**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: June
      30, 2006





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 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 July 31, 2006, the issuer had 2,802,932
      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


As
      of June
      30,
      2006


(UNAUDITED)


($000
      Omitted, except share and per share amounts)





ASSETSCurrent
                Assets:Cash
                and cash equivalents
            
            $
            1,299Short-term
                investments
            
            
            12,106Securities
                owned
            
            
            106Other
                current assets
            
            
            102Total
                current assets
            
            
            13,613Property
                and equipment:Office
                furniture and equipment, net of accumulated depreciation of
                $5
            
            
            2Goodwill
            
            
            90Total
                assets
            
            $
            13,705LIABILITIES
                AND STOCKHOLDERS’ EQUITYCurrent
                liabilities:Accounts
                payable and accrued expenses
            
            $
            1,008Minority
                interest in subsidiaries
            
            
            5,245Stockholders'
                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
            
            
            12,395Accumulated
                deficit
            
            
            (5,223
            )Total
                stockholders' equity
            
            
            7,452Total
                liabilities and stockholders' equity
            
            $
            13,705





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 Ended
              June
                30,2006
            
            2005Revenues:Seminar
                fees
            
            $
            116
            
            $
            28Interest
                and dividends
            
            
            147
            
            
            94Investing
                gains (losses)
            
            
            5
            
            
            (83
            )Other
                income
            
            
            11
            
            
            24Total
                revenues
            
            
            279
            
            
            63Expenses:General
                and administrative
            
            
            474
            
            
            343Loss
                before income taxes, minority interest and extraordinary
                item
            
            
            (195
            )
            
            (280
            )Provision
                for income taxes
            
            
            6
            
            
            2Loss
                before minority interest and extraordinary item
            
            
            (201
            )
            
            (282
            )Minority
                interest in subsidiaries losses
            
            
            25
            
            
            7Loss
                before extraordinary item
            
            
            (176
            )
            
            (275
            )Extraordinary
                gain due to purchase of subsidiary stock
            
            
            18
            
            
            -Net
                loss
            
            $
            (158
            )
            $
            (275
            )Basic
                and diluted net loss per common share:Loss
                per share before extraordinary item
            
            $
            (0.06
            )
            $
            (0.10
            )Extraordinary
                gain
            
            
            0.01
            
            
            -Net
                loss per share
            
            $
            (0.05
            )
            $
            (0.10
            )Weighted
                average number of common shares outstanding (in 000's)
            
            
            2,803
            
            
            2,831





See
      accompanying notes to condensed consolidated financial statements.





3





**KENT
      FINANCIAL SERVICES, INC. AND SUBSIDIARIES**


CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS


(UNAUDITED)


($000
      Omitted, except per share data)





Six
                Months Ended
              June
                30,2006
            
            2005Revenues:Seminar
                fees
            
            $
            167
            
            $
            28Management
                fee income
            
            
            -
            
            
            12Interest
                and dividends
            
            
            288
            
            
            176Investing
                losses
            
            
            (11
            )
            
            (30
            )Other
                income
            
            
            27
            
            
            182Total
                revenues
            
            
            471
            
            
            368Expenses:General
                and administrative
            
            
            874
            
            
            617Loss
                before income taxes, minority interest and extraordinary
                item
            
            
            (403
            )
            
            (249
            )Provision
                for income taxes
            
            
            7
            
            
            22Loss
                before minority interest and extraordinary item
            
            
            (410
            )
            
            (271
            )Minority
                interest in subsidiaries losses
            
            
            59
            
            
            25Loss
                before extraordinary item
            
            
            (351
            )
            
            (246
            )Extraordinary
                gain due to purchase of subsidiary stock
            
            
            28
            
            
            -Net
                loss
            
            $
            (323
            )
            $
            (246
            )Basic
                and diluted net loss per common share:Loss
                per share before extraordinary item
            
            $
            (0.13
            )
            $
            (0.09
            )Extraordinary
                gain
            
            
            0.01
            
            
            -Net
                loss per share
            
            $
            (0.12
            )
            $
            (0.09
            )Weighted
                average number of common shares outstanding (in 000's)
            
            
            2,803
            
            
            2,837





See
      accompanying notes to condensed consolidated financial statements.





