UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C. 20549
 FORM
10-Q
 
 T
              QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
 For the
quarterly period ended:  September 30,
2008
 
 OR
 
 £
              TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
 For the
transition period from: ________ to ________.
 
 Commission
File No.: 1-7986
 
 Kent
Financial Services, Inc.
 (Exact
name of registrant 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)
 
 (908)
766-7221
 (Registrant's
telephone number)
 
 Indicate
by check mark whether the registrant(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  TNo  £
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer”,
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check One)
 Large
accelerated filer £Accelerated
filer £Non-accelerated filer £Small
reporting company T
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
 Yes  £No  T
 
 
 State the
number of shares outstanding of each of the issuer's classes of common equity as
of the latest practicable date:  As of November 4, 2008, the issuer
had 2,759,293 shares of its common stock, par value $.10 per share,
outstanding.
  
 1
  KENTFINANCIAL SERVICES, INC. AND SUBSIDIARIES
 FORM
10-Q
 For The
Quarterly Period Ended September 30, 2008
 Table of
Contents
 
 PageNumberPART I.
      FINANCIAL INFORMATIONItem
      1.
                                                        
                                                        Financial StatementsConsolidated Balance Sheets as of September 30, 2008 and
      December 31, 2007
                                                        
                                                        3Consolidated Statements of Operations for the Three and Nine
      Months Ended September 30, 2008 and 2007
                                                        
                                                        4Consolidated Statements of Cash Flows for the Nine Months Ended
      September 30, 2008 and 2007
                                                        
                                                        5Notes to Consolidated Financial
    Statements
                                                        
                                                        6Item
      2.
                                                        
                                                        Management's Discussion and Analysis of Financial Condition and
      Results of Operations
                                                        
                                                        12Item
      3.
                                                        
                                                        Quantitative and Qualitative Disclosure About Market
      Risk
                                                        
                                                        16Item
      4.
                                                        
                                                        Controls and Procedures
                                                        
                                                        16PART
      II. OTHER INFORMATIONItem
      1.
                                                        
                                                        Legal Proceedings
                                                        
                                                        17Item
      2.
                                                        
                                                        Unregistered Sales of Equity Securities and Use of
      Proceeds
                                                        
                                                        17Item
      3.
                                                        
                                                        Defaults Upon Senior Securities
                                                        
                                                        17Item
      4.
                                                        
                                                        Submission of Matters to a Vote of Security
      Holders
                                                        
                                                        17Item
      5.
                                                        
                                                        Other Information
                                                        
                                                        18Item
      6.
                                                        
                                                        Exhibits
                                                        
                                                        18Signatures
                                                        
                                                        19
  2
 Table of Contents
  PART
I   -FINANCIAL
INFORMATION
 Item1.  -
              Financial
      Statements
 
 KENTFINANCIAL SERVICES, INC. AND SUBSIDIARIES
 CONSOLIDATED
BALANCE SHEETS
 (In
thousands, except share and per share amounts)
 
 ASSETS
                  
                  September 30,
      2008(Unaudited)
                  
                  
                  December 31,2007Current
      Assets:Cash
      and cash equivalents
                  
                  $
                  1,033
                  
                  
                  $
                  135Short-term
      investments
                  
                  
                  11,153
                  
                  
                  
                  12,270Marketable
      securities
                  
                  
                  96
                  
                  
                  
                  117Accounts
      receivable
                  
                  
                  59
                  
                  
                  
                  98Prepaid
      expenses and other current assets
                  
                  
                  29
                  
                  
                  
                  18Total
      current assets
                  
                  
                  12,370
                  
                  
                  
                  12,638Property
      and equipment, net of accumulated depreciation of $4 and
$1
                  
                  
                  28
                  
                  
                  
                  6Other
      assets
                  
                  
                  16
                  
                  
                  
                  62Total
      assets
                  
                  $
                  12,414
                  
                  
                  $
                  12,706LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilities:Accounts
      payable and accrued expenses
                  
                  $
                  243
                  
                  
                  $
                  269Noncurrent
      liabilities:Accrued
      post employment obligations
                  
                  
                  720
                  
                  
                  
                  685Total
      liabilities
                  
                  
                  963
                  
                  
                  
                  954Minority
      interest in subsidiaries
                  
                  
                  5,034
                  
                  
                  
                  5,083Stockholders'
      equity:Preferred
      stock without par value;500,000 shares authorized;none
      outstanding
                  
                  
                  -
                  
                  
                  
                  -Common
      stock, $.10 par value;8,000,000 shares authorized;2,786,483 shares issued
      and outstanding
                  
                  
                  279
                  
                  
                  
