U.S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-Q


[X]   Quarterly report pursuant to Section 13 or 15(d) of the Securities Act of
      1934

For the quarterly period ended June 30, 2004


[_]   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 0-25336


                              KIRLIN HOLDING CORP.
                              --------------------
             (Exact Name of Registrant as Specified in its Charter)


                 Delaware                          11-3229358
     -------------------------------            -------------------
     (State or Other Jurisdiction of             (I.R.S. Employer
      Incorporation or Organization)            Identification No.)


                 6901 Jericho Turnpike, Syosset, New York 11791
                 ----------------------------------------------
                    (Address of Principal Executive Offices)

                                 (800) 899-9400
              ---------------------------------------------------
              (Registrant's Telephone Number Including Area Code)


--------------------------------------------------------------------------------
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report


      Check whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act 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 [_].

      State the number of shares outstanding of each of the registrant's classes
of common equity, as of the latest practicable date: At August 10, 2004, Issuer
had outstanding 2,061,688 shares of Common Stock, par value $.0001 per share.

<PAGE>

KIRLIN HOLDING CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
                                                                           JUNE 30,       DECEMBER 31,
                                                                             2004             2003
                                                                        --------------   --------------
                                                                         (Unaudited)
<S>                                                                     <C>              <C>
                                  ASSETS:

Cash                                                                    $    5,673,463   $    3,032,931
Due from Clearing Brokers                                                    2,858,774        3,175,650
Securities Owned:
   U.S. government and agency obligations, at market value                      48,304           53,532
   State and municipal obligations, at market value                            708,500          283,101
   Corporate bonds and other securities, at market value                       729,329        3,008,844
   Non-marketable securities, at fair value                                    108,613          130,044
Rebate Receivable                                                            1,503,000        1,241,000
Representative Loans                                                           107,129          136,341
Furniture, Fixtures and Leasehold Improvements, at cost, net of
    accumulated depreciation and amortization of $3,049,666 and
    $2,963,955, respectively                                                    75,309          142,498
Deferred Tax Assets, net of valuation allowances of $1,048,310 and
    $1,425,043, respectively                                                 1,963,963        2,165,805
Other Assets                                                                   497,842          850,669
                                                                        --------------   --------------

               Total assets                                             $   14,274,226   $   14,220,415
                                                                        ==============   ==============

                   LIABILITIES and STOCKHOLDERS' EQUITY:

Liabilities:
   Securities sold, not yet purchased, at market value                  $       63,451   $      123,972
   Accrued compensation                                                        883,257        1,892,160
   Accounts payable and accrued expenses                                     4,336,962        4,180,279
                                                                        --------------   --------------

               Total liabilities                                             5,283,670        6,196,411
                                                                        --------------   --------------


Subordinated borrowings                                                      1,937,500        2,062,500
                                                                        --------------   --------------

Commitments and Contingencies

Stockholders' Equity:
   Common stock, $.0001 par value; authorized 15,000,000 and 7,000,000
      shares, respectively, issued and outstanding 2,032,668 and
      2,036,853 shares, respectively                                               203              204
   Additional paid-in capital                                               16,792,974       16,644,939
   Unearned stock compensation                                                 (44,616)        (106,002)
   Accumulated deficit                                                      (9,695,505)     (10,577,637)
                                                                        --------------   --------------

               Total stockholders' equity                                    7,053,056        5,961,504
                                                                        --------------   --------------

               Total liabilities and stockholders' equity               $   14,274,226   $   14,220,415
                                                                        ==============   ==============
</TABLE>

See Notes to Condensed Consolidated Financial Statements                       2

<PAGE>

KIRLIN HOLDING CORP. and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME


<TABLE>
<CAPTION>
                                                                THREE-MONTHS ENDED              SIX-MONTHS ENDED
                                                                     JUNE 30,                       JUNE 30,
                                                          ------------------------------  -------------------------------
                                                               2004            2003           2004           2003
                                                          --------------  --------------  --------------   --------------
                                                                    (Unaudited)                     (Unaudited)
<S>                                                       <C>             <C>             <C>              <C>
Revenues:
   Principal transactions, net                            $      118,240  $      259,612  $      180,172   $      419,243
   Commissions                                                 3,660,350       5,659,944      10,260,806        9,907,924
   Investment banking                                                 --         465,000         273,226          465,000
   Other income                                                  696,452         736,284       1,465,937        1,329,471
                                                          --------------  --------------  --------------   --------------

                  Total revenues                               4,475,042       7,120,840      12,180,141       12,121,638
                                                          --------------  --------------  --------------   --------------
Expenses:
   Employee compensation and benefits                          2,818,564       4,494,033       8,073,986        7,818,261
   Promotion and advertising                                      54,910          42,717         113,536          116,857
   Clearance and execution charges                               109,575         142,983         261,404          253,730
   Occupancy and communications                                  437,089         866,040       1,016,360        1,653,696
   Professional fees                                             135,708         217,388         323,857          358,346
   Interest                                                        6,947           8,120          12,550           (6,086)
   Other                                                         843,449         337,477       1,241,400          516,122
                                                          --------------  --------------  --------------   --------------

                  Total expenses                               4,406,242       6,108,758      11,043,093       10,710,926
                                                          --------------  --------------  --------------   --------------

   Income before income tax benefit (provision)                   68,800       1,012,082       1,137,048        1,410,712

Income tax benefit (provision)                                   202,701         507,738        (254,916)       1,305,991
                                                          --------------  --------------  --------------   --------------

   Net income                                             $      271,501  $    1,519,820  $      882,132   $    2,716,703
                                                          ==============  ==============  ==============   ==============

Basic earnings per common share (See Note 2)              $         0.16  $         0.95  $         0.54   $         1.70
                                                          ==============  ==============  ==============   ==============

Weighted-average shares outstanding (See Note 2)               1,666,403       1,609,040       1,648,800        1,601,685
                                                          ==============  ==============  ==============   ==============

Diluted earnings per common share (See Note 2)            $         0.11  $         0.72  $         0.36   $         1.38
                                                          ==============  ==============  ==============   ==============

Weighted-average shares of common stock and common stock
  equivalents outstanding (See Note 2)                         2,392,455       2,104,835       2,420,614        1,965,968
                                                          ==============  ==============  ==============   ==============
</TABLE>


See Notes to Condensed Consolidated Financial Statements                       3

<PAGE>

KIRLIN HOLDING CORP. and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

For the Six-Months Ended June 30, 2004
(Unaudited)


<TABLE>
<CAPTION>
                                  Common Stock         Additional      Unearned
                         ---------------------------     Paid-in         Stock       Accumulated
                            Shares        Par Value      Capital      Compensation      Deficit        Total
                         ------------   ------------   ------------   ------------   ------------   ------------
<S>                         <C>         <C>            <C>            <C>            <C>            <C>
Stockholders' equity
   at January 1, 2004       2,036,853   $        204   $ 16,644,939   $   (106,002)  $(10,577,637)  $  5,961,504

Issuance of restricted
   stock to employees
   under stock plans            1,135             --          9,437             --             --          9,437

