**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON,D.C. 20549**

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**FORM 10-Q/A**

**AmendmentNo. 1**

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| **(Mark One)** |
|----------------|
| ** **     | ** ** |
| **x**          | **Quarterly  report pursuant to Section 13 OR 15(D) of the Securities Exchange  Act of 1934** |
| ** **     | ** ** |
| ** **     | **For the  quarterly period ended March 31, 2007** |
| ** **     | ** ** |
| ** **     | **OR** |
| ** **     | ** ** |
| **o**          | **Transition  report pursuant to Section 13 or 15(D) of the Securities Exchange  Act of 1934** |

 

**Forthe transition period from            to**

**CommissionFile Number: 0-08962**

**KENILWORTHSYSTEMS CORPORATION**

(Exact name ofregistrant as specified in its charter)

| **New York**                              |   | **84-1641415**                        |
|-------------------------------------------|--------|---------------------------------------|
| (State of  incorporation)                 |   | (I.R.S. employer  identification no.) |
|                                      |   |                                  |
| **185  Willis Avenue, Mineola, New York** |   | **11501**                             |
| (Address of  principal executive offices) |   | (Zip Code)                            |

 

**(516)741-1352**

(Registrant’stelephone number, including area code)

Indicate by check markwhether the Registrant (1) has filed all reports required to be filed bysection 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes  x   No  o

State the number ofshares outstanding of each of the issuer’s classes of common stock as of thelatest practical date.

The number of shares of common stock, $.01 par value of the Registrantoutstanding as of March 31, 2007 was 287,594,294.

 

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**Table ofContents**

**KENILWORTHSYSTEMS CORPORATION AND SUBSIDIARIES****(A DEVELOPMENT STAGE COMPANY)**

**INDEX**
| **Part I.**  | ** ** | **Financial Information**                                                                                                                                                                                            |   |   |
|-------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
|              |       |                                                                                                                                                                                                                 |   |   |
| Item 1.           |       | Financial Statements                                                                                                                                                                                                 |   |   |
|              |       |                                                                                                                                                                                                                 |   |   |
|              |       | Condensed  Consolidated Balance Sheets (unaudited) - March 31, 2007 and  December 31, 2006                                                                                                                 |   | 4      |
|              |       |                                                                                                                                                                                                                 |   |   |
|              |       | Condensed  Consolidated Statements of Operation (and Deficit) (unaudited) - Three months  ended March 31, 2007 and 2006, and the period from inception, as a  Development Stage Company, to March 31, 2007 |   | 5      |
|              |       |                                                                                                                                                                                                                 |   |   |
|              |       | Condensed  Consolidated Statements of Cash Flows (unaudited) - Three months ended  March 31, 2007 and 2006, and the period from inception, as a Development  Stage Company, to March 31, 2007              |   | 6      |
|              |       |                                                                                                                                                                                                                 |   |   |
|              |       | Condensed  Notes to Consolidated Financial Statements (unaudited)                                                                                                                                                    |   | 8      |
|              |       |                                                                                                                                                                                                                 |   |   |
| Item 2.           |       | Management’s  Discussion and Analysis of Financial Condition and Results of Operations                                                                                                                          |   | 10     |
|              |       |                                                                                                                                                                                                                 |   |   |
| Item 3.           |       | Quantitative and Qualitative Disclosures About  Market Risk                                                                                                                                                          |   |   |
|              |       |                                                                                                                                                                                                                 |   |   |
| Item 4.           |       | Controls and Procedures                                                                                                                                                                                              |   |   |
|              |       |                                                                                                                                                                                                                 |   |   |
| **Part II.** | ** ** | **Other Information**                                                                                                                                                                                                |   |   |
|              |       |                                                                                                                                                                                                                 |   |   |
| Item 1.           |       | Description of  Business                                                                                                                                                                                             |   | 10     |
|              |       |                                                                                                                                                                                                                 |   |   |
| Item 2.           |       | Legal Proceedings                                                                                                                                                                                                    |   | 16     |
|              |       |                                                                                                                                                                                                                 |   |   |
| Items 3,4,5,6     |       |                                                                                                                                                                                                                 |   | 16     |
|              |       |                                                                                                                                                                                                                 |   |   |
| Item 7.           |       | Exhibits                                                                                                                                                                                                             |   | 16     |
|              |       |                                                                                                                                                                                                                 |   |   |
| Signature         |       |                                                                                                                                                                                                                 |   | 17     |

 

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FORWARD LOOKINGSTATEMENTS

The information containedin this Form 10-Q/A Amendment No. 1 and Kenilworth’s other filings withthe Securities Exchange Commission may 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 that could significantly affectresults in the future and, accordingly, such results may differ from thoseexpressed in any forward looking statements herein. Future operating resultsmay be adversely affected as a result of a number of factors.

You should not rely onforward-looking statements in this Form 10-Q/A Amendment No. 1. ThisForm 10-Q/A Amendment No. 1 contains forward-looking statements thatinvolved risks and uncertainties. We use words such as “anticipates”, “believes”,“plans”, “expects”, “future”, “intends” and similar expressions to identify suchforward-looking statements. You should not place undue reliance on theseforward-looking statements, which apply only as of the date of thisForm 10-Q/A Amendment No. 1. Our actual results could differ materiallyfrom those anticipated in these forward-looking statements for many reasons,including the risks faced by Kenilworth as described below and elsewhere inthis Form 10-Q/A Amendment No. 1.

RISKS

Specific reference ismade to each of the risks described in Item 7 in Part II of the Form 10-Kfor December 31, 2006 under the discussion “Cautionary Statement ForPurposes of the Safe Harbor Provisions of the Private Securities LitigationReform Act of 1995 and Risk Factors”. Reference is also made to future filingsunder Forms 10-Q and Forms 10-K and filings under the Securities Exchange Actof 1934 as amended and as may be applicable under the Securities Act of 1933 asamended.

