**UNITEDSTATES**

**SECURITIESAND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

 

**FORM10-Q**

 

**(Mark One)**

 

ý                                  **Quarterly reportpursuant to Section 13 OR 15(D) of the Securities Exchange Act of 1934**

 

**For the quarterly period ended September 30, 2003**

 

**OR**

 

**o****                                ****Transition reportpursuant to Section 13 or 15(D) of the Securities Exchange Act of 1934**

 

**For the transition period from             to             **

 

**Commission File Number: 0-08962**

 

**KENILWORTHSYSTEMS CORPORATION**

(Exact name of registrant as specified in its charter)

 

| **New York**                             |   | **13-2610105**                       |
|------------------------------------------|--------|--------------------------------------|
| (State of incorporation)                 |   | (I.R.S. employer identification no.) |
|                                     |   |                                 |
| **185 Willis Avenue, Mineola, New York** |   | **11501**                            |
| (Address of principal executive offices) |   | (Zip Code)                           |

 

**(516) 741-1352**

(Registrant’s telephone number, including area code)

 

Indicateby check mark whether the Registrant (1) has filed all reports required to befiled by section 13 or 15(d) of the Securities Exchange Act of 1934 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  ý   No  o

 

Statethe number of shares outstanding of each of the issuer’s classes of commonstock as of the latest practical date

 

Thenumber of shares of common stock, $.01 par value of the Registrant outstandingas of November 1, 2003 was: 126,888,594

 

 

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PART IV – INTRODUCTORY NOTE

 

a)                                      The Company’sFinancials have not been reviewed by an Independent Auditor.

b)                                     The financials arepresented as a Development Stage Corporation.

c)                                      The acquisitioncost of Patent No. US 6,575,834 BI has been reduced from $2,500,000 to$357,100.  Accordingly, the FinancialStatements for the quarter annual periods ending March 31 and June 30, 2003 onFORM 10-Q will be restated to adjust the reduction of the acquisition cost ofthe Patent (see Note 10).

 

PART I – FINANCIAL INFORMATION

 
| Item 1. | Financial  Statements                                                                       |   |
|---------|---------------------------------------------------------------------------------------------|--------|
| Item 2. | Management’s  Discussion and Analysis of Financial Condition and Results of Operations |   |
| Item 3. | Controls and Procedures                                                                     |   |

 

PART II– OTHER INFORMATION

 
| Item 2. | Changes in Securities and Use of Procedures |   |
|---------|---------------------------------------------|--------|
| Item 6. | Exhibits and Reports on Form 8-K            |   |

 

SPECIAL NOTE REGARDING FORWARD-LOOKINGSTATEMENTS

 

To the extentthat the information presented in this Quarterly Report on Form 10-Q for thequarter ended September 30, 2003 discusses financial projections, informationor expectations about our proposed products or markets, or otherwise makesstatements about future events, such statements are forward-looking.  We are making these forward-lookingstatements in reliance on the safe harbor provision of the Private SecuritiesLitigation Reform Act of 1995.  Althoughwe believe that the expectations reflected in these forward-looking statementsare based on reasonable assumptions, there are a number of risks anduncertainties that could cause actual results to differ materially from suchforward-looking statements.  These risksand uncertainties are described, among other places in this Quarterly Report,in “Management’s Discussion and Analysis of Financial Condition and Results ofOperations”.

 

In addition,we disclaim any obligations to update any forward-looking statements to reflectevents or circumstances after the date of this Quarterly Report.  When considering such forward-lookingstatements, you should keep in mind the risks referenced above and the othercautionary statements in this Quarterly Report.

