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, 2002
                                    ------------------

                                       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, 10th 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 ___

The number of shares of common  stock  outstanding  as of  November  8, 2002 was
1,056,500.

<PAGE>


                                TABLE OF CONTENTS

PART I.  FINANCIAL INFORMATION                                                 3
         Item 1. Financial Statements (Unaudited)                              3
                 Balance Sheets                                                4
                 Statements of Operations                                      5
                 Statements of Cash Flows                                      6
                 Statements of Changes in Net Assets                           7
                 Portfolio of Investments                                      8
                 Notes to Financial Statements                                 9
         Item 2. Management's Discussion and Analysis of
                     Financial Condition and Results of Operations            18
                 Critical Accounting Policies                                 18
                 Statement of Operations                                      18
                 Financial Condition                                          18
                 Termination of Merger with Change Technology Partners, Inc.  19
                 Investments                                                  19
                 Results of Operations                                        22
                 Liquidity and Capital Resources                              23
                 Risk Factors                                                 23
         Item 3. Quantitative and Qualitative Disclosures about Market Risk   25
         Item 4. Controls and Procedures                                      26

PART II. OTHER INFORMATION                                                    26
         Item 1. Legal Proceedings                                            26
         Item 2. Changes in Securities and Use of Proceeds                    27
         Item 3. Defaults Upon Senior Securities                              27
         Item 4. Submission of Matters to a Vote of Security Holders          27
         Item 5. Other Information                                            27
         Item 6. Exhibits and Reports on Form 8-K                             27

SIGNATURE                                                                     27

CERTIFICATIONS                                                                28

EXHIBIT INDEX                                                                 xx

                           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  consisting of normal  recurring  accruals 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,  DECEMBER 31,
                                                          2002          2001
                                                      (UNAUDITED)
--------------------------------------------------------------------------------

ASSETS

Marketable investment securities, at market value
  (cost: September 30, 2002 - $34,675;
  December 31, 2001 - $34,675)  (Note 2)                  $34,675       $34,675
Investments, at fair value
  (cost: September 30, 2002 - $3,390,000;
  December 31, 2001 - $3,876,430) (Note 2)
    Excelsior Radio Networks, Inc.                      4,365,000     2,325,000
    Other investments                                   1,000,000     1,369,197
                                                       ----------    ----------
                                                        5,365,000     3,694,197
                                                       ----------    ----------

Cash and cash equivalents (Notes 1 & 2)                     3,112       279,728
Other assets                                               88,967        90,266
                                                       ----------    ----------

TOTAL ASSETS                                           $5,491,754    $4,098,866
                                                       ==========    ==========

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

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES

Note payable                                             $952,070    $1,000,000
Accounts payable and accrued liabilities                  794,984       177,121
                                                       ----------    ----------

TOTAL LIABILITIES                                       1,747,054     1,177,121
                                                       ----------    ----------

Commitments and contingencies  (Note 5)

STOCKHOLDERS' EQUITY

Convertible preferred stock, $1 par value,
  cumulative 7% dividend:
  5,000,000 shares authorized; 16,450 shares
  issued and outstanding at September 30, 2002
  and December 31, 2001 (Liquidation preference
  $1,645,000) (Note 4)                                     16,450        16,450
Common stock, $1 par value: 5,000,000 shares
  authorized; 1,505,888 shares issued: 1,064,500
  shares outstanding at September 30, 2002 and
  1,074,700 at December 31,2001 (Note 6)                1,505,888     1,505,888
Additional paid-in capital                             10,571,610    10,271,610
Unrealized appreciation (depreciation) of
  investments (Notes 2 and 3)                           1,975,000      (182,233)
Accumulated deficit                                    (7,767,570)   (6,170,614)
                                                       ----------    ----------
                                                        6,301,378     5,441,101
Deduct common stock held in treasury, at cost,
  441,388 shares at September 30, 2002, and
  431,188 shares at December 31, 2001 (Note 4)         (2,556,678)   (2,519,356)
                                                       ----------    ----------

  Net assets (See Note 9 for per share information)     3,744,700     2,921,745
                                                       ----------    ----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY             $5,491,754    $4,098,866
                                                       ==========    ==========

--------------------------------------------------------------------------------
   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,
                                              2002           2001          2002            2001
--------------------------------------------------------------------------------------------------
<S>                                       <C>             <C>             <C>          <C>
INVESTMENT INCOME
  Interest and dividend income                   $110       $11,735         $2,219          69,094
  Management fees                             120,000        30,000        330,000          30,000
                                          -----------     ---------     ----------     -----------

                                              120,110        41,735        332,219          99,094
                                          -----------     ---------     ----------     -----------
EXPENSES
  Salaries and employee benefits              195,957       215,216        589,848         692,487
  Professional fees                            35,325        41,325        106,575         123,975
  Rent                                         15,768        29,784         79,164          89,351
  Insurance                                    17,843        10,600         39,973          31,799
  Directors' fees                                 501           501          1,502          19,502
  Taxes other than income taxes                 7,525         7,901         35,615          37,160
  Newswire and promotion                        1,001         1,000          3,000           3,000
  Depreciation and amortization                 4,242         4,998         12,727          14,995
  Interest expense                              8,850            --         26,550              --
  Expenses related to cancelled merger        265,782            --        465,782              --
  General and administrative                   39,536        47,556        132,599         165,359
                                          -----------     ---------     ----------     -----------

                                              592,330       358,881      1,493,335       1,177,628
                                          -----------     ---------     ----------     -----------

Net investment loss from operations          (472,220)     (317,146)    (1,161,116)     (1,078,534)

Net realized (loss) gain on portfolio
of investments:
  Investment securities:
    Affiliated                                     --         1,000             --         138,757
    Unaffiliated                              (16,431)        4,902       (349,147)        592,100
                                          -----------     ---------     ----------     -----------

