**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON,D.C. 20549**

 

**FORM 10-K**

 

| **(Mark One)**                                                                                                                                                                                             |
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| **ý****      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE  ACT OF 1934**                                                                         |
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| **FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003**                                                                                                                                                       |
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| **OR**                                                                                                                                                                                                     |
|                                                                                                                                                                                                       |
| **o****      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES  EXCHANGE ACT OF 1934 (NO FEE REQUIRED)**                                                        |
|                                                                                                                                                                                                       |
| **FOR THE TRANSITION PERIOD FROM                               TO** |
|                                                                                                                                                                                                       |
| **COMMISSION  FILE NUMBER: 0-08962**                                                                                                                                                                       |

 

| **KENILWORTH SYSTEMS CORPORATION**                         |
|------------------------------------------------------------|
| (Exact name of registrant  as specified in its charter)    |
|                                                       |   |   |
| **NEW YORK**                                               |   | **84-1641415** |
| (State of Incorporation)                                   |   | (I.R.S. employer  identification no.) |
|                                                       |   |   |
| **185  WILLIS AVENUE, MINEOLA, NEW  YORK**                 |   | **11501** |
| (Address of principal  executive offices)                  |   | (Zip Code) |
|                                                       |   |   |
| **(516)  741-1352**                                        |
| (Registrant’s telephone  number, including area code) |

 
| SECURITIES REGISTERED  PURSUANT TO SECTION 12(B) OF THE ACT: |
|-------------------------------------------------------------------|
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| **NONE**                                                          |
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| SECURITIES REGISTERED  PURSUANT TO SECTION 12(G) OF THE ACT: |
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| **(TITLE OF  CLASS)**                                             |
| Common Stock, par value  $.01 per share                           |

 

Indicateby check mark whether the Registrant (1) has filed all reports required to befiled by section 13 or 15(d) of the Securities Exchange Act of 1934 duringthe preceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes ý No o

 

 

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Indicateby check mark if disclosure of delinquent filers pursuant to Item 405 ofRegulation S-K (Section 229.405 of this chapter) is not contained herein,and will not be contained, to the best of the registrant’s knowledge, indefinitive proxy or information statements incorporated by reference in PartIII of this Form 10-K or any amendment to this Form 10-K. o

 

Indicateby check mark whether the Registrant has filed all documents and reportsrequired to be filed by Section 12, 13 or 15(d) of the Securities ExchangeAct of 1934 subsequent to the distribution of securities under a plan confirmedby court. Yes ý No o

 

Thenumber of shares outstanding of the Company’s Common Stock as of December 31,2003 totaled 100,412,753 Shares.

 

Atthe Annual Meeting of Shareholders the Shareholders approved the issuance of20,000,000 Shares of Restricted Common Stock to Herbert Lindo, the President ofthe Company for having assigned to the Company the Patent that was granted onJune 10, 2003.  Titled “System andMethod For Remote Roulette and Other Game Play Using Game Table at aCasino”.  Upon Mr. Lindo’s request, theShares have not been issued.  (See PartIII Item 12 Beneficial Ownership (1).)

 

Theaggregate market value of the voting stock held by non-affiliates 55,912,753 ofthe Company on March 22, 2004 was $23,674,454. The price at which thecommon stock sold on the aforesaid date was $0.26.

 

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TABLE OF CONTENTS

 
| **PART 1**                                                                                                                   |   |
|------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                         |   |
| ITEM 1 - Description of Business                                                                                             | 4      |
| ITEM 2 - Properties                                                                                                          | 16     |
| ITEM 3 - Legal Proceedings                                                                                                   | 16     |
| ITEM 4 - Submission of Matters to  a Vote of Security Holders                                                                | 17     |
|                                                                                                                         |   |
| **PART II**                                                                                                                  |   |
|                                                                                                                         |   |
| ITEM 5 -  Market Prices of the Company’s Common Stock and Related Stock  Holder Matters                            | 17     |
| ITEM 6 -  Selected Financial Data                                                                                       | 18     |
| ITEM 7 -  Management Discussions and Analysis of Financial Condition and  Results of Operations (Contains Risk Factors) | 19     |
| ITEM 8 - Financial Statements and  Supplementary Data                                                                        | 22     |
| ITEM 9 - Changes and Disagreements  with Accountants on Accounting and Financial Disclosure                                  | 22     |
| ITEM 9A - Controls and  Procedures                                                                                           | 22     |
|                                                                                                                         |   |
| **PART III**                                                                                                                 |   |
|                                                                                                                         |   |
| ITEM 10 – Directors and  Executive Officers of the Registrant                                                           | 23     |
| ITEM 11 – Executive Compensation                                                                                        | 25     |
| ITEM 12 – Security Ownership of  Certain Beneficial Owner and Management and Related Stockholders Matters               | 26     |
| ITEM 13 – Certain Relationships  and Related Transactions                                                               | 27     |
| ITEM 14 – Principal Accountant  Fees and Services                                                                       | 27     |
|                                                                                                                         |   |
| **PART IV**                                                                                                                  |   |
|                                                                                                                         |   |
| ITEM 15 – Exhibits, Financial  Statement Schedules and Reports on Form 8-K                                              | 27     |

 

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FORWARD LOOKING STATEMENTS

 

Inaddition to historical information, This Annual Report on Form 10-K containscertain forward-looking statements and Risk Factors. We expressly disclaim anyobligations on undertaking to release publicly any updates or revisions to anyforward-looking statements contained herein to reflect any change in ourexpectations with regard thereto or to reflect any change in events, conditionsor circumstances on which any such forward-looking statement is based in wholeor in part.

 

**Readersshould amongst the other statements contained herein and future filings withthe Securities and Exchange Commission, including the Quarterly Reports on Form10-Q to be filed, carefully review in Item 7 the following: “CautionaryStatements for Purposes of the “Safe Harbor” Provisions of the PrivateSecurities Litigation Reform Act of 1995 and Risk Factors”. All of the RiskFactors contained therein should be carefully read**.

 

INTRODUCTORY NOTE TO PART IV

 

The Consolidated Financial Statements forthis Annual Report on Form 10-K for the year ended December 31, 2003, aspresented, have **NOT BEEN AUDITED** by Independent Auditors.  The report by Independent Auditors isexpected to be completed by May 30, 2004 and will be filed as an Amendment tothese Financial Statements.  The delayIs caused in part by the following prior year statements.

 

INTRODUCTORY NOTE

 

AnAmendment No. 3 hereto for FORM 10-K/A to the Annual Report on FORM 10-K forthe year ended December 31, 2002 was filed to restate certain amountswhich were reported and revised in the presentation of the Company’sConsolidated Statements for the years ended December 31, 2002.

 

Theitems amended were as follows:

 

PartIV           The Company’s financial for 2002 were notaudited.

 

The financials are presented as a Development StageCorporation.

 

Throughout the FinancialReports all references to financial data now indicate that the Companysustained only Losses and Deficits since emerging from Bankruptcy Proceedingsin September 1998.

 

PARTI

 

ITEM 1—DESCRIPTION OF BUSINESS

 

THECOMPANY

 

KenilworthSystems Corporation, hereinafter referred to as “Kenilworth” or “we”, wasincorporated on April 25, 1968 under the laws of the State of New York.

 

PLANNEDBUSINESS

 

Kenilworth’sbusiness presently is solely in the planning stage. We plan to engage in thedevelopment, manufacturing and marketing of an operation entitled RoulabetteTM.RoulabetteTM would allow casino patrons and other players to play along withlive in-progress casino table games such as Roulette, Craps and Baccarat andmore via digital satellite and digital cable television broadcasts (simulcasts)emanating from strictly regulated casinos located in the United States andother locations around the world, to self-sufficient computer terminals dubbed“RoulabetteTM” and digital satellite and cable TV set top boxes. The

 

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RoulabetteTMterminal is a concept intended to be built and there can be no assurances thatit will ever be built.  Themicroprocessor to be installed in the TV set top boxes have not been designed.We have as at December 31, 2003, no agreements, customers or proposals for anyfuture business and there can be no assurances that we will ever have same.

 

Ourpresent plans are to develop a wagering system that would allow patronsthroughout the industrialized world to play and wager on live casino tablegames called “Roulabette”TM which can be viewed and wagered upon in hotels,resorts, bars and other public gathering places and in homes and offices onpersonal computers (PC’s) or television sets connected to set top boxes forInteractive TV via digital satellite and digital cable broadcasts emanatingfrom strictly regulated casinos.

 

OnMarch 28, 2002, the Company had entered into a contract with ArchonCorporation for a thirty (30) day test to simulcast live in-progress roulettetable game action that eventually could allow players worldwide to wager alongwith table players at Archon’s Pioneer Casino in Laughlin, Nevada. The test, aworld first, was to demonstrate to the Nevada Gaming Control Board, and otherU.S. and foreign Gaming Regulators that have regulated gaming forums, such aslotteries, racing, OTB, etc., the benefits of the Kenilworth “Play Along withNevada Live” concept.

 

TheNevada Gaming Authorities must approve any contracts between Kenilworth, acasino operator and the simulcast test proposal before any test can take place.

 

Theproposed live test was cancelled by mutual consent.  It was determinedthat the proposed simulcasts of live in-progress casino table games, had firstto be approved by the Nevada State Legislature in the form of a legislativebill, permitting the “Live Game Broadcasts” from Nevada.

 

TheNevada State Legislature meets for only ninety (90) days once every two (2)years.  The current session began on February 3, 2003.   Weretained lobbyists and legislative advisors to introduce legislation that, ifapproved, will establish the regulatory framework for worldwide simulcasts, viadigital satellite transmission of live, in-progress, casino table gameplay.  The Nevada Senate Committee onJudiciary comprised of seven (7) Senators met on April 8, 2003 and afterhearing testimony from various interested parties, and the Company, failed totake any action on the bill to enact provisions governing live game broadcasts(BDR 41-1174) because of lack of time available for further hearings.

(Thethirty-six [36] page minutes of the Nevada Senate Judiciary hearing areavailable on www.leg.state.nv.us/72nd/minutes/senate/jud/final/2562.html.)

 

Ifthe proposed legislative bill had been passed and signed by the State ofNevada’s governor, Kenilworth would have initially broadcast Roulette, Crapsand Baccarat games to jurisdictions around the industrialized world.  As the result of the failure to act upon thelegislation, Kenilworth is in active negotiations with the owners of theseventy-five thousand (75,000) square foot Dynasty Hotel and Resort Casinolocated in Tinian, Commonwealth of the Northern Mariana Islands, a U.S.Commonwealth and the Authorities of the Northern Marians, the Tinian CasinoGaming Control Commission and the office of the Mayor of Tinian, all of whichwill share in the net revenue earned by Kenilworth from the live game broadcastprimarily to the Asian market.  Thismarket consists of an estimated one hundred seventy million (170,000,000)satellite and cable subscribers, all of whom are potential wagerers.

 

Itmay be that in order for hotels not to be required to obtain casino licenses intheir jurisdictions to offer “Roulabette”TM, they may have to limit the wageringto minimal amounts, so as to qualify the games as entertainment for registeredhotel guests.  Resort gaming may establish a trend for the entire hotelindustry worldwide.

 

Inthe event a substantial amount is won by a player, Kenilworth will make paymentto the winner, via money wire transfer to the establishment which managed thewager within twenty-four (24) hours.  Kenilworth will establish aworldwide cage for winning payments; or, a guarantee of payment by a well-recognizedinternational bank.

 

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Whenplaying along with live table games from a highly regulated jurisdiction,players will be assured that the game results are exactly what they see; and,playing along with casino table games such asroulette, craps and baccarat we believe willprovide interaction, fun and far more excitement than playing make believeanimated (virtual) games. It is the next best thing we believe to actuallybeing at the table.

 

Toconduct the initial broadcast Kenilworth believes it will require ten milliondollars ($10,000,000) and there are no assurances we will ever be able toobtain any of such money. At present, the Company does not have the fundsavailable but hopes to obtain same, from investors, as soon as Kenilworth cancommence broadcasting from the Dynasty casino and other casinos throughout theworld.

 

Inprior years, Kenilworth completed a prototype system that allowed casinopatrons to play along with live in-progress casino table games only within theconfines of a casino, via closed circuit television. Also in 1990, we developedand delivered for the TAB (Totalizator Agency Board) a quasy government agencyof the State of Victoria, Australia, a cashless slot machine system. Bothsystems required debit cards and central mainframe computers to manage thewagers. By making use of the expertise applied in the development of theaforementioned systems we plan to develop a second-generation system that willmanage the wagers by the microprocessor installed in TV Set Top boxes toreceive satellite broadcasts. This as planned would allow a player in aninteractive manner, at a remote location (outside the casino confines), toexperience the actual play and excitement at the casino table game and to makewagers on the various games, without having to be physically present at thecasino or casino table.  There are noassurances we will be able to successfully develop any system.

 

Theproposed system dubbed “Roulabette”TM also will provide RoulabetteTM terminalsthat may be placed in resorts, racetracks or other gathering places whichconsists of a personal computer (PC) with two (2) monitors.  One monitorwill display the live in-progress casino table game play as well as advertising. The second, which will be outfitted with a touch screen, allows a player toplace wagers directly over the games displayed on the first monitor.  Itwill also have a variable denomination bill acceptor and a bar code ticketdispenser.  Both monitors will be housed in an attractive enclosure. The RoulabetteTMterminal will be the size of a typical “low boy” slot machine (desk topheight).  Each terminal would be self-sufficient, manages wagers from$0.25 to $100.00 or the equivalent in most any currency, and receives the tablegame play via simulcast digital satellite TV transmissions (with dish antennas)or local cable connection from legally operating casinos throughout theindustrialized world.

 

Whereauthorized, hotels, resorts clubs and other public gathering places will beable to offer casino table game action in their establishments withoutincurring the costs to operate a casino. The RoulabetteTM terminal is expectedto offer an alternative to slot machine players. There are now believed to bemore than ten (10) million slot machines played throughout the world.

 

Kenilworthwill seek to promote to state lotteries and foreign jurisdictions, and otherstate regulated entities, the ability to operate websites that will manage thewagers. The program will ask state legislatures to amend their lotteryhorse/dog racing and OTB legislation to include RoulabetteTM wagering orpromulgate new legislation. There are no assurances that the necessaryapprovals will be granted.

