- Quarterly Report (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, 2009

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

For the transition period from: ________ to ________.

Commission File No.: 1-7986

Kent Financial Services, Inc.

(Exact name of 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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.) Yes o No o

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 o

Accelerated filer o

Non-accelerated filer o

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 o 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, 2009, the issuer had 2,759,193 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, 2009

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		Page Number

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

Consolidated Balance Sheets as of March 31, 2009 and December 31, 2008		3

Consolidated Statements of Operations for the Three Months Ended March 31, 2009 and 2008		4

Consolidated Statements of Cash Flows Three Months Ended March 31, 2009 and 2008		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	15

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	15

Item 3.	Defaults Upon Senior Securities	15

Item 4.	Submission of Matters to a Vote of Security Holders	16

Item 5.	Other Information	16

Item 6.	Exhibits	16

Signatures		17

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PART I - FINANCIAL INFORMATION

Item 1. -

Financial Statements

KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

ASSETS	March 31, 2009 (Unaudited)			December 31, 2008

Current Assets:
Cash and cash equivalents	$	1,788,910		$	1,990,753
Short-term investments		10,095,620			10,090,292
Marketable securities		51,017			70,450
Accounts receivable		103,533			55,895
Prepaid expenses and other current assets		37,658			14,769

Total current assets		12,076,738			12,222,159

Property and equipment, net of accumulated depreciation of $11,959 and $10,728		20,387			21,618
Other assets		16,000			16,000

Total assets	$	12,113,125		$	12,259,777

LIABILITIES

Current liabilities:
Accounts payable and accrued expenses	$	260,655		$	227,497
Deferred revenue		27,533			64,817

Total current liabilities		288,188			292,314

Noncurrent liabilities:
Accrued post employment obligations		720,000			720,000

Total liabilities		1,008,188			1,012,314

EQUITY

Kent Financial Services shareholders' equity
Preferred stock without par value; 500,000 shares authorized; none outstanding		-			-
Common stock, $.10 par value; 8,000,000 shares authorized; 2,759,293 shares issued and outstanding		275,929			275,929
Additional paid-in capital		12,344,949			12,344,949
Accumulated deficit		(6,400,135	)		(6,293,407	)
Accumulated other comprehensive loss		(65,257	)		(45,824	)

Total Kent Financial Services shareholders' equity		6,155,486			6,281,647

Noncontrolling interest in subsidiaries		4,949,451			4,965,816

Total equity		11,104,937			11,247,463

Total liabilities and equity	$	12,113,125		$	12,259,777

See accompanying notes to consolidated financial statements.

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KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended
	March 31,
	2009			2008
Revenues:
Seminar fees	$	110,283		$	69,798
Interest and dividends		7,583			95,209
Realized gains (losses)		10,034			(660	)
Other income		2,479			69,827

Total revenues		130,379			234,174

Expenses:
General and administrative		251,859			322,159

Loss before income taxes and minority interest		(121,480	)		(87,985	)
Provision for income taxes		(1,613	)		(1,110	)

Net loss including noncontrolling interest		(123,093	)		(89,095	)
Add: net loss attributable to noncontrolling interest		16,365			24,455

Net loss attributable to Kent Financial Services shareholders		(106,728	)		(64,640	)

Other comprehensive loss:
Unrealized loss on available for sale securities		(19,433	)		(8,879	)

Comprehensive loss	$	(126,161	)	$	(73,519	)

Basic and diluted net loss per common share	$	(0.04	)	$	(0.02	)

Weighted average number of common shares outstanding		2,759,293			2,792,022

See accompanying notes to consolidated financial statements.

