Table of Contents

** **

 

** **

**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

 

**FORM 10-Q**

 

**(Mark One)**

 

| **x**                                                       | **Quarterly report pursuant to Section 13 OR  15(D) of the Securities Exchange Act of 1934**  |
|-------------------------------------------------------------|---------------------------------------------------------------------------------------------------------|
|                                                        |                                                                                                    |
| **For the quarterly period  ended September 30, 2010** |
|                                                        |
| **OR**                                                      |
|                                                        |                                                                                                    |
| **o**                                                       | **Transition report pursuant to Section 13 or  15(D) of the Securities Exchange Act of 1934** |

 

**For the transition periodfrom             to           **

 

**Commission File Number:0-08962**

 

**KENILWORTH SYSTEMSCORPORATION**

(Exact name of registrant as specified inits charter)

 

| **New York**                              | ** ** | **84-1641415**                       |
|-------------------------------------------|------------|--------------------------------------|
| (State of incorporation)                  |       | (I.R.S. employer identification no.) |
|                                      |       |                                 |
| **185 Willis Avenue,  Mineola, New York** | ** ** | **11501**                            |
| (Address of principal executive offices)  |       | (Zip Code)                           |

 

**(516) 741-1352**

(Registrant’s telephone number, includingarea code)

 

Indicate by check mark whether the 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 12months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements forthe past 90 days. Yes  x  No  o

 

Indicate by check mark whether the registrant hassubmitted electronically and posted on its corporate Web site, if any, everyInteractive Data File required to be submitted and posted pursuant toRule 405 of Regulation S-T (§ 232.405 of this chapter) during thepreceding 12 months (or for such shorter period that the registrant wasrequired to submit and post such files). Yes  o  No  o

 

Indicate by check mark whether the registrant is alarge accelerated filer, an accelerated filer, a non-accelerated filer, or asmaller reporting company. See definitions of “large accelerated filer,” “acceleratedfiler,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.(Check one):

 

| Large accelerated filer o                      |   | Accelerated filer o         |
|------------------------------------------------|--------|----------------------------------|
|                                           |   |                             |
| Non-accelerated filer o                        |   | Smaller reporting company x |
| (Do not check if a smaller reporting  company) |   |                             |

 

Indicate by check mark whether the registrant is ashell company (as defined in Rule 12b-2 of the Act).  Yes  o  No  x

 

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

 

The number of shares of common stock, $.01 parvalue of the Registrant outstanding as of September 30, 2010 was 644,426,586.

 

 

 

----

Table of Contents

 

**Disclaimer****:**

 

**As stated in Kenilworth’s prior 10-Q for theperiod ended June 30, 2010, the Company’s management team has changed.Management is dependent on the probability that financial information containedin the Company’s previous 10-Qs and 10-Ks is correct. The Company is activelyengaged in the process of hiring an accounting firm to review and audit thebooks of the corporation retroactively to 2005 when the last audited statementswere filed in the 2004 10-K.**

 

**We plan to continue presentation of the financialsand notes as Mr. Lindo had presented them in the 2009 10-K and subsequent10-Qs for 2010.  If it becomes necessary(a strong possibility) we will restate them in a form acceptable by the S.E.C.**

 

**We shall also continue to use the format used inthe previous filings to avoid confusion.**

 

**We believe that all material transactions havebeen disclosed in this 10-Q, but an audit could reveal additional items.**

 

**KENILWORTH SYSTEMSCORPORATION AND SUBSIDIARIES**

 

