**UNITED STATES********SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON,D.C. 20549**

 

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**FORM 10-Q/A**

 

**Amendment No. 1**

 

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**(Mark One)**

 

**ý****      ****Quarterly reportpursuant to Section 13 OR 15(D) of the Securities Exchange Act of1934**

 

**For thequarterly period ended March 31, 2005**

 

**OR**

 

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

 

**For thetransition period from            to           **

 

**CommissionFile Number: 0-08962**

 

**KENILWORTH SYSTEMS CORPORATION**

(Exact name of registrant asspecified in its charter)

 
| **New York**                              | ** ** | **84-1641415**                        |
|-------------------------------------------|------------|---------------------------------------|
| (State of incorporation)                  |       | (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)

 

Indicate by check mark whether the Registrant (1) hasfiled all reports required to be filed by section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months (or for suchshorter period that the registrant was required to file such reports), and (2) hasbeen subject to such filing requirements for the past 90 days. Yes  ý   No  o

 

State the number of shares outstanding of each ofthe issuer’s classes of common stock as of the latest practical date

 

The number of shares of common stock, $.01 par valueof the Registrant outstanding as of March 31, 2005 was 141,226,245.

 

 

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##### **Tableof Contents**

 

**KENILWORTHSYSTEMS CORPORATION AND SUBSIDIARIES**

**(ADEVELOPMENT STAGE COMPANY)**

 

**INDEX**

 
| **Part I.**  | **Financial Information**                                                                                                                                                         |   |
|-------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|              |                                                                                                                                                                              |   |
| Item 1.           | Financial Statements                                                                                                                                                              |   |
|              |                                                                                                                                                                              |   |
|              | Condensed  Consolidated Balance Sheets (unaudited) - March 31, 2005 and December 31,  2004                                                                              | 4      |
|              |                                                                                                                                                                              |   |
|              | Condensed  Consolidated Statements of Operation and Deficit (unaudited) - Three months  ended March 31, 2005 and 2004, and the period from inception to March 31,  2005 | 5      |
|              |                                                                                                                                                                              |   |
|              | Condensed  Consolidated Statements of Cash Flows (unaudited) - Three months ended March 31,  2005 and 2004, and the period from inception to March 31, 2005             | 6      |
|              |                                                                                                                                                                              |   |
|              | Condensed  Notes to Consolidated Financial Statements (unaudited)                                                                                                                 | 7      |
|              |                                                                                                                                                                              |   |
| Item 2.           | Management’s Discussion  and Analysis of Financial Condition and Results of Operations                                                                                       | 9      |
|              |                                                                                                                                                                              |   |
| Item 3.           | Quantitative and Qualitative Disclosures About Market Risk                                                                                                                        |   |
|              |                                                                                                                                                                              |   |
| Item 4.           | Controls and Procedures                                                                                                                                                           |   |
|              |                                                                                                                                                                              |   |
| **Part II.** | **Other Information**                                                                                                                                                             | 12     |
|              |                                                                                                                                                                              |   |
| Item 1.           | Legal Proceedings                                                                                                                                                                 | 12     |
|              |                                                                                                                                                                              |   |
| Item 6.           | Exhibits                                                                                                                                                                          | 12     |
|              |                                                                                                                                                                              |   |
| Signature         |                                                                                                                                                                              |   |

 

CAUTIONARY STATEMENT FORPURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THEPRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND RISK FACTORS

 

The information contained in this Form 10-Q/AAmendment No. 1 and Kenilworth’s other filings with the SecuritiesExchange Commission may contain “forward-looking” statements within the meaningof section 27A of the Securities Act of 1933, as amended, and Section 21Eof the Securities Exchange Act of 1934, as amended, and is subject to the safeharbors created thereby. Such information involves important risks anduncertainties that could significantly affect results in the future and,accordingly, such results may differ from those expressed in any forwardlooking statements herein. Future operating results may be adversely affectedas a result of a number of factors.

