**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

 

**FORM10-Q**

 

| **(Mark One)** |   |                                                                                                                                                                                              |
|----------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|           |   |                                                                                                                                                                                              |
| **ý**     |   | **Quarterly report pursuant to Section 13 OR  15(D) of the Securities Exchange Act of 1934**                                                                                                      |
|           |   |                                                                                                                                                                                              |
|           |   | **For the quarterly period ended September 30,  2002**                                                                                                                                            |
|           |   |                                                                                                                                                                                              |
| **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 ofregistrant as specified in its charter)

 

| **New York**                                               |   | **13-2610105**                        |
|------------------------------------------------------------|--------|---------------------------------------|
| (State  of incorporation)                                  |   | (I.R.S.  employer identification no.) |
|                                                       |   |                                  |
| **343 Beebe Road, Mineola, New York**                      |   | **11501**                             |
| (Address  of principal executive offices)                  |   | (Zip  Code)                           |
|                                                       |   |                                  |
| **(516) 741-1352**                                         |
| (Registrant’s  telephone number, including area code) |

 

Securities registered pursuantto section 12(b) of the Act:

 

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

 

Securities registered pursuantto section 12(g) of the Act:

 

| **(Title of Class)**                    |
|-----------------------------------------|
| COMMON  STOCK, PAR VALUE $.01 PER SHARE |

 

Indicate by check mark whetherthe Registrant (1) has filed all reports required to be filed by section 13 or15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (orfor such shorter period that the registrant was required to file such reports),and (2) has been subject to such filing requirements for the past 90 days.Yes  ý  No  o

 

The number of shares of commonstock, $.01 par value of the Registrant outstanding as of September 30, 2002was: 89,204,589

 

 

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KENILWORTHSYSTEMS CORPORATION

INDEXTO FORM 10-Q

 
| PART I. | FINANCIAL INFORMATION |                                                                                                                       |
|---------|-----------------------|----------------------------------------------------------------------------------------------------------------------------|
|    |                  |                                                                                                                       |
|    | Item 1.               | Consolidated Financial  Statements                                                                                         |
|    |                  |                                                                                                                       |
|    |                  | Consolidated  Condensed Balance Sheets as of September 30, 2002 (unaudited) and December  31, 2001                         |
|    |                  |                                                                                                                       |
|    |                  | Consolidated  Condensed Statement of Operations for the nine months period ended September  30, 2002 and 2001 (unaudited)  |
|    |                  |                                                                                                                       |
|    |                  | Consolidated  Condensed Statements of Cash Flows for the nine months period ended September  30, 2002 and 2001 (unaudited) |
|    |                  |                                                                                                                       |
|    |                  | Notes  to Consolidated Condensed Financial Statements (unaudited)                                                          |
|    |                  |                                                                                                                       |
|    | Item  2.              | Management’s  Discussion and Analysis of Financial Conditions and Results of Operations                               |
|         |                       |                                                                                                                            |  |

 

2

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PART I.

FINANCIALINFORMATION

 

ITEM 1.  FINANCIAL STATEMENTS

 