INTRODUCTORY NOTE

**The 10-Q/A Amendment No. 1 isbeing filed to advise that the 10-Q filed May 10, 2007 for the three (3) month periodended March 31, 2007 was not reviewed by the Company’s Independent Auditors. AnAmendment No. 2 will be filed upon the completion of the review and financialchanges, if any.**

This Form 10-Q is beingfiled as a “Development Stage Company” from the period beginning November 24,1998 to the present at March 31, 2007, including a charge in the amount of$4,256,926, which was the amount the Company disbursed on September 28, 1998 toexit from Chapter 7 Bankruptcy Proceedings.

d) The Company issued140,957,048 shares of its Restricted Common Stock since December 31,2004.  All of the shares may have the restrictions lifted pursuant to Rule144 and 144K within one (1) or two (2) years which may substantially depressthe trading price of the Company’s Stock in the future.

During the three (3)month period ended September 30, 2005, the Company expensed the 25,000,000shares to be issued to Herbert Lindo, the Chairman, CEO and Chief FinancialOfficer at the rate of $0.05 per share.  At the Shareholders Meeting heldon September 13, 2005, the Shareholders approved the issuance of 25,000,000shares to Herbert Lindo.

At the ShareholdersMeeting held on May 28, 2003, the Shareholders approved the issuance of20,000,000 shares to be issued to Herbert Lindo the Chairman and President ofthe Company.  Unlike the 25,000,000 shares issuable to Herbert Lindo,which were expensed, the 20,000,000 shares were not expensed.

Herbert Lindo requestedto have the 45,000,000 shares issued during the period ended March 31,2006.  The Company expensed the 20,000,000 shares during the period at therate of $0.015 per share, which amounted to a reduced capital adjustment of53,652 instead of $303,652.

During the period endedMarch 31, 2007 and 2006, the Company made certain adjustments to the number ofshares outstanding which did not require capital changes.

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KENILWORTH SYSTEMSCORPORATION(A DEVELOPMENT STAGE COMPANY)

CONDENSED CONSOLIDATED BALANCE SHEET(Unaudited)
| ** **                                                                                                                                        | ** ** | **March 31,  2007** | ** ** | **December 31,  2006** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
|                                                                                                                                              |       |                     |       |                        |       |
| ASSETS                                                                                                                                            |       |                     |       |                        |       |
| CURRENT ASSETS                                                                                                                                    |       |                     |       |                        |       |
| Cash                                                                                                                                              |       | $                        | 4,198      |                        | $          | 49,995 |   |
| Prepaid expenses                                                                                                                                  |       | 50,000                   |       | 75,000                      |       |
| Loan receivable  — including from stockholders                                                                                               |       | 30,000                   |       | 30,000                      |       |
| Receivable from  Herbert Lindo (Note 8)                                                                                                           |       | 750,000                  |       | 750,000                     |       |
|                                                                                                                                              |       |                     |       |                        |       |
| TOTAL CURRENT  ASSETS                                                                                                                             |       | 834,198                  |       | 904,995                     |       |
|                                                                                                                                              |       |                     |       |                        |       |
| PROPERTY AND EQUIPMENT  — NET                                                                                                                |       | 28,690                   |       | 31,878                      |       |
|                                                                                                                                              |       |                     |       |                        |       |
| SECURITY DEPOSIT                                                                                                                                  |       | 9,422                    |       | 9,422                       |       |
|                                                                                                                                              |       |                     |       |                        |       |
| TOTAL ASSETS                                                                                                                                      |       | $                        | 872,310    |                        | $          | 946,295 |   |
|                                                                                                                                              |       |                     |       |                        |       |
| LIABILITIES AND  STOCKHOLDERS’ DEFICIT                                                                                                       |       |                     |       |                        |       |
| CURRENT LIABILITIES                                                                                                                               |       |                     |       |                        |       |
| Accounts payable  and accrued expenses                                                                                                            |       | $                        | 275,787    |                        | $          | 311,358 |   |
| Payroll taxes  payable (Note 7)                                                                                                                   |       | 141,000                  |       | 141,000                     |       |
| Loans payable –  including accrued interest                                                                                                  |       | 34,632                   |       | 33,787                      |       |
| Loans payable —  automobile                                                                                                                  |       | 500                      |       | 750                         |       |
|                                                                                                                                              |       |                     |       |                        |       |
| TOTAL CURRENT  LIABILITIES                                                                                                                        |       | 451,919                  |       | 486,895                     |       |
|                                                                                                                                              |       |                     |       |                        |       |
| STOCKHOLDERS’ EQUITY  (DEFICIT)                                                                                                              |       |                     |       |                        |       |
| Preferred Stock - par  value $.01 per share; authorized 2,000,000 shares; no shares issued and  outstanding                                       |       |                     |       |                        |       |
| Common stock -  par value $.01 per share; authorized 500,000,000 shares; issued and  outstanding 287,594,294 and 278,508,293 shares, respectively |       | 2,875,942                |       | 2,785,082                   |       |
| Additional  paid-in capital                                                                                                                       |       | 30,508,133               |       | 30,419,215                  |       |
| Accumulated  deficit                                                                                                                              |       | (32,963,684              | )          | (32,744,897                 | )          |
|                                                                                                                                              |       |                     |       |                        |       |
| TOTAL  STOCKHOLDER’S EQUITY                                                                                                                  |       | 420,391                  |       | 459,400                     |       |
|                                                                                                                                              |       |                     |       |                        |       |
| TOTAL LIABILITIES AND  STOCKHOLDER’S EQUITY                                                                                                  |       | $                        | 872,310    |                        | $          | 946,295 |   |

 

The accompanyingnotes are an integral part of these financial statements.