Net realized (loss) gain on portfolio
  of investments                              (16,431)        5,902       (349,147)        730,857

Provision (benefit) for current
  income taxes                                    331            --            331          (1,676)
                                          -----------     ---------     ----------     -----------

                                              (16,762)        5,902       (349,478)        732,533
                                          -----------     ---------     ----------     -----------

Net realized loss                            (488,982)     (311,244)    (1,510,594)       (346,001)
                                          -----------     ---------     ----------     -----------

(Decrease) increase in unrealized
appreciation of investments
  Investment securities:
    Affiliated                               (885,000)     (140,974)     2,115,000         278,725
    Unaffiliated                                5,985        86,001         42,233      (1,866,419)
                                          -----------     ---------     ----------     -----------

(Decrease) increase in unrealized
  appreciation of investments                (879,015)      (54,973)     2,157,233      (1,587,694)
                                          -----------     ---------     ----------     -----------

Net (decrease) increase in
  net assets from operations               (1,367,997)     (366,217)       646,639      (1,933,695)

Preferred dividends                            28,787        28,787         86,362          86,362
                                          -----------     ---------     ----------     -----------

Net (decrease) increase in net assets
  attributable to common stockholders     ($1,396,784)    ($395,004)      $560,277     ($2,020,057)
                                          ===========     =========     ==========     ===========

Basic and diluted net (decrease)
  increase per share in net assets
  attributable to common stockholders
  (Note 8)                                     ($1.31)       ($0.37)         $0.52          ($1.86)
                                          ===========     =========     ==========     ===========
</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,                                        2002            2001
------------------------------------------------------------------------------------------------------
<S>                                                                         <C>            <C>
Cash flows from operating activities:
  Net increase (decrease) in net assets from operations                       $646,639     ($1,933,695)
  Adjustments to reconcile net increase (decrease) in net assets from
    operations to net cash used in operating activities:
      Depreciation and amortization                                             12,727          14,995
      (Increase) decrease in unrealized appreciation of investments         (2,157,233)      1,587,694
      Net realized loss (gain) on portfolio of investments,
        net of current income taxes                                            349,477        (732,533)

      Changes in operating assets and liabilities:
        (Increase) decrease in other assets                                    (11,428)          6,595
        Decrease (increase) in accounts payable and accrued liabilities,
        excluding change in current income taxes payable                       617,532         (53,727)
                                                                            ----------     -----------

          Total adjustments                                                 (1,188,925)        823,024
                                                                            ----------     -----------

          Net cash used in operating activities                               (542,286)     (1,110,671)
                                                                            ----------     -----------

Cash flows from investing activities:
  Proceeds from sale of affiliates                                                  --       1,519,421
  Proceeds from sale of other investments                                       78,715       1,044,782
  Proceeds from sale of marketable investment securities                         6,554         462,989
  Loan payments from majority-owned affiliate                                   75,000              --
  Purchase of investment in majority-owned affilitiate                              --      (1,650,000)
  Purchases of other investments                                                    --         (49,095)
  Purchases of marketable investment securities                                (22,985)       (542,146)
                                                                            ----------     -----------

          Net cash provided by investing activities                            137,284         785,951
                                                                            ----------     -----------

Cash flows from financing activities:
  Payment of preferred dividends                                               (86,362)        (86,362)
  Decrease in note payable                                                     (47,930)             --
  Proceeds for conversion right                                                300,000              --
  Purchases of treasury stock                                                  (37,322)       (123,873)
                                                                            ----------     -----------

          Net cash provided by (used in) financing activities                  128,386        (210,235)
                                                                            ----------     -----------

Net decrease in cash and cash equivalents                                     (276,616)       (534,955)

Cash and cash equivalents at beginning of period                               279,728         647,565
                                                                            ----------     -----------

Cash and cash equivalents at end of period                                      $3,112        $112,610
                                                                            ==========     ===========
</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,
                                                                       2002           2001            2002            2001
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>            <C>            <C>             <C>
(Decrease) increase in net assets from operations:
   Net investment loss                                               ($472,220)     ($317,146)    ($1,161,116)    ($1,078,534)
   Net realized (loss) gain on portfolio of investments,
     net of current income taxes                                       (16,762)         5,902        (349,478)        732,533
   (Decrease) increase in unrealized appreciation of investments      (879,015)       (54,973)      2,157,233      (1,587,694)
                                                                    ----------     ----------     -----------     -----------

     Net (decrease) increase in net assets from operations          (1,367,997)      (366,217)        646,639      (1,933,695)

Capital stock transactions:
   Payment of dividends on preferred stock                             (28,787)       (28,787)        (86,362)        (86,362)
   Proceeds for conversion right                                            --             --         300,000              --
   Purchase of treasury stock                                           (2,076)        (8,514)        (37,322)       (123,873)
                                                                    ----------     ----------     -----------     -----------

       Total (decrease) increase in net assets                      (1,398,860)      (403,518)        822,955      (2,143,930)
                                                                    ----------     ----------     -----------     -----------

Net assets at beginning of period                                    5,143,560      3,838,668       2,921,745       5,579,080
                                                                    ----------     ----------     -----------     -----------

Net assets at end of period                                         $3,744,700     $3,435,150      $3,744,700      $3,435,150
                                                                    ==========     ==========     ===========     ===========
</TABLE>

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


                                       7
<PAGE>


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

PORTFOLIO OF INVESTMENTS

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

MARKETABLE INVESTMENT SECURITIES
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                            NUMBER OF
                                                                                            SHARES OR                     MARKET
                                                                                            PRINCIPAL                      VALUE
SEPTEMBER 30, 2002 (2)                                                                      AMOUNT ($)      COST(1)       (NOTE 2)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>             <C>             <C>            <C>            <C>
Certificate of Deposit - 1.3%, due 10/04/2002                                                                  34,675         34,675
                                                                                                           ----------     ----------

