U.S. 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:    September 30, 1999
                                            ------------------

                                       OR

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934

                           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                         (I.R.S. Employer
incorporation or organization)                          Identification No.)


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


                                 (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 _____

     State the number of shares  outstanding of each of the issuer's  classes of
common stock:  As of October 31, 1999,  the issuer had  1,904,308  shares of its
common stock, par value $.10 per share, outstanding.

     Transitional Small Business Disclosure Format (check one).
                                 Yes _____   No X





<PAGE>



PART I  - FINANCIAL INFORMATION
------    ---------------------
Item 1. - Financial Statements
------    --------------------


                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                   (UNAUDITED)
                                 ($000 Omitted)

                                                                September 30,
                                                                    1999
                                                                -------------
Assets
------

Cash and cash equivalents                                          $  5,055
Securities owned                                                      7,375
Net receivable from clearing broker                                      92
Property and equipment:
     Land and building                                                1,440
     Office furniture and equipment                                     265
                                                                   --------
                                                                      1,705
     Accumulated depreciation                                     (     518)
                                                                   --------
     Net property and equipment                                       1,187
                                                                   --------
Other assets                                                            406
                                                                   --------
          Total assets                                             $ 14,115
                                                                   ========

Liabilities and Stockholders' Equity
------------------------------------


Liabilities:
   Accounts payable and accrued expenses                           $  1,384
   Mortgage payable                                                     469
   Accrual for previously discontinued operations                       318
                                                                   --------
          Total liabilities                                           2,171
                                                                   --------

Stockholders' equity:
  Preferred stock without par value, 500,000
     shares authorized; none outstanding                                  -
  Common stock, $.10 par value, 4,000,000
     shares authorized; 1,904,308 outstanding                           190
  Additional paid-in capital                                         14,645
  Accumulated deficit                                             (   2,891)
                                                                   --------
          Total stockholders' equity                                 11,944
                                                                   --------
          Total liabilities and stockholders' equity               $ 14,115
                                                                   ========



          See accompanying notes to consolidated financial statements.



<PAGE>



                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                      ($000 Omitted, except per share data)



                                                           Three Months Ended
                                                              September 30,
                                                           ------------------
                                                            1999        1998
                                                           ------      ------

Revenues:
     Brokerage commissions and fees                        $  350      $  412
     Principal transactions:
       Trading                                                199          87
       Investing losses                                   (   409)    (   393)
     Interest, dividends and other                            167         250
                                                           ------      ------
                                                              307         356
                                                           ------      ------

Expenses:
     Brokerage                                                402         339
     General, administrative and other                        472         600
     Interest                                                  67          82
                                                           ------      ------
                                                              941       1,021
                                                           ------      ------

Earnings (loss) before income taxes                       (   634)    (   665)
Provision (benefit) for income taxes                      (    18)    (   113)
                                                           ------      ------
Net earnings (loss)                                       ($  616)    ($  552)
                                                           ======      ======

Basic net loss per common share                           ($  .32)    ($  .28)
                                                           ======      ======

Diluted net loss per common share                         ($  .32)    ($  .28)
                                                           ======      ======

Weighted average number of common
  shares outstanding (in 000's)                             1,906       1,992
                                                           ======      ======



          See accompanying notes to consolidated financial statements.




<PAGE>



                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                      ($000 Omitted, except per share data)



                                                             Nine Months Ended
                                                                September 30,
                                                             -----------------
                                                              1999       1998
                                                             ------     ------

Revenues:
    Brokerage commissions and fees                          $ 1,299    $ 1,425
    Principal transactions:
      Trading                                                   695        442
      Investing gains                                            85      1,174
    Underwriting and placement fees,
      net of related expenses                                     -        135
    Interest, dividends and other                               976        612
                                                            -------    -------
                                                              3,055      3,788
                                                            -------    -------

Expenses:
    Brokerage                                                 1,386      1,288
    General, administrative and other                         1,687      2,136
    Interest                                                    200        211
                                                            -------    -------
                                                              3,273      3,635
                                                            -------    -------

Earnings (loss) before income taxes                        (    218)       153
Provision(benefit) for income taxes                               -   (     60)
                                                            -------    -------
Net earnings (loss)                                        ($   218)   $   213
                                                            =======    =======

Basic net earnings (loss) per
  common share                                             ($   .11)   $   .11
                                                            =======    =======

Diluted net earnings (loss) per
  common share                                             ($   .11)   $   .11
                                                            =======    =======

Weighted average number of common
  shares outstanding (in 000's)                               1,940      2,006
                                                            =======    =======



          See accompanying notes to consolidated financial statements.




