**U.S.
      SECURITIES AND EXCHANGE COMMISSION**


**Washington,
      DC 20549**








**FORM
      10-QSB**





(Mark
      One)





x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
      Act
      of 1934





**For
      the Quarterly Period Ended July 31, 2006**


Or





 ̈ Transition Report Pursuant to Section 13 or 15(d) of the Exchange Act





For
      the
      Transition Period from _________ to _________





**Commission
      File Number 000-21812**








**FRANKLIN
                LAKE RESOURCES INC.**(Exact
                name of Registrant as specified in its charter)**Nevada**
            **52-2352724**(State
                of Incorporation)
            (I.R.S.
                Identification Number)**172
                Starlite Street, South San Francisco, CA 94080**
            **(650)
                588-0425**(Address
                of principal executive offices)
            (Telephone)N/A .(Former
                name, former address, and formal fiscal year, if changed since last
                report)








Check
      whether issuer (1) filed all reports required to be filed by Section 13 or
      15(d)
      of the Exchange Act during the past 12 months , and (2) has been subject to
      such
      filing requirements for the past 90 days Yes x No o


Indicate
      by check mark whether registrant is a shell company (as defined in Rule 12b-2
      of
      the Exchange Act)


Yes  ̈ No x




Applicable
      Only to users Involved in Bankruptcy Proceeding during the Preceding Five Years N/A
      .





Applicable
      Only to Corporate Users -- Indicate the number of shares outstanding of each
      of
      the Issuer's classes


of
      common
      stock as of the latest practicable date 16,968,475
      shares as of August 31, 2006 .





Transitional
      Small Business Disclosure Format Yes o  x








-
          1
          -


**PART
      I -- FINANCIAL STATEMENTS**





Item
      1
      Financial Statements





FRANKLIN
                  LAKE RESOURCES, INC.(An
                  Exploration Stage Company)Consolidated
                  Balance Sheet(Unaudited)July
                  31,
              
              October
                  31,ASSETS
              
              2006
              
              2005Current
                  Assets:Cash
              
              $
              6,943
              
              $
              8,652Prepaids and other
              
              
              598
              
              
              598Total
                  Current Assets
              
              
              7,541
              
              
              9,250Fixed
                  Assets:Office
                  furniture & equipment
              
              
              30,101
              
              
              30,101Plant equipment
              
              
              431,712
              
              
              429,712Accumulated
                  depreciation
              
              
              (427,487
              )
              
              (397,130
              )Total
                  Fixed Assets
              
              
              34,326
              
              
              62,683Other
                  Assets:Reclamation bond- net of estimated reclamation costs
              
              
              19,867
              
              
              19,867Deposits
              
              
              6,542
              
              
              -26,409
              
              
              19,867Total
                  Assets
              
              $
              68,276
              
              $
              91,800LIABILITIES
                  & SHAREHOLDERS' EQUITYCurrent
                  Liabilities:Accounts payable and accrued liabilities
              
              
              4,896
              
              
              2,588Advances from Stockholders'
              
              
              20,000
              
              
              -Total
                  Current Liabilities
              
              
              24,896
              
              
              2,588Total
                  Liabilities
              
              
              24,896
              
              
              2,588Stockholders'
                  Equity:Preferred Stock, $.001 par value; authorized 5,000,000
                  shares;no preferred shares outstanding
              
              
              -Common Stock, $.001 par value; authorized 45,000,000
                  shares;
              
              
              18,926
              
              
              14,80316,968,745 issued and outstanding at July 31, 2006;14,803,975 issued and outstanding at October 31, 2005Additional Paid-In Capital
              
              
              31,900,814
              
              
              31,688,486Accumulated Deficit
              
              
              (31,876,359
              )
              
              (31,614,077
              )Total
                  Stockholders' Equity
              
              
              43,380
              
              
              89,212Total
                  Liabilities and Stockholders' Equity
              
              $
              68,276
              
              $
              91,800







-
          2
          -




**FRANKLIN
                  LAKE RESOURCES, INC.**(An
                  Exploration Stage Company)Consolidated
                  Statements of Operations(Unaudited)CumulativeFrom
                  Date ofInception
                  onThree
                  Months
              Three
                  Months
              
              Nine
                  Months
              
              Nine
                  Months
              
              May
                  23, 1986Ended
              Ended
              
              Ended
              
              Ended
              
              to
                  July 31,July
                  31, 2006
              July
                  31, 2005
              