KENILWORTHSYSTEMS CORPORATION

CONDENSEDCONSOLIDATED BALANCE SHEETS

 
|                                                                                                                                                 |   | **September 30  2002** |    | **December 31  2001** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|-----------------------|--------|
|                                                                                                                                                 |   | **(unaudited)**        |    |                  |   |
|                                                                                                                                                 |   |                   |    |                  |   |
| ASSETS                                                                                                                                               |   |                   |    |                  |   |
|                                                                                                                                                 |   |                   |    |                  |   |
| Cash                                                                                                                                                 |   | $                      | 23,517  |                  | $      | 15,266 |   |
| Due  from shareholder                                                                                                                                |   | 9,000                  |    | 55,077                |   |
| Other  current assets and prepaid expenses                                                                                                           |   | 301,999                |    | 42,461                |   |
| Property,  Plant and Equipment, Net                                                                                                                  |   | 2,939                  |    | 8,007                 |   |
| TOTAL  ASSETS                                                                                                                                        |   | $                      | 337,455 |                  | $      | 120,811 |   |
|                                                                                                                                                 |   |                   |    |                  |   |
|                                                                                                                                                 |   |                   |    |                  |   |
| LIABILITIES AND STOCKHOLDERS’  EQUITY (DEFICIT)                                                                                                 |   |                   |    |                  |   |
|                                                                                                                                                 |   |                   |    |                  |   |
| Accrued  Liabilities                                                                                                                                 |   | $                      | 103,972 |                  | $      | 94,182 |   |
| Payroll  Taxes Payable                                                                                                                               |   | 6,465                  |    | 6,548                 |   |
| TOTAL  LIABILITIES                                                                                                                                   |   | $                      | 110,437 |                  | $      | 100,730 |   |
|                                                                                                                                                 |   |                   |    |                  |   |
| Convertible  Preferred Stock authorized 2,000,000 shares; outstanding: none                                                                          |   |                   |    |                  |   |
| Common  Stock, $.01 par value, authorized 200,000,000 shares; issued and outstanding  73,115,484 December 31, 2001 and 89,204,589 September 30, 2002 |   | $                      | 892,045 |                  | $      | 731,154 |   |
| Paid  in capital                                                                                                                                     |   | 24,720,813             |    | 24,245,867            |   |
| Deficit                                                                                                                                              |   | (25,385,840            | )       | (24,956,940           | )      |
|                                                                                                                                                 |   |                   |    |                  |   |
| TOTAL  STOCKHOLDERS’ EQUITY                                                                                                                     |   | $                      | 227,018 |                  | $      | 20,081 |   |
| TOTAL  LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)                                                                                           |   | $                      | 337,455 |                  | $      | 120,811 |   |

 

See accompanying notes.

 

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KENILWORTHSYSTEMS CORPORATION

CONDENSEDCONSOLIDATED STATEMENTS

OFOPERATION AND DEFICIT

 
|                                                |   | **Three-Months Ended  September 30** | ** ** | **Nine-Months Ended  September 30** | ** ** |
|-----------------------------------------------------|--------|--------------------------------------|------------|-------------------------------------|------------|
|                                                |   | **2002**                             | ** ** | **2001**                            | ** ** | **2002** | ** ** | **2001** | ** ** |
|                                                |   | **(unaudited)**                      |       | **(unaudited)**                     |       | **(unaudited)** |   | **(unaudited)** |   |
|                                                |   |                                 |       |                                |       |   |   |   |   |
| Revenues:                                           |   |                                 |       |                                |       |   |   |   |   |
| Sales                                               |   | 0                                    |       | 0                                   |       | 0 |   | 0 |   |
| Costs  and Expenses:                                |   | 0                                    |       | 0                                   |       | 0 |   | 0 |   |
| Selling,  general and administrative expenses       |   | $                                    | 321,191    |                                | $          | 101,975 |   | $ | 428,900 |   | $ | 317,935 |   |
| Total  Costs and Expenses                           |   | $                                    | 321,191    |                                | $          | 101,975 |   | $ | 428,900 |   | $ | 317,935 |   |
|                                                |   |                                 |       |                                |       |   |   |   |   |
| Net  income (loss) before other income and (losses) |   | (321,191                             | )          | (101,975                            | )          | (428,900 | ) | (317,935 | ) |
|                                                |   |                                 |       |                                |       |   |   |   |   |
| Net  income (loss)                                  |   | (321,191                             | )          | (101,975                            | )          | (428,900 | ) | (317,935 | ) |
| Deficit  - Beginning of period                      |   | (24,995,482                          | )          | (24,751,140                         | )          | (24,956,940  | ) | (24,535,450 | ) |
|                                                |   |                                 |       |                                |       |   |   |   |   |
| Deficit  - End of of period                         |   | (25,385,840                          | )          | (24,853,385                         | )          | (25,385,840 | ) | (24,835,385 | ) |
|                                                |   |                                 |       |                                |       |   |   |   |   |
| Earnings  (Loss) per Share of common stock (Note 4) |   | 0                                    |       | 0                                   |       | 0 |   | 0 |   |
| Average  number of shares outstanding               |   | 89,204,589                           |       | 64,888,865                          |       | 89,204,589 |   | 71,495,808 |   |

 

See accompanying notes.

