10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

T QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:  March 31, 2008

OR

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

For the transition period from: ________ to ________.

Commission File No.: 1-7986

Kent Financial Services, Inc.

(Exact name of registrant as specified in its charter)

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

211 Pennbrook Road, P.O. Box 97, Far Hills, New Jersey 07931

(Address of principal executive offices)

(908) 766-7221

(Registrant's telephone number)

Indicate by check mark whether the registrant(1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  T No  £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One)

Large accelerated filer £ Accelerated filer £ Non-accelerated filer £ Small reporting company T

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes £ No T

State the number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date:  As of May 1, 2008, the issuer had 2,792,022 shares of its common stock, par value $.10 per share, outstanding.

KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES

FORM 10-Q

For The Quarterly Period Ended March 31, 2008

Table Of Contents

	Page Number
PART I. FINANCIAL INFORMATION
Item 1.  Financial Statements
Consolidated Balance Sheets as of March 31, 2008 and December 31, 2007	3
Consolidated Statements of Operations for the Three Months Ended March 31, 2008 and 2007	4
Consolidated Statements of Cash Flows Three Months Ended March 31, 2008 and 2007	5
Notes to Consolidated Financial Statements	6
Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3.  Quantitative and Qualitative Disclosure About Market Risk	14
Item 4.  Controls and Procedures	15
PART II. OTHER INFORMATION
Item 1.  Legal Proceedings	16
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds	16
Item 3.  Defaults Upon Senior Securities	16
Item 4.  Submission of Matters to a Vote of Security Holders	16
Item 5.  Other Information	16
Item 6.  Exhibits	16
Signatures	18

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PART I   -  FINANCIAL INFORMATION

Item 1.  -  Financial Statements

KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

ASSETS	March 31, 2008 (Unaudited)			December 31, 2007
Current Assets:
Cash and cash equivalents	$	1,103		$	135
Short-term investments		11,284			12,270
Marketable securities		105			117
Accounts receivable		108			98
Prepaid expenses and other current assets		30			18
Total current assets		12,630			12,638
Property and equipment, net of accumulated depreciation of $2		6			6
Other assets		16			62
Total assets	$	12,652		$	12,706
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	300		$	269
Noncurrent liabilities:
Accrued post employment obligations		698			685
Total liabilities		998			954
Minority interest in subsidiaries		5,059			5,083
Stockholders' equity:
Preferred stock without par value; 500,000 shares authorized; none outstanding		-			-
Common stock, $.10 par value; 8,000,000 shares authorized; 2,792,022 shares issued and outstanding		279			279
Additional paid-in capital		12,390			12,390
Accumulated deficit		(6,062	)		(5,997	)
Accumulated other comprehensive loss		(12	)		(3	)
Total stockholders' equity		6,595			6,669
Total liabilities and stockholders' equity	$	12,652		$	12,706

See accompanying notes to consolidated financial statements.

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KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(In thousands, except per share data)

	Three Months Ended
	March 31,
	2008			2007
Revenues:
Seminar fees	$	70		$	107
Interest		96			159
Investing losses		(1	)
Other income		70			101
Total revenues		235			367
Expenses:
General and administrative		323			427
Loss before income taxes and minority interest		(88	)		(60	)
Provision for income taxes		(1	)		(10	)
Loss before minority interest		(89	)		(70	)
Minority interest in subsidiaries losses		24			17
Net loss		(65	)		(53	)
Other comprehensive loss:
Unrealized loss on available for sale securities		(9	)		(2	)
Comprehensive loss	$	(74	)	$	(55	)
Basic and diluted net loss per common share	$	(0.02	)	$	(0.02	)
Weighted average number of common shares outstanding (in 000's)		2,792			2,799

See accompanying notes to consolidated financial statements.