              July
                  31, 2006
              
              July
                  31, 2005
              
              2006RevenuesMineral
                  processing fees
              
              $
                  -
              $
                  -
              
              $
                  -
              
              $
                  -
              
              $
                  4,585Total
                  Revenue
              
              -
              -
              
              -
              
              -
              
              4,585Expenses:Mineral
                  exploration costs
              31,396
              30,243
              
              129,866
              
              101,545
              
              16,246,271Depreciation/amortization
                  expenses
              10,119
              10,119
              
              30,357
              
              29,757
              
              3,714,871General
                  and administrative
              31,047
              40,502
              
              102,059
              
              111,078Impairment
                  of patents and
              -
              -
              
              -
              
              
              
              1,162,792Intellectual
                  property
              -
              -
              
              -
              
              
              
              -Total
                  Expenses
              72,562
              80,864
              
              262,282
              
              242,380
              
              31,907,155Other
                  Income:Precious
                  Metal Sales
              
              
              
              
              
              
              
              
              26,211Misc
                  Income
              
              
              5,242
              
              
              
              5,242
              
              5,242Net
                  Loss
              
              (72,562)
              (75,622)
              
              (262,282)
              
              (237,138)
              
              (31,871,117)Weighted
                  Average SharesCommon
                  Stock Outstanding
              16,859,725
              9,494,407
              
              15,494,544
              
              9,494,407Net
                  Loss Per Common Share(Basic
                  and Fully Diluted)
              
              $0.01)
              $
                  (0.01)
              
              $
                  (0.02)
              
              $
                  (0.02)










-
          3
          -




**FRANKLIN
                  LAKE RESOURCES, INC.**(An
                  Exploration Stage Company)Consolidated
                  Statements of Cash Flows(Unaudited)


CumulativeThree
                Months Ended July 31, 2006
            
            Three
                Months Ended July 31, 2005
            
            Nine
                Months Ended July 31, 2006
            
            Nine
                Months Ended July 31, 2005
            From
                date of inception on May 23, 1986 to July 31, 2006Cash
                Flows used in Operating Activities:Net
                Loss
            $
                (72,562)
            
            $(75,622)
            
            $(262,282)
            
            $(237,138)
            (31,876,359)Adjustments
                to reconcile net loss to net cash provided by operationsAmortization / depreciation
            10,119
            
            10,119
            
            30,357
            
            29,757
            3,714,871Proceeds-
                net book value of equipment licenses,properties
                sold/ abandoned
            
            
            
            
            
            
            
            2,621,265Impairment
                of patents and intellectual property
            
            
            
            
            
            
            
            1,162,792Common
                stock issued for compensation, rent and expenses
            21,750
            
            21,750
            
            65,250
            
            65,250
            820,074Changes
                in Operating Assets and Liabilities:(Increase) decrease in prepaid expenses and other
            (6,542)
            
            (30)
            
            (6,542)
            
            (166)
            (7,140)Increase (refund) of reclamation bond outstanding
            
            
            
            
            
            
            -
            (19,867)Increase ( decrease) in accounts payable and accrued
                liabilities
            4,767
            
            2,178
            
            2,308
            
            6,138
            4,896Cash Flows used in Operating Activities
            (42,468)
            
            (41,605)
            
            (170,909)
            
            (136,159)
            (23,579,468)Cash
                Flows from Investing Activities:Purchases of plant & equipment
            (2,000)
            
            (7,599)
            
            (2,000)
            
            (10,243)
            (882,079)Acquisition
                of mineral properties
            -
            
            -
            
            -
            
            -
            (2,152,077)Total
                Cash Flows Provided by Investing Activities
            (2,000)
            
            (7,599)
            
            (2,000)
            
            (10,243)
            (3,034,156)Cash
                Flows from Financing Activities:Common stock issued for cash
            
            
            50,000
            
            151,200
            
            150,000
            23,904,809Loan
                proceeds
            
            
            -
            
            -
            
            -
            2,202,408Advances
                (repayments) from officers/directors/affiliates
            20,000
            
            -
            
            20,000
            
            -
            513,350Cash
                Flows from Financing Activities
            20,000
            
            50,000
            
            171,200
            
            150,000
            26,620,567Net
                Increase (Decrease) in Cash
            (24,468)
            
            796
            
            (1,709)
            
            3,598
            6,943Cash
                at Beginning of Period
            31,411
            