 

You should not rely on forward-looking statements inthis Form 10-Q/A Amendment No. 1. This Form 10-Q/A Amendment No. 1contains forward-looking statements that involved risks and uncertainties. Weuse words such as “anticipates”, “believes”, “plans”, “expects”, “future”, “intends”and similar expressions to identify such forward-looking statements. You shouldnot place undue reliance on these forward-looking statements, which apply onlyas of the date of this Form 10-Q/A Amendment No. 1. Our actualresults could differ materially from those anticipated in these forward-lookingstatements for many reasons, including the risks faced by Kenilworth asdescribed below and elsewhere in this Form 10-Q/A Amendment No. 1.

 

RISKS

 

Specific reference is made to each of therisks described in Item 7 of the Form 10-K/A Amendment No. 1 for December 31,2004 under the discussion “Cautionary Statement For Purposes of the Safe HarborProvisions of the Private Securities Litigation Reform Act of 1995 and RiskFactors”. Reference is also made to future filings under Forms 10-Q and Forms10-K and filings under the Securities Exchange Act of 1934 as amended and asmay be applicable under the Securities Act of 1933 as amended.

 

2

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INTRODUCTORYNOTE

 

This Amendment No. 1 on FORM 10-Q/A is being filed to restate theCompany’s Financial Statements in order to conform to the accounting requirementsas a “Development Stage Company” from the period beginning November 24, 1998 tothe present at March 31, 2005, to reverse a charge in the amount of $4,256,926,which was the amount the Company disbursed on or about September 28, 1998 to bedischarged from Chapter 7 Bankruptcy Proceedings, and certain adjustmentsprincipally to correct the values applied to Convertible Promissory Notediscounts and shares of Common Stock issued for services rendered. 

 

d) The Company issued 70,980,447 shares of its Restricted Common Stocksince January 1, 2002.  All of the sharesmay have the restrictions lifted pursuant to Rule 144 and 144K within one (1)or two (2) years which may substantially depress the trading price of the Company’sStock in the future.

 

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**KENILWORTH SYSTEMS CORPORATION**

**(ADEVELOPMENT STAGE COMPANY)**

** **

**CONDENSED CONSOLIDATEDBALANCE SHEET**

 
| ** **                                                                                                                                        | ** ** | **March 31, 2005** | ** ** | **December 31, 2004** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------|------------|----------------------------|------------|
| ** **                                                                                                                                        | ** ** | **(Unaudited)**         | ** ** | ** **                 | ** ** |
|                                                                                                                                              |       |                    |       |                       |       |
| ASSETS                                                                                                                                            |       |                    |       |                       |       |
| CURRENT ASSETS                                                                                                                                    |       |                    |       |                       |       |
| Cash                                                                                                                                              |       | $                       | 3,334      |                       | $          | 5 |   |
| Prepaid expenses                                                                                                                                  |       | 62,500                  |       | 93,750                     |       |
| Loan receivable - employee                                                                                                                        |       | 1,800                   |       | —                     |       |
|                                                                                                                                              |       |                    |       |                       |       |
| Total current assets                                                                                                                              |       | 67,634                  |       | 93,755                     |       |
|                                                                                                                                              |       |                    |       |                       |       |
| PROPERTY AND EQUIPMENT - NET                                                                                                                      |       | 33,627                  |       | 36,863                     |       |
|                                                                                                                                              |       |                    |       |                       |       |
| PATENT REGISTRATION COSTS                                                                                                                         |       | 67,827                  |       | 68,763                     |       |
|                                                                                                                                              |       |                    |       |                       |       |
| SECURITY DEPOSIT                                                                                                                                  |       | 4,250                   |       | 4,250                      |       |
|                                                                                                                                              |       |                    |       |                       |       |
| Total assets                                                                                                                                      |       | $                       | 173,338    |                       | $          | 203,631 |   |
|                                                                                                                                              |       |                    |       |                       |       |
| LIABILITIES AND STOCKHOLDERS’ DEFICIT                                                                                                        |       |                    |       |                       |       |
| CURRENT LIABILITIES                                                                                                                               |       |                    |       |                       |       |
| Accounts payable and accrued expenses                                                                                                             |       | $                       | 114,498    |                       | $          | 218,772 |   |
| Payroll taxes payable                                                                                                                             |       | 77,661                  |       | 59,522                     |       |
| Loans payable - stockholders                                                                                                                      |       | 35,000                  |       | 10,000                     |       |
| Loans payable - related parties                                                                                                                   |       | —                  |       | 25,120                     |       |
|                                                                                                                                              |       |                    |       |                       |       |
| Total current liabilities                                                                                                                         |       | 227,159                 |       | 313,414                    |       |
|                                                                                                                                              |       |                    |       |                       |       |
| STOCKHOLDERS’ DEFICIT                                                                                                                        |       |                    |       |                       |       |
| Preferred Stock - par value $.01 per share;  authorized 2,000,000 shares; no shares issued and outstanding                                        |       |                    |       |                       |       |
| Common stock - par value $.01 per share;  authorized 200,000,000 shares; issued and outstanding 142,126,245 and  137,551,245 shares, respectively |       | 1,421,262               |       | 1,375,512                  |       |
| Additional paid-in capital                                                                                                                        |       | 26,679,348              |       | 26,468,771                 |       |
| Less: stock subscriptions receivable                                                                                                              |       | —                  |       | (15,000                    | )          |
| Deficit accumulated during the development  stage                                                                                                 |       | (28,154,431             | )          | (27,939,066                | )          |
|                                                                                                                                              |       |                    |       |                       |       |
| Total stockholders’ deficit                                                                                                                  |       | (53,821                 | )          | (109,783                   | )          |
|                                                                                                                                              |       |                    |       |                       |       |
| Total liabilities and stockholders’ deficit                                                                                                  |       | $                       | 173,338    |                       | $          | 203,631 |   |