Exercise of stock
   options                     15,000              2         21,748             --             --         21,750

Issuance of stock to
   employees under
   deferred commission
   plan                        46,985              4        465,820             --             --        465,824

Amortization of
   unearned stock
   compensation                    --             --             --         53,539             --         53,539

Forfeitures of
   restricted stock by
   employees                   (5,973)            --        (57,499)         7,847             --        (49,652)

Forfeitures of stock
   by employees under
   deferred commission
   plan                       (46,332)            (5)      (182,636)            --             --       (182,641)

Repurchases and
   retirements of stock       (15,000)            (2)      (108,835)            --             --       (108,837)

Net income                         --             --             --             --        882,132        882,132
                         ------------   ------------   ------------   ------------   ------------   ------------

Stockholders' equity
   at June 30, 2004         2,032,668   $        203   $ 16,792,974   $    (44,616)  $ (9,695,505)  $  7,053,056
                         ============   ============   ============   ============   ============   ============
</TABLE>


See Notes to Condensed Consolidated Financial Statements                       4

<PAGE>

KIRLIN HOLDING CORP. and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                 Six Months Ended June 30,
                                                                 -------------------------
                                                                     2004         2003
                                                                 -----------   -----------
                                                                        (Unaudited)
<S>                                                              <C>           <C>
 Cash flows from operating activities:
    Net income                                                   $   882,132   $ 2,716,703
                                                                 -----------   -----------
    Adjustments to reconcile net income to net cash provided by
    operating activities:
      Depreciation and amortization                                   85,711       214,233
      Deferred income taxes                                          201,842    (1,250,592)
      Decrease (increase) in nonmarketable securities                 21,431          (167)
      Non-cash compensation                                          296,507        85,173
      Loss on disposal of fixed assets                                    --        70,678
      Decrease (increase) in operating assets:
          Due from clearing brokers                                  316,876      (760,372)
          Securities owned, at market value                        1,859,344      (593,675)
          Rebate receivable                                         (262,000)       (6,000)
          Representative loans                                        29,212       180,173
          Other assets                                               352,827       (27,764)
      (Decrease) increase in operating liabilities:
          Securities sold, not yet purchased, at market value        (60,521)      106,136
          Accrued compensation                                    (1,008,903)      255,197
          Accounts payable and accrued expenses                      156,683       (32,786)
                                                                 -----------   -----------

               Total adjustments                                   1,989,009    (1,759,766)
                                                                 -----------   -----------

               Net cash provided by operating activities           2,871,141       956,937
                                                                 -----------   -----------

Cash flows from investing activities:
    Purchase of furniture, fixtures and leasehold improvements       (18,522)           --
                                                                 -----------   -----------

               Net cash used in investing activities                 (18,522)           --
                                                                 -----------   -----------

Cash flows from financing activities:
    Proceeds from issuance of common stock                            21,750            --
    Repayment of subordinated borrowings                            (125,000)     (312,500)
    Repurchase of common stock                                      (108,837)           --
                                                                 -----------   -----------

               Net cash used in financing activities                (212,087)     (312,500)
                                                                 -----------   -----------

Net increase in cash                                               2,640,532       644,437

Cash at beginning of year                                          3,032,931     3,035,083
                                                                 -----------   -----------

Cash at end of period                                            $ 5,673,463   $ 3,679,520
                                                                 ===========   ===========
Supplemental disclosures of cash flow information:
    Cash paid during the period for:
      Interest                                                   $   140,865   $     9,661
      Income taxes                                               $   123,550   $     6,192
</TABLE>


See Notes to Condensed Consolidated Financial Statements                       5

<PAGE>

KIRLIN HOLDING CORP. and SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.    BASIS OF PRESENTATION AND STOCK-BASED COMPENSATION

      The accompanying condensed consolidated financial statements have been
      prepared in accordance with U.S. generally accepted accounting principles
      for interim financial information and with the instructions to Form 10-Q.
      Accordingly, they do not include all of the information and footnotes as
      required by generally accepted accounting principles for annual financial
      statements. In the opinion of management of the Company, all adjustments
      (consisting only of normal recurring adjustments) necessary for a fair
      presentation have been included. The operations for the six-month period
      ended June 30, 2004 are not necessarily indicative of the results that may
      be expected for the full year ending December 31, 2004. For further
      information, refer to the consolidated financial statements and footnotes
      thereto included in the Company's Annual Report on Form 10-K for the
      fiscal year ended December 31, 2003.

      As permitted under Statement of Financial Accounting Standards ("SFAS")
      No. 148, "Accounting for Stock-Based Compensation - Transition and
      Disclosure", which amended SFAS No. 123, "Accounting for Stock-Based
      Compensation", the Company has elected to continue to follow the intrinsic
      value method in accounting for its stock-based employee compensation
      arrangements as defined in Accounting Principles Board Opinion ("APB") No.
      25, "Accounting for Stock Issued to Employees", and the related
      interpretations including Financial Accounting Standards Board
      Interpretation No. 44, "Accounting for Certain Transactions Involving
      Stock Compensation", an interpretation of APB No. 25. No stock-based
      employee compensation cost is reflected in operations, as all options
      granted by the Parent to employees of the Company under those plans had an
      exercise price equal to the market value of the underlying common stock at
      the date of grant.

      The following summary illustrates the effect on net income as if the
      Company had applied the fair value recognition provisions of SFAS No. 123
      to stock-based employee compensation:


<TABLE>
<CAPTION>
                                                          Three-Months Ended              Six-Months Ended
                                                               June 30,                        June 30,
                                                    -----------------------------   -----------------------------
                                                         2004           2003            2004            2003
                                                    -------------   -------------   -------------   -------------
<S>                                                 <C>             <C>             <C>             <C>
         Net income - as reported                   $     271,501   $   1,519,820   $     882,132   $   2,716,703

            Deduct: Total stock based employee
               compensation expense determined
               under the fair value based method         (101,033)       (144,713)       (202,066)       (289,426)
                                                    -------------   -------------   -------------   -------------

         Proforma net income                        $     170,468   $   1,375,107   $     680,066   $   2,427,277
                                                    =============   =============   =============   =============

         Basic income per common share as reported  $        0.16   $        0.95   $        0.54   $        1.70
         Proforma basic income per common share     $        0.10   $        0.85   $        0.41   $        1.52

         Diluted income per common share as
           reported                                 $        0.11   $        0.72   $        0.36   $        1.38
         Proforma diluted income per common share   $        0.07   $        0.65   $        0.28   $        1.23
</TABLE>

                                                                               6
<PAGE>

KIRLIN HOLDING CORP. and SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements
(Unaudited)

2.    EARNINGS PER SHARE

      The Company follows SFAS No. 128, Earnings Per Share, which provides for
      the calculation of "basic" and "diluted" earnings per share ("EPS"). Basic
      EPS includes no dilution and is computed by dividing income or loss
      available to common stockholders by the weighted-average number of common
      shares outstanding for the period. Diluted EPS reflects the potential
      dilution that could occur through the effect of common shares issuable
      upon exercise of stock options and warrants and convertible securities.
      For the three and six-month periods ended June 30, 2004, potential common
      shares amounted to 813,069 and 686,443, respectively, and for the three-
      and six-month periods ended June 30, 2003, potential common shares
      amounted to 964,855 and 995,875, respectively, and have not been included
      in the computation of diluted EPS since the effect would be antidilutive.

