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**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

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**FORM 10-K**

 

| **(Mark One)**                                       |       |                                                                                                                       |
|------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------|
|                                                 |       |                                                                                                                       |
| **x**                                                | ** ** | **ANNUAL  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE  ACT OF 1934**                       |
|                                                 |       |                                                                                                                       |
| **For the Fiscal Year Ended December 31, 2008** |
|                                                 |       | ** **                                                                                                                 |
| **Or**                                               |
|                                                 |       |                                                                                                                       |
| **o**                                                | ** ** | **TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE  ACT OF 1934 (NO FEE REQUIRED)** |

 

**For the transition period from                  to                ..**

 

**Commission file number 0-08962**

 

**KENILWORTHSYSTEMS CORPORATION**

(Exact name of registrant as specified 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 telephone number, including area code)

 

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

 

**NONE**

 

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

 

**(TITLE OF CLASS)**

Common Stock, par value $.01 per share

 

Indicateby check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405of the Securities Act. 

Yesx No o

 

Indicateby check mark if the registrant is not required to file reports pursuant to Section 13or Section 15(d) of the Act. Yes x  No o

 

Indicate by check markwhether the registrant: (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the registrant was required to filesuch reports) and (2) has been subject to such filing requirements for thepast 90 days.  Yes x 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 containedherein, and will not be contained, to the best of the registrant’s knowledge,in definitive proxy or information statements incorporated by reference in Part IIIof this Form 10-K or any amendment to this Form 10-K. o

 

Indicateby check mark whether the registrant is a large accelerated filer, anaccelerated filer, a non-accelerated filer, or a smaller reporting company. Seethe definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer,’’ and ‘‘smallerreporting company’’ in Rule 12b-2 of the Exchange Act.

 

| Large accelerated filer o |   | Accelerated filer o |   | Non-accelerated filer o                       |   | Smaller reporting company  x |
|---------------------------|--------|---------------------|--------|-----------------------------------------------|--------|-----------------------------------|
|                      |   |                |   | (Do not check if a smaller reporting company) |   |                              |

 

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 16, 2009 was $3,587,320.

 

 

 

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Asof December 31, 2008, 434,597,086 Shares of the Registrant’s Common Stock,$0.01 par value, were outstanding.

 

Portionsof the Registrant’s Proxy Statement for its 2008 Annual Meeting ofStockholders, which was held on January 7, 2009, are incorporated in Part IIIof 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, Chairman of the Board of Directors and the President of theCompany for having assigned to the Company the Patent that was granted on June 10,2003.  Titled “SYSTEM AND METHOD FOR REMOTE ROULETTE AND OTHER GAME PLAYUSING GAME TABLE AT A CASINO”.  Upon Mr. Lindo’s request, the Shareswere not issued until January 11, 2006, as restricted securities. (See Part III Item 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 titled “METHOD AND SYSTEM FOR SUPPLYING FUNDS TO A TERMINAL FOR REMOTEWAGERING” (lottery terminals).  Upon Mr. Lindo’s request, the shareswere not issued until January 11, 2006, as restricted securities (see Part IIIItem 12 Beneficial Ownership (1)).

 

OnNovember 27, 2006 Herbert Lindo, the Chairman and Chief Executive Officerexercised a five million (5,000,000) share option for seven hundred fiftythousand dollars ($750,000) at fifteen cents ($0.15) per share pursuant to theCompany’s Performance and Equity Plan.  The price per share was the pricefor the Option which would have expired on the following date.  Mr. Lindodoes not own any other Options pursuant to the Plan.  The average marketprice of the Common Stock for the thirty (30) days prior to November 27,2006 was high: $0.05, low: $0.03.  As provided in the Plan, Herbert Lindoborrowed the seven hundred fifty thousand dollars ($750,000) from the Companyand pledged the five million (5,000,000) and other shares he owns totalingfifty million (50,000,000) shares, as collateral for the loan.  The fivemillion (5,000,000) shares have been issued and are included ascollateral.  All of Mr. Lindo’s Kenilworth shares are legended “RestrictedSecurities”.

 

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**TABLE OF CONTENTS**

 
| **PART I**   |   |                                                                                                          | 5      |
|-------------------|--------|---------------------------------------------------------------------------------------------------------------|--------|
|              |   |                                                                                                          |   |
| ITEM 1            | — | Description of Business                                                                                       | 5      |
| ITEM 2            | — | Properties                                                                                                    | 12     |
| ITEM 3            | — | Legal Proceedings                                                                                             | 12     |
| ITEM 4            | — | Submission of Matters to a Vote of Security  Holders                                                          | 12     |
|              |   |                                                                                                          |   |
| **PART II**  |   |                                                                                                          | 13     |
|              |   |                                                                                                          |   |
| ITEM 5            | — | Market Prices of the Company’s Common Stock  and Related Stock Holder Matters                            | 13     |
| ITEM 6            | — | Selected Financial Data                                                                                       | 14     |
| ITEM 7            | — | Management Discussions and Analysis of  Financial Condition and Results of Operations (Contains Risk Factors) | 14     |
| ITEM 8            | — | Financial Statements and Supplementary Data                                                                   | 18     |
| ITEM 9            | — | Changes and Disagreements with Accountants  on Accounting and Financial Disclosure                            | 18     |
| ITEM 9A           | — | Controls and Procedures                                                                                       | 18     |
|              |   |                                                                                                          |   |
| **PART III** |   |                                                                                                          | 19     |
|              |   |                                                                                                          |   |
| ITEM 10           | — | Directors and Executive Officers of the  Registrant                                                           | 19     |
| ITEM 11           | — | Executive Compensation                                                                                        | 21     |
| ITEM 12           | — | Security Ownership of Certain Beneficial  Owner and Management and Related Stockholders Matters               | 22     |
| ITEM 13           | — | Certain Relationships and Related  Transactions                                                               | 23     |
| ITEM 14           | — | Principal Accountant Fees and Services                                                                        | 23     |
|              |   |                                                                                                          |   |
| **PART IV**  |   |                                                                                                          | 23     |
|              |   |                                                                                                          |   |
| ITEM 15           | — | Exhibits, Financial Statement Schedules and  Reports on Form 8-K                                         | 23     |
|              |   | Subsequent Events                                                                                             | 43     |

 

**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 or revisionsto any forward-looking statements contained herein to reflect any change in ourexpectations with regard thereto or to reflect any change in events, conditionsor circumstances on which any such forward-looking statement is based in wholeor in part.

 

**Readers should amongst the other statements contained hereinand future filings with the Securities and Exchange Commission, including theQuarterly Reports on Form 10-Q to be filed, carefully review in Item 7 thefollowing: “Cautionary Statements for Purposes of the “Safe Harbor” Provisionsof the Private Securities Litigation Reform Act of 1995 and Risk Factors”. Allof the Risk Factors contained therein should be carefully read.**

 

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INTRODUCTORY NOTE TO PART IV

 

TheAmendment No. 1 on FORM 10-K filed to restate certain amounts whichchanged as the results of having been ordered by the Securities and ExchangeCommission to file the Company’s Financials as a “Development Stage Company”from the period beginning November 24, 1998 to the present at December 31,2008, the elimination of $4,256,926, which was the amount the Company disbursedon or about September 28, 1998 to exit from Chapter 7 BankruptcyProceedings, and certain adjustments to losses sustained for the periods ended December 31,2002, 2003 and 2004 for having discounted Convertible Promissory Notes frombetween ten cents ($0.10) per share and twelve cents ($0.12) per share to fivecents ($0.05) 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 has outstanding at March 18, 2009 473,989,586 CommonShares.  All of the restricted shares may have the restrictions liftedpursuant to new Rule 144 B within six (6) months which willsubstantially depress the trading price of the Company’s Common Stock.

 

***Remainder of page intentionallyleft blank***

 

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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 August 1968formerly on the National NASDAQ Market, presently on the OTC Pink Sheet Marketsince emerging from Bankruptcy Proceedings in September 1998. Kenilworth is 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 and other casino gamblers throughout the industrialized worldto play and wager along from remote locations with live, in-progress casino tablegames (Roulette, Craps, Baccarat and more) from strictly regulated casinoslocated in the United States and other locations around the world.

 

Employingthe latest encrypted satellite, cable and Internet technology and placingtelevision cameras in strategic locations above the casino table games, withoutdisrupting the normal game-monitoring activities, (a separate control roomwould direct the various camera angles), and transmitting the table games overthe digital satellite, digital cable and Internet networks (in countries thatpermit Internet wagering) to television sets (“TV’s”), which become a platformfor playing along with the casino games wherever TV’s and laptops are located.

 

Kenilworthtitled the overall project “RoulabetteTM”.  There are thirty-eightmillion (38,000,000) satellite and seventy-three million (73,000,000) cable TVsubscribers in the United States and more than five hundred million(500,000,000) subscribers throughout the rest of the industrialized world (“TheMarket”).  On average, households in the U.S. have three (3) TV’s. (It is important since the satellite and cable companies will charge a separatefee for transmitting the table games).  Public gathering places canaccommodate (be able to network) up to one thousand (1,000) or more TV setswith a single satellite receiving dish, direct cable connections, or streamedvia the Internet.  With wagering possible in homes, hotel rooms, resortrooms, pubs, restaurants, race tracks and other public gathering places theCompany believes it will become a more than $500 billion annual **net win**Market within five (5) yearsthroughout the industrialized world (by the year ended 2013).

 

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-three (43) lotteries in the United States are owned and operated byCounty and State agencies.  Since the beginning of year 2008, lotterystates have indicated exploring the privatization of their lotteries. Thiscould greatly enhance our efforts to broadcast the live casino table games tothese lottery locations and could result in having cafés that offer laptops andTV sets to play along.  Internet cafés that offer wagering on variousevents have been a huge success in the Asian Market. With Internet wageringoutlawed in the United States, our patented satellite, one-way broadcasts offerthe best possibility to establish satellite cafés.

 

Throughoutthe rest of the world, lotteries are owned by government agencies or non profitcharitable agencies that distribute the net earnings to benefit social andcharitable programs, or by private entities that pay a percentage of their netwin to designated government agencies.

 

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Theseforeign lotteries also have the same databases as lotteries in the UnitedStates, except most lotteries throughout Europe pool their lotteries betweencountries, not unlike Mega Millions and PowerBall in the United States, whichmakes the distribution simpler and very cost effective for both Kenilworth andthe lotteries.

 

Thereare no technical breakthroughs required.  The equipment for the technologyis readily available.  What is needed is to get through the maze of Local,County, State and Federal regulations in each U.S. State and foreigncountries.  When the first State in the United States grants the Companypermission to transmit the broadcast from one of its casinos to their residentsand to States that do not have any casinos, (the entire East coast of theUnited States), the other forty-three (43) States with lotteries will joinexpeditiously. The same will occur in foreign countries.

 

Kenilworthwill share the **net win** revenuewith all participating entities that provide RoulabetteTM gamingwithout **costs of any kind. **Statelotteries or their private operators will receive a minimum of forty percent(40%) of the total **net win** fromtheir respective jurisdictions.

 

InStates and foreign countries that designate exclusively lottery proceeds toschools and their teachers it is a welcome contribution.  It also willhelp close state budget gaps.

 

Inaddition, throughout the United States and most foreign countries there arehundreds of facilities that simulcast live in-progress horse/dog races. At most facilities there are several large TV screens that show the races fromthe different tracks with general theater-type seating for patrons and atprivate cubicles with television sets outfitted with touch screens.  Thecubicles rent for additional fees.  After players open an account andselect pin numbers, they can watch, in privacy, each race offered on thedifferent tracks on the TV and place wagers on the different races.  Theplayers may also watch sporting events, the news, the stock market reports, andin the near future RoulabetteTM, live, in-progresscasino table games.  The simulcast centers have their own databases tomanage the cash deposit and pay winnings on the horse/dog races and will beable to manage the casino games, on the same methods as the lotteries willmanage RoulabetteTM.  With private TV’s, available insimulcast centers, especially at night, 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 andBaccarat, we believe, will provide interaction, fun and far more excitementthan playing virtual games and video lottery terminals. It is the next bestthing, we believe, to actually being at the table in the casino.

 

Toconduct actual live test broadcasts Kenilworth believes it will require aminimum of ten million dollars ($10,000,000) and there are no assurances wewill ever be able to obtain any of such money. At present, the Company does nothave the funds readily available but hopes to obtain same, from investors, assoon as Kenilworth can obtain governmental permission and commence broadcastingfrom a casino in the United States or other 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 or an attachment directlyconnected to the TV set to receive satellite and/or Internet broadcasts. Thisas planned would allow a player in an interactive manner, at a remote location(outside the casino confines), to experience the actual play and excitement atthe casino table game and to make wagers on the various games, without havingto be physically present at the casino or casino table.  There are noassurances we will be able to successfully develop any system.

 

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Wealso propose for slot machine manufacturers to develop “RoulabetteTM SlotMachines”.  The RoulabetteTM Slot will offer the regular slot orvideo lottery games and by the touch of a button, the live in-progress casinotable games.  Slot players are offered a change of pace at the cost of aslot handle pull.  The games are transmitted to the RoulabetteTM Slotvia satellite or the Internet (all broadcasts are encrypted to preventunauthorized use of the broadcasts).

 

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. There are now believed to be more thanten million (10,000,000) slot machines played throughout the world,outside of casino confines.

 

ProjectRoulabetteTM is a concept intended to be built andthere can be no assurances that it will ever be built.  The Patentedmicroprocessors to be installed in the TV set top boxes have not been designed.

