements ~~have at lease 70%~~ of ~~its~~historical ~~assets~~fact inare “~~eligible~~forward-looking ~~portfolio companies.~~statements” It isfor ~~stated~~purposes inof ~~the~~federal ~~Investment~~and ~~Committee~~state ~~Charter~~securities ~~that~~laws, ~~the~~including, ~~Company~~but ~~will~~not ~~endeavor~~limited to, ~~maintain~~any ~~this~~projections ~~minimum~~of ~~asset~~earnings, ~~ratio. Between~~revenue ~~September~~or 1other ~~and~~financial ~~December~~items; ~~31,~~any ~~2006,~~statements ~~the Company liquidated all~~ of ~~its~~the ~~investments~~plans, strategies and ~~ceased~~objections ~~operating~~of asmanagement afor ~~BDC. On~~future ~~March~~operations; ~~13,~~any ~~2007,~~statements ~~the~~concerning ~~Company~~proposed ~~filed~~new aservices ~~Form~~or ~~N-54C~~developments; ~~withdrawing~~any ~~the~~statements ~~Company’s~~regarding ~~election~~future aseconomic aconditions ~~BDC. As~~or ~~the~~performance; ~~result,~~any ~~the~~statements ~~Company~~or isbelief; ~~no longer considered a BDC~~ and isany nostatements ~~longer~~of ~~subject~~assumptions tounderlying ~~the~~any ~~requirements~~ of the ~~1940 Act~~foregoing.

~~Portfolio~~Forward-looking ~~Investments~~statements may include the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. We do not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the dates they are made. You should, however, consult further disclosures we make in future filings of our Annual Report on Form 10-KSB, Quarterly Reports on Form 10-QSB and Current Reports on Form 8-K.

AsItem a business development company under the Investment Company Act of 1940, the Company's investments must be carried at either market value or fair value as determined by our Board of Directors for investments which do not have readily determinable market values2. ~~All~~ ~~of the Company~~Management’s ~~investment~~Discussion ~~assets~~and ~~were~~Analysis ~~acquired~~of inFinancial ~~privately~~Condition ~~negotiated transactions~~ and ~~have~~Results ~~no readily determinable market values. These securities have therefore been carried at fair value as determined by the Board~~ of ~~Directors under our valuation policy~~Operations.

At June 30, 2006, the Company’s management determined that the business model in effect was not sustainable and voted to liquidate the Company’s investment portfolio. From July 1, 2006 through December 31, 2006, the Company sold 100% of its portfolio assets and effectively ceased operating as an investment company. General

~~RESULTS~~Aero OFPerformance ~~OPERATIONS~~Products, Inc. (the “Company”) was formed as a Nevada corporation on July 6, 2001 under the name Cortex Systems, Inc. They were originally a development stage company that intended to establish memory clinics in several different locations in North America. Unfortunately, the Company was unable to successfully execute its business plan. In July of 2003, the Company changed its name to BGR Corporation. Along with the name change came a new management and ownership team. The intention of management was to acquire new innovative fast-casual restaurant concepts, develop them into a profitable working design, and franchise them across the country. In December of 2004 the Company changed its name to Franchise Capital Corporation.

~~Three~~On ~~months~~December ~~ended~~23, ~~December~~2004, 31the company elected to be regulated as a Business Development Company (BDC) as outlined in the Investment Company Act of 1940 by filing a Form N-54A. As a BDC, the Company focused on investing and developing restaurant franchise companies and made several investments (discussed below). During the fourth quarter of 2006, ~~compared~~the Company abandoned its business model and liquidated all of its investment holdings. On March 13, 2007, the Company held a shareholder meeting at which the Company’s shareholders voted to ~~three~~withdraw ~~months~~the ~~ended~~Company’s ~~December~~election 31to be a business development company as defined by the 1940 Act. On March 13, ~~2005~~2007, the Company filed for N-54C to formally withdraw the Company’s BDC status.

