UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-KSB


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, 2007





 ̈
            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.


(Exact
name of small business issuer as specified in its charter)





Nevada
            
            75-1695953(State
      or other jurisdiction of incorporation or organization)
            
            (I.R.S.
      Employer Identification No.)211 Pennbrook Road, P.O. Box 97, Far Hills, New
      Jersey
            
            07931(Address
      of principal executive offices)
            
            (Zip
      Code)





Issuer's
telephone number   (908)
766-7221





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


(Title of
Class)





Check
whether the issuer is not required to file reports pursuant to Section 13 or
15(d) of the Exchange Act  ̈





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 registrant 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 registrants 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





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


Yes  ̈   No
x





The
issuer's revenues for the fiscal year ended December 31, 2007 were approximately
$1,240,000.





The
aggregate market value of the common stock held by non-affiliates of the issuer,
based upon the closing sale price on the NASDAQ Capital Markets as of February
29, 2008, was approximately $2.3 million.  At February 29, 2008, there
were 2,792,022 shares of common stock outstanding.





Transitional Small Business Disclosure
Format  Yes  ̈  No x
















PART I





Item
1.                      DESCRIPTION OF
BUSINESS





Kent
Financial Services, Inc.’s (“Kent” or the “Company”) business is comprised of
the management of Kent International Holdings, Inc. (“Kent International”) and
Kent Educational Services, Inc. (“Kent Educational”).  Kent was formed
in 1988 as a Delaware corporation and reincorporated in Nevada in 2006 by a
merger into a newly formed, wholly owned Nevada subsidiary with the same name
that was the surviving corporation of the merger.





General





Except
for the historical information contained herein, the matters discussed in this
Annual Report on Form 10-KSB are forward-looking statements that involve risks
and uncertainties.  For a discussion of certain factors that may
affect the outcome projected in such statements, see Item 6 (“Management’s
Discussion and Analysis of Financial Condition and Results of Operations”) of
this Annual Report, as well as factors noted in the balance of this Item 1
(“Description of Business”).  Actual results may differ materially
from those projected.  These forward-looking statements represent the
Company’s judgment as of the date of the filing of this Annual
Report.  However, the Company disclaims any intent or obligation to
update these forward-looking statements.





Kent
International





Kent
International is a publicly traded company (stock symbol “KNTH.PK”) currently
seeking to redeploy its assets into an operating business.  The
Company owned approximately 53.25% of Kent International at December 31,
2007.  All of Kent International’s assets, excluding its portfolio of
pharmaceutical patents (which have a zero carrying value on the consolidated
financial statements), are invested in cash and United States Treasury
Bills.  Kent International’s current business plan is to serve as a
vehicle for the acquisition of or merger or consolidation with another
company.  Kent International may use its available working capital,
capital stock, debt or a combination of these to start a business or to effect a
business combination with a company seeking to establish a public trading market
for its securities while avoiding the time delays, significant expense, loss of
voting control and other burdens including significant professional fees of an
initial public offering.  A business combination may be with a
financially stable, mature company or a company that is in its early stages of
development or growth, which could include companies seeking to obtain capital
and to improve their financial stability.





Additionally,
Kent International has developed a niche social networking website, www.chinauspals.com,
designed to promote cultural exchange between the citizens of the United States
and those of the People’s Republic of China.  Membership to the site
is free, thus, any potential revenues will be derived from advertisements placed
on the site by third parties.  The site provides users with access to
other users’ personal profiles and enables the user to send private messages to
other registered users of similar interests in order to develop lasting
friendships or simply attain a pen pal.  Chinauspals.com also features
user generated discussion forums and blogs as well as user submitted videos and
pictures.





Kent
International does not expect that these activities will generate any
significant revenues for an indefinite period as these efforts are in their
early stages.  As a result, these programs may produce significant
losses until such time as meaningful revenues are achieved.




2




Kent
Educational





Kent
Educational is a wholly owned subsidiary of Kent that has a 60% controlling
interest in The Academy for Teaching and Leadership, Inc., a Delaware
corporation (“The Academy”).  The Academy, headed by Dr. Saul
Cooperman, a former Commissioner of Education in the State of New Jersey, offers
educators high quality programs designed to dramatically improve themselves,
their students and their schools.  The Academy brings together
educators from school districts to engage in quality programs related to
curriculum, assessment, and instructional strategies that have the potential to
assist them in their own development as well as to enhance the learning of their
students.  Similarly, it offers administrators the latest programs in
leadership practices that can support their school district’s goals and give
them the skills to achieve their specific objectives.





Academy
programs for school leaders include “Solutions for Superintendents”, “Strategies
for School Leaders”, “Effective Presentation Skills”, “Leading and Coaching in a
Complex Environment”.  Programs designed for educators include
“Coaching the Literacy Coach”, “Differentiating the Curriculum”, “Classroom
Management for the Elementary and Middle School Teacher” and “Designing and
Delivering Effective Instruction”.





Risk
Factors Related to the Company





The
Company’s business success is wholly dependent on the success of Kent
International and Kent Educational.





Kent’s
business is comprised entirely of the management of Kent International and Kent
Educational.  Accordingly, any risks affecting those companies
constitute risks to Kent at the same time.





The
Company could be exposed to environmental liabilities of an inactive
subsidiary.





As
described in Item 3 (“Legal Proceedings”), a wholly owned subsidiary of Kent
without assets is subject to a potential significant environmental claim of
approximately $2.5 million.  Due to the corporate separateness, we
believe that Kent should not be exposed to its subsidiary’s environmental
liabilities; however, no assurance can be given that such would be the
case.





Risk
Factors Related to Kent International





For a
discussion of Kent International’s risk factors, please refer to Kent
International’s annual report for the year ended December 31, 2007 filed on form
10-KSB under SEC file no. 000-20726.





Risk
Factors Related to Kent Educational





The
Academy is in its early stages of operations.





In 2007,
its third year of operations, The Academy had revenues of approximately $493,000
and a net loss of approximately $7,000.  Continued revenue growth and
profitability are uncertain.  As a result, losses may be
incurred.


3




The
Academy is currently reviewing its strategic options.





The
Academy’s sole full time executive officer resigned on December 15,
2007.  This individual was primarily responsible for business
development and coordinating services.  As a result, The Academy is
currently reviewing its strategic options including hiring a replacement for the
executive officer, partnering with a competitor, continuing to provide services
to existing clients through an outsourcing platform, or discontinuation or
services.





The
educational services sector in New Jersey is highly competitive.





The
Academy operates in a highly fragmented market with numerous small service
providers and no dominant competition.  There can be no assurance that
The Academy will maintain or improve its competitive position or that no single
competitor or group of competitors will dominate the market in the
future.





The
resources allocated for educational purposes are unforeseeable.





The
allocation of resources for educational purposes is currently under great
scrutiny in New Jersey.  Funding for public schools in New Jersey
comes from either State aid or local property taxes.  Although
property taxes have increased rapidly in New Jersey over the last eight years,
this has not resulted in additional educational expenditures, because the State
of New Jersey has at the same time reduced its aid allocated to public
schools.  It is impossible to foresee the future developments of
property taxes and educational State aids.  As public schools in New
Jersey are currently our primary customer, our revenue growth is restricted by
any limitation on these resources.





Employees





As of
February 29, 2008, the Company and its subsidiaries had two full-time employees
and one part-time employee.





Item
2.                      DESCRIPTION OF
PROPERTY





None.





Item
3.                      LEGAL
PROCEEDINGS





Texas
American Petrochemicals, Inc. (“TAPI”)





By letter dated May 24, 2005,
the Texas Commission on Environmental Quality ("TCEQ") advised Texas American
Petrochemicals, Inc. (“TAPI”), that it was a person responsible for solid waste
at a hazardous waste site in Texas.TAPI is an inactive
subsidiary of the Company with no assets.The TCEQ determined that the
amount owed to the State of Texas for remediation is $2,459,593.92 and that
failure to pay that amount would result in the matter being referred to the TCEQ
Litigation Division.The Company has been advised
by its environmental counsel that it has good legal arguments to support its
position that it should not be subject to liability for the remediation costs of
the site.However, no assurances can be
made as to the outcome of this matter.





4


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





The
Company held its Annual Meeting of Stockholders on December 17,
2007.  Management's nominees, Paul O. Koether, William Mahomes, Jr.,
Casey K. Tjang, M. Michael Witte, and Bryan P. Healey were elected to the Board
of Directors.





The
following is the vote tabulation for all nominees:





ABSTENTIONS
      ANDFOR
            
            AGAINST
            
            WITHHELD
            
            BROKER NONVOTESPaul
      O. Koether
            1,540,689
            
            -
            
            -
            
            -William
      Mahomes, Jr.
            1,540,689
            
            -
            
            -
            
            -Casey
      K. Tjang
            1,540,689
            
            -
            
            -
            
            -M.
      Michael Witte
            1,540,689
            
            -
            
            -
            
            -Bryan
      P. Healey
            1,540,689
            
            -
            
            -
            
            -





PART II





Item
5.                      MARKET FOR COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS





Shareholders
of Record





As of
February 29, 2008, the Company had 1,394 stockholders of record of its common
stock.  The closing price of the common stock was $1.93 on February
29, 2008.





Market
Information





The
Company's common stock trades on the NASDAQ Capital 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 inter-dealer quotations
without retail markups, markdowns or commissions, and may not represent actual
transactions.




High
              
              
              LowCalendar
      Quarter:2007First
      Quarter
              
              $
              3.73
              
              
              $
              2.21Second
      Quarter
              
              
              2.81
              
              
              
              1.94Third
      Quarter
              
              
              2.40
              
              
              
              1.98Fourth
      Quarter
              
              
              2.50
              
              
              
              2.012006First
      Quarter
              
              $
              2.67
              
              
              $
              2.32Second
      Quarter
              
              
              2.64
              
              
              
              2.25Third
      Quarter
              
              
              2.29
              
              
              
              2.16Fourth
      Quarter
              
              
              2.49
              
              
              
              2.18




5


Dividends





The
Company did not declare or pay any dividends in 2007 or 2006.





Equity
Compensation Plan Information





On
November 25, 2005, shareholders of the Company approved the 2005 Stock Option
Plan making a total of 400,000 common stock options available for
issuance.  Subsequently, 300,000 options were awarded to Dr. Qun Yi
Zheng, the former President of Kent, on the same date.  33,000 of
these options were immediately exercisable with an additional 33,000 becoming
exercisable on the first eight anniversaries of the grant date.  On
August 31, 2007, the effective date of Dr. Zheng’s resignation, the 66,000
common stock options that had become exercisable were forfeited as were the
234,000 options that were still unexercisable.  The Company did not
record stock-based compensation expense for the year ended December 31, 2007 as
no options were earned during this period; however, approximately $36,000 in
stock-based compensation expense was recorded for the year ending December 31,
2006.  At December 31, 2007, the Company had no common stock options
outstanding.




The
following table provides a summary of the securities authorized for issuance
under equity compensation plans, the weighted average price and number of
securities remaining available for issuance, at December 31, 2007.


