**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

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**FORM 10-K/A**

 

**Amendment No. 1**

 

**(Mark One)**
|       | ý | **ANNUAL  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE  ACT OF 1934**                                                                                                                                                   |
|------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |   | ** **                                                                                                                                                                                                                                             |
|       |   | **For the  Fiscal Year Ended December 31, 2004**                                                                                                                                                                                                  |
|       |   | ** **                                                                                                                                                                                                                                             |
|       |   | **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                  .** |

 

**Commissionfile number 0-08962**

 

**KENILWORTH SYSTEMS CORPORATION**

(Exact name of registrant asspecified in its charter)

 

| **NEW YORK**                               | ** ** | **84-1641415**                     |
|--------------------------------------------|------------|------------------------------------|
| (State of incorporation)                   |       | (IRS Employer  Identification No.) |
|                                       |       |                               |
| **185  WILLIS AVENUE,  MINEOLA, NEW YORK** | ** ** | **11501**                          |
| (Address of principal  executive offices)  |       | (zip code)                         |

 

**(516)741-1352**

(Registrant’s telephonenumber, including area code)

 

SECURITIES REGISTEREDPURSUANT TO SECTION 12(B) OF THE ACT:

 

**NONE**

 

SECURITIES REGISTEREDPURSUANT TO SECTION 12(G) OF THE ACT:

 
|   |   | **(TITLE OF  CLASS)**                   |   |   |
|--------|--------|-----------------------------------------|--------|--------|
|   |   | Common  Stock, par value $.01 per share |   |   |

 

Indicateby check mark whether the Registrant (1) has filed all reports required tobe filed by section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject tosuch filing requirements for the past 90 days. Yes ý No o

 

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 inPart III of this Form 10-K or any amendment to thisForm 10-K. o

 

Indicateby check mark whether the registrant is an accelerated filer (as defined inRule 12b-2 of the Act).

Yesý No o

 

 

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Theaggregate market value of the registrant’s Common Stock held by non-affiliatesof the registration based on the closing price as reported on the Pink SheetMarket on March 15, 2005 was $11,300,000.

 

Asof March 15, 2005, 141,226,245 Shares of the Registrant’s Common Stock,$0.01 par value, were outstanding.

 

Portionsof the Registrant’s Proxy Statement for its 2005 Annual Meeting of Stockholdersto be filed are incorporated by reference into Part III of this Form 10-K.

 

Atthe Annual Meeting of Shareholders held on July 17, 2002 the Shareholdersapproved the issuance of 20,000,000 Shares of restricted Common Stock toHerbert Lindo, the President of the Company for having assigned to the Companythe Patent that was granted on June 10, 2003.  Titled “SYSTEM ANDMETHOD FOR REMOTE ROULETTE AND OTHER GAME PLAY USING GAME TABLE AT A CASINO”. Upon Mr. Lindo’s request, the Shares have not been issued.  (See Part IIIItem 12 Beneficial Ownership (1).)

 

Atthe regular meeting of the Board of Directors of the Company held on December 1,2004 at which all six (6) members of the Board of Directors were present,the Directors (with Herbert Lindo, the Chairman and President abstaining)unanimously voted to issue 25,000,000 shares of restricted Common Stock toHerbert Lindo for having assigned in October 2003 to the Company, thePatent which is pending titled “METHOD AND SYSTEM FOR SUPPLYING FUNDS TO ATERMINAL FOR REMOTE WAGERING” (lottery terminals).  Upon Mr. Lindo’srequest, the shares have not been issued (see Part III Item 12 BeneficialOwnership (1)).

 

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TABLE OF CONTENTS

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

 

FORWARD LOOKING STATEMENTS

 

Inaddition to historical information, this Annual Report on Form 10-Kcontains certain forward-looking statements and Risk Factors. We expresslydisclaim any obligations on undertaking to release publicly any updates orrevisions to any forward-looking statements contained herein to reflect anychange in our expectations with regard thereto or to reflect any change inevents, conditions or circumstances on which any such forward-looking statementis based in whole or in part.

 

**Readers should amongst the other statements containedherein and future filings with the Securities and Exchange Commission,including the Quarterly Reports on Form 10-Q to be filed, carefully reviewin Item 7 the following: “Cautionary Statements for Purposes of the “SafeHarbor” Provisions of the Private Securities Litigation Reform Act of 1995 andRisk Factors”. All of the Risk Factors contained therein should be carefullyread**.

 

INTRODUCTORY NOTE TO PART IV

 

ThisAmendment No. 1 on FORM 10-K/A is being filed to restate certain amountswhich changed as the results of having been ordered by the Securities andExchange Commission to file the Company’s Financials as a “Development StageCompany” from the period beginning November 24, 1998 to the present at December 31,2004, the elimination of $4,256,926, which was the amount the Company disbursedon or about September 28, 1998 to be discharged from Chapter 7 BankruptcyProceedings, and certain adjustments to losses sustained for the periods ended December 31,2002, 2003 and 2004 for having discounted

 

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ConvertiblePromissory Notes from between ten cents ($.10) per share and twelve cents($.12) per share to five cents ($.05) per share.  The Company also added in PART II Item 5-MARKET PRICES OF THE COMPANY’S COMMON STOCK AND RELATED STOCKHOLDER MATTERS:

d)The Company issued 48,246,656 shares of its Restricted Common Stock since December 31,2002.  All of the shares may have therestrictions lifted pursuant to Rule 144 and 144K within one (1) ortwo (2) years which may substantially depress the trading price of theCompany’s Stock in the future.

 

PART I

 

ITEM 1—DESCRIPTION OF BUSINESS

 

THECOMPANY

 

KenilworthSystems Corporation, hereinafter referred to as “Kenilworth”, the “Company” or “we”,was incorporated on April 25, 1968 under the laws of the State of NewYork.  Kenilworth has been a publicly traded Company since 1968 formerlyon the National NASDAQ Market, presently on the OTC Pink Sheet Market sinceemerging from Bankruptcy Proceedings in September 1998.  Kenilworthis now being presented as a Development Stage Company.

 

GENERAL

 

Sinceearly in the year 2000 we have been solely engaged in developing patents,markets and investigating how best to obtain Governmental approvals, byengaging lobbyists and consultants that would allow television satellite andcable subscribers throughout the industrialized world to play and wager alongwith live, in-progress casino table games (Roulette, Craps, Baccarat and more)from strictly regulated casinos located in the United States and otherlocations around the world.

 

Employingthe latest encrypted satellite and cable technology and placing televisioncameras in strategic locations above the casino table games, without disruptingthe normal game-monitoring activities, (a separate control room would direct thevarious camera angles), and transmitting the table games over the digitalsatellite and digital cable networks to television sets (“TV’s”), which becomea platform for playing along with the casino games wherever TV’s are located.

 

Kenilworthtitled the overall proposed project “RoulabetteTM”.  There are 120 millionTV subscribers in the United States and more than 300 million subscribersthroughout the rest of the world (“The Market”).  On average, householdsin the U.S. have 2 1⁄2 TV’s.  (It is important since the satellite and cablecompanies will charge a separate fee for transmitting the table games). Public gathering places can accommodate (be able to network) up to 200 TV setswith a simple satellite receiving dish or direct cable connections.  Withwagering possible in homes, hotel rooms, resort rooms, pubs, restaurants, racetracks and other public gathering places the Company believes will become amore than $500 billion **net win**Marketwithin five (5) years throughout the industrialized world.

 

Tobest market the casino games, the Company is selecting lotteries throughout theworld to manage and operate the distribution and cash handling (deposits toplay and paying winnings) using the lotteries’ existing databases for the saleof lottery tickets, and paying winnings at regular lottery licensed terminallocations.

 

Allforty one (41) lotteries in the United States are owned and operated by Countyand State agencies.  Throughout the rest of the world lotteries are ownedby government agencies or non profit charitable agencies that distribute thenet earnings to benefit social and charitable programs, or by private entitiesthat pay a percentage of their net win to designated government agencies.

 

Theseforeign lotteries also have the same databases as lotteries in the United States,except most lotteries throughout Europe pool their lotteries between countries,not unlike Mega Millions and PowerBall in the

 

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UnitedStates, which makes the distribution simpler and very cost effective for bothKenilworth and the lotteries.

 

Thereare no technical breakthroughs required.  The technology is readilyavailable.  What is needed is to get through the maze of Local, County,State and Federal regulations in each U.S. State and foreign countries. When the first State in the United States grants the Company permission totransmit the broadcast from one of its casinos to their residents and to Statesthat do not have any casinos, (the entire East coast of the United States), theother forty (40) States with lotteries will join expeditiously.

 

Thelotteries will receive forty percent (40%) of the net win without **costs of any kind.** In addition, the States’general fund will receive five percent (5%) of the net win, also without **costs of any kind**.

 

InStates that designate exclusively lottery proceeds to schools and theirteachers it is a welcome contribution.  In other States it will closebudget gaps.

 

Inaddition, throughout the United States there are five hundred (500) facilitiesthat simulcast live in-progress horse/dog races.  At all facilities thereare several large TV screens that show the races from the different tracks withgeneral theater type seating for patrons and at private cubicles withtelevision sets outfitted with touch screens.  The cubicles rent foradditional fees.  After players open an account and select pin numbers,they can watch each race offered on the different tracks on the TV and placewagers on the different races by simply changing channels.  The players mayalso watch sporting events, the news, the Stock market reports, and in the nearfuture RoulabetteTM, live, in-progress casino table games.  The simulcastcenters have their own databases to manage the cash deposit and pay winnings onthe horse/dog races and will be able to manage the casino games, on the samemethods as the lotteries will manage RoulabetteTM.  With fifty to onehundred (50-100) private TV’s, available in simulcast centers, especially atnight, when fewer tracks are operating.

 

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 live casino table games such as Roulette, Craps and Baccaratwe believe will provide interaction, fun and far more excitement than playingmake believe animated (virtual) games. It is the next best thing, we believe,to actually being at the table in the casino.

 

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 fundsreadily available but hopes to obtain same, from investors, as soon asKenilworth can commence broadcasting from a casino in the United States orother casinos throughout the world.

 

Inprior years, Kenilworth completed a prototype system that allowed casinopatrons to play along with live in-progress casino table games **only within the confines of a casino,** viaclosed circuit television. Also in 1990, we developed and delivered for the TAB(Totalizator Agency Board) a quasy government agency of the State of Victoria,Australia, a cashless slot machine system. Both systems required debit cardsand central mainframe computers to manage the wagers. By making use of theexpertise applied in the development of the aforementioned systems we plan todevelop a second-generation system that will manage the wagers by themicroprocessor installed in TV set-top boxes to receive satellite broadcasts.This as planned would allow a player in an interactive manner, at a remotelocation (outside the casino confines), to experience the actual play andexcitement at the casino table game and to make wagers on the various games,without having to be physically present at the casino or casino table. There are no assurances we will be able to successfully develop any system.

 

Theproposed “RoulabetteTM” system also will provide RoulabetteTM terminals that maybe placed in resorts, racetracks or other gathering places which consists of apersonal computer (PC) with two (2) monitors.  One (1) monitorwill display the live in-progress casino table game play as well asadvertising.  The second, which will be outfitted with a touch screen,allows a player to place wagers directly over the games displayed on the firstmonitor.  It will also have a variable denomination bill acceptor and abar code ticket dispenser.  Both monitors will be housed in an attractiveenclosure. The RoulabetteTM terminal will

 

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bethe size of a typical “low boy” slot machine (desk top height).  Eachterminal would be self-sufficient, manages wagers from $0.25 to $100.00 or theequivalent in most any currency, and receives the table game play via simulcastdigital satellite TV transmissions (with dish antennas) or local digital cableconnection from legally operating casinos throughout the industrialized 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 “PowerBall” 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 almost prevent100% of the underaged from wagering on RoulabetteTM by use of lottery terminalsto make deposits in cash to wager along.

 

ProjectRoulabetteTM is a concept intended to be built and there can be no assurancesthat it will ever be built.  The Patented microprocessors to be installedin the TV set top boxes have not been designed.  We have as at December 31,2004, no agreement, customers except for proposals submitted for futurebusiness and there can be no assurances that we will ever have same.

 

# ***FeaturesArchive***

*Thisfollowing feature has been prepared by the groupe of Sorbonne University’s DESS Communication Audiovisuelle in Paris, France under the direction ofJulien 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 Watch Casino”service will be deployed in conjunction with States Lotteries. Digital TVsubscribers will go to their local lottery agents and buy an “admission ticket”.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 thegames.

 

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**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.

 

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

 

A second Patent which ispending titled “Method and Systems for Supplying Funds to a Terminal for RemoteWagering” which Patents the use of lottery terminals to manage RoulabetteTMwagers, also invented by Herbert Lindo and assigned to Kenilworth in 2003.

 

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. Actuallive experience will determine scheduling.

 

Thegaming industry is comprised primarily of five (5) service industries: (1) traditionalpari-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.

 

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KENILWORTH MANIFEST

 

**(TheManifest contains forward-looking statements****which isbased upon our beliefsand expectations of which there 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.  Recently a newspaper report published inthe Wall Street Journal in March 2004 indicated that nineteen (19) statesare exploring to use gambling to raise funding needed for schools and other taxrelief.

 

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 arena, and its Patent and Patentpending and its technology we believe would allow all of this to happen ofwhich there can 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 eight (8) billiondollars from U.S. citizens in 2004 and is expected to increase to ten to twelve(10-12) billion dollars in 2005, violating the 1961 Wire Act without paying anyU.S. taxes.  We expect that players will prefer to “Play Along with a LiveCasino Game” versus a virtual make believe game, assisting the U.S. AttorneyGeneral’s Office curbing illegal wagering in the United States by foreignwebsite operators that entice 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.