 

The accompanying notes are an integral partof these financial statements.

 

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**KENILWORTHSYSTEMS CORPORATION**

**(ADEVELOPMENT STAGE COMPANY)**

**CONDENSEDCONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT ACCUMULATED DURING DEVELOPMENTSTAGE**

**FOR THETHREE MONTHS ENDED MARCH 31,**

**(Unaudited)**

 
| ** **                                     | ** ** | ** **             | ** ** | ** **            | ** ** | **Period from**    | ** ** |
|------------------------------------------------|------------|------------------------|------------|-----------------------|------------|--------------------|------------|
| ** **                                     | ** ** | **Three months ended** | ** ** | **November 24, 1998** | ** ** |
| ** **                                     | ** ** | **March 31,**          | ** ** | **to**                | ** ** |
| ** **                                     | ** ** | **2005**               | ** ** | **2004**              | ** ** | **March 31, 2005** | ** ** |
|                                           |       |                   |       |                  |       |               |       |
| Expenses                                       |       |                   |       |                  |       |               |       |
| Selling, general and administrative            |       | $                      | 161,303    |                  | $          | 708,212            |       | $ | 2,964,922 |   |
|                                           |       |                   |       |                  |       |               |       |
| Other income  (expenses)                       |       |                   |       |                  |       |               |       |
| Interest income                                |       | -                      |       | 61                    |       | 922                |       |
| Interest expense                               |       | (54,062                | )          | (216,266              | )          | (811,312           | )          |
|                                           |       |                   |       |                  |       |               |       |
| Total other  income (expense)                  |       | (54,062                | )          | (216,205              | )          | (810,390           | )          |
|                                           |       |                   |       |                  |       |               |       |
| Net loss                                       |       | $                      | (215,365   | )                     | $          | (924,417           | )          | $ | (3,775,312 | ) |
|                                           |       |                   |       |                  |       |               |       |
| Basic and  diluted loss per share              |       | (0.002                 | )          | (0.008                | )          |               |       |
|                                           |       |                   |       |                  |       |               |       |
| Weighted  average number of shares outstanding |       | 139,838,745            |       | 114,780,261           |       |               |       |

 