4





**KENT
      FINANCIAL SERVICES, INC. AND SUBSIDIARIES**


CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS


(UNAUDITED)


($000
      Omitted)


Six
                Months Ended
              June
                30,2006
            
            2005Cash
                flows from operating activities:Net
                loss
            
            $
            (323
            )
            $
            (246
            )Adjustments
                to reconcile net loss to net cash provided by (used in) operating
                activities:Depreciation
            
            
            1
            
            
            1Unrealized
                losses on securities owned
            
            
            35
            
            
            74Interest
                receivable on short-term investments
            
            
            (14
            )
            
            -Stock-based
                compensation expense
            
            
            18
            
            
            -Extraordinary
                gain on purchase of stock of subsidiary
            
            
            (28
            )
            
            -Minority
                interest in subsidiaries losses
            
            
            (59
            )
            
            (25
            )Change
                in securities owned
            
            
            -
            
            
            624Change
                in accounts receivable and other assets
            
            
            (70
            )
            
            129Change
                in accounts payable and accrued expenses
            
            
            (18
            )
            
            113Net
                cash provided by (used in) operating activities
            
            
            (458
            )
            
            670Cash
                flows from investing activities:Purchase
                of stock of subsidiary
            
            
            (192
            )
            
            -Purchase
                of short-term investments
            
            
            (12,068
            )
            
            -Maturity
                of short-term investments
            
            
            12,200
            
            
            -Cash
                acquired through consolidation of:The
                Academy for Teaching and Leadership, Inc.
            
            
            -
            
            
            50General
                Devices, Inc.
            
            
            -
            
            
            74Net
                cash provided by (used in) investing activities
            
            
            (60
            )
            
            124Cash
                flows from financing activities:Dividends
                paid
            
            
            -
            
            
            (851
            )Repurchase
                of common stock
            
            
            (73
            )
            
            (82
            )Net
                cash used in financing activities
            
            
            (73
            )
            
            (933
            )Net
                decrease in cash and cash equivalents
            
            
            (591
            )
            
            (139
            )Cash
                and cash equivalents at beginning of period
            
            
            1,890
            
            
            14,156Cash
                and cash equivalents at end of period
            
            $
            1,299
            
            $
            14,017Supplemental
                disclosure of cash flow information:Cash
                paid for:Taxes
            
            $
            7
            
            $
            10





See
      accompanying notes to condensed consolidated financial statements.





5





**KENT
      FINANCIAL SERVICES, INC. AND SUBSIDIARIES**


NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


For
      the
      Fiscal Periods Ending June 30, 2006 and 2005


(UNAUDITED)





**NOTE
      A** - **Basis
      of Presentation**





The
      accompanying unaudited condensed consolidated financial statements of Kent
      Financial Services, Inc. and subsidiaries (the "Company") as of June 30, 2006
      and for the three and six month periods ended June 30, 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 immaterial 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 and six months ended June 30, 2006 and
      2005
      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
      Holdings, Inc., formerly Cortech, Inc. (“Kent International”) and Kent
      Educational Services, Inc. (“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 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 53.22%
      of Kent International at June 30, 2006. 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 is consolidated in the accompanying
      financial statements and its activity is reported in the business development
      activities segment.





6





In
      November 2005, Dr. Qun Yi Zheng was named President of the Company and of Kent
      International. Under Dr. Zheng’s operational leadership, Kent International
      intends to pursue business opportunities in China, Eastern Europe and the United
      States. The Company does not expect that these activities will generate any
      revenues for an indefinite period as these efforts are in their early stages.
      As
      a result, this program may produce significant losses until such time as
      meaningful revenues are achieved.