~~During~~On October 4, 2007, Aero consummated a share exchange with Franchise Capital Corporation (“FCCN”), a publicly-held Nevada corporation. As a result of the ~~quarter~~transaction, ~~ended~~FCCN ~~December~~agreed 31to issue a total of 1,119,636,659 ~~2006~~new shares of restricted common stock in exchange for 6,745,456 shares of Aero common stock, representing 100% of the ~~Company~~total ~~experienced~~issued aand ~~net~~outstanding ~~loss~~shares of Aero, and the satisfaction of Aero debt of $36,~~035~~406,~~582~~646. Since ~~compared~~FCCN towas essentially a ~~net~~non-operating ~~loss~~shell ofimmediately ~~$589~~prior to the share exchange,~~818~~ the Company has treated the transaction as a reverse merger for accounting purposes. Accordingly, all financial information presented prior to the ~~same~~date ~~period~~of inthe ~~2005~~share exchange is that of Aero exclusive of FCCN operations or assets. The ~~current~~equity ~~loss~~and share information presented is ~~primarily~~that ~~due~~of Aero and all share information has been adjusted to ~~settlement~~reflect ~~costs~~the ofshare $2exchange rate (approximately 84:1). In addition,~~578,766~~ ~~related~~shares toheld ~~debt~~by ~~reduction~~FCCN shareholders at the time of ~~$220,927~~the share exchange have been treated as shares issued by Aero.

~~For~~ Aero ~~the~~designs ~~three~~and ~~months~~manufactures ~~ended~~performance ~~December~~exhaust ~~31,~~systems ~~2006~~for ~~the~~both ~~Company~~street ~~reported~~and norace ~~revenues~~applications. Aero ~~compared~~Exhaust ~~with~~has ~~revenues~~been ofissued ~~$1,750~~U.S. ~~for~~and Australian patents on its innovations and development in the ~~three~~exhaust ~~months~~industry, ~~ended~~and ~~December~~its 31mufflers are available worldwide through major retailers, ~~2005~~mass merchant centers, automotive aftermarket supply stores and wholesalers. ~~Revenues~~Aero Exhaust mufflers are an exclusive National Association for ~~the~~Stock ~~three~~Car ~~months~~Auto ~~ended~~Racing ~~December~~(NASCAR) 31Performance product and carry the NASCAR brand on product, ~~2005~~packaging ~~were~~and ~~generated~~related ~~from~~media. The ~~consulting~~Company ~~fees~~is headquartered outside of Salt Lake City, Utah.

~~Six months ended December 31, 2006 compared to six months ended December 31, 2005~~ 10

~~During~~RESULTS ~~the~~OF ~~six~~OPERATIONS months ended December 31, 2006, the Company experienced a net loss of $3,068,834 compared to a net loss of $826,542 for the same period in 2005. The current loss is primarily due to settlement costs of $2,578,766 related to debt reduction of $220,927.

~~For~~Three ~~the six~~ months ended ~~December~~September 3130, ~~2006~~2008 ~~the Company reported no revenues~~ compared ~~with~~to ~~revenues~~three ~~of $1,750 for the six~~ months ended ~~December~~September 3130, ~~2005. Revenues~~2007 ~~for the six months ended December 31, 2005 were generated from consulting fees.~~

~~Liquidity~~During the quarter ended September 30, 2008, the Company experienced a net loss of $218,034 compared to a net loss of $472,002 for the same period in 2007. The primary reason for a decrease in loss is a result of lower legal costs of $19,552 compared to $101,104, lower marketing and ~~Capital~~advertising ~~Resources~~costs following the cessation of the Company’s Nascar team sponsorship of $9,691 compared to $82,954, and lower interest costs following the conversion of a significant portion of the Company’s debt into stock at the time of the share exchange on October 2, 2007 of $51,210 compared to $121,598.

~~The~~Liquidity ~~Company’s financial statements present an impairment in terms of liquidity. As of December 31, 2006 the Company had $186,933 in liabilities~~ and ~~$26,623~~Capital inResources current assets. The Company has accumulated $10,256,958 of net operating losses through December 31, 2006 which may be used to reduce taxes in future years through 2026. The use of these losses to reduce future income taxes will depend on the generation of sufficient taxable income prior to the expiration of the net operating loss carry forwards. The potential tax benefit of the net operating loss carry forwards have been offset by a valuation allowance of the same amount. The Company has not yet established revenues to cover its operating costs. .Management believes that the share exchange with Aero Exhaust will be successful and result in the Company’s achieving profitability in the short term; however, the Company has consummated this transaction and there is no guarantee that Aero’s operations will prove profitable. In the event the Company is unable to generate profits and if suitable financing is unavailable, there is substantial doubt about the Company’s ability to continue as a going concern.