6




Plan
      Category
              
              (a)
      Number of Securities to be Issued Upon Exercise of Outstanding Options,
      Warrants and Rights
              
              (b)
      Weighted-Average Exercise Price of Outstanding Options, Warrants and
      Rights
              
              (c)
      Number of Securities Remaining Available for Future Issuance Under Equity
      Compensation Plans Excluding Securities Reflected in Column
      (a)Equity
      Compensation Plans Approved by Security Holders2005
      Stock Option Plan
              
              N/A
              
              N/A
              
              400,000Equity
      Compensation Plans not Approved by Security Holders
              
              N/A
              
              N/A
              
              N/ATotal
              
              N/A
              
              N/A
              
              400,000


Repurchase
Plans




SMALL
BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES


(COMMON
STOCK-AUGUST 2004 REPURCHASE PLAN) (1)




Period
              
              Total
      Number of Shares Purchased
              
              
              Average
      Price Paid per Share
              
              
              Total
      Number of Shares Purchased as Part of Publicly Announced Plans or
      Programs
              
              
              Maximum
      Number of Shares that May Yet Be Purchased Under the Plans or
      ProgramsOctober
      1, 2007 - October 31, 2007
              
              
              168
              
              
              $
              2.11
              
              
              
              168
              
              
              
              97,708November
      1, 2007 - November 30, 2007
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              97,708December
      1, 2007 - December 31, 2007
              
              
              60
              
              
              
              2.05
              
              
              
              60
              
              
              
              97,648Total
              
              
              228
              
              
              $
              2.09
              
              
              
              228
              
              
              
              97,648




(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.




7


Item
      6.
            MANAGEMENT'S
      DISCUSSION AND ANALYSIS





The
following discussion and analysis should be read in conjunction with the
Company’s Financial Statements and Notes thereto included elsewhere in this Form
10-KSB.  Statements in this report relating to future plans,
projections, events or conditions are forward-looking
statements.  Such statements are subject to risks and uncertainties
that could cause actual results to differ materially from those projected and
include, but are not limited to, the risks discussed below, the risks discussed
in the section of this Form 10-KSB entitled “Description of Business” and risks
discussed elsewhere in this Form 10-KSB.  The Company expressly
disclaims any obligation or undertaking to update these statements in the
future.





The
Company's business is comprised of the management of Kent International
Holdings, Inc. (“Kent International”) and Kent Educational Services, Inc. (“Kent
Educational”).





Kent
International





Kent
International is a publicly traded company (stock symbol “KNTH.PK”) currently
seeking to redeploy its assets into an operating business.  The
Company owned approximately 53.25% of Kent International at December 31,
2007.  All of Kent International’s assets, excluding its portfolio of
pharmaceutical patents (which have a zero carrying value on the consolidated
financial statements), are invested in cash and United States Treasury
Bills.  Kent International’s current business plan is to serve as a
vehicle for the acquisition of or merger or consolidation with another
company.  Kent International may use its available working capital,
capital stock, debt or a combination of these to start a business or to effect a
business combination with a company seeking to establish a public trading market
for its securities while avoiding the time delays, significant expense, loss of
voting control and other burdens including significant professional fees of an
initial public offering.  A business combination may be with a
financially stable, mature company or a company that is in its early stages of
development or growth, which could include companies seeking to obtain capital
and to improve their financial stability.





Additionally,
Kent International has developed a niche social networking website, www.chinauspals.com,
designed to promote cultural exchange between the citizens of the United States
and those of the People’s Republic of China.  Membership to the site
is free, thus, any potential revenues will be derived from advertisements placed
on the site by third parties.  The site provides users with access to
other users’ personal profiles and enables the user to send private messages to
other registered users of similar interests in order to develop lasting
friendships or simply attain a pen pal.  Chinauspals.com also features
user generated discussion forums and blogs as well as user submitted videos and
pictures.





Kent
International does not expect that these activities will generate any
significant revenues for an indefinite period as these efforts are in their
early stages.  As a result, these programs may produce significant
losses until such time as meaningful revenues are achieved.





Kent
Educational





Kent
Educational, a wholly owned subsidiary of Kent has a 60% controlling interest in
The Academy for Teaching and Leadership, Inc., (“The Academy”).  The
Academy, headed by Dr. Saul Cooperman, a former Commissioner of Education in the
State of New Jersey, offers educators high quality programs designed to
dramatically improve themselves, their students and their
schools.  The Academy brings together educators from school districts
to engage in quality programs related to curriculum, assessment, and
instructional strategies that have the potential to assist them in their own
development as well as to enhance the learning of their
students.  Similarly, it offers administrators the latest programs in
leadership practices that can support their school district’s goals and give
them the skills to achieve their specific objectives.





8




The
Academy has also produced an innovative educational DVD entitled “Sex Over
Sixty”.  The Academy has worked to produce this DVD based on
research that enables those people over 60 to learn about their changing bodies
and experience a healthier, happier sex life.  “Sex Over Sixty” provides
frank answers to sexual questions that mature adults face as they age,
experience health problems, or begin dating again after a loss or
divorce.  The DVD was released on October 16, 2007; however, as with
any new media release, the possible commercial success of this DVD is
uncertain.  Initial marketing, which has commenced, will be
constrained by a modest advertising budget.  Initial sales results are
disappointing.





Kent
Educational and The Academy are consolidated in the accompanying financial
statements.  The Company has determined that continued revenue growth
and profitability at The Academy are uncertain. As a result, losses may be
incurred.





Results
of Operations





The
Company had a consolidated net loss of $551,000, ($.20 basic and fully diluted
loss per share) in 2007, compared to a consolidated net loss of $546,000 ($.19
basic and fully diluted loss per share) in 2006.  The change in the
net loss was mainly the result of increased interest revenue, seminar fees and
administrative fees paid by an un-affiliated investment partnership offset by
costs related to the separation agreement with Dr. Qun Yi Zheng, our former
President.  Accordingly, results for 2007 and 2006 may not be
comparable nor are they necessarily indicative of future results.





Revenues





Seminar
fees based on seminars held by The Academy increased to $481,000 for the year
ended December 31, 2007, compared to $378,000 for the year ended December 31,
2006.  This increase is a result of an increase in marketing efforts
and name recognition during The Academy’s third year of
operations.  The Academy currently has approximately $113,125 under
contract for services to be rendered in 2008.  The Company recognizes
seminar revenue when the services are provided.





Interest
income was $613,000 and $619,000 in 2007 and 2006, respectively, a decrease of
$6,000.  Although we enjoyed a higher yield on short-term investments
and cash equivalents during the first six months of 2007 as compared to the
first six months of 2006, the yield on our United States Treasury Bills
purchased between June and December 2007 decreased resulting in a decrease in
interest revenue for the year ended December 31, 2007.





Net
unrealized losses on available for sale securities were $3,000, and realized
gains were $7,000 for the year ended December 31, 2007.  Net investing
gains were $28,000 for the year ended December 31, 2006.  As a result
of the transfer in classification from trading securities to available for sale
securities, unrealized losses during the year ended December 31, 2007 were
recorded as an adjustment to accumulated other comprehensive income in
stockholder’s equity instead of a component of operating
income.  Accordingly, investing gains reported for the year ending
December 31, 2007 are not comparable to those reported for the year ending
December 31, 2006.





9




For the
year ended December 31, 2007, other income increased to approximately $139,000
from approximately $60,000 for the comparable period in 2006, caused primarily
by the increase in administrative fees paid by an un-affiliated investment
partnership.  As these administrative fees fluctuate based on the
performance of the investment partnership, we cannot be certain they will
recur.  The largest concentration of other income for the year ended
December 31, 2006 was related to the one time sale of certain of Kent
International’s pharmaceutical patent rights to Accuthera, Inc., a Colorado
corporation, for $50,000 in September 2006.  These patents were
previously recorded on the Company’s books at a zero carrying
value.





Expenses





General
and administrative expenses increased to $1,805,000 for the year ended December
31, 2007 from $1,766,000 for 2006.  The increase in expenses of 2.2%
is primarily attributed to Kent International’s costs associated with the
separation agreement with Dr. Qun Yi Zheng of approximately $136,000, expenses
associated with operating www.ChinaUSPals.com
of approximately $40,000 and expenses associated with Sex Over Sixty of
approximately $62,000.  These increases were offset by decreases in
accounting and legal fees of approximately $46,000, other general administrative
expenses of $26,000 and expenses related to travel and entertainment associated
with our ongoing business development activities of approximately
$40,000.





The
Company recorded a charge of approximately $90,000 to write off goodwill
associated with the investment in The Academy.  Although seminar
revenue increased $93,000 in 2007 as compared to 2006, The Academy experienced a
net loss of approximately $7,000 due to costs associated with marketing a
documentary DVD and consulting fees.  Additionally, as discussed in
risk factors related to Kent Educational, The Academy is currently reviewing its
strategic options after the resignation of its sole full time executive
officer.  Consequently, management determined that as further revenue
growth and profitability were uncertain, writing off the goodwill associated
with the investment would be appropriate.





Our
consolidated subsidiary, Kent International recorded a charge of approximately
$38,000 in June 2007 to write off certain website development costs related to
our social networking website, ChinaUSPals.com.  These costs were
associated with a beta version of the website that Kent International is no
longer utilizing.





Other





In 2006,
the Company acquired 69,834 additional shares of Kent International (then known
as Cortech, Inc.) in open market transactions for approximately $192,000
recording an extraordinary gain of approximately $28,000, as the amount paid for
the shares was less than the fair value of the net assets recorded.





Liquidity
and Capital Resources





At
December 31, 2007, the Company had cash and cash equivalents of
$135,000.  Cash and cash equivalents consist of cash held in banks and
brokerage firms.  The Company had short-term investments, consisting
of U.S. Treasury Bills with original maturities of six months, of $12.27 million
at December 31, 2007 with yields ranging from 3.18% to 5.04%.  Working
capital at December 31, 2007 was approximately $12.4
million.  Management believes its cash and cash equivalents are
sufficient for its business activities for at least the next 12 months and for
the costs of seeking an acquisition of an operating business.





10




Net cash
used in operations was $649,000 for the year ended December 31, 2007, compared
to net cash used in operations of $757,000 in 2007.  Cash used in
operations is a direct result of operating expenses offset by operating revenues
and adjusted for changes in operating assets and liabilities.  The
decrease in net cash used in operations was largely the result of the timing of
interest received on short term investments, the timing of payments for accounts
payable and the receipt of a larger than average administrative fee paid by an
unaffiliated investment partnership, not an indication of decreasing
expenses.  If net cash used in operations for the year ended December
31, 2007 were adjusted to eliminate the larger than average administrative fee,
the net result would be $745,000 net cash used in operations.





$639,000
was provided by investing activities during the year ended December 31, 2007 by
the sales and maturities of short-term investments of $25.58 million offset by
the purchase of short-term investments of $24.96 million and $14,000 for
capitalized costs related to the development of www.chinauspals.com.  The
Company used $886,000 for investing activities during the year ended December
31, 2006 for the purchase of short-term investments of $24.3 million and the
purchase of additional shares of Kent International of $192,000 offset by the
sales and maturities of short-term investments of $23.6 million.





The
Company used $17,000 for financing activities for the year ended December 31,
2007 to repurchase 7,770 shares of common stock compared to the $12,000 used for
financing activities for the year ended December 31, 2006 to repurchase 5,335
shares of common stock.  Kent International also used approximately
$5,000 and $68,000 to repurchase their stock in the years ended December 31,
2007 and 2006, respectively.