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KENILWORTH SYSTEMSCORPORATION(A DEVELOPMENT STAGE COMPANY)

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS ANDDEFICITACCUMULATED DURING DEVELOPMENT STAGEFOR THE THREE MONTHS ENDED MARCH 31,(Unaudited)
| ** **                                     | ** ** | **Three months ended  March 31,** | ** ** | **Period from  November 24, 1998  to** | ** ** |
|------------------------------------------------|------------|--------------------------------------------------|------------|-------------------------------------------------------|------------|
| ** **                                     | ** ** | **2007**                                         | ** ** | **2006**                                              | ** ** | **March 31, 2006** | ** ** |
| Revenues                                       |       |                                             |       |                                                  |       |   |   |
| Sales                                          |       | 0                                                |       | 0                                                     |       | 0 |   |
|                                           |       |                                             |       |                                                  |       |   |   |
| Expenses                                       |       |                                             |       |                                                  |       |   |   |
| Selling, general and administrative            |       | $                                                | 218,787    |                                                  | $          | 349,088 |   | $ | 8,449,455 |   |
|                                           |       |                                             |       |                                                  |       |   |   |
| Other income  (expenses)                       |       |                                             |       |                                                  |       |   |   |
| Interest income                                |       | —                                           |       | —                                                |       | 922 |   |
| Interest expense                               |       | —                                           |       | —                                                |       | (811,312 | ) |
|                                           |       |                                             |       |                                                  |       |   |   |
| Total other  income (expense)                  |       | —                                           |       | —                                                |       | (810,390 | ) |
|                                           |       |                                             |       |                                                  |       |   |   |
| Net loss                                       |       | $                                                | (218,787   | )                                                     | $          | (349,088 | ) | $ | (8,668,242 | ) |
|                                           |       |                                             |       |                                                  |       |   |   |
| Basic and  diluted loss per share              |       | (0.0001                                          | )          | (0.0016                                               | )          |   |   |
|                                           |       |                                             |       |                                                  |       |   |   |
| Weighted average number  of shares outstanding |       | 287,594,294                                      |       | 213,321,462                                           |       |   |   |

 

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KENILWORTH SYSTEMSCORPORATIONAND SUBSIDIARIES(A DEVELOPMENT STAGE COMPANY)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)
| ** **                                                                      | ** ** | **Three Months ended  March 31** | ** ** | **Period from  November 24,  1998  to** | ** ** |
|---------------------------------------------------------------------------------|------------|-------------------------------------------------|------------|---------------------------------------------------|------------|
| ** **                                                                      | ** ** | **2007**                                        | ** ** | **2006**                                          | ** ** | **March 31, 2006** | ** ** |
| Cash flows from  operating activities                                           |       |                                            |       |                                              |       |   |   |
| Net loss                                                                        |       | $                                               | (218,787   | )                                                 | $          | (349,088 | ) | $ | (4,124,400 | ) |
| Adjustments to reconcile net loss to net cash  provided by operating activities |       |                                            |       |                                              |       |   |   |
| Depreciation                                                                    |       | 3,188                                           |       | 3,301                                             |       | 23,141 |   |
| Amortization of patent                                                          |       | —                                          |       | 1,888                                             |       | 11,087 |   |
| Accretion of convertible debt discount                                          |       |                                            |       | —                                            |       | 72,656 |   |
| Beneficial conversion feature                                                   |       | —                                          |       | —                                            |       | 669,097 |   |
| Common stock issued for services                                                |       | 37,500                                          |       | 325,000                                           |       | 7,748,660 |   |
| Common stock issued to induce debt conversion                                   |       | 136,100                                         |       | 164,000                                           |       | 6,145,276 |   |
| Common stock issued for interest due on notes  payable                          |       | —                                          |       | —                                            |       | 8,501 |   |
| Accrued interest transferred to capital                                         |       | —                                          |       | —                                            |       | 4,270 |   |
| Other                                                                           |       |                                            |       |                                              |       | 21,100 |   |
| Increase (decrease) in cash attributable to changes  in assets and liabilities: |       |                                            |       |                                              |       |   |   |
| Prepaid expenses                                                                |       | (110,000                                        | )          | 160,000                                           |       | 153,750 |   |
| Loan receivable                                                                 |       | 23,700                                          |       | (6,300                                            | )          | (6,300 | ) |
| Accounts payable and accrued expenses                                           |       | (101,919                                        | )          | (173,868                                          | )          | 184,092 |   |
| Payroll taxes payable                                                           |       | (53,244                                         | )          | 87,756                                            |       | 87,756 |   |
|                                                                            |       |                                            |       |                                              |       |   |   |
| Net cash used in operating activities                                           |       | (283,462                                        | )          | (212,689                                          | )          | (212,689 | ) |
|                                                                            |       |                                            |       |                                              |       |   |   |
| Cash flows from  investing activities                                           |       |                                            |       |                                              |       |   |   |
| Payment of loan receivable-stockholder                                          |       | —                                          |       | —                                            |       | (4,000 | ) |
| Proceeds from loan receivable-stockholder                                       |       | —                                          |       | —                                            |       | 4,000 |   |
| Payment of patent costs                                                         |       | —                                          |       | (7,200                                            | )          | (67,026 | ) |
| Purchase of property and equipment                                              |       | —                                          |       | —                                            |       | (58,567 | ) |
| Security deposit                                                                |       | (9,422                                          | )          | (9,422                                            | )          | (4,250 | ) |
|                                                                            |       |                                            |       |                                              |       |   |   |
| Net cash used in investing activities                                           |       | (283,462                                        | )          | (16,622                                           | )          | (113,221 | ) |
|                                                                            |       |                                            |       |                                              |       |   |   |
| Cash flows from  financing activities                                           |       |                                            |       |                                              |       |   |   |
| Proceeds from loans payable - stockholders                                      |       | 30,000                                          |       | —                                            |       | 85,000 |   |
| Payment of loans payable - stockholders                                         |       | —                                          |       | —                                            |       | (10,000 | ) |
| Proceeds from loans payable - related parties                                   |       | —                                          |       | —                                            |       | 154,137 |   |
| Repayment of loans payable - related parties                                    |       | 34,632                                          |       | —                                            |       | (137,967 | ) |
| Proceeds from convertible notes payable                                         |       |                                            |       |                                              |       | 1,400,361 |   |
| Proceeds from sale of common stock                                              |       | 136,100                                         |       | 325,000                                           |       | 457,600 |   |
| Proceeds from stock subscriptions receivable                                    |       | —                                          |       | 154,000                                           |       | 40,000 |   |
|                                                                            |       |                                            |       |                                              |       |   |   |
| Net cash provided by financing activities                                       |       | 136,100                                         |       | 64,732                                            |       | 1,728,763 |   |
|                                                                            |       |                                            |       |                                              |       |   |   |
| Net change in  cash                                                             |       |                                            |       |                                              |       | 3,334 |   |
|                                                                                 |            |                                                 |            |                                                   |            |  |  |  |  |  |