      In connection with the audit of the Company's consolidated financial
      statements for the year ended December 31, 2003 it was determined that the
      earnings per share calculation should be changed in order to exclude
      nonvested and contingently returnable shares in the Company's restricted
      and deferred commission plans from the basic earnings per share
      calculation and a modification of those shares in the calculation of
      diluted earnings per share. This change resulted in different basic and
      diluted earnings per share amounts for the three- and six-month periods
      ended June 30, 2003 than previously reported.

      The following table sets forth the components of basic and diluted
      earnings per share for the three and six-month periods ended June 30, 2004
      and 2003, respectively:


<TABLE>
<CAPTION>
                                                        Three-Months Ended      Six-Months Ended
                                                             June 30,               June 30,
                                                     ----------------------  ----------------------
                                                        2004        2003        2004        2003
                                                     ----------  ----------  ----------  ----------
<S>                                                  <C>         <C>         <C>         <C>
            Numerator:
               Net income                            $  271,501  $1,519,820  $  882,132  $2,716,703
                                                     ==========  ==========  ==========  ==========

            Denominator:
               Weighted average shares outstanding    1,666,403   1,609,040   1,648,800   1,601,685

               Effect of dilutive securities:
                   Stock options                        335,813     168,383     375,483      84,191

                   Nonvested stock                      390,239     327,412     396,331     280,092
                                                     ----------  ----------  ----------  ----------

            Denominator for diluted earnings per
              share - weighted average shares of
              common stock and common stock
              equivalents after assumed conversions   2,392,455   2,104,835   2,420,614   1,965,968
                                                     ==========  ==========  ==========  ==========
</TABLE>

3.    CONTINGENCIES

      In the normal course of the Company's business, the Company from time to
      time is involved in claims, lawsuits and arbitrations brought by its
      customers and former employees. It is the opinion of management, based
      upon its evaluation of each of these matters and the reserves established
      by the Company, that the resolution of all claims presently pending will
      not have a material adverse effect on the consolidated financial condition
      of the Company.

                                                                               7
<PAGE>

4.    STOCKHOLDERS' EQUITY

      On June 24, 2004 the stockholders approved the amendment to the
      certificate of incorporation to increase the authorized number of shares
      of Common Stock by an additional 8,000,000 shares of Common Stock to
      15,000,000 shares of Common Stock.

      During the six-month period ended June 30, 2004, the Company granted
      options to purchase 50,515 shares of common stock at an exercise price
      between $4.50 and $10.80 per share. Such options vest over periods of up
      to 10 years and are exercisable at various dates through March 31, 2014.

5.    SUBSEQUENT EVENTS

      On August 9, 2004, Kirlin Securities, Inc. and certain present or former
      Kirlin personnel concluded a settlement with the NASD to resolve three
      NASD disciplinary proceedings and an investigation by the NASD Department
      of Enforcement relating to alleged violations of NASD Conduct Rules and
      the federal securities laws occurring from late 1995 to 2001. Each of
      these disciplinary proceedings and the investigation were previously
      reported by the Company in prior periodic filings with the Securities and
      Exchange Commission. Pursuant to the settlement, without admitting or
      denying any violation or wrongdoing, Kirlin consented to a fine in the
      amount of $155,800, restitution to customers in the amount of $1,044,201
      and the requirement to pre-file all firm advertising materials for one
      year. Kirlin also agreed to retain, at its own expense, an independent
      consultant to review and make recommendations concerning the adequacy of
      the firm's current supervisory and operating procedures as they relate to
      the settled matters. The independent consultant's recommendations must
      also be submitted to NASD. Anthony J. Kirincic, Kirlin's Co-Chief
      Executive Officer and the Company's President, also agreed to settle
      allegations that he failed to reasonably supervise Kirlin's personnel with
      respect to certain of these matters. Without admitting or denying any
      violation or wrongdoing, Mr. Kirincic consented to a fine in the amount of
      $25,000 and a 30-day suspension as a general securities principal. A
      former Kirlin branch manager and two former sales representatives also
      agreed to fines totaling $35,000 and other disciplinary sanctions in
      connection with the settlement.

                                                                               8
<PAGE>

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


FORWARD-LOOKING STATEMENTS

      When used in this Form 10-Q and in future filings by the Company with the
Commission, the words or phrases "will likely result," "management expects" or
"the Company expects," "will continue," "is anticipated," "estimated," "it is
the opinion of management" or similar expressions are intended to identify
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance
on any such forward-looking statements, each of which speak only as of the date
made. Such statements are subject to certain risks and uncertainties that could
cause actual results to differ materially from historical earnings and those
presently anticipated or projected. These risks are included in "Item 1:
Business," "Item 7: Management's Discussion and Analysis of Financial Condition
and Results of Operations" and in "Exhibit 99: Risk Factors" included in Form
10-K for the year ended December 31, 2003. The Company has no obligation to
publicly release the result of any revisions which may be made to any
forward-looking statements to reflect anticipated or unanticipated events or
circumstances occurring after the date of such statements.

CRITICAL ACCOUNTING POLICIES

      An understanding of our accounting policies is necessary for a complete
analysis of our results, financial position, liquidity and trends. Note 1 to our
consolidated financial statements filed with our Annual Report on Form 10-K for
the year ended December 31, 2003 includes a summary of the significant
accounting policies and methods used in the preparation of our consolidated
financial statements. We focus your attention on the following, which provides a
brief discussion of the more significant accounting policies and methods used by
us:

      Valuation of Investments. The major portion of the Company's securities
      owned and securities sold, not yet purchased, are stated at quoted market
      values. Included in securities owned are stock warrants and investments in
      privately held companies not readily marketable, which have been valued at
      fair value as determined by management. The warrants are valued based on a
      percentage of the market value of the underlying securities. The resulting
      unrealized gains and losses are reflected in principal transactions,
      investment banking and merchant banking income. The liquidation of the
      Company's position could result in substantial differences from the market
      and fair value prices used in the consolidated financial statements.

      Impairment of Deferred Tax Assets. The carrying value of the Company's net
      deferred tax assets assumes that it will be able to generate future
      taxable income, based on estimates and assumptions. If these estimates and
      assumptions change in the future, the Company may be required to increase
      valuation allowances against its deferred tax assets, which would result
      in additional income tax expense. At June 30, 2004, the valuation
      allowance was approximately 35% of the Company's deferred tax assets
      related to its net operating loss carryforwards and other temporary
      differences.