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KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)

	Three Months Ended
	March 31,
	2008			2007
Cash flows from operating activities:
Net loss	$	(65	)	$	(53	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation		1			2
Interest receivable on short-term investments		(61	)		(126	)
Stock-based compensation expense					9
Minority interest in subsidiaries losses		(24	)		(17	)
Change in accounts receivable		(10	)		19
Change in prepaid expenses and other assets		34			(33	)
Change in accounts payable and accrued expenses		44			(19	)
Change in deferred revenue					(12	)
Net cash used in operating activities		(81	)		(230	)
Cash flows from investing activities:
Acquistion of property and equipment					(14	)
Purchase of short-term investments		(371	)		(1,174	)
Sales and maturities of short-term investments		1,420			1,428
Net cash provided by investing activities		1,049			240
Cash flows from financing activities:
Repurchase of common stock by subsidiary					(6	)
Repurchase of common stock					(9	)
Net cash used in financing activities		-			(15	)
Net increase (decrease) in cash and cash equivalents		968			(5	)
Cash and cash equivalents at beginning of period		135			167
Cash and cash equivalents at end of period	$	1,103		$	162
Supplemental disclosure of cash flow information:
Cash paid for:
Taxes	$	1		$	6

See accompanying notes to consolidated financial statements.

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KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Periods Ending March 31, 2008 and 2007

(UNAUDITED)

NOTE A - Basis of Presentation

The accompanying unaudited consolidated financial statements of Kent Financial Services, Inc. and subsidiaries (the "Company") 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, 2007 as filed with the Securities and Exchange Commission.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  Estimates that are particularly susceptible to change include assumptions used in determining the fair value of securities owned and non-readily marketable securities.

The results of operations for the three months ended March 31, 2008 are not necessarily indicative of the results to be expected for the entire year or for any other period.

NOTE B – Business and Segment Information

The Company's business is comprised of the management of Kent International and Kent Educational.  The Company has determined that its operations can be segregated into two principal operating segments which are business development activities and education services.  We define operating segments as components of an enterprise about which separate financial information is available that is evaluated regularly by the Chairman in deciding how to allocate resources and in assessing performance.

Kent International is a publicly traded company (stock symbol “KNTH.PK”) currently seeking to redeploy its assets into an operating business through an acquisition or merger.  Kent Financial Services owned approximately 53.25% of Kent International at March 31, 2008.  All of Kent International’s assets, excluding its portfolio of pharmaceutical patents (which have a zero carrying value on the consolidated financial statements), are invested in cash and United States Treasury Bills.  Kent International’s activity is reported in the business development activities segment.

Additionally, Kent International has developed a niche social networking website, www.chinauspals.com, designed to promote cultural exchange between the citizens of the United States and those of the People’s Republic of China.  Membership to the site is free, thus any potential revenues will be derived from advertisements placed on the site by third parties.  The site provides users with access to other users’ personal profiles and enables the user to send private messages to other registered users of similar interests in order to develop lasting friendships or simply attain a pen pal.  Chinauspals.com also features user generated discussion forums and blogs as well as user submitted videos and pictures.

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We face the risk that our website will not be viewable in China or will be deliberately blocked by the government of the People’s Republic of China.  Internet usage and content are heavily regulated in China and compliance with these laws and regulations may cause us to change or limit our business practices in a manner adverse to our business.

The Company does not expect that these activities will generate any significant revenues for an indefinite period as these efforts are in their early stages.  As a result, these programs may produce significant losses until such time as meaningful revenues are achieved.

The education services segment represents the activity of Kent Educational; 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.

The allocation of resources for educational purposes is currently under great scrutiny in New Jersey.  Funding for public schools in New Jersey comes from either State aid or local property taxes.  Although property taxes have increased rapidly in New Jersey over the last seven years, this has not resulted in additional educational expenditures, because the State of New Jersey has at the same time reduced its aid allocated to public schools.  It is impossible to foresee the future developments of property taxes and educational State aids.  As public schools in New Jersey are currently our primary customer, our revenue growth is restricted by any limitation on these resources.

