SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-KSB/A
                                (Amendment No.1)
MARK ONE:
[X]      Annual  Report under Section 13 or 15(d) of the Securities Exchange Act
         of 1934 For the fiscal year ended December 31, 2004

[ ]      Transition Report under  Section 13 or 15(d) of the Securities Exchange
         Act of 1934
         For the transition period from _________________ to _________________.

                          Commission file number 1-7986
                                                 ------

                          KENT FINANCIAL SERVICES, INC.
                          -----------------------------
                 (Name of small business issuer in its charter)

            Delaware                                          75-1695953
            --------                                          ----------
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                            Identification No.)

376 Main Street, P.O. Box 74, Bedminster, New Jersey                   07921
-----------------------------------------------------                  -----
       (Address of principal executive offices)                     (Zip Code)

          Issuer's telephone number, including area code (908) 234-0078
                                                         --------------

         Securities registered under Section 12(b) of the Exchange Act:
         --------------------------------------------------------------

                                      NONE

         Securities registered under Section 12(g) of the Exchange Act:
         --------------------------------------------------------------

                     Common Stock, par value $.10 per share

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

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained  to  the  best  of  registrant's  knowledge  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.[X]

     Issuer's  revenues  for the  fiscal  year  ended  December  31,  2004  were
approximately $1.9 million.

     At  February  28,  2005,  there  were  2,836,317  shares  of  common  stock
outstanding.   The  aggregate   market  value  of  the  voting  shares  held  by
non-affiliates  of the registrant,  based on the closing bid price of such stock
on such date as reported by Nasdaq, was approximately $3.4 million.

     Transitional Small Business Disclosure Format    Yes      No   X
                                                         -----    -----

<PAGE>
                                Explanatory Note

     This  Amendment No. 1 to the Annual Report on Form 10-KSB ("Form  10-KSB/A)
for the fiscal year ended  December 31, 2004 of Kent  Financial  Services,  Inc.
(the  "Company") is being filed with the Securities  and Exchange  Commission to
reflect the restatement of its consolidated  financial statements as of December
31,  2004 and for each of the  years  ended  December  31,  2004  and  2003,  as
discussed in Note 18 thereto, and other information related to such restatement.

Restatement

     The  Company  undertook  a review of  certain of its  accounting  practices
relating to its accounting for marketable securities. As a result of this review
and in consultation  with our Audit Committee,  the Company has re-evaluated its
accounting treatment with respect to its investment in two securities,  Cortech,
Inc. and General Devices, Inc. The primary effect of this accounting revision is
to account for these  investments by the equity method of accounting rather than
the fair value method of accounting  that had been used in previous  periods.  A
discussion  of the  restatement  is set  forth  in Note  18 to the  consolidated
financial statements included in this Amendment.

Additional Disclosures

     Additionally,  the Company has revised certain  disclosures  regarding its:
securities  owned;  sale of its  previously  owned  subsidiary,  T.R  Winston  &
Company; acquisition of Cortech, Inc.; new subsidiary Kent Educational Services,
Inc.; income taxes; and the sale of it headquarters building.

     Except as described  above,  no attempt has been made in this Form 10-KSB/A
to amend or update other disclosures  presented in the Form 10-KSB/A.  This Form
10-KSB/A does not reflect events  occurring  after the filing of the Form 10-KSB
on March 31, 2005 or amend or update those  disclosures,  including the exhibits
to the Form  10-KSB  affected  by  subsequent  events.  Accordingly,  this  Form
10-KSB/A should be read in conjunction  with our filings with the SEC subsequent
to the filing of the Form 10-KSB.














<PAGE>

                                     PART I
                                     ------

Item 1.   DESCRIPTION OF BUSINESS
          -----------------------

General
-------

     Until  July  2003,  the  Company  owned  T.  R.  Winston  &  Company,  Inc.
("Winston"), a licensed securities broker-dealer. In July 2003, the Company sold
60% of Winston, Inc. to two executives of Winston (the "Agreement").  Subsequent
to completion of the transaction,  the Company had no management  responsibility
for Winston. In August 2004, the Company sold its remaining interest in Winston.

Acquisition of Cortech, Inc. ("Cortech"), by AVF
------------------------------------------------

     In 2004, Kent through its wholly owned  subsidiary Asset Value Fund Limited
Partnership  ("AVF"),  acquired an additional 139,328 shares of Cortech's common
stock for approximately $427,000,  increasing its ownership of Cortech to 50.06%
on June 30, 2004. Prior to that date, AVF had been accounting for its investment
in Cortech by the equity method. Since AVF's ownership exceeded 50%, Cortech has
been consolidated in the accompanying financial statements. (See Note 16 for pro
forma financial information.) Cortech is currently seeking the acquisition of an
operating  business.  All  of  Cortech's  assets,  excluding  its  portfolio  of
pharmaceutical patents, are invested in cash and United States Treasury Bills.

Kent Educational Services, Inc.
------------------------------

     In August  2004,  the Company  formed a new  subsidiary,  Kent  Educational
Services,  Inc.,  ("KES"),  initially  funded with  $300,000.  KES purchased for
$300,000, a 60% controlling interest in The Academy for Teaching and Leadership,
Inc.,  ("The  Academy") a new company  formed to offer  educators  high  quality
programs designed to dramatically improve themselves,  their students, and their
schools.  The Academy is headed by Dr. Saul Cooperman,  a former Commissioner of
Education  in the State of New Jersey  during  the  administration  of  Governor
Thomas H. Kean. At December 31, 2004,  the Company's  interest in The Academy is
recorded  as an other asset in the  accompanying  financial  statements,  as The
Academy was in the formation stage at that time.

General Devices, Inc.
---------------------

     Kent, through AVF, also owns 44% of General Devices,  Inc. having purchased
an additional  714,413  shares of General  Devices for $71,400 in February 2005.
General Devices is currently  seeking the acquisition of an operating  business.
Kent is accounting for its investment in General Devices by the equity method.



                                      I-1

<PAGE>

Employees
---------

     As of February 28, 2005, the Company and its wholly-owned  subsidiaries had
4 employees.

Item 2.   DESCRIPTION OF PROPERTY
          -----------------------

     The Company and certain of its affiliates  occupied the Company's corporate
office building in Bedminster,  New Jersey and shared direct occupancy costs. In
August 2004,  the Company  sold its  corporate  office  building to an unrelated
party,  and is currently  leasing its required office space, on a month to month
basis, at the same location.

Item 3.   LEGAL PROCEEDINGS
          -----------------

Environmental Matters - Texas American Petrochemicals, Inc. ("TAPI")
--------------------------------------------------------------------

     In January, 1988, an inactive subsidiary of the Company, TAPI, was notified
by  environmental  regulators  in  Texas  ("Texas  Regulators")  that  it  was a
potentially  responsible party ("PRP") in connection with a hazardous waste site
in the state.  TAPI  advised  the Texas  Regulators  that TAPI had no assets and
could not conduct a remedial investigation of the site. Based on information and
belief,  the Company  understands a remedial  action has been  authorized by the
Texas Regulations to clean up any contaminants.  The Company does not believe it
has any liability in connection with this environmental matter.

Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
          ---------------------------------------------------

     The Company held its Annual  Meeting of  Stockholders  on November 8, 2004.
Management's  nominees,  Paul O. Koether,  Casey K. Tjang, and M. Michael Witte,
were elected to the Board of Directors.

     The following is a vote tabulation for all nominees:

                                                     ABSTENTIONS AND
                      FOR         AGAINST  WITHHELD  BROKER NONVOTES
                      ---         -------  --------  ---------------

Paul O. Koether    1,594,758         -         -            -
Casey K. Tjang     1,594,758         -         -            -
M. Michael Witte   1,594,758         -         -            -

     No other matters were voted upon at the meeting.






                                      I-2

<PAGE>

                                     PART II
                                     -------

Item 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
          --------------------------------------------------------

     The Company's common stock trades on the National Association of Securities
Dealers,  Inc. Automated  Quotations System ("Nasdaq") SmallCap Market under the
symbol "KENT".

     The table below  lists the high and low bid prices for the common  stock as
reported by Nasdaq for the periods indicated.  These prices represent quotations
between dealers and do not include retail markups, markdowns or commissions, and
may not represent actual transactions.

                                                High                 Low
Calendar Quarter:                             --------            ---------

         2003

         First Quarter                         $  1.65             $  1.51
         Second Quarter                           2.02                1.62
         Third Quarter                            2.48                1.80
         Fourth Quarter                           2.26                1.87

         2004

         First Quarter                         $  2.59             $  1.88
         Second Quarter                           4.76                2.18
         Third Quarter                            2.30                1.84
         Fourth Quarter                           3.26                2.02

     As of February 28, 2005,  the Company had 1,628  stockholders  of record of
its common  stock.  The closing  price of the common stock was $2.70 on February
28, 2005.

     On April 16, 2004 the Board of Directors approved a two for one stock split
in the form of a 100% stock  dividend.  The record  date was April 30,  2004 and
distribution  date  was May 3,  2004.  Accordingly,  all  share  and  per  share
information has been restated for all periods presented.

     The Company did not pay any cash dividends in 2004 or 2003.

     On March 10,  2005 the  Company  declared  a special  dividend  of $.30 per
share.  The  record  date for the  special  dividend  is March 21,  2005 and the
distribution date is April 5, 2005.





                                      II-1

<PAGE>

PURCHASE OF EQUITY
------------------

              SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES
                   (COMMON STOCK-AUGUST 2004 REPURCHASE PLAN)

                                                       (c) Total
                                                       Number of    (d) Maximum
                                                        Shares        Number of
                                                     Purchased as    Shares that
                                                        Part of      May Yet Be
                       (a) Toal                        Publicly      Purchased
                       Number of         (b)           Announced     Under the
                         Shares     Average Price      Plans or       Plans or
    Period             Purchased    Paid per Share     Programs     Programs (1)
--------------------------------------------------------------------------------


October 1, 2004 -        17,942           $2.05          17,942        157,335
October 31, 2004

November 1, 2004 -          938            2.05             938        156,397
November 30, 2004

December 1, 2004 -            -               -               -        156,397
December 31, 2004


Total                    18,880          $ 2.05          18,880        156,397



(1)  In August 2004, the Board of Directors  approved a plan to repurchase up to
     200,000 shares of the Company's  common stock.  This plan has no expiration
     date.



















                                      II-2

<PAGE>

Item 6.   MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND
          ----------------------------------------------------------------------
          RESULTS OF OPERATIONS
          ---------------------

     This Form 10-KSB/A  contains  forward-looking  statements which may involve
known and unknown  risks,  uncertainties  and other  factors  that may cause the
Company's  actual  results and  performance  in future  periods to be materially
different from any future periods or performance suggested by these statements.

Acquisition of Cortech, Inc. by Asset Value Fund Limited Partnership (AVF)
--------------------------------------------------------------------------

     In 2004,  AVF acquired an  additional  139,328  shares of Cortech's  common
stock for approximately $427,000,  increasing its ownership of Cortech to 50.06%
on June 30, 2004. Prior to that date, AVF had been accounting for its investment
in Cortech by the equity method.  Since AVF's ownership now exceeds 50%, Cortech
is included in the consolidated  results of AVF and the Company,  effective June
30, 2004.

Kent Educational Services, Inc.
-------------------------------

     In August  2004,  the Company  formed a new  subsidiary,  Kent  Educational
Services,  Inc.,  ("KES"),  initially  funded with  $300,000.  KES purchased for
$300,000, a 60% controlling interest in The Academy for Teaching and Leadership,
Inc.,  ("The  Academy") a new company  formed to offer  educators  high  quality
programs designed to dramatically improve themselves,  their students, and their
schools.  The Academy is headed by Dr. Saul Cooperman,  a former Commissioner of
Education  in the State of New Jersey  during  the  administration  of  Governor
Thomas H. Kean. At December 31, 2004,  the Company's  interest in The Academy is
recorded  as an other asset in the  accompanying  financial  statements,  as The
Academy was in the formation stage at that time.

General Devices, Inc.
---------------------

     Kent, through AVF, also owns 44% of General Devices,  Inc. having purchased
an additional  714,413  shares of General  Devices for $71,400 in February 2005.
General Devices is currently  seeking the acquisition of an operating  business.
Kent is accounting for its investment in General Devices by the equity method.

T. R. Winston & Company, LLC
----------------------------

     Until July 31, 2003,  the Company's  business was comprised  principally of
the operation of T.R. Winston & Company, Inc. ("Winston"), a licensed securities
broker-dealer  and a wholly  owned  subsidiary.  Effective  July 31,  2003,  the
Company  sold 60% of Winston to two  executives  of Winston  (the  "Agreement").
Immediately  prior  to the  sale,  Winston  paid  cash to the  Company  reducing
Winston's equity to $500,000 and the Company then recorded its 40% investment in
T. R.  Winston & Company,  LLC  ("Winston  LLC") at  $200,000.  The Company also

                                      II-3

<PAGE>

established a put option  liability for $390,000 as the Agreement  also provided
that an officer of Winston LLC (and former officer of Kent),  subject to certain
conditions,  had the  right to  require  Kent to  purchase  all of his  Units in
Winston LLC for a purchase price of $390,000,  for a period of 30 days following
the second anniversary of the date of execution of the Agreement,  however,  the
actual payment of this contingent  liability was not certain, nor anticipated by
the Company.  As this  contingent  payment  related to the officer's  employment
agreement  with the  Company,  the put option was  recorded as a  liability  and
offset to stockholders' equity as deferred (contingent) compensation. Subsequent
to the Agreement,  the Company had no management  responsibility for Winston LLC
but was entitled to a 40% distributive share of Winston LLC's profits as defined
by the  Agreement,  and was  accounting for its investment in Winston LLC by the
equity method.