      Market, Credit, and Liquidity Risk. The Company's investing and
      underwriting activities often involve the purchase, sale or short sale of
      securities as principal. Such activities subject our capital to
      significant risks from markets that may be characterized by relative
      illiquidity or may be particularly susceptible to rapid fluctuation in
      liquidity. Such market conditions could limit the Company's ability to
      resell securities purchased or to purchase securities sold short. These
      activities subject our capital to significant risks, including market,
      credit counterparty and liquidity risks. Market risks relate to the risk
      of fluctuating values based on market prices without action on our part.
      The Company's primary credit risk is settlement or counterparty risk,
      which relates to whether a counterparty will fulfill its contractual
      obligations, such as delivery of securities or payment of funds. Liquidity
      risk relates to the Company's inability to liquidate assets or redirect
      the deployment of assets contained in illiquid investments. In addition,
      our market and liquidity risks and risks associated with asset revaluation

                                                                               9
<PAGE>

      are increased because these risks for us are concentrated. The areas
      related to the above risks are valued based on listed market prices, where
      possible. If listed market prices are not available then these items are
      carried at fair value as determined by management, with related unrealized
      gains and losses recognized in the consolidated statement of operations.
      Actual results could differ from the values used in these consolidated
      financial statements.

      Contingencies. The Company's business involves substantial risks of
      liability, including exposure to liability under federal and state
      securities laws in connection with the underwriting or distribution of
      securities and claims by dissatisfied customers for fraud, unauthorized
      trading, churning, mismanagement and breach of fiduciary duty. The Company
      does not presently maintain an errors and omissions insurance policy
      insuring it against these risks. In the normal course of the Company's
      business, the Company from time to time is involved in claims, lawsuits
      and arbitrations brought by its customers. The Company consults its
      attorneys in order to estimate amounts that should be reflected in the
      Company's consolidated financial statements relating to pending or
      threatened claims. If pending or threatened claims result in damages to be
      paid by the Company, these amounts could be different from the amounts
      previously estimated and reflected in the Company's consolidated financial
      statements. The Company's review of existing claims, arbitrations and
      unpaid settlements at June 30, 2004 resulted in an accrued liability in
      the amount of approximately $585,000.


OVERVIEW

      The following discussion and analysis should be read in conjunction with
the Company's condensed consolidated financial statements and the notes
presented following the condensed consolidated financial statements. The
discussion of results, causes and trends should not be construed to imply any
conclusion that such results or trends will necessarily continue in the future.

      The Company's revenues during the six-month period ended June 30, 2004
were generated primarily from brokerage transactions. Revenues from brokerage
transactions result in the Company earning commissions charged to customers for
purchasing and selling securities and is comprised of equity securities, unit
trusts, and mutual funds. To a lesser extent, the Company's revenues were
generated from principal trading activities. As a principal, the Company buys
and sells securities, both for proprietary trading and, more significantly, to
facilitate sales to its retail customers and other dealers. Principal
transactions with customers are effected at a net price equal to the current
interdealer price plus or minus a mark-up or mark-down within the guidelines of
applicable securities regulations. As a result of its principal trading
activities, the amount of the Company's liabilities and assets can vary widely
from period-to-period.

      The Company pays its registered representatives commissions equal to
varying percentages of gross commissions and mark-ups and mark-downs in
connection with the purchases and sales of securities on behalf of its
customers. In addition, the Company pays ticket charges to its clearing brokers
for the processing of security transactions. The Company maintains some
inventories of securities in order to facilitate sales to customers. In this
regard, the Company may pay interest on the securities held in inventory since
its securities can be purchased on margin through its clearing brokers.

      The Company is directly affected by general economic conditions, interest
rates and market conditions. All of these factors have an impact on its
principal trading and overall business volume. The Company's costs associated
with occupancy, communications and equipment costs are relatively fixed and, in
periods of reduced revenues, can have an adverse effect on earnings.

                                                                              10
<PAGE>

      The following table shows each specified item as a dollar amount and as a
percentage of revenues for the three and six-month periods ended June 30, 2004
and 2003, respectively, and should be read in conjunction with the condensed
consolidated financial statements included elsewhere in this Quarterly Report on
Form 10-Q:

<TABLE>
<CAPTION>
                                              Three-Months Ended June 30,                   Six-Months Ended June 30,
                                      -----------------------------------------   --------------------------------------------

                                              2004                  2003                  2004                    2003
                                      -------------------   -------------------   --------------------    --------------------
<S>                                   <C>             <C>   <C>             <C>   <C>              <C>    <C>              <C>
Revenues:

   Principal transactions, net        $    118,240    2.6%  $    259,612    3.6%  $    180,172     1.5%   $    419,243     3.5%
   Commissions                           3,660,350   81.8%     5,659,944   79.6%    10,260,806    84.2%      9,907,924    81.7%
   Investment banking                           --     --        465,000    6.5%       273,226     2.3%        465,000     3.8%
   Other income                            696,452   15.6%       736,284   10.3%     1,465,937    12.0%      1,329,471    11.0%
                                      ------------  -----   ------------  -----   ------------   -----    ------------   -----

         Total revenues                  4,475,042  100.0%     7,120,840  100.0%    12,180,141   100.0%     12,121,638   100.0%
                                      ------------  -----   ------------  -----   ------------   -----    ------------   -----

Expenses:
   Employee compensation and benefits    2,818,564   63.0%     4,494,033   63.1%     8,073,986    66.3%      7,818,261    64.5%
   Promotion and advertising                54,910    1.2%        42,717    0.6%       113,536     0.9%        116,857     1.0%
   Clearance and execution charges         109,575    2.5%       142,983    2.0%       261,404     2.2%        253,730     2.1%
   Occupancy and communications            437,089    9.8%       866,040   12.2%     1,016,360     8.3%      1,653,696    13.6%
   Professional fees                       135,708    3.0%       217,388    3.1%       323,857     2.7%        358,346     3.0%
   Interest                                  6,947    0.2%         8,120    0.1%        12,550     0.1%         (6,086)   (0.1)%
   Other                                   843,449   18.8%       337,477    4.7%     1,241,400    10.2%        516,122     4.3%
                                      ------------  -----   ------------  -----   ------------   -----    ------------   -----

         Total expenses                  4,406,242   98.5%     6,108,758   85.8%    11,043,093    90.7%     10,710,926    88.4%
                                      ------------  -----   ------------  -----   ------------   -----    ------------   -----
Income before income tax
 benefit (provision)                        68,800    1.5%     1,012,082   14.2%     1,137,048     9.3%      1,410,712    11.6%

Income tax benefit (provision)             202,701    4.5%       507,738    7.1%      (254,916)   (2.1)%     1,305,991    10.8%
                                      ------------  -----   ------------  -----   ------------   -----    ------------   -----

Net income                            $    271,501    6.0%  $  1,519,820   21.3%  $    882,132     7.2%   $  2,716,703    22.4%
                                      ============  =====   ============  =====   ============   =====    ============   =====
</TABLE>


RESULTS OF OPERATIONS

                                    Revenues

      Principal transactions, net for the three- and six-month periods ended
June 30, 2004 decreased to $118,240 and $180,172, respectively, from the
comparable periods in 2003. The decrease is primarily attributable to losses
related to equity and fixed income business for which the Company maintained an
inventory, offset by gains in the Company's investment account during the three
and six-month periods ended June 30, 2003. Principal transactions, net for the
three-month period ended June 30, 2004 consisted of trading losses of
approximately $94,000 and gains in the Company's investment account of
approximately $212,000. Principal transactions, net for the six-month period
ended June 30, 2004 consisted of trading losses of approximately $32,000 and
gains in the Company's investment account of approximately $212,000.