The following table summarizes the assets and operations of the Company’s segments as of and for the three months ended March 31, 2008 and 2007:

	Business
	Development			Educational			All Other						Consolidated
	Activities			Services			Operations			Eliminations			Totals
Three Months Ended March 31, 2008
Revenues from external customers				$	71		$	68					$	139
Management fees								63		$	(63	)
Interest revenue	$	84			2			10						96
Investing losses								(1	)					(1	)
Other revenue								1						1
Total revenues		84			73			141			(63	)		235
General and administrative expenses		(114	)		(98	)		(174	)		63			(323	)
Income tax expense					(1	)								(1	)
Minority interest		14			10									24
Net loss by segment	$	(16	)	$	(16	)	$	(33	)	$	-		$	(65	)
As of March 31, 2008
Total assets by segment	$	10,580		$	352		$	1,720		$	-		$	12,652

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	Business
	Development			Educational			All Other						Consolidated
	Activities			Services			Operations			Eliminations			Totals
Three Months Ended March 31, 2007
Revenues from external customers				$	107		$	101					$	208
Management fees								63		$	(63	)
Interest revenue	$	134			3			22						159
Total revenues		134			110			186			(63	)		367
General and administrative expenses		(200	)		(65	)		(225	)		63			(427	)
Income tax expense					(10	)								(10	)
Minority interest		31			(14	)								17
Net income (loss) by segment	$	(35	)	$	21		$	(39	)	$	-		$	(53	)
As of March 31, 2007
Total assets by segment	$	10,874		$	520		$	2,002		$	-		$	13,396

NOTE C - Securities Owned

Marketable securities owned as of March 31, 2008 and December 31, 2007, comprised mainly of portfolio positions (equity securities) held for capital appreciation consisted of the following (all numbers in thousands):

				March 31, 2008					December 31, 2007
	Percent Owned			Estimated Fair Value		Losses in Accumulated Other Comprehensive Income			Estimated Fair Value		Gains in Accumulated Other Comprehensive Income		Losses in Accumulated Other Comprehensive Income
GolfRounds.com, Inc.		4.35	%	$	90	$	(12	)	$	92			$	(10	)
All other equity securities		N/A			15					24	$	7
				$	105	$	(12	)	$	116	$	7	$	(10	)

During the first quarter of 2007, the Company reclassified its marketable securities from trading securities to available for sale securities.  The Company’s securities are valued at fair value.  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.

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NOTE D - Capital Stock Activity

Dividends

No dividends were declared or paid during the three months ended March 31, 2008.

Common Stock Repurchases

In August 2004, the Board of Directors approved a plan to repurchase up to 200,000 shares of the Company’s common stock at prices deemed favorable in the open market or in privately negotiated transactions subject to market conditions, the Company’s financial position and other considerations.  This program has no expiration date.  No shares were acquired during the quarter ended March 31, 2008.  As of March 31, 2008, 102,352 shares under this plan had been repurchased, canceled and returned to the status of authorized but unissued shares.

NOTE E - Net Income (Loss) Per Share

The Company reports net income (loss) per share under the requirements of Statement of Financial Accounting Standards No. 128, “Earnings per Share”.  Basic income (loss) per share includes the weighted average number of common shares outstanding during the year.  Diluted income (loss) per share includes the weighted average number of shares outstanding and dilutive potential common shares, such as warrants and options.  The Company had no common stock options outstanding at March 31, 2008 and 300,000 outstanding at March 31, 2007.  Because the Company had losses in the three months ended March 31, 2008 and 2007, any stock options outstanding would have an anti-dilutive effect on net loss per share and as such are not included in the calculations.

NOTE F - Stock Option Plans

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.