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**KENILWORTHSYSTEMS CORPORATION**

**ANDSUBSIDIARIES**

**(ADEVELOPMENT STAGE COMPANY)**

 

**CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS**

**(UNAUDITED)**

 
| ** **                                                                      | ** ** | ** ** | ** ** | ** ** | ** ** | **Period from  November 24, 1998  to  March 31, 2005** | ** ** |
|---------------------------------------------------------------------------------|------------|------------|------------|------------|------------|------------------------------------------------------------------|------------|
| **Three Months ended**                                                          |
| **March 31**                                                               |
| **2005**                                                                        | ** ** | **2004**   |
| Cash flows  from operating activities                                           |       |       |       |       |       |                                                             |       |
| Net loss                                                                        |       | $          | (215,365   | )          | $          | (924,417                                                         | )          | $ | (3,775,312 | ) |
| Adjustments  to reconcile net loss to net cash provided by operating activities |       |       |       |       |       |                                                             |       |
| Depreciation                                                                    |       | 3,236      |       | 434        |       | 19,840                                                           |       |
| Amortization  of patent                                                         |       | 1,323      |       | 1,040      |       | 9,199                                                            |       |
| Accretion of  convertible debt discount                                         |       | —     |       | —     |       | 72,656                                                           |       |
| Beneficial  conversion feature                                                  |       | 54,000     |       | 214,240    |       | 669,097                                                          |       |
| Common stock  issued for services                                               |       | 51,096     |       | 390,083    |       | 1,248,660                                                        |       |
| Common stock  issued to induce debt conversion                                  |       | —     |       | —     |       | 63,276                                                           |       |
| Common stock  issued for interest due on notes payable                          |       | —     |       | —     |       | 8,501                                                            |       |
| Accrued  interest transferred to capital                                        |       | 61         |       | 2,015      |       | 4,270                                                            |       |
| Other                                                                           |       | —     |       | —     |       | 21,100                                                           |       |
| Increase  (decrease) in cash attributable to changes in assets and liabilities: |       |       |       |       |       |                                                             |       |
| Prepaid  expenses                                                               |       | 31,250     |       | (4,250     | )          | (62,500                                                          | )          |
| Loan  receivable - employee                                                     |       | (1,800     | )          | —     |       | (1,800                                                           | )          |
| Accounts  payable and accrued expenses                                          |       | (104,274   | )          | (30,832    | )          | 114,498                                                          |       |
| Payroll  taxes payable                                                          |       | 18,139     |       | (1,079     | )          | 77,661                                                           |       |
|                                                                            |       |       |       |       |       |                                                             |       |
| Net cash  used in operating activities                                          |       | (162,334   | )          | (352,766   | )          | (1,530,854                                                       | )          |
|                                                                            |       |       |       |       |       |                                                             |       |
| Cash flows  from investing activities                                           |       |       |       |       |       |                                                             |       |
| Payment of  loan receivable-stockholder                                         |       | —     |       | —     |       | (4,000                                                           | )          |
| Proceeds  from loan receivable-stockholder                                      |       | —     |       | —     |       | 4,000                                                            |       |
| Payment of  patent costs                                                        |       | (387       | )          | (1,069     | )          | (67,026                                                          | )          |
| Purchase of  property and equipment                                             |       | —     |       | (1,000     | )          | (58,567                                                          | )          |
| Security  deposit                                                               |       | —     |       | —     |       | (4,250                                                           | )          |
|                                                                            |       |       |       |       |       |                                                             |       |
| Net cash  used in investing activities                                          |       | (387       | )          | (2,069     | )          | (129,843                                                         | )          |
|                                                                            |       |       |       |       |       |                                                             |       |
| Cash flows  from financing activities                                           |       |       |       |       |       |                                                             |       |
| Proceeds  from loans payable - stockholders                                     |       | 25,000     |       | —     |       | 85,000                                                           |       |
| Payment of  loans payable - stockholders                                        |       | —     |       | (5,000     | )          | (10,000                                                          | )          |
| Proceeds  from loans payable - related parties                                  |       | 13,000     |       | —     |       | 154,137                                                          |       |
| Repayment of  loans payable - related parties                                   |       | (21,950    | )          | (51,508    | )          | (137,967                                                         | )          |
| Proceeds  from convertible notes payable                                        |       | 125,000    |       | 422,000    |       | 1,400,361                                                        |       |
| Proceeds  from sale of common stock                                             |       | 10,000     |       | 25,000     |       | 132,500                                                          |       |
| Proceeds  from stock subscriptions receivable                                   |       | 15,000     |       | 25,000     |       | 40,000                                                           |       |
|                                                                            |       |       |       |       |       |                                                             |       |
| Net cash  provided by financing activities                                      |       | 166,050    |       | 415,492    |       | 1,664,031                                                        |       |
|                                                                            |       |       |       |       |       |                                                             |       |
| Net change  in cash                                                             |       | 3,329      |       | 60,657     |       | 3,334                                                            |       |
|                                                                            |       |       |       |       |       |                                                             |       |
| Cash -  beginning of period                                                     |       | 5          |       | 5          |       | —                                                           |       |
|                                                                            |       |       |       |       |       |                                                             |       |
| Cash - end  of period                                                           |       | $          | 3,334      |       | $          | 60,662                                                           |       | $ | 3,334 |   |
|                                                                            |       |       |       |       |       |                                                             |       |
| Supplemental  disclosure of non-cash activities:                                |       |       |       |       |       |                                                             |       |
| Common stock  issued for patent costs                                           |       | $          | —     |       | $          | —                                                           |       | $ | 10,000 |   |
| Exchange of  loans payable for convertible notes payable                        |       | $          | —     |       | $          | —                                                           |       | $ | 50,000 |   |
| Conversion  of notes payable to common stock                                    |       | $          | 125,000    |       | $          | 422,000                                                          |       | $ | 1,388,500 |   |
| Conversion  of loan payable - related party to common stock                     |       | $          | 16,170     |       | $          | —                                                           |       | $ | 16,170 |   |
| Cancellation  of stock subscriptions receivable                                 |       | $          | —     |       | $          | 29,000                                                           |       | $ | 29,000 |   |
| Common stock  issued for subscriptions receivable                               |       | $          | —     |       | $          | —                                                           |       | $ | 71,500 |   |

