<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)

/X/      Quarterly report pursuant to Section 13 OR 15(D) of the Securities
         Exchange Act of 1934

         For the quarterly period ended JUNE 30, 2000

                                       OR

/ /      Transition report pursuant to Section 13 or 15(D) of the Securities
         Exchange Act of 1934 (No Fee Required)

         For the transition period from ________ to _______

                         COMMISSION FILE NUMBER: 0-08962
                         -------------------------------

                         KENILWORTH SYSTEMS CORPORATION
                         ------------------------------
             (Exact name of registrant as specified in its charter)

            NEW YORK                                  13-2610105
            --------                                  ----------
     (State of incorporation)           (I.R.S. employer identification no.)

  54 KENILWORTH ROAD, MINEOLA, NEW YORK                             11501
  -------------------------------------                             -----
(Address of principal executive offices)                          (Zip Code)

                                 (516) 741-1352
                                 --------------
              (Registrant's telephone number, including area code)

Securities registered pursuant to section 12(b) of the Act:

                                                  Name of each exchange on
      Title of each class                             which registered
      -------------------                         ------------------------
            NONE                                       OTC PINK SHEETS

Securities registered pursuant to section 12(g) of the Act:

                                (Title of class)
                                ----------------
                     COMMON STOCK, PAR VALUE $.01 PER SHARE

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

The number of shares of common stock, $.01 par value outstanding as of June 30,
2000:
                                   63,745,268


                                       1
<PAGE>

                         KENILWORTH SYSTEMS CORPORATION
                               INDEX TO FORM 10-Q

<TABLE>
<CAPTION>

PART I.           FINANCIAL INFORMATION                                                                           PAGE NO.
<S>                                                                                                                 <C>
                  Item 1.           Consolidated Financial Statements

                  Consolidated Condensed Balance Sheets as of June 30, 2000                                           3
                  (unaudited) and December 31, 1999

                  Consolidated Condensed Statement of Operations for the                                              4
                  six month periods ended June 30, 2000 and 1999 (unaudited).

                  Consolidated Condensed Statements of cash flows for the                                             5
                  six month periods ended June 30, 2000 and 1999 (unaudited).

                  Notes to Consolidated Condensed Financial Statements                                              6/7
                  (unaudited)

                  Item 2.           Management's Discussion and Analysis of                                           8
                  Financial Condition and Results of Operations

Part II.          OTHER INFORMATION

                  Item 1.           Legal Proceedings:
                                    None

                  Item 2.           Change In Securities:
                                    None

                  Item 3.           Default Upon Senior Securities:
                                    None

                  Item 4.           Submission of Matters to a vote of Securities Holders:                           12

                  Item 5.           Other Information:
                                    None

                  Item 6.           Exhibits and Reports on Form 8-K                                                 14

                                    Signature                                                                        14
</TABLE>


                                       2

<PAGE>

<TABLE>
<CAPTION>

<S>                                                                                                                 <C>

                  Financial Data Schedule (for electronic filing purposes)                                           18

</TABLE>

ITEM 1.           Financial Statements

                 KENILWORTH SYSTEMS CORPORATION AND SUBSIDIARIES
                  CONSOLIDATED CONDENSED BALANCE SHEETS, as of

<TABLE>
<CAPTION>

                                       ASSETS                             June 30            December 31
                                                                            2000                1999
                                                                       -------------         -----------
                                                                        (unaudited)
<S>                                                                    <C>                  <C>
Cash                                                                   $     15,990         $          2
Due from related party                                                 $          0         $      9,032
                                                                       ------------         ------------
    TOTAL ASSETS                                                       $     15,990         $      9,034
                                                                       ============         ============

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Accounts payable                                                       $     20,460         $          0
Due to related party                                                         15,566                    0
Accrued Liabilities                                                             242                  242
    TOTAL LIABILITIES                                                        36,268                  242

Common Stock, $.01 par value, authorized
100,000,000 shares; issued and outstanding
62,289,018 in December 31, 1999 and
63,745,268 in June 30, 2000
                                                                            637,452              622,890
Paid in capital                                                          23,794,701           23,784,763
Deficit                                                                 (24,452,431)         (24,398,861)
                                                                       ------------         ------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                                   $    (20,278)        $      8,792
                                                                       ------------         ------------
TOTAL LIABILITIES                                                      $     15,990         $      9,034
AND STOCKHOLDERS' EQUITY (DEFICIT)                                     ============         ============

</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                       3
<PAGE>

                 KENILWORTH SYSTEMS CORPORATION AND SUBSIDIARIES
           CONSOLIDATED CONDENSED STATEMENTS of OPERATION and DEFICIT
                                   (Unaudited)