 

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.

 

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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. We are not within the constraints of the Internetgambling interdiction.  Our broadcast is similar to horseracing andsporting events, where the simulcast is transmitted via satellites to thevarious satellite dish subscribers, and then downloaded to cablecompanies.  Licensed Betting Offices, OTB offices and racetracks thatoffer out of state horse racing would pick up the satellite broadcasts withtheir own dish antennas.  We believe broadcasting casino play action viasatellite transmission within state boundaries does not violate the Federal1961 Wire Act.  We further believe it will be permitted by the InterstateHorseracing Act of 1978, USC 300, Et. Seq.  There can be no assurances ofthe foregoing.

 

Inprior years, the House of Representatives voted and passed the InternetGambling Enforcement Act, which bans credit and debit cards, checks, “WesternUnion type” wire transmission and all other means of transferring money for usein connection with Internet Wagering. Since the Senate did not approve acompanion Bill, the House and Senate must pass the legislation again in2004/5.  We believe there appears to be an anti-Internet gamblingsentiment in Congress and passage by both houses appears certain.  Ourmethod is distinct, as players using our system, unlike the Internet, will besubject to state casino regulations and will not be permitted to use credit ordebit cards. We believe there are no U.S. prohibitions to simulcast live actionof casino games as long as 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 simulcast broadcasts. We believe, although there can be no assurances, that our system is simple andalmost 100% foolproof.

 

Initiallyour proposed simulcast will be for entertainment purposes only and will startwith broadcast emanating from casinos in the United States and delivered toforeign jurisdictions that permit our type of casino gambling. Our proposedbroadcasts may actually contain live entertainment produced in Hollywood. Thirty (30) minutes of gambling, then thirty (30) minutes of entertainment, thenthirty (30) minutes of gambling and then back to entertainment.  Theentertainment would be inserted the same as commercials are presented on TVshows.  Kenilworth has been able to engage CenterStaging MusicalProductions, Inc. of Burbank, California to provide the entertainmentcontent for RoulabetteTM broadcasts.

 

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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).

 

**LOGICALQUESTIONS**:

(The following is a seriesof some questions, and what we believe,without assurances, are our answers to them.)

 

(1.)                               **Why aren’t major casinos inNevada and Atlantic City that have substantial resources, and the casino tablegames, 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. Patents for remote casino wagering and depositingcash funds to and they would only be able to operate under our license. Sharing profits with non-licensees is a violation of the Nevada Gaming ControlAct.

 

Further,if we ever commence broadcasting from Las Vegas or Atlantic City, we plan tobroadcast from casinos in rotation, in order that each casino will have theopportunity, on certain days, to broadcast during prime time.  When wemanage the broadcast in their casino, we will make use of the same crew in thecommunication room (4 technicians, 24 hours a day, 7 days a week).

 

Webelieve that casino centers would fare better in accepting a percentage of ournet win, which they would receive without any operating costs.

 

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 five hundredbillion dollar range ($500 billion).  That could earn billions of dollarsannually to participating jurisdictions.  Law enforcement agenciesestimate that Americans wagered $380 billion in 2001 on sporting events (mostlyillegally).  Our proposed system can be regulated and controlled (unlikeInternet sites).

 

(2.)                               **Why wouldn’t the U.S.Congress also prevent simulcasting of live casino table games, like it has withInternet 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 and substantial contributors toHouse and Senate campaigns.  It is big business that we believe would haveto be abolished if our proposed simulcasts are outlawed.  The probabilityof its abolition is remote.

 

(3.)                               **What will happen ifnon-casino or casino operators 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 OTHER GAMEPLAY USING GAME

 

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TABLEAT A CASINO” for remote live in-progress casino play was issued on June 10,2003 to Kenilworth and has been filed for approval in forty-nine (49) industrializedcountries including Russia and China.

 

(4.)                               **Will there be opposition byNevada casino operators?**

 

Thepast has proven to the Nevada casino industry that as more casinos are built inthe United States (we believe there are now more than nine hundred [900]casinos outside of Nevada), more visitors come to Nevada. Our worldwidebroadcasts would substantially enhance the overall demand to visit Las Vegas orany other state or jurisdiction that permits our broadcasts, and to othercasinos from which 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 Baccarat and more via digital satellite anddigital cable television broadcasts (simulcasts) emanating from strictlyregulated casinos located in the United States and other locations around theworld, to self-sufficient computer terminals dubbed “RoulabetteTM” and digitalsatellite and cable TV set top boxes. The RoulabetteTM terminal is a proposalintended to be built and there can be no assurances that it will ever bebuilt.  The microprocessors to be installed in the TV set top boxes havenot been designed. We have as at December 31, 2004, no agreements,customers or proposals for any future business and there can be no assurancesthat we will ever have same. **Reference isalso made to each of the “Risk Factors” that are set forth in Item 7.**

 

(2.)          Our RoulabetteTM terminals, wherever theywould be placed in bars, resorts, hotels, racetracks, etc. will only be leasedto the operators by the leasing company, which we will engage for thatpurpose.  If a terminal cannot meet the minimum revenue necessary to paythe monthly leasing charges, it will be moved to another location.  Byplacing RoulabetteTM terminals at horse race tracks, which also offer slotmachines, we will be transforming them into complete casinos, without theinherent start up and operating costs.

 

(3.)          We believe the thousand virtual casinowebsites via the Internet obtain sixty percent (60%) of their annual revenuefrom 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 foreign jurisdiction).

 

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 of cashless, variabledenomination and multiple game virtual PAT’s (“Player Activated Terminals”).  Prior thereto Kenilworth sponsored,

 

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withthe assistance 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 on June 13,1985.

 

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

 

Ourmarketing strategy consists of developing the RoulabetteTM terminal and theRoulabetteTM broadcasts. We estimate at this time, that we will need at leastapproximately ten million dollars ($10,000,000) for promoting the RoulabetteTMconcept. We do not have this money nor do we have any agreements orunderstanding 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 technically oriented employees who will beable to develop RoulabetteTM. It will be necessary for us to obtain personnelqualified and with the expertise to develop RoulabetteTM. We would require six (6) additionalemployees and several consultants and there can be no assurances of our beingable to obtain any necessary personnel. There can be no assurances of theavailability of any such employees and consultants.  The Company willoutsource the development of RoulabetteTM and the microprocessors for the TV settop 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 in Europe, Russia andon Caribbean islands, totally unregulated. In RoulabetteTM, the play-alongbroadcast emanates from casinos that are regulated by strict and comprehensive rules andstate and jurisdiction regulations, enforced by gaming control regulators andeverybody plays along with the same live table game. There is a world ofdifference between playing in a virtual make believe casino compared with anactual casino.

 

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 interactive TV set top boxes that convertregular television sets into minicomputers within their state or jurisdiction.There can be no assurances that we will be able to obtain any arrangement withany of these 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 andrecently with remote purchase of lottery tickets in many states within theUnited States.

 

Afterwe obtain permission to play RoulabetteTM of which there can be noassurances,  in a given state and engages a wager management organizationin order to promote digital satellite and interactive television to the state’sresidents, Kenilworth would install the eighteen (18) inch dish antenna andconverter box required to receive digital TV programming and interactive TV atits own cost, if the subscriber opens a RoulabetteTM wagering account for twohundred dollars ($200). In addition, Kenilworth would pay the monthlysubscription fees to view all digital TV programming offered and the Internetservice provider

 

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(ISP)subscription fee if the 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 the broadcast signal, all that would be required isan eighteen (18) inch dish TV antenna and distribution equipment. TheRoulabetteTM terminals are intended to be self-sufficient and accept dollarbills (or script, to control the amount an individual is allowed to wager inone day or other time period). We plan to lease all the equipment necessary toparticipants 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 and 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 assurances can be given that we can obtainany 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 sharing arrangementsto franchisees, which will require leasing all the equipment necessary to thefranchisee, 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.

 

Kenilworthpresently has engaged lobbyists in four (4) states at an annual cost offour hundred eighty four thousand dollars ($484,000).

 

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 payment by awell-recognized international bank.

 

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,all of which have vastly greater capital resources and substantially morepersonnel than the Company and may have under development systems that directlycompete with 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.

 

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PATENTS,TRADEMARKS AND INTELLECTUAL PROPERTY

 

Ourmost important assets are Patents we have acquired and RoulabetteTM related trademarksand service marks.  The Patent granted on June 10, 2003 titled “SYSTEMAND METHOD FOR REMOTE ROULABETTE AND OTHER GAME PLAY USING GAME TABLE AT ACASINO” and Patent Application filed October 15, 2003, entitled “METHODAND SYSTEM FOR SUPPLYING FUNDS TO A TERMINAL FOR REMOTE WAGERING”, trademarksROULABETTETM, “PLAY ALONG WITH NEVADA, LIVETM”, “ROULABETTE PLAY CARDTM” as inpre-marked cards similar to lottery cards to select number in each game, usedwith terminals “ROULABETTE SWIPE CARD” to activate set-top boxes to playRoulabetteTM and “PLAY ALONG WITH ROULABETTETM, LIVE”.

 

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 may be required 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 necessary license in an applicable jurisdiction.The following discussion is not necessarily complete, or current regarding lawsand regulations that may be applicable to us.  Any present laws are alsosubject 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 county regulatoryagencies (collectively, the “Nevada Gaming Regulators”). The laws, regulationsand supervisory procedures of the Nevada Gaming Regulators are based upondeclarations of public policy which are concerned with, among other things, (i) thecharacter of persons having any direct or indirect involvement with gaming, (ii) applicationof appropriate accounting practices and procedures, (iii) maintenance ofinternal fiscal affairs and the safeguarding of assets and revenues, (iv) recordkeeping and reporting to the Nevada Gaming Regulators, (v) fair operationsof games, and (vi) the raising of revenues through taxation and licensingfees.

 

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

 

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Kenilworth’ssecurities must report the acquisition to the Nevada Gaming Regulators. Anyperson who becomes a beneficial owner of ten percent (10%) or more ofKenilworth’s securities must apply for a finding of suitability. The NevadaRegulators have the power to investigate 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.

 

**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 the Federal Act. Violations of the Federal Act may result in seizureor forfeiture of equipment, as well as other penalties.

 

**Other Regulations**

 

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 no assurances,we plan to engage sub-contractors to assemble/manufacture the terminals fromstandard or specially manufactured (to our specifications) electronic, TV, andother components purchased from vendors or manufactured by subcontractors.

 

EMPLOYEES

 

Kenilworthat present has five (5) full time employees. Four (4) performadministrative work and one (1) other works on research related to casinowagering and marketing around the world in addition to the officers that managethe affairs of the Company. The Company has engaged consultants to assist us inthe Asian market and that may manage the proposed satellite transmissionprograms, and others that may assist in the marketing of RoulabetteTM broadcaststhroughout the industrialized world.

 

Kenilworthmaintains medical insurance for its employees, who do not contribute to thecosts of the Plan.

 

BACKLOG

 

Wedo not have any backlog.

 

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ITEM 2—PROPERTIES

 

Kenilworthleases two thousand (2,000) square feet in 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.

 

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        |       | 79      |       | PRESIDENT,CHAIRMAN  OF THE BOARD AND CHIEF FINANCIAL OFFICER |       | 1972                                      |
| GINO  SCOTTO          |       | 35      |       | CHIEF  EXECUTIVE OFFICER AND DIRECTOR                        |       | 2001                                      |
| MAUREEN  PLOVNICK     |       | 38      |       | CORPORATE  SECRETARY, VICE PRESIDENT AND DIRECTOR            |       | 2000                                      |
| JOYCE  CLARK          |       | 68      |       | VICE  PRESIDENT AND DIRECTOR                                 |       | 1998                                      |
| KIT  WONG             |       | 75      |       | VICE  PRESIDENT AND DIRECTOR                                 |       | 1999                                      |
| PATRICK  J. MC DEVITT |       | 63      |       | VICE  PRESIDENT AND DIRECTOR                                 |       | 2001                                      |
| ANDREW  HIRKO         |       | 28      |       | VICE  PRESIDENT                                              |       | 2004                                      |
| CHRISTOPHER  JENKINS  |       | 23      |       | VICE  PRESIDENT                                              |       | 2004                                      |

 

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 the latter part of August 2005.

 

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PART II

 

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

 

(a) Kenilworthemerged from Bankruptcy Proceedings in September of 1998, its Common Stockwhich had been trading on the NASDAQ National Market, resumed trading on theOTC Pink Sheets under the old trading symbol “KENS”. The following table setsforth high and low closing sales prices for our Common Stock, as reported onthe OTC Pink Sheets.

 
| ** **                      | ** ** | **LOW** | ** ** | **HIGH** | ** ** |
|---------------------------------|------------|---------|------------|----------|------------|
| **2003**                        |       |    |       |     |       |
|                            |       |    |       |     |       |
| January 1, 2003            |       |    |       |     |       |
| Through March 31, 2003     |       | $       | 0.050      |     | $          | 0.215 |   |
|                            |       |    |       |     |       |
| April 1, 2003              |       |    |       |     |       |
| Through June 30, 2003      |       | $       | 0.080      |     | $          | 0.190 |   |
|                            |       |    |       |     |       |
| July 1, 2003               |       |    |       |     |       |
| Through September 30, 2003 |       | $       | 0.058      |     | $          | 0.200 |   |
|                            |       |    |       |     |       |
| October 1, 2003            |       |    |       |     |       |
| Through December 31, 2003  |       | $       | 0.038      |     | $          | 0.118 |   |
| **2004**                        |       |    |       |     |       |
|                            |       |    |       |     |       |
| January 1, 2004            |       |    |       |     |       |
| Through March 31, 2004     |       | $       | 0.450      |     | $          | 0.071 |   |
|                            |       |    |       |     |       |
| April 1, 2004              |       |    |       |     |       |
| Through June 30, 2004      |       | $       | 0.330      |     | $          | 0.125 |   |
|                            |       |    |       |     |       |
| July 1, 2004               |       |    |       |     |       |
| Through September 30, 2004 |       | $       | 0.165      |     | $          | 0.065 |   |
|                            |       |    |       |     |       |
| October 1, 2004            |       |    |       |     |       |
| Through December 31, 2004  |       | $       | 0.155      |     | $          | 0.080 |   |
| **2005**                        |       |    |       |     |       |
|                            |       |    |       |     |       |
| January 1, 2005            |       |    |       |     |       |
| Through March 15, 2005     |       | $       | 0.280      |     | $          | 0.105 |   |

 

(b) Holders. There were approximately eight thousand (8,000) holders of recordof Common Stock of Kenilworth as of March 15, 2005.