~~ITEM~~The Company’s financial statements present an impairment in terms of liquidity. As of September 30, 2008 the Company had $3,680,269 in current liabilities and $339,899 in current assets. The ~~QUANTITATIVE~~Company ~~AND~~has ~~QUALITATIVE~~accumulated ~~DISCLOSURES~~$22,465,455 ~~ABOUT~~of ~~MARKET~~net ~~RISK~~operating losses through September 30, 2008 which may be used to reduce taxes in future years through 2028. The use of these losses to reduce future income taxes will depend on the generation of sufficient taxable income prior to the expiration of the net operating loss carry forwards. The potential tax benefit of the net operating loss carry forwards have been offset by a valuation allowance of the same amount. The Company has not yet established revenues to cover its operating costs. Management believes that the share exchange with Aero Exhaust will result in the Company’s achieving profitability in the short term; however, there is no guarantee that Aero’s operations will prove profitable. In the event the Company is unable to generate profits and if suitable financing is unavailable, there is substantial doubt about the Company’s ability to continue as a going concern.

AnItem ~~investment in the Company involves a high degree of risk~~3. InQuantitative ~~addition to matters discussed elsewhere in this report, careful consideration should be given to the following risk factors. This report contains certain forward-looking statements that involve risks~~ and ~~uncertainties.~~Qualitive ~~Our~~Disclosures ~~actual~~About ~~results~~Market ~~could~~Risk be substantially different from the results we anticipate in these forward-looking statements because of one or more of the factors described below and/or elsewhere in this report. If any of these risks were to actually occur, our business, results of operations and financial condition would likely suffer materially. The risks outlined below are those which management believes are material to an understanding of our business and the risks inherent in it, but such list is not exclusive of every possible risk which may impact the Company and its shareholders in the future. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also appear or increase in significance, and could therefore impair our projected business results of operations and financial condition. Related

~~RISKS~~Risk ~~RELATED~~Related TOto ~~OUR~~our ~~BUSINESS~~Business

We Have Historically Lost Money and Losses May Continue in the Future

We have historically lost money. The loss for the ~~2006~~2008 fiscal year was $~~933~~ 2,~~602~~923,215 and future losses are likely to occur. Accordingly, we may experience significant liquidity and cash flow problems if we are not able to raise additional capital as needed and on acceptable terms. No assurances can be given we will be successful in reaching or maintaining profitable operations.

We Will Need to Raise Additional Capital to Finance Operations

Our operations have relied almost entirely on external financing to fund our operations. Such financing has historically come from a combination of borrowings and from the sale of common stock and assets to third parties. We will need to raise additional capital to fund our anticipated operating expenses and future expansion. Among other things, external financing will be required to cover our operating costs. We cannot assure you that financing whether from external sources or related parties will be available if needed or on favorable terms. The sale of our common stock to raise capital may cause dilution to our existing shareholders. Our inability to obtain adequate financing will result in the need to curtail business operations. Any of these events would be materially harmful to our business and may result in a lower stock price.

There is Substantial Doubt About Our Ability to Continue as a Going Concern Due to Recurring Losses and Working Capital Shortages, Which Means that We May Not Be Able to Continue Operations Unless We Obtain Additional Funding

The report of our independent accountants on our June 30, ~~2006~~2008 financial statements include an explanatory paragraph indicating that there is substantial doubt about our ability to continue as a going concern due to recurring losses and working capital shortages. Our ability to continue as a going concern will be determined by our ability to obtain additional funding. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.

~~Our Common Stock May Be Affected By Limited Trading Volume and May Fluctuate Significantly~~11

Prior to this offering, there has been a limited public market for our common stock and there can be no assurance that an active trading market for our common stock will develop. As a result, this could adversely affect our shareholders' ability to sell our common stock in short time periods, or possibly at all. Our ~~common~~Common ~~stock~~Stock ~~has~~May ~~experienced,~~Be ~~and~~Affected isBy ~~likely~~Limited toTrading ~~experience~~Volume ~~in the future, significant price~~ and ~~volume~~May ~~fluctuations~~Fluctuate that could adversely affect the market price of our common stock without regard to our operating performance. In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause the price of our common stock to fluctuate substantially. Substantial fluctuations in our stock price could significantly reduce the price of our stock.Significantly