<TABLE>
<CAPTION>

                                            Three Month Ended                        Six Month Ended
                                                  June 30                                 June 30
                                             2000         1999                      2000          1999
                                             -----------------                      ------------------
<S>                              <C>                 <C>                 <C>                 <C>
Revenues:
Sales                                           0              0                       0               0
Costs and Expenses:
Selling, general
and administrative                         21,123          6,643                  53,570           9,799
expenses
Interest expense (income)
Total Costs and
Expenses
Net income (loss)                    (21,123)             (6,643)            (53,570)              9,799
before other income
and (losses)
Other income and losses                                                                           (9,533)
Net income (loss)                    (21,123)             (6,643)            (53,570)            (19,232)
Deficit - Beginning
of period                        (24,298,861)        (24,398,861)        (24,398,861)        (24,379,629)
Deficit - End of
of period                        (24,419,984)        (24,405,504)        (24,452,431)        (24,398,861)
                                 ===========         ===========         ===========         ===========
Earnings (Loss) per
Share of                                   0                   0                   0                   0
common stock (Note 5)
Average number of
shares outstanding                63,745,268          63,582,768          63,745,268          62,289,018
                                 ===========         ===========         ===========         ===========

</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                       4
<PAGE>

                 KENILWORTH SYSTEMS CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS of CASH FLOWS
                                   (unaudited)

<TABLE>
<CAPTION>

                                             Six Month Ended
                                                June 30
                                          2000           1999
                                       ---------       ---------
<S>                                    <C>                 <C>
CASH FLOWS USED IN
OPERATING ACTIVITIES

Net Loss                               $ 53,570         $ 19,232
Adjustments to reconcile
net income to net cash
used in operating activities
increase (decrease) in due
to related party                         24,599
Increase(Decrease)in accrued
Liabilities                             (20,460)          (7,675)
                                       --------         --------
      TOTAL ADJUSTMENTS                  45,059           (7,675)

      NET CASH USED IN
      OPERATING ACTIVITIES               (8,511)         (26,907)

CASH FLOWS FROM
Conversion of Promissory Notes           (7,500)           9,534
FINANCING ACTIVITIES
Proceeds from Private Placement                           21,000
Proceeds from issuance of
convertible Promissory Note              17,000
Net Increase (Decrease) in cash          15,989            3,627
CASH - BEGINNING OF PERIOD                                     0
CASH - END OF PERIOD                   $ 15,990            3,627

</TABLE>

   The accompanying notes are an integral part of these financial statements


                                       5
<PAGE>

                 KENILWORTH SYSTEMS CORPORATION and SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

NOTE 1 - Summary of Significant Accounting Policies

The Company and Nature of Business

Kenilworth Systems Corporation (the "Company") was incorporated in New York in
April 1968 and is now engaged in the business of developing, manufacturing, and
operating of casino machines.

The Company was in bankruptcy proceedings under Chapter 7 and 11 of the
Bankruptcy Code for the period from August 27, 1982 through September 23, 1998.
(See Note 2). For the period of February 5, 1991 through September 23, 1998 the
Company ceased all operations.

The Company emerged from Chapter 7 bankruptcy on September 23, 1998 and plans to
be engaged in the development, manufacturing, marketing and operation of a
system that allows casino patrons to play along with live table games in
progress, via closed circuit television, on terminals located within the casino
confines.

Principals of Consolidation

The consolidated financial statements include the accounts of Kenilworth Systems
Corporation and its wholly owned subsidiaries: Video Wagering Systems
Corporation and Roulabette Corporation. Neither subsidiary has any assets or
liabilities.

In September 1986 the Company exchanged 466,000 shares of its common stock for
all of the outstanding common stock of Video Wagering Corporation ("Video").
This transaction was accounted for under the purchase method of accounting.

Earnings Per Share

The Company computes and presents earnings (loss) per share in accordance with
the requirements of Statement of Financial Accounting Standards ("SFAS") No. 128
"Earnings Per Share".

Basic loss per share is based on the weighted-average number of shares of common
stock outstanding for the period, which were ($.00), ($.00) and ($.07) for the
year ended December 31, 1999, the period November 24, 1998 to December 31, 1998
and the period January 1, 1991 to November 23, 1998, respectively.

Diluted earnings per share has not been presented in the accompanying financial
statements because the effect of assumed conversion of convertible promissory
notes was anti-dilutive.

Income Taxes

The Company uses the liability method to account for income taxes in accordance
with requirements of SFAS No. 109.

Use of Estimates in the Financial Statements

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from these estimates.

Fair Value of Financial Instruments

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


                                       6
<PAGE>

NOTE 2 - Bankruptcy Proceedings

Throughout the 1980's the Company experienced working capital shortages that
resulted in the Company filing a voluntary petition for reorganization under
Chapter 11 of the United States Bankruptcy Code. From August 31, 1982 to June 7,
1985 the Company operated during reorganization proceedings. On June 7, 1985, a
United States Bankruptcy Judge confirmed the Company's Plan of Reorganization.
On April 27, 1988, the Bankruptcy Court entered a final decree in the case. On
October 27, 1988, the case was re-opened on grounds the Debtor failed to
consummate its plan of reorganization and on February 25, 1991 the case was
converted to a case under Chapter 7 of the Bankruptcy Code. By order of the
Court dated June 19, 1991 the Chapter 7 was reconverted to a case under Chapter
11 of the Bankruptcy Code. A second plan of reorganization was approved and a
second order of confirmation was entered in connection with the Chapter 11 case
on October 2, 1991. However, the Debtor was unable to consummate its second plan
of reorganization, and by order dated November 25, 1991, the case was
reconverted to a case under Chapter 7 of the bankruptcy Code.