                  279Additional
      paid-in capital
                  
                  
                  12,381
                  
                  
                  
                  12,390Accumulated
      deficit
                  
                  
                  (6,223
                  )
                  
                  
                  (5,997
                  )Accumulated
      other comprehensive loss
                  
                  
                  (20
                  )
                  
                  
                  (3
                  )Total
      stockholders' equity
                  
                  
                  6,417
                  
                  
                  
                  6,669Total
      liabilities and stockholders' equity
                  
                  $
                  12,414
                  
                  
                  $
                  12,706
     3
 Table of Contents
  KENTFINANCIAL SERVICES, INC. AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 (UNAUDITED)
 (In
thousands, except per share data)
 
 Three
      Months Ended
                  
                  
                  Nine
      Months EndedSeptember 30,
                  
                  
                  September 30,2008
                  
                  
                  2007
                  
                  
                  2008
                  
                  
                  2007Revenues:Seminar
      fees
                  
                  $
                  50
                  
                  
                  $
                  125
                  
                  
                  $
                  184
                  
                  
                  $
                  356Interest
                  
                  
                  65
                  
                  
                  
                  153
                  
                  
                  
                  248
                  
                  
                  
                  469Investing
      gains (losses)
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (1
                  )
                  
                  
                  7Other
      income
                  
                  
                  9
                  
                  
                  
                  9
                  
                  
                  
                  89
                  
                  
                  
                  129Total
      revenues
                  
                  
                  124
                  
                  
                  
                  287
                  
                  
                  
                  520
                  
                  
                  
                  961Expenses:General
      and administrative
                  
                  
                  236
                  
                  
                  
                  517
                  
                  
                  
                  789
                  
                  
                  
                  1,426Write
      off capitalized software costs
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  38Total
      expenses
                  
                  
                  236
                  
                  
                  
                  517
                  
                  
                  
                  789
                  
                  
                  
                  1,464Loss
      before income taxes and minority interest
                  
                  
                  (112
                  )
                  
                  
                  (230
                  )
                  
                  
                  (269
                  )
                  
                  
                  (503
                  )Provision
      for income tax benefit (expense)
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (2
                  )Loss
      before minority interest
                  
                  
                  (112
                  )
                  
                  
                  (230
                  )
                  
                  
                  (271
                  )
                  
                  
                  (503
                  )Minority
      interest in subsidiaries losses
                  
                  
                  19
                  
                  
                  
                  65
                  
                  
                  
                  45
                  
                  
                  
                  138Net
      loss
                  
                  
                  (93
                  )
                  
                  
                  (165
                  )
                  
                  
                  (226
                  )
                  
                  
                  (365
                  )Other
      comprehensive loss:Unrealized
      gain (loss) on available for sale securities
                  
                  
                  (5
                  )
                  
                  
                  
                  
                  
                  
                  (17
                  )
                  
                  
                  1Comprehensive
      loss
                  
                  $
                  (98
                  )
                  
                  $
                  (165
                  )
                  
                  $
                  (243
                  )
                  
                  $
                  (364
                  )Basic
      and diluted net loss per common share
                  
                  $
                  (0.03
                  )
                  
                  $
                  (0.06
                  )
                  
                  $
                  (0.08
                  )
                  
                  $
                  (0.13
                  )Weighted
      average number of common shares outstanding (in 000's)
                  
                  
                  2,790
                  
                  
                  
                  2,793
                  
                  
                  
                  2,791
                  
                  
                  
                  2,795
 
 
 See
accompanying notes to consolidated financial statements.
  4
 Table of Contents
  KENTFINANCIAL SERVICES, INC. AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 (UNAUDITED)
 (In
thousands)
 
 Nine
      Months EndedJune 30,2008
                  
                  
                  2007Cash
      flows from operating activities:Net
      loss
                  
                  $
                  (226
                  )
                  
                  $
                  (365
                  )Adjustments
      to reconcile net loss to net cash provided by (used in) operating
      activities:Depreciation
                  
                  
                  3
                  
                  
                  
                  5Write
      off capitalized software costs
                  
                  
                  
                  
                  
                  
                  38Interest
      receivable on short-term investments
                  
                  
                  (30
                  )
                  
                  
                  (116
                  )Minority
      interest in subsidiaries losses
                  
                  
                  (45
                  )
                  
                  
                  (138
                  )Change
      in accounts receivable
                  
                  
                  39
                  
                  
                  
                  (4
                  )Change
      in prepaid expenses and other assets
                  
                  
                  35
                  
                  
                  
                  (39
                  )Change
      in accounts payable and accrued expenses
                  
                  
                  9
                  
                  
                  