 

The accompanying notes are an integral partof these financial statements.

 

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**KENILWORTH SYSTEMSCORPORATION**

**AND SUBSIDIARIES**

**(A DEVELOPMENT STAGECOMPANY)**

 

**CONDENSEDNOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(UNAUDITED)**

 

NOTE 1 - BASIS OF PRESENTATION

 

In the opinion of management, the accompanyingunaudited condensed consolidated financial statements of Kenilworth SystemsCorporation and subsidiaries (“Kenilworth”) beginning as of January 1,2005 contain all adjustments (consisting of only normal accruals) necessary topresent fairly the consolidated balance sheets as of March 31, 2005 and December 31,2004 and the related statements of operations and cash flows for the three (3) monthperiods ended March 31, 2005 and 2004. These financial statements should be read in conjunction with theaudited consolidated financial statements and notes thereto included in our AnnualReport on FORM 10-K/A, restated as a Development Stage Company, filed withthe Securities and Exchange Commission on July 13, 2005.

 

The results of operations for the three (3) monthperiod ended March 31, 2005 are not necessarily indicative of the resultsfor the entire year ending December 31, 2005.

 

NOTE 2 - THE COMPANY AND NATURE OF BUSINESS

 

Kenilworth Systems Corporation (the “Company”) wasincorporated in New York in April 1968 and since emerging from bankruptcyproceedings now plans to be engaged in the business of developing and havingterminals and other equipment manufactured and design systems that permitindividuals from remote locations, to play along with live in progress casinotable games via TV (simulcast) satellite and satellite cable broadcast aroundthe world.

 

The Company was in bankruptcy proceedings underChapter 7 and 11 of the Bankruptcy Code for the period from August 28,1982 through September 28, 1998. The Company ceased all operations,between February 2, 1991 through September 28, 1998.