            7,170
            
            8,652
            
            4,368
            -Cash
                at End of Period
            $
                6,943
            
            $
                7,966
            
            $
                6,943
            
            $
                7,966
            $
                6,943Supplemental
                Non-Cash Financing Activities:Common
                Stock issued for compensation and rent
            $
                21,750
            
            $21,750
            
            $
                65,250
            
            $
                65,250
            $
                880,079Common
                Stock issued for licenses
            
            
            
            
            
            
            
            136,080Common
                Stock issued for subsidiaryacquisition-mineral
                properties & equipment
            
            
            
            
            
            
            
            2,286,576Common
                Stock issued for mineral properties
            
            
            
            
            
            
            
            1,198,075Common
                Stock issued for equipment
            
            
            
            
            
            
            
            1,297,718Common
                Stock issued to acquire Xenolix assetsnet
                of $25,000 expensed $1,162,792 Xenolix patents andtechnologies
                $109,978 capitalized as equipment
            
            
            
            
            
            
            
            1,272,790Cancellation
                of shares issued to Xenolix
            
            
            
            
            
            
            
            -Equipment
                returned to satisfy debt , payables
            
            
            
            
            
            
            
            1,299,872Interest
                Paid
            
            
            
            
            
            
            
            68,851Income
                Taxes Paid
            
            
            
            
            
            
            
            4,078








-
          4
          -


**FRANKLIN
      LAKE
      RESOURCES, INC.**


(Formerly
      Naxos Resources, Ltd.)


(An
      Exploration Stage Company)


**Notes
      to Interim Financial Statements**


**July
      31, 2006**





**1.
      HISTORY**





Franklin
      Lake Resources Inc. ("FKLR" or "Company") was originally incorporated as Naxos
      Resources Ltd. ("Naxos") in British Columbia under the Canada Business
      Corporations Act on May 23, 1986, with its principal place of business in
      Vancouver. In the year 2000, the Company moved its executive and administrative
      offices to South San Francisco, California, effectively ending its business
      connections in Canada. On October 15, 2001, the shareholders approved the
      redomiciliation of the Company to the United States. On October 29, 2001,
      Articles of Incorporation and Articles of Domestication were filed with the
      Secretary of State of Nevada and Naxos was "continued" as a Nevada corporation
      under the name of Franklin Lake Resources Inc. On January 3, 2002, Industry
      Canada issued a Certificate of Discontinuance, formally ending the Company's
      legal ties to Canada. On January 9, 2002, the name change (to Franklin Lake
      Resources Inc.) became effective for trading purposes. At the same time, a
      reverse split of the Company's shares on the basis of one new share for each
      ten
      shares held also became effective and the Company received a new symbol, FKLR.





The
      Company is in the business of exploring for precious metals, developing
      processes for extracting them from the earth, and, if warranted, developing
      sites for possible development. The Company's principal property consists of
      58
      placer association claims, covering approximately 8,000 acres, at Franklin
      Lake,
      near Death Valley Junction, California, on land owned by the United States
      government and managed by the Bureau of Land Management (BLM).





The
      Company is an exploration stage company as defined in Statement on Financial
      Accounting Standard No. 7 (SFAS 7) (Accounting and Reporting by Development
      Stage Companies). Further, as a “reporting company”  pursuant
      to the Securities Exchange Act of 1934, as amended, the Company’s financial
      reports include  the
      information required by provisions of Regulation S-X under that Act, and
      specifically Industry Guide 7 therein, applicable to the companies engaged
      in
      mineral exploration and development.





**Basis
      of Presentation**





The
      Interim financial statements of the Company for the three and nine months ended
      July 31, 2006 were not audited. The financial statements are prepared in
      accordance with the requirements for unaudited interim periods, and consequently
      do not include all disclosures required to be in conformity with accounting
      principles generally accepted in the United States of America.





-
          5
          -





These
      financial statements reflect all adjustments that, in the opinion of management,
      are necessary to present fairly the results of operations for the interim
      periods presented. All adjustments are of a normal recurring nature, unless
      otherwise disclosed.





**A.**  **2.
      SIGNIFICANT ACCOUNTING POLICIES**





(a)
            Accounting
                Methods





The
      Company recognizes income and expense based on the accrual method of
      accounting.




(b)
            Use
                of Estimates




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
























































-
          6
          -





**FRANKLIN
      LAKE RESOURCES, INC** .


(Formerly
      Naxos Resources, Ltd.)