 

4

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KENILWORTHSYSTEMS CORPORATION AND SUBSIDIARIES

CONDENSEDCONSOLIDATED STATEMENTS

OF CASHFLOWS

 
|                                                     |   | **Nine-months ended  September 30** |       |
|----------------------------------------------------------|--------|-------------------------------------|------------|
|                                                     |   | **2002**                            | ** ** | **2001** | ** ** |
|                                                     |   | **(unaudited)**                     | ** ** | **(unaudited)** | ** ** |
|                                                     |   |                                |       |   |   |
| CASH  FLOWS USED IN OPERATING ACTIVITIES                 |   |                                |       |   |   |
|                                                     |   |                                |       |   |   |
| Net  Loss                                                |   | $                                   | (428,900   | ) | $ | (317,935 | ) |
| Depreciation  increase (decrease)                        |   | 6,212                               |       | 3,442 |   |
| Increase  (decrease) in due to related party             |   | (42,106                             | )          | 51,106 |   |
| Increase(decrease)in  accrued liabilities                |   | 30,907                              |       | (11,125 | ) |
| Prepaid  expenses                                        |   | 277,817                             |       | 37,985 |   |
| TOTAL  ADJUSTMENTS NET CASH USED IN OPERATING ACTIVITIES |   | $                                   | (156,070   | ) | $ | (236,527 | ) |
|                                                     |   |                                |       |   |   |
| CASH  FLOWS FROM                                         |   |                                |       |   |   |
| Conversion  of Promissory Notes                          |   | (120,000                            | )          | 180,000 |   |
| Proceed  from issuing stock for debt and services        |   | 443,994                             |       | 19,027 |   |
|                                                     |   |                                |       |   |   |
| FINANCING  ACTIVITIES                                    |   |                                |       |   |   |
| Increase  (decrease) in due from Shareholder             |   | (14,000                             | )          | 37,500 |   |
| Proceeds  from issuance of Promissory Notes              |   | 30,000                              |       | 19,027 |   |
|                                                     |   |                                |       |   |   |
| Net  cash provided by financing Activities               |   | 353,994                             |       | 236,527 |   |
|                                                     |   |                                |       |   |   |
| Net  Increase (Decrease) in cash                         |   | 22,390                              |       | 1,127 |   |
| CASH  - BEGINNING OF PERIOD                              |   | 1,127                               |       | 967 |   |
| CASH  - END OF PERIOD                                    |   | $                                   | 23,517     |   | $ | 1,127 |   |

 

See accompanying notes.

 

5

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KENILWORTHSYSTEMS CORPORATION

NOTESTO CONDENSED CONSOLIDATED

FINANCIALSTATEMENTS

 

NOTE 1 - BASIS OF PRESENTATION

 

In the opinion of management,the accompanying unaudited condensed consolidated financial statements ofKenilworth Systems Corporation and subsidiaries (“Kenilworth”) contain alladjustments (consisting of only normal accruals) necessary to present fairlythe consolidated balance sheets as of September 30, 2002(unaudited) andDecember 31, 2001 and the related statements of operations for each of thethree and nine month periods ended September 30, 2002 and 2001 and statement ofcash flows for the nine month period ended September 30, 2002 and 2001. Theresults of operations for the three and nine month periods ended June 30, 2002are not necessarily indicative of the results for the entire year.

 

NOTE 2 - THE COMPANY AND NATURE OFBUSINESS

 

Kenilworth Systems Corporation(the “Company”) was incorporated in New York in April 1968 and now plans to beengaged in the business of developing and manufacturing terminals that permitindividuals from remote locations, to play along with live in-progress casinotable games located outside the casino confines via TV (simulcast) satellitebroadcast around the world.

 

The Company was in bankruptcyproceedings under Chapter 7 and 11 of the Bankruptcy Code for the period fromAugust 28, 1982 through September 23, 1998. The Company ceased all operations,between February 2, 1991 through September 23,1998.

 

The Company emerged fromChapter 7 bankruptcy on September 23, 1998 and plans to be engaged in thedevelopment, manufacturing, marketing and operation of a systems that allowscasino patrons to play along with live table games in-progress via TV satellitebroadcasts on terminals located outside the casino confines.

