**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 
 **WASHINGTON,
        D.C. 20549**
 
 **FORM
        10-QSB**
 (Mark
        One)
 
 x
              QUARTERLY
                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                  ACT OF
                  1934
 
 For
        the
        quarterly period ended: March
        31, 2006
 
 OR
 
 o
              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 small business issuer as specified in its charter)
 
 Delaware
              
              75-1695953(State
                  or other jurisdiction of incorporation or organization)
              
              (I.R.S.
                  Employer Identification No.)
 
 
 376
        Main Street, PO Box 74, Bedminster, NJ 07921
 (Address
        of principal executive offices)
 
 (908)
        234-0078
 (Issuer's
        telephone number)
 
 N/A
 (Former
        name, former address and former fiscal year,
 if
        changed since last report)
 
 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 o
 
 Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act).
 Yes o No x
 
 **APPLICABLE
        ONLY TO ISSUERS INVOLVED IN BANKRUPTCY**
 **PROCEEDINGS
        DURING THE PRECEDING FIVE YEARS**
 
 Check
        whether the registrant filed all documents and reports required to be filed
        by
        Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
        under a plan confirmed by a court.
 Yes o No o
 
 **APPLICABLE
        ONLY TO CORPORATE ISSUERS**
 
 State
        the
        number of shares outstanding of each of the issuer's classes of common equity
        as
        of the latest practicable date: As of April 30, 2006, the issuer had 2,803,084
        shares of its common stock, par value $.10 per share, outstanding.
 
 Transitional
        Small Business Disclosure Format (check one).
 Yes o No x
  
  **PART
                  I****-**
              **FINANCIAL
                  INFORMATION**
 **Item
                  1.****-**
              **Financial
                  Statements**
 
 **KENT
        FINANCIAL SERVICES, INC. AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED BALANCE SHEET**
 **March
        31, 2006**
 **(UNAUDITED)**
 **($000
        Omitted, except share and per share amounts)**
  ASSETSCurrent
                  Assets:Cash
                  and cash equivalents
              
              $
              1,087Short-term
                  investments
              
              
              12,722Securities
                  owned
              
              
              113Other
                  current assets
              
              
              47Total
                  current assets
              
              
              13,969Property
                  and equipment:Office
                  furniture and equipment
              
              
              7Accumulated
                  depreciation
              
              
              (4
              )Net
                  property and equipment
              
              
              3Goodwill
              
              
              90Total
                  assets
              
              $
              14,062LIABILITIES
                  AND STOCKHOLDERS’ EQUITYCurrent
                  liabilities:Accounts
                  payable and accrued expenses
              
              $
              833Accrual
                  for previously discontinued operations
              
              
              166Total
                  liabilities
              
              
              999Contingent
                  liabilitiesMinority
                  interest in subsidiaries
              
              
              5,462Stockholders'
                  equity:Preferred
                  stock without par value; 500,000 shares authorized; none
                  outstanding
              
              
              -Common
                  stock, $.10 par value; 4,000,000 shares authorized; 2,803,084 shares
                  issued and outstanding
              
              
              280Additional
                  paid-in capital
              
              
              12,386Accumulated
                  deficit
              
              
              (5,065
              )Total
                  stockholders' equity
              
              
              7,601Total
                  liabilities and stockholders' equity
              
              $
              14,062
 
 See
        accompanying notes to condensed consolidated financial statements.
  2
  **KENT
        FINANCIAL SERVICES, INC. AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF OPERATIONS**
 **(UNAUDITED)**
 **($000
        Omitted, except per share data)**
  Three
                  Months EndedMarch
                  31,2006
              
              2005(as
                  restated, see Note 10)Revenues:Interest
              
              $
              141
              
              $
              81Investing
                  gains (losses)
              
              
              (
                  16
              )
              
