**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

 

**FORM10-Q/A**

 

**Amendment 1.**

 

| **(Mark One)**                                   |
|--------------------------------------------------|
|                                             |
| **ý**                                       | **Quarterly  report pursuant to Section 13 or 15(D) of the Securities Exchange Act of 1934** |
|                                             |
| **For the quarterly period ended June 30, 2003** |
|                                             |
| **OR**                                           |
|                                             |
| **o**                                            | **Transition  report pursuant to Section 13 or 15(D) of the Securities Exchange Act of 1934** |

 

**For the transition period from      to      **

 

**Commission File Number: 0-08962**

 

**KENILWORTHSYSTEMS CORPORATION**

(Exact name of registrant as specified in its charter)

 

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

 

**(516) 741-1352**

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the Registrant(1) has filed 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)has been subject to such filing requirements for the past 90 days.Yes  ý   No  o

 

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

 

Thenumber of shares of common stock, $.01 par value of the Registrant outstandingas of August 1, 2003 was: 121,322,757

 

 

----

 

PART IV – INTRODUCTORY NOTE

 
| a) |   | The  Company’s Financials have not been reviewed by an Independent Auditor.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| b) |   | The  financials are presented as a Development Stage Corporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| c) |   | The  acquisition cost of Patent No. US 6,575,834 B1 titled “SYSTEM AND METHOD FOR  REMOTE ROULETTE AND OTHER GAME PLAY USING GAME TABLE AT A CASINO” issued June  10, 2003, which was valued by the Board of Directors of the Company at  $2,500,000 has been reduced to the actual costs of filing and processing the  Patent in the United States and in forty-nine (49) foreign countries to  $357,100.  The cost will increase  annually by approximately $15,000 to $20,000 for certain semi-annual and  annual “maintenance fees” payable to the foreign Patent Offices, which may  take up to five (5) years. |

 

PART I – FINANCIALINFORMATION

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

 

PART II – OTHER INFORMATION

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

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

To the extent that theinformation presented in this Quarterly Report on Form 10-Q for the three (3)month and six (6) month periods ended June 30, 2003 discusses financialprojections, information or expectations about our proposed products ormarkets, or otherwise makes statements about future events, such statements areforward-looking.  We are making these forward-looking statements inreliance on the safe harbor provision of the Private Securities LitigationReform Act of 1995.  Although we believe that the expectations reflectedin these forward-looking statements are based on reasonable assumptions, thereare a number of risks and uncertainties that could cause actual results todiffer materially from such forward-looking statements.  These risks anduncertainties are described, among other places in this Quarterly Report, in“Management’s Discussion and Analysis of Financial Condition and Results ofOperations”.

 

In addition, we disclaim anyobligations to update any forward-looking statements to reflect events orcircumstances after the date of this Quarterly Report.  When consideringsuch forward-looking statements, you should keep in mind the risks referencedabove and the other cautionary statements in this Quarterly Report.

 

PART I – FINANCIALINFORMATION

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

 

1

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KENILWORTH SYSTEMS CORPORATION

INDEX TO FORM 10-Q

 

PARTI.

FINANCIAL INFORMATION

 

ITEM1.     FINANCIAL STATEMENTS

 