                  (43
                  )Change
      in deferred revenue
                  
                  
                  
                  
                  
                  
                  (23
                  )Net
      cash used in operating activities
                  
                  
                  (215
                  )
                  
                  
                  (685
                  )Cash
      flows from investing activities:Acquistion
      of property and equipment
                  
                  
                  (25
                  )
                  
                  
                  (14
                  )Sale
      of marketable securities
                  
                  
                  2
                  
                  
                  
                  30Purchase
      of short-term investments
                  
                  
                  (11,549
                  )
                  
                  
                  (14,013
                  )Sales
      and maturities of short-term investments
                  
                  
                  12,697
                  
                  
                  
                  14,611Net
      cash provided by investing activities
                  
                  
                  1,125
                  
                  
                  
                  614Cash
      flows from financing activities:Repurchase
      of common stock by subsidiary
                  
                  
                  (3
                  )
                  
                  
                  (6
                  )Repurchase
      of common stock
                  
                  
                  (9
                  )
                  
                  
                  (16
                  )Net
      cash used in financing activities
                  
                  
                  (12
                  )
                  
                  
                  (22
                  )Net
      increase in cash and cash equivalents
                  
                  
                  898
                  
                  
                  
                  (93
                  )Cash
      and cash equivalents at beginning of period
                  
                  
                  135
                  
                  
                  
                  167Cash
      and cash equivalents at end of period
                  
                  $
                  1,033
                  
                  
                  $
                  74Supplemental
      disclosure of cash flow information:Cash
      paid for:Taxes
                  
                  $
                  2
                  
                  
                  $
                  6
 
 
 See
accompanying notes to consolidated financial statements.
  5
 Table of Contents
  KENTFINANCIAL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 For the
Periods Ending September 30, 2008 and 2007
 (UNAUDITED)
 
 NOTE A - Basis of
Presentation
 
 The
accompanying unaudited financial statements of Kent Financial Services, Inc. and
subsidiaries (the "Company") have been prepared in accordance with accounting
principles generally accepted for interim financial information and with the
instructions to Form 10-Q and Article 8 of Regulation S-X relating to smaller
reporting companies.  Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States of America (“GAAP”) for complete financial
statements.  In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included.  The balance sheet at December 31, 2007 has been
derived from the audited financial statements at that date but does not include
all of the information and footnotes required by GAAP for complete financial
statements; as such, these financial statements should be read in conjunction
with the financial statements and notes thereto included in the Company’s Annual
Report on Form 10-KSB for the year ended December 31, 2007 as filed with the
Securities and Exchange Commission.
 
 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.  Estimates that are particularly susceptible to change
include assumptions used in determining the fair value of securities owned and
non-readily marketable securities.
 
 The
results of operations for the three and nine months ended September 30, 2008 are
not necessarily indicative of the results to be expected for the entire year or
for any other period.
 
 NOTE B – 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 through an acquisition
or merger.  Kent Financial Services owned approximately 53.28% of Kent
International at September 30, 2008.  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.  In July, Kent International reached an agreement with
Wizart Studios, LLC, a New York based web design firm, to redesign and market
the site in return for a 19% equity interest in ChinaUSPals.com, Inc., the
site’s holding company.  The redesigned site was launched on August 6,
2008.  Since then, site membership has grown to over 1,100 members
from the approximately 150 members prior to the redesign.
  6
 Table of Contents
  While
Kent International is encouraged by the membership and traffic growth since the
redesign, we cannot be certain that the growth rate will continue or that
existing members will continue using the site.  Kent International
also faces the risk that our website will not be viewable in China or will be
deliberately blocked by the government of the People’s Republic of
China.  Internet usage and content are heavily regulated in China and
compliance with these laws and regulations may cause us to change or limit our
business practices in a manner adverse to our business.
 
 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.
 
 The
education services segment represents the activity of Kent Educational, 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 seven 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 three and nine months ended September 30, 2008 and
2007:
  7
 Table of Contents
  
 BusinessDevelopment
                    
                    
                    Educational
                    
                    
                    All
      Other
                    
                    
                    
                    
                    
                    ConsolidatedActivities
                    
                    
                    Services
                    
                    
                    Operations
                    
                    
                    Eliminations
                    
                    
                    TotalsThree Months Ended September 30,
      2008Revenues
      from external customers
                    
                    
                    
                    
                    $
                    51
                    
                    
                    $
                    7
                    
                    
                    
                    
                    
                    $
                    58Management
      fees
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    63
                    
                    
                    $
                    (63
                    )Interest
      revenue
                    
                    $
                    57
                    
                    
                    
                    2
                    
                    
                    