  Total Marketable Investment Securities
    (0.6% of total investments and 0.9% of net assets)                                                        $34,675        $34,675
                                                                                                           ==========     =========

------------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS, AT FAIR VALUE
------------------------------------------------------------------------------------------------------------------------------------
                                                                                            Number of
                                                                                            Shares or                     Directors'
                                                                                 Equity     Principal                     Valuation
September 30, 2002 (2)                                         Investment       Interest    Amount ($)      Cost(1)       (Note 2)
------------------------------------------------------------------------------------------------------------------------------------

MAJORITY OWNED AFFILIATE
                                                              Common stock
Excelsior Radio Networks, Inc.                                and warrants       90.00%     2,262,879      $2,250,000    $4,365,000
Total Excelsior Radio Networks, Inc.
  (80.8% of total investments and 116.6% of net assets)                          50.81%
    (Radio production and advertising sales)                                (fully diluted)

AFFILIATES

Excom Ventures, LLC (0.0% of total investments
  and 0.0% of net assets)                                       Units            18.64%       140,000         140,000            --
    (Purchase evaluation software)

OTHER INVESTMENTS

Alacra Corporation (18.5% of total investments                Convertible
  and 26.7% of net assets)                                  Preferred Stock       1.68%       321,543       1,000,000      1,000,000
                                                                                                           ----------     ----------
  (Internet-based information provider)

    Investments, at Fair Value                                                                              3,390,000      5,365,000
                                                                                                           ==========     =========

------------------------------------------------------------------------------------------------------------------------------------
</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, 2002

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.  For  the  nine  months  ended
September  30, 2002 and for the years ended  December  31, 2001,  and 2000,  the
Corporation has incurred a net investment loss from operations of  approximately
$1.2 million,  $1.4 million, and $2.3 million,  respectively,  and has a working
capital deficiency of approximately $1.7 million at September 30, 2002. (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 3, 2002, Franklin sold to Sunshine Wireless, LLC ("Sunshine") 773,196
shares of the  common  stock of  Excelsior  at $1.94 per share for an  aggregate
purchase price of  $1,500,000,  realizing a gain of $726,804 (See Note 12). This
asset sale  reduced  Franklin's  working  capital  deficiency  to  approximately
$200,000.  Franklin continues to have a working capital deficiency primarily due
to a note payable of $952,070 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.



                                       9
<PAGE>


FRANKLIN CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

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, 2002 and 2001.

At September 30, 2002 and 2001, the Corporation  held cash and cash  equivalents
primarily in money market funds at two commercial banking institutions,  and one
broker/dealer.

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.



                                       10
<PAGE>


FRANKLIN CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

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".

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,  2002  and  2001,  Franklin's  tax
(provision) benefit was based on the following:

                                                          2002          2001
                                                      -----------   -----------
Net investment loss from operations ................  $(1,161,116)  $(1,078,534)
Net realized (loss) gain on portfolio
  of investments ...................................     (349,147)      730,857
Increase (decrease) in unrealized appreciation .....    2,157,233    (1,587,694)
                                                      -----------   -----------
  Pre-tax book income (loss) .......................  $   646,970   $(1,935,371)
                                                      ===========   ===========

                                                          2002          2001
                                                      -----------   -----------
Tax (provision) benefit at 34% on $646,970 and
  $(1,935,371), respectively .......................  $  (220,000)  $   658,000
State and local, net of Federal benefit ............           --        49,000
Other ..............................................     (155,000)       (8,000)
Change in valuation allowance ......................      375,000      (697,000)
                                                      -----------   -----------
                                                      $        --   $     2,000
                                                      ===========   ===========
The components of the tax provision are as follows:
                                                             2002          2001
                                                      -----------   -----------
Current state and local tax provision ..............  $        --   $     2,000
Deferred tax expense ...............................           --            --
                                                      -----------   -----------
Provision for income taxes .........................  $        --   $     2,000
                                                      ===========   ===========


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, 2002 and December 31, 2001, significant deferred tax assets and
liabilities consist of:



                                       11
<PAGE>


FRANKLIN CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)



                                                          Asset (Liability)
                                                     ---------------------------
                                                     September 30,  December 31,
                                                          2002          2001
                                                      -----------   -----------
Deferred Federal and state benefit from
  net operating loss carryforward ................... $ 2,438,000   $ 1,905,000
Deferred Federal and state provision on unrealized
  (appreciation) depreciation of investments ........    (842,000)       66,000
Valuation allowance .................................  (1,596,000)   (1,971,000)
                                                      -----------   -----------
Deferred taxes ...................................... $        --   $        --
                                                      ===========   ===========

At December 31, 2001,  Franklin had net operating loss  carryforwards for income
tax purposes of approximately $5,291,000 that will begin to expire in 2011. At a
36%  effective  tax rate the  after-tax  net  benefit  from this  loss  would be
approximately $1,905,000.

4.   STOCKHOLDERS' EQUITY

The  accumulated  deficit at September  30, 2002,  consists of  accumulated  net
realized gains of $4,612,000 and accumulated investment losses of $12,379,000.

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.  During the nine months ended  September 30,
2002,  Franklin  purchased  10,200  shares of its common  stock for an aggregate
price of $37,322.  As of September 30, 2002,  the  Corporation  has  repurchased
492,550 shares of its common stock of which 441,388 shares remain in treasury at
September 30, 2002.