On November 25, 2005, shareholders of the Company approved the 2005 Stock Option Plan making a total of 400,000 common stock options available for issuance.  Subsequently, 300,000 options were awarded to Dr. Qun Yi Zheng as President of Kent on the same date.  33,000 of these options were immediately exercisable with an additional 33,000 becoming exercisable on the first eight anniversaries of the grant date.  On August 31, 2007, the effective date of Dr. Zheng’s resignation, the 66,000 common stock options that had become exercisable were forfeited as were the 234,000 options that were still unexercisable.  The Company did not record stock-based compensation expense for the three months ended March 31, 2008 as no options were earned during this period; however, approximately $9,000 in stock-based compensation expense was recorded for the three month period ending March 31, 2007.  At March 31, 2008, the Company had no common stock options outstanding.

All options granted had an exercise price equal to or more than 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.

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Kent International Stock Options Plans

Kent International has issued certain common stock options to its employees, directors and consultants.  At March 31, 2008 and December 31, 2007, Kent International had 120,000 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.  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 three month periods ending March 31, 2008 and 2007.

NOTE G - Related Party Transactions

The Company receives a monthly management fee of $21,000 from Kent International for management services.  These services include, among other things, preparation of periodic and other filings with the Securities and Exchange Commission, evaluating merger and acquisition proposals, providing internal accounting services and shareholder relations.  This arrangement may be terminated at will by either party.  The monthly management fee revenue and offsetting expense is eliminated during consolidation.  The Company is the beneficial owner of approximately 53.25% of Kent International’s outstanding Common Stock at March 31, 2008.  Paul O. Koether, Chairman of the Company is also the Chairman of Kent International and the beneficial owner of approximately 56.22% of the Company’s outstanding common stock.  Bryan P. Healey, Chief Financial Officer and Director of the Company is also the Chief Financial Officer and Director of Kent International as well as the son-in-law of Paul O. Koether.

The Company and its consolidated subsidiaries reimburse an affiliate, Bedminster Management Corp., for the allocated direct cost of group health insurance and office supplies. These reimbursements were approximately $14,000 and $24,000 in the three months ended March 31, 2008 and 2007, 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.

NOTE H - Legal Proceedings

Texas American Petrochemicals, Inc. (“TAPI”)

By letter dated May 24, 2005, the Texas Commission on Environmental Quality ("TCEQ") advised Texas American Petrochemicals, Inc. (“TAPI”), that it was a person responsible for solid waste at a hazardous waste site in Texas. TAPI is an inactive subsidiary of the Company with no assets. The TCEQ determined that the amount owed to the State of Texas for remediation is $2,459,594 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.

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NOTE I – Net Operating Loss Carryforwards

As of December 31, 2007, the Company had approximately $3.3 million of net operating loss carryforwards (“NOL”) for income tax purposes.  In addition, Kent International had approximately $77.6 million of NOL and $1.85 million of research and development and foreign tax credit carryforwards available to offset future federal income tax, subject to limitations for alternative minimum tax.  The NOL’s and tax credit carryforwards expire in various years from 2008 through 2027.  The Company’s and Kent International’s use of operating loss carryforwards and tax credit carryforwards is subject to limitations imposed by the Internal Revenue Code.  Management believes that the deferred tax assets as of March 31, 2008 do not satisfy the realization criteria set forth in SFAS No. 109 and has recorded a valuation allowance for the entire net tax asset.  By recording a valuation allowance for the entire amount of future tax benefits, the Company has not recognized a deferred tax benefit for income taxes in its statements of operations.

NOTE J - New Accounting Pronouncements

In December 2007, the FASB issued SFAS No. 141 (R), Business Combinations, and SFAS No. 160, Non-controlling Interests in Consolidated Financial Statements.  SFAS No. 141 (R) requires an acquirer to measure the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at their fair values on the acquisition date, with goodwill being the excess value over the net identifiable assets acquired.  SFAS No. 160 clarifies that a non-controlling interest in a subsidiary should be reported as equity in the consolidated financial statement.  The calculation of earnings per share will continue to be based on income amounts attributable to the parent.  SFAS No. 141 (R) and SFAS No. 160 are effective for financial statements issued for fiscal years beginning after December 15, 2008.  Early adoption is prohibited.  We have not yet determined the effect on our financial statements, if any, upon adoption of SFAS No. 141 (R) or SFAS No. 160.