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





The
      following table summarizes the assets and operations of the Company’s segments
      as of and for the three and six months ended June 30, 2006 and
      2005:





Business
              Development
              Activities
            
            Educational
              Services
            
            Corporate
            
            Eliminations
            
            Consolidated
              TotalsThree
                Months Ended June 30, 2006Revenues
                from external customers
            
            
            
            
            $
            116
            
            $
            11
            
            
            
            
            $
            127Management
                fees
            
            
            
            
            
            
            
            
            63
            
            $
            (63
            )
            
            -Interest
                revenue
            
            $
            121
            
            
            3
            
            
            23
            
            
            
            
            
            147Investing
                gains (losses)
            
            
            
            
            
            
            
            
            5
            
            
            
            
            
            5Total
                revenues
            
            
            121
            
            
            119
            
            
            102
            
            
            (63
            )
            
            279General
                and administrative expenses
            
            
            (219
            )
            
            (64
            )
            
            (254
            )
            
            63
            
            
            (474
            )Income
                tax expense
            
            
            
            
            
            (1
            )
            
            (5
            )
            
            
            
            
            (6
            )Minority
                interest
            
            
            47
            
            
            (22
            )
            
            
            
            
            
            
            
            25Extraordinary
                gain
            
            
            
            
            
            
            
            
            18
            
            
            
            
            
            18Net
                income (loss) by segment
            
            $
            (51
            )
            $
            32
            
            $
            (139
            )
            
            -
            
            $
            (158
            )Six
                Months Ended June 30, 2006Revenues
                from external customers
            
            
            
            
            $
            167
            
            $
            27
            
            
            
            
            $
            194Management
                fees
            
            
            
            
            
            
            
            
            126
            
            $
            (126
            )
            
            -Interest
                revenue
            
            $
            236
            
            
            4
            
            
            48
            
            
            
            
            
            288Investing
                gains (losses)
            
            
            
            
            
            
            
            
            (11
            )
            
            
            
            
            (11
            )Total
                revenues
            
            
            236
            
            
            171
            
            
            190
            
            
            (126
            )
            
            471General
                and administrative expenses
            
            
            (400
            )
            
            (122
            )
            
            (478
            )
            
            126
            
            
            (874
            )Income
                tax expense
            
            
            (1
            )
            
            (1
            )
            
            (5
            )
            
            
            
            
            (7
            )Minority
                interest
            
            
            78
            
            
            (19
            )
            
            
            
            
            
            
            
            59Extraordinary
                gain
            
            
            
            
            
            
            
            
            28
            
            
            
            
            
            28Net
                income (loss) by segment
            
            $
            (87
            )
            $
            29
            
            $
            (265
            )
            
            -
            
            $
            (323
            )As
                of June 30, 2006Total
                assets by segment
            
            $
            11,016
            
            $
            452
            
            $
            2,237
            
            
            -
            
            $
            13,705




7




Business
                  Development
                Activities
              
              Educational
                Services
              
              Corporate
              
              Eliminations
              
              Consolidated
                TotalsThree
                  Months Ended June 30, 2005Revenues
                  from external customers
              
              
              
              
              $
              28
              
              $
              24
              
              
              
              
              $
              52Management
                  fees
              
              
              
              
              
              
              
              
              45
              
              $
              (45
              )
              
              -Interest
                  and investing revenue
              
              $
              77
              
              
              2
              
              
              15
              
              
              
              
              
              94Investing
                  gains (losses)
              
              
              
              
              
              
              
              
              (83
              )
              
              
              
              
              (83
              )Total
                  revenues
              
              
              77
              
              
              30
              
              
              1
              
              
              (45
              )
              
              63General
                  and administrative expenses
              
              
              (96
              )
              
              (22
              )
              
              (270
              )
              