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KENT FINANCIAL SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Three Months Ended
	March 31,
	2009			2008
Cash flows from operating activities:
Net loss	$	(106,728	)	$	(64,640	)
Adjustments to reconcile net loss to net cash used in operating activities:
Gain (loss) on sale of marketable securities		(10,034	)		660
Depreciation		1,231			244
Minority interest in subsidiaries losses		(16,365	)		(24,455	)
Changes to operating assets and liabilities:
Interest receivable on short-term investments		(5,328	)		(61,190	)
Change in accounts receivable		(47,638	)		(10,998	)
Change in prepaid expenses and other current assets		(22,889	)		33,942
Change in accounts payable and accrued expenses		33,158			44,559
Change in deferred revenue		(37,284	)

Net cash used in operating activities		(211,877	)		(81,878	)


Cash flows from investing activities:
Sales of marketable securities		629,031			1,315
Sales and maturities of short-term investments					1,419,363
Purchases of short-term investments					(370,674	)
Purchases of marketable securities		(618,997	)

Net cash provided by investing activities		10,034			1,050,004

Net increase (decrease) in cash and cash equivalents		(201,843	)		968,126
Cash and cash equivalents at beginning of period		1,990,753			134,927

Cash and cash equivalents at end of period	$	1,788,910		$	1,103,053

Supplemental disclosure of cash flow information:
Cash paid for:
Taxes	$	1,613		$	1,110

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, 2009 and 2008

(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-K for the year ended December 31, 2008 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, 2009 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 53.44% of Kent International at March 31, 2009. 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 messages to other registered users of similar interests in order to develop lasting friendships or simply attain a pen pal. ChinaUSPals.com also features user generated discussion forums and blogs as well as user submitted videos and pictures. In July, Kent International reached an agreement with Wizart Studios, LLC, a New York based web design firm, to redesign and market the site in return for a 19% equity interest in ChinaUSPals.com, Inc., the site’s holding company. As a part of the agreement, Kent International will be responsible for the costs of marketing the site until revenue is generated. The redesigned site was launched on August 6, 2008. Since then, site membership has grown to over 4,000 members from the approximately 150 members prior to the redesign.

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While Kent International is encouraged by the membership and traffic growth since the redesign, we cannot be certain that the growth rate will continue or that existing members will continue using the site. Kent International also faces the risk that our website will not be viewable in China or will be deliberately blocked by the government of the People’s Republic of China. Internet usage and content are heavily regulated in China and compliance with these laws and regulations may cause us to change or limit our business practices in a manner adverse to our business.

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

The education services segment represents the activity of Kent Educational; 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, 2009 and 2008:

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	Business
	Development			Educational			All Other						Consolidated
	Activities			Services			Operations			Eliminations			Totals
Three Months Ended March 31, 2009
Revenues from external customers				$	110,353		$	2,409					$	112,762
Management fees								63,000		$	(63,000	)
Interest revenue	$	5,763			26			1,794						7,583
Investing gains					10,034									10,034

Total revenues		5,763			120,413			67,203			(63,000	)		130,379

General and administrative expenses		(112,350	)		(38,441	)		(164,068	)		63,000			(251,859	)
Income tax expense					(1,613	)								(1,613	)
Noncontrolling interest		48,604			(32,239	)								16,365

Net income (loss) by segment	$	(57,983	)	$	48,120		$	(96,865	)	$	-		$	(106,728	)

As of March 31, 2009
Total assets by segment	$	10,301,667		$	483,511		$	1,327,947		$	-		$	12,113,125

	Business
	Development			Educational			All Other						Consolidated
	Activities			Services			Operations			Eliminations			Totals
Three Months Ended March 31, 2008
Revenues from external customers				$	70,735		$	68,232					$	138,967
Management fees								63,000		$	(63,000	)
Interest revenue	$	83,835			1,974			9,400						95,209
Investing losses								(660	)					(660	)
Other revenue								658						658

Total revenues		83,835			72,709			140,630			(63,000	)		234,174

General and administrative expenses		(114,277	)		(98,396	)		(172,486	)		63,000			(322,159	)
Income tax expense					(1,110	)								(1,110	)
Noncontrolling interest		14,231			10,224									24,455

Net loss by segment	$	(16,211	)	$	(16,573	)	$	(31,856	)	$	-		$	(64,640	)

As of March 31, 2008
Total assets by segment	$	10,580,461		$	352,044		$	1,718,951		$	-		$	12,651,456

NOTE C - Securities Owned

Marketable securities owned as of March 31, 2009 and December 31, 2008, comprised mainly of portfolio positions (equity securities) held for capital appreciation consisted of the following:

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		March 31, 2009				December 31, 2008

	Percent Owned	Estimated Fair Value		Losses in Accumulated Other Comprehensive Income		Estimated Fair Value		Losses in Accumulated Other Comprehensive Income

GolfRounds.com, Inc.	4.35%	$	48,000	$	54,000	$	66,000	$	36,000
All other equity securities	N/A		3,017		11,257		4,450		9,824

		$	51,017	$	65,257	$	70,450	$	45,824

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.

