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 [Fee Required] For the fiscal year ended December 31, 1998

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

                          Commission file number 1-7986

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

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

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

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

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

                                      NONE

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

                     Common Stock, par value $.10 per share

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

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

     Issuer's  revenues  for the  fiscal  year  ended  December  31,  1998  were
approximately $5,200,000.

     At  February  28,  1999,  there  were  1,991,658  shares  of  common  stock
outstanding.   The  aggregate   market  value  of  the  voting  shares  held  by
non-affiliates  of the registrant,  based on the closing bid price of such stock
on such date as reported by NASDAQ, was approximately $4,529,000.

     Transitional Small Business Disclosure Format Yes ____   No __X__  




<PAGE>



                                     PART I


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

General
-------

     The principal business of Kent Financial  Services,  Inc. (the "Company" or
"Kent") is the operation of its wholly-owned subsidiary, T.R. Winston & Company,
Inc.  ("Winston"),  a securities  broker-dealer  licensed in all states  (except
Alaska)  and the  District  of  Columbia.  Winston  is a member of the  National
Association of Securities  Dealers,  Inc. and the Securities Investor Protection
Corporation.  All clearing arrangements for Winston are conducted pursuant to an
agreement  with  Bear  Stearns  Securities   Corporation,   an  unrelated  major
broker-dealer  which is a member of the New York Stock  Exchange,  Inc.  Winston
conducts  various  activities  customary for  broker-dealers  of comparable size
including  buying  and  selling  securities  for  customer   accounts,   trading
securities  in the  over-the-counter  market  and  providing  various  corporate
finance  services  including   underwritings,   private   placements,   mergers,
acquisitions and similar transactions.  Winston has three offices in New Jersey,
and one office in each of California,  Texas and New  Hampshire.  As of December
31, 1998,  Winston's  equity capital was $979,000,  all of which was advanced by
Kent or generated by Winston's  earnings.  Winston had regulatory net capital at
that same date,  pursuant to the  provisions of Rule 15c3-1 under the Securities
Exchange Act of 1934,  of $574,000  which was $474,000 in excess of the required
net capital. Winston is exempt from the provisions of Rule 15c3-3 under the 1934
Act as its activities are limited to those set forth in the conditions appearing
in paragraphs (k)(2)(ii) of the rule.

     The Company also  provides,  through  Asset Value Fund Limited  Partnership
("AVF"),  investment  advisory and  management  services.  AVF is an  investment
partnership  whose primary purpose is to make investments in a limited number of
portfolio  companies,   whose  securities  are  considered  undervalued  by  the
partnership's  management.  To date, fees from investment advisory services have
not been material.  AVF was funded with an initial  capital  contribution  of $5
million in February  1991. At December 31, 1998,  the equity  capital of AVF was
approximately $11.8 million. AVF has no debt.

     The  securities  business  is, by its  nature,  subject to  various  risks,
particularly  in  volatile  or illiquid  markets,  including  the risk of losses
resulting  from the  underwriting  or ownership of securities,  customer  fraud,
employee  errors and  misconduct,  failures in connection with the processing of
securities   transactions  and  litigation.   The  Company's  business  and  its
profitability  are affected by many factors,  including the volatility and price
level of the  securities  markets;  the  volume,  size and timing of  securities
transactions;  the  demand  for  investment  banking  services;  the  level  and
volatility of interest rates; the availability of credit;  legislation affecting
the  business and  financial  communities;  and the economy in general.  Markets
characterized  by low trading volumes and depressed  prices  generally result in
reduced  commissions  and  investment  banking  revenues  as well as losses from
declines in the market value of securities positions.  Moreover,  Kent is likely
to be adversely  affected by negative economic  developments in New Jersey,  the
Mid-Atlantic  region or the  financial  services  industry in  general.  Reduced


<PAGE>

volume and  prices  generally  result in  lower investment  banking revenues and
commissions  and  may  result in  losses  from  declines  in the market value of
securities held in trading, investment and underwriting positions. In periods of
relatively low business activity for the Company,  profitability  will likely be
adversely  affected because a significant  portion of the Company's expenses are
fixed.


Competition
-----------

     The Company is engaged in an extremely  competitive  business.  Competitors
include, with respect to one or more aspects of its business,  all of the member
organizations  of the New York Stock  Exchange and other  registered  securities
exchanges,  all members of the NASD,  commercial banks,  thrift institutions and
financial  consultants.  Many of these  organizations  have  substantially  more
employees and greater  financial  resources  than the Company.  The Company also
competes for  investment  funds with banks,  insurance  companies and investment
companies. Discount brokerage firms and online Internet brokerage firms oriented
to the retail market,  including  firms  affiliated  with  commercial  banks and
thrift  institutions,  are devoting  substantial funds to advertising and direct
solicitation of customers in order to increase their share of commission dollars
and other  securities-related  income.  The Company typically has not engaged in
extensive advertising programs for this type of business.

     The securities  industry has become considerably more concentrated and more
competitive  in recent  years as numerous  securities  firms have either  ceased
operation  or have been  acquired by or merged into other  firms.  In  addition,
companies  not  engaging  primarily  in  the  securities  business,  but  having
substantial  financial resources,  have acquired leading securities firms. These
developments  have  increased   competition  from  firms  with  greater  capital
resources than those of the Company.  Furthermore,  many commercial  banks offer
various  securities  related  activities  and investment  vehicles.  While it is
presently  not possible to predict the type and extent of  competitive  services
which  other   financial   institutions   may  offer  or  the  extent  to  which
administrative  or legal  barriers are repealed or  modified,  ultimately  these
developments  may lead to the creation of integrated  financial  services  firms
that may be able to compete  more  effectively  than the Company for  investment
funds by offering a greater range of financial services.

Employees
---------

     As of December  31,  1998,  the Company  and its  subsidiaries  employed 24
people of whom 18 are registered securities brokers.

<PAGE>

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

Corporate and Branch Offices
----------------------------

     The Company and certain of its  affiliates  occupy the Company's  corporate
office  building  and share  direct  occupancy  costs.  The office  building  is
collateral  for a mortgage  loan with a balance  of  approximately  $478,000  at
December 31, 1998, bearing interest on that date at the rate of 7.05% per annum.
The loan matures in May 1999.  

     Effective  February 1, 1999,  an  affiliate  entered into an extension of a
lease  agreement with the Company for office space for a five-year  period.  The
Company's  aggregate  rental income from this arrangement was $43,000 in each of
1998 and 1997. Winston leases space for its Los Angeles office from its clearing
broker-dealer.


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

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

Texas Water Commission

     In January 1988,  pursuant to Section 13 of the Texas Solid Waste  Disposal
Act,  the Texas Water  Commission  ("TWC")  listed on the Texas  Register a site
identified by the TWC as the "Texas  American Oil Site"  located in  Midlothian,
Ellis County,  Texas as a hazardous waste facility.  The site was owned by Texas
American Oil  Corporation,  a formerly  wholly-owned  subsidiary of the Company,
prior to ownership being  transferred to TAPI. TAPI has been notified by the TWC
that TAPI is a  potentially  responsible  party  ("PRP") for the site.  Early in
1990, TAPI declined a request by the TWC to perform a remedial  investigation at
the site. The TWC has not issued an Administrative  Order or instituted a formal
proceeding. TAPI has notified the TWC that TAPI has limited financial resources.

Other Environmental Matters

     TAPI has been  identified as a PRP at another waste  disposal site operated
by an  unrelated  party.  In the past,  TAPI had  participated  in the PRP group
investigating the site, but is not doing so at the current time.

     The Company  believes that it should have no liability in  connection  with
TAPI's environmental matters.