                    6
                    
                    
                    
                    
                    
                    
                    
                    65Oher
      income
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    1
                    
                    
                    
                    
                    
                    
                    
                    1Total
      revenues
                    
                    
                    57
                    
                    
                    
                    53
                    
                    
                    
                    77
                    
                    
                    
                    (63
                    )
                    
                    
                    124General
      and administrative expenses
                    
                    
                    (121
                    )
                    
                    
                    (33
                    )
                    
                    
                    (145
                    )
                    
                    
                    63
                    
                    
                    
                    (236
                    )Minority
      interest
                    
                    
                    27
                    
                    
                    
                    (8
                    )
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    19Net
      income (loss) by segment
                    
                    $
                    (37
                    )
                    
                    $
                    12
                    
                    
                    $
                    (68
                    )
                    
                    
                    -
                    
                    
                    $
                    (93
                    )
 
 Nine Months Ended September 30,
      2008Revenues
      from external customers
                        
                        
                        
                        
                        $
                        187
                        
                        
                        $
                        83
                        
                        
                        
                        
                        
                        $
                        270Management
      fees
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        189
                        
                        
                        $
                        (189
                        )Interest
      revenue
                        
                        $
                        218
                        
                        
                        
                        5
                        
                        
                        
                        25
                        
                        
                        
                        
                        
                        
                        
                        248Investing
      losses
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (1
                        )
                        
                        
                        
                        
                        
                        
                        (1
                        )Other
      Income
                        
                        
                        1
                        
                        
                        
                        
                        
                        
                        
                        2
                        
                        
                        
                        
                        
                        
                        
                        3Total
      revenues
                        
                        
                        219
                        
                        
                        
                        192
                        
                        
                        
                        298
                        
                        
                        
                        (189
                        )
                        
                        
                        520General
      and administrative expenses
                        
                        
                        (336
                        )
                        
                        
                        (175
                        )
                        
                        
                        (467
                        )
                        
                        
                        189
                        
                        
                        
                        (789
                        )Minority
      interest
                        
                        
                        52
                        
                        
                        
                        (7
                        )
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        45Income
      tax expense
                        
                        
                        (1
                        )
                        
                        
                        (1
                        )
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (2
                        )Net
      income (loss) by segment
                        
                        $
                        (66
                        )
                        
                        $
                        9
                        
                        
                        $
                        (169
                        )
                        
                        
                        -
                        
                        
                        $
                        (226
                        )As of September 30, 2008Total
      assets by segment
                        
                        $
                        10,486
                        
                        
                        $
                        391
                        
                        
                        $
                        1,537
                        
                        
                        
                        -
                        
                        
                        $
                        12,414Three Months Ended September 30,
      2007Revenues
      from external customers
                        
                        
                        
                        
                        
                        $
                        125
                        
                        
                        $
                        7
                        
                        
                        
                        
                        
                        
                        $
                        132Management
      fees
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        63
                        
                        
                        $
                        (63
                        )Interest
      revenue
                        
                        $
                        131
                        
                        
                        
                        2
                        
                        
                        
                        20
                        
                        
                        
                        
                        
                        
                        
                        153Other
      income
                        
                        
                        2
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        2Total
      revenues
                        
                        
                        133
                        
                        
                        
                        127
                        
                        
                        
                        90
                        
                        
                        
                        (63
                        )
                        
                        
                        287General
      and administrative expenses
                        
                        
                        (287
                        )
                        
                        
                        (109
                        )
                        
                        
                        (184
                        )
                        
                        
                        63
                        
                        
                        
                        (517
                        )Minority
      interest
                        
                        
                        72
                        
                        
                        
                        (7
                        )
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        65Net
      income (loss) by segment
                        
                        $
                        (82
                        )
                        
                        $
                        11
                        
                        
                        $
                        (94
                        )
                        
                        
                        -
                        
                        
                        $
                        (165
                        )
  8
 Table of Contents
  
 BusinessDevelopment
                      
                      
                      Educational
                      
                      
                      All
      Other
                      
                      
                      
                      
                      
                      ConsolidatedActivities
                      
                      
                      Services
                      
                      
                      Operations
                      
                      
                      Eliminations
                      
                      
                      TotalsNine Months Ended September 30,
      2007Revenues
      from external customers
                      
                      
                      
                      
                      $
                      356
                      
                      
                      $
                      115
                      
                      
                      
                      
                      
                      $
                      471Management
      fees
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      233
                      
                      
                      $
                      (233
                      )Interest
      revenue
                      
                      $
                      397
                      
                      
                      
                      9
                      
                      
                      
                      63
                      
                      
                      