NOTE D - Capital Stock Activity

Dividends

No dividends were declared or paid during the three months ended March 31, 2009.

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, 2009. As of March 31, 2009, 135,081 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 or warrants outstanding at March 31, 2009 and 2008.

NOTE F - Stock Option Plans

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. The Company did not record stock-based compensation expense for the three month periods ending March 31, 2009 and 2008, respectively, as no options were earned during these periods. At March 31, 2009, the Company had no common stock options outstanding.

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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, 2009 and December 31, 2008, Kent International had 200,000 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.

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 53.44% of Kent International’s outstanding Common Stock at March 31, 2009. Paul O. Koether, Chairman of the Company is also the Chairman of Kent International and the beneficial owner of approximately 59.11% 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 $18,407 and $14,393 in the three months ended March 31, 2009 and 2008, 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.

NOTE I – Net Operating Loss Carryforwards

As of December 31, 2008, the Company had approximately $2.6 million of net operating loss carryforwards (“NOL”) for income tax purposes. In addition, Kent International had approximately $63.4 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 2009 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, 2009 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.

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NOTE J - New Accounting Pronouncements

Effective January 1, 2009, the Company adopted Financial Accounting Standards Board's (FASB) Statement No. 160 (FAS 160), " Noncontrolling Interests in Consolidated Financial Statements - an Amendment of ARB No. 51 ." FAS 160 changed the accounting and reporting for minority interests, which will be recharacterized as noncontrolling interests and classified as a component of equity. FAS 160 required retrospective adoption of the presentation and disclosure requirements for existing minority interests. All other requirements of FAS 160 will be applied prospectively. The adoption of FAS 160 did not have a material impact on the Company's financial statements.

Effective January 1, 2009, the Company adopted FASB Statement No. 141R, Business Combinations ("SFAS 141R"). This statement revises SFAS 141, Business Combinations , by requiring an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions. This method replaces the cost-allocation process, which required the cost of an acquisition to be allocated to the individual assets acquired and liabilities assumed based on their estimated fair values. A significant change included in SFAS 141R is the requirement that costs incurred to effect an acquisition, as well as restructuring costs resulting from an acquisition, must be accounted for separately as expenses. These costs were previously capitalized as part of the cost of the acquisition. Another significant change is the requirement that pre-acquisition contingencies be recognized at fair value as of the date of acquisition if it is more likely than not that they will meet the definition of an asset or liability. The adoption of this statement did not have a material impact on the Company's results of operations or financial position.

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-K for the fiscal year ended December 31, 2008, 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.

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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 53.44% of Kent International at March 31, 2009. 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.

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.

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Kent Educational and The Academy are consolidated in the accompanying financial statements. The Academy is currently reviewing its strategic options including hiring an executive officer, partnering with a competitor, continuing to provide services to existing clients through an outsourcing platform, or discontinuation of services.

Results of Operations

The Company had a net loss of $106,728 or $.04 basic and diluted loss per share, for the three months ended March 31, 2009 compared to a net loss of $64,640, or $.02 basic and diluted loss per share for the comparable quarter in 2008. The increase in the net loss was mainly the result of decreased interest revenue 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 increased to $110,283 for the three months ended March 31, 2009 compared to $69,798 for the three months ended March 31, 2008. The majority of the increase was caused by the timing of the seminars provided in 2009 versus those provided in 2008. Several of the seminars provided in the first quarter of 2009 were provided to the identical clients in the second quarter of 2008, resulting in an earlier recognition of income in 2009. The Company recognizes seminar revenue when the services are provided.

Interest and dividend income was $7,583 and $95,209 for the periods ending March 31, 2009 and 2008, respectively, a decrease of $87,626 due to a decrease in the yields on invested balances from 3.2% to 0.2%.

The Company realized gains on securities transactions of $10,034 for the three months ended March 31, 2009 as compared to the realized losses on securities transactions of $660 for the three months ended March 31, 2008.