From February 1991 through September 1998, the Company was inactive. In
September 1998 a United States Bankruptcy Judge in the Eastern District of New
York approved the Final Report and Accounts submitted by the Chapter 7 Trustee
of the Estate of Kenilworth and after obtaining approval from the U.S. Trustee,
Kenilworth made a 100% cash distribution to the creditors and paid in full all
administrative fees and expenses. The Company emerged from Bankruptcy on
September 23, 1998 with no assets and no liabilities. For the period September
24, 1998 through November 23, 1998 the Company was in the process of monitoring
the payments by check to the creditors. No other activity occurred during that
period.

NOTE 3 - Income Taxes

The Company is a "C" Corporation for tax purposes.

The Company estimates that it has available approximately $8,000,000 in net
operating loss carryforwards, of which approximately $4,000,000 will expire at
various dates through 2005 with the remaining amount expiring at various dates
through 2018. Utilization of the NOL carryforward may be limited under various
sections of the Internal Revenue Code depending on the nature of the Company's
operations.

The Company has a deferred tax asset of approximately $2,800,000 arising from
its net operating loss carryforwards. The deferred tax asset has been fully
reserved due to the uncertainty of future realization.

NOTE 4 - Going Concern Uncertainty

As indicated in Note 2, the Company emerged from Chapter 7 in September 1998 and
has not yet commenced operations. These factors create uncertainty as to the
Company's ability to operate as a going-concern. Management plans to develop a
wagering system that allows casino patrons and individuals outside the casino to
play along with live casino table games. The first step in the plan is to
conduct testing. Unless the Company is able to obtain sufficient funds, none of
the tests and initial development work can commence. The Company plans to obtain
the necessary funding by offerings its common stock, or private placement,
Senior Cumulative Convertible Preferred Shares, or selling limited joint venture
participants in future "play along with casino game" franchises.

If initial testing is successful, the second step is to obtain the proper
licenses from the gaming control regulators. Upon successful licensing, the
Company plans to obtain financing from regular banking sources to finance the
manufacturing of the computer terminals that allow the worldwide play along.

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

Due to related party at June 30, 2000 represents a loan from a stockholder of
the Company.

Subsequent Event

         On August 7, 2000 the Company sold a one (1) year $100,000.00
Convertible Promissory Note to a single, non-affiliated party. Prior thereto,
the Company had sold a total of $38,500.00 in Convertible Notes to three
individuals between December 1988 and June 30, 2000. All prior Notes were
converted into restricted common stock of the Company as the term is defined
under the Securities Act of 1933. All proceeds either have been or will be used
to defray current expenses, which are minimal during present operations.


                                       7
<PAGE>

ITEM 2- MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS.
----------------------------------------------------------------------

Between February 5, 1991, when the Trustee for the Estate of Kenilworth Systems
Corporation was appointed, and September 23, 1998, when the Trustee of the
Estate of Kenilworth paid, in cash, one hundred (100%) percent of all approved
creditors claims and administration fees and expenses out of the $4,424,056
proceeds from the sale of substantially all of the assets of the Kenilworth
Estate and recoveries of receivables and interest income, the Company did not
conduct any business and operations.

         The Company filed all reports required since September 23, 1998, except
that the December 31, 1998 annual report on Form 10-K report, included
financials, which were not audited. The statement could not be audited since
less than one year expired after the Trustee issued checks to all creditors. All
checks were cashed. No one filed objections to the distribution of the Estate's
funds. The Company included the 1998 audited financials with the 1999 annual
report on Form 10-K and is now current in its reporting requirements.

         Because of the Company's failure to include audited financials in its
December 31, 1998 10-K report, on January 19, 2000 the Company's Common Shares
were removed from the National Association of Securities Dealers Automated
Quotation System (NASDAQ) Bulletin Board. The shares now trade in the electronic
Pink Sheets.

         Before entering bankruptcy proceedings the Company was engaged in the
development, manufacturing and marketing of cashless casino wagering systems.

         The Company and three casino operators, Golden Nugget, Inc. (formerly
"Mirage"), Del Web, Inc. and Elsinore Corporation, sponsored legislation to
permit cashless wagering in the state of Nevada. The legislation, in the form of
an amendment to existing casino control statutes, now permits the use of account
cards (debit cards), in Nevada casinos, and was signed into law by Governor
Richard H. Bryan on June 13, 1985. The account cards are now used in every
casino throughout the United States in player tracking systems and pre-paid slot
machine wagering.

         In April 1988, the Company entered into a contract with the Totalizator
Agency Board (the "TAB"), a statutory agency of the State of Victoria,
Australia, to design and install computer hardware and software and supply
plastic wagering cards for high-tech cashless wagering facilities, called
"Tabarets", to be operated by the TAB within the State of Victoria. The first
Tabaret opened on November 27, 1990, with 124 Player Activated Terminals
("PATs") which are similar to slot machines except they are played with debit
cards instead of coins or tokens. The PAT's offer variable denomination play and
selection of five different games. There are now 13,000 PATs in play at 127
locations throughout the State of Victoria.