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, 2007, of Kent Financial Services, Inc. (“Kent” or the “Company”) as well as the Company’s financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q.  Statements in this report relating to future plans, projections, events or conditions are forward-looking statements.  Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those described.  The Company expressly disclaims any obligation or undertaking to update these statements in the future.

Kent‘s business is comprised of the management of Kent International Holdings, Inc. (“Kent International”) and Kent Educational Services, Inc. (“Kent Educational”).  Kent was formed in 1988 as a Delaware corporation and reincorporated in Nevada in 2006 by a merger into a newly formed, wholly owned Nevada subsidiary with the same name that was the surviving corporation of the merger.

Kent International

Kent International is a publicly traded company (stock symbol “KNTH.PK”) currently seeking to redeploy its assets into an operating business.  The Company owned approximately 53.25% of Kent International at March 31, 2008.  All of Kent International’s assets, excluding its portfolio of pharmaceutical patents (which have a zero carrying value on the consolidated financial statements), are invested in cash and United States Treasury Bills.  Kent International’s current business plan is to serve as a vehicle for the acquisition of or merger or consolidation with another company.  Kent International may use its available working capital, capital stock, debt or a combination of these to start a business or to effect a business combination with a company seeking to establish a public trading market for its securities while avoiding the time delays, significant expense, loss of voting control and other burdens including significant professional fees of an initial public offering.  A business combination may be with a financially stable, mature company or a company that is in its early stages of development or growth, which could include companies seeking to obtain capital and to improve their financial stability.

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Additionally, Kent International has developed a niche social networking website, www.chinauspals.com, designed to promote cultural exchange between the citizens of the United States and those of the People’s Republic of China.  Membership to the site is free, thus, any potential revenues will be derived from advertisements placed on the site by third parties.  The site provides users with access to other users’ personal profiles and enables the user to send private messages to other registered users of similar interests in order to develop lasting friendships or simply attain a pen pal.  Chinauspals.com also features user generated discussion forums and blogs as well as user submitted videos and pictures.

Kent International does not expect that these activities will generate any significant revenues for an indefinite period as these efforts are in their early stages.  As a result, these programs may produce significant losses until such time as meaningful revenues are achieved.

Kent Educational

Kent Educational, a wholly owned subsidiary of Kent has a 60% controlling interest in The Academy for Teaching and Leadership, Inc., (“The Academy”).  The Academy, headed by Dr. Saul Cooperman, a former Commissioner of Education in the State of New Jersey, offers educators high quality programs designed to dramatically improve themselves, their students and their schools.  The Academy brings together educators from school districts to engage in quality programs related to curriculum, assessment, and instructional strategies that have the potential to assist them in their own development as well as to enhance the learning of their students.  Similarly, it offers administrators the latest programs in leadership practices that can support their school district’s goals and give them the skills to achieve their specific objectives.

The Academy’s sole full time executive officer resigned on December 15, 2007.  This individual was primarily responsible for business development and coordinating services.  As a result, The Academy is currently reviewing its strategic options including hiring a replacement for the executive officer, partnering with a competitor, continuing to provide services to existing clients through an outsourcing platform, or discontinuation of services.

The Academy has also produced an innovative educational DVD entitled “Sex Over Sixty”.  The Academy has worked to produce this DVD based on research that enables those people over 60 to learn about their changing bodies and experience a healthier, happier sex life.  “Sex Over Sixty” provides frank answers to sexual questions that mature adults face as they age, experience health problems, or begin dating again after a loss or divorce.  The DVD was released on October 16, 2007; however, as with any new media release, the possible commercial success of this DVD is uncertain.  Initial marketing, which has commenced, will be constrained by a modest advertising budget.  Initial sales results have been disappointing.

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Kent Educational and The Academy are consolidated in the accompanying financial statements.  The Company has determined that continued revenue growth and profitability at The Academy are uncertain. As a result, losses may be incurred.