Other

     The  Company may be involved  from time to time in various  lawsuits  which
arise in the ordinary  course of business and the outcome of which,  if adverse,
would not have a material impact on the business of the Company.


                                                      

<PAGE>



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

     The Company held its Annual  Meeting of  Stockholders  on November 2, 1998.
Management's  nominees,  Messrs.  Paul O. Koether,  Mathew E. Hoffman,  Casey K.
Tjang and M. Michael Witte, were elected to the Board of Directors.

         The following is a vote tabulation for all nominees:

                                                  FOR             WITHHELD
                                                  ---             --------

                  Paul O. Koether                 749,160           23,706
                  Mathew E. Hoffman               749,290           23,576
                  Casey K. Tjang                  749,389           23,477
                  M. Michael Witte                749,378           23,488



<PAGE>



                                     PART II


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

     The Company's common stock trades on the National Association of Securities
Dealers,  Inc. Automated Quotations System ("NASDAQ") Small Cap 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, adjusted for the two-for-one stock
split distributed on November 9, 1998. These prices represent quotations between
dealers and do not include retail markups, markdowns or commissions, and may not
represent actual transactions.

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

         1998

         First Quarter               $ 2 13/16             $ 2 11/16
         Second Quarter              $ 3 3/8               $ 2 15/16
         Third Quarter               $ 3 3/4               $ 3
         Fourth Quarter              $ 5 13/16             $ 3 1/8

         1997

         First Quarter               $ 4 1/4               $ 3 1/2
         Second Quarter              $ 3 1/4               $ 3
         Third Quarter               $ 2 7/8               $ 2 3/4
         Fourth Quarter              $ 3                   $ 2 11/16

---------------

     As of February 28, 1999, the Company had approximately  1,898  stockholders
of record of its common stock.  The closing price of the common stock was $4.375
on February 26, 1999.

     The Company did not pay  dividends in 1998 or 1997 and does not  anticipate
paying dividends in the foreseeable future.


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

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

     At  December  31,  1998,  the  Company  had  consolidated   cash  and  cash
equivalents  of  approximately  $8.2  million.  The cash  equivalents  were U.S.
Treasury  Bills with original  maturities  of three months or less,  with yields
ranging  from 3.70% to 4.64%.  The Company had  securities  owned valued at $5.1
million at December  31,  1998.  See Note 1 of Notes to  Consolidated  Financial
Statements for additional  information on the valuation of securities  owned. At
that same date, the Company's mortgage note payable on its headquarters facility
had a remaining principal amount of approximately  $478,000.  The loan currently
bears  interest  at the rate of 7.05% with  principal  payments  amortized  over
twenty  years.  The loan  matures in May 1999.  The  Company is  evaluating  its
options to either  refinance  or pay the mortgage in its  entirety.  The Company
believes that its liquidity is adequate for future operations.
                                         

<PAGE>

     Net cash of approximately  $1.6 million was provided by operations in 1998,
compared to net cash used in  operations  of  approximately  $62,000 in 1997.  A
principal  reason for the  increase was the change in  securities  owned in 1998
compared  to 1997  partially  offset by the  change in net  receivable  from the
clearing  broker.  In 1998,  the  change in  securities  owned and the change in
receivable from the clearing broker generated net cash of $1.4 million, compared
to  $843,000  in 1997.  The  operating  cash flow  impact  of the net  income of
$532,000  in 1998 and the net loss of $1.2  million  in 1997 were  offset by the
change in  unrealized  gains  (losses) on  securities  owned.  Unrealized  gains
(losses) are included in consolidated operations, but do not utilize or generate
cash flows.  The change in accounts  payable and income taxes payable  generated
cash of $87,000 in 1998 compared to a use of cash of $911,000 in 1997.

     During 1998, the Company  repurchased 33,692 shares of its common stock for
an aggregate cost of $124,000.  In 1997, the Company  repurchased  67,372 shares
for an  aggregate  cost of  approximately  $219,000.  All shares  acquired  were
purchased at market  prices and have been canceled and returned to the status of
authorized and unissued shares.

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

     The  Company  had net income in 1998 of  $532,000,  or $.27 basic and fully
diluted earnings per share, compared to a net loss of $1,150,000,  or $.56 basic
and fully diluted  earnings per share, in 1997. Total brokerage  revenue,  which
consisted of commissions, underwriting fees, and principal trading transactions,
was approximately  $2.6 million in 1998, a decrease of $700,000 or 21% from 1997
total brokerage revenue of $3.3 million. Brokerage expenses (including all fixed
and variable expenses)  decreased by $400,000,  or 18% from $2.2 million in 1997
to $1.8 million in 1998. Net brokerage  income of $800,000 in 1998 represented a
decrease of $300,000, or 27%, from net brokerage income of $1.1 million in 1997.
The overall decrease in the total brokerage revenue, total brokerage expense and
net brokerage income is attributable to a change in the composition of producing
brokers employed at Winston in 1998 compared to 1997.

     Net investing gains were approximately $1.7 million in 1998, an increase of
approximately  $2.6 million from the net  investing  losses in 1997 of $987,000.
The  increase in net  investing  gains was due to realized  gains on the sale of
selected investments in the investment portfolio.

     Interest,  dividends and other income totaled $979,000 in 1998 and $876,000
in 1997.  The increase was primarily the result of higher  invested  balances of
cash equivalents.

     General and administrative  expenses were $2.6 million in 1998, an increase
of  approximately  $700,000 or 37% from the $1.9 million  recorded in 1997.  The
majority of the  increase  was a result of the  following  items:  (i)  $200,000
provision  for  start up costs  of a  subsidiary  that  will  provide  telephone
services  in the New England  region,  (ii)  $130,000  in  expenses  incurred in
connection  with a proxy  solicitation for one of the  securities  owned by AVF,
(iii) $160,000 increase in employee bonus accruals, and (iv) $75,000 increase in
business development expenses.

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

     On January 28, 1997, the SEC adopted new rules  (Securities Act Release No.
7386)  that  require   disclosures  about  the  policies  used  to  account  for
derivatives,  and certain quantitative and qualitative  information about market
risk exposures.  Since its inception,  neither the Company nor its  subsidiaries
has traded or otherwise  transacted in derivatives.  In the normal course of its
securities business, the Company maintains inventories of marketable securities.


<PAGE>


The fair value of these  securities  at December 31, 1998 was $5.1 million as to
its long  positions  and $1.4 million as to its short  positions.  The potential
change in fair value,  using a hypothetical 10% decline in prices,  is estimated
to be a $510,000  loss as to its long  positions  and a $140,000  gain as to its
short  positions as of December  31, 1998.  For working  capital  purposes,  the
Company invests in U.S. Treasury Bills or maintains interest bearing balances in
its trading  accounts  with its clearing  broker,  which are  classified as cash
equivalents  and  receivable  from  clearing   broker,   respectively,   in  the
consolidated financial statements.

Pending Sale Of Subsidiary
--------------------------

     On July 30,  1998,  Winston,  its  wholly-owned  subsidiary  T. R.  Winston
Capital, Inc. ("Wincap"),  and an unrelated third party ("Third Party"), entered
into a stock  purchase  agreement  ("Agreement").  The Agreement  provides among
other  things,  for the Third  Party to  contribute  to the  capital  of Wincap,
$800,000 in return for an 80%  ownership  interest  and an officer of Wincap and
Winston to receive a 10%  ownership  interest.  The closing of the Agreement and
the resultant  change in control are subject to NASD approval  which has not yet
been received.