Other
Disclosures – Related Party Transactions





The
Company receives a monthly management fee of $21,000 from Kent International for
management services.  These services include, among other things,
preparation of periodic and other filings with the Securities and Exchange
Commission, evaluating merger and acquisition proposals, providing internal
accounting services and shareholder relations.  This arrangement may
be terminated at will by either party.  The monthly management fee
revenue and offsetting expense is eliminated during
consolidation.  The Company is the beneficial owner of approximately
53.25% of Kent International’s outstanding Common Stock at December 31,
2007.  Paul O. Koether, Chairman of the Company is also the Chairman
of Kent International and the beneficial owner of approximately 56.17% of the
Company’s outstanding common stock.  Bryan P. Healey, Chief Financial
Officer and Director of the Company is also the Chief Financial Officer and
Director of Kent International and the son-in-law of Paul O.
Koether.





The
Company and its consolidated subsidiaries reimburse an affiliate, Bedminster
Management Corp., for the allocated direct cost of group health insurance and
office supplies. These reimbursements were approximately $83,000 and $78,000 in
the years ended December 31, 2007 and 2006, respectively.  Bedminster
Management Corp. facilitates the allocation of certain central administrative
costs on a cost reimbursement basis and is owned equally by Kent, Kent
International and T.R. Winston & Company, LLC.





11




Other
Disclosures





Dr. Qun
Yi Zheng resigned as President of the Company and as President and Director of
Kent International Holdings, Inc., the Company’s 53.25% owned subsidiary and all
other subsidiaries effective August 31, 2007.  Paul O. Koether has
assumed the title and duties of President.





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.
In our preparation of the financial statements for 2007, there was one estimate
made which was (a) subject to a high degree of uncertainty and (b) material to
our results.  The estimate was our determination, detailed in Note 5
to the Financial Statements, to write-off approximately $90,000 in goodwill
attributable to our acquisition of The Academy.  The determination was
based on our uncertainty as to whether The Academy can achieve sustained revenue
growth and profitability.





We made
no material changes to our critical accounting policies in connection with the
preparation of financial statements for 2006.





New
Accounting Pronouncements





FASB
issued SFAS No. 157 ("SFAS 157") “Fair Value Measurements” on
September 15, 2006.  SFAS 157 enhances existing guidance for measuring
assets and liabilities using fair value.  Previously, guidance for
applying fair value was incorporated in several accounting
pronouncements.  The new statement provides a single definition of
fair value, together with a framework for measuring it, and requires additional
disclosure about the use of fair value to measure assets and
liabilities.  While the statement does not add any new fair value
measurements, it does change current practice.  One such change is a
requirement to adjust the value of nonvested stock for the effect of the
restriction even if the restriction lapses within one year.  SFAS 157
is effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years.  The
adoption of SFAS 157 is not expected to have a material impact on the financial
statements of the Company.





12




There
were no other recently issued accounting pronouncements with delayed effective
dates that would currently have a material impact on the consolidated financial
statements of the Company.





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, 2007 was approximately $117,000. The
potential change in fair value, using a hypothetical 10% decline in prices, is
estimated to be a $11,700 loss as of December 31, 2007.  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.





Item
7.   FINANCIAL
STATEMENTS





The financial statements filed herein
are listed below:





Report of Independent Registered Public
Accounting Firm





Financial Statements:





Consolidated Balance Sheet as of
December 31, 2007





Consolidated Statements of Operations
for the


Years ended December 31, 2007 and
2006





Consolidated Statements of Cash Flows
for the


Years ended December 31, 2007 and
2006





Consolidated Statements of
Stockholders’ Equity for the


Years ended December 31, 2007 and
2006





Notes to Consolidated Financial
Statements




13





Report
of Independent Registered Public Accounting Firm





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





We have
audited the accompanying consolidated balance sheet of Kent Financial Services,
Inc. and subsidiaries as of December 31, 2007, and the related consolidated
statements of operations, stockholders’ equity, and cash flows for the years
ended December 31, 2007 and 2006. These consolidated financial statements are
the responsibility of the Company’s management. Our responsibility is to express
an opinion on these consolidated financial statements based on our
audits.





We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  The
Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting.  Accordingly, we express no such
opinion.  An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.  We
believe that our audit provided 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, 2007, and the results of their
operations and their cash flows for each of the two years in the period ended
December 31, 2007, in conformity with U.S. generally accepted accounting
principles.








/s/
Paritz & Company, P.A.





March 3,
2008


Hackensack,
New Jersey







14


KENT
      FINANCIAL SERVICES, INC. AND SUBSIDIARIESCONSOLIDATED
      BALANCE SHEETAs
      of December 31, 2007(in
      thousands, except share and per share amounts)ASSETSCurrent
      Assets:Cash
      and cash equivalents
              
              $
              135Short-term
      investments
              
              
              12,270Securities
      owned
              
              
              117Accounts
      receivable
              
              
              98Prepaid
      expenses
              
              
              18Total
      current assets
              
              
              12,638Property
      and equipment, net of accumulated depreciation of $1
              
              
              6Other
      assets
              
              
              62Total
      assets
              
              $
              12,706LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilities:Accounts
      payable and accrued expenses
              
              $
              269Noncurrent
      liabilities:Accrued
      post employment obligations
              
              
              685Total
      liabilities
              
              
              954Minority
      interest in subsidiaries
              
              
              5,083Stockholders'
      equity:Preferred
      stock without par value;500,000
      shares authorized;none
      outstanding
              
              
              -Common
      stock, $.10 par value;8,000,000
      shares authorized;2,792,022
      shares issued and outstanding
              
              
              279Additional
      paid-in capital
              
              
              12,390Accumulated
      deficit
              
              
              (5,997
              )Accumulated
      other comprehensive income
              
              
              (3
              )Total
      stockholders' equity
              
              
              6,669Total
      liabilities and stockholders' equity
              
              $
              12,706


See
accompanying notes to consolidated financial statements.




15




KENT
      FINANCIAL SERVICES, INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF OPERATIONS(in
      thousands, except per share amounts)Year
      Ended December 31,2007
              
              
              2006Revenues:Seminar
      fees
              
              $
              481
              
              
              $
              378Interest
      revenue
              
              
              613
              
              
              
              619Investing
      gains
              
              
              7
              
              
              
              28Sale
      of patent rights
              
              
              
              
              
              
              50Other
      income
              
              
              139
              
              
              
              60Total
      revenues
              
              
              1,240
              
              
              
              1,135Expenses:General
      and administrative
              
              
              1,805
              
              
              
              1,766Write
      off capitalized software costs
              
              
              38Write
      off goodwill
              
              
              90Total
      expenses
              
              
              1,933
              
              
              
              1,766Loss
      before income taxes, minorityinterest
      and extraordinary gain
              
              
              (693
              )
              
              
              (631
              )Provision
      for income tax benefit (expense)
              
              
              (2
              )
              
              
              (14
              )Loss
      before minority interestand
      extraordinary gain
              
              
              (695
              )
              
              
              (645
              )Minority
      interest in subsidiaries losses
              
              
              144
              
              
              
              71Loss
      before extraordinary gain
              
              
              (551
              )
              
              
              (574
              )Extraordinary
      gain due to purchase ofsubsidiary
      stock
              
              
              
              
              
              
              28Net
      loss
              
              
              (551
              )
              
              
              (546
              )Other
      comprehensive income (loss):Unrealized
      loss on available for sale securities
              
              
              (3
              )Comprehensive
      loss
              
              $
              (554
              )
              
              $
              (546
              )Basic
      and diluted net loss per common share:Loss
      per share before extraordinary gain
              
              $
              (0.20
              )
              
              $
              (0.20
              )Extraordinary
      gain
              
              
              
              
              
              
              0.01Net
      loss per share
              
              $
              (0.20
              )
              
              $
              (0.19
              )Weighted
      average number of common sharesoutstanding
      (in 000's)
              
              
              2,794
              
              
              
              2,802


See
accompanying notes to consolidated financial statements.
  16




KENT FINANCIAL SERVICES, INC. AND
      SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF CASH FLOWS(in
      thousands)Year
      Ended December 31,2007
              
              
              2006Cash
      flows from operating activities:Net
      loss
              
              $
              (551
              )
              
              $
              (546
              )Adjustments
      to reconcile net loss to netcash
      provided by (used in) operating activities:Depreciation
              
              
              5
              
              
              
              2Write
      off goodwill
              
              
              90Write
      off capitalized software costs
              
              
              38Stock-based
      compensation expense
              
              
              
              
              
              
              36Unrealized
      gains on securities owned
              
              
              
              
              
              
              5Extraordinary
      gain on purchase of stock of subsidiary
              
              
              
              
              
              
              (28
              )Minority
      interest in subsidiaries losses
              
              
              (144
              )
              
              
              (71
              )Interest
      receivable on short-term investments
              
              
              5
              
              
              
              (28
              )Change
      in accounts receivable and other current assets
              
              
              (8
              )
              
              
              (116
              )Change
      in other assets
              
              
              (6
              )
              
              
              (16
              )Change
      in accounts payable and accrued expenses
              
              
              (55
              )
              
              
              (18
              )Change
      in deferred revenue
              
              
              (23
              )
              
              
              23Net
      cash used in operating activities
              
              
              (649
              )
              
              
              (757
              )Cash
      flows from investing activities:Purchase
      of stock of subsidiary
              
              
              
              
              
              
              (192
              )Sale
      of marketable securities
              
              
              30Purchase
      of short-term investments
              
              
              (24,959
              )
              
              
              (24,267
              )Maturity
      and sales of short-term investments
              
              
              25,582
              
              
              
              23,607Acquisition
      of property and equipment
              
              
              (14
              )
              
              
              (34
              )Net
      cash provided by (used in) investing activities
              
              
              639
              
              
              
              (886
              )Cash
      flows from financing activities:Repurchase
      of common stock by subsidiary
              
              
              (5
              )
              
              
              (68
              )Repurchase
      of common stock
              
              
              (17
              )
              
              
              (12
              )Net
      cash used in financing activities
              
              
              (22
              )
              
              
              (80
              )Net
      decrease in cash and cash equivalents
              
              
              (32
              )
              
              
              (1,723
              )Cash
      and cash equivalents at beginning of period
              
              
              167
              
              
              
              1,890Cash
      and cash equivalents at end of period
              
              $
              135
              
              
              $
              167Supplemental
      disclosure of cash flow information:Cash
      paid for:Taxes
              
              $
              8
              
              
              $
              25


See
accompanying notes to consolidated financial statements.
  17




KENT
      FINANCIAL SERVICES, INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF STOCKHOLDERS' EQUITY(in
      thousands)AccumulatedAdditional
              
              
              
              
              
              OtherCommon
      Stock
              
              
              Paid
      in
              
              
              Accumulated
              
              
              ComprehensiveShares
              
              
              Amount
              
              
              Capital
              
              
              Deficit
              
              
              Income
              
              
              TotalBalance
      December 31, 2005
              
              
              2,805
              
              
              $
              280
              
              
              $
              12,382
              
              
              $
              (4,900
              )
              
              
              
              
              
              $
              7,762Repurchase
      of common stock
              
              
              (5
              )
              
              
              
              
              
              
              (12
              )
              
              
              
              
              
              
              
              
              
              
              (12
              )Stock
      based compensation
              
              
              
              
              
              
              
              
              
              
              36
              
              
              
              
              
              
              
              
              
              
              
              36Net
      loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (546
              )
              
              
              
              
              
              
              (546
              )Balance
      December 31, 2006
              
              
              2,800
              
              
              
              280
              
              
              
              12,406
              
              
              
              (5,446
              )
              
              
              
              
              
              
              7,240Repurchase
      of common stock
              
              
              (8
              )
              
              
              (1
              )
              
              
              (16
              )
              
              
              
              
              
              
              
              
              
              
              (17
              )Unrealized
      loss on availablefor
      sale securities
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              (3
              )
              
              
              (3
              )Net
      loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (551
              )
              
              
              
              
              
              
              (551
              )Balance
      December 31, 2007
              
              
              2,792
              
              
              $
              279
              
              
              $
              12,390
              
              
              $
              (5,997
              )
              
              $
              (3
              )
              
              $
              6,669


See
accompanying notes to consolidated financial statements.