 

**SUMMARY**:

 

(1.)         Kenilworth continues to fine tune its patented technology dubbed RoulabetteTM. It now plans to “outsource” the manufacturing of all the components instead asformerly manufacture some of the equipment in its twenty-six thousand (26,000)square foot facility then located in Melville, NY.  RoulabetteTM wouldallow casino patrons and other players to play along with live in-progresscasino table games such as Roulette, Craps, Baccarat and more via digitalsatellite, digital cable television or Internet broadcasts (simulcasts)emanating from strictly regulated casinos located in the United States andother locations around the world, to self-sufficient computer terminals dubbed “RoulabetteTM Slots”and digital satellite, cable TV set top boxes or the Internet in countries thatpermit Internet gaming. 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, 2008, no firmagreements, customers, or proposals for any future business and there can be noassurances that we will ever have same. **Referenceis also made to each of the “Risk Factors” that are set forth in Item 7.**

 

(2.)         We believe the thousand virtual casino websites via the Internet obtain sixtypercent (60%) of their annual revenue from customers in the U.S.  Thesewebsite have been shut down when President Bush signed the Internet EnforcementAct of 2006.

 

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 or used.  We believe this fact should ease anyopposition from concerned citizens and anti-gambling groups, as regulation andenforcement responsibility will be vested in each individual state (or foreignjurisdiction).

 

Kenilworthwas the first to use color personal computers (PC’s) to replaceelectromechanical slot machines (1988).  We provided the software for thefirst 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, with the assistance of three (3) Nevadacasino operators, legislation to permit cashless wagering in the state ofNevada.  The legislation, which is in the form of an amendment to existingcasino control statutes, permits the use of account cards (debit cards) and wassigned 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 present business in 1988, it also provided security systemsto Nuclear Electric Generating Plants in the U.S. and foreign countries, aswell as time/attendance systems at a major department store chain.

 

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 THESTATUS WITH PAGCOR

 

DuringJanuary 2006, the Company reestablished negotiations with the PhilippinesAmusement and Gaming Corporation (“PAGCOR”) for permission to broadcast live,in-progress casino table games from their casinos.

 

PAGCORis the Republic of the Philippines chartered government gaming monopoly. PAGCOR partially owns and exclusively operates all fourteen (14) Filipinocasinos, some of which are located in exclusive resort facilities frequented byAsian patrons (tourists).

 

InMarch 2006, Kenilworth conducted a live, in-progress casino table gametest to demonstrate the ability to broadcast the table games, for around theworld viewing, without disrupting the normal security monitoring and protectingthe privacy of players at adjoining table games.  The film clip of thetest broadcast which was made at a roulette table located in the new HyattHotel and Casino, Manila, is available for viewing on our websitewww.kenilworthsys.com (see Press Release: Monday, March 6, 2006).

 

In2002, the Philippines Government permitted the establishment of two (2) InternetCafés in the Manila area and allowed the operators, for a fee to PAGCOR, toprovide life-like action on virtual baccarat, accept sports bets and videobroadcast of actual in-progress cock fights with wagering on the outcome. By year end 2007, the number of Cafés operating in the Manila area increased tosixty (60) Cafés.  At the end of 2006 there are now six hundred (600)Cafés in Manila with an additional thirty four hundred (3,400) throughout thecountry.

 

Kenilworthnever attempted to provide live in-progress real time casino table games to theCafés since President Gloria Macapagal-Arroyo stated, at all times, that ourbroadcast should not expand gambling throughout the Philippines.  TheCafés now represent a huge profit base for PAGCOR which provides the incomefrom its overall operation entirely for **socio-civicendeavors**.  PAGCOR is the most profitable corporation in thePhilippines.

 

Thephenomenal success by the Internet Cafés may not require our broadcasts toimprove PAGCOR’s income stream.   Kenilworth planned to broadcast tothe Pacific Rim countries to maintain the tourist’s trade to the Philippinesresorts, all of which have casinos, and now have to compete with Macau. We believe, in the future, PAGCOR will require our broadcasts to maintain theirpresent tourist trade.

 

MARKETINGSTRATEGY/SALES PLAN

 

Ourmarketing strategy consists of developing the RoulabetteTM Slotterminal and the RoulabetteTM broadcasts. We estimate at this time,that we will need at least approximately ten million dollars ($10,000,000) forpromoting the RoulabetteTM concept. We do not have this money nordo we have any agreements or understanding to procure this money. We may neverget this money. If we do obtain this money, it may not be sufficient. Further,should such monies be available it may not be available on terms satisfactoryto Kenilworth or it may be available on such terms that substantially dilute theinterest of existing shareholders. If we obtain this money, we will needsubstantial additional funds for the proposed marketing plan and there can beno assurances that such funds will ever be available to allow Kenilworth toengage in business on a profitable basis.

 

Atthe present time, we do not engage technically oriented employees who will beable to assist in the development of RoulabetteTM.It will be necessary for us to obtain additional personnel qualified and withthe expertise to develop RoulabetteTM. We would require additional employees andseveral more consultants in respective locations and there can be no assurancesof our being able to obtain any necessary personnel. There can be no assurancesof the availability of any such employees and consultants.

 

TheCompany will outsource the development of RoulabetteTM andthe microprocessors for the TV set top boxes.

 

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Inthe United States, Kenilworth must refrain from using the Worldwide Web (WWW)Internet to manage wagers from individuals outside of the casino confines. Itis against the law. 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’sPC and/or television sets with telephone lines not crossing any state lines,similar in principle to telephone accounts wagering offered by the New YorkState Off-Track Betting Corporation and the state of Nevada casino sports bookand recently with remote purchase of lottery tickets in many states within theUnited States.

 

Afterwe obtain permission to play RoulabetteTM, of which there can beno assurances, in a given state and engages a wager managementorganization in order to promote digital satellite and interactive televisionto the state’s residents, Kenilworth would install the eighteen (18) inch dishantenna and converter box required to receive digital TV programming andinteractive TV at its own cost, if the subscriber opens a RoulabetteTM wageringaccount for two hundred dollars ($200). In addition, Kenilworth would pay themonthly subscription fees to view all digital TV programming offered and theInternet service provider (ISP) subscription fee if the customer wagers atleast one hundred twenty dollars ($120) each month — win, lose, or draw — makesno difference.  In the U.S. the contracts would be financed by thesatellite carrier such as EchoStar and DirecTV, or cable companies.

 

Instates with approved lottery and/or other gambling legislation, we plan tointroduce RoulabetteTM Slot terminals to hotels, clubs(similar to card clubs in California) and resorts, to provide upscale gatheringplaces for tourists and local residents. Charitable organizations that arepermitted to conduct “Nevada Nights” and Bingo games may wish to offerRoulabetteTM gaming on a more permanent basis. Toreceive the broadcast signal, all that would be required is an eighteen (18)inch dish TV antenna and distribution equipment. The RoulabetteTM terminalsare intended to be self-sufficient and accept dollar bills (or script, tocontrol the amount an individual is allowed to wager in one day or other timeperiod). We plan to lease all the equipment necessary to participants for ashare of the profits.

 

Togain approval for our RoulabetteTM-style gambling injurisdictions that have not approved any gambling legislation, Kenilworthproposes to engage lobbyists to introduce, promote, and obtain legislativeapproval to permit RoulabetteTM-style gambling. Our strategy is to finddepressed resort areas and have the resort/hotel operators convince their localpoliticians of the benefits to their business and the local economies andrequest them to promote legislative approval, either state-wide or limited totheir areas. Riverboat gambling started to rehabilitate decaying waterfronts.RoulabetteTM can do the same in depressed economicareas.  No assurances can be given that we can obtain any such approvals.

 

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

 

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

 

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Inthe event a substantial amount is won by a player, Kenilworth will make thepayment to the winner, via money wire transfer, to the establishment whichmanaged the wager, within twenty-four (24) hours.  Kenilworth willestablish a worldwide 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 sameor similar equipment or systems as intended by RoulabetteTM.The most likely competition will come from slot machine manufacturers who couldrelatively quickly adapt slot machines to play along with live casino tablegames. We believe there are three (3) major slot machine manufacturers inthe world, all of which have vastly greater capital resources and substantiallymore personnel than the Company and may have under development systems thatdirectly compete 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.

 

PATENTS,TRADEMARKS AND INTELLECTUAL PROPERTY

 

Ourmost important assets are Patents we have acquired and RoulabetteTM relatedtrademarks and service marks.  The Patent granted on June 10, 2003titled “SYSTEM AND METHOD FOR REMOTE ROULABETTE AND OTHER GAME PLAY USING GAMETABLE AT A CASINO” and Patent Application filed October 15, 2003, entitled“METHOD AND SYSTEM FOR SUPPLYING FUNDS TO A TERMINAL FOR REMOTE WAGERING”, “MULTI-USEGAMING MACHINE” trademarks ROULABETTETM, as in pre-markedcards similar to lottery cards to select number in each game, used withterminals “ROULABETTETM SWIPE CARD” to activate set-top boxesto play RoulabetteTM and “PLAY ALONG WITH ROULABETTETM,LIVE” and MULTI-USE GAMING MACHINE.

 

DELAYEDAPPROVAL OF PATENTS IN CHINA, HONG KONG AND JAPAN

 

Earlierthis year we reported that after a seven (7) year delay, China and HongKong have accepted our RoulabetteTM System patents for remote live, in-progresscasino table game wagering action.  Since then Japan has also accepted ourRoulabetteTM patents.

 

Toassist us in our marketing efforts in China, we are pleased to confirm that wehave signed contracts with Charles P. Wang and Fred Catapano. Both gentlemenhave more than thirty (30) years of experience, with Chinese governmentagencies and Chinese marketing and possess the appropriate “know how”.

 

Wewere surprised at the Japanese approval. Japan has NO CASINOS which translatesto us, that they would entertain remote wagering from other Asian countriesthat offer casino action.  Otherwise, why approve something that will not,in the near Japanese future, occur?  Affluent Japanese gamblers visitSouth Korea, the Philippines and of late, Macau.  That leaves the averagewage earner to play Pachinko games in Japan for their gamblingentertainment.  The Pachinko player is the potential remote casino tablegame player.

 

Chinanow leads the world with 220 million Internet users; a mere seventeen percent(17%) of its population, compared with 216 million seventy-one percent (71%)who use the Internet in the United States.   Adoption of theRoulabetteTM system is capable of providing five times more Internet players inChina than in the United States once the most sought after market in the world.

 

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**Charles P. Wang Dossier**

** **

**1988-1993 Former President — China Institute of America**Premiere culture andeducation organization promoting better U.S./China relations since 1933.

** **

**Former Executive Director — Chinese America Planning Counsel**Largest socialservice organization serving Asian Americans in New York.

** **

**1995-2001 Former Vice Chairman U.S. Commission on CivilRights**Appointed byPresident George Bush.

** **

**Former Assistant Commissioner — NY State Department of SocialServices**Under Governor MarioCuomo.

 

Introducesand accompanies Chinese Heads of State and Dignitaries when they visit withU.S. Congressional, State and City Officials and at meetings at the United Nationsin New York.

 

Mr. Wangwas invited to meet Chinese Premier Wen Jiaboa while he was attending the September UnitedNations meetings of World Leaders.

 

Mr. Catapanois the owner of **Well Made Toys ManufacturingCorp.**, one of the largest U.S. manufacturers and importer of toysfrom China with offices in Hong Kong and elsewhere in China.  With histhirty (30) years of experience in dealing with Chinese Government Officialsand manufacturers, many of which are government owned, Kenilworth has membersof his office staff expertise available in facilitating our RoulabetteTMmarketing plans. They are well acquainted with how to procure talent and “knowhow” in China.  Mr. Catapano is a major Kenilworth shareholder.

 

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.

 

**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 are 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 gaming 

 

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devices.Our RoulabetteTM terminals may be considered similar to slot machines andmay have to meet these regulations.

 

FABRICATION/ASSEMBLYOPERATION

 

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

 

EMPLOYEES

 

Kenilworth,at present, has three (3) full time employees to performadministrative work and research related to casino wagering and marketingaround the world, in addition to the officers that manage the affairs of theCompany. The Company has engaged consultants to assist us in the United States,Europe and Asian markets and that may manage the proposed satellitetransmission programs, and others that may assist in the marketing ofRoulabetteTM broadcasts throughout the industrialized world.

 

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

 

BACKLOG

 

Wedo not have any backlog.

 

ITEM 2 — PROPERTIES

 

Kenilworthleases two thousand three hundred (2,300) square feet in an office buildingpaying two thousand eight hundred dollars ($2,800) per month rent, fuel andelectric cost adjustments from the date of the lease, renewed for a three (3) yearterm to end in June 2009.

 

ITEM 3 — LEGAL PROCEEDINGS

 

Sinceexiting 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 SECURITY HOLDERS

 

Notapplicable.

 

EXECUTIVE OFFICERS OF THE REGISTRANT

 

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 |       | 83      |       | PRESIDENT,CHAIRMAN  OF THE BOARD,CHIEF  EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER |       | 1972                                       |
| KIT  WONG      |       | 77      |       | SECRETARY                                                                             |       | 1999                                       |

 

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 during the third quarter period of 2009.