                      
                      
                      
                      
                      469Investing
      gains
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      7
                      
                      
                      
                      
                      
                      
                      
                      7Other
      income
                      
                      
                      14
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      14Total
      revenues
                      
                      
                      411
                      
                      
                      
                      365
                      
                      
                      
                      418
                      
                      
                      
                      (233
                      )
                      
                      
                      961General
      and administrative expenses
                      
                      
                      (685
                      )
                      
                      
                      (345
                      )
                      
                      
                      (629
                      )
                      
                      
                      233
                      
                      
                      
                      (1,426
                      )Minority
      interest
                      
                      
                      146
                      
                      
                      
                      (8
                      )
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      138Write
      off capitalized software costs
                      
                      
                      (38
                      )
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      (38
                      )Net
      income (loss) by segment
                      
                      $
                      (166
                      )
                      
                      $
                      12
                      
                      
                      $
                      (211
                      )
                      
                      
                      -
                      
                      
                      $
                      (365
                      )As of September 30, 2007Total
      assets by segment
                      
                      $
                      10,582
                      
                      
                      $
                      514
                      
                      
                      $
                      1,820
                      
                      
                      
                      -
                      
                      
                      $
                      12,916
 
 NOTE C - Securities Owned
 
 Marketable
securities owned as of September 30, 2008 and December 31, 2007, comprised
mainly of portfolio positions (equity securities) held for capital appreciation
consisted of the following (all numbers in thousands):
 
 September 30,
      2008
                                                                
                                                                
                                                                December 31,
      2007Percent
      Owned
                                                                
                                                                
                                                                Estimated
      Fair Value
                                                                
                                                                
                                                                Losses
      in Accumulated Other Comprehensive Income
                                                                
                                                                
                                                                Estimated
      Fair Value
                                                                
                                                                
                                                                Gains
      in Accumulated Other Comprehensive Income
                                                                
                                                                
                                                                Losses
      in Accumulated Other Comprehensive IncomeGolfRounds.com,
      Inc.
                                                                
                                                                4.35%
                                                                
                                                                
                                                                $
                                                                86
                                                                
                                                                
                                                                $
                                                                (16
                                                                )
                                                                
                                                                $
                                                                92
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                $
                                                                (10
                                                                )All
      other equity securities
                                                                
                                                                N/A
                                                                
                                                                
                                                                
                                                                10
                                                                
                                                                
                                                                
                                                                (4
                                                                )
                                                                
                                                                
                                                                24
                                                                
                                                                
                                                                $
                                                                7$
                                                                96
                                                                
                                                                
                                                                $
                                                                (20
                                                                )
                                                                
                                                                $
                                                                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. The unrealized gains or losses
from marking available for sale securities to market are included in other
comprehensive income.   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.
  9
 Table of Contents
  NOTE D - Capital Stock
Activity
 
 Dividends
 
 No
dividends were declared or paid during the nine months ended September 30,
2008.
 
 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.  This program has no
expiration date.  5,539 shares were repurchased during the three and
nine months ended September 30, 2008 for approximately $9,178, while during the
three and nine months ended September 30, 2007, 7,542 shares were acquired for
approximately $16,278.  As of September 30, 2008, 92,109 shares
remained authorized for repurchase under the program.  All shares
repurchased under this plan have been cancelled and returned to the status of
authorized but unissued shares.
 
 NOTE E - Net Income (Loss) Per
Share
 
 The
Company reports net income (loss) per share under the requirements of Statement
of Financial Accounting Standards No. 128, “Earnings per
Share”.  Basic income (loss) per share includes the weighted average
number of common shares outstanding during the year.  Diluted income
(loss) per share includes the weighted average number of shares outstanding and
dilutive potential common shares, such as warrants and options.  The
Company had no common stock options outstanding at September 30, 2008 and
300,000 outstanding at September 30, 2007.  Because the Company had
losses in the three and nine months ended September 30, 2008 and 2007, any stock
options outstanding would have an anti-dilutive effect on net loss per share and
as such are not included in the calculations.
 
 NOTE
F - Stock Option Plans
 
 The
Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 123(R),
Share-Based Payment,” (“SFAS 123(R)”), a revision of SFAS No. 123, “Accounting
for Stock-Based Compensation” (“SFAS 123”) on January 1, 2006.  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.
 
 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 as 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 nine month periods ended September 30, 2008 and
2007, as no options were earned during this period.  At September 30,
2008, the Company had no common stock options outstanding.
  10
 Table of Contents
  Kent
International Stock Option Plans
 
 Kent
International has issued certain common stock options to its employees,
directors and consultants.  At September 30, 2008 and December 31,
2007, Kent International had 220,000 and 120,000 common stock options
outstanding, respectively.  Any exercises of these common stock
options could have a dilutive effect on the percentage of Kent International
owned by the Company.
 