 

NOTE 3 - PRINCIPLES OF CONSOLIDATION

 

The consolidated financial statements include theaccounts of Kenilworth Systems Corporation and its wholly owned subsidiaries:Video Wagering Systems Corporation, RoulabetteTM Nevada Corporation, KenilworthSystems Nevada Corporation, Kenilworth Systems (UK) Limited and KenilworthSatellite Broadcasting Corporation (a Delaware Corporation). None of thesesubsidiaries has any assets or liabilities.

 

 

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**KENILWORTH SYSTEMSCORPORATION**

**AND SUBSIDIARIES**

**(A DEVELOPMENT STAGECOMPANY)**

 

**CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(UNAUDITED)**

 

NOTE 4 - GOING CONCERN UNCERTAINTY

 

As indicated in Note 2, the Company emerged fromChapter 7 in September 1998 and has not yet commenced operations. Thesefactors create uncertainty as to the Company’s ability to operate as agoing-concern and continue in business. Management plans to develop a wageringsystem that allows casino patrons and individuals outside the casino to playalong remotely with live in-progress casino table games. The Company plans toobtain the necessary funding by offering its Common Stock, Senior CumulativeConvertible Preferred Shares and/or continue to sell Convertible PromissoryNotes in private placements. There can be no assurances the Company can besuccessful in obtaining such financing.

 

The accompanying financial statements have beenprepared assuming the Company is a going-concern and do not reflectadjustments, if any that would be necessary if the Company were not agoing-concern.

 

NOTE 5 – CONVERTIBLEPROMISSORY NOTES

 

During the quarters ended March 31,2005 and March 31, 2004 respectively, the Company sold to various privateinvestors $125,000 and $422,000 principal amount of Convertible PromissoryNotes bearing interest at rates ranging from 4.00% to 5.50% per annum.  The Notes had a one-year term and wereimmediately convertible at the option of the noteholder into shares of restrictedcommon stock based on conversion prices ranging from $.05 to $.12 pershare.  All Notes issued in the quartersended March 31, 2005 and March 31, 2004 were converted into a totalof 2,500,000 and 8,540,000 common shares, respectively.

 

NOTE 6- NON CASH TRANSACTIONS

 

Common shares issued for services

 

2005:

 

The Company issued 1,175,000 shares as compensationfor services rendered during the first quarter period ended March 31,2005.  The services were valued at$51,096.

 

2004:

 

The Company issued 7,801,667shares as compensation for services rendered during the first-quarter periodended March 31, 2004.  The services werevalued at $390,083.

 

NOTE 7 – SUBSEQUENTEVENTS

 

Subsequent to March 31, 2005, the Company raised an additional$354,500 from the sale of Convertible Promissory Notes.

 

In April 2005, the Company entered into a consulting agreement fora one-year term.  As compensation, theconsultants received 2,000,000 shares of restricted common stock upon signing.

 

In June 2005, the Company agreed to issue 770,588 shares ofrestricted common stock in settlement of an employment contract dispute.  The shares were valued by management atapproximately $38,500.  The liability wasaccrued in 2004.

 

Subject to shareholder approvalduring the Annual Shareholders’ Meeting, the Board of Directors has voted toincrease the number of Authorized shares to 500,000,000.

 

8

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ITEM 2.      MANAGEMENT’S DISCUSSION ANDANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

RESULTS OF OPERATIONS

 

Since we emerged from bankruptcy proceedingson September 23, 1998 we have had no revenues from operations. Wesustained substantial losses from general administrative expenses amounting of$1,860,296 and $768,229 in year 2004 and 2003 and for the three-months endedMarch 31, 2005 we sustained losses amounting to $215,365 compared to aloss of $924,417 for the quarter ending March 31, 2004. Kenilworth has hadno revenues from operations during the past thirteen (13) years and there canbe no assurances that it will ever have revenues from present plannedoperations.