 

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| Cash - beginning  of period                                 |   | 49,995 |    | 3,334  |   | — |   |
|-------------------------------------------------------------|--------|--------|---------|--------|--------|--------|--------|
|                                                        |   |   |    |   |   |   |   |
| Cash - end of  period                                       |   | $      | 4,198   |   | $      | 3,777  |   | $ | 3,334 |   |
|                                                        |   |   |    |   |   |   |   |
| Supplemental  disclosure of non-cash activities:            |   |   |    |   |   |   |   |
| Common stock  issued for patent costs                       |   | $      | —  |   | $      | — |   | $ | 10,000 |   |
| Exchange of  loans payable for convertible notes payable    |   | $      | —  |   | $      | — |   | $ | 50,000 |   |
| Conversion of  notes payable to common stock                |   | $      | 136,100 |   | $      | — |   | $ | 1,388,500 |   |
| Conversion of  loan payable - related party to common stock |   | $      | 750,000 |   | $      | — |   | $ | 16,170 |   |
| Cancellation of  stock subscriptions receivable             |   | $      | —  |   | $      | — |   | $ | 29,000 |   |
| Common stock issued for  subscriptions receivable           |   | $      | —  |   | $      | 20,000 |   | $ | 71,500 |   |

 

The accompanyingnotes are an integral part of these financial statements.

7

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**KENILWORTHSYSTEMS CORPORATION AND SUBSIDIARIES(A DEVELOPMENT STAGE COMPANY)**

**CONDENSED NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS(UNAUDITED)**

NOTE 1- BASIS OF PRESENTATION

In the opinion ofmanagement, the accompanying unaudited condensed consolidated financialstatements of Kenilworth Systems Corporation and subsidiaries (“Kenilworth”)beginning as of January 1, 2007 contain all adjustments (consisting ofonly normal accruals) necessary to present fairly the consolidated balancesheets as of March 31, 2007 and December 31, 2006 and the relatedstatements of operations and cash flows for the three (3) month periodsended March 31, 2007 and 2006.  These financial statements should beread in conjunction with the consolidated financial statements and notes theretoincluded in our Annual Report on FORM 10-K.

The results of operationsfor the three (3) month period ended March 31, 2007 are notnecessarily indicative of the results for the entire year endingDecember 31, 2007.

NOTE 2- THE COMPANY AND NATURE OF BUSINESS

Kenilworth SystemsCorporation (the “Company”) was incorporated in New York in April 1968 andsince exiting from bankruptcy proceedings now plans to be engaged in thebusiness of developing and having terminals and other equipment manufacturedand design systems that permit individuals from remote locations, to play alongwith live, in-progress casino table games via TV (simulcast) Satellite,Internet and Cable Broadcasts around the world.

The Company was inbankruptcy proceedings under Chapter 7 and 11 of the Bankruptcy Code for theperiod from August 28, 1982 through September 28, 1998. The Companyceased all operations, between February 2, 1991 through September 28,1998.

NOTE 3- PRINCIPLES OF CONSOLIDATION

The consolidatedfinancial statements include the accounts of Kenilworth Systems Corporation andits wholly owned subsidiaries: Video Wagering Systems Corporation, RoulabetteTMNevada Corporation, Kenilworth Systems Nevada Corporation, Kenilworth Systems(UK) Limited, Kenilworth Satellite Broadcasting Corporation (a DelawareCorporation) and Satellite Gaming Consultants, Inc. (a Delaware Corporation).None of these subsidiaries has any assets or liabilities, except SatelliteGaming Consultants, Inc.

NOTE 4- GOING CONCERN UNCERTAINTY

As indicated in Note 2,the Company exited from Chapter 7 in September 1998 and has not yetcommenced revenue producing operations. These factors create uncertainty as tothe Company’s ability to operate as a going-concern and continue in business.Management plans to develop a wagering system that allows casino patrons andindividuals outside the casino to play along remotely with live in-progress casinotable games. The Company plans to obtain the necessary funding by offering itsCommon Stock, Senior Cumulative Convertible Preferred Shares and/or continue tosell Convertible Promissory Notes in private placements. There can be noassurances the Company can be successful in obtaining such financing.

The accompanyingfinancial statements have been prepared assuming the Company is a going-concernand do not reflect adjustments, if any that would be necessary if the Companywere not a going-concern.

8

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NOTE 5- CONVERTIBLE PROMISSORY NOTES

During the quarters endedMarch 31, 2007 and March 31, 2006 respectively, the Company sold tovarious private investors $136,100 and $154,000 principal amount of ConvertiblePromissory Notes bearing interest at rates ranging from 4.00% to 8.00% perannum.  The Notes had a one-year term and were immediately convertible atthe option of the noteholder into shares of restricted common stock based onconversion prices ranging from $.05 to $.10 per share.  All Notes issuedin the quarters ended March 31, 2007 and March 31, 2006 wereconverted into a total of 10,786,001 and 12,582,000 common shares,respectively.