 

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PART II

 

ITEM 5 — MARKET PRICES OF THE COMPANY’S COMMON STOCK AND RELATEDSTOCKHOLDER MATTERS

 

(a)         Kenilworth exited from Bankruptcy Proceedings in September of1998, its Common Stock which had been trading on the NASDAQ National Market, isnow trading on the OTC Pink Sheets under the old trading symbol “KENS”. Thefollowing table sets forth high and low closing sales prices for our CommonStock, as reported on the OTC Pink Sheets.

 
| ** **                                            | ** ** | **LOW** | ** ** | **HIGH** | ** ** |
|-------------------------------------------------------|------------|---------|------------|----------|------------|
| **2007**                                              |       |    |       |     |       |
|                                                  |       |    |       |     |       |
| January 1,  2007  Through March 31, 2007    |       | $       | 0.002      |     | $          | 0.05 |   |
|                                                  |       |    |       |     |       |
| April 1,  2007  Through June 30, 2007       |       | $       | 0.02       |     | $          | 0.04 |   |
|                                                  |       |    |       |     |       |
| July 1,  2007  Through September 30, 2007   |       | $       | 0.02       |     | $          | 0.007 |   |
|                                                  |       |    |       |     |       |
| October 1,  2006  Through December 31, 2006 |       | $       | 0.01       |     | $          | 0.03 |   |
|                                                  |       |    |       |     |       |
| **2008**                                              |       |    |       |     |       |
|                                                  |       |    |       |     |       |
| January 1,  2008  Through March 30, 2008    |       | $       | 0.008      |     | $          | 0.0175 |   |
|                                                  |       |    |       |     |       |
| April 1,  2008  Through June 30, 208        |       | $       | 0.005      |     | $          | 0.011 |   |
|                                                  |       |    |       |     |       |
| July 1,  2008  Through September 30, 2008   |       | $       | 0.004      |     | $          | 0.008 |   |
|                                                  |       |    |       |     |       |
| October 1,  2008  Through December 31, 2008 |       | $       | 0.012      |     | $          | 0.001 |   |
|                                                  |       |    |       |     |       |
| **2009**                                              |       |    |       |     |       |
|                                                  |       |    |       |     |       |
| January 1,  2009  Through March 15, 2009    |       | $       | 0.006      |     | $          | 0.02 |   |

 

(b)         Holders.There were approximately six thousand (6,000) holders of record of CommonStock of Kenilworth as of March 16, 2009.

 

(c)          Dividends.Kenilworth has not paid any dividends on its Common Stock. We plan to apply anyearnings it achieves to expansion of the business and does not expect to payany dividends in the foreseeable future.

 

(d)         No underwriters were involved in the sale of the unregisteredConvertible Promissory Notes and Stock Purchase and Option Agreements. Exemption from registration is claimed under Section 4(2) of the SECAct of 1933 as amended.  The proceeds from the sale of all unregisteredsecurities have all been used for working capital.

 

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TheCompany has outstanding 434,597,086 Common Shares.  All of the restrictedshares may have the restriction lifted pursuant to new SEC Rule 144 Bwithin six (6) months which may substantially depress the trading price ofthe Company’s stock.

 

(e)         Equity Compensation Plan expired in November 27, 2006.  The Company plans to ask the Shareholders toapprove a future plan when the Company’s business becomes more viable.

 

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, 2008, are asFollows:

 

SUMMARY OF OPERATIONS

 
| ** **                                         | ** ** | **2008**   | ** ** | **2007**     | ** ** | **2006**     | ** ** | **2005**     | ** ** | **2004**     | ** ** | **PERIOD FROM  NOVEMBER 24,  1998 TO  DECEMBER 31,  2008** | ** ** |
|----------------------------------------------------|------------|------------|------------|--------------|------------|--------------|------------|--------------|------------|--------------|------------|--------------------------------------------------------------------------------|------------|
| ** **                                         | ** ** | ** ** | ** ** | **Restated** | ** ** | **Restated** | ** ** | **Restated** | ** ** | **Restated** | ** ** | **Restated**                                                                   | ** ** |
| Net sales from operations                          |       | $          | —     |         | $          | —       |       | $            | —     |         | $          | —                                                                         |       | $ | — |   | $ | — |   |
| Other income                                       |       | $          | —     |         | $          | —       |       | $            | —     |         | $          | —                                                                         |       | $ | — |   | $ | — |   |
| Net loss accumulated during the development  stage |       | $          | 1,074,193  |         | $          | 1,093,538    |       | $            | 850,079    |         | $          | 3,815,302                                                                      |       | $ | 1,860,296 |   | $ | 4,634,140 |   |
| Loss per common share                              |       | $          | 0.002      |         | $          | 0.003        |       | $            | 0.003      |         | $          | 0.02                                                                           |       | $ | 0.010 |   | $ | 0.0383 |   |
| Loss per common share — diluted               |       | $          | 0.002      |         | $          | 0.003        |       | $            | 0.003      |         | $          | 0.02                                                                           |       | $ | 0.010 |   | $ | 0.0383 |   |
| Consolidated balance sheet data:                   |       |       |       |         |       |         |       |         |       |         |       |                                                                           |       |
| Total liabilities                                  |       | $          | 318,488    |         | $          | 303,187      |       | $            | 486,895    |         | $          | 217,540                                                                        |       | $ | 313,414 |   | $ | 314,488 |   |
| Stockholders’ Equity (deficit)                |       | $          | 34,912,628 |         | $          | 576,710      |       | $            | 459,400    |         | $          | 75,450                                                                         |       | $ | (109,783 | ) | $ | 885,560 |   |

 

 ITEM7 — MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS

 

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) RESULTSOF OPERATIONS

 

Sincewe exited from bankruptcy proceedings on September 28, 1998, we have hadno revenues from operations, and therefore sustained losses from generaladministration expenses amounting to $1,074,193 in 2008, $1,093,538 in 2007 and$850,079 in 2006.  Kenilworth has had no revenues from operations sinceexiting from Bankruptcy Proceedings in September 1998.

 

(B) LIQUIDITYAND CAPITAL RESOURCES

 

Kenilworthhas not conducted any new business operations since 1991. At December 31,2008, 2007 and 2006 we had a deficiency in working capital of $302,138, $301,957and $436,910 respectively. In Kenilworth’s present state of operation tocontinue a viable business plan, Kenilworth requires little 

 

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funding.We have been dependant upon the resources of its Chairman and Chief ExecutiveOfficer, who receives no compensation, and funds received from privateinvestors, totaling $511,000 in 2008, $832,500 in 2007 and $765,400 in2006.  In addition the Company issued restricted Common Stock for servicestotaling $523,565 for 52,355,522 shares in 2008, $306,400 for 10,240,000 sharesin 2007 and $1,829,000 for 58,116,044 shares in 2006.

 

Ourpresent plans are to continue to develop a wagering system titled “RoulabetteTM”that would allow patrons all over the industrialized world to view and wager onlive casino 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 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-Kcontains 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. Anystatements contained in this Form 10-K that are not statements ofhistorical fact may be deemed to be forward-looking statements. Withoutlimiting the generality of the foregoing, in some cases, you can identifyforward-looking statements by terminology such as “may,” “will,” “should,” “would,”“could,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “continue”or the negative of these terms or other comparable terminology. Suchforward-looking information involves important risks and uncertainties thatcould significantly affect anticipated results in the future and, accordingly,such results may differ from those expressed in any forward-looking statementsmade by us. These risks and uncertainties include, but are not limited to, ourlack of recent operating history, our dependence on Herbert Lindo, our Chairmanand Chief Executive Officer who is eighty-three (83) years old and existingmanagement, general domestic or international economic conditions, pending orfuture legal  proceedings, changes in federal or state taxlaws or the administration of such laws, changes in gaming laws or regulations(including the legalization of gaming in certain jurisdictions), applicationsfor licenses and approvals under applicable jurisdictional laws and regulations(including gaming laws and regulations).  You should not place unduereliance on any forward-looking statements, which are based only on informationcurrently available to us. We undertake no obligation to publicly release anyrevisions to such forward-looking statements to reflect events or circumstancesafter the date of this 10-K report for the year ended December 31, 2008.

 

***Remainder of page intentionallyleft blank***

 

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** **

**RISK FACTORS**

 

**NO OPERATING HISTORY**

 

Wehave had no new revenues from operations since 1991. We exited 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, 2008 the working capital deficiency of Kenilworth was$302,138. This will not enable Kenilworth to achieve any of its plannedoperations. There can be no assurances that Kenilworth will again havesufficient working capital to engage in its planned operations.  Althoughwe have been able to obtain working capital from investors that purchaseConvertible Promissory Notes and by issuing restricted Common Shares forservices rendered.

 

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

 

Kenilworth’sbusiness except for the completion of the $9,000,000 contract with theTotalizator Agency Board of Victoria, Australia, and the revenue from providingencoded access cards to United States and foreign Nuclear Electric GeneratingPlants, remains in the planning stage. We plan to engage in the development,manufacturing by subcontractors, and marketing of an operation entitledRoulabetteTM. RoulabetteTM would allow casino patrons and other players to playalong from remote locations with live in-progress casino table games such asRoulette, Craps, Baccarat and more via digital satellite and digital cabletelevision broadcasts (simulcasts) emanating from strictly regulated casinoslocated in the United States or via the Internet in 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 orattached to TVs have not been designed. We have, as at December 31, 2007,no specific agreements, customers or proposals for any future business andthere can be no assurances that 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 in businesson a profitable basis.

 

**OUR BUSINESS IS SUBJECT TO OUR ABILITY TO OBTAIN AND RETAINKEY 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 requireadditional employees and several more consultants. There can be no assurancesof the availability of any such employees and consultants.  The Companyexpects to outsource the development of RoulabetteTM and the microprocessors forthe TVs or set top boxes.  No assurances can be given that the Companywill be able to do this successfully.

 

**WE ARE DEPENDANT UPON HERBERT LINDO**

 

Kenilworthhas been dependant upon the services of its Chairman and Chief ExecutiveOfficer Herbert Lindo who is eighty-three (83) years old. Herbert Lindo hasperformed his services during the past eighteen

 

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(18)years without compensation. Should Kenilworth procure working capital, therecan be no assurances that he will continue to work without receivingcompensation. There also can be no assurances of Herbert Lindo’s continuedavailability.  We believe without assurances that present management iscapable to continue our present plans in the event that Herbert Lindo is notavailable.

 

**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 OF SIMULCASTWAGERING**

 

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 to HerbertLindo, the Inventor and which Patent was assigned by Herbert Lindo to theCompany in August 2000.  We filed the Patent for approval inforty-nine (49) countries in the industrialized world including Russia andChina. 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 been publishedto use lottery terminals to accept deposits for wagers placed with the TV settop boxes and the use of Play Cards similar to lottery tickets, which have alsobeen assigned to the Company by Herbert Lindo.  A Patent Application forMulti-Use Gaming Machines invented by Herbert Lindo and Gordon Coplein, Esq.was published on February 1, 2007 and assigned, by the inventors, toKenilworth.

 

**OUR ROULABETTETM TERMINALS ARE SUBJECT TO VARIOUS FEDERAL,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,Baccarat and more via digital satellite television and digital cableprogramming emanating from regulated casinos.

 

**OUR OFFICERS AND DIRECTORS WILL HAVE SIGNIFICANT CONTROL OVERUS AND MAY APPROVE OR REJECT MATTERS CONTRARY TO A VOTE OF OURSHAREHOLDERS**

 

Ourexecutive officers and directors together with their affiliates beneficiallyown a significant percentage of our outstanding common stock. These stockholders,if acting together, will be able to significantly influence all mattersrequiring approval by our stockholders including the election of directors andthe approval of mergers or similar transactions even if the stockholdersdisagree.

 

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** **

**SHARES ELIGIBLE FOR FUTURE SALE COULD CAUSE OUR STOCK PRICETO FALL**

 

Ifour stockholders sell substantial amounts of our common stock in the publicmarket, the market price of our common stock could fall. As of December 31,2008 we added 106,855,522 restricted shares of Common Stock outstanding, whichare eligible for sale by our Shareholders under new SEC Rule 144 B of theSecurities Act of 1933 as amended which reduces the holding period to six (6) monthsor 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 ACCOUNTANTS ON ACCOUNTING ANDFINANCIAL DISCLOSURE

 

OnOctober 2, 2006, Demetrius & Company, L.L.C. (“Demetrius”)resigned as independent registered public accountants of Kenilworth SystemsCorporation (the “Company”).  The Company’s Board of Directors acceptedthe resignation of Demetrius.

 

Thereport of Demetrius on the Company’s financial statements as of December 31,2004 and for the year then ended neither contains an adverse opinion or adisclaimer of opinion nor is modified as to uncertainty, audit scope oraccounting principles, except that the opinion includes an explanatoryparagraph that the Company has incurred operating losses since its inception asa development stage company for the period beginning September 24, 1998,which raises substantial doubt about the Company’s ability to continue as agoing concern.  Demetrius did not issue a report on the Company’sfinancial statements as of December 31, 2005 or for the years then ended.

 

Duringthe fiscal years ended December 31, 2004 and 2005 and the period from January 1,2006 to October 2, 2006, there were no disagreements with Demetrius on anymatter of accounting principles or practices, financial statement disclosure,or auditing scope or procedure, which, if not resolved to the satisfaction ofDemetrius, would have caused it to make reference to the subject matter of thedisagreement in connection with its report.

 

EffectiveFebruary 5, 2007, the Company engaged KGS, LLP as its independent certifiedpublic accountants with respect to the fiscal years ended December 31,2005, 2006 and 2007.  The Company’s Board of Directors approved theengagement of KGS, LLP.  KGS, LLP. has not yet audited any of the Company’sfinancials from the time Demetrius ended their audit engagement.  Thedelay was not caused by KGS, LLP.