 

(c) Dividends. Kenilworth has not paid any dividends on its Common Stock. We planto apply any earnings it achieves to expansion of the business and does notexpect to pay any dividends in the foreseeable future.

 

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

 

TheCompany issued 48,246,656 shares of its Restricted Common Stock since December 31,2002.  All of the shares may have therestrictions lifted pursuant to

 

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Rule 144and Rule 144K within one (1) or two (2) years, which maysubstantially depress the trading price of the Company’s Stock in the future.

 

(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, 2004.

 
|                                                    |   | **(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 |   | 5,500,000                                                                           |   | $                                                                                       | 0.15   |                                                                                                                                                        | 4,500,000 |   |
|                                                         |        |                                                                                     |        |                                                                                         |        |                                                                                                                                                             |           |  |

 

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.

 

SelectedFinancial Data for the five (5) years ended December 31, 2004, are asFollows:

 

SUMMARY OF OPERATIONS

 
| ** **                                         | ** ** | **2004**     | ** ** | **2003**     | ** ** | **2002**     | ** ** | **2001**   | ** ** | **2000**   | ** ** | **PERIOD FROM  NOVEMBER 24,  1998 TO  DECEMBER 31,  2004** | ** ** |
|----------------------------------------------------|------------|--------------|------------|--------------|------------|--------------|------------|------------|------------|------------|------------|----------------------------------------------------------------------|------------|
| ** **                                         | ** ** | **Restated** | ** ** | **Restated** | ** ** | **Restated** | ** ** | ** ** | ** ** | ** ** | ** ** | **Restated**                                                         | ** ** |
| Net sales from operations                          |       | $            | —     |         | $          | —       |       | $          | —     |       | $          | —                                                               |       | $ | — |   | $ | — |   |
| Other income                                       |       | $            | —     |         | $          | —       |       | $          | —     |       | $          | —                                                               |       | $ | — |   | $ | — |   |
| Net loss accumulated during the development  stage |       | $            | 1,860,296  |         | $          | 768,229      |       | $          | 384,889    |       | $          | 390,202                                                              |       | $ | 133,964 |   | $ | 3,559,947 |   |
| Loss per common share                              |       | $            | 0.010      |         | $          | 0.010        |       | $          | 0.007      |       | $          | 0.007                                                                |       | $ | 0.002 |   | $ | 0.040 |   |
| Loss per common share - diluted                    |       | $            | 0.010      |         | $          | 0.010        |       | $          | 0.007      |       | $          | 0.007                                                                |       | $ | 0.002 |   | $ | 0.040 |   |
| Consolidated balance sheet data:                   |       |         |       |         |       |         |       |       |       |       |       |                                                                 |       |
| Total liabilities                                  |       | $            | 313,414    |         | $          | 328,916      |       | $          | 231,029    |       | $          | 175,441                                                              |       | $ | 28,365 |   | $ | 873,359 |   |
| Stockholders’ Equity (deficit)                |       | $            | (109,783   | )            | $          | (263,624     | )          | $          | (208,512   | )          | $          | 158,888                                                              |       | $ | 19,494 |   | $ | 581,919 |   |

 

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

 

Thediscussion following should be read in conjunction with, and is qualified inits entirety by, the consolidated financial statements and the notes theretoincluded elsewhere in this Annual Report on Form 10-K/A.

 

(A) RESULTSOF OPERATIONS

 

Sincewe emerged from bankruptcy proceedings on September 28, 1998, we have hadno revenues from operations, and therefore sustained losses from generaladministration expenses amounting to $1,860,296 in 2004, $768,229 in 2003 and$263,624 in 2002.  Kenilworth has had norevenues from operations during the past thirteen (13) years and there can beno assurances that it will ever have revenues from present planned operations.

 

(B) LIQUIDITYAND CAPITAL RESOURCES

 

Kenilworthhas not conducted any business and operations since 1991. At December 31,2004, 2003 and 2002 we had a deficiency in working capital of $219,659, $324,911, and $208,512, respectively. In Kenilworth’s present state of operation toformulate a viable business plan, Kenilworth requires little funding tocontinue this planning. We have been dependant upon the resources of itsPresident, who receives no compensation, and funds received from privateinvestors, totaling $652,000 in 2004, $305,000 in 2003 and $122,500 in 2002. In addition the Company issued restricted Common Stock for services totaling$855,449 for 17,072,651 shares in 2004, $78,956 for 7,895,558 shares in 2003and $159,195 for 14,648,275 shares in 2002.

 

Ourpresent plans are to develop a wagering system titled “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 have sufficient liquidity and capitalresources to develop our business or to remain in business and we may neverhave 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/A and Kenilworth’s other filingswith the Securities Exchange Commission contain “forward- looking” statementswithin the meaning of section 27A of the Securities Act of 1933, asamended, and Section 21E of the Securities Exchange Act of 1934, asamended, and is subject to the safe harbors created thereby. Such informationinvolves important risks and uncertainties.

 

Forward-LookingStatements

 

ThePrivate Securities Litigation Reform Act of 1995 provides a “safe harbor” forforward-looking statements. Certain information included in this Annual Reporton this Form 10-K/A contains statements that are forward-looking,including, but not limited to, statements relating to our business strategy anddevelopment activities as well as other capital spending, financing sources,the effects of regulation (including gaming and tax regulations), expectationsconcerning future operations, margins, profitability and competition. Any statementscontained in this Form 10-K/A that are not statements of historical factmay be deemed to be forward-looking statements. Without limiting the generalityof the foregoing, in some cases, you can identify forward-looking statements byterminology such as “may,” “will,” “should,” “would,” “could,” “believe,” “expect,”“anticipate,” “estimate,” “intend,” “plan,” “continue” or the negative of theseterms or other comparable terminology. Such forward-looking informationinvolves important risks and uncertainties that could significantly affectanticipated results in the future and, accordingly, such results may differfrom those expressed in any forward-looking statements made by us. These risksand uncertainties include, but are not limited to, our lack of recent operatinghistory, our dependence on Herbert Lindo, our Chairman and President who isnearly eighty (80) years old and existing

 

19

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management,general domestic or international economic conditions, pending or future legalproceedings, changes in federal or state tax laws or the administration of suchlaws, changes in gaming laws or regulations (including the legalization ofgaming in certain jurisdictions), applications for licenses and approvals underapplicable jurisdictional laws and regulations (including gaming laws andregulations).  You should not place undue reliance on any forward-lookingstatements, which are based only on information currently available to us. Weundertake no obligation to publicly release any revisions to suchforward-looking statements to reflect events or circumstances after the date ofthis 10-K/A report for the year ended December 31, 2004.

 

**RISKFACTORS**

 

**NO OPERATING HISTORY**

 

Wehave had no revenues from operations since 1991. We emerged from 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 thetermination of our business**.

 

**WE HAVE NO WORKING CAPITAL**

 

Asof December 31, 2004 the working capital deficiency of Kenilworth was $219,659.This will not enable Kenilworth to achieve any of its planned operations. Therecan be no assurances that Kenilworth will ever have sufficient working capitalto engage in its planned operations.  Although we have been able to obtainworking capital from investors that purchase Convertible Promissory Notes andby issuing restricted Common Shares for services rendered.

 

**OUR BUSINESS IS ONLY IN THE PLANNING STAGE**

 

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 RoulabetteTM terminal is aproposal intended to be built and there can be no assurances that it will everbe built.  The microprocessors to be installed in the TV set top boxeshave not been designed. We have as at December 31, 2004, no agreements,customers or proposals for any future business and there can be no assurancesthat we will ever have same.

 

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

 

Inorder to commence to develop the RoulabetteTM terminal and the RoulabetteTMbroadcasts, we estimate at this time, that we will need at least approximatelyten million dollars ($10,000,000). We do not have this money nor do we have anyagreements or understanding to procure this money. We may never get this money.If we do obtain this money, it may not be sufficient. Further, should suchmonies be available it may not be available on terms satisfactory to Kenilworthor it may be available on such terms that substantially dilute the interest ofexisting shareholders. If we obtain this money, we will need substantialadditional funds for the proposed marketing plan and there can be no assurancesthat such funds will ever be available to allow Kenilworth to engage inbusiness on a profitable basis.

 

**OUR BUSINESS IS SUBJECT TO OUR ABILITY TO OBTAIN ANDRETAIN 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 canbe no

 

20

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assurancesof the availability of any such employees and consultants.  The Companyexpects to outsource the development of RoulabetteTM and the microprocessors forthe TV set top boxes.  No assurances can be given that the Company will beable to do this successfully.

 

**WE ARE DEPENDANT UPON OUR PRESIDENT**

 

Kenilworthhas been dependant upon the services of its president Herbert Lindo who isseventy-nine (79) years old. Herbert Lindo has performed his services duringthe past thirteen (13) years without compensation. Should Kenilworth procureworking capital, there can be no assurances that he will continue to workwithout receiving compensation. There also can be no assurances of HerbertLindo’s continued availability.  We believe without assurances thatpresent management is capable to continue our present plans in the event thatHerbert Lindo is not available.

 

**RAPID CHANGES 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 ENGAGED IN 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 WERE GRANTED A PATENT FOR THE VARIOUS ASPECTS OFSIMULCAST 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 filed the Patent for approval inforty-nine (49) countries in the industrialized world including Russia and China.There can be no assurances that foreign patents will be issued and thechallenges will not be instituted against the validity or enforceability of ourpatent.  Herbert Lindo also filed two (2) Patents in the U.S. PatentOffices in September and October 2004 which Patents have beenpublished to use lottery terminals to accept deposits for wagers placed withthe TV set top boxes and the use of Play Cards similar to lottery tickets,which have also been assigned to the Company by Herbert Lindo.

 

**OUR ROULABETTETM TERMINALS ARE SUBJECT TO VARIOUSFEDERAL, STATE, LOCAL AND FOREIGN JURISDICTION 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 thatcasino operators will ever participate in Kenilworth’s business.

 

21

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**OUR OFFICERS AND DIRECTORS WILL HAVE SIGNIFICANTCONTROL OVER US AND MAY APPROVE OR REJECT MATTERS CONTRARY TO A VOTE OFOUR 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.

 

**SHARES ELIGIBLE FOR FUTURE SALE COULD CAUSE OUR STOCKPRICE 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 15,2005 we had 141,226,245 shares of Common Stock outstanding of whichapproximately 100,000,000 are eligible for sale by our Shareholders under Rule 144of the Securities Act of 1933 as amended or are otherwise registered for sale.

 

**WE DO NOT INTEND 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

 

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

 

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

 

None

 

ITEM 9A—CONTROLS AND PROCEDURES

 

a.)            Disclosure Controls and Procedures

 

TheCompany has evaluated, under the supervision and with the participation of theCompany’s management including the Company’s Chairman and Chief ExecutiveOfficer along with the Company’s Chief Financial Officer who is the President,the effectiveness of the Company’s disclosure controls and procedures (asdefined in Rules 13a-15(e) and 15d-15 (e) under the SecuritiesExchange Act of 1934, as amended (the “Exchange Act”) as of the end of theperiod 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 that evaluation, the Company’s Chairmanand Chief Executive Officer along with the Company’s Chief Financial Officerhave concluded that the Company’s disclosure controls and procedures wereeffective as of the end of the period covered by this Report at a reasonableassurance level.

 

b.)           Changes in Internal Control over FinancialReporting

 

Therewas no change in the Company’s internal control over financial reporting thatoccurred during the annual period ending December 31, 2004, that hasmaterially affected, or is reasonably likely to materially affect the Company’sinternal control over financial reporting.

 

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PART III

 

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THEREGISTRANT

 
| **Name**              | ** ** | **Age** | ** ** | **Position**                                                                        |
|-----------------------|------------|---------|------------|-------------------------------------------------------------------------------------|
|                  |       |    |       |                                                                                |
| Herbert  Lindo        |       | 79      |       | Director,  Chairman of the Board, President, Treasurer, and Chief Financial Officer |
|                  |       |    |       |                                                                                |
| Gino  Scotto          |       | 35      |       | Director  and Chief Executive Officer                                               |
|                  |       |    |       |                                                                                |
| Maureen  Plovnick     |       | 38      |       | Director,  Corporate Secretary and Vice President                                   |
|                  |       |    |       |                                                                                |
| Joyce  Clark          |       | 68      |       | Director                                                                            |
|                  |       |    |       |                                                                                |
| Kit  Wong             |       | 75      |       | Director                                                                            |
|                  |       |    |       |                                                                                |
| Patrick  J. Mc Devitt |       | 63      |       | Director                                                                            |
|                  |       |    |       |                                                                                |
| Andrew  Hirko         |       | 28      |       | Vice  President                                                                     |
|                  |       |    |       |                                                                                |
| Christopher  Jenkins  |       | 26      |       | 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 electedto that office.  Mr. Lindo devotes his full time to the business ofKenilworth.

