As filed with the Securities and Exchange Commission on July 30, 1999
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
KIRLIN HOLDING CORP.
(Exact Name of Registrant as Specified in its Charter)
Delaware 11-3229358
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(State of Incorporation) I.R.S. Employer Identification Number)
6901 Jericho Turnpike
Syosset, NY 11791
(800) 899-9400
(Address and telephone number of principal executive offices)
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Anthony J. Kirincic
President and Chief Financial Officer
Kirlin Holding Corp.
6901 Jericho Turnpike
Syosset, NY 11791
(800) 899-9400
(Name, address and telephone number of agent for service)
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Copies to:
Peter M. Ziemba, Esq.
Graubard Mollen & Miller
600 Third Avenue
New York, New York 10016
(212) 818-8800
(212) 818-8881 - Facsimile
Approximate date of commencement of proposed sale to the public: As
soon as practicable after the effective date of this registration statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. |X|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_| ________________
If this form is a post-effective amendment filed pursuant to Rule
462(b) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_| ________________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
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Calculation of Registration Fee
- ------------------------------------------------------------------------------
Proposed
Maximum Proposed
Title of Shares Amount Offering Maximum Amount of
to be to be Price Per Aggregate Registration
Registered Registered Share (1) Offering Price (1) Fee
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Common Stock, 300,000 $12.44 $3,732,000 $1,037.50
$.0001 par value
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TOTAL FEE ................................................... $1,037.50
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(1) Based upon the market price of the Common Stock, as reported by The
Nasdaq Stock Market, Inc. on July 27, 1999, in accordance with Rule
457(c) of the Securities Act of 1933.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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The information in this prospectus is incomplete and may be changed.
The selling stockholder may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and is not soliciting an
offer to buy these securities in any state where the offer or sale of these
securities is not permitted.
Subject to Completion, dated July 30, 1999
Prospectus
KIRLIN HOLDING CORP.
300,000 Shares of Common Stock
This prospectus relates to up to 300,000 shares of common stock of
Kirlin Holding Corp. that may be offered for resale for the account of the
stockholder set forth in this prospectus under the heading "Selling Stockholder"
beginning on page 10.
Our common stock is traded on The Nasdaq SmallCap Market, under the
symbol KILN. On July 27, 1999, the last reported sale price of our common stock
was $11-13/16.
Investing in our common stock involves a high degree of risk. See "Risk
Factors" beginning on page 4.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is ___________ __ 1999.
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You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different information. We are not making an offer of these securities in any
state where the offer is not permitted. You should not assume that the
information in this prospectus is accurate as of any date other than the date on
the front page of this prospectus.
Table of Contents
Page
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Business Summary ..................................................... 3
Risk Factors .......................................................... 4
Use of Proceeds ....................................................... 10
Selling Stockholder ................................................... 10
Plan of Distribution .................................................. 11
Legal Matters ......................................................... 11
Experts ............................................................... 12
Where You Can Find More Information ................................... 12
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The information in this Prospectus gives effect to a 2-for-1 stock
split, accomplished by declaration of a 100% stock dividend payable on July 30,
1999, to all stockholders of record on July 14, 1999.
Business Summary
We are a holding company engaged in securities brokerage, securities
trading and investment and merchant banking, primarily through Kirlin
Securities, Inc., one of our operating subsidiaries.
Kirlin Securities is registered as a broker-dealer with the SEC and is
a member of the NASD. Kirlin Securities is a full service, retail-oriented
brokerage firm, specializing in the trading and sale of both equity and fixed
income securities, including mutual funds. Kirlin Securities also offers a
managed assets portfolio program to manage the financial assets of its clients.
At June 30, 1999, Kirlin Securities maintained over 15,000 retail customer
accounts, which held over $850 million in assets. Kirlin Securities is licensed
to conduct activities as a broker-dealer in the District of Columbia and in 47
states, and operates primarily from its headquarters in Syosset, New York, as
well as five branch offices located in California, New Jersey and New York.