There has been a limited public market for our common stock and there can be no assurance that an active trading market for our common stock will develop. As a result, this could adversely affect our shareholders' ability to sell our common stock in short time periods, or possibly at all. Our ~~Common~~common ~~Stock~~stock has experienced, and is ~~Traded~~likely onto ~~the~~experience ~~"Pink~~in ~~Sheets~~the future," ~~Which~~significant ~~May~~price ~~Make~~and itvolume ~~More~~fluctuations ~~Difficult~~that ~~For~~could ~~Investors~~adversely affect the market price of our common stock without regard to ~~Resell~~our ~~Their~~operating ~~Shares~~performance. In ~~Due~~addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause the price of our common stock to ~~Suitability~~fluctuate ~~Requirements~~substantially. Substantial fluctuations in our stock price could significantly reduce the price of our stock.

~~Our~~There ~~common stock~~ is ~~currently~~no ~~traded~~Assurance onof ~~the~~Continued ~~Pink~~Public ~~Sheets~~Trading ~~where~~Market ~~we expect it to remain for the foreseeable future. Broker-dealers often decline to trade in Pink Sheet stocks given that the market for such securities is often limited, the stocks are more volatile,~~ and ~~the~~Being ~~risks~~a toLow ~~investors~~Priced ~~are~~Security ~~greater. These factors~~ may ~~reduce~~Affect the ~~potential~~Market ~~market~~Value ~~for our common stock by reducing the number~~ of ~~potential~~Our ~~investors. This may make it more difficult for investors in our common stock to sell shares to third parties or to otherwise dispose of them. This could cause our stock price to decline.~~ Stock

WeTo ~~Could~~date, ~~Fail~~there has been only a limited public market for our common stock. Our common stock is currently quoted on the OTCBB. As a result, an investor may find it difficult to ~~Retain~~dispose of, or ~~Attract~~to ~~Key~~obtain ~~Personnel~~accurate quotations as to the market value of our stock. Our stock is subject to the low-priced security or so called "penny stock" rules that impose additional sales practice requirements on broker-dealers who sell such securities. The Securities Enforcement and Penny Stock Reform Act of 1990 requires additional disclosure in connection with any trades involving a stock defined as a penny stock (generally, according to recent regulations adopted by the SEC, any equity security that has a market price of less than $5.00 per share, subject to certain exceptions that we no longer meet). For example, brokers/dealers selling such securities must, prior to effecting the transaction, provide their customers with a document that discloses the risks of investing in such securities. Included in this document are the following:

~~Our~~- ~~future success depends in significant part on~~ the ~~continued~~bid ~~services~~and ofoffer ~~Steven~~price ~~Peacock,~~quotes ~~our~~in ~~Chief~~and ~~Executive. We cannot assure you we would be able to find an appropriate replacement~~ for ~~key~~the ~~personnel. Any~~"penny ~~loss~~stock," orand ~~interruption~~the number of ~~our~~shares ~~key personnel's services could adversely affect our ability~~ to ~~develop~~which ~~our~~the ~~business~~quoted ~~plan. We~~prices ~~have~~apply, ~~no employment agreements or life insurance on Mr. Peacock.~~

~~Nevada~~- ~~Law~~the ~~and~~brokerage ~~Our~~firm's ~~Charter~~compensation ~~May~~for ~~Inhibit~~the atrade, ~~Takeover~~and ~~of Our Company That Stockholders May Consider Favorable~~

~~Provisions~~- ~~of Nevada law, such as its business combination statute, may have~~ the ~~effect~~compensation ofreceived ~~delaying,~~by ~~deferring or preventing a change in control of our company. As a result, these provisions could limit~~ the ~~price~~brokerage ~~some~~firm's ~~investors~~sales ~~might~~person befor ~~willing to pay in~~ the ~~future for shares of our common stock~~trade.