 

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 devotes only part of his time tothe business of Kenilworth.

 

MaureenPlovnick was elected the Corporate Secretary in August 2001 and a Directorin October 2002. Mrs. Plovnick is a 1989 graduate of FordhamUniversity and holds a Bachelor of Science degree in Marketing with minors inboth Psychology and Sociology. Before joining the Company, Mrs. Plovnickwas employed in her profession by Fortunoff and The Hyman Companies.  Mrs. Plovnickdevotes her full time to the business of Kenilworth.

 

KitY. Wong has served as a Director of Kenilworth since 1999. He is part owner andoperator of several Chinese restaurants in the New York metropolitanarea.  Mr. Wong devotes only a portion of his time to the business ofKenilworth.

 

PatrickJ. McDevitt has been a licensed representative for Securities firms for thepast five (5) years. He retired in 2003 from the Securities business andwill, in the very near future, devote all of his time as a Vice President ofMarketing for the Company.  Mr. McDevitt devotes only a portion ofhis time to the business of Kenilworth at this time.

 

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, who is engaged in business as a medical transcriber. JoyceD. Clark is the ex-wife of Herbert Lindo, they divorced in 1980.   Mrs. Clarkdevotes only a portion of her time to the business of Kenilworth.

 

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AndrewHirko, Mr. Lindo’s grandson, joined the Company on February 1,2004.  He is a graduate from Stony Brook University and holds a B.S. inEconomics.  Mr. Hirko devotes his full time to the business ofKenilworth.

 

ChristopherJenkins is the stepson of Mr. Lindo.  He joined the Company on February 1,2004.  He is a graduate with honors from Pratt Institute.  He iscontinuing his studies for his Master’s Degree.  Mr. Jenkins devoteshis full time to the business of Kenilworth.

 

DIRECTORS IN OTHER PUBLIC COMPANIES

 

NONE

 

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

 

NONE

 

SECTION 16(a) BENEFICIALOWNERSHIP REPORTING COMPLIANCE

 

Section 16(a) ofthe Securities Exchange Act of 1934 requires Kenilworth’s Executive Officersand Directors, and persons who beneficially own more than ten percent (10%) ofour Common Stock, to file initial reports of ownership and reports of changesin ownership with the Securities and Exchange Commission. Executive Officers,Directors and greater than ten percent (10%) beneficial owners are required bySEC regulations to furnish us with copies of all Section 16(a) formsthey file.  The Company is presentlyreviewing the compliance for the foregoing.

 

AUDITCOMMITTEE AND CHARTER

 

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

 

1.)            Review the adequacy and effectiveness of the Company’ssystem of internal financial controls and accounting practices to achievereliability and integrity in the Company’s financial statements, and initiatesuch examinations of such controls and practices as the Audit Committee deemsadvisable.

 

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.

 

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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.

 

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/A.

 

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

 

11.)          Meet with the Chief Financial Officer and theIndependent Accountants, in separate executive sessions, to discuss any mattersthat the committee or these groups believe should be considered privately.

 

12.)          Take such other actions concerning theCompany’s accounting and financial functions as the Committee deems appropriatewith respect to the matters described above.

 

**Code of Ethics**

 

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 Registrantfiles with or submits to the Securities and Exchange Commission and in otherpublic communications made by the Registrant; compliance with applicablegovernmental laws, rules and regulations; prompt internal reporting of anyviolations of the foregoing to an appropriate person and accountability foradherence of the foregoing.  A formal Code of Ethics is expected to beadopted shortly.  It will be filed with the Securities and ExchangeCommission.

 

ITEM 11 — EXECUTIVE COMPENSATION

 

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

 

Aggregated Option/SARExercises in Last Fiscal Year

And FY-End Option/SAR Values

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

 

Nooptions or SARs were granted or exercised during the year ended December 31,2004.

 

b.)           The Registrant has no employment agreementswith any of its Executive Officers or Directors.

 

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c.)            The Registrant has no compensation committeeat this time.

 

d.)           Stock Performance Graph is not applicable.

 

**TOTALRETURN TO SHAREHOLDER’S**

**(DIVIDENDSREINVESTED MONTHLY)**

 

Kenilworthhas not declared a dividend since its inception in 1968.

 

e.)            The following table sets forth the totalcompensation of the President and each Executive Officer of Kenilworth whosetotal 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                     |       | 2004       |       | 0                        |       | 0                           |       | 0 |   | 0 |   | 0 |   | 0 |   | 0 |   |
|                               |       | 2003       |       | 0                        |       | 0                           |       | 0 |   | 0 |   | 0 |   | 0 |   | 0 |   |
|                               |       | 2002       |       | 0                        |       | 0                           |       | 0 |   | 0 |   | 0 |   | 0 |   | 0 |   |
|                               |       | 2001       |       | 0                        |       | 0                           |       | 0 |   | 0 |   | 0 |   | 0 |   | 0 |   |

 

HerbertLindo received no compensation during the past four (4) years and noExecutive Officer received any compensation in excess of $100,000 during thepast three (3) fiscal years.

 

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

 

Thefollowing table sets forth as of March 15, 2005 the ownership with respectto each Executive Officer and Director and each person known to ownbeneficially more than five percent (5%) of the Company’s Common Stock.

 

Theinformation provided in the table is based on Kenilworth’s records, informationfiled with the Securities and Exchange Commission and information provided toKenilworth, except where otherwise noted.

 

Thenumber of shares beneficially owned by each person, Director or ExecutiveOfficer is determined under rules of the Securities and ExchangeCommission, and the information is not necessarily indicative of beneficialownership for any other purpose.  Under such rules, beneficial ownershipincludes any shares as to which the individual has the right to acquire as of May 31,2005 (60 days after March 31, 2005) through the exercise of any stockoption or other right.  Unless otherwise indicated, each person has solevoting and investment power (or shares such powers with his spouse) withrespect to the shares set forth in the following table.

 

26

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**BENEFICIALOWNERSHIP 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                  |       | 50,000,000                                            |       | 26.1                            | %          |
| 185  Willis Avenue                                                                      |       | $0.01 par value               |       |                                                  |       |                            |       |
| Mineola,  NY 11501                                                                      |       |                          |       |                                                  |       |                            |       |
|                                                                                    |       |                          |       |                                                  |       |                            |       |
| Gino  Scotto (3)                                                                        |       | Common Stock                  |       | 9,000,000                                             |       | 4.7                             | %          |
| 1500  Old Country Road                                                                  |       | $0.01 par value               |       |                                                  |       |                            |       |
| Plainview,  NY 11803                                                                    |       |                          |       |                                                  |       |                            |       |
|                                                                                    |       |                          |       |                                                  |       |                            |       |
| The  total number of shares beneficially owned by all Directors and Executive  Officers |       | Common Stock  $0.01 par value |       | 8,200,000                                             |       | 4.2                             | %          |
|                                                                                    |       |                          |       | 67,200,000                                            |       | 35.0                            | %          |

 

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(1)   At the Annual Meeting of Shareholders held onMay 28, 2003 the Shareholders approved the issuance of twenty million(20,000,000) restricted Common Shares of the Company to Herbert Lindo, theInventor of U.S. Patent 6,575,834 B1 dated June 10, 2003 entitled “SYSTEMAND 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 Performanceand Equity Incentive Plan have not been exercised.  The delay of issuingthe twenty million (20,000,000) shares is by Mr. Lindo’s request.

 

(2)   At the regular meeting of the Board ofDirectors of the Company held on December 1, 2004 at which all six (6) membersof the Board of Directors were present, the Directors (with Herbert Lindo, theChairman and President abstaining) unanimously voted to issue 25,000,000 sharesof Restricted Common Stock to Herbert Lindo for having assigned in October 2003to the Company, the Patent which is pending titled “METHOD AND SYSTEM FORSUPPLYING FUNDS TO A TERMINAL FOR REMOTE WAGERING” (lottery terminals). Upon Mr. Lindo’s request, the shares have not been issued, since allshares to be issued to Mr. Lindo may be issued immediately the Companyconsiders the shares as beneficial ownership.

 

(3)   Includes shares owned by the members of Mr. GinoScotto’s family.

 

ITEM 13 — CERTAIN RELATIONSHIPS AND RELATEDTRANSACTIONS

 

NONE

 

ITEM 14 — PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

TheCompany has appointed Demetrius & Company, LLC. as Independent Auditor’sfor the fiscal year ending December 31, 2004 and to restate the Company’sfinancials as A Development Stage Company as directed by the SEC. Representatives of Demetrius & Company, LLC. are expected to bepresent at the annual meeting and will have the opportunity to make a statementif they desire to do so and are expected to be available to respond toappropriate questions.

 

**Fees Incurred by Kenilworth**

 

Feesfor professional services provided by the Company’s Independent Auditor,Demetrius & Company, LLC. are:

 

27

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| ** ** | ** ** | **2004** | ** ** | **2003** | ** ** | **2002** | ** ** |
|------------|------------|----------|------------|----------|------------|----------|------------|
| Audit Fees |       | $        | 20,000     |     | $          | 9,000    |       | $ | 9,000 |   |
|            |            |          |            |          |            |          |            |  |  |  |

 

Audit fees are for professional services rendered in connection withthe audit of the Company’s annual financial statements, the review of its quarterlyfinancial statements and the restatements of the years 2002, 2003 and 2004 as ADevelopment Stage Company. No other services were provided by Demetrius &Company, LLC.

 

TheCompany has no Audit Committee.

 

PART IV

 

ITEM15—EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

 

(a)           (1) Financial Statements

 
| Report  of independent registered accounting firm                                                                | 31     |
|------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                             |   |
| Consolidated balance  sheets as of December 31, 2004 and 2003                                               | 32     |
|                                                                                                             |   |
| Consolidated  statement of operations and deficit for the periods ended December 31,  2004, 2003 and 2002   | 33     |
|                                                                                                             |   |
| Consolidated statement of  cash flows for the periods ended December 31, 2004, 2003 and 2002                | 34     |
|                                                                                                             |   |
| Consolidated  statement of changes in stockholders equity the years ended December 31,  2004, 2003 and 2002 | 35     |
|                                                                                                             |   |
| Notes to consolidated  financial statements                                                                      | 36-44  |

 

(b)           On July 12, 2002 Kenilworth filed an 8-Kin which the Company reported 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”) 10,333,450 restrictedcommon shares of Kenilworth Systems Corporation (the “Shares”) that he hadowned 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.  HerbertLindo owned Real Estate at the time valued in excess of $128,062 which theSheriff could have seized instead of the Kenilworth Shares.

 

Kenilworth claims that the Sheriff’s Auction Salewas conducted in a fraudulent manner by (1) failing to comply with the rules andregulations set forth under the Securities and Exchange Commission Act of 1933and 1934, as amended (The “Acts”) the New York State Securities Laws, and (2) byfailing to properly advertise the Sale, failing to notify any or all Kenilworthshareholder’s (numbering approximately 5,500), and (3) failing to registerthe Restricted Shares with the Securities and Exchange Commission beforeconducting the Sale or in the absence of registering the Shares, obtain aNo-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 andbid only one thousand dollars ($1,000) for all the shares when the marketvalue of the 10,333,450 shares was nine hundred thirty thousand ten dollars andfifty cents ($930,010.50).  He should have adjourned the auction and thenadvertise the auction sale in appropriate newspapers that quoted Kenilworth SystemsCorporation

 

28

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shares which has traded since 1968 under the trading symbol “KENS” onorganized exchanges NASDAQ and OTC, and (6) by failing to file requirednotices of 13 D-G as provided under the Acts.  Tappan Zee and its Counseland the Sheriff’s department were advised in court documents and correspondencethat their acts violated Federal and State Securities Laws and of the existenceof the Real Property, prior to the Sale.  By the attorneys for Tappan Zee’sfailure to seize the Real Property owned by Herbert Lindo raises the questionof complicity to take control of Kenilworth instead of satisfying a disputedclaim for $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.  HerbertLindo and Kenilworth have not commenced any proceedings against the Sheriff’sOffice of Nassau County and Tappan Zee and the attorney’s representationsTappan Zee since we believe that the Statue for Security Fraud does not expireuntil June 26, 2007 or possibly 2009.

 

At the this time, the Company does not wish to spendthe substantial funds required to commence the action nor does Mr. Lindohave the time, at present, to assist in any law suit Kenilworth may instituteon behalf of its Shareholders.

 

Kenilworth will distribute the proceeds, if any,from any settlement or court award to the Shareholders that owned KenilworthCommon Stock on or before June 26, 2002.

 

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 wascomplicent 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 Company was desirous of having the twomillion (2,000,000) shares returned, reducing the claim against the NassauCounty Sheriff’s Department and for future free distribution to Kenilworth’sshareholders on record on June 26, 2002 which were not made aware by theSheriff of the Auction Sale.

