U.S. 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 EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2006

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____ to ____

Commission File Number 1-6436

FRAWLEY CORPORATION

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

Delaware	95-2639686
(STATE OR OTHER JURISDICTION OF INCORPORATION)	(I.R.S. EMP I.D. NO)

5737 Kanan Rd. PMB # 188, Agoura Hills, California	91301
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)	(ZIP CODE)

(818)735-6640

(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

(FORMER NAME, ADDRESS AND FISCAL YEAR, IF CHANGED SINCE LAST REPORT)

Indicated 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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES X NO __

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the close of the latest practicable date.

Common stock, par value $1		1,222,905
(Class)		Outstanding at March 31, 2006

Total Number of Pages 14

FRAWLEY CORPORATION AND SUBSIDIARIES

INDEX

PART I: FINANCIAL INFORMATION		PAGE NO.

	Item 1: Financial Statements

	Consolidated Balance Sheets
	March 31, 2006 and December 31, 2005	3

	Consolidated Statements of Operations
	Three Months Ended March 31, 2006 and 2005	4

	Consolidated Statements of Cash Flows
	Three Months Ended March 31, 2006 and 2005	5

	Notes to Consolidated Financial Statements	6

	Item 2: Management's Discussion and Analysis
	of Financial Condition and Results of Operations	7

PART II: OTHER INFORMATION

	Item 1: Legal Proceedings	8-9

	Item 5: Other Information	9

	Item 6: Exhibits and Reports on Form 8-K	10

SIGNATURES		11

ITEM I: FINANCIAL STATEMENTS

FRAWLEY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

		MARCH 31,			DECEMBER 31,
		2006			2005
		(Unaudited)
ASSETS
CURRENT ASSETS
Cash	$	62,000		$	7,000
Accounts receivable, net		4,000			-
Prepaid expenses and other current assets		1,000			24,000

TOTAL CURRENT ASSETS		67,000			31,000

Real estate investments, net		457,000			812,000
Investment in partnership		16,000			16,000

TOTAL ASSETS	$	540,000		$	859,000

LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES
Notes payable to stockholders	$	2,054,000		$	2,338,000
Accounts payable and accrued expenses		148,000			287,000
Environmental reserve		115,000			115,000
Interest payable to related parties		1,685,000			1,651,000
Deposits		385,000			374,000

TOTAL CURRENT LIABILITIES		4,387,000			4,765,000

LONG TERM LIABILITIES

Environmental reserve		1,070,000			1,220,000

TOTAL LIABILITIES		5,457,000			5,985,000

STOCKHOLDERS’ DEFICIT:
Preferred stock, par value $1 per share:
Authorized, 1,000,000 shares; none issued
Common stock, par value $1 per share;
Authorized, 6,000,000 shares, issued
1,414,217 shares		1,414,000			1,414,000
Capital surplus		17,209,000			17,209,000
Accumulated deficit		(22,779,000	)		(22,988,000	)
		(4,156,000	)		(4,365,000	)
Less common stock in treasury, 191,312 shares (at cost)		(761,000	)		(761,000	)

TOTAL STOCKHOLDERS’ DEFICIT		(4,917,000	)		(5,126,000	)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	540,000		$	859,000

See notes to consolidated financial statements.

FRAWLEY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended MARCH 31
		2006		2005

REVENUES:
Net revenue	$	749,000	$	4,000

TOTAL REVENUE	$	749,000	$	4,000

COSTS AND EXPENSES:
Cost of real estate sold		355,000		-
Selling, general and administrative expenses		126,000		66,000
Interest expense		59,000		54,000

TOTAL COSTS AND EXPENSES		540,000		120,000

NET INCOME/(LOSS)	$	209,000	$	(116,000	)

NET INCOME/(LOSS) PER SHARE, COMMON	$	0.17	$	(0.09	)

FULLY DILUTED	$	0.17	$	(0.09	)

Weighted average number of Common shares outstanding		1,222,905		1,222,905

See notes to consolidated financial statements.