<PAGE>



                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                 ($000 Omitted)

                                                          Nine Months Ended
                                                            September 30,
                                                          -----------------
                                                           1999       1998
                                                          ------     ------

Cash flows from operating activities:
    Net earnings (loss)                                 ($   218)    $  213
    Adjustments:
      Depreciation and amortization                           47         38
      Change in unrealized gains on
        securities owned                                (    237)   (   495)
      Change in securities owned                        (  3,502)     2,535
      Change in receivable from
        clearing broker                                    1,147    (   283)
      Change in accounts payable and
        accrued expenses                                     195        372
      Other, net                                        (    150)   (    72)
                                                         -------     ------
      Net cash provided by (used in)
        operating activities                            (  2,718)     2,308
                                                         -------     ------

Cash flows from investing activities:
    Purchase of equipment                               (     18)   (    11)
    Net noncash assets of a previously
      consolidated subsidiary                                 27          -
    Net cash related to a previously
      consolidated subsidiary                           (     85)         -
                                                         -------     ------
     Net cash used in investing
        activities                                      (     76)   (    11)
                                                         -------     ------

Cash flows from financing activities:
    Purchase of common stock                            (    359)   (   124)
    Payments on debt                                    (      9)   (    23)
                                                         -------     ------
     Net cash used in financing
       activities                                       (    368)   (   147)
                                                         -------     ------
Net (decrease) increase in cash
    and cash equivalents                                (  3,162)     2,150
Cash and cash equivalents at
  beginning of period                                      8,217      6,768
                                                         -------     ------

Cash and cash equivalents at end of
  period                                                 $ 5,055     $8,918
                                                         =======     ======


                      Consolidated Statements of Cash Flows
                             is Continued on Page 6


          See accompanying notes to consolidated financial statements.




<PAGE>


                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES
          CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED FROM PAGE 5
                                   (UNAUDITED)
                                 ($000 Omitted)


                                                            Nine Months Ended
                                                               September 30,
                                                            -----------------
                                                             1999       1998
                                                            ------     ------
Supplemental disclosure of cash flow
   information:
     Cash paid for:
       Interest                                             $  200     $  211
                                                            ======     ======
       Taxes                                                $   28     $   29
                                                            ======     ======


Supplemental disclosure of non-cash
   transaction:

     During  the  quarter  ended  June 30,  1999,  the  previously  consolidated
subsidiary,  T.R. Winston Capital, Inc., ("Wincap") issued stock to an unrelated
third party, resulting in a change of control. Net assets of Wincap consisted of
$168,000,  including  $141,000 of cash at December 31, 1998.  Subsequent  to the
stock issuance, the Company withdrew $56,000 from Wincap.





          See accompanying notes to consolidated financial statements.


<PAGE>



                 KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           SEPTEMBER 30, 1999 AND 1998
                                   (UNAUDITED)



1.   Basis of Presentation
     ---------------------

     The  accompanying  unaudited  consolidated  financial  statements  of  Kent
Financial  Services,  Inc. and subsidiaries  (the "Company") as of September 30,
1999 and for the three and nine month periods ended  September 30, 1999 and 1998
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 generally accepted  accounting  principles 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, 1998 as filed with the  Securities  and
Exchange Commission.

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

     On  May 7,  1999,  T.R.  Winston  Capital,  Inc.  ("Wincap")  a  previously
consolidated  subsidiary  of the Company,  issued  stock to an  unrelated  third
party,  resulting in a change of control.  The  financial  statements  presented
prior to that date include the accounts of Wincap  which was  consolidated  into
the Company.  Subsequently,  the Company accounts for its residual investment in
Wincap using the equity method to reflect its minority ownership interest.

     Certain  reclassifications  have been made to the  prior  years'  financial
statements to conform to the current years' presentation.

     The  results  of  operations  for the three and nine  month  periods  ended
September 30, 1999 and 1998 are not necessarily  indicative of the results to be
expected for the entire year or for any other period.




<PAGE>



2.   Business
     --------

     The Company's  business is comprised  principally of the operation of T. R.
Winston  &  Company,  Inc.  ("Winston"),  a  wholly-owned  subsidiary,  and  the
management  of Asset  Value Fund  Limited  Partnership  ("AVF"),  an  investment
partnership  whose  primary  purpose is to make large  investments  in a limited
number of portfolio companies whose securities are considered undervalued by the
partnership's management.  Winston is a licensed securities broker-dealer and is
a member  of the  National  Association  of  Securities  Dealers,  Inc.  and the
Securities Investor Protection  Corporation.  All safekeeping,  cashiering,  and
customer   account   maintenance   activities   are  provided  by  an  unrelated
broker-dealer under a clearing agreement.

     Pursuant to the net  capital  provisions  of Rule 15c3-1 of the  Securities
Exchange Act of 1934,  Winston is required to maintain  minimum net capital.  At
September  30,  1999,  Winston had net  capital,  as defined,  of  approximately
$444,000, which was $344,000 in excess of the required minimum.

3.   Securities Owned
     ----------------

     Securities owned consist of the following ($000's omitted):

                                Marketable, at   Marketable, at
                                 Market Value      Fair Value      Total
                                --------------   --------------    -----

     Equity securities             $ 6,824           $ 500        $ 7,324
     Mutual funds                       51               -             51
                                   -------           -----        -------
     Total                         $ 6,875           $ 500        $ 7,375
                                   =======           =====        =======

     The estimated  fair value of securities  owned has been  determined in good
faith under  consistently  applied  principles by the management of the Company,
using  available   market   information  and  other  valuation   considerations.
Considerable judgement is required to develop the estimates of fair value, thus,
the estimates provided herein are not necessarily indicative of the amounts that
could be realized in a current market exchange.