NOTE 6- NON CASH TRANSACTIONS

Common shares issued forservices

2007:

The Company issued750,000 shares as compensation for services rendered during the first quarterperiod ended March 31, 2007.  The services were valued at $37,500.

2006:

The Company issued26,500,000 shares as compensation for services rendered during the firstquarter period ended March 31, 2006.  The services were valued at$403,662.

NOTE 7 -PAYROLL TAXES PAYABLE

The Company has madearrangements with the Internal Revenue Service (IRS) and the New York StateDepartment of Taxation to pay approximately $141,000 in past due payroll taxes,including all penalties and interest accrued during the years 2006 and 2005, bythe end of the calendar year 2007.  The agreements provide that theCompany must pay all present taxes, when due, and payments must remain currentin 2007.

NOTE 8- RECEIVABLE FROM HERBERT LINDO

On November 27, 2006Herbert Lindo, the Chairman and Chief Executive Officer exercised a fivemillion (5,000,000) share option for seven hundred fifty thousand dollars($750,000) at fifteen cents ($0.15) per share pursuant to the Company’sPerformance and Equity Plan. The price per share was the price for the Optionwhich would have expired on the following date. Mr. Lindo does not own anyother Options pursuant to the Plan. The average market price of the CommonStock for the thirty (30) days prior to November 27, 2006 was high: $0.05,low: $0.03. As provided in the Plan, Herbert Lindo borrowed the seven hundredfifty thousand dollars ($750,000) from the Company and pledged the five million(5,000,000) and other shares he owns, as collateral for the loan. The fivemillion (5,000,000) shares have been issued as restricted shares.

NOTE 9- SUBSEQUENT EVENTS

Subsequent toMarch 31, 2007, the Company raised an additional $80,000 from the sale ofConvertible Promissory Notes.

Subsequent to March 31,2007, the Company issued 3,440,000 shares for consultants for servicesrendered.  The consultant fees and services were valued at $167,000.

9

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ITEM2.      MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Since we exited frombankruptcy proceedings on September 23, 1998 we have had no revenues fromoperations. We sustained substantial losses from general administrativeexpenses amounting to $850,079 and $3,815,302 in year 2006 and 2005 and for thethree-months ended March 31, 2007 we sustained losses amounting to$218,787 compared to a loss of $349,088 for the quarter ending March 31,2006. Kenilworth has had no revenues from operations during the past fifteen(15) years and there can be no assurances that it will ever have revenues frompresent planned operations.

LIQUIDITY AND CAPITALRESOURCES

Our present plans are todevelop a wagering system dubbed “RoulabetteTM” that would allow patrons in theindustrialized world to play and wager on live in-progress simulcast casinotable games on TV’s placed in hotels, resorts, bars and other public gatheringplaces and in homes and offices on personal computers (PC’s) or television setsconnected to set top boxes for Interactive TV via digital satellite, digitalcable and Internet broadcasts emanating from strictly regulated casinos.

PART II

ITEM 1—DESCRIPTIONOF BUSINESS

Kenilworth SystemsCorporation hereinafter referred to as “Kenilworth”, the “Company” or “we”, wasincorporated 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 exiting from bankruptcy proceedings in September 1998. Kenilworth is now being presented as a Development Stage Company.

GENERAL

Since early in the year2000 we have been solely engaged in developing patents, markets andinvestigating how best to obtain Governmental approvals, by engaging lobbyistsand consultants that would allow television satellite and cable subscribersthroughout the industrialized world to play and wager along from remotelocations with live, in-progress casino table games (Roulette, Craps, Baccaratand more) from strictly regulated casinos located in the United States andother locations around the world.

Employing the latestencrypted satellite, cable and Internet technology and placing televisioncameras in strategic locations above the casino table games, without disruptingthe normal game-monitoring activities, (a separate control room would directthe various camera angles), and transmitting the table games over the digitalsatellite, digital cable and Internet networks (in countries that permitInternet wagering) to television sets (“TV’s”), which become a platform forplaying along with the casino games wherever TV’s are located.

Kenilworth titled theoverall project “RoulabetteTM”.  There are thirty-eight million(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 **net win**Market within five (5) yearsthroughout the industrialized world (by the year ended 2012).

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To best market the casinogames, the Company is selecting lotteries throughout the world to manage andoperate the distribution and cash handling (deposits to play and payingwinnings) using the lotteries’ existing databases for the sale of lotterytickets, and paying winnings at regular lottery licensed terminal locations.

All forty-three (43)lotteries in the United States are owned and operated by County and Stateagencies.  Since the beginning of year 2007, Texas, Illinois and Indianaare engaged in privatizing their lotteries by selling or leasing (on long termleases) their lotteries.  Maryland, Michigan, Iowa and New Jersey are alsoexploring the privatization of their lotteries. This could greatly enhance ourefforts to broadcast the live casino table games to these lottery locations andcould result in having Cafés that offer terminals and TV sets to playalong.  Internet Cafés that offer wagering on various events have been ahuge success in the Asian Market. With Internet wagering outlawed in the UnitedStates, our patented satellite, one-way broadcasts offer the best possibilityto establish satellite Cafés.

Throughout the rest ofthe world, lotteries are owned by government agencies or non profit charitableagencies that distribute the net earnings to benefit social and charitableprograms, or by private entities that pay a percentage of their net win todesignated government agencies.

These foreign lotteriesalso have the same databases as lotteries in the United States, except mostlotteries throughout Europe pool their lotteries between countries, not unlikeMega Millions and PowerBall in the United States, which makes the distributionsimpler and very cost effective for both Kenilworth and the lotteries.

There are no technicalbreakthroughs required.  The equipment for the technology is readilyavailable.  What is needed is to get through the maze of Local, County, Stateand Federal regulations in each U.S. State and foreign countries.  Whenthe first State in the United States grants the Company permission to transmitthe broadcast from one of its casinos to their residents and to States that donot have any casinos, (the entire East coast of the United States), the otherforty-three (43) States with lotteries will join expeditiously. The samewill occur in foreign countries.