**INDEX**

 
| **Part I.**  | **Financial Information**                                                                                                       |
|-------------------|---------------------------------------------------------------------------------------------------------------------------------|
|              |                                                                                                                            |
| Item 1.           | Unaudited Condensed Consolidated Financial  Statements                                                                          |
|              |                                                                                                                            |
|              | Condensed  Consolidated Statements of Operation (and Deficit) (unaudited) - Nine months  ended September 30, 2010 and 2009 |
|              |                                                                                                                            |
|              | Condensed  Consolidated Balance Sheets (unaudited) — September 30, 2010 and  December 31, 2009                   |
|              |                                                                                                                            |
|              | Condensed  Consolidated Statements of Cash Flows (unaudited) - Nine months ended  September 30, 2010 and 2009              |
|              |                                                                                                                            |
|              | Condensed  Notes to Consolidated Financial Statements (unaudited)                                                               |
|              |                                                                                                                            |
| Item 2.           | Management’s  Discussion and Analysis of Financial Condition and Results of Operations                                     |
|              |                                                                                                                            |
| Item 3.           | Quantitative and Qualitative Disclosures About  Market Risk — Not Applicable                                               |
|              |                                                                                                                            |
| Item 4.           | Controls and Procedures                                                                                                         |
|              |                                                                                                                            |
| **Part II.** | **Other Information**                                                                                                           |
|              |                                                                                                                            |
| Item 1.           | Description of  Business                                                                                                        |
|              |                                                                                                                            |
| Item 2.           | Legal Proceedings                                                                                                               |
|              |                                                                                                                            |
| Item 3.           | CHANGE IN SECURITIES:                                                                                                           |
|              |                                                                                                                            |
| Item 4.           | DEFAULT UPON  SENIOR SECURITIES:                                                                                                |
|              |                                                                                                                            |
| Item 5.           | OTHER INFORMATION:                                                                                                              |
|              |                                                                                                                            |
| Item 7.           | Exhibits                                                                                                                        |
|              |                                                                                                                            |
| Signature         |                                                                                                                            |

 

2

----

Table of Contents

 

FORWARD LOOKING STATEMENTS

 

The information contained in this Form 10-Qand Kenilworth’s other filings with the Securities Exchange Commission contain “forward-looking”statements within the meaning of section 27A of the Securities Act of1933, as amended, and Section 21E of the Securities Exchange Act of 1934,as amended, and is subject to the safe harbors created thereby. Suchinformation involves important risks and uncertainties that could significantlyaffect results in the future and, accordingly, such results may differ fromthose expressed in any forward looking statements herein. Future operatingresults may be adversely affected as a result of a number of factors.

 

You should not rely on forward-looking statementsin this Form 10-Q. This Form 10-Q contains forward-looking statementsthat involved risks and uncertainties. We use words such as “anticipates”, “believes”,“plans”, “expects”, “future”, “intends” and similar expressions to identifysuch forward-looking statements. You should not place undue reliance on theseforward-looking statements, which apply only as of the date of thisForm 10-Q. Our actual results could differ materially from those anticipatedin these forward-looking statements for many reasons, including the risks facedby Kenilworth as described below and elsewhere in this Form 10-Q.

 

RISKS

 

Specific reference is made to each of the risksdescribed in Item 7 in Part II of the Form 10-K for December 31,2009 under the discussion “Cautionary Statement For Purposes of the Safe HarborProvisions of the Private Securities Litigation Reform Act of 1995 and RiskFactors”. Reference is also made to future filings under Forms 10-Q and Forms10-K and filings under the Securities Exchange Act of 1934 as amended and asmay be applicable under the Securities Act of 1933 as amended.

 

INTRODUCTORY NOTE

 

The Company’s management has always objected to theSEC designation as a **Development StageCompany**.  The Company made a one hundred percent (100%) cashdistribution to all approved creditors and **paidin full all administrative fees and expenses when we exited from BankruptcyProceedings.**

 

The Development Stage Company designation appliesONLY to Bankrupt Companies that exit from Bankruptcy Proceedings**that do not pay all approved creditors in full.**

 

***Remainderof page intentionally left blank***

 

3

----

Table of Contents

 

KENILWORTH SYSTEMS CORPORATION

 

CONDENSEDCONSOLIDATED STATEMENT OF OPERATIONS

AND DEFICIT

**(Unaudited)**

 
| ** **                                     | ** ** | **For the nine months ended** | ** ** |
|------------------------------------------------|------------|---------------------------------------------------|------------|
| ** **                                     | ** ** | **September 30,**                            | ** ** |
| ** **                                     | ** ** | **2010**                                          | ** ** | **2009** | ** ** |
| ** **                                     | ** ** | ******                                            | ** ** | ***** | ** ** |
| Revenues                                       |       |                                              |       |   |   |
| Sales                                          |       | $                                                 | 0          |   | $ | 0 |   |
|                                           |       |                                              |       |   |   |
| Expenses                                       |       |                                              |       |   |   |
| Selling, general and  administrative           |       | $                                                 | 464,296    |   | $ | 819,172 |   |
|                                           |       |                                              |       |   |   |
| Other income (expenses)                        |       | —                                            |       | — |   |
| Interest income                                |       | 0                                                 |       | 0 |   |
| Interest expense                               |       | 0                                                 |       | 0 |   |
|                                           |       |                                              |       |   |   |
| Total other income  (expense)                  |       | 0                                                 |       | 0 |   |
|                                           |       |                                              |       |   |   |
| **NET  LOSS * ****                             |       | $                                                 | 464,296    |   | $ | 819,172 |   |
|                                           |       |                                              |       |   |   |
| Basic and diluted loss  per share              |       | $                                                 | 0.001      |   | $ | 0.001 |   |
|                                           |       |                                              |       |   |   |
| Weighted average number  of shares outstanding |       | 644,426,586                                       |       | 502,956,586 |   |