     In August 2004, pursuant to a new agreement, the Company sold its remaining
interest  in Winston LLC for a gross  sales  price of $1 million  adjusted  for,
among other items,  the original  $390,000  contingent  put option.  The Company
recorded a gain of approximately $71,000 in connection with the sale.

     In August 2004, the Company entered into a consulting & advisory  agreement
with Winston, (the "Consulting & Advisory Agreement") in that the Company agreed
to provide financial consulting and advisory services to Winston for a period of
eighteen  months  commencing  August 1,  2004  through  January  31,  2006.  The
Consulting & Advisory  Agreement is cancelable  only by the Company.  During the
term of the Consulting & Advisory  Agreement,  the Company will receive  certain
fees, but in no event will the fees for the term be less than $200,000.  Fees of
$70,000  were  earned  in 2004 in  connection  with the  Consulting  &  Advisory
Agreement.

Results of Operations
---------------------

     The  Company  had net  income in 2004 of  $949,000,  ($.32  basic and fully
diluted  income per share)  compared to a net income of $327,000 ($.10 basic and
fully diluted  income per share) in 2003.  Per share earnings have been adjusted
to reflect a 100% stock  dividend in April 2004. Due to changes in the Company's
business  over  the  past  two  years,  results  for  2004  and  2003 may not be
comparable nor are they indicative of any future results.

     Net investing  gains were $362,000 in 2004, a decrease of $413,000 from net
investing gains in 2003 of $775,000.  This decrease is principally the result of
an increase in realized gains of $143,000  offset by a decrease in the change in
the carrying value of selected investments in the Company's investment portfolio
of $556,000.


                                      II-4

<PAGE>

     There was no brokerage income or expenses  recorded in 2004 due to the sale
of 60% of Winston  effective July 2003. The Company  accounted for its remaining
40%  investment  in  Winston by the equity  method  until it sold its  remaining
interest in August 2004. Total brokerage income,  which consisted of commissions
and principal  trading  transactions at Winston was  approximately $2 million in
2003.  Brokerage  expenses  (including  all fixed and  variable  expenses)  were
$1,164,000 in 2003.  Equity in its investment in Winston of $20,000 was recorded
in 2003 and  $138,000  was  recorded in 2004 prior to the sale of the  Company's
remaining  interest  in  Winston.  The  Company  recorded  a gain of  $71,000 in
connection with the sale of its remaining interest in Winston.

     A management fee of $4,000 per month is paid to the Company by an affiliate
for  management  services  performed by the Company on behalf of the  affiliate.
These services include corporate governance, financial management and accounting
services. Prior to the consolidation of Cortech in the financial statements, the
Company  recorded  an  additional  $15,000  per month in  management  fee income
received  from  Cortech,  however  the  management  fee  is  now  eliminated  in
consolidation.

     In 2004,  the Company  recorded  equity in the losses of Cortech of $84,000
for the period prior to the acquisition of Cortech and its  consolidation in the
financial statements of the Company. In 2003, the Company recorded equity in the
losses of Cortech of  $115,000.  The  Company  recorded  equity in the losses of
General Devices of $25,000 and $27,000 in 2004 and 2003, respectively.

     In August 2004, the Company sold its  headquarters  building in Bedminster,
New Jersey to an  unrelated  party,  for  $1,950,000  recording a pretax gain of
approximately  $845,000.  The Company is currently  leasing its required  office
space, on a month to month basis, in the same location.

     Interest income was $116,000 and $73,000 in 2004 and 2003, respectively. An
increase  of  $87,000,  due to the  inclusion  of  Cortech  in the  consolidated
financial  statements was offset by a decrease of $44,000,  due primarily to the
sale of Winston in 2003.

     Dividend  and other  income was  $369,000  and  $212,000  in 2004 and 2003,
respectively, an increase of $157,000. The increase in 2004 was due primarily to
an increase in fees for services (primarily general and administrative services)
received from a non-affiliated company of $177,000 combined with consulting fees
earned in 2004 of $70,000,  offset by other income  earned by Winston in 2003 of
$100,000.

     General and  administrative  expenses  were $936,000 in 2004, a decrease of
$641,000  from  the  $1,577,000  recorded  in  2003.  These  decreases  are  due
principally  to the  reduction  of  expenses  due to the sale of Winston in July
2003.

                                      II-5

<PAGE>

     Interest expense  decreased from $55,000 in 2003 to $37,000 in 2004, due to
the sale of Winston and the sale of the building in Bedminster, New Jersey.

     The Company recorded minority interest in Cortech's losses of approximately
$48,000 in 2004.

Liquidity and Capital Resources
-------------------------------

     At  December  31,  2004,  the  Company  had  consolidated   cash  and  cash
equivalents of approximately $14.2 million.  Cash equivalents  consisted of U.S.
Treasury  Bills with original  maturities  of three months or less,  with yields
ranging  between  2.014% and  2.239%.  The  Company  and its  subsidiaries  also
maintain  interest  bearing  balances  in  brokerage  accounts.  The Company had
securities owned valued at approximately  $1.1 million at December 31, 2004. See
Notes 1 and 3 of Notes  to  Consolidated  Financial  Statements  for  additional
information on the valuation of securities  owned. The Company believes that its
liquidity  is  adequate  for  future  operations  for the  next  twelve  months,
including  the costs of acquiring  operating  businesses,  or making  additional
investments.

     Net cash of  approximately  $1.3  million was used in  operations  in 2004,
compared to net cash provided by operations of approximately $4 million in 2003.
The change in securities owned of $4.3 million in 2003 compared to ($676,000) in
2004, and the gain on sale of property of $845,000 were the primary  reasons for
the decrease in the cash provided by  operations  in 2004 compared to 2003.  The
change in securities  owned was due principally to the  reclassification  of the
Company's investment in Cortech to a consolidated subsidiary.

     Net cash provided by investing  activities was approximately  $13.3 million
in 2004  compared  to net cash used of $423,000  in 2003.  In 2004,  net cash of
approximately  $11 million was acquired through the consolidation of Cortech and
approximately  $2.3  million  was  received in  connection  with the sale of the
Company's  building  in  Bedminster,  New Jersey  and the sale of the  Company's
investment in T. R. Winston. In 2003, cash of $238,000 and $183,000 was used for
the Company's investments in T. R. Winston and Cortech, respectively.

     Net cash used in financing  activities  was  approximately  $1.6 million in
2004 compared to $125,000 in 2003. During 2004, the Company  repurchased 406,177
shares of its common stock for an aggregate cost of approximately  $906,000.  In
2003,  the  Company   repurchased   31,316  shares  for  an  aggregate  cost  of
approximately  $113,000. All shares acquired were purchased at market prices and
have been canceled and returned to the status of authorized and unissued shares.
Payments on debt of $658,000 in 2004 and $12,000 in 2003  consisted  of payments
of the mortgage  loan  collateralized  by the Company's  headquarters  building,

                                      II-6

<PAGE>

which was sold in the third  quarter of 2004,  at which time the  mortgage  loan
balance was paid.

     In 2003,  $390,000 was recorded as a liability in  connection  with the 60%
sale of Winston.  Due to the  characteristics of this accrual,  the $390,000 was
recorded as a deduction in stockholders'  equity in the  accompanying  financial
statements.  (For  more  information  see Note 1 of  Notes  to the  Consolidated
Financial  Statements).  In August 2004, this liability was reversed as a result
of the sale of the Company's remaining interest in Winston.

Off-Balance Sheet Arrangements
------------------------------

     The Company has no off-balance sheet arrangements.

Contractual Commitments
-----------------------

     The Company has no contractual commitments.

Critical Accounting Estimates
-----------------------------

     The  preparation  of financial  statements  in conformity  with  accounting
principles   generally  accepted  in  the  United  States  of  America  requires
management to make estimates and assumptions that affect the reported amounts of
assets and  liabilities  and disclosure of contingent  assets and liabilities at
the date of the financial  statements  and the reported  amounts of revenues and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.  The Company has  identified  the valuation of  securities  owned and
non-readily  marketable  securities  as  critical  accounting  estimates.  These
estimates, which are particularly susceptible to change, include the assumptions
used in determining the fair value of these securities.

     In January 2003, the Financial  Accounting  Standards Board ("FASB") issued
Interpretation  No. 46,  "Consolidation of Variable Interest Entities" (FIN 46),
which  addresses  consolidation  by business  enterprises  of variable  interest
entities  ("VIEs").  FIN 46 is  applicable  immediately  for VIEs created  after
January 31, 2003 and are effective for reporting  periods  ending after December
15, 2003, for VIEs created prior to February 1, 2003. In December 2003, the FASB
published a revision to FIN 46 ("FIN 46R") to clarify some of the  provisions of
the interpretation and to defer the effective date of implementation for certain
entities. Under the guidance of FIN 46R, public companies that have interests in
VIE's that are commonly  referred to as special purpose entities are required to
apply the  provisions of FIN 46R for periods  ending after  December 15, 2003. A
public company that does not have any interests in special purpose  entities but
does have a variable  interest in a VIE created  before  February 1, 2003,  must
apply  the  provisions  of FIN 46R by the end of the  first  interim  or  annual
reporting period ending after March 14, 2004. The adoption of FIN No. 46 did not

                                      II-7

<PAGE>

have an effect on the consolidated financial statements.

     In  December  2004,  the FASB  issues  Statement  of  Financial  Accounting
Standards  ("SFAS") 123(R),  "Share-Based  Payment," which is a revision of SFAS
123,  "Accounting for Stock-Based  Compensation."  SFAS 123(R) requires that the
compensation cost relating to share-based payment  transactions be recognized in
financial  statements.  The compensation cost will be measured based on the fair
value of the equity or liability instruments issued. SFAS 23 (R) is effective as
of the beginning of the first interim or annual period  beginning after June 15,
2005.  The  Company  will adopt SFAS  123(R) on July 1, 2005 using the  modified
prospective  method.  The Company  does not expect that the adoption of SFAS 123
(R) will have an impact on the consolidated financial statements.

Market Risk
-----------

     Market risk  represents  the  potential  loss as a result of  absolute  and
relative  price  movements in financial  instruments  due to changes in interest
rates,  foreign exchange rates, equity prices, and other factors.  The Company's
exposure to market risk is directly related to price movements of its securities
holdings.

     The fair value of securities  owned at December 31, 2004 was  approximately
$1.1  million.  The potential  change in fair value,  using a  hypothetical  10%
decline in prices,  is estimated to be a $110,000  loss as of December 31, 2004.
For working  capital  purposes,  the Company  invests in U.S.  Treasury Bills or
maintains  interest  bearing  balances  in  its  brokerage  accounts  which  are
classified as cash equivalents in the consolidated financial statements.

Investment Company Act of 1940
------------------------------

     As a result of the Company's  sale of 100% of its holdings of Winston,  the
Company  believes  that a large  portion of its  remaining  assets may have been
classified as "investment  securities" as such term is defined in the Investment
Company Act of 1940,  as amended  (the "1940 Act").  If the Company,  therefore,
were deemed to be an investment company under the 1940 Act, it would be required
to register as an investment company with the Securities and Exchange Commission
and would become subject to the regulatory  duties and  restrictions of the 1940
Act, including, but not limited to, restrictions on:

         o  operating methods;
         o  management structure;
         o  capital structure and debt issuance;
         o  issuance of dividends; and
         o  transactions with affiliates


                                      II-8

<PAGE>

     These  restrictions  would require the Company to significantly  change the
manner in which it conducts its operations  and require it to incur  significant
expenses  for which it has not  provided.  This would  have a  material  adverse
effect on the Company's results of operations.

     Furthermore,  if the Company were deemed to be an  unregistered  investment
company,  it would be  subject to  substantial  restrictions  on its  ability to
conduct its present  business  activities  unless it became  registered with the
Securities  and  Exchange  Commission.  These  restrictions  would  also  have a
material adverse effect on the Company's results of operations.

     The Company intends to engage primarily in a business other than that of an
investment  company and,  unless an exception  from the definition of investment
company under the 1940 Act is available to it, the Company intends on taking all
action  necessary to prevent it from being deemed an investment  company  within
the time  permitted by the 1940 Act. This may include  reducing the value of the
"investment  securities"  that the Company  holds as a  percentage  of its total
assets and any other  actions  that the Company  deems to be  appropriate.  This
reduction  could  be  achieved  in a  number  of  ways,  including  through  the
disposition of "investment  securities"  and the  acquisition of  non-investment
security assets.  If the Company is required to sell "investment  securities" it
may be forced to sell them sooner than it otherwise would and these dispositions
may be made  under  unfavorable  market  conditions  resulting  in losses to the
Company.