 

PART I –FINANCIAL INFORMATION

 
| Item 1. | FINANCIAL STATEMENTS                                                                                                                               |   |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|    |                                                                                                                                               |   |
|    | Consolidated Balance Sheets as of September  30, 2003 (unaudited) and December 31, 2002 (unaudited)                                                |   |
|    |                                                                                                                                               |   |
|    | Consolidated Statements of Operations for  the three months and nine months ended September 30, 2003 and  September 30, 2003 (unaudited) |   |
|    |                                                                                                                                               |   |
|    | Consolidated Statements of Cash Flows for  the nine months ended September 30, 2003 and September 30, 2002  (unaudited)                  |   |
|    |                                                                                                                                               |   |
|    | Notes to Consolidated Financial Statements  (unaudited)                                                                                            |   |

 

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KENILWORTH SYSTEMS CORPORATION

INDEX TO FORM 10-Q

 

PART I.

FINANCIAL INFORMATION

 

ITEM 1.      FINANCIAL STATEMENTS

 

KENILWORTH SYSTEMS CORPORATION

CONDENSEDCONSOLIDATED BALANCE SHEETS

 
|                                                                                                                                                        |   | **September  30  2003** |      | **December  31  2002** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|-----------|------------------------|--------|
|                                                                                                                                                        |   | **(unaudited)**         |      |                   |   |
| ASSETS                                                                                                                                                      |   |                    |      |                   |   |
|                                                                                                                                                        |   |                    |      |                   |   |
| Cash                                                                                                                                                        |   | $                       | 23,176    |                   | $      | 10,071 |   |
| Prepaid expenses                                                                                                                                            |   | 125,000                 |      | 232,544                |   |
| Due from sale of Convertible Note                                                                                                                           |   | 50,000                  |      | —                 |   |
| Property, Plant and Equipment, Net                                                                                                                          |   | 15,408                  |      | 13,263                 |   |
|                                                                                                                                                        |   |                    |      |                   |   |
| CURRENT  ASSETS                                                                                                                                             |   | $                       | 213,584   |                   | $      | 255,878 |   |
| Patent                                                                                                                                                      |   | 357,100                 |      |                   |   |
| TOTAL ASSETS                                                                                                                                                |   | $                       | 570,684   |                   | $      | 255,878 |   |
|                                                                                                                                                        |   |                    |      |                   |   |
| LIABILITIES AND  STOCKHOLDERS’ EQUITY (DEFICIT)                                                                                                        |   |                    |      |                   |   |
|                                                                                                                                                        |   |                    |      |                   |   |
| Accrued Liabilities                                                                                                                                         |   | $                       | 123,831   |                   | $      | 93,883 |   |
| Payroll Taxes Payable                                                                                                                                       |   | 8,400                   |      | 13,575                 |   |
| Notes Payable within one year                                                                                                                               |   | 128,196                 |      | —                 |   |
| Notes Payable after one year (auto)                                                                                                                         |   | 9,369                   |      | —                 |   |
| TOTAL LIABILITIES                                                                                                                                           |   | $                       | 269,796   |                   | $      | 107,458 |   |
|                                                                                                                                                        |   |                    |      |                   |   |
| Common Stock, $.01 par value, authorized  200,000,000 shares; issued and outstanding 89,304,589 in December 31, 2002  and 126,888,594 on September 30, 2003 |   | $                       | 1,268,885 |                   | $      | 893,045 |   |
| Paid in capital                                                                                                                                             |   | 25,331,142              |      | 24,872,604             |   |
|                                                                                                                                                        |   |                    |      |                   |   |
| Deficit                                                                                                                                                     |   | (26,499,139             | )         | (25,617,229            | )      |
| TOTAL STOCKHOLDERS’ EQUITY                                                                                                                             |   | $                       | 300,888   |                   | $      | 148,420 |   |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                             |   | $                       | 570,684   |                   | $      | 255,878 |   |

 

Seeaccompanying notes.

