Summary of KENT INTERNATIONAL HOLDINGS INC

ITEM 7. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the Company's Financial Statements and Notes thereto included elsewhere in this Form 10-K. 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 projected and include, but are not limited to, the risks discussed below, the risks discussed in the section of this Form 10-K entitled "Description of Business" and risks discussed elsewhere in this Form 10-K. The Company expressly disclaims any obligation or undertaking to update these statements in the future.

Organization

The Company, previously known as Cortech, Inc., was a biopharmaceutical company whose primary focus had been the discovery and development of novel therapeutics for the treatment of inflammatory disorders. Specifically, Cortech had directed its research and development efforts principally toward protease inhibitors and bradykinin antagonists. Although these efforts produced certain intellectual property rights, these rights are currently recorded at nil value as the Company is not currently marketing them.

In response to disappointing test results and its loss of collaborative partner support, Cortech implemented a series of workforce reductions which resulted in the Company having no compensated employees from 1999 until November 2005, and effectively discontinued all internal research and development activities. In addition, in 1998 Cortech decommissioned its laboratories and sold all of its remaining scientific, technical and office equipment. As a result of these actions, Cortech no longer had the staff or operative facilities required to conduct internal research and development activities.

On May 25, 2006, Cortech was reincorporated in Nevada by a merger with its wholly owned subsidiary, Kent International Holdings, Inc. The reincorporation effected a change in Cortech's legal domicile from Delaware to Nevada and a change in the name from Cortech, Inc. to Kent International Holdings, Inc.

Business Activities

Our current business plan is to serve as a vehicle for the acquisition of or merger or consolidation with another company (a ''target business''). We intend to use our available working capital, capital stock, debt or a combination of these to effect a business combination with a target business which we believe has significant growth potential. The 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. We will not restrict our search to any particular industry. Rather, we may investigate businesses of essentially any kind or nature and participate in any type of business that may, in our management's opinion, meet our business objectives as described in this report. We emphasize that the description in this report of our business objectives is extremely general and is not meant to restrict the discretion of our management to search for and enter into potential business opportunities. We have not chosen the particular business in which we will engage and have not conducted any market studies with respect to any business or industry for you to evaluate the possible merits or risks of the target business or the particular industry in which we may ultimately operate. To the extent we enter into a business combination with a financially unstable company or an entity in its early stage of development or growth, including entities without established records of sales or earnings, we will become subject to numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. In addition, to the extent that we effect a business combination with an entity in an industry characterized by a high level of risk, we will become subject to the currently unascertainable risks of that industry. An extremely high level of risk frequently characterizes certain industries that experience rapid growth. In addition, although we will endeavor to evaluate the risks inherent in a particular industry or target business, we cannot assure you that we will properly ascertain or assess all significant risk factors.

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, we 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 3,100 members from the approximately 150 members prior to the redesign.

While we are 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. We also 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.

Results of Operations

Kent International had a net loss of $190,937, or $0.05 basic and fully diluted loss per share, for the year ended December 31, 2008 compared to a net loss of $301,361, or $0.08 basic and fully diluted income per share, for the year ended December 31, 2007. The decrease in the net loss was a result of a decrease in personnel expenses offset by decreased interest revenue and increased consulting and due diligence expenses related to a proposed acquisition that was terminated prior to closing.

Revenues

Revenues were $265,579 and $532,843 for the years ended December 31, 2008 and 2007, respectively. Interest income decreased to $264,329 in 2008 from $517,843 in 2007 due to dramatically lower yields on invested balances. The Company recorded $1,250 and $15,000 in other income for 2008 and 2007, respectively, in connection with a patent licensing agreement with the University of Colorado. These patents are recorded on the Company's books at a zero carrying value and the Company does not anticipate significant earnings in the future in connection with the agreement.

Expenses

General and administrative expenses were $456,006 in 2008 compared to $795,306 in 2007. The decrease can be primarily attributed to a reduction of $333,099 in personnel related expenses as a result of the resignation of our former President in August of 2007. Other significant reductions in expenses included directors' fees which decreased $19,500, and rental expense which decreased $16,200. These decreases were partially offset by $58,227 in consulting and due diligence expenses related to a proposed acquisition that was terminated prior to closing.

The Company recorded a charge of $37,764 in June 2007 to write off certain website development costs related to our social networking website, ChinaUSPals.com. These costs were associated with a beta version of the website that the Company is no longer utilizing.

Liquidity and Capital Resources

At December 31, 2008, the Company had cash and cash equivalents of $290,880. Cash and cash equivalents consist of cash held in banks and brokerage firms. The Company had short-term investments, consisting of U.S. treasury bills with original maturities of six months, of $10.090 million at December 31, 2008. Working capital at December 31, 2008 was approximately $10.356 million. Management believes its cash and cash equivalents are sufficient for its business activities for the at least the next 12 months and for the costs of seeking an acquisition of an operating business.

Net cash of $159,939 was used in operations during 2008, a decrease of $121,970 or 43% over the $281,909 used in operations during 2007. This decrease resulted primarily from the decrease in expenses as previously described in the Expenses section of the Management's Discussion and Analysis.

Net cash of $443,243 and $290,072 was provided by investing activities in 2008 and 2007, respectively, primarily by the amount that the sales and maturities exceeded the purchases of short-term investments.

The Company used $20,764 for financing activities for the year ended December 31, 2008 to repurchase 12,468 shares of common stock compared to $5,343 used to repurchase 2,000 shares during 2007.

Factors Which May Affect Future Results

Future earnings of the Company are dependent on interest rates earned on the Company's invested balances and expenses incurred. The Company expects to incur significant expenses in connection with its objective of redeploying its assets into an operating business.

Other Disclosures - Related Party Transactions

A monthly management fee of $21,000 is paid to Kent Financial Services, Inc. ("Kent"), a Nevada corporation, for management services. These services include, among other things, periodic and other filings with the Securities and Exchange Commission, evaluating merger and acquisition proposals, internal accounting and shareholder relations. This arrangement may be terminated at will by either party. Kent was the beneficial owner of approximately 53.44% of the Company's outstanding common stock at February 28, 2009. Paul O. Koether, Chairman of the Company is also the Chairman of Kent and the beneficial owner of approximately 59.11% of Kent's outstanding common stock. Bryan P. Healey, Chief Financial Officer of the Company is also the Chief Financial Officer of Kent and the son-in-law of Paul O. Koether.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

Contractual Commitments

The Company has no contractual commitments.

Other Matters

As of December 31, 2008, Kent International had approximately $63.4 million of net operating loss carryforwards ("NOL") for income tax purposes. In addition, Kent International has approximately $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 NOLs and tax credit carryforwards expire in various years from 2009 through 2027. 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 December 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.