 

29

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

 
| 3.1    |   | Certificate  of Incorporation and prior Amendments thereto are incorporated by reference  to Exhibit 3.1.                                                                                                                                                                                                |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                     |
| 3.2    |   | Certificate  of Amendment to the Certificate of Incorporation dated May 25, 2004 Annexed  hereto.                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                     |
| 3.3    |   | The  Bylaws are Annexed in Exhibit 3 (2) to the Registrant’s Annual Report on FORM  10-K for the fiscal year ended December 31, 2001.                                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                     |
| 10.1   |   | Sample  Convertible Promissory Note                                                                                                                                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                     |
| 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, 2001.                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                     |
| 10.3   |   | 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.                            |
|   |   |                                                                                                                                                                                                                                                                                                     |
| 21.1   |   | Subsidiaries  of the Registrant:                                                                                                                                                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                     |
|   |   | Video  Wagering Systems Corporation                                                                                                                                                                                                                                                                      |
|   |   | RoulabetteTM  Nevada Corporation                                                                                                                                                                                                                                                                     |
|   |   | Kenilworth  Systems Nevada Corporation                                                                                                                                                                                                                                                                   |
|   |   | Kenilworth  U.K. Ltd.                                                                                                                                                                                                                                                                                    |
|   |   | Kenilworth  Satellite Broadcasting Corporation, a Delaware Corporation                                                                                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                     |
| 23.1   |   | Consent  of Demetrius & Company, LLC. 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.                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                     |
|   |   | REPORT  ON FORM 8-K                                                                                                                                                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                     |
|   |   | On  July 15, 2004 the Company reported on FORM 8-K the change of the Registrant  Independent Certifying Accountant for the year ended December 31, 2004 and  for the restatement of the Company’s financials for the years ended December  31, 2001, 2002 and 2003, as A Development Stage Company. |

 

30

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REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board ofDirectors andStockholders of Kenilworth Systems Corporation

 

We have audited theaccompanying consolidated balance sheet of Kenilworth Systems Corporation (adevelopment stage company) as of December 31, 2004 and 2003 and therelated consolidated statements of operations, stockholders’ deficit and cashflows for each of the three years in the period ended December 31, 2004and the period of September 23, 1998 (inception) to December 31,2004. These financial statements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on these financialstatements based on our audit. The cumulative consolidated statements ofoperations, cash flows, and changes in stockholders’ deficit for the period September 23,1998 (inception) to December 31, 2001 were audited by other auditors, andour opinion, insofar as it relates to the amounts included for the period September 23,1998 (inception) to December 31, 2001 is based solely on the reports ofother auditors.

 

We conducted our auditsin accordance with the standards of the Public Company Accounting OversightBoard (United States). Those standards require that we plan and perform theaudit to obtain reasonable assurance about whether the financial statements arefree of material misstatement. The Company is not required to have, nor were weengaged to perform, an audit of its internal control over financial reporting.Our audit included consideration of internal control over financial reportingas a basis for designing audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on theeffectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in the financial statements andincludes assessing the accounting principles used and significant estimatesmade by management, as well as evaluating the overall financial statementpresentation. We believe that our audits provide a reasonable basis for ouropinion.

 

In our opinion, based onour opinion and the reports of other auditors, the consolidated financialstatements referred to above present fairly, in all material respects, thefinancial position of Kenilworth Systems Corporation (a development stagecompany) as of the year ended December 31, 2004 and 2003 and theconsolidated results of its operations and its cash flows for each of the threeyears in the period ended December 31, 2004 and for the period of September 23,1998 (inception) to December 31, 2004 in conformity with accountingprinciples generally accepted in the United States of America.

 

The accompanyingconsolidated financial statements have been prepared assuming that the Companywill continue as a going concern.  Asmore fully described in Note 1 to the consolidated financial statements, theCompany has incurred operating losses since its inception as a developmentstage company for the period beginning November 24, 1998, which raisessubstantial doubt about its ability to continue as a going concern.  The consolidated financial statements do notinclude any adjustments that may result from the outcome of this uncertainty.

 

 
| /s/  Demetrius & Company, L.L.C. |   |
|-------------------------------------------|--------|
|                                      |
| Wayne, New Jersey                         |
| June 17, 2005                        |

 

31

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**KENILWORTHSYSTEMS CORPORATION AND SUBSIDIARIES**

**(ADEVELOPMENT STAGE COMPANY)**

 

**CONSOLIDATEDBALANCE SHEETSAS OF DECEMBER 31,**

 
| ** **                                                                                                                                        | ** ** | **2004**     | ** ** | **2003**     | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------|------------|--------------|------------|
| ** **                                                                                                                                        | ** ** | **Restated** | ** ** | **Restated** | ** ** |
| ASSETS                                                                                                                                            |       |         |       |         |       |
| CURRENT ASSETS                                                                                                                                    |       |         |       |         |       |
| Cash                                                                                                                                              |       | $            | 5          |         | $          | 5 |   |
| Prepaid expenses                                                                                                                                  |       | 93,750       |       | —       |       |
| Loan receivable - stockholder                                                                                                                     |       | —       |       | 4,000        |       |
|                                                                                                                                              |       |         |       |         |       |
| Total current assets                                                                                                                              |       | 93,755       |       | 4,005        |       |
|                                                                                                                                              |       |         |       |         |       |
| PROPERTY AND EQUIPMENT - NET                                                                                                                      |       | 36,863       |       | 4,382        |       |
|                                                                                                                                              |       |         |       |         |       |
| PATENT - NET                                                                                                                                      |       | 68,763       |       | 56,905       |       |
|                                                                                                                                              |       |         |       |         |       |
| SECURITY DEPOSIT                                                                                                                                  |       | 4,250        |       | —       |       |
|                                                                                                                                              |       |         |       |         |       |
| Total assets                                                                                                                                      |       | $            | 203,631    |         | $          | 65,292 |   |
|                                                                                                                                              |       |         |       |         |       |
| LIABILITIES AND STOCKHOLDERS’ DEFICIT                                                                                                        |       |         |       |         |       |
| CURRENT LIABILITIES                                                                                                                               |       |         |       |         |       |
| Accounts payable and accrued expenses                                                                                                             |       | $            | 218,772    |         | $          | 131,313 |   |
| Payroll taxes payable                                                                                                                             |       | 59,522       |       | 35,466       |       |
| Loans payable - stockholders                                                                                                                      |       | 10,000       |       | 25,000       |       |
| Loans payable - related parties                                                                                                                   |       | 25,120       |       | 137,137      |       |
|                                                                                                                                              |       |         |       |         |       |
| Total current liabilities                                                                                                                         |       | 313,414      |       | 328,916      |       |
|                                                                                                                                              |       |         |       |         |       |
| COMMITMENTS AND CONTINGENCY- see notes                                                                                                            |       |         |       |         |       |
|                                                                                                                                              |       |         |       |         |       |
| STOCKHOLDERS’ DEFICIT                                                                                                                        |       |         |       |         |       |
| Preferred stock - par value $.01 per share;  authorized 2,000,000 shares; no shares issued and outstanding                                        |       | —       |       | —       |       |
| Common stock - par value $.01 per share;  authorized 200,000,000 shares; issued and outstanding 137,551,245 and  104,388,594 shares, respectively |       | 1,375,512    |       | 1,043,886    |       |
| Additional paid-in capital                                                                                                                        |       | 26,468,771   |       | 24,825,260   |       |
| Less: stock subscriptions receivable                                                                                                              |       | (15,000      | )          | (54,000      | )          |
| Deficit accumulated during the development  stage                                                                                                 |       | (27,939,066  | )          | (26,078,770  | )          |
|                                                                                                                                              |       |         |       |         |       |
| Total stockholders’ deficit                                                                                                                  |       | (109,783     | )          | (263,624     | )          |
|                                                                                                                                              |       |         |       |         |       |
| Total liabilities and stockholders’ deficit                                                                                                  |       | $            | 203,631    |         | $          | 65,292 |   |

 

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

 

32

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**KENILWORTHSYSTEMS CORPORATION AND SUBSIDIARIES**

**(ADEVELOPMENT STAGE COMPANY)**

 

**CONSOLIDATEDSTATEMENTS OF OPERATIONS**

 
| ** **                                     | ** ** | **Years ended December 31,** | ** ** | **Period from  November 24, 1998  to** | ** ** |
|------------------------------------------------|------------|------------------------------|------------|----------------------------------------|------------|
| ** **                                     | ** ** | **2004**                     | ** ** | **2003**                               | ** ** | **2002** | ** ** | **December 31, 2004** | ** ** |
| ** **                                     | ** ** | **Restated**                 | ** ** | **Restated**                           | ** ** | **Restated** | ** ** | **Restated** | ** ** |
| Expenses                                       |       |                         |       |                                   |       |   |   |   |   |
| Selling, general and administrative            |       | $                            | 1,488,716  |                                   | $          | 474,193 |   | $ | 361,400 |   | $ | 2,803,619 |   |
|                                           |       |                         |       |                                   |       |   |   |   |   |
| Other income (expenses)                        |       |                         |       |                                   |       |   |   |   |   |
| Interest income                                |       | 121                          |       | 113                                    |       | 81 |   | 922 |   |
| Interest expense                               |       | (371,701                     | )          | (294,149                               | )          | (23,570 | ) | (757,250 | ) |
|                                           |       |                         |       |                                   |       |   |   |   |   |
| Total other income (expense)                   |       | (371,580                     | )          | (294,036                               | )          | (23,489 | ) | (756,328 | ) |
|                                           |       |                         |       |                                   |       |   |   |   |   |
| Net loss                                       |       | $                            | (1,860,296 | )                                      | $          | (768,229 | ) | $ | (384,889 | ) | $ | (3,559,947 | ) |
|                                           |       |                         |       |                                   |       |   |   |   |   |
| Basic and diluted loss per share               |       | $                            | (0.01      | )                                      | $          | (0.01 | ) | $ | (0.01 | ) | $ | (0.04 | ) |
|                                           |       |                         |       |                                   |       |   |   |   |   |
| Weighted average number of shares  outstanding |       | 124,364,335                  |       | 99,087,628                             |       | 75,233,842 |   | 80,202,501 |   |

 

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

 

33

----

 

**KENILWORTHSYSTEMS CORPORATION AND SUBSIDIARIES**

**(ADEVELOPMENT STAGE COMPANY)**

 

**STATEMENTSOF CASH FLOWS**

 
| ** **                                                                      | ** ** | **Years ended December 31,** | ** ** | **Period from   November 24, 1998  to** | ** ** |
|---------------------------------------------------------------------------------|------------|------------------------------|------------|-----------------------------------------|------------|
| ** **                                                                      | ** ** | **2004**                     | ** ** | **2003**                                | ** ** | **2002** | ** ** | **December 31, 2004** | ** ** |
| ** **                                                                      | ** ** | **Restated**                 | ** ** | **Restated**                            | ** ** | **Restated** | ** ** | **Restated** | ** ** |
| Cash flows from operating activities                                            |       |                         |       |                                    |       |   |   |   |   |
| Net loss                                                                        |       | $                            | (1,860,296 | )                                       | $          | (768,229 | ) | $ | (384,889 | ) | $ | (3,559,947 | ) |
| Adjustments to reconcile net loss to net  cash provided by operating activities |       |                         |       |                                    |       |   |   |   |   |
| Depreciation                                                                    |       | 9,647                        |       | 1,588                                   |       | 1,938 |   | 16,604 |   |
| Amortization of patent                                                          |       | 5,745                        |       | 2,131                                   |       | — |   | 7,876 |   |
| Accretion of convertible debt discount                                          |       | —                       |       | 41,533                                  |       | 15,492 |   | 72,656 |   |
| Beneficial conversion feature                                                   |       | 368,640                      |       | 188,191                                 |       | 10,617 |   | 615,097 |   |
| Common stock issued for services                                                |       | 855,449                      |       | 78,956                                  |       | 149,195 |   | 1,197,564 |   |
| Common stock issued to induce debt  conversion                                  |       | —                       |       | 63,276                                  |       | — |   | 63,276 |   |
| Common stock issued for interest due on  notes payable                          |       | —                       |       | —                                  |       | 3,600 |   | 8,501 |   |
| Accrued interest transferred to capital                                         |       | 3,048                        |       | 1,161                                   |       | 3,861 |   | 4,209 |   |
| Other                                                                           |       | —                       |       | —                                  |       | 5,100 |   | 21,100 |   |
| Increase (decrease) in cash attributable to  changes in assets and liabilities: |       |                         |       |                                    |       |   |   |   |   |
| Prepaid expenses                                                                |       | (93,750                      | )          | —                                  |       | — |   | (93,750 | ) |
| Accounts payable and accrued expenses                                           |       | 87,458                       |       | 9,950                                   |       | 14,924 |   | 218,772 |   |
| Payroll taxes payable                                                           |       | 24,056                       |       | 1,962                                   |       | 15,805 |   | 59,522 |   |
|                                                                            |       |                         |       |                                    |       |   |   |   |   |
| Net cash used in operating activities                                           |       | (600,003                     | )          | (379,481                                | )          | (164,357 | ) | (1,368,520 | ) |
|                                                                            |       |                         |       |                                    |       |   |   |   |   |
| Cash flows from investing activities                                            |       |                         |       |                                    |       |   |   |   |   |
| Payment of loan receivable - stockholder                                        |       | —                       |       | (4,000                                  | )          | — |   | (4,000 | ) |
| Proceeds from loan receivable - stockholder                                     |       | 4,000                        |       | —                                  |       | 3,850 |   | 4,000 |   |
| Payment of patent costs                                                         |       | (17,602                      | )          | (42,490                                 | )          | (1,852 | ) | (66,639 | ) |
| Purchase of property and equipment                                              |       | (42,128                      | )          | —                                  |       | (5,000 | ) | (58,567 | ) |
| Security deposit                                                                |       | (4,250                       | )          | —                                  |       | — |   | (4,250 | ) |
|                                                                            |       |                         |       |                                    |       |   |   |   |   |
| Net cash used in investing activities                                           |       | (59,980                      | )          | (46,490                                 | )          | (3,002 | ) | (129,456 | ) |
|                                                                            |       |                         |       |                                    |       |   |   |   |   |
| Cash flows from financing activities                                            |       |                         |       |                                    |       |   |   |   |   |
| Proceeds from loans payable - stockholders                                      |       | —                       |       | 40,000                                  |       | 10,000 |   | 60,000 |   |
| Repayment of loans payable-stockholders                                         |       | —                       |       | —                                  |       | — |   | (10,000 | ) |
| Proceeds from loans payable - related  parties                                  |       | —                       |       | 70,976                                  |       | 28,859 |   | 141,137 |   |
| Repayment of loans payable - related  parties                                   |       | (112,017                     | )          | —                                  |       | (4,000 | ) | (116,017 | ) |
| Proceeds from convertible notes payable                                         |       | 652,000                      |       | 305,000                                 |       | 122,500 |   | 1,275,361 |   |
| Proceeds from sale of common stock                                              |       | 95,000                       |       | 10,000                                  |       | 10,000 |   | 122,500 |   |
| Proceeds from stock subscriptions  receivable                                   |       | 25,000                       |       | —                                  |       | — |   | 25,000 |   |
|                                                                            |       |                         |       |                                    |       |   |   |   |   |
| Net cash provided by financing activities                                       |       | 659,983                      |       | 425,976                                 |       | 167,359 |   | 1,497,981 |   |
|                                                                            |       |                         |       |                                    |       |   |   |   |   |
| Net change in cash                                                              |       | —                       |       | 5                                       |       | — |   | 5 |   |
| Cash - beginning of year                                                        |       | 5                            |       | —                                  |       | — |   | — |   |
|                                                                            |       |                         |       |                                    |       |   |   |   |   |
| Cash - end of year                                                              |       | $                            | 5          |                                    | $          | 5 |   | $ | — |   | $ | 5 |   |
|                                                                            |       |                         |       |                                    |       |   |   |   |   |
| Supplemental disclosure of non-cash  activities:                                |       |                         |       |                                    |       |   |   |   |   |
|                                                                            |       |                         |       |                                    |       |   |   |   |   |
| Common stock issued for patent costs                                            |       | $                            | —     |                                    | $          | — |   | $ | 10,000 |   | $ | 10,000 |   |
| Exchange of loans payable for convertible  notes payable                        |       | $                            | 15,000     |                                    | $          | 25,000 |   | $ | 10,000 |   | $ | 50,000 |   |
| Conversion of notes payable to common stock                                     |       | $                            | 682,000    |                                    | $          | 384,000 |   | $ | 130,000 |   | $ | 1,263,500 |   |
| Cancellation of stock subscriptions  receivable                                 |       | $                            | 29,000     |                                    | $          | — |   | $ | — |   | $ | 29,000 |   |
| Common stock issued for subscriptions  receivable                               |       | $                            | 15,000     |                                    | $          | 54,000 |   | $ | — |   | $ | 71,500 |   |