              53Equity
                  in losses of General Devices
              
              
              -
              
              
              (
                  9
              )Other
                  income
              
              
              67
              
              
              159Total
                  revenues
              
              
              192
              
              
              284Expenses:General
                  and administrative
              
              
              400
              
              
              253Income
                  (loss) before income taxes, minority interest and extraordinary
                  item
              
              
              (
                  208
              )
              
              31Provision
                  for income taxes
              
              
              1
              
              
              20Income
                  (loss) before minority interest and extraordinary item
              
              
              (
                  209
              )
              
              11Minority
                  interest in subsidiaries losses
              
              
              34
              
              
              18Income
                  (loss) before extraordinary item
              
              
              (
                  175
              )
              
              29Extraordinary
                  gain due to purchase of subsidiary stock
              
              
              10
              
              
              -Net
                  income (loss)
              
              $
              (165
              )
              $
              29Basic
                  and diluted net income (loss) per common share:Income
                  (loss) per share before extraordinary item
              
              $
              (.06
              )
              $
              .01Extraordinary
                  gain
              
              
              -
              
              
              -Net
                  income (loss) per share
              
              $
              (.06
              )
              $
              .01Weighted
                  average number of common shares outstanding (in 000's)
              
              
              2,804
              
              
              2,843
  See
        accompanying notes to condensed consolidated financial statements.
  3
  **KENT
        FINANCIAL SERVICES, INC. AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF CASH FLOWS**
 **(UNAUDITED)**
 **($000
        Omitted)**
 
 Three
                  Months EndedMarch
                  31,2006
              
              2005(as
                  restated, see Note 10)Cash
                  flows from operating activities:Net
                  income (loss)
              
              $
              (165
              )
              $
              29Adjustments
                  to reconcile net income (loss) to net cash provided by (used in)
                  operating
                  activities:Unrealized
                  losses on securities owned
              
              
              28
              
              
              95Interest
                  earned on short-term investments
              
              
              (
                  132
              )
              
              -Stock-based
                  compensation expense
              
              
              9
              
              
              -Equity
                  in losses of General Devices
              
              
              -
              
              
              9Extraordinary
                  gain on purchase of stock of subsidiary
              
              
              (
                  10
              )
              
              -Minority
                  interest in subsidiaries losses
              
              
              (
                  34
              )
              
              (
                  18
              )Change
                  in securities owned
              
              
              -
              
              
              456Change
                  in accounts payable and accrued expenses
              
              
              (
                  28
              )
              
              34Change
                  in other assets
              
              
              (
                  14
              )
              
              175Other,
                  net
              
              
              1
              
              
              23Net
                  cash provided by (used in) operating activities
              
              
              (345
              )
              
              803Cash
                  flows from investing activities:Purchase
                  of stock of subsidiary
              
              
              (
                  86
              )
              
              -Purchase
                  of short-term investments
              
              
              (
                  440
              )
              
              -Sale
                  of short-term investments
              
              
              73
              
              
              -Cash
                  acquired through consolidation of The Academy for Teaching and
                  Leadership,
                  Inc.
              
              
              -
              
              
              50Investment
                  in General Devices
              
              
              -
              
              
              (72
              )Net
                  cash used in investing activities
              
              
              (453
              )
              
              (22
              )Cash
                  flows from financing activities -
                Repurchase
                  of common stock
              
              
              (5
              )
              
              (39
              )Net
                  increase (decrease) in cash and cash equivalents
              
              
              (
                  803
              )
              
              742Cash
                  and cash equivalents at beginning of period
              
              
              1,890
              
              
              14,156Cash
                  and cash equivalents at end of period
              
              $
              1,087
              
              $
              14,898Supplemental
                  disclosure of cash flow information:Cash
                  paid for:Taxes
              
              $
              1
              
              $
              10
  See
        accompanying notes to condensed consolidated financial
        statements.
  4
  **KENT
        FINANCIAL SERVICES, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **March
        31, 2006 AND 2005**
 **(UNAUDITED)**
  