 

Webelieve there are powerful arguments for state legislatures to amend theirLottery Acts to include “Play Along with RoulabetteTM Live”. Lottery revenue isgradually decreasing in every state. Thirty-two (32) states and the District ofColumbia are pooling their lottery prizes with the “Power Ball” and “Big Game”national lotteries. In most of these states, the state lottery finds itdifficult to obtain sufficient numbers of players to make up a minimum weeklylottery prize of one million dollars ($1,000,000). In most states, the revenuefrom lottery play benefits education. States need something more attractive torestore revenue. With “Play Along with RoulabetteTM Live”, there is interaction,excitement and fun. All which we believe may be at much better odds than may beoffered by the lotteries. The lotteries can establish maximum wagers daily,weekly and monthly limits, and monitor compulsive gamblers, and limit theirplay by use of lottery terminals to make deposits in cash to wager along.

 

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# ***FeaturesArchive***

*This following feature has been prepared by the groupe ofSorbonne University’s DESS**  **Communication Audiovisuelle in Paris, France underthe direction of Julien Favre.*

 

**FOCUS**Casino table game broadcast live on TV, and interactive!by Julien Favre, Chief Editor, iTVi

 

Subscribers to digitalsatellite and cable programs will soon be able to bet as they watch live,in-progress casino table game action, thanks to a new (a patented) systemdeveloped by Kenilworth Systems Corporation that will involve Stateslotteries...

** **

**Bet As You Watch Casino**

 

The “Bet As You WatchCasino” service will be deployed in conjunction with States Lotteries. DigitalTV subscribers will go to their local lottery agents and buy an “admissionticket”. The ticket will allow them to access the interactive service.

The service will consist oftelevision simulcast broadcasts of live in-progress casino table game action.Viewers will be able to bet exactly as they were in the casino playing at thetable.

The program will includeHollywood entertainment and commentators (much like commentators of sportingevents) in order to assist players with the rules and strategies of the games.

** **

**Distribution**

 

The first viewers to accessthe service will probably be Asians. Kenilworth is presently actively exploringcasino broadcast sites to the Asian market, which has twice as many digitalsatellite subscribers than the U.S. and U.K. combined. 

**A highly regulated initiative**

 

Exclusively licensinglotteries and their operators for the cash deposits required for wagering onthe programs will assist Kenilworth in its efforts to make sure the under agedwon’t participate in the casino action. Lottery Terminal Operators must observethe minimum age laws under criminal penalty.

 

A special effort will alsobe made to identify compulsive gamblers. By monitoring all wagering action, thesystem will be able to identify problematic gamblers and limit or shut downtheir obsessive gambling habits.

** **

**Business model**

 

Revenues from the admissiontickets will be split between Kenilworth and the State lotteries, OTB officesand Race track owners.

** **

**Technology**

 

Kenilworth has been granteda U.S. Patent for the interactive television wagering system in June 2003,which Patent has also been filed in forty-nine (49) countries including Chinaand Russia.

 

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The Patent was assigned tothe Company when it was pending in 2000 by its inventor Herbert Lindo.

 

Kenilworth’s technologyinvolves a microprocessor that is incorporated in the TV Set Top Box used bythe viewer to receive the digital satellite broadcasts. The microprocessormanages the wagers.

 

Onceplay along in homes and other public gathering places has started, we intend tointroduce casino games such as “limited tournament play”. For twenty-fivedollars ($25.00), players would be able to sign up with their respectivelottery operators and make up to thirty (30) wagers on any table game. Theindividual that wins the most money during a specific tournament game periodmay win as much as a million dollars ($1,000,000) in addition to their gameplay win. As more interactive play along with casino games develops throughoutthe world, the prizes can be increased and multiplied. The limited tournamentplay games can be scheduled more than once a day, during specific hours of theday, on specific days or nights of the week or once or twice a month. Actual liveexperience will determine scheduling.

 

Thegaming industry is comprised primarily of five (5) service industries: (1)traditional pari-mutuel wagering on horse and dog racing; (2) casino, IndianReservations, and riverboat gambling; (3) lotteries; (4) charitableorganization gambling (Bingo and Las Vegas Nights); and (5) Sports book.

 

Kenilworthintends to operate primarily in the casino segment.

 

KENILWORTH MANIFEST

 

**(The Manifest contains forward-looking statements**

**which is based upon our beliefs and expectations of whichthere can be no assurances.**

**See “Risk Factors” contained in Item 7)**

 

Casinogambling throughout the world, in every form, is on the increase.  Mostjurisdictions need the revenue from gambling to balance their budgets orincrease their tax collection.  Recentlya newspaper report published in the Wall Street Journal in March 2004 indicatedthat nineteen (19) states are exploring to use gambling to raise funding neededfor schools and other tax relief.

 

KenilworthSystems Corporation expects to be able to provide, of which there can be noassurances, simulcast gaming worldwide, giving everyone the opportunity ofplaying a casino table game as if they were on the floor of a majorcasinos.  This project would provide all of the benefits and actualexcitement of playing in a casino as actually being at the casino.  Gaming enthusiasts will welcome the chance to place wagers on live in-progresscasino table games, whether they are at a local tavern, hotel, resort,racetrack or other public gathering place, or at home.  Kenilworth hopesto be able to lead the industry in this area, and its Patent and Patent pendingand its technology we believe would allow all of this to happen of which therecan be no assurances.

 

Ourproposed system has the potential to replace the existing one thousand (1,000)foreign virtual gambling websites now in play, which garnished more than five(5) billion dollars from U.S. citizens in 2003 violating the 1961 Wire Actwithout paying any U.S. taxes.  Weexpect that players will prefer to “Play Along with a Live Casino Game” versusa virtual make believe game, assisting the U.S. Attorney General’s Officecurbing illegal wagering in the United States by foreign website operators andenticing the public into wagering illegally.

 

Initially,the proposed broadcasts will be of Roulette, Craps and Baccarat games.

 

Wemay franchise the simulcast which may allow broadcasts to jurisdictions thathave approved gaming regulations.

 

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Kenilworthwill offer to share a percentage of its worldwide net winnings with the state,and other foreign jurisdictions, and the appropriate sponsoring casinos.

 

Allfranchisees will be required to make the broadcasts available to digitalsatellite and digital cable subscribers in their jurisdictions.  Kenilworth, as part of its marketing plan, will supply the appropriate TV,cable, and interactive equipment (for betting terminals) to the franchisee.

 

Thevarious Regulatory Authorities will monitor all franchisees of the KenilworthSystem.  A violation of their regulations by a franchisee may result in atermination of the franchise.

 

For“Play Along With RoulabetteTM, Live” a franchisee will be required to providethe at home player with the ability to deposit funds into their pre-paidgambling accounts anytime, and on the spur of the moment.

 

Wehope to provide Licensed Betting Offices (bookmakers) in Europe, lotteryoperators and OTB offices in the U.S., to manage the wagering accounts for athome players.  They will be able to accept last minute deposits.  Injurisdictions, which have lottery terminals in place, arrangements will be madewith the lottery to accept instant deposits and pay winners, using the lotteryterminals as the managing device.

 

Aplayer will simply mark a ticket with his/her Set Top Box and TV setIdentification Number, together with the amount to be deposited.  Fromthat point on, the procedure is the same as selecting lottery numbers.  Awinner can be paid using the reverse procedure.

 

Bettingoffices and lottery terminal providers will either share in the net win managedby each, or be paid a fixed commission for the amount deposited.

 

Whereauthorized, hotels, resorts, clubs, pubs, racetracks and other public gatheringplaces (the “site”) will be able to offer casino table game action in theirestablishments without incurring casino operating costs.  At our expense,we will place RoulabetteTM terminals and/or advanced PDA’s at the site, enablingwagering via the site’s television sets.

 

Itmay be that in order for hotels not to be required to obtain casino licenses tooffer “Roulabette”TM, they may have to limit the wagering to minimal amounts, soas to qualify the games as entertainment for registered hotel guests. Resort gaming we believe will establish a trend for the entire hotel industry.

 

Inthe event a substantial amount is won by a player, Kenilworth will make paymentto the winner, via money wire transfer to the establishment within twenty-four(24) hours.  Kenilworth will establish a worldwide cash cage for winningpayments; or, a guarantee of payment by a well-recognized international bank.

 

InAugust 2002, the Attorney General of the United States Office informed theNevada Gaming Control Board (Chairman and Commissioner Dennis Neilander, Esq.)that Internet wagering is in violation of the 1961 Wire Act and, therefore,cannot be permitted in the United States or transmitted from the United Statesto other countries in the world.  Previously, the Nevada State Legislaturehad approved Internet gambling (February 2001) subject to the approval bythe U.S. Attorney General’s office.  Nevada is the only state thatapproved Internet gambling.  Most states have outlawed Internet gambling.Others have taken no action.

 

Ourproposed simulcast, via digital satellites, will not use a wire transmissionand communication facility. Weare not within the constraints of the Internet gamblinginterdiction.  Our broadcast is similar to horseracing and sportingevents, where the simulcast is transmitted via satellites to the varioussatellite dish subscribers, and then downloaded to cable companies. Licensed Betting Offices, OTB offices and racetracks that offer out of statehorse racing would pick up the satellite broadcasts with their own dishantennas.  We believe broadcastingcasino play action via satellite transmission within state boundaries does notviolate the Federal 1961 Wire Act.  Wefurther believe it will be permitted by the Interstate Horseracing Act of 1978,USC 300, Et. Seq.  There can be noassurances of the foregoing.

 

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LastSeptember, the House of Representatives voted and passed the Internet GamblingEnforcement Act, which bans credit and debit cards, checks, “Western Uniontype” wire transmission and all other means of transferring money for use inconnection with Internet Wagering. Since the Senate did not approve a companionBill, the House and Senate must pass the legislation again in 2004.  Webelieve there appears to be an anti-Internet gambling sentiment in Congress andpassage by both houses appears certain.  Our method is distinct, as playersusing our system, unlike the Internet, will be subject to state casinoregulations and will not be permitted to use credit or debit cards. We believeare there no U.S. prohibitions to simulcast live action of casino games as longas the wagers are placed and wagered within the state.

 

Inour proposed worldwide plans, wagers would be placed with Licensed BettingOffices and lottery terminal operators.  They would be only permitted toaccept cash at their offices or lottery terminal locations.  Currently,they would be obliged to make sure that no one underage places or collectswagers on horseracing, sporting events or the lottery.  The same wouldapply when they accept wagers or pay winnings on our live simulcastbroadcasts.  We believe, although there can be no assurances, that oursystem is simple and 100% foolproof.

 

Initiallyour proposed simulcast will be for entertainment purposes only and will startwith broadcast emanating from casinos outside of the United States anddelivered to foreign jurisdictions that permit our type of casino gamblinguntil the anti-casino expansion sentiment subsides in the United StatesCongress. Our proposed broadcasts may actually contain live entertainmentproduced in Hollywood.  Thirty (30)minutes of gambling, then thirty (30) minutes of entertainment, then thirty(30) minutes of gambling and then back to entertainment.  The entertainment would be inserted the sameas commercials are presented on TV shows.

 

Webelieve the proposed broadcast does not require any sophisticated electronics;only the acceptance by the satellite and cable operators and the approval ofthe Federal Communications Commission.  We have been unofficially advisedthat, for entertainment only (no wagering), our broadcasts will be classifiedthe same as any program now being broadcast via the networks.  Forgambling, we will require an FCC license, which we would have to obtain(simulcasting of horse racing requires an FCC license).

 

Asthe Justice Department has prevented the EchoStar and DirecTV merger, we wouldlike, without assurances to be able to franchise these companies. Initially, they might broadcast our simulcasts for advertising revenue. Later, with live games, they would share in the net win, which is what weexpect to negotiate in Europe and Asia.

 

BSkyB(NewsCorp.) and Vivendi (France) are both leaders in the bettingbusiness.  They presently control satellite broadcasts in Europe for turfand sport wagering (soccer) and we will without assurances attempt to reach alicense with them.

 

LOGICAL QUESTIONS:

 

(The following is a seriesof some questions, and what we believe,

without assurances, are ouranswers to them.)

 

(1.)          Why aren’t major casinos in Nevada and Atlantic City that havesubstantial resources, and the casino table games, competing with us?

 

Theanswer is simple.  They are casino operators.  If they, even byaccident, have a minor playing along with their broadcasts, or commit any otherviolation, they could lose their Nevada or Atlantic City and other state Casinoor foreign licenses.  Establishing a subsidiary for their transmissionsdoes not absolve them from the violation.  Kenilworth **is not a licensed casino operator**. Kenilworth holds the U.S. Patent for remote casino wagering and they would beable to operate under our license.

 

Further,if we commence broadcasting from the gaming capital of the world, we plan tobroadcast from five (5) strip casinos in rotation, in order that each casinowill have the opportunity, on certain days, to broadcast during primetime.  When we manage the broadcast in their casino, we will have the samecrew

 

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inthe communication room (4 technicians, 24 hours a day, 7 days a week). For example, on Monday at Caesar’s, Tuesday at the Venetian, Wednesday at MGM,and so on.  If another casino attempts to compete with us, we believe theywill violate our patent.  They would also have to engage their own crews(24 hours a day, 7 days a week), hire the same satellite provider for theirbroadcast to Europe and Asia, and pay a percentage of their net win to otherfranchisees (at least the same percentage of our net win or more, as we allwill compete to have them manage the wagering).

 

Webelieve that the Nevada casinos would fare better in accepting a percentage ofour net win, which they would receive without any operating costs.  Webelieve they might be exempt from Nevada taxes, as we propose to share ourrevenue with states that permit our broadcasts.

 

Netwin is determined before deduction of expenses.  It’s a term used tocollect taxes on gambling revenue (table drop) before operating expenses. In Europe, and now in some states in the U.S., this tax amounts to an averageof twenty percent (20%), with minimum annual taxes of up to one hundred milliondollars ($100,000,000).

 

Wepropose to offer a percentage of our net win to any state.  On a worldwidebasis revenue could reach, in the not too distant future, in the three to fivehundred billion dollar range ($300-500 billion).  That could earn billionsof dollars annually to participating jurisdictions.  Law enforcementagencies estimate that Americans wagered $380 billion in 2001 on sportingevents (mostly illegally).  Our proposed system can be regulated andcontrolled (unlike Internet sites).

 

(2.)                               Why wouldn’t the U.S. Congress also preventsimulcasting of live casino table games, like it has with Internet gambling?

 

TheInterstate Horse Racing Act of 1978 permits simulcasts of races via satellitetransmission between states, which are then downloaded to cable systems. Horse and sporting club owners are traditional andsubstantial contributors to House and Senatecampaigns.  It is big business that we believe would have to be abolishedif our proposed simulcasts are outlawed.  The probability of its abolitionis remote.

