**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

** **

**FORM 10-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 June 30, 2002**                                                                                                                                                                                                                                                                               |
|       |   |                                                                                                                                                                                                                                                                                                                            |
| **OR**     |
|       |   |                                                                                                                                                                                                                                                                                                                            |
| ** ̈** |   | **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**

** **

**KENILWORTH SYSTEMS CORPORATION**

(Exactname of registrant 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:

 

|                    |   | **Name of each exchange on** |
|-------------------------|--------|------------------------------|
| **Title of each class** |   | **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  ̈

 

The number of shares of commonstock, $.01 par value of the Registrant outstanding as of June 30, 2002 was:75,285,048

 

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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 June 30, 2002 (unaudited) and  December 31, 2001 |
|    |                  |   |
|    |                  | Consolidated  Condensed Statement of Operations for the six months period ended June 30,  2002 and 2001 (unaudited) |
|    |                  |   |
|    |                  | Consolidated  Condensed Statements of Cash Flows for the six months period ended  June 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

 

 

KENILWORTH SYSTEMS CORPORATION

CONDENSEDCONSOLIDATED BALANCE SHEETS

 

 
|                                                                                                                                            |   | **June 30**     |    | **December 31** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------|---------|-----------------|--------|
|                                                                                                                                            |   | **2002**        |    | **2001**        |   |
|                                                                                                                                            |   | **(unaudited)** |    |            |   |
| ASSETS                                                                                                                                          |   |            |    |            |   |
|                                                                                                                                            |   |            |    |            |   |
| Cash                                                                                                                                            |   | $               | 25,706  |            | $      | 15,266 |   |
| Due from shareholder/Note Holder                                                                                                                |   | 23,000          |    | 55,077          |   |
| Other current assets                                                                                                                            |   | 42,461          |    | 42,461          |   |
| Property, Plant and Equipment, Net                                                                                                              |   | 6,863           |    | 8,007           |   |
|                                                                                                                                            |   |            |    |            |   |
| TOTAL ASSETS                                                                                                                                    |   | $               | 98,030  |            | $      | 120,811 |   |
|                                                                                                                                            |   |            |    |            |   |
| LIABILITIES AND  STOCKHOLDERS’ EQUITY (DEFICIT)                                                                                            |   |            |    |            |   |
|                                                                                                                                            |   |            |    |            |   |
| Accrued Liabilities                                                                                                                             |   | $               | 98,648  |            | $      | 94,182 |   |
| Payroll Taxes Payable                                                                                                                           |   | 3,878           |    | 6,548           |   |
| Cumulative Convertible Promissory                                                                                                               |   |            |    |            |   |
| Notes (including accrued interest)                                                                                                              |   | 120,986         |    |            |   |
|                                                                                                                                            |   |            |    |            |   |
| TOTAL LIABILITIES                                                                                                                               |   | $               | 223,508 |            | $      | 100,730 |   |
|                                                                                                                                            |   |            |    |            |   |
| Common Stock, $.01 par value, authorized 200,000,000 shares;  issued and outstanding 73,115,484 December 31, 2001 and 75,285,048 June 30,  2002 |   | $               | 752,850 |            | $      | 731,154 |   |
| Paid in capital                                                                                                                                 |   | 24,437,277      |    | 24,245,867      |   |
| Deficit                                                                                                                                         |   | (25,064,649     | )       | (24,956,940     | )      |
|                                                                                                                                            |   |            |    |            |   |
| TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)                                                                                                       |   | $               | 125,478 |            | $      | 20,081 |   |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)                                                                                       |   | $               | 98,030  |            | $      | 120,811 |   |

See accompanying notes.