     A condition  of the  Agreement  is that the Third Party and two officers of
Winston  enter into an investment  advisory  agreement  ("Advisory  Agreement").
Under the Advisory  Agreement,  the Third Party has committed to provide no less
than $4.7 million of assets to be managed by the two officers as long as certain
performance criteria are met.

     Certain  fees and  commissions  generated  in  managing  these  assets will
ultimately be remitted to Winston and one of its officers.

     If the  Agreement  is closed,  Winston  has  agreed to  provide  management
services to Wincap.  These  services will consist of all services  necessary for
the  operation  of  Wincap's  securities  business.   Winston  will  receive  as
compensation for the services,  60% of Wincap's gross  commissions as defined in
the Agreement.

Year 2000 Matters
-----------------

     The Year 2000 Issue is the result of computer  programs being written using
two digits rather than four to define the applicable  year. Any of the Company's
computer programs that have  time-sensitive  software may recognize a date using
"00" as the year 1900 rather than the year 2000.  This could  result in a system
failure or miscalculations causing disruptions of operations,  including,  among
other things, a temporary inability to process transactions or engage in similar
normal business activities.

     Management  has  determined   that  the  Year  2000  issue  will  not  pose
significant operational problems for its internal computer systems. Management's
Year 2000 Plan addresses  aspects of Assessment which was completed during 1998;
Implementation which will be completed during the 3rd Quarter of 1999; Staffing;
Testing; and Contingency  Planning.  To date the Company is on schedule with its
Year 2000  Project  with the  anticipated  completion  date of October 31, 1999,
which is prior to any anticipated effect on its operating  systems.  The Company
has replaced  certain  systems that were not Year 2000  compliant  and is in the
process of converting  others to properly  recognize the Year 2000.  The Company
will utilize external resources to reprogram,  or replace, and test the software
for Year 2000 modifications. Due to the critical relationship with the Company's
clearing  broker,  the Company has developed a plan to test the  transaction and
other data provided by the clearing  broker after any required  revisions to its
software.  However,  there can be no guarantee  that the systems of the clearing
broker and other  companies on which the  Company's  systems rely will be timely

<PAGE>

converted  and will not have an adverse  effect on the  Company's  systems.  The
total cost of the Year 2000  project is not  expected to be material and will be
funded through operating cash flows and will be expensed as incurred.

     The costs of the project and the date on which the Company believes it will
complete the Year 2000  modifications  are based on management's best estimates,
which were derived utilizing  numerous  assumptions of future events,  including
the continued availability of certain resources,  third party modification plans
and other factors.  However, there can be no guarantee that these estimates will
be achieved and actual results could differ materially from those anticipated.

                                                  
<PAGE>


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

         The financial statements filed herein are listed below:

         Independent Auditors' Report

         Financial Statements:

                  Consolidated Balance Sheet - December 31, 1998

                  Consolidated Statements of Operations -
                           Years ended December 31, 1998 and 1997

                  Consolidated Statements of Stockholders' Equity -
                           Years ended December 31, 1998 and 1997

                  Consolidated Statements of Cash Flows -
                           Years ended December 31, 1998 and 1997

                  Notes to Consolidated Financial Statements -
                           Years ended December 31, 1998 and 1997



                                                     

<PAGE>


                                                  Deloitte & Touche LLP
                                                  Two World Financial Center
                                                  New York, New York 10281-1414





INDEPENDENT AUDITORS' REPORT



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

We have audited the  accompanying  consolidated  balance sheet of Kent Financial
Services, Inc. and Subsidiaries (the "Company") as of December 31, 1998, and the
related consolidated  statements of income, changes in stockholders' equity, and
cash  flows  for  each  of  the  two  years  in the  period  then  ended.  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  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the consolidated  financial statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as evaluating the overall  consolidated  financial
statement  presentation.  We believe that our audits provide a reasonable  basis
for our opinion.

In our opinion,  such consolidated  financial  statements present fairly, in all
material  respects,  the  consolidated  financial  position  of  Kent  Financial
Services,  Inc. and  Subsidiaries  at December 31,  1998,  and the  consolidated
results  of their  operations  and their cash flows for each of the two years in
the period  ended  December  31,  1998 in  conformity  with  generally  accepted
accounting principles.




/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
March 17, 1999
New York, New York



                                                     

<PAGE>



                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET
                                     ASSETS

                                 ($000 Omitted)


                                                    December 31,
                                                       1998   
                                                    ------------ 


Cash and cash equivalents                              $ 8,217
Securities owned                                         5,064
Receivable from clearing broker                          1,269

Property and equipment:
  Land and building                                      1,440
  Office furniture and equipment                           248
                                                       -------
                                                         1,688
  Accumulated depreciation                            (    474)
                                                       -------
  Net property and equipment                             1,214

Other assets                                               194
                                                       -------
         Total assets                                  $15,958
                                                       =======



          See accompanying notes to consolidated financial statements.

                                                   

<PAGE>



                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET
                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                 ($000 Omitted)



                                                             December 31,
                                                                 1998
                                                             ------------    

Liabilities:
  Securities sold, not yet purchased                            $ 1,429
  Accounts payable                                                  109
  Income taxes payable                                              261
  Accrued expenses                                                  796
  Mortgage payable                                                  478
  Discontinued operations                                           363
                                                                -------
         Total liabilities                                        3,436
                                                                -------

Contingent liabilities (Notes 3 and 7)

Stockholders' equity:
Preferred stock without par value,
  500,000 shares authorized;
  none outstanding                                                    -
Common stock, $.10 par value,
  4,000,000 shares authorized;
  1,991,982 outstanding                                             199
Additional paid-in capital                                       14,996
Accumulated deficit                                            (  2,673)
                                                                -------
         Total stockholders' equity                              12,522
                                                                -------
         Total liabilities and stockholders' equity             $15,958
                                                                =======




          See accompanying notes to consolidated financial statements.

                                                 

<PAGE>



                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS


                      ($000 Omitted, except per share data)
                                                                  

                                                   Year ended December 31,
                                                   ----------------------  
                                                   1998             1997
                                                   ----             ----



Revenues:
  Brokerage commissions and fees                 $ 1,697          $ 1,688   
  Principal transactions:
    Trading                                          703            1,610
  Investing gains (losses)                         1,651         (    987)
  Underwriting and placement fees,
    net of related expenses                          153                -
  Interest, dividends and other                      979              876
                                                 -------          -------
       Total revenues                              5,183            3,187
                                                 -------          -------

Expenses:
  Brokerage                                        1,772            2,242
  General, administrative and other                2,596            1,911
  Interest                                           280              287
                                                 -------          -------
       Total expenses                              4,648            4,440
                                                 -------          -------

Earnings (loss) before income taxes                  535         (  1,253)
Income taxes (benefit)                                 3         (    103)
                                                 -------          -------
Net earnings (loss)                              $   532         ($ 1,150)
                                                 =======          =======

Basic net earnings (loss) per common share       $   .27         ($   .56)
                                                 =======          =======

Diluted net earnings (loss) per common share     $   .27         ($   .56)
                                                 =======          =======

Weighted average number of common shares
  outstanding (in 000's)                           2,003            2,058
                                                 =======          =======




          See accompanying notes to consolidated financial statements.

                                                                

<PAGE>




                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY


                                 ($000 Omitted)
<TABLE>
<CAPTION>



                                                           Additional                             Total
                                           Common           Paid-In        Accumulated        Stockholders'
                                            Stock           Capital          Deficit             Equity  
                                           ------         ------------     -----------        ------------


<S>                                        <C>             <C>              <C>                 <C>    
Balance, December 31, 1996                  $ 210           $15,328         ($ 2,055)            $13,483

Repurchase and cancellation
  of common stock                          (    8)         (    211)               -            (    219)

Net loss                                        -                 -         (  1,150)           (  1,150)
                                            -----           -------          -------             -------

Balance, December 31, 1997                    202            15,117         (  3,205)             12,114

Repurchase and cancellation
  of common stock                          (    3)         (    121)               -            (    124)

Net earnings                                    -                 -              532                 532
                                            -----           -------          -------             -------

Balance, December 31, 1998                  $ 199           $14,996         ($ 2,673)            $12,522
                                            =====           =======          =======             =======


</TABLE>



          See accompanying notes to consolidated financial statements.