FRAWLEY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Three Months Ended March 31,
		2006			2005

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss)	$	209,000		$	(116,000	)
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:

Changes in operating assets and liabilities:
Short and long-term accounts receivable, net		(4,000	)		(4,000	)
Prepaid expenses and other current assets		23,000			28,000
Real estate investments		355,000			-
Accounts payable and accrued expenses		(95,000	)		47,000

TOTAL ADJUSTMENTS		279,000			71,000

NET CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES		488,000			(45,000	)

CASH FLOWS FROM FINANCING ACTIVITIES:

Short-term debt borrowings from related party		86,000			44,000
Repayment of borrowings		(369,000	)		-
Repayment of environmental reserve		(150,000	)		-
Capital contributions		-			1,000

NET CASH (USED IN)/PROVIDED BY FINANCING ACTIVITIES		(433,000	)		45,000

NET CHANGE IN CASH AND CASH EQUIVALENTS		55,000			-

CASH, BEGINNING OF PERIOD		7,000			4,000

CASH, END OF PERIOD	$	62,000		$	4,000

See notes to consolidated financial statements.

FRAWLEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1:

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the financial position at March 31, 2006, the results of operations and changes in cash flows for the three months then ended.

NOTE 2:

The results of operations for the three months ended March 31, 2006 as compared to the results of 2005 are not necessarily indicative of results to be expected for the full year.

FRAWLEY CORPORATION AND SUBSIDIARIES

ITEM 2:

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Real Estate

The real estate operating gain during the quarter ended March 31, 2006 was approximately $209,000 as compared to a loss of $116,000 for the same period in 2005. However, real estate losses will continue as the Company incurs carrying costs and improvements required to sell the remaining properties.

In February 2004, the Company received notice from Los Angeles County that the county intends to severely restrict grading permits and may require condition use permits for grading on the Company’s property. In addition, the County of Los Angeles announced its intention to restrict the building of residences on three of the Company’s six parcels of land because of new ridgeline building ordinances. Prior to the ordinance deadline, the Company received grandfathering status on three of its remaining parcels. Because the grandfathering clause is conditional, it is unclear whether or not the Company will be able to take advantage of this grandfathering status until the Company completes the permit process. The above regulations potentially require multi-year processing to reach the point that a parcel can be sold to a third party.

If an agreement cannot be reached with Los Angeles County, these new regulations may force the Company to liquidate its real estate, make settlements with its lenders and close down its real estate development business. As of March 31, 2006, no decision has been made by management regarding liquidation, nor can they determine the potential financial impact to the Company. Accordingly, the March 31, 2006 financial statements do not reflect any adjustments that might result from these new and more stringent regulations.

In the first quarter 2006, the Company sold one parcel of land to an unrelated third party for $749,000, net of additional improvements, and realized a gain of approximately $394,000. Proceeds from the sale were used to pay off secured debt in the amount of $393,000 including interest in the amount of $24,000 to related parties, make payment on past due amounts related to the Chatham Site, make partial payments related to the Omega Site, pay past due property taxes, pay other creditors including Michael Frawley, President, in the amount of $7,000 and to provide operating cash.

Liquidity and Capital Resources

The Company’s recurring losses from continuing operations and difficulties in generating cash flow sufficient to meet its obligations raise substantial doubt about its ability to continue as a going concern.

Real Estate and Corporate overhead are producing losses that the real-estate business is unable to absorb. The required investments in real estate are currently funded from loans.

The Company intends to meet its obligations through real estate sales. The limited resources available to the Company will be directed at reducing operating expenses and selling real estate.

The Company continues to incur legal expenses and has an obligation in 2006 to contribute to the Chatham Brothers toxic waste cleanup lawsuit.

PART II - OTHER INFORMATION

ITEM 1: Legal Proceedings

The Company is named as a defendant in the Chatham Brothers Toxic Waste cleanup lawsuit. In February 1991, the Company was identified as one of many “Potentially Responsible Parties” (PRPS) in the Chatham Brothers toxic waste cleanup site case, filed by the State of California - Environmental Protection Agency, Department of Toxic Substances Control (DTSC) and involved The Harley Pen Company previously owned by the Company.