4.   Sale of Subsidiary
     ------------------

     In July 1998,  Winston,  its then  wholly-owned  subsidiary  T. R.  Winston
Capital, Inc. ("Wincap"),  and an unrelated third party ("Third Party"), entered
into a stock  purchase  agreement  ("Agreement").  The Agreement  provides among
other  things,  for the  Third  Party to  contribute  to the  capital  of Wincap
$800,000 in return for an 80%  ownership  interest  and an officer of Wincap and
Winston to receive a 10%  ownership  interest.  The closing of the Agreement and
the  resultant  change in control were  effected  during May 1999  subsequent to
receiving NASD approval. No gain or loss was recorded on the transaction.



<PAGE>



     Winston has agreed to provide management services to Wincap. These services
will consist of all services necessary for the operation of Wincap's  securities
business. Winston will receive as compensation for the services, 60% of Wincap's
gross  commissions  as  defined in the  Agreement.  Wincap is  currently  in the
process of amending its Membership Agreement with the NASD in order to enable it
to conduct its  planned  securities  business.  Approval  of this  amendment  is
pending.

5.   Segment Reporting
     -----------------

     The Company has  evaluated  the  requirements  of  Statement  of  Financial
Accounting  Standards No. 131  "Disclosures  about Segments of an Enterprise and
Related  Information"  ("SFAS No. 131") and has determined that it does not have
reportable  operating segments as defined.  The Company conducts stock brokerage
and investment banking activities through its wholly-owned  subsidiaries Winston
and AVF, as described in Note 2 of Notes to Consolidated  Financial  Statements.
These  wholly-owned  subsidiaries  do not have  individual  segment  managers or
discrete financial data used to allocate resources as defined by SFAS No. 131.



<PAGE>



Item 2.    Management's Discussion and Analysis of Financial
------
           Condition and Results of Operations
           -------------------------------------------------


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

     Kent Financial Services, Inc. (the "Company") had cash and cash equivalents
(U.S.  Treasury bills with an original  maturity of ninety days or less) of $5.1
million  and   securities   owned  of  $7.4  million  at  September   30,  1999.
Substantially all securities are owned by AVF. For additional information on the
valuation  of  securities  owned see Note 3 of Notes to  Consolidated  Financial
Statements.

     Net cash (used in) provided by operations was approximately  ($2.7) million
and $2.3 million in the nine month  periods  ended  September 30, 1999 and 1998,
respectively. Cash flows from operations for the nine months ended September 30,
1999 decreased from the comparable period in 1998 principally from the change in
securities owned, partially offset by the change in receivable from the clearing
broker.

     Net cash used in investing activities increased during 1999 due to the sale
of  Winston's  subsidiary  as  discussed  in  Note 4 of  Notes  to  Consolidated
Financial Statements.

     Net cash used in financing activities of $368,000 and $147,000 for the nine
month  periods  ended  September  30,  1999  and  1998,  respectively,  resulted
principally  from the Company's  purchase and retirement of its common stock and
the  continued  payments on the mortgage  loan  collateralized  by the Company's
headquarters facility. The loan matures in December 1999. The Company intends to
refinance  the loan before the  maturity  date.  The Company  believes  that its
liquidity is sufficient for future operations.


Material Changes in Results of Operations
-----------------------------------------

     The Company had a net loss of $616,000,  or $.32 basic and diluted loss per
share,  for the three months ended  September 30, 1999 compared to a net loss of
$552,000 or $.28 basic and diluted loss per share, for the comparable quarter in
1998. For the nine months ended September 30, 1999, the net loss was $218,000 or
$.11 basic and  diluted  loss per share,  compared  to net income of $213,000 or
$.11 basic and diluted earnings per share, for the comparable period in 1998.




<PAGE>



     Total  brokerage  income  (consisting  of brokerage  commissions,  fees and
trading  gains) for the three months ended  September 30, 1999 was $549,000,  an
increase of $50,000, or 10%, from $499,000 in the comparable 1998 period.  Total
brokerage  income was $1,994,000 for the nine months ended September 30, 1999, a
decrease of $8,000 or less than one percent from  $2,002,000  for the nine month
period  ended  September  30, 1998.  Included in  brokerage  income for the nine
months ended September 30, 1998 was net underwriting  fees of $135,000 that were
earned from a private placement of debt for a  publically-traded  company in the
first  quarter of 1998.  Brokerage  expenses  (including  all fixed and variable
expenses)  increased  by $63,000,  or 19%,  from  $339,000 in the quarter  ended
September 30, 1998, to $402,000 for the quarter  ended  September 30, 1999.  For
the nine months ended  September 30, 1999,  brokerage  expenses were  $1,386,000
compared to $1,288,000 for the comparable  period in the prior year, an increase
of $98,000 or 8%. Net  brokerage  income of $147,000  for the three months ended
September  30, 1999  decreased  from  $160,000  from the same period in 1998,  a
decrease of $13,000 or 8%. For the nine month period ended  September  30, 1999,
net  brokerage  income was  $608,000,  compared to $714,000  for the nine months
ended September 30, 1998, a decrease of $106,000 or 15%.