     Currently, the Company believes that its 50.06% ownership in Cortech is its
primary  business,  and that it will not be deemed to be an  investment  company
under the 1940 Act.


















                                      II-9

<PAGE>

Item 7.   FINANCIAL STATEMENTS
          --------------------

         The financial statements filed herein are listed below:

         Report of Independent Registered Public Accounting Firm

         Financial Statements:

                  Consolidated Balance Sheet - December 31, 2004

                  Consolidated Statements of Income -
                           Years ended December 31, 2004 and 2003

                  Consolidated Statements of Stockholders' Equity -
                           Years ended December 31, 2004 and 2003

                  Consolidated Statements of Cash Flows -
                           Years ended December 31, 2004 and 2003

                  Notes to Consolidated Financial Statements -
                           Years ended December 31, 2004 and 2003

























                                     II-10

<PAGE>

             Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of
Kent Financial Services, Inc.

We have audited the  accompanying  consolidated  balance sheet of Kent Financial
Services,  Inc.  and  Subsidiaries  as of  December  31,  2004,  and the related
consolidated statements of income,  stockholders' equity, and cash flows for the
years ended  December  31, 2004 and 2003.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audits to  obtain  reasonable  assurance  about  whether  the
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the  financial  position of Kent  Financial
Services,  Inc. and  Subsidiaries  as of December  31, 2004,  and the results of
their  operations and their cash flows for the years ended December 31, 2004 and
2003, in conformity with U.S. generally accepted accounting principles.

As discussed in Note 18, the accompanying  consolidated  financial statements as
of December 31, 2004 and for each of the two years in the period ended  December
31, 2004 have been restated.

/s/ Amper, Politziner & Mattia, P.C.


Edison, New Jersey
March 16, 2005

(January 6, 2006 as to the effects of the restatements discussed in Note 18)






                                      F-1

<PAGE>

                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                December 31, 2004
                                 ($000 Omitted)
                                  (as restated,
                                  see Note 18)
ASSETS
------

Current Assets:
  Cash and cash equivalents                                          $ 14,156
  Securities owned                                                      1,119
  Other                                                                    26
                                                                     --------
      Total current assets                                             15,301
Property and equipment:
  Office furniture and equipment                                           61
  Accumulated depreciation                                          (      58)
                                                                     --------
      Net property and equipment                                            3
Other assets                                                              300
                                                                     --------
      Total assets                                                   $ 15,604
                                                                     ========

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Current Liabilities:
  Accounts payable and accrued expenses                              $    919
  Accrual for previously discontinued operations                          166
                                                                     --------
      Total liabilities                                                 1,085
                                                                     --------

Contingent liabilities

Minority interest in subsidiary                                         5,614

Stockholders' equity:
Preferred stock without par value,
  500,000 shares authorized;
  none outstanding                                                          -
Common stock, $.10 par value,
  4,000,000 shares authorized;
  2,850,771 shares issued and outstanding                                 285
Additional paid-in capital                                             12,487
Accumulated deficit                                                 (   3,867)
                                                                     --------
      Total stockholders' equity                                        8,905
                                                                     --------
      Total liabilities and stockholders' equity                     $ 15,604
                                                                     ========



          See accompanying notes to consolidated financial statements.


                                      F-2

<PAGE>

                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                      ($000 Omitted, except per share data)


                                                  Year ended December 31,
                                                  -----------------------
                                                    2004           2003
                                                  --------       --------
                                                (as restated,  (as restated,
                                                 see Note 18)   see Note 18)
Revenues:
  Principal transactions:
    Investing gains                                $   362         $   775
    Trading                                              -             122
  Brokerage commissions and fees                         -           1,869
  Management fee income                                138             228
  Equity in earnings of T. R. Winston                  138              20
  Equity in losses of Cortech                     (     84)       (    115)
  Equity in losses of General Devices             (     25)       (     27)
  Interest                                             116              73
  Dividend and other                                   369             212
  Other:
    Gain on sale of property                           845               -
    Gain on sale of T. R. Winston                       71               -
                                                   -------         -------
      Total revenues                                 1,930           3,157
                                                   -------         -------

Expenses:
  General, administrative and other                    936           1,577
  Brokerage                                              -           1,164
  Interest                                              37              55
                                                   -------         -------
      Total expenses                                   973           2,796
                                                   -------         -------

Income before income taxes                             957             361
Provision for income taxes                              56              34
                                                   -------         -------
Income before minority interest                        901             327
Minority interest in subsidiary's losses                48               -
                                                   -------         -------
Net income                                         $   949         $   327
                                                   =======         =======

Basic and diluted net income per common share      $   .32         $   .10
                                                   =======         =======

Weighted average number of common shares
 outstanding (in 000's)*                             2,921           3,292
                                                   =======         =======


*Reflects a two for one stock split in the form of a stock dividend


          See accompanying notes to consolidated financial statements.

                                      F-3

<PAGE>

                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                 ($000 Omitted)
                           (As restated, see Note 18)

<TABLE>

<S>                                        <C>           <C>              <C>             <C>               <C>

                                                         Additional                                             Total
                                           Common          Paid-In        Accumulated       Deferred        Stockholders'
                                           Stock           Capital          Deficit       Compensation         Equity
                                           -----           -------          -------       ------------         ------
Balance, December 31, 2002,
  (as previously reported)               $    332         $ 13,459        ($  5,061)        $      -         $  8,730

Prior years adjustments (see
  Note 18)                                      -                -        (      82)               -        (      82)
                                         --------         --------         --------         --------         --------
Balance, December 31, 2002
  (as restated)                               332           13,459        (   5,143)               -            8,648

Repurchase and cancellation
  of common stock                       (       6)       (     107)               -                -        (     113)

Deferred Compensation                           -                -                -        (     390)       (     390)

Net income (as restated, see
  Note 18)                                      -                -              327                -              327
                                         --------         --------         --------         --------         --------
Balance, December 31, 2003
  (as restated, see Note 18)                  326           13,352        (   4,816)       (     390)           8,472

Repurchase and cancellation
  of common stock                       (      41)       (     865)               -                -        (     906)

Deferred compensation                           -                -                -              390              390

Net income (as restated, see
  Note 18)                                      -                -              949                -              949
                                         --------         --------         --------         --------         --------
Balance, December 31, 2004
  (as restated, see Note 18)             $    285         $ 12,487        ($  3,867)        $      -         $  8,905
                                         ========         ========         ========         ========         ========
</TABLE>


       Reflects a two for one stock split in the form of a stock dividend

          See accompanying notes to consolidated financial statements.

                                      F-4


<PAGE>
                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 ($000 Omitted)
                                                      Year Ended December 31,
                                                   -----------------------------
                                                       2004            2003
                                                    ----------      ----------
                                                   (as restated,   (as restated,
                                                    see Note 18)    see Note 18)
Cash flows from operating activities:
  Net income                                          $    949       $    327
  Adjustments to reconcile net income to net
   cash provided by (used in) operating activities:
    Depreciation                                            20             38
    Unrealized gains on securities owned             (     303)     (     881)
    Equity in earnings in T. R. Winston              (     138)     (      20)
    Equity in losses of Cortech                             84            115
    Equity in losses of General Devices                     25             27
    Gain on sale of property                         (     845)             -
    Gain on sale of T. R. Winston                    (      71)             -
    Minority interest in subsidiary losses           (      48)             -
  Change in operating assets and liabilities:
    Change in securities owned                       (     676)         4,308
    Change in accounts payable and accrued expenses        118      (      92)
    Change in other assets                           (     317)            34
    Other, net                                       (      84)           101
                                                      --------       --------
          Net cash provided by (used in)
            operating activities                     (   1,286)         3,957
                                                      --------       --------
Cash flows from investing activities:
  Net cash acquired through consolidation
   of Cortech                                           10,992              -
  Proceeds from sale of property                         1,811              -
  Proceeds from sale of T. R. Winston                      520              -
  Purchase of equipment                              (       4)     (       2)
  Investment in T. R. Winston                        (      53)     (     238)
  Investment in Cortech                                      -      (     183)
  Other, net                                                 3              -
                                                      --------       --------
          Net cash provided by (used in)
            investing activities                        13,269      (     423)
                                                      --------       --------
Cash flows from financing activities:
  Repurchase of common stock                         (     906)     (     113)
  Payments on debt                                   (     658)     (      12)
                                                      --------       --------
          Net cash used in financing activities      (   1,564)     (     125)
                                                      --------       --------

Net increase in cash and cash equivalents               10,419          3,409
Cash and cash equivalents at beginning of year           3,737            328
                                                      --------       --------
Cash and cash equivalents at end of year              $ 14,156       $  3,737
                                                      ========       ========

Supplemental Disclosures of Cash Flow Information:
  Cash paid for:
    Interest                                          $     37       $     52
                                                      ========       ========
    Taxes                                             $     23       $      2
                                                      ========       ========
Non-cash put option liability established (reversed) ($    390)      $    390
                                                      ========       ========

          See accompanying notes to consolidated financial statements.

                                      F-5

<PAGE>

                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     Years Ended December 31, 2004 and 2003

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     ------------------------------------------

Principles of Consolidation
---------------------------

     The  consolidated   financial  statements  include  the  accounts  of  Kent
Financial  Services,  Inc.  (the  "Company"  or  "Kent")  and  its  wholly-owned
subsidiaries,  Kent Advisors,  Inc.,  Kent  Educational  Services,  Inc.,  Texas
American Petrochemicals,  Inc. ("TAPI") and Asset Value Management, Inc. and its
respective  subsidiaries,  Asset  Value  Holdings,  Inc.,  and Asset  Value Fund
Limited  Partnership  ("AVF") and  effective  June 30, 2004,  AVF's 50.06% owned
subsidiary,  Cortech,  Inc.  TAPI and Kent  Advisors,  Inc.  are  inactive.  All
material   intercompany  balances  and  transactions  have  been  eliminated  in
consolidation.

     Certain  reclassifications  have been made to the  prior  year's  financial
statements to conform to the current year's presentation.

Cash Equivalents
----------------

     The Company considers as cash equivalents all short-term  investments which
are highly  liquid and readily  exchangeable  for cash at amounts equal to their
stated value. Cash equivalents  consist of U. S. Treasury Bills with an original
maturity of 90 days that matured through March 2005 and were  substantially  all
reinvested  for an  additional  90 days.  The Company  also  maintains  interest
bearing balances in its brokerage accounts. All cash and cash equivalents are on
deposit  either  with a major  money  center  bank or with a  securities  broker
dealer.

Property and Equipment
----------------------

     The Company  records all property and  equipment at cost.  Depreciation  is
computed using the  straight-line  method over the estimated useful lives of the
individual assets generally two years.

Fair Value of Financial Instruments
-----------------------------------

     Substantially  all  assets and  liabilities  are stated at fair value or at
amounts which approximate fair value.




                                      F-6

<PAGE>

                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     Years Ended December 31, 2004 and 2003

Interest Income and Expenses
----------------------------

     The  Company  received  interest  income  on  its  credit  balances  at its
securities  broker dealer and is charged  interest expense on its debit balances
at the  securities  broker  dealer,  if  applicable.  The Company also  receives
interest on its cash equivalents.

     Winston  received  interest  income on its credit  balances at the clearing
broker and was charged  interest  expense on its debit  balances at the clearing
broker.  Prior to the sale of  Winston  such  interest  income and  expense  was
recorded in the consolidated financial statements.

Income Taxes (Benefit)
----------------------

     The Company  utilizes  the asset and  liability  method of  accounting  for
income taxes.  Under the asset and liability  method,  deferred income taxes are
recognized for the tax consequences of temporary differences by applying enacted
statutory  tax rates  applicable  to future  years to  differences  between  the
financial  statement  carrying  amounts and the tax bases of existing assets and
liabilities.  The Company and its wholly owned  subsidiaries file a consolidated
federal income tax return.

Earnings Per Common Share
-------------------------

     Earnings  per common  share is  calculated  based on the  weighted  average
number of shares  outstanding.  Diluted  earnings per share includes the assumed
conversion of shares issuable upon exercise of options, where appropriate.

Estimates
---------

     The  preparation  of financial  statements  in conformity  with  accounting
principles that are generally  accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and  liabilities  and disclosure of contingent  assets and liabilities at
the date of the financial  statements  and the reported  amounts of revenues and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.  Estimates  that  are  particularly  susceptible  to  change  include
assumptions  used  in  determining  the  fair  value  of  securities  owned  and
non-readily marketable securities.