 

----

** Includes a NON CASH loss of $83,970 resultingfrom the sale and issuance of 42,987,500 shares of RESTRICTED Common Stock, parvalue $0.01 per share, for cash at less than par value during the period fromJanuary 1, 2010 and September 30, 2010 with the loss charged topaid-in capital.

 

* Includes a NON CASH loss of $48,778 resultingfrom the sale and issuance of 24,389,000 shares of RESTRICTED Common Stock, parvalue $0.01 per share, for cash at less than par value during the period fromJanuary 1, 2009 and September 30, 2009 with the loss charged topaid-in capital.

 

The accompanying notes are an integral partof these financial statements.

 

4

----

Table of Contents

 

KENILWORTH SYSTEMS CORPORATION

 

CONDENSEDCONSOLIDATED BALANCE SHEETS

**(Unaudited)**

 
| ** **                                                                                                                                         | ** ** | **September 30,  2010** | ** ** | **December 31,  2009** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------|------------|-----------------------------|------------|
|                                                                                                                                               |       |                         |       |                        |       |
| ASSETS                                                                                                                                             |       |                         |       |                        |       |
| CURRENT ASSETS                                                                                                                                     |       |                         |       |                        |       |
| Cash                                                                                                                                               |       | $                            | 45,911     |                        | $          | 123,633 |   |
| Prepaid expenses (Note  6)                                                                                                                         |       | 40,000                       |       | 80,000                      |       |
| Loan receivable — from  vendors including accrued interest                                                                                    |       | 52,400                       |       | 58,600                      |       |
| Receivable from the  Estate of Herbert Lindo (Note 8)                                                                                              |       | 803,438                      |       | 775,725                     |       |
|                                                                                                                                               |       |                         |       |                        |       |
| TOTAL CURRENT ASSETS                                                                                                                               |       | $                            | 941,749    |                        | $          | 1,037,958 |   |
| PROPERTY AND EQUIPMENT  — NET                                                                                                                 |       | 1,001                        |       | 1,156                       |       |
|                                                                                                                                               |       |                         |       |                        |       |
| SECURITY DEPOSIT                                                                                                                                   |       | 13,677                       |       | 13,677                      |       |
|                                                                                                                                               |       |                         |       |                        |       |
| TOTAL ASSETS                                                                                                                                       |       | $                            | 956,427    |                        | $          | 1,052,791 |   |
|                                                                                                                                               |       |                         |       |                        |       |
| LIABILITIES  AND STOCKHOLDERS’ EQUITY                                                                                                         |       |                         |       |                        |       |
| CURRENT LIABILITIES                                                                                                                                |       |                         |       |                        |       |
| Accounts payable and  accrued expenses                                                                                                             |       | $                            | 57,690     |                        | $          | 165,349 |   |
| Payroll taxes payable  (Note 7)                                                                                                                    |       | 193,760                      |       | 18,108                      |       |
| Loans payable —  including accrued interest                                                                                                   |       | 21,400                       |       | 25,101                      |       |
|                                                                                                                                               |       |                         |       |                        |       |
| TOTAL CURRENT  LIABILITIES                                                                                                                         |       | $                            | 251,450    |                        | $          | 208,558 |   |
|                                                                                                                                               |       |                         |       |                        |       |
| STOCKHOLDERS’ EQUITY  (DEFICIT)                                                                                                               |       |                         |       |                        |       |
| Preferred Stock - par  value $.01 per share; authorized 50,000,000 shares; no shares issued and  outstanding                                       |       |                         |       |                        |       |
| Common stock - par  value $.01 per share; authorized 1,000,000,000shares; issued and outstanding 644,426,586  and 587,691,586 shares, respectively |       | 6,444,266                    |       | 5,876,915                   |       |
| Additional paid-in  capital                                                                                                                        |       | 31,926,118                   |       | 32,010,088                  |       |
| Accumulated deficit                                                                                                                                |       | (37,665,407                  | )          | (32,242,790                 | )          |
|                                                                                                                                               |       |                         |       |                        |       |
| TOTAL STOCKHOLDER’S  EQUITY                                                                                                                   |       | 704,977                      |       | 844,233                     |       |
|                                                                                                                                               |       |                         |       |                        |       |
| TOTAL LIABILITIES AND  STOCKHOLDER’S EQUITY                                                                                                   |       | $                            | 956,427    |                        | $          | 1,052,791 |   |