 

NOTE 3 - PRINCIPLES OF CONSOLIDATION

 

The consolidated financialstatements include the accounts of Kenilworth Systems Corporation and itswholly owned subsidiaries: Video Wagering Systems Corporation, RoulabetteNevada Corporation and Kenilworth Systems Nevada Corporation. None of thesesubsidiaries has any assets or liabilities.

 

NOTE 4 - EARNINGS PER SHARE

 

The Company computes andpresents earnings (loss) per share in accordance with the requirements ofStatement of Financial Accounting Standards (“SFAS”) No. 128 “Earnings PerShare”.

 

Basic loss per share is basedon the weighted-average number of shares of common stock outstanding for theperiod, which were ($.00), ($.00), and ($.00)

 

6

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for the year ended December 31,2001, and the periods September 30, 2002 and September 30, 2001.

 

Diluted earnings per share havenot been presented in the accompanying financial statements because the effectof assumed conversion of convertible promissory notes was anti-dilutive.

 

NOTE 5 - INCOME TAXES

 

The Company uses the liabilitymethod to account for income taxes in accordance With requirements of SFAS No.109.

 

The Company is a “C”Corporation for tax purposes.

 

The Company estimates that ithas available approximately $9,000,000 in net operating loss carry-forwards,which expire at various dates through 2020. Utilization of the NOLcarry-forward may be limited under various sections of the Internal RevenueCode depending on the nature of the Company’s operations.

 

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

 

NOTE 6 - USE OF ESTIMATES IN THEFINANCIAL STATEMENTS

 

The preparation of financialstatements in conformity with generally accepted accounting principles requiresmanagement to make estimates and assumptions that affect the reported amountsof assets and liabilities and disclosure of contingent assets and liabilitiesat the date of the financial statements and the reported amounts of revenuesand expenses during the reporting period. Actual results could differ fromthese estimates.

 

NOTE 7 - FAIR VALUE OF FINANCIALINSTRUMENTS

 

The Company’s financialstatements include cash, receivables, pre-paid expenses and accounts payable.Due to the short-term nature of these instruments, the fair value of theseinstruments approximates their recorded values.

 

NOTE 8 - PROPERTY AND EQUIPMENT

 

Property and Equipment arestated at cost. For financial reporting purposes, property and equipment aredepreciated utilizing the Straight-Line Method over the estimated useful livesof the related assets as follows:

 

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

 

7

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Propertyand Equipment consist of the following

as ofSeptember 30, 2002 and

September30, 2001

 
|                               |   | **Nine-months ended  September 30** |       |
|------------------------------------|--------|-------------------------------------|------------|
|                               |   | **2002**                            | ** ** | **2001** |   |
|                               |   |                                |       |   |   |
| Office  Equipment                  |   | $                                   | 2,939      |   | $ | 2,939 |   |
| Vehicles                           |   | 8,500                               |       | 8,500 |   |
|                               |   | $                                   | 11,439     |   | $ | 11,439 |   |
| Less-Accumulated  Amortization     |   | 8,500                               |       | 2,288 |   |
| Total  Property and Equipment, Net |   | $                                   | 2,939      |   | $ | 9,151 |   |

 

Depreciation expense for thenine months ended September 30, 2002 and June 30, 2001 was $8,500 and $2,288respectively.

 

NOTE 9 - DUE TO/FROM SHAREHOLDERS ATSEPTEMBER 30, 2002

 

Due to/from shareholders atSeptember 30, 2002 and December 31, 2001 represents advances made to astockholder of the Company or loaned to the Company in the normal course ofbusiness. Such amounts are non-interest bearing and have no definite repaymentterms.

 

NOTE 10 - CONVERTIBLE PROMISSORY NOTES

 

During the first and secondquarters, January 15 through June 30,2002, the Company sold twelve (12) offifteen (15) authorized by the Board of Directors, ten thousand dollar($10,000) Convertible Promissory Notes to present shareholders of theCompany.  All the notes are convertibleinto restricted Common Stock of the Company. All Holders of the Convertible Promissory Notes converted their Notes.