~~Our~~In ~~Officers~~addition, ~~and Directors Have~~ the ~~Ability~~brokerage tofirm ~~Exercise~~must ~~Significant~~send ~~Influence~~the ~~Over~~investor: ~~Matters Submitted for Stockholder Approval and Their Interests May Differ From Other Stockholders~~

~~Our~~- ~~Chairman of the Board of Directors has the ability to vote~~ a ~~majority~~monthly ofaccount ~~the~~statement ~~Company’s~~that ~~issued~~gives ~~and~~an ~~outstanding~~estimate ~~common shares by virtue~~ of the ~~stock~~value ~~power contained within the escrow agreement with Golden Gate Investors. Accordingly, he may have significant influence in determining the outcome~~ of ~~any~~each ~~corporate~~"penny ~~transaction or other matter submitted to our shareholders for approval, including issuing common and preferred~~ stock," ~~electing~~in ~~directors and appointing officers, and effecting recapitalizations of our equity, which could have a material impact on mergers, acquisitions, consolidations and~~ the ~~sale~~investor's ~~of all or substantially all of our assets~~account, and ~~also the power to prevent or cause a change in control. The interests of our Chairman may differ from the interests of the other stockholders.~~

~~ITEM~~- 4.a ~~CONTROLS~~written ~~AND~~statement ~~PROCEDURES~~of the investor's financial situation and investment goals.

~~Evaluation~~If ofthe ~~Disclosure~~person ~~Controls~~purchasing ~~and Procedures. As required by Rule 13a-15 under~~ the ~~Securities~~securities ~~Exchange~~is ~~Act~~someone ofother ~~1934~~than ~~(the~~an ~~Exchange~~accredited ~~Act"),~~investor weor ~~carried out~~ an ~~evaluation~~established ofcustomer ~~the effectiveness~~ of the ~~design~~broker/dealer, ~~and operation of our disclosure controls and procedures within~~ the 90broker/dealer ~~days~~must ~~prior~~also toapprove the ~~filing~~potential ~~date~~customer's ofaccount ~~this~~by ~~report.~~obtaining ~~This~~information ~~evaluation~~concerning ~~was carried out under~~ the ~~supervision and with the participation of the Company’~~customer's ~~Chief~~financial ~~Executive Officer~~situation, ~~Chief~~investment ~~Financial~~experience ~~Officer~~ and ~~Compliance~~investment ~~Officer, Mr~~objectives. ~~Steven~~The ~~Peacock.~~broker/dealer ~~Based~~must ~~upon~~also ~~that~~make ~~evaluation,~~a ~~Steven~~determination ~~Peacock~~whether ~~concluded~~the ~~that~~transaction ~~our~~is ~~disclosure~~suitable ~~controls~~for the customer and ~~procedures~~whether ~~are~~the ~~effective~~customer inhas ~~timely~~sufficient ~~alerting~~knowledge ~~management~~and toexperience ~~material~~in ~~information~~financial ~~relating~~matters to usbe ~~and~~reasonably ~~required~~expected to be ~~included~~capable inof ~~our~~evaluating ~~periodic~~the ~~SEC~~risk ~~filings.~~of ~~There~~transactions ~~have been no significant changes~~ in ~~our~~such ~~internal~~securities. ~~controls~~Accordingly, orthe inCommission's ~~other~~rules ~~factors~~may ~~that~~limit ~~could~~the ~~significantly~~number ~~affect~~of ~~internal~~potential ~~controls~~purchasers ~~subsequent~~of to the ~~date~~shares weof ~~carried out~~ our ~~evaluation~~common stock.

~~Disclosure~~Resale ~~controls~~restrictions ~~and~~on ~~procedures~~transferring ~~are~~"penny ~~controls~~stocks" ~~and other procedures that~~ are ~~designed~~sometimes toimposed ~~ensure~~by ~~that~~some ~~information~~states, ~~required~~which tomay bemake ~~disclosed~~transaction in our ~~reports~~stock ~~filed~~more ordifficult ~~submitted under the Exchange Act is recorded, processed, summarized~~ and ~~reported,~~may ~~within~~reduce the ~~time~~value ~~periods~~of ~~specified~~the ininvestment. ~~the~~Various ~~Securities~~state ~~and~~securities ~~Exchange~~laws ~~Commission's~~pose ~~rules~~restrictions ~~and~~on ~~forms.~~transferring ~~Disclosure~~"penny ~~controls~~stocks" and ~~procedures~~as ~~include,~~a ~~without limitation~~result, ~~controls~~investors ~~and procedures designed to ensure that information required to be disclosed~~ in our ~~reports~~common ~~filed~~stock ~~under~~may have the ~~Exchange~~ability ~~Act~~to issell ~~accumulated~~their ~~and~~shares ~~communicated~~of ~~to management, including~~ our ~~Chief~~common ~~Executive~~stock ~~Officer, Chief Compliance Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures~~impaired.