                                      F-7

<PAGE>

                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     Years Ended December 31, 2004 and 2003

Sale of T. R. Winston
---------------------

     Until July 31, 2003,  the Company's  business was comprised  principally of
the operation of T.R. Winston & Company, Inc. ("Winston"), a licensed securities
broker-dealer  and a wholly  owned  subsidiary.  Effective  July 31,  2003,  the
Company  sold 60% of Winston to two  executives  of Winston  (the  "Agreement").
Immediately  prior  to the  sale,  Winston  paid  cash to the  Company  reducing
Winston's equity to $500,000 and the Company then recorded its 40% investment in
T. R.  Winston & Company LLC  ("Winston  LLC") at  $200,000.  The  Company  also
established a put option  liability for $390,000 as the Agreement  also provided
that an officer of Winston LLC (and former officer of Kent),  subject to certain
conditions,  had the  right to  require  Kent to  purchase  all of his  Units in
Winston LLC for a purchase price of $390,000,  for a period of 30 days following
the second anniversary of the date of execution of the Agreement,  however,  the
actual payment of this contingent  liability was not certain, nor anticipated by
the Company.  As this  contingent  payment  related to the officer's  employment
agreement  with the  Company,  the put option was  recorded as a  liability  and
offset to stockholders' equity as deferred (contingent) compensation. Subsequent
to the Agreement,  the Company had no management  responsibility for Winston LLC
but was entitled to a 40% distributive share of Winston LLC's profits as defined
by the  Agreement,  and was  accounting for its investment in Winston LLC by the
equity method.

     In August 2004, pursuant to a new agreement, the Company sold its remaining
interest  in Winston LLC for a gross  sales  price of $1 million  adjusted  for,
among other items, the original $390,000 contingent put option.

Recent Accounting Standards
---------------------------

     In January 2003, the Financial  Accounting  Standards Board ("FASB") issued
Interpretation  No. 46,  "Consolidation of Variable Interest Entities" (FIN 46),
which  addresses  consolidation  by business  enterprises  of variable  interest
entities  ("VIEs").  FIN 46 is  applicable  immediately  for VIEs created  after
January 31, 2003 and are effective for reporting  periods  ending after December
15, 2003, for VIEs created prior to February 1, 2003. In December 2003, the FASB
published a revision to FIN 46 ("FIN 46R") to clarify some of the  provisions of
the interpretation and to defer the effective date of implementation for certain
entities. Under the guidance of FIN 46R, public companies that have interests in
VIE's that are commonly  referred to as special purpose entities are required to
apply the  provisions of FIN 46R for periods  ending after  December 15, 2003. A
public company that does not have any interests in special purpose  entities but
does have a variable  interest in a VIE created  before  February 1, 2003,  must
apply  the  provisions  of FIN 46R by the end of the  first  interim  or  annual


                                      F-8

<PAGE>

                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     Years Ended December 31, 2004 and 2003

reporting  period  ending after March 14,  2004.  The adoption of FIN 46 did not
have an effect on the consolidated financial statements.

     In  December  2004,  the FASB  issues  Statement  of  Financial  Accounting
Standards  ("SFAS") 123(R),  "Share-Based  Payment," which is a revision of SFAS
123,  "Accounting for Stock-Based  Compensation."  SFAS 123(R) requires that the
compensation cost relating to share-based payment  transactions be recognized in
financial  statements.  The compensation cost will be measured based on the fair
value of the equity or liability instruments issued. SFAS 23 (R) is effective as
of the beginning of the first interim or annual period  beginning after June 15,
2005.  The  Company  will adopt SFAS  123(R) on July 1, 2005 using the  modified
prospective  method.  The Company  does not expect that the adoption of SFAS 123
(R) will have an impact on the consolidated financial statements.

2.   BUSINESS
     --------

     The Company's  business is comprised  principally  of the management of AVF
and Cortech.  AVF is an investment  partnership whose primary purpose is to make
investments  in a limited  number of companies  whose  securities are considered
undervalued by AVF's management. AVF owns 50.06% of Cortech.

3.   SECURITIES OWNED
     ----------------

     At December 31, 2004,  the Company  owned 44% of General  Devices,  Inc., a
publicly  traded  company.  The Company is accounting for this investment by the
equity method.  For the years ended December 31, 2004 and 2003,  General Devices
had net losses $81,000 and $73,000, respectively. The Company recorded equity in
the  losses  of  General  Devices  in 2004  and  2003 of  $25,000  and  $27,000,
respectively.  General Devices had a stockholders deficit of $13,000 at December
31, 2004, and stockholders  equity of $67,000 at December 31, 2003. (See Note 17
for subsequent event information relating to General Devices).













                                      F-9

<PAGE>

                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     Years Ended December 31, 2004 and 2003


     Other  securities  owned as of December 31, 2004,  consisting  of portfolio
positions  (equity  securities)  held for  capital  appreciation  consist of the
following:

                                                                         %
                                                       Value           Owned
                                                       -----           -----
                                                    (in $000's)

    Marketable equity securities
      Portfolio Positions of greater
        than 5% of outstanding common stock:
          Dewey Electronics (135,000 shares)          $   810          9.9%
          Golf Rounds.com, Inc. (193,800 shares)          127          5.6%
      All other portfolio positions                       182
                                                      -------
    Aggregate market                                  $ 1,119
                                                      =======

     The Company's securities are valued at fair value. Fair value is ordinarily
the listed market price of the stock. If listed market prices are not indicative
of fair value or if  liquidating  the  Company's  position  would  reasonably be
expected  to impact  market  prices,  fair  value is  determined  based on other
relevant factors. Among the factors considered by management in determining fair
value of the portfolio positions are the financial condition,  asset composition
and operating  results of the issuer,  the long-term  business  potential of the
issuer and other factors  generally  pertinent to the valuation of  investments,
including the analysis of the valuation of comparable companies.

     As a result of the  foregoing,  securities  owned at December 31, 2004 were
valued at listed  market prices for all but one  position.  Securities  owned of
Golf  Rounds.com,  Inc. were discounted 20%, or  approximately  $32,000 from the
listed market price, based on the criteria described in the preceding paragraph.

     The Company had net investing gains of approximately  $362,000 in 2004. Net
unrealized gains on securities owned were approximately  $51,000 at December 31,
2004 compared to net  unrealized  losses of  approximately  $252,000 at December
2003,  resulting  in net  unrealized  gains of  approximately  $303,000 in 2004.
Realized gains were approximately $59,000 in 2004.

     In 2003, the Company had net investing gains of approximately $775,000. Net
unrealized losses on securities owned were approximately $252,000 and $1,111,000
at December 31, 2003 and 2002, respectively resulting in net unrealized gains of

                                      F-10

<PAGE>

                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     Years Ended December 31, 2004 and 2003

approximately  $859,000 in 2003.  Realized losses were approximately  $84,000 in
2003.

4.   ACQUISITION OF CORTECH, INC., BY AVF
     ------------------------------------

     In 2004,  AVF acquired an  additional  139,328  shares of Cortech's  common
stock for approximately $427,000,  increasing its ownership of Cortech to 50.06%
on June 30, 2004. Prior to that date, AVF had been accounting for its investment
in Cortech by the equity method. Since AVF's ownership exceeded 50%, Cortech has
been  consolidated in the accompanying  financial  statements.  (See Note 16 for
proforma financial information.)

     When the Company  acquired its majority  control in June 2004,  Cortech had
been a  biopharmaceutical  company whose research and  development  efforts were
focused  primarily on protease  inhibitors  and  bradykinin  antagonists.  These
efforts  produced  a  technology  portfolio,  the  products  of  which  may have
therapeutic  application across a broad range of medical  conditions.  Shares in
Cortech were  originally  acquired with the  objective of generating  profits on
short-term differences in price or capital appreciation, however, AVF determined
to  increase  its  ownership  in Cortech to exceed 50% and make  Cortech  Kent's
primary business, which, was primarily made to exploit Cortech's technology. The
results of operations  of Cortech are included in the combined  entity from July
1,  2004.  Since  1998,  AVF had been  acquiring  shares of  Cortech in the open
market, and at June 30, 2004 had acquired 1,800,000 shares of Cortech at a total
cost of approximately $5.7 million.  Since June 30, 2004, Cortech has determined
not to incur any  additional  expenses  to  maintain  its patent  portfolio  and
instead  intends  to use its  available  working  capital  to effect a  business
combination or grow a business internally.

     No value was  assigned to  Cortech's  patents or other  intangibles  at the
acquisition  date.  At June  30,  2004,  all  purchase  price  allocations  were
finalized and the Company recorded its investment as follows (in $000's):

          Cash                            $ 11,455
          Other assets                           6
          Accrued expenses               (     129)
          Kent's investment in Cortech   (   5,670)
          Minority Interest              (   5,662)
                                          --------
                                          $      -
                                          ========

                                      F-11

<PAGE>

                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     Years Ended December 31, 2004 and 2003

     The following  pro forma results of operations  are provided to reflect the
operations of the Company had the  acquisition of Cortech taken place on January
1, 2003. This pro forma financial information is not intended to reflect results
of operations  which would have actually  resulted had these  transactions  been
effected on January 1, 2003. Moreover,  this pro forma financial  information is
not intended to be indicative of operations that may be attained in the future.

                                                     2004             2003
                                                     ----             ----

         Revenues (in $000's)                      $  1,976         $  3,211
         Income before income taxes(in $000's)          985              312
         Pro forma net income (in $000's)               928              278
         Pro forma net income per share                 .32              .08

Cortech Stock Option Plans
--------------------------

     Cortech has issued certain common stock options to its employees, directors
and consultants.  At December 31, 2004, Cortech had 382,735 common stock options
outstanding  at exercise  prices ranging from $3.50 to $13.59 per share expiring
from 2005 through 2010. Any exercises of these common stock options could have a
dilutive effect on the percentage of Cortech owned by the Company.

     In October 1995, the FASB issued SFAS No. 123,  "Accounting for Stock-Based
Compensation".  This  standard  encouraged,  but did not  require,  companies to
recognize  compensation  expense  for grants of stock,  stock  options and other
equity instruments based on a fair-value method of accounting.

     Companies that do not adopt the new expense  recognition  rules of SFAS No.
123 will continue to apply the existing rules contained in Accounting Principles
Board  ("APB")  Opinion  No.  25,  but  will be  required  to  provide  proforma
disclosures  of  the  compensation   expense  determined  under  the  fair-value
provisions of SFAS No. 123, if material.  APB No. 25 requires no  recognition of
compensation  expense  for  most  of  the  stock-based   employee   compensation
arrangements  provided by the Cortech,  namely broad-based employee stock option
grants and stock  purchase plans where the exercise price is equal to the market
price at the date of grant.

     Cortech  applies APB No. 25 and related  Interpretations  in accounting for
its plans.  Had  compensation  cost for the Cortech's  stock-based  compensation

                                      F-12

<PAGE>

                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     Years Ended December 31, 2004 and 2003

plans  been  determined  based on the fair  value at the grant  dates for awards
under those plans  consistent with the method of SFAS No. 123, the Company's net
income  and net  income per share  would  have been  decreased  to the pro forma
amounts indicated below:

                                                   2004             2003
                                                   ----             ----
         Net income
              As reported (in $000's)            $   949          $   327
              Pro forma (in $000's)              $   886          $   264

         Basic and fully diluted net income
           per share:
              As reported                        $   .32          $   .10
              Pro forma                          $   .30          $   .08

     The fair value of each option grant is estimated on the date of grant using
the Black-Scholes  option-pricing models. Assumptions used include Expected Life
of the option, interest rate, and volatility. Since no options have been granted
since 2000,  no  assumptions  were made during 2004 or 2003,  nor were there any
changes to the assumptions disclosed in each year of grant.

     A summary of the status of Cortech's 1986 Plan,  1993 Plan and non employee
directors'  stock  option  plans as of  December  31,  2004 and 2003 and changes
during the years ended on those dates is presented below.

<TABLE>
<S>                           <C>         <C>               <C>                <C>        <C>               <C>

                                                  2004                                               2003
                        ------------------------------------------------------------------------------------------------------
                                             Weighted-           Range                       Weighted-          Range
                                              Average             of                          Average             of
                              Shares      Exercise Price    Exercise Price     Shares     Exercise Price    Exercise Price
                        ------------------------------------------------------------------------------------------------------

Options outstanding
  at beginning of year       465,202          $ 5.62       $3.50 - $ 13.594    465,202          $5.62       $3.50 - $ 13.594
Expired                       88,717          $ 9.10       $8.75 - $ 12.1875         -              -                      -
                             -------                                           -------
Options outstanding
  at end of  year            376,485          $ 4.80       $3.50 - $ 13.594    465,202          $5.62       $3.50 - $ 13.594
                             =======                                           =======
Options exercisable
  at end of year             376,485          $ 4.80       $3.50 - $ 13.594    465,202          $5.62       $3.50 - $ 13.594
                             =======                                           =======
</TABLE>


     Additionally,  prior to 1997,  Cortech  granted  other  options  to certain
directors  and  consultants  at that time.  These  officers  and  directors  are
currently providing no services to the Company. A summary of the status of these
options and the changes during the fiscal years ended December 31, 2004 and 2003
is presented below:

                                      F-13

<PAGE>

                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     Years Ended December 31, 2004 and 2003

<TABLE>


<S>                           <C>         <C>               <C>                <C>        <C>               <C>
                                                  2004                                               2003
                        ------------------------------------------------------------------------------------------------------
                                             Weighted-           Range                       Weighted-          Range
                                              Average             of                          Average             of
                              Shares      Exercise Price    Exercise Price     Shares     Exercise Price    Exercise Price
                        ------------------------------------------------------------------------------------------------------

Options outstanding
  at beginning of year        12,834          $ 7.50       $5.00 - $17.50       12,834          $7.50       $5.00 - $  17.50
Expired                        6,584          $ 9.00       $8.75 - $17.50            -              -                      -
                             -------                                           -------
Options outstanding
  at end of  year              6,250          $ 5.92       $5.00 - $ 7.5785     12,834          $7.50       $5.00 - $  17.50
                             =======                                           =======
Options exercisable
  at end of year               6,250          $ 5.92       $5.00 - $ 7.5785     12,834          $7.50       $5.00 - $  17.50
                             =======                                           =======

</TABLE>

          Cortech  granted no options  during  2004 or 2003,  nor were there any
     modifications  of  outstanding   awards.  No  compensation  cost  has  been
     recognized  in  income  for  stock-based  employee  compensation  awards at
     Cortech.