     Net investing  gains (losses) were ($409,000) and $85,000 for the three and
nine months ended  September 30, 1999,  respectively,  compared to net investing
gains (losses) of ($393,000) and $1,174,000 for the comparable  periods in 1998.
The decrease in net investing  gains from the nine month period ended  September
30, 1998 to the comparable  period in 1999 reflected the gain on sale in 1998 of
a significant amount of securities owned.

     Interest,  dividends  and other  income was  $167,000  and $976,000 for the
three and nine  months  ended  September  30,  1999,  respectively,  compared to
$250,000 and $612,000  for the three and nine months ended  September  30, 1998,
respectively.  The increase for the nine months ended  September  30, 1999 was a
result of an  extraordinary  dividend  received by AVF from one of its portfolio
investments  offset by a  decrease  in  interest  earned  due to lower  invested
balances and lower available rates.

     General and  administrative  expenses  were  $472,000  and $600,000 for the
quarters ended September 30, 1999 and 1998, respectively, a decrease of $128,000
or 21%. The decrease in general and administrative expense for the quarter ended
September  30,  1999  versus  the  quarter  ended  September  30,  1998  was due
principally  to a decrease  in  compensation  and various  other  administrative
expenses.

     For the nine month periods ended  September 30, 1999 and 1998,  general and
administrative expenses were $1,687,000 and $2,136,000 respectively,  a decrease
of $449,000 or 21%. This  decrease for the nine months ended  September 30, 1999
compared to the same period in 1998 is principally  due to the following  items:
(i)  $200,000  provision  for start up costs of a  subsidiary  that will provide





<PAGE>




telephone  services  in the New  England  region  during the 1998  period;  (ii)
$70,000  decrease in employee bonus  accruals;  (iii) $40,000  decrease in legal
expenses; (iv) $60,000 decrease in business development expenses and (v) $50,000
in  expenses  incurred in  connection  with a proxy  solicitation  in one of the
securities owned by the Company in 1998.

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

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

     Management  has  determined   that  the  Year  2000  Issue  will  not  pose
significant operational problems for its internal computer systems. Management's
Year 2000 Plan  addresses  aspects  of:  Assessment,  Staffing  and  Contingency
Planning which were completed  during 1998;  Implementation  which was completed
during  the third  quarter of 1999;  and  Testing,  which is an ongoing  process
largely  dependent upon the Company's  clearing broker.  The Company's  critical
systems were remediated during May 1999 and management believes that all systems
are Year 2000  ready.  The  Company has either  converted  or  replaced  certain
systems that were not Year 2000  compliant to properly  recognize the Year 2000.
The Company  used  external  resources  to  reprogram  or replace,  and test the
software for Year 2000 modifications.

     Since the clearing broker's compliance is critical to the Company's systems
and  continuing  operations,  the  Company  has been  monitoring  its Year  2000
progress.  The Company's  clearing  broker has  performed  testing on all of the
systems  that either  interact  with or are used via the internet by the Company
with no Year 2000 issues  found.  However,  there can be no  guarantee  that the
systems  of the  clearing  broker  and other  companies  on which the  Company's
systems rely will not have an adverse effect on the Company's systems. The total
cost of the Year 2000 Plan to date has not been material and will continue to be
funded through opearating cash flows and will be expensed as incurred.

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


<PAGE>



PART II - OTHER INFORMATION
-------   -----------------

Item 4. - Submission of Matters to a Vote of Security Holders
------    ---------------------------------------------------

     The Company held its Annual  Meeting of  Stockholders  on November 1, 1999.
Management's  nominees,  Messrs.  Paul O. Koether,  Mathew E. Hoffman,  Casey K.
Tjang, and M. Michael Witte were elected to the Board of Directors.

     The following is a tabulation for all nominees:

                                              For               Withheld
                                            -------             --------

        Paul O. Koether                     964,454                 -
        Mathew E. Hoffman                   964,454                 -
        Casey K. Tjang                      964,454                 -
        M. Michael Witte                    964,454                 -


Item 6. - Exhibits and Reports on Form 8-K
------    --------------------------------

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

          (10)   Employment Agreement with John W. Galuchie, Jr.
                 dated September 1, 1999.

          (27)   Financial  Data Schedule for the nine months ended
                 September 30, 1999.

     (b)  Reports on Form 8-K
          -------------------

          No reports on Form 8-K were filed  during the quarter for which
          this report is being filed.


<PAGE>


                                   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: November 12, 1999                     By: /s/ Mark Koscinski
                                                 ------------------------------
                                                 Mark Koscinski
                                                 Vice President



<PAGE>



     This is an EMPLOYMENT AGREEMENT (the "Agreement"), dated as of September 1,
1999, by and between KENT FINANCIAL SERVICES,  INC., a Delaware corporation (the
"Corporation"), and John W. Galuchie, Jr. (the "Executive").