We also engage in merchant banking through Greenleaf Capital Partners
II, LLC., a recently formed private investment that has been capitalized through
a $5,900,000 private placement. Our wholly-owned subsidiary, Greenleaf Capital
Management Corp., is the Manager of this fund.
We are also an 80.1% owner of VentureHighway.com Inc., a
recently-formed company that owns and operates VentureHighway.com, a branded
website designed to serve as an interactive portal for the matching of companies
seeking funding with qualified investors seeking to fund these companies, and
the facilitation of private placements and public offerings of securities of
companies.
Kirlin Holding was incorporated under the laws of the State of Delaware
on July 28, 1994 to serve as a holding company for Kirlin Securities. Kirlin
Securities was incorporated under the laws of the State of Delaware on January
6, 1988. Our principal executive offices are located at 6901 Jericho Turnpike,
Syosset, New York 11791 and our telephone number is (800) 899-9400.
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Risk Factors
You should carefully consider the risks described below before you decide
to invest in our company. The risks described below are not the only ones facing
us. Additional risks not presently known to us or that we currently believe are
immaterial may also impair our business operations. Our business, financial
condition or results of operation could be materially adversely affected by any
of these risks. The trading price of our common stock could decline because of
any one of these risks, and you may lose all or part of your investment.
A downturn in the securities markets may cause our revenues to decline and harm
our business.
Our business, and the securities industry generally, is directly affected
by many factors that are beyond our control and that could cause a downturn in
the securities markets, including the following factors:
. A national and international political and economic conditions;
. broad trends in business and finance;
. interest rate levels and changes in interest rate levels;
. changes in tax laws; and
. changes in government and self-regulatory organization
regulations.
If there is a market downturn, our revenues are likely to decline and, if
we were unable to reduce our expenses at the same pace, our results of operation
would deteriorate. For example:
. A market downturn could lead to a decline in the volume of
transactions that we execute for our customers and would reduce
the revenues we receive from commissions and spreads.
. A market downturn that reduces the value of our clients'
portfolios or increases the amount of withdrawals would reduce
the revenues we receive from our asset management business.
. A market downturn could reduce the number and size of
transactions for which we provide underwriting or placement agent
services.
Our business is subject to risks of losses from trading activities.
Our proprietary trading activities involve the purchase, sale or short sale
of securities as principal. We face the risk of changes in the market prices of
those securities and the risk of a decrease in the liquidity of markets for
those securities, which could limit our ability to resell securities purchased
or to repurchase securities sold in principal transactions. Our trading
department maintains inventories of equity and debt securities on both a long
and short basis. If we have any long positions (i.e., own securities), a
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downturn in the market could reduce the value of our positions and result in
losses. Conversely, if we have short positions (i.e., have sold securities we do
not own), an upturn in the market could expose us to unlimited losses as we
attempt to cover our short position by acquiring securities in a rising market.
Our business is subject to risks of losses from underwriting activities.
Our business is subject to risks of losses from underwriting activities. As
an underwriter, we commit to purchasing securities from an issuer and assume the
risk that we may not be able to resell such securities to our customers. As we
increase our underwriting business and serve as manager or co-manager of public
offerings of securities, we expect to make increased commitments of our capital
for this purpose and thus increase our exposure to this risk. Further, we expect
that increased underwriting activity will also increase our commitment of
capital for the purpose of making a market in these securities following an
offering. The increased concentration of our capital in these securities will
increase our exposure to trading risks regarding these securities.
Under applicable law, as an underwriter we are subject to substantial
potential liability for misstatements or omissions of material facts in
prospectuses and other communications with respect to such offerings and we may
not be able to obtain indemnification from the issuers of these securities for
this liability.
Our business is subject to risks of losses from long term and speculative
merchant banking investments.
We make long term merchant banking investments that are usually speculative
and involve a high degree of risk. The long term nature of these investments
also increases our exposure to market risks and restricts the use of our capital
for longer periods of time. Since these investments are sometimes illiquid, we
may be unable to realize gains or reduce losses during periods of fluctuating
values of these investments
Because of the present level of our capital (we had stockholders' equity of
$9,575,000 at March 31, 1999), a large reduction in value of one or more of our
investments could have a significant impact on our capital.