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.  Franklin  believes that  plaintiffs'  claims are without
merit and intends to defend this lawsuit  vigorously,  though the outcome cannot
be predicted  at this time.  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.   TRANSACTIONS WITH AFFILIATES

On February  1, 2001,  Franklin  sold to Avery  Communications,  Inc.  ("Avery")
1,183,938  shares of common stock and 350,000 shares of preferred stock of Avery
representing  Franklin's  entire holding in Avery,  for $1,557,617  plus accrued
dividends  on the  preferred  stock  for a  realized  gain  net of  expenses  of
$137,759.  As part of the sale Franklin  retained the right to receive 1,533,938
shares of Primal Solutions,  Inc.  ("Primal") a then wholly-owned  subsidiary of
Avery.  On  February  13,  2001,  Primal  announced  that Avery had  completed a
spin-off  of  Primal  and  Franklin  received  1,533,938  fully  registered  and
marketable shares of Primal.  During the year ended December 31, 2001,  Franklin
sold 1,150,000 shares of Primal for total proceeds of $53,861,  realizing a loss
of $130,139.  During the nine months ended September 30, 2002, Franklin sold its
remaining position of 383,938 shares for total proceeds of $28,715,  realizing a
loss of $32,715.

On August 28, 2001,  Franklin  along with  Sunshine  Wireless  LLC  ("Sunshine")
purchased the assets of Winstar Radio  Networks,  Global Media and Winstar Radio
Productions  (collectively  "WRN") for a total  purchase price of $6.25 million.
Change Technology Partners,  Inc. ("Change"),  a public company,  provided $2.25
million  of senior  financing  for the deal.  The  acquisition  was  consummated
through eCom Capital Inc.,  subsequently renamed Excelsior Radio Networks,  Inc.
("Excelsior"),  a then  wholly-owned  subsidiary of Franklin.  Franklin's  total
investment was $2.5 million  consisting of $1.5 million in cash and a $1 million
note payable to WRN.  The note was due February 28, 2002 with  interest at 3.54%
and has a right of set-off against certain  representations  and warranties made
by WRN. In October 2001, a legal  proceeding  was filed against WRN,  which also
named Franklin as a defendant,  in which the representations and warranties made
by WRN have been challenged.  Until the time that this action is settled the due
date of the note is extended  indefinitely (see Note 5). Additionally,  Franklin
provided a $150,000 note receivable to Excelsior.  The note bore interest at 10%
per annum and was issued for a ninety-day  rolling  period.  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. As of September 30, 2002,
this note has been  repaid.  In  contemplation  of a proposed  merger  agreement
between  Franklin  and Change  (see Note 11),  Franklin  sold to Change  250,000
shares of common stock in Excelsior for $250,000.

At the  closing,  Franklin  entered  into a services  agreement  with  Excelsior
whereby Franklin will provide Excelsior with certain services.  In consideration
for the services  provided,  for a period of nine months  Franklin would receive
$30,000  per month and be  reimbursed  for all  direct  expenses.  Subsequently,
Franklin's  monthly fee will be  determined  by a majority  of the  non-Franklin
directors;  however, said management fee will be no less than $15,000 per month.
Franklin  will  continue  to be  reimbursed  for all direct  expenses.  Finally,
Franklin's chief financial officer will serve in that capacity for Excelsior and
his salary and benefits will be allocated  between  Excelsior and Franklin on an
80/20 basis.  During the nine months ended  September 30, 2002,  Franklin earned
$330,000 in management  fees and was reimbursed  $90,702 for salary and benefits
for Franklin's  chief  financial  officer,  which was recorded as a reduction of
expenses on Franklin.

On April 3, 2002,  Dial  Communications  Global Media,  Inc.  ("DCGM"),  a newly
formed  wholly-owned  subsidiary of  Excelsior,  a  majority-owned  affiliate of
Franklin,  completed the acquisition of substantially  all of the assets of Dial
Communications Group, Inc. ("DCGI"),  and Dial Communications Group, LLC ("DCGL"
and together with DCGI, the "Dial  Entities")  used in connection  with the Dial
Entities'  business of selling  advertising  relating to radio  programming (the
"Dial  Acquisition").  The Dial Acquisition was



                                       13
<PAGE>


FRANKLIN CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

completed pursuant to the Asset Purchase Agreement (the "Purchase Agreement"),
dated as of April 1, 2002, by and among the Dial Entities, Franklin and
Excelsior. Immediately prior to the closing of the transactions contemplated by
the Purchase Agreement, Excelsior assigned all of its rights and obligations
under the Purchase Agreement, as well as certain other assets and liabilities
relating to the portion of Excelsior's business dedicated to the sale of
advertising relating to radio programming, to DCGM.

The total  purchase  price for the Dial  Acquisition  will be an amount  between
$8,880,000 and $13,557,500.  The initial  consideration for the Dial Acquisition
consisted  of  $6,500,000  in cash  and a three  year  promissory  note  bearing
interest  at 4.5%  issued  by DCGM in favor of DCGL in the  aggregate  principal
amount of $460,000. In addition, the Purchase Agreement provides for the minimum
payment of $1,920,000 of additional consideration,  which is subject to increase
to a maximum amount of $6,597,500  based upon the attainment of certain  revenue
and earnings  objectives in 2002 and 2003. The additional  consideration will be
comprised  of both cash and two  additional  promissory  notes issued by DCGM in
favor of DCGL,  each with an  initial  aggregate  principal  amount of  $460,000
bearing interest at 4.5% that is subject to increase upon the attainment of such
revenue  and  earnings  objectives.  Each  of the  promissory  notes  issued  in
consideration  of the Dial  Acquisition 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 Purchase  Agreement
or the promissory  notes issued in consideration  of the Dial  Acquisition.  For
each share of common  stock  Franklin is  required  to issue under the  Purchase
Agreement or the promissory  notes,  Franklin will receive 0.86 shares of common
stock in Excelsior.

Change and Sunshine,  both existing stockholders of Excelsior,  loaned Excelsior
an aggregate  amount of $7,000,000 to finance the initial  consideration  of the
Dial  Acquisition.  The  obligations  under the loans are  secured by certain of
Excelsior's assets.

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  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.