Kenilworth will share the**net win** revenue with allparticipating entities that provide RoulabetteTM gaming without **costs of any kind. **State lotteries ortheir private operators will receive a minimum of forty percent (40%) of thetotal **net win** from theirrespective jurisdictions.

In States and foreigncountries that designate exclusively lottery proceeds to schools and theirteachers it is a welcome contribution.  It also will help close budgetgaps.

In addition, throughoutthe United States and most foreign countries there are hundreds of facilitiesthat simulcast live in-progress horse/dog races.  At most facilities thereare several large TV screens that show the races from the different tracks withgeneral theater-type seating for patrons and at private cubicles withtelevision sets outfitted with touch screens.  The cubicles rent foradditional fees.  After players open an account and select pin numbers,they can watch, in privacy, each race offered on the different tracks on the TVand place wagers on the different races by simply changing channels.  Theplayers may also watch sporting events, the news, the stock market reports, andin the near future RoulabetteTM, live, in-progress casino table games.  Thesimulcast centers have their own databases to manage the cash deposit and paywinnings on the horse/dog races and will be able to manage the casino games, onthe same methods as the lotteries will manage RoulabetteTM.  With privateTV’s, available in simulcast centers, especially at night, when fewer tracksare operating.

When playing along withlive table games from a highly regulated jurisdiction, players will be assuredthat the game results are exactly what they see; and, playing along with livecasino table games such as Roulette, Craps and Baccarat, we believe, willprovide interaction, fun and far more excitement than playing make believe animated(virtual) games. It is the next best thing, we believe, to actually being atthe table in the casino.

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To conduct permanentbroadcasts Kenilworth believes it will require a minimum of ten million dollars($10,000,000) and there are no assurances we will ever be able to obtain any ofsuch money. At present, the Company does not have the funds readily availablebut hopes to obtain same, from investors, as soon as Kenilworth can commencebroadcasting from a casino in the United States or other casinos throughout theworld.

In prior years,Kenilworth completed a prototype system that allowed casino patrons to playalong with live in-progress casino table games **only within the confines of a casino,** via closed circuittelevision. Also in 1990, we developed and delivered for the TAB (TotalizatorAgency Board) a quasy government agency of the State of Victoria, Australia, acashless slot machine system. Both systems required debit cards and centralmainframe computers to manage the wagers. By making use of the expertiseapplied in the development of the aforementioned systems we plan to develop asecond-generation system that will manage the wagers by the microprocessorinstalled in TV set-top boxes or an attachment directly connected to the TV setto receive satellite and/or Internet broadcasts. This as planned would allow aplayer in an interactive manner, at a remote location (outside the casinoconfines), to experience the actual play and excitement at the casino tablegame and to make wagers on the various games, without having to be physicallypresent at the casino or casino table.  There are no assurances we will beable to successfully develop any system.

We also propose for slotmachine manufacturers to develop “RoulabetteTM Slot Machines”.  TheRoulabetteTM Slot will offer the regular slot or video lottery games and by thetouch of a button, the live in-progress casino table games.  Slot playersare offered a change of pace at the cost of a slot handle pull.  The gamesare transmitted to the RoulabetteTM Slot via satellite or the Internet (allbroadcasts are encrypted to prevent unauthorized use of the broadcasts).

Where authorized, hotels,resorts, clubs and other public gathering places will be able to offer casinotable game action in their establishments without incurring the costs tooperate a casino. There are now believed to be more than ten million(10,000,000) slot machines played throughout the world, outside of casinoconfines.

RoulabetteTM is a conceptintended to be built and there can be no assurances that it will ever bebuilt.  The Patented microprocessors to be installed in the TV set topboxes have not been designed.

**SUMMARY**:

(1.)         Kenilworth continues to fine tune its patented technology dubbedRoulabetteTM.  It now plans to “outsource” the manufacturing of all thecomponents instead as formerly manufacture some of the equipment in its 26,000square foot facility located in Melville, NY.  RoulabetteTM would allowcasino patrons and other players to play along with live in-progress casinotable games such as Roulette, Craps and 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 “RoulabetteTMSlots” and digital satellite, cable TV set top boxes or the Internet incountries that permit Internet gaming. The RoulabetteTM terminal is a proposalintended to be built and there can be no assurances that it will ever bebuilt.  The microprocessors to be installed in the TV set top boxes havenot been designed. We have as at December 31, 2006, no firm agreements,customers, or proposals for any future business and there can be no assurancesthat we will ever have same. **Reference isalso made to each of the “Risk Factors” that are set forth in Item 7.**

(2.)         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.

Simulcast broadcasts ofdigital satellite and digital cable transmissions around the world must meet,and will be supervised by, the regulations by the gaming authorities of thebroadcasting casino and the jurisdiction, which receives the broadcast. We believe the supervision will not be difficult to enforce, because allsimulcast wagering is “cash only”, from regulated, supervised bettingsites.  There are no wire 

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money transfers withbanks and no credit or debit cards permitted.  We believe this fact shouldease any opposition from concerned citizens and anti-gambling groups, asregulation and enforcement responsibility will be vested in each individualstate (or foreign jurisdiction).

Kenilworth was the firstto use color personal computers (PC’s) to replace electromechanical slotmachines (1988).  We provided the software for the first Tabaret locatedat the Menzie at the Rialto in Melbourne, Australia, which opened in November1990.  This consisted of cashless, variable denomination and multiplegame, virtual PAT’s (“Player Activated Terminals”).   Prior theretoKenilworth sponsored, with the assistance of three (3) Nevada casino operators,legislation to permit cashless wagering in the state of Nevada.  Thelegislation, which is in the form of an amendment to existing casino controlstatutes, permits the use of account cards (debit cards) and was signed intolaw by Governor Richard H. Bryan on June 13, 1985.