 

(3.)                               What happens if the Nevada State Legislaturedoes not, or cannot, authorize the live game broadcasts?

 

Wewill endeavor to proceed outside the U.S. similarly to the Dynasty casino onTinian.  We will seek to introduce our proposed legislation to otherstates such as New Jersey, Michigan, New Orleans and Connecticut.

 

(4.)                               What will happen if non-casino or casinooperators attempt to compete with us?

 

Ifthey do, they run the risk of an injunction and incurring triple damages. The U.S. Patent titled “System and Method For Remote Roulette and OtherGame Play Using Game Table At A Casino” for remote live in-progress casino play was issued on June 10, 2003 toKenilworth and has been filed for approval in forty-nine (49) industrializedcountries including Russia and China.

 

(5.)                               Will there be opposition by Nevada casinooperators?

 

Thepast has proven to the Nevada casino industry that as more casinos are built inthe United States (we believe there are now seven hundred fifty [750] casinosoutside of Nevada), more visitors come to Nevada. Our worldwide broadcastswould substantially enhance the overall demand to visit Las Vegas or any otherstate or jurisdiction that permits our broadcasts, and to other casinos fromwhich we will broadcast.

 

SUMMARY:

 

(1.)  Kenilworth’s business presently is solely inthe planning stage. We plan to engage in the development, manufacturing,marketing of an operation entitled RoulabetteTM. RoulabetteTM would allow casinopatrons and other players to play along with live in-progress casino tablegames such as Roulette, Craps and

 

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Baccaratand more via digital satellite and digital cable television broadcasts(simulcasts) emanating from strictly regulated casinos located in the UnitedStates and other locations around the world, to self-sufficient computerterminals dubbed “RoulabetteTM” and digital satellite and cable TV set topboxes. The RoulabetteTM terminal is a proposal intended to be built and therecan be no assurances that it will ever be built.  The microprocessor to be installed in the TV set top boxes havenot been designed. We have as at December 31, 2003, no agreements, customers orproposals for any future business and there can be no assurances that we willever have same. **Reference is also made to each of the “Risk Factors” that are set forthin Item 7.**

 

(2.)   In order not to endanger the viability of the their local casinos, webelieve, without any assurances that the Nevada Legislature should allow ourproposed simulcasts, as there are too many other prominent and well-regulatedcasinos in the U.S. from which our simulcasts can be transmitted around theworld.  For example, Atlantic City, N.J., Connecticut, (Foxwood andMohegan Sun, the two most profitable casinos in the world), Detroit, NewOrleans, etc. Most casinos are owned by the very same casino operators we planto solicit in Las Vegas.  Nevada is the world capital and leader of thecasino industry.  As such, it cannot afford to pass up our new innovation.

 

(3.)    Our RoulabetteTMterminals, wherever they would be placed in bars, resorts, hotels, racetracks,etc. will only be leased to the operators by the leasing company, which we willengage for that purpose.  If a terminal cannot meet the minimum revenuenecessary to pay the monthly leasing charges, it will be moved to anotherlocation.  By placing RoulabetteTM terminals at horse race tracks, whichalso offer slot machines, we will be transforming them into complete casinos,without the inherent start up and operating costs.

 

(4.)   If Nevada approves the simulcasts, of which there can be no assurances,we believe, it could spell the end of most of the existing one (1) thousandInternet Virtual casino websites around the world.  It will be likely thatno one would wager with a make believe casino game when they know that they canplay along with a live game from Las Vegas or other foreign jurisdiction.

 

Webelieve the thousand virtual casino websites via the Internet obtain sixtypercent (60%) of their annual revenue from customers in the U.S.

 

AlthoughInternet gambling is outlawed, we believe it is presently not very wellenforced by the U.S. Justice Department.  Much of the opposition inCongress against Internet gambling stems from the fact that the websites arenot legitimate, and may even be used for money laundering.  Further, thewebsites do not effectively prevent minors and underage college students fromwagering.  Approximately one hundred (100) entities control the thousandwebsites. When one site experiences losses, it is shut down and another site iscreated.  We expect that a majority of these sites will shut down becauseof our simulcasts, thus directly reducing the number of sites, which need to bepoliced.

 

Simulcastbroadcasts of digital satellite and digital cable transmissions around theworld must meet, and will be supervised by, the regulations by the gamingauthorities of the broadcasting casino and the jurisdiction, which receives thebroadcast.  We believe the supervision will not be difficult to enforce,because all simulcast wagering is “cash only”, from regulated, supervisedbetting sites.  There are no wire money transfers with banks and no creditor debit cards permitted.  We believe this fact should ease any oppositionfrom concerned citizens and anti-gambling groups, as regulation and enforcementresponsibility will be vested in each individual state (or foreignjurisdiction).

 

Webelieve Kenilworth was the first to use color personal computers (PC’s) toreplace electromechanical slot machines (1988).  We provided the softwarefor the first Tabaret located at the Menzie at the Rialto in Melbourne,Australia, which opened in November 1990.  This consisted ofcashless, variable denomination and multiple game virtual PAT’s (“PlayerActivated Terminals”).   Prior thereto Kenilworth sponsored, with theassistance of three Nevada casino operators, legislation to permit cashlesswagering in the state of Nevada.  The legislation, which is in the form ofan amendment to existing casino control statutes, permits the use of accountcards (debit cards) and was signed into law by Governor Richard H. Bryan onJune 13, 1985.

 

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Kenilworthhas been a publicly traded Company since 1968. Prior to commencing itsendeavors into its proposed business in 1988, it provided security systems toNuclear Electric Generating Plants in the U.S. and foreign countries, as wellas time/attendance systems at a major department store chain.

 

MARKETINGSTRATEGY/SALES PLAN

 

 Inorder to develop the RoulabetteTM terminal and the RoulabetteTM broadcasts, weestimate at this time, that we will need at least approximately ten milliondollars ($10,000,000). We do not have this money nor do we have any agreementsor understanding to procure this money. We may never get this money. If we doobtain this money, it may not be sufficient. Further, should such monies beavailable it may not be available on terms satisfactory to Kenilworth or it maybe available on such terms that substantially dilute the interest of existingshareholders. If we obtain this money, we will need substantial additionalfunds for the proposed marketing plan and there can be no assurances that suchfunds will ever be available to allow Kenilworth to engage in business on aprofitable basis.

 

Atthe present time, we do not have any employees who will be able to developRoulabetteTM. It will be necessary for us to obtain personnel qualified and withthe expertise to develop RoulabetteTM. We believe at this time we would requireinitially six (6) additional employees and several consultants and there can beno assurances of our being able to obtain any necessary personnel. There can beno assurances of the availability of any such employees and consultants.  The Company will outsource the development ofRoulabetteTM and the microprocessors for the TV set top boxes.

 

Inthe United States Kenilworth hopes to refrain from using the Worldwide Web(WWW) Internet to manage wagers from individuals outside of the casinoconfines. Legislators have voiced strong objections to having theirconstituents’ gamble one-on-one against computers located on Caribbean islands,totally unregulated. In RoulabetteTM, the play-along broadcast emanates fromcasinos that are regulated by strict and comprehensive rules and state andjurisdiction regulations, enforced by gaming control regulators and everybodyplays along with the same live table game. There is a world of differencebetween playing in a virtual make believe casino compared with an actualcasino.

 

Forthe reasons stated, Kenilworth will ask state lotteries, Off-Track Betting(OTB) corporations, pari-mutuel race tracks, and other state and federalregulated agencies to manage the wagers from individuals playing along on theirPC’s and their television sets using interactiveTV set top boxes that convert regulartelevision sets into minicomputers within their state or jurisdiction. Therecan be no assurances that we will be able to obtain any arrangement with any ofthese entities or that they would be on suitable terms.

 

Theindividuals would have to pre-deposit funds into an account with the wagermanagement company and then place wagers with their credit balance. The wagersand running balances will be transmitted to the RoulabetteTM player’s PC and/ortelevision sets with telephone lines not crossing any state lines, similar inprinciple to telephone accounts wagering offered by the New York StateOff-Track Betting Corporation and the state of Nevada casino sports book.

 

Afterwe obtain permission to play RoulabetteTM of which there can be noassurances,  in a given state andengages a wager management organization in order to promote digital satelliteand interactive television to the state’s residents, Kenilworth would install theeighteen (18) inch dish antenna and converter box required to receive digitalTV programming and interactive TV at its own cost, if the subscriber opens aRoulabetteTM wagering account for two hundred dollars ($200). In addition,Kenilworth would pay the monthly subscription fees to view all digital TVprogramming offered and the internet service provider (ISP) subscription fee ifthe customer wagers at least one hundred twenty dollars ($120) each month—win,lose, or draw—makes no difference.

 

Instates with approved lottery and/or other gambling legislation, we plan tointroduce RoulabetteTM terminals to hotels, clubs (similar to card clubs inCalifornia) and resorts, to provide upscale gathering places for tourists andlocal residents. Charitable organizations that are permitted to conduct “NevadaNights” and Bingo games may wish to offer RoulabetteTM gaming on a morepermanent basis. To receive

 

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thebroadcast signal, all that would be required is an eighteen (18) inch dish TVantenna and distribution equipment. The RoulabetteTM terminals are intended tobe self-sufficient and accept dollar bills (or script, to control the amount anindividual is allowed to wager in one day or other time period). We plan tolease all the equipment necessary to participants for a share of the profits.

 

Togain approval for our RoulabetteTM-style gambling in jurisdictions that have notapproved any gambling legislation, Kenilworth proposes to engage lobbyists tointroduce, promote, and obtain legislative approval to permit RoulabetteTM-stylegambling. Our strategy is to find depressed resort areas an have theresort/hotel operators convince their local politicians of the benefits totheir business and the local economies and request them to promote legislativeapproval, either state-wide or limited to their areas. Riverboat gamblingstarted to rehabilitate decaying waterfronts. RoulabetteTM can do the same indepressed economic areas.  No assurancescan be given that we can obtain any such approvals.

 

Whenthe live casino TV broadcasts are beamed for global viewing, Kenilworth willseek out similar organizations, as proposed for the United States and bettingshops and slot route operators that can provide the servicing of individualaccounts and placement of RoulabetteTM terminals in hotels, clubs, pubs,racetracks, etc. In all instances, we plan to offer only profit sharingarrangements to franchisees, which will require leasing all the equipmentnecessary to the franchisee, to discourage competition.

 

Inoverseas installations, wherever permitted, Kenilworth will make use of the WWWInternet only to manage the wagers, and only in jurisdictions that permit thedata collection of the gambler not for the live broadcast.

 

COMPETITION

 

Manysegments of the gaming industry are characterized by intense competition, witha large number of companies offering the same type of wagering products andservices. None of these companies at present are believed to offer the same orsimilar equipment or systems as intended by RoulabetteTM. The most likelycompetition will come from slot machine manufacturers who could relativelyquickly adapt slot machines to play along with live casino table games. Webelieve there are three (3) major slot machine manufacturers in the world, allof which have vastly greater capital resources and substantially more personnelthan the Company and may have under development systems that directly competewith RoulabetteTM.

 

Ourpresent plans are to broadcast the live casino table games from companies thatown casinos throughout the industrialized world. Other casino owners may starttheir own broadcasts and have their own terminals manufactured that competewith Kenilworth after Kenilworth has done all its pioneering for play-alongwagering.

 

PATENTS

 

OnJune 10, 2003, our U.S. patent for the various aspects of wagering on livein-progress casino table games via digital satellite transmission and othermeans of transmission, was granted by the U.S. Patent Office and we have takenthe steps to protect our interests in forty-nine (49) other countries of theindustrialized world.  The Companyrecently submitted a disclosure for a Patent for accepting wagers forRoulabetteTM by lottery terminal operators to the U.S. Patent Offices. There canbe no assurances that foreign patents will be issued and that challenges willnot be instituted against the validity or enforceability of our patent.

 

GOVERNMENTREGULATIONS

 

Kenilworthhas no licenses from any casino regulating authorities and may not require anycasino licenses at the present time and may never become able to obtain anylicenses that we will require in the future. Each state has its ownregulations, and in states where Kenilworth does business, Kenilworth will haveto comply with these regulations and there can be no assurances that it will beable to do so or obtain the

 

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necessarylicense in an applicable jurisdiction. The following discussion is notnecessarily complete, or current regarding laws and regulations that may beapplicable to us.  Any present laws arealso subject to future change, amendment or cancellation.

 

**New Jersey**

 

Inorder to sell its RoulabetteTM wagering systems from casinos in New Jersey,Kenilworth must be licensed by the New Jersey Casino Control Commission (CCC)in accordance with the New Jersey Casino Control Act as a manufacturer anddistributor of gaming equipment. We will have to make arrangements to apply forlicensing in New Jersey. The New Jersey Commission may require that personsholding in excess of five percent (5%) of the publicly traded equity securitiesof Kenilworth qualify under the Casino Control Act. Any beneficial holder ofthe voting securities owned may be required to file an application, beinvestigated, and have his qualifications determined if the CCC has reason tobelieve that such ownership may be inconsistent with the declared policies ofthe Casino Control Act.

 

**Nevada**

 

Themanufacture and distribution of gaming devices in Nevada are subject to theNevada Gaming Control Act (the “Nevada Act”), and to licensing and regulatorycontrol by the State Gaming Control Board and various local, city and countyregulatory agencies (collectively, the “Nevada Gaming Regulators”). The laws,regulations and supervisory procedures of the Nevada Gaming Regulators arebased upon declarations of public policy which are concerned with, among otherthings, (i) the character of persons having any direct or indirect involvementwith gaming, (ii) application of appropriate accounting practices andprocedures, (iii) maintenance of internal fiscal affairs and the safeguardingof assets and revenues, (iv) record keeping and reporting to the Nevada GamingRegulators, (v) fair operations of games, and (vi) the raising of revenuesthrough taxation and licensing fees.

 

Nopublicly traded corporation is eligible to apply for, or hold gaming licensesin Nevada. A publicly traded corporation may be registered and found suitableto acquire or to hold an interest in a corporate subsidiary, which holds suchgaming licenses. Before Kenilworth may do business in Nevada, it will have toregister with the Nevada Gaming Regulators as a publicly traded holding companyand found suitable to hold an interest in a licensed subsidiary. After aninvestigation is completed, licensing may take ninety (90) days or more. Noproceeds from the public sale of securities by a registered holding company maybe used to acquire, construct, operate, or finance gaming facilities in Nevadaor to retire or extend obligations incurred for such purposes unless the publicoffering of those securities has been approved by the Nevada Gaming Regulators.