Our merchant banking and proprietary trading investments may cause our operating
results to fluctuate widely regardless of whether we have liquidated our
investments and actually realized gain or loss.
We must value our merchant banking and proprietary trading investments on a
quarterly basis at a price related to the current market prices of such
securities. Accordingly, a large fluctuation in the market prices of these
securities, regardless of whether we have liquidated them and actually realized
gain or loss, can have a significant impact upon our results of operation for
that quarter, particularly so since we had total revenues of $15,555,000 in the
last fiscal year.
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We may have difficulty effectively managing our growth.
We expect our business to grow in several areas:
. We expect to expand our retail brokerage operations by both
hiring registered representatives and acquiring other
broker-dealers.
. We have been increasing our investment banking activities and
anticipate engaging in more underwritings and private placements
in the future.
. We anticipate a greater level of merchant banking business,
particularly through investments made by Greenleaf Capital
Partners II, LLC, a private investment fund we established this
year. We are also committing resources to our majority-owned
subsidiary, VentureHighway.com Inc., which owns and operates a
branded website designed to match companies seeking funding from
qualified investors and, in the future, will engage in public
offerings or private placements over the Internet.
Our current senior management has limited experience managing a rapidly
growing enterprise and may not be able to effectively manage our growth.
We depend on David O. Lindner and Anthony J. Kirincic and the loss of either of
their services could harm our business.
We place substantial reliance upon the efforts and abilities of our two key
executive officers: David O. Lindner, Chairman and Chief Executive Officer, and
Anthony J. Kirincic, President and Chief Financial Officer. The loss of the
services of either of them could have a material adverse effect on our business,
operations, revenues or prospects. We do not have employment agreements with
either of Messrs. Lindner or Kirincic, although we are considering entering into
such agreements. We do not maintain and we do not intend to obtain key man
insurance on the lives of Messrs. Lindner or Kirincic.
Intense competition from existing and new entities may adversely affect our
revenues and profitability.
The securities industry is rapidly evolving, intensely competitive and has
few barriers to entry. We expect competition to continue and intensify in the
future. Many of our competitors have significantly greater financial, technical,
marketing and other resources than us. Some of our competitors also offer a
wider range of services and financial products than us and have greater name
recognition and a larger client base. These competitors may be able to respond
more quickly to new or changing opportunities, technologies and client
requirements and may be able to undertake more extensive promotional activities,
offer more attractive terms to clients, and adopt more aggressive pricing
policies. We cannot assure you that we will be able to compete effectively with
current or future competitors or that the competitive pressures faced by us will
not harm our business.
We rely very heavily on our clearing broker, Correspondent Services Corporation,
and termination of our agreement with it could disrupt our business.
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Correspondent Services Corporation acts as our clearing broker. It
processes all securities transactions for our account and for the accounts of
our clients. It also provides billing services, extends credit and provides for
control and receipt, custody and delivery of securities. We depend upon the
operational capacity and ability of Correspondent Services Corporation for the
orderly processing of transactions. In addition, by engaging the processing
services of a clearing firm, we are exempt from some capital reserve
requirements and other regulatory requirements imposed by federal and state
securities laws. Our clearing agreement may be terminated by Correspondent
Services Corporation upon 90 days' prior written notice. Termination of this
agreement could disrupt our business since we would find it necessary to engage
another clearing firm.
Our clearing broker extends credit to our clients and we are liable if our
clients do not pay.
We permit our clients to purchase securities on a margin basis or sell
securities short, which means that our clearing firm extends credit to the
client secured by cash and securities in the clients' account. During periods of
volatile markets the value of the collateral held by our clearing broker could
fall below the amount borrowed by the client. If margin requirements are not
sufficient to cover losses, our clearing broker sells or buys securities at
prevailing market prices, and may incur losses to satisfy client obligations. We
have agreed to indemnify our clearing broker for losses it incurs while
extending credit to our clients. As of March 31, 1999, we had approximately
$11.5 million in credit extended to our clients through our clearing broker.
Employee misconduct could harm us and is difficult to detect and deter.