Kenilworth has been apublicly traded Company since 1968. Prior to commencing its endeavors into itspresent business in 1988, it also provided security systems to Nuclear ElectricGenerating Plants in the U.S. and foreign countries, as well as time/attendancesystems at a major department store chain.

THE STATUS WITH PAGCOR

During January 2006, theCompany reestablished negotiations with the Philippines Amusement and GamingCorporation (“PAGCOR”) for permission to broadcast live, in-progress casinotable games from their casinos.

PAGCOR is the Republic ofthe Philippines chartered government gaming monopoly.  PAGCOR partiallyowns and exclusively operates all fourteen (14) Filipino casinos, some of whichare located in exclusive resort facilities frequented by Asian patrons(tourists).

In March 2006, Kenilworthconducted a live, in-progress casino table game test to demonstrate the abilityto broadcast the table games, for around the world viewing, without disruptingthe normal security monitoring and protecting the privacy of players at adjoiningtable games.  The film clip of the test broadcast which was made at aroulette table located in the new Hyatt Hotel and Casino, Manila, is availablefor viewing on our website www.kenilworthsys.com (see Press Release: Monday,March 6, 2006).

In April 2006, Kenilworthoffered to pay PAGCOR monthly payments, for hosting the broadcasts when theycommence, for a period of ten (10) years; US $1 million for year one (1); US $2million for years two (2) and three (3); US $5 million for years four (4) throughseven (7) and US $10 million for every year thereafter, totaling US$636,000,000 over the ten (10) year period. The payments have to be maderegardless from where we broadcast.  Kenilworth requires the flexibilityto broadcast from other casinos besides the Philippines.

In July 2006, PAGCOR’sBoard of Directors approved to commence the first live, in-progress casinotable game broadcasts to emanate from the new (August 2005) Hyatt Hotel &Casino in Manila, Philippines.

We, thus, have acquired abroadcast site for RoulabetteTM.  Now we have to obtain agreements forlocations that will permit us to receive the broadcasts.  We are in anactive search in Europe, including Eastern Europe, South America, China, Indiaand the Pacific Rim nations.  We filed our patents in all of thesedestinations.

In 2002, the PhilippinesGovernment permitted the establishment of two (2) Internet Cafés in the Manilaarea and allowed the operators, for a fee to PAGCOR, to provide life-likeaction on virtual baccarat, accept sports bets and video broadcast of actualin-progress cock fights with wagering on the outcome.  By year end 2004,the number of Cafés operating in the Manila area increased to sixty (60)Cafés.  At the end of 2006 there are now six hundred (600) Cafés in Manilawith an additional thirty four hundred (3,400) throughout the country.

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Kenilworth neverattempted to provide live in-progress real time casino table games to the Caféssince 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.

The phenomenal success bythe Internet Cafés may not require our broadcasts to improve PAGCOR’s incomestream.   Kenilworth planned to broadcast to the Pacific Rimcountries to maintain the tourist’s trade to the Philippines resorts, all ofwhich have casinos, and now have to compete with Macau.  We believe PAGCORwill require our broadcasts to maintain the tourist trade.

MARKETING STRATEGY/SALESPLAN

Our marketing strategyconsists of developing the RoulabetteTM Slot terminal and the RoulabetteTMbroadcasts. We estimate at this time, that we will need at least approximatelyten million dollars ($10,000,000) for promoting the RoulabetteTM concept. We do nothave this money nor do we have any agreements or understanding to procure thismoney. We may never get this money. If we do obtain this money, it may not besufficient. Further, should such monies be available it may not be available onterms satisfactory to Kenilworth or it may be available on such terms thatsubstantially dilute the interest of existing shareholders. If we obtain thismoney, we will need substantial additional funds for the proposed marketingplan and there can be no assurances that such funds will ever be available toallow Kenilworth to engage in business on a profitable basis.

At the present time, wedo not engage technically oriented employees who will be able to assist in thedevelopment of RoulabetteTM (we have available three [3] former technicalKenilworth employees that have indicated to rejoin Kenilworth at theappropriate time). It will be necessary for us to obtain additional personnelqualified and with the expertise to develop RoulabetteTM. We would requireadditional employees and several more consultants and there can be noassurances of our being able to obtain any necessary personnel. There can be noassurances of the availability of any such employees and consultants.

The Company willoutsource the development of RoulabetteTM and the microprocessors for the TV settop boxes.

In the United States,Kenilworth must refrain from using the Worldwide Web (WWW) Internet to managewagers from individuals outside of the casino confines. It is against the law.In RoulabetteTM, the play-along broadcast emanates from casinos that areregulated by strict and comprehensive rules and state and jurisdictionregulations, enforced by gaming control regulators and everybody plays alongwith the same live table game. There is a world of difference between playingin a virtual make believe casino compared with an actual casino.

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

The individuals wouldhave to pre-deposit funds into an account with the wager management company andthen place wagers with their credit balance. The wagers and running balanceswill be transmitted to the RoulabetteTM player’s PC and/or television sets withtelephone lines not crossing any state lines, similar in principle to telephoneaccounts wagering offered by the New York State Off-Track Betting Corporationand the state of Nevada casino sports book and recently with remote purchase oflottery tickets in many states within the United States.

After we obtainpermission to play RoulabetteTM, of which there can be no assurances, in agiven state and engage a wager management organization in order to promotedigital satellite and interactive television to the state’s residents,Kenilworth would install the eighteen (18) inch dish antenna and converter box 

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required to receivedigital TV programming and interactive TV at its own cost, if the subscriberopens a RoulabetteTM wagering account for two hundred dollars ($200). Inaddition, Kenilworth would pay the monthly subscription fees to view alldigital TV programming offered and the Internet service provider (ISP)subscription fee if the customer wagers at least one hundred twenty dollars($120) each month — win, lose, or draw — makes no difference.  In the U.S.the contracts would be financed by satellite carriers such as EchoStar andDirecTV.