         In 1990, the Company had entered into contracts with three (3) Atlantic
City, New Jersey casino operators to test market the Company's cashless wagering
system for a minimum of six months. Each installation on the casino floor was to
have a minimum of 100 PAT's and 50 slot machines, converted by the Company to be
played both with cash and cashless. The combination of cash and cashless on
existing slot machines was attractive to the casino operators, as it permitted a
gradual transition from cash to cashless play.

         The Company was to furnish, without expense to the casino, all the
necessary equipment, including the central computer and communications hardware.
The casino operators would provide for the installation of cables required to
interconnect the equipment, as well as provide free accommodations for the
Company's personnel necessary to operate the system during the test. Each of the
operators committed a substantial budget for the promotion of the systems.


                                       8
<PAGE>

After the first system was to be in operation for a period of three (3) months,
and which operated profitably, the New Jersey casino regulatory agency agreed to
commence examining the system for their approval process. The Company expected
this process to take at least three (3) months. When the Company had obtained
approval from the regulatory agencies for its system, the operators would then
purchase the system in quantities, for prices stated in the contract, or ask the
Company to remove the system.

         Just prior to the start of the first test, the Company ceased all
operations. Thus, none of the tests were conducted. The Company sold and
installed only one cashless slot system, which was to the Australian agency
which continues to operate the system with 13,000 PAT's in 127 locations. The
Company receives no revenue from that operation.

         Present plans are by making use of the expertise applied in the
development of the cashless PATs for the TAB in Australia, to develop a second
generation of terminals, that allows a player in an interactive manner, at a
remote location, to experience the actual play and excitement at the casino
table of Roulette, Baccarat, Craps, Blackjack, Pai Go Poker, Carribean Stud, Red
Dog Poker, Panchico and Big Wheel, and is able to make wagers on the various
games, without having to be physically present at the casino table.

         The proposed terminal consists of a personal computer (PC) with two (2)
monitors, one of which is outfitted with a touch screen, a variable denomination
bill acceptor and a bar code ticket dispenser, all housed within an attractive
enclosure, about the size of a typical slot machine. Each terminal is
selfsufficient, manages wagers from $.25 to $100 or the equivalent in most any
currency and receives the table game play via satellite TV broadcasts.

         The terminals are legal wherever in the world slot machines are played
(there are more than 10 million slot machines played throughout the world). In
the United States, the terminals are legal in thirty-seven (37) states that
permit charitable "Nevada/Casino Nights".

         Terminals played in casinos will allow players to wager at table games
in progress, only a few feet away, with much lower minimum wagers. They can also
experiment and learn the games before graduating to table play.

         In addition to developing the stand alone terminals, the Company will
also develop systems that allow individuals at homes, offices, clubs, hotels and
other public gathering places in the industrialized world, to play along with
the live casino games in progress, using computers or modalities such as a TV
set connected to the internet, with set top boxes as offered by WEBTV and AOLTV.
The computers can either be stationary or the lap top version, which can
communicate wireless.

         For this form of "play along", the Company will promote to state
lotteries, and other state regulated entities, the ability to operate websites
that will manage the wagers. This program will require state legislative
approval, permitting casino play along in lottery, and/or On and Off Track
Betting (OTB) legislation.

         There are powerful arguments for state legislatures to amend their
Lottery Acts and include "play along with casino games". Lottery revenue is
gradually decreasing in every state and most are on their way out. Thirty-two
(32) states and the District of Columbia are pooling their lottery prizes with
the "Power Ball" and "Big Game" national lotteries. In most of those states, the
state lottery finds it difficult to obtain sufficient numbers of players to make
up a minimum weekly lottery prize of $1.0 million. In most states, the revenue
from lottery playing benefits education. States need something more attractive
to restore revenue. It is not "Power Ball" or "Big Game". The only excitement
derived from lottery play is when a player looks at the newspaper, listens to
the radio or views tv broadcasts to see or hear if he or she has won. With "play
along casino games", there is interaction, excitement and fun. All at much
better odds than offered by the lotteries.


                                       9
<PAGE>

         To open an account with the lottery to "play along with casino games",
a player must have a credit card. Those that can least afford it usually do not
have a valid credit card. They are in debt and their credit lines are exhausted.
They purchase lottery tickets to live from day to day, hoping to get lucky and
win. A family with an annual income in excess of $75,000.00 does not play the
lottery, proportionately, in dollar amounts or as often as a family that earns
less than $30,000.00.

         TV broadcasts of sporting events is beneficial to illegal bookmaking,
with no tax benefit to the state governments. The same applies to offshore
virtual casinos. Roulette and Baccarat play are associated with the rich and
famous. It is the "elite" gambling sport. Like horse-racing is the sport of
kings, it is for people that can afford the risks without diminishing their
lifestyle.