                                                            

<PAGE>




                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS



                                 ($000 Omitted)

<TABLE>
<CAPTION>
                                                                           Year Ended December 31, 
                                                                         --------------------------- 
                                                                            1998              1997   
                                                                         ----------         --------
<S>                                                                   <C>                   <C>                                    
Cash flows from operating activities:
    Net earnings (loss)                                                $   532              ($ 1,150)
    Adjustments to reconcile net earnings (loss) to net
      cash provided by (used in) operating activities:
        Depreciation and amortization                                       53                    45
        Unrealized (gains) losses on securities owned                 (    577)                1,269
        Change in securities owned                                       2,633                   680
        Change in net receivable from clearing broker                 (  1,200)                  163
        Change in accounts payable and accrued expenses                     84              (    711)
        Change in income taxes payable                                       3              (    200)
        Other, net                                                          95              (    158)
                                                                       -------               -------
        Net cash provided by (used in) operating
          activities                                                     1,623              (     62)
                                                                       -------               -------

Cash flows from investing activities-
    Purchase of property and equipment                                (     11)             (     29)
                                                                       -------               -------

Cash flows from financing activities:
    Repurchase of common stock                                        (    124)             (    219)
    Payments on debt                                                  (     39)             (     31)
                                                                       -------               -------
        Net cash used in financing activities                         (    163)             (    250)
                                                                       -------               -------

Net increase (decrease) in cash and cash equivalents                     1,449              (    341)
Cash and cash equivalents at beginning of period                         6,768                 7,109
                                                                       -------               -------
Cash and cash equivalents at end of period                             $ 8,217               $ 6,768
                                                                       =======               =======

Supplemental Disclosures of Cash Flow Information:
    Cash paid for:
        Interest                                                       $   280               $   287
                                                                       =======               =======
        Taxes                                                          $    31               $   109
                                                                       =======               =======

</TABLE>




          See accompanying notes to consolidated financial statements.

                                                               

<PAGE>



                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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

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

The   consolidated    financial  statements  include   the  accounts   of   Kent
Financial  Services,  Inc.  (the  "Company"  or  "Kent")  and  its  wholly-owned
subsidiaries,   T.R.  Winston  &  Company,  Inc.  ("Winston"),   Texas  American
Petrochemicals,   Inc.  ("TAPI")  and  Asset  Value  Management,  Inc.  and  its
respective subsidiaries, Asset Value Fund Limited Partnership ("AVF"), a limited
partnership,  and Asset Value  Holdings,  Inc.  TAPI is  inactive.  All material
intercompany balances and transactions have been eliminated in consolidation.

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

The Company  considers as cash equivalents all short-term  investments which are
highly liquid and readily exchangeable for cash at amounts equal to their stated
value.  Cash  equivalents  consist entirely of U. S. Treasury Bills that matured
through March 1999 and were rolled over for 90 days.

Securities Owned
----------------

Securities  owned and  securities  sold, but not yet purchased are recorded on a
trade  date basis and are  valued at fair  value.  Fair value is based on quoted
market prices with the resulting net  unrealized  gains and losses  reflected in
earnings.

The Company takes proprietary  trading securities  positions to satisfy customer
demand  for  Nasdaq  market  and  over-the-counter   securities.   Realized  and
unrealized  gains and losses from  holding  proprietary  trading  positions  for
resale to customers are included in principal transaction trading revenues.  The
Company also holds principal investment  securities which are recorded at quoted
market  prices  or at fair  value as  determined  by  management  based on other
relevant  factors.  The net  change  in  market  or  fair  value  of  investment
securities  owned is  included in  principal  transactions  investing  revenues.
Substantially  all securities are owned by AVF and consist of equity  securities
valued at market value.

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

The Company records all property and equipment at cost. Depreciation is computed
using the straight-line method over the estimated useful lives of the individual
assets ranging from three to thirty-nine  years. Gains or losses on dispositions
of property and equipment are included in operating results.

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

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


<PAGE>

                                 
                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



Investment Banking Revenues
---------------------------

Investment  banking  revenues include gains,  losses,  and fees net of syndicate
expenses  arising  from  securities  offerings  in which the Company  acts as an
underwriter or agent.  Investment  banking  management  fees are recorded on the
offering date, sales  concessions on the settlement date, and underwriting  fees
at the  time  the  underwriting  is  completed  and  the  income  is  reasonably
determined.

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

Winston  receives  interest income on its credit balances at the clearing broker
and is charged interest expense on its debit balances at the clearing broker.


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

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

Earnings (Loss) Per Common Share
--------------------------------

Earnings  (loss) per common share is calculated in accordance  with Statement of
Financial  Accounting  Standards No. 128,  "Earnings Per Share" ("SFAS No. 128")
and is based on the  weighted  average  number  of shares  outstanding.  Diluted
earnings  per share  includes the assumed  conversion  of shares  issuable  upon
exercise of options where appropriate.

Estimates
---------

The preparation of financial  statements in conformity  with generally  accepted
accounting principles 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.

Reclassification
----------------

Prior  years  financial  statements  have been  reclassified  to  conform to the
current years' presentation.

<PAGE>
                                



                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


                                                 
2. SECURITIES BROKERAGE BUSINESS
   -----------------------------

The Company's business is comprised  principally of the operation of Winston and
the management of AVF.  Winston is a licensed  securities  broker-dealer  in all
states  (except  Alaska) and the  District  of  Columbia  and is a member of the
National  Association of Securities  Dealers,  Inc., and the Securities Investor
Protection  Corporation.  Winston conducts retail securities brokerage,  trading
and investment banking  activities.  All safekeeping,  cashiering,  and customer
account maintenance activities are provided by an unrelated broker-dealer,  Bear
Stearns Securities Corporation, pursuant to a clearing agreement.

Pursuant  to the net capital  provisions  of Rule  15c3-1  under the  Securities
Exchange Act of 1934 ("1934 Act"), Winston is required to maintain a minimum net
capital, as defined, of $100,000. At December 31, 1998, Winston had net capital,
as defined, of $574,000 which was $474,000 in excess of the required minimum.

Winston is exempt from the  provisions  of Rule 15c3-3 under the 1934 Act as its
activities  are  limited  to those  set  forth in the  conditions  appearing  in
paragraphs (k)(2)(ii) of the rule.

AVF is an investment partnership whose primary purpose is to make investments in
a limited number of companies,  whose  securities are considered  undervalued by
the partnership's management.


3. COMMITMENTS AND CONTINGENCIES
   -----------------------------

Leases
------

The Company leases  certain  office space for a monthly rental of  approximately
$7,500,  however this lease is cancellable  with 90 days notice.  Future minimum
rental requirements under the terms of this lease are approximately  $22,600 for
1999.

Winston  subleases  part of its premises at one  location to several  subtenants
under  sublease terms  substantially  equivalent to Winston's  lease  agreement.
Rental income under these agreements in 1998 and 1997 was approximately  $65,000
and $110,000, respectively.




<PAGE>


                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)




                                                    
Aggregate  net rent  expense for the years ended  December 31, 1998 and 1997 was
approximately $28,000 and $10,000, respectively.