                                    Recitals
                                    --------

     The Executive  currently serves as Executive Vice President of the Company.
The  Company  desires  the  Executive  to  continue  to serve  as the  Company's
Executive  Vice  President,  and the Executive  desires to continue to serve the
Company as its Executive Vice  President,  on the terms and conditions set forth
in this Agreement.

     NOW, THEREFORE, the parties agree as follows:

     1.  Employment.  The Company hereby employs the Executive as Executive Vice
         ----------
President of the Company, and the Executive hereby accepts such employment, upon
the terms and conditions set forth herein.

     2. Duties and Powers.
        -----------------

        2.1 Duties.  The Executive  shall serve  as Executive  Vice President of
            ------
the Company and perform the duties of  Executive  Vice  President  as defined in
the  Bylaws  of  the  Company  in  effect on  the  date of this  Agreement.  The
Executive  Vice  President  shall  receive   the  compensation  provided  herein
notwithstanding  any  future  amendment  to  the  Bylaws of  the  Company  which
diminishes or alters the duties  of the Executive Vice President of the Company.
The Executive  shall not be  required to devote his entire  working  time to the
business of the Company, and  may  devote  time  to  other  business  interests,
including  directorships  of other companies public and private.

<PAGE>



        2.2  Service  as  Director.  If  elected,  the   Executive  shall  serve
             ---------------------
as  a  director  of  the  Company  without  additional  compensation,  and shall
have the right  at  any  time  to  serve  as a director of any subsidiary of the
Company.

     3. Term of Agreement.  The initial term of employment  under this Agreement
        -----------------
shall  be  three  years  commencing  effective  as of  September  1,  1999  (the
"Effective  Date")  and  shall  extend  until  August  31,  2002  unless  sooner
terminated  pursuant to Section 6 below. The term of the Executive's  employment
under  this  Agreement  shall  be  automatically  extended  one day for each day
elapsed  after the  Effective  Date.  Employment of the Executive by the Company
prior to the Effective  Date shall,  subject to the terms and  conditions of the
benefit plans and  arrangements  referred to in Section 5.1 below, be counted in
determining the Executive's  continuous service with the Company for purposes of
any benefit computation.


     4.  Compensation.  For all services  rendered by the  Executive  under this
         ------------
Agreement, the Company shall pay the Executive an annual salary of $180,000 (the
"Base Salary"), payable in equal monthly installments. The Board of Directors of
the Company  shall from time to time review the  compensation  to be paid to the
Executive  under  this  Agreement  and shall  increase  (but not  decrease)  the
compensation in such amounts, if any, as the Board of Directors determines.

<PAGE>


     5.  Benefits, Expenses, Reimbursement; etc.
         --------------------------------------

        5.1 Benefit  Plans.  The  Company  shall  provide   the  Executive  with
            --------------
such  medical  and  disability  insurance,  hospital  insurance  and  group life
insurance  and  other  benefits made available to executive  level  employees of
the  Company, subject  to  the  terms  and  conditions of such benefit plans and
arrangements.


        5.2  Expenses.  The  Company  shall  pay  all  expenses  incurred by the
             --------
Executive  in  furtherance  of  or  in  connection  with  the  business  of  the
Company  and  its  subsidiaries  and affiliates  including,  without limitation,
all (i) travel and living  expenses  while away from home on  business or at the
request and in  the service of the Company or its  subsidiary or affiliate,  and
(ii)  entertainment  expenses,   upon  submission  of  appropriate  receipts  or
vouchers and in accordance  with the  standard  expense  reimbursement  policies
of the Company as in effect from  time to time. If any such expenses are paid by
the  Executive,  the Company  shall  reimburse him promptly for those  expenses.
The Executive  shall also be entitled to  reimbursement  for the  annual  fee(s)
of any  credit  cards  the Executive  acquires for use in charging  expenditures
incurred in the performance of his duties under this Agreement.

<PAGE>



        5.3 Vacations.  The Executive  shall be entitled each year to a vacation
            ---------
of four weeks (twenty working days),  during which time his  compensation  shall
be paid  in  full and such holidays and other non-working days as are consistent
with  the  policies  of  the  Company for  executives  generally.  All vacations
shall be scheduled  so as to cause  minimal  interference  with  the  operations
of  the  Company.  If  the  Executive's  employment  under  this   Agreement  is
terminated  pursuant  to  Section  6,  the  Executive  shall  be   entitled   to
payment  for all untaken vacation days.