(An
      Exploration Stage Company)


**Notes
      to Interim Financial Statements**


**July
      31, 2006**





(c)  Dividend
      Policy





The
      Company has not adopted a policy regarding the payment of dividends and does
      not
      anticipate payment of dividends in the future.





(d)  Mineral
      Properties and Equipment





The
      Company has expensed the costs of acquiring and exploring its properties during
      the periods in which they were incurred, and will continue to do so until it
      is
      able to determine that commercially recoverable ore reserves are present on
      the
      properties. If it determines that such reserves exist, it will capitalize
      further costs.





Reclamation
      bonds for which the Company has posted refundable cash deposits cover the
      restoration and rehabilitation of the Company’s BLM properties. The Company does
      not believe that it has significant environmental, rehabilitation or restoration
      expenses for the exploration operations it has conducted to date. The Company
      believes that its cash deposits could be refunded without significant additional
      expenditures to restore its exploration properties. The Company has not recorded
      an increase in the estimated recoverable deposits until it has received a more
      formal notification of its reduced exposure to environmental, rehabilitation,
      and restoration expenses. The Company has a deposit in the amount of $58,000
      available to cover reclamation costs. The Company has reflected a net
      recoverable value of $19,867 based upon estimates of those costs. The Company
      will reflect an increase in the value of its deposits when it is able to reduce
      them based upon regulatory approvals and a refund of its deposit.





(e)  Basic
      and
      Dilutive Net Income (Loss) Per Share





Basic
      net
      income (loss) per share amounts are computed based on the weighted average
      number of shares actively outstanding in accordance with SFAS 128 “Earnings Per
      Share.” Diluted net income (loss) per share amounts are computed using the
      weighted average number of common shares and common equivalent shares
      outstanding as if shares had been issued on the exercise of any common share
      rights unless the exercise becomes antidultive and then only the basic per
      share
      amounts are shown in the report.





(f)  Comprehensive
      Income


The
      Company adopted SFAS 130, “Reporting Comprehensive Income”, which requires
      inclusion of foreign currency translation adjustments, reported separately
      in
      its Statement of Stockholders’ Equity, in other comprehensive income. Such
      amounts


-
          7
          -





are
      immaterial and have not been reported separately. The Company had no other
      forms
      of comprehensive income since inception.





(g)  Stock
      Based Compensation





The
      Company has elected to follow Accounting Principles Board Opinion 25 (APB 25)
      and related interpretations in accounting for its employee stock options. Under
      APB 25, when the exercise price of employee stock options is equal to the
      estimated market price of the stock on the date of grant, no compensation
      expense is recorded. The Company has adopted the disclosure-only provisions
      of
      SFAS 123 with respect to employee stock options.





(h)  Income
      Taxes





The
      Company utilizes the liability method of accounting for income taxes. Under
      the
      liability method, deferred tax assets and liabilities are determined based
      on
      the differences between financial reporting and the tax bases






























































-
          8
          -





**FRANKLIN
      LAKE RESOURCES, INC.**


(Formerly
      Naxos Resources, Ltd.)


(An
      Exploration Stage Company)


**Notes
      to Interim Financial Statements**


**July
      31, 2006**





of
      the
      assets and liabilities and are measured using the enacted tax rates and laws
      that will be in effect, when the differences are expected to reverse. An
      allowance against deferred tax assets is recognized when it is more likely
      than
      not, that such tax benefit will not be realized. On July 31, 2006, the Company
      had estimated net operating losses to be carried forward in the amounts of
      $31,600,000. The tax benefit of approximately $4,680,000 at July 31, 2006 has
      been fully offset by a valuation reserve because the use of the future benefit
      is doubtful since the Company has not generated taxable income since inception.
      The net operating loss expires starting 2006 through 2025.





Due
      to
      the uncertainty regarding the Company’s future profitability, the future tax
      benefits of its losses have been fully reserved and no net tax benefit has
      been
      recorded in these financial statements.





(i)  Fair
      Value of Financial Instruments





The
      respective carrying value of certain on-balance-sheet financial instruments
      approximated their fair values. These financial instruments include cash, tax
      credit recoverable, reclamation bond, accounts payable and accrued liabilities,
      amount due to a director and loan payable.





(j)  Recent
      Accounting Pronouncements





The
      Company does not expect that the adoption of other recent account pronouncements
      will have a material effect on its financial statements.