18


KENT
FINANCIAL SERVICES, INC. AND SUBSIDIARIES


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


For the
Years Ended December 31, 2007 and 2006





NOTE
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 subsidiary, Kent
Educational Services, Inc. (“Kent Educational”) and Kent’s majority owned
subsidiary, Kent International Holdings, Inc., (“Kent International”) and Kent
Educational’s majority owned subsidiary, The Academy of Teaching and Leadership,
Inc. (“The Academy”).  Intercompany balances and transactions between
the Company and its subsidiaries have been eliminated.





Use
of 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 and the differences could be material.





Cash
Equivalents





The
Company considers as cash equivalents all short-term investments that 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.  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.





Short-Term
Investments





Short-term
investments consist of U.S. Treasury Bills purchased with an original maturity
of six months and are valued at cost plus accrued interest, which approximates
the fair market value.  The Company currently intends to hold these
investments until maturity.





Marketable
Securities





Marketable
securities, consisting of equity securities, are stated at fair value and are
considered available for sale securities.





Property
and Equipment





Property
and equipment are stated at cost.  Depreciation, which is calculated
using the straight-line method, is provided by periodic charges to expense over
the estimated useful lives of the assets ranging from 3 to 5 years.





19




Other
Assets





Other
assets consist primarily of capitalized film costs expended by The Academy for
the production of a documentary on DVD for direct sale to consumers titled Sex Over
Sixty.  These costs are being amortized utilizing the
individual-film-forecast method pursuant to the AICPA’s Statement of Position
00-2, Accounting by Producers
and Distributors of Motion Picture Films.  This method
amortizes film costs using the ratio of current period actual revenue to
estimated remaining unrecognized ultimate revenue.





Goodwill





In
accordance with SFAS No. 142, Goodwill and Other Intangible
Assets, we do not amortize goodwill or intangibles with indefinite lives
resulting from acquisitions.  We review these assets annually for
potential impairment issues.  Separable intangible assets that are not
deemed to have an indefinite life are amortized over their estimated useful
lives.





Income
Taxes





The
Company recognizes deferred tax assets and liabilities related to the expected
future tax consequences of events that have been recognized in the Company’s
financial statements and tax returns.  However, if it is more likely
than not that some portion or all of the net deferred tax assets will not be
realized, a valuation allowance is established and the tax benefit is not
recognized in the statements of operations.





Revenue
Recognition





Revenue
consists primarily of interest revenue on invested balances and educational
services provided by the Academy.  Interest revenue is recognized on
an accrual basis.  The Academy recognizes revenue when services are
provided to customers.  When the Academy collects payments from
customers before services are rendered, the advance payments are recorded as
deferred revenue and realized after services are rendered.





Basic
and Diluted Net Loss Per Share





Basic
loss per common share is computed by dividing the net loss by the
weighted-average number of common shares outstanding.  Diluted loss
per share is computed by dividing the net loss by the sum of the
weighted-average number of common shares outstanding plus the dilutive effect of
shares issuable through the exercise of stock options.  We have
excluded 300,000 Common Stock options from the calculation of diluted loss per
share for the year ended December 31, 2006, which, if included, would have an
antidilutive effect.





For more
information on stock options, see Note 10 of Notes to Consolidated Financial
Statements.





Accounting
for Stock Based Compensation





Until
December 31, 2005, the Company applied Accounting Principles Board Opinion No.
25 and related interpretations in accounting for its common stock
options.  Accordingly, no compensation cost had been recognized for
the common stock options issued.  In December 2004, the FASB issued
SFAS No. 123(R), "Share-Based
Payment," (“SFAS 123(R)”), 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 is measured based on the fair value
of the equity or liability instruments issued. SFAS 123(R) was effective as of
the beginning of the first interim or annual period beginning after December 15,
2005.  The Company adopted SFAS 123(R) on January 1,
2006.





20




New
Accounting Pronouncements





FASB
issued SFAS No. 157 ("SFAS 157") “Fair Value Measurements” on
September 15, 2006.  SFAS 157 enhances existing guidance for measuring
assets and liabilities using fair value. Previously, guidance for applying fair
value was incorporated in several accounting pronouncements.  The
statement provides a single definition of fair value, together with a framework
for measuring it, and requires additional disclosure about the use of fair value
to measure assets and liabilities.  While the statement does not add
any new fair value measurements, it does change current practice.  One
such change is a requirement to adjust the value of nonvested stock for the
effect of the restriction even if the restriction lapses within one
year.  SFAS 157 is effective for financial statements issued for
fiscal years beginning after November 15, 2007, and interim periods within those
fiscal years.  The adoption of SFAS 157 is not expected to have a
material impact on the financial statements of the Company.





NOTE 2 – BUSINESS AND SEGMENT
INFORMATION





The
Company's business is comprised of the management of Kent International and Kent
Educational.  The Company has determined that its operations can be
segregated into two principal operating segments which are business development
activities and education services.  We define operating segments as
components of an enterprise about which separate financial information is
available that is evaluated regularly by the Chairman in deciding how to
allocate resources and in assessing performance.





Kent
International is a publicly traded company (stock symbol “KNTH.PK”) currently
seeking to redeploy its assets into an operating business.  The
Company owned approximately 53.25% of Kent International at December 31,
2007.  All of Kent International’s assets, excluding its portfolio of
pharmaceutical patents (which have a zero carrying value on the consolidated
financial statements), are invested in cash and United States Treasury
Bills.  Kent International’s activity is reported in the business
development activities segment.





Additionally,
Kent International has developed a niche social networking website, www.chinauspals.com,
designed to promote cultural exchange between the citizens of the United States
and those of the People’s Republic of China.  Membership to the site
is free, thus, any potential revenues will be derived from advertisements placed
on the site by third parties.  The site provides users with access to
other users’ personal profiles and enables the user to send private messages to
other registered users of similar interests in order to develop lasting
friendships or simply attain a pen pal.  Chinauspals.com also features
user generated discussion forums and blogs as well as user submitted videos and
pictures.





The
Company does not expect that these activities will generate any significant
revenues for an indefinite period as these efforts are in their early
stages.  As a result, these programs may produce significant losses
until such time as meaningful revenues are achieved.





21




The
education services segment represents the activity of Kent Educational; which is
a wholly owned subsidiary of the Company that has a 60% controlling interest in
the Academy for Teaching and Leadership Inc. (“The Academy”).  The
Academy, headed by Dr. Saul Cooperman, a former Commissioner of Education in the
State of New Jersey, provides educators various programs designed to improve
themselves, their students, and their schools.





The
allocation of resources for educational purposes is currently under great
scrutiny in New Jersey.  Funding for public schools in New Jersey
comes from either State aid or local property taxes.  Although
property taxes have increased rapidly in New Jersey over the last eight years,
this has not resulted in additional educational expenditures, because the State
of New Jersey has at the same time reduced its aid allocated to public
schools.  It is impossible to foresee the future developments of
property taxes and educational State aids.  As public schools in New
Jersey are currently our primary customer, our revenue growth is restricted by
any limitation on these resources.





The
following table summarizes the assets and operations of the Company’s segments
as of and for the years ended December 31, 2007 and 2006:





BusinessDevelopment
              
              
              Educational
              
              
              All
      Other
              
              
              
              
              
              ConsolidatedActivities
              
              
              Services
              
              
              Operations
              
              
              Eliminations
              
              
              TotalsFor the year ended
      December 31, 2007Revenues
      from external customers
              
              
              
              
              $
              481
              
              
              $
              123
              
              
              
              
              
              $
              604Management
      fees
              
              
              
              
              
              
              
              
              
              296
              
              
              $
              (296
              )Interest
      revenue
              
              $
              518
              
              
              
              11
              
              
              
              84
              
              
              
              
              
              
              
              613Investing
      gains
              
              
              
              
              
              
              
              
              
              
              7
              
              
              
              
              
              
              
              7Other
      Income
              
              
              
              
              
              
              1
              
              
              
              15
              
              
              
              
              
              
              
              16Total
      revenues
              
              
              518
              
              
              
              493
              
              
              
              525
              
              
              
              (296
              )
              
              
              1,240General
      and administrative expenses
              
              
              (795
              )
              
              
              (500
              )
              
              
              (806
              )
              
              
              296
              
              
              
              (1,805
              )Write
      off capitalized software costs
              
              
              (38
              )
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (38
              )Write
      off goodwill
              
              
              
              
              
              
              (90
              )
              
              
              
              
              
              
              
              
              
              
              (90
              )Income
      tax expense
              
              
              (1
              )
              
              
              (1
              )
              
              
              
              
              
              
              
              
              
              
              (2
              )Minority
      interest
              
              
              141
              
              
              
              3
              
              
              
              
              
              
              
              
              
              
              
              144Net
      loss by segment
              
              $
              (175
              )
              
              $
              (95
              )
              
              $
              (281
              )
              
              
              -
              
              
              $
              (551
              )As of December 31,
      2007Total
      assets by segment
              
              $
              10,598
              
              
              $
              372
              
              
              $
              1,736
              
              
              
              -
              
              
              $
              12,706




22




BusinessDevelopment
              
              
              Educational
              
              
              All
      Other
              
              
              
              
              
              ConsolidatedActivities
              
              
              Services
              
              
              Operations
              
              
              Eliminations
              
              
              TotalsFor the year ended
      December 31, 2006Revenues
      from external customers
              
              
              
              
              $
              378
              
              
              $
              37
              
              
              
              
              
              $
              415Management
      fees
              
              
              
              
              
              
              
              
              
              252
              
              
              $
              (252
              )Interest
      revenue
              
              $
              512
              
              
              
              10
              
              
              
              97
              
              
              
              
              
              
              
              619Investing
      losses
              
              
              
              
              
              
              
              
              
              
              28
              
              
              
              
              
              
              
              28Sale
      of patent rights
              
              
              50
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              50Other
      income
              
              
              2
              
              
              
              
              
              
              
              21
              
              
              
              
              
              
              
              23Total
      revenues
              
              
              564
              
              
              
              388
              
              
              
              435
              
              
              
              (252
              )
              
              
              1,135General
      and administrative expenses
              
              
              (775
              )
              
              
              (306
              )
              
              
              (937
              )
              
              
              252
              
              
              
              (1,766
              )Income
      tax expense
              
              
              (1
              )
              
              
              (8
              )
              
              
              (5
              )
              
              
              
              
              
              
              (14
              )Minority
      interest
              
              
              101
              
              
              
              (30
              )
              
              
              
              
              
              
              
              
              
              
              71Extraordinary
      gain
              
              
              
              
              
              
              
              
              
              
              28
              
              
              
              
              
              
              
              28Net
      income (loss) by segment
              
              $
              (111
              )
              
              $
              44
              
              
              $
              (479
              )
              
              
              -
              
              
              $
              (546
              )As of December 31,
      2006Total
      assets by segment
              
              $
              10,948
              
              
              $
              515
              
              
              $
              2,042
              
              
              
              -
              
              
              $
              13,505




Note
3 – MARKETABLE SECURITIES





Marketable
securities owned as of December 31, 2007, comprised mainly of portfolio
positions (equity securities) held for capital appreciation consisted of the
following (all numbers in thousands):




December
      31, 2007Percent
      Owned
              
              
              Estimated
      Fair Value
              
              
              Gains
      in Accumulated Other Comprehensive Income
              
              
              Losses
      in Accumulated Other Comprehensive IncomeGolfRounds.com,
      Inc.
              