In states with approvedlottery and/or other gambling legislation, we plan to introduce RoulabetteTMSlot terminals to hotels, clubs (similar to card clubs in California) andresorts, to provide upscale gathering places for tourists and local residents.Charitable organizations that are permitted to conduct “Nevada Nights” andBingo games may wish to offer RoulabetteTM 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 terminals areintended to be self-sufficient and accept dollar bills (or script, to controlthe amount an individual is allowed to wager in one day or other time period).We plan to lease all the equipment necessary to participants for a share of theprofits.

To gain approval for ourRoulabetteTM-style gambling in jurisdictions that have not approved any gamblinglegislation, Kenilworth proposes to engage lobbyists to introduce, promote, andobtain legislative approval to permit RoulabetteTM-style gambling. Our strategyis to find depressed resort areas and have the resort/hotel operators convincetheir local politicians of the benefits to their business and the localeconomies and request them to promote legislative approval, either state-wideor limited to their areas. Riverboat gambling started to rehabilitate decayingwaterfronts. RoulabetteTM can do the same in depressed economic areas.  Noassurances can be given that we can obtain any such approvals.

When the live casino TVbroadcasts are beamed for global viewing, Kenilworth will seek out similarorganizations, as proposed for the United States and betting shops and slotroute operators that can provide the servicing of individual accounts andplacement of RoulabetteTM terminals in hotels, clubs, pubs, racetracks, etc. Inall instances, we plan to offer only profit sharing arrangements tofranchisees, which will require leasing all the equipment necessary to thefranchisee, to discourage competition.

In overseasinstallations, wherever permitted, Kenilworth will make use of the WWW Internetonly to manage the wagers, and only in jurisdictions that permit the datacollection of the gambler, not for the live broadcast.

In the event asubstantial amount is won by a player, Kenilworth will make the payment to thewinner, via money wire transfer, to the establishment which managed the wager,within twenty-four (24) hours.  Kenilworth will establish a worldwide cagefor winning payments; or, a guarantee payment by a well-recognized internationalbank.

COMPETITION

Many segments of thegaming industry are characterized by intense competition, with a large numberof companies offering the same type of wagering products and services. None ofthese companies, at present, are believed to offer the same or similarequipment or systems as intended by RoulabetteTM. The most likely competitionwill come from slot machine manufacturers who could relatively quickly adaptslot machines to play along with live casino table games. We believe there arethree (3) major slot machine manufacturers in the world, all of which havevastly greater capital resources and substantially more personnel than theCompany and may have under development systems that directly compete withRoulabetteTM.

Our present plans are tobroadcast the live casino table games from companies that own casinosthroughout the industrialized world. Other casino owners may start their ownbroadcasts and have their own terminals manufactured that compete withKenilworth after Kenilworth has done all its pioneering for play-alongwagering.

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PATENTS, TRADEMARKS ANDINTELLECTUAL PROPERTY

Our most important assetsare Patents we have acquired and RoulabetteTM related trademarks and servicemarks.  The Patent granted on June 10, 2003 titled “SYSTEM AND METHODFOR REMOTE ROULABETTE AND OTHER GAME PLAY USING GAME TABLE AT A CASINO” andPatent Application filed October 15, 2003, entitled “METHOD AND SYSTEM FORSUPPLYING FUNDS TO A TERMINAL FOR REMOTE WAGERING”, “MULTI-USE GAMING MACHINE”trademarks ROULABETTETM, as in pre-marked cards similar to lottery cards toselect number in each game, used with terminals “ROULABETTETM SWIPE CARD” toactivate set-top boxes to play RoulabetteTM and “PLAY ALONG WITH ROULABETTETM,LIVE” and MULTI-USE GAMING MACHINE.

GOVERNMENT REGULATIONS

Kenilworth has nolicenses from any casino regulating authorities and may not require any casinolicenses at the present time and may never become able to obtain any licensesthat may be required in the future. Each state has its own regulations, and instates where Kenilworth does business, Kenilworth will have to comply withthese regulations and there can be no assurances that it will be able to do soor obtain the necessary license in an applicable jurisdiction. The followingdiscussion is not necessarily complete, or current regarding laws andregulations that may be applicable to us.  Any present laws are alsosubject to future change, amendment or cancellation.

Item2.    LEGAL PROCEEDINGS:

None

Item3.    CHANGE IN SECURITIES:

None

Item4.    DEFAULT UPON SENIOR SECURITIES:

None

Item5.    SUBMISSION OF A MATTER TO A VOTE OF SECURITIES HOLDERS:

None

Item6.    OTHER INFORMATION:

The Company plans to holdits Annual Meeting of Shareholders in September 2007 or any adjournment thereofwith proxy materials mailed to shareholders of record in August 2007 prior tothe proposed meeting dates.

Item7.    EXHIBITS AND REPORTS ON FORM 8-K:

8-K – filedFebruary 7, 2007: Item 4.01 Change of Independent Auditors

8-K/A Amendment No. 1 – filed February 22, 2007: Item 4.01 Changes inRegistrant’s Certifying Accountant

8-K/A Amendment No. 2 – filed February 28, 2007: Item 4.01 Changes inRegistrant’s Certifying Accountant

Ex 31.1 Certification of Chief Financial Officer of the CompanyRequired by Rule 13a-14(a) or Rule 15d-14(c) of theExchange Act

Ex 32.1 Certification of Chairman and Chief Executive Officer Pursuantto 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-OxleyAct of 2007.

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SIGNATURE

Pursuant to therequirements of the Securities Exchange Act of 1934, the Registrant has dulycaused this report to be signed in its behalf by the undersigned thereunto dulyauthorized.
|            | KENILWORTH SYSTEMS CORPORATION                                 |
|-----------------|----------------------------------------------------------------|
|            |                                                           |
| By:   | /s/ HERBERT LINDO                                              |   |
|            | Herbert Lindo,                                                 |
|            | Chairman, Chief Executive Officer and Chief  Financial Officer |
|            | June 4, 2007                                                   |

 

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