 

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KENILWORTH SYSTEMS CORPORATION

CONDENSED CONSOLIDATEDSTATEMENTS

OFOPERATION AND DEFICIT

 
| ** **                                         |   | **Three-Months Ended  June 30** |   | **Six-Months Ended  June 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       |   | $                               | 69,167 |                          | $      | 138,236 |   | $ | 107,709 |   | $ | 215,960 |   |
| Placement cost of Convertible                      |   | 0                               |   | 0                             |   | 0 |   | 0 |   |
| Note Interest expense (income)                     |   |                            |   |                          |   |   |   |   |   |
| Total Costs and Expenses                           |   |                            |   |                          |   |   |   |   |   |
|                                               |   |                            |   |                          |   |   |   |   |   |
| Net income (loss) before other income and (losses) |   | (69,167                         | )      | (138,336                      | )      | (107,709 | ) | (215,960 | ) |
|                                               |   |                            |   |                          |   |   |   |   |   |
| Net income (loss)                                  |   | (69,167                         | )      | (138,180                      | )      | (107,709 | ) | (215,960 | ) |
| Deficit—Beginning of period                   |   | (24,995,482                     | )      | (24,613,074                   | )      | (24,956,940 | ) | (24,535,450 | ) |
| Deficit—End of of period                      |   | (25,064,649                     | )      | (24,751,410                   | )      | (25,064,649 | ) | (24,751,410 | ) |
|                                               |   |                            |   |                          |   |   |   |   |   |
| Earnings (Loss) per Share of common stock (Note 4) |   | 0                               |   | 0                             |   | 0 |   | 0 |   |
| Average number of shares outstanding               |   | 75,285,048                      |   | 64,888,865                    |   | 75,285,048 |   | 64,888,865 |   |
|                                                    |        |                                 |        |                               |        |  |  |  |  |  |  |  |  |

 

See accompanying notes.

 

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KENILWORTHSYSTEMS CORPORATION AND SUBSIDIARIES

CONDENSEDCONSOLIDATED STATEMENTS

OF CASHFLOWS

 
| ** **                                              |   | **Six-months ended  June 30** |     |
|---------------------------------------------------------|--------|-------------------------------|----------|
|                                                    |   | **2002**                      |     | **2001** |   |
|                                                    |   | **(unaudited)**               |     | **(unaudited)** |   |
| CASH FLOWS USED IN OPERATING ACTIVITIES                 |   |                          |     |   |   |
|                                                    |   |                          |     |   |   |
| Net Loss                                                |   | $                             | (107,709 | ) | $ | (215,960 | ) |
| Depreciation                                            |   | 2,288                         |     | 1,144 |   |
| increase (decrease) in due to related party             |   | —                        |     | 51,106 |   |
| Increase (Decrease) in accrued liabilities              |   | 27,553                        |     | 71,095 |   |
| Increase in receivables                                 |   | 3,000                         |     | (20,000 | ) |
| Prepaid expenses                                        |   |                          |     | (37,500 | ) |
| TOTAL ADJUSTMENTS NET CASH USED IN OPERATING ACTIVITIES |   | $                             | 74,865   |   | $ | (150,115 | ) |
|                                                    |   |                          |     |   |   |
| Cash flows from Investing  Activities                   |   |                          |     |   |   |
| Purchase of Equipment                                   |   | $                             |     |   | $ | 0 |   |
|                                                    |   |                          |     |   |   |
| CASH FLOWS FROM                                         |   |                          |     |   |   |
| Conversion of Promissory Notes                          |   | 10,000                        |     | 0 |   |
|                                                    |   |                          |     |   |   |
| FINANCING ACTIVITIES                                    |   |                          |     |   |   |
| Increase (decrease) in due from Shareholder             |   | 23,000                        |     |   |   |
| Proceeds from issuance of Promissory Notes              |   | 120,000                       |     | 142,500 |   |
|                                                    |   | 143,000                       |     | 142,500 |   |
| Net cash provided by financing  Activities              |   |                          |     |   |   |
| Net Increase (Decrease) in cash                         |   |                          |     | (7,615 | ) |
| CASH — BEGINNING OF PERIOD                         |   | 24,739                        |     | 8,582 |   |
| CASH — END OF PERIOD                               |   | $                             | 25,706   |   | $ | 967 |   |

 

See accompanying notes.