         The lotteries can establish maximum wagers, daily, weekly and monthly
limits. The lotteries can identify problem gamblers and can address the issue.
Casinos cannot. Before the average casino player drives to a casino, he or she
has to spend $25.00 for tolls, parking and gasoline. For the same $25.00, "play
along with casino games" offers an enjoyable, exciting night of gambling at
home.

         Once play along in homes and other public gathering places has started,
the Company will introduce casino games such as "limited tournament play." For
$25.00, players can sign up with their respective website operators and make up
to 30 wagers on any table game, mixed or straight. The individual that wins the
most money during a specific tournament game period, will win a million dollars,
in addition to their game play win. As more interactive play along with casino
games develop, the prizes will be increased and multiplied. This is how to
become a millionaire by adding skill to the luck needed to win the lottery,
while enjoying oneself. The limited tournament play games can be scheduled more
than once a day, during specific hours of the day, on specific days or nights of
the week or once or twice a month. Actual live experience will determine
scheduling.

         Casino gambling has spread throughout the nation. Now, even in
California, constituents, who live within driving distance of Nevada, have
approved casinos on Indian Reservations. Indian tribes have announced that they
have backers and operators for three (3) multi-million dollar casinos.

         Other Indian tribes in other states may wish to earn income from casino
wagering. But, many casinos will be located in areas that cannot be supported by
the surrounding population. "Play along with casino games" is the perfect
solution for such areas. Not only on Indian Tribe land, but also to rehabilitate
economically depressed resorts areas, in the same manner that river boats have
started to rehabilitate decaying waterfronts.

         As a first step to bringing live casino table game play in an
interactive manner to remote sites from the actual casino table, while still
having a view of and experiencing the live casino action and excitement while
the games are being played, the Company must obtain an agreement, preferably
with a well recognized casino operator, to permit the telecasting of live
in-progress table games around the world.

         The Company will first install a number of its terminals in the casino,
from which the world wide TV broadcast will emanate, using a closed circuit, in
house, broadcast of the table games to bring the action to the terminals. The
Company and the sponsoring casino will require the approval of the state casino
control commission for a three month test of the system. Later, the approval of
the terminal as a viable gaming device will be necessary. The Company believes
it can complete this phase within 12 months.

         While the test is in progress, the Company and the sponsoring casino
operator will apply to the State Legislature for a permit allowing the Company
to use the closed circuit television play being broadcast within the casino for
simulcast, via a satellite broadcaster as content for a TV channel, similar to
the HBO, Disney, etc. channels. Eventually, worldwide distribution will occur,
as more satellites operate worldwide.

         In order to conduct testing, the Company will require approximately
$5,000,000 to: (a) purchase computers, digital television broadcast equipment
and table games and (b) defray facility costs and hire twenty (20)employees,
including former Company employees, who are specialists in software design, TV
broadcasts and mechanical design and, from time to time, consultants to the
design team.

         Unless the Company is able to obtain these funds, none of the tests and
initial development work can commence.

         The company plans to obtain the necessary funding by offering in a
Private Placement, Common Shares, or Cumulative Convertible Preferred Shares,
and/or by the sale of limited joint venture participations in future play along
with casino franchises.


                                       10
<PAGE>

         In connection with the initial funding of $5,000,000.00, the Company
has been advised by a finder who, in prior years, has obtained capital for the
Company, that his investors are prepared to make additional investments after
the Company obtains permission from a well established casino operator to
conduct the test for in house play along. There can be no assurances that even
if the Company obtains the permission to conduct the first test that the finder
will be able to provide working capital to meet the Company's initial
requirements.

         When the tests are complete and the company has obtained a license from
the gaming control regulators for the use of the terminals in the sponsoring
casino, the Company will obtain production financing from regular banking
sources. This will allow it to finance the manufacturing of the terminals and
supporting equipment, which will be leased to franchisees on a revenue sharing
arrangement.

         The Company has filed a patent application for the system that
includes the terminals, games and for copyright protection for its associated
software. There are no assurances that the Company will be issued any patents
and if they are issued that they will deter competition and/or benefit the
Company financially. The Company's best protection against competition is to
be the first to broadcast from one of the best known names in the casino
industry, and its ability to obtain from traditional sources the substantial
amounts of money necessary to implement the world wide wagering systems.

         The casino operator will receive an annual license fee and royalty
payments from the world wide net win of all play along wagers. Net win is the
difference between the amount the lotteries or other franchisee's collect in
wagers and the amount they pay for winnings.

         The lotteries will earn commissions on each wager and the franchisees
will retain their agreed upon share. The Company retains the balance. The
Company will be responsible for furnishing websites or other monitoring systems
at its own expense. It will only make available stand alone self sufficient
"play along with casino games" terminals on a lease and revenue sharing
arrangement.

         The Company will market the stand alone terminals to slot route
operators, betting shops in Europe and Asia, racetrack, hotel and resort
operators.