Franklin  accounts for the options issued to employees under APB Opinion No. 25,
under which no  compensation  cost has been  recognized.  Pro forma  information
determined  consistent with the fair value method required by FASB Statement No.
123, is as follows for the years ended:



                                       14
<PAGE>


FRANKLIN CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                                         September 30, 2002   September 30, 2001
                                         ------------------   ------------------
Net increase (decrease) in net assets
  attributable to common stockholders:
As reported                                   $560,277           ($2,020,057)
Pro forma                                     $553,965           ($2,048,546)

Basic net increase (decrease) in
  net assets per share attributable
  to common stockholders:
As reported                                   $0.52              ($1.86)
Pro forma                                     $0.52              ($1.89)


No options were  granted  during the nine months  ended  September  30, 2002 and
2001.

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

                                         September 30, 2002   September 30, 2001
                                         ------------------   ------------------
                                                   Weighted             Weighted
                                                    Average              Average
                                                   Exercise             Exercise
                                         Shares      Price    Shares      Price
                                         ------    --------   ------    --------
Outstanding at beginning of period       39,375      $11.27   39,375     $11.27
Granted                                      --          --       --         --
Exercised                                    --          --       --         --
Forfeited                                18,750      $11.13       --         --
Expired                                      --          --       --         --
                                         ------               ------
Outstanding at end of period             20,625      $11.39   39,375     $11.27
                                         ======               ======
Exercisable at end of period             20,625      $11.39   26,875     $10.73
                                         ======               ======

The options issued under the SIP have a remaining contractual life of 6.2 years.
The options issued under the SOP have a remaining contractual life of 7.3 years.

8.   NET (DECREASE)  INCREASE 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:

                                   Three Months ended       Nine months ended
                                      September 30,           September 30,
                                -----------------------------------------------
                                    2002         2001       2002        2001
                                -----------   ---------  ---------  -----------
Numerator:
  Net (decrease) increase in
    net assets from operations  ($1,367,997)  ($366,217)  $646,639  ($1,933,695)
  Preferred stock dividends         (28,787)    (28,787)   (86,362)     (86,362)
                                -----------   ---------  ---------  -----------
  Numerator for basic and
    diluted earnings per
    share - net (decrease)
    increase in net assets
    attributable to common
    stockholders                ($1,396,784)  ($395,004)  $560,277  ($2,020,057)
                                ===========   =========  =========  ===========



                                       15
<PAGE>

FRANKLIN CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Denominator:
  Denominator for basic
  and diluted (decrease)
  increase in net assets from
  operations - weighted -
  average shares                  1,064,593   1,076,012  1,068,155    1,083,408

Basic and diluted net
  (decrease) increase in
  net assets from
  operations per share               ($1.31)     ($0.37)     $0.52       ($1.86)
                                ===========   =========  =========  ===========

The  following  securities  have  been  excluded  from the  dilutive  per  share
computation as they are antidilutive:

Preferred stock convertible into 123,375 shares of common stock was antidilutive
for the three and nine months ended  September 30, 2002 and 2001.  Stock options
were  antidilutive  for the three and nine months ended  September  30, 2002 and
2001.

For additional information on the above securities, see Note 7.

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,
                                                     ---------------------------
                                                         2002           2001
                                                     ---------------------------
Numerator:
  Numerator for net asset value per
    common share, as if converted basis               $3,744,700     $2,921,745
  Liquidation value of convertible
    preferred stock                                   (1,645,000)    (1,645,000)
                                                      ----------     ----------
  Numerator for net asset value per share
    attributable to common stockholders               $2,099,700     $1,276,745
                                                      ==========     ==========

Denominator:
  Number of common shares outstanding,
    denominator for net asset value per share
    attributable to common stockholders                1,064,500      1,074,700
  Number of shares of common stock to be
    issued upon conversion of preferred stock            123,375        123,375
                                                      ----------     ----------
  Denominator for net asset value per common
    share as if converted basis                        1,187,875      1,198,075
                                                      ==========     ==========

  Net asset value per share attributable
    to common stockholders                                 $1.97          $1.19
                                                      ==========     ==========

  Net asset value per common share,
    as if converted basis                                  $3.15          $2.44
                                                      ==========     ==========



                                       16
<PAGE>


FRANKLIN CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

10.  PURCHASES AND SALES OF INVESTMENT SECURITIES

The cost of purchases and proceeds from sales of investment securities excluding
short-term  investments,  aggregated $22,985 and $85,269  respectively,  for the
nine  months  ended   September  30,  2002,   and   $3,091,241   and  $3,026,363
respectively, for the nine months ended September 30, 2001.

11.  MERGER WITH CHANGE TECHNOLOGY PARTNERS, INC.

On July 1, 2002,  Franklin  executed its right to terminate the merger agreement
that had been  entered  into on  December  4, 2001,  between  Change  Technology
Partners,  Inc. ("Change") and Franklin pursuant to which Change would have been
merged with and into Franklin. Had the merger gone through,  Change shareholders
would  have  owned  approximately  80% of  Franklin  with  the  balance  held by
Franklin's current stockholders.

12.  SUBSEQUENT EVENT

On October 3, 2002, Franklin sold to Sunshine 773,196 shares of the common stock
of Excelsior for an aggregate purchase price of $1,500,000,  realizing a gain of
$726,804,  pursuant to a stock purchase agreement between Sunshine and Franklin.
After  giving  effect  to  the  purchase  of the  common  stock,  Sunshine  owns
approximately  30.9% and the  Company  owns 59.1% 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, Sunshine
and the Corporation own a total of approximately 57.0% and 29.3%,  respectively,
of the common stock of  Excelsior.  The  remaining  common stock of Excelsior is
owned by Change. In addition,  on or before the earlier of November 30, 2002 and
the next annual meeting of Excelsior,  the  Corporation and Sunshine have agreed
to vote their  shares of common  stock of Excelsior to cause the election to the
board of directors of Excelsior of two designees of Franklin and five  designees
of Sunshine.