      Commissions for the three- and six-month periods ended June 30, 2004
decreased 35.3% to $3,660,350 and increased 3.6% to $10,260,806, respectively,
from the comparable periods in 2003. The change during the quarter is primarily
attributable to the Company's decreased business in equity and fixed income
securities, mutual funds, and unit investment trusts, which the Company believes
was due to sluggish market conditions. Commissions for the three-month period
ended June 30, 2004 consisted of agency commissions of approximately $3,106,000,
syndicate commissions of approximately $89,000 and mutual fund, variable
annuity, life insurance and managed money commissions of approximately $465,000.
Commissions for the six-month period ended June 30, 2004 consisted of agency
commissions of approximately $8,913,000, syndicate commissions of approximately
$452,000 and mutual fund, variable annuity, life insurance and managed money
commissions of approximately $896,000.

                                                                              11
<PAGE>

      There was no investment banking activity during the three-month period
ended June 30, 2004. Investment banking for the six-month period ended June 30,
2004 decreased 41.2% to $273,226. During the six-month period ended June 30,
2004 the Company acted as the placement agent for one private placement.

      Other income for the three- and six-month periods ended June 30, 2004
decreased 5.4% to $696,452 and increased 10.3% to $1,465,937, respectively, from
the comparable periods in 2003. The decrease during the three-month period ended
June 30, 2004 is primarily attributable to the decrease in fees related to the
annual account maintenance fee, which is recognized monthly as the annual fee is
amortized, and a decrease in consulting fees offset by an increase in interest
rebates the Company is entitled to receive from its clearing broker under its
clearing agreement. The decrease in fees related to the annual maintenance fee
is due to a change in business mix that eliminated smaller accounts, which
resulted in a fewer number of accounts available to bill. The increase during
the six-month period ended June 30, 2004 results from two additional months of
annual maintenance fee income during 2004 as compared to 2003 since this fee was
instituted during March 2003. Other income for the three-month period ended June
30, 2004 consisted of transactional and account balance rebates of approximately
$513,000, maintenance fee income of approximately $175,000, and other income for
approximately $8,000. Other income for the six-month period ended June 30, 2004
consisted of transactional and account balance rebates of approximately
$1,092,000, maintenance fee income of approximately $359,000, and other income
for approximately $15,000.

                                    Expenses

      Employee compensation and benefits for the three- and six-month periods
ended June 30, 2004 decreased 37.3% to $2,818,564 and increased 3.3% to
$8,073,986, respectively, from the comparable periods in 2003. Since employee
compensation related to the Company's retail brokerage traders and registered
representatives is directly related to revenue they generate, a portion of
employee compensation follows the change in the Company's revenues. The increase
during the six-month period ended June 30, 2003 is also attributable to the
reduction in the first quarter of 2003 of base salary by the Company's Chief
Executive Officer and its President by 68% and by its Chief Financial Officer by
35% during the first three months of 2003. During that time period other key
management personnel also agreed to reduce their base salaries. In addition the
Chief Executive Officer and President of the Company reduced the variable
portion of their base salaries by 100% during this period. The salary reductions
amounted to approximately $117,000. These reductions were not continued in 2004.
Additionally, during the three-month period ended June 30, 2003 the Company
collected outstanding loans from one former employee that was written off in a
prior year for approximately $145,000, which was partially offset by loan
write-offs of approximately $40,000. During the three-month period ended June
30, 2004 the Company changed its benefit contribution policy to include all
employees participating in the medical insurance plan which resulted in an
increase monthly expense of approximately $8,000. Prior to June 2004 the benefit
contribution was only given to non-highly compensated employees. Finally, hiring
and training expense increased during the three- and six-month periods ended
June 30, 2004 due to the hiring of an executive search firm to recruit and hire
a retail sales director.

      Promotion and advertising for the three- and six-month periods ended June
30, 2004 increased 28.5% to $54,910 and decreased 2.8% to $113,536,
respectively, from the comparable periods in 2003. The increase during the
three-month period ended June 30, 2004 results from an increase in meals and
travel expenses related to prospective business as well as planning and
operating meetings . The decrease during the six-month period ended June 30,
2004 results from the decrease in car allowances arising from the termination of
certain employees during the comparable period during 2003.

      Clearance and execution charges for the three- and six-month periods ended
June 30, 2004 decreased 23.4% to $109,575 and increased 3% to $261,404,
respectively, from the comparable periods in 2003. The decrease is a result of a
lower ticket volume.

                                                                              12
<PAGE>

      Occupancy and communications costs for the three- and six-month periods
ended June 30, 2004 decreased 49.5% to $437,089 and decreased 38.5% to
$1,016,360, respectively, from the comparable periods in 2003. This decrease is
primarily a result of the closing of the New York City, Fort Lauderdale and Red
Bank offices in the prior year and resulted in the reduction of rent and
depreciation expenses during the three and six-month periods ended June 30, 2004
as compared to the same period in 2003. Rent decreased approximately $182,000
and $317,000, respectively, and depreciation expense inclusive of disposals
decreased approximately $132,000 and $199,000, respectively.

      Professional fees for the three- and six-month periods ended June 30, 2004
decreased 37.6% to $135,708 and decreased 9.6% to $323,857, respectively, from
the comparable periods in 2003. The decrease is reflective of non-recurring
legal fees in the prior periods as it related to certain customer arbitrations,
regulatory matters related to potential violations of NASD Conduct Rules and/or
Federal securities laws and legal fees related to the Company's vacated office
space in San Diego. In the current periods this line item reflects an increase
in fees related to strategic business consulting fees to increase the Company's
revenues and expand its business lines.

      Interest expense for the three- and six-month periods ended June 30, 2004
decreased 14.4% to $6,947 and increased 306% to $12,550, respectively, from the
comparable periods in 2003. Interest for the three and six-month periods ended
June 30, 2004 relates to inventory positions purchased on margin and securities
sold short, which are held at a clearing broker and charged interest. The
increase for the six-month period ended June 30, 2004 compared to the same
period in 2003 results from the forfeiture of non-vested deferred commission
interest during 2003 upon the termination of representatives.