 

ITEM 9A — CONTROLS AND PROCEDURES

 

a.)           DisclosureControls and Procedures

 

TheCompany has evaluated, under the supervision and with the participation of theCompany’s management including the Company’s Chairman, Chief Executive Officerwho is also its Financial Officer.  The effectiveness of the Company’sdisclosure controls and procedures (as defined in Rules 13a-15(e) and15d-15 (e) under the Securities Exchange Act of 1934, as amended (the “ExchangeAct”) as of the end of the period covered by this Report.  Because of theinherent limitations in all control systems evaluation of controls can provideonly reasonable assurance that all control issues and instances of fraud, ifany, within the Company have been detected.  However, based on thatevaluation, the Company’s

 

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Chairmanand Chief Executive Officer who is also 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.)          Changesin Internal Control over Financial Reporting

 

Therewas no change in the Company’s internal control over financial reporting thatoccurred during the annual period ending December 31, 2008, that hasmaterially affected, or is reasonably likely to materially affect the Company’sinternal control over financial reporting.

 

PART III

 

ITEM 10 — DIRECTORS AND EXECUTIVE OFFICERS OFTHE REGISTRANT

 
| **Name**              | ** ** | **Age** | ** ** | **Position**                                                                                                 |
|-----------------------|------------|---------|------------|--------------------------------------------------------------------------------------------------------------|
|                  |       |    |       |                                                                                                         |
| Herbert  Lindo        |       | 83      |       | Director,  Chairman of the Board, President, Treasurer, Chief Executive Officer and Chief  Financial Officer |
|                  |       |    |       |                                                                                                         |
| Joyce  Clark          |       | 73      |       | Director                                                                                                     |
|                  |       |    |       |                                                                                                         |
| Kit  Wong             |       | 77      |       | Director                                                                                                     |
|                  |       |    |       |                                                                                                         |
| Patrick  J. Mc Devitt |       | 67      |       | Director                                                                                                     |
|                  |       |    |       |                                                                                                         |
| Edward  Vietmeier     |       | 47      |       | Director                                                                                                     |

 

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.   When Mr. Scotto resigned in November 2005,Mr. Lindo resumed the position of Chief Executive Officer.  Mr. Lindodevotes his full time to the business of Kenilworth.

 

KitY. Wong has served as a Director of Kenilworth since 1999, since December 2005he also serves as Secretary of the Company. He is part owner and operator ofseveral Chinese restaurants in the New York metropolitan area.  Mr. Wongdevotes only a portion of his time to the business of Kenilworth.

 

PatrickJ. Mc Devitt has been a licensed representative for Securities firms for thepast eight (8) years. He retired in 2003 from the Securities business andjoined his wife in the CPA business.  Mr. Mc Devitt devotes only aportion of his time to the business of Kenilworth.

 

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 and recently started her own tax filing entity. She is also thesister of Betty S. Svandrlik, the former Corporate Secretary, who is engaged inbusiness as a medical transcriber. Joyce D. Clark is the ex-wife of HerbertLindo, they divorced in 1980.   Mrs. Clark devotes only aportion of her time to the business of Kenilworth.

 

EdwardVietmeier is a professional golfer and participates in major golf tournamentsthroughout the United States.  He is also the operator of a public golfcourse in Pennsylvania.  The immediate members of his family areshareholders of our Company’s stock. Mr. Vietmeier devotes only a portionof his time to the business of Kenilworth.

 

DIRECTORSIN OTHER PUBLIC COMPANIES

 

KitWong, a Director of the Company, serves as a Director of a private plasticextrusion company.

 

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CRIMINAL/BANKRUPTCY/SECVIOLATIONS 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. Through December 31, 2007 only Herbert Lindo, Chairman andChief Executive Officer owns beneficially more than ten percent (10%) of ourCommon Stock.  The Company is presently reviewing the compliance for theforegoing.

 

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’s system of internal financial  controls and accounting practices to achieve reliability and integrity in the  Company’s financial statements, and initiate such examinations of such  controls and practices as the Audit Committee deems advisable. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                  |
| 2.)    | Review  the qualification, performance and independence of the Company’s independent  auditors and recommend independent auditors for appointment annually by the  Board of Directors.                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                  |
| 3.)    | Prior  to the commencement of the Company’s annual external audit, review with the  Company’s independent auditors the scope of their audit function and  estimated audit fees.                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                  |
| 4.)    | Subsequent  to the completion of the Company’s annual external audit, review the report  and recommendations of the independent auditors with the independent auditors  and the Company’s management.                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                  |
| 5.)    | Review  the annual and quarterly consolidated financial statements of the company and  other financial disclosures of the Company and the accounting principles  being applied in such statements and disclosures.                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                  |
| 6.)    | Review  the authority and duties of the Company’s chief financial officer and chief  accounting officer and the performance by each of them of their respective  duties.                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                  |
| 7.)    | Review  the insurance programs for the Company including professional malpractice,  general liability, director and officer liability and property insurance, and  the insurers carrying the Company’s insurance.                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                  |
| 8.)    | Oversee  the establishment and thereafter periodically review a corporate code of  conduct and the Company’s policies on ethical business practices.                                                                                                                                                             |

 

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| 9.)    |   | Prior  to public release, review with management and the Independent Accountants,  the financial results for the prior year including the Company’s annual report  on Form 10-K/A.                |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                        |
| 10.)   |   | Review  the committee’s charter annually and revise as appropriate.                                                                                                                                    |
|   |   |                                                                                                                                                                                                        |
| 11.)   |   | Meet  with the Chief Financial Officer and the Independent Accountants, in separate  executive sessions, to discuss any matters that the committee or these groups  believe should be considered privately. |
|   |   |                                                                                                                                                                                                        |
| 12.)   |   | Take  such other actions concerning the Company’s accounting and financial  functions as the Committee deems appropriate with 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 be adoptedshortly and will be filed with the Securities and Exchange Commission.

 

ITEM 11 — EXECUTIVE COMPENSATION

 

a.)           The following table sets forth the exerciseof options and SARs during the fiscal year ended December 31, 2008.

 

Aggregated Option/SAR Exercises in Last Fiscal YearAnd FY-End Option/SAR Values

NONE

 
| ** **    | ** ** | ** **                    | ** ** | ** **                 | ** ** | **Number of**                                        | ** ** | **Value of unexercised**    | ** ** |
|---------------|------------|-------------------------------|------------|----------------------------|------------|-----------------------------------------------------------|------------|---------------------------------------|------------|
| ** **    | ** ** | ** **                    | ** ** | ** **                 | ** ** | **securities underlying  unexercised options/** | ** ** | **in- the-  money options** | ** ** |
| ** **    | ** ** | ** **                    | ** ** | ** **                 | ** ** | **SARS at FY-end (#)**                     | ** ** | **SARS at FY-end($ )** | ** ** |
| ** **    | ** ** | **Shares acquired**      | ** ** | ** **                 | ** ** | **exercisable /**                                    | ** ** | **exercisable /**                | ** ** |
| **Name**      | ** ** | **on exercise (#)** | ** ** | **Value realized($)** | ** ** | **Unexercisable**                                         | ** ** | **unexercisable**                     | ** ** |
| Herbert Lindo |       | 5,000,000                     |       | $                          | 20,000     |                                                      | 0          |                                  | 0          |   |
|               |            |                               |            |                            |            |                                                           |            |                                       |            |  |

 

Nooptions or SARs were granted during the year ended December 31,2008.  Herbert Lindo exercised his five million (5,000,000) share Optionon November 27, 2006.

 

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

 

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

 

d.)          Stock Performance Graph is not applicable.

 

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**TOTAL RETURN TO SHAREHOLDER’S(DIVIDENDS REINVESTED MONTHLY)**

 

Kenilworthhas not declared a dividend since its inception in 1968.

 

e.)           Thefollowing table sets forth the total compensation of the President and eachExecutive Officer of Kenilworth whose total salary and bonus exceeds $100,000.

 

**SUMMARY COMPENSATION TABLE**

 
| ** **                  | ** ** | ** ** | ** ** | **Annual Compensation** | ** ** | **Long term compensation** | ** ** |
|-----------------------------|------------|------------|------------|------------------------------|------------|--------------------------------------|------------|
| ** **                  | ** ** | ** ** | ** ** | ** **                   | ** ** | ** **                           | ** ** | ** ** | ** ** | **Awards** | ** ** | **Payout** | ** ** |
| ** **                  | ** ** | ** ** | ** ** | ** **                   | ** ** | ** **                           | ** ** | **Other** | ** ** | **Restricted** | ** ** | **Securities** | ** ** | **LTIP** | ** ** | **All** | ** ** |
| **Name and**           | ** ** | ** ** | ** ** | ** **                   | ** ** | ** **                           | ** ** | **annual** | ** ** | **stock** | ** ** | **underlying** | ** ** | **payouts** | ** ** | **other** | ** ** |
| **principal position** | ** ** | **Year**   | ** ** | **Salary ($)**          | ** ** | **Bonus ($)**                   | ** ** | **compensation($)** | ** ** | **award(s)($)** | ** ** | **options/SARS (#)** | ** ** | **($)** | ** ** | **compensation($)** | ** ** |
| Herbert Lindo               |       | 2008       |       | 0                            |       | 0                                    |       | 0 |   | 0 |   | 0 |   | 0 |   | 0 |   |
|                        |       | 2007       |       | 0                            |       | 0                                    |       | 0 |   | 0 |   | 0 |   | 0 |   | 0 |   |
|                        |       | 2006       |       | 0                            |       | 0                                    |       | 0 |   | 0 |   | 0 |   | 0 |   | 0 |   |
|                        |       | 2005       |       | 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 BENEFICIAL OWNERS AND MANAGEMENTAND RELATED STOCKHOLDER MATTERS

 

Thefollowing table sets forth as of March 16, 2009 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 Exchange Commission,and the information is not necessarily indicative of beneficial ownership forany other purpose.  Under such rules, beneficial ownership includes anyshares as to which the individual has the right to acquire as of May 31,2008 through the exercise of any stock option or other right.  Unlessotherwise indicated, each person has sole voting and investment power (orshares such powers with his spouse) with respect to the shares set forth in thefollowing table:

 

**BENEFICIAL OWNERSHIP TABLE**

 
| ** **                                            | ** ** | ** **                   | ** **     | **AMOUNT AND**    | ** ** | ** **         | ** ** |
|-------------------------------------------------------|------------|------------------------------|----------------|------------------------|------------|--------------------|------------|
| ** **                                            | ** ** | ** **                   | ** **     | **NATURE OF**     | ** ** | ** **         | ** ** |
| **NAME AND ADDRESS OF**                | ** ** | ** **                   | ** **     | **BENEFICIAL**         | ** ** | **PERCENT OF**     | ** ** |
| **BENEFICIAL OWNER**                             | ** ** | **TITLE OF CLASS** | ** **     | **OWNERSHIP (1)** | ** ** | **CLASS (1)** | ** ** |
| Herbert Lindo (1)                                     |       |                         |           |                   |       |               |       |
| 185 Willis Avenue                                     |       | Common Stock                 |           |                   |       |               |       |
| Mineola, NY 11501                                     |       | $                            | 0.01 par value |                   | 50,000,000 |               | 11.9       | % |
|                                                  |       |                         |           |                   |       |               |       |
| The total number of shares beneficially  owned by all |       | Common Stock                 |           |                   |       |               |       |
| Directors and Executive Officers                      |       | $                            | 0.01 par value |                   | 21,359,465 |               | 5.0        | % |
|                                                  |       |                         |           | 71,359,465             |       | 16.9               | %          |

 

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Thepercent of class has been determined with 437,597,086 shares issued andoutstanding on December 31, 2008.

 

ITEM 13 — CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

NONE

 

ITEM 14 — PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

TheCompany has appointed KGS, LLP. as Independent Auditor’s for the fiscal yearending December 31, 2006, 2007 and 2008 and to restate the Company’sfinancials as A Development Stage Company as directed by the SEC.  KGS,LLP. has not commenced the audit for the respective years.  The Company’sback office accountants, which were not timely compensated during some of theirwork, halted the financial preparation for the audit.  As the result ofthe delays, KGS, LLP resigned in 2008. The Company has not as yet engaged an Independent Auditor.

 

**Fees Incurred by Kenilworth**

 

Feesfor professional services provided are estimated:

 
| ** ** | ** ** | **2008** | ** ** | **2007** | ** ** | **2006** | ** ** |
|------------|------------|----------|------------|----------|------------|----------|------------|
|       |       |     |       |     |       |     |       |
| Audit Fees |       | $        | 4,000      |     | 75,000     |     | $          | 75,000 |   |
|            |            |          |            |          |            |          |            |  |  |

 

TheCompany has no Audit Committee.

 

PART IV

 

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

 

(a) (1) Financial Statements

 

Consolidatedbalance sheets as of December 31, 2008 and 2007

 

Consolidatedstatement of operations and deficit for the periods ended December 31,2008, 2007 and 2006

 

Consolidatedstatement of cash flows for the periods ended December 31, 2008, 2007 and2006

 

Consolidatedstatement of changes in stockholders equity the years ended December 31,2008, 2007 and 2006

 

Notesto consolidated financial statements

 

(b)   On July 12, 2002 Kenilworthfiled an 8-K in which the Company reported the following event:

 

HerbertLindo, Chairman and Chief Executive Officer of Kenilworth Systems Corporation (“Kenilworth”)since 1972, advised the Company’s Board of Directors that on June 26, 2002the Sheriff of Nassau County (the “Sheriff”) sold at a purported Public AuctionSale (the “Sale”) 10,333,450 restricted common shares of Kenilworth SystemsCorporation (the “Shares”) that he had owned and which represented control (14%of the outstanding shares) of Kenilworth, for one thousand dollars ($1,000) or$0.000095 per share.  The Shares were sold to Tappan Zee Capital Corp. (“TappanZee”).  On the date of the Sale the Shares had a market value of ninehundred thirty thousand ten dollars and fifty cents ($930,010.50).  TheSheriff seized and sold the Shares on behalf of Tappan Zee, as a result of aclaim by Tappan Zee in a disputed civil suit brought in the New York SupremeCourt for $128,062.  Tappan Zee was 

 

23

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boththe foreclosing party and the purchaser.  Herbert Lindo owned real estateat the time valued in excess of $128,062 which the Sheriff could have seizedinstead of the Kenilworth Shares.