                                       17
<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 generally  accepted
accounting  principles 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,
$5,491,754  and  $3,744,700  at  September  30,  2002,   versus  $4,098,866  and
$2,921,745 at December 31, 2001. Net asset value per share  attributable  common
stockholders  and on an as if converted basis was $1.97 and $3.15,  respectively
at September 30, 2002, versus $1.19 and $2.44 at December 31, 2001.

         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, 2002   DECEMBER 31, 2001
                                          ------------------   -----------------
Investments, at cost                         $3,424,675           $3,911,105
Unrealized appreciation (depreciation)        1,975,000             (182,233)
                                             ----------           ----------
Investments, at fair value                   $5,399,675           $3,728,872
                                             ==========           ==========

         The accompanying  financial statements have been prepared assuming that
the  Corporation  will  continue as a going  concern.  For the nine months ended
September  30, 2002 and for the years ended  December  31, 2001,  and 2000,  the
Corporation has incurred a net investment loss from operations of  approximately
$1.2 million,  $1.4 million, and $2.3 million,  respectively,  and has a working
capital deficiency of approximately $1.7 million at September 30, 2002. (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 is seeking a financing
source.  (See Note 12 to the  financial  statements).  There can be no assurance
that the Corporation would be able to obtain financing. The



                                       18
<PAGE>


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  3,  2002,   Franklin  sold  to  Sunshine   Wireless,   LLC
("Sunshine")  773,196 shares of the common stock of Excelsior at $1.94 per share
for an aggregate purchase price of $1,500,000, realizing a gain of $726,804 (See
Note 12 to the financial statements). This asset sale reduced Franklin's working
capital  deficiency  to  approximately  $200,000.  Franklin  continues to have a
working  capital  deficiency  primarily  due to a note  payable of  $952,070  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.  See
further discussion in Liquidity and Capital Resources section.

TERMINATION OF MERGER WITH CHANGE TECHNOLOGY PARTNERS, INC.

         On July 1, 2002,  Franklin  executed its right to terminate  the merger
agreement  that had been  entered  into on  December  4,  2001,  between  Change
Technology Partners, Inc. ("Change") and Franklin pursuant to which Change would
have been merged with and into  Franklin.  Had the merger  gone  through  Change
shareholders  would have owned  approximately  80% of Franklin  with the balance
held by Franklin's current stockholders.

INVESTMENTS

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

         EXCELSIOR

         At September 30, 2002, the  Corporation had an investment in Excelsior,
formerly known as eCom Capital,  Inc.,  valued at $4,365,000,  which  represents
79.5% of the Corporation's total assets and 116.6% of its net assets.

         Excelsior   is  a   majority-owned   affiliate   of  Franklin  and  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's
principal  executive  offices are located at 450 Park  Avenue,  10th Floor,  New
York, NY 10022.

         On April 3, 2002, Dial  Communications  Global Media, Inc. ("DCGM"),  a
newly  formed  wholly-owned   subsidiary  of  Excelsior  Radio  Networks,   Inc.
("Excelsior"),  completed the acquisition of substantially  all of the assets of
Dial Communications  Group, Inc. ("DCGI"),  and Dial  Communications  Group, LLC
("DCGL" and together with DCGI, the "Dial Entities") used in connection with the
Dial Entities'  business of selling  advertising  relating to radio  programming
(the "Dial  Acquisition").  The Dial  Acquisition was completed  pursuant to the
Asset Purchase Agreement (the "Purchase Agreement"),  dated as of April 1, 2002,
by and among the Dial Entities, Franklin and Excelsior. Immediately prior to the
closing of the transactions  contemplated by the Purchase  Agreement,  Excelsior
assigned all of its rights and obligations under the Purchase Agreement, as well
as certain other assets and  liabilities  relating to the portion of Excelsior's
business dedicated to the sale of advertising relating to radio programming,  to
DCGM.

         The total  purchase  price for the Dial  Acquisition  will be an amount
between  $8,880,000  and  $13,557,500.  The initial  consideration  for the Dial
Acquisition  consisted of  $6,500,000 in cash and a three year  promissory  note
bearing  interest  at 4.5%  issued  by DCGM in  favor  of DCGL in the  aggregate
principal amount of $460,000.  In addition,  the Purchase Agreement provides for
the minimum payment of



                                       19
<PAGE>


$1,920,000  of  additional  consideration,  which is  subject to  increase  to a
maximum amount of $6,597,500  based upon the  attainment of certain  revenue and
earnings  objectives  in 2002 and 2003.  The  additional  consideration  will be
comprised of both cash and two additional  promissory  notes bearing interest at
4.5% issued by DCGM in favor of DCGL, each with an initial  aggregate  principal
amount of  $460,000  that is subject to  increase  upon the  attainment  of such
revenue  and  earnings  objectives.  Each  of the  promissory  notes  issued  in
consideration  of the Dial  Acquisition is convertible into shares of Franklin's
common  stock at a premium of ranging  from 115% to 120% of the average  closing
prices of  Franklin's  common  stock  during a  specified  pre and post  closing
measurement  period.  The promissory  notes are not  convertible  for at least a
one-year  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 Purchase  Agreement or the
promissory notes issued in consideration of the Dial Acquisition.

         The  assets  purchased  in the  Dial  Acquisition  were  combined  with
Excelsior's   Global   Media   division   to  create  a  national   radio  sales
representation  company  with 2001  advertising  sales  revenues  of almost  $50
million  and  a  client  roster  of  over  fifty  independent  radio  production
companies.

         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  150  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  currently  produces 23 network  programs  targeting the most
popular radio formats,  including adult contemporary,  rock, urban oldies, album
oriented rock, comedy and country.  Excelsior  produces both short form and long
form programs.  Short form features are two to three minute daily  vignettes and
include such programs as "African Americans Making History." Long form programs,
such as "Walt `Baby'  Love's The  Countdown"  and "Gospel  Traxx,"  "Keeping The
Seventies  Alive,"  "Behind the Hits" and "All Star Mix Party" are programs that
range from one to four hours in length. Excelsior offers these programs to radio
stations  free of  charge.  The radio  stations  airing  these  programs  become
networks for Excelsior to sell advertising time.  Excelsior sells the commercial
broadcast  time  inside  of these  networks  to  advertisers  desiring  national
coverage.