Legal Matters
-------------

In the normal course of business,  Winston has been named as a respondent in two
arbitrations.   Although  the  ultimate  outcome  of  these  actions  cannot  be
ascertained  at this time, it is the opinion of Management,  after  consultation
with  counsel,  that the  resolution  of such  actions  will not have a material
adverse effect on the consolidated financial statements.

4. INCOME TAXES
   ------------

The components of income tax expense (benefit) are as follows:

                                                      ($000 Omitted)
                                                   Year Ended December 31, 
                                                ----------------------------- 
                                                   1998               1997
                                                ----------         ---------- 

         Federal-Current                          ($ 29)             ($ 97)
         State-Current                               32              (   6)
         Deferred                                     -                  -
                                                    ---                ---

         Total                                     $  3              ($103)
                                                   ====               ====



Total  income tax expense  (benefit)  for the years ended  December 31, 1998 and
1997 is different from the amount computed by multiplying  total earnings before
income taxes by the  statutory  Federal  income tax rate of 34%. The reasons for
these differences and the related tax effects are:

                                                           ($000 Omitted)
                                                       Year Ended December 31,
                                                       ----------------------- 
                                                       1998               1997
                                                       ----               ---- 
Income tax expense (benefit) computed at
  statutory rates on total earnings
    (loss) before income taxes                        $ 182             ($ 426)

Increase (decrease) in tax from:
  Valuation allowance on net operating
    loss carryforward                                (  190)               430
  State income tax, net of Federal benefit               21             (    4)
  Benefit from carryback of alternative
    minimum tax net operating loss                        -             (   52)
  Other, net                                         (   10)            (   51)
                                                      -----              -----
        Total tax expense (benefit)                   $   3             ($ 103)
                                                      =====              =====

                                                    

<PAGE>



                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)




The tax effects of significant  items  comprising the Company's net deferred tax
asset at December 31, 1998 are as follows:

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

         Deferred tax assets:
                  Operating loss carryforwards                        $ 2,645
                  Alternative minimum tax credit carryforward             958
                  General business credit carryforwards                   990
                  Mark-to-market reserves                                 207
                  Other                                                   297
                                                                      -------
                                                                      $ 5,097

         Valuation allowance                                         ($ 5,097)
                                                                      =======

         Net deferred tax asset                                       $     -
                                                                      =======


Deferred  tax assets  reflect the net effects of  operating  loss and tax credit
carryforwards  and the  temporary  differences  between the carrying  amounts of
assets and liabilities for financial statement purposes and the amounts used for
income tax purposes. Due to the uncertainty of realizing its deferred tax asset,
a  valuation  allowance  of an equal  amount is  maintained.  For the year ended
December 31, 1998, the valuation allowance decreased by approximately  $213,000,
principally  as  a  result  of  the  expiration  of  state  net  operating  loss
carryforwards and the generation of new deferred tax liabilities.

Significant carryforward balances for Federal income tax purposes as of December
31, 1998 are:

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

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

         Net operating loss                    $ 6,543        2006-2013
         General business tax credit           $   990        1999-2000
         Alternative minimum tax credit        $   958              N/A

                                                      

<PAGE>



                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5. MORTGAGE PAYABLE
   ----------------

The mortgage loan  collateralized by the Company's  headquarters  facility bears
interest at the rate of 7.05%.  Under the terms of the loan,  the  Company  will
make monthly payments of approximately $6,000,  including interest,  through May
1999,  at which time the  remaining  balance of $463,000 is due.  The Company is
evaluating  its options to either  refinance or pay the mortgage  payable in its
entirety.

6. CAPITAL STOCK
   -------------

Stock Split
-----------

On October 15, 1998, the Company  announced it would split its stock two for one
to be  effected in the form of a stock  dividend.  The record date for the stock
split was October 26, 1998 and the  distribution  date was November 9, 1998. All
common stock  information  in the  consolidated  financial  statements  has been
adjusted for the effects of this stock split.

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

On March 26, 1996,  the Board of Directors  approved a plan to  repurchase up to
300,000 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.  All
shares acquired through December 31, 1998 have been canceled and returned to the
status of authorized but unissued shares. As of December 31, 1998 123,748 shares
have been acquired under this repurchase plan.

Common Stock Options
--------------------

The  Non-Qualified  Stock Option Plan adopted by the stockholders of the Company
in 1987 provides for a maximum of 133,332  shares of common stock of the Company
to be issued to key executives, including officers and directors of the Company,
at the discretion of the Board of Directors. Options under this plan expire five
years from the date of grant and are exercisable as to one-half of the shares on
the date of grant and, as to the other half, after the first  anniversary of the
date of grant,  or at such other time, or in such other  installments  as may be
determined by the Board of Directors at the time of grant.


                                                   

<PAGE>



                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



The following table summarizes option transactions under this plan for 1998:

                                                                       Average
                                                         Shares         Price
                                                         ------        ------- 

         Options outstanding at December 31, 1996
           and 1997                                      60,000        $2.15625
         Options granted in 1998                              -               -
         Options exercised in 1998                      (10,000)        1.68750
         Options forfeited in 1998                            -               -
                                                         ------         -------

         Options outstanding at December 31, 1998        50,000        $2.25000
                                                         ======        --------


The  Company  does not accrue  compensation  expense  for the  issuance of stock
options  granted in accordance  with its  accounting  policy,  which is based on
Accounting  Principles  Board  Opinion No. 25,  "Accounting  for Stock Issued to
Employees."  If  compensation   expense  for  granted  stock  options  had  been
determined  based on the fair  value at grant  date,  the  effect  on basic  and
diluted earnings per share in 1998 and 1997 would be immaterial.


7. COMPENSATION ARRANGEMENTS
   -------------------------

In  April  1990,  the  Company   entered  into  an  employment   agreement  (the
"Agreement") with the Company's Chairman for a three-year term commencing April,
1990 (the  "Effective  Date")  at an annual  salary  of  $175,000  (adjusted  to
$200,000 in December  1993),  which may be  increased  but not  decreased at the
discretion of the Board of Directors.  The term is to be automatically  extended
one day for  each day  elapsed  after  the  Effective  Date.  The  Chairman  may
terminate his employment under the Agreement under certain conditions  specified
in the Agreement and the Company may terminate the Chairman's  employment  under
the Agreement for cause. In the event of the Chairman's death during the term of
the Agreement,  his beneficiary  shall be paid a death benefit equal to $200,000
per year for three  years  payable  in equal  monthly  installments.  Should the
Chairman become "disabled" (as such term is defined in the Agreement) during the
term of the Agreement he shall be paid an annual disability payment equal to 80%
of his base  salary in effect at the time of the  disability.  The  Company  has
accrued for the contingent payments under this Agreement.



<PAGE>



                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



8. DISCONTINUED OPERATIONS
   -----------------------

In January 1988,  pursuant to Section 13 of the Texas Solid Waste  Disposal Act,
the  Texas  Water  Commission  ("TWC")  listed  on  the  Texas  Register  a site
identified by the TWC as the "Texas  American Oil site"  located in  Midlothian,
Ellis County,  Texas as a hazardous waste facility.  The site was owned by Texas
American Oil  Corporation,  a formerly  wholly-owned  subsidiary of the Company,
prior to ownership being  transferred to TAPI. TAPI has been notified by the TWC
that TAPI is a potentially responsible party ("PRP") for the site. Early in 1990
the TWC requested that TAPI perform a remedial  investigation at the site, which
TAPI has declined.  The TWC has not issued an Administrative Order or instituted
a formal  proceeding.  TAPI has notified the TWC that TAPI has limited financial
resources.