 

TheNevada Gaming Regulators may require any individual who has a materialrelationship with it to be investigated and licensed or found suitable. Anyperson who acquired five percent (5%) or more of Kenilworth’s securities mustreport the acquisition to the Nevada Gaming Regulators. Any person who becomesa beneficial owner of ten percent (10%) or more of Kenilworth’s securities mustapply for a finding of suitability. The Nevada Regulators have the power toinvestigate any security holder of Kenilworth.

 

IfKenilworth registers as a publicly traded holding company, the Nevada GamingRegulators would have the power, at any time, to require the Company’s stockcertificates to bear a legend indicating that the stock is subject to theNevada Gaming Control Act and the regulations of the Nevada Gaming Regulators.The Nevada Gaming Regulators, through the power to regulate licensees andotherwise under Nevada law, would have the power to impose additionalrestrictions on the holders of Kenilworth’s securities at any time.

 

**Tinian(Northern Mariana Group)**

 

Webelieve the Tinian Casino Control Commission of the Northern Marianas IslandGroup mirrors the requirements of the New Jersey Regulations.  At the time of the issuance of this AnnualReport on Form 10-K for the year ended December 31, 2003, we were unable todetermine the exact outcome of the Tinian

 

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CasinoControl Act of 1989 which has been amended several times by various courtactions and to the best available information have not been finalized.   Since we are only seeking permission tobroadcast live in-progress casino table games from the only casino in theMarianas Group we believe the New Jersey Casino Regulations will more thanadequately describe the revised Tinian Regulations.

 

**Federal**

 

TheFederal Gambling Devices Act of 1962 (the “Federal Act”) makes it unlawful fora person to manufacture, deliver, or receive gaming machines, gaming machinetype devices and components thereof across interstate lines unless that personhas first registered with the Attorney General of the United States. Inaddition, various record keeping and equipment identification requirements areimposed by theFederalAct. Violations of the Federal Act may result in seizure or forfeiture ofequipment, as well as other penalties.

 

**OtherRegulations**

 

Themanufacture, distribution, sale, and use of slot machines is controlled bystate and federal law, which may also apply to our RoulabetteTM gamingterminals. Certain foreign countries permit the importation, sale, or operationof slot machines. Where importation is permitted, some countries prohibit orrestrict the payout feature of the traditional slot machine or limit theoperation of slot machines to a controlled number of casinos or casino-likelocations. Certain of these jurisdictions also require the licensing of gamingdevices. Our RoulabetteTM terminals may be considered similar to slot machinesand may have to meet these regulations.

 

FABRICATION/ASSEMBLYOPERATION

 

Whenwe start to market the RoulabetteTM Wagering System, of which there can be noassurances, we plan to engage sub-contractors to assemble/manufacture theterminals from standard or specially manufactured (to our specifications)electronic, TV, and other components purchased from vendors or manufactured bysubcontractors.

 

EMPLOYEES

 

Kenilworthat present has five (5) full time employees. Four (4) perform administrativework and one (1) other work on research related to casino wagering andmarketing around the world in addition to the officers that manage the affairsof the Company. The Company has engaged consultants that may manage theproposed satellite transmission programs, and others that may assist in themarketing of RoulabetteTM broadcasts throughout the industrialized world.

 

BACKLOG

 

Wedo not have any backlog.

 

ITEM 2—PROPERTIES

 

Kenilworthleases two thousand  (2,000) square feetin an office building paying ($2,500) per month rent pursuant to a three (3)year lease commenced in June 2003.

 

ITEM 3—LEGAL PROCEEDINGS

 

Sinceemerging from Chapter 7 Bankruptcy Proceedings on September 23, 1998,Kenilworth has not been involved in any significant legal proceedings.

 

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ITEM 4—SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS

 

Notapplicable.

 

EXECUTIVE OFFICERS OF THEREGISTRANT

 

Thenames, ages and positions held by each of Kenilworth’s directors and executiveofficers are as follows:

 
| **NAME**             |   | **AGE** |   | **OFFICES  AND  POSITIONS HELD**                            |   | **FIRST  ELECTED  OFFICER OF  KENILWORTH** |   |
|----------------------|--------|---------|--------|-------------------------------------------------------------|--------|--------------------------------------------|--------|
|                 |   |    |   |                                                        |   |                                       |   |
| HERBERT LINDO        |   | 78      |   | PRESIDENT,CHAIRMAN OF THE BOARD AND CHIEF FINANCIAL OFFICER |   | 1972                                       |   |
|                 |   |    |   |                                                        |   |                                       |   |
| GINO SCOTTO          |   | 34      |   | CHIEF EXECUTIVE OFFICER AND DIRECTOR                        |   | 2001                                       |   |
|                 |   |    |   |                                                        |   |                                       |   |
| MAUREEN PLOVNICK     |   | 37      |   | CORPORATE SECRETARY, VICE PRESIDENT AND DIRECTOR            |   | 2000                                       |   |
|                 |   |    |   |                                                        |   |                                       |   |
| JOYCE CLARK          |   | 67      |   | VICE PRESIDENT AND DIRECTOR                                 |   | 1998                                       |   |
|                 |   |    |   |                                                        |   |                                       |   |
| KIT WONG             |   | 74      |   | VICE PRESIDENT AND DIRECTOR                                 |   | 1999                                       |   |
|                 |   |    |   |                                                        |   |                                       |   |
| PATRICK J. MC DEVITT |   | 62      |   | VICE PRESIDENT AND DIRECTOR                                 |   | 2001                                       |   |

 

Allof the above executive officers and directors have been elected to serve untilthe next Annual Meeting of Shareholders or until their respective successorsare elected and qualified. The Board presently anticipates that the nextShareholders Meeting will be held in June 2004.

 

PARTII

 

ITEM 5— MARKET PRICES OF THE COMPANY’S COMMON STOCKAND RELATED STOCKHOLDER MATTERS

 

(a)After Kenilworth emerged from Bankruptcy Proceedings in September of 1998,its Common Stock resumed trading on the OTC Pink Sheets under the old tradingsymbol “KENS”. The following table sets forth high and low closing sales pricesfor our Common Stock, as reported on the OTC Pink Sheets.

 
|                            |   | **LOW** |   | **HIGH** |   |
|---------------------------------|--------|---------|--------|----------|--------|
| **2002**                        |   |    |   |     |   |
|                            |   |    |   |     |   |
| January 1, 2002            |   |    |   |     |   |
| Through March 31, 2002     |   | $       | .02    |     | $      | .25 |   |
|                            |   |    |   |     |   |
| April 1, 2002              |   |    |   |     |   |
| Through June 30, 2002      |   | $       | .08    |     | $      | .25 |   |
|                            |   |    |   |     |   |
| July 1, 2002               |   |    |   |     |   |
| Through September 30, 2002 |   | $       | .05    |     | $      | .13 |   |
|                            |   |    |   |     |   |
| October 1, 2002            |   |    |   |     |   |
| Through December 31, 2002  |   | $       | .02    |     | $      | .08 |   |
| **2003**                        |   |    |   |     |   |
|                            |   |    |   |     |   |
| January 1, 2003            |   |    |   |     |   |
| Through March 31, 2003     |   | $       | .05    |     | $      | .215 |   |
|                            |   |    |   |     |   |
| April 1, 2003              |   |    |   |     |   |
| Through June 30, 2003      |   | $       | .08    |     | $      | .19 |   |
|                            |   |    |   |     |   |
| July 1, 2003               |   |    |   |     |   |
| Through September 30, 2003 |   | $       | .0575  |     | $      | .20 |   |
|                            |   |    |   |     |   |
| October 1, 2003            |   |    |   |     |   |
| Through December 31, 2003  |   | $       | .038   |     | $      | .118 |   |
| **2004**                        |   |    |   |     |   |
| January 1, 2004                 |   |    |   |     |   |
| Through March 31, 2004          |   | $       | .06    |     | $      | .40 |   |

 

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(b)  Holders. There were approximately seventhousand (7,000) holders of record of Common Stock of Kenilworth as ofDecember 31, 2003.

 

(c)  Dividends. Kenilworth has not paid anydividends on its Common Stock. We plan to apply any earnings it achieves toexpansion of the business and does not expect to pay any dividends in theforeseeable future.

 

(d)  No underwriters were involved in the sale ofthe unregistered Convertible Promissory Notes. Exemption from registration is claimed under Section 4(2) of the SEC Actof 1933 as amended.  The proceeds fromthe sale of all unregistered securities have all been used for working capital.

 

(e)  Equity Compensation Plan Information

 

Thefollowing table summarizes the equity compensation plans under which KenilworthSystems Corporation common stock may be issued as of December 31, 2003.

 
|                                                   |   | **(a)****Number of securities  to be issued upon  exercise of outstanding  options** |   | **(b)****Weighted-average  exercise price of  outstanding options,  warrants and rights** |   | **(c)****Number of securities  remaining available  for future issuance  under equity  compensation plans  (excluding securities  reflected in column (a))** |      |
|--------------------------------------------------------|--------|--------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------|
|                                                   |   |                                                                                 |   |                                                                                      |   |                                                                                                                                                         |      |
| **Plan Category**                                      |   |                                                                                 |   |                                                                                      |   |                                                                                                                                                         |      |
|                                                   |   |                                                                                 |   |                                                                                      |   |                                                                                                                                                         |      |
| Equity compensation plans approved by security holders |   | 6,000,000                                                                            |   | $                                                                                         | 1.00   |                                                                                                                                                         | 4,000,000 |   |
|                                                        |        |                                                                                      |        |                                                                                           |        |                                                                                                                                                              |           |  |

 

ITEM 6—SELECTED FINANCIAL DATA

 

Thefollowing table summarizes certain selected financial data and is qualified byreference to, and should be read in conjunction with, the ConsolidatedFinancial Statements and related Notes thereto and with “Management’sDiscussion and Analysis of Financial Condition and Results of Operations”included elsewhere herein.

 

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SelectedFinancial Data for the five (5) years ended December 31, 2003, are asFollows:

 

SUMMARY OF OPERATIONS

 
|                             |   | **2003** |    | **2002** |   | **2001** |   | **2000** |    | **1999** |   | **1998** |   |
|----------------------------------|--------|----------|---------|----------|--------|----------|--------|----------|---------|----------|--------|----------|--------|
| Net sales from operations        |   | $        | 0       |     | $      | 0        |   | $        | 0       |     | $      | 0        |   | $ | 0 |   | $ | 0 |   |
| Other income                     |   |     |    |     |   |     |   |     |    |     |   |     |   |
| Net Loss                         |   | $        | 832,168 |     | $      | 660,289  |   | $        | 421,491 |     | $      | 136,589  |   | $ | 11,830 |   | $ | 4,300,403 |   |
| Loss per common share            |   | $        | 0.008   |     | $      | .007     |   | $        | .005    |     | $      | .002     |   | $ | .01 |   | $ | .07 |   |
| Loss per common share-diluted    |   | $        | 0.008   |     | $      | .007     |   | $        | .005    |     | $      | .002     |   | $ | .01 |   | $ | .02 |   |
| Consolidated Balance Sheet Data: |   |     |    |     |   |     |   |     |    |     |   |     |   |
| Total assets                     |   | $        | 593,038 |     | $      | 225,878  |   | $        | 120,811 |     | $      | 47,859   |   | $ | 9,034 |   | $ | 8,034 |   |
| Current liabilities              |   | $        | 274,346 |     | $      | 107,458  |   | $        | 100,730 |     | $      | 28,365   |   | $ | 242 |   | $ | 7,912 |   |
| Stockholders’ equity        |   | $        | 318,692 |     | $      | 148,420  |   | $        | 20,081  |     | $      | 19,494   |   | $ | 8,792, |   | $ | .112 |   |

 

ITEM 7— MANAGEMENT DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

(A)RESULTS OF OPERATIONS

 

Sincewe emerged from bankruptcy proceedings on September 23, 1998, we have hadno revenues from operations, and therefore sustained losses from generaladministration expenses amounting to $832,168 in 2003 and $660,289 in 2002.Kenilworth has had no revenues from operations during the past eleven (11)years and there can be no assurances that it will ever have revenues frompresent planned operations.

 

(B)LIQUIDITY AND CAPITAL RESOURCES

 

Kenilworthhas not conducted any business and operations since 1991. At December 31,2003 our working capital was $7,136. In Kenilworth’s present state of operationto formulate a viable business plan, Kenilworth requires very little funding tocontinue this planning. We have been dependant upon the resources of itsPresident who receives no compensation and funds received from privateinvestors. Totaling $406,000 in 2003 and $520,000 in 2002.  In addition the Company issued restrictedCommon Stock for services primarily to consultants and for legal servicestotaling $596,440 in 2003 and $498,627 in 2002.

 

Ourpresent plans are to develop a wagering system dubbed “RoulabetteTM” that wouldallow patrons all over the industrialized world to view and wager on livecasino table games on terminals placed in hotels, resorts, bars and otherpublic gathering places and in homes and offices on personal computers (PC’s)or television sets connected to set top boxes for Interactive TV via digitalsatellite and digital cable broadcasts emanating from strictly regulatedcasinos.  At present we do not havesufficient liquidity and capital resources to develop our business or to remainin business and we may never have such resources.

 

CAUTIONARYSTATEMENT FOR PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE PRIVATESECURITIES LITIGATION REFORM ACT OF 1995 AND RISK FACTORS

 

Theinformation contained in this Form 10-K and Kenilworth’s other filings with theSecurities Exchange Commission contain “forward- looking” statements within themeaning of section 27A of the Securities Act of 1933, as amended, andSection 21E of the Securities Exchange Act of 1934, as amended, and issubject to the safe harbors created thereby. Such information involvesimportant risks and uncertainties that could significantly affect results inthe future and, accordingly, such results may differ from those expressed inany forward looking statements herein. Future operating results may beadversely affected as a result of a number of factors. Set forth below arecertain important factors that could cause actual results to differ materiallyfrom those in such “forward-looking” statements that are directed to eachshareholder and potential shareholder of Kenilworth.

 

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Youshould not rely on forward-looking statements in this Form 10-K because theyare inherently uncertain. This Form 10-K contains forward-looking statementsthat involved risks and uncertainties. We use words such as “anticipates”,“believes”, “plans”, “expects”, “future”, “intends” and similar expressions toidentify such forward- looking statements. You should not place undue relianceon these forward-looking statements, which apply only as of the date of thisForm 10-K. Our actual results could differ materially from those anticipated inthese forward-looking statements for many reasons, including the risks faced byKenilworth as described below and elsewhere in this Form 10-K.