 

The accompanying notes are an integral partof these financial statements.

 

5

----

Table of Contents

 

KENILWORTH SYSTEMS CORPORATION

 

CONDENSEDCONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30,

**(Unaudited)**

 
| ** **                                                                      | ** ** | **2010** | ** ** | **2009** | ** ** |
|---------------------------------------------------------------------------------|------------|----------|------------|----------|------------|
|                                                                            |       |     |       |     |       |
| Cash flows from  operating activities                                           |       |     |       |     |       |
| Net loss                                                                        |       | $        | (464,296   | )        | $          | (879,182 | ) |
| Increase (decrease) in  cash attributable to changes in assets and liabilities: |       |     |       |     |       |
| Prepaid expenses                                                                |       | 40,000   |       | 20,000   |       |
| Loan Receivable                                                                 |       | 20,600   |       | 23,100   |       |
| Accounts payable and  accrued expenses                                          |       | (57,390  | )          | 99,612   |       |
| Payroll taxes payable                                                           |       | (168,700 | )          | 33,462   |       |
| Net cash used in  operating activities                                          |       | (629,786 | )          | (642,998 | )          |
| Net cash used in  investing activities                                          |       | —   |       | —   |       |
| Cash flows from  financing activities                                           |       |     |       |     |       |
| Proceeds from Paid in  Capital                                                  |       |     |       |     |       |
| Proceeds from  convertible notes payable                                        |       |     |       |     |       |
| Proceeds from sale of  common stock                                             |       | 345,900  |       | 508,000  |       |
| Proceeds from stock  subscriptions receivable                                   |       | —   |       | —   |       |
| Net cash provided by  financing activities                                      |       | 345,900  |       | 508,000  |       |
| Net change in cash                                                              |       |     |       |     |       |
| Cash — beginning of  period                                                |       | 3,308    |       | 103      |       |
| Cash - end of period                                                            |       | $        | 45,911     |     | $          | 26,868 |   |

 

The accompanying notes are an integral partof these financial statements.

 

6

----

Table of Contents

 

**KENILWORTH SYSTEMSCORPORATION AND SUBSIDIARIES**

** **

**CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(UNAUDITED)**

 

NOTE 1- BASIS OF PRESENTATION

 

In the opinion of management, the accompanyingunaudited condensed consolidated financial statements of Kenilworth SystemsCorporation and subsidiaries (“Kenilworth”) beginning as of January 1,20010 contain all adjustments (consisting of only normal accruals) necessary topresent fairly the consolidated balance sheets as of September 30, 2010and December 31, 2009 and the related statements of operations and cashflows for the nine (9) month periods ended September 30, 2010 and2009  These financial statements should be read in conjunction with theconsolidated financial statements and notes thereto included in our AnnualReport on FORM 10-K for the fiscal year ended December 31, 2009.

 

The results of operations for the nine(9) month period ended September 30, 2010 are not necessarilyindicative of the results for the entire year ending December 31, 2010.

 

NOTE 2- THE COMPANY AND NATURE OF BUSINESS

 

Kenilworth Systems Corporation (the “Company”) wasincorporated in New York in April 1968 and since exiting from bankruptcyproceedings in 1998 plans to be engaged in the business of developing systemsthat permit individuals from remote locations, to play along with live,in-progress casino table games via Internet and Cable Broadcasts aroundthe world.

 

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

 

NOTE 3- PRINCIPLES OF CONSOLIDATION

 

The consolidated financial statements include theaccounts of Kenilworth Systems Corporation and its wholly owned subsidiaries:Video Wagering Systems Corporation, Roulabette Nevada Corporation, KenilworthSystems Nevada Corporation, Kenilworth Systems (UK) Limited, KenilworthSatellite Broadcasting Corporation (a Delaware Corporation), Satellite GamingConsultants, Inc. (a Delaware Corporation), KenSysCo International andConvergent Networks. None of these subsidiaries has any assets or liabilities,except for Satellite Gaming Consultants, Inc. whose activities areconsolidated herein.