         As an inducement to play along with casino games, the Company will
offer to install, free of charge, the satellite dish required to receive
satellite broadcasts, and the TV set top box, which converts the TV set into an
interactive mini computer and allows individuals sitting in their living room to
"play along with the casino games", with a wireless remote control, when an
individual first opens an account with the lottery or other franchisee for
$300.00, or the equivalent in any foreign currency. The Company will also pay
the monthly subscription fee to view all digital TV programming offered and the
internet service (ISP)fee if the customer wagers at least $150.00 each month,
win, loose or draw.

         The Company plans to offer to every hotel operator in the
industrialized world, the installation of TV set top boxes on their guest room
television sets, allowing their guests to play along with the live casino games
broadcast via satellite. The Company will also install a cash management system,
as used with the PAT's in Australia's Tabarets, on a revenue sharing basis.
Hotels then can also offer free play as a bonus to promote room rentals.

         The Company believes that as viewers throughout the world will play
along with the same games emanating from a single, well recognized casino with
strict government regulations, a sense of common interest will develop.


                                       11
<PAGE>

         Now that the Company has completed the filing for patent and copyright
protection for its new generation terminals, the ability to have individuals at
homes, offices, clubs hotels and other public gathering places in the
industrialized world using computers or other modalities such as TV sets
connected to the internet, with set top boxes for play along with casino games
in progress, the Company has started to seek out a casino operator. In
connection therewith, the Company has presented a proposal to the operator, of
who the Company believes to be, the best recognized name in the domestic and
international casino industry, for preliminary discussions to explore the
feasibility of broadcasting worldwide, live casino table games in progress, via
satellite and cable television. The proposal includes the test of the system in
one of the operators casinos and the granting of an option, for the Company to
acquire an exclusive license, with the right to sublicense, to send the closed
circuit in house TV broadcast, for distribution as content to satellite and
cable television providers for inter-active "play along with casino games".

         Discussions have taken place with no definitive results. There is no
assurance that an acceptable agreement can be reached. Until then, the Company
will refrain from contacting other casino operators.

(a)      Liquidity and Capital Resources

Results of Operation

         Since the Company emerged from bankruptcy proceedings on September 23,
1998, the company had no revenue from operations, and therefore sustained losses
from the general administration expenses amounting to $53,570 during the six (6)
month period ending on June 30,2000 and $19,232 in 1999. The losses will
continue until the Company has revenue from profitable operations.

Inflation

         Inflation has not had in the past, nor does the Company expect it in
the future a significant impact on the Company's business.

Forward Looking and Cautionary Statements

         This report contains "forward looking statements", including without
limitations: (a) statements of proposed financing; (b) assumptions that a casino
operator will participate in a test of the play along systems; (c) obtaining the
licenses from the casino regulatory agencies permitting the use of the gaming
systems, (d) proposed broadcasting of live casino games; (e) obtaining
permission from state and foreign governmental agencies allowing their residents
to watch on television and wager along with the live casino broadcast; (f) the
feasibility to profitably operate such play along casino games, (g) changes in
the competitive environment, and (h)general economic factors in markets where
the Company's products and systems are proposed to be offered, franchised and
leased.

Item 4. Submission of Matters to a vote of Securities Holders:

The Company has not held a meeting of shareholders since 1988 as the cost of
soliciting proxies and holding a meeting for the large number of shareholders
(approximately 11,000) is excessively costly, as it relates to its income. The
directors and officers continue to serve under provisions of the By-Laws which
allow them to continue in office until their successors are elected and take
office.


                                       12
<PAGE>

At the next Annual Meeting of Shareholders the shareholders of the Company will
be asked to ratify the following: (a) An amendment to the Company's Certificate
of Incorporation to increase the authorized number of Common Shares from
61,000,000 shares to 100,000,000 shares, and to permit the Company's Board of
Directors, without further action by the shareholders, to issue from time to
time up to 1,000,000 authorized but unissued shares of Preference Stock, and to
fix and determine the terms, limitations, relative rights and preferences of the
Preferred Stock, in order to obtain financing, capital and/or acquire other
businesses that can improve the performance or growth of the Company. When any
shares of Preferred Stock are issued, certain rights of their holders may affect
the rights of the holders of Common Stock. In addition to any other powers
conferred on the Preferred Stock, holders of the Preferred Stock would have,
under New York General Corporation Law, the right to vote as a separate class on
any increase, decrease or change in the rights of the Preferred Stock. The
affirmative vote of a majority of the outstanding shares of Preferred Stock
would be required for approval of any such increase, decrease, or change. The
authority of the Board of Directors to issue shares of Preferred Stock with
characteristics it determines (such as preferential voting, conversion
redemption and liquidation rights) may have a deterrent effect on persons who
might wish to make a takeover bid to purchase shares of the Company at a price
which might be attractive to its shareholders. However, the Board of Directors
must fulfill its fiduciary obligation to the Company and its shareholders in
evaluating any takeover bid; and (b) The creation of a stock option and stock
award plan (the "Plan") which will authorize the grant of options to purchase
common shares of the Company to key employees (including directors who are
employees), which may be "incentive stock options" (ISO's) within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended, or non-qualified
options. The Plan also will provide for the grant of stock appreciation rights
and stock awards to eligible participants subject to forfeiture restrictions;
(c) The creation of a Directors Stock Option Plan pursuant to which stock
options are awarded to those directors who are not officers or employees of the
Company ("outside directors"). The plan will permit the Company to recruit and
retain outside directors who will use their best efforts to promote the success
of the Company's business,(d) The election of members to the Board of Directors;
and (e)Ratify the selection of Peter C. Cosmas Co., CPA's, as the independent
public accountant of the Company for the ensuing fiscal year.