KENILWORTH SYSTEMS CORPORATION

CONDENSEDCONSOLIDATED BALANCE SHEETS

 
|                                                                                                                                                                          |   | **June 30  2003** |      | **December  31  2002** |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|-----------|------------------------|---------|
|                                                                                                                                                                          |   | **(unaudited)**   |      |                   |    |
| ASSETS                                                                                                                                                                        |   |              |      |                   |    |
|                                                                                                                                                                          |   |              |      |                   |    |
| Cash                                                                                                                                                                          |   | $                 | 42,221    |                   | $       | 10,071 |   |
| Prepaid expenses                                                                                                                                                              |   | 121,107           |      | 232,544                |    |
| Due from sale of Convertible Notes                                                                                                                                            |   | 50,000            |      | —                 |    |
| Property, Plant and Equipment, Net                                                                                                                                            |   | 16,072            |      | 13,263                 |    |
| CURRENT ASSETS                                                                                                                                                                |   | 229,400           |      | $                      | 255,878 |   |
| Patent Acquisition Cost                                                                                                                                                       |   | 357,100           |      | —                 |    |
|                                                                                                                                                                          |   |              |      |                   |    |
| TOTAL ASSETS                                                                                                                                                                  |   | $                 | 586,500   |                   | $       | 255,878 |   |
|                                                                                                                                                                          |   |              |      |                   |    |
| LIABILITIES AND  STOCKHOLDERS’ EQUITY (DEFICIT)                                                                                                                          |   |              |      |                   |    |
|                                                                                                                                                                          |   |              |      |                   |    |
| Accrued Liabilities                                                                                                                                                           |   | $                 | 128,440   |                   | $       | 93,883 |   |
| Payroll Taxes Payable                                                                                                                                                         |   | 5,600             |      | 13,575                 |    |
| Notes Payable within one year                                                                                                                                                 |   | 128,196           |      | —                 |    |
| Notes Payable after one year (auto)                                                                                                                                           |   | 10,065            |      | —                 |    |
|                                                                                                                                                                          |   |              |      |                   |    |
| TOTAL LIABILITIES                                                                                                                                                             |   | $                 | 272,301   |                   | $       | 107,458 |   |
|                                                                                                                                                                          |   |              |      |                   |    |
| Common Stock, $.01 par value, authorized 200,000,000 shares; issued  and outstanding 89,304,589 in December 31, 2002 and 121,322,757 issued or to  be issued on June 30, 2003 |   | $                 | 1,213,227 |                   | $       | 893,045 |   |
|                                                                                                                                                                          |   |              |      |                   |    |
| Paid in capital                                                                                                                                                               |   | 25,410,660        |      | 24,872,604             |    |
|                                                                                                                                                                          |   |              |      |                   |    |
| Deficit                                                                                                                                                                       |   | (26,309,688       | )         | (25,617,229            | )       |
| TOTAL STOCKHOLDERS’ EQUITY                                                                                                                                               |   | $                 | 314,199   |                   | $       | 148,420 |   |
|                                                                                                                                                                          |   |              |      |                   |    |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                               |   | $                 | 586,500   |                   | $       | 255,878 |   |

 

Seeaccompanying notes.

 

2

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KENILWORTHSYSTEMS CORPORATION

CONDENSEDCONSOLIDATED STATEMENTS

OF OPERATION AND DEFICIT

 
|                                         |   | **Three-Months  Ended  June 30** |    | **Six-Months  Ended  June 30** |   |
|----------------------------------------------|--------|----------------------------------|---------|--------------------------------|--------|
|                                         |   | **2003**                         |    | **2002**                       |   | **2003** |   | **2002** |   |
|                                         |   | **(unaudited)**                  |    | **(unaudited)**                |   | **(unaudited)** |   | **(unaudited)** |   |
| Revenues:                                    |   |                             |    |                           |   |   |   |   |   |
| Sales                                        |   | 0                                |    | 0                              |   | 0 |   | 0 |   |
| Costs and Expenses:                          |   | 0                                |    | 0                              |   | 0 |   | 0 |   |
| Selling, general and administrative expenses |   | $                                | 138,984 |                           | $      | 69,167 |   | $ | 692,459 |   | $ | 107,709 |   |
|                                         |   |                             |    |                           |   |   |   |   |   |
| Total Costs and Expenses                     |   | 138,984                          |    | 69,167                         |   | 692,459 |   | 107,709 |   |
|                                         |   |                             |    |                           |   |   |   |   |   |
| Net loss                                     |   | 138,984                          |    | 69,167                         |   | 692,459 |   | 107,709 |   |
|                                         |   |                             |    |                           |   |   |   |   |   |
| Deficit-Beginning of period                  |   | (26,170,704                      | )       | (24,995,482                    | )      | (25,617,229 | ) | (24,956,940 | ) |
| Deficit-End of period                        |   | (26,309,688                      | )       | (25,064,649                    | )      | (26,309,688 | ) | (25,064,649 | ) |
|                                         |   |                             |    |                           |   |   |   |   |   |
| Loss per Share of common stock               |   | 0.001                            |    | 0.000                          |   | 0.005 |   | 0.001 |   |
| Average number of shares outstanding         |   | 121,322,757                      |    | 75,285,048                     |   | 121,322,757 |   | 75,285,048 |   |
|                                              |        |                                  |         |                                |        |  |  |  |  |  |  |  |  |

 

Seeaccompanying notes.