 

NOTE 4- GOING CONCERN UNCERTAINTY

 

As indicated in Note 2, the Company exited fromChapter 7 in September 1998 and has not yet commenced revenue producingoperations. These factors create uncertainty as to the Company’s ability tooperate as a going-concern and continue in business. Management plans todevelop a wagering system that allows casino patrons and individuals outsidethe casino to play along remotely with live in-progress casino table games. TheCompany continues to obtain the necessary funding by offering its Common Stock,Senior Cumulative Convertible Preferred Shares, and Convertible PromissoryNotes and/or Stock Purchase and Option Agreements in private placements toqualified buyers. There can be no assurances the Company can be successful incontinuing to obtain such financing.

 

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

 

7

----

Table ofContents

 

NOTE 5- CONVERTIBLE PROMISSORY NOTES AND STOCK PURCHASE AND OPTION AGREEMENTS

 

During the nine-month period endedSeptember 30, 2010 and September 30, 2009 respectively, the Companysold to various private investors $345,905 and $122,000 principal amount ofConvertible Promissory Notes, made loans to the Company and issued StockPurchase and Option Agreements bearing interest at rates ranging from 4.00% to12.00% per annum.  The Notes had a six-month and one-year term and wereimmediately convertible at the option of the noteholder into shares ofrestricted common stock based on conversion prices ranging from $0.005 to $0.10per share and purchase prices at $0.008 per share.

 

STOCK OPTIONS

 

For the period April 2008 throughMay 2009, the Company granted Stock Options for 115,709,000 restrictedCommon Shares, par value $0.01 per share at an average price of $0.011 pershare in connection with the private sale to accredited investors of StockPurchase and Option Agreements.  The Option grant is for a period of two(2) years from the date of the Stock Purchase and Option Agreements.

 

In the nine-month period ending September 30,2010, options granted in 2008 have been exercised for $74,000 (9,250,000shares) and 2010 options were exercised for $2,400 (300,000shares).

 

NOTE 6- NON CASH TRANSACTIONS

 

Common shares issued for services

 

2010:

 

The Company issued six million (6,000,000) sharesto Directors and employees as compensation for services rendered in the nine (9) monthsended September 30, 2010.

 

2009:

 

The Company issued 23,179,000 shares ascompensation for services rendered.  Theservices were valued at $347,686.

 

2008:

 

The Company issued 20,675,000 shares ascompensation for services rendered.  Theservices were valued at $418,500.

 

PREPAID EXPENSES

 

Prepaid expenses consist of the unamortized valueof stock issued to directors and employees for their services for the twelve(12) month period ending September 30, 2009.  The balance will beamortized on a straight-line basis over the remaining term.  The directorsreceive no other compensation.

 

8

----

Table ofContents

 

NOTE 7— PAYROLL TAXES PAYABLE

 

New management has requested assistance from theIRS and New York State in resolving the Company’s tax issues.  The Company had previously made agreementswith the IRS and New York State to make scheduled payments of past payrolltaxes and interest.  We believe this didnot happen as planned.  At present, newmanagement is working with the IRS and New York State to determine the tax andinterest due.

 

NOTE 8- RECEIVABLE FROM HERBERT LINDO

 

On November 27, 2006 Herbert Lindo, theChairman and Chief Executive Officer exercised a five million (5,000,000) shareoption for seven hundred fifty thousand dollars ($750,000) at fifteen cents($0.15) per share pursuant to the Company’s Performance and Equity Plan. Theprice per share was the price for the Option which would have expired on thefollowing day. Mr. Lindo did not own any other Options pursuant to thePlan. The average market price of the Common Stock for the thirty (30) days priorto November 27, 2006 was high: $0.05, low: $0.03. As provided in the Plan,Herbert Lindo borrowed the seven hundred fifty thousand dollars ($750,000) fromthe Company and pledged the five million (5,000,000) and other shares he owns,as collateral for the loan. The five million (5,000,000) shares were issued asrestricted shares.