 On May 8,
2008, Kent International’s Board awarded a non-qualified stock option to Bryan
P. Healey to purchase 100,000 shares of Kent International’s common stock under
the Kent International’s 1986 Stock Option Plan.  The option has an
exercise price of $3.20 and shall become exercisable at a rate of 20,000 shares
on each of the first five anniversaries of the date of grant, provided that Mr.
Healey remains in the continuous employ of Kent International.  The
option shall expire on May 8, 2018, unless earlier terminated.
 
 NOTE G - 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 owner of approximately 53.28% of
Kent International’s outstanding common stock at September 30,
2008.  Paul O. Koether, Chairman of the Company is also the Chairman
of Kent International and the beneficial owner of approximately 58.3% 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 as well as 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 $16,032 and $43,364 in the three and
nine months ended September 30, 2008, respectively and $19,399 and $69,854 in
the three and nine months ended September 30, 2007,
respectively.  Bedminster Management Corp. facilitates the allocation
of certain central administrative costs on a cost reimbursement basis resulting
in no income or loss and is owned equally by Kent, Kent International and T.R.
Winston & Company, LLC.
 
 NOTE H - 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 thatfailure
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
positionandthat 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.
  11
 Table of Contents
  NOTE
I – Net Operating Loss Carryforwards
 
 As of
December 31, 2007, the Company had approximately $3.3 million of net operating
loss carryforwards (“NOL”) for income tax purposes.  In addition, Kent
International had approximately $77.6 million of NOL and $1.85 million of
research and development and foreign tax credit carryforwards available to
offset future federal income tax, subject to limitations for alternative minimum
tax.  The NOL’s and tax credit carryforwards expire in various years
from 2008 through 2027.  The Company’s and Kent International’s use of
operating loss carryforwards and tax credit carryforwards is subject to
limitations imposed by the Internal Revenue Code.  Management believes
that the deferred tax assets as of September 30, 2008 do not satisfy the
realization criteria set forth in SFAS No. 109 and has recorded a valuation
allowance for the entire net tax asset.  By recording a valuation
allowance for the entire amount of future tax benefits, the Company has not
recognized a deferred tax benefit for income taxes in its statements of
operations.
 
 NOTEJ- New Accounting
Pronouncements
 
 In
December 2007, the FASB issued SFAS No. 141 (R), Business Combinations, and
SFAS No. 160, Non-controlling
Interests in Consolidated Financial Statements.  SFAS No. 141
(R) requires an acquirer to measure the identifiable assets acquired, the
liabilities assumed, and any non-controlling interest in the acquiree at their
fair values on the acquisition date, with goodwill being the excess value over
the net identifiable assets acquired.  SFAS No. 160 clarifies that a
non-controlling interest in a subsidiary should be reported as equity in the
consolidated financial statement.  The calculation of earnings per
share will continue to be based on income amounts attributable to the
parent.  SFAS No. 141 (R) and SFAS No. 160 are effective for
financial statements issued for fiscal years beginning after December 15,
2008.  Early adoption is prohibited.  We have not yet
determined the effect on our financial statements, if any, upon adoption of SFAS
No. 141 (R) or SFAS No. 160.
 
 Item2.  -
              Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
 
 The
following discussion and analysis should be read in conjunction with the Annual
Report on Form 10-KSB for the fiscal year ended December 31, 2007 of Kent
Financial Services, Inc. (“Kent” or the “Company”) as well as the Company’s
financial statements and notes thereto included elsewhere in this Quarterly
Report on Form 10-Q.  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
described.  The Company expressly disclaims any obligation or
undertaking to update these statements in the future.
 
 Kent‘s
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.
 
 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 53.28% of Kent International at September 30,
2008.  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.
  12
 Table of Contents
  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.  In July, Kent International reached an agreement with
Wizart Studios, LLC, a New York based web design firm, to redesign and market
the site in return for a 19% equity interest in ChinaUSPals.com, Inc., the
site’s holding company.  The redesigned site was launched on August 6,
2008.  Since then, site membership has grown to over 1,100 members
from the approximately 150 members prior to the redesign.
 
 While
Kent International is encouraged by the membership and traffic growth since the
redesign, we cannot be certain that the growth rate will continue or that
existing members will continue using the site.  Kent International
also faces the risk that our website will not be viewable in China or will be
deliberately blocked by the government of the People’s Republic of
China.  Internet usage and content are heavily regulated in China and
compliance with these laws and regulations may cause us to change or limit our
business practices in a manner adverse to our business.
 