In April 1989,  TAPI was  formally  notified  that the  Michigan  Department  of
Natural  Resources  deemed TAPI a responsible  party in connection  with alleged
environmental  problems at a site owned by TAPI. In the fourth  quarter of 1994,
TAPI entered  into a consent  judgment  with the State of Michigan.  The consent
judgment  provides for the payment by TAPI of approximately  $450,000 to satisfy
TAPI's  alleged  liability for past and future costs incurred and to be incurred
by the State of Michigan in  undertaking  remedial  environmental  activities at
TAPI's former refinery site in Michigan. Under the terms of the settlement, TAPI
paid $90,000 in the fourth  quarter of 1994 and $45,000 per year in 1995 through
1998. The Company is required to pay $45,000 in annual installments  through the
year 2002 without interest. The Company joined the consent judgment for the sole
purpose of assuring payments by TAPI.  Neither TAPI nor the Company admitted any
liability.  The  liability  had  been  accrued  for in  prior  years  as part of
discontinued operations.

TAPI has been  identified as a PRP at another Texas waste disposal site operated
by an unrelated  party. The Company believes that it should have no liability in
connection with TAPI's environmental matters.

9. TRANSACTIONS WITH RELATED PARTIES
   ---------------------------------

Rosenman & Colin LLP  ("R&C") has  performed  legal work for the Company and its
affiliates  in 1998 and 1997.  Natalie  I.  Koether,  wife of the  Chairman  and
President of the Company is of counsel to R&C and also  employed by the Company.
Aggregate fees and expenses billed by R&C to the Company and its subsidiaries in
1998 and 1997 were  approximately  $120,000  and  $128,000,  respectively.  Mrs.
Koether  received  $170,000 and $150,000 in 1998 and 1997,  respectively,  as an
employee.  She received no compensation  from R&C related to fees charged to the
Company for her time.


<PAGE>


                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Since March 1990 certain non-subsidiary affiliates have rented office space from
the Company.  The Company's  aggregate rental income from these arrangements was
approximately $43,000 in 1998 and 1997.

The Company reimburses an affiliate for the direct cost of certain group medical
insurance,  401(k)  benefits  and  office  supplies.  Such  reimbursements  were
approximately $164,000 and $171,000 during 1998 and 1997, respectively.

Affiliates  of the Company  maintain  brokerage  accounts  with  Winston,  which
received  commissions from those affiliates totaling  approximately  $41,000 and
$36,000 during 1998 and 1997, respectively.

10. OFF-BALANCE SHEET RISK
    ----------------------

The Company is engaged in various trading and brokerage activities, on an agency
and principal  basis.  The Company's  exposure to off-balance  sheet credit risk
occurs in the event a customer,  clearing agent or counterparty does not fulfill
their obligations arising from a transaction.

Securities  sold,  not yet  purchased  represent  obligations  of the Company to
deliver  securities,  at  contracted  prices,  thereby  creating a liability  to
purchase these securities in the market at prevailing prices. Accordingly, these
transactions  result  in  off-balance  sheet  risk,  as the  Company's  ultimate
obligation  to satisfy the sale of  securities  sold but not yet  purchased  may
exceed the amount recognized in the consolidated financial statements.

The Company is also engaged in various  investment  banking  activities in which
counterparties include broker-dealers, banks, and other institutional customers.
In the event counterparties do not fulfill their obligations, the Company may be
exposed to risk.  The risk of default  depends  on the  creditworthiness  of the
counterparty or issuer of the instrument.  It is the Company's policy to review,
as  necessary,  the credit  standing  of each  counterparty  or issuer  prior to
consummation of such transactions.

Winston  conducts  its  business on a fully  disclosed  basis with one  clearing
broker, Bear Stearns Securities Corporation,  on behalf of its customers and for
its own proprietary  accounts.  The clearing  operations for Winston's  customer
accounts and  proprietary  transactions  are  performed  by its clearing  broker
pursuant to a clearance agreement.

At December 31, 1998,  substantially  all of the securities  owned and the total
receivable  from clearing  broker are  positions  with and amounts due from this
clearing  broker.  The  Company is subject to credit  risk  should the  clearing
broker be unable to pay this balance.

11. PENDING SALE OF SUBSIDIARY
    --------------------------
On July 30, 1998,  Winston,  its  wholly-owned  subsidiary T.R. Winston Capital,
Inc.("Wincap"),  and an unrelated  third party ("Third  Party"),  entered into a
stock  purchase  agreement  ("Agreement").  The  Agreement provides  among other
things, for the Third Party to contribute to the capital of Wincap, $800,000  in

<PAGE>


                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

return for an 80% ownership interest and an officer  of Wincap  and  Winston  to
receive a 10% ownership interest. The closing of the agreement and the resultant
change in control are subject to NASD approval which has not yet been received.

A condition of the Agreement is that the Third Party and two officers of Winston
enter into an investment advisory agreement  ("Advisory  Agreement").  Under the
Advisory  Agreement,  the Third Party has committed to provide no less than $4.7
million  of  assets  to be  managed  by the two  officers  as  long  as  certain
performance criteria are met.

Certain fees and commissions  generated in managing these assets will ultimately
be remitted to Winston and one of its officers.

If the Agreement is closed, Winston has agreed to provide management services to
Wincap.  These services will consist of all services necessary for the operation
of Wincap's  securities  business.  Winston will receive as compensation for the
services, 60% of Wincap's gross commissions as defined in the Agreement.

12. SEGMENT REPORTING
    -----------------

Statement of Financial  Accounting Standards No. 131 "Disclosures about Segments
of an Enterprise and Related  Information" ("SFAS No. 131") became effective for
fiscal  years  beginning  after  December  31,  1997.  SFAS No. 131  establishes
standards  for the way  public  companies  report  information  about  operating
segments  in annual  and  quarterly  reports.  The  Company  has  evaluated  the
requirements of SFAS No. 131 and has determined that it does not have reportable
operating  segments  as  defined.  The  Company  conducts  stock  brokerage  and
investment banking activities through its wholly-owned  subsidiaries Winston and
AVF, as described in Note 2 of Notes to the Consolidated  Financial  Statements.
These  wholly-owned  subsidiaries  do not have  individual  segment  managers or
discrete financial data used to allocate resources as defined by SFAS No. 131.
                                                     

<PAGE>


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

         None.

<PAGE>



                                    PART III


Item 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
         ------------------------------------------------------------

     All of the members of the current  Board of  Directors  were elected at the
1998 Annual  Meeting  and all will serve until the next Annual  Meeting or until
their successors have been elected and shall qualify. The Company's officers are
elected by and serve at the leave of the Board.

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

     The directors  and  executive  officers of the Company at February 28, 1999
are as follows:

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

         Paul O. Koether          62            Chairman, Director and
                                                  President

         Mathew E. Hoffman        45            Director

         Casey K. Tjang           60            Director

         M. Michael Witte         72            Director

         John W. Galuchie, Jr.    46            Vice President and
                                                  Treasurer

         Mark Koscinski           41            Vice President
------------------------------------

     Paul O. Koether is principally engaged in the following businesses:  (i) as
Chairman and director  since July 1987 and  President  since October 1990 of the
Company and the general partner since 1990 of Shamrock Associates,  ("Shamrock")
an investment  partnership which is the principal stockholder of the Company and
(ii) various positions with affiliates of the Company,  including Chairman since
1990 and a registered representative since 1989 of T. R. Winston & Company, Inc.
("Winston") and since July 1992, a director of American  Metals  Service,  Inc.,
("AMS") which was an indirect,  majority-owned  subsidiary of the Company before
its shares were  distributed  to the  Company's  shareholders.  AMS currently is
seeking to acquire an operating  business.  Mr.  Koether also has been  Chairman
since April 1988,  President from April 1989 to February 1997 and director since
March 1988 of Pure World,  Inc., ("Pure World") and since December 1994 has been
a  director  and  since   January  1995  has  been   Chairman  of  Pure  World's
majority-owned subsidiary, Pure World Botanicals,  Inc., ("PWBI") a manufacturer
and distributor of natural products.  He is also Chairman and a director of Pure
World's  principal  stockholder,  Sun  Equities  Corporation,  ("Sun") a private
company.  Mr.  Koether  served as Chairman  and a director of  NorthCorp  Realty
Advisors,  Inc., an asset management company,  ("NorthCorp") from June 1992 when
it was acquired by Pure World until August,  1994 when it was merged and renamed
Crown  NorthCorp,  Inc. In September 1998 Mr. Koether was elected a director and
Chairman of Cortech, Inc.("Cortech")a Denver-based biopharmaceutical company.