        5.4 Death  Benefits.  Subject  to  the  provisions of Section  5.5(B) of
            ---------------
this Agreement,  in the  event  of the  Executive's  death  during  the  term of
this  Agreement,  the Company shall pay to such  beneficiaries  as the Executive
shall  designate  in  writing  prior to the Executive's death, or if he fails to
designate  a  beneficiary,  to  the  Executive's  spouse  or,  if  none,  to the
Executive's estate, an annual  benefit  equal to $180,000 (the "Death  Benefit")
The  Death  Benefit  shall  be  payable  in  equal  monthly  installments  for a
period   of  3  years, commencing  on the first day of the next month  following
the month  in  which  the Executive's  death  occurs.  Payments made pursuant to
this Section 5.4 shall  be  made  in  lieu  of any  and  all  payments  provided
for in  Section  4 of this Agreement.


        5.5  Disability.
             ----------
         A. The Executive  shall  be  paid such benefits to which he is entitled
under  the  terms  of such  long-term  disability  insurance  as the Company has
provided  under  Section  5.1  of  this  Agreement.  If  at any time  during the
term  of  this Agreement  (i)  the  Company  is  not  providing   the  Executive
with  long-term disability  insurance  coverage,  or (ii) the amount of coverage
provided  pays  benefits less than an annual benefit to age 70 of 80% or more of
the Executive's  Base  Salary  plus  cash bonuses which the  Executive  is being
paid prior to the  commencement of disability benefits, then the Executive shall
be paid the amount specified in Section 5.5(B) of this Agreement.


<PAGE>



         B. Subject to  the  provisions  of Section 5.5(A) of this Agreement, if
during  the  term  of  this  Agreement  (i)  the  Executive suffers any illness,
disability  or  incapacity   which  renders  him  unable  to  perform his duties
hereunder  and  such  illness,  disability  or  incapacity  is  deemed by a duly
licensed  physician  (who may  be  the  Executive's  personal  physician)  to be
permanent,  or  (ii)  the Executive is unable to render  services to the Company
of  the  nature  required  by this Agreement  because of illness,  disability or
incapacity for a period of 90 days,  whether  or not such days are  consecutive,
during  any  year  of  the  term hereof,  then the Executive  shall  continue to
render advisory and  consulting services as he is able and as may be  reasonably
requested  by  the  Company.  The  Company  shall pay to the Executive an annual
disability payment (the "Disability Payment") equal  to  80%  of the Executive's
base  compensation of $180,000 or such base  compensation  in effect at the time
the  event  or  condition   described   in  Section   5.5(B)   (i)  or (ii) (the
"Condition")  above  occurs.  The  Disability  Payment  shall  be  paid  to  the
Executive  in  equal  monthly  installments  under the Executive attains age 70.
Disability Payments shall commence on the first day of  the month  following the
month in which the  Condition  occurs and shall be made even if the Executive is
unable to render any services to the Company.




         C. In  the  event  of  the  Executive's  death  during  the  period  in
which  Disability  Payments  are  to  be  paid,   the   Company  shall  pay  any
remaining  Disability  Payments  due  pursuant   to   Section   5.5(B)  to  such
beneficiaries as the Executive  designates  in  writing  before  his  death,  or
upon his  failure to  designate  a  beneficiary,  to his  surviving  spouse  or,
if none,  then  to  the Executive's  estate. Such payments shall be paid in lieu
of any and all payments provided for in Section 4 and 5.4 of this Agreement.


<PAGE>



     6. Termination. The Executive's employment hereunder may be terminated only
        -----------
under the following circumstances:

        6.1  Cause.  The  Company  may  terminate  the  Executive's   employment
             -----
hereunder for "cause"  upon not  less  than  five  days'  prior  written  notice
of  such  termination.  For  purposes of this Agreement,  the Company shall have
"cause" to terminate the Executive's employment hereunder upon (A) the continued
failure  by  the  Executive to substantially perform his duties hereunder (other
than  any  such  failure  resulting  from  the  executive's  incapacity  due  to
physical or mental illness or the  removal of  Executive's  office to a location
more  than  5  miles  from  its current  location),  which  failure has not been
cured (i) within three days after a written demand for  substantial  performance
is  delivered  to  the  Executive  by the Company that  specifically  identifies
the manner  in  which  the Company believes the Executive has not  substantially
performed  his  duties (the "Three  Day  Period"),  or (ii)  in  the  event such
failure  cannot be  reasonably cured within the Three Day Period, within 20 days
thereafter,  provided  that  the  Executive  promptly  commences and  thereafter
diligently  prosecutes  the cure  thereof,  or  (B) the  Executive's  conviction
of any criminal act or  fraud  with respect  to  the  Company.   Notwithstanding
the  foregoing,   the  Executive's employment  may not be  terminated  for cause
unless and until the  Company  has  delivered  to  the  Executive  a  copy  of a
resolution  duly  adopted  by  the  affirmative vote of not less than 80 percent
of  the  entire  Board  of  Directors  at  a  meeting of the Board (of which the
Executive  was  given at least 20 days prior  written notice and an opportunity,
together with his counsel, to be heard before the Board),  finding that  in  the
good faith opinion of the Board,  the Executive has not substantially  performed
his duties (which failure shall be described in detail) and such failure has not
been  cured  within  the  period  described  in  (ii) above.  In  addition,  the
Company   shall   not   have  cause  to  terminate  the  Executive's  employment
hereunder  as  a  result  of  any  event  occurring prior to the date hereof and
previously  disclosed to the Company. The burden of establishing  cause shall be
upon the Company.