 

NOTE 11 - GOING CONCERN UNCERTAINTY

 

As indicated in Note 2, in theAnnual Report on Form 10-K for the year ended December 31, 2001, the Companyemerged from Chapter 7 in September 1998 and has not yet commencedoperations.  These factors createuncertainty as to the Company’s ability to operate as a going-concern.Management plans to simulcast live in-progress casino table game action viadigital satellite transmission around the world. The Company plans to obtainthe necessary funding by offering its common stock, or Senior CumulativeConvertible Preferred Shares in a private placement, or selling limited jointventure participations in future “play along with casino game” franchises.  There can be no assurances the Company canbe successful in obtaining such financing.

 

8

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

 

NOTE 12 - COMMITMENTS ANDCONTINGENCIES

 

OUTSTANDING PAYROLL TAXES

 

As of year-end, 2000, theInternal Revenue Service is contending that the Company owes payroll taxesincluding interest and penalties totaling almost four hundred thousand dollars($400,000) for various periods from 1985-1991. The Company is currently innegotiations with the IRS to resolve these issues. In management’s opinion, noaccruals are necessary since it believes that these assessments are incorrectand were discharged in its bankruptcy proceedings. Similar contentions were madeby the New York State Income Tax Authorities, which have been officiallycancelled by New York State on July 1, 2002.

 

NOTE 13 - STOCK OPTIONS

 

The Company does not plan, atthis time, to make any adjustments to it’s financials as the result of issuingstock options totaling three million five hundred thousand (3,500,000) commonshares of the Company.  The exerciseprice of the stock options are well above the price per share of the commonstock for the last five (5) years.

 

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

RESULTS OF OPERATIONS

 

Since we emerged frombankruptcy proceedings on September 23, 1998 we have had no revenues fromoperations. We sustained substantial losses from general administrative expensesamounting to $421,491 in 2001, $136,589 in 2000 and for the nine-months endedSeptember 30, 2002 we sustained losses from general administrative expensesamounting to $428,900 compared to a loss of $317,935 for the nine-months endingSeptember 30, 2002. Kenilworth has had no revenues from operations during thepast ten (10) years and there can be no assurances that it will ever haverevenues from present planned operations.

 

LIQUIDITY AND CAPITAL RESOURCES

 

Our present plans are todevelop a wagering system dubbed “Roulabette” that would allow patrons all overthe industrialized world to play and wager on live simulcast casino table gameson terminals placed in hotels, resorts, bars and other public gathering placesand in homes and offices on personal computers (PC’s) or television setsconnected to set top boxes for Interactive TV via digital satellite or cablebroadcasts emanating from strictly regulated U.S. casinos.

 

The first step will be toconduct a one (1) month test of the system at a casino site to prove theviability of broadcasting live in-progress table games around the world.

 

To conduct the tests Kenilworthbelieves it will require initially five million dollars ($5,000,000) to (a)purchase computers, digital television broadcast

 

9

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equipment and table games; and,(b) defray the cost of the facility and pay the salaries of six (6) employeeswho are specialists in software design, TV broadcasts, and mechanical design,for a period of eighteen (18) months, and from time to time, consultants whowill assist the design team. In order to market Project Roulabette while thedevelopment of the terminals proceeds we will require an additional fivemillion dollars ($5,000,000) to hire management and marketing people to securefuture orders for the system.

 

Unless we are able to obtainthese funds, of which there are no assurances none of the tests and initialdevelopment work can commence; and we will not be able to commence our plannedbusiness.

 

Kenilworth plans to obtain thenecessary funding by offering in a Private Placement, Common Shares, CumulativeConvertible Preferred Shares and/or by the sale of limited joint ventureparticipations in future Roulabette franchises. There can be no assurances thatthe Company will be able to secure any of these funds.

 

When the tests are completedand we have obtained approval from the Nevada gaming control regulators tobroadcast the live in progress casino table games and has contracts withfranchisees to place terminals around the world and franchise televisionbroadcasters, we expect to commence normal business. Kenilworth will also seekto obtain production financing from regular banking sources to finance themanufacturing of the Roulabette terminals. There can be no assurances that anysuch financing will be available to us.

