SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-Q

(Mark One)
    __X__      Quarterly Report Pursuant to Section 13 or 15(d) of the
               Securities and Exchange Act of 1934

      For the Quarterly period ended September 30, 2003

                                            or

    _____      Transition report pursuant to Section 13 or 15(d) of the
               Securities and Exchange Act of 1934

      For the transition period from  ________________ to ___________________.

Commission File No.  1-9727
                    --------

                          Franklin Capital Corporation
               ---------------------------------------------------
               (Exact name of registrant specified in its charter)

         Delaware                                        13-3419202
-------------------------------             ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

450 Park Avenue, 20th Floor, New York, New York                    10022
-----------------------------------------------              -------------------
(Address of principal executive offices)                         (Zip Code)

Registrant's telephone number, including area code         (212) 486-2323
                                                     ---------------------------

Indicate by check mark whether the Registrant (1) has 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  Corporation  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X    No
                                      ---     ---

                                 NOT APPLICABLE

(Former name, former address and former fiscal year, if changed since last
report)

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).

Yes _____   No __X___

The number of shares of common  stock  outstanding  as of  November  3, 2003 was
1,020,100.


                                       1
<PAGE>


                                TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
         Item 1.  Financial Statements (Unaudited)
                  Balance Sheets
                  Statements of Operations
                  Statements of Cash Flows
                  Statements of Changes in Net Assets
                  Portfolio of Investments
                  Notes to Financial Statements
         Item 2.  Management's Discussion and Analysis of Financial Condition
                        and Results of Operations
                  Critical Accounting Policies
                  Statement of Operations
                  Financial Condition
                  Investments
                  Results of Operations
                  Taxes
                  Liquidity and Capital Resources
                  Risk Factors
         Item 3.  Quantitative and Qualitative Disclosures about Market Risk
         Item 4.  Controls and Procedures

PART II. OTHER INFORMATION
         Item 1.  Legal Proceedings
         Item 2.  Changes in Securities and Use of Proceeds
         Item 3.  Defaults Upon Senior Securities
         Item 4.  Submission of Matters to a Vote of Security Holders
         Item 5.  Other Information
         Item 6.  Exhibits and Reports on Form 8-K

SIGNATURE

EXHIBIT INDEX

                           FORWARD LOOKING STATEMENTS

WHEN  USED  IN THIS  QUARTERLY  REPORT  ON  FORM  10-Q,  THE  WORDS  "BELIEVES,"
"ANTICIPATES,"  "EXPECTS"  AND  SIMILAR  EXPRESSIONS  ARE  INTENDED  TO IDENTIFY
FORWARD-LOOKING  STATEMENTS.  STATEMENTS LOOKING FORWARD IN TIME ARE INCLUDED IN
THIS QUARTERLY REPORT ON FORM 10-Q. SUCH STATEMENTS ARE SUBJECT TO CERTAIN RISKS
AND  UNCERTAINTIES  WHICH  COULD  CAUSE  ACTUAL  RESULTS  TO DIFFER  MATERIALLY,
INCLUDING,  BUT NOT LIMITED TO, THOSE SET FORTH IN "MANAGEMENT'S  DISCUSSION AND
ANALYSIS  OF  FINANCIAL  CONDITION  AND  RESULTS  OF  OPERATIONS."  READERS  ARE
CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH
SPEAK ONLY AS OF THE DATE HEREOF.  THE  CORPORATION  UNDERTAKES NO OBLIGATION TO
PUBLICLY   REVISE  THESE   FORWARD-LOOKING   STATEMENTS  TO  REFLECT  EVENTS  OR
CIRCUMSTANCES  OCCURRING  AFTER THE DATE HEREOF OR TO REFLECT THE  OCCURRENCE OF
UNANTICIPATED EVENTS.

                                       2
<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

      The information furnished in the accompanying financial statements
reflects all adjustments that are, in the opinion of management, necessary for a
fair presentation of the results for the interim period presented.


                                       3
<PAGE>


                          FRANKLIN CAPITAL CORPORATION
================================================================================


BALANCE SHEETS

-------------------------------------------------------------------------------
                                                     SEPTEMBER 30,
                                                          2003     DECEMBER 31,
                                                      (UNAUDITED)      2002
-------------------------------------------------------------------------------

ASSETS

Marketable investment securities, at market value
  (cost: September 30, 2003 - $40,899;
  December 31, 2002 - $34,675)  (Note 2)              $   37,424     $   34,675
Investments, at fair value (cost: September 30,
  2003 - $2,283,804; December 31, 2002 - $3,876,430)
  (Note 2)
    Excelsior Radio Networks, Inc.                     2,671,270      2,957,875
    Other investments                                  1,000,000      1,000,000
                                                      ----------     ----------
                                                       3,671,270      3,957,875
                                                      ----------     ----------

Cash and cash equivalents (Notes 1 & 2)                   25,987        562,191
Other assets                                              85,573         77,597
                                                      ----------     ----------

TOTAL ASSETS                                          $3,820,254     $4,632,338
                                                      ==========     ==========


--------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES

Note payable                                          $  940,609     $  951,817
Accounts payable and accrued liabilities                 547,688        412,981
                                                      ----------     ----------

TOTAL LIABILITIES                                      1,488,297      1,364,798
                                                      ----------     ----------

Commitments and contingencies  (Note 5)

STOCKHOLDERS' EQUITY

Convertible preferred stock, $1 par value,
  cumulative 7% dividend: 5,000,000 shares
  authorized; 10,950 shares issued and outstanding
  at September 30, 2003 and December 31, 2002
  (Liquidation preference $1,095,000) (Note 4)            10,950         10,950
Common stock, $1 par value: 5,000,000 shares
  authorized; 1,505,888 shares issued:
  1,040,100 shares outstanding at September 30, 2003
  and 1,049,600 at December 31,2002 (Note 6)           1,505,888      1,505,888
Additional paid-in capital                            10,439,610     10,439,610
Unrealized appreciation of investments
  (Notes 2 and 3)                                      1,383,991      1,481,071
Accumulated deficit                                   (8,403,750)    (7,578,808)
                                                      ----------     ----------

                                                       4,936,689      5,858,711
Deduct common stock held in treasury, at cost,
  465,788 shares at September 30, 2003, and
  456,288 shares at December 31, 2002 (Note 4)        (2,604,732)    (2,591,171)
                                                      ----------     ----------

  Net assets (See Note 9 for per share information)    2,331,957      3,267,540
                                                      ----------     ----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY            $3,820,254     $4,632,338
                                                      ==========     ==========

--------------------------------------------------------------------------------

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

                                       4
<PAGE>


<TABLE>
<CAPTION>
                                          FRANKLIN CAPITAL CORPORATION
==============================================================================================================
STATEMENTS OF OPERATIONS
(UNAUDITED)
--------------------------------------------------------------------------------------------------------------
                                                               THREE MONTHS ENDED          NINE MONTHS ENDED
                                                                  SEPTEMBER 30,               SEPTEMBER 30,
                                                               2003          2002          2003         2002
--------------------------------------------------------------------------------------------------------------
<S>                                                          <C>          <C>            <C>          <C>
INVESTMENT INCOME
    Interest and dividend income                             $     90     $      110     $    848     $  2,219
    Management fees                                            45,000        120,000      135,000      330,000
                                                             --------     ----------     --------     --------

                                                               45,090        120,110      135,848      332,219
                                                             --------     ----------     --------     --------

EXPENSES
    Salaries and employee benefits                            111,660        195,957      422,854      589,848
    Professional fees                                          30,000         35,325      132,605      106,575
    Rent                                                       18,404         15,768       53,655       79,164
    Insurance                                                  16,714         17,843       52,037       39,973
    Directors' fees                                             2,001            501        6,003        1,502
    Taxes other than income taxes                               6,196          7,525       31,523       35,615
    Newswire and promotion                                         --          1,001           --        3,000
    Depreciation and amortization                               4,242          4,242       12,729       12,727
    Interest expense                                           12,600          8,850       30,300       26,550
    Expenses related to cancelled merger                       73,500        265,782       73,500      465,782
    General and administrative                                 41,456         39,536      143,978      132,599
                                                             --------     ----------     --------     --------

                                                              316,773        592,330      959,184    1,493,335
                                                             --------     ----------     --------     --------

Net investment loss from operations                          (271,683)      (472,220)    (823,336)  (1,161,116)

Net realized gain (loss) on portfolio of investments:
  Investment securities:
          Affiliated                                           57,900             --       57,900           --
          Unaffiliated                                         (2,017)       (16,431)      (2,017)    (349,147)
                                                             --------     ----------     --------     --------

Net realized gain (loss) on portfolio of investments           55,883        (16,431)      55,883     (349,147)

Provision for current income taxes                                 --            331           --          331
                                                             --------     ----------     --------     --------

                                                               55,883        (16,762)      55,883     (349,478)
                                                             --------     ----------     --------     --------

Net realized loss                                            (215,800)      (488,982)    (767,453)  (1,510,594)

Increase (decrease) in unrealized appreciation
  of investments
  Investment securities:
          Affiliated                                          383,450       (885,000)     (93,605)   2,115,000
          Unaffiliated                                         (3,475)         5,985       (3,475)      42,233
                                                             --------     ----------     --------     --------