              
              4.35
              %
              
              $
              92
              
              
              
              
              
              $
              (10
              )All
      other equity securities
              
              
              N/A
              
              
              
              24
              
              
              $
              7$
              116
              
              
              $
              7
              
              
              $
              (10
              )






During
the first quarter of 2007, the Company reclassified its marketable securities
from trading securities to available for sale securities.  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.





23


NOTE 4 – PROPERTY, PLANT &
EQUIPMENT





Net
property, plant and equipment as December 31 consisted of (numbers in
thousands):




2007Office
      Furniture and Equipment
              
              $
              7Less:
      Accumulated Depreciation
              
              
              (1
              )$
              6






NOTE 5 – KENT EDUCATIONAL SERVICES,
INC.





Goodwill





Kent
Educational recorded a charge in the fourth quarter of 2007 of approximately
$90,000 to write off the goodwill associated with the acquisition of the 60%
interest of the Academy.  Although seminar revenue increased $93,000
in 2007 as compared to 2006, The Academy experienced a net loss of approximately
$7,000 due to costs associated with marketing a documentary DVD and consulting
fees.  Additionally The Academy is currently reviewing its strategic
options after the resignation of its sole full time executive
officer.  Consequently, management determined that as further revenue
growth and profitability were uncertain, writing off the goodwill associated
with the purchase would be appropriate.





NOTE 6 – KENT INTERNATIONAL HOLDINGS,
INC.





In 2006,
the Company acquired 69,834 additional shares of Kent International (then known
as Cortech, Inc.) in open market transactions for $191,979 recording, in
accordance with SFAS No. 141, “Business Combinations”, an extraordinary gain of
approximately $28,000, as the amount paid for the shares was less than the fair
value of the net assets recorded.  At December 31, 2007, the Company
owned 1,900,000 shares or 53.25% of Kent International’s issued
shares.





On May
25, 2006, Cortech was reincorporated in Nevada by a merger with its wholly owned
subsidiary, Kent International Holdings, Inc.  The reincorporation
effected a change in Cortech’s legal domicile from Delaware to Nevada and a
change in the name from Cortech, Inc. to Kent International Holdings,
Inc.





Kent
International Stock Option Plans





Kent
International has issued certain common stock options to its employees,
directors and consultants.  At December 31, 2007, Kent International
had 120,000 common stock options outstanding.





Until
December 31, 2005, Kent International applied Accounting Principles Board
Opinion No. 25 and related interpretations in accounting for its common stock
options.  Accordingly, no compensation cost had been recognized for
the common stock options issued.  In December 2004, the FASB issued
SFAS No. 123(R), "Share-Based
Payment," (“SFAS 123(R)”), 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 is measured based on the fair value
of the equity or liability instruments issued. SFAS 123(R) was effective as of
the beginning of the first interim or annual period beginning after December 15,
2005.  Kent International adopted SFAS 123(R) on January 1,
2006.  The adoption did not have an impact on the Kent International’s
financial position or results of operations as all stock options granted to date
were fully vested prior to January 1, 2006.




24




The
Company’s 1986 Stock Option Plan (“1986 Plan”) authorizes the grant of stock
options to officers and employees of the Company to purchase an aggregate of
300,000 shares of common stock.  No options were granted in 2007 or
2006.





The
Company’s 1993 Equity Incentive Plan (“1993 Plan”), approved by the stockholders
on May 10, 1994, authorizes the issuance of 340,000 shares through the grant of
options to purchase common stock, stock bonuses, and rights to purchase
restricted stock.  The 1993 Plan was terminated on December 9, 2003
and no further options may be awarded under this plan.





The stock
options granted under either plan may be incentive stock options (“ISO”) or
nonstatutory stock options (“NSO”).  The Board of Directors may set
the rate at which the options expire, subject to limitations discussed
below.  However, no options shall be exercisable after the tenth
anniversary of the date of grant or, in the case of ISOs, three months following
termination of employment, except in cases of death or disability, for which the
time or exercisability is extended.  In the event of dissolution,
liquidation or other corporate reorganization, all stock options outstanding
under the 1986 Plan and the 1993 Plan would become exercisable in
full.





ISOs may
not be granted at an exercise price of less than the fair market value of the
common stock at the date of grant.  If an ISO is granted to an
employee who owns more than 10% of the Company’s total voting stock, such
exercise price shall be at least 110% of fair market value of the common stock,
and the ISO shall not be exercisable until after five years from the date of
grant.  The exercise price of each NSO may not be less than 85% of the
fair market value of the common stock at the date of grant.





Each of
these plans also provides for stock appreciation rights, which may be granted
with respect to any stock option.  No stock appreciation rights have
been granted through December 31, 2007.





A summary
of the status of Kent International’s 1986 Plan and 1993 Plan as of December 31,
2007 and 2006 and changes during the years ended on those dates is presented
below:




25




2007
              
              2006Shares
              
              Weighted-
                Average
                Exercise
                Price
              
              Range
      of
                Exercise
                Price
              
              Shares
              
              Weighted-
                Average
                Exercise
                Price
              
              Range
      of
                Exercise
                PriceOptions
      outstanding at the beginning of the year
              
              
              290,850
              
              $
              3.52
              
              $
              3.50
      - $7.34
              
              
              350,880
              
              $
              4.27
              
              $
              3.50
      - $12.80Expired
              
              
              (170,850
              )
              $
              3.54
              
              $
              3.50
      - $7.34
              
              
              (60,030
              )
              $
              7.90
              
              $
              5.00
      - $12.80Options
      outstanding at the end of the year
              
              
              120,000
              
              $
              3.50
              
              $
              3.50
              
              
              290,850
              
              $
              3.52
              
              $
              3.50
      - $7.34Options
      exercisable at the end of the year
              
              
              120,000
              
              $
              3.50
              
              $
              3.50
              
              
              290,850
              
              $
              3.52
              
              $
              3.50
      - $7.34
 
 The
status of other Kent International options awarded to certain directors and
consultants is summarized below:
 
 2007
              
              2006Shares
              
              Weighted-
                Average
                Exercise
                Price
              
              Range
      of
                Exercise
                Price
              
              Shares
              
              Weighted-
                Average
                Exercise
                Price
              
              Range
      of
                Exercise
                PriceOptions
      outstanding at the beginning of the year
              
              
              300
              
              $
              7.34
              
              $
              7.34
              
              
              6,250
              
              $
              5.92
              
              $
              5.00
      - $7.58Expired
              
              
              (300
              )
              $
              7.34
              
              $
              7.34
              
              
              (5,950
              )
              $
              5.85
              
              $
              5.00
      - $7.58Options
      outstanding at the end of the year
              
              
              -
              
              
              
              
              
              
              
              
              300
              
              $
              7.34
              
              $
              7.34Options
      exercisable at the end of the year
              
              
              -
              
              
              
              
              
              
              
              
              300
              
              $
              7.34
              
              $
              7.34
 
 For all
Kent International options outstanding and exercisable at December 31, 2007, the
exercise price ranges are:
 
 Options
      Outstanding
              
              Options
      ExercisableRange
      of Exercise Prices
              
              Number
      Outstanding at December 31, 2007
              
              Weighted
      Average Remaining Life (in Years)
              
              Weighted
      Average Exercise Price
              
              Number
      Outstanding at December 31, 2007
              
              Weighted
      Average Remaining Life (in Years)
              
              Weighted
      Average Exercise Price$3.50
              
              
              120,000
              
              
              2.54
              
              $
              3.50
              
              
              120,000
              
              
              2.54
              
              $
              3.50


26


NOTE
7 - INCOME TAXES





The
components of income tax expense are as follows ($000 Omitted):




Year
      Ended December 31,2007
                
                
                2006Federal
      – Current
                
                
                
                
                $
                4State
      – Current
                
                $
                2
                
                
                
                10DeferredTotal
                
                $
                2
                
                
                $
                14
 
 The
income tax expense for the years ended December 31, 2007 and 2006 is different
from the amount computed by multiplying earnings before income taxes by the
statutory Federal income tax rate of 34%.  The reasons for this
difference and the related tax effect are as follows (in 000's):
  2007
                
                
                2006Expected
      tax expense (benefit) computed on total income before
taxes
                
                $
                (236
                )
                
                $
                (190
                )Increase
      (decrease) in tax from:State
      income taxes
                
                
                2
                
                
                
                10Post
      employment benefit obligations
                
                
                14
                
                
                
                13Stock
      based compensation
                
                
                
                
                
                
                12Taxable
      income of subsidiary
                
                
                
                
                
                
                4Change
      in valuation allowance
                
                
                222
                
                
                
                165Provision
      for income tax
                
                $
                2
                
                
                $
                14
 
 Temporary
differences and carryforwards that result in the Company’s net deferred tax
asset at December 31, 2007 are as follows (in 000’s):
 
 KentCompany
                
                
                International
                
                
                TotalNet
      operating loss carryforwards
                
                $
                2,358
                
                
                $
                77,567
                
                
                $
                79,925Mark-to-market
      valuation adjustments
                
                
                190
                
                
                
                
                
                
                
                190Post
      employment benefit obligations
                
                
                685
                
                
                
                
                
                
                
                685Stock
      based compensation deductions
                
                
                36
                
                
                
                
                
                
                
                363,269
                
                
                
                77,567
                
                
                
                80,836Statutory
      federal income tax rate
                
                
                34
                %
                
                
                34
                %
                
                
                34
                %Expected
      income tax benefit
                
                
                1,111
                
                
                
                26,373
                
                
                
                27,484Research
      and development and other credits
                
                
                
                
                
                
                1,848
                
                
                
                1,8481,111
                
                
                
                28,221
                
                
                
                29,332Valuation
      Allowance
                
                
                (1,111
                )
                
                
                (28,221
                )
                
                
                (29,332
                )Net
      deferred tax asset
                
                $
                -
                
                
                $
                -
                
                
                $
                -


27




Deferred
tax assets reflect the net effects of operating loss and tax credit
carryforwards and the temporary differences between the carrying amounts of
assets and liabilities for financial statement purposes and the amounts used for
income tax purposes.  Based upon Kent International’s and the
Company’s operating history, which includes continuous operating losses
(excluding extraordinary gains) in each of the last five years and the Company’s
assessment of Kent International’s and the Company’s ability to achieve future
taxable income, a 100% valuation allowance has been established for Kent
International’s and the Company’s deferred tax assets.  Approximately
$76 million of the $80 million operating loss carryforward expires between 2008
and 2014.