(k)  Revenue
      Recognition





Revenue
      will be recognized on the sale and delivery of a product or the completion
      of a
      service provided.





(l)  Statement
      of Cash Flows





For
      the
      purposes of the statement of cash flows, the Company considers all highly liquid
      investments with a maturity of three months or less to be cash
      equivalents.





(m)  Financial
      and Concentration Risk





The
      Company does not have any concentration or related financial credit
      risk.


-
          9
          -








**3.
      COMMON STOCK**





The
      trading volume of the Company’s shares is low and the price per share is highly
      volatile based upon relatively small amounts of trading activity. The price
      of
      shares in sales by the Company for cash and the values of shares issued in
      other
      transactions are determined by private negotiations between the parties
      involved. The Company issued 217,500 shares of stock during the three months
      ended July 31, 2006 to the president of the Company for compensation and rent.
      The Company issued 1,127,500 during the three months ended April 30, 2006 and
      819,500 shares during the three months ended January 31, 2006, to the president
      of the company, for cash, compensation, and rent.




















**FRANKLIN
      LAKE RESOURCES, INC.**


(Formerly
      Naxos Resources, Ltd.)


(An
      Exploration Stage Company)


**Notes
      to Interim Financial Statements**


**April
      30, 2006**





**4.
      RELATED PARTY TRANSACTIONS AND OPERATING LEASES**





The
      Company has received cash advances, management services, office space (including
      supplies and overhead), and use of land and buildings for its new testing and
      production facility, from its president. The management services, office space,
      and land and buildings are payable only in shares of Company stock, not in
      cash.





**5.
      STOCK OPTIONS & WARRANTS**





The
      Company accounts for its stock options and warrants in accordance with APB
      25
“Accounting for Stock Issued to Employees”. Under APB 25, no compensation is
      recognized when the exercise price of employee options is equal to the fair
      market value of the underlying stock on the date of the grant. For each of
      the
      Company’s stock options, the exercise price was equal to the estimated fair
      market value of the shares at the date of the grant.





The
      Company granted directors and certain employees’ stock options as an incentive
      to purchase shares of the Company’s common stock. All options were vested
      immediately and are exercisable at a price equal to the fair market value on
      the
      date of the grant. As of July 31, 2006, there were 2,000,000 options and
      2,402,123 warrants outstanding. 817,500 warrants expired in July, 2006. There
      were 217,500 new warrants issued during the quarter ended July 31,
      2006.


-
          10
          -





On
      July
      31, 2006, the Company granted an additional 217,500 warrants to the President
      of
      the Company, that were immediately vested and exercisable on that date.
      Accordingly, if the Company had applied the fair value method to these warrants,
      compensation expense, net of the tax effect, would have been $2,500 for the
      quarter ended July 31, 2006.





**6.
      METALS EXTRACTION AGREEMENT**





On
      November 30, 2004, the Company entered into a Metals Extraction Agreement with
      MR3 Systems, Inc. (MR3) whereby both parties agreed to jointly build and operate
      a facility at the “Amargosa” site to process Source Material from Franklin Lake
      Playa in order to extract precious metals for sale to refiners and other third
      parties. As part of the agreement MR3 was to obtain financing to construct
      and
      operate the facility. MR3 had represented to the Company that it had developed
      the technology necessary for such extraction.





Subsequent
      to the end of the fiscal year on October 31, 2005, management of the Company
      made a determination that MR3 had not met its obligations under the agreement.
      On November 21, 2005 management sent a letter to MR3 in which the Company
      terminated the agreement. As of March 10, 2006, MR3 has not given the Company
      any notice that it disagrees with any of the facts or conclusions in the letter
      or that it disputed the termination.





**7.
      GOING CONCERN**





The
      accompanying consolidated financial statements have been prepared in conformity
      with generally accepted


accounting
      principles, which contemplate continuation of the Company as a going
      concern.





The
      Company has incurred losses since its inception and has not yet been successful
      in establishing profitable operations. These factors raise substantial doubt
      about the ability of the Company to continue as a going concern. Continuance
      of
      the Company as a going concern is dependent upon obtaining additional working
      capital through loans and/or additional sales of the Company’s common stock.
      There is no assurance that the Company will be successful in raising this
      additional capital or achieving profitable operations. The accompanying
      financial statements do not include any adjustments that might result from
      the
      outcome of these uncertainties.





