         On August 28,  2001,  the  Corporation  purchased  $2,500,000  worth of
Excelsior  Common Stock and issued a secured note for  $150,000.  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. On November 28,
2001,  $75,000 of the secured  note was paid back to  Franklin.  On February 28,
2002, the remaining $75,000 of the secured note was paid back to Franklin.

         On October 1, 2002,  Excelsior refinanced $2.25 million of indebtedness
owing to Change pursuant to a note entered into by Excelsior in favor of Change.
The  refinancing  was funded by  Sunshine,  another  shareholder  of  Excelsior,
pursuant to a Credit Agreement dated as of September 30, 2002 between  Excelsior
and Sunshine.  The obligations under the Credit Agreement are guaranteed by DCGM
and  secured  by  all  of the  accounts  receivable  and  proceeds  of  accounts
receivable of Excelsior and DCGM. In connection with the refinancing,  Excelsior
issued to Sunshine a warrant for the  purchase  of 816,551  shares of  Excelsior
common stock,  $.01 par value, at a strike price of $1.20 per share. The warrant
expires  September 30, 2012. In addition,  Excelsior issued to the Corporation a
warrant for the purchase of 74,232 shares of Excelsior common stock,  having the
same  strike  price and  expiration  date as the warrant  referred to above.  In
connection  with  the  refinancing,  Phoenix  Enterprises  LLC  ("Phoenix")  and
Sunshine  also agreed to extend until  October 31, 2002 the maturity of $750,000
in aggregate  principal amount of indebtedness of Excelsior owing to Phoenix and
Sunshine.

         In a related  transaction,  on October 3, 2002, Sunshine purchased from
the Corporation 773,196 shares of the common stock of Excelsior for an aggregate
purchase price of $1,500,000,  pursuant to a stock  purchase  agreement  between
Sunshine and the Corporation.  After giving effect to the purchase of the



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common stock,  Sunshine owns approximately  30.9% and the Corporation owns 59.1%
of the issued and outstanding common stock, and voting power, of Excelsior. On a
fully  diluted  basis,  after  giving  effect  to  the  exercise  of  all of the
outstanding  warrants,  including  the  warrants  referred  to  above,  and  the
conversion of Sunshine's  outstanding  preferred  stock of Excelsior into common
stock,  Sunshine  and the  Corporation  own a total of  approximately  57.0% and
29.3%,  respectively,  of the common stock of Excelsior.  The  remaining  common
stock of Excelsior is owned by Change. In addition,  on or before the earlier of
November 30, 2002 and the next annual meeting of Excelsior,  the Corporation and
Sunshine have agreed,  based on the current fully  diluted stock  ownership,  to
vote their  shares of common  stock of  Excelsior  to cause the  election to the
board of directors of Excelsior  of two  designees of the  Corporation  and five
designees of Sunshine.

         ALACRA CORPORATION

         At September  30, 2002,  the  Corporation  had an  investment in Alacra
Corporation  ("Alacra"),  valued at $1,000,000,  which  represents  18.2% of the
Corporation's total assets and 26.7% 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  include  privatesuiteTM,  a fast,  easy,  cost-effective  way to
identify and retrieve  profiles of privately  held  companies  around the world;
compbookTM, a tool for company peer analysis; and Portal BTM, a fully integrated
business information portal.

         On April 20, 2000, the Corporation purchased $1,000,000 worth of Alacra
Series F  Convertible  Preferred  Stock.  In  connection  with this  investment,
Franklin was granted observer rights for Alacra Board of Directors meetings.

         EXCOM VENTURES, LLC

         At September  30, 2002,  the  Corporation  had an  investment  in Excom
Ventures,  LLC ("Excom")  valued at $0. Excom was formed as a limited  liability
holding company for the purpose of investing in Expert Commerce,  Inc.  ("Expert
Commerce").  Expert  Commerce  was a  Business-to-Business  purchase  evaluation
engine that simulated the way people make decisions.

         On June 26, 2000,  the  Corporation  purchased  $140,000 worth of Excom
Units.  At December 31, 2001,  the Board of Franklin  had  determined  that this
investment  had no value and had marked  these  securities  down to reflect that
determination.

         PRIMAL SOLUTIONS, INC.

         The Corporation no longer has an investment in Primal  Solutions,  Inc.
("Primal"). On February 13, 2001, Primal was spun-off from Avery Communications,
Inc.  ("Avery").  As a result of this spin-off Franklin received 1,533,938 fully
registered and marketable  shares of common stock of Primal at an allocated cost
basis of $245,430.  During the nine months ended  September  30, 2002,  Franklin
sold its  remaining  position of 383,938  shares for total  proceeds of $28,715,
realizing a loss of $32,715.

         STRUCTURED WEB, INC.

         At September 30, 2002, the  Corporation had an investment in Structured
Web, Inc.  ("Structured Web") valued at $0. Structured Web develops web building
blocks to enable small  businesses  to create and manage their own digital nerve
system  easily  and  at  an  affordable  price.  Structured  Web's  object-based
proprietary  technology  enables customers to choose from a growing selection of
"WebBlocks" including content, communication, commerce and services.

         On  August  8,  2000,  the  Corporation  purchased  $350,000  worth  of
Structured Web  convertible  preferred  stock.  On May 30, 2002, the Corporation
sold its position in Structured Web for $50,000 realizing a loss of $300,000. As
part of the sale price, the Corporation maintained the right to receive 50%



                                       21
<PAGE>


of any  proceeds  received by the  purchaser  in excess of the $50,000  purchase
price.  The  Corporation has valued this right at $0, as it cannot be determined
at this time if the Corporation will receive any funds from this right.