 

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

 

34

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**KENILWORTHSYSTEMS CORPORATION AND SUBSIDIARIES**

**(ADEVELOPMENT STAGE COMPANY)**

 

**CONSOLIDATEDSTATEMENTSOF CHANGES IN STOCKHOLDERS’ DEFICIT**
| ** **                                                                    | ** ** | **Common Stock** | ** ** | **Additional** | ** ** | **Stock**   | ** ** | **Deficit   Accumulated   During the** | ** ** | ** **      | ** ** |
|-------------------------------------------------------------------------------|------------|------------------|------------|----------------|------------|-------------|------------|----------------------------------------|------------|-----------------|------------|
| ** **                                                                    | ** ** | ** **       | ** ** | **Par**        | ** ** | **Paid-in** | ** ** | **Subscriptions**                      | ** ** | **Development** | ** ** | **Stockholders’** | ** ** |
| ** **                                                                    | ** ** | **Shares**       | ** ** | **Value**      | ** ** | **Capital** | ** ** | **Receivable**                         | ** ** | **Stage**       | ** ** | **Deficit** | ** ** |
| Balances - January 1, 2002 Restated                                           |       | 71,145,798       |       | $              | 711,458    |        | $          | 24,057,806                             |       | $               | (2,500     | ) | $ | (24,925,652 | ) | $ | (158,888 | ) |
|                                                                          |       |             |       |           |       |        |       |                                   |       |            |       |   |   |
| Receipt of stock subscription receivable                                      |       | —           |       | —         |       | —      |       | 2,500                                  |       | —          |       | 2,500 |   |
|                                                                          |       |             |       |           |       |        |       |                                   |       |            |       |   |   |
| Common stock issued for services                                              |       | 14,648,275       |       | 146,483        |       | 12,712      |       | —                                 |       | —          |       | 159,195 |   |
|                                                                          |       |             |       |           |       |        |       |                                   |       |            |       |   |   |
| Common stock issued in connection with convertible  notes                     |       | 446,646          |       | 4,465          |       | 11,027      |       | —                                 |       | —          |       | 15,492 |   |
|                                                                          |       |             |       |           |       |        |       |                                   |       |            |       |   |   |
| Conversion of notes payable to common stock                                   |       | 2,603,355        |       | 26,034         |       | 103,966     |       | —                                 |       | —          |       | 130,000 |   |
|                                                                          |       |             |       |           |       |        |       |                                   |       |            |       |   |   |
| Accrued interest on convertible notes transferred  to capital upon conversion |       | 144,160          |       | 1,442          |       | 2,419       |       | —                                 |       | —          |       | 3,861 |   |
|                                                                          |       |             |       |           |       |        |       |                                   |       |            |       |   |   |
| Sale of common stock                                                          |       | 236,355          |       | 2,364          |       | 7,636       |       | —                                 |       |            |       | 10,000 |   |
|                                                                          |       |             |       |           |       |        |       |                                   |       |            |       |   |   |
| Common stock issued in payment of interest  on note                           |       | 80,000           |       | 800            |       | 2,800       |       | —                                 |       |            |       | 3,600 |   |
|                                                                          |       |             |       |           |       |        |       |                                   |       |            |       |   |   |
| Value attributed to beneficial conversion features  of convertible notes      |       | —           |       | —         |       | 10,617      |       | —                                 |       | —          |       | 10,617 |   |
|                                                                          |       |             |       |           |       |        |       |                                   |       |            |       |   |   |
| Net loss accumulated during the development  stage                            |       | —           |       | —         |       | —      |       | —                                 |       | (384,889        | )          | (384,889 | ) |
|                                                                          |       |             |       |           |       |        |       |                                   |       |            |       |   |   |
| Balances - December 31, 2002 Restated                                         |       | 89,304,589       |       | 893,046        |       | 24,208,983  |       | —                                 |       | (25,310,541     | )          | (208,512 | ) |
|                                                                          |       |             |       |           |       |        |       |                                   |       |            |       |   |   |
| Common stock issued for services                                              |       | 7,895,558        |       | 78,956         |       | —      |       | —                                 |       | —          |       | 78,956 |   |
|                                                                          |       |             |       |           |       |        |       |                                   |       |            |       |   |   |
| Sale of common stock                                                          |       | 180,000          |       | 1,800          |       | 8,200       |       | —                                 |       | —          |       | 10,000 |   |
|                                                                          |       |             |       |           |       |        |       |                                   |       |            |       |   |   |
| Common stock issued in connection with convertible  notes                     |       | 465,000          |       | 4,650          |       | 36,883      |       | —                                 |       | —          |       | 41,533 |   |
|                                                                          |       |             |       |           |       |        |       |                                   |       |            |       |   |   |
| Accrued interest on convertible notes  transferred to capital upon conversion |       | —           |       | —         |       | 1,161       |       | —                                 |       | —          |       | 1,161 |   |
|                                                                          |       |             |       |           |       |        |       |                                   |       |            |       |   |   |
| Conversion of notes payable to common stock                                   |       | 6,081,447        |       | 60,814         |       | 323,186     |       | —                                 |       | —          |       | 384,000 |   |
|                                                                          |       |             |       |           |       |        |       |                                   |       |            |       |   |   |
| Common stock issued as inducements to convert  notes payable                  |       | 462,000          |       | 4,620          |       | 58,656      |       | —                                 |       | —          |       | 63,276 |   |
|                                                                          |       |             |       |           |       |        |       |                                   |       |            |       |   |   |
| Value attributed to beneficial conversion feature  of convertible notes       |       | —           |       | —         |       | 188,191     |       | —                                 |       | —          |       | 188,191 |   |
|                                                                          |       |             |       |           |       |        |       |                                   |       |            |       |   |   |
| Common stock issued for subscriptions receivable                              |       | —           |       | —         |       | —      |       | (54,000                                | )          | —          |       | (54,000 | ) |
|                                                                          |       |             |       |           |       |        |       |                                   |       |            |       |   |   |
| Net loss accumulated during the development  stage                            |       | —           |       | —         |       | —      |       | —                                 |       | (768,229        | )          | (768,229 | ) |
|                                                                          |       |             |       |           |       |        |       |                                   |       |            |       |   |   |
| Balances - December 31, 2003 Restated                                         |       | 104,388,594      |       | 1,043,886      |       | 24,825,260  |       | (54,000                                | )          | (26,078,770     | )          | (263,624 | ) |
|                                                                          |       |             |       |           |       |        |       |                                   |       |            |       |   |   |
| Common stock issued for stock subscription receivable                         |       |             |       |           |       |        |       | (15,000                                | )          |            |       | (15,000 | ) |
|                                                                          |       |             |       |           |       |        |       |                                   |       |            |       |   |   |
| Receipt of stock subscription receivable                                      |       | —           |       | —         |       | —      |       | 25,000                                 |       | —          |       | 25,000 |   |
|                                                                          |       |             |       |           |       |        |       |                                   |       |            |       |   |   |
| Cancellation of stock subscription  receivable                                |       | —           |       | —         |       | (29,000     | )          | 29,000                                 |       | —          |       | — |   |
|                                                                          |       |             |       |           |       |        |       |                                   |       |            |       |   |   |
| Common stock issued for services                                              |       | 17,072,651       |       | 170,726        |       | 684,723     |       | —                                 |       | —          |       | 855,449 |   |
|                                                                          |       |             |       |           |       |        |       |                                   |       |            |       |   |   |
| Sale of common stock                                                          |       | 2,350,000        |       | 23,500         |       | 71,500      |       | —                                 |       | —          |       | 95,000 |   |
|                                                                          |       |             |       |           |       |        |       |                                   |       |            |       |   |   |
| Accrued interest on convertible notes  transferred to capital upon conversion |       | —           |       | —         |       | 3,048       |       | —                                 |       | —          |       | 3,048 |   |
|                                                                          |       |             |       |           |       |        |       |                                   |       |            |       |   |   |
| Conversion of notes payable to common stock                                   |       | 13,740,000       |       | 137,400        |       | 544,600     |       | —                                 |       | —          |       | 682,000 |   |
|                                                                          |       |             |       |           |       |        |       |                                   |       |            |       |   |   |
| Value attributed to beneficial conversion feature  of convertible notes       |       | —           |       | —         |       | 368,640     |       | —                                 |       | —          |       | 368,640 |   |
|                                                                          |       |             |       |           |       |        |       |                                   |       |            |       |   |   |
| Net loss accumulated during the development  stage                            |       | —           |       | —         |       | —      |       | —                                 |       | (1,860,296      | )          | (1,860,296 | ) |
|                                                                          |       |             |       |           |       |        |       |                                   |       |            |       |   |   |
| Balances - December 31, 2004                                                  |       | 137,551,245      |       | $              | 1,375,512  |        | $          | 26,468,771                             |       | $               | (15,000    | ) | $ | (27,939,066 | ) | $ | (109,783 | ) |

 

The accompanying notes are an integral partof these consolidated financial statements.

 

35

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**KENILWORTHSYSTEMS CORPORATION AND SUBSIDIARIES**

**(ADEVELOPMENT STAGE COMPANY)**

 

**NOTES****TO CONSOLIDATED FINANCIAL STATEMENTS**

 

NOTE1 - THE COMPANY ANDNATURE OF BUSINESS

 

KenilworthSystems Corporation (the “Company”) was incorporated in New York in April 1968and is currently engaged in the development and eventual manufacture ofterminals that will permit individuals to play along with live in-progresscasino table games at locations outside the casino confines.  Games will be available via TV simulcast ofdigital satellite and digital cable broadcasts to individuals at homes andoffices and wherever television sets are located around the world.  The Company’s proposed business is in thedevelopment stage and planned principal operations have not yet fullycommenced.  Successful execution of itsbusiness plan is dependent up such factors as: the ability to raise substantialcapital and assemble a skilled and experienced management team, obtaining regulatoryapproval from gaming authorities and other governmental bodies, customeracceptance of a new experience in casino gaming, and technological feasibility.

 

Thesechallenges create uncertainty as to the Company’s ability to operate as a goingconcern and could result in the termination of its business.  Management plans to develop a wagering systemthat allows casino patrons and individuals outside the casino to play and wageralong with live casino table games. The first step in the plan is to conduct testing.Unless the Company is able to obtain sufficient funds, none of the tests andinitial development work can commence. The Company will attempt to obtain thenecessary funding by offering its Common Stock or Preferred Stock to privateinvestors**.**

 

Ifinitial testing is successful, the second step is to obtain, as required, theappropriate licenses from gaming control regulators in the various venues theCompany intends to offer its system. Upon successful licensing, the Companyintends to seek financing from banking sources for the manufacture of amicroprocessor that will be installed in digital set top boxes and digitalcable boxes.  These appliances will thenbe able to convert an ordinary television set into a computer terminal usingthe TV set as the monitor for remote casino game play and wagering. Thistechnology is protected by the Company’s recently issued patent (see Note 6).

 

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

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

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, Kenilworth U.K. Ltd. and Kenilworth Satellite BroadcastingCorporation, a Delaware Corporation. None of the subsidiaries has any assets orliabilities.

 

Useof estimates

 

Managementuses estimates and assumptions in preparing these financial statements inaccordance with generally accepted accounting principles.  Those estimates and assumptions affect thereported amounts of assets and liabilities, the disclosure of contingent assetsand liabilities, and the reported revenue and expenses. Actual results couldvary from the estimates that were used.