We run the risk that employee misconduct could occur. Misconduct by
employees could include binding us to transactions that exceed authorized limits
or present unacceptable risks, or hiding from us unauthorized or unsuccessful
activities. This type of misconduct could result in unknown and unmanaged risks
or losses. Employee misconduct could also involve the improper use of
confidential information, which could result in regulatory sanctions and serious
reputational harm. The precautions we take to prevent and detect this activity
may not be effective to deter or prevent misconduct.
We are currently subject to extensive securities regulation, and the failure to
comply could subject us to penalties or sanctions.
The securities industry in the United States is subject to extensive
regulation under both federal and state laws. The SEC, the NASD and other
self-regulatory organizations, such as the various stock exchanges and the
Municipal Securities Rulemaking Board, and state securities commissions all
require strict compliance with their rules and regulations. Failure to comply
with any of these laws, rules or regulations could result in censure, the
imposition of a fine, the issuance of a cease-and-desist order or in suspension
or expulsion of us or any of our officers or employees, any of which could harm
our business.
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Failure to comply with net capital requirements could subject us to suspension
or revocation by the SEC or suspension or expulsion by the NASD.
The SEC and the NASD have stringent rules with respect to the maintenance
of specific levels of net capital by broker-dealers. Our failure to maintain the
required net capital may result in a suspension or revocation of our
registration by the SEC or in a suspension or expulsion of our membership by the
NASD. A change in the net capital rules, the imposition of new rules or any
unusually large charge against net capital could limit our operations that
require the extensive use of our capital. A significant operating loss or any
unusually large charge against net capital also could adversely affect our
ability to expand or maintain our present levels of business, which could harm
our business.
Despite our efforts, our computer systems as well as those of others may not be
Year 2000 compliant, which could significantly disrupt our business.
Like most securities firms, we depend to a very substantial degree upon the
proper functioning of computer systems. This includes our internal systems and
the systems of third parties with which we have significant interaction,
including, most significantly, our clearing broker and vendors providing phone
service, payroll services and banking services. Although the company has
completed an evaluation of its mission critical systems and expects to remediate
any systems that are not Year 2000 compliant by the third quarter of 1999, we
cannot assure you that these results will be achieved. Although we have been
working closely with third-party vendors to determine whether their systems will
be Year 2000 compliant on a timely basis, we cannot assure you that they will be
compliant and that we will not face disruption in our business, which could
adversely effect our results of operation, liquidity and financial condition.
The exercise by Individual Investor Group of its right to terminate its
agreement with VentureHighway to provide advertising and promotion could harm
VentureHighway's business.
As discussed in this Prospectus in the section entitled "Selling
Stockholder" on page 10, Individual Investor Group, Inc. purchased the shares of
common stock which it is offering pursuant to this Prospectus for $750,000 and
also purchased a 19.9% equity interest in VentureHighway in exchange for
providing VentureHighway with $3,184,000 of advertising and promotional services
over a 30-month period. If VentureHighway, either directly or through a
subsidiary is not registered as a broker-dealer with the SEC by December 31,
1999, we may be required to repurchase the shares of common stock owned by
Individual Investor Group at cost, together with interest at 10% per annum, and
Individual Investor Group may terminate its obligation to provide the
advertising and promotional services to VentureHighway. Although we expect that
VentureHighway will be registered as a broker-dealer by December 31, 1999, we
cannot assure you that this will be the case. If Individual Investor were able
to and did exercise its rights, although we anticipate that our obligation to
repurchase the common stock would not have a material adverse effect on our
capital resources, the loss of the promotional and advertising services by
VentureHighway may adversely affect its business.
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The success of VentureHighway is dependent upon market acceptance for recently
introduced services and on-line commerce.
VentureHighway's success will depend on the willingness of entrepreneurs
and investors to use on-line services as a method to seek capital and business
opportunities. We cannot assure you that entrepreneurs or investors will use
on-line services for this purpose or will use the services of VentureHighway.
A significant percentage of our common stock is held by our directors and
executive officers, who can significantly influence all actions by our company
requiring a vote of our stockholders.