          For options  outstanding  and  exercisable  at December 31, 2004,  the
     exercise price ranges are:
<TABLE>

<S>      <C>            <C>               <C>              <C>            <C>               <C>              <C>

                     Options Outstanding                                           Options Exercisable
     ----------------------------------------------------------------------------------------------------------------------
                          Number          Weighted-                         Number          Weighted-
          Range         Outstanding        Average         Weighted-      Outstanding        Average         Weighted-
            of              At            Remaining         Average           at            Remaining         Average
         Exercise        December            Life          Exercise        December           Life           Exercise
          Prices         31, 2004         (in years)         Price         31, 2004        (in years)          Price
     ----------------------------------------------------------------------------------------------------------------------

    $ 3.50 - $10.00       342,900            5.17          $  3.93          342,900           5.17            $  3.93
    $10.01 - $13.594       39,835            0.94          $ 12.46           39,835           0.94            $ 12.46
                         --------                                         ---------
                          382,735                                           382,735
                         ========                                         =========
</TABLE>

5.   T. R. WINSTON & COMPANY, LLC.
     -----------------------------

     Until July 31, 2003,  the Company's  business was comprised  principally of
the operation of T.R. Winston & Company, Inc. ("Winston"), a licensed securities
broker-dealer  and a wholly  owned  subsidiary.  Effective  July 31,  2003,  the
Company  sold 60% of Winston to two  executives  of Winston  (the  "Agreement").
Immediately  prior  to the  sale,  Winston  paid  cash to the  Company  reducing
Winston's equity to $500,000 and the Company then recorded its 40% investment in
T. R.  Winston & Company LLC  ("Winston  LLC") at  $200,000.  The  Company  also
established a put option  liability for $390,000 as the Agreement  also provided
that an officer of Winston LLC (and former officer of Kent),  subject to certain
conditions,  had the  right to  require  Kent to  purchase  all of his  Units in
Winston LLC for a purchase price of $390,000,  for a period of 30 days following
the second anniversary of the date of execution of the Agreement,  however,  the
actual payment of this contingent  liability was not certain, nor anticipated by

                                      F-14

<PAGE>

                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     Years Ended December 31, 2004 and 2003

the Company.  As this  contingent  payment  related to the officer's  employment
agreement  with the  Company,  the put option was  recorded as a  liability  and
offset to stockholders' equity as deferred (contingent) compensation. Subsequent
to the Agreement,  the Company had no management  responsibility for Winston LLC
but was entitled to a 40% distributive share of Winston LLC's profits as defined
by the  Agreement,  and was  accounting for its investment in Winston LLC by the
equity method.

     In August 2004, pursuant to a new agreement, the Company sold its remaining
interest  in Winston LLC for a gross  sales  price of $1 million  adjusted  for,
among other items,  the original  $390,000  contingent  put option.  The Company
recorded a gain of $71,000 in connection with the sale.

     In August 2004, the Company entered into a consulting & advisory  agreement
with Winston, (the "Consulting & Advisory Agreement") in that the Company agreed
to provide financial consulting and advisory services to Winston for a period of
eighteen  months  commencing  August 1,  2004  through  January  31,  2006.  The
Consulting & Advisory  Agreement is cancelable  only by the Company.  During the
term of the Consulting & Advisory  Agreement,  the Company will receive  certain
fees, but in no event will the fees for the term be less than $200,000.  Fees of
$70,000  were  earned  in 2004 in  connection  with the  Consulting  &  Advisory
Agreement.

6.   KENT EDUCATIONAL SERVICES, INC.
     -------------------------------

     The Academy for Teaching and  Leadership,  Inc. (The Academy) was formed to
offer  educators  high  quality  programs   designed  to  dramatically   improve
themselves,  their  students  and  their  schools.  As a result  of the  Company
assessing  the Academy,  Kent  Education  Services,  Inc.,  (KES) a wholly owned
subsidiary  of the Company,  acquired an interest in The Academy for $300,000 in
August 2004.

     The Company  accounted for its investment in The Academy in other assets in
2004 as The  Academy had no  operations  in 2004,  other than costs  incurred of
approximately  $1,800 in  formation  expenses,  which the  Company  deemed to be
immaterial.  In  addition,  the equity  interests  in The  Academy had yet to be
finalized,  thus the  purchase  price  allocations  had not yet been  completed.
During the first quarter of 2005,  the equity  interests had been  finalized and
purchase price  allocations were completed.  Additionally,  The Academy actively
began operations  including  designing and offering programs to school districts
and  incurred  expenses  of  approximately  $21,000.  As a result,  the  Company

                                      F-15

<PAGE>

consolidated  The  Academy  as of  January 1,  2005.  As The  Academy  was a new
business, its valuation was based on business plans and forecasts. The following
is a condensed  balance sheet reflecting the amount assigned to each major asset
and liability caption relating to the consolidation of The Academy at January 1,
2005 (in $000's):


                    Cash                                       $ 350
                    Goodwill                                      90
                    Investment in The Academy                 (  300)
                    Minority Interest in The Academy          (  140)
                                                               -----
                                                               $   -
                                                               =====

     No  pro  forma  financial   information  was  presented  as  The  Academy's
operations  were  consolidated  since  January  1, 2005 and The  Academy  had no
operations in 2004, other than approximately $1,800 of formation expenses in the
fourth quarter of 2004, which the Company deemed immaterial.

7.   INCOME TAXES
     ------------

     The components of income tax expense are as follows:

                                                        ($000 Omitted)
                                                     Year Ended December 31,
                                                     -----------------------
                                                        2004          2003
                                                     --------       --------

             Federal-Current                          $   22         $    -
             State-Current                                34             34
                                                      ------         ------
                 Total                                $   56         $   34
                                                      ======         ======











                                      F-16

<PAGE>

                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     Years Ended December 31, 2004 and 2003

     Total income tax expense for the years ended  December 31, 2004 and 2003 is
different  from the amount  computed by  multiplying  total income before income
taxes by the  statutory  Federal  income tax rate of 34%.  The reasons for these
differences and the related tax effects are:

                                                         ($000 Omitted)
                                                     Year Ended December 31,
                                                     -----------------------
                                                       2004           2003
                                                     --------       --------
Income tax expense computed at statutory
  rates on total income before income taxes          $   342        $   123

Increase (decrease) in tax from:
  Federal alternative minimum tax                         22              -
  State income tax, net of Federal benefit                27             22
  Expiration of state net operating loss
    carryforwards                                          -             16
  Change in estimate of net operating losses              69            291
  Net operating losses and credits acquired
    through consolidation of Cortech                ( 31,999)             -
  Increase (decrease) in valuation allowance          31,762       (    539)
  Minority interest in current year deferred
    tax benefit                                     (    151)             -
  Other, net                                        (     16)           121
                                                     -------        -------
    Total tax expense                                $    56        $    34
                                                     =======        =======

     The tax effects of significant  items comprising the Company's net deferred
tax asset at December 31, 2004 are as follows:

                                                            ($000 Omitted)
                                                            --------------

     Deferred tax assets:
          Operating loss carryforwards                         $ 31,990
          Capital loss carryforwards                                  4
          Federal tax credit carryforwards                        3,570
          Mark-to-market valuation adjustments                       11
          Deferred Compensation                                     222
          Other                                                      56
                                                               --------
                                                                 35,853
     Valuation allowance                                      (  35,853)
                                                               --------
     Net deferred tax asset                                    $      -
                                                               ========

     Deferred  tax assets  reflect  the net  effects of  operating  loss and tax
credit carryforwards and the temporary  differences between the carrying amounts

                                      F-17

<PAGE>

                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     Years Ended December 31, 2004 and 2003

of assets and liabilities for financial  statement purposes and the amounts used
for income tax purposes.  Approximately  $32 million of the $36 million deferred
tax asset relates to Cortech.  Based upon  Cortech's  operating  history,  which
includes  continuous  operating  losses in each of the last  four  years and the
Company's  assessment of Cortech's  ability to achieve future taxable income,  a
100% valuation allowance has been established for Cortech's deferred tax asset.


     Significant  carryforward  balances  for Federal  income tax purposes as of
December 31, 2004 are: ($000 omitted)

                                                                   Expiration
                                              Amount                  Years
                                              ------                  -----

    Net operating loss                       $ 97,703              2005 - 2023
    Alternative minimum tax credit                973                      N/A

     The net operating loss of $97.7 million  includes $86.3 million relating to
Cortech.

     The Tax Reform Act of 1986 contains  provisions  that may limit the NOL and
credit carryforwards  available to be used in any given year upon the occurrence
of certain events,  including  significant  changes in ownership of a company of
greater  than  50%  within  a  three-year  period  which  results  in an  annual
limitation  on the  Company's  ability  to  utilize  its  NOLs  and  tax  credit
carryforwards from tax periods prior to the ownership change.

8.   SALE OF BUILDING
     ----------------

     The Company sold its  building to an unrelated  third party in August 2004.
Following the sale,  Winston LLC leased office space from the owner. The Company
subleases certain office space from Winston LLC on a month-to-month basis. Total
rent expense for 2004 was approximately $8,245.


9.   CAPITAL STOCK ACTIVITY
     ----------------------

     On April 16, 2004 the Board of Directors approved a two for one stock split
in the form of a 100% stock  dividend.  The record  date was April 30,  2004 and
distribution  date  was May 3,  2004.  Accordingly,  all  share  and  per  share
information has been restated for all periods presented.

     Common Stock Repurchases
     ------------------------

     In January 2004, the Board of Directors approved a plan to repurchase up to
500,000 shares of the Company's  common stock at prices deemed  favorable in the

                                      F-18

<PAGE>

                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     Years Ended December 31, 2004 and 2003

open  market  or  in  privately   negotiated   transactions  subject  to  market
conditions,  the Company's  financial position and other  considerations  ("2004
Plan").  In April  2004,  the Board of  Directors  reduced  the number of shares
available for repurchase under the 2004 Plan to 200,000 shares. All shares under
the 2004 Plan had been  repurchased,  canceled  and  returned  to the  status of
authorized but unissued shares.

     In August 2004, the Board of Directors  approved a plan to repurchase up to
an  additional  200,000  shares of the  Company's  common stock at prices deemed
favorable in the open market or in privately negotiated  transactions subject to
market conditions, the Company's financial position and other considerations. As
of December  31,  2004,  43,603  shares  under this plan have been  repurchased,
canceled and returned to the status of authorized but unissued shares.

10.  COMPENSATION ARRANGEMENTS
     -------------------------

     In 2002, the Company entered into an employment agreement (the "Agreement")
with the Company's  Chairman for a three-year term  commencing  December 1, 2002
(the "Effective  Date") at an annual salary of $240,000 ("Base  Salary"),  which
may be increased but not decreased at the  discretion of the Board of Directors.
The term is to be automatically  extended one day for each day elapsed after the
Effective  Date. The Chairman may terminate his  employment  under the Agreement
under  certain  conditions  specified  in the  Agreement  and  the  Company  may
terminate the Chairman's  employment under the Agreement for cause. In the event
of the Chairman's death during the term of the Agreement,  his beneficiary shall
be paid a death  benefit  equal to his Base  Salary  per  year for  three  years
payable in equal monthly installments.

     Should  the  Chairman  become  "disabled"  (as such term is  defined in the
Agreement)  during  the  term of the  Agreement  he  shall  be  paid  an  annual
disability  payment equal to 80% of his Base Salary in effect at the time of the
disability.  Such payments shall continue until the Chairman reaches age 75. The
Company is accruing  the present  value of the  contingent  payments  under this
agreement.  Included in accrued  expenses at December 31, 2004 is  approximately
$554,000 related to this liability.

11.  PREVIOUSLY DISCONTINUED OPERATIONS
     ----------------------------------

     In January, 1988, an inactive subsidiary of the Company, TAPI, was notified
by  environmental  regulators  in  Texas  ("Texas  Regulators")  that  it  was a
potentially  responsible party ("PRP") in connection with a hazardous waste site
in the state.  TAPI  advised  the Texas  Regulators  that TAPI had no assets and
could not conduct a remedial investigation of the site. Based on information and
belief,  the Company  understands a remedial  action has been  authorized by the
Texas Regulations in order to clean up any contaminants.