      Other expenses for the three- and six-month periods ended June 30, 2004
increased 150% to $843,449 and increased 141% to $1,241,400, respectively, from
the comparable periods in 2003 primarily as a result of municipal bond syndicate
participation losses and customer expenses, which includes existing claims,
arbitrations and unpaid settlements. Municipal bond syndicate participation
losses were approximately $20,000 and $111,000, respectively, for the three and
six-month periods ended June 30, 2004. Customer expenses were approximately
$526,000 and $551,000, respectively, for the three- and six-month period ended
June 30, 2004. Other expenses for the three-month period ended June 30, 2004
consisted of municipal syndicate participation losses of approximately $20,000,
clearing broker non-trade processing costs of approximately $8,000, office
insurance (property, casualty, and umbrella) related to each office, directors
and officers insurance and automobile insurance of approximately $36,000,
directors fees of approximately $8,000, regulatory listing, registration and
assessment expenses of approximately $51,000, customer expenses of approximately
$526,000, general office expenses of approximately $137,000, and a receivable
write-off of approximately $57,000. Other expenses for the six-month period
ended June 30, 2004 consisted of municipal syndicate participation losses of
approximately $111,000, clearing broker non-trade processing costs of
approximately $27,000, office insurance (property, casualty, and umbrella)
related to each office, directors and officers insurance and automobile
insurance of approximately $76,000, directors fees of approximately $15,000,
regulatory listing, registration and assessment expenses of approximately
$130,000, customer expenses of approximately $551,000, general office expenses
of approximately $274,000, and a receivable write-off of approximately $57,000.

      Income tax benefit for the three-month period ended June 30, 2004 was
$202,701 as compared to $507,738 for the three-month period ended June 30, 2003
and the income tax provision for the six-month period ended June 30, 2004 was
$254,916 as compared to the income tax benefit of $1,305,991 for the six-month
period ended June 30, 2003. At June 30, 2004 the Company's valuation allowance
was approximately 35% of the Company's gross deferred tax assets (which relate
to its net operating loss carryforwards and other temporary differences) based
upon the Company's estimation of future taxable income, which directly effects
the income tax provision/benefit amount.

      Net income of $271,501 and $882,132 for the three- and six-month periods
ended June 30, 2004 compares unfavorably to net income of $1,519,820 and
$2,716,703 for the three and six-month periods ended June 30, 2003. Overall this
resulted primarily from a decrease in revenues, an increase in customer expenses
offset by a reduction in occupancy and communication charges, and a change in
the income tax benefit. On a pretax basis, the Company recorded income of
$68,800 and 1,137,048 for the three- and six-month periods ended June 30, 2004,
respectively, as compared to $1,012,082 and $1,410,712 for the three- and
six-month periods ended June 30, 2003, respectively.

                                                                              13
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

      At June 30, 2004, approximately 70% of the Company's assets were comprised
of cash and highly liquid securities.

      Cash amounted to $5,673,463 at June 30, 2004 as compared to $3,032,931 at
December 31, 2003. This increase is reflective of the cash held in the Company's
investment account resulting from the liquidation of equity securities and the
collection of the annual maintenance fee on client accounts.

      Due from Clearing Brokers amounted to $2,858,774 at June 30, 2004 as
compared to $3,175,650 at December 31, 2003. This 10% decrease is primarily
attributable to monies owed on security positions purchased on margin in the
Company's investment account, which are netted against amounts otherwise due
from clearing brokers. These securities are reflected in the "Securities Owned"
line item in the condensed consolidated statement of financial condition.

      Securities Owned at June 30, 2004 were $1,594,746 as compared to
$3,475,521 at December 31, 2003. This decrease is primarily reflective of the
decrease in equity securities maintained in the Company's investment account,
partially offset by an increase in state and municipal obligations held in
inventory with respect to the Company's syndicate activities.

      Rebate Receivable amounted to $1,503,000 at June 30, 2004 as compared to
$1,241,000 at December 31, 2003. This 21.1% increase is reflective of the rebate
the Company is entitled to receive from its clearing broker as provided in the
clearing agreement. The Company generated income and fees which increased this
line item by $387,000 offset by the collection of $125,000 of this rebate
receivable. The clearing broker will rebate, in amounts and at dates specified
in the agreement, 50% of the clearing fees and other items (as defined) up to a
maximum of $2,500,000. The rebate is supposed to be paid by the clearing broker
up to maximum installments of $62,500 at the end of each subsequent calendar
quarter through March 31, 2005, at which time the balance will be payable.

      Representative Loans at June 30, 2004 amounted to $107,129 as compared to
$136,341 at December 31, 2003. This 21.4% decrease is reflective of the
forgiveness and amortization of some of the loans disbursed in the current and
prior years. A majority of the loans will be forgiven based on the recipient's
production or employment through a specific time period. The Company amortizes
the principal amount of the loan over the performance period or the employment
period, whichever is shorter.

      Furniture, Fixtures and Leasehold Improvements, net, at June 30, 2004,
decreased to $75,309 as compared to $142,498 at December 31, 2003. This 47.2%
decrease results from the depreciation of the Company's furniture, fixtures and
leasehold improvements.

      Deferred Tax Assets, net at June 30, 2004 amounted to $1,963,963 as
compared to $2,165,805 at December 31, 2003. The deferred tax assets changed
during the period due to the expected utilization of the Company's net operating
loss carryforward and other temporary differences which resulted in a decrease
in its valuation allowance. At June 30, 2004 the valuation allowance is
approximately 35% of its deferred tax assets related to its net operating loss
carryforwards and other temporary differences as a result of events giving rise
to greater expectation of a return to long-term profitability. At June 30, 2004
the deferred tax assets amount to approximately $3,012,000 and the recorded
valuation allowance amounted to approximately $1,048,000. If the Company
continues to be profitable then it anticipates being able to use a substantial
portion of the deferred tax assets.

      Other assets decreased by 41.5% to $497,842 at June 30, 2004, from
$850,669 at December 31, 2003. The net decrease is primarily attributable to
receipt of a clearing broker conversion cost reimbursement receivable, receipt
of unit investment trust commission receivables related to the Company's retail
activities, and a decrease in prepaid expenses and deposits related to the
Company's general operations, partially offset by two loans made to a potential

                                                                              14
<PAGE>

investment banking client,. Other assets at June 30, 2004 consisted of a loan to
a potential investment banking client of $100,000, unit investment trust and
mutual fund commissions receivable of approximately $64,000, prepaid expenses of
approximately $84,000, rent and other deposits inclusive of a letter of credit
deposit of approximately $214,000, and other assets of approximately $36,000.
Other assets at December 31, 2003 consisted of clearing broker conversion cost
reimbursement receivable of $300,000, unit investment trust and mutual fund
commissions receivable of approximately $108,000, prepaid expenses of
approximately $146,000, rent deposits inclusive of a letter of credit deposit of
approximately $224,000, and other assets of approximately $73,000.

      Securities sold, not yet purchased amounted to $63,451 at June 30, 2004 as
compared to $123,972 at December 31, 2003. Management monitors these positions
on a daily basis and covers short positions when deemed appropriate.

      Accrued compensation was $883,257 at June 30, 2004 as compared to
$1,892,160 at December 31, 2003, a 53.3% decrease. The revenues upon which
commission income to registered representatives is based directly affect this
line item, which was lower at the end of the current quarter as compared to 2003
offset by a decrease in the accrual related to bonuses accrued at December 31,
2003 and paid during January 2004. Finally, this line item decreased due to the
deferred commission payout which was paid during April 2004.