Results of Operations

The Company had a net loss of $65,000 or $.02 basic and diluted loss per share, for the three months ended March 31, 2008 compared to a net loss of $53,000, or $.02 basic and diluted loss per share for the comparable quarter in 2007.  The increase in the net loss was mainly the result of decreased interest revenue, seminar fees and administrative fees paid by an un-affiliated investment partnership offset by decreased expenses during the period.

Revenue

Seminar fees based on seminars held by The Academy decreased to $70,000 for the three months ended March 31, 2008 compared to $107,000 for the three months ended March 31, 2007.  This decrease is the result of the departure of The Academy’s executive director who was primarily responsible for business development.  The Company recognizes seminar revenue when the services are provided.

Interest income was $96,000 and $159,000 for the periods ending March 31, 2008 and 2007, respectively, a decrease of $63,000 due to lower yields on invested balances.

The Company realized losses on securities transactions of approximately $1,000 for the three months ended March 31, 2008.  In comparison, no gains or losses on securities transactions were reported during the three months ended March 31, 2007.

For the three months ended March 31, 2008, other income decreased to $70,000 from $101,000 for the three months ended March 31, 2007 caused primarily by the decrease in administrative fees paid by an un-affiliated investment partnership.  As these administrative fees fluctuate based on the performance of the investment partnership, we cannot be certain they will recur.

Expenses

General and administrative expenses were $323,000 in the three months ended March 31, 2008 compared to $427,000 in the three months ended March 31, 2007, a decrease of $77,000.  This decrease can be primarily attributed to a reduction of $121,000 in personnel expenses as a result of the resignation of several employees including our former President in August of 2007.  Other significant reductions in expenses included legal fees which decreased $17,000, travel and entertainment expenses which decreased $6,000 and rental expense which decreased $6,000.  These decreases were partially offset by increases in expenses at the Academy related to seminars held of approximately $7,000 and production, marketing and fulfillment costs for the Sex Over Sixty DVD of approximately $55,000.

Liquidity and Capital Resources

At March 31, 2008, the Company had cash and cash equivalents of approximately $1,103,000.  Cash and cash equivalents consist of cash held in banks and brokerage firms and U.S. Treasury Bills with original maturities of three months.  The Company had short-term investments, consisting of U.S. Treasury Bills with original maturities of six months, of $11.3 million at March 31, 2008 with yields ranging from 2.33% to 3.182%.  Working capital at March 31, 2008 was approximately $12.3 million.  Management believes its cash and cash equivalents are sufficient for its business activities for at least the next 12 months and for the costs of seeking an acquisition of an operating business.

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Net cash used in operations was $81,000 in the three months ended March 31, 2008, compared to net cash used in operations of $230,000 in the comparable period of 2007.  Cash used in operations is a direct result of operating expenses offset by operating revenues and adjusted for changes in operating assets and liabilities.  The decrease in net cash used in operations was largely the result of the decrease in expenses as described above.

Net cash of approximately $1,049,000 was provided by investing activities during the period ended March 31, 2008 by the sales and maturities of short-term investments of $1.42 million offset by the purchase of short-term investments of approximately $371,000.  Net cash of $240,000 was provided by investing activities during the period ended March 31, 2007 by the sales and maturities of short-term investments of $1.428 million offset by the purchase of short-term investments of $1.174 million and capitalized costs for the development of www.chinauspals.com.

Nil cash was used for financing activities in the period ending March 31, 2008.  In the period ended March 31, 2007, net cash used in financing activities for the repurchase of the Company’s common stock was $9,000.  Kent International also used approximately $6,000 to repurchase its stock in the quarter ended March 31, 2007.