~~PART~~There IIcan be no assurance we will have market makers in our stock. If the number of market makers in our stock should decline, the liquidity of our common stock could be impaired, not only in the number of shares of common stock which could be bought and sold, but also through possible delays in the timing of transactions, and lower prices for the common stock than might otherwise prevail. Furthermore, the lack of market makers could result in persons being unable to buy or sell shares of the common stock on any secondary market.

~~Other Information~~ 12

~~Item~~We 1.Could ~~Legal~~Fail ~~Proceedings~~to Retain or Attract Key Personnel

~~None~~Our future success depends in significant part on the continued services of Bryan Hunsaker, our Chief Executive Officer. We cannot assure you we would be able to find an appropriate replacement for key personnel. Any loss or interruption of our key personnel's services could adversely affect our ability to develop our business plan. We have no employment agreements or life insurance on Mr. Hunsaker.

~~Item~~Nevada 2.Law ~~Changes~~and inOur ~~Securities~~Charter May Inhibit a Takeover of Our Company That Stockholders May Consider Favorable

InProvisions ~~November 2006, the Company agreed to settle litigation with Golden Gate Investors on the past-due convertible debenture which had a principle balance due~~ of ~~$220,927. Under~~Nevada ~~the terms of the settlement~~law, ~~the~~such ~~Company~~as ~~placed 850,000,000 shares of~~ its ~~restricted~~business ~~common~~combination ~~stock~~statute, ~~into~~may anhave ~~escrow~~the ~~account~~effect ~~for satisfaction~~ of ~~the~~delaying, ~~debenture. Golden~~deferring ~~Gate~~or ispreventing ~~allowed~~a tochange ~~withdraw the shares from escrow provided that their overall holdings~~ in ~~the~~control ~~Company do not exceed 4.9%~~ of ~~all~~our ~~issued and outstanding common stock~~company. ~~The~~As ~~debenture~~a ~~obligation~~result, isthese ~~reduced~~provisions bycould ~~80%~~limit of the ~~average~~price ofsome ~~the~~investors ~~five~~might ~~lowest~~be ~~closing~~willing ~~bid prices of the Company’s common stock over a 90-day period prior~~ to ~~the~~pay ~~share~~in ~~withdrawal multiplied by~~ the ~~number~~future offor shares ~~being withdrawn. The difference between the value~~ of ~~the~~our ~~shares~~common ~~issued into escrow and the value of the debenture payable was $2,578,766 and has been recorded as settlement costs in the accompanying financial statements~~stock. ~~Under~~ ~~the terms of this settlement, as of December 31, 2006, 21,055,185 shares have been released from escrow and the debenture balance has been reduced to $216,902.~~

InItem connection with the debenture settlement with Golden Gate, Golden Gate entered into a stock purchase agreement which required Golden Gate to purchase $100,000 of the Company’s restricted common stock for every $10,000 in debenture redeemed through the escrow4. As ofControls ~~December~~and 31, 2006, the Company sold 50,275 shares of restricted common stock under the agreement for proceeds of $50,275. The Company also received $74,875 from Golden Gate as an advance on future stock purchases under the agreement.Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to be effective in providing reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “SEC”), and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure.

In designing and evaluating disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute assurance of achieving the desired objectives. Also, 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 all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. The design of any system of controls is based, in part, upon 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.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of management, including our chief executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, management concluded that our disclosure controls and procedures are effective as of March 31, 2008 to cause the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods prescribed by SEC, and that such information is accumulated and communicated to management, including our chief executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Item 4(T). Controls and Procedures

Evaluation of and Report on Internal Control over Financial Reporting

The management of Aero Performance Products, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:


	−	Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;

	−	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

	−	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 the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 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. 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 presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of September 30, 2008. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework.

Based on its assessment, management concluded that, as of September 30, 2008, the Company’s internal control over financial reporting is effective based on those criteria.

This quarterly report does not include an attestation report of the Company’s registered accounting firm regarding internal control over financial reporting. Management’s report is not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission.

Changes in Internal Control over Financial Reporting

There was no change in our internal controls over financial reporting identified in connection with the requisite evaluation that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II--OTHER INFORMATION

Item 1.