Our directors and executive officers own approximately 47% of our
outstanding common stock. Accordingly, management is in a position to
significantly influence the election of the directors of our company and all
other matters that are put to a vote of our stockholders.
We may issue preferred stock with preferential rights which may adversely affect
your rights.
The rights of the holders of our common stock will be subject to and may be
adversely by the rights of holders of any preferred stock that may be issued by
us in the future. Our articles of incorporation authorize our board of directors
to issue up to 1,000,000 shares of "blank check" preferred stock, and to fix the
rights, preferences, privilege and restrictions, including voting rights, of
these shares without further stockholder approval. To date, we have not issued
any shares of preferred stock.
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Use of Proceeds
We will not receive any proceeds from the sale of the shares by the
selling stockholder.
Selling Stockholder
The following table provides certain information with respect to the
selling stockholder's beneficial ownership of our common stock as of July 30,
1999, and as adjusted to give effect to the sale of all of the shares offered
hereby. See "Plan of Distribution." The selling stockholder possesses sole
voting and investment power with respect to the securities shown. See the text
following the footnotes for a description of the transaction in which our common
stock was issued to the selling stockholder.
Shares Beneficially Shares Beneficially
Owned Owned
Before Offering After Offering
------------------- -----------------
Number Number
of of
Shares Shares Number
Name ------- Percentage Offered of Shares Percentage
- --------------------- ---------- -------- --------- ----------
Individual Investor 300,000 4.9% 300,000 -0- -0-
Group, Inc.
On June 2, 1999, we entered into a Securities Purchase Agreement with the
selling stockholder pursuant to which the selling stockholder purchased 150,000
shares (300,000 shares on a post-split basis) of our common stock for $750,000.
We contributed all the proceeds of this sale to the capital of our subsidiary,
VentureHighway. We are obligated to file this registration statement registering
the resale of these shares under the Securities Act of 1933 by August 2, 1999
and to use our best efforts to cause this registration statement to become
effective as soon as practicable thereafter.
On June 2, 1999, the selling stockholder also purchased 19.9% of the common
stock of VentureHighway. The purchase price for the selling stockholder's
ownership in VentureHighway was $3,184,000, which is payable in the form of
promotion and advertising for VentureHighway in the selling stockholder's
magazines, such as Individual Investor and Ticker, and on the selling
stockholder's websites, such as iionline.com, during the next 30 months. If
VentureHighway does not provide users with certain capabilities and if
VentureHighway does not obtain registration, directly or indirectly, through a
subsidiary, as a broker-dealer prior to December 31, 1999, the selling
stockholder may elect to terminate the agreement. If the selling stockholder
elects to terminate this agreement, the selling stockholder will return all of
the equity of VentureHighway owned by it to VentureHighway and will be relieved
of any further obligation to provide promotion and advertising. Also, the
selling stockholder will have the right to require us to repurchase all the
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shares of common stock then owned by the selling stockholder at cost ($2.50 per
share adjusted for the stock split) together with interest at the rate of 10%
per annum.
We also entered into a Stockholder Agreement with the selling stockholder
and VentureHighway with respect to our respective ownership of VentureHighway.
Until the time when either the selling stockholder owns less than 10% of the
outstanding common stock of VentureHighway or December 31, 2001 (the date when
the promotion period expires), whichever event occurs later, the selling
stockholder has the right to designate one member of VentureHighway's board of
directors, and we have the right to designate the majority of such board. The
Stockholders Agreement also places certain restrictions on, and rights with
respect to, the sale of shares of VentureHighway stock by us and the selling
stockholder.