 

Kenilworthclaims that the Sheriff’s Auction Sale was conducted in a fraudulent manner by (1) failingto comply with the rules and regulations set forth under the Securitiesand Exchange Commission Act of 1933 and 1934, as amended (The “Acts”) the NewYork State Securities Laws, and (2) by failing to properly advertise theSale, failing to notify any or all Kenilworth shareholder’s (numberingapproximately 5,500), and (3) failing to register the Restricted Shareswith the Securities and Exchange Commission before conducting the Sale or inthe absence of registering the Shares, obtain a No-Action letter from theCommission permitting the Public Sale, and (4) by making an immediatedistribution of the Restricted Shares, and (5) by concluding the auctionsale despite only one (1) bidder that appeared and bid only one thousanddollars ($1,000) for all the shares when the market value of the10,333,450 shares was nine hundred thirty thousand ten dollars and fifty cents($930,010.50).  He should have adjourned the auction and then advertisethe auction sale in appropriate newspapers that quoted Kenilworth SystemsCorporation shares which has traded since 1968 under the trading symbol “KENS”on organized 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.

 

Bythe attorneys for Tappan Zee’s failure to seize the Real Property owned byHerbert Lindo raises the question of complicity to take control of Kenilworthinstead of satisfying a disputed claim for $128,062.

 

Kenilworthor Herbert Lindo, as an individual will seek in Federal or State Courts tocancel the 10,333,450 shares, which were subject of the Sheriff Auctions Sale,and seek triple damages under RICO on behalf of the shareholders of Kenilworth,the damaged parties.  Herbert Lindo and Kenilworth have not commenced anyproceedings against the Sheriff’s Office of Nassau County and Tappan Zee andthe attorney’s representations Tappan Zee since we believe that the Statue forSecurity Fraud does not expire until June 26, 2009.

 

Atthe this time, the Company does not wish to spend the substantial fundsrequired to commence the action nor does Mr. Lindo have the time, atpresent, to assist in any law suit Kenilworth may institute on behalf of itsShareholders.

 

Kenilworthwill distribute the proceeds, if any, from any settlement or court award to theShareholders that owned Kenilworth Common Stock on or before June 26,2002.

 

InJune 2003, the Madison Bank of Blue Bell, Pennsylvania returned twomillion (2,000,000) of the wrong fully distributed shares by Tappan Zee forcancellation to American Stock Transfer and Trust Company, Kenilworth’s StockTransfer Agents.  Since the Madison Bank was complacent with Tappan Zee inthe fraudulent seizure and auction of the shares, neither Herbert Lindonor Kenilworth issued general releases to the Madison Bank, although thesubsequent Madison Bank and Kenilworth Agreement provided for thereleases.  The Company was desirous of having the two million (2,000,000)shares returned, reducing the claim against the Nassau County Sheriff’sDepartment and for future free distribution to Kenilworth’s shareholders onrecord on June 26, 2002 which were not made aware by the Sheriff of theAuction Sale.

 

ITEM 15—EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS 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 January 26, 2009  Annexed hereto.     |

 

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| 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  Stock Purchase and Option Agreement                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                             |
| 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.  The Plan has expired.                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                             |
| 10.3   | Three  (3) year lease with Police Benevolent Association (PBA) of Nassau County  for office space at 185 Willis Avenue, Mineola, NY 11501 renewed to May 30,  2009 for approximately two thousand three hundred (2,300) square feet for two  thousand six hundred dollars ($2,600) per month, plus adjustments for  electricity and real estate taxes. |
|   |                                                                                                                                                                                                                                                                                                                                                             |
| 21.1   | Subsidiaries  of the Registrant                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                             |
| 23.1   | Consent  of KGS, LLP. Independent Auditor, when provided.  Resigned in 2008.                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                             |
| 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   | 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.                                                                                                                                                                                                                                                   |

 

REPORTON FORM 8-K

 

None

 

ITEM8.01   OTHER EVENTS

 

None

 

**On April 18,2006 the Company reported on FORM 8-K:**

 

ITEM 9.01            FINANCIAL STATEMENTS AND EXHIBITS

 

(c)          Exhibits

 

Thefollowing exhibits are annexed hereto:

 
| 99.1 |   | Press  Release dated April 18, 2006 |
|------|--------|------------------------------------------|

 

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**FOR RELEASE****: Tuesday, April 18, 2006**

 
| **For:**                           | ** ** | **Contact:**             |
|------------------------------------|------------|--------------------------|
| KENILWORTH  SYSTEMS CORPORATION    |       | Herbert  Lindo           |
| 185  Willis Avenue, Suite # 4 |       | Chairman &  CEO |
| Mineola,  NY 11501                 |       |                     |
| Tel:  (516) 741-1352               |       |                     |
| Fax:  (516) 741-7194               |       |                     |

 

**FOR IMMEDIATE RELEASE**

 

**ANNUAL REPORT FURTHER DELAYED**

 

**MINEOLA, N.Y., April 18, 2006 — Kenilworth SystemsCorporation (OTC Pink Sheets: KENS)**........Kenilworth Systems Corporation (“Kenilworth”) in an 8-K filingtoday reported that the Company’s Annual Report for the period ended December 31,2005, after having filed an extension until April 17, 2006, will befurther delayed for approximately two (2) weeks.

 

HerbertLindo, Chairman and CEO stated the delay is caused by the extensive expensesincurred in continuing negotiations taking place in the Philippines with aPhilippine government authorized agency, the acquisition of Lighthouse Supplyand Services, Inc. in the Philippines, all of which require IndependentAuditors confirmation and the lack of qualified staff personnel that left theCompany in November 2005, which have not as yet been replaced.

 

Aspreviously reported, the Company sustained a loss of $3,267,912 for the nine (9) monthperiod ended September 30, 2005 which included a non-operating loss of$1,250,000. The Company expects these losses will continue until its “Roulabette®System” becomes acceptable to the worldwide Casino and Lottery Industry.

 

**Roulabette®**is the brand name, coined by the Company, for a method and system forplacing wagers on live, in-progress casino table games broadcast to digitalsatellite and digital cable subscribers, such as Roulette, Dice, Baccarat andmore, at sites remote from the actual casino table at which the game is takingplace.

 

Withthe patented Roulabette® System, the actual wagering takes place at thereceiving television set managed by the microprocessor installed in the set-topboxes (both cable and satellite) or as an attachment to the TV set. Thewagering is not managed by the casino that broadcasts Roulabette®. It is aone-way transmission requiring only the consent of the receiving jurisdictions.The Roulabette® casino is next door, doesn’t have the costly bricks and mortar,and can be managed to prevent the under aged from participating and shut outthe compulsive gamblers by using lotteries to manage the cash handlings.

 

**FORWARD LOOKING STATEMENT**

 

Thisrelease contains “forward-looking statements” within the meaning of Section 27Aof the Securities Act of 1933, as amended, and Section 21E the SecuritiesExchange Act of 1934, as amended and such forward-looking statements are madepursuant to the safe harbor provisions of the Private Securities LitigationReform Act of 1995. “Forward-looking statements” describe futureexpectations, plans, results, or strategies and are generally preceded by wordssuch as “may,” “future,” “plan” or “planned,” “will” or “should,” “expected,” “anticipates,”“draft,” “eventually” or “projected.” You are cautioned that such statementsare subject to a multitude of risks and uncertainties that could cause futurecircumstances, events, or results to differ materially from those projected inthe forward-looking statements, including the risks that actual resultsmay differ materially from those projected in the forward-lookingstatements as a result of various factors, and other risks identified in a company’sannual report on Form 10-K or 10-Q and other filings made by such companywith the Securities and Exchange Commission. You should consider these factorsin evaluating the forward-looking statements included herein, and not placeundue reliance on 

 

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suchstatements. The forward-looking statements in this release are made as of thedate hereof and Kenilworth undertakes no obligation to update such statements.

 

Contact:Herbert Lindo, Chairman & CEO, Kenilworth Systems Corp. (516)741-1352,  Roulabette@aol.com.

 

**On September 26, 2006 the Company reported on FORM 8-K:**

 
| ITEM  5.02     |   | DEPARTURE  OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF  PRINCIPAL OFFICERS                                                                                                                                                                                                                                                                                                                                                                                                                |
|----------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| (b)            |   | Between  September 1 and 6, 2006 Kenilworth Systems Corporation received notices  from Paul Nusbaum and David Satterfield that they wished to resign as  Directors of the Company as of August 28, 2006, when the Company did not  renew the annual Director’s Insurance.  During the week ending September 25,  2006 we polled our remaining five (5) Directors who agreed to continue  to serve the Company and approved the resignations of Mr. Nusbaum and Mr. Satterfield. |
|           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| ITEM 9.01 |   | FINANCIAL  STATEMENTS AND EXHIBITS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| (c)            |   | Exhibits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|           |   | The  following exhibits are annexed hereto:                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|           |   | 17.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | Letters  of Resignation from Paul Nusbaum dated September 1, 2006 and David Satterfield  dated September 6, 2006 |

 

**On November 27, 2006 the Company reported on FORM 8-K:**

 
| ITEM  5.01 |   | OTHER  EVENTS AND REGULATIONS: |
|------------|--------|--------------------------------|

 

HerbertLindo, Chairman and Chief Executive Officer today exercised his Incentive StockOptions granted on November 27, 2001 and acquired five million (5,000,000)shares at the exercise price of $0.15 per share.

 

Mr. Lindoborrowed the $750,000 to exercise the Options from the Company, as provided inthe Plan and pledged the five million (5,000,000) shares and forty-five million(45,000,000) other Kenilworth shares he owns as collateral for the loan.

 

Mr. Lindohas performed his services during the past seventeen (17) years withoutcompensation and with the acquisition of the five million (5,000,000) shares,he now owns fifty million (50,000,000) shares of the Company’s Common Stock,par value one cent ($0.01) per share, which represents fifteen and two-tenthsof one percent (15.2%) of the presently 327,741,465 shares issued andoutstanding as at December 31, 2007.  Mr. Lindo is believed tobe the largest individual shareholder of Kenilworth stock.

 

**On February 7,2007 the Company reported on FORM 8-K/A:**

 

**Item 4.01****                                         ****Changes in Registrant’sCertifying Accountant****.**

 

On October 2, 2006, Demetrius &Company, L.L.C. (“Demetrius”) resigned as independent registered publicaccountants of Kenilworth Systems Corporation (the “Company”).  TheCompany’s Board of Directors accepted the resignation of Demetrius.

 

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The report of Demetrius on the Company’s financialstatements as of December 31, 2004 and for the year then ended neithercontains an adverse opinion or a disclaimer of opinion nor is modified as touncertainty, audit scope or accounting principles, except that the opinionincludes an explanatory paragraph that the Company has incurred operatinglosses since its inception as a development stage company for the periodbeginning November 24, 1998, which raises substantial doubt about theCompany’s ability to continue as a going concern.  Demetrius did not issuea report on the Company’s financial statements as of December 31, 2005 orfor the year then ended.

 

During the fiscal years ended December 31, 2004and 2005 and the period from January 1, 2006 to October 2, 2006,there were no disagreements with Demetrius on any matter of accountingprinciples or practices, financial statement disclosure, or auditing scope orprocedure, which, if not resolved to the satisfaction of Demetrius, would havecaused it to make reference to the subject matter of the disagreement inconnection with its report.

 

Effective February 5, 2007, the Company engagedKGS, LLP as its independent certified public accountants with respect to thefiscal years ended December 31, 2005 and 2006.  The Company’s Boardof Directors approved the engagement of KGS, LLP.

** **

**Item 9.01****                                            ****Financial Statements andExhibits.**

 

(d)                               **Exhibits**.

 

16.                               Letter from Demetrius & Company,L.L.C. to the Securities and Exchange Commission.

** **

**Exhibit 16**

** **

**[LETTERHEADOF DEMETRIUS & COMPANY, L.L.C.]**

 

February 27, 2007

 

Securitiesand Exchange CommissionMail Stop 7561100 F Street NEWashington, DC 20549

 

Ladiesand Gentlemen:

 

Wehave read the statements made by Kenilworth Systems Corporation which wereprovided to us on February 27, 2007, which we understand will be filedwith Commission pursuant Item 4.01 in the Form 8-K/A. We agree withthe statements under Item 4.01 concerning firm. We have no basis to agreeor disagree with other statements made.

Yourstruly,

*** ***
| ***/s/ Demetrius & Company, L.L.C.*** | *** *** |
|------------------------------------------------|--------------|

 

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**On February 7, 2007 the Company reported on FORM 8-K:**

 

ITEM4.01 CHANGE OF INDEPENDENT AUDITORS:

 

The Company engaged KGS, LLP as its Independent CertifyingAccountants.  The former Auditors, Demetrius & Company, LLP hadadvised the Company, on October 2, 2006, that the client-auditorrelationship has ceased.  The ending of the relationship was not as theresult of any dispute.