 

36

----

 

**KENILWORTHSYSTEMS CORPORATION AND SUBSIDIARIES**

**(A DEVELOPMENTSTAGE COMPANY)**

 

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)**

 

Cashand cash equivalents

 

TheCompany considers all highly liquid debt instruments with an original maturityof three months or less when purchased to be cash equivalents.  There were no cash equivalents at December 31,2004 and 2003.

 

Propertyand equipment

 

Propertyand equipment are stated at cost. Equipment is depreciated over the estimated useful lives of therespective assets, ranging from five to seven years.  Leasehold improvements are amortized over theshorter of either the asset’s useful life or the related lease term.  Depreciation is computed on the straight-linemethod for financial reporting purposes.

 

Impairmentof long-lived Assets

 

TheCompany regularly reviews long-lived assets for indicators of impairment.  Management’s judgments regarding theexistence of impairment indicators are based on performance.  Future events could cause management toconclude that impairment indicators exist and that the value of long-livedassets is impaired.  When events orcircumstances indicate that the carrying amount of an asset may not berecoverable, the fair value of the asset is compared to its carrying value.  Impairment losses are measured as the amountby which the carrying value of an asset exceeds its estimated fair value.

 

Advertisingcosts

 

Advertisingcosts are expensed as incurred.  There were no advertising costs for anyperiod presented.

 

Incometaxes

 

Incometaxes are accounted for under the asset and liability method specified by SFAS No. 109,“Accounting for Income Taxes.”  Deferredtax assets and liabilities are recognized for the future tax consequencesattributable to differences between the financial statement carrying amounts ofexisting assets and liabilities, and their respective tax bases and operatingloss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax ratesexpected to apply to taxable income in the year in which those temporarydifferences are expected to be recovered or settled.

 

Fairvalue of financial instruments

 

Financialinstruments reported in the balance sheet consist of accounts payable and loanspayable, the carrying value of which approximated fair value at December 31,2004 and 2003.  The fair value of thefinancial instruments disclosed are not necessarily representative of theamount that could be realized or settled nor does the fair value amountconsider the tax consequences of realization or settlement.

 

Stock-basedcompensation

 

TheCompany has adopted SFAS No. 123 “Accounting for Stock Based Compensation”which requires it to recognize stock awards granted to employees andnon-employees as compensation expense based on the fair market value of thestock award or fair market value of the goods or services received, whicheveris more reliably measurable.

 

Lossper share

 

Basicloss per share is calculated by dividing net loss by the weighted-averagenumber of common shares outstanding during the period. Diluted loss per shareis calculated by dividing net loss by the weighted-

 

37

----

 

**KENILWORTHSYSTEMS CORPORATION AND SUBSIDIARIES**

**(ADEVELOPMENT STAGE COMPANY)**

 

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)**

 

averagenumber of common shares outstanding, plus the weighted average number of netshares that would be issued upon the exercise or conversion of dilutivesecurities, such as stock options and warrants, and convertible debt.  There were no dilutive securities outstandingas of December 31, 2004, 2003 and 2002. Accordingly, diluted loss per share for 2004, 2003 and 2002 is the sameas basic loss per share.

 

NewAuthoritative Accounting Pronouncements

 

TheCompany does not anticipate the adoption of recently issued accountingpronouncements will have a significant impact on its results of operations,financial position or cash flows.

 

NOTE3 - 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 of Reorganization.On April 27, 1988, the Bankruptcy Court entered a final decree in thecase. On October 27, 1988, the case was re-opened on grounds the Debtorfailed to consummate its plan of reorganization and on February 25, 1991the case was converted to a case under Chapter 7 of the Bankruptcy Code. Byorder of the Court dated June 19, 1991 the Chapter 7 was reconverted to acase under Chapter 11 of the Bankruptcy Code. A second plan of reorganizationwas approved and a second order of confirmation was entered in connection withthe Chapter 11 case on October 2, 1991. However, the Debtor was unable toconsummate its second plan of reorganization, and by order dated November 25,1991, the case was reconverted to a case under Chapter 7 of the Bankruptcy Code.

 

FromFebruary 1991 through September 1998, the Company was inactive. In September 1998a United States Bankruptcy Judge in the Eastern District of New York approvedthe Final Report and Accounts submitted by the Chapter 7 Trustee of the Estateof Kenilworth and after obtaining approval from the U.S. Trustee, Kenilworthmade a one hundred percent (100%) cash distribution to the creditors and paidin full all administrative fees and expenses. The Company emerged fromBankruptcy on September 28 1998 with no assets and no liabilities. For theperiod September 29, 1998 through November 23, 1998 the Company wasin the process of monitoring the payments by check to the creditors. No otheractivity occurred during that period.  Effective, November 24, 1998,the Company commenced its present plans.

 

NOTE4 - PREPAID EXPENSES

 

Prepaidexpenses consist of the unamortized value of stock issued to directors for thetwelve-month service period ending September 30, 2005.  The balance will be amortized on astraight-line basis over the remaining term.

 

38

----

 

**KENILWORTHSYSTEMS CORPORATION AND SUBSIDIARIES**

**(ADEVELOPMENT STAGE COMPANY)**

 

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)**

 

NOTE5 - PROPERTY ANDEQUIPMENT

 

Propertyand equipment consist of the following:

 
| ** **                        | ** ** | **2004** | ** ** | **2003** | ** ** |
|-----------------------------------|------------|----------|------------|----------|------------|
|                              |       |     |       |     |       |
| Office equipment                  |       | $        | 13,827     |     | $          | 7,939 |   |
| Leasehold improvements            |       | 16,640   |       | —   |       |
| Furniture and fixtures            |       | 19,601   |       | —   |       |
|                              |       |     |       |     |       |
|                              |       | 50,068   |       | 7,939    |       |
| Less: Accumulated amortization    |       | 13,205   |       | 3,557    |       |
|                              |       |     |       |     |       |
| Total property and equipment, net |       | $        | 36,863     |     | $          | 4,382 |   |

 

NOTE6 - PATENT

 

TheCompany owns a patent for technology that will enable it to provide real-timetransmission of roulette and other game play from live tables at a casinofacility.  Costs incurred in connectionwith the submission and approval of the patent application have beencapitalized.  A U.S. patent was awardedin June 2003.  The Company isamortizing patent costs of $76,639 on a straight-line basis over a fifteen-yearperiod.  Amortization expense for theyears ended December 31, 2004, 2003 and 2002 was $5,745, $2,131 and $0,respectively.

 

NOTE7 - ACCOUNTS PAYABLEAND ACCRUED EXPENSES

 
| ** **                        | ** ** | **2004** | ** ** | **2003** | ** ** |
|-----------------------------------|------------|----------|------------|----------|------------|
|                              |       |     |       |     |       |
| Legal and other professional fees |       | $        | 180,061    |     | $          | 102,935 |   |
| Book overdraft                    |       | 11,875   |       | 12,386   |       |
| Other                             |       | 26,836   |       | 15,992   |       |
|                              |       |     |       |     |       |
|                              |       | $        | 218,772    |     | $          | 131,313 |   |

 

AtDecember 31, 2004 and 2003, the Company also owed payroll tax liabilitiesof approximately $49,000 and $21,000, plus estimated statutory charges of$11,000 and $14,000, respectively.

 

NOTE8 - LOANS PAYABLE

 

2004:

 

Relatedparties

 

TheCompany’s CEO has advanced funds of $23,170 as of December 31, 2004.  A board director has also loaned the Company$1,950.  Both loans are due on demand,unsecured and noninterest-bearing.

 

39

----

 

**KENILWORTHSYSTEMS CORPORATION AND SUBSIDIARIES**

**(ADEVELOPMENT STAGE COMPANY)**

 

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)**

 

Stockholder

 

Theloan payable - stockholder is unsecured, due on demand and non-interestbearing.

 

2003:

 

Relatedparties

 

Asof December 31, 2003, the Company’s President had advanced funds of$113,967, and the Company’s CEO had advanced funds of $23,170.  Both loans were due on demand, unsecured andnon-interest bearing.

 

Stockholder

 

Asof December 31, 2003, two stockholders had advanced funds of $15,000 and$10,000, respectively.  Both loans wereunsecured, due on demand and non-interest bearing.

 

NOTE 9 - CONVERTIBLE PROMISSORY NOTES

 

During2004, 2003 and 2002, respectively, the Company sold to various privateinvestors $652,000, $305,000 and $122,500 principal amount of ConvertiblePromissory Notes bearing interest at rates ranging from 4.00% to 8.00% perannum.  The Notes had a one-year term andwere immediately convertible at the option of the noteholder into shares ofrestricted common stock based on conversion prices ranging from $.05 to $.12per share.  All Notes issued in 2004,2003 and 2002 were converted into a total of 13,740,000, 6,081,447 and 2,603,355common shares, respectively.  Theissuance of the Notes gave rise to a beneficial conversion feature (BCF) in theamount of $368,640 in 2004, $188,191 in 2003 and $10,617 in 2002, reflectingthe benefit of conversion prices that were below the market price of theCompany’s common stock.  The BCF wascharged in full to operations on the respective issuance dates of the Noteswith an offsetting credit to additional paid-in capital.  The Company accounts for BCF under therecognition and measurement principles of Emerging Issues Task Force (EITF) 98-5,“Accounting for Convertible Securities with Beneficial Conversion Features orContingently Adjustable Conversion Ratios to Certain Convertible Instruments”and EITF-00-27, “Application of EITF Issue 98-5.

 

During2003 and 2002, the Company issued a total of 465,000 and 446,646 restrictedcommon shares to investors in connection with their purchase of Notes.  The value of the shares amounted to $41,533and $15,492, respectively, which was accounted for as a note discount andamortized to interest expense during the year. Also in 2003, the Company issued 462,000 restricted common shares valuedat $63,276 as an inducement to certain noteholders to convert their debt.  The inducements were recorded as interest expenseupon acceptance by the noteholder.  Therewere no inducement payments in 2002 or 2004 nor were there any shares issuedwith Notes in 2004.

 

40

----

 

**KENILWORTHSYSTEMS CORPORATION AND SUBSIDIARIES**

**(A DEVELOPMENTSTAGE COMPANY)**

 

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)**

 

NOTE10 - INCOME TAXES

 

Theprovision for income taxes consists of the following:

 
| ** **                 | ** ** | **Years  ended December 31,** | ** ** |
|----------------------------|------------|------------------------------------|------------|
| ** **                 | ** ** | **2004**                           | ** ** | **2003** | ** ** | **2002** | ** ** |
|                       |       |                               |       |   |   |   |   |
| Current:                   |       |                               |       |   |   |   |   |
| Federal                    |       | $                                  | —     |   | $ | — |   | $ | — |   |
| State                      |       | —                             |       | — |   | — |   |
|                       |       | —                             |       | — |   | — |   |
|                       |       |                               |       |   |   |   |   |
| Deferred:                  |       |                               |       |   |   |   |   |
| Federal                    |       | —                             |       | —- |   | — |   |
| State                      |       | —                             |       | — |   | — |   |
|                       |       | —                             |       | — |   | — |   |
|                       |       |                               |       |   |   |   |   |
| Provision for income taxes |       | $                                  | —     |   | $ | — |   | $ | — |   |

 

Theeffective income tax rate differed from the U. S. federal statutory rate asfollows:

 
| ** **                                    | ** ** | **Years ended December 31,** | ** ** |
|-----------------------------------------------|------------|-----------------------------------|------------|
| ** **                                    | ** ** | **2004**                          | ** ** | **2003** | ** ** | **2002** | ** ** |
|                                          |       |                              |       |   |   |   |   |
| Federal income tax benefit at statutory  rate |       | $                                 | (486,000   | ) | $ | (175,000 | ) | $ | (126,000 | ) |
| State income taxes, net of federal benefit    |       | (86,000                           | )          | (31,000 | ) | (22,000 | ) |
| Increase in valuation allowance               |       | 572,000                           |       | 206,000 |   | 148,000 |   |
|                                          |       |                              |       |   |   |   |   |
|                                          |       | $                                 | —     |   | $ | — |   | $ | — |   |

 

Thedifference between the U. S. federal tax rate and the Company’s effective taxrate in 2004, 2003 and 2002 is due primarily to changes in the valuation allowancerelated to the net deferred tax asset, offset by certain nondeductibleexpenses.

 

Themajor sources of temporary differences and their deferred tax effect are asfollows:

 

Deferredtax assets:

 
| ** **                | ** ** | **2004**   | ** ** | **2003** | ** ** |
|---------------------------|------------|------------|------------|----------|------------|
|                      |       |       |       |     |       |
| Net operating losses      |       | $          | 1,142,000  |     | $          | 570,000 |   |
| Less: Valuation allowance |       | (1,142,000 | )          | (570,000 | )          |
|                      |       |       |       |     |       |
| Net deferred tax assets   |       | $          | —     |     | $          | — |   |

 

Thebenefits of net operating losses will not be recognized until managementdetermines that realization is more likely than not to occur.  Accordingly, management has established avaluation allowance to offset the tax benefits of net operating losses for allperiods presented.  At December 31,2004, the Company had

 

41

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**KENILWORTHSYSTEMS CORPORATION AND SUBSIDIARIES**

**(ADEVELOPMENT STAGE COMPANY)**

 

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)**

 

netoperating loss carryforwards of approximately $2,850,000, expiring through2024. Utilization of NOL carryforwards may be limited under various sections ofthe Internal Revenue Code depending on the nature of the Company’s operations.