                                      F-19

<PAGE>

                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     Years Ended December 31, 2004 and 2003

     The Company does not believe it has any liability in  connection  with this
environmental matter.

     In April 1989, TAPI was formally  notified that the Michigan  Department of
Natural  Resources  deemed TAPI a responsible  party in connection  with alleged
environmental  problems at a site owned by TAPI. In the fourth  quarter of 1994,
TAPI entered  into a consent  judgment  with the State of Michigan.  The consent
judgment  provides for the payment by TAPI of approximately  $450,000 to satisfy
TAPI's  alleged  liability for past and future costs incurred and to be incurred
by the State of Michigan in  undertaking  remedial  environmental  activities at
TAPI's former refinery site in Michigan. Under the terms of the settlement, TAPI
paid $90,000 in the fourth  quarter of 1994 and $45,000 per year in 1995 through
2002. The Company  joined the consent  judgment for the sole purpose of assuring
payments by TAPI.  Neither  TAPI nor the Company  admitted  any  liability.  The
liability  had  been  accrued  for  in  prior  years  as  part  of  discontinued
operations.

12.  TRANSACTIONS WITH RELATED PARTIES
     ---------------------------------

     From March  1990  until the sale of the  building  in August  2004  certain
non-subsidiary  affiliates  had  rented  office  space  from  the  Company.  The
Company's  aggregate  rental income from these  arrangements  was  approximately
$66,000 and $70,000 during 2004 and 2003, respectively.

     The Company  reimburses  affiliates  for the direct  cost of certain  group
medical insurance,  and office supplies.  Such reimbursements were approximately
$54,000 and $73,000 during 2004 and 2003, respectively.

     An affiliate of the Company pays an administrative  fee of $4,000 per month
for  management  services  performed by the Company on behalf of the  affiliate.
These services include corporate governance, financial management and accounting
services. Prior to the consolidation of Cortech in the Financial Statements, the
Company recorded an additional $15,000 per month in management fee income.

     The Company  sold its  building in  Bedminster,  New Jersey to an unrelated
third party in August 2004. Following the sale, Winston leased office space from
the owner.  The Company  subleases  certain  office  space from Winston LLC on a
month to month basis. Total rent expense for 2004 was approximately $8,245.





                                      F-20

<PAGE>

                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     Years Ended December 31, 2004 and 2003

13.  SEGMENT REPORTING
     -----------------

     The  Company  has  determined  that it does not have  reportable  operating
segments.  The Company conducts  investment  activities through its wholly owned
subsidiary  AVF, as described in Note 2 of Notes to the  Consolidated  Financial
Statements.  AVF does not have individual segment managers or discrete financial
data used to allocate resources.

14.  401 (K) - PLAN
     --------------

     Eligible  employees can elect to  participate  in the  Company's  qualified
401(k) Retirement Plan (the "Plan").  Employees may voluntarily contribute up to
15% of their  compensation,  not to exceed the Internal  Revenue  Service  limit
($13,000 in 2004 and $12,000 in 2003).  The  employees'  contributions  are 100%
vested and the Company's  contribution,  if any, vests over a six-year period in
accordance  with the  vesting  schedule  in the  Plan.  There  were no  employer
matching contributions in 2004 or 2003.

15.  INVESTMENT COMPANY ACT OF 1940
     ------------------------------

     As a result of the Company's  sale of 100% of its holdings of Winston,  the
Company  believes  that a large  portion of its  remaining  assets may have been
classified as "investment  securities" as such term is defined in the Investment
Company Act of 1940,  as amended  (the "1940 Act").  If the Company,  therefore,
were deemed to be an investment company under the 1940 Act, it would be required
to register as an investment company with the Securities and Exchange Commission
and would become subject to the regulatory  duties and  restrictions of the 1940
Act, including, but not limited to, restrictions on:

         o  operating methods;
         o  management structure;
         o  capital structure and debt issuance;
         o  issuance of dividends; and
         o  transactions with affiliates

     These  restrictions  would require the Company to significantly  change the
manner in which it conducts its operations  and require it to incur  significant
expenses  for which it has not  provided.  This would  have a  material  adverse
effect on the Company's results of operations.

     Furthermore,  if the Company were deemed to be an  unregistered  investment
company,  it would be  subject to  substantial  restrictions  on its  ability to
conduct its present  business  activities  unless it became  registered with the
Securities  and  Exchange  Commission.  These  restrictions  would  also  have a

                                      F-21

<PAGE>

                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     Years Ended December 31, 2004 and 2003

material adverse effect on the Company's results of operations.

     The Company intends to engage primarily in a business other than that of an
investment  company and,  unless an exception  from the definition of investment
company under the 1940 Act is available to it, the Company intends on taking all
action  necessary to prevent it from being deemed an investment  company  within
the time  permitted by the 1940 Act. This may include  reducing the value of the
"investment  securities"  that the Company  holds as a  percentage  of its total
assets and any other  actions  that the Company  deems to be  appropriate.  This
reduction  could  be  achieved  in a  number  of  ways,  including  through  the
disposition of "investment  securities"  and the  acquisition of  non-investment
security assets.  If the Company is required to sell "investment  securities" it
may be forced to sell them sooner than it otherwise would and these dispositions
may be made  under  unfavorable  market  conditions  resulting  in losses to the
Company.

     Currently, the Company believes that its 50.06% ownership in Cortech is its
primary  business,  and that it will not be deemed to be an  investment  company
under the 1940 Act.

16.  UNAUDITED PRO FORMA FINANCIAL INFORMATION
     -----------------------------------------

     The  Company  sold 60% of its  wholly  owned  subsidiary,  T.R.  Winston  &
Company,  Inc., a registered securities  broker-dealer ("T.R.  Winston") in July
2003 and its  remaining  40% in  August  2004.  Additionally,  in June  2004 the
Company acquired shares of Cortech,  Inc.  ("Cortech") a publicly traded company
seeking to redeploy its assets into an operating business. The Company had owned
shares of Cortech  prior to June 2004,  however the  acquisition  of  additional
Cortech  shares in June 2004  increased  the  Company's  ownership of Cortech to
50.06%.  Beginning  June 30, 2004,  Cortech was  consolidated  in the  financial
statements of the Company. Pro forma results of operations are provided below to
reflect the  operations  of the Company had the  acquisition  of Cortech and the
disposition of T.R. Winston taken place prior to January 1, 2004. This pro forma
financial  information is not intended to reflect  results of operations,  which
would have actually  resulted,  had these  transactions  been effected  prior to
January 1, 2004. Moreover,  this pro forma financial information is not intended
to be indicative of results of operations that may be attained in the future.







                                      F-22

<PAGE>

                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     Years Ended December 31, 2004 and 2003

                 Kent Financial Services, Inc. and Subsidiaries
                 Pro forma Consolidated Statements of Operation
                       (in $000's, except per share data)
                                    Unaudited
                      For the year ended December 31, 2004

<TABLE>

<S>                                           <C>            <C>               <C>              <C>

                                                               Winston          Cortech
                                                 As           Pro forma        Pro forma        Pro forma
                                              Reported       Adjustments       Adjustments       Results
                                          ---------------------------------------------------------------------
Revenues:
  Investing gains                             $   362           $    -           $    -         $   362
  Management fee income                           138                -          (    90)  (a)        48
  Equity in earnings of T. R. Winston             138          (   138)               -   (b)         -
  Equity in losses of Cortech                (     84)               -               84   (c)         -
  Equity in losses of General Devices        (     25)               -                -        (     25)
  Interest                                        116                -               52   (d)       168
  Dividend and other                              369                -                -             369
  Other:
    Gain on sale of property                      845                -                -             845
    Gain on sale of T. R. Winston                  71          (    71)               -   (e)         -
                                              -------           ------           ------          ------
      Total revenues                            1,930          (   209)              46           1,767
                                              -------           ------           ------          ------

Expenses:
  General, administrative and other               936                -              171   (f)     1,107
  Interest                                         37                -                -              37
                                              -------           ------           ------          ------
      Total expenses                              973                -              171           1,144
                                              -------           ------           ------          ------

Income before income taxes                        957          (   209)         (   125)            623
Provision for income taxes                         56                -                1   (g)        57
                                              -------           ------           ------          ------
Income before minority interest                   901          (   209)         (   126)            566
Minority interest in subsidiary's losses           48                -              105   (h)       153
                                              -------           ------           ------          ------
Net income                                    $   949          ($  209)         ($   21)         $  719
                                              =======           ======           ======          ======

Basic and diluted net income per
  common share                                $  0.32                                            $ 0.25
                                              =======                                            ======

Weighted average number of common
  Shares outstanding (in 000's)                 2,921                                             2,921
                                              =======                                            ======

</TABLE>


(a)  Eliminate management fees of $90,000 paid by Cortech to the Company.
(b)  Reverse the equity in earnings of Winston.
(c)  Reverse the equity in the loss of Cortech.
(d)  Record interest income earned by Cortech.
(e)  Reverse gain on sale of Winston.
(f)  Record actual general and administrative  expenses (prior to consolidation)
     of Cortech of $261,000 as  reported  in  Cortech's  Form 10-QSB for the six
     months ended June 30, 2004,  net of management  fees of $90,000 paid to the
     Company.
(g)  Record the income tax expense of Cortech.
(h)  Record minority interest of Cortech as follows (in $000's):
        Cortech reported net loss for 2004     ($   306)
        Minority ownership of Cortech             49.94%
                                                --------
        Minority interest in Cortech           ($   153)
        Amount recorded by Kent                (     48)
                                                -------
        Pro forma adjustment needed            ($   105)
                                                =======

                                      F-23

<PAGE>

                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     Years Ended December 31, 2004 and 2003

17.  SUBSEQUENT EVENTS
     -----------------

     On February 11, 2005, the Company purchased an additional 714,413 shares of
General Devices for approximately  $71,000,  increasing its ownership of General
Devices to 44%.  General  Devices is  currently  seeking the  acquisition  of an
operating business.

     On March 10,  2005 the Company  declared a dividend of $.30 per share.  The
record  date for the  dividend is March 21,  2005 and the  distribution  date is
April 5, 2005.

18.  Restatement of Consolidated Financial Statements
     ------------------------------------------------

     Subsequent to the issuance of the 2004 consolidated  financial  statements,
the Company has determined that its investments in two securities, Cortech, Inc.
and General  Devices,  Inc. should have been accounted for by the equity method,
rather  than  the  fair  value  method  that had been  used.  As a  result,  the
accompanying consolidated balance sheets as of December 31, 2004 and the related
consolidated  statements of income,  cash flows and stockholders  equity for the
years ended  December  31, 2004 and 2003 have been  restated to correct for this
change. As discussed in Note 4, the Company  consolidated Cortech beginning June
30, 2004.  The following  tables  summarize the effect of such  restatement  (in
$000's except per share data):

Consolidated Balance Sheet as of December 31, 2004

                                    As              As
                                 Reported         Amended
                                 --------         -------

Securities owned                 $  1,205        $  1,119
Total current assets               15,387          15,301
Total assets                       15,690          15,604
Accumulated deficit             (   3,781)      (   3,867)
Total stockholders' equity          8,991           8,905








                                      F-24

<PAGE>

                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     Years Ended December 31, 2004 and 2003

Consolidated Statements of Income for the years ended December 31,

                                              2004                  2003
                                              ----                  ----
                                        As         As         As          As
                                     Reported   Restated   Reported    Restated
                                     --------   --------   --------    --------

Investing gains                      $   310     $   362    $   663     $   775
Equity in losses of General Devices        -    (     25)         -    (     27)
Equity in losses of Cortech         (     83)   (     84)         -    (    115)
Total revenues                         1,904       1,930      3,187       3,157
Income before income taxes               931         957        391         361
Income before minority interest          875         901        357         327
Net income                               923         949        357         327

Net income per share                 $  0.32     $  0.32    $  0.11     $  0.10


Consolidated Statements of Cash Flows for the years ended December 31,

                                        2004                      2003
                                        ----                      ----
                                   As          As           As           As
                                Reported    Restated     Reported     Restated
                                --------    --------     --------     --------

Net cash provided by (used in)
  operating activities          ($ 1,286)   ($ 1,286)     $ 3,774      $3,957

Net cash provided by (used in)
  investing activities            13,269      13,269     (    240)    (   423)

     Additionally,  the  Company  has  reduced  its  stockholders'  equity as of
December 31, 2002 by $82,000 for the prior effect of these restatements.















                                      F-25

<PAGE>

Item 8.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
         -----------------------------------------------------------------------
         FINANCIAL DISCLOSURES
         ---------------------

     None.

Item 8A. CONTROLS AND PROCEDURES
         -----------------------


     As of the end of the period  covered by this  report,  the Company  carried
out,  under  the  supervision  and  with  the  participation  of  the  Company's
management,  including its Chief Executive Officer and Chief Financial  Officer,
an evaluation of the  effectiveness of the design and operation of the Company's
disclosure  controls and  procedures (as defined in Rule 13a-15(e) and 15d-15(e)
under the  Securities  Exchange Act of 1934).  Based upon that  evaluation,  the
Chief Executive  Officer and Chief Financial  Officer  concluded that the design
and operation of these disclosure  controls and procedures are effective.  There
was no change in the Company's  internal  control over  financial  reporting (as
defined in Rule  13a-15(f) and 15d-15(f)  under the  Securities  Exchange Act of
1934) during the quarter ended December 31, 2004 that has  materially  affected,
or is reasonably  likely to materially  affect,  the Company's  internal control
over financial reporting.