 

**On November 12, 2008 the Company reported on FORM 8-K:**

 

Item4.01 Changes in Registrant’s Certifying Accountant

 

On November 6, 2008, KGS, LLP resigned asIndependent Registered Public Accountant of Kenilworth Systems Corporation (the“Company”). The Company’s Board of Directors, at a special meeting held on November 12,2008 at which a quorum of Directors was present, accepted the resignation ofKGS, LLP and authorized the Company to engage a new independent registeredpublic accountant for the Board to approve and introduced for approval by theshareholders at the Annual Meeting of Shareholders on January 7, 2009, forthe year ended December 31, 2009.

 

There were no disagreements with KGS, LLP.

 

Item9.01 Financial Statement Exhibits

 

d. Exhibits.

 

16. Letters from KGS, LLP to the Securities and Exchange Commissiondated November 6, 2008 and November 12, 2008.

 

**Exhibit 16**

 
|                                    |                                  |   |
|------------------------------------|---------------------------------------|--------|
|                               |                                  |
|                               | 125  Jericho Turnpike, Suite 300 |
| **KGS LLP**                        | Jericho,  NY 11753-1024               |
| ***Certified Public Accountants*** | (516)  997-7500 Fax: (516) 997-3480   |
|                               | Email:  info@kgsllp.com               |
|                               |                                  |

 

November 6,2008

 

Mr. HerbertLindo

KenilworthSystems Corporation

185Willis Avenue

Suite #4

Mincola,NY 11501

 

DearMr. Lindo:

 

EffectiveFebruary 7, 2007, Kenilworth Systems Corporation, the “Company”, engagedKGS LLP (“KGS”) to audit the Company’s financial statements as of and for theyears ended December 31, 2005 and 2006. During the time frame from beingengaged to date, the Company has filed various financial statements with theSecurities and Exchange Commission without submitting the final documents forthe review or audit of 

 

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KGS.Since KGS has not been provided the necessary documents, we have not completedany auditing or review procedures to express an opinion or any other form ofassurances on the financial statements submitted.

 

Inlight of these facts, this is to confirm that the client-auditor relationshipbetween the Company (commission file No. 0-08962) and KGS LLP has ceased.

 

Verytruly yours,

 

KGSLLP

 
|                |   |
|----------------|--------|
|           |   |
| Mitchell  Kahn |   |

 

 

November 12,2008

 

Securitiesand Exchange Commission

100F Street, N.E.

Washington,D.C. 20549

 

Gentlemen:

 

Wehave read Item 4.01 of Form 8-K dated November 12, 2008, ofKenilworth Systems Corporation and are in agreement with the statementscontained in Item 4.01.

 

 

/s/ KGS LLP

 

***Remainder of page intentionallyleft blank***

 

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Tothe Board of Directors ofKenilworth Systems Corporation:

 

EffectiveFebruary 5, 2007 the Company engaged KGS, LLP. as its independentCertified Public Accountants to Audit the Company’s financials for the yearsended December 31, 2005, 2006 and 2007.

 

TheCompany has completed the financials but the Audit is not, as yet,completed.  After filing an automatic extension on March 27, 2007, wefeel obligated to our shareholders to file the 2005, 2006 and 2007 Financialsabsent of the Auditor’s Opinion.

 

Whenthe Audit is completed, which we expect to be within ninety (90) days, theCompany will file a FORM 10K/A, explicitly pointing out any significantchanges in our unaudited financials, if any, for ease of review.

 

Respectfullysubmitted,Herbert Lindo, Chairman and CEOMarch 26, 2009

 

TheIndependent Auditor’s Report will appear on this page when the Companywill file the Amended FORM 10-K/A.

 

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**KENILWORTH SYSTEMS CORPORATION AND SUBSIDIARIES(A DEVELOPMENT STAGE COMPANY)**

 

**CONSOLIDATED BALANCE SHEETSAS OF DECEMBER 31, (Unaudited)**

 
| ** **                                                                                                                                               | ** ** | **2008**    | ** ** | **2007**    | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------|------------|-------------|------------|
|                                                                                                                                                     |       |        |       |        |       |
| ASSETS                                                                                                                                                   |       |        |       |        |       |
| CURRENT ASSETS                                                                                                                                           |       |        |       |        |       |
| Cash                                                                                                                                                     |       | $           | 2,391      |        | $          | 1,232 |   |
| Prepaid expenses Note (4)                                                                                                                                |       | 80,000      |       | 80,000      |       |
| Loan receivable                                                                                                                                          |       | 21,600      |       | 20,120      |       |
| Receivable from Herbert Lindo                                                                                                                            |       | 767,289     |       | 750,000     |       |
| Total current assets                                                                                                                                     |       | $           | 871,270    |        | $          | 851,352 |   |
|                                                                                                                                                     |       |        |       |        |       |
| PROPERTY AND EQUIPMENT — NET                                                                                                                        |       | $           | 603        |        | $          | 14,868 |   |
|                                                                                                                                                     |       |        |       |        |       |
| SECURITY DEPOSIT                                                                                                                                         |       | $           | 13,677     |        | 13,677     |   |
| TOTAL ASSETS                                                                                                                                             |       | $           | 885,560    |        | $          | 879,897 |   |
|                                                                                                                                                     |       |        |       |        |       |
| LIABILITIES  AND STOCKHOLDERS’ DEFICIT                                                                                                              |       |        |       |        |       |
| CURRENT LIABILITIES                                                                                                                                      |       |        |       |        |       |
| Accounts payable and accrued expenses                                                                                                                    |       | $           | 128,529    |        | $          | 210,717 |   |
| Payroll taxes payable                                                                                                                                    |       | 169,695     |       | 73,341      |       |
| Loans payable — including accrued interest                                                                                                          |       | 20,264      |       | 19,129      |       |
| Total current liabilities                                                                                                                                |       | $           | 318,488    |        | $          | 303,187 |   |
|                                                                                                                                                     |       |        |       |        |       |
| COMMITMENTS AND CONTINGENCY — see notes                                                                                                             |       |        |       |        |       |
|                                                                                                                                                     |       |        |       |        |       |
| STOCKHOLDERS’ EQUITY (DEFICIT)                                                                                                                      |       |        |       |        |       |
| Preferred Stock — par value $.01 per share;  authorized 50,000,000 shares; no shares issued and outstanding                                         |       |        |       |        |       |
| Common stock — par value $.01 per share;  authorized 1,000,000,000 shares; issued and outstanding 434,597,086 and  327,741,562 shares, respectively |       | 4,345,970   |       | 3,277,415   |       |
| Additional paid-in capital                                                                                                                               |       | 31,103,730  |       | 31,137,730  |       |
| Accumulated deficit                                                                                                                                      |       | (34,912,628 | )          | (33,838,435 | )          |
| TOTAL STOCKHOLDER’S EQUITY                                                                                                                          |       | 537,072     |       | 576,710     |       |
| TOTAL STOCKHOLDER’S LIABILITIES AND EQUITY                                                                                                          |       | $           | 885,560    |        | $          | 879,897 |   |

 

The accompanying notes are an integral part of these consolidatedfinancial statements.

 

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**KENILWORTH SYSTEMS CORPORATION AND SUBSIDIARIES(A DEVELOPMENT STAGE COMPANY)**

 

**CONSOLIDATED STATEMENTS OF OPERATIONS**

 
| ** **                                     | ** ** | ** **            | ** ** | ** **            | ** ** | ** **            | ** ** | **PERIOD FROM**            | ** ** |
|------------------------------------------------|------------|-----------------------|------------|-----------------------|------------|-----------------------|------------|---------------------------------|------------|
| ** **                                     | ** ** | ** **            | ** ** | ** **            | ** ** | ** **            | ** ** | **NOVEMBER 24, 1998** | ** ** |
| ** **                                     | ** ** | **YEARS ENDED**  | ** ** | **YEARS ENDED**  | ** ** | **YEARS ENDED**  | ** ** | **TO**                          | ** ** |
| ** **                                     | ** ** | **DECEMBER 31,** | ** ** | **DECEMBER 31,** | ** ** | **DECEMBER 31,** | ** ** | **DECEMBER 31,**           | ** ** |
| ** **                                     | ** ** | **2008**              | ** ** | **2007**              | ** ** | **2006**              | ** ** | **2008**                        | ** ** |
| ** **                                     | ** ** | ** **            | ** ** | **Restated**          | ** ** | **Restated**          | ** ** | ** **                      | ** ** |
| Expenses                                       |       |                  |       |                  |       |                  |       |                            |       |
| Selling, general and administrative            |       | $                     | 1,074,193  |                  | $          | 1,093,538             |       | $                               | 850,079    |   | $ | 5,778,211 |   |
|                                           |       |                  |       |                  |       |                  |       |                            |       |
| Other income (expenses)                        |       |                  |       |                  |       |                  |       |                            |       |
| Interest income                                |       | —                |       | —                |       | —                |       | 922                             |       |
| Interest expense                               |       | —                |       | —                |       | —                |       | (757,250                        | )          |
| Total other income (expense)                   |       | 0                     |       | 0                     |       | 0                     |       | (756,328                        | )          |
| Net loss                                       |       | $                     | 1,074,193  |                  | $          | 1,093,538             |       | $                               | (850,079   | ) | $ | (9,453,316 | ) |
| Basic and diluted loss per share               |       | $                     | (0.002     | )                     | $          | (0.003                | )          | $                               | (0.003     | ) | $ | (0.04 | ) |
| Weighted average number of shares  outstanding |       | 434,597,086           |       | 327,741,562           |       | 275,508,293           |       |                            |       |

 

The accompanying notes are an integral part of these consolidatedfinancial statements.

 

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**KENILWORTH SYSTEMS CORPORATION AND SUBSIDIARIES(A DEVELOPMENT STAGE COMPANY)**

 

**STATEMENTS OF CASH FLOWS**

 
| ** **                                                                      | ** ** | ** **            | ** ** | ** **            | ** ** | ** **            | ** ** | **PERIOD FROM**            | ** **   |
|---------------------------------------------------------------------------------|------------|-----------------------|------------|-----------------------|------------|-----------------------|------------|---------------------------------|--------------|
| ** **                                                                      | ** ** | ** **            | ** ** | ** **            | ** ** | ** **            | ** ** | **NOVEMBER 24, 1998** | ** **   |
| ** **                                                                      | ** ** | **YEARS ENDED**  | ** ** | **YEARS ENDED**  | ** ** | **YEARS ENDED**  | ** ** | **TO**                          | ** **   |
| ** **                                                                      | ** ** | **DECEMBER 31,** | ** ** | **DECEMBER 31,** | ** ** | **DECEMBER 31,** | ** ** | **DECEMBER 31,**           | ** **   |
| ** **                                                                      | ** ** | **2008**              | ** ** | **2007**              | ** ** | **2006**              | ** ** | **2008**                        | ** **   |
| ** **                                                                      |       |                  |       |                  |       | **Restated**          |       |                            |         |
| CASH FLOWS FROM OPERATING ACTIVITIES                                            |       |                  |       |                  |       |                  |       |                            |         |
| Net loss                                                                        |       | $                     | (1,074,193 | )                     | $          | (1,093,538            | )          | $                               | (850,079     | ) | $ | (5,780,380 | ) |
| Adjustments to reconcile net loss to net  cash provided by operating activities |       |                  |       |                  |       |                  |       |                            |         |
| Depreciation                                                                    |       | 15,265                |       | 17,010                |       | 17,132                |       | 29,809                          |         |
| Amortization of patent (Note 6)                                                 |       |                  |       | —                |       | —                |       | 22,980                          |         |
| Accretion of convertible debt discount                                          |       |                  |       | —                |       | —                |       | 72,656                          |         |
| Beneficial conversion feature                                                   |       |                  |       |                  |       |                  |       | 1,113,484                       |         |
| Common stock issued for services                                                |       | 370,500               |       | 204,800               |       | 1,024,205             |       | 2,920,564                       |         |
| Common stock issued to induce debt  conversion                                  |       |                  |       | —                |       | —                |       | 839,526                         |         |
| Common stock issued for interest due on  notes payable                          |       | —                |       | —                |       | —                |       | 8,501                           |         |
| Accrued interest transferred to capital                                         |       | —                |       | —                |       | —                |       | 4,209                           |         |
| Other                                                                           |       | —                |       | —                |       | —                |       | 21,100                          |         |
| Increase (decrease) in cash attributable to  changes in assets and liabilities: |       |                  |       |                  |       |                  |       |                            |         |
| Prepaid expenses                                                                |       | (80,000               | )          | (80,000               | )          | (75,000               | )          | (280,000                        | )            |
| Accounts payable and accrued expenses                                           |       | 128,529               |       | 229,846               |       | 345,895               |       | 218,772                         |         |
| Payroll taxes payable                                                           |       | 169,695               |       | 73,341                |       | 141,000               |       | 59,522                          |         |
| Net cash used in operating activities                                           |       | 470,209               |       | 648,541               |       | 603,153               |       | (1,368,520                      | )            |
|                                                                            |       |                  |       |                  |       |                  |       |                            |         |
| CASH FLOWS FROM INVESTING ACTIVITIES                                            |       |                  |       |                  |       |                  |       |                            |         |
| Payment of loan receivable — stockholder                                   |       |                  |       | —                |       | —                |       | (4,000                          | )            |
| Proceeds from loan receivable — stockholder                                |       |                  |       |                  |       |                  |       | 4,000                           |         |
| Payment of patent costs (Note 6)                                                |       |                  |       |                  |       |                  |       | (66,639                         | )            |
| Purchase of property and equipment                                              |       | 1,000                 |       |                  |       |                  |       | (58,567                         | )            |
| Security deposit                                                                |       | 13,677                |       | 13,677                |       | 9,422                 |       | (9,422                          | )            |
| Net cash used in investing activities                                           |       |                  |       |                  |       |                  |       | (129,456                        | )            |
|                                                                            |       |                  |       |                  |       |                  |       |                            |         |
| CASH FLOWS FROM FINANCING ACTIVITIES                                            |       |                  |       |                  |       |                  |       |                            |         |
| Proceeds from loans payable—stockholders                                   |       |                  |       |                  |       | (3,700                | )          | 60,000                          |         |
| Repayment of loans payable — stockholders                                  |       |                  |       | —                |       | —                |       | (10,000                         | )            |
| Proceeds from loans payable — related  parties                             |       |                  |       |                  |       | 16,000                |       | 141,137                         |         |
| Repayment of loans payable — related  parties                              |       |                  |       |                  |       | 17,787                |       | (116,017                        | )            |
| Proceeds from convertible notes                                                 |       | 511,000               |       | 832,500               |       | 623,000               |       | 1,275,361                       |         |
| Proceeds from sale of common stock                                              |       |                  |       |                  |       | 10,000                |       | 122,500                         |         |
| Proceeds from stock subscriptions  receivable                                   |       |                  |       | —                |       | —                |       | 25,000                          |         |
| Net cash provided by financing activities                                       |       | 511,000               |       | 832,500               |       | 663,087               |       | 1,497,981                       |         |
| Net loss during Development Stage  Enterprise                                   |       |                  |       |                  |       |                  |       | 9,453,316                       |         |
| Net change in cash                                                              |       |                  |       | —                |       | —                |       | 5                               |         |
| Cash — beginning of year                                                   |       | 1,232                 |       | 49,995                |       | 44,500                |       | —                          |         |
| Cash — end of year                                                         |       | $                     | 2,391      |                  | $          | 1,232                 |       | $                               | 49,995       |   | $ | 5,495 |   |
| Supplemental disclosure of non-cash  activities:                                |       |                  |       |                  |       |                  |       |                            |         |
| Common stock issued for patent costs                                            |       | $                     | 0          |                  | $          | 0                     |       | $                               | 0            |   | $ | 10,000 |   |
| Exchange of loans payable for convertible  notes payable                        |       | $                     | —     |                  | $          | —                |       | $                               | 18,000       |   | $ | 50,000 |   |
| Conversion of notes payable to common stock                                     |       | $                     | 312,801-   |                  | $          | 987,500               |       | $                               | 623,000      |   | $ | 2,986,500 |   |
| Cancellation of stock subscriptions  receivable                                 |       | $                     | —     |                  | $          | —                |       | $                               | —— |   | $ | 29,000 |   |
| Common stock issued for subscriptions  receivable                               |       | $                     | —     |                  | $          | —                |       | $                               | —       |   | $ | 9,453,316 |   |