Increase (decrease) in unrealized appreciation
  of investments                                              379,975       (879,015)     (97,080)   2,157,233
                                                             --------     ----------     --------     --------

Net increase (decrease) in net assets from operations         164,175     (1,367,997)    (864,533)     646,639

Preferred dividends                                            19,162         28,787       57,489       86,362
                                                             --------     ----------     --------     --------

Net increase (decrease) in net assets attributable to
   common stockholders                                       $145,013    ($1,396,784)   ($922,022)    $560,277
                                                             ========     ==========     ========     ========

Basic and diluted net increase (decrease) per share in
  net assets attributable to common stockholders (Note 8)       $0.14         ($1.31)      ($0.88)       $0.52
                                                                =====         ======       ======        =====
---------------------------------------------------------------------------------------------------------------
</TABLE>

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

                                       5
<PAGE>


<TABLE>
<CAPTION>
                           FRANKLIN CAPITAL CORPORATION
=============================================================================================

STATEMENTS OF CASH FLOWS
(UNAUDITED)
---------------------------------------------------------------------------------------------

FOR THE NINE MONTHS ENDED SEPTEMBER 30,                                  2003          2002
---------------------------------------------------------------------------------------------
<S>                                                                    <C>          <C>
Cash flows from operating activities:
  Net (decrease) increase in net assets from operations               ($864,533)    $ 646,639
  Adjustments to reconcile net (decrease) increase in net assets
    from operations to net cash used in operating activities:
      Depreciation and amortization                                      12,729        12,727
      Decrease (increase) in unrealized appreciation of investments      97,080    (2,157,233)
      Net realized (gain) loss on portfolio of investments, net of
        current income taxes                                            (55,882)      349,477

      Changes in operating assets and liabilities:
        Increase in other assets                                        (20,705)      (11,428)
        Decrease in accounts payable and accrued liabilities,
        excluding change in current income taxes payable                134,707       617,532
                                                                       --------     ---------

          Total adjustments                                             167,929    (1,188,925)
                                                                       --------     ---------

          Net cash used in operating activities                        (696,604)     (542,286)
                                                                       --------     ---------

Cash flows from investing activities:
  Proceeds from sale of securities in majority-owned affiliate          250,900            --
  Proceeds from sale of other investments                                    --        78,715
  Proceeds from sale of marketable investment securities                 28,924         6,554
  Loan payments from majority-owned affiliate                                --        75,000
  Purchases of marketable investment securities                         (37,166)      (22,985)
                                                                       --------     ---------

          Net cash provided by investing activities                     242,658       137,284
                                                                       --------     ---------

Cash flows from financing activities:
  Payment of preferred dividends                                        (57,489)      (86,362)
  Decrease in note payable                                              (11,208)      (47,930)
  Proceeds for conversion right                                              --       300,000
  Purchases of treasury stock                                           (13,561)      (37,322)
                                                                       --------     ---------

          Net cash (used in) provided by financing activities           (82,258)      128,386
                                                                       --------     ---------

Net decrease in cash and cash equivalents                              (536,204)     (276,616)

Cash and cash equivalents at beginning of period                        562,191       279,728
                                                                       --------     ---------

Cash and cash equivalents at end of period                             $ 25,987     $   3,112
                                                                       ========     =========
---------------------------------------------------------------------------------------------
</TABLE>

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

                                       6
<PAGE>


<TABLE>
<CAPTION>
                                              FRANKLIN CAPITAL CORPORATION
==========================================================================================================================


STATEMENTS OF CHANGES IN NET ASSETS
(UNAUDITED)
--------------------------------------------------------------------------------------------------------------------------
                                                                      THREE MONTHS ENDED            NINE MONTHS ENDED
                                                                         SEPTEMBER 30,                 SEPTEMBER 30,
                                                                      2003           2002           2003           2002
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>            <C>            <C>            <C>
Increase (decrease) in net assets from operations:
  Net investment loss                                               ($271,683)     ($472,220)     ($823,336)   ($1,161,116)
  Net realized gain (loss) on portfolio of investments,
    net of current income taxes                                        55,883        (16,762)        55,883       (349,478)
  Increase (decrease) in unrealized appreciation of investments       379,975       (879,015)       (97,080)     2,157,233
                                                                   ----------     ----------     ----------     ----------

    Net increase (decrease) in net assets from operations             164,175     (1,367,997)      (864,533)       646,639

Capital stock transactions:
  Payment of dividends on preferred stock                             (19,162)       (28,787)       (57,489)       (86,362)
  Proceeds for conversion right                                            --             --             --        300,000
  Purchase of treasury stock                                               --         (2,076)       (13,561)       (37,322)
                                                                   ----------     ----------     ----------     ----------

    Total increase (decrease) in net assets                           145,013     (1,398,860)      (935,583)       822,955
                                                                   ----------     ----------     ----------     ----------

Net assets at beginning of period                                   2,186,944      5,143,560      3,267,540      2,921,745
                                                                   ----------     ----------     ----------     ----------

Net assets at end of period                                        $2,331,957     $3,744,700     $2,331,957     $3,744,700
                                                                   ==========     ==========     ==========     ==========
--------------------------------------------------------------------------------------------------------------------------
</TABLE>

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

                                       7
<PAGE>


<TABLE>
<CAPTION>
                                                    FRANKLIN CAPITAL CORPORATION
====================================================================================================================================

PORTFOLIO OF INVESTMENTS

------------------------------------------------------------------------------------------------------------------------------------

MARKETABLE INVESTMENT SECURITIES
------------------------------------------------------------------------------------------------------------------------------------

                                                                                         NUMBER OF
                                                                                         SHARES OR                       MARKET
                                                                                         PRINCIPAL                       VALUE
SEPTEMBER 30, 2003 (2)                                                                   AMOUNT ($)      COST(1)        (NOTE 2)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>                  <C>         <C>           <C>            <C>
Certificate of Deposit - 0.65%, due 11/03/2003                                                            26,249          26,249
Xplor Technology                                                                             7,500        14,650          11,175
                                                                                                          ------          ------

     Total Marketable Investment Securities
     (1.0% of total investments and 1.6% of net assets)                                                  $40,899         $37,424
                                                                                                         =======         =======
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS, AT FAIR VALUE
------------------------------------------------------------------------------------------------------------------------------------
                                                                                         NUMBER OF
                                                                                         SHARES OR                     DIRECTORS'
                                                                             EQUITY      PRINCIPAL                     VALUATION
SEPTEMBER 30, 2003 (2)                                     INVESTMENT       INTEREST     AMOUNT ($)      COST(1)        (NOTE 2)
------------------------------------------------------------------------------------------------------------------------------------

MAJORITY OWNED AFFILIATE

Excelsior Radio Networks, Inc.                           Common stock
                                                         and warrants        51.35%      1,370,915     $1,283,804     $2,671,270
Total Excelsior Radio Networks, Inc.
(72.0% of total investments and 114.6% of net assets)                        22.09%
  (Radio production and advertising sales)                              (fully diluted)

OTHER INVESTMENTS

Alacra Corporation (27.0% of total investments            Convertible
and 42.9% of net assets)                                Preferred Stock      1.68%         321,543      1,000,000      1,000,000
                                                                                                       ----------      ---------
  (Internet-based information provider)

     Investments, at Fair Value                                                                         2,283,804      3,671,270
                                                                                                       ==========      =========
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)   Book cost equals tax cost for all investments

(2)   Total investments refers to investments and marketable investment
      securities.

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

                                       8
<PAGE>


FRANKLIN CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003

1.    DESCRIPTION OF BUSINESS

Franklin Capital  Corporation  ("Franklin",  or the "Corporation") is a Delaware
corporation  operating  as a  Business  Development  Company  ("BDC")  under the
Investment  Company  Act of 1940 (the  "Act").  A BDC is a  specialized  type of
investment  company  under  the Act.  A BDC  must be  primarily  engaged  in the
business of  furnishing  capital and making  available  managerial  expertise to
companies  that  do not  have  ready  access  to  capital  through  conventional
financial channels.  Such companies are termed "eligible  portfolio  companies".
The Corporation,  as a BDC,  generally may invest in other securities;  however,
such  investments may not exceed 30% of the  Corporation's  total asset value at
the time of any such investment.

The  accompanying  financial  statements  have been  prepared  assuming that the
Corporation  will continue as a going  concern.  The  Corporation  has a working
capital deficiency of approximately  $1,400,000 at September 30, 2003.  (Working
capital is defined as total  liabilities  less liquid assets.) These  conditions
raise substantial  doubt about the Corporation's  ability to continue as a going
concern.  In order to alleviate the  substantial  doubt about the  Corporation's
ability to continue as a going concern, the Corporation will seek to sell assets
or find an  alternative  financing  source.  There can be no assurance  that the
Corporation would be able to obtain financing.  The financial  statements do not
include  any   adjustments  to  reflect  the  possible  future  effects  on  the
recoverability  of assets or the amounts of liabilities that may result from the
outcome of this uncertainty.