 1.
              Basis
                  of Presentation
 
 The
        accompanying unaudited condensed consolidated financial statements of Kent
        Financial Services, Inc. and subsidiaries (the "Company") as of March 31,
        2006
        and for the three month periods ended March 31, 2006 and 2005 reflect all
        material adjustments consisting of only normal recurring adjustments which,
        in
        the opinion of management, are necessary for a fair presentation of results
        for
        the interim periods. Certain information and footnote disclosures required
        under
        accounting principles generally accepted in the United States of America
        have
        been condensed or omitted pursuant to the rules and regulations of the
        Securities and Exchange Commission, although the Company believes that the
        disclosures are adequate to make the information presented not misleading.
        These
        consolidated financial statements should be read in conjunction with the
        consolidated financial statements and notes thereto included in the Company's
        Annual Report on Form 10-KSB for the year ended December 31, 2005 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.
 
 Certain
        reclassifications have been made to the prior year’s financial statements to
        conform to the current year’s presentation.
 
 The
        results of operations for the three months ended March 31, 2006 and 2005
        are not
        necessarily indicative of the results to be expected for the entire year
        or for
        any other period.
 
 2.
              Business
 
 The
        Company's business is comprised principally of the management of Cortech,
        Inc.,
        a publicly traded company currently seeking to redeploy its assets into an
        operating business. Through its wholly-owned partnership, Asset Value Fund
        Limited Partnership, (“AVF”), the Company owned approximately 52% of Cortech at
        March 31, 2006. All of Cortech’s assets, excluding its portfolio of
        pharmaceutical patents (which have a zero value on the consolidated financial
        statements), are invested in cash and United States treasury bills. Cortech
        is
        consolidated in the accompanying financial statements.
  5
 
 In
        November 2005, Dr. Qun Yi Zheng was named President of the Company and of
        Cortech. Under Dr. Zheng’s operational leadership, Cortech intends to pursue
        business opportunities in China, Eastern Europe and the United
        States.
 
 3.
              Securities
                  owned
 
 Securities
        owned as of March 31, 2006, consisting of portfolio positions (equity
        securities) held for capital appreciation consist of the following:
  Fair
              
              %Value
              
              Owned(in
                  $000’s)Golf
                  Rounds.com, Inc. (193,800 shares)
              
              $
              110
              
              
              5.6
              %All
                  other portfolio positions
              
              
              3Total
                  securities owned
              
              $
              113
 
 The
        Company’s securities are valued at fair value. Fair value is ordinarily the
        listed market price of the stock. If listed market prices are not indicative
        of
        fair value or if liquidating the Company’s position would reasonably be expected
        to impact market prices, fair value is determined based on other relevant
        factors. Among the factors considered by management in determining fair value
        of
        the portfolio positions are the financial condition, asset composition and
        operating results of the issuer, the long-term business potential of the
        issuer
        and other factors generally pertinent to the valuation of investments, including
        the analysis of the valuation of comparable companies.
 
 As
        a
        result of the foregoing, securities owned at March 31, 2006 were valued at
        listed market prices for all but one position. Securities owned of
        GolfRounds.com, Inc. were discounted 20% or approximately $28,000 from listed
        market prices, based on the criteria described in the preceding
        paragraph.
 
 Net
        investing losses were $16,000 in the quarter ended March 31, 2006. Net
        unrealized losses on securities owned were approximately $229,000 at March
        31,
        2006 compared to net unrealized losses of approximately $201,000 at December
        31,
        2005, resulting in net unrealized losses of approximately $28,000 in the
        first
        quarter of 2006. Realized gains were approximately $12,000 in the first quarter
        of 2006.
   6
  Net
        investing gains were $53,000 in the quarter ended March 31, 2005. Net unrealized
        losses on securities owned were approximately $44,000 at March 31, 2005 compared
        to net unrealized gains of approximately $51,000 at December 31, 2004, resulting
        in net unrealized losses of approximately $95,000 in the first quarter of
        2005.
        Realized gains were approximately $148,000 in the first quarter of 2005.
 