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 $332,219 and $99,094 for the
nine months ended  September  30, 2002 and 2001,  respectively.  The increase in
investment  income for the nine months ended September 30, 2002 when compared to
September 30, 2001,  was primarily the result of the receipt of a management fee
from Excelsior.  The  Corporation had investment  income of $120,110 and $41,735
for the three  months  ended  September  30,  2002 and 2001,  respectively.  The
increase in investment income for the three months ended September 30, 2002 when
compared to September 30, 2001,  was  primarily  the result of a management  fee
from Excelsior.

         Operating  expenses were  $1,493,335 and $1,177,628 for the nine months
ended and $592,330 and  $358,881 for the three months ended  September  30, 2002
and 2001,  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. The  Corporation  incurred  $465,782 in expenses
related to the terminated  merger with Change.  The  Corporation  was reimbursed
$90,702 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 $1,161,116 and $1,078,534
for the nine months  ended and  $472,220 and $317,146 for the three months ended
September 30, 2002 and 2001, respectively.  The increase resulted primarily from
the merger related expenses noted above.

         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.

NET REALIZED GAINS AND LOSSES ON PORTFOLIO OF INVESTMENTS:

         During  the  nine  months  ended  September  30,  2002  and  2001,  the
Corporation  realized net (losses) gains before taxes of ($349,147) and $730,857
respectively, from the disposition of various investments.

UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS:

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

         Unrealized appreciation of investments,  decreased by $1,587,694 during
the nine months ended September 30, 2001,  primarily from unrealized  losses due
to the decrease in value of Franklin's investment



                                       22
<PAGE>


in Go  America  as  well as the  sale of a  significant  portion  of  Franklin's
holdings  in Go  America.  This  decrease  was  partially  offset by the sale of
Franklin's investment in Avery Communications.

LIQUIDITY AND CAPITAL RESOURCES

         The accompanying  financial statements have been prepared assuming that
the  Corporation  will  continue as a going  concern.  For the nine months ended
September  30, 2002 and for the years ended  December  31, 2001,  and 2000,  the
Corporation has incurred a net investment loss from operations of  approximately
$1.2 million,  $1.4 million, and $2.3 million,  respectively,  and has a working
capital deficiency of approximately $1.7 million at September 30, 2002. (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 is seeking a financing
source.  (See Note 12 to the  financial  statements).  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  3,  2002,   Franklin  sold  to  Sunshine   Wireless,   LLC
("Sunshine")  773,196 shares of the common stock of Excelsior at $1.94 per share
for an aggregate purchase price of $1,500,000, realizing a gain of $726,804 (See
Note 12 to the financial statements). This asset sale reduced Franklin's working
capital  deficiency  to  approximately  $200,000.  Franklin  continues to have a
working  capital  deficiency  primarily  due to a note  payable of  $952,070  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.

         The sale of the Excelsior stock has provided  Franklin with $1,500,000.
Management   believes  that  this  amount  will  allow  Franklin  to  cover  its
obligations  for  approximately  the next  twelve  months  assuming  the note to
Winstar discussed above does not come due.  Franklin  continues to seek adequate
alternative  financing  rather than additional asset sales in order to alleviate
the going concern issue.  Because of the uncertainty and other factors  relating
to the  repayment  of the note it may  cause  the  Company's  results  to differ
materially from what Management believes.

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



                                       23
<PAGE>


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 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.

         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



                                       24
<PAGE>


year-end  financial  statements.  Franklin is seeking financing  alternatives to
continue  operating  through the current  fiscal year. If funds were not raised,
Franklin  may  not be able  to  continue  its  operations.  (See  Note 12 to the
financial statements).

         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.

         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



                                       25
<PAGE>


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 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  defendents  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 (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



                                       26
<PAGE>


         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.  Franklin  believes
         that  plaintiffs'  claims are without  merit and intends to defend this
         lawsuit  vigorously,  though the outcome  cannot be  predicted  at this
         time.  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

ITEM 5.  OTHER INFORMATION

                  Not applicable

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)  Exhibits
                 Exhibit 99.1  Certification Pursuant To 18 U.S.C. Section 1350,
                               As Adopted By Section 906 Of The Sarbanes-Oxley
                               Act Of 2002
                 Exhibit 99.2  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. The Corporation filed a report on Form 8-K on
              July 1, 2002  announcing the termination of the merger with Change
              Technology  Partners,  Inc.  and  filed a  report  on Form  8-K on
              October  8,  2002   announcing  the  sale  of  a  portion  of  the
              Corporation's holdings in Excelsior.


                                    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, 2002                By: /s/ Stephen L. Brown
                                           ------------------------------------
                                           Stephen L. Brown
                                           CHAIRMAN AND CHIEF EXECUTIVE OFFICER


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




                                       27
<PAGE>


                                 CERTIFICATIONS


I, Stephen L. Brown, certify that:

1.   I have  reviewed  this  quarterly  report on Form 10-Q of Franklin  Capital
     Corporation;

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

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

4.   The  registrant's  other certifying  officers  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a.   Designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     b.   Evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c.   Presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent function):

     a.   All  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b.   Any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


Date November 14, 2002


     By: /s/ Stephen L. Brown
         -----------------------------------
         Name: Stephen L. Brown
         Title:   Chairman and Chief Executive Officer





                                       28
<PAGE>


                                 CERTIFICATIONS


I, Hiram M. Lazar, certify that:

1.   I have  reviewed  this  quarterly  report on Form 10-Q of Franklin  Capital
     Corporation;

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

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

4.   The  registrant's  other certifying  officers  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a.   Designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     b.   Evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c.   Presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent function):

     a.   All  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b.   Any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


Date November 14, 2002


By: /s/ Hiram M. Lazar
    --------------------------------
    Name: Hiram M. Lazar
    Title:   Chief Financial Officer





                                       29

<PAGE>
                                  EXHIBIT INDEX

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

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