 

CAUTIONARY STATEMENT FORPURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATIONREFORM ACT OF 1995 AND RISK FACTORS

 

The information contained inthis Form 10-Q and Kenilworth’s other filings with the Securities ExchangeCommission may contain “forward-looking” statements within the meaning ofsection 27A of the Securities Act of 1933, as amended, and Section 21E of theSecurities Exchange Act of 1934, as amended, and is subject to the safe harborscreated thereby. Such information involves important risks and uncertaintiesthat could significantly affect results in the future and, accordingly, suchresults may differ from those expressed in any forward-looking statementsherein. Future operating results may be adversely affected as a result of anumber of factors.

 

You should not rely onforward-looking statements in this Form 10-Q. This Form 10-Q containsforward-looking statements that involved risks and uncertainties. We use wordssuch as “anticipates”, “believes”, “plans”, “expects”, “future”, “intends” andsimilar expressions to identify such forward-looking statements. You should notplace undue reliance on these forward-looking statements, which apply only asof the date of this Form 10-Q. Our actual results could differ materially fromthose anticipated in these forward-looking statements for many reasons,including the risks faced by Kenilworth as described below and elsewhere inthis Form 10-Q.

 

RISKS

 

Specific reference is made toeach of the risks described in Item 7 of the Form 10-K for December 31, 2001under 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.

 

 

10

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PARTII.

OTHERINFORMATION

 

Item 1.   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 OFSECURITIES HOLDERS:

 

None

 

Item 5.   EXHIBITS AND REPORTS ON FORM 8-K:

 

a)  None

 

b)  On July 12, 2002 Kenilworth filed an 8-K inwhich the Company reported the following event:

 

Herbert Lindo, Chairman andPresident of Kenilworth Systems Corporation (“Kenilworth”) since 1972, advisedthe Company’s Board of Directors that on June 26, 2002 the Sheriff of NassauCounty (the “Sheriff”) sold at a purported Public Auction Sale (the “Sale”),10,333,450 restricted common shares of Kenilworth Systems Corporation (the“Shares”) that he had owned and which represented control (14% of theoutstanding shares) of Kenilworth, for one-thousand dollars ($1,000) or$0.000095 per share. The Shares were sold to Tappan Zee Capital Corp. (“TappanZee”). On the date of the Sale the Shares had a market value in excess of ninehundred thousand dollars ($900,000). The Sheriff seized and sold the Shares onbehalf of Tappan Zee, as a result of a claim by Tappan Zee in a disputed civilsuit brought in the New York State Supreme Court for $128,062.  Tappan Zee was both the foreclosing partyand the purchaser.

 

Kenilworth claims that theSheriff’s Auction Sale was conducted in a fraudulent manner, by (1) failing tocomply with the rules and regulations set forth under the Securities andExchange Commission Act of 1933 and 1934, as amended (the “Acts”), and (2) byfailing to properly advertise the Sale, failing to notify any or all Kenilworthshareholder’s (numbering approximately 5,500), and (3) failing to register theshares with the Securities and Exchange Commission before conducting the saleor in the absence of registering the shares, or obtain a No-Action letter fromthe Commission permitting the Public Sale, and (4) by making an immediatedistribution of the shares, and (5) by failing to file required notices 13 D-Gas provided under the Acts.  Tappan Zeeand its Counsel and the Sheriff’s department were advised in court documentsand

 

11

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correspondence that their actsviolated Federal and State Securities Laws, prior to the Sale.

 

Kenilworth will seek in theFederal Courts to cancel the 10,333,450 shares, which were the subject of theSheriff Auction Sale, and seek triple damages under RICO on behalf of theshareholders of Kenilworth.

 

Subsequent Events

 

(a)                  The Annual Meeting of theShareholders of Kenilworth took place on July 17, 2002.  At the meeting Herbert Lindo, Kit Wong andJoyce Clark, the incumbent and four (4) new management endorsed directors: GinoScotto, Patrick J. Mc Devitt, Steve Donner, and Preston Smart were unanimouslyelected by the shareholders.

 

Therewere no other proposals presented at the meeting.

 

(b)                 The Board of Directorsauthorized the issuance of five million (5,000,000) shares of authorized butunissued Common Stock of the Corporation to the Directors in lieu ofcompensation and liability insurance for the ensuing year.

 

(c)                  On October 11, 1002 the Boardof Directors unanimously agreed to ask Preston Smart to resign from theCorporation’s Board of Directors. As a member of the Board, Preston Smart andthe Corporation may be faced with a possible conflict of interest in futureplanned objectives by the Corporation.