 

3

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KENILWORTH SYSTEMS CORPORATION

AND SUBSIDIARIES

CONDENSEDCONSOLIDATED STATEMENTS OF CASH FLOWS

 
|                                                                          |   | **Six-month  ended   June 30** |    |
|-------------------------------------------------------------------------------|--------|--------------------------------|---------|
|                                                                          |   | **2003**                       |    | **2002** |   |
|                                                                          |   | **(unaudited)**                |    | **(unaudited)** |   |
| CASH FLOWS USED IN OPERATING ACTIVITIES                                       |   |                           |    |   |   |
|                                                                          |   |                           |    |   |   |
| Net Loss                                                                      |   | $                              | 692,459 |   | $ | 107,709 |   |
| Adjustments to reconcile net income to net cash used in operating  activities |   |                           |    |   |   |
| Depreciation                                                                  |   | 1,328                          |    | 2,288 |   |
| Increase in receivables                                                       |   | 0                              |    | 3,000 |   |
|                                                                          |   |                           |    |   |   |
| Increase (Decrease) in accrued liabilities                                    |   | 19,826                         |    | 27,553 |   |
| NET CASH USED IN OPERATING ACTIVITIES                                         |   | (671,305                       | )       | (74,865 | ) |
|                                                                          |   |                           |    |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                                          |   |                           |    |   |   |
| Purchase of Equipment                                                         |   | $                              | (13,461 | ) | $ | 0 |   |
| Patent acquisition costs                                                      |   | (357,100                       | )       |   |   |
|                                                                          |   |                           |    |   |   |
| Proceeds from stock issuance                                                  |   | 558,483                        |    | 10,000 |   |
|                                                                          |   |                           |    |   |   |
| CASH FLOW FROM FINANCING ACTIVITIES                                           |   |                           |    |   |   |
| Increase (decrease) in due to Affiliate                                       |   | $                              | 486,320 |   | (23,000 | ) |
| Proceeds from issuance of Convertible Promissory Note                         |   | 0                              |    | 120,000 |   |
| Net cash provided by financing Activities                                     |   | 674,242                        |    | 143,000 |   |
| Net Increase (Decrease) in cash                                               |   | 32,150                         |    |   |   |
| CASH — BEGINNING OF PERIOD                                               |   | 10,071                         |    | 24,739 |   |
| CASH — END OF PERIOD                                                     |   | $                              | 42,221  |   | $ | 25,706 |   |

 

Seeaccompanying notes.

 

4

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KENILWORTH SYSTEMS CORPORATION

NOTESTO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE1 - BASIS OFPRESENTATION

 

Inthe opinion of management, the accompanying unaudited condensed consolidatedfinancial statements of Kenilworth Systems Corporation and subsidiaries(“Kenilworth”) contain all adjustments (consisting of only normal accruals)necessary to present fairly the consolidated balance sheets as of June 30, 2003(unaudited) and December 31, 2002 (unaudited) and the related statements ofoperations and for each of the three and six-month periods ended June 30, 2003and 2002 and December 31, 2002 cash flows for the six-month periods ended June30, 2003 and 2002.

 

Theresults of operations for the six-month period ended June 30, 2003 are notnecessarily indicative of the results for the entire year.

 

NOTE2 - THE COMPANY ANDNATURE OF BUSINESS

 

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

 

TheCompany was granted a U.S. Patent # U.S. 6,575,834 on June 10, 2003 for “Systemand Method for Remote Roulette and Other Game Play Using Game Table at aCasino”.  The Patent grant places the Company in a singularly prominentposition.  It has been filed for approval in forty-nine (49) countriesincluding Russia and China.  It protects the Company’s broadcast of livein-progress casino table game play for wagering throughout the industrializedworld for the next seventeen (17) years.

 

TheCompany was in bankruptcy proceedings under Chapter 7 and 11 of the BankruptcyCode for the period from August 28, 1982 through September 23, 1998. TheCompany ceased all operations, between February 2, 1991 through September 23,1998.

 

TheCompany emerged from Chapter 7 bankruptcy on September 23, 1998 and plans to beengaged in the development, manufacturing, marketing and operation of a systemthat allows casino patrons to play along with live table games in-progress viaTV satellite broadcasts on TV sets and terminals located outside the casinoconfines.