              45
              
              
              (343
              )Income
                  tax expense
              
              
              (1
              )
              
              
              
              
              (1
              )
              
              
              
              
              (2
              )Minority
                  interest
              
              
              10
              
              
              (3
              )
              
              
              
              
              
              
              
              7Net
                  income (loss) by segment
              
              $
              (10
              )
              $
              5
              
              $
              (270
              )
              
              -
              
              $
              (275
              )Six
                  Months Ended June 30, 2005Revenues
                  from external customers
              
              
              
              
              $
              28
              
              $
              182
              
              
              
              
              $
              210Management
                  fees
              
              
              
              
              
              
              
              
              102
              
              $
              (90
              )
              
              12Interest
                  and investing revenue
              
              $
              141
              
              
              3
              
              
              32
              
              
              
              
              
              176Investing
                  gains (losses)
              
              
              
              
              
              
              
              
              (30
              )
              
              
              
              
              (30
              )Total
                  revenues
              
              
              141
              
              
              31
              
              
              286
              
              
              (90
              )
              
              368General
                  and administrative expenses
              
              
              (180
              )
              
              (44
              )
              
              (483
              )
              
              90
              
              
              (617
              )Income
                  tax expense
              
              
              (1
              )
              
              
              
              
              (21
              )
              
              
              
              
              (22
              )Minority
                  interest
              
              
              20
              
              
              5
              
              
              
              
              
              
              
              
              25Net
                  loss by segment
              
              $
              (20
              )
              $
              (8
              )
              $
              (218
              )
              
              -
              
              $
              (246
              )As
                  of June 30, 2005Total
                  assets by segment
              
              $
              11,324
              
              $
              427
              
              $
              2,922
              
              
              -
              
              $
              14,673




**NOTE
      C -**  **Securities
      Owned**





Securities
      owned as of June 30, 2006, comprised mainly of portfolio positions (equity
      securities) held for capital appreciation consisted of the
      following:




Fair
              Value
            
            %
              Owned(in
                $000’s)Golf
                Rounds.com, Inc. (193,800 shares)
            
            $
            104
            
            
            5.6
            %All
                other portfolio positions
            
            
            2Total
                securities owned
            
            $
            106





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. Based on the criteria described above, securities owned at June
      30,
      2006 were valued at listed market prices for all but one position, securities
      owned of GolfRounds.com, Inc. were discounted 20% or approximately $26,000
      from
      listed market prices.





8





Net
      investing gains (losses) were $5,000 and ($11,000) for the three and six months
      ended June 30, 2006. Net unrealized losses on securities owned were
      approximately $6,000 and $35,000 for the three and six months ended June 30,
      2006. Realized gains on securities transactions were $11,000 and $24,000 for
      the
      three and six months ended June 30, 2006.





Net
      investing losses were $83,000 and $30,000 for the three and six months ended
      June 30, 2005. Net unrealized losses on securities owned were approximately
      $58,000 and $153,000 for the three and six months ended June 30, 2005. Realized
      gains (losses) on securities transactions were approximately ($25,000) and
      $123,000 for the three and six months ended June 30, 2005.





**NOTE
      D -**  **Income
      Taxes**





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





Three
                  Months Ended
              June
                30,
            
            Six
                  Months Ended
              June
                30,2006
            
            2005
            
            2006
            
            2005Federal
                - Current
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            4State
                - Current
            
            
            6
            
            
            2
            
            
            7
            
            
            18Deferred
            
            
            -
            
            
            -
            
            
            -
            
            
            -Total
            
            $
            6
            
            $
            2
            
            $
            7
            
            $
            22





**NOTE
      E -**  **Capital
      Stock Activity**





**Dividends**





No
      dividends were declared or paid during the six months ended June 30,
      2006.





**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. No shares were repurchased during
      the three months ending June 30, 2006. As of June 30, 2006, 91,290 shares under
      this plan have been repurchased, canceled and returned to the status of
      authorized but unissued shares.