 

(d)                 On October 11, 2002 the Boardof Directors unanimously elected Maureen Plovnick, the Corporate Secretary ofthe Corporation and Kenilworth Systems Nevada Corporation, to the Board ofDirectors.

 

Herbert Lindo, the Presidentand Chief Financial Officer of Kenilworth Systems Corporation hereby certifiesunder penalty of perjury to the accuracy of the within report on Form 10-Q forthe three (3) and nine (9) months periods ended September 30, 2002.

 

SIGNATURES

 

Pursuant to the requirements ofthe Securities Exchange Act of 1934, the Registrant has duly caused this reportto be signed in its behalf by the undersigned thereunto duly authorized.

 

 
|                    | KENILWORTH SYSTEMS  CORPORATION               |
|-------------------------|-----------------------------------------------|
|                    |                                          |
|                    |                                          |
| Date: November 13, 2002 | By: /s/  Herbert Lindo                   |
|                    | Herbert Lindo, President                      |
|                    |                                          |
|                    |                                          |
| Date: November 13, 2002 | By: /s/  Herbert Lindo                   |
|                    | Chief Financial Officer                       |
|                    | (Principal Financial and  Accounting Officer) |

 

12

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CERTIFICATION

 

 

I, Herbert Lindo, certify that:

 

1.               I have reviewed this quarterly report on Form 10-Q of KenilworthSystems Corporation;

 

2.               Based on my knowledge, this quarterly report does not containany untrue statement of a material fact or omit to state a material factnecessary to make the statements made, in light of the circumstances underwhich such statements are made, not misleading with respect to the periodcovered by this quarterly report;

 

3.               Based on my knowledge, the financial statements, and otherfinancial information included in this quarterly report, fairly present in allmaterial respects the financial condition, results of operations and cash flowsof the registrant as of, and for, the periods presented in this quarterlyreport;

 

4.               As registrant’s certifying officer I am responsible forestablishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-14 and 15d-14) for the registrant and I have:

 

a)                designed such disclosure controls and procedures to ensure thatmaterial information relating to the registrant, including its consolidatedsubsidiaries, is made known to my by others within those entities, particularlyduring the period in which this quarterly report is being prepared;

 

b)               evaluated the effectiveness of the registrant’s disclosurecontrols and procedures as of a date within 90 days prior to the filing date ofthis quarterly report (November 13, 2002); and

 

c)                presented in this quarterly report our conclusions about theeffectiveness of the disclosure controls and procedures based on my evaluationas of November 13, 2002;

 

5.               All significant deficiencies in the design or operation ofinternal controls which could adversely affect the registrant’s ability torecord, process, summarize and report financial data and have identified forthe registrant’s auditors any material weaknesses in internal controls; and

 

a)                any fraud, whether or not material, that involves management orother employees who have a significant role in the registrant’s internalcontrols; and

 

6.               The registrant’s other certifying officers and I have indicatedin this quarterly report whether or not there were significant changes ininternal controls or in other factors that could significantly affect internalcontrols subsequent to the date of our most recent evaluation, including anycorrective actions with regard to significant deficiencies and materialweaknesses.

 

 
| Date: November 13, 2002 |   | By: /s/  Herbert Lindo            |
|-------------------------|--------|----------------------------------------|
|                    |   | President and Chief  Financial Officer |

 

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CERTIFICATIONUNDER SECTION 906

OF THESARBANES-OXLEY ACT OF 2002

 

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, eachof the undersigned certifies that this periodic report fully complies with therequirements of 13(a) or 15(d) of the Securities Exchange Act of 1934 and thatinformation contained in this periodic report fairly represents, in allmaterial respects, the financial condition and results of operations ofKenilworth Systems Corporation.

 

 
|                    | By: /s/  Herbert Lindo                   |
|-------------------------|-----------------------------------------------|
|                    | President                                     |
|                    |                                          |
|                    |                                          |
| Date: November 13, 2002 | By: /s/  Herbert Lindo                   |
|                    | Chief Financial Officer                       |
|                    | (Principal Financial and  Accounting Officer) |

 

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