 

NOTE3 - PRINCIPLES OFCONSOLIDATION

 

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

 

NOTE4 - EARNINGS PER SHARE

 

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

 

Basicloss per share is based on the weighted-average number of shares of commonstock outstanding for the periods, which were ($.00), ($.00), and ($.00) forthe year ended December 31, 2002, and the periods June 30, 2003 and 2002.

 

5

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

 

NOTE5 - INCOME TAXES

 

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

 

TheCompany is a “C” Corporation for tax purposes.

 

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

 

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

 

NOTE6 - USE OF ESTIMATESIN THE FINANCIAL STATEMENTS

 

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

 

NOTE7 - FAIR VALUE OFFINANCIAL INSTRUMENTS

 

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

 

NOTE8 - PROPERTY ANDEQUIPMENT

 

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

 

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

 

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

 
|                              |   | **Six-month  ended  June 30** |   |
|-----------------------------------|--------|-------------------------------|--------|
|                              |   | **2003**                      |   | **2002** |   |
| Office Equipment                  |   | $                             | 3,939  |   | $ | 2,939 |   |
| Vehicles                          |   | 13,461                        |   | 8,500 |   |
|                              |   | $                             | 17,400 |   | $ | 11,439 |   |
| Less-Accumulated Amortization     |   | 1,328                         |   | 4,576 |   |
| Total Property and Equipment, Net |   | $                             | 16,072 |   | $ | 6,863 |   |

 

6

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Depreciationexpense for the periods ended June 30, 2003 and 2002 was $1,328 and $4,576respectively due to the theft of vehicle and insurance reimbursement.

 

NOTE9 - CONVERTIBLEPROMISSORY NOTES

 

Duringthe year 2002 Convertible Promissory Notes totaling five hundred twentythousand dollars ($520,000) issued in 2002 where converted into 11,520,605shares of Common Stock.  During the quarter period ended March 31, 2003,Notes totaling two hundred fifty thousand dollars ($250,000) were sold andconverted into 4,166,666 shares during the quarter period ended June 30, 2003Notes totaling one hundred twenty thousand dollars ($120,000) were sold andconverted into 2,671,812 shares of restricted Common Stock.  On a one hundredthousand dollar ($100,000) Note, the Company agreed to extend to September 2003a balance payable of fifty thousand dollars ($50,000).  Subsequent to June30, 2003 all Notes receivable were paid and are reflected in these financials.

 

NOTE10 - PRO-FORMA PRESENTATIONAS AT MARCH 31, 2003

 

OnFebruary 24, 2003, the United States Patent and Trade Mark Offices gave noticeof intent to approve the Company’s patent titled “System and Method for RemoteRoulette and Other Game Play Using Game Table at a Casino” which was assignedby Herbert Lindo, the inventor, in August 2000, to the Company.

 

TheBoard of Directors (with Mr. Lindo abstaining) voted to issue to Mr. Lindo20,000,000 shares of the Company’s Common Stock in lieu of a payment $2,50,000which the Board considered fair consideration for the invention.  Thetransaction was subject to shareholder’s approval at the annual meeting ofshareholders to held on May 28, 2003.

 

TheBoard of Directors directed all shareholders to vote in favor of the proposalin the Company’s Proxy Statement for the shareholder’s meeting.

 

Inorder for shareholders to evaluate the proposal, the Company presented in thesethe quarter annual financials for the period ending March 31, 2003 interposingthe effect of issuing 20,000,000 shares in lieu of $2,500,000 payment on aPro-Forma basis.

 

Atthe Annual Meeting of Stock Holder’s held on May 28, 2003 sixty-six percent(66%) of the Shareholder’s were present or represented by proxies.  Allthe nominated Directors were elected for one (1) year terms and the issuance oftwenty million (20,000,000) shares of Common Stock of the Company, forinvestment, to Herbert Lindo, the inventor of the Company’s Patent, wasapproved.  The Company placed a value of two million five hundred thousanddollars ($2,500,000) on the Patent based on the shares issued to Herbert Lindo.