9





**NOTE
      F -**  **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 June 30, 2006 and none outstanding at June 30, 2005.
      Since the Company had losses in the three and six months ended June 30, 2006,
      the stock options outstanding would have an anti-dilutive effect on net loss
      per
      share and as such are not included in the calculation.





**NOTE
      G - Stock Option Plans**




The
      Company has issued certain common stock options to its President. At June 30,
      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 related to common
      stock options issued. There were no common stock options issued or outstanding
      as of and for the three and six months ended June 30, 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 or liability instruments issued. SFAS 123(R) was effective as of the
      beginning of the first interim or annual period beginning after December 15,
      2005. The Company adopted SFAS 123(R) on January 1, 2006. As a result, the
      Company recorded approximately $9,000 and $18,000 in stock-based compensation
      expense for the three and six months ended June 30, 2006, respectively.





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
      duration of 7 years.





**Kent
      International Stock Options Plans**





Kent
      International has issued certain common stock options to its employees,
      directors and consultants. At June 30, 2006, Kent International had 294,149
      common stock options outstanding. Any exercises of these common stock options
      could have a dilutive effect on the percentage of Kent International owned
      by
      the Company.





Until
      December 31, 2005, Kent International applied APB 25 and related interpretations
      in accounting for its options. Accordingly, no compensation cost had been
      recognized for common stock options issued.





10





In
      January 2006, Kent International adopted SFAS 123(R). As all outstanding common
      stock options were fully vested prior to January 1, 2006, no compensation
      expense was recognized in the financial statements in the six months ended
      June
      30, 2006.





**NOTE
      H -**  **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. Asset Value Fund L.P. (“AVF”) is the beneficial
      owner of approximately 53.22% of the Kent International’s outstanding Common
      Stock at June 30, 2006. The sole partner of AVF is Asset Value Management,
      Inc.
      (“AVM”), a Delaware Corporation and wholly-owned subsidiary of the Company. Paul
      O. Koether, Chairman of the Company is also the Chairman of Kent International
      and the beneficial owner of approximately 54.93% of the Company’s outstanding
      common stock. Qun Yi Zheng, President of the Company is also the President
      of
      Kent International and Bryan P. Healey, Chief Financial Officer of the Company
      is also the Chief Financial Officer of Kent International.





On
      May 1,
      2006, the Company entered into an employment agreement with Bryan P. Healey,
      CPA, to be Vice President and Chief Financial Officer of the Company and Kent
      International for an initial two-year term at an annual salary of $140,000.
      Mr.
      Healey is the son-in-law of Paul O. Koether, Chairman of the Board and Chief
      Executive Officer of the Company and Kent International.





The
      Company and its consolidated subsidiaries reimburse an affiliate, Bedminster
      Management Corp., for the allocated direct cost of group health insurance and
      office supplies. These reimbursements were approximately $15,879 and $35,285
      in
      the three and six months ended June 30, 2006 and $16,921 and $36,623 in the
      three and six months ended June 30, 2005, respectively. Bedminster Management
      Corp. facilitates the allocation of certain central administrative costs on
      a
      cost reimbursement basis and is owned equally by Kent, Kent International and
      T.R. Winston & Company, LLC.





Until
      October of 2005, General Devices, Inc. (“General Devices”), a publicly traded
      company, 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 management fee was
      recorded as revenue until the second quarter of 2005 when the Company began
      consolidating General Devices in the financial statements. From April of 2005
      to
      October of 2005, the monthly management fee was eliminated during consolidation.
      The Company sold its interest in General Devices in October 2005 and no longer
      collects any fees from it.





**NOTE
      I -**  **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 and 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.