 

5

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KENILWORTHSYSTEMS CORPORATION

NOTES TO 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 June 30, 2002 (unaudited) and December31, 2001 and the related statements of operations for each of the three and sixmonth periods ended June 30, 2002 and 2001 and statement of cash flows for thesix month period ended June 30, 2002 and 2001. The results of operations forthe three and six month periods ended June 30, 2002 are not necessarilyindicative of the results for the entire year.

 

 

NOTE 2 — THECOMPANY AND NATURE OF BUSINESS

 

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 inside and outside the casino confines via TV (simulcast)satellite broadcast 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 within the casino confines and outside thecasino 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) for the year ended December 31,2001, and the periods June 30, 2002 and June 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.

 

 

6

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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” Corporationfor tax purposes.

 

The Company estimates that ithas available approximately $8,500,000 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 — USEOF ESTIMATES IN THE FINANCIAL 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 from theseestimates.

 

 

NOTE 7 — FAIRVALUE OF FINANCIAL INSTRUMENTS

 

The Company’s financialstatements include cash, receivables and accounts payable. Due to theshort-term nature of these instruments, the fair value of these instrumentsapproximates 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 ofJune 30, 2002 and

June30, 2001

 

 

|                               |   | **Six-months ended** |   |
|------------------------------------|--------|----------------------|--------|
|                               |   | **June 30**          |   |
|                               |   | **2002**             |   | **2001** |   |
| Office Equipment                   |   | $                    | 2,939  |   | $ | 2,939 |   |
| Vehicles                           |   | 8,500                |   | 8,500 |   |
|                               |   | $                    | 11,439 |   | $ | 11,439 |   |
| Less—Accumulated Amortization |   | 4,576                |   | 2,288 |   |
| Total Property and Equipment, Net  |   | $                    | 6,863  |   | $ | 9,151 |   |

 

 

Depreciation expense for thesix months ended June 30, 2002 and June 30, 2001 was $2,288 and $2,288respectively.

 

 

NOTE 9 — DUETO/FROM SHAREHOLDERS AT June 30, 2002

 

Due to/from shareholders atJune 30, 2002 and December 31, 2001 represents advances made to a stockholderof the Company or loaned to the Company in the normal course of business. Suchamounts are non-interest bearing and have no definite repayment terms.

 

 

NOTE 10 —CONVERTIBLE PROMISSORY NOTES

 

During the second quarter,April 1 through June 30,2002, the Company sold twelve (12) of fifteen (15)authorized by the Board of Directors, ten thousand dollar ($10,000) CumulativeConvertible Promissory Notes to present shareholders of the Company.  All the notes are convertible intorestricted common stock of the Company. One holder, who purchased two (2) notes, has converted the Notessubsequent to June 30, 2002.

 

 

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 commenced operations.These factors create uncertainty as to the Company’s ability to operate as agoing-concern. Management plans to develop a wagering system that allows casinopatrons and individuals outside the casino to play along with live casino tablegames. The first step in the plan is to conduct testing. Unless the Company isable to obtain sufficient funds, none of the tests and initial development workcan commence. The Company plans to obtain the necessary funding by offering itscommon stock, or Senior Cumulative Convertible Preferred Shares in a privateplacement, or selling limited joint venture participations in future “playalong with casino game” franchises. There can be no assurances the Company canbe successful in obtaining such financing.

 

 

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.

 

 

8

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NOTE 12 —COMMITMENTS AND CONTINGENCIES

 

OUTSTANDING PAYROLL TAXES

 

As of year-end, 2000, theInternal Revenue Service is contending that the Company owes payroll taxesincluding interest and penalties totaling almost $400,000 for various periods from1985-1991. The Company currently continues negotiations with the IRS to resolvethese issues. In management’s opinion, no accruals are necessary since itbelieves that these assessments are incorrect and were discharged in itsbankruptcy proceedings. Similar contentions were made by the New York StateIncome Tax Authorities which have been officially cancelled by New York Stateon 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’SDISCUSSION AND ANALYSIS OF FINANCIAL 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 administrativeexpenses amounting to $421,491 in 2001, $136,589 in 2000 and for thethree-months ended June 30, 2002 we sustained losses from generaladministrative expenses amounting to $69,167 compared to a loss of $138,236 forthe quarter ending June 30, 2001. Kenilworth has had no revenues fromoperations during the past ten (10) years and there can be no assurances thatit will ever have revenues from present planned operations.