On October 8, 2003, Franklin sold to Sunshine Wireless, LLC ("Sunshine") 375,000
shares of the common  stock of  Excelsior at $2.00 per share for an aggregate of
$750,000,  realizing a gain of $375,000  (See Note 11).  This asset sale reduced
Franklin's  working  capital  deficiency  to  approximately  $700,000.  Franklin
continues to have a working capital  deficiency  primarily due to a note payable
of $940,609 to Winstar  Communications,  Inc. ("Winstar") in connection with the
acquisition of assets from Winstar (see Note 6). This note is taken into account
in calculating the working capital deficit as it is assumed to be payable within
the next year. Due to an action in which Franklin is a named party (see Note 5),
the due date of this note has been extended  indefinitely and it is uncertain as
to when this note will come due. Franklin continues to seek adequate alternative
financing  rather than  additional  asset sales in order to alleviate  the going
concern issue.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States  requires  management to make estimates
and assumptions  that affect the reported  amounts of 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.

STATEMENTS OF CASH FLOWS

For purposes of the  Statements of Cash Flows,  Franklin  considers  only highly
liquid  investments  such as  money  market  funds  and  commercial  paper  with
maturities  of 90  days or less at the  date  of  their  acquisition  to be cash
equivalents.

The  Corporation  paid no interest or income  taxes during the nine months ended
September 30, 2003 and 2002.

At September 30, 2003 and 2002, the Corporation  held cash and cash  equivalents
primarily in money market funds at two commercial banking institutions,  and one
broker/dealer.

                                       9
<PAGE>


FRANKLIN CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)


VALUATION OF INVESTMENTS

Security  investments which are publicly traded on a national exchange or Nasdaq
Stock  Market  are  stated  at the  last  reported  sales  price  on the  day of
valuation,  or if no sale was  reported on that date,  then the  securities  are
stated at the last quoted bid price.  The Board of  Directors  of Franklin  (the
"Board of Directors") may determine, if appropriate, to discount the value where
there is an impediment to the marketability of the securities held.

Investments for which there is no ready market are initially valued at cost and,
thereafter,  at fair value  based upon the  financial  condition  and  operating
results of the issuer and other pertinent factors as determined in good faith by
the Board of Directors.  The financial condition and operating results have been
derived  utilizing  both audited and  unaudited  data. In the absence of a ready
market for an  investment,  numerous  assumptions  are inherent in the valuation
process.  Some or all of these  assumptions may not  materialize.  Unanticipated
events and  circumstances  may occur subsequent to the date of the valuation and
values may change due to future events. Therefore, the actual amounts eventually
realized  from  each  investment  may vary  from the  valuations  shown  and the
differences  may be  material.  Franklin  reports  the  unrealized  gain or loss
resulting from such valuation in the Statements of Operations.

GAINS (LOSSES) ON PORTFOLIO OF INVESTMENTS

Amounts  reported as realized  gains  (losses)  are  measured by the  difference
between the  proceeds of sale or exchange  and the cost basis of the  investment
without regard to unrealized gains (losses) reported in the prior periods. Gains
(losses) are considered  realized when sales or  dissolution of investments  are
consummated.

INCOME TAXES

Franklin  does not  qualify  for  pass  through  tax  treatment  as a  Regulated
Investment  Company under  Subchapter M of the Internal  Revenue Code for income
tax purposes. Therefore, the Corporation is taxed under Regulation C.

Franklin accounts for income taxes in accordance with the provision of Statement
of Financial  Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109").  The  significant  components of deferred tax assets and  liabilities are
principally related to the Corporation's net operating loss carryforward and its
unrealized appreciation of investments.

DEPRECIATION AND AMORTIZATION

Depreciation  is  recorded  using the  straight-line  method at rates based upon
estimated  useful lives for the respective  assets.  Leasehold  Improvements are
included  in other  assets  and are  amortized  over their  useful  lives or the
remaining life of the lease, whichever is shorter.

NET (DECREASE) INCREASE IN NET ASSETS PER SHARE
ATTRIBUTABLE TO COMMON STOCKHOLDERS

Net  (decrease)  increase  in  net  assets  per  share  attributable  to  common
stockholders  is calculated in  accordance  with the  provisions of Statement of
Financial Accounting Standards No. 128, "Earnings per Share".

STOCK-BASED COMPENSATION

The  Corporation  has elected to follow APB Opinion  25,  "Accounting  for Stock
Issued to Employees," to account for its  Non-Qualified  Stock Option Plan under
which no  compensation  cost is recognized  because the option exercise price is
equal to at least the market price of the underlying stock on the date of grant.
Had  compensation  cost for these plans been  determined  at the grant dates for
awards under the  alternative  accounting  method  provided for in SFAS No. 148,
"Accounting  for  Stock-Based  Compensation  -  Transition  and  Disclosure - an
Amendment of FASB  Statement  No. 123," net income and earnings per share,  on a
pro forma basis, would have been:


                                       10
<PAGE>


FRANKLIN CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)


                                                   September 30,   September 30,
                                                       2003            2002
                                                    ----------       --------
Net (decrease) increase in net assets
  attributable to common stockholders:
As reported                                         $ (922,022)      $560,277

Deduct:
Total stock-based employee compensation
  expense determined under fair value based
  method for all awards, net of related tax effect          --          6,312
                                                    ----------       --------
Pro forma                                           $ (922,022)      $553,965
                                                    ==========       ========

Basic and diluted net (decrease) increase in
  net assets attributable to common stockholders:
As reported                                             $(0.88)         $0.52
Pro forma                                               $(0.88)         $0.52

RECLASSIFICATION

Certain  amounts in prior  years  have been  reclassified  to  conform  with the
current year presentation.

3.    INCOME TAXES

For  the  nine  months  ended  September  30,  2003  and  2002,  Franklin's  tax
(provision) benefit was based on the following:

                                                         2003          2002
                                                      ---------     -----------
Net investment loss from operations ...............   $(823,336)    $(1,161,116)
Net realized gain (loss) on portfolio
  of investments ..................................      55,883        (349,147)
(Decrease) increase in unrealized appreciation ....     (97,080)      2,157,233
                                                      ---------     -----------
   Pre-tax book (loss) income .....................   $(864,533)    $   646,970
                                                      =========     ===========

                                                         2003          2002
                                                      ---------     -----------
Tax benefit (provision) at 34% on $(864,533) and
  $646,970, respectively ..........................   $ 294,000     $  (220,000)
State and local, net of Federal benefit ...........          --              --
Other .............................................      45,000        (155,000)
Change in valuation allowance .....................    (339,000)        375,000
                                                      ---------     -----------
                                                      $      --     $        --
                                                      =========     ===========

Deferred  income tax provision  reflects the impact of  "temporary  differences"
between amounts of assets and liabilities for financial  reporting  purposes and
such amounts as measured by tax laws.

At September 30, 2003 and December 31, 2002, significant deferred tax assets and
liabilities consist of:

                                                         Asset (Liability)
                                                   ----------------------------
                                                   September 30,   September 30,
                                                       2003            2002
                                                   -----------      -----------
Deferred Federal and state benefit from
  net operating loss carryforward ..............   $ 2,660,000      $ 2,356,000
Deferred Federal and state provision on
  unrealized (appreciation) depreciation
  of investments ...............................      (498,000)        (533,000)
Valuation allowance ............................    (2,162,000)      (1,823,000)
                                                   -----------      -----------
Deferred taxes .................................   $        --      $        --
                                                   ===========      ===========

                                       11
<PAGE>


FRANKLIN CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)


At December 31, 2002,  Franklin had net operating loss  carryforwards for income
tax purposes of approximately $6,544,000 that will begin to expire in 2011. At a
36%  effective  tax rate the  after-tax  net  benefit  from this  loss  would be
approximately $2,356,000.

4.    STOCKHOLDERS' EQUITY

The  accumulated  deficit at September  30, 2003,  consists of  accumulated  net
realized gains of $5,168,000 and accumulated investment losses of $13,572,000.

The Board of Directors has authorized  Franklin to repurchase up to an aggregate
of 525,000  shares of its common stock in open market  purchases on the American
Stock  Exchange when such purchases are deemed to be in the best interest of the
Corporation and its  stockholders.  As of December 31, 2002, the Corporation had
purchased  507,450  shares of its  common  stock of which  456,288  remained  in
treasury.  During the nine months  ended  September  30, 2003,  the  Corporation
purchased 9,500 shares of its common stock at a total cost of $13,561.  To date,
Franklin has  repurchased  516,950  shares of its common stock of which  465,788
shares remain in treasury at September 30, 2003.

PREFERRED STOCK -

The preferred  stock has a cumulative 7% quarterly  dividend and is  convertible
into the number of shares of common stock by dividing the purchase price for the
convertible  preferred  stock by conversion  price in effect (which is currently
$13.33). The convertible preferred stock has antidilution provisions,  which can
change the conversion price in certain  circumstances if the Corporation  issues
additional  shares of common  stock.  The holder  has the right to  convert  the
shares of convertible  preferred  stock at any time until February 22, 2010 into
common stock.  Upon  liquidation,  dissolution or winding up of the Corporation,
the stockholders of the convertible preferred stock are entitled to receive $100
per share plus any  accrued and unpaid  dividends  before  distributions  to any
holder of the Corporation's  common stock. On December 31, 2002, the Corporation
redeemed  from  certain  preferred  stockholders  5,500  shares  of  convertible
preferred stock for $25.00 per share.