Legal Proceedings

None

Item 1. A. Risk Factors

Not applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the three months ended September 30, 2008, the Company issued a total of 116,000,000 shares of unregistered common stock under the following transactions:

38,000,000 shares were issued on the partial conversion of a note payable. The shares were issued under Rule 144 of the Securities Act of 1933. The subsequent resale of the stock resulted in a total of $17,527 reduction in the outstanding principle and interest owed on the obligation. The difference between the fair value of the securities on the date of issuance and the amount of debt relieved was debited against derivative liability.

78,000,000 shares were issued as partial settlement of debt owed to a third party. Under the terms of the settlement, the debt was reduced by $50,000. The shares were issued under Rule 144 of the Securities Act of 1933.

Item 3. Defaults Upon Senior Securities

~~None~~As of September 30, 2008, the Company was in default on its loan obligation to a former shareholder. The Company has reached an out of court settlement under which it is repaying the loan under structured monthly payments of $50,000.

Item 4. Submission of Matters to Vote of Security Holders

None

Item 5. Other Information

None

Item 6. Exhibits

The ~~following~~ exhibits listed below are ~~filed~~required asby ~~part~~Item 601 of ~~this~~Regulation ~~statement:~~S-B.

Exhibit No.	Description	Location
3.1	Articles of Incorporation	*
3.2	Bylaws	*
14	Code of Ethics adopted December 23,2004	**
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	***
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	***
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	***
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	***
99(i)	Audit Committee Charter adopted December 23, 2004	**
99.2(ii)	Investment Committee Charter adopted December 23, 2004	**

* Incorporated by reference from Franchise Capital Corporation's Registration Statement on Form SB-2 filed on October 29, 2001.

** Incorporated by reference from Franchise Capital Corporation’s Annual Report on Form 10-K for the Fiscal Year Ended June 30, 2005 filed on September 30, 2005.

*** Filed herewith.

SIGNATURE PAGE

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

Dated: ~~June~~November 613, ~~2007~~2008 /s/ ~~Steven~~Bryan ~~Peacock~~Hunsaker ~~Steven~~Bryan ~~Peacock~~Hunsaker Chief Executive Officer

EXHIBIT 31.1

SECTION 302

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, ~~Steven~~Bryan ~~Peacock~~Hunsaker, certify that:

1. I have reviewed this quarterly report on Form 10-Q of ~~Franchise~~Aero ~~Capital~~Performance ~~Corporation~~Products, Inc.;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4) The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

(5) The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: ~~June~~November 613, ~~2007~~2008 By: /s/ ~~Steven~~Bryan ~~Peacock~~Hunsaker ~~Steven~~Bryan ~~Peacock~~Hunsaker, Chief Executive Officer

EXHIBIT 31.2

SECTION 302

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, ~~Steven~~Bryan ~~Peacock~~Hunsaker, certify that:

1. I have reviewed this quarterly report on Form 10-Q of ~~Franchise~~Aero ~~Capital~~Performance ~~Corporation~~Products, Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: ~~June~~November 613, ~~2007~~2008 By: /s/ ~~Steven~~Bryan ~~Peacock~~Hunsaker ~~Steven~~Bryan ~~Peacock~~Hunsaker, Chief Financial Officer

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of ~~Franchise~~Aero ~~Capital~~Performance ~~Corporation~~Products, Inc. (the "Company") on Form 10-Q for the period ending ~~December~~September 3130, ~~2006~~2008, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, ~~Steven~~Bryan ~~Peacock~~Hunsaker, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of the operation of the Company.

/s/ ~~Steven~~Bryan ~~Peacock~~Hunsaker ~~Steven~~Bryan ~~Peacock~~Hunsaker Chief Executive Officer ~~June~~November 613, ~~2007~~2008

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of ~~Franchise~~Aero ~~Capital~~Performance ~~Corporation~~Products, Inc. (the "Company") on Form 10-Q for the period ending ~~December~~September 3130, ~~2006~~2008, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, ~~Steven~~Bryan ~~Peacock~~Hunsaker, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of the operation of the Company.

/s/ ~~Steven~~Bryan ~~Peacock~~Hunsaker ~~Steven~~Bryan ~~Peacock~~Hunsaker Chief Financial Officer ~~June~~November 613, ~~2007~~2008

Filing Compare · AERO PERFORMANCE PRODUCTS, INC.