        6.2  Termination  by   the   Executive.  The   Executive  may  terminate
             ---------------------------------
this  employment  hereunder  for "good  reason"  upon  not less than five  days'
prior  written   notice  to  the  Company.  For  purposes  of  this   Agreement,
"good  reason"  shall  mean  the continued failure by the Company to perform its
obligations   under  this  Agreement  (including  any  material  change  by  the
Company  in  the  duties, responsibilities  and  powers  of the Executive as set
forth  herein  or  the  removal of the  Executive's  office to a  location  more
than 5 miles  from  its  current  location)  which failure has not been cured(i)
within  three  days  after   a  written  demand  for  performance  is  delivered
to  the  Company  by the  Executive  that specifically  identifies the manner in
which the Executive  believes the Company  has not performed its obligation (the
"Three Day Period"),  or (ii) in the event  such a failure  cannot be reasonably
cured  within   the  Three  Day  Period,  within  twenty  (20)  days  thereafter
provided   that  the  Company  promptly  commences   and  thereafter  diligently
prosecutes the cure thereof.

<PAGE>



        6.3  Change in Control.
             -----------------

         A. The Executive may terminate his  employment  under this Agreement at
any  time for "good  reason" (as defined  below) within 36 months after the date
of a Change in Control (as defined below) of the Company.

         B. A  "Change  in  Control" of  the  Company  shall  be  deemed to have
occurred if:

         (1) any "person"  (as such term is used in Sections  13(d) and 14(d) of
the Securities  Exchange Act of 1934 (the  "Exchange  Act") as  in effect on the
date  hereof),  other  than  individuals    beneficially   owning,  directly  or
indirectly,  common  stock  of  the  Company  representing  30%  or  more of the
Company's issued  and  outstanding  common stock as of the Effective Date, is or
becomes the beneficial  owners, directly  or indirectly,  of common stock of the
Company  representing  30%  or more of the Company's then issued and outstanding
common stock; or


         (2) individuals  who constitute the Company's Board of Directors on the
date  hereof (the  "Incumbent  Board")  cease  for  any reason to  constitute at
least  a  majority  thereof,  provided   that  any  person  becoming  a Director
subsequent to  the date  hereof  whose  election,  or  nomination  for  election
by the  Company's  stockholders,  was  approved by a vote of at least a majority
of the  Directors comprising  the Incumbent  Board (either by a specific vote or
by  approval  of  the proxy  statement  of  the  Company in which such person is
named as a nominee for  Director,  without  objection  to such nomination) shall
be, for purposes of this clause,  considered as though such person were a member
of  the  Incumbent  Board. For  purposes of this Section  6.3(A),  "good reason"
shall  mean  a  determination  solely  by the Employee, in good faith, that as a
result  of  the change  of control of the Company he may be  adversely  affected
(i) in  carrying  out his duties and powers in the fashion he previously enjoyed
or (ii) in his future prospects with the Company.



         C. If  the  Executive  terminates  his  employment  after  a  Change of
Control of  the Company, he shall notify the Company in writing of the effective
date of the termination  (the  "Termination  Date") and he shall be paid (i) the
Base  Salary  payable  to  the  Executive  under  this  Agreement   through  the
Termination  Date,  or (ii) an  amount  equal  to the product of (a) the average
annual Base Salary  paid to  the  Executive  during  the  five  years  preceding
the Termination Date, multiplied by (b) three, whichever of (i) or (ii) is more.
The amount  payable under  this Section 6.3(C) shall be paid in a lump sum on or
before the fifth day following the Termination Date.


<PAGE>


     7.  Interest and Counsel Fees.
         -------------------------

         7.1  Interest.  All   amounts  payable  to  the  Executive  under  this
              --------
Agreement  shall  be  due  and  payable  at  the  time  specified herein and any
payment  which  is  not made  within  five  days of the date of  written  demand
shall be made with  interest  on  the  amount  due from the due date  until paid
in full at  an  annual rate equal to 2% over the prime or base rate of  interest
generally offered or charged by Citibank,  N.A. to its commercial  customers for
short-term unsecured  loans,  as  in  effect from time to time during the period
from such due date until the date such payment is made.