 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.
 
 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 continuing to provide services to new and existing clients through an
outsourcing platform and commission based business development
contractors.
  13
 Table of Contents
  The
Academy has also produced an innovative educational DVD entitled “Sex Over Sixty”.  The Academy has
produced 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 will be constrained by a modest
advertising budget.  Initial sales results have been
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 net loss of $93,000, or $.03 basic and diluted loss per share, for
the quarter ended September 30, 2008 compared to a net loss of $165,000, or $.06
basic and diluted loss per share, for the comparable quarter in
2007.  For the nine months ended September 30, 2008, the Company had a
net loss of $226,000, or $0.08 basic and fully diluted loss per share, compared
to a net loss of $365,000, or $0.13 basic and fully diluted loss per share, for
the same period in 2007.  The decreases in net losses were mainly the
result of decreased expenses offset by decreased interest revenue, seminar fees
and administrative fees paid by an un-affiliated investment partnership during
the period.
 
 Revenue
 
 Seminar
fees based on seminars held by The Academy decreased to $50,000 and $184,000 for
the three and nine months ended September 30, 2008, respectively, compared to
$125,000 and $356,000 for the three and nine months ended September 30,
2007.  These decreases are the result of the departure of The
Academy’s executive director who was primarily responsible for business
development.  The Academy has approximately $193,500 under contract
for services to be rendered during the 2008-2009 school year.  The
Company recognizes seminar revenue when the services are provided.
 
 Interest
income decreased to $65,000 and $248,000 for the three and nine months ended
September 30, 2008, respectively, from $153,000 and $469,000, respectively, for
the same periods in 2007.  The decreases of $88,000 and $221,000,
respectively, are due to lower yields on invested balances.
 
 Although,
the Company did not realize any gains or losses on securities transactions
during the three months ended September 30, 2008, during the nine months ended
September 30, 2008 $1,000 in losses on securities transactions were
realized.  Realized gains on securities transactions were
approximately $7,000 for the three and nine months ended September 30,
2007.
 
 Other
income for the three months ended September 30 2008 and 2007 was consistent at
$9,000.  For the nine months ended September 30, 2008, other income
decreased to $89,000 from $129,000 for the nine months ended September 30, 2007
caused primarily by the decrease 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.
  14
 Table of Contents
  Expenses
 
 General
and administrative expenses decreased to $236,000 and $789,000 for the three and
nine months ended September 30, 2008, respectively, from $517,000 and $1,426,000
for the same periods in 2007.  The decreases of $281,000 and $637,000
for the three and nine months respectively, can be primarily attributed to
reductions of $257,000 and $511,000 in personnel expenses as a result of the
resignation of several employees, including our former President in August of
2007 and the Executive Director of The Academy in December of
2007.  Other significant reductions in expenses included legal fees
which decreased $15,000 and rental expense which decreased approximately
$19,000.  The decreases were partially offset by increases in expenses
at the Academy related to production, marketing and fulfillment costs for the
Sex Over Sixty DVD of
approximately $57,000 and expenses at Kent International of approximately
$24,000 in consulting and due diligence expenses related to a proposed
acquisition that was terminated prior to closing..
 
 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 the Company is no longer
utilizing.
 
 Liquidity
and Capital Resources
 
 At
September 30, 2008, the Company had cash and cash equivalents of approximately
$1.033 million.  Cash and cash equivalents consist of cash held in
banks and brokerage firms and U.S. Treasury Bills with original maturities of
three months.  The Company had short-term investments, consisting of
U.S. Treasury Bills with original maturities of six months, of $11.153 million
at September 30, 2008 with yields ranging from 1.98% to
2.19%.  Working capital at September 30, 2008 was approximately
$12.127 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.
 
 Net cash
used in operations was $215,000 in the nine months ended June 30, 2008, compared
to net cash used in operations of $685,000 in the comparable period of
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 decrease in expenses as described
above.
 
 Net cash
of approximately $1.125 million was provided by investing activities during the
nine months ended September 30, 2008 by the sales and maturities of short-term
investments and marketable securities of $12.699 million offset by the purchase
of short-term investments of approximately $11.549 million and acquisition of
property and equipment of $25,000.  Net cash of $614,000 was provided
by investing activities during the period ended September 30, 2007 by the sales
and maturities of short-term investments and marketable securities of $14.611
million offset by the purchase of short-term investments of $14.103 million and
capitalized costs for the development of www.chinauspals.com.
 