For the three months ended March 31, 2009, other income decreased to $2,479 from $69,827 for the three months ended March 31, 2008 caused primarily by the decrease in administrative fees paid by an un-affiliated investment partnership. These administrative fees fluctuate based on the performance of the investment partnership; as a result, based upon current global financial market conditions we do not believe that these fees will return to 2008 levels for the foreseeable future.

Expenses

General and administrative expenses were $251,859 in the three months ended March 31, 2009 compared to $322,159 in the three months ended March 31, 2008, a decrease of $70,300. This decrease can be primarily attributed to a $54,774 reduction in expenses related to the production and fulfillment of the Sex Over Sixty DVD. Other significant reductions in expenses included personnel costs which decreased $13,312 and travel and entertainment expenses which decreased $10,800.

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Liquidity and Capital Resources

At March 31, 2009, the Company had cash and cash equivalents of $1,788,910. 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 approximately $10.096 million at March 31, 2009 with a yield of 0.2%. Working capital at March 31, 2009 was approximately $11.8 million. Management believes its cash and cash equivalents are sufficient for its business activities for at least the next 12 months and for the costs of seeking an acquisition of an operating business.

Net cash used in operations was $211,877 in the three months ended March 31, 2009, compared to net cash used in operations of $81,878 in the comparable period of 2008. 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 increase in net cash used in operations was largely the result of the decrease in revenues as described above.

Net cash of $10,034 was provided by investing activities during the period ended March 31, 2009 by the gain generated by the net purchases and sales of marketable securities. Net cash of $1,050,004 was provided by investing activities during the period ended March 31, 2008 by the sales and maturities of short-term investments of $1,419,363 and marketable securities of $1,315, offset by the purchase of short-term investments of $370,674.

Nil cash was used for financing activities in the periods ending March 31, 2009 and 2008.

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 53.44% of Kent International’s outstanding Common Stock at March 31, 2009. Paul O. Koether, Chairman of the Company is also the Chairman of Kent International and the beneficial owner of approximately 59.11% 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.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

ITEM 3.

Quantitative and Qualitative Disclosure About Market Risk.

Not Applicable.

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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, 2009, 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, 2009 that has materially affected or is reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II -

OTHER INFORMATION

ITEM 1. -

Legal Proceedings

None.

ITEM 1A.

Risk Factors

Not Applicable

ITEM 2. -

Unregistered Sales of Equity Securities and Use of Proceeds

None.

ITEM 3. -

Defaults Upon Senior Securities

None.

Table of Contents

ITEM 4. -

Submission of Matters to a Vote of Security Holders

None.

ITEM 5. -

Other Information

None.

ITEM 6. -

Exhibits

(a)

Exhibits

3.1

Bylaws of the Registrant, as amended. (l)

3.2(a)

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

3.2(b)

Certificate of Amendment to Certificate of Incorporation. (3)

3.2(c)

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

10.1

Employment Agreement dated May 12, 2008 by and between Kent Financial Services, Inc. and Paul O. Koether. (5) **

10.2

Employment Agreement dated May 1, 2006 by and between Kent Financial Services, Inc. and Bryan P. Healey. (6) **

31.1

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(1)	Incorporated by reference to Texas American Energy Corporation Registration Statement, as amended, on Form S-l, No. 33-11109.

(2)	Incorporated by reference to Texas American Energy Corporation Form 10-K, for the fiscal year ended December 31, 1984.

(3)	Incorporated by reference to Texas American Energy Corporation Form 10-K for the fiscal year ended December 31, 1987.

(4)	Incorporated by reference to Kent Financial Services, Inc. Form 10-Q for the quarter ended September 30, 1991.

(5)	Incorporated by reference to Kent Financial Services, Inc., Form 10-Q for the quarter ended June 30, 2008.

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

**	Compensatory Plan

Table of Contents

SIGNATURES

In accordance with the requirements of the Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	KENT FINANCIAL SERVICES, INC.


Dated: May 11, 2009		By:	/s/ Bryan P. Healey
			Bryan P. Healey
			Chief Financial Officer and Secretary
			(Principal Financial and Accounting Officer)