Compliance with Section 404 of Sarbanes-Oxley Act
-------------------------------------------------

     In order to achieve  compliance with Section 404 of the  Sarbanes-Oxley Act
of 2002 (the "Act") by December  31,  2006,  the  Company  expects to begin,  in
fiscal  2005,  the system and process  documentation  and  evaluation  needed to
comply with  Section  404. The Company  believes  this process for  documenting,
evaluating  and  monitoring  its internal  control over  financial  reporting is
consistent with the objectives of Section 404 of the Act.


Item 8B. OTHER INFORMATION
         -----------------

     None.














                                     II-11

<PAGE>

                                    PART III
                                    --------

Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        ------------------------------------------------------------------------
        WITH SECTION 16(a) OF THE EXCHANGE ACT
        --------------------------------------

     The  current  members of the Board of  Directors  were  elected at the 2004
Annual  Meeting  and will serve  until the next  Annual  Meeting and until their
successors have been elected and qualify.  The Company's officers are elected by
and serve at the leave of the Board.

     None of the  executive  officers  of the  Company  is related to any other.
There is no arrangement or understanding  between any executive  officer and any
other person pursuant to which such officer was selected.

     The directors  and  executive  officers of the Company at February 28, 2005
were as follows:

          Name                        Age                 Position Held
          ----                        ---                 -------------

     Paul O. Koether                   68            Chairman, Director and
                                                      President

     Casey K. Tjang                    66            Director

     M. Michael Witte                  78            Director

     Sue Ann Merrill                   41            Chief Financial Officer

     Paul O. Koether is  principally  engaged in the following  businesses:  (i)
Chairman and director  since July 1987 and  President  since October 1990 of the
Company and, until December 31, 2003 when it was dissolved,  the general partner
of Shamrock  Associates,  ("Shamrock")  an investment  partnership  that was the
principal  stockholder of the Company; (ii) various positions with affiliates of
the Company,  including Chairman since April 1988,  President from April 1989 to
February 1997 and director since March 1988 of Pure World,  Inc., ("Pure World")
and a director  since  December  1994 and  Chairman  since  January 1995 of Pure
World's wholly owned subsidiary, Pure World Botanicals, Inc., a manufacturer and
distributor of natural products.  He was Chairman and a director of Sun Equities
Corporation,  ("Sun"),  a private company,  until December 2004, when Sun merged
with Pure World.  Mr.  Koether was Chairman  from 1990 until August 2003,  and a
registered  representative  since  1989,  of  T.  R.  Winston  &  Company,  LLC.
("Winston").  Since September 1998, Mr. Koether has been a director and Chairman
of  Cortech,  Inc.,  ("Cortech")  a company  seeking  to  acquire  an  operating
business.  Since November 2003 Mr.  Koether has been General  Partner of Emerald
Partners ("Emerald") an investment partnership.



                                     III-1

<PAGE>

     Casey K. Tjang.  Mr.  Tjang has been a director of the Company  since 1992.
Since January  2005,  he has been  President  and Chief  Executive  Officer,  of
Erudite Internet Systems,  Inc. (EIS), an e-learning custom courseware  provider
of Internet  corporate training and the Sarbanes-Oxley Act (SOX) custom training
program.  Since  January 2004,  Mr. Tjang has been Chairman and Chief  Executive
Officer of First Merchant Bankers, Inc. From September 2001 to December 2004, he
was  President  and Chief  Executive  Officer  of  Knowledge  Window,  Inc.,  an
e-learning  developer and provider of Internet base distance  education  system.
From December 1995, until August 2000, he was with Leading Edge Packaging, Inc.,
a marketing,  wholesaler and distribution  company of consumer product packaging
in the following  capacities:  director and Secretary since December 1995; Chief
Financial  Officer since  September 1996 and President  since September 1998. On
August 16, 2000,  Leading Edge Packaging,  Inc., filed a Chapter XI petition and
on  November  21,  2000,  converted  to  Chapter  VII  under the  United  States
Bankruptcy Code.

     M. Michael Witte.  Mr. Witte has been a director of the Company since 1986.
Since August 1980, he has been  President of M. M. Witte &  Associates,  Inc., a
private  corporation  that is engaged in oil and gas  consulting  and investment
management.  In November 1995, Mr. Witte was elected Co-Chairman of The American
Drilling  Company,  L.L.C.,  a position he subsequently  relinquished  after his
election  on August 1, 1996 as Chief  Executive  Officer  and  Director of South
Coast Oil Corporation, a Los Angeles-based oil company founded in 1921.

     Sue Ann Merrill, a certified public accountant,  is principally  engaged in
the  following  businesses:  (i) the Company,  in various  positions  since 1995
including  Chief  Financial  Officer  since  November  2003;  (ii) since 1995 in
various positions with affiliates and former affiliates of the Company including
Chief Financial Officer of Pure World and Pure World  Botanicals,  since October
2002;  Chief  Financial  Officer of Cortech  since  September  1998 and (iii) in
various positions with Winston from 1995 to 2003.

     Section  16(a)  of the  Securities  Exchange  Act  requires  the  Company's
officers and directors and persons who own more than ten percent of a registered
class of the  Company's  equity  securities,  to file reports of  ownership  and
changes  in  ownership  on  Forms 3, 4 and 5 with the  Securities  and  Exchange
Commission  ("SEC").  Officers  and  directors  and  greater  than  ten  percent
stockholders  are required by SEC  regulation to furnish the Company with copies
of all Forms 3, 4 and 5 which they file.

     Based  solely on the  Company's  review of the  copies of such forms it has
received, the Company believes that all its officers, directors and greater than
ten percent beneficial owners complied with all filing  requirements  applicable
to them with respect to transactions during fiscal 2004.

Audit Committee Financial Expert
--------------------------------

     The Board of Directors of the Company has determined that Casey K. Tjang is
an audit committee financial expert, as that term is defined under SEC rules and

                                     III-2

<PAGE>

that  Mr.  Tjang is  independent,  as the  term is used in Item  7(d)(3)(iv)  of
Schedule 14A under the Exchange Act.

Code of Ethics
--------------

     The  Company has  adopted a Code of Ethics  that  applies to its  principal
executive officer and principal financial officer. Stockholders may write to Sue
Ann Merrill,  the Secretary of the Company, at the Company's principal executive
office: 376 Main Street,  Bedminster, New Jersey 07921, to request a copy of the
Code of Ethics,  and the Company  will provide it to any person  without  charge
upon such request.

Item 10. EXECUTIVE COMPENSATION
         ----------------------

     There is shown below  information  concerning the annual  compensation  for
services in all  capacities  to the Company for the fiscal years ended  December
31, 2004,  2003 and 2002,  for those  persons who were, at December 31, 2004 the
chief executive  officer (the "Named  Officers").  No other executive officer of
the  Company  who  was  serving  as such  at the  end of  2004  received  annual
compensation in excess of $100,000 in 2004, 2003 or 2002.

                           Summary Compensation Table

<TABLE>

<S>                 <C>      <C>        <C>      <C>             <C>        <C>          <C>       <C>

                                       Annual Compensation (1) (2)         Long-term compensation
                                       -------------------                 ----------------------
                                                                         Awards              Payouts
                                                                         ------              -------
                                                                            Securities
      Name                                                                     under-
      and                                            Other       Restricted    lying               All other
   principal                                        annual          stock     options/    LTIP       compen-
   position         Year     Salary     Bonus    Compensation(3)    award       SARs     Payouts     sation
                               ($)       ($)          ($)            ($)        (#)        ($)        ($)
--------------------------------------------------------------------------------------------------------------

Paul O. Koether     2004    $240,000   $ 40,000    $ 95,502           -          -          -          -
Chairman, Presi-    2003     240,000          -      69,113           -          -          -          -
dent and Chief      2002     240,000          -      63,552           -          -          -          -
Executive Officer
----------------------------------------------------
</TABLE>


(1)  The Company has no bonus or deferred compensation plans and pays bonuses at
the discretion of the Board based on performance.

(2)  Mr. Koether received  incidental  personal benefits during the fiscal years
covered by the table. The value of these incidental benefits did not exceed  the
lesser of either  $50,000 or 10% of the total  annual  salary and bonus reported
for him. Such amounts are excluded from the table.

(3)  Represents commissions paid by T. R. Winston to Mr. Koether in his capacity
as  a  registered   representative   for  securities   trades   made   for   his
customers. The Company sold its interest in T. R. Winston in August 2004.



                                     III-3

<PAGE>

Remuneration of Directors
-------------------------

     Directors  who are not  employees  of the Company  receive a monthly fee of
$1,000 plus $200 for each day of  attendance  at board and  committee  meetings.
During  2004,  the  Company  paid  directors'  fees in the  aggregate  amount of
approximately $28,000.

Compensation Arrangements
-------------------------

     On December  1, 2002,  ("Effective  Date") the Company and Paul O.  Koether
entered into an employment agreement ("Agreement") pursuant to which Mr. Koether
serves as the  Company's  Chairman for an initial  three-year  term at an annual
salary of $240,000 ("Base Salary"),  which may be increased but not decreased at
the  discretion  of the  Board of  Directors.  The  term is to be  automatically
extended one day for each day elapsed after the Effective  Date. (See Note 11 of
Notes to Consolidated Financial Statements).

     Mr.  Koether may terminate his  employment  under the Agreement at any time
for "good reason" (defined below) within 36 months after the date of a Change in
Control (defined below) of the Company.  Upon his termination,  he shall be paid
the  greater of the (i) Base  Salary  payable  under the  Agreement  through the
expiration  date of the  Agreement  or (ii) an amount  equal to three  times the
average annual Base Salary paid to him during the preceding five years.

     Change in  Control  is deemed to have  occurred  if (i) any  individual  or
entity,  other than  individuals or entities  beneficially  owning,  directly or
indirectly,  common  stock  of  the  Company  representing  30% or  more  of the
Company's stock outstanding as of December 1, 2003, is or becomes the beneficial
owner, directly or indirectly, of 30% or more of the Company's outstanding stock
or (ii)  individuals  constituting  the Board of  Directors  on December 1, 2002
("Incumbent  Board"),  including  any person  subsequently  elected to the Board
whose  election or nomination  for election was approved by a vote of at least a
majority of the Directors comprising the Incumbent Board, cease to constitute at
least a majority of the Board.  "Good reason" means a determination  made solely
by Mr. Koether, in good faith, that as a result of a Change in Control he may be
adversely  affected  (i) in carrying out his duties and powers in the fashion he
previously enjoyed or (ii) in his future prospects with the Company.

     Mr.  Koether may also  terminate  his  employment  if the Company  fails to
perform its  obligations  under the Agreement  (including any material change in
Mr. Koether's duties,  responsibilities  and powers or the removal of his office
to a location more than five miles from its current  location)  which failure is
not cured within specified time periods.



                                     III-4

<PAGE>

     The Company may terminate Mr. Koether's  employment under the Agreement for
"cause" which is defined as (i) Mr. Koether's continued failure to substantially
perform his duties  under the  Agreement  (other than by reason of his mental or
physical  incapacity  or the removal of his office to a location  more than five
miles  from its  current  location)  which is not cured  within  specified  time
periods,  or (ii) Mr.  Koether's  conviction  of any  criminal act or fraud with
respect to the Company.  The Company may not terminate Mr. Koether's  employment
except by a vote of not less than 80 percent of the entire Board of Directors at
a meeting at which Mr. Koether is given the opportunity to be heard.

     In the event of Mr.  Koether's death during the term of the Agreement,  his
beneficiary  shall be paid a death  benefit  equal to three  years Base  Salary,
payable in 36 equal monthly  installments.  Should Mr. Koether become "disabled"
(as such term is defined in the Agreement)  during the term of the Agreement and
either  long-term  disability  insurance  is not provided by the Company or such
policy does not provide an annual  benefit to age 75 equal to 80% or more of Mr.
Koether's Base Salary,  he shall be paid an annual  disability  payment equal to
80% of his Base Salary in effect at the time of the  disability.  Such  payments
shall continue until Mr. Koether attains the age of 75.























                                     III-5

<PAGE>

Item 11.  SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL  OWNERS AND  MANAGEMENT AND
          ----------------------------------------------------------------------
          RELATED STOCKHOLDER MATTERS
          ---------------------------

     The  following  table  provides  information  with respect to the Company's
common stock  beneficially owned as of February 28, 2005 by each director of the
Company,  by each person having beneficial  ownership of five percent or more of
the Company's common stock and by all directors and officers of the Company as a
group.