 

At a regular meeting of the Board of Directors inJuly 2008, the Board unanimously approved (with Mr. Lindo abstaining)to extend the $750,000 loan until December 31, 2009, providedMr. Lindo agreed to pay a nominal one and one-half percent (1.5%) interestfrom November 2006.  Mr. Lindo agreed to pay the interest whichtotaled $53,438 through September 30, 2010. Mr. Lindo provided hisservices to the company without any remuneration.  The loan remains openat September 30, 2010.  The Companywill look to the Estate of Herbert Lindo for payment.

 

NOTE 9- SUBSEQUENT EVENTS

 

Subsequent to September 30, 2010, the Companya sold $20,000 in a Stock Purchase and Option Agreement (2,500,000 shares) to aprevious accredited investor.

 

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

 

RESULTS OF OPERATIONS

 

Since we exited from bankruptcy proceedings onSeptember 23, 1998 we have had no revenues from operations. We sustainedsubstantial losses from general administrative expenses amounting to$37,242,790 through December 31, 2009 and for the nine-months endedSeptember 30, 2010 we sustained a loss amounting to $464,296. Kenilworthhas had no revenues from operations during the past sixteen (16) years andthere can be no assurances that it will ever have revenues from present plannedoperations.

 

9

----

Table ofContents

 

LIQUIDITY AND CAPITAL RESOURCES

 

Current management, under the guidance of DanSnyder, has several plans it hopes to put in place.  Our intentions are to protect theshareholders and Directors and bring the Company into a well run 21st century cutting edge companythrough the following steps:

 

a.)           Review the books and records of the Company for the previous five (5) years,have all necessary   filings updatedand/or restated as needed, reach agreements with all authorities and presentaudited financials.

b.)          Protect the valuable intellectual properties assets (patents, etc.).

c.)           Foster aggressive growth by acquisition and development of our corecapabilities.

 

Of course, there are no assurances that we can obtainthe financing or achieve these goals.

 

Kenilworth Systems Corporation is an integratedtechnology corporation with intellectual property assets and technicalcapabilities in the live online gaming sector.

 

Kenilworth has begun a major corporate restructuringdesigned to focus the Company’s efforts on its core business and maximizeshareholder value. A new wholly owned subsidiary, KenSysCo Corp, holds andoperates Kenilworth’s intellectual property assets such as the Company’slive-gaming patents and other patents pending. KenSysCo will conduct alloperations related to use of the patents in licensed casinos outside of theUSA. It is the intention to rapidly develop this subsidiary; then spin it outto existing Kenilworth shareholders in early 2011 as a publicly traded company.

 

A second wholly owned subsidiary, ConvergentNetworks, Inc. was formed to continue and greatly expand Kenilworth’sapplication of broadband technology in the gaming sector, as well as thebroadcast media to support these operations. This subsidiary also intends toacquire companies in the rapidly expanding digital convergence and socialnetworking segments. Mr. Snyder indicated that Kenilworth will likely alsospin out this new subsidiary to existing shareholders of Kenilworth in early2011.

 

Our present plans are to continue developing awagering system, “Roulabette”, that would allow patrons in the industrializedworld to play and wager on live in-progress simulcast casino table games on TV’splaced in hotels, resorts, bars and other public gathering places and in homesand offices on personal computers, digital satellite, digital cable andInternet broadcasts emanating from strictly regulated casinos.

 

PART II

 

ITEM 1—DESCRIPTION OF BUSINESS

 

Kenilworth Systems Corporation hereinafter referredto as “Kenilworth”, the “Company” or “we”, was incorporated on April 25,1968 under the laws of the State of New York.  Kenilworth has been apublicly traded Company since August 1968 formerly on the National NASDAQMarket, presently on the OTC Pink Sheet Market since exiting from bankruptcyproceedings in September 1998.  Kenilworth was formerly presented asa Development Stage Company.  The Company believes this designation isincorrect.  The Company exited from Chapter 7 Proceedings having made a100% cash distribution to all approved creditors for their entire claims andpaid, in full, all administrative fees and expenses.  The designation ishindering the Company in its operations and management dropped the DevelopmentStage Company designation in the third quarter period of 2009.

 

10

----

Table ofContents

 

GENERAL

 

Since early in the year 2000 we have been solelyengaged in developing patents, markets and investigating how best to obtainGovernmental approvals, by engaging lobbyists and consultants that would allowtelevision satellite, cable subscribers and internet network throughout theindustrialized world to play and wager along from remote locations with live,in-progress casino table games (Roulette, Craps, Baccarat and more) fromstrictly regulated casinos located in the United States and other locationsaround the world.