 

3

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KENILWORTH SYSTEMS CORPORATION

CONDENSEDCONSOLIDATED STATEMENTS

OF OPERATION AND DEFICIT

 
|                                         |   | **Three-Months  Ended  September 30** |   | **Nine-Months  Ended  September 30** |   |
|----------------------------------------------|--------|---------------------------------------|--------|--------------------------------------|--------|
|                                         |   | **2003**                              |   | **2002**                             |   | **2003** |   | **2002** |   |
|                                         |   | **(unaudited)**                       |   | **(unaudited)**                      |   | **(unaudited)** |   | **(unaudited)** |   |
| Revenues:                                    |   |                                  |   |                                 |   |   |   |   |   |
| Sales                                        |   | 0                                     |   | 0                                    |   | 0 |   | 0 |   |
| Costs and Expenses:                          |   |                                  |   |                                 |   |   |   |   |   |
| Selling, general and administrative expenses |   | $                                     | 89,451 |                                 | $      | 321,191 |   | $ | 781,910 |   | $ | 428,900 |   |
|                                         |   |                                  |   |                                 |   |   |   |   |   |
| Total Costs and Expenses                     |   | 89,451                                |   | 321,191                              |   | 781,910 |   | 428,900 |   |
|                                         |   |                                  |   |                                 |   |   |   |   |   |
| Net loss                                     |   | 89,451                                |   | 321,191                              |   | 781,910 |   | 428,900 |   |
| Deficit-Beginning of period                  |   | (26,309,688                           | )      | (24,995,482                          | )      | (25,617,229 | ) | (24,956,940 | ) |
| Deficit-End of period                        |   | (26,399,139                           | )      | (25,385,840                          | )      | (26,399,139 | ) | (25,385,840 | ) |
|                                         |   |                                  |   |                                 |   |   |   |   |   |
| Loss per Share of common stock               |   | 0.0007                                |   | 0.005                                |   | 0.006 |   | 0.004 |   |
| Average number of shares outstanding         |   | 126,888,594                           |   | 89,204,589                           |   | 124,388,139 |   | 89,204,589 |   |
|                                              |        |                                       |        |                                      |        |  |  |  |  |  |  |  |  |

 

Seeaccompanying notes.

 

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KENILWORTH SYSTEMS CORPORATION

AND SUBSIDIARIES

CONDENSEDCONSOLIDATED STATEMENTS OF CASH FLOWS

 
|                                                                           |   | **Nine-month  ended  September 30** |    |
|--------------------------------------------------------------------------------|--------|-------------------------------------|---------|
|                                                                           |   | **2003**                            |    | **2002** |   |
|                                                                           |   | **(unaudited)**                     |    | **(unaudited)** |   |
| CASH FLOWS USED IN OPERATING ACTIVITIES                                        |   |                                |    |   |   |
|                                                                           |   |                                |    |   |   |
| Net Loss                                                                       |   | $                                   | 775,426 |   | $ | (107,709 | ) |
| Adjustments to reconcile net income to net cash  used in operating activities: |   |                                |    |   |   |
| Stock issuance for services rendered                                           |   | 176,520                             |    | 268,628 |   |
| Depreciation                                                                   |   | 1,992                               |    | 6,212 |   |
| Changes in operating assets and  liabilities:                                  |   |                                |    |   |   |
| Due from shareholder                                                           |   | 50,000                              |    | 42,106 |   |
| Prepaid expenses                                                               |   | (125,000                            | )       | (277,817 | ) |
| Accrued expenses and taxes                                                     |   | 132,231                             |    | 107,458 |   |
| Total Adjustments                                                              |   | 235,743                             |    | 146,587 |   |
| Net cash used in operating activities                                          |   | (539,683                            | )       | (282,313 | ) |
|                                                                           |   |                                |    |   |   |
| CASH FLOW FROM INVESTING ACITIVITIES                                           |   |                                |    |   |   |
| Purchase of Property and Equipment                                             |   | $                                   | (15,408 | ) | $ | (13,263 | ) |
| Net cash used in investing activities                                          |   | (15,408                             | )       | (13,263 | ) |
|                                                                           |   |                                |    |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                           |   |                                |    |   |   |
| Proceeds from loans payable                                                    |   | 128,196                             |    | 0 |   |
| Proceeds from stock issuances                                                  |   | 440,000                             |    | 317,966 |   |
|                                                                           |   |                                |    |   |   |
| Net cash provided by financing activities                                      |   | 568,196                             |    | 317,966 |   |
| Cash paid during period for:                                                   |   |                                |    |   |   |
| Net increase (decrease) in cash                                                |   | 13,105                              |    | 22,390 |   |
| CASH — BEGINNING OF PERIOD                                                |   | 10,071                              |    | 1,127 |   |
| CASH — END OF PERIOD                                                      |   | $                                   | 23,176  |   | $ | 23,517 |   |