11


**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 $158,000 or $.05 basic and diluted loss per share,
      for
      the three months ended June 30, 2006 compared to a net loss of $275,000, or
      $.10
      basic and diluted loss per share for the comparable quarter in 2005. For the
      six
      months ended June 30, 2006, the net loss was $323,000 or $.12 basic and diluted
      loss per share, compared to a loss of $246,000 or $.09 basic and diluted loss
      per share for the comparable period in 2005. As discussed in the Revenue and
      Expenses sections below, the changes in the net loss were mainly the result
      of
      increased business development expenses offset by increased interest revenue
      and
      seminar fees during the periods.





**Revenue**





Seminar
      fees based on seminars held by The Academy for Teaching and Leadership, Inc.
      (“The Academy”) increased to $116,000 and $167,000 for the three and six months
      ended June 30, 2006, respectively compared to $28,000 for both the three and
      six
      months ended June 30, 2005. The Company recognizes seminar revenue when the
      services are provided.





Interest
      income increased to $147,000 and $288,000 for the three and six months ended
      June 30, 2006, respectively, from $94,000 and $176,000 for the three and six
      months ended June 30, 2005, respectively. These increases resulted principally
      from higher yields on invested balances.





Net
      investing gains (losses) were $5,000 and ($11,000) for the three and six months
      ended June 30, 2006, respectively. Realized gains were $12,000 and $24,000
      offset by unrealized losses of $7,000 and $33,000 for the three and six months
      ended June 30, 2006, respectively. Net investing losses were $83,000 and $30,000
      for the three and six months ended June 30, 2005, respectively. Realized gains
      (losses) were ($25,000) and $123,000 offset by unrealized losses of $58,000
      and
      $153,000 for the three and six months ended June 30, 2005, respectively. These
      net investing gains and losses are the result of changes in the fair value of
      portfolio positions.





Other
      income decreased to $11,000 and $27,000 for the three and six months ended
      June
      30, 2006 compared to $24,000 and $182,000 for the same periods in 2005 caused
      primarily by the end of an agreement requiring the payment of $10,000 a month
      in
      fees related to the sale of TR Winston and the decrease in administrative fees
      paid by an un-affiliated company, which fluctuate based on
      performance.





12





**Expenses**





General
      and administrative expenses increased to $474,000 and $874,000 for the three
      and
      six months ended June 30, 2006 from $343,000 and $617,000 for the same periods
      in 2005, due principally to personnel expenses at Kent International as a result
      of the inclusion of the President’s salary and an increase in business
      development activities at Kent International.





**Liquidity
      and Capital Resources**





At
      June
      30, 2006, the Company had consolidated cash and cash equivalents of
      approximately $1.3 million. Cash equivalents consisted of U.S. treasury bills
      with original maturities of three months or less with an average yield of
      4.816%. The Company also had short-term investments, consisting of U.S. treasury
      bills with original maturities of six months of $12.1 million with yields
      ranging between 4.918% and 5.239%, and marketable securities owned valued at
      approximately $106,000 at June 30, 2006.





Net
      cash
      used in operations was $458,000 in the six months ended June 30, 2006, compared
      to net cash provided by operations of $670,000 in the comparable period of
      2005.
      The primary reasons for the cash used in 2006 was the net loss of $323,000,
      an
      adjustment for interest earned on short-term investments but not yet received
      of
      $14,000, the minority interest in subsidiaries losses of $59,000 and the
      increase in accounts payable and accrued expenses of $18,000, and the increase
      in accounts receivable and other assets offset by an adjustment for unrealized
      losses on securities owned of $35,000. Unrealized losses are included in
      financial results, but do not effect cash flows. For the period ended June
      30,
      2005, a decrease in securities owned of $624,000, combined with the increase
      in
      other assets of $129,000 and the increase in accounts payable and accrued
      expenses of $113,000 offset by the loss of $246,000 were the primary reasons
      for
      the cash provided by operations.