 

**RISK FACTORS**

 

**NOOPERATING HISTORY**

 

Wehave had no revenues from operations since 1991. We emerged from our bankruptcyproceedings in 1998 without assets and liabilities. We have had no revenuesfrom operations since then and we may never have any revenues from operationsin the future, **which may result in the termination of our business**.

 

**WE HAVE NOWORKING CAPITAL**

 

Asof December 31, 2003 the working capital of Kenilworth is $ 7,136. Thiswill not enable Kenilworth to achieve any of its planned operations. There canbe no assurances that Kenilworth will ever have sufficient working capital toengage in its planned operations.

 

**OURBUSINESS IS ONLY IN THE PLANNING STAGE**

 

Kenilworth’sbusiness presently is solely in the planning stage. We plan to engage in thedevelopment, manufacturing, marketing of an operation entitled RoulabetteTM.RoulabetteTM would allow casino patrons and other players to play along withlive in-progress casino table games such as Roulette, Craps and Baccarat andmore via digital satellite and digital cable television broadcasts (simulcasts)emanating from strictly regulated casinos located in the United States andother locations around the world, to self-sufficient computer terminals dubbed“RoulabetteTM” and digital satellite and cable TV set top boxes. The RoulabetteTMterminal is a proposal intended to be built and there can be no assurances thatit will ever be built.  Themicroprocessor to be installed in the TV set top boxes have not been designed.We have as at December 31, 2003, no agreements, customers or proposals for anyfuture business and there can be no assurances that we will ever have same.

 

**WE NEED ATLEAST TEN MILLION DOLLARS ($10,000,000)**

 

Inorder to develop the RoulabetteTM terminal and the RoulabetteTM broadcasts, weestimate at this time, that we will need at least approximately ten milliondollars ($10,000,000). We do not have this money nor do we have any agreementsor understanding to procure this money. We may never get this money. If we doobtain this money, it may not be sufficient. Further, should such monies beavailable it may not be available on terms satisfactory to Kenilworth or it maybe available on such terms that substantially dilute the interest of existingshareholders. If we obtain this money, we will need substantial additionalfunds for the proposed marketing plan and there can be no assurances that suchfunds will ever be available to allow Kenilworth to engage in business on aprofitable basis.

 

**OURBUSINESS IS SUBJECT TO OUR ABILITY TO OBTAIN AND RETAIN KEY PERSONNEL**

 

Atthe present time, we do not have any employees who will be able to developRoulabetteTM. It will be necessary for us to obtain personnel qualified and withthe expertise to develop RoulabetteTM. We believe at this time we would requireinitially six (6) additional employees and several consultants. There can be noassurances of the availability of any such employees and consultants.  The Company expect to outsource thedevelopment of RoulabetteTM and the microprocessors for the TV set topboxes.  No assurances can be given thatthe Company will be able to do this successfully.

 

20

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**WE AREDEPENDANT UPON OUR PRESIDENT**

 

Kenilworthhas been dependant upon the services of its president Herbert Lindo who isseventy-eight (78) years old. Herbert Lindo has performed his services duringthe past recent years without compensation. Should Kenilworth procure workingcapital, there can be no assurances that he will continue to work withoutreceiving compensation. There also can be no assurances of Herbert Lindo’scontinued availability.  We believewithout assurances that present management is capable to continue our presentplans in the event that Herbert Lindo is not available.

 

**RAPIDCHANGES IN TECHNOLOGY**

 

Thetechnology and RoulabetteTM in general is subject to rapid change. Kenilworthwill need to maintain an ongoing research and development effort of which therecan be no assurances of success or availability of funds.  Additionally,there can be no assurances that the development of technologies and products bycompetitors will not render the Kenilworth’s products or technologiesnon-competitive or obsolete.

 

**WE ARE ENGAGEDIN A HIGHLY COMPETITIVE INDUSTRY**

 

Ourbusiness is subject to significant competition. Competition exists from largercompanies that possess substantially greater technical, financial, sales andmarketing resources that Kenilworth presently possesses. Such competition isexpected to increase. Such increased competition may have a material adverseeffect on Kenilworth’s ability to successfully market its products.

 

**WE WEREGRANTED A PATENT FOR THE VARIOUS ASPECTS OF SIMULCAST WAGERING**

 

OnJune 10, 2003, the U.S. patent for the various aspects of wagering on livein-progress casino table games, was granted by the U.S. Patent Office toHerbert Lindo, the Inventor and which Patent was assigned by Herbert Lindo tothe Company in August 2000.  We filedthe Patent for approval in forty-nine (49) countries in the industrializedworld including Russia and China. There can be no assurances that foreignpatents will be issued and the challenges will not be instituted against thevalidity or enforceability of our patent. Herbert Lindo also filed a Patent in the U.S. Patent Offices to uselottery terminals to accept deposits for wagers placed with the TV set topboxes, which has also been assigned to the Company by Herbert Lindo.

 

**OURROULABETTETM TERMINALS ARE SUBJECT TO VARIOUS FEDERAL, STATE, LOCAL AND FOREIGNJURISDICTION LAWS AND REGULATIONS**

 

Theuse of RoulabetteTM, may be subject to various federal, state and local laws andregulations both in the United States and foreign countries. There can be noassurances that we will ever be able to obtain licenses or permits necessary toconduct our business or that we will be able to comply with these applicablelaws and regulations.

 

TheRoulabetteTM system is planned to allow casino patrons and other players to playalong with live in progress casino table games such as Roulette, Craps andBaccarat and more via digital satellite television and digital cableprogramming emanating from regulated casinos. There can be no assurances that casinooperators will ever participate in Kenilworth’s business.

 

**OUROFFICERS AND DIRECTORS WILL HAVE SIGNIFICANT CONTROL OVER US ANDMAY APPROVE OR REJECT MATTERS CONTRARY TO A VOTE OF OUR SHAREHOLDERS**

 

Ourexecutive officers and directors together with their affiliates beneficiallyown a significant percentage of our outstanding common stock. Thesestockholders, if acting together, will be able to significantly influence allmatters requiring approval by our stockholders including the election ofdirectors and the approval of mergers or similar transactions even if thestockholders disagree.

 

21

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**SHARESELIGIBLE FOR FUTURE SALE COULD CAUSE OUR STOCK PRICE TO FALL**

 

Ifour stockholders sell substantial amounts of our common stock in the publicmarket, the market price of our common stock could fall. As of March 30,2004 we had 140,480,261 shares of Common Stock outstanding of whichapproximately 91,000,000 are eligible for sale by our Shareholders under Rule144 of the Securities Act of 1933 as amended or are otherwise registered forsale.

 

**WE DO NOTINTEND TO PAY DIVIDENDS**

 

Weare not able to pay any dividends because we have no funds available to do so.Even if we had funds available, we do not intend or declare to pay anydividends on our common stock in the near future.

 

ITEM 8—FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

Thefinancial statements, the accompanying notes are filed as part of this Reportannexed at the end of this report.  SeeITEM 15.

 

ITEM 9—CHANGES AND DISAGREEMENTS WITH ACCOUNTANTSON ACCOUNTING AND FINANCIAL DISCLOSURE

 

TheCompany’s prior year auditors discontinued their business during 2002.  The Company restated the Annual Reports forthe periods ended December 31, 2001 and 2002 and the first and second quarterperiods ended March 31 and June 30, 2003 as a Development Stage Company.  The restatements were not audited.  The financials for the year ended 2003 are audited.

 

ITEM 9A—CONTROLS AND PROCEDURES

 

a.)            Disclosure Controls and Procedures

 

 The Company has evaluated, under thesupervision and with the participation of the Company’s management includingthe Company’s Chairman and Chief Executive Officer along with the Company’sChief Financial Officer who is the President, the effectiveness of theCompany’s disclosure controls and procedures (as defined in Rules 13a-15(e) and15d-15 (e) under the Securities Exchange Act of 1934, as amended (the “ExchangeAct”) as of the end of the period covered by this Report.  Because of the inherent limitations in allcontrol systems evaluation of controls can provide only reasonable assurancethat all control issues and instances of fraud, if any, within the Company havebeen detected.  However, based on thatevaluation, the Company’s Chairman and Chief Executive Officer along with theCompany’s Chief Financial Officer have concluded that the Company’s disclosurecontrols and procedures were effective as of the end of the period covered bythis Report at a reasonable assurance level.

 

b.)           Changes in Internal Control Over Financial Reporting

 

Therewas no change in the Company’s internal control over financial reporting thatoccurred during the annual period ending December 31, 2003, that has materiallyaffected, or is reasonably likely to materially affect the Company’s internalcontrol over financial reporting.

 

22

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PARTIII

 

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THEREGISTRANT

 
| **Name**          |   | **Age** |   | **Position**                                                                        |
|-------------------|--------|---------|--------|-------------------------------------------------------------------------------------|
|              |   |    |   |                                                                                |
| Herbert  Lindo    |   | 78      |   | Director,  Chairman of the Board, President, Treasurer, and Chief Financial Officer |
|              |   |    |   |                                                                                |
| Gino  Scotto      |   | 36      |   | Director  and Chief Executive Officer                                               |
|              |   |    |   |                                                                                |
| Maureen  Plovnick |   | 37      |   | Director,  Corporate Secretary and Vice-President                                   |
|              |   |    |   |                                                                                |
| Kit  Wong         |   | 74      |   | Director  and Vice-President                                                        |
|              |   |    |   |                                                                                |
| Patrick  McDevitt |   | 63      |   | Director  and Vice-President                                                        |
|              |   |    |   |                                                                                |
| Joyce  Clark      |   | 67      |   | Director,  Financial Officer and Vice-President                                     |

 

HerbertLindo has been President, Treasurer and Chief Financial Officer of Kenilworthsince 1972. Since Kenilworth’s emergence from bankruptcy, he has also served asChief Executive Officer until July 17, 2002 when Gino Scotto was elected tothat office.  Mr. Lindo devotes his fulltime to the business of the Registrant.

 

GinoScotto has been the financial officer of Scotto Brothers a nationalhospitality, restaurant and hotel owner/operator for the past 5 years. Herecently resigned from Scotto Brothers, to devote more time to managing theaffairs of the Company. He was elected a Director and Chief Executive Officeron July 17, 2002.  Mr. Scotto devotesonly part of his time to the business of the Registrant.

 

MaureenPlovnick was elected the Corporate Secretary in August 2001 and a Director inOctober 2002. Mrs. Plovnick is a 1989 graduate of Fordham University and holdsa Bachelor of Science degree in Marketing with minors in both Psychology andSociology. Before joining the Company, Mrs. Plovnick was employed in herprofession by Fortunoff and The Hyman Companies.  Mrs. Plovnick devotes her full time to the business of theRegistrant.

 

KitY. Wong has served as a Director of Kenilworth since 1999. He is part owner andoperator of several Chinese restaurants in the New York metropolitan area.  Mr. Wong devotes only a portion of his timeto the business of the Registrant.

 

PatrickJ. McDevitt has been a licensed representative for Securities firms for thepast five (5) years. He recently retired from the Securities business and willdevote all of his time as a Vice President of Marketing for the Company.  Mr. McDevitt devotes only a portion of histime to the business of the Registrant.

 

JoyceD. Clark has served as a Director of Kenilworth since 1998. Since 1991 she hasserved as controller of Long Island Wholesalers Inc., a wholesale doormanufacturer. She is also the sister of Betty S. Svandrlik, the formerCorporate Secretary and presently the Assistant Corporate Secretary ofKenilworth, who is engaged in business as a medical transcriber. Joyce D. Clarkis the ex-wife of Herbert Lindo, they divorced in 1980.   Mrs. Clark devotes only a portion of hertime to the business of the Registrant.

 

DIRECTORS IN OTHER PUBLIC COMPANIES

 

NONE

 

23

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CRIMINAL/BANKRUPTCY/SEC VIOLATIONS WITHIN THE LAST FIVE (5) YEARS 

 

NONE

 

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTINGCOMPLIANCE

 

Section16(a) of the Securities Exchange Act of 1934 requires Kenilworth’s executiveofficers and directors, and persons who beneficially own more than ten percent(10%) of our Common Stock, to file initial reports of ownership and reports ofchanges in ownership with the Securities and Exchange Commission. ExecutiveOfficers, Directors and greater than ten percent (10%) beneficial owners arerequired by SEC regulations to furnish us with copies of all Section 16(a)forms they file.

 

Basedsolely on representations from our Executive Officers and Directors, we believethat during the fiscal year ended December 31, 2003, all Section 16(a) filingrequirements applicable to our Executive Officers, Directors and greater thanten percent (10%) beneficial owners were complied with.

 

AUDITCOMMITTEE AND CHARTER

 

Thefollowing Charter has been adopted with respect to an Audit Committee.  **We have not, however, at this****timeappointed an Audit Committee.**

 

 TheAudit Committee of the Board of Directors (the “Audit Committee”) shall havethe responsibility to assist the Board of Directors in fulfilling its fiduciaryand other obligations with respect to accounting and financial matters.Specifically, and without limiting the generality of the foregoing, the AuditCommittee shall:

 

TheAudit Committee will be comprised of at least three (3) Independent Directors.

 

1.)            Review the adequacy and effectiveness of theCompany’s system of internal financial controls and accounting practices toachieve reliability and integrity in the Company’s financial statements, andinitiate such examinations of such controls and practices as the AuditCommittee deems advisable.

 

2.)            Review the qualification, performance andindependence of the Company’s independent auditors and recommend independentauditors for appointment annually by the Board of Directors.

 

3.)            Prior to the commencement of the Company’sannual external audit, review with the Company’s independent auditors the scopeof their audit function and estimated audit fees.

 

4.)            Subsequent to the completion of the Company’sannual external audit, review the report and recommendations of the independentauditors with the independent auditors and the Company’s management.

 

5.)            Review the annual and quarterly consolidatedfinancial statements of the company and other financial disclosures of theCompany and the accounting principles being applied in such statements anddisclosures.

 

6.)            Review the authority and duties of theCompany’s chief financial officer and chief accounting officer and theperformance by each of them of their respective duties.

 

7.)            Review the insurance programs for the Companyincluding professional malpractice, general liability, director and officerliability and property insurance, and the insurers carrying the Company’sinsurance.

 

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8.)            Oversee the establishment and thereafterperiodically review a corporate code of conduct and the Company’s policies onethical business practices.

 

9.)            Prior to public release, review withmanagement and the Independent Accountants, the financial results for the prioryear including the Company’s annual report on Form 10-K.