 

LIQUIDITY AND CAPITAL RESOURCES

 

Our present plans are to develop a wagering systemdubbed “RoulabetteTM” that would allow patrons in the industrialized world toplay and wager on live in-progress simulcast casino table games on terminalsplaced in hotels, resorts, bars and other public gathering places and in homesand offices on personal computers (PC’s) or television sets connected to settop boxes for Interactive TV via digital satellite and digital cable broadcastsemanating from strictly regulated casinos.

 

GENERAL

 

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

 

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

 

Kenilworthtitled the overall proposed project “RoulabetteTM”.  There are 120 million TV subscribers in theUnited States and more than 300 million subscribers throughout the rest of theworld (“The Market”).  On average,households in the U.S. have 2 1⁄2 TV’s. (It is important since the satellite and cable companies will charge aseparate fee for transmitting the table games). Public gathering places can accommodate (be able to network) up to 200TV sets with a simple satellite receiving dish or direct cableconnections.  With wagering possible inhomes, hotel rooms, resort rooms, pubs, restaurants, race tracks and otherpublic gathering places the Company believes will become a more than $500billion net win****Market within five (5) yearsthroughout the industrialized world.

 

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

 

Allforty one (41) lotteries in the United States are owned and operated by Countyand State agencies.  Throughout the restof the world lotteries are owned by government agencies or non profitcharitable agencies that distribute the net earnings to benefit social andcharitable programs, or by private entities that pay a percentage of their netwin to designated government agencies.

 

Theseforeign lotteries also have the same databases as lotteries in the UnitedStates, except most lotteries throughout Europe pool their lotteries betweencountries, not unlike Mega Millions and PowerBall in the

 

9

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

 

Thereare no technical breakthroughs required. The technology is readily available. What is needed is to get through the maze of Local, County, State andFederal regulations in each U.S. State and foreign countries.  When the first State in the United Statesgrants the Company permission to transmit the broadcast from one of its casinosto their residents and to States that do not have any casinos, (the entire Eastcoast of the United States), the other forty (40) States with lotteries willjoin expeditiously.

 

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

 

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

 

Inaddition, throughout the United States there are five hundred (500) facilitiesthat simulcast live in-progress horse/dog races.  At all facilities there are several large TVscreens that show the races from the different tracks with general theater typeseating for patrons and at private cubicles with television sets outfitted withtouch screens.  The cubicles rent foradditional fees.  After players open anaccount and select pin numbers, they can watch each race offered on thedifferent tracks on the TV and place wagers on the different races by simplychanging channels.  The players may alsowatch sporting events, the news, the Stock market reports, and in the nearfuture RoulabetteTM, live, in-progress casino table games.  The simulcast centers have their owndatabases to manage the cash deposit and pay winnings on the horse/dog racesand will be able to manage the casino games, on the same methods as thelotteries will manage RoulabetteTM.  Withfifty to one hundred (50-100) private TV’s, available in simulcastcenters, especially at night, when fewer tracks are operating.

 

When playing along with live table games from ahighly regulated jurisdiction, players will be assured that the game resultsare exactly what they see; and, playing along with live casino table games suchas Roulette, Craps and Baccarat we believe will provide interaction, fun andfar more excitement than playing make believe animated (virtual) games. It isthe next best thing, we believe, to actually being at the table in the casino.

 

To conduct the initial broadcast Kenilworth believesit will require ten million dollars ($10,000,000) and there are no assuranceswe will ever be able to obtain any of such money. At present, the Company doesnot have the funds readily available but hopes to obtain same, from investors,as soon as Kenilworth can commence broadcasting from a casino in the UnitedStates or other casinos throughout the world.