<PAGE>


     Mathew E. Hoffman.  Since January 1997, he has been head of the  litigation
department  of  Todtman,  Nachamie,  Spizz,  & Johns,  P.C.  From May 1994 until
January 1997 Mr. Hoffman was head of the  litigation  department of the law firm
of Rosen & Reade.  From  February  1989 to May 1994,  he was a partner  of Keck,
Mahin & Cate. His articles have been published in the United States,  Europe and
Japan.

     Casey K.  Tjang.  Since  December  1995,  he has  been  with  Leading  Edge
Packaging,  Inc., a marketing,  wholesaler and distribution  company of consumer
product  packagings in the following  capacities:  director and secretary  since
December 1995; Chief Financial  Officer since September 1996 and President since
September  1998.  From 1991 to 1995,  Mr. Tjang  served as  President  and Chief
Executive Officer of First Merchant Bankers, Inc., a privately-owned  investment
company,  whose  business is focused in the Asia  Pacific  rim, and from 1993 to
1995, he was an Executive  Director of Starlite Holdings Limited,  a printer and
manufacturer  of packaging  materials.  From March 1991 until February 1995, Mr.
Tjang was a director of Concord Camera Corp., which manufactures and distributes
camera equipment.

     M. Michael Witte. Since August 1980, he has been President of M. M. Witte &
Associates,  Inc.,  a  private  corporation  which  is  engaged  in oil  and gas
consulting and investment  management.  In November,  1995 Mr. Witte was elected
Co-Chairman of The American  Drilling  Company,  L.L.C. and on August 1, 1996 he
was  elected   President  and  Chief  Executive   Officer  of  South  Coast  Oil
Corporation,  positions he still  holds.  From April 1991 to June 1995 Mr. Witte
was a director of Search Exploration, Inc., a publicly held corporation until it
was  acquired by Harken  Energy  Corporation,  which,  through its  wholly-owned
subsidiary, McCulloch Energy, Inc. ("McCulloch") was engaged in the acquisition,
exploration, development and production of oil and natural gas properties in the
United States.  Mr. Witte was Chairman of McCulloch from April 1991 through June
1995.

     John W. Galuchie,  Jr., a certified  public  accountant,  is engaged in the
following  businesses:  (i) the Company,  as Vice President and Treasurer  since
September  1986 and a director from June 1989 to August 1993;  (ii) Winston,  as
President and Treasurer  since  September  1989;  (iii) Pure World, as Executive
Vice  President  since April 1988 and director  from January 1990 until  October
1994;  and (iv)  NorthCorp as a director from June 1992 until August 1996 and as
Secretary,  from November 1992 to August 1994. In September  1998, Mr.  Galuchie
was  elected a director  and  President  of  Cortech.  Since  December  1998 Mr.
Galuchie has been a director of HealthRite, Inc.

     Mark Koscinski,  a certified public accountant,  is principally  engaged in
the following  businesses since August 1993: (i) the Company and Winston as Vice
President;  (ii) Pure World, as Senior Vice President;  and (iii) since December
1994, Pure World Botanicals, Inc., as director, Senior Vice President, Secretary
and Treasurer.

     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") and the National  Association of Securities Dealers ("NASD").
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 1998.

<PAGE>



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

     There is shown below  information  concerning the annual  compensation  for
services in all  capacities  to the Company for the fiscal years ended  December
31, 1998,  1997 and 1996,  for those  persons who were, at December 31, 1998 (i)
the chief executive officer and (ii) the other most highly compensated  officers
of  the  Company,   whose  annual  compensation  exceeds  $100,000  (the  "Named
Officers").

<TABLE>
<CAPTION>

                                            Summary Compensation Table
                                                                    Long-Term   
Name and Principal                    Annual Compensation(1)(2)    Compensation      Other
                                --------------------------------- --------------   ---------  
Officer                Year      Salary      Bonus       Other(3)    Options(#)
<S>                    <C>      <C>          <C>         <C>             <C>          <C>
Paul O. Koether        1998     $200,000     $20,000     $171,161
Chairman, Presi-       1997     $200,000     $65,000     $124,484        -            -
dent and Chief         1996     $200,000     $65,000     $142,366        -            -
Executive Officer


John W. Galuchie, Jr.  1998     $166,000     $30,000     $    194
Vice President         1997     $160,000     $ 8,000     $    386        -            -
and Treasurer          1996     $160,000     $15,000     $    892        -            -

</TABLE>

----------------------------------------------------

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

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

(3)  Represents  commissions  paid by  Winston  to  these  individuals  in their
     capacity as registered representatives for securities trades made for their
     respective customers.

     There  were  no  stock  options  granted  pursuant  to the  Company's  1987
Non-Qualified  Stock  Option  Plan (the  "Plan")  during the fiscal  years ended
December 31, 1998, 1997 and 1996 to the Named Officers.

     Options may be granted by the Board of Directors to officers, directors and
employees of the Company or its subsidiaries.  The exercise price for the shares
shall not be less than the fair market  value of the Common Stock on the date of
grant. Options will expire five years from date of grant and will be exercisable
as to  one-half  of the  shares on the date of grant  and as to the other  half,
after the first  anniversary of the date of grant,  or at such other time, or in
such other  installments  as may be  determined  by the Board of  Directors or a
committee thereof at the time of grant. The options are non-transferable  (other
than  by will or by  operation  of the  laws  of  descent)  and are  exercisable
generally only while the holder is employed by the Company or by a subsidiary of
the Company or, in the event of the holder's death or permanent disability while
employed by the Company, within one year after such death or disability.

<PAGE>


     The table below contains information  concerning the exercise of options by
the Named  Officers  during 1998 and the fiscal  year-end  value of  unexercised
options held by the Named Officers.

<TABLE>
<CAPTION>

                                Aggregated Option Exercises in Last Fiscal Year and
                                           Fiscal Year-End Option Values

                            Number of                                                        Value of Unexercised
                         Shares Acquired      Value           Number of Unexercised          In-the-Money Options
                           on Exercise      Realized      Options at December 31, 1998       at December 31, 1998
                         ---------------    --------      ----------------------------    --------------------------  
                                                          Exercisable   Unexercisable    Exercisable  Unexercisable
                                                          ------------  -------------    -----------  -------------
<S>                           <C>           <C>                 <C>           <C>             <C>           <C>
Paul O. Koether                    -              -             -             -               -             -

John W. Galuchie, Jr.         10,000        $16,875             -             -               -             -
 
</TABLE>


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

     Directors  who are not  employees  of the Company  receive a monthly fee of
$1,000 plus $200 for each day of  attendance  at board and  committee  meetings.
During  1998,  the  Company  paid  directors'  fees in the  aggregate  amount of
approximately $32,000.