5.    COMMITMENTS AND CONTINGENCIES

On October 15, 2001, Jeffrey A. Leve and Jeffrey Leve Family  Partnership,  L.P.
filed a lawsuit against Franklin,  Sunshine and four other defendants affiliated
with Winstar in the Superior  Court of the State of California for the County of
Los Angeles.  The  lawsuit,  which has  subsequently  been removed to the United
States District Court for the Central  District of California,  alleges that the
Winstar  defendants  conspired to commit fraud and breached their fiduciary duty
to the plaintiffs in connection with the  acquisition of the  plaintiffs'  radio
production  and  distribution  business.  The  complaint  further  alleges  that
Franklin and Sunshine joined the alleged conspiracy.  The business was initially
acquired by certain  entities  affiliated  with Winstar and,  subsequently,  the
assets  of such  business  were  sold to  Franklin  and  Sunshine  (see Note 6).
Concurrently with such purchase,  Franklin transferred such assets to Excelsior.
The  plaintiffs  seek  recovery of damages in excess of  $10,000,000,  costs and
attorneys'  fees.  On January 7, 2002,  Franklin  filed a motion to dismiss  the
lawsuit or, in the alternative,  to transfer venue to the United States District
Court of the  Southern  District  of New  York.  The  plaintiffs  filed a motion
opposing Franklin's request on January 28, 2002. Franklin's motion for dismissal
was granted on February 25, 2002,  due to improper  venue.  On June 7, 2002, the
plaintiffs  filed their  complaint to the United  States  District  Court of the
Southern  District of New York.  On July 12,  2002,  Franklin  filed a motion to
dismiss the  complaint.  On February  25, 2003,  the case  against  Franklin and
Sunshine  was  dismissed;  however,  the  plaintiffs  may  file  an  appeal.  An
unfavorable  outcome  in this  lawsuit  may have a  material  adverse  effect on
Franklin's business, financial condition and results of operations.

                                       12
<PAGE>


FRANKLIN CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)


6.    EXCELSIOR RADIO NETWORKS, INC.

Franklin valued its position in Excelsior at $2.00 per common share based on the
sale of 375,000  common  shares to Sunshine on October 8, 2003 (See Note 11) and
the receipt of an  unsolicited  non-binding  expression of interest by Excelsior
from a third party at a price greater than $2.00 per common share.

Franklin  issued a $1,000,000  note as part of the purchase  price of Excelsior.
This note was due  February  28, 2002 with  interest at 3.54% but has a right of
set-off  against  certain  representations  and warranties made by Winstar Radio
Networks, Inc. (See Note 5)

On October 1, 2002,  Franklin  received  74,232  warrants  to acquire  shares of
Excelsior  common stock at an exercise  price of $1.20 per share for arranging a
refinancing of Excelsior debt.

Franklin  entered into a services  agreement  with  Excelsior  whereby  Franklin
provides Excelsior with certain services.  Franklin receives a management fee of
not  less  than  $15,000  per  month  as   determined  by   Excelsior's   board.
Additionally,  Franklin's  chief  financial  officer serves in that capacity for
Excelsior  and his salary and  benefits  are  allocated  between  Excelsior  and
Franklin on an 80/20 basis. During the nine months ended September 30, 2003, and
2002,  Franklin earned $135,000 and $330,000,  respectively,  in management fees
and was reimbursed $108,000 and $90,702,  respectively,  for salary and benefits
for Franklin's  chief  financial  officer,  which was recorded as a reduction of
expenses on Franklin.

Excelsior  issued  notes,  each with an initial  aggregate  principal  amount of
$460,000 in connection with the acquisition of  substantially  all of the assets
of Dial Communications  Group, Inc., and Dial Communications Group, LLC in April
2002.  Each of the  promissory  notes is  convertible  into shares of Franklin's
common  stock at a  premium  ranging  from 115% to 120% of the  average  closing
prices of  Franklin's  common  stock  during a  specified  pre and post  closing
measurement  period.  Excelsior has paid to Franklin an amount equal to $300,000
in  consideration  of Franklin's  obligations  in  connection  with any Franklin
common stock that may be issued  pursuant to the terms of the promissory  notes.
For each  share of  common  stock  Franklin  is  required  to  issue  under  the
promissory  notes,  Franklin  will  receive  0.86  shares  of  common  stock  in
Excelsior.  The  note  holders  have  entered  into  advanced  discussions  with
Excelsior  to amend  the  conversion  feature  so that the  notes  would  become
convertible into stock  appreciation  rights on Excelsior's  common stock rather
than  convertible  into  Franklin's  common  stock.  It is  expected  that  this
agreement will be signed after the filing of this 10Q but prior to year-end.  If
the  agreement is not signed,  then the note  holders will  continue to hold the
right to convert the notes into shares of Franklin's common stock.

Franklin along with Sunshine initially  purchased  Excelsior on August 28, 2001.
On October 3, 2002,  Franklin sold 773,196 common shares for $1.94 per share for
$1,500,000  realizing a gain of  $726,804.  On August 12,  2003,  Franklin  sold
193,000  common  shares  for $1.30 per share for  $250,900  realizing  a gain of
$57,900.  Franklin  has stock  appreciation  rights on these  commons  shares as
follows,  a) in the event that Excelsior is sold on or before August 8, 2004 for
gross proceeds of no less than  $40,000,000,  then Franklin shall be entitled to
receive fifty percent (50%) of any net value above $1.30 per share not to exceed
proceeds to Franklin of $1.94 per share,  and b) in the event that  Excelsior is
sold on or before August 8, 2005 for gross proceeds of no less than $40,000,000,
then Franklin  shall be entitled to receive fifty percent (50%) of any net value
above $1.30 per share not to exceed proceeds to Franklin of $1.625 per share. On
October 8, 2003,  Franklin sold  additional  shares to Sunshine (Note 11). There
can be no  guarantee  that  Franklin  will be able to continue to sell shares of
Excelsior to Sunshine.

7.    STOCK OPTION PLANS

On September 9, 1997, Franklin's stockholders approved two Stock Option Plans: a
Stock  Incentive  Plan ("SIP") to be offered to the  Corporation's  consultants,
officers and employees (including any officer or employee who is also a director
of the Corporation) and a Non-Statutory  Stock Option Plan ("SOP") to be offered
to the Corporation's  "outside"  directors,  (i.e.,  those directors who are not
also officers or employees of  Franklin).  112,500  shares of the  Corporation's
Common Stock have been reserved for issuance under these plans,  of which 67,500
shares have been  reserved for the SIP and 45,000  shares have been reserved for
the SOP.  Shares  subject to options that  terminate or expire prior to exercise
will be available  for future  grants  under the Plans.  Because the issuance of
options  to  "outside"  directors  is not  permitted  under the Act  without  an
exemptive order by the Securities and Exchange

                                       13
<PAGE>


FRANKLIN CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)


Commission,  the  issuance  of options  under the SOP was  conditioned  upon the
granting of such order.  The order was granted by the  Commission on January 18,
2000.

The  following  is a summary of the status of the Stock  Option Plans during the
nine months ended:

                                      September 30, 2003      September 30, 2002
                                      ------------------      ------------------
                                                Weighted                Weighted
                                                 Average                 Average
                                                Exercise                Exercise
                                      Shares      Price       Shares      Price
                                      ------      ------      ------      ------
Outstanding at beginning
  of period                           20,625      $11.39      39,375      $11.27
Granted                                   --          --          --          --
Exercised                                 --          --          --          --
Forfeited                                 --          --      18,750      $11.13
Expired                                   --          --          --          --
                                      ------                  ------
Outstanding at end of period          20,625      $11.39      20,625      $11.39
                                      ======                  ======
Exercisable at end of period          20,625      $11.39      20,625      $11.39
                                      ======                  ======

The options issued under the SIP have a remaining contractual life of 4.2 years.
The options issued under the SOP have a remaining contractual life of 6.3 years.

8.    NET INCREASE  (DECREASE) IN NET ASSETS ATTRIBUTABLE TO COMMON STOCKHOLDERS
      PER SHARE

The following  table sets forth the  computation  of basic and diluted change in
net assets attributable to common stockholders per share:

<TABLE>
<CAPTION>
                                                      Three Months ended              Nine months ended
                                                         September 30,                 September   30,
                                                   -------------------------------------------------------
                                                     2003             2002           2003           2002
                                                   -------------------------------------------------------
<S>                                                <C>            <C>              <C>            <C>
Numerator:
    Net increase (decrease) in net assets
      from operations                              $ 164,175      ($1,367,997)     ($864,533)     $ 646,639
    Preferred stock dividends                        (19,162)         (28,787)       (57,489)       (86,362)
                                                   ---------      -----------      ---------      ---------
    Numerator for basic and diluted earnings
      per share - net increase (decrease) in net
      assets attributable to common stockholders   $ 145,013      ($1,396,784)     ($922,022)     $ 560,277
                                                   =========      ===========      =========      =========

Denominator:
    Denominator for basic and diluted increase
      (decrease) in net assets from operations
      - weighted - average shares                  1,040,100        1,064,593      1,042,262      1,068,155

Basic and diluted net increase (decrease) in
      net assets from operations per share             $0.14           ($1.31)        ($0.88)         $0.52
                                                       =====           ======         ======          =====
</TABLE>

Common  shares  which  would be  issued  upon  conversion  of the  Corporation's
preferred  stock or exercise of options have been excluded from the dilutive per
share computation as they are antidilutive (see Notes 4 and 7):

                                       14
<PAGE>


FRANKLIN CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)