Plan of Distribution
The shares offered by the selling stockholder may be sold from time to time
in transactions in The Nasdaq Stock Market, in negotiated transactions, or a
combination of such methods of sale, at fixed prices which may be changed, at
market prices prevailing at the time of sale, or at negotiated prices. The
selling stockholder may sell its shares directly to purchasers or to or through
broker-dealers, which may act as agents or principals. These broker-dealers may
receive compensation in the form of discounts, concessions or commission from
the selling stockholder. Except as described in the following sentence, the
selling stockholder has advised us that it has not entered into agreements,
understandings or arrangements with any underwriters or broker-dealers regarding
the sale of its shares. The selling stockholder has agreed with us that all
sales of its shares on the open market will be made in brokerage transactions
through Kirlin Securities, which will act as an agent and receive customary
commissions. The selling stockholder and any broker-dealer that assist in the
sale of the common stock may be deemed to be underwriters within the meaning of
Section 2(a)(11) of the Securities Act. The selling stockholder may agree to
indemnify broker-dealers, including Kirlin Securities, for transactions
involving sales of the common stock against certain liabilities, including
liabilities arising under the Securities Act.
We are responsible for all costs, expenses and fees incurred in registering
the shares offered hereby. The selling stockholder is responsible for brokerage
commissions, if any, attributable to the sale of such securities.
Legal Matters
The legality of the securities offered hereby has been passed upon by
Graubard Mollen & Miller, New York, New York.
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Experts
The consolidated financial statements of Kirlin Holding Corp. and
subsidiaries as of December 31, 1998 and 1997, and for the years then ended have
been incorporated by reference herein and in the registration statement in
reliance upon the report of Goldstein Golub Kessler LLP, independent auditors,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
Where You Can Find More Information
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. Our SEC filings
are available to the public over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file at the SEC's
public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please
call the SEC at 1-800-SEC-0330 for further information about the public
reference room.
The SEC allows us to incorporate by reference the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. This
prospectus incorporates by reference our documents listed below and any future
filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, until all of the securities are
sold.
. Annual Report on Form 10-KSB for the year ended December 31,
1988;
. Quarterly Report on Form 10-QSB for the quarter ended March 31,
1999;
. Proxy Statement dated May 7, 1999, for its 1999 Annual Meeting of
Stockholders;
. Current Report on Form 8-K dated June 2, 1999; and
. The description of our common stock that is contained in our
Registration Statement on Form 8-A, dated December 30, 1994, as
amended on January 18, 1995.
Potential investors may obtain a copy of any of the agreements summarized
herein or any of our SEC filings without charge by written or oral request
directed to Kirlin Holding Corp., Attention: Investor Relations, 6901 Jericho
Turnpike, Syosset, New York 11791, (800) 899-9400.
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Part II
Information Not Required in Prospectus
Item 14. Other Expenses of Issuance and Distribution
The following is an itemized statement of the estimated amounts of all
expenses payable by us in connection with the registration of the common stock,
other than underwriting discounts and commissions:
SEC filing fee ..................................................... $1,037.50
The Nasdaq Stock Market, Inc. fee for listing additional shares .... 1,500.00
Legal fees and expenses ............................................ 20,000.00
Accounting fees and expenses ....................................... 5,000.00
Miscellaneous ...................................................... 2,000.00
Total ..................................................... $29,537.50
Item 15. Indemnification of Directors and Officers
Our certificate of incorporation provides that all directors, officers,
employees and agents of the registrant shall be entitled to be indemnified by us
to the fullest extent permitted by Section 145 of the Delaware General
Corporation Law.
Section 145 of the Delaware General Corporation Law concerning
indemnification of officers, directors, employees and agents is set forth below.
"Section 145. Indemnification of officers, directors, employees and
agents; insurance.
(a) A corporation shall have power to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that the person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit or proceeding if the
person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe the
person's conduct was unlawful. The termination of any action, suit or proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
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any criminal action or proceeding, had reasonable cause to believe that the
person's conduct was unlawful.
(b) A corporation shall have power to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
the person in connection with the defense or settlement of such action or suit
if the person acted in good faith and in a manner the person reasonably believed
to be in or not opposed to the best interests of the corporation and except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
(c) To the extent that a present or former director or officer of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, such person shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the present or
former director, officer, employee or agent is proper in the circumstances
because the person has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section. Such determination shall be made, with
respect to a person who is a director or officer at the time of such
determination, (1) by a majority vote of the directors who are not parties to
such action, suit or proceeding, even though less than a quorum, or (2) by a
committee of such directors designated by majority vote of such directors, even
though less than a quorum, or (3) if there are no such directors, or if such
directors so direct, by independent legal counsel in a written opinion, or (4)
by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that such person is not entitled to be
indemnified by the corporation as authorized in this section. Such expenses
(including attorneys' fees) incurred by former directors and officers or other
employees and agents may be so paid upon such terms and conditions, if any, as
the corporation deems appropriate.