 

10.)          Review the committee’s charter annually and revise as appropriate.

 

11.)          Meet with the Chief Financial Officer and the Independent Accountants,in separate executive sessions, to discuss any matters that the committee orthese groups believe should be considered privately.

 

12.)          Take such other actions concerning the Company’s accounting andfinancial functions as the Committee deems appropriate with respect to thematters described above.

** **

**Code ofEthics**

 

TheRegistrant has not yet adopted a written formal Code of Ethics. However, theRegistrant’s Officers intend to comply with all honest and ethical requirementsincluding the ethical handling of actual or apparent conflicts of interestbetween personal and professional relationships; full, fair, accurate, timelyand understandable disclosure in reports and documents that the Registrant fileswith or submits to the Securities and Exchange Commission and in other publiccommunications made by the Registrant; compliance with applicable governmentallaws, rules and regulations; prompt internal reporting of any violations of theforegoing to an appropriate person and accountability for adherence of theforegoing.  A formal Code of Ethics isexpected to be adopted shortly.  It willbe filed with the Securities and Exchange Commission.

 

ITEM 11 — EXECUTIVE COMPENSATION

 

a.)           The following table sets forth the exercise of options and SARs during the fiscal year ended December 31, 2003.

 

 

Aggregated Option/SAR Exercises in Last Fiscal Year

And FY-End Option/SAR Values

 
| **Name**         |   | **Shares  acquired on****exercise  (#)** |   | **Value****realized($)** |   | **Number of  securities un-  derlying unex-  ercised options/  SARS at FY-end (#)  exercisable /****unexercisable** | ** ** | **Value of  unexercised in-  the-money options  SARS at FY-end($)  exercisable /****unexercisable** | ** ** |
|------------------|--------|------------------------------------------|--------|--------------------------|--------|---------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------|------------|
|             |   |                                     |   |                     |   |                                                                                                                |       |                                                                                                |       |
| Herbert Lindo    |   | -0-                                      |   | -0-                      |   | 5,000,000                                                                                                           |       | -0-                                                                                                 |       |
|             |   |                                     |   |                     |   |                                                                                                                |       |                                                                                                |       |
| Maureen Plovnick |   | -0-                                      |   | -0-                      |   | 500,000                                                                                                             |       | -0-                                                                                                 |       |

 

No options or SARs were granted or exercised during the year ended December 31, 2003.

 

b.)           The Registrant has no employment agreements with any of its executive officers or directors.

 

c.)            The Registrant has no compensation committee at this time.

 

d.)           Stock Performance Graph is not applicable.

 

25

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TOTAL RETURN TO SHAREHOLDER’S

(DIVIDENDS REINVESTED MONTHLY)

 

Kenilworth has not declared a dividend since its inception in 1968.

 

e.)            The following table sets forth the total compensation of the President and each executive officer            of Kenilworth whose total salary and bonus exceeds $100,000.

 

**SUMMARYCOMPENSATION TABLE**

 
|                              |   |     |   | **Annual  Compensation** |   | **Long term  compensation** |   |
|-----------------------------------|--------|----------|--------|--------------------------|--------|-----------------------------|--------|
|                              |   |     |   |                     |   |                        |   |   |   | **Awards** |   | **Payout** |   |
| **Name and  principal  position** |   | **Year** |   | **Salary  ($)**          |   | **Bonus  ($)**              |   | **Other  annual  compen-  sation($)** |   | **Restricted  stock  award(s)($)** |   | **Securities  underlying  options/  SARS (#)** |   | **LTIP  payouts  ($)** |   | **All  other  compen-  sation($)** |   |
| Herbert Lindo                     |   | 2003     |   | 0                        |   | 0                           |   | 0 |   | 0 |   | 0 |   | 0 |   | 0 |   |
|                              |   | 2002     |   | 0                        |   | 0                           |   | 0 |   | 0 |   | 0 |   | 0 |   | 0 |   |
|                              |   | 2001     |   | 0                        |   | 0                           |   | 0 |   | 0 |   | 0 |   | 0 |   |   |   |

 

Herbert Lindo received no compensation during the past three (3) years and no executive officer received any compensation in excess of $100,000 during the past three (3) fiscal years.

 

ITEM 12 — SECURITY OWNERSHIP OF CETAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

The following table sets forth as of March 31, 2004 the ownership with respect to each executive officer and director and each person known to own beneficially more than five percent (5%) of the Company’s Common Stock.

 

The information provided in the table is based on Kenilworth’s records, information filed with the Securities and Exchange Commission and information provided to Kenilworth, except where otherwise noted.

 

The number of shares beneficially owned by each person, director or executive officer is determined under rules of the Securities and Exchange Commission, and the information is not necessarily indicative of beneficial ownership for any other purpose.  Under such rules, beneficial ownership includes any shares as to which the individual has the right to acquire as of May 31, 2004 (60 days after March 31, 2004) through the exercise of any stock option or other right.  Unless otherwise indicated, each person has sole voting and investment power (or shares such powers with his spouse) with respect to the shares set forth in the following table.

 

**BENEFICIAL OWNERSHIP TABLE**

 
| **NAME AND ADDRESS OF BENEFICIAL OWNER**                                               |   | **TITLE OF  CLASS** |   | **AMOUNT AND  NATURE OF  BENEFICIAL OWNERSHIP (1)** |   | **PERCENT  OF CLASS (1)** |   |
|----------------------------------------------------------------------------------------|--------|---------------------|--------|-----------------------------------------------------|--------|---------------------------|--------|
|                                                                                   |   |                |   |                                                |   |                      |   |
| Herbert Lindo (1)                                                                      |   | Common Stock        |   | 25,000,000                                          |   | 19.2                      | %      |
| 185 Willis Avenue                                                                      |   | $0.01 par  value    |   |                                                |   |                      |   |
| Mineola, NY 11501                                                                      |   |                |   |                                                |   |                      |   |
|                                                                                   |   |                |   |                                                |   |                      |   |
| Gino Scotto                                                                            |   | Common Stock        |   | 7,000,000                                           |   | 5.3                       | %      |
| 1500 Old Country Road                                                                  |   | $0.01 par  value    |   |                                                |   |                      |   |
| Plainview, NY 11803                                                                    |   |                |   |                                                |   |                      |   |
|                                                                                   |   |                |   |                                                |   |                      |   |
| The total number of shares beneficially  owned by all directors and executive officers |   |                |   | 44,500,000                                          |   | 34.3                      | %      |

 

26

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1.)       At the Annual Meeting of Shareholders held on May 28, 2003 the Shareholders approved the issuance of twenty million (20,000,000) restricted Common Shares of the Company to Herbert Lindo, the Inventor of U.S. Patent 6,575,834 B1 dated June 10, 2003 entitled “SYSTEM AND METHOD FOR REMOTE ROULETTE AND OTHER GAME PLAY USING GAME TABLE AT A CASINO” for having assigned the Patent to Kenilworth.  The twenty million (20,000,000) shares are listed as to be issued in this report on Form 10-K.  The five million (5,000,000) shares grant pursuant to the Company’s Performance and Equity Incentive Plan have not been exercised.  The delay of issuing the twenty million (20,000,000) shares is by Mr. Lindo’s request.

 

ITEM 13 — CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

NONE

 

ITEM 14 — PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

The Company has appointed                                    as Independent Auditor’s for the fiscal year ending December 31, 2004.  Representatives of                                    are expected to be present at the annual meeting and will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions.

 

**Fees Incurred by Kenilworth.**

 

Fees for professional services provided by the Company’s independent auditor are:

 
|       |   | **2003** |   | **2002** |   |
|------------|--------|----------|--------|----------|--------|
|       |   |     |   |     |   |
| Audit Fees |   | $        | 20,000 |     | $      | 10,000 |   |
|            |        |          |        |          |        |  |  |

 

Auditfees are for professional services rendered in connection with the audit of theCompany’s annual financial statements, the review of its quarterly financialstatements.  The Independent Auditor forfiscal year 2003 and a different Independent Auditor for fiscal year 2002 didnot provide any other services to the Company including Income Tax Reviewssince the Company did not have any income producing revenue or other incomesince emerging from bankruptcy proceedings in September 1998.

 

TheCompany has no Audit Committee.

 

PARTIV

 

ITEM 15—EXHIBITS, FINANCIAL STATEMENT SCHEDULES ANDREPORTS ON FORM 8-K

 

(a)           (1) Financial Statements

 
| Consolidated balance sheets  as of December 31, 2003 and 2002                                             |   |
|----------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                           |   |
| Consolidated  statement of operations and deficit for the periods ended December 31,  2003, 2002 and 2001 |   |

 

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| Consolidated statement of  cash flows for the periods ended December 31, 2003, 2002 and 2001                |   |
|------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                             |   |
| Consolidated  statement of changes in stockholders equity the years ended December 31,  2003, 2002 and 2001 |   |
|                                                                                                             |   |
| Notes  to consolidated financial statements                                                                      |   |

 

(b)           On July 12, 2002 Kenilworth filed an 8-K in which the Companyreported the following event:

 

Herbert Lindo, Chairman and President of KenilworthSystems Corporation (“Kenilworth”) since 1972, advised the Company’s Board ofDirectors that on June 26, 2002 the Sheriff of Nassau County (the“Sheriff”) sold at a purported Public Auction Sale (the “Sale”) 10,333,450restricted common shares of Kenilworth Systems Corporation (the “Shares”) thathe had owned and which represented control (14% of the outstanding shares) ofKenilworth, for one thousand dollars ($1,000) or $0.000095 per share.  TheShares were sold to Tappan Zee Capital Corp. (“Tappan Zee”).  On the dateof the Sale the Shares had a market value of nine hundred thirty thousand tendollars and fifty cents ($930,010.50).  The Sheriff seized and sold theShares on behalf of Tappan Zee, as a result of a claim by Tappan Zee in adisputed civil suit brought in the New York Supreme Court for $128,062. Tappan Zee was both the foreclosing party and the purchaser.  Herbert Lindo owned Real Estate at the timevalued in excess of $128,062 which the sheriff could have seized instead of theKenilworth Shares.

 

Kenilworth claims that the Sheriff’s Auction Salewas conducted in a fraudulent manner by (1) failing to comply with the rulesand regulations set forth under the Securities and Exchange Commission Act of1933 and 1934, as amended (The “Acts”) the New York State Securities Laws, and(2) by failing to properly advertise the Sale, failing to notify any or allKenilworth shareholder’s (numbering approximately 5,500), and (3) failing toregister the Restricted Shares with the Securities and Exchange Commissionbefore conducting the Sale or in the absence of registering the Shares, obtaina No-Action letter from the Commission permitting the Public Sale, and (4) bymaking an immediate distribution of the Restricted Shares, and (5) byconcluding the auction sale despite only one (1) bidder that appeared and bidonly one thousand dollars  ($1,000) forall the shares when the market value of the 10,333,450 shares was nine hundredthirty thousand ten dollars and fifty cents ($930,010.50).  He should have adjourned the auction andthen advertise the auction sale in appropriate newspapers that quotedKenilworth Systems Corporation shares which has traded since 1968 under thetrading symbol “KENS” on organized exchanges NASDAQ and OTC, and (6) by failingto file required notices of 13 D-G as provided under the Acts.  Tappan Zeeand its Counsel and the Sheriff’s department were advised in court documentsand correspondence that their acts violated Federal and State Securities Laws andof the existence of the Real Property, prior to the Sale.  By the attorneys for Tappan Zee’s failure toseize the Real Property owned by Herbert Lindo raises the question ofcomplicity to take control of Kenilworth instead of satisfying a disputed claimfor $128,062.

 

Kenilworth or Herbert Lindo, as an individual willseek in Federal or State Courts to cancel the 10,333,450 shares, which weresubject of the Sheriff Auctions Sale, and seek triple damages under RICO onbehalf of the shareholders of Kenilworth, the damaged parties.

 

In June 2003, the Madison Bank of Blue Bell,Pennsylvania returned two million (2,000,000) of the wrong fully distributedshares by Tappan Zee for cancellation to American Stock Transfer and TrustCompany, Kenilworth’s Stock Transfer Agents. Since the Madison Bank was complicent with Tappan Zee in the   fraudulent seizure and auction of theshares, neither Herbert Lindo nor Kenilworth issued general releases to theMadison Bank, although the subsequent Madison Bank and Kenilworth Agreementprovided for the releases.  The Companywas desirous of having the two million (2,000,000) shares returned, reducingthe claim against the Nassau County Sheriff’s Department and for future freedistribution to Kenilworth’s shareholders on record on June 26, 2002 which werenot made aware by the Sheriff of the Auction Sale.

 

28

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(c)           Exhibits

 
| 3.1    |   | Amended  Certificate of Incorporation, incorporated by reference to exhibit 3.1 to the  Registrant’s Annual Report on Form 10-K for the fiscal year ended December  31, 2001.                                                                                            |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                          |
| 10.2   |   | Kenilworth  Systems Corporation Performance and Equity Incentive Plan incorporated by  reference to the exhibit 10.2 to the Registrant’s Annual Report on form 10-K  for the fiscal year ended December 31, 2000.                                                        |
|   |   |                                                                                                                                                                                                                                                                          |
| 10.8   |   | Three  (3) year lease with Police Benevolent Association (PBA) of Nassau County for  office space at 185 Willis Avenue, Mineola, NY 11501 ending June 30, 2006 for  approximately two thousand (2,000) square feet for two thousand five hundred  dollars ($2,500) per month. |
|   |   |                                                                                                                                                                                                                                                                          |
| 22.1   |   | Subsidiaries  of the Registrant:                                                                                                                                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                          | Video  Wagering Systems Corporation |
|   |   |                                                                                                                                                                                                                                                                          | RoulabetteTM  Nevada Corporation |
|   |   |                                                                                                                                                                                                                                                                          | Kenilworth  Systems Nevada Corporation |
|   |   |                                                                                                                                                                                                                                                                          | Kenilworth  U.K. Ltd. |
|   |   |                                                                                                                                                                                                                                                                          |
| 22.2   |   | Consent  of                               Independent Auditor.                                                                         |
|   |   |                                                                                                                                                                                                                                                                          |
| 31.1   |   | Certification  of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities  Exchange Act of 1934.                                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                          |
| 31.2   |   | Certification  of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities  Exchange Act of 1934.                                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                          |
| 32.1.1 |   | Certification  of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley  Act of 2002.                                                                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                          |
| 32.2   |   | Certification  of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley  Act of 2002.                                                                                                                                                                     |

 

29

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Tothe Board of Directors of

KenilworthSystems Corporation:

 

Theaccompanying consolidated balance sheets of Kenilworth Systems Corporation andsubsidiaries as of December 31, 2003 and the related consolidatedstatements of operations and stockholder’s equity and cash flow for the yearended December 31, 2003. The financial statements are the responsibilityof the Company’s management.