                                                      Period ended September 30,
                                                      -------------------------
                                                       2003               2002
                                                      -------------------------
Preferred stock convertible into common stock         82,125            123,375
Stock options                                         20,625             20,625

9.    NET ASSET VALUE PER SHARE

The  following  table sets forth the  computation  of net asset value per common
share attributable to common stockholders:

                                                   September 30,   December 31,
                                                       2003            2002
                                                    ----------      ----------
Numerator:
    Numerator for net asset value per
      common share, as if converted basis           $2,331,957      $3,267,540
    Liquidation value of convertible
      preferred stock                               (1,095,000)     (1,095,000)
                                                    ----------      ----------
    Numerator for net asset value per share
      attributable to common stockholders           $1,236,957      $2,172,540
                                                    ==========      ==========

Denominator:
    Number of common shares outstanding,
      denominator for net asset value per share
      attributable to common stockholders            1,040,100       1,049,600
    Number of shares of common stock to be
      issued upon conversion of preferred stock         82,125          82,125
                                                    ----------      ----------
    Denominator for net asset value per common
      share as if converted basis                    1,122,225       1,131,725
                                                    ==========      ==========

         Net asset value per share attributable
           to common stockholders                        $1.19           $2.07
                                                         =====           =====

         Net asset value per common share,
           as if converted basis                         $2.08           $2.89
                                                         =====           =====

10.  PURCHASES AND SALES OF INVESTMENT SECURITIES

The cost of purchases and proceeds from sales of investment securities excluding
short-term  investments,  aggregated $37,166 and $271,398 respectively,  for the
nine months ended September 30, 2003, and $22,985 and $85,269 respectively,  for
the nine months ended September 30, 2002.

11.   SUBSEQUENT EVENT

On October 8, 2003, Franklin sold to Sunshine 375,000 shares of the common stock
of Excelsior for an aggregate  purchase  price of $750,000,  realizing a gain of
$375,000,  pursuant to a stock purchase agreement between Sunshine and Franklin.
Franklin  has stock  appreciation  rights on these  common  shares  such that if
Excelsior is sold and the purchaser of the common shares from Franklin  receives
more than $3.50 per share,  Franklin  is  entitled  to receive  80% of the value
greater than $3.50 per share.  After giving effect to the purchase of the common
stock,  Sunshine  owns  approximately  63.6% and the  Company  owns 36.4% of the
issued and outstanding common stock, and voting power, of Excelsior.  On a fully
diluted basis,  after giving effect to the exercise of the outstanding  warrants
and the conversion of Sunshine's  outstanding  preferred stock of Excelsior into
common stock, the Corporation owns approximately 13.8% of Excelsior.

                                       15
<PAGE>


ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
            RESULTS OF OPERATIONS

CRITICAL ACCOUNTING POLICIES

      Franklin's  discussion and analysis of its financial condition and results
of operations are based upon the Corporation's financial statements,  which have
been prepared in accordance with accounting principles generally accepted in the
United  States.  The  preparation  of these  financial  statements  requires the
Corporation to make estimates and judgments that affect the reported  amounts of
assets, liabilities,  revenues and expenses and related disclosure of contingent
assets and  liabilities.  On an ongoing  basis,  the  Corporation  evaluates its
estimates, the most critical of which are those related to the fair value of the
portfolio of investments.

STATEMENT OF OPERATIONS

      The Corporation  accounts for its operations under  accounting  principles
generally accepted in the United States for investment companies. On this basis,
the principal  measure of its financial  performance  is captioned "Net increase
(decrease) in net assets from  operations",  which is composed of the following:
"Net  investment  loss from  operations,"  which is the  difference  between the
Corporation's  income  from  interest,  dividends  and  fees  and its  operating
expenses;  "Net  realized  gain  on  portfolio  of  investments,"  which  is the
difference   between  the  proceeds  received  from  dispositions  of  portfolio
securities  and  their  stated  cost;  any  applicable   income  tax  provisions
(benefits);   and  "Net  increase  (decrease)  in  unrealized   appreciation  of
investments,"  which is the net  change in the fair  value of the  Corporation's
investment  portfolio,  net of any increase  (decrease) in deferred income taxes
that would become payable if the unrealized  appreciation  were realized through
the sale or other disposition of the investment portfolio.

      "Net realized gain (loss) on portfolio of  investments"  and "Net increase
(decrease) in unrealized appreciation of investments" are directly related. When
a security is sold to realize a gain, the net unrealized  appreciation decreases
and the net realized gain increases.  When a security is sold to realize a loss,
the net unrealized appreciation increases and the net realized gain decreases.

FINANCIAL CONDITION

      The  Corporation's  total  assets  and  net  assets  were,   respectively,
$3,820,254  and  $2,331,957  at  September  30,  2003,   versus  $4,632,338  and
$3,267,540  at December  31,  2002.  Net asset value per share  attributable  to
common  shareholders  and on an as if  converted  basis  was  $1.19  and  $2.08,
respectively at September 30, 2003, versus $2.07 and $2.89 at December 31, 2002.

      The Corporation's  financial  condition is dependent on the success of its
investments. A summary of the Corporation's investment portfolio is as follows:

                                          SEPTEMBER 30, 2003   DECEMBER 31, 2002
                                          ------------------   -----------------
Investments, at cost                          $2,324,703          $2,511,479
Unrealized appreciation                        1,383,991           1,481,071
                                              ----------          ----------
Investments, at fair value                    $3,708,694          $3,992,550
                                              ==========          ==========

                                       16
<PAGE>


      The accompanying financial statements have been prepared assuming that the
Corporation  will continue as a going  concern.  The  Corporation  has a working
capital  deficiency of  approximately  $1,400,000  at September  30, 2003.  This
condition raises  substantial doubt about the Corporation's  ability to continue
as a going concern. There can be no assurance that the Corporation would be able
to find a suitable  merger partner or be able to obtain  alternative  financing.
The financial  statements do not include any adjustments to reflect the possible
future  effects on the  recoverability  of assets or the amounts of  liabilities
that may result from the outcome of this uncertainty.

      On October 8, 2003,  Franklin sold to Sunshine Wireless,  LLC ("Sunshine")
375,000  shares  of the  common  stock of  Excelsior  at $2.00  per share for an
aggregate  of  $750,000,  realizing  a gain  of  $375,000  (See  Note  11 to the
financial  statements).  This  asset sale  reduced  Franklin's  working  capital
deficiency  to  approximately  $700,000.  Franklin  continues  to have a working
capital  deficiency  primarily  due to a note  payable  of  $940,609  to Winstar
Communications,  Inc.  ("Winstar") in connection  with the acquisition of assets
from Winstar (see Note 6 to the financial  statements).  This note is taken into
account  in  calculating  the  working  capital  deficit  as it is assumed to be
payable  within the next  year.  Due to an action in which  Franklin  is a named
party (see Note 5 to the  financial  statements),  the due date of this note has
been  extended  indefinitely  and it is uncertain as to when this note will come
due.  Franklin  continues to seek  adequate  alternative  financing  rather than
additional asset sales in order to alleviate the going concern issue.

INVESTMENTS

      Franklin's primary investment is in Excelsior. A description of Franklin's
other investment follows the description of Excelsior.

      EXCELSIOR

      At September  30, 2003,  the  Corporation  has an investment in Excelsior,
valued at $2,671,270,  which represents 69.9% of the Corporation's  total assets
and 114.6% of its net assets.

      Franklin  valued its position in Excelsior at $2.00 per common share based
on the sale of 375,000  common  shares to  Sunshine on October 8, 2003 (See Note
11) and the  receipt of an  unsolicited  non-binding  expression  of interest by
Excelsior from a third party at a price greater than $2.00 per common share.

      Excelsior  was  incorporated  in  1999  under  the  laws of the  State  of
Delaware.  Excelsior  had no  operations  until  August 2001 when a group led by
Franklin  invested in Excelsior for the purpose of acquiring certain assets from
Winstar  Radio  Networks,  LLC,  Winstar  Global  Media,  Inc. and Winstar Radio
Productions, LLC.

      Excelsior creates, produces, distributes and is a sales representative for
national  radio  programs and offers other  miscellaneous  services to the radio
industry.  Excelsior  offers  radio  programs to the  industry  in exchange  for
commercial  broadcast  time,  which  Excelsior  sells to  national  advertisers.
Excelsior  currently  offers  approximately  100  programs  to over 2,000  radio
stations  across the country.  The group of radio  stations  who  contract  with
Excelsior  to  broadcast  a  particular  program  constitutes  a radio  network.
Excelsior derives its revenue from selling the commercial  broadcast time on its
radio networks to advertisers desiring national coverage.

      Excelsior issued notes, each with an initial aggregate principal amount of
$460,000 in connection with the acquisition of  substantially  all of the assets
of Dial Communications  Group, Inc., and Dial Communications Group, LLC in April
2002.  Each of the  promissory  notes is  convertible  into shares of Franklin's
common  stock at a  premium  ranging  from 115% to 120% of the  average  closing
prices of  Franklin's  common  stock  during a  specified  pre and post  closing
measurement  period.  Excelsior has paid to Franklin an amount equal to $300,000
in

                                       17
<PAGE>


consideration  of Franklin's  obligations in connection with any Franklin common
stock that may be issued pursuant to the terms of the promissory notes. For each
share of common stock Franklin is required to issue under the promissory  notes,
Franklin will receive 0.86 shares of common stock in Excelsior. The note holders
have entered into advanced  discussions  with  Excelsior to amend the conversion
feature so that the notes would become  convertible  into shares of  Excelsior's
common stock  rather than  Franklin's  common  stock.  It is expected  that this
agreement will be signed after the filing of this 10Q but prior to year-end.  If
the agreement is not signed,  then the note holders will continue the hold right
to convert the notes into shares of Franklin's common stock.