On December 31, 1991, the Company and approximately 90 other companies were named in a formal complaint. The Company joined a group of defendants, each of whom was so notified and which is referred to as Potentially Responsible Parties (PRPs) for the purpose of negotiating with the DTSC and for undertaking remediation of the site. Between 1995 and 1998, the State of California adjusted the estimated Cost of remediation on several occasions. As a result, the Company has increased their recorded liability to reflect their share. In January, 1999, the PRP’s consent decree was approved by the Court. As of March 31, 2006 the Company had paid into the PRP Group approximately $990,000, which includes the assignment of a $250,000 note receivable with recourse, and had a cash call contribution payable of approximately $103,000. In addition, the Company has accrued short-term and long-term undiscounted liabilities of $115,000 and $1,070,000 respectively, to cover future costs under the remediation plan.

During the past several years, the Company has requested a Hardship Withdrawal Settlement with the PRP group due to the Company’s financial condition. The PRP group has continually denied the Company’s request. In December 2003, the Company again formally requested a Hardship Withdrawal Settlement with the PRP Group. The Company’s proposal was for payment of $240,000 over four years in exchange for complete release from all further legal and financial responsibility related to the environmental liability.

On July 16, 2004, the Company entered in a settlement agreement note of $240,000 payment to be paid as follows: $100,000 on December 31, 2004, $50,000 on December 31, 2005, $50,000 on December 31, 2006 and $40,000 on December 31, 2007. The Company will not be fully released from the environmental liability until the settlement agreement note of $240,000 and the assigned note in the amount of $250,000 are paid in full. In March 2006, the Company made a payment in the amount of $150,000 related to the settlement agreement note representing the payments due on December 31, 2004, and December 31, 2005.

If Frawley Corporation complies with the terms of the notes, the Company will not be responsible for any additional payments to the Chatham Site PRP Group for the financing of the remediation action plan approved by the State of California in 1999. However, the PRP Group refused to indemnify Frawley Corporation for any third party lawsuit related to the Chatham Site clean up that are not considered in the remediation action plan approved in 1999.

In June 2004, the Corporation received a new environmental claim against its former Harley Pen division in the amount of approximately $99,000. The claim has been made by the United States Environmental Toxic Agency concerning the Company’s alleged responsibility for the Omega Chemical Superfund Site. The Company has recorded the liability in the year ended December 31, 2004 as it is more likely than not that the Company will have to pay the claim. In December 2005, the Company received a demand for payment from the EPA and negotiated a payment plan which required the total liability, plus interest to be paid by January 2007. In January 2006, the Company made its first payment in the amount of approximately $12,000 and in March 2006, the Company made payments required for the entire year 2006, leaving a balance of approximately $45,000 due in January 2007.

The Company is in dispute with its 1988 licensee over the trademark ”Classics Illustrated“. In 1998, the Company terminated its license agreement for breach of contract. The licensee has objected to the termination stating that the Company failed to notify the licensee of a potential problem with the trademark in Greece. A Greek court has ruled against a sub licensee in Greece. The Company believes that the license agreement supports that it adequately notified the licensee that the licensee would have to investigate the international trademark involving “Classics Illustrated”. Although the parent company of the licensee has filed for Chapter 7 bankruptcy protection, management believes that there is no probable risk of loss related to this dispute.

ITEM 5: Other Information

Related Party Transactions

During the first quarter ended March 31, 2006 the Company borrowed from the Frawley Family Trust approximately $86,000 secured by Deeds of Trust on the Company’s property.

In the first quarter 2006, the Company sold one parcel of land to an unrelated third party. Proceeds from the sale were used to pay secured debt to related parties in the amount of $393,000, including interest in the amount of $24,000, as well as payments to Michael Frawley, President, in the amount of $7,000.

ITEM 6: Exhibits and Reports on Form 8-K

No Reports on Form 8-K were filed in the quarter ended March 31, 2006.

Exhibit 31.1,

Sarbanes-Oxley Act Section 302 Certification

Exhibit 32.1,

Certification of CEO and CFO

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 thereunto duly authorized.

FRAWLEY CORPORATION

(REGISTRANT)




Date: June 13, 2006	By:	/s/ Michael P. Frawley
		Michael P. Frawley
		(Authorized Officer and CEO and Chairman of the Board)

FRAWLEY CORP 10-Q