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

     In April,  1990, the Company and Paul O. Koether entered into an employment
agreement  ("Agreement")  pursuant to which Mr.  Koether serves as the Company's
Chairman  for an  initial  three-year  term  ("Commencement  Date") at an annual
salary of $175,000 (changed to $200,000 in December 1993) ("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
Commencement Date.

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

     Change in  Control  is deemed to have  occurred  if (i) any  individual  or
entity,  other than  individuals  beneficially  owning,  directly or indirectly,
common  stock of the Company  representing  30% or more of the  Company's  stock
outstanding as of April,  1990, 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 April,  1990  ("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.

<PAGE>


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

     The Company may terminate Mr. Koether's  employment under the Agreement for
"cause" which is defined as (i) Mr. Koether's continued failure to substantially
perform his duties  under the  Agreement  (other than by reason of his mental or
physical  incapacity  or the removal of his office to a location  more than five
miles  from its  current  location)  which is not cured  within  specified  time
periods,  or (ii) Mr.  Koether's  conviction  of any  criminal act or fraud with
respect to the Company.  The Company may not terminate Mr. Koether's  employment
except by a vote of not less than 75 percent of the entire Board of Directors at
a meeting at which Mr. Koether is given the opportunity to be heard.

     In the event of Mr.  Koether's death during the term of the Agreement,  his
beneficiary  shall be paid a death  benefit equal to $200,000 per year for three
years  payable  in  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 70 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 70.


<PAGE>


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

     The  following  table  provides  information  with respect to the Company's
common stock  beneficially owned as of February 28, 1999 by each director of the
Company,  by each person having beneficial  ownership of five percent or more of
the Company's common stock and by all directors and officers of the Company as a
group.

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

Paul O. Koether                      923,454(2)                 45.23%
 211 Pennbrook Road
 Far Hills, NJ 07931

Shamrock Associates                  834,940                    40.90%
 211 Pennbrook Road
 Far Hills, NJ 07931

M. Michael Witte                      19,000                        *
 1120 Granville Avenue
 Suite 102
 Los Angeles, CA 90049

Casey K. Tjang                        20,000                        *
 510 Tallwood Lane
 Greenbrook, NJ 08812

Mathew E. Hoffman                     14,000                        *
 62 Rosehill Avenue
 New Rochelle, NY 10804

John W. Galuchie, Jr.                 48,332(3)                  2.37%
 376 Main Street
 Bedminster, NJ 07921

Mark Koscinski                        10,000                        *
 376 Main Street
 Bedminster, NJ 07921

All Directors and Officers         1,006,454                    49.30%
 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 this  footnote or in other
     footnotes below.  Included in such number of Shares  beneficially owned are
     shares subject to options  currently  exercisable  or becoming  exercisable
     within sixty days: Mr. Witte (14,000  shares);  Mr. Tjang (14,000  shares);
     Mr.  Hoffman  (14,000  shares);  Mr.  Koscinski  (8,000  shares);  and  all
     directors and officers as a group (50,000 shares).

(2)  Includes the 834,940 Shares  beneficially  owned by Shamrock.  As a general
     partner  of  Shamrock,  Mr.  Koether  may be  deemed  to own  these  shares
     beneficially. Includes 28,332 shares owned by Sun, a private corporation of
     which Mr.  Koether is the  Chairman and a principal  stockholder.  Includes
     3,332  shares held by Mr.  Koether's  Keogh Plan and 1,750 shares held in a
     trust for the benefit of Mr. Koether's  daughter for which Mr. Koether acts
     as the sole trustee.  Mr. Koether is also a limited partner of Shamrock and
     may be deemed to own  beneficially  that  percentage of the shares owned by
     Shamrock  represented by his partnership percentage.  Mr. Koether disclaims
     beneficial ownership of such shares.

<PAGE>

(3)  Includes  28,332  Shares owned by Sun, a private  corporation  of which Mr.
     Galuchie is a director  and  officer.  Mr.  Galuchie  disclaims  beneficial
     ownership of such shares.


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

     Rosenman & Colin LLP ("R&C")  performed  legal work for the Company and its
affiliates  in 1998 and 1997.  Natalie  I.  Koether,  wife of the  Chairman  and
President of the Company, is of counsel to R&C and also employed by the Company.
Aggregate fees and expenses billed by R&C to the Company and its subsidiaries in
1998 and 1997 were  approximately  $120,000  and  $128,000,  respectively.  Mrs.
Koether  received  $170,000 and $150,000 in 1998 and 1997,  respectively,  as an
employee.  She received no compensation  from R&C related to her fees charged to
the Company for her time.

     The Company  reimburses  an affiliate  for the direct cost of certain group
medical insurance, 401(k) benefits and office supplies. Such reimbursements were
approximately $164,000 and $171,000 during 1998 and 1997, respectively.


<PAGE>

                                     PART IV


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

     The following exhibits are filed as part of this report:

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

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

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

                  3.2(b)       Certificate  of  Amendment   to   Certificate  of
                               Incorporation. (3)

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

                  10.1         1987  Non-Qualified  Executive Stock Option Plan.
                               (6)

                  10.2         Employment Agreement, dated as  of  April 6, 1990
                               by and between Texas  American Energy Corporation
                               and Paul 0. Koether. (7)

                  21           Subsidiaries*

                  27           Financial Data Schedule*

(b)      Reports on Form 8-K.

                  On October 15, 1998, the Company announced it would split  its
                  stock  two  for  one   to  be  effected in the form of a stock
                  dividend.  The  record  date   for  the  stock  split  was  on
                  October   26,   1998   and    the    distribution   date   was
                  November 9, 1998.
-------------------
*   Filed herewith.

(1)  Incorporated by reference to Texas American Energy Corporation Registration
     Statement, as amended, on Form S-l, No. 33-11109.

(2)  Incorporated by reference to Texas American Energy  Corporation  Form 10-K,
     for the fiscal year ended December 31, 1984.

(3)  Incorporated  by reference to Texas American Energy  Corporation  Form 10-K
     for the fiscal year ended December 31, 1987.

(4)  Incorporated  by reference to Kent Financial  Services,  Inc. Form 10-Q for
     the quarter ended September 30, 1991.

(5)  Intentionally left blank.

(6)  Incorporated  by  reference  to Texas  American  Energy  Corporation  Proxy
     Statement dated November 11, 1987.

(7)  Incorporated  by reference to Kent Financial  Services,  Inc. Form 10-Q for
     the quarter ended June 30, 1990.


<PAGE>
                                             


                                   SIGNATURES

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

                                     KENT FINANCIAL SERVICES, INC.


Dated:  March 29, 1999               BY       /s/ Paul O. Koether           
                                              ------------------------------
                                              Paul 0. Koether
                                              Chairman of the Board, President
                                              and Director
                                              (Principal Executive Officer)



                                     BY       /s/ Mark Koscinski
                                              ------------------------------   
                                              Mark Koscinski
                                              Vice President
                                              (Principal Financial and
                                              Accounting 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 29, 1999                           /s/ Paul O. Koether           
                                                 ------------------------------
                                                 Paul 0. Koether
                                                 Chairman of the Board,
                                                 President and Director
                                                 (Principal Executive Officer)


Dated:  March 29, 1999                           /s/ Mathew E. Hoffman         
                                                 ------------------------------
                                                 Mathew E. Hoffman
                                                 Director


Dated:  March 29, 1999                           /s/ M. Michael Witte          
                                                 ------------------------------
                                                 M. Michael Witte
                                                 Director

Dated:  March 29, 1999                           /s/ Casey K. Tjang            
                                                 ------------------------------
                                                 Casey K. Tjang
                                                 Director