      On  August  28,  2001,  the  Corporation  purchased  $2,500,000  worth  of
Excelsior  Common  Stock  and  issued a  secured  note for  $150,000,  which has
subsequently  been repaid.  In connection  with this note,  Franklin was granted
warrants to acquire 12,879 shares of Excelsior common stock at an exercise price
of $1.125 per share.  Franklin sold 250,000 common shares for $1.00 per share on
December 4, 2001 for no gain or loss in connection  with a proposed  merger with
Change Technology  Partners,  Inc. On October 1, 2002,  Franklin received 74,232
warrants to acquire  shares of Excelsior  common  stock at an exercise  price of
$1.20 per share for  arranging a  financing  of  Excelsior.  On October 3, 2002,
Franklin sold 773,196  common  shares for $1.94 per share for total  proceeds of
$1,500,000 realizing a gain of $726,804. On January 31, 2003, Franklin purchased
and subsequently on May 29, 2003, Franklin sold, 33,750 common shares for $1.625
per share and 65,199 warrants to acquire shares of Excelsior  common stock at an
exercise  price of $1.125 per share for $0.50 per  warrant.  On August 12, 2003,
Franklin sold 193,000  common  shares for $1.30 per share for total  proceeds of
$250,900 realizing a gain of $57,900.  Franklin has stock appreciation rights on
these  common  shares as follows,  a) in the event that  Excelsior is sold on or
before  August 8,  2004 for gross  proceeds  of no less than  $40,000,000,  then
Franklin shall be entitled to receive fifty percent (50%) of any net value above
$1.30 per share not to exceed proceeds to Franklin of $1.94 per share, and b) in
the  event  that the  Excelsior  is sold on or  before  August 8, 2005 for gross
proceeds of no less than $40,000,000, then Franklin shall be entitled to receive
fifty  percent  (50%) of any net  value  above  $1.30  per  share  not to exceed
proceeds to Franklin of $1.625 per share.

      On October 8, 2003, Franklin sold to Sunshine 375,000 shares of the common
stock of Excelsior for an aggregate purchase price of $750,000, realizing a gain
of  $375,000,  pursuant  to a stock  purchase  agreement  between  Sunshine  and
Franklin.  Franklin has stock  appreciation  rights on these common  shares such
that if Excelsior is sold and the  purchaser of the common  shares from Franklin
receives  more than $3.50 per share,  Franklin is entitled to receive 80% of the
value  greater than $3.50 per share.  After giving effect to the purchase of the
common stock,  Sunshine owns  approximately  63.6% and the Company owns 36.4% of
the issued and outstanding  common stock,  and voting power, of Excelsior.  On a
fully  diluted  basis,  after giving  effect to the exercise of the  outstanding
warrants  and the  conversion  of  Sunshine's  outstanding  preferred  stock  of
Excelsior  into  common  stock,  the  Corporation  owns  approximately  13.8% of
Excelsior.  Franklin  continues  to maintain a seat on the board of directors of
Excelsior.

      ALACRA CORPORATION

      At  September  30,  2003,  the  Corporation  has an  investment  in Alacra
Corporation  ("Alacra"),  valued at $1,000,000,  which  represents  26.2% of the
Corporation's total assets and 42.9% of its net assets. Alacra, headquartered in
New York and London, is a leading provider of Internet-based  online information
services.   Alacra  provides  a  service  called  .xls,   which  aggregates  and
cross-indexes  over  70  premier  business  databases,   delivering  information
directly to Microsoft Excel, HTML, Microsoft Word or PDF formats at the desktop.
Other products

                                       18
<PAGE>


include  privatesuite(TM),  a fast,  easy,  cost-effective  way to identify  and
retrieve profiles of privately held companies around the world; compbook(TM),  a
tool for company peer analysis;  and Portal B(TM), a fully  integrated  business
information portal.

      On April 20, 2000, the Corporation  purchased  $1,000,000  worth of Alacra
Series  F  Convertible  Preferred  Stock.  Franklin  has the  right  to have the
preferred  stock  redeemed by Alacra for face value plus  accrued  dividends  on
December 31, 2005.  In  connection  with this  investment,  Franklin was granted
observer rights for Alacra Board of Directors meetings.

RESULTS OF OPERATIONS

INVESTMENT INCOME AND EXPENSES:

      The Corporation's  principal objective is to achieve capital  appreciation
through  long-term  investments in businesses  believed to have favorable growth
potential.  Therefore,  a  significant  portion of the  investment  portfolio is
structured  to maximize  the  potential  for capital  appreciation  and provides
little or no current yield in the form of dividends or interest. The Corporation
earns interest income from loans,  preferred  stocks,  corporate bonds and other
fixed income  securities.  The amount of interest  income  varies based upon the
average  balance of the  Corporation's  fixed income  portfolio  and the average
yield on this portfolio.

      The  Corporation  had  investment  income of $135,848 and $332,219 for the
nine months ended  September  30, 2003 and 2002,  respectively.  The decrease in
investment  income for the nine months ended September 30, 2003 when compared to
September 30, 2002,  was primarily the result of the decrease in the  management
fee from  Excelsior.  The  Corporation  had  investment  income of  $45,090  and
$120,110 for the three months ended  September 30, 2003 and 2002,  respectively.
The decrease in investment  income for the three months ended September 30, 2003
when compared to September  30, 2002,  was primarily the result of a decrease in
the management fee from Excelsior.

      Operating  expenses were $959,184 and $1,493,335 for the nine months ended
and $316,773 and  $592,330  for the three  months ended  September  30, 2003 and
2002,  respectively.  A majority of the Corporation's operating expenses consist
of employee  compensation,  office and rent expense,  other expenses  related to
identifying  and  reviewing  investment  opportunities  and  professional  fees.
Professional  fees  consist  of  general  legal  fees,  audit  and tax  fees and
investment  related legal fees. In 2002, the  Corporation  incurred  $465,782 in
expenses related to a terminated  merger. In 2003, the Corporation  settled with
two vendors  related to the  terminated  merger for an additional  $73,500.  The
Corporation  was  reimbursed  approximately  $108,000  and  $90,702 for the nine
months ended  September 30, 2003 and 2002  respectively,  for salary and benefit
expense  for its chief  financial  officer  under  the  terms of the  management
agreement with Excelsior. This reimbursement has been recorded as a reduction in
operating expenses.

      Net investment losses from operations were $823,336 and $1,161,116 for the
nine months ended and $271,683 and $472,220 for the three months ended September
30,  2003 and 2002,  respectively.  The  decrease  resulted  primarily  from the
decrease in expenses related to the cancelled merger.

      The  Corporation  has relied and  continues to rely to a large extent upon
proceeds from sales of  investments  rather than  investment  income to defray a
significant  portion of its  operating  expenses.  Because  such sales cannot be
predicted with certainty,  the Corporation attempts to maintain adequate working
capital to provide for fiscal periods when there are no such sales.

                                       19
<PAGE>


NET REALIZED GAINS AND LOSSES ON PORTFOLIO OF INVESTMENTS:

      During the nine months ended  September 30, 2003 and 2002, the Corporation
realized net losses before taxes of $55,883 and $349,147 respectively,  from the
disposition of various investments.

UNREALIZED APPRECIATION OF INVESTMENTS:

      Unrealized  appreciation of  investments,  decreased by $97,080 during the
nine months ended  September 30, 2003,  primarily  from the sale of a portion of
Excelsior.

      Unrealized appreciation of investments, increased by $2,157,233 during the
nine months  ended  September  30,  2002,  primarily  from  unrealized  gains in
Excelsior.

TAXES

      Franklin  does not qualify for pass  through tax  treatment as a Regulated
Investment  Company under  Subchapter M of the Internal  Revenue Code for income
tax  purposes.  The  Corporation  is taxed under  Regulation  C of the Code and,
therefore,  it is subject to federal  income tax on the  portion of its  taxable
income and net capital as well as such distribution to its stockholders.

LIQUIDITY AND CAPITAL RESOURCES

      The accompanying financial statements have been prepared assuming that the
Corporation  will continue as a going  concern.  The  Corporation  has a working
capital  deficiency of  approximately  $1,400,000  at September  30, 2003.  This
condition raises  substantial doubt about the Corporation's  ability to continue
as a going concern. The Corporation is seeking alternative financing.  There can
be no  assurance  that  the  Corporation  would  be able to  obtain  alternative
financing.  The financial  statements do not include any  adjustments to reflect
the possible  future effects on the  recoverability  of assets or the amounts of
liabilities that may result from the outcome of this uncertainty.