-
          11
          -


Item
      2
      -- Management's Discussion and Analysis or Plan of Operation





In
      April
      2006, we filed an application for our pilot plant testing facility in
      Amargosa


Valley,
      Nevada, with the State's Division of Environmental Protection. In addition
      to
      routine


questions
      and requests for additional information, they also required that we verify
      that
      we


will
      have
      adequate water resources to operate the facility. To do this, we purchased
      10
      acre-


feet
      of
      water rights, at a total cost of $25,000.00, one-fourth of which, $6,250.00,
      was
      paid


and
      the
      balance is payable in January 2007. We have also filed an application to the
      Bureau


of
      Land
      Management of the Federal Government for permission to extract the dirt we
      will


need
      from
      our claims at Franklin Lake. We are now waiting for an inspection of the site
      by


the
      Bureau's environmental and archeological staff. This inspection has been
      scheduled and


then
      postponed, but we have recently been assured that it will be done by
      mid-September.





We
      are in
      the process of analyzing several different concentrators and
      attempting


to
      determine the most efficient means of processing the resulting concentrate.
      We
      are also


seeking
      to obtain the few pieces of additional equipment we still need. One of these,
      acquired in


July
      2006, is a wet drum magnetic separator. This is intended, after the
      concentration, to further


increase
      the proportion of gold in the material processed. If we can do these steps
      effectively, we


should
      be
      able to begin using our pilot plant promptly after we receive the appropriate


governmental
      approvals. Our goal is to be able to process three to five tons per day on
      a
      regular


and
      consistent basis. At the same time, this should allow us to work out any kinks
      that may exist


in
      the
      equipment and processes and to achieve a better yield of gold from our
      material.





We
      do not
      expect the early operation of the pilot plant to be profitable. Accordingly,
      as


our
      results warrant, we will increase our production in an attempt to achieve
      profitability as


soon
      as
      possible. At this time, we have no way of knowing when, or if, that will
      happen.





The
      company believes that, in view of the situation described above, it will know
      with a higher


degree
      of
      reliability than before, by the end of its fiscal year on October 31, 2006,
      whether it will


ultimately
      be able to develop an economically viable business. If it them seems that the


likelihood
      of success is positive, the company will require funds for additional equipment
      for the


pilot
      plant, technical and professional consultants, additional technical staff,
      claims maintenance


fees,
      accounting and auditing, the purchase of water rights, ongoing administrative
      expenses, and


a
      contingency reserve. We estimate these items will require additional funds
      of
      approximately


$300,000
      to $500,000 to cover the next six months to one year. This is a substantially
      greater


sum
      than
      the company has been able to raise in recent years, and, if it cannot obtain
      such funds,


it
      probably will not be able to continue in business.





At
      the
      end of quarter, on July 31, 2006, we had approximately $7,000 cash on hand.
      Father


Gregory
      Ofiesh, our president, guaranteed investments of $250,000 in September
      2004,


and
      another $250,000 in November, 2005. The first $250,000 has been received, all
      from


Father
      Ofiesh personally, and, of the second $250,000, approximately $170,000 has
      been
      re-














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          12
          -





ceived,
      again all from Father Ofiesh himself. During the previous quarter, Father Ofiesh
      had


informed
      the board of directors that he continues to be unable to find other investors,
      but that


he
      will
      stand by his commitment to invest the remaining amount of approximately
      $80,000.


He
      also
      noted the increasing risk he is assuming as his investments continue, and,
      instead of


just
      acquiring shares, he would like to obtain some security for his next
      investments, such as


by
      purchasing the equipment at the Amargosa facility and leasing it back to the
      Company.


He
      said
      he would not pursue the matter for at least 30 days in order to give the
      directors time to search for a better alternative.





The
      Company has not been able to find investors (other than Father Ofiesh) willing
      to


purchase
      shares of its stock for the past two years (during which he has invested more
      than


$400,000.00).
      During the period covered by this report, the Company has looked for
      outside


parties
      to provide financing on alternative terms, specifically by making a loan to
      the
      Company


secured
      by the equipment at its Amargosa facility or by purchasing the equipment and
      leasing


it
      back
      to the Company. Despite numerous inquiries, it has not been able to find a
      party
      willing


to
      do
      either. Through the firms it talked with, it also sought the names of qualified
      appraisers


who
      could
      value the equipment, but was not able to get any; nor could it find an appraiser
      through other sources.