 

Inaccordance with generally accepted accounting standards, require thatreasonable assurance about whether the financial statements are free ofmaterial misstatement, including examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements. Assessingthe accounting principals used and significant estimates made by management, aswell as evaluating the overall financial statement presentation.

 

Theconsolidated financial statements referred to above as a development stageCompany present fairly, in all material respects, the consolidated financialposition of Kenilworth Systems Corporation as of December 31, 2003 and theresults of its operations and its cash flow for the year then ended inconformity with generally accepted accounting principals.

 

Theaccompanying consolidated financial statements have been prepared assuming thatthe Company will continue as a going concern. As discussed in Note 7 to theconsolidated financial statements, the Company emerged from bankruptcy in 1998and has not yet commenced operations. Future operations are contingent onobtaining funding. These conditions raise substantial doubt about its abilityto continue as a going concern. Management’s plans regarding those matters arealso described in Note 7. The consolidated financial statements do not includeany adjustments that might result from the outcome of this uncertainty.

 

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KENILWORTH SYSTEMS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS,AS OF DECEMBER 31, 2003 AND 2002

 
|                                                                                                                                                                 |   | **2003**    |      | **2002**    |    |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------|-----------|-------------|---------|
| ASSETS                                                                                                                                                               |   |        |      |        |    |
|                                                                                                                                                                 |   |        |      |        |    |
| Cash                                                                                                                                                                 |   | $           | 7,136     |        | $       | 10,071 |   |
| Due from Shareholders (subscriptions)                                                                                                                                |   | 50,000      |      | —      |    |
| Prepaid Expenses                                                                                                                                                     |   | 187,500     |      | 232,544     |    |
| Property, Plant and Equipment, Net                                                                                                                                   |   | 12,302      |      | 13,263      |    |
| CURRENT ASSETS                                                                                                                                                       |   | 256,938     |      | $           | 255,878 |   |
| Patent                                                                                                                                                               |   | $           | 336,100   |        | $       | — |   |
| TOTAL ASSETS                                                                                                                                                         |   | $           | 593,038   |        | $       | 255,878 |   |
|                                                                                                                                                                 |   |        |      |        |    |
| LIABILITIES AND  STOCKHOLDERS’ EQUITY (DEFICIT)                                                                                                                 |   |        |      |        |    |
|                                                                                                                                                                 |   |        |      |        |    |
| Accrued Liabilities                                                                                                                                                  |   | $           | 119,097   |        | 93,883  |   |
| Payroll Taxes Payable                                                                                                                                                |   | 13,018      |      | 13,575      |    |
| Notes Payable                                                                                                                                                        |   | $           | 142,231   |        | $       |   |   |
| TOTAL LIABILITIES                                                                                                                                                    |   | $           | 274,346   |        | $       | 107,458 |   |
| Common Stock, $.01 par value, authorized 200,000,000 shares; issued  and outstanding 104,412,753 in December 31, 2003 and 89,304,589 in  December 31, 2002 |   | $           | 1,044,126 |        | $       | 893,045 |   |
| Paid in capital                                                                                                                                                      |   | 25,723,963  |      | 24,872,604  |    |
| Deficit                                                                                                                                                              |   | (26,449,397 | )         | (25,617,229 | )       |
| TOTAL STOCKHOLDERS’ EQUITY                                                                                                                                      |   | $           | 318,692   |        | $       | 148,420 |   |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUIY                                                                                                                       |   | $           | 593,038   |        | $       | 255,878 |   |

 

The accompanying notes arean integral part of these consolidated financial statements.

 

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KENILWORTH SYSTEMSCORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONFOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

 
|                                         |   | **YEAR ENDED  DEC. 31, 2003** |        | **YEAR ENDED  DEC. 31, 2002** |   | **YEAR ENDED  DEC. 31, 2001** |   |
|----------------------------------------------|--------|-------------------------------|-------------|-------------------------------|--------|-------------------------------|--------|
| Revenues:                                    |   |                          |        |                          |   |                          |   |
| Sales                                        |   | $                             | 0           |                          | $      | -0-                           |   | $ | -0- |   |
| Costs and Expenses:                          |   |                          |        |                          |   |                          |   |
| Selling, general and administrative expenses |   | 832,168                       |        | 660,289                       |   | 421,491                       |   |
| Interest expense                             |   |                          |        |                          |   |                          |   |
| Total Costs and Expenses                     |   | 832,168                       |        | 660,289                       |   | 421,491                       |   |
| Net loss before other income                 |   | 832,168                       |        | 660,289                       |   | 421,491                       |   |
| Interest Income                              |   |                          |        |                          |   |                          |   |
| Total                                        |   |                          |        |                          |   |                          |   |
| Net loss                                     |   | 832,168                       |        | 660,289                       |   | 421,491                       |   |
| Deficit — Beginning Of year             |   | (25,617,229                   | )           | (24,956,940                   | )      | (24,535,450                   | )      |
| Deficit — End Of year                   |   | $                             | (26,449,397 | )                             | $      | (25,617,229                   | )      | $ | (24,956,940 | ) |
|                                         |   |                          |        |                          |   |                          |   |
| Loss per Share of common stock               |   | $                             | .008        |                          | $      | .007                          |   | $ | .005 |   |
| Average number of shares outstanding         |   | 100,412,315                   |        | 89,304,589                    |   | 73,115,484                    |   |

 

The accompanying notes arean integral part of these consolidated financial statements.

 

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KENILWORTH SYSTEMSCORPORATION AND SUBSIDIARIESSTATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001 

 
|                                                                                       |   | **YEAR ENDED  DEC. 31, 2003** |     | **YEAR  ENDED  DEC. 31, 2002** |   | **YEAR  ENDED  DEC.  31,2001** |   |
|--------------------------------------------------------------------------------------------|--------|-------------------------------|----------|--------------------------------|--------|--------------------------------|--------|
| CASH FLOWS USED IN OPERATING ACTIVITIES                                                    |   |                          |     |                           |   |                           |   |
| Net Loss                                                                                   |   | $                             | (832,168 | )                              | $      | (660,289                       | )      | $ | (421,491 | ) |
| Adjustments to reconcile net loss to net cash provided by (used in)  operating activities: |   |                          |     |                           |   |                           |   |
| Stock issuance for services rendered                                                       |   | 596,440                       |     | 268,628                        |   | 128,348                        |   |
| Depreciation                                                                               |   | 1,961                         |     | 588                            |   | 3,432                          |   |
| Changes in operating assets and liabilities:                                               |   |                          |     |                           |   |                           |   |
| Due from shareholder                                                                       |   | (50,000                       | )        |                           |   | (17,577                        | )      |
| Prepaid expenses                                                                           |   | 45,044                        |     | (232,554                       | )      | (42,461                        | )      |
| Accrued expenses and taxes                                                                 |   | 24,657                        |     | 107,458                        |   | 100,730                        |   |
|                                                                                       |   |                          |     |                           |   |                           |   |
| Total adjustments                                                                          |   | 618,102                       |     | 144,130                        |   | 134,972                        |   |
| Net cash used in operating activities                                                      |   | (214,066                      | )        | (516,159                       | )      | (286,519                       | )      |
|                                                                                       |   |                          |     |                           |   |                           |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                                                       |   |                          |     |                           |   |                           |   |
| Purchases of Property and Equipment                                                        |   | (1,000                        | )        | (13,263                        | )      | -0-                            |   |
| Purchase of Patent                                                                         |   | (336,100                      | )        |                           |   |                           |   |
| Net cash used in investing activities                                                      |   | (337,100                      | )        | (13,263                        | )      | -0-                            |   |
|                                                                                       |   |                          |     |                           |   |                           |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                                       |   |                          |     |                           |   |                           |   |
| Proceeds from loans payable                                                                |   | 142,231                       |     |                           |   |                           |   |
| Proceeds from stock issuances                                                              |   | 406,000                       |     | 520,000                        |   | 293,729                        |   |
|                                                                                       |   |                          |     |                           |   |                           |   |
| Net cash provided by financing activities                                                  |   | 548,231                       |     | 520,000                        |   | 23,729                         |   |
| Cash paid during period for: Interest                                                      |   | 0                             |     | (4,227                         | )      | (526                           | )      |
| Net increase (decrease) in cash                                                            |   | (2,935                        | )        | (5,195                         | )      | 6,684                          |   |
| Cash beginning of period                                                                   |   | 10,071                        |     | 15,266                         |   | 8,582                          |   |
| Cash-end of period                                                                         |   | $                             | 7,136    |                           | $      | 10,071                         |   | $ | 15,266 |   |

 

NON-CASHTRANSACTIONS

 

Duringthe year ended December 31, 2002 the Company issued 10,411,355 shares ofrestricted Common Stock in payments for services rendered in the amount of$498,627 and average price of $0.099 per share.  The amount includes 5,000,000 shares for services rendered byDirectors of the Company. (See Note 11)

 

Duringthe year ended December 31, 2003 the Company issued 7,395,558 shares ofrestricted Common Stock in payment for services rendered in the amount of $596,440 an average price of $ 0.08 per share. The amount includes 2,500,000 for services rendered by the Directors ofthe Company. (See Note 11)

 

Inconnection with the emergence from bankruptcy in September 1998 thetrustee distributed four million three hundred thousand four hundred and threedollars ($4,300,403) to pay one hundred percent (100%) of all approved claims

 

The accompanying notes arean integral part of these consolidated financial statements.

 

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KENILWORTH SYSTEMSCORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICITFOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

 
|                                                    |   | **COMMON  SHARES** |   | **ADDITIONAL  PAID-IN  CAPITAL** |      | **RETAINED  DEFICIT** |   |
|---------------------------------------------------------|--------|--------------------|--------|----------------------------------|-----------|-----------------------|--------|
|                                                    |   | **SHARES**         |   | **AMOUNT**                       |      |
|                                                    |   |               |   |                             |      |                  |   |   |   |
| Balance, December 31, 2000                              |   | 64,932,502         |   | $                                | 649,325   |                  | $      | 23,905,619 |   | $ | 24,535,450 |   |
|                                                    |   |               |   |                             |      |                  |   |   |   |
| Issuance of Stock in connection with conversion of debt |   | 6,582,982          |   | 65,289                           |      | 227,900               |   |   |   |
|                                                    |   |               |   |                             |      |                  |   |   |   |
| For services                                            |   | 1,600,000          |   | 16,000                           |      | 112,348               |   |   |   |
|                                                    |   |               |   |                             |      |                  |   |   |   |
| Net Loss                                                |   |               |   |                             |      |                  |   | 421,490 |   |
|                                                    |   |               |   |                             |      |                  |   |   |   |
| Balances, December 31, 2001                        |   | 73,115,484         |   | $                                | 731,154   |                  | $      | 24,245,867 |   | $ | (24,956,940 | ) |
|                                                    |   |               |   |                             |      |                  |   |   |   |
| Issuance of Stock in connection with Conversion of debt |   | 5,777,750          |   | 57,777                           |      | 232,223               |   |   |   |
|                                                    |   |               |   |                             |      |                  |   |   |   |
| For services                                            |   | 10,411,355         |   | 104,113                          |      | 394,514               |   |   |   |
|                                                    |   |               |   |                             |      |                  |   |   |   |
| Net Loss                                                |   |               |   |                             |      |                  |   | 660,289 |   |
|                                                    |   |               |   |                             |      |                  |   |   |   |
| Balances, December 31, 2002                             |   | 89,304,589         |   | $                                | 893,045   |                  | $      | 24,872,604 |   | $ | (25,617,229 | ) |
|                                                    |   |               |   |                             |      |                  |   |   |   |
| Issuance of Stock in connection with conversionof debt  |   | 7,712,606          |   | 77,126                           |      | 328,874               |   |   |   |
|                                                    |   |               |   |                             |      |                  |   |   |   |
| For Services                                            |   | 7,395,558          |   | 73,955                           |      | 522,485               |   |   |   |
|                                                    |   |               |   |                             |      |                  |   |   |   |
| Net Loss                                                |   |               |   |                             |      |                  |   | 832,168 |   |
|                                                    |   |               |   |                             |      |                  |   |   |   |
| Balances, December 31, 2003                             |   | 104,412,753        |   | $                                | 1,044,126 |                  | $      | 25,723,963 |   | $ | (26,449,397 | ) |

 

The accompanying notes arean integral part of these consolidated financial statements.

 

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KENILWORTH SYSTEMS CORPORATIONAND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

THECOMPANY AND NATURE OF BUSINESS

 

KenilworthSystems Corporation (the “Company”) was incorporated in New York inApril 1968 and now plans to be engaged in the business of developing andmanufacturing terminals that permit individuals from remote locations, to playalong with live in progress casino table games located outside the casinoconfines and via TV simulcast of digital satellite and digital cable broadcaststo individuals at homes and offices around the world.

 

TheCompany was in bankruptcy proceedings under Chapter 7 and 11 of the BankruptcyCode for the period from August 28, 1982 through September 23, 1998the Company ceased all operations from February 1991 to September 23,1998.

 

ADVERTISINGCOSTS

 

Advertisingcosts are expensed as incurred.  Therewere none, through December 31, 2003.

 

PRINCIPLESOF CONSOLIDATION

 

Theconsolidated financial statements include the accounts of Kenilworth SystemsCorporation and its wholly owned subsidiaries: Video Wagering SystemsCorporation, RoulabetteTM Nevada Corporation, Kenilworth Systems NevadaCorporation and Kenilworth U.K. Ltd. None of the subsidiaries have any assetsor liabilities.

 

EARNINGSPER SHARE

 

TheCompany computes and presents earnings (loss) per share in accordance with therequirements of Statement of Financial Accounting Standards (“SFAS”) No. 128“Earnings Per Share”.

 

Basicloss per share is based on the weighted-average number of shares of commonstock outstanding for the period, which were $0.008, $.007 and $.005 for theyears ended December 31, 2003, 2002 and 2001 respectively.

 

Dilutedearnings per share has not been presented in the accompanying financialstatements because the effect of assumed conversion of convertible promissorynotes was anti-dilutive.

 

INCOMETAXES

 

TheCompany uses the liability method to account for income taxes in accordancewith requirements of SFAS No. 109.