 

In prior years, Kenilworth completed a prototypesystem that allowed casino patrons to play along with live in-progress casinotable games only within the confines of a casino, via closed circuittelevision. Also in 1990, we developed and delivered for the TAB (TotalizatorAgency Board) a quasy government agency of the State of Victoria, Australia, acashless slot machine system. Both systems required debit cards and centralmainframe computers to manage the wagers. By making use of the expertiseapplied in the development of the aforementioned systems we plan to develop asecond-generation system that will manage the wagers by the microprocessorinstalled in TV set-top boxes to receive satellite broadcasts. This as plannedwould allow a player in an interactive manner, at a remote location (outsidethe casino confines), to experience the actual play and excitement at thecasino table game and to make wagers on the various games, without having to bephysically present at the casino or casino table.  There are no assuranceswe will be able to successfully develop any system.

 

The proposed “RoulabetteTM” system also will provideRoulabetteTM terminals that may be placed in resorts, racetracks or othergathering places which consists of a personal computer (PC) with two (2) monitors. One (1) monitor will display the live in-progress casino table game playas well as advertising.  The second, which will be outfitted with a touchscreen, allows a player to place wagers directly over the games displayed onthe first monitor.  It will also have a variable denomination billacceptor and a bar code ticket dispenser.  Both monitors will be housed inan attractive enclosure. The RoulabetteTM terminal will

 

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be the size of a typical “low boy” slot machine(desk top height).  Each terminal would be self-sufficient, manages wagersfrom $0.25 to $100.00 or the equivalent in most any currency, and receives thetable game play via simulcast digital satellite TV transmissions (with dishantennas) or local digital cable connection from legally operating casinosthroughout the industrialized world.

 

Where authorized, hotels, resorts clubs and otherpublic gathering places will be able to offer casino table game action in theirestablishments without incurring the costs to operate a casino. The RoulabetteTMterminal is expected to offer an alternative to slot machine players. There arenow believed to be more than ten (10) million slot machines playedthroughout the world.

 

Kenilworth will seek to promote to state lotteriesand foreign jurisdictions, and other state regulated entities, the ability tooperate websites that will manage the wagers. The program will ask statelegislatures to amend their lottery horse/dog racing and OTB legislation toinclude RoulabetteTM wagering or promulgate new legislation. There are noassurances that the necessary approvals will be granted.

 

We believe there are powerful arguments for statelegislatures to amend their Lottery Acts to include “Play Along withRoulabetteTM Live”. Lottery revenue is gradually decreasing in every state.Thirty-two (32) states and the District of Columbia are pooling their lottery prizeswith the “PowerBall” and “Big Game” national lotteries. In most of thesestates, the state lottery finds it difficult to obtain sufficient numbers ofplayers to make up a minimum weekly lottery prize of one million dollars($1,000,000). In most states, the revenue from lottery play benefits education.States need something more attractive to restore revenue. With “Play Along withRoulabetteTM Live”, there is interaction, excitement and fun. All which webelieve may be at much better odds than may be offered by the lotteries. Thelotteries can establish maximum wagers daily, weekly and monthly limits, andmonitor compulsive gamblers, and almost prevent 100% of the underaged fromwagering on RoulabetteTM by use of lottery terminals to make deposits in cash towager along.

 

Project RoulabetteTM is a concept intended to bedeveloped and there can be no assurances that it will ever be developedsuccessfully.  The Patentedmicroprocessors to be installed in the TV set top boxes or the Television setdirectly have not been designed.  We haveas at March 31, 2005, no firm developed agreement, customers except forproposals submitted for future business and there can be no assurances that wewill ever have same.

 

Kenilworth plans to obtain the necessary funding by offeringin Private Placements, Common Shares, Convertible Promissory Notes, andCumulative Convertible Preferred Shares and/or by the sale of limited jointventure participations in future RoulabetteTM franchises. There can be noassurances that the Company will be able to secure any of these funds.

 

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PART II.

OTHERINFORMATION

 

Item1.    LEGAL PROCEEDINGS:

 

None

 

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

 

Item5.    OTHER INFORMATION:

 

The Company plans to hold its Annual Meeting ofShareholders on or about September 13, 2005 or any adjournment thereof withproxy materials mailed to shareholders of record on August 2, 2005 priorto the proposed meeting dates.

 

Item6.    EXHIBITS AND REPORTS ON FORM 8-K:

 

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

 

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