 

NOTE11 - GOING CONCERNUNCERTAINTY

 

Asindicated in Note 2, the Company emerged from Chapter 7 in September 1998 andhas not yet commenced manufacturing operations. These factors createuncertainty as to the Company’s ability to operate as a going-concern.Management plans to develop a wagering system that allows casino patrons andindividuals outside the casino to play along with live casino table games.Among the first steps in the plan is to conduct testing. Unless the Company isable to obtain a casino site to conduct the test and sufficient funds, none ofthe tests and initial development work can commence. The Company plans toobtain the necessary funding by offering its common stock, or Senior CumulativeConvertible Preferred Shares in private placements, or selling limited jointventure participations in future “play along with casino game” franchises.There can be no assurances the Company can be successful in obtaining suchfinancing.

 

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

 

7

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NOTE12 - COMMITMENTS ANDCONTINGENCIES

 

OUTSTANDINGPAYROLL TAXES

 

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

 

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

 

RESULTSOF OPERATIONS

 

Sincewe emerged from bankruptcy proceedings on September 23, 1998 we have had norevenues from operations. We sustained substantial losses from generaladministrative expenses amounting of $660,289 in year 2002 and for thesix-months ended June 30, 2003 we sustained losses from general administrativeexpenses amounting to $692,459 compared to a loss of $107,704. Kenilworth hashad no revenues from operations during the past twelve (12) years and there canbe no assurances that it will ever have revenues from present plannedoperations.

 

LIQUIDITYAND CAPITAL RESOURCES

 

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

 

Afirst step will be to conduct a one (1) month test of the system at a casinosite to prove the viability of broadcasting live in-progress table games aroundthe world.

 

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

 

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

 

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

 

Whenthe tests are completed and we have obtained all required licenses from thegaming control regulators and state legislatures or foreign jurisdictions tobroadcast the live in-progress casino table games and has contracts withfranchisees to place terminals around the world and franchise televisionbroadcasters, we expect to commence normal business. Kenilworth will also seekto obtain production

 

8

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financingfrom regular banking sources to finance the manufacturing of the RoulabetteTMterminals. There can be no assurances that any such financing and approvalswill be available to us.

 

CAUTIONARYSTATEMENT FOR PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE PRIVATESECURITIES LITIGATION REFORM ACT OF 1995 AND RISK FACTORS

 

Theinformation contained in this Form 10-Q and Kenilworth’s other filings with theSecurities Exchange Commission may contain “forward-looking” statements withinthe meaning of section 27A of the Securities Act of 1933, as amended, andSection 21E of the Securities Exchange Act of 1934, as amended, and is subjectto the safe harbors created thereby. Such information involves important risksand uncertainties 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.

 

Youshould not rely on forward-looking statements in this Form 10-Q. This Form 10-Qcontains 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 should not place undue reliance on these forward-looking statements, whichapply only as of the date of this Form 10-Q. Our actual results could differmaterially from those anticipated in these forward-looking statements for manyreasons, including the risks faced by Kenilworth as described below andelsewhere in this Form 10-Q.

 

RISKS

 

Specificreference is made to each of the risks described in Item 7 of the Form 10-K forDecember 31, 2002 under the discussion “Cautionary Statement For Purposes ofthe Safe Harbor Provisions of the Private Securities Litigation Reform Act of1995 and Risk Factors”. Reference is also made to future filings under Forms10-Q and Forms 10-K and filings under the Securities Exchange Act of 1934 asamended and as may be applicable under the Securities Act of 1933 as amended.

 

PART II.

OTHER INFORMATION

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

 

TheCompany plans to hold its Annual Meeting of Shareholders in May 2004 with proxymaterials mailed to shareholders of record in April 1, 2004 prior to theproposed meeting dates.

 
| Item 6.                       |   | EXHIBITS  AND REPORTS ON FORM 8-K:                                                                                          |
|-------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------|
|                          |   |                                                                                                                        |
| Ex  31.1                      |   | Certification  of Chief Financial Officer of the Company required by Rule 13a-14(a) or Rule  15d-14(c) of the Exchange Act. |
|                          |   |                                                                                                                        |
| Form  8-K filed July 15, 2003 |

 

9

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SIGNATURE

 

Pursuant to the requirements of theSecurities Exchange Act of 1934, the Registrant has duly caused this report tobe signed in its behalf by the undersigned thereunto duly authorized.

 

 
|   | KENILWORTH  SYSTEMS CORPORATION        |
|--------|----------------------------------------|
|   |                                   |
| By:    | /s/  Herbert Lindo                     |   |
|   | Herbert  Lindo,                        |
|   | President  and Chief Financial Officer |
|   | March  23, 2004                   |

 

10

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