      Accounts payable and accrued expenses at June 30, 2004 were $4,336,962 as
compared to $4,180,279 at December 31, 2003, a 3.7% increase. The change is
primarily attributable to the collection in March 2004 of the annual maintenance
fee charged to client accounts and the recording of an offsetting liability in
the Company's consolidated statement of financial condition. The income related
to the annual maintenance fee will be recognized monthly as the annual fee is
amortized. The above increase is also attributable to an increase in the accrued
liability related to existing claims, arbitrations and unpaid settlements. To a
lesser extent this line item increased due to the increase in payables related
to the Company's general business. Finally, this line item is offset by a
decrease in the deferred commission interest which was paid during April 2004.
Accounts payable and accrued expenses at June 30, 2004 consisted of accrued
professional fees of approximately $407,000, accrued communication charges of
approximately $178,000, accrued computer and copier charges of approximately
$200,000, accrued arbitration settlements of $583,000, accrued lease expense of
approximately $547,000, accrued regulatory expense of approximately $1,260,000
and other accounts payable and accrued expenses of approximately $1,162,000.
Accounts payable and accrued expenses at December 31, 2003 consisted of accrued
professional fees of approximately $588,000, accrued communication charges of
approximately $233,000, accrued computer and copier charges of approximately
$202,000, accrued arbitration settlements of approximately $191,000, accrued
lease expense of approximately $648,000, accrued regulatory expense of
approximately $1,250,000 and other accounts payable and accrued expenses of
approximately $1,069,000.

      Subordinated borrowings amounted to $1,937,500 at June 30, 2004 as
compared to $2,062,500 at December 31, 2003. During March 2002, Kirlin
Securities received from its clearing broker a $2,500,000 three-year
subordinated loan that requires payments over various periods of time during
this three-year period. During the six-month period ended June 30, 2004 the
Company repaid $125,000 of this subordinated loan back to the clearing broker,
which payment was made from the funds received from the clearing broker under
the rebate agreement.

      The Company, as guarantor of its customer accounts to its clearing
brokers, is exposed to off-balance-sheet risks in the event that its customers
do not fulfill their obligations with the clearing brokers. In addition, to the
extent the Company maintains a short position in certain securities, it is
exposed to a further off-balance-sheet market risk, since the Company's ultimate
obligation may exceed the amount recognized in the financial statements.

                                                                              15
<PAGE>

      The Company's business involves substantial risks of liability, including
exposure to liability under federal and state securities laws in connection with
the underwriting or distribution of securities and claims by dissatisfied
customers for fraud, unauthorized trading, churning, mismanagement and breach of
fiduciary duty. The Company does not presently maintain an errors and omissions
insurance policy insuring itself against these risks. In the normal course of
the Company's business, the Company from time to time is involved in claims,
lawsuits and arbitrations brought by its customers and former employees. It is
the opinion of management, based upon its evaluation of each of these matters
and the reserves established by the Company, that the resolution of all claims
presently pending will not have a material adverse effect on the condensed
consolidated financial condition of the Company.

      The Company's operations historically have been the principal source of
cash needed by the Company's business. Retained earnings and cash generally were
sufficient to carry the Company through periods when operations used more cash
than was generated. However, the Company experienced significant losses in 2000
through 2002 and the Company sought capital from external sources. This was
provided by the $2,500,000 three-year subordinated loan Kirlin Securities
obtained from its clearing broker in 2002 and by a private placement of the
Company's securities in 2001 that raised $1,500,000.

      The Company will be required to pay $1,260,000 in the coming months
related to the resolution of three NASD disciplinary proceedings and an
investigation by the NASD Department of Enforcement relating to alleged
violations of NASD Conduct Rules and the federal securities laws occurring from
late 1995 to 2001. The Company believes its current cash position and revenues
from operations will be sufficient to satisfy its obligations.

      The Company believes its financial resources will be sufficient to fund
the Company's operations and capital requirements for the foreseeable future.
The Company, however, continues to explore the possibility of a financing to
assist it in pursuing its plans for growth.


Consolidated Contractual Obligations and Lease Commitments


      The table below summarizes information about our consolidated contractual
obligations as of June 30, 2004 and the effects these obligations are expected
to have on our consolidated liquidity and cash flow in future years. This table
does not include any projected payment amounts related to the Company's
potential exposure to arbitrations and other legal matters.


<TABLE>
<CAPTION>
                                                                                                             2008 and
                              Total            2004            2005            2006            2007         thereafter
========================  --------------  --------------  --------------  --------------  --------------  --------------
<S>                       <C>             <C>             <C>             <C>             <C>             <C>
Equipment lease
  obligations             $      426,131  $      110,589  $      199,407  $      113,297  $        2,838  $           --
Office lease obligations       1,353,796         448,919         663,402         147,492          93,983              --
Employment contract
  obligations                  3,145,833         377,500         755,000         755,000         755,000         503,333
                          --------------  --------------  --------------  --------------  --------------  --------------

                          $    4,925,760  $      937,008  $    1,617,809  $    1,015,789  $      851,821  $      503,333
                          ==============  ==============  ==============  ==============  ==============  ==============
</TABLE>


ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.


            Our investing and underwriting activities often involve the
purchase, sale or short sale of securities as principal. Such activities subject
our capital to significant risks from markets that may be characterized by
relative illiquidity or may be particularly susceptible to rapid fluctuation in
liquidity. Such market conditions could limit our ability to resell securities
purchased or to purchase securities sold short. These activities subject our
capital to significant risks, including market, credit counterparty and
liquidity risks. Market risk relates to the risk of fluctuating values based on
market prices without action on our part. Our primary credit risk is settlement

                                                                              16
<PAGE>

or counterparty risk, which relates to whether a counterparty will fulfill its
contractual obligations, such as delivery of securities or payment of funds.
Liquidity risk relates to our inability to liquidate assets or redirect the
deployment of assets contained in illiquid investments. In addition, our market
and liquidity risks and risks associated with asset revaluation are increased
because these risks for us are concentrated.


ITEM 4.     CONTROLS AND PROCEDURES.

            An evaluation of the effectiveness of the Company's disclosure
controls and procedures as of June 30, 2004 was made under the supervision and
with the participation of the Company's management, including the chief
executive officer and chief financial officer. Based on that evaluation, they
concluded that the Company's disclosure controls and procedures are effective to
ensure that information required to be disclosed by the Company in reports that
it files or submits under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in
Securities and Exchange Commission rules and forms. During the most recently
completed fiscal quarter, there has been no significant change in the Company's
internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect, the Company's internal control over
financial reporting.