The Tax
Reform Act of 1986 contained 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.





NOTE
8 - OPERATING LEASES





Kent
International leases an automobile under an operating lease agreement that
expires in 2008.  The automobile lease expense for the Company and its
subsidiaries totaled $28,869 and $38,001 during 2007 and 2006,
respectively.  The following is a schedule of future minimum rental
payments required under the operating lease agreements:




2008
                
                $1,541




The
Company and Kent International had leased office space at 376 Main Street,
Bedminster, New Jersey from an unaffiliated company for $3,600 per month
($43,200 annually).  In order to reduce costs, the Company terminated
this lease effective September 30, 2007.  The Company’s administrative
offices are now located at 211 Pennbrook Road, Far Hills, New
Jersey.  Total rent expense totaled $35,400 and $43,200 in 2007 and
2006, respectively.





NOTE
9 – COMPENSATION CONTRACTS AND POST-EMPLOYMENT BENEFITS





Paul O.
Koether’s employment agreement ("Agreement") pursuant to which Mr. Koether
serves as the Company's Chairman is for a three year term at an annual salary of
$240,000 ("Base Salary"); this term is automatically extended one day for each
day elapsed after December 1, 2002.  Mr. Koether may terminate his
employment after a change of control for good reason in accordance with certain
provisions of the Agreement, at which time he would 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.  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.




28




Bryan P.
Healey’s employment agreement (the “Healey Agreement”) pursuant to which Mr.
Healey serves as the Company’s Chief Financial Officer is for a two year term at
an annual salary of $140,000 (“Healey Base Salary”), this term is automatically
extended one day for each day elapsed after May 15, 2007.  The Healey
Base Salary will increase to $156,000 annually effective January 1,
2008.  In the event of Mr. Healey’s death during the term of the
Healey Agreement, his beneficiary shall be paid a death benefit equal to his
then current annual salary in equal monthly installments for the remainder of
the term of the Healey Agreement.  Should Mr. Healey become disabled
during the term of the Healey Agreement, Mr. Healey shall be paid such benefits
to which he is entitled under the terms of such long-term insurance as the
Company has provided him or 80% of his salary for the remainder of the two year
term of the Healey Agreement, whichever is greater, in accordance with his
regular payment schedule.





The
Company has accrued approximately $685,000 as of December 31, 2007 for post
employment benefits related to Mr. Koether’s contract.  The Company
charged approximately $41,000 and $38,000 to operations for post employment
benefit accruals in 2007 and 2006, respectively.





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 ($15,500 in 2007
and $15,000 in 2006).  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 2007 or 2006.





NOTE
10 – STOCKHOLDERS’ EQUITY





Preferred
Stock





The
Company is authorized to issue 500,000 shares of preferred stock without par
value, which may be issued with various terms in one or more series, as the
Board of Directors may determine. No preferred stock has been issued as of
December 31, 2007.





Common
Stock Repurchases





In August
2004, the Board of Directors approved a plan to repurchase up to 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, 2007, 102,352
shares under this plan had been repurchased, canceled and returned to the status
of authorized but unissued shares.





Stock
Options





On
November 25, 2005, shareholders of the Company approved the 2005 Stock Option
Plan making a total of 400,000 common stock options available for
issuance.  Subsequently, 300,000 options were awarded to Dr. Qun Yi
Zheng, the former President of Kent, on the same date.  33,000 of
these options were immediately exercisable with an additional 33,000 becoming
exercisable on the first eight anniversaries of the grant date.  On
August 31, 2007, the effective date of Dr. Zheng’s resignation, the 66,000
common stock options that had become exercisable were forfeited as were the
234,000 options that were still unexercisable.  At December 31, 2007,
the Company had no common stock options outstanding.





29




A summary
of the status of the 2005 Stock Option Plan and changes during the years ended
December 31, 2007 and 2006 is presented below:





2007
              
              
              2006Weighted-
              
              
              
              
              
              
              
              
              Weighted-Average
              
              
              Range
      of
              
              
              
              
              
              Average
              
              
              Range
      ofExercise
              
              
              Exercise
              
              
              
              
              
              Exercise
              
              
              ExerciseShares
              
              
              Price
              
              
              Price
              
              
              Shares
              
              
              Price
              
              
              PriceOptions
      outstanding at the beginning of the year
              
              
              300,000
              
              
              $
              3.00
              
              
              $
              3.00
              
              
              
              300,000
              
              
              $
              3.00
              
              
              $
              3.00Forfeited
              
              
              (300,000
              )
              
              
              3.00
              
              
              
              3.00
              
              
              
              -
              
              
              
              -
              
              
              
              -Options
      outstanding at the end of the year
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              300,000
              
              
              $
              3.00
              
              
              $
              3.00Options
      exercisable at the end of the year
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              66,000
              
              
              $
              3.00
              
              
              $
              3.00




Stock
Based Compensation





The
Company did not record stock-based compensation expense for the year ended
December 31, 2007 as no options were earned during this period; however,
approximately $36,000 in stock-based compensation expense was recorded for the
year ending December 31, 2006.  The Company recorded stock based
compensation expense during 2006 for the options granted to the former President
in December 2005.  The options granted had an exercise price greater
than the market price of the Company’s stock on the grant date.  For
purposes of calculating the compensation cost consistent with SFAS No. 123(R),
"Share-Based Payment,",
the fair value of the option grant was estimated on the grant date using the
Black-Scholes option-pricing model with the following assumptions used: no
dividend yield; expected volatility of 29 percent; risk free interest rate of
4.37 percent; and weighted average expected life of 7 years.





NOTE 11 - RELATED PARTY
TRANSACTIONS




The
Company receives a monthly management fee of $21,000 from Kent International for
management services.  These services include, among other things,
preparation of periodic and other filings with the Securities and Exchange
Commission, evaluating merger and acquisition proposals, providing internal
accounting services and shareholder relations.  This arrangement may
be terminated at will by either party.  The monthly management fee
revenue and offsetting expense is eliminated during
consolidation.  The Company is the beneficial owner of approximately
53.25% of Kent International’s outstanding Common Stock at December 31,
2007.  Paul O. Koether, Chairman of the Company is also the Chairman
of Kent International and the beneficial owner of approximately 56.17% of the
Company’s outstanding common stock.  Bryan P. Healey, Chief Financial
Officer and Director of the Company is also the Chief Financial Officer and
Director of Kent International and the son-in-law of Paul O.
Koether.




30


The
Company and its consolidated subsidiaries reimburse an affiliate, Bedminster
Management Corp., for the allocated direct cost of group health insurance and
office supplies. These reimbursements were approximately $83,000 and $78,000 in
the years ended December 31, 2007 and 2006, respectively.  Bedminster
Management Corp. facilitates the allocation of certain central administrative
costs on a cost reimbursement basis and is owned equally by Kent, Kent
International and T.R. Winston & Company, LLC.





NOTE
12 – SEPARATION AGREEMENT





Effective
August 31, 2007, the Company, Kent International, and their subsidiaries and
affiliates entered into a separation and general release agreement (the
"Agreement") with Dr. Qun Yi Zheng.  Until that date, Dr. Zheng was
the Company’s President and Kent International’s President and a member of Kent
International’s Board of Directors.





The terms
of the Agreement stipulate that Kent International will:





1.
            release
      Dr. Zheng from his obligations under his employment agreement dated
      November 1, 2005;


2.
            allow
      Dr. Zheng to continue to have the use of a Mercedes Benz automobile and
      automobile insurance until February 23,
2008;


3.
            pay
      Dr. Zheng a lump sum severance of
$130,000;


4.
            assign
      to Dr. Zheng all present contracts with Schering-Plough totaling
      approximately $6,000 together with any related
  liabilities.





In
return, Dr. Zheng agreed that he would resign effective August 31, 2007 from
employment and from all officer and directorship positions in the Company, Kent
International and their subsidiaries and affiliates.





NOTE
13 - TRANSFER OF PATENT RIGHTS





On
September 15, 2006, Kent International entered into an asset purchase option
agreement to transfer certain patent rights to Accuthera, Inc., a Colorado
corporation, for $50,000 paid on September 15, 2006, and an additional $300,000
payable within the following thirty-six (36) months.  These patents
were previously recorded on the Kent International’s books at a zero carrying
value.  The agreement stipulates that Accuthera, Inc. can terminate
the agreement at any time within the thirty-six (36) month period at which time
the patent rights would revert back to Kent International without any additional
payment.  Kent International has not recorded revenue or a
corresponding receivable for the additional payment as its receipt is believed
to be uncertain.





NOTE 14 - LEGAL PROCEEDINGS





Texas
American Petrochemicals, Inc. (“TAPI”)





By letter dated May 24, 2005,
the Texas Commission on Environmental Quality ("TCEQ") advised Texas American
Petrochemicals, Inc. (“TAPI”), that it was a person responsible for solid waste
at a hazardous waste site in Texas. TAPI is an inactive subsidiary of the
Company with no assets. The TCEQ determined that the amount owed to the State of
Texas for remediation is $2,459,594and thatfailureto pay that amount would
result in the matter being referred to the TCEQ Litigation Division. The Company
has been advised by its environmental counsel that it has good legal arguments
to support its position that it should not be subject to liability for the
remediation costs of the site, however no assurances can be made as to the
outcome of this matter.




31


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





None.





Item
8A.                CONTROLS AND
PROCEDURES





Evaluation
of Disclosure 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) in ensuring that information required to be disclosed by
the Company in its reports is recorded, processed, summarized and reported
within the required time periods.  In carrying out that evaluation,
management identified a material weakness (as defined in Public Company
Accounting Oversight Board Standard No. 2) in our internal control over
financial reporting regarding a lack of adequate segregation of
duties.  Accordingly, based on their evaluation of our disclosure
controls and procedures as of December 31, 2007, the Company’s Chief Executive
Officer and its Chief Financial Officer have concluded that, as of that date,
the Company’s controls and procedures were not effective for the purposes
described above.





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, 2007 that has materially affected or is
reasonably likely to materially affect the Company’s internal control over
financial reporting.





Management’s
Report on Internal Control over Financial Reporting





Management
of the Company is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rule 13a-15(f) under the
Securities Exchange Act of 1934.  We have assessed the effectiveness
of those internal controls as of December 31, 2007, using the Committee of
Sponsoring Organizations of the Treadway Commission (“COSO”) Internal Control – Intergrated
Framework as a basis for our assessment.





Because
of inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies and procedures may deteriorate.  All internal
control systems, no matter how well designed, have inherent
limitations.  Therefore, even those systems determined to be effective
can provide only reasonable assurance with respect to financial statement
preparation and presentation.





A
material weakness in internal controls is a deficiency in internal control, or
combination of control deficiencies, that adversely affects the Company’s
ability to initiate, authorize, record, process, or report external financial
data reliably in accordance with accounting principles generally accepted in the
United States of America such that there is more than a remote likelihood that a
material misstatement of the Company’s annual or interim financial statements
that is more than inconsequential will not be prevented or
detected.  In the course of making our assessment of the effectiveness
of internal controls over financial reporting, we identified a material weakness
in our internal control over financial reporting.  This material
weakness consisted of inadequate staffing and supervision within the bookkeeping
and accounting operations of our company.  The relatively small number
of employees who have bookkeeping and accounting functions prevents us from
segregating duties within our internal control system.  The inadequate
segregation of duties is a weakness because it could lead to the untimely
identification and resolution of accounting and disclosure matters or could lead
to a failure to perform timely and effective reviews.