II-2
<PAGE>
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office.
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against such
person and incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the corporation would have the power to
indemnify such person against such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as such person would have with respect to such constituent
corporation if its separate existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction
to hear and determine all actions for advancement of expenses or indemnification
brought under this section or under any bylaw, agreement, vote of stockholders
or disinterested directors, or otherwise. The Court of Chancery may summarily
II-3
<PAGE>
determine a corporation's obligation to advance expenses (including attorneys'
fees)."
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers, and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment of expenses incurred or paid by a director, officer or controlling
person in a successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, we will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to the court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE>
Item 16. Exhibits
<TABLE>
<CAPTION>
Incorporated
Exhibit By Reference No. in
Number Description from Document Page
- ------ ----------- Document -------- ----
--------
<S> <C> <C> <C> <C>
3.1 Certificate of Incorporation A 3.1
3.1.1 Certificate of Correction to Certificate of A 3.1.1
Incorporation, dated July 29, 1994
3.2 Amended and Restated By-Laws A 3.2
4.1 Form of Common Stock Certificate A 4.1
5.1 Opinion of Graubard Mollen & Miller (including - - Filed
Consent) Herewith
10.1 1994 Stock Plan A 10.2
10.2 Clearing Agreement between Kirlin Securities, A 10.3
Inc. and Correspondent Services Corporation
10.3 1996 Stock Plan C Appendix A
10.4 Indemnification Agreement, dated November 14, B 10.9
1995, between the Registrant and Edward J. Casey
10.5 Indemnification Agreement, dated February 5, D 10.6
1998, between the Registrant and Edmund McCormick
10.6 Agreement, dated April 27, 1998, between the E 10.7
Registrant and Robert A. Paduano
10.7 Stock Option Agreement, dated January 11, 1999, F 10.7
between the Registrant and David O. Lindner
10.7.1 Schedule of Omitted Document in the form of F 10.7.1
Exhibit 10.7, including material detail in which
such document differs from Exhibit 10.7
10.8 Stock Option Agreement, dated January 11, 1999, F 10.8
between the Registrant and Edward J. Casey
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Incorporated
Exhibit By Reference No. in
Number Description from Document Page
- ------ ----------- Document -------- ----
--------
<S> <C> <C> <C> <C>
10.8.1 Schedule of Omitted Document in the form of F 10.8.1
Exhibit 10.8, including material detail in
which such document differs from Exhibit 10.8
10.9 Restricted Stock Agreement, dated January 11, F 10.9
1999, between the Registrant and Barry Shapiro
10.10 Agreement, dated as of June 2, 1999, among the G 10.1
Registrant, Individual Investor Group, Inc. and
VentureHighway.com Inc.
10.11 Stockholder Agreement, dated as of June 2, 1999, G 10.2
among the Registrant, Individual Investor Group,
Inc. and VentureHighway.com Inc.
10.12 Securities Purchase Agreement, dated as of June G 10.3
2, 1999 between the Registrant and Individual
Investor Group, Inc.
21 List of Subsidiaries F 21
23.1 Consent of Graubard Mollen & Miller - -
(including in Exhibit 5.1)
23.2 Consent of Goldstein Golub Kessler LLP - - Filed
Herewith
</TABLE>
- ---------------------
A. Registrant's Form SB-2 Registration Statement (No. 33-84512), declared
effective November 14, 1994.
B. Registrant's Form 10-KSB for the fiscal year ended December 31, 1995.
C. Registrant's Definitive Proxy Statement dated May 8, 1996.
D. Registrant's Form 10-KSB for the fiscal year ended December 31, 1997.
E. Registrant's Form 10-QSB for the fiscal quarter ended March 31, 1998.
II-6
<PAGE>
F. Registrant's Form 10-KSB for the fiscal year ended December 31, 1998.
G. Current Report on Form 8-K of Individual Investor Group, Inc. (SEC File
No. 1-10932) dated June 2, 1999.