         7.2  Counsel  Fees. The  Company   hereby   irrevocably  authorizes the
              -------------
Executive  from  time to time to retain  counsel of his choice at the expense of
the  Company  to  represent  the  Executive in connection  with the  Executive's
initiation  or  defense  of  any  litigation,  arbitration or other legal action
relating  to this Agreement  or any  provision  hereof  (whether  such action is
by  or  against  the  Company  or  any director,  officer,  stockholder or other
person affiliated with the  Company,  or in any  jurisdiction).  Notwithstanding
any  existing  or  prior  attorney-client  relationship  between the Company and
such counsel, the Company  irrevocably   consents  to  the  Executive   entering
into an attorney-client relationship with such  counsel, and in that  connection
the  Company and the Executive  agree  that a  confidential  relationship  shall
exist  between  the Executive and such counsel. The reasonable fees and expenses
of  counsel  selected  by  the  Executive  shall  be  paid  or reimbursed to the
Executive by the Company on a regular,  periodic basis upon  presentation by the
Executive  of  a  statement or statements prepared by such counsel in accordance
with  its  customary   practices, up  to a maximum aggregate amount of $250,000.
Notwithstanding the preceding, if  it should be finally  determined  by judgment
or  order  of  a  court of  competent jurisdiction  (the time for the  appeal of
which  judgment  or order  shall have  expired),  that  the  Executive  has  not
prevailed  in  any  such  litigation,  arbitration  or  other legal action,  the
Executive  shall promptly  return to  the  Company, upon its demand, any amounts
so advanced in connection with such action together with interest thereon at the
rate provided in Section 7.1 above.


<PAGE>

        8.  No Conflicting Commitments.
            --------------------------

         8.1 Representation and Warranty.  The Executive represents and warrants
             ---------------------------
that  he has no commitments or obligations of any kind  whatsoever  inconsistent
with  this  Agreement and is under no disability  of any kind  whatsoever  which
would impair, infringe upon or limit Executive's ability to enter this Agreement
or to perform the services required hereunder.


         8.2 Indemnification. The  Executive  agrees  to  indemnify and hold the
             ---------------
Company  harmless  against  any  claim  or  other  actions  asserted against the
Company  based  upon  circumstances  in  which it is alleged that the  Executive
has breached the warranty set forth in Section 8.1.


        9.  Governing  Law.  This  Agreement has  been executed and delivered in
            --------------
the  State of New Jersey,  and shall in all respects be interpreted,  construed,
and  governed  by  and  in  accordance  with the law of the State of New Jersey.
Except  as otherwise  herein  provided,   all  actions  or  proceedings  arising
directly, indirectly or otherwise in  connection  with,  out of,  related to, or
from  this  Agreement  shall be litigated  exclusively and only in courts having
situs  within the  State of New  Jersey,  and the  parties  hereby  consent  and
submit to  the jurisdiction  of any state or federal  court located in the State
of  New  Jersey.  Notwithstanding the preceding,  the Executive, at his sole and
exclusive  option, exercisable  by  written  notice  given to the Company at any
time,  may  elect  to  submit  any  dispute  arising  under  this  Agreement  to
resolution by arbitration held in Somerset County, New Jersey in accordance with
the rules of the American Arbitration Association.


        10.  Notices.  All  notices   hereunder   shall  be   in   writing   and
             -------
personally  delivered or mailed by registered or certified mail,  return receipt
requested, to the following address:

                  If to the Company:

                  376 Main Street
                  Bedminster, New Jersey 07921

                  If to the Executive:

                  John W. Galuchie, Jr.
                  376 Main Street
                  Bedminster, New Jersey 07921

<PAGE>


The Company or the  Executive  may hereafter  designate  another  address to the
other in writing for purposes of notices under this Agreement.

        11.  Waivers.  Any waiver by any party of any  violation  of,  breach of
             -------
or default  under any  provision of this  Agreement by the other party shall not
be construed as, or constitute, a continuing waiver of such provision, or waiver
of  any  other  violation of, breach of or default under any other  provision of
this Agreement.

        12.  Assignability.  This  Agreement  shall  not  be  assignable  by the
             -------------
Company  without  the  written  consent of Executive, except that if the Company
shall merge or consolidate  with or into, or transfer  substantially  all of its
assets  to,  another  corporation  or  other form of business organization, this
Agreement  shall  be  binding on the  Executive  and be for the  benefit  of and
binding  upon  the  successor  of   the  Company  resulting  from  such  merger,
consolidation or transfer  without  Executive's  consent,  unless this Agreement
is terminated  pursuant  to Section  6.3(C).  Executive may not assign,  pledge,
or  encumber  any  interest  in  this Agreement or any part thereof  without the
express  written  consent  of  the  Company,  this  Agreement  being personal to
Executive.


        13.  Severability.  Each  provision  of  this  Agreement   constitutes a
             ------------
separate  and  distinct  undertaking,  covenant and/or provision  hereof. In the
event  that  any  provision  of this Agreement shall finally be determined to be
unlawful, such  provision shall be deemed severed from this Agreement, but every
other provision  of this Agreement shall remain in full force and effect, and in
substitution   for   any   such   provision   held   unlawful,  there  shall  be
substituted a provision of similar  import  reflecting  the  original  intent of
the parties  hereto to the extent permissible under law.

         IN  WITNESS  WHEREOF,  the  parties hereto have executed this Agreement
as of the date and year first set forth above written.

                                         KENT FINANCIAL SERVICES, INC.


                                   By:   /s/ Paul O. Koether
                                         ----------------------------

                                   Title: President
                                         ----------------------------


/s/ John W. Galuchie, Jr.
-------------------------
    John W. Galuchie, Jr.