 

NOTE11 - COMMITMENT

 

Operatinglease

 

TheCompany rents approximately 2,000 square feet of office space in Mineola, NYunder a lease expiring in May 2006. Annual rent is approximately $30,000, payable monthly.  The leasealso requires the Company to pay its share of increases in real estate taxes,operating costs and repairs over the base year amounts.  The lease expires in May 2006.  Following is a schedule of minimum leasepayments required under the lease.

 
| **Year  ending  December 31,** | ** ** | ** ** | ** ** |
|-------------------------------------|------------|------------|------------|
| ** **                          | ** ** | ** ** | ** ** |
| 2005                                |       | $          | 30,000     |   |
| 2006                                |       | 12,500     |       |
|                                |       |       |       |
| Total                               |       | $          | 42,500     |   |

 

Rentexpense for the years ended December 31, 2004, 2003 and 2002 was $27,000,$37,000 and $0, respectively.

 

NOTE12 - RELATED PARTYTRANSACTIONS

 

2004:

 

TheCompany paid $3,500 to an entity partially owned by its CEO for servicesrendered during the year.

 

Twoindividuals related to Maureen Plovnick, a Company director, received findersfees totaling $50,000 in connection with the issuance of Notes.  The consideration was paid by issuance of1,000,000 shares of common stock valued at $.05 per share.

 

2003:

 

InMarch 2003, the Company issued 500,000 shares valued at $.01 per share toa relative of the Company’s CEO in payment of an outstanding balance forservices valued at $5,000.

 

2002:

 

InNovember 2002, the Company issued 1,000,000 shares valued at $.01 pershare to a relative of the Company’s CEO in payment of an outstanding balancefor services valued at $10,000.

 

42

----

 

**KENILWORTHSYSTEMS CORPORATION AND SUBSIDIARIES**

**(ADEVELOPMENT STAGE COMPANY)**

 

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)**

 

NOTE 13 - STOCKHOLDERS’ DEFICIT

 

Authorized shares

 

The Company is authorized to issue up to 200,000,000 shares of CommonStock and up to 2,000,000 shares of Preferred Stock.  Both classes have a par value of $.01 pershare.  The rights and preferences of thepreferred shares will be designated by the Board of Directors.

 

Sales of unregistered common stock

 

In fiscal 2002, the Company raised $10,000 from the sale of 236,355shares of common stock to a private investor at a price of approximately $.04per share. In fiscal 2003, the Company raised $10,000 from the sale of 180,000shares of common stock to a private investor at a price of approximately $.06per share.  In fiscal 2004, the Companyraised $95,000 from the sale of 2,350,000 shares of common stock to variousprivate investors at prices ranging from $.03 to $.05 per share.

 

Stock subscriptions receivable

 

At December 31, 2003, two private investors owed $50,000 and $4,000,respectively, for the purchase of common stock. The Company received $25,000 against one subscription in February 2004and canceled the balance due of $29,000.

 

Common shares issued for services

 

2004:

 

The Company issued 500,000 shares each to five individuals ascompensation for services rendered as corporate directors through September 30,2004.  The services were valued at$25,000 per director.  In December 2004,the same directors received an additional 500,000 shares each valued at $25,000for the annual service period ending in September 2005.

 

During the year, the Company issued 3,500,000 shares to variousattorneys for legal services valued at $175,000; 4,145,000 shares to variousindividuals in payment of finders fees valued at $207,250 for referring Noteinvestors; 2,864,327 shares to various consultants for services rendered at avalue of $143,216**;** 1,140,000 shares to a directorfor reimbursement of expenses totaling $56,482; and 423,324 shares to vendorsin payment of outstanding balances totaling $23,500.

 

2003:

 

During the year, the Company issued 2,500,000 shares to variousattorneys for legal services valued at $25,000; 297,779 shares to variousindividuals in payment of finders fees valued at $2,978 for obtaining Noteinvestors; 4,597,779 shares to various consultants, including 1,000,000 sharesto a director, for services rendered at a value of $45,000; and 500,000 sharesto a vendor in payment of an outstanding balance for services rendered totaling$5,000.

 

2002:

 

During the year, the Company issued 100,000 shares to an attorney forlegal services valued at $10,000; 1,228,785 shares to individuals in payment offinders fees valued at $16,000 for referring Note investors; 3,236,355 sharesto various consultants for services rendered at a value of $32,364; 7,500,000shares to directors for services rendered valued at $75,000; 2,583,135 sharesto a director for reimbursement of expenses totaling $25,831.

 

Conversion of Notes and related transactions

 

During 2004, 2003 and 2002, the Company issued 13,740,000, 6,081,447and 2,603,355 shares, respectively, upon conversion of the Notes. In 2003 and2002, the Company also issued 465,000 and 446,646 shares, respectively,  in connection with the sale of Notes.  In 2003, the Company issued 462,000 shares toinduce existing noteholders to convert their Notes.

 

Equity plan

 

In December 2000, the Company adopted and in August 2001, stockholdersapproved the Performance and Equity Incentive Plan (the Plan).  The Board of Directors has reserved up to10,000,000 shares of common stock for issuance under the plan as incentivestock options (ISOs), nonqualified stock options (NQSOs), restricted stock grants,and stock appreciation rights.  The termsand conditions of each grant are determined by a committee composed of two ormore non-employee directors.  Grants tonon-employee directors are subject to approval of the entire board.  All employees, directors and non-employeeconsultants are eligible to receive grants under the Plan.  ISOs may not be granted to any owner of 10%or more of the combined voting power of the Company, unless the exercise price isat least 110% of the fair market value of the common stock on the grant dateand the option term does not exceed five years.

 

In August 2001, administrators of the Plan granted 5,000,000 NQSOs toHerbert Lindo, the Company’s President, and 500,000 NQSOs to Maureen Plovnick,and employee and Company director.  Theoptions have a five-year term, an exercise price of $.15 per share andimmediate vesting.  There have been noother Plan transactions since these grants.

 

43

----

 

**KENILWORTHSYSTEMS CORPORATION AND SUBSIDIARIES**

**(ADEVELOPMENT STAGE COMPANY)**

 

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)**

 

NOTE 14 - RESTATEMENT

 

There were certain transactions that were entered into in fiscal years2001 through 2004 that were accounted for improperly.  The transactions involved the beneficialconversion features accompanying the issuance of the convertible notes, as wellas additional shares issued in connection with the convertible notes asdiscounts and inducements to convert.

 

In addition, there were a number of transactions involving the day today operations of the Company that were accounted for improperly.  These included the recognition of deferredand accrued expenses, the recording of loans to and from the Company and therecording of the patent related costs and other capitalized expenses.

 

The cumulative impact of these restatements increases the deficitaccumulated during the development stage by $55,308, and increases the totalstockholders’ deficit by $719,471.

 

The following table summarizes the annual consolidated statements ofoperations and balance sheet data for the periods indicated, giving effect tothe restatement described above:

 
| ** **                          | ** ** | **Year Ended December 31,** | ** ** |
|-------------------------------------|------------|-----------------------------|------------|
| ** **                          | ** ** | **2004**                    | ** ** | **2003** | ** ** | **2002** | ** ** |
| ** **                          | ** ** | **Previously  Reported**    | ** ** | **Restated** | ** ** | **Previously  Reported** | ** ** | **Restated** | ** ** | **Previously  Reported** | ** ** | **Restated** | ** ** |
|                                |       |                        |       |   |   |   |   |   |   |   |   |   |   |
| **STATEMENT OF OPERATIONS DATA**    |       |                        |       |   |   |   |   |   |   |   |   |   |   |
| Selling, general and administrative |       | $                           | 1,434,361  |   | $ | 1,488,716 |   | $ | 832,168 |   | $ | 474,193 |   | $ | 660,289 |   | $ | 361,400 |   |
| Interest income                     |       | —                      |       | 121 |   | — |   | 113 |   | — |   | 81 |   |
| Interest expense                    |       | —                      |       | (371,701 | ) | — |   | (294,149 | ) | — |   | (23,570 | ) |
| Net loss                            |       | (1,434,361                  | )          | (1,860,296 | ) | (832,168 | ) | (768,229 | ) | (660,289 | ) | (384,889 | ) |
| Basic and diluted loss per share    |       | $                           | (0.01      | ) | $ | (0.01 | ) | $ | (0.008 | ) | $ | (0.01 | ) | $ | (0.007 | ) | $ | (0.01 | ) |

 
| ** **                                        | ** ** | **Year Ended December 31,** | ** ** |
|---------------------------------------------------|------------|-----------------------------|------------|
| ** **                                        | ** ** | **2004**                    | ** ** | **2003** | ** ** | **2002** | ** ** |
| ** **                                        | ** ** | **Previously  Reported**    | ** ** | **Restated** | ** ** | **Previously  Reported** | ** ** | **Restated** | ** ** | **Previously  Reported** | ** ** | **Restated** | ** ** |
|                                              |       |                        |       |   |   |   |   |   |   |   |   |   |   |
| **BALANCE SHEET DATA**                            |       |                        |       |   |   |   |   |   |   |   |   |   |   |
| Prepaid expenses                                  |       | $                           | 198,300    |   | $ | 93,750 |   | $ | 187,500 |   | $ | — |   | $ | 232,544 |   | $ | — |   |
| Loan receivable - stockholders                    |       | 142,000                     |       | — |   | 50,000 |   | 4,000 |   | — |   | — |   |
| Total current assets                              |       | 409,458                     |       | 93,755 |   | 244,636 |   | 4,005 |   | 242,615 |   | — |   |
| Patent - net                                      |       | 329,917                     |       | 68,763 |   | 336,100 |   | 56,905 |   | — |   | 16,547 |   |
| Total assets                                      |       | 789,795                     |       | 203,631 |   | 593,038 |   | 65,292 |   | 255,878 |   | 22,517 |   |
| Loans payable - related parties                   |       | —                      |       | 25,120 |   | — |   | 137,137 |   | — |   | 66,161 |   |
| Total current liabilities                         |       | 180,107                     |       | 313,414 |   | 274,346 |   | 328,916 |   | 107,458 |   | 231,029 |   |
| Deficit accumulated during the development  stage |       | (27,883,758                 | )          | (27,939,066 | ) | (26,449,397 | ) | (26,078,770 | ) | (25,617,229 | ) | (25,310,541 | ) |
| Total stockholders’ equity (deficit)         |       | 609,688                     |       | (109,783 | ) | 318,692 |   | (263,624 | ) | 148,420 |   | (208,512 | ) |
|                                                   |            |                             |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

NOTE 15 - SUBSEQUENT EVENTS

 

Duringthe first quarter of 2005, the Company raised $385,000 from the issuance ofadditional Notes.  The Notes areconvertible into 7,700,000 shares based on a conversion price of $.05 pershare.  All Notes were converted as of March 31,2005.

 

InFebruary 2005, the Company issued 400,000 shares of restricted CommonStock in settlement of a vendor judgment for approximately $15,000.  The liability was accrued in 2004.

 

InApril 2005, the Company entered into a consulting agreement for a one-yearterm.  As compensation, the consultantsreceived 2,000,000 shares of restricted common stock upon signing.

 

InJune 2005, the Company agreed to issue 770,588 shares of restricted commonstock in settlement of an employment contract dispute.  The shares were valued by management atapproximately $38,500.  The liability wasaccrued in 2004.

 

44

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PRIORCONVICTION OF HERBERT LINDO

 

HerbertLindo, the president of Kenilworth, was convicted in 1993 on three (3) countsof having permitted three (3) banks located in the Upper Peninsula ofMichigan to sell unregistered, legended, restricted Kenilworth shares pursuantto SEC Rule 144 prior to the bank having the then required two (2) yearholding period. The sales took place in 1987 and 1988. Mr. Lindo was foundnot guilty of conspiring to sell unregistered securities which was not met,pursuant to SEC Rule 144. The Securities and Exchange Commission did notenter into the case. The indictments were brought by the U.S. Attorney of theWestern

 

Districtof Michigan. Mr. Lindo was sentenced to one thousand (1,000) hours ofcommunity service, fifteen (15) months house arrest, and fined six hundredthousand dollars ($600,000).

 

In1992, the holding period for exemption pursuant to Rule 144 was reduced toone (1) year. The changed Rule did not apply to the 1987-88 sales. Noone lost any money and Kenilworth had received fair value for the pledgedsecurities. The government never charged Mr. Lindo with fraud. Mr. Lindoclaimed he had no knowledge of the sales by the banks.

 

Becauseof this conviction, Herbert Lindo is likely not be found suitable by any CasinoControl Commission or other regulatory body to hold licenses. When the time toapply for licensing RoulabetteTM arrives, Mr. Lindo will resign totallyfrom Kenilworth and place his Kenilworth shares into a voting trust. Until thattime, Herbert Lindo believes that he is best suited to manage the postbankruptcy reorganization and to transform Kenilworth into a viable business.

 

45

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**SIGNATURES**

 

Pursuantto the requirements of Section 13 or 15(d) of the Securities ExchangeAct of 1934, the Registrant has duly caused this report to be signed on itsbehalf by 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 |     | July 5, 2005 |
| Herbert  Lindo           |   |      |     |     |
|                     |   |      |     |     |
| /s/  JOYCE CLARK         |   |      | Director |     | July 5, 2005 |
| Joyce  Clark             |   |      |     |     |
|                     |   |      |     |     |
| /s/  KIT WONG            |   |      | Director |     | July 5, 2005 |
| Kit  Wong                |   |      |     |     |
|                     |   |      |     |     |
| /s/  GINO SCOTTO         |   |      | Director |     | July 5, 2005 |
| Gino  Scotto             |   |      |     |     |
|                     |   |      |     |     |
| /s/  MAUREEN PLOVNICK    |   |      | Director |     | July 5, 2005 |
| Maureen  Plovnick        |   |      |     |     |
|                     |   |      |     |     |
| /s/  PATRICK J. MCDEVITT |   |      | Director |     | July 5, 2005 |
| Patrick  J. McDevitt     |   |      |     |     |

 

46

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