 

Employing the latest encrypted satellite, cable andInternet technology and placing television cameras in strategic locations abovethe casino table games, without disrupting the normal game-monitoringactivities, (a separate control room would direct the various camera angles),and transmitting the table games over the digital satellite, digital cable andInternet networks (in countries that permit Internet wagering) to televisionsets, computers, cell phones or other electronic devices, which become aplatform for playing along with the casino games wherever TV’s are located.

 

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

 

To conduct broadcasts Kenilworth believes it willrequire a minimum of ten million dollars ($10,000,000) and there are noassurances we will ever be able to obtain any of such money. At present, theCompany does not have the funds readily available but hopes to obtain same,from investors, as soon as Kenilworth can commence broadcasting from casinosoutside the United States.

 

Where authorized, hotels, resorts, clubs and otherpublic gathering places will be able to offer casino table game action in theirestablishments without incurring the costs to operate a casino.

 

11

----

Table of Contents

 

We have as at September 30, 2010, no firmagreements, customers, or proposals for any future business and there can be noassurances that we will ever have same. **Referenceis also made to each of the “Risk Factors” that are set forth in Item 7 ofFORM 10-K for the year ended December 31, 2009.**

 

Where authorized, hotels, resorts, clubs and otherpublic gathering places will be able to offer casino table game action in theirestablishments without incurring the costs to operate a casino.

 

We have as at September 30, 2010, no firmagreements, customers, or proposals for any future business and there can be noassurances that we will ever have same. **Reference is also made toeach of the “Risk Factors” that are set forth in Item 7 of FORM 10-K for theyear ended December 31, 2009**.

 

The Unlawful Internet Gambling Enforcement Act of2006 banning wagering over the Internet in the U.S. has not yet been repealedand may never be, despite the efforts of Representative Barney Frank’s HR 2267Internet Gambling Regulation, Consumer Protection, and Enforcement Act. If andwhen it is passed gaming must meet, and will be supervised by, the regulationsof the gaming authorities of the broadcasting casino and the jurisdiction,which receives the broadcast.  We believethe supervision will not be difficult to enforce, because all simulcastwagering is “cash only”, from regulated, supervised betting sites.  There are no wire money transfers with banksand no credit or debit cards permitted. We believe this fact should ease any opposition from concerned citizensand anti-gambling groups, as regulation and enforcement responsibility will bevested in each individual state or foreign jurisdiction.  We have no assurances that this will beattainable. 

 

However, other international jurisdictions do nothave similar laws, and we plan to aggressively market licensing of our patentsand technology to these jurisdictions outside the borders of the U.S.  It remains unclear as to our ability tosucceed and our ability to raise the necessary funds to achieve our goals.

 

Kenilworth was the first to use color personalcomputers to replace electromechanical slot machines in 1988.  We providedthe software for the first Tabaret located at the Menzie at the Rialto inMelbourne, Australia, which opened in November 1990.  This consistedof cashless, variable denomination and multiple games, virtual PAT’s (“PlayerActivated Terminals”).  Prior thereto Kenilworth sponsored, with theassistance of three (3) Nevada casino operators, legislation to permitcashless wagering in the state of Nevada.  The legislation, which is inthe form of an amendment to existing casino control statutes, permits the useof account cards (debit cards) and was signed into law by Governor Richard H.Bryan on June 13, 1985.

 

Kenilworth has been a publicly traded Company since1968. Prior to commencing its endeavors in its present business in 1988, italso provided security systems to Nuclear Electric Generating Plants in theU.S. and foreign countries, as well as time/attendance systems at a majordepartment store chain.

 

12

----

Table of Contents

 

MARKETING STRATEGY/SALES PLAN

 

The Company intends to aggressively pursueagreements of our licensing technology and expertise in locations outside theU.S.A., as well as promoting the repeal of the Unlawful Internet GamblingEnforcement Act of 2006.  In ourreorganization plan, we address the need for an offshore subsidiary to promoteand facilitate the gaming applications of our related patents.  The other wholly owned subsidiary willcontinue and greatly expand our application of broadband technology throughacquisitions.

 

It will be necessary for us to obtain additionalpersonnel qualified and with the expertise to further develop Roulabette. Wewould require additional employees and several more consultants and there canbe no assurances of our being able