      On October 8, 2003,  Franklin sold to Sunshine Wireless,  LLC ("Sunshine")
375,000  shares  of the  common  stock of  Excelsior  at $2.00  per share for an
aggregate purchase price of $750,000,  realizing a gain of $375,000 (See Note 11
to the financial statements). This asset sale reduced Franklin's working capital
deficiency  to  approximately  $700,000.  Franklin  continues  to have a working
capital  deficiency  primarily  due to a note  payable  of  $940,609  to Winstar
Communications,  Inc.  ("Winstar") in connection  with the acquisition of assets
from Winstar (see Note 6 to the financial  statements).  This note is taken into
account  in  calculating  the  working  capital  deficit  as it is assumed to be
payable  within the next  year.  Due to an action in which  Franklin  is a named
party (see Note 5 to the  financial  statements),  the due date of this note has
been  extended  indefinitely  and it is uncertain as to when this note will come
due.  Franklin  continues to seek  adequate  alternative  financing  rather than
additional asset sales in order to alleviate the going concern issue.

      Cash and cash  equivalents  decreased  by $536,204 to $25,987 for the nine
months ended September 30, 2003, compared to a decrease of $279,728 for the nine
months ended September 30, 2002.

                                       20
<PAGE>


      Operating  activities  used  $696,604  of cash for the nine  months  ended
September  30,  2003,  compared  to using  $542,286  for the nine  months  ended
September 30, 2002.

      Operating  activities  for the  nine  months  ended  September  30,  2003,
exclusive of changes in operating assets and liabilities, used $810,606 of cash,
as the  Corporation's  net  decrease in net assets from  operations  of $864,533
included   non-cash  charges  for  depreciation  and  amortization  of  $12,729,
unrealized losses of $97,080 and realized gains of $55,882.  For the nine months
ended  September  30,  2002,  operating  activities,  exclusive  of  changes  in
operating assets and liabilities,  used $1,148,390 of cash, as the Corporation's
net increase in net assets from operations of $646,639 included non-cash charges
of depreciation and amortization of $12,727,  unrealized gains of $2,157,233 and
realized losses of $349,477.

      Changes in operating  assets and  liabilities  increased cash $114,002 for
the nine months ended September 30, 2003,  principally due to an increase in the
level of  accounts  payable  and accrued  expenses.  For the nine  months  ended
September  30,  2002,  changes  in  operating  assets and  liabilities  produced
$606,104 of cash.

      The sale of a portion of Excelsior provided $250,900 of cash offset by the
net purchase of  marketable  securities  of $8,242 of cash provided in investing
activities  for the nine months ended  September  30, 2003.  For the nine months
ended September 30, 2002, the principal  factor in the $137,284 cash provided by
investing  activities was repayment of a loan to Excelsior and the sale of other
investments  offset  by the  net  purchase  and  sale of  marketable  investment
securities.

      Cash used in financing  activities for the nine months ended September 30,
2003 of $82,258  resulted  primarily  from  payment of  preferred  dividends  of
$57,489  and the  purchase of treasury  stock of $13,561.  Financing  activities
provided by $128,386 in the prior year's comparable period from the proceeds for
conversion  rights  offset by the payment of preferred  dividends of $86,362 and
the purchase of treasury stock of $37,322.

RISK FACTORS

      There are significant risks inherent in the Corporation's  venture capital
business.  The Corporation  has invested a substantial  portion of its assets in
small  private  companies  and one  bulletin  board listed  public  corporation.
Because of the speculative nature of these  investments,  there is significantly
greater risk of loss than is the case with  traditional  investment  securities.
The Corporation  expects that from time to time its venture capital  investments
may result in a complete loss of the  Corporation's  invested  capital or may be
unprofitable.  Other investments may appear likely to become successful, but may
never realize their  potential.  Neither the  Corporation's  investments  nor an
investment in the  Corporation  is intended to constitute a balanced  investment
program. The Corporation has in the past relied and continues to rely to a large
extent upon proceeds from sales of investments  rather than investment income to
defray a significant portion of its operating expenses.

      INVESTING  IN  PRIVATE  COMPANIES  INVOLVES  A HIGH  DEGREE  OF RISK.  The
Corporation's  portfolio consists primarily of investments in private companies.
Investments  in  private  businesses  involve  a high  degree  of  business  and
financial risk, which can result in substantial losses and accordingly should be
considered  speculative.  There is generally no publicly  available  information
about the companies in which Franklin invests, and Franklin relies significantly
on the diligence of its employees and agents to obtain information in connection
with  the  Corporation's   investment  decisions.   In  addition,  some  smaller
businesses have narrower product

                                       21
<PAGE>


lines and market shares than their  competitors,  and may be more  vulnerable to
customer  preferences,  market  conditions  or  economic  downturns,  which  may
adversely affect the return on, or the recovery of, the Corporation's investment
in such businesses.

      THE PORTFOLIO OF  INVESTMENTS IS ILLIQUID.  Franklin  acquires most of its
investments directly from private companies.  The majority of the investments in
its portfolio  will be subject to  restrictions  on resale or otherwise  have no
established  trading  market.  The  illiquidity  of  most of the  portfolio  may
adversely affect Franklin's  ability to dispose of loans and securities at times
when it may be advantageous to liquidate such investments.

      FRANKLIN'S PORTFOLIO  INVESTMENTS ARE RECORDED AT FAIR VALUE AS DETERMINED
BY THE BOARD OF  DIRECTORS  IN ABSENCE OF READILY  ASCERTAINABLE  PUBLIC  MARKET
VALUES. Pursuant to the requirements of the 1940 Act, the Corporation's board of
directors is required to value each asset quarterly, and Franklin is required to
carry  the  portfolio  at a fair  market  value as  determined  by the  board of
directors.  Since there is typically  no public  market for the loans and equity
securities of the companies in which  Franklin makes  investments,  the board of
directors estimates the fair value of these loans and equity securities pursuant
to written valuation policy and a consistently applied valuation process. Unlike
banks,  Franklin is not permitted to provide a general  reserve for  anticipated
loan losses; instead, Franklin is required by the 1940 Act to specifically value
each  individual  investment and record an unrealized  loss for an asset that it
believes has become impaired.  Without a readily ascertainable market value, the
estimated  value of the  portfolio  of loans and  equity  securities  may differ
significantly  from the values  that would be placed on the  portfolio  if there
existed a ready  market for the loans and equity  securities.  Franklin  adjusts
quarterly  the  valuation of the  portfolio  to reflect the board of  directors'
estimate of the current realizable value of each investment in the Corporation's
portfolio.  Any changes in  estimated  value are  recorded in the  Corporation's
statement of operations as "Net unrealized gains (losses)."

      FRANKLIN  OPERATES IN A COMPETITIVE  MARKET FOR INVESTMENT  OPPORTUNITIES.
Franklin  competes for investments  with many other  companies and  individuals,
some of whom have greater  resources than does Franklin.  Increased  competition
would make it more difficult to purchase or originate  investments at attractive
prices.  As a result of this  competition,  sometimes  Franklin may be precluded
from making otherwise attractive investments.

      QUARTERLY  RESULTS  MAY  FLUCTUATE  AND MAY NOT BE  INDICATIVE  OF  FUTURE
QUARTERLY  PERFORMANCE.  The  Corporation's  quarterly  operating  results could
fluctuate,  and  therefore,  you  should  not rely on  quarterly  results  to be
indicative  of Franklin's  performance  in future  quarters.  Factors that could
cause quarterly operating results to fluctuate include, among others, variations
in the  investment  origination  volume,  variation  in timing  of  prepayments,
variations in and the timing of the recognition of realized and unrealized gains
or losses,  the degree to which Franklin  encounters  competition in its markets
and general economic conditions.

      FRANKLIN IS DEPENDENT  UPON KEY MANAGEMENT  PERSONNEL FOR FUTURE  SUCCESS.
Franklin is dependent for the selection,  structuring, closing and monitoring of
its investments on the diligence and skill of its senior management  members and
other  management  members.  The future success of the Corporation  depends to a
significant  extent on the  continued  service  and  coordination  of its senior
management  team,  particularly  the Chairman and Chief Executive  Officer.  The
departure of any of the  executive  officers or key employees  could  materially
adversely affect the Corporation's  ability to implement its business  strategy.
Franklin  does not  maintain  key man life  insurance  on any of its officers or
employees.

                                       22
<PAGE>


      THERE IS SUBSTANTIAL DOUBT AS TO FRANKLIN'S ABILITY TO CONTINUE AS A GOING
CONCERN.  Franklin has determined  that it may not have sufficient cash and cash
equivalents to meet its working capital  requirements over the next fiscal year.
Franklin's  independent auditors have issued an opinion in which the independent
auditors have indicated that there is substantial doubt as to Franklin's ability
to continue as a going concern as noted in their  explanatory  paragraph  within
their  opinion,  which is  noted  in  Franklin's  annual  financial  statements.
Franklin is  currently  seeking  alternative  sources of  financing  to continue
operating  through the current  fiscal year. If funds were not raised,  Franklin
may not be able to continue its operations.