                                                                              17
<PAGE>

PART II:    OTHER INFORMATION

ITEM 1:     LEGAL PROCEEDINGS

            On August 9, 2004, Kirlin Securities, Inc. and certain present or
former Kirlin personnel concluded a settlement with the NASD to resolve three
NASD disciplinary proceedings and an investigation by the NASD Department of
Enforcement relating to alleged violations of NASD Conduct Rules and the federal
securities laws occurring from late 1995 to 2001. Each of these disciplinary
proceedings and the investigation were previously reported by the Company in
prior periodic filings with the Securities and Exchange Commission. Pursuant to
the settlement, without admitting or denying any violation or wrongdoing, Kirlin
consented to a fine in the amount of $155,800, restitution to customers in the
amount of $1,044,201 and the requirement to pre-file all firm advertising
materials for one year. Kirlin also agreed to retain, at its own expense, an
independent consultant to review and make recommendations concerning the
adequacy of the firm's current supervisory and operating procedures as they
relate to the settled matters. The independent consultant's recommendations must
also be submitted to NASD. Anthony J. Kirincic, Kirlin's Co-Chief Executive
Officer and the Company's President, also agreed to settle allegations that he
failed to reasonably supervise Kirlin's personnel with respect to certain of
these matters. Without admitting or denying any violation or wrongdoing, Mr.
Kirincic consented to a fine in the amount of $25,000 and a 30-day suspension as
a general securities principal. A former Kirlin branch manager and two former
sales representatives also agreed to fines totaling $35,000 and other
disciplinary sanctions in connection with the settlement. For additional
information see the Company's Current Report on Form 8-K filed August 13 2004,
which is incorporated by reference hereto.

ITEM 2:     SALES OF UNREGISTERED SECURITIES

<TABLE>
<CAPTION>
================ ====================== ================= =========================== =============== ====================
                                                            CONSIDERATION RECEIVED
                                                              AND DESCRIPTION OF                      IF OPTION, WARRANT
                                                               UNDERWRITING OR          EXEMPTION       OR CONVERTIBLE
                                                              OTHER DISCOUNTS TO           FROM       SECURITY, TERMS OF
                                                            MARKET PRICE AFFORDED      REGISTRATION       EXERCISE OR
 DATE OF SALE      TITLE OF SECURITY      NUMBER SOLD           TO PURCHASERS            CLAIMED          CONVERSION
---------------- ---------------------- ----------------- --------------------------- --------------- --------------------
<S>              <C>                     <C>              <C>                         <C>             <C>
    4/1/04       Options to purchase         6,895        Options granted under            4(2)       Fully exercisable
                 Common Stock                             1994 Stock Plan - no cash                   on 4/1/07, for a
                                                          consideration received by                   period of 10 years
                                                          the Company.                                from date of
                                                                                                      grant, at an
                                                                                                      exercise price of
                                                                                                      $8.94 per share.
---------------- ---------------------- ----------------- --------------------------- --------------- --------------------
    4/27/04      Options to purchase         5,985        Options granted under            4(2)       Fully exercisable
                 Common Stock                             1994 Stock Plan - no cash                   on 4/27/07, for a
                                                          consideration received by                   period of 5 years
                                                          the Company.                                from date of
                                                                                                      grant, at an
                                                                                                      exercise price of
                                                                                                      $7.52 per share.
---------------- ---------------------- ----------------- --------------------------- --------------- --------------------
    5/3/04       Options to purchase         10,270       Options granted under            4(2)       Fully exercisable
                 Common Stock                             1994 Stock Plan - no cash                   on date of grant
                                                          consideration received by                   for a period of 10
                                                          the Company.                                years from date of
                                                                                                      grant, at an
                                                                                                      exercise price of
                                                                                                      $7.7245 per share.
---------------- ---------------------- ----------------- --------------------------- --------------- --------------------
    6/1/04       Options to purchase         1,000        Options granted under            4(2)       Fully exercisable
                 Common Stock                             1994 Stock Plan - no cash                   on 6/1/07, for a
                                                          consideration received by                   period of 5 years
                                                          the Company.                                from date of
                                                                                                      grant, at an
                                                                                                      exercise price of
                                                                                                      $4.50 per share.
================ ====================== ================= =========================== =============== ====================
</TABLE>

                                                                              18
<PAGE>
                     ISSUER PURCHASES OF EQUITY SECURITIES

<TABLE>
<CAPTION>
================ ================ ================ ====================== =========================
                                                                           (d) Maximum Number (or
                    (A) TOTAL                       (C) TOTAL NUMBER OF      APPROXIMATE DOLLAR
                    NUMBER OF                        SHARES (OR UNITS)      VALUE) OF SHARES (OR
                   SHARES (OR       (B) AVERAGE    PURCHASED AS PART OF    UNITS) THAT MAY YET BE
                     UNITS)       PRICE PAID PER    PUBLICLY ANNOUNCED      PURCHASED UNDER THE
    PERIOD          PURCHASED     SHARE (OR UNIT)    PLANS OR PROGRAMS       PLANS OR PROGRAMS
---------------- ---------------- ---------------- ---------------------- -------------------------
<S>                  <C>               <C>                <C>                   <C>
April 1, 2004        15,000            $7.25              15,000                $327,753 (1)
to April 30, 2004
---------------- ---------------- ---------------- ---------------------- -------------------------
May 1, 2004 to        None              N/A                 N/A                 $327,753 (1)
 May 31, 2004
---------------- ---------------- ---------------- ---------------------- -------------------------
June 1, 2004          None              N/A                 N/A                 $327,753 (1)
 to June 30, 2004
---------------- ---------------- ---------------- ---------------------- -------------------------
     Total           15,000            $7.25              15,000                $327,753 (1)
================ ================ ================ ====================== =========================
</TABLE>

(1) On November 1, 2002 the Company announced that the Board of Directors had
authorized a repurchase program to purchase up to $1,500,000 of common stock
purchased from time to time. The repurchase program does not have a specified
expiration date.

                                                                              19
<PAGE>

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

            The Company held its Annual Meeting of Stockholders on June 24,
2004. At the meeting each of the two directors nominated for election, Anthony
J. Kirincic and John Milcetich, were re-elected to a three year term expiring in
2007, with 1,475,617 shares voted in favor of Mr. Kirincic's election and 8,945
shares withheld authority to vote, and with 1,474,906 shares voted in favor of
Mr. Milcetich's election and 7,656 shares withheld authority to vote. At the
meeting the stockholders authorized an amendment to the Company' s certificate
of incorporation to increase the number of shares of common stock the Company
was authorized to issue from 7,000,000 to 15,000,000, with 1,460,827 shares
voted in favor of this amendment, 14,795 shares voted against this amendment,
7,940 shares abstained from the vote of this amendment, and zero shares were
broker non-votes.

ITEM 6:     EXHIBITS AND REPORTS ON FORM 8-K

      (a)   3.1.3     Certificate of Amendment of Certificate of Incorporation,
                      dated June 24, 2004.

            31.2      Section 302 Certification of Chief Financial Officer.

            31.2      Section 302 Certification of Chief Financial Officer.

            32        Section 906 Certification.

      (b)   Reports on Form 8-K

            On August 13, 2004 a Form 8-K was filed to report the Company's
            resolution of three NASD disciplinary proceedings and an
            investigation by the NASD Department of Enforcement.

                                                                              20
<PAGE>

                                   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.

                                     Kirlin Holding Corp.
                                     (Registrant)


Dated:   August 16, 2004             By:  /s/ Anthony J. Kirincic
                                          --------------------------------------
                                          Anthony J. Kirincic
                                          President


Dated:   August 16, 2004             By:  /s/ Barry E. Shapiro
                                          --------------------------------------
                                          Barry E. Shapiro
                                          Chief Financial Officer
                                          (and principal accounting officer)

                                                                              21