 

The accompanying notes are an integral part of these consolidatedfinancial statements.

 

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**KENILWORTH SYSTEMS CORPORATION AND SUBSIDIARIES****(A DEVELOPMENT STAGE COMPANY)**

 

**CONSOLIDATED STATEMENTSOF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)**

 
| ** **                                                | ** ** | **COMMON STOCK** | ** ** | **ADDITIONAL** | ** ** | **STOCK**            | ** ** | **DEFICIT  ACCUMULATED  DURING THE** | ** ** | ** **             | ** ** |
|-----------------------------------------------------------|------------|-----------------------|------------|----------------|------------|----------------------|------------|-------------------------------------------|------------|------------------------|------------|
| ** **                                                | ** ** | **SHARES**            |       | **PAR  VALUE** |       | **PAID-IN  CAPITAL** |       | **SUBSCRIPTIONS  RECEIVABLE**             |       | **DEVELOPMENT  STAGE** |       | **STOCKHOLDERS’  DEFICIT** |   |
|                                                      |       |                  |       |           |       |                 |       |                                      |       |                   |       |   |   |
| Balances December 31, 2005                           |       | 200,036,246           |       | $              | 2,000,362  |                 | $          | 29,859,456                                |       | $                      | (15,000    | ) | $ | (31,894,818 | ) | $ | (31,894,181 | ) |
|                                                      |       |                  |       |           |       |                 |       |                                      |       |                   |       |   |   |
| Common stock issued for services                          |       | 60,426,047            |       | 604,426        |       | 419,779              |       |                                      |       |                   |       |   |   |
|                                                      |       |                  |       |           |       |                 |       |                                      |       |                   |       |   |   |
| Common stock issued in connection with  convertible notes |       | 17,646,000            |       | 176,646        |       | 139,940              |       |                                      |       |                   |       |   |   |
|                                                      |       |                  |       |           |       |                 |       |                                      |       |                   |       |   |   |
| Sale of common stock                                      |       | 400,000               |       | 400            |       | 40                   |       |                                      |       |                   |       |   |   |
|                                                      |       |                  |       |           |       |                 |       |                                      |       |                   |       |   |   |
| Net loss accumulated during the development  stage        |       |                  |       |           |       |                 |       |                                      |       | (850,079               | )          | (850,079 | ) |
|                                                      |       |                  |       |           |       |                 |       |                                      |       |                   |       |   |   |
| Balances December 31, 2006                           |       | 278,508,293           |       | 2,785,082      |       | $                    | 30,419,215 |                                      | $          | 0                      |       | $ | (32,744,897 | ) | $ | (32,744,897 | ) |
|                                                      |       |                  |       |           |       |                 |       |                                      |       |                   |       |   |   |
| Common stock issued for services                          |       | 10,240,000            |       | 102,400        |       | 204,000              |       |                                      |       |                   |       |   |   |
|                                                      |       |                  |       |           |       |                 |       |                                      |       |                   |       |   |   |
| Common stock issued in connection with  convertible notes |       | 38,993,269            |       | 389,932        |       | 513,715              |       |                                      |       |                   |       |   |   |
|                                                      |       |                  |       |           |       |                 |       |                                      |       |                   |       |   |   |
| Sale of common stock                                      |       |                  |       |           |       |                 |       |                                      |       |                   |       |   |   |
|                                                      |       |                  |       |           |       |                 |       |                                      |       |                   |       |   |   |
| Net loss accumulated during the development  stage        |       |                  |       |           |       |                 |       |                                      |       | 9,453,316              |       | 1,094,000 |   |
|                                                      |       |                  |       |           |       |                 |       |                                      |       |                   |       |   |   |
| Balances December 31, 2007                           |       | 327,741,562           |       | 3,277,415      |       | $                    | 31,137,730 |                                      | 0          |                   | 8,453,316  |   | 33,838,897 |   |
|                                                      |       |                  |       |           |       |                 |       |                                      |       |                   |       |   |   |
| Common stock issued for services                          |       | 52,355,522            |       | 523,565        |       | 0                    |       |                                      |       |                   |       |   |   |
|                                                      |       |                  |       |           |       |                 |       |                                      |       |                   |       |   |   |
| Sale of common stock                                      |       | 54,500,000            |       | 545,000        |       | (34,000              | )          |                                      |       |                   |       |   |   |
|                                                      |       |                  |       |           |       |                 |       |                                      |       |                   |       |   |   |
| Net loss accumulated during the development  stage        |       |                  |       |           |       |                 |       |                                      |       | 1,074,193              |       | 1,074,193 |   |
|                                                      |       |                  |       |           |       |                 |       |                                      |       |                   |       |   |   |
| Balances December 31, 2008                           |       | 434,597,086           |       | 4,345,970      |       | 31,103,730           |       | 0                                         |       | (32,912,628            | )          | 34,912,628 |   |
|                                                           |            |                       |            |                |            |                      |            |                                           |            |                        |            |  |  |  |  |  |  |  |

 

The accompanying notes are an integral part of these consolidatedfinancial statements.

 

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**KENILWORTH SYSTEMS CORPORATION AND SUBSIDIARIES****(A DEVELOPMENT 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 completed an S-1 Registration in August 1968.  The Company iscurrently engaged in the development and eventual by outsourcing themanufacture the terminals that will permit individuals to play along with livein-progress casino table games at locations inside and outside the casinoconfines (remote locations).  Games will be available via TV simulcast ofdigital satellite and digital cable broadcasts to individuals at homes, officesand public gathering places and wherever television sets are located around theworld.  The Company’s business remains in continuous development stagealthough it completed a nine million dollar ($9,000,000) contract with the TotalizatorAgency Board (“TAB”), a state government agency of Victoria, Australia, whilebeing in voluntary bankruptcy reorganization under Chapter 11, of the UnitedStates Bankruptcy Code. Successful execution of its business plan is dependentup such factors as: the ability to raise substantial capital and assemble askilled and experienced management team, obtaining regulatory approval fromgaming authorities and other governmental bodies, customer acceptance of a newexperience 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.  Managementcontinues to develop a wagering system that allows casino patrons and individualsinside and outside the casino to play and wager along with live casino tablegames. The first step in the plan is to conduct testing. Unless the Company isable to obtain sufficient funds, none of the tests and initial development workcan commence. The Company will attempt to obtain the necessary funding byoffering its Common Stock or Preferred Stock to private investors**.**

 

Ifinitial testing is successful, the second step is to obtain, if required, theappropriate licenses from gaming control regulators in the various venues theCompany intends to offer its system. Upon successful testing, the Companyintends to seek financing from banking sources for the manufacture of amicroprocessor that will be installed in digital set top boxes, digital cable boxes,or as attachments to TVs when necessary.  These appliances will then beable to convert an ordinary television set into a computer terminal using theTV set as the monitor for remote casino game play and wagering. Thistechnology is protected by the Company’s recently issued patents (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., Kenilworth Satellite BroadcastingCorporation and Satellite Gaming Consultants, Inc., both DelawareCorporations. None of the subsidiaries has any significant assets or liabilitiesexcept Satellite Gaming Consultants which acts primarily as depository anddisburses payments of expenses payable by Kenilworth.

 

Useof estimates

 

Managementuses estimates and assumptions in preparing these financial statements inaccordance with generally accepted accounting principles.  Those estimatesand assumptions affect the reported amounts of assets and liabilities, thedisclosure of contingent assets and liabilities, and the reported revenue andexpenses. Actual results could vary from the estimates that were used.

 

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**KENILWORTH SYSTEMS CORPORATION AND SUBSIDIARIES****(A DEVELOPMENT STAGE 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 werecash equivalents at December 31, 2008 and 2007.

 

Propertyand equipment

 

Propertyand equipment are stated at cost.  Equipment is depreciated over theestimated useful lives of the respective assets, ranging from five to seven(5-7) years.  Leasehold improvements are amortized over the shorter ofeither the asset’s useful life or the related lease term.  Depreciation iscomputed on the straight-line method for financial reporting purposes.

 

Impairmentof long-lived Assets

 

TheCompany regularly reviews long-lived assets for indicators of impairment. Management’s judgments regarding the existence of impairment indicators arebased on performance.  Future events could cause management to concludethat impairment indicators exist and that the value of long-lived assets is impaired. When events or circumstances indicate that the carrying amount of an asset maynot be recoverable, the fair value of the asset is compared to its carryingvalue.  Impairment losses are measured as the amount by which the carryingvalue 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.”  Deferred tax assets and liabilities arerecognized for the future tax consequences attributable to differences betweenthe financial statement carrying amounts of existing assets and liabilities,and their respective tax bases and operating loss and tax credit carryforwards.  Deferred tax assets and liabilities are measured using enactedtax rates expected to apply to taxable income in the year in which thosetemporary differences 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 31,2008 and 2007.  The fair value of the financial instruments disclosed arenot necessarily representative of the amount that could be realized or settlednor does the fair value amount consider the tax consequences of realization orsettlement.

 

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.

 

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**KENILWORTH SYSTEMS CORPORATION AND SUBSIDIARIES****(A DEVELOPMENT STAGE COMPANY)**

 

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

 

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-average number of commonshares outstanding, plus the weighted average number of net shares that wouldbe issued upon the exercise or conversion of dilutive securities, such as stockoptions and warrants, and convertible debt.  There were no dilutivesecurities outstanding as of December 31, 2008, 2007 and 2006. Accordingly, diluted loss per share for 2008, 2007 and 2006 is the same asbasic 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 ofReorganization. On April 27, 1988, the Bankruptcy Court entered a finaldecree in the case. On October 27, 1988, the case was re-opened on groundsthe Debtor failed to consummate its plan of reorganization and on February 25,1991 the case was converted to a case under Chapter 7 of the Bankruptcy Code.By order of the Court dated June 19, 1991 the Chapter 7 was reconverted toa case 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 BankruptcyCode.

 

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 exited 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 other activityoccurred during that period.  Effective, November 24, 1998, theCompany 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, 2009.  The balancewill be amortized on a straight-line basis over the remaining term.

 

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**KENILWORTH SYSTEMS CORPORATION AND SUBSIDIARIES****(A DEVELOPMENT STAGE COMPANY)**

 

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

 

NOTE5 — PROPERTY ANDEQUIPMENT

 

Propertyand equipment consist of the following:

 
| ** **                         | ** ** | **2008** | ** ** | **2007** | ** ** |
|------------------------------------|------------|----------|------------|----------|------------|
|                               |       |     |       |     |       |
| Office equipment                   |       | $        | 19,800     |     | $          | 18,800 |   |
| Leasehold improvements             |       | 21,000   |       | 21,000   |       |
| Furniture and fixtures, automobile |       | 35,620   |       | 35,620   |       |
|                               |       |     |       |     |       |
|                               |       | 76,420   |       | 75,420   |       |
| Less: Accumulated amortization     |       | 75,817   |       | 60,552   |       |
| Total property and equipment, net  |       | $        | 603        |     | $          | 14,868 |   |

 

NOTE6 — PATENT

 

TheCompany owns a patent and has pending, three (3) additional patents fortechnology that will enable it to provide real-time transmission of rouletteand other game play from live tables at a casino facility.  Prior to December 31,2006, the costs incurred in connection with the submission and approval of thepatent applications has been capitalized.  A U.S. patent was awarded in June 2003. The Company previously amortized patent costs.  On December 31, 2006,the Company elected to write-off all patent costs to meet generally acceptedaccounting principles (GAAP).  The $81,604 of accrued costs was chargedagainst capital.