 

Seeaccompanying notes.

 

5

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KENILWORTH SYSTEMS CORPORATION

NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

 

NOTE1 - BASIS OFPRESENTATION

 

Inthe opinion of management, the accompanying unaudited condensed consolidatedfinancial statements of Kenilworth Systems Corporation and subsidiaries(“Kenilworth”) contain all adjustments (consisting of only normal accruals)necessary to present fairly the consolidated balance sheets as of September 30,2003 (unaudited) and December 31, 2002 (unaudited) and the related statementsof operations and for each of the three and nine-month periods ended September30, 2003.

 

Theresults of operations for the nine-month periods ended September 30, 2003 arenot necessarily indicative of the results for the entire year.

 

NOTE2 - THE COMPANY ANDNATURE OF BUSINESS

 

KenilworthSystems Corporation (the “Company”) was incorporated in New York in April 1968and now plans to be engaged in the business of developing and manufacturingterminals and design systems that permit individuals from remote locations, toplay along with live in progress casino table games via TV (simulcast) tosubscribers of digital satellite and digital cable broadcasts around the world.

 

TheCompany was in bankruptcy proceedings under Chapter 7 and 11 of the BankruptcyCode for the period from August 28, 1982 through September 28, 1998. TheCompany ceased all operations, between February 2, 1991 through September 28,1998.

 

TheCompany emerged from Chapter 7 bankruptcy on September 28, 1998 and plans to beengaged in the development, manufacturing, marketing and operation of a systemthat allows casino patrons to play along with live table games in-progress viaTV satellite broadcasts on TV sets and terminals located on racetracks, hotelrooms, bars and at home.

 

NOTE3 - PRINCIPLES OFCONSOLIDATION

 

Theconsolidated financial statements include the accounts of Kenilworth SystemsCorporation and its wholly owned subsidiaries: Video Wagering SystemsCorporation, RoulabetteTM Nevada Corporation, Kenilworth Systems NevadaCorporation and Kenilworth Systems (UK) Limited. None of these subsidiaries hasany assets or liabilities.

 

NOTE4 - EARNINGS PERSHARE

 

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

 

Basicloss per share is based on the weighted-average number of shares of common stockoutstanding for the periods, which were $0.0007, $0.005, and $0.006 for theyear ended December 31, 2002, and the periods September 30, 2003 and 2002.

 

Dilutedearnings per share have not been presented in the accompanying financialstatements because the effect of conversion of convertible promissory notes wasanti-dilutive.

 

NOTE5 - INCOME TAXES

 

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

 

TheCompany is a “C” Corporation for tax purposes.

 

6

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

 

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

 

NOTE6 - USE OF ESTIMATESIN THE FINANCIAL STATEMENTS

 

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

 

NOTE7 - FAIR VALUE OFFINANCIAL INSTRUMENTS

 

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

 

NOTE8 - PROPERTY ANDEQUIPMENT

 

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

 

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

 

Propertyand Equipment consist of the following as of September 30, 2003 and September30, 2002:

 
|                              |   | **Nine-month  ended  September 30** |   |
|-----------------------------------|--------|-------------------------------------|--------|
|                              |   | **2003**                            |   | **2002** |   |
| Office Equipment                  |   | $                                   | 3,939  |   | $ | 2,939 |   |
| Vehicles                          |   | 13,461                              |   | 8,500 |   |
|                              |   | $                                   | 17,400 |   | $ | 11,439 |   |
| Less-Accumulated Amortization     |   | 1,992                               |   | 4,576 |   |
| Total Property and Equipment, Net |   | $                                   | 15,408 |   | $ | 6,863 |   |

 

Depreciationexpense for the periods ended September 30, 2003 and 2002 was $1,992 and $4,576respectively due to the theft of vehicle and insurance reimbursement.

 

NOTE9 – NON-CASHTRANSACTIONS

 

During the year 2002, the Company sold one (1) year Convertible PromissoryNotes totaling five hundred twenty thousand dollars ($520,000).  At the option of the Note holders, the Noteswere convertible into Common Stock of the Company at the rate of between one(1) share for each $.10 to $.25 of face value of the indebtedness representedby the Notes, together with interest at the annual rate of two percent (2%)above the prime rate quoted by Citibank N.A. Management believed it was unable to repay the Notes when they becamedue, the Company offered the Note Holders to convert the Notes by year end 2002when the quoted price per Common Share, as traded on the Pink Sheet Market wasbetween $.02 and $.08 per share, to convert the Notes at the rate of one (1)share for each $.05 of indebtedness represented by each

 

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Note, together with accrued interest. As a result of the Company’s offer, all Note Holders converted theirNotes into eleven million twenty thousand six hundred and five (11,020,605)shares of Common Stock, including accrued interest, at an average price of$.047 per share.

 

During the nine-month period ended September 30, 2003, the Company soldone (1) year Convertible Promissory Notes totaling four hundred and twentythousand dollars ($420,000).  At theoption of the Note Holders, the Notes were convertible into Common Stock of theCompany at various conversion prices. The Company made an offer to the Holders to convert the Notes at $.05per share in order to avoid insolvency. All the Note holders accepted the Company’s offer and the Company issuedto the Note Holders nine million three hundred ten thousand fourteen(9,310,014) shares of Common Stock, including accrued interest, at an averageprice of $0.047 per share.

 

During the nine-month period ended September 30, 2003, the Companyissued Common Stock in lieu of payments for services rendered in the amount of$176,520 of which $125,000 of the amount is included for services to berendered by Directors of the Company for the year commencing on September 30, 2003and in settlement of debt for other services in the amount of $51,520 for355,594 shares at a price of $0.145 per share.

 

NOTE 10 – PATENT ACQUISITION

 

When the United States Patent Office advised Herbert Lindo that hisPatent has passed preliminary reviews, the Board of Directors (with Mr. Lindoabstaining) voted to issue to Mr. Lindo 20,000,000 shares of the Company’sCommon Stock in lieu of a payment of $2,500,000, which the Board consideredfair consideration for Mr. Lindo’s invention, which he assigned to theCompany.  The issuance of the 20,000,000Common Shares to Mr. Lindo was subject to Shareholders’ approval.

 

 The Board of Directors directedall Shareholders to vote in favor of the proposal in the Company’s ProxyStatement for the 2003 Shareholder’s Meeting.

 

At the Annual Meeting of Shareholders held on May 28, 2003, sixty-sixpercent (66%) of the Shareholders were present or represented by proxies.  The Shareholders, among other matters,approved the issuance of 20,000,000 Common Shares for investment to Mr. Lindofor having assigned his invention Patent No: U.S. 6,575,834 B1, issued June 10, 2003, Titled: “System and Method forRemote Roulette and Other Game Play Using Game Table at Casino” to the Company.

 

Originally, the Company placed a value of $2,500,000 on the Patent, butsince Mr. Lindo is a controlling Shareholder, the Chairman of the Board ofDirectors and President of the Company, GAAP regulations do not permit thevaluation of a Patent by the Board of Directors.  Accordingly, the Company has assigned a value of $375,100, whichis the actual costs the Company had previously expensed beginning in August2000 for filing the Patent throughout the industrialized world, in forty-nine(49) countries, and for additional fees paid to maintain the Patentapplications in the foreign countries. The valuation of $357,100, or $.018 per share for the shares issued toMr. Lindo, exceeds the par value of the Company’s Common Stock of $.01 pershare.  The Company therefore did notsustain a capital loss by having to reverse the Patent valuation.

 

NOTE11 - GOING CONCERNUNCERTAINTY

 

Asindicated in Note 2, the Company emerged from Chapter 7 in September 1998 andhas not yet commenced manufacturing operations. These factors createuncertainty as to the Company’s ability to operate as a going-concern.Management plans to develop a wagering system that allows casino patrons andindividuals outside the casino to play along with live casino table games.Among the first steps in the plan is to conduct feasibility testing. Unless theCompany is able to obtain a casino site to conduct the test and sufficientfunds, none of the tests and initial development work can commence. The Companyplans to obtain the necessary funding by offering its common stock, or SeniorCumulative Convertible Preferred Shares in private placements, or sellinglimited joint venture participations in future “play along with

 

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casinogame” franchises. There can be no assurances the Company can be successful inobtaining such financing, which may result in the termination of the business.

 

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

 

NOTE13 – PREPAID ITEMS

 

Atthe Board of Directors Meeting held on October 8, 2003, the Board authorizedthe issuance of two million five hundred thousand (2,500,000) shares ofauthorized but unissued Common Stock of the Corporation to the Directors inlieu of Director’s compensation and liabilities insurance for the ensuing yearcommencing on September 30, 2003:  GinoScotto, Maureen Plovnick, Kit Wong, Patrick J. Mc Devitt and Joyce Clark wereeach issued five hundred thousand (500,000) shares of restricted Common Stockof the company at a price of $.05 per share, the equivalent of twenty-fivethousand dollars ($25,000) for each Director, a total of one hundredtwenty-five thousand dollars ($125,000). The $125,000 has been recorded for Services Rendered.

 

NOTE12 - COMMITMENTS ANDCONTINGENCIES

 

OUTSTANDINGPAYROLL TAXES

 

Duringthe year 2000, the Internal Revenue Service contended that the Company owespayroll taxes including interest and penalties totaling almost $400,000 forvarious periods from 1985-1991. The Company commenced negotiations with the IRSto resolve these issues. In management’s opinion, no accruals are necessarysince it believes that these assessments are incorrect and were discharged in itsbankruptcy proceedings.  Similar contentions were made by the New YorkState Income Tax Authorities, which have been officially cancelled by the NewYork State Taxing Authorities on July 1, 2002.

 

ITEM 2.     MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION   AND RESULTS OF OPERATIONS

 

RESULTSOF OPERATIONS

 

Sincewe emerged from bankruptcy proceedings on September 28, 1998 we did not haveany revenues from operations. We sustained substantial losses from generaladministrative expenses amounting of $660,289 in year 2002 and for thenine-months ended September 30, 2003 we sustained losses from generaladministrative expenses amounting to $781,910 compared to a loss of $428,900for the three quarters ending September 30, 2002. Kenilworth did not have anyrevenues from operations during the past thirteen (13) years and there can beno assurances that it will ever have revenues from present planned operations.

 

LIQUIDITYAND CAPITAL RESOURCES

 

Ourpresent plans are to develop a wagering system dubbed “RoulabetteTM” that wouldallow patrons in the industrialized world to play and wager on live in-progresssimulcast casino table games on terminals placed in hotels, resorts, bars andother public gathering places and in homes and offices on personal computers(PC’s) or television sets connected to set top boxes for Interactive TV viadigital satellite and digital cable broadcasts emanating from strictlyregulated casinos.

 

Afirst step will be to conduct a one (1) month feasibility test of the system ata casino site to prove the viability of broadcasting live in-progress tablegames around the world.

 

Toconduct the tests Kenilworth believes it will require initially five milliondollars ($5,000,000) to (a) purchase computers, digital television broadcastequipment and table games; and, (b) defray the cost of the facility and pay thesalaries of six (6) employees who are specialists in software design, TVbroadcasts, and mechanical design, for a period of eighteen (18) months, andfrom time to time, consultants who will assist the design team. In order tomarket RoulabetteTM while the development of the terminals proceeds we will 

 

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requirean additional five million dollars ($5,000,000) to hire management and marketingpeople to secure future orders for the system.

 

Unlesswe are able to obtain these funds, of which there are no assurances, none ofthe tests and initial development work can begin; and we will not be able tocommence our planned business.

 

Kenilworthplans to obtain the necessary funding by offering in Private Placements, CommonShares, Cumulative Convertible Preferred Shares and/or by the sale of limitedjoint venture participations in future RoulabetteTM franchises. There can be noassurances that the Company will be able to secure any of these funds.

 

Whenthe tests are completed and we have obtained all required licenses from thegaming control regulators and state legislatures or foreign jurisdictions tobroadcast the live in-progress casino table games and has contracts withfranchisees to place terminals around the world and franchise televisionbroadcasters, we expect to commence normal business. Kenilworth will also seekto obtain production financing from regular banking sources to finance themanufacturing of the RoulabetteTM terminals. There can be no assurances that anysuch financing and approvals will be available to us.

 

RISKS

 

Specificreference is made to each of the risks described in Item 7 of the Form 10-K forDecember 31, 2002 and on page 2 under the discussion Special Note RegardingForward-Looking Statements For Purposes of the Safe Harbor Provisions of thePrivate Securities Litigation Reform Act of 1995 and Risk Factors”. Referenceis also made to future filings under Forms 10-Q and Forms 10-K and filingsunder the Securities Exchange Act of 1934 as amended and as may be applicableunder the Securities Act of 1933 as amended.

 

PART II.

OTHER INFORMATION

 
| Item  1. |   | LEGAL  PROCEEDINGS:                                      |
|----------|--------|----------------------------------------------------------|
|     |   |                                                     |
|     |   | None  of any consequences                                |
|     |   |                                                     |
| Item  2. |   | CHANGE IN SECURITIES:                                    |
|     |   |                                                     |
|     |   | None                                                     |
|     |   |                                                     |
| Item  3. |   | DEFAULT  UPON SENIOR SECURITIES:                         |
|     |   |                                                     |
|     |   | None                                                     |
|     |   |                                                     |
| Item  4. |   | SUBMISSION  OF A MATTER TO A VOTE OF SECURITIES HOLDERS: |
|     |   |                                                     |
|     |   | None                                                     |
|     |   |                                                     |
| Item  5. |   | OTHER  INFORMATION:                                      |

 

TheCompany plans to hold its Annual Meeting of Shareholders in May 2004 with proxymaterials mailed to shareholders of record in April 2004 prior to the proposedmeeting dates.

 
| Item  6. |   | EXHIBITS  AND REPORTS ON FORM 8-K: |
|----------|--------|------------------------------------|
|     |   |                               |
|     |   | Ex  31.1                           | Certification  of Chief Financial Officer of the Company required by Rule 13a-14(a) or Rule  15d-14(c) of the Exchange Act. |

 

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|   |   | Form  8-K filed July 15, 2003 |
|--------|--------|-------------------------------|

 

 

SIGNATURE

 

 

Pursuantto the requirements of the Securities Exchange Act of 1934, the Registrant hasduly caused this report to be signed in its behalf by the undersigned thereuntoduly authorized.

 
|   | KENILWORTH  SYSTEMS CORPORATION                      |
|--------|------------------------------------------------------|
|   |                                                 |
| By:    | /s/  Herbert Lindo                                   |   |
|   | Herbert  LindoPresident and Chief Financial  Officer |
|   | December  1, 2003                                    |

 

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