                                   Amount and Nature
      Name and Address               of Beneficial                 Percent of
    of Beneficial Owner              Ownership (1)                   Class
    -------------------              -------------                   -----

Paul O. Koether                       1,567,658(2)                   55.3%
 211 Pennbrook Road
 Far Hills, NJ 07931

Casey K. Tjang                                -                         -
 510 Tallwood Lane
 Greenbrook, NJ 08812

M. Michael Witte                          2,000                         *
 1120 Granville Avenue
 Suite 102
 Los Angeles, CA 90049

Marital Trust u/w/o                     451,434                      15.9%
 Natalie I. Koether
 211 Pennbrook Road
 Far Hills, NJ 07931

All Directors and Officers            1,569,658                      55.3%
  as a Group (3 persons)
-----------------------------------------
*Less than 1 percent.

(1)  The beneficial  owner has both sole voting and sole investment  powers with
     respect to these  shares  except as set forth in this  footnote or in other
     footnotes below.

(2)  Includes  42,275 shares held in Mr.  Koether's  IRA. Also includes  451,434
     Shares beneficially owned by the Marital Trust u/w/o Natalie I. Koether. As
     trustee, Mr. Koether may be deemed to own these shares beneficially.

     At December  31, 2004,  the Company had no  Compensation  plans  (including
individual  compensation  arrangements) under which its equity securities may be
issued.



                                     III-6

<PAGE>

Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
         ----------------------------------------------

     From March 1990, until the sale of its building in 2004, certain affiliates
have rented office space from the Company. The Company's aggregate rental income
from these arrangements was approximately  $66,000 and $70,000 in 2004 and 2003,
respectively.

     The Company  reimburses  affiliates  for the direct  cost of certain  group
medical  insurance,  office  supplies and  expenses.  Such  reimbursements  were
approximately $54,000 and $73,000 during 2004 and 2003, respectively.

     An affiliate of the Company pays an administrative  fee of $4,000 per month
for  management  services  performed by the Company on behalf of the  affiliate.
These services include corporate governance, financial management and accounting
services. Prior to the consolidation of Cortech in the Financial Statements, the
Company recorded an additional $15,000 per month in management fee income.



























                                     III-7

<PAGE>

Item 13. EXHIBITS AND REPORTS ON FORM 8-K
         --------------------------------

     The following exhibits are filed as part of this report:

(a) Exhibits
    --------

           3.1          Bylaws of the Registrant, as amended. (l)

           3.2(a)       Articles of Incorporation of Registrant, as amended
                        (including certificate of stock designation for $2.575
                        Cumulative Convertible Exchangeable Preferred Stock).
                        (2)

           3.2(b)       Certificate of Amendment to Certificate of Incorpora-
                        tion. (3)

           3.2(c)       Certificate of Amendment to Certificate of Incorporation
                        dated September 26, 1991. (4)

           10.2         Employment Agreement, dated December 1, 2002 by and
                        between Kent Financial Services,  Inc. and Paul O.
                        Koether. (5)

           10.4         Amended and Restated Limited Liability Company Agreement
                        of T. R. Winston & Company, LLC (6)

           10.5         Agreement to sell the Company's Investment in T. R.
                        Winston & Company, LLC. (7)

           21           Subsidiaries*

           31.1         Certification pursuant to Section 302 of the Sarbanes-
                        Oxley Act of 2002*

           31.2         Certification pursuant to Section 302 of the Sarbanes-
                        Oxley Act of 2002*

           32           Certification pursuant to Section 906 of the Sarbanes-
                        Oxley Act of 2002*







                                     III-8

<PAGE>

-------------------
*   Filed herewith.

(1)  Incorporated by reference to Texas American Energy Corporation Registration
     Statement, as amended, on Form S-l, No. 33-11109.
(2)  Incorporated by reference to Texas American Energy  Corporation  Form 10-K,
     for the fiscal year ended December 31, 1984.
(3)  Incorporated  by reference to Texas American Energy  Corporation  Form 10-K
     for the fiscal year ended December 31, 1987.
(4)  Incorporated  by reference to Kent Financial  Services,  Inc. Form 10-Q for
     the quarter ended September 30, 1991.
(5)  Incorporated by reference to Kent Financial Services, Inc., Form 10-KSB for
     the fiscal year ended December 31, 2002.
(6)  Incorporated by reference to Kent Financial Services, Inc., Form 10-QSB for
     the quarter ended June 30, 2003.
(7)  Incorporated by reference to Kent Financial Services, Inc., Form 10-QSB for
     the quarter ended June 30, 2004.


















                                     III-9

<PAGE>

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
         --------------------------------------

Year ended December 31, 2004

Audit Fees: The aggregate fees,  including  expenses,  expected to be billed, by
the  Company's  principal  accountant  in  connection  with  the  audit  of  its
consolidated   financial   statements  and  for  the  review  of  its  financial
information  included in its Annual  Report on Form  10-KSB;  and its  quarterly
reports on Form  10-QSB  during the fiscal  year  ending  December  31, 2004 was
$36,675.

Tax Fees: The aggregate fees, including expenses,  expected to be billed, by the
Company's principal  accountant in connection with the preparation of income tax
returns  for the  Company  for the fiscal  year  ending  December  31, 2004 were
$10,277.

All Other Fees: There were no audit related fees or any other fees billed to the
Company by its principal accountant during 2004.

Year ended December 31, 2003

Audit Fees:  The aggregate  fees,  including  expenses,  billed by the Company's
principal accountant in connection with the audit of its consolidated  financial
statements  and for the  review of its  financial  information  included  in its
Annual Report on Form 10-KSB;  and its  quarterly  reports on Form 10-QSB during
the fiscal year ending December 31, 2003 was $33,600.

Tax Fees:  The  aggregate  fees,  including  expenses,  billed by the  Company's
principal  accountant in connection  with the  preparation of income tax returns
for the Company for the fiscal year ending December 31, 2003 was $8,000.

All Other Fees: There were no audit related fees or any other fees billed to the
Company by its principal accountant during 2003.

















                                     III-10

<PAGE>

                                   SIGNATURES

In  accordance  with  Section  13 or 15(d)  of the  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.

                                         KENT FINANCIAL SERVICES, INC.

Dated:  February 10, 2006                BY     /s/ Paul O. Koether
                                                -------------------------------
                                                Paul O. Koether
                                                Chairman of the Board and
                                                Director
                                                (Principal Executive Officer)

In  accordance  with the Exchange  Act, this report has been signed below by the
following  persons on behalf of the  Registrant and in the capacities and on the
dates indicated.

Dated:  February 10, 2006                       /s/ Paul O. Koether
                                                -------------------------------
                                                Paul O. Koether
                                                Chairman of the Board and
                                                Director
                                                (Principal Executive Officer)

Dated:  February 10, 2006                       /s/ Sue Ann Merrill
                                                -------------------------------
                                                Sue Ann Merrill
                                                Chief Financial Officer
                                                and Secretary
                                                (Principal Financial and
                                                Accounting Officer)

Dated:  February 10, 2006                       /s/ Qun Yi Zheng, Ph.D.
                                                -------------------------------
                                                Qun Yi Zheng, Ph.D.
                                                President

Dated:  February 10, 2006                       /s/ William Mahomes, Jr.
                                                -------------------------------
                                                William Mahomes, Jr.
                                                Director

Dated:  February 10, 2006                       /s/ Casey K. Tjang
                                                -------------------------------
                                                Casey K. Tjang
                                                Director

Dated:  February 10, 2006                       /s/ M. Michael Witte
                                                -------------------------------
                                                M. Michael Witte
                                                Director


                                     III-11

<PAGE>

                                                                    EXHIBIT 21


                          KENT FINANCIAL SERVICES, INC.

                                  SUBSIDIARIES




Name of Subsidiary                               State of Incorporation
------------------                               ----------------------



Asset Value Holdings, Inc.                               Delaware

Asset Value Management, Inc.                             Delaware

Cortech, Inc.                                            Delaware

Kent Educational Services, Inc.                          Delaware

Kent Advisors, Inc. (Inactive)                           New Jersey

Texas American Petrochemicals, Inc. (Inactive)           Texas
























<PAGE>
                                                                   EXHIBIT 31.1
                      CERTIFICATION PURSUANT TO SECTION 302
                        OF THE SARBANES-OXLEY ACT OF 2002

I,   Paul O. Koether, certify that:

1.   I have  reviewed  this  Amendment  Number 1 to the  annual  report  on Form
     10-KSB/A of Kent Financial Services, Inc.;

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

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

4.   The small business issuer's other certifying  officer and I are responsible
     for  establishing  and maintaining  disclosure  controls and procedures (as
     defined  in  Exchange  Act Rules  13a-15(e)  and  15d-15(e))  for the small
     business issuer and have:

     a)   designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision, to ensure that material information relating to the small
          business  issuer,  including its  consolidated  subsidiaries,  is made
          known to us by others within those entities,  particularly  during the
          period in which this report is being prepared;

     b)   evaluated the effectiveness of the small business issuer's  disclosure
          controls and procedures  and presented in this report our  conclusions
          about the effectiveness of the disclosure controls and procedures,  as
          of the  end of the  period  covered  by  this  report  based  on  such
          evaluation; and

     c)   disclosed  in this  report any change in the small  business  issuer's
          internal  control over financial  reporting  that occurred  during the
          small business issuer's most recent fiscal quarter (the small business
          issuer's  fourth fiscal  quarter in the case of an annual report) that
          has materially affected, or is reasonably likely to materially affect,
          the small business issuer's internal control over financial reporting;
          and

5.   The small business issuer's other certifying  officer and I have disclosed,
     based on our most recent  evaluation  of internal  control  over  financial
     reporting,  to the small business issuer's auditors and the audit committee
     of the small business  issuer's  board of directors (or persons  performing
     the equivalent functions):

     a)   all significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably  likely to  adversely  affect the small  business  issuer's
          ability   to  record,   process,   summarize   and  report   financial
          information; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a significant  role in the small business  issuer's
          internal control over financial reporting.

February 10, 2006                                 /s/ PAUL O. KOETHER
                                                  -----------------------------
                                                  Paul O. Koether
                                                  Chairman and President
<PAGE>

                                                                   EXHIBIT 31.2
                      CERTIFICATION PURSUANT TO SECTION 302
                        OF THE SARBANES-OXLEY ACT OF 2002

I,   Sue Ann Merrill, certify that:

1.   I have  reviewed  this  Amendment  Number 1 to the  annual  report  on Form
     10-KSB/A of Kent Financial Services, Inc.;

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

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

4.   The small business issuer's other certifying  officer and I are responsible
     for  establishing  and maintaining  disclosure  controls and procedures (as
     defined  in  Exchange  Act Rules  13a-15(e)  and  15d-15(e))  for the small
     business issuer and have:

     a)   designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision, to ensure that material information relating to the small
          business  issuer,  including its  consolidated  subsidiaries,  is made
          known to us by others within those entities,  particularly  during the
          period in which this report is being prepared;

     b)   evaluated the effectiveness of the small business issuer's  disclosure
          controls and procedures  and presented in this report our  conclusions
          about the effectiveness of the disclosure controls and procedures,  as
          of the  end of the  period  covered  by  this  report  based  on  such
          evaluation; and

     c)   disclosed  in this  report any change in the small  business  issuer's
          internal  control over financial  reporting  that occurred  during the
          small business issuer's most recent fiscal quarter (the small business
          issuer's  fourth fiscal  quarter in the case of an annual report) that
          has materially affected, or is reasonably likely to materially affect,
          the small business issuer's internal control over financial reporting;
          and

5.   The small business issuer's other certifying  officer and I have disclosed,
     based on our most recent  evaluation  of internal  control  over  financial
     reporting,  to the small business issuer's auditors and the audit committee
     of the small business  issuer's  board of directors (or persons  performing
     the equivalent functions):

     a)   all significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably  likely to  adversely  affect the small  business  issuer's
          ability   to  record,   process,   summarize   and  report   financial
          information; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a significant  role in the small business  issuer's
          internal control over financial reporting.

February 10, 2006                              /s/ SUE ANN MERRILL
                                               --------------------------------
                                               Sue Ann Merrill
                                               Chief Financial Officer
                                                and Secretary

<PAGE>
                                                                    Exhibit 32

 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION
                      906 OF THE SARBANES-OXLEY ACT OF 2002


Pursuant to Section 906 of the Public  Company  Accounting  Reform and  Investor
Protection  Act of 2002 (18 U.S.C.  1350,  as  adopted),  Paul O.  Koether,  the
Chairman and President of Kent Financial  Services,  Inc., (the "Company"),  and
Sue Ann Merrill,  the Chief Financial  Officer and Secretary of the Company each
hereby certifies that, to the best of his or her knowledge:

     1.   The Annual Report on Form 10-KSB/A of the Company for the period ended
          December 31, 2004,  (the "Annual  Report"),  fully  complies  with the
          requirements  of  Section  13(a) or  Section  15(d) of the  Securities
          Exchange Act of 1934, as amended;

     and

     2.   The information contained in the Annual Report fairly presents, in all
          material respects,  the financial  condition and results of operations
          of the Company.


Dated:   February 10, 2006


/s/ Paul O. Koether
----------------------------------
Paul O. Koether
Chairman and President



/s/ Sue Ann Merrill
----------------------------------
Sue Ann Merrill
Chief Financial Officer and Secretary