 

NOTE7 — ACCOUNTS PAYABLEAND ACCRUED EXPENSES

 
| ** **                                                     | ** ** | **2008** | ** ** | **2007** | ** ** |
|----------------------------------------------------------------|------------|----------|------------|----------|------------|
|                                                           |       |     |       |     |       |
| Legal and other professional fees,  including accrued payables |       | $        | 38,298     |     | $          | 140,411 |   |
| Payroll Taxes (approximately, including  penalties)            |       | 169,695  |       | 73,341   |       |
| Other                                                          |       | 110,495  |       | 89,435   |       |
|                                                           |       |     |       |     |       |
|                                                           |       | $        | 318,488    |     | $          | 303,187 |   |

 

TheCompany is paying delinquent taxes in monthly installments while paying presenttaxes current.

 

NOTE8 — LOANS PAYABLE

 

2008:

 

Duringthe year, the Company borrowed from two (2) shareholders, $10,000 eachwith annual interest payments of twelve percent (12%).  Each loan was converted into Stock Purchaseand Option Agreements totaling 1,337,500 shares and an option to acquire anadditional 1,337,500 shares at $0.0096 per share for a period of two (2) years.

 

Duringthe year 2005, the Company borrowed from a private Shareholder fifty thousanddollars ($50,000) which now has a balance due including accrued interest ateight percent (8%) annually at December 31, 2008 $20,264.  As part of the number of extension of theloan, the Company issued during 2008, one million (1,000,000) shares if itsCommon Stock to the lender.

 

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NOTE9 — CONVERTIBLEPROMISSORY NOTES

 

During2008, 2007 and 2006, respectively, the Company sold to various privateinvestors $511,000, $832,500, $765,400 principal amount of ConvertiblePromissory Notes bearing interest at rates ranging from 4.00% to 10.00% perannum and Stock Purchase and Option Agreements.  The Notes had a one (1) yearterm and were immediately convertible at the option of the note holder intoshares of restricted common stock based on conversion prices ranging from$0.025 and $0.05 per share.  All Notes and shares sold in 2008, 2007 and2006 were converted into a total of 54,500,002, 49,733,259 and 20,356,000common shares, respectively.  The issuance of the Notes gave rise to abeneficial conversion feature (BCF) in the amount of: none in 2006, $368,640 in2005 and $188,191 in 2004, reflecting the benefit of conversion prices thatwere below the market price of the Company’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 Companyaccounts for BCF under the recognition and measurement principles of EmergingIssues Task Force (EITF) 98-5, “Accounting for Convertible Securities withBeneficial Conversion Features or Contingently Adjustable Conversion Ratios toCertain Convertible Instruments” and EITF-00-27, “Application of EITF Issue98-5.

 

NOTE10 — INCOME TAXES

 

Theprovision for income taxes consists of the following:

 
| ** **                 | ** ** | **Years ended December 31,** | ** ** |
|----------------------------|------------|---------------------------------------------|------------|
| ** **                 | ** ** | **2008**                                    | ** ** | **2007** | ** ** | **2006** | ** ** |
|                       |       |                                        |       |   |   |   |   |
| Current:                   |       |                                        |       |   |   |   |   |
| Federal                    |       | $                                           | —     |   | $ | — |   | $ | — |   |
| State                      |       | —                                      |       | — |   | — |   |
|                       |       | —                                      |       | — |   | — |   |
|                       |       |                                        |       |   |   |   |   |
| Deferred:                  |       |                                        |       |   |   |   |   |
| Federal                    |       | —                                      |       | — |   | — |   |
| State                      |       | —                                      |       | — |   | — |   |
|                       |       | —                                      |       | — |   | — |   |
|                       |       |                                        |       |   |   |   |   |
| Provision for income taxes |       | $                                           | —     |   | $ | — |   | $ | — |   |

 

TheCompany did not have any revenue from operations since exiting BankruptcyProceedings in September 1998.

 

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

 
| ** **                                    | ** ** | **Years ended December 31,** | ** ** |
|-----------------------------------------------|------------|---------------------------------------------|------------|
| ** **                                    | ** ** | **2008**                                    | ** ** | **2007** | ** ** | **2006** | ** ** |
|                                          |       |                                        |       |   |   |   |   |
| Federal income tax benefit at statutory  rate |       | $                                           | N/A        |   | $ | N/A |   | $ | N/A |   |
| State income taxes, net of federal benefit    |       | N/A                                         |       | N/A |   | N/A |   |
| Increase in valuation allowance               |       | N/A                                         |       | N/A |   | N/A |   |
|                                          |       |                                        |       |   |   |   |   |
|                                          |       | $                                           | —     |   | $ | — |   | $ | — |   |

 

Thedifference between the U. S. federal tax rate and the Company’s effective taxrate in 2008, 2007 and 2006 is due primarily to changes in the valuationallowance related to the net deferred tax asset, offset by certainnondeductible expenses.

 

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

 

Deferredtax assets:

 
| ** **                | ** ** | **2008** | ** ** | **2007** | ** ** |
|---------------------------|------------|----------|------------|----------|------------|
|                      |       |     |       |     |       |
| Net operating losses      |       | $        | 1,074,193  |     | $          | 1,093,538 |   |
| Less: Valuation allowance |       | —   |       | —   |       |
|                      |       |     |       |     |       |
| Net deferred tax assets   |       | $        | 1,074,193  |     | $          | 1,093,538 |   |

 

Thebenefits of net operating losses will not be recognized until managementdetermines that realization is more likely than not to occur. Accordingly, management has established a valuation allowance to offset the taxbenefits of net operating losses for all periods presented.  At December 31,2008, the Company had net operating loss carry-forwards of $34,912,625 expiringthrough 2024 and approximately $12,000,000 equipment loss when the BankruptcyTrustee closed the only leased manufacturing facility of the Company and theequipment was destroyed by the landlord. Utilization of NOL carry-forwards maybe limited under various sections of the Internal Revenue Code depending on thenature of the Company’s operations.

 

NOTE11 — COMMITMENT

 

Operatinglease

 

TheCompany rents approximately 2,300 square feet of office space in Mineola, NYunder a lease expiring in May 2009.  Annual rent is approximately$35,000, payable monthly.  The lease also requires the Company to pay itsshare of increases in real estate taxes, operating costs and repairs over thebase year amounts.  Following is a schedule of minimum lease paymentsrequired under the lease.

 
| **Year ending December 31,** | ** ** | ** ** | ** ** |
|---------------------------------------------|------------|------------|------------|
|                                        |       |       |       |
| 2007                                        |       | $          | 36,000     |   |
| 2008                                        |       | 38,000     |       |
| 2009                                        |       | 40,000     |       |
| Total                                       |       | $          | 114,000    |   |

 

Rentexpense for the years ended December 31, 2007, 2008 and 2009 was $36,000,$38,000 and $40,000 respectively.

 

NOTE12 — RELATED PARTYTRANSACTIONS

 

OnNovember 27, 2006 Herbert Lindo, the Chairman and Chief Executive Officerexercised a five million (5,000,000) share option for seven hundred fiftythousand dollars ($750,000) at fifteen cents ($0.15) per share pursuant to theCompany’s Performance and Equity Plan.  The price per share was the pricefor the Option which would have expired on the following date.  Theaverage market price of the Common Stock for the thirty (30) days prior to November 27,2006 was high: $0.05, low: $0.03.

 

Asprovided in the Plan, Herbert Lindo borrowed the seven hundred fifty thousand($750,000) from the Company and pledged the five million (5,000,000) and othershares he owns, as collateral for the loan. The five million (5,000,000) share have been issued as restrictedshares.

 

Ata regular meeting of the Board of Directors in July 2008, the Boardunanimously approved (with Mr. Lindo abstaining) to extend the $750,000loan until December 31, 2009, provided Mr. Lindo pays a nominal oneand one-half (11⁄2%) interest from November 2006.  Mr. Lindo agreed to pay the interestwhich totaled $17,289 thorough December 31, 2008.  Mr. Lindo provides his services to theCompany without any remuneration.

 

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NOTE13 — STOCKHOLDERS’DEFICIT

 

Authorizedshares

 

TheCompany is authorized to issue up to 1,000,000,000 shares of Common Stock andup to 50,000,000 shares of Preferred Stock.  Both classes have a par valueof $.01 per share.  The rights and preferences of the preferred shareswill be designated by the Board of Directors.

 

Salesof unregistered common stock

 

Infiscal 2008, the Company obtained $511,000 from the sale of 54,500,002 sharesof common stock to a group of accredited private investors at an average priceof $0.009 per share.

 

Loanreceivable

 

AtDecember 31, 2007, shareholders owed $4,000 and $1,650, respectively, onbalances due for the purchase of common stock and loans and a consultant owes$15,950 including accrued interest to December 31, 2008 on a PromissoryNote guaranteed by Herbert Lindo, the Chairman and Chief Executive of theCompany.

 

Commonshares issued for services

 

2008:The Company issued 18,525,001 restricted shares to investors and services renderedwith a stated value of $370,500.

 

2007:The Company issued 10,240,000 restricted shares to investors and for servicesrendered with a stated value of $307,200.

 

Conversionof Notes, Stock Purchase and Option Agreements and related transactions

 

During2008, 2007 and 2006, the Company issued 54,500,002, 49,733,259 and 17,646,000shares, respectively, upon sales of the Notes and direct sale of shares.

 

Equityplan

 

InDecember 2000, the Company adopted and in August 2001, stockholdersapproved the Performance and Equity Incentive Plan (the Plan).  The Boardof Directors has reserved up to 10,000,000 shares of common stock for issuanceunder the plan as incentive stock options (ISOs), nonqualified stock options(NQSOs), restricted stock grants, and stock appreciation rights.  Theterms and conditions of each grant are determined by a committee composed oftwo or more non-employee directors.  Grants to non-employee directors aresubject to approval of the entire board.  All employees, directors andnon-employee consultants are eligible to receive grants under the Plan. ISOs may not be granted to any owner of 10% or more of the combined votingpower of the Company, unless the exercise price is at least 110% of the fairmarket value of the common stock on the grant date and the option term does notexceed five years.

 

InAugust 2001, administrators of the Plan granted 5,000,000 NQSOs to HerbertLindo, the Company’s Chairman and Chief Executive Officer, and 500,000 NQSOs toMaureen Plovnick, an employee.  The options have a five-year term, anexercise price of $.15 per share and immediate vesting.  There have beenno other Plan transactions since these grants.  Mr. Lindo exercisedhis 5,000,000 share option on November 27, 2006.  A remaining optionfor 500,000 shares expired.  No new options have been granted.

 

ThePlan expired on November 28, 2006. The present members of the Board of Directors of the Company haveindicated that until the Company has substantial earnings to refrain fromasking the Company’s Shareholder’s to approve a new Plan.

 

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NOTE 15 —SUBSEQUENT EVENTS

 

TheCompany, through March 16, 2009 has issued 39,392,500 shares by the saleof Stock Purchase and Option Agreements for $165,000, an average price of$0.004 per share.

 

PRIORCONVICTION OF HERBERT LINDO

 

HerbertLindo, the Chairman and CEO 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 District of Michigan. Mr. Lindo was sentenced to one thousand(1,000) hours of community service, fifteen (15) months house arrest, and finedsix hundred thousand 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.  Similarly, in 2008, Wells Fargo &Co. Bank sold two million (2,000,000) and Citibank (Smith Barney) soldsixty-two thousand five hundred (62,500) shares of unregistered Common Stock ofthe Company.  In both instances, thebanks repurchased the shares in the trading market and the Company assisted thebanks to clear the restricted shares for resale in the market.  The only reason the Wells Fargo sales wasnoticed since the sale of the two million (2,000,000) shares substantiallydepressed the trading price of the Company’s Common Stock, Citibank reportedthe restricted stock sale to the Company. The SEC did not take any action ineither sale of the restricted shares.

 

Becauseof this conviction, Herbert Lindo is likely not to be found suitable by anyCasino Control Commission or other regulatory body to hold licenses. When thetime to apply for licensing RoulabetteTM arrives, Mr. Lindo will resigntotally from Kenilworth and place his Kenilworth shares into a voting trust.Until that time, Herbert Lindo believes that he is best suited to manage thepost bankruptcy reorganization and to transform Kenilworth into a viablebusiness.

 

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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     |   |
|                                  |               |
| CHAIRMAN  AND CHIEF FINANCIAL 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  |       | March 24,  2009  |
| Herbert  Lindo           |       |      |       |                  |
|                     |       |      |       |                  |
| /s/  JOYCE CLARK         |       | Director  |       | March 24  , 2009 |
| Joyce  Clark             |       |      |       |                  |
|                     |       |      |       |                  |
| /s/  KIT WONG            |       | Director  |       | March 24,  2009  |
| Kit  Wong                |       |      |       |                  |
|                     |       |      |       |                  |
| /s/  PATRICK J. MCDEVITT |       | Director  |       | March 24,  2009  |
| Patrick  J. McDevitt     |       |      |       |                  |
|                     |       |      |       |                  |
| /s/  EDWARD VIETMEIER    |       | Director  |       | March 24,  2009  |
| Edward  Vietmeier        |       |      |       |                  |

 

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