32




As we are
not aware of any instance in which the company failed to identify or resolve a
disclosure matter or failed to perform a timely and effective review, we
determined that the addition of personnel to our bookkeeping and accounting
operations is not an efficient use of our resources at this time and not in the
interest of shareholders.





Because
of the above condition, the Company’s internal controls over financial reporting
were not effective as of December 31, 2007.





This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial
reporting.  Management’s report was not subject to attestation by the
Company’s registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the Company to provide only
management’s report in this annual report.





Item
8B.                 OTHER
INFORMATION





None.


PART III





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





The
current members of the Board of Directors were elected at the 2007 Annual
Meeting and will serve until the next Annual Meeting or until their successors
have been duly elected and qualified.  The Company's officers are
elected by and serve at the leave of the Board.





The
directors and executive officers of the Company at February 29, 2008 were as
follows:





Name
            
            Age
            
            Position HeldPaul
      O. Koether
            
            71
            
            Chairman,
      Chief Executive Officer and DirectorWilliam
      Mahomes, Jr.
            
            61
            
            DirectorCasey
      K. Tjang
            
            69
            
            DirectorM.
      Michael Witte
            
            81
            
            DirectorBryan
      P. Healey
            
            37
            
            Chief
      Financial Officer and Director






33




Paul O. Koetherhas been
Chairman, Director and Chief Executive Officer of the Company since July 1987
and President of the Company from October 1990 until November 2005, and until
December 31, 2003 when it was dissolved, the general partner of Shamrock
Associates, an investment partnership which was the principal stockholder of the
Company.  Mr. Koether was Chairman from April 1988 to July 2005,
President from April 1989 to February 1997 and director from March 1988 to July
2005 of Pure World, Inc., (“Pure World”) and from December 1994 until July 2005
a director and from January 1995 to July 2005 Chairman of Pure World’s wholly
owned subsidiary, Pure World Botanicals, Inc., a manufacturer and distributor of
natural products.  Mr. Koether was Chairman and a Director of Sun
Equities Corporation, (“Sun”) a private company until Sun was merged into Pure
World in December 2004.  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, Chairman and Chief Executive Officer as well as President from
October 2003 until November 2005, of Kent International Holdings, Inc., a
biopharmaceutical company formerly known as Cortech, Inc. that is seeking to
redeploy its assets.  From November 2003 to December 2003, Mr. Koether
was General Partner of Emerald Partners, an investment
partnership.  Bryan P. Healey, Chief Financial Officer and Director of
the Company is the son-in-law of Paul O. Koether.





William Mahomes, Jr.currently
is a senior shareholder in Simmons Mahomes P.C., a law firm emphasizing
commercial real estate transactions, public finance, business transactions and
mediation. From 1997 to May 2001, Mr. Mahomes was in the private practice of law
emphasizing mediation, real estate and commercial transactions. From 1994 to
March 1997, Mr. Mahomes was a senior shareholder with a major Texas law firm.
From 1989 to 1994, he was an international partner in the Dallas office of a
major international law firm. From 1993 to July 2005, Mr. Mahomes was a director
of Pure World. Mr. Mahomes currently serves on the Board of Directors of a
variety of organizations, including the Center for New Ventures and
Entrepreneurship (Texas A&M University), The Association of Former Students
at Texas A&M University and the Texas Affiliate Board of Healthcare Service
Corporation (HCSC), also known as Blue Cross and Blue Shield of
Texas.





Casey K. Tjang.has been a
director of the Company since 1992.  Since January 2004, he has been
chairman and chief executive officer of First Merchant Bankers, Inc., a private
merchant bank dealing with Asia-Pacific businesses. From September 2001 to
February 2002, he has been President and Chief Executive Officer and from August
2000 to September 2001 was Chief Financial Officer of Knowledgewindow, Inc., an
e-learning provider of Internet training. Since February 2002, Mr. Tjang has
been President and Chief Executive Officer of Princeton Accredited Services,
Inc. and Erudite Internet Systems, Inc. an e-learning custom courseware
developer and provider of an Internet based distance education
system.





M. Michael Witte.Since August
1980, he has been President of M.M. Witte & Associates, Inc., a private
corporation that is engaged in oil & gas consulting and investing
management. In November 1995, Mr. Witte was elected Co-chairman of the American
Drilling Company, LLC. On August 1, 1996, Mr. Witte was elected Chief Executive
Officer and Director of South Coast Oil Corporation, a Los Angeles based oil
company founded in 1921. He formally resigned this position in September 2007
after serving 11 years.





Bryan P. Healey, a certified
public accountant, has been Vice-President, Secretary and Chief Financial
Officer of the Company since May 2006 and a Director since November
2007.  Mr. Healey has also been Vice-President, Secretary and Chief
Financial Officer since May 2006 and a Director since November 2007 of Kent
International Holdings, Inc.  Since July 2006, Mr. Healey has been a
registered representative of T. R. Winston & Company, LLC.  From
September 1995 to April 2006, Mr. Healey was with Bowman & Company, L.L.P.,
the largest CPA firm in Southern New Jersey, in various positions including
audit manager from July 2001 to April 2006.





34




Compliance
with Section 16(a) of the Exchange Act





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 2007.





Audit
Committee





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 that Mr.
Tjang is independent, as the term is used in Item 7(d)(3)(iv) of Schedule 14A
under the Exchange Act. The Company has a separately designated standing Audit
Committee whose members are William Mahomes, Jr. Esq., Casey K. Tjang and M.
Michael Witte.





Nominating Committee;
Compensation Committee





The Board
of Directors has neither a nominating committee nor a compensation
committee.  The Board believes that its numbers are sufficiently small
that nominations and determinations of compensation can be addressed by the
entirety of the Board.





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
Bryan P. Healey, the Secretary of the Company, at the Company’s principal
executive office: 211 Pennbrook Road, P.O. Box 97, Far Hills, New Jersey 07931,
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





Summary
Compensation Table





The table
shown below includes information concerning the annual compensation for services
in all capacities to the Company for the fiscal years ended December 31, 2007
and 2006, for those persons who were, at December 31, 2007 and 2006, the chief
executive officer, the principal financial officer and the most highly paid
executive officer other than the chief executive officer and principal financial
officer (the "Named Officers").  The Company did not compensate any
officers over $100,000 other than the Named Officers.




35




Name
      and Principal Position
              
              Year
              
              Salary
              
              
              Bonus
              
              
              Option
      Awards
              
              
              All
      Other Compensation (2)
              
              
              TotalPaul
      O. Koether
              
              2007
              
              $
              240,000
              
              
              
              
              
              
              
              
              $
              50,943
              (3)
              
              $
              290,943Chief
      Executive Officer and
              
              2006
              
              
              240,000
              
              
              
              
              
              
              
              
              
              51,653
              (3)
              
              
              291,653Chairman
      of the BoardQun
      Yi Zheng (4)
              
              2007
              
              
              133,333
              
              
              
              
              
              
              
              
              
              163,854
              (4)
      (5)
              
              
              297,188President
              
              2006
              
              
              200,000
              
              
              
              
              
              $
              35,488
              
              
              
              33,495
              (5)
              
              
              268,983Bryan
      P. Healey
              
              2007
              
              
              140,000
              
              
              $
              10,000
              
              
              
              
              
              
              
              
              
              
              
              150,000Chief
      Financial Officer,
              
              2006
              
              
              93,333
              
              
              
              
              
              
              
              
              
              
              
              3,990
              (6)
              
              
              97,323Principal
      Financial andAccounting
      Officer





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





(2)
            Omitted
      from this table are amounts paid for group life, health and
      hospitalization insurance provided to the Named Officers.  These
      benefits do not discriminate in scope, terms or operation in favor of
      executive officers or directors and are generally available to all
      salaried employees.





(3)
            Amounts
      include $40,812 and $38,142 accrued in 2007 and 2006, respectively, for
      post employment benefit obligations including change in control and death
      benefit provisions pursuant to Mr. Koether’s employment
      contract.  All Other Compensation also includes $10,130 and
      $19,511 paid in 2007 and 2006, respectively, to lease an automobile used
      for business purposes.





(4)
            The
      salary and perquisites of Dr. Zheng were paid by Kent International, a
      subsidiary of the Company.  Dr. Zheng resigned effective August
      31, 2007.





(5)
            Amounts
      include $13,518 and $13,159 paid by Kent International in 2007 and 2006,
      respectively, for Dr. Zheng’s country club membership, $1,846 paid in 2007
      and 2006 for Dr. Zheng’s life insurance premiums and $18,490 paid in 2007
      and 2006, respectively, to lease an automobile used for business
      purposes.  All Other Compensation also includes $130,000 paid in
      accordance with the separation agreement with Dr. Zheng dated August 24,
      2007.





(6)
            Represents
      relocation expenses in the amount of $3,990 paid to Mr.
      Healey.





Outstanding
Equity Awards at Fiscal Year End





There
were no outstanding equity awards at December 31, 2007.




36




Director
Compensation Table





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
2007, the Company paid directors' fees in the aggregate amount of
$39,000.  The table below includes information about compensation paid
to our non-employee directors:




Name
              
              Fees
      Earned or Paid in Cash
              
              
              TotalWilliam
      Mahomes, Jr.
              
              $
              13,000
              
              
              $
              13,000Casey
      K. Tjang
              
              
              13,000
              
              
              
              13,000M.
      Michael Witte
              
              
              13,000
              
              
              
              13,000$
              39,000
              
              
              $
              39,000




Employment
Agreements




Paul
O. Koether





On
December 1, 2002 (“Effective Date”) the Company and Paul O. Koether entered into
an employment agreement (“Koether 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.





Mr.
Koether may terminate his employment under the Koether 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 Koether
Agreement through the expiration date of the Koether Agreement or (ii) an amount
equal to three times the average annual Base Salary paid to him during the
preceding five years.





A Change
in Control is deemed to have occurred if (i) any individual or entity, other
than individuals beneficially owning, directly or indirectly, common stock of
the Company representing 30% or more of the Company’s stock outstanding as of
December 1, 2002, 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 Koether 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.




37




The
Company may terminate Mr. Koether’s employment under the Koether Agreement for
“cause” which is defined as (i) Mr. Koether’s continued failure to substantially
perform his duties under the Koether 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 Koether Agreement, his
beneficiary shall be paid a death benefit equal to $240,000 per year for three
years payable in equal monthly installments.  Should Mr. Koether
become “disabled” (as such term is defined in the Koether Agreement) during the
term of the Koether 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.





Bryan
P. Healey





Effective
May 15, 2006 the Company and Bryan P. Healey, CPA entered into an employment
agreement (“Healey Agreement”) pursuant to which Mr. Healey serves as the
Company’s Chief Financial Officer for an initial two year term at an annual
salary of $140,000 (“Healey Base Salary”), which may be increased but not
decreased at the discretion of the Board of Directors.  The Healey
Base Salary will increase to $156,000 annually effective January 1,
2008.  The Healey Agreement was automatically extended for one day for
each day elapsed after May 15, 2007, converting the term of the Healey Agreement
to a contract with a two year ‘evergreen’ term, commencing on May 15,
2007.