 

LIQUIDITY AND CAPITAL RESOURCES

 

Our present plans are to developa wagering system dubbed “Roulabette” that would allow patrons all over theindustrialized world to play and wager on live simulcast casino table games onterminals placed in hotels, resorts, bars and other public gathering places andin homes and offices on personal computers (PC’s) or television sets connectedto set top boxes for Interactive TV via digital satellite or cable broadcastsemanating 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 equipment and table games;and, b) defray the cost of the facility and pay the salaries of six (6)employees who are specialists in software design, TV broadcasts, and mechanicaldesign, for a period of eighteen (18) months, and from time to time, consultantswho will assist the design team. In order to market Project Roulabette whilethe development 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.

 

9

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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 with franchiseesto place terminals around the world and franchise television broadcasters, weexpect to commence normal business. Kenilworth will also seek to obtainproduction financing from regular banking sources to finance the manufacturingof the Roulabette terminals. There can be no assurances that any such financingwill 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 in thisForm 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 OF SECURITIES HOLDERS:

 

                None

 

 

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

 

                a)  None

 

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

 

 

                Mr. Herbert Lindo, Chairman and President ofKenilworth Systems Corporation (“Kenilworth”) since 1972, advised the company’sBoard of Directors that on June 26, 2002 the Sheriff of Nassau County (the“Sheriff”) sold at a purported public auction sale (the “Sale”), 10,333,450restricted common shares of Kenilworth Systems Corporation (the “Shares”) thathe had owned, for one-thousand dollars ($1,000). The Shares were sold to TappanZee Capital Corp. (“Tappan Zee”), the lone bidder at the Sale. On the date ofthe Sale the Shares had a market value in excess of nine hundred thousanddollars ($900,000).

 

                The Sheriff seized and sold the Shares on behalf ofTappan Zee, as a result of a claim by Tappan Zee in a disputed civil suit, thatMr. Lindo owed Tappan Zee approximately one hundred twenty eight thousanddollars ($128,000). Tappan Zee elected to have the Sheriff seize the Shares byan order obtained from the Supreme Court State of New York, County of Rockland,issued in February 1989, instead of seizing other assets owned by Mr. Lindo.

 

                Mr. Lindo further advised Kenilworth that he has madea request for Appellate Division Intervention (the “Appeal Request”), from theSupreme Court of the State of New York Appellate Division: Second JudicialDepartment, to appeal the lower courts’ ruling. In his Appeal Request, Mr.Lindo claims that the lower court’s ruling only allowed Tappan Zee to seizeapproximately one million two hundred fifty thousand (1,250,000) of his shares.The appeal further claims that the Sheriff’s auction Sale was conducted in afraudulent manner, by not complying to the rules and regulations setforth underthe Securities and Exchange Commission Act of 1933, as amended (the “Act”),regarding the sale and transfer of restricted securities. Mr. Lindo furthercontends that Tappan Zee also violated the Act, when they had the Sharesfurther transferred to various Tappan Zee insiders/owners.

 

11

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                Herbert Lindo stated he would continue to serveKenilworth without remuneration, which he has done since 1991, when Kenilworthentered Chapter 7 Bankruptcy proceedings. Kenilworth was discharged frombankruptcy proceedings in September 1998, when Kenilworth paid 100% of allapproved creditor claims in

full.

 

 

Subsequent Events

 

(a)                  TheAnnual Meeting of the Shareholders of Kenilworth took place on July 17,2002.  At the meeting Herbert Lindo, KitWong and Joyce Clark, the incumbent and four (4) new management endorseddirectors: Gino Scotto, Patrick J. McDevitt, Steve Donner, and Preston Smartwere unanimously elected by the shareholders.

 

 

Therewere no other proposals presented at the meeting.

 

 

 

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) months period ended June 30, 2002.

 

12

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SIGNATURE

 

 

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

 

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