 

USEOF ESTIMATES IN THE FINANCIAL STATEMENTS

 

Thepreparation of financial statements in conformity with generally acceptedaccounting principles requires management to make estimates and assumptionsthat affect the reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements andthe reported amounts of revenues and expenses during the reporting period.Actual results could differ from these estimates.

 

TheCompany’s financial statements include cash, receivables and accounts payable.Due to the short-term nature of these instruments, the fair value of theseinstruments approximates their recorded values.

 

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PROPERTYAND EQUIPMENT

 

Propertyand Equipment are stated at cost. For financial reporting purposes, propertyand equipment are depreciated utilizing the Straight-Line Method over theestimated useful lives of the related assets as follows:

 
|             |   | **YEARS** |   |
|------------------|--------|-----------|--------|
| Office Equipment |   | 5         |   |
| Vehicles         |   | 5         |   |

 

NOTE 2 —DUETO RELATED PARTIES AT DECEMBER 31, 2003

 

Dueto related parties at December 31, 2003 represents advances made bystockholders of the Company in the normal course of business. Such amounts arenon-interest bearing and have no definite repayment terms.

 

NOTE 3—PROPERTY AND EQUIPMENT

 

Propertyand Equipment consist of the following as of December 31, 2003 and 2002.

 
|                              |   | **2003** |   | **2002** |   |
|-----------------------------------|--------|----------|--------|----------|--------|
| Office Equipment                  |   | $        | 3,351  |     | $      | 2,351 |   |
| Vehicles                          |   | 11,500   |   | 11,500   |   |
|                              |   | $        | 14,851 |     | $      | 13,851 |   |
| Less-Accumulated Amortization     |   | 2,549    |   | 588      |   |
| Total Property and Equipment, Net |   | $        | 12,302 |     | $      | 13,263 |   |

 

Depreciationexpense for the years ended December 31, 2003 and December 31, 2002was $1,961 and $588, respectively.

 

NOTE 4 —BANKRUPTCYPROCEEDINGS

 

Throughoutthe 1980’s the Company experienced working capital shortages that resulted inthe Company filing a voluntary petition for reorganization under Chapter 11 ofthe United States bankruptcy Code. From August 28, 1982 to June 7,1985 the Company operated during reorganization proceedings. On June 7, 1985,a United States Bankruptcy Judge confirmed the Company’s Plan ofReorganization. On April 27, 1988, the Bankruptcy Court entered a finaldecree in the case. On October 27, 1988, the case was re-opened on groundsthe Debtor failed to consummate its plan of reorganization and onFebruary 25, 1991 the case was converted to a case under Chapter 7 of theBankruptcy Code. By order of the Court dated June 19, 1991 the Chapter 7was reconverted to a case under Chapter 11 of the Bankruptcy Code. A secondplan of reorganization was approved and a second order of confirmation wasentered in connection with the Chapter 11 case on October 2, 1991.However, the Debtor was unable to consummate its second plan of reorganization,and by order dated November 25, 1991, the case was reconverted to a caseunder Chapter 7 of the bankruptcy Code.

 

FromFebruary 1991 through September 1998, the Company was inactive. InSeptember 1998 a United States Bankruptcy Judge in the Eastern District ofNew York approved the Final Report and Accounts submitted by the Chapter 7Trustee of the Estate of Kenilworth and after obtaining approval from the U.S.Trustee, Kenilworth made a one hundred percent (100%) cash distribution to thecreditors and paid in full all administrative fees and expenses. The Companyemerged from Bankruptcy on September 23, 1998 with no assets and noliabilities. For the period September 24, 1998 through November 23,1998 the Company was in the process of monitoring the payments by check to thecreditors. No other activity occurred during that period.  Thereafter the Company commenced its presentplans.

 

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NOTE 5—INCOME TAXES

 

TheCompany is a “C” Corporation for tax purposes.

 

TheCompany estimates that it has available approximately ten million dollars($10,000,000) in net operating loss carry-forwards, which expire at variousdates through 2020. Utilization of the NOL carry-forward may be limited undervarious sections of the Internal Revenue Code depending on the nature of theCompany’s operations.

 

TheCompany has a deferred tax asset of approximately two million eight hundredthousand dollars ($2,800,000) arising from its net operating losscarry-forwards. The deferred tax asset has been fully reserved due to the uncertaintyof future realization.

 

NOTE 6—CONVERTIBLEPROMISSORY NOTES

 

Duringthe year 2003, the Company sold one (1) year Convertible Promissory Notestotaling four hundred and six thousand ($406,000).  At the option of the Note Holders, the Notes were convertibleinto Common Stock of the Company at the rate of between one (1) share for each$0.07 and $0.10 of face value of the indebtedness represented by the Notestogether with accrued interest at the annual rate of two percent (2%) above theprime rate quoted by Citibank of N.A. Management believed it was unable torepay the Notes when they become due, in order to induce the Note Holders toconvert the Notes by year end 2003 when the quoted price per Common Share, astraded on the Pink Sheet Market was between $0.035 and $0.06 per share, theCompany offered to convert the Notes at the rate of one (1) share for each$0.05 of indebtedness represented by each Note, together with accruedinterest.  As the result of theCompany’s offer, all Note Holders converted their Notes into 7,712,606restricted shares of authorized but unissued Common Stock, including accruedinterest, at an average price of $0.05 per share.

 

Duringthe year 2002, the Company sold one (1) year Convertible Promissory Notestotaling two hundred ninety thousand dollars ($290,000).  At the option ofthe Note holders, the Notes were convertible into Common Stock of the Companyat the rate of between one (1) share for each $.10 to $.15 of face value of theindebtedness represented by the Notes, together with interest at the annualrate of two percent (2%) above the prime rate quoted by Citibank of N.A.Management believed it was unable to repay the Notes when they becamedue.  In order to induce the Note Holders to convert the Notes by year end2002 when the quoted price per Common Share, as traded on the Pink Sheet Marketwas between $.02 and $.08 per share, the Company offered to convert the Notesat the rate of one (1) share for each $.05 of indebtedness represented by eachNote, together with accrued interest.  As a result of the Company’s offer,all Note Holders converted their Notes into five million seven hundred seventyseven thousand seven hundred and fifty (5,777,750) shares of Common Stock,including accrued interest, at an average price of $0.05 share.

 

NOTE 7 —GOINGCONCERN UNCERTAINTY

 

Asindicated in Note 4, the Company emerged from Chapter 7 in September 1998and has not yet commenced operations. These factors create uncertainty as tothe Company’s ability to operate as a going-concern and continue in business.Management plans to develop a wagering system that allows casino patrons andindividuals outside the casino to play and wager along with live casino tablegames. The first step in the plan is to conduct testing. Unless the Company isable to obtain sufficient funds, none of the tests and initial development workcan commence. The Company plans to obtain the necessary funding by offering itsCommon Stock, or Senior Cumulative Convertible Preferred Shares in a privateplacement, or selling limited joint venture participations in future “playalong with casino game” franchises.

 

Ifinitial testing is successful, the second step is to obtain the proper licensesfrom the gaming control regulators in the various venues the Company intends tooffer its system. Upon successful licensing, the Company plans to obtainfinancing from regular banking sources to finance the manufacturing of themicroprocessor to be installed into digital set top boxes and digital cableboxes that convert an ordinary

 

37

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televisionset into a computer terminal using the TV set as the monitor.  The heart of Kenilworth’s Patent     that protects our worldwide play alongbroadcasts.

 

Theaccompanying financial statements have been prepared assuming the Company is agoing-concern and do not reflect adjustments, if any, that would be necessaryif the Company were not a going-concern.

 

NOTE 8—COMMITMENTS AND CONTINGENCIES

 

OUTSTANDINGPAYROLL TAXES

 

Asof year-end, the Internal Revenue Service is contending that the Company owespayroll taxes including interest and penalties totaling almost $400,000 forvarious periods from 1985-1991. The Company is currently in negotiations withthe IRS to resolve these issues. In management’s opinion, no accruals arenecessary since it believes that these assessments are incorrect and weredischarged in its bankruptcy proceedings.  Similar contentions were madeby the New York State Income Tax Authorities, which have been officially cancelledby the New York State Taxing Authorities on July 1, 2002 withsatisfactions issued.

 

NOTE 9 —QUARTERLYFINANCIAL INFORMATION—UNAUDITED

 

Thefollowing table sets forth certain unaudited condensed quarterly financial datafor the fiscal years ended December 31, 2003 and 2002. This informationhas been prepared on the same basis as the consolidated financial statementsand all necessary adjustments have been included in the amounts stated below topresent fairly the selected quarterly information when read in conjunction withits consolidated financial statements and notes thereto. Historical quarterlyfinancial results and trends may not be indicative of future results.

 

KENILWORTH SYSTEMSCORPORATIONQUARTERLY DATA2003 AND 2002

 
|               |   | **1Q03** |    | **2Q03** |    | **3Q03** |   | **4Q03** |   | **1Q02** |   | **2Q02** |   | **3Q02** |    | **4Q02** |    |
|--------------------|--------|----------|---------|----------|---------|----------|--------|----------|--------|----------|--------|----------|--------|----------|---------|----------|---------|
| Net Sales          |   | $        | 0       |     | 0       |     | 0      |     | 0      |     | 0      |     | 0      |     | 0       |     | 0       |   |
|               |   |     |    |     |    |     |   |     |   |     |   |     |   |     |    |     |    |
| Gross Profit       |   | 0        |    | 0        |    | 0        |   | 0        |   | 0        |   | 0        |   | 0        |    | 0        |    |
|               |   |     |    |     |    |     |   |     |   |     |   |     |   |     |    |     |    |
| Net Loss           |   | $        | 553,475 |     | 138,984 |     | 89,451 |     | 50,258 |     | 38,542 |     | 69,167 |     | 321,191 |     | 231,389 |   |
|               |   |     |    |     |    |     |   |     |   |     |   |     |   |     |    |     |    |
| Net Loss per Share |   |     |    |     |    |     |   |     |   |     |   |     |   |     |    |     |    |
|               |   |     |    |     |    |     |   |     |   |     |   |     |   |     |    |     |    |
| Basic              |   | $        | 0.005   |     | $       | 0.001    |   | $        | 0.0007 |     | $      | 0.0005   |   | $        | .007    |     | $       | .007 |   | $ | .007 |   | $ | .007 |   |
|               |   |     |    |     |    |     |   |     |   |     |   |     |   |     |    |     |    |
| Diluted            |   | $        | 0.005   |     | $       | 0.001    |   | $        | 0.0007 |     | $      | 0.005    |   | $        | .007    |     | $       | .007 |   | $ | .007 |   | $ | .007 |   |

 

NOTE 10—STOCKOPTIONS

 

TheCompany does not plan, at this time, to make any adjustments to its financialsas the result of having issued stock options totaling six million (6,000,000)Common Shares of the Company through December 31, 2003.  The exerciseprice of the stock options are two dollars ($2.00) per share, well above theprice per share of the Common Stock for the last five (5) years.

 

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NOTE 11—PREPAIDITEMS

 

Atthe Board of Directors Meeting held on July 17, 2002 the Board authorizedthe issuance of five million (5,000,000) shares of authorized but unissuedCommon Stock of the Corporation to the Directors in lieu of Director’scompensation and liabilities insurance for the ensuing year: Gino Scotto, KitWong, Patrick J. McDevitt, Joyce Clark and Maureen Plovnick were each issuedone million (1,000,000) shares of restricted Common Stock of the Company at aprice of $.05 per share, the equivalent of fifty thousand dollars ($50,000) foreach Director, a total of $250,000.  The $250,000 has been recorded forServices Rendered in the Statement of Stockholder’s Deficit and charged toOperating Expenses in fiscal 2002.

 

Atthe Board of Directors Meeting held in September 2003 the Board approved toissuance of two million five hundred thousand (2,500,000) shares of authorizedbut unissued Common Stock of the Corporation to the Directors in lieu ofDirector’s Compensation and Director’s Liability insurance for the ensuingyear: Gino Scotto, Kit Wong, Patrick J. McDevitt, Joyce Clark and MaureenPlovnick will each be issued five hundred thousand (500,000) shares ofrestricted Common Stock of the Company at a price of five cents ($0.05) pershare, the equivalent of twenty five thousand dollars ($25,000) for eachDirector, a total of $125,000.  The$125,000 will be recorded for shares issued for Services Rendered in theStatement of Stockholder’s Deficit in the first quarter period in 2004, andwill be charged to Operating Expenses.

 

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**SIGNATURES**

 

Pursuantto the requirements of Section 13 or 15(d) of the Securities Exchange Actof 1934, the Registrant has duly caused this report to be signed on its behalfby the undersigned, thereunto duly authorized.

 
| KENILWORTH  SYSTEMS CORPORATION        |               |
|----------------------------------------|--------------------|
|                                   |               |
| By:                                    | /s/  HERBERT LINDO |   |   |
| Herbert  Lindo                         |               |
|                                   |               |
| PRESIDENT  AND CHIEF FINANCIAL OFFICER |               |
|                                   |               |
| By:                                    | /s/GINO  SCOTTO    |   |   |
| Gino  Scotto                           |               |
|                                   |               |
| CHIEF  EXECUTIVE OFFICER               |               |
|                                        |                    |  |  |  |

 

Pursuantto the requirements of Securities Exchange Act of 1934, this report has beensigned below by the following persons on behalf of the Registrant and in thecapacities and on the dates indicated.

 
| **NAME**                 |   | **TITLE** |     | **DATE** |
|--------------------------|--------|-----------|----------|----------|
|                     |   |      |     |     |
| /s/  HERBERT LINDO       |   |      | Director |     | May  10, 2004 |
| Herbert  Lindo           |   |      |     |     |
|                     |   |      |     |     |
| /s/  JOYCE CLARK         |   |      | Director |     | May 10,  2004 |
| Joyce  Clark             |   |      |     |     |
|                     |   |      |     |     |
| /s/  KIT WONG            |   |      | Director |     | May 10,  2004 |
| Kit  Wong                |   |      |     |     |
|                     |   |      |     |     |
| /s/  GINO SCOTTO         |   |      | Director |     | May  10, 2004 |
| Gino  Scotto             |   |      |     |     |
|                     |   |      |     |     |
| /s/  MAUREEN PLOVNICK    |   |      | Director |     | May 10,  2004 |
| Maureen  Plovnick        |   |      |     |     |
|                     |   |      |     |     |
| /s/  PATRICK J. MCDEVITT |   |      | Director |     | May 10,  2004 |
| Patrick  J. McDevitt     |   |      |     |     |

 

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