Mr.
Healey may terminate his employment under the Healey Agreement at any time for
“good reason” (defined below) within 36 months after the date of a “Change in
Control” (defined below).  Upon his termination, Mr. Healey shall be
paid the Healey Base Salary payable under the Healey Agreement through the
expiration date of the Healey Agreement.





A Change
in Control is deemed to have occurred if (i) any individual or entity, other
than individuals beneficially owning, directly or indirectly, common stock of
the Company representing 50.1% or more of the Company’s stock outstanding as of
May 15, 2006, is or becomes the beneficial owner, directly or indirectly, of
50.1% or more of the Company’s outstanding stock or (ii) individuals
constituting the Board of Directors on May 15, 2006 (“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. Healey, 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.
Healey may also terminate his employment if the Company fails to make the
payments specified in the Healey Agreement, or if the Company fails to make such
payments for a period of five days after Mr. Healey has given notice of such
failure.




38




The
Company may terminate Mr. Healey’s employment under the Healey Agreement for
“cause” which is defined as (i) Mr. Healey’s continued failure to substantially
perform his duties under the Healey Agreement (other than by reason of his
incapacity due to physical or mental illness) which is not cured within
specified time frames or (ii) Mr. Healey’s conviction of any criminal act of
fraud.  The Company may not terminate Mr. Healey’s employment except
by a vote of not less than 75% of the entire Board of Directors at a meeting at
which Mr. Healey is given the opportunity to be heard.





In the
event of Mr. Healey’s death during the term of the Agreement, his beneficiary
shall be paid a death benefit equal to his then current annual salary in equal
monthly installments for the remainder of the term of the Healey
Agreement.  Should Mr. Healey become disabled during the term of the
Healey Agreement, Mr. Healey shall be paid such benefits to which he is entitled
under the terms of such long-term insurance as the Company has provided him or
80% of his salary for the remainder of the two year term of the Healey
Agreement, whichever is greater, in accordance with his regular payment
schedule.





39





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 29, 2008 by each director and executive
officer 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 NatureName
      and Address
                    
                    of
      Beneficial
                    
                    
                    Percent
      ofof Beneficial Owner
                    
                    Ownership(1)
                    
                    
                    ClassPaul
      O. Koether
                    
                    
                    1,568,338
                    (2)
                    
                    
                    56.17
                    %211
      Pennbrook RoadFar
      Hills, NJ 07931William
      Mahomes, Jr.
                    
                    
                    -
                    
                    
                    
                    -900
      Jackson StreetSuite
      540Dallas,
      TX 75202Casey
      K. Tjang
                    
                    
                    -
                    
                    
                    
                    -510
      Tallwood LaneGreenbrook,
      NJ 08812M.
      Michael Witte
                    
                    
                    2,000
                    
                    
                    
                    *1120
      Granville AvenueSuite
      102Los
      Angeles, CA 90049Bryan
      P. Healey
                    
                    
                    29,044
                    (3)
                    
                    
                    1.04
                    %211
      Pennbrook RoadFar
      Hills, NJ 07931Marital
      Trust u/w/o
                    
                    
                    479,083
                    
                    
                    
                    17.16
                    %Natalie
      I. Koether211
      Pennbrook RoadFar
      Hills, NJ 07931All
      Directors and Executive
                    
                    
                    1,599,382
                    
                    
                    
                    57.28
                    %Officers
      as a Group (6 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 other footnotes
      below.  Included in such number of shares beneficially owned are
      shares subject to options currently exercisable or becoming exercisable
      within 60 days for all directors and executive officers as a
      group.




40




(2)
            Includes
      53,106 shares held in Mr. Koether’s IRA.  Also includes 479,083
      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.





(3)
            Includes
      4,000 shares held in Mr. Healey’s IRA.  Also includes 25,044
      shares beneficially owned by Mr. Healey’s
  spouse.





Stock
Option and Stock Appreciation Rights; Grants and Exercises





In 2005,
stockholders holding approximately 54.69% of the outstanding common stock of the
Company approved the Kent Financial Services, Inc. 2005 Stock Option Plan (“2005
Stock Option Plan”), by written consent.  The Board of Directors also
approved the 2005 Stock Option Plan.  Under the 2005 Stock Option
Plan, a total of 400,000 shares of Common Stock were available for issuance to
key employees, including officers of the Company or any of its
subsidiaries.  On November 25, 2005, 300,000 options were awarded to
Dr. Qun Yi Zheng, the company’s former President.  33,000 of these
options were immediately exercisable with an additional 33,000 becoming
exercisable on the first eight anniversaries of the grant date.  On
August 31, 2007, the effective date of Dr. Zheng’s resignation, the 66,000
common stock options that had become exercisable were forfeited as were the
234,000 options that were still unexercisable.  At December 31, 2007,
the Company had no common stock options outstanding.





Long-Term
Incentive Plan Awards Table and Defined Benefit or Actuarial Plan
Table





The
Company does not maintain any long-term incentive plans or defined benefit or
actuarial plans.





Item
      12.
            CERTAIN RELATIONSHIPS
      AND RELATED TRANSACTIONS AND DIRECTOR
  INDEPENDENCE





Certain
Relationships and Related Transactions





The
Company receives a monthly management fee of $21,000 from Kent International for
management services.  These services include, among other things,
preparation of periodic and other filings with the Securities and Exchange
Commission, evaluating merger and acquisition proposals, providing internal
accounting services and shareholder relations.  This arrangement may
be terminated at will by either party.  The monthly management fee
revenue and offsetting expense is eliminated during
consolidation.  The Company is the beneficial owner of approximately
53.25% of Kent International’s outstanding Common Stock at December 31,
2007.  Paul O. Koether, Chairman of the Company is also the Chairman
of Kent International and the beneficial owner of approximately 56.17% of the
Company’s outstanding common stock.  Bryan P. Healey, Chief Financial
Officer and Director of the Company is also the Chief Financial Officer and
Director of Kent International and the son-in-law of Paul O.
Koether.





The
Company and its consolidated subsidiaries reimburse an affiliate, Bedminster
Management Corp., for the allocated direct cost of group health insurance and
office supplies. These reimbursements were approximately $83,000 and $78,000 in
the years ended December 31, 2007 and 2006, respectively.  Bedminster
Management Corp. facilitates the allocation of certain central administrative
costs on a cost reimbursement basis and is owned equally by Kent, Kent
International and T.R. Winston & Company, LLC.




41




Director
Independence





The
following members of our Board of Directors are independent, as “independent” is
defined in the rules of the NASDAQ Stock Market:  William Mahomes,
Jr., Casey K. Tjang and M. Michael Witte.





Item
13.                      EXHIBITS





The
following exhibits are filed as part of this report:





(a) Exhibits





3.1
            Articles
      of Incorporation of Kent Financial Services, Inc. (1)





3.2
            Bylaws
      of Kent Financial Services, Inc. (1)





10.1
            Employment
      Agreement, dated December 1, 2002 by and between Kent
      Financial  Services, Inc. and Paul O. Koether. (2)**





10.2
            Employment
      Agreement, dated May 15, 2006 by and between Kent
      Financial  Services, Inc. and Bryan P. Healey. (3)**





10.3
            Kent
      Financial Services 2005 Stock Option Plan, Form of Incentive Stock Option
      and Form of Non-Qualified Stock Option. (4)





10.4
            Separation
      Agreement and General Release between Dr. Qun Yi Zheng, Kent Financial
      Services, Inc., Kent International Holdings, Inc., and their subsidiaries
      dated August 24, 2007. (5)





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*


___________________


*      Filed
herewith.


**      Compensatory
Plan


(1)
              Filed
      as an exhibit to the Company’s Form 8-K filed on December 20, 2006, and
      incorporated herein by reference.
 (2)
              Incorporated
      by reference to Kent Financial Services, Inc. Form 10-KSB for the fiscal
      year ended December 31, 2002.
 (3)
              Incorporated
      by reference to Kent Financial Services, Inc. Form 8-K filed on May 1,
      2006.
 (4)
              Incorporated
      by reference to Kent Financial Services, Inc. Form 8-K filed on December
      2, 2005.
 (5)
              Incorporated
      by reference to Kent Financial Services, Inc. Form 8-K filed on September
      4, 2007.
 42


ITEM
14.                      PRINCIPAL ACCOUNTANT FEES
AND SERVICES





Year
ended December 31, 2007





Audit
Fees:  The aggregate fees, including expenses, expected to be billed
by Paritz in connection with the audit of the Company’s consolidated financial
statements and for the review of the Company’s financial information included in
the Company’s Annual Report on Form 10-KSB for the fiscal year ending December
31, 2007 are $21,500.  The aggregate fees, including expenses, billed
by Paritz in connection with the review of the Company’s financial information
included in the Company’s quarterly reports on Form 10-QSB filed during the
fiscal year ending December 31, 2007 were $6,000.





Audit
Related Fees: The aggregate fees, including expenses, billed by APM in 2007,
related to issuing a consent opinion for the year ended December 31, 2005
included in the Company’s Annual Report on Form 10-KSB for the fiscal year
ending December 31, 2006 were $5,000.





Tax Fees:
The aggregate fees, including expenses, billed by Paritz in connection with the
preparation of income tax returns for the Company during fiscal year ended
December 31, 2007 were $2,500.





All Other
Fees: There were no other fees billed to the Company by either APM or Paritz
during 2006.





Year
ended December 31, 2006





Audit
Fees:  The aggregate fees, including expenses, billed by Paritz in
connection with the audit of the Company’s consolidated financial statements and
for the review of the Company’s financial information included in the Company’s
Annual Report on Form 10-KSB for the fiscal year ending December 31, 2006 were
$21,500.  The aggregate fees, including expenses, billed by APM in
connection with the review of the Company’s financial information included in
the Company’s quarterly reports on Form 10-QSB filed during the fiscal year
ending December 31, 2006 were $11,577.





Audit
Related Fees: The aggregate fees, including expenses, billed by APM in 2006,
related to auditing restated financial statements for the years ended December
31, 2004 and 2003 were $5,000.





Tax Fees:
The aggregate fees, including expenses, billed by APM in connection with the
preparation of income tax returns for the Company during fiscal year ended
December 31, 2006 were $11,546.





All Other
Fees: There were no other fees billed to the Company by either APM or Paritz
during 2006.





Audit
Committee Pre-Approval Policies and Procedures





The Audit
Committee pre-approved all non-audit work performed by the Company’s principal
accountant, specifically, the preparation of income tax returns for the
Company.




43


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:  March
      28, 2008
            BY
            /s/ Paul O. KoetherPaul
      O. KoetherChairman
      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:  March
      28, 2008
            
            /s/ Paul O. KoetherPaul
      O. KoetherChairman
      of the Board and Director(Principal
      Executive Officer)





Dated:  March
      28, 2008
            
            /s/ Bryan P. HealeyBryan
      P. HealeyChief
      Financial Officer, Secretaryand
      Director(Principal
      Financial andAccounting
      Officer)





Dated:  March
      28, 2008
            
            /s/ William Mahomes, Jr.William
      Mahomes, Jr.Director





Dated:  March
      28, 2008
            
            /s/ Casey K. TjangCasey
      K. TjangDirector





Dated:  March
      28, 2008
            
            /s/ M. Michael WitteM.
      Michael WitteDirector