      INVESTMENT IN SMALL, PRIVATE COMPANIES

      There are significant risks inherent in the Corporation's  venture capital
business.  The Corporation  has invested a substantial  portion of its assets in
private development stage or start-up  companies.  These private businesses tend
to be thinly capitalized, unproven, small companies with risky technologies that
lack management depth and have not attained  profitability or have no history of
operations.  Because of the  speculative  nature and the lack of a public market
for these investments,  there is significantly  greater risk of loss than is the
case with traditional investment  securities.  The Corporation expects that some
of  its  venture  capital  investments  will  be a  complete  loss  or  will  be
unprofitable  and that some will  appear to be likely to become  successful  but
never realize their potential. The Corporation has been risk seeking rather than
risk averse in its approach to venture  capital and other  investments.  Neither
the  Corporation's  investments nor an investment in the Corporation is intended
to constitute a balanced  investment  program.  The  Corporation has in the past
relied,  and  continues to rely to a large  extent,  upon proceeds from sales of
investments rather than investment income to defray a significant portion of its
operating expenses.

      ILLIQUIDITY OF PORTFOLIO INVESTMENTS

      Most  of  the  investments  of  the  Corporation  are or  will  be  equity
securities acquired directly from small companies.  The Corporation's  portfolio
of equity securities is and will usually be subject to restrictions on resale or
otherwise have no established  trading  market.  The  illiquidity of most of the
Corporation's portfolio of equity securities may adversely affect the ability of
the  Corporation  to  dispose  of  such  securities  at  times  when  it  may be
advantageous for the Corporation to liquidate such investments.

      THE INABILITY OF THE  CORPORATION'S  PORTFOLIO  COMPANIES TO  SUCCESSFULLY
      MARKET  THEIR  PRODUCTS  WOULD  HAVE A NEGATIVE  IMPACT ON ITS  INVESTMENT
      RETURNS

      Even  if  the  Corporation's  portfolio  companies  are  able  to  develop
commercially viable products, the market for new products and services is highly
competitive and rapidly changing. Commercial success is difficult to predict and
the  marketing  efforts  of the  Corporation's  portfolio  companies  may not be
successful.

      VALUATION OF PORTFOLIO INVESTMENTS

      There is  typically  no public  market of equity  securities  of the small
private companies in which the Corporation  invests.  As a result, the valuation
of the equity securities in the  Corporation's  portfolio is subject to the good
faith determination of the Corporation's Board of Directors. In the absence of a
readily  ascertainable  market value,  the estimated value of the  Corporation's
portfolio of equity  securities  may differ  significantly  from the values that
would be placed on the  portfolio  if a ready  market for the equity  securities
existed. Any changes in

                                       23
<PAGE>


estimated  net asset  value  are  recorded  in the  Corporation's  statement  of
operations as "Change in unrealized appreciation on investments."

      FLUCTUATIONS OF QUARTERLY RESULTS

      The Corporation's  quarterly operating results could fluctuate as a result
of a number of factors.  These  include,  among  others,  variations  in and the
timing of the recognition of realized and unrealized gains or losses, the degree
to which the  Corporation  encounters  competition  in its  markets  and general
economic conditions.  As a result of these factors,  results for any one quarter
should not be relied upon as being indicative of performance in future quarters.

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      The  Corporation's  business  activities  contain  elements  of risk.  The
Corporation  considers a principal  type of market  risk to be  valuation  risk.
Investments  are  stated at "fair  value" as  defined in the 1940 Act and in the
applicable regulations of the Securities and Exchange Commission. All assets are
valued at fair value as  determined in good faith by, or under the direction of,
the Board of Directors.

      Neither the Corporation's investments nor an investment in the Corporation
is intended to constitute a balanced  investment  program.  The  Corporation has
exposure  to  public-market  price  fluctuations  to the extent of its  publicly
traded portfolio.

      The  Corporation  has  invested  a  substantial  portion  of its assets in
private development stage or start-up  companies.  These private businesses tend
to be thinly capitalized,  unproven,  small companies that lack management depth
and have not attained profitability or have no history of operations. Because of
the  speculative  nature and the lack of public  market  for these  investments,
there is  significantly  greater risk of loss than is the case with  traditional
investment securities.  The Corporation expects that some of its venture capital
investments  will be a complete loss or will be unprofitable  and that some will
appear to be likely to become successful but never realize their potential.

      Because  there is typically no public  market for the equity  interests of
the small  companies  in which the  Corporation  invests,  the  valuation of the
equity  interests in the  Corporation's  portfolio is subject to the estimate of
the Corporation's Board of Directors. In making its determination, the Board may
consider  valuation  information  provided by an independent  third party or the
portfolio  company  itself.  In the  absence of a readily  ascertainable  market
value,  the estimated value of the  Corporation's  portfolio of equity interests
may differ  significantly  from the values that would be placed on the portfolio
if a ready market for the equity interests existed. Any changes in valuation are
recorded in the  Corporation's  consolidated  statements  of  operations as "Net
increase (decrease) in unrealized appreciation on investments."

ITEM 4.     CONTROLS AND PROCEDURES

      (a)   The Company  maintains  disclosure  controls and procedures that are
designed to ensure that  information  required to be disclosed in the  Company's
filings  under  the  Securities  Exchange  Act of 1934 is  recorded,  processed,
summarized and reported  within the periods  specified in the rules and forms of
the  Securities and Exchange  Commission.  Such  information is accumulated  and
communicated  to the Company's  management,  including  its principal  executive
officer  and  principal  financial  officer,  as  appropriate,  to allow  timely
decisions regarding required disclosure. The Company's management, including the
principal executive officer and the

                                       24
<PAGE>


principal financial officer, recognizes that any set of controls and procedures,
no matter how well designed and operated,  can provide only reasonable assurance
of achieving the desired control objectives.

      Within 90 days prior to the filing date of this  quarterly  report on Form
10-Q, the Company has carried out an evaluation,  under the supervision and with
the participation of the Company's management, including the Company's principal
executive  officer  and  the  Company's  principal  financial  officer,  of  the
effectiveness of the design and operation of the Company's  disclosure  controls
and procedures.  Based on such  evaluation,  the Company's  principal  executive
officer and principal financial officer concluded that the Company's  disclosure
controls and procedures are effective.

      (b)   There have been no  significant  changes in the  Company's  internal
controls  or in other  factors  that could  significantly  affect  the  internal
controls  subsequent  to the date of their  evaluation  in  connection  with the
preparation of this quarterly report on Form 10-Q.

                           PART II. OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS

      On October 15, 2001, Jeffrey A. Leve and Jeffrey Leve Family  Partnership,
L.P. filed a lawsuit against Franklin,  Sunshine Wireless,  LLC ("Sunshine") and
four other  defendants  affiliated  with  Winstar  Communications,  Inc.  in the
Superior  Court of the State of  California  for the County of Los Angeles.  The
lawsuit, which has subsequently been removed to the United States District Court
for the Central  District of  California,  alleges  that the Winstar  defendants
conspired to commit fraud and breached their fiduciary duty to the plaintiffs in
connection  with  the  acquisition  of  the  plaintiffs'  radio  production  and
distribution  business. The complaint further alleges that Franklin and Sunshine
joined the alleged  conspiracy.  The business was initially  acquired by certain
entities affiliated with Winstar Communications and, subsequently, the assets of
such  business  were  sold to  Franklin  and  Sunshine.  Concurrently  with such
purchase,  Franklin  transferred  such assets to Excelsior.  The plaintiffs seek
recovery of damages in excess of  $10,000,000,  costs and  attorneys'  fees.  On
January  7, 2002,  Franklin  filed a motion to dismiss  the  lawsuit  or, in the
alternative,  to  transfer  venue to the  United  States  District  Court of the
Southern District of New York. The plaintiffs filed a motion opposing Franklin's
request on January 28,  2002.  Franklin's  motion for  dismissal  was granted on
February 25, 2002, due to improper venue. On June 7, 2002, the plaintiffs  filed
their  complaint to the United States  District of the Southern  District of New
York. On July 12, 2002,  Franklin  filed a motion to dismiss the  complaint.  On
February 25, 2003, the case against Franklin and Sunshine was dismissed, however
the  plaintiffs may file an appeal.  An unfavorable  outcome in this lawsuit may
have a material adverse effect on Franklin's  business,  financial condition and
results of operations.

ITEM 2.     CHANGES IN SECURITIES AND USE OF PROCEEDS

                     Not applicable

ITEM 3.     DEFAULTS UPON SENIOR SECURITIES HOLDERS

                     Not applicable

ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

                     Not applicable

                                       25
<PAGE>


ITEM 5.     OTHER INFORMATION

                     Not applicable

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

            (A)   EXHIBITS

                  Exhibit 31.1    Certification of Chairman and Chief  Executive
                                  Officer

                  Exhibit 31.2    Certification of Chief Financial Officer

                  Exhibit 32.1    Certification  Pursuant  To 18 U.S.C.  Section
                                  1350,   As  Adopted  By  Section  906  Of  The
                                  Sarbanes-Oxley Act Of 2002

                  Exhibit 32.2    Certification  Pursuant  To 18 U.S.C.  Section
                                  1350,   As  Adopted  By  Section  906  Of  The
                                  Sarbanes-Oxley Act Of 2002

            (B)   REPORTS ON FORM 8-K.

                     None


                                    SIGNATURE

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

                                         FRANKLIN CAPITAL CORPORATION



Date: November 14, 2003                  By: /s/ Stephen L. Brown
                                            ------------------------------------
                                            Stephen L. Brown
                                            CHAIRMAN AND CHIEF EXECUTIVE OFFICER

                                            /s/ Hiram M. Lazar
                                            ------------------------------------
                                            Hiram M. Lazar
                                            CHIEF FINANCIAL OFFICER

                                       26