II-7
<PAGE>
Item 17. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
1. To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
2. To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement;
3. To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the registration statement is on Form S-3, Form S-8 or Form F-3,
and the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished to the
SEC by the registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
II-8
<PAGE>
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) To deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual report, to
security holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3
under the Exchange Act, where interim financial information required to be
presented by Article 3 of Regulation S-X is not set forth in the prospectus, to
deliver, or cause to be delivered to each person to whom the prospectus is sent
or given, the latest quarterly report that is specifically incorporated by
reference in the prospectus to provide such interim financial information.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-9
<PAGE>
Signatures
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Town of Syosset, State of New York on July 30, 1999.
Kirlin Holding Corp.
By: /s/ Anthony J. Kirincic
----------------------------
Anthony J. Kirincic,
President and Chief Financial Officer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints David O. Lindner and Anthony J. Kirincic
his true and lawful attorneys-in-fact and agents, each acting alone, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any or all amendments to this
registration statement, including post-effective amendments, and to file the
same, with all exhibits thereto, and all documents in connection therewith, with
the SEC, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, and hereby ratifies and confirms all that said
attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- ------------------------ ------ -----
Chairman of the Board of
/s/ David O. Lindner Directors and Chief July 30, 1999
- ----------------------- Executive Officer
David O. Lindner (Principal Executive
Officer)
Director, President and
/s/ Anthony J. Kirincic Chief Financial Officer July 30, 1999
- ------------------------- (Principal Financial
Anthony J. Kirincic Officer)
II-10
<PAGE>
Controller (Principal
/s/ Barry Shapiro Accounting Officer) July 30, 1999
- -------------------------
Barry Shapiro
/s/ Edward J. Casey Director July 30, 1999
- -------------------------
Edward J. Casey
/s/ Harold Paul Director July 30, 1999
- -------------------------
Harold Paul
II-11
EXHIBIT 5.1
Graubard Mollen & Miller
600 Third Avenue
New York, New York 10016
July 30, 1999
Kirlin Holding Corp.
6901 Jericho Turnpike
Syosset, New York 11791
Ladies and Gentlemen:
Reference is made to the Registration Statement on Form S-3 ("Registration
Statement") filed by Kirlin Holding Corp. ("Company") under the Securities Act
of 1933, as amended ("Act"), with respect to an aggregate of 300,000 shares of
common stock, par value $.0001 per share ("Common Stock").
We have examined such documents and considered such legal matters as we
have deemed necessary and relevant as the basis for the opinion set forth below.
With respect to such examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as reproduced
or certified copies, and the authenticity of the originals of those latter
documents. As to questions of fact material to this opinion, we have, to the
extent deemed appropriate, relied upon certain representations of certain
officers and employees of the Company.
Based upon the foregoing, it is our opinion that the shares of Common Stock
currently outstanding and owned by the Selling Stockholder and being registered
on the Registration Statement have been duly authorized and legally issued, and
are fully paid and non-assessable.
In giving this opinion, we have assumed that all certificates for the
Company's shares of Common Stock have been duly executed on behalf of the
Company by the Company's transfer agent and registered by the Company's
registrar, if necessary, and will conform, except as to denominations, to
specimens which we have examined.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement, to the use of our name as your counsel, and to all
references made to us in the Registration Statement and in the Prospectus
forming a part thereof. In giving this consent, we do not hereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Act, or the rules and regulations promulgated thereunder.
Very truly yours,
/s/ Graubard Mollen & Miller
Exhibit 23.2
Independent Auditor's Consent
We consent to the incorporation by reference in this Registration Statement of
Kirlin Holding Corp. on Form S-3 of our report, dated February 15, 1999,
appearing in the Annual Report on Form 10-KSB for the year ended December 31,
1998, and to the reference to us under the heading "Experts" in the Prospectus,
which is a part of this Registration Statement.
/s/ Goldstein Golub Kessler LLP
New York, New York
July 27, 1999