Other Disclosures – Related Party Transactions

The Company receives a monthly management fee of $21,000 from Kent International for management services.  These services include, among other things, preparation of periodic and other filings with the Securities and Exchange Commission, evaluating merger and acquisition proposals, providing internal accounting services and shareholder relations.  This arrangement may be terminated at will by either party.  The monthly management fee revenue and offsetting expense is eliminated during consolidation.  The Company was the beneficial owner of approximately 53.25% of Kent International’s outstanding Common Stock at March 31, 2008.  Paul O. Koether, Chairman of the Company is also the Chairman of Kent International and the beneficial owner of approximately 56.22% of the Company’s outstanding common stock.  Bryan P. Healey, Chief Financial Officer and Director of the Company is also the Chief Financial Officer and Director of Kent International as well as the son-in-law of Paul O. Koether.

The Company and its consolidated subsidiaries reimburse an affiliate, Bedminster Management Corp., for the allocated direct cost of group health insurance and office supplies. These reimbursements were approximately $14,000 and $24,000 in the three months ended March 31, 2008 and 2007, 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.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

ITEM 3. Quantitative and Qualitative Disclosure About Market Risk.

Not Applicable.

14

Item 4. - Controls and Procedures

As of the end of the period covered by this report, the Company carried out, under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) in ensuring that information required to be disclosed by the Company in its reports is recorded, processed, summarized and reported within the required time periods.  In carrying out that evaluation, management identified a material weakness (as defined in Public Company Accounting Oversight Board Standard No. 2) in our internal control over financial reporting.

The material weakness identified by Management consisted of inadequate staffing and supervision within the bookkeeping and accounting operations of our company.  The relatively small number of employees who have bookkeeping and accounting functions prevents us from segregating duties within our internal control system.  The inadequate segregation of duties is a weakness because it could lead to the untimely identification and resolution of accounting and disclosure matters or could lead to a failure to perform timely and effective reviews.  However, as there has been no instance in which the company failed to identify or resolve a disclosure matter or failed to perform a timely and effective review, management determined that the addition of personnel to our bookkeeping and accounting operations is not an efficient use of our resources at this time.

Accordingly, based on their evaluation of our disclosure controls and procedures as of March 31, 2008, the Company’s Chief Executive Officer and its Chief Financial Officer have concluded that, as of that date, the Company’s controls and procedures were not effective for the purposes described above.

There was no change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during the quarter ended March 31, 2008 that has materially affected or is reasonably likely to materially affect the Company’s internal control over financial reporting.

15

PART II  - OTHER INFORMATION

ITEM 1. - Legal Proceedings

None.

ITEM 2. - Unregistered Sales of Equity Securities and Use of Proceeds

None.

ITEM 3. - Defaults Upon Senior Securities

None.

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

None.

ITEM 5. - Other Information

None.

ITEM 6. - Exhibits

(a) Exhibits

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

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

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

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

10.1 Employment Agreement dated 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.

16

(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 of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	KENT FINANCIAL SERVICES, INC.
Dated: May 9, 2008	By:	/s/ Bryan P. Healey
		Bryan P. Healey
		Chief Financial Officer and Secretary
		(Principal Financial and Accounting Officer)

18 

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Paul O. Koether, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Kent Financial Services, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 9, 2008	/s/ Paul O. Koether
	Paul O. Koether
	Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Bryan P. Healey, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Kent Financial Services, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 9, 2008	/s/ Bryan P. Healey
	Bryan P. Healey
	Chief Financial Officer

EX-32.2

Exhibit 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Public Company Accounting Reform and Investor Protection Act of 2002 (18 U.S.C. 1350, as adopted), Paul O. Koether, the Chief Executive Officer of Kent Financial Services, Inc., (the "Company"), and Bryan P. Healey, the Chief Financial Officer of the Company each hereby certifies that, to the best of his knowledge:

1. The Quarterly Report on Form 10-Q of the Company for the period ended March 31, 2008, (the "Quarterly Report"), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended;

and

2. The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 9, 2008

/s/ Paul O. Koether

Paul O. Koether

Chief Executive Officer

/s/ Bryan P. Healey

Bryan P. Healey

Chief Financial Officer