 4.
              Income
                  taxes
 
 The
        components of income tax expense are as follows ($000 Omitted):
 
 Three
                  Months EndedMarch
                  31,2006
              
              2005Federal
                  - Current
              
              $
              -
              
              $
              4State
                  - Current
              
              
              1
              
              
              16Total
              
              $
              1
              
              $
              20
 
 5.
              Capital
                  Stock Activity
 
 On
        March
        10, 2005 the Company declared a dividend of $.30 per share. The record date
        for
        the dividend was March 21, 2005 and the distribution date was April 5, 2005.
        Total dividends paid in 2005 were approximately $852,000.
 
 Common
        Stock Repurchases
  In
        August
        2004, the Board of Directors approved a plan to repurchase up to 200,000
        shares
        of the Company’s common stock at prices deemed favorable in the open market or
        in privately negotiated transactions subject to market conditions, the Company’s
        financial position and other considerations. As of March 31, 2006, 91,290
        shares
        under this plan have been repurchased, canceled and returned to the status
        of
        authorized but unissued shares.
 
 6.
              Net
                  Income (Loss) Per Share
 
 The
        Company reports 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 300,000 common stock
        options outstanding at March 31, 2006 and none outstanding at March 31, 2005.
        Since the Company had losses in the first quarter of 2006, the stock options
        outstanding would have an anti-dilutive effect on net loss per share and
        are not
        included in the calculation.
  7
  7.
              Stock
                  Option Plans
  The
        Company has issued certain common stock options to its President. At March
        31,
        2006, the Company had 300,000 common stock options outstanding.
 
 Until
        December 31, 2005, the Company applied Accounting Principles Board Opinion
        No.
        25 (“APB 25”) and related interpretations in accounting for its common stock
        options. Accordingly, no compensation cost had been recognized for the common
        stock options issued. There were no common stock options outstanding in the
        first quarter of 2005.
 
 In
        December 2004, the Financial Accounting Standards Board “FASB” issued 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”) 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 of liability instruments issued. SFAS 123(R) was effective as of the
        beginning of the first interim or annual period beginning after December
        15,
        2005. The Company adopted SFAS 123(R) on January 1, 2006. As a result the
        Company recorded approximately $9,000 in expense during the first quarter
        of
        2006.
 
 All
        options granted to date have an exercise price equal to the market price
        of the
        Company’s stock on the grant date. For purposes of calculating the compensation
        cost consistent with SFAS 123, the fair value of each option grant was estimated
        on the grant date using the Black-Scholes option-pricing model with the
        following assumptions used: no dividend yield; expected volatility of 29
        percent; risk free interest rates of 4.37 percent; and weighted average expected
        lives of 7 years.
 
 Cortech
        Stock Options Plans
 
 Cortech
        has issued certain common stock options to its employees, directors and
        consultants. At March 31, 2006 Cortech had 350,150 common stock options
        outstanding. Any exercises of these common stock options could have a dilutive
        effect on the percentage of Cortech owned by the Company.
  Until
        December 31, 2005, Cortech applied APB 25 and related interpretations in
        accounting for its options. Accordingly, no compensation cost had been
        recognized for common stock options issued.
 
 In
        January 2006, Cortech adopted SFAS 123(R). Since all outstanding common stock
        options were fully vested prior to January 1, 2006 no compensation expense
        was
        recognized in the financial statements in the first quarter of 2006.
  8
  8.
              Related
                  Party Transactions
 
 The
        Company reimburses an affiliate for the direct cost of certain group medical
        insurance and office supplies. Such reimbursements were approximately $22,000
        and $12,000 in the first quarter of 2006 and 2005, respectively.
 
 General
        Devices paid an administrative fee of $4,000 per month for management services
        performed by the Company. These services, included corporate governance,
        financial management and internal accounting services. The Company sold its
        interest in General Devices in October 2005 and no longer collects any fees
        from
        them.
 