 In the
nine month periods ended September 30, 2008 and 2007, net cash used in financing
activities for the repurchase of the Company’s common stock was approximately
$9,000 and $16,000, respectively.  Kent International also used
approximately $3,000 and $6,000 to repurchase its stock in the nine months ended
September 30, 2008 and 2007, respectively.
  15
 Table of Contents
  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 owner of approximately 53.28% of
Kent International’s outstanding common stock at September 30,
2008.  Paul O. Koether, Chairman of the Company is also the Chairman
of Kent International and the beneficial owner of approximately 58.3% 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 as well as 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 $16,032 and $43,364 in the three and
nine months ended September 30, 2008, respectively and $19,399 and $69,854 in
the three and nine months ended September 30, 2007,
respectively.  Bedminster Management Corp. facilitates the allocation
of certain central administrative costs on a cost reimbursement basis resulting
in no income or loss and is owned equally by Kent, Kent International and T.R.
Winston & Company, LLC.
 
 Off-Balance
Sheet Arrangements
 
 The
Company has no off-balance sheet arrangements.
 
 ITEM3.
              Quantitative and
      Qualitative Disclosure About Market
Risk.
 
 Not
Applicable.
 
 Item4. -
              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.
 
 The
material weakness identified by Management 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.  However, as there has been no instance
in which the company failed to identify or resolve a disclosure matter or failed
to perform a timely and effective review, management determined that the
addition of personnel to our bookkeeping and accounting operations is not an
efficient use of our resources at this time.
  16
 Table of Contents
  Accordingly,
based on their evaluation of our disclosure controls and procedures as of
September 30, 2008, 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 September 30, 2008 that has materially affected or is
reasonably likely to materially affect the Company’s internal control over
financial reporting.
 
 PART
      II  -
              OTHER
      INFORMATION
 ITEM1. -
              Legal
      Proceedings
 
 None.
 
 ITEM2. -
              Unregistered Sales of
      Equity Securities and Use of
Proceeds
 
 Purchase
of Equity Securities
 
 Issuer
Purchases of Equity Securities (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
      ProgramsJuly 1,
      2008 –July 31,
      2008
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              97,648August 1,
      2008 –August 31,
      2008
                              
                              
                              5,191
                              
                              
                              $
                              1.67
                              
                              
                              
                              5,191
                              
                              
                              
                              92,457September 1,
      2008 –September 30,
      2008
                              
                              
                              348
                              
                              
                              
                              1.45
                              
                              
                              
                              348
                              
                              
                              
                              92,109Total
                              
                              
                              5,539
                              
                              
                              $
                              1.66
                              
                              
                              
                              5,539
                              
                              
                              
                              92,109
 
 
 (1)           In
August 2004, the Board of Directors approved a stock repurchase program
authorizing the Company to repurchase up to 200,000 shares of its common
stock.  This program has no expiration date.
 
 
 ITEM3. -
              Defaults Upon Senior
      Securities
 
 None.
 
 ITEM4. -
              Submission of Matters
      to a Vote of Security
Holders
 
 None.
  17
 Table of Contents
  ITEM5. -
              Other
      Information
 
 None.
 
 ITEM6. -
              Exhibits
 
 (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
                Employment
      Agreement dated May 12, 2008 by and between Kent Financial Services, Inc.
      and Paul O. Koether. (5)**
 
 10.2
                Employment
      Agreement dated May 1, 2006 by and between Kent Financial Services, Inc.
      and Bryan P. Healey. (6) **
 
 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.
 
 (1)
              Incorporated
      by reference to Texas American Energy Corporation Registration Statement,
      as amended, on Form S-l, No.
33-11109.
 (2)
              Incorporated
      by reference to Texas American Energy Corporation Form 10-K, for the
      fiscal year ended December 31,
1984.
 (3)
              Incorporated
      by reference to Texas American Energy Corporation Form 10-K for the fiscal
      year ended December 31, 1987.
 (4)
              Incorporated
      by reference to Kent Financial Services, Inc. Form 10-Q for the quarter
      ended September 30, 1991.
 (5)
              Incorporated
      by reference to the Kent Financial Services, Inc. Form 10-Q for the
      quarter ended June 30, 2008.
 (6)
              Incorporated
      by reference to Kent Financial Services, Inc. Form 8-K filed on May 1,
      2006.
 
 **
              Compensatory
      Plan
  18
 Table of Contents
  SIGNATURES
 
 In
accordance with the requirements of the Exchange Act of 1934, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
 
 
 KENT
      FINANCIAL SERVICES, INC.Dated:
      November 13, 2008
                                    
                                    By:
                                    /s/ Bryan P. HealeyBryan
      P. HealeyChief
      Financial Officer(Principal
      Financial and Accounting
Officer)






19