At
      a
      meeting of the board of directors on July 27, 2006, Father Ofiesh made an
      offer


to
      purchase all the equipment at the Amargosa facility (except for the Lyden dryer
      purchased by Paul Kaser for the Company) for $50,000, and to lease it back
      to
      the Company for $1.00 per month. (These funds would be part of the second
      commitment of $250,000, referred to above.) The lease would end on March 31,
      2008, the date the lease on the facility expires. The board (with Father Gregory
      abstaining) unanimously accepted the offer, subject to preparation of and
      further approval of a written agreement. Subsequent to the end of the period
      covered by this report, a Sale, Purchase and Leaseback Agreement was prepared
      and approved by the board of directors. The transaction is expected to close
      during September 2006. A copy of the Agreement is included with this report
      as
      Exhibit 2.








Item
      3
      -- Controls and Procedures





Evaluation
      of Disclosure Controls and Procedures





As
      of the
      end of the period covered by this report, an evaluation was made by our
      chief


executive
      officer, who is also our acting chief financial officer, of the effectiveness
      of
      our disclo-


sure
      controls and procedures (as defined in Rule 13a-15(e), under the Securities
      Exchange Act


of
      1934
      ("Act")). Based on that evaluation, our chief executive officer, in that
      capacity and in


his
      capacity as acting chief financial officer, concluded that these disclosure
      controls and proce- dures were effective as of that time. In addition, no change
      in our internal control over financial


reporting
      (as defined in Rule 13a-15(f), under the Act) occurred during our most recent
      fiscal











-
          13
          -




quarter
      that has materially affected, or is reasonably likely to affect, our internal
      control over


financial
      reporting.





Changes
      in Internal controls





There
      were no significant changes in the company's internal controls or in other
      factors


that
      could significantly affect those controls since the most recent evaluation
      of
      such controls.








**PART
      II -- OTHER INFORMATION**





Item
      1
      -- Legal Proceedings





None





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





During
      the period covered by this Report, the Company issued 217,500 shares of common
      stock


in
      exchange for management services and rent. All shares were issued to Father
      Gregory Ofiesh,


president
      and CEO of the Company. Each share was accompanied by a warrant to purchase
      an


additional
      share at the same price for one year.





Item
      3
      -- Defaults upon Senior Securities





None





Item
      4
      -- Submission of Matters to a Vote of Security Holders





During
      July 2006, shareholders holding a majority of the Company's outstanding common
      stock, acting by written consent without a meeting, pursuant to Section 78.320
      of the Nevada Revised Statutes, took the following actions:





1)
            They
                elected the following persons as directors of the corporation, to
                serveuntil
                the next annual meeting of stockholders and until their successors
                havebeen
                chosen: Father Gregory Ofiesh, Kamal Alawas, Stanley Combs,
                Paul(2)
            They
                ratified the appointment by the board of directors of Madsen &
                AssociatesCPAs,
                Inc., as the independent registered auditor for the current fiscal
                year
                endingOctober
                31, 2006.














-
          14
          -





Item
      5
      -- Other Information





During
      the period covered by this report, Richard S. Kunter was elected a director
      of
      the Company and also appointed vice president - research and
      development.





During
      July 2006, Father Gregory Ofiesh, president and CEO, made an offer to purchase
      all the Company's equipment (except the Lyden dryer purchased by Paul Kaser
      for
      the Company) for $50,000, and to lease it back to the Company for $1.00 per
      month. The lease would end on March 31, 2008, the date the lease on the facility
      expires. The board of directors (with Father Gregory abstaining) unanimously
      accepted the offer, subject to preparation and further approval of a written
      agreement between the parties. Subsequent to the end of the period covered
      by
      this report, a Sale, Purchase and Leaseback Agreement was prepared and approved
      by the board of directors. The transaction is expected to close during
      September, 2006. A copy of the Agreement is included with this report as Exhibit
      2.





Item
      6
      -- Exhibits and Reports on Form 8-K





Exhibit
                No.
            Description--------------
            -----------------------------------2
            Copy
                of Sale, Purchase and Leaseback
                Agreement31.1
            Rule
                13a-14(a)/15d-14(a)
                Certifications32.1
            Certification
                under Section 906 of
                the Sarbanes-Oxley Act (18 U.S.C. 1350)


**SIGNATURES**





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, duly
      authorized.





Date
                September 6, 2006**Franklin
                Lake Resources Inc.**(Registrant)By/s/
                Father Gregory Ofiesh .Father
                Gregory OfieshPresident
                and Chief Executive Officer