Management at present does not know of any other matters that may be presented
to a vote at the Annual Meeting of Shareholders.


                                       13
<PAGE>

SIGNATURE

Pursuant to the requirements of Section 13 of 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this report to be signed
in its behalf by the undersigned thereunto duly authorized.

   KENILWORTH SYSTEMS CORPORATION


By: /s/ Herbert Lindo
   --------------------------------------
   Herbert Lindo, President and Treasurer

(b) Reports on Form 8-K

The Company filed Current reports on Form 8-K on March 15, 2000 to explain the
reason for the delisting from the NASDAQ Bulletin Board and March 30, 2000 to
give notice that the Company is current with its SEC financial reporting
requirements.


                                       14
<PAGE>

EXHIBITS:

CONVERTIBLE PROMISSORY NOTE

$0,000                                                     Dated:         2000
                                                           Due:           2001

         FOR VALUE RECEIVED, KENILWORTH SYSTEMS CORPORATION, a New York
corporation (herein called the "Company"), Promises to pay to the order of
_____________________________________________________________ (herein called the
"Holder") or registered assigns, at the principal office of the Company
(presently located at 54 Kenilworth Road, Mineola, New York 11501) in lawful
monies of the United States of America, the principal sum of DOLLARS (received
by the Company in cash) with accrued and unpaid interest thereon, at the
prevailing prime rate as quoted by Citibank, on or before
            . The first quarterly interest accrual date on the unpaid principal
amount shall be ___________________ and all other accrual dates every three
months thereafter.

         This note may be prepaid in whole or in part at any time and from time
to time, without penalty, but with interest on the amount prepaid to the date of
prepayment.

         The Holder of this note has the right at any time through _____________
2000, to convert all or any part of the indebtedness represented by this note,
including the accrued interest, through the date of conversion, into fully paid
and non-assessable common stock, par value $.01 per share, of the Company at the
conversion price of one (1) share for the lower of (a) $ per share or (b) the
bid price, at any time from date hereof to date of exercise, for the shares of
the Company as traded in the public market, of unpaid principal and accrued
interest. If the Holder shall elect to exercise such conversion right, then
he/she shall notify the Company, in writing of such election, specifying the
principal amount and interest to be converted, and shall, if the Note shall be
converted in full, surrender the Note to the Company for cancellation and, if
this Note be converted in part, shall surrender this Note to the Company so that
there may be endorsed thereof the reduction of the principal and interest the
same which has been converted, after which the Note shall be returned to the
Holder.

         Prior to due presentment for registration or transfer of this Note, the
Company and its agents may deem and treat the person in whose name this Note
shall be registered upon the books of the Company as the absolute owner of this
Note (whether or not this Note shall be overdue and notwithstanding any notation
of ownership or other writing thereon) for the purpose of receiving payment of
or on account of the principal hereof and interest due hereon and for all other
purposes, and neither the Company nor its agents shall be affected by any notice
to the contrary.

         Neither this Convertible Promissory Note nor the common shares issuable
on conversion thereof (in whole or in part) have been registered under the
Securities Act of 1933 (the "Act") and may not be sold, transferred, pledged, or
offered for sale in the absence of an effective registration statement relating
to these securities under said Act, or an opinion of counsel to the Company that
such registration is not required, or an exemption from the Act is available.


                                       15
<PAGE>

         If during the convertible period of this Note the Company shall (i) pay
a stock dividend or make a distribution of its common stock into a greater
number of shares, (ii) combine its outstanding stock into a smaller number of
shares, or (iii) issue by reclassification of its common stock any shares of
capital stock of the Company then the conversion right shall be adjusted so that
the holder thereof, if he/she shall elect to convert the same, after the record
date or the effective date of any such event as the case may be, shall be
entitled to receive the number of shares of common stock or other capital stock
of the Company which he/she would have owned or have been entitled to receive
after any of the events described above, had the Note been converted at the
record date in the case of a stock dividend or stock distribution or the
effective date in the case of a sub-division, combination or reclassification.

         The Company agrees that in the event it shall hereafter file a
registration statement under the Act which includes shares on behalf of any
shareholders, that it will give notice in writing of said registration to the
Holder thereof. In the event the Holder shall in writing addressed and delivered
to the Company elect to exercise such conversion right hereinbefore granted
within the time period specified in said notice, then the Company agrees to
include so much of said stock as the Holder shall be entitled to receive as a
result of said conversion proportionately to the other shareholders included in
the registration statement and to file same with the Securities and Exchange
Commission and agrees to use its best efforts to cause the same to become
effective under the said Act as promptly as possible, so that the stock may be
publicly offered and sold by the Holder after such effectiveness in compliance
with the requirements of said Act and other applicable provisions of federal and
state securities laws.