The
      Company used $60,000 for investing activities during the period ended June
      30,
      2006 for the purchase of short-term investments of $12 million and the purchase
      of additional shares of Kent International of $192,000 offset by the sales
      and
      maturities of short-term investments of $12.2 million. During the period ended
      June 30, 2005, cash provided by investing activities of $124,000 was a result
      of
      cash acquired through the initial consolidations of The Academy and General
      Devices of $50,000 and $74,000.





Net
      cash
      used in financing activities for the repurchase of the Company’s common stock,
      was $73,000 and $82,000 in the periods ended June 30, 2006 and 2005,
      respectively. In the period ended June 30, 2005, $851,000 was used for the
      payment of a cash dividend that was declared in March 2005 and paid in April
      2005.





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.





13





**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, the 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 is eliminated during
      consolidation. Asset Value Fund L.P. (“AVF”) is the beneficial owner of
      approximately 53.22% of the Kent International’s outstanding Common Stock at
      June 30, 2006. The sole partner of AVF is Asset Value Management, Inc. (“AVM”),
      a Delaware Corporation and wholly-owned subsidiary of the Company. Paul O.
      Koether, Chairman of the Company is also the Chairman of Kent International
      and
      the beneficial owner of approximately 54.93% of the Company’s outstanding common
      stock. Qun Yi Zheng, President of the Company is also the President of Kent
      International and Bryan P. Healey, Chief Financial Officer of the Company is
      also the Chief Financial Officer of Kent International.





On
      May 1,
      2006, the Company entered into an employment agreement with Bryan P. Healey,
      CPA, to be Vice President and Chief Financial Officer of the Company and Kent
      International for an initial two-year term at an annual salary of $140,000.
      Mr.
      Healey is the son-in-law of Paul O. Koether, Chairman of the Board and Chief
      Executive Officer of the Company and Kent International.





The
      Company and its consolidated subsidiaries reimburse an affiliate, Bedminster
      Management Corp., for the allocated direct cost of group health insurance and
      office supplies. These reimbursements were approximately $15,879 and $35,285
      in
      the three and six months ended June 30, 2006 and $16,921 and $36,623 in the
      three and six months ended June 30, 2005, respectively. Bedminster Management
      Corp. facilitates the allocation of certain central administrative costs on
      a
      cost reimbursement basis and is owned equally by Kent, Kent International and
      T.R. Winston & Company, LLC.





Until
      October of 2005, General Devices, Inc. (“General Devices”), a publicly traded
      company, 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 management fee was
      recorded as revenue until the second quarter of 2005 when the Company began
      consolidating General Devices in the financial statements. From April of 2005
      to
      October of 2005, the monthly management fee was eliminated during consolidation.
      The Company sold its interest in General Devices in October 2005 and no longer
      collects any fees from it.





**Off-Balance
      Sheet Arrangements**





The
      Company has no off-balance sheet arrangements.





14





**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 June 30, 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.




15





**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 and 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 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. No shares were repurchased during
      the three months ending June 30, 2006. As of June 30, 2006, 91,290 shares under
      this plan have been repurchased, canceled and returned to the status of
      authorized but unissued shares.








**ITEM
                3.****-**
            **Defaults
                Upon Senior Securities**





None.








**ITEM
                4.****-**
            **Submission
                of Matters to a Vote of Security
                Holders**





None.








**ITEM
                5.****-**
            **Other
                Information**





None.





16





**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 Incorpora-tion.
                (3)





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





10.1
            Employment
                Agreement dated December 31, 2002 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 Kent Financial Services, Inc., Form 10-KSB for the
                fiscal
                year ended December 31, 2002


(6)
            Incorporated
                by reference to Kent Financial Services, Inc. Form 8-K filed on May
                1,
                2006.





**
            Compensatory
                Plan





17





**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:
                August 11, 2006
            By:
            /s/
                Bryan P. HealeyBryan
                P. HealeyChief
                Financial Officer andSecretary
                (Principal Financial and Accounting Officer, and officer duly authorized
                to sign on behalf of the small business
                issuer)




18