 9.
              Legal
                  Proceedings
 
 Texas
        American Petrochemicals, Inc. (“TAPI”)
 
 By
        letter dated May 24, 2005, the Texas Commission on Environmental Quality
        ("TCEQ") advised Texas American Petrochemicals, Inc. (“TAPI”), that it was a
        person responsible for solid waste at a hazardous waste site in Texas. TAPI
        is
        an inactive subsidiary of the Company with no assets. The TCEQ determined
        that
        the amount owed to the State of Texas for remediation is $2,459,593.92 and
        that failure to pay that amount would result in the matter being referred to the TCEQ
        Litigation Division. The Company has been advised by its environmental counsel
        that it has good legal arguments to support its position that it should not
        be
        subject to liability for the remediation costs of the site, however no
        assurances can be made as to the outcome of this matter.
 
 10.
              Restatement
                  of Condensed Consolidated Financial
                  Statements
 
 Subsequent
        to the issuance of the condensed consolidated financial statements for the
        three
        months ended March 31, 2005, the Company determined that its investments
        in
        General Devices, Inc. should have been accounted for by the equity method,
        rather than the fair value method that had been used. As a result, consolidated
        statements of operations and cash flows for the three months ended March
        31,
        2005 have been restated to correct for this change. The following tables
        summarize the effect of such restatement (in $000’s except per share
        data):
 
 Consolidated
        Statement of Operations for the three months ended March 31, 2005:
  As
                  Reported
              
              As
                  RestatedEquity
                  in losses of General Devices
              
              $
              -
              
              $
              (9
              )Total
                  revenues
              
              
              293
              
              
              284General
                  and administrative expenses
              
              
              262
              
              
              253
  9
 
 Consolidated
        Statement of Cash Flow’s for the three months ended March 31, 2005:
 
 As
                  Reported
              
              As
                  RestatedNet
                  cash provided by operating activities
              
              $
              731
              
              $
              803Net
                  cash provided by (used in) investing activities
              
              
              50
              
              
              (
                  22
              )
  10
  **Item
                  2****.   
                  -**
              **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, 2005, 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-QSB. When used in this discussion, the word “expects” and
        similar expressions are intended to identify forward-looking statements.
        Such
        statements are subject to risks and uncertainties that could cause actual
        results to differ materially from those projected. The forward-looking
        statements contained herein speak only as of the date hereof. The Company
        expressly disclaims any obligation or undertaking to release publicly any
        updates or revisions to any forward-looking statements contained herein to
        reflect any change in the Company’s expectations with regard thereto or any
        change in events, conditions or circumstances on which any such statement
        is
        based.
 
 Results
        of Operations
 
 The
        Company had a net loss of $165,000, or $.06 basic and diluted net loss per
        share, for the three months ended March 31, 2006, compared to net income
        of
        $29,000, or $.01 basic and diluted net income per share, for the comparable
        period in 2005.
 
 Revenue
 
 Interest
        income increased to $141,000 in the first quarter of 2006 from $81,000 for
        the
        same period in 2005, due primarily to higher yields on invested balances.
 
 Net
        investing losses were $16,000 for the three months ended March 31, 2006,
        compared to net investing gains of $53,000 for the comparable period in 2005.
        A
        decrease in realized gains of $136,000 offset by a decrease in unrealized
        losses
        of $67,000 was the reason for the change.
 
 Other
        income decreased to $67,000 in the first quarter of 2006 from $159,000 in
        the
        first quarter of 2005, due primarily to a reduction in fees earned for providing
        administrative services to a non-affiliated company of $104,000 offset by
        an
        increase in fees earned for seminars held by The Academy for Teaching &
Leadership, Inc.(“The Academy”) of $51,000.
 
 Expenses
 
 General
        and administrative expenses increased to $400,000 in the first quarter of
        2006
        from $253,000 in the first quarter of 2005 due primarily to increases in
        expenses at Cortech and The Academy of $78,000 and $36,000, respectively.
        Personnel expenses at Cortech were $55,000 in the first quarter of 2006 as
        a
        result of the inclusion of the President’s salary for an entire quarter. Prior
        to hiring the President in November 2005, Cortech had no personnel expenses.
        All
        other expenses had a net increase of $33,000 in the first quarter of 2006
        compared to the same period in 2005.
  11
 
 Liquidity
        and Capital Resources
 
 At
        March
        31, 2006, the Company had consolidated cash and cash equivalents of
        approximately $1.1 million. Cash equivalents consisted of U.S. treasury bills
        with original maturities of three months or less yielding 4.51%. The Company
        also had short-term investments, consisting of U.S. treasury bills with original
        maturities of six months of $12.7 million with yields ranging between 4.11%
        and
        4.48%, and securities owned valued at approximately $113,000 at March 31,
        2006.
 
 Net
        cash
        used in operations was $345,000 in the first quarter of 2006, compared to
        net
        cash provided by operations of $803,000 in the first quarter of 2005. The
        primary reasons for the cash used in the first quarter of 2006 was the net
        loss
        of $165,000 adjusted for interest earned on short-term investments of $132,000,
        the minority interest in subsidiaries losses of $34,000 and the change in
        accounts payable and accrued expense of $28,000, offset by an adjustment
        for
        unrealized losses on securities owned of $28,000. Unrealized losses are included
        in financial results, but do not effect cash flows. For the quarter ended
        March
        31, 2005, a decrease in securities owned of $456,000, combined with the change
        in other assets of $175,000 and an adjustment for unrealized losses of $95,000
        were the primary reasons for the cash provided by operations.
  Net
        cash
        used in investing activities was $453,000 and $22,000 for the quarters ended
        March 31 2006 and 2005, respectively. The purchase of short-term investments
        of
        $440,000 combined with the purchase of additional shares of Cortech of $86,000
        offset by the sale of short-term investments of $73,000 were the reasons
        for the
        cash used in investing activities in the first quarter of 2006. Cash used
        for an
        investment in General Devices, Inc. of $72,000, offset by cash acquired through
        the consolidation of The Academy of $50,000 were the reasons for the net
        cash
        used in investing activities in the quarter ended March 31, 2005.
 
 Net
        cash
        used in financing activities, due to the repurchase of the Company’s common
        stock, was $5,000 and $39,000 in the quarters ended March 31, 2006 and 2005,
        respectively.
 
 The
        Company believes that its cash and cash equivalents are sufficient to fund
        operations for at least the next twelve months, including the cost of acquiring
        operating businesses, or making additional investments.
  12
  Off-Balance
        Sheet Arrangements
 
 The
        Company has no off-balance sheet arrangements.
 
 **Item
                  3****.    
                  -**
              **Controls
                  and Procedures**
 
 As
        of the
        end of the period covered by this report, the Company carried out, under
        the
        supervision and with the participation of the Company’s management, including
        its Chief Executive Officer and Chief Financial Officer, an evaluation of
        the
        effectiveness of the design and operation of the Company’s disclosure controls
        and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities
        Exchange Act of 1934). Based upon that evaluation, the Chief Executive Officer
        and Chief Financial Officer concluded that the design and operation of these
        disclosure controls and procedures are effective. There was no change in
        the
        Company’s internal control over financial reporting (as defined in Rule
        13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during
        the
        quarter ended March 31, 2006 that has materially affected, or is reasonably
        likely to materially affect, the Company’s internal control over financial
        reporting.
 
 **Compliance
        with Section 404 of Sarbanes-Oxley Act**
 
 In
        order
        to achieve compliance with Section 404 of the Sarbanes-Oxley Act of 2002
        (the
“Act”) by December 31, 2007, the Company expects to begin, in fiscal 2006, the
        system and process documentation and evaluation needed to comply with Section
        404.
  13
  **PART
                  II****-**
              **OTHER
                  INFORMATION**
 **ITEM
                  1.**
              **Legal
                  Proceedings**
 
 Texas
        American Petrochemicals, Inc. (“TAPI”)
 
 By
        letter dated May 24, 2005, the Texas Commission on Environmental Quality
        ("TCEQ") advised Texas American Petrochemicals, Inc. (“TAPI”), that it was a
        person responsible for solid waste at a hazardous waste site in Texas. TAPI
        is
        an inactive subsidiary of the Company with no assets. The TCEQ determined
        that
        the amount owed to the State of Texas for remediation is $2,459,593.92 and
        that failure to pay that amount would result in the matter being referred to the TCEQ
        Litigation Division. The Company has been advised by its environmental counsel
        that it has good legal arguments to support its position that it should not
        be
        subject to liability for the remediation costs of the site, however no
        assurances can be made as to the outcome of this matter.
 
 **ITEM
                  2.**
              **Unregistered
                  Sales of Equity Securities and Use of
                  Proceeds**
 
 Purchase
        of Equity Securities
 
 In
        August
        2004, the Board of Directors approved a plan to repurchase up to 200,000
        shares
        of the Company’s common stock. This plan has no expiration date. The following
        table sets forth certain information about the Company’s repurchase of shares
        under this Plan during the quarter ended March 31, 2006.
 
 SMALL
        BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES
 (COMMON
        STOCK-AUGUST 2004 REPURCHASE PLAN)
  Period
              (a)
                  Total Number of Shares Purchased
              (b)Average
                  Price Paid per Share
              (c)
                  Total Number of Shares Purchased as Part of Publicly Announced
                  Plans or
                  Programs
              (d)
                  Maximum Number of Shares that May Yet Be Purchased Under the Plans
                  or
                  ProgramsJanuary
                  1, 2006 - January 31, 2006
              1,823
              $    
                  2.35
              1,823
              108,930February
                  1, 2006 - February 28, 2006
              -
              -
              -
              108,930March
                  1, 2006 - March 31, 2006
              220
              2.37
              220
              108,710Total
              2,043
              $    
                  2.35
              2,043
              108,710
  14
 
 **ITEM
                  3.**
              **Defaults
                  Upon Senior Securities**
 
 None.
 
 **ITEM
                  4.**
              **Submission
                  of Matters to a Vote of Security
                  Holders**
 
 None.
 
 **ITEM
                  5.**
              **Other
                  Information**
 
 None.
 
 **ITEM
                  6.****-**
              **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 1, 2006 between Kent Financial Services, Inc.
                  and
                  Bryan P. Healey (5)
 
 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
                  *
  15
 __________________
 *
              Filed
                  herewith.
 
 (1)
              Incorporated
                  by reference to Texas American Energy Corporation Registration
                  Statement,
                  as amended, on Form S-l, No.
                  33-11109.
 (2)
              Incorporated
                  by reference to Texas American Energy Corporation Form 10-K, for
                  the
                  fiscal year ended December 31,
                  1984.
 (3)
              Incorporated
                  by reference to Texas American Energy Corporation Form 10-K for
                  the fiscal
                  year ended December 31, 1987.
 (4)
              Incorporated
                  by reference to Kent Financial Services, Inc. Form 10-Q for the
                  quarter
                  ended September 30, 1991.
 (5)
              Incorporated
                  by reference to Kent Financial Services, Inc. Form 8-K filed on
                  May 1,
                  2006.
  16
  **SIGNATURES**
 
 In
        accordance with the requirements of the Exchange Act, the registrant caused
        this
        report to be signed on its behalf by the undersigned, thereunto duly
        authorized.
  KENT
                  FINANCIAL SERVICES, INC.Dated:
                  May 10, 2006
              
              By:
              /s/
                  Sue Ann MerrillSue
                  Ann MerrillChief
                  Financial Officer and Secretary (Principal Financial and Accounting
                  Officer, and officer duly authorized to sign on behalf of the small
                  business issuer)




17