         If this Note is not paid when due, whether at maturity or by
acceleration by other events, the Company agrees to pay reasonable costs of
collection and such costs shall include without limitation all costs, attorney's
fees and expenses incurred by the Holder hereof in connection with any
insolvency, bankruptcy, reorganization, arrangement or similar proceedings
involving the Company, or involving any endorser or guarantor hereof, which in
any way affect the exercise by the Holder hereof of his/her rights and remedies
under this Note.

         Presentment, demand, protest, notices of protest, dishonor and
non-payment of this Note and all notices of every kind are waived.

         The issuance and execution of this Note has been authorized and
approved by the Board of Directors of the Company.

         The terms "Company" and "Holder" used herein shall be construed to
include their respective heirs, personal representatives, successors, subsequent
holders, and assigns.

         This Convertible Promissory Note shall be enforced in accordance with
the laws of the State of New York, U.S.A., and shall be construed in accordance
thereof.

         IN WITNESS WHEREOF, the undersigned has executed this Convertible
Promissory Note as of the day and year first above written.

                                           KENILWORTH SYSTEMS CORPORATION


                                             By: /s/ Herbert Lindo
                                                ------------------------
                                                Herbert Lindo, President
ATTEST:

* * * * * * * * * *
-------------------------------

In the event of conversion, the
Holder agrees to accept any
shares for investment and
consents to the endorsement
on said shares of an
appropriate legend

* * * * * * * * * *
-------------------------------


                                       16
<PAGE>

EXHIBITS:
                                                            January 4, 2000
Jeffrey Erb

         This letter serves to confirm that Kenilworth Systems Corporation
("Kenilworth" or the "Company") will cause to be issued to you, or your
designee, one hundred thousand (100,000) shares of its Common Stock, par value
$.01 per share in full consideration for services you rendered and will render
as a consultant to the Company in connection with all its SEC EDGAR filings
during calendar years 1999 and 2000. This service includes all amended financial
and other statements the Company may have to file as a result of the audit for
the years ended December 31, 1998 and 1999.

         The shares to be issued will be duly and validly issued, fully paid and
non-assessable and will be issued as "Restricted Securities" as that term is
defined under the Securities Act of 1933, as amended (the "Securities Act"),
pursuant to an exemption afforded under Section 4(2) of the Act.

         All corporate action necessary for the issuance for the shares has been
made. The Certificates represented by the Shares will be issued as promptly as
possible after March 30, 2000, the Company's audit reporting date with the SEC.
Each certificate to be issued for the Shares will bear the following legend:

                  "The Shares represented by the certificates have not been
         registered under the Securities Act of 1933, as amended. The Shares
         have been acquired for investment and may not be sold, transferred or
         assigned in the absence of an effective registration statement for the
         Shares under the Securities Act of 1933 or an opinion of the Company's
         counsel that registration is not required under the Act".

         If the aforementioned terms meet with your approval, please execute
this letter agreement and return a copy to us.


KENILWORTH SYSTEMS CORPORATION                 ACCEPTED AND AGREED:


/s/ Herbert Lindo                              /s/ Jeffrey Erb
--------------------------------               --------------------------------
Herbert Lindo, President                       Jeffrey Erb


                                       17
<PAGE>

EXHIBITS:                                                        , 2000

Gorden Coplein, Esq.

         This letter serves to confirm that Kenilworth Systems Corporation
("Kenilworth" or the "Company") will cause to be issued to you, or your
designee, one hundred thousand (100,000) shares of its Common Stock, par value
$.01 per share as additional consideration for services you rendered and will
render as a consultant to the Company in connection with the research required
to file for patents, copyrights or other similar protection for Kenilworth's
"Play along with live casino table games" technology. The Company will pay all
disbursements and fees that may be charged by you or others that will assist or
actually file and prosecute the required documents.

         The shares to be issued will be duly and validly issued, fully paid and
non-assessable and will be issued as "Restricted Securities" as that term is
defined under the Securities Act of 1933, as amended (the "Securities Act"),
pursuant to an exemption afforded under Section 4(2) of the Act.

         All corporate action necessary for the issuance for the shares has been
made. The Certificates represented by the Shares will be issued as promptly as
possible. Each certificate to be issued for the Shares will bear the following
legend:

                  "The Shares represented by the certificates have not been
         registered under the Securities Act of 1933, as amended. The Shares
         have been acquired for investment and may not be sold, transferred or
         assigned in the absence of an effective registration statement for the
         Shares under the Securities Act of 1933 or an opinion of the Company's
         counsel that registration is not required under the Act".

         If the aforementioned terms meet with your approval, please execute
this letter agreement and return a copy to us.

KENILWORTH SYSTEMS CORPORATION                 ACCEPTED AND AGREED:


/s/ Herbert Lindo                              /s/ Gorden Coplein, Esq.
--------------------------------               --------------------------------
Herbert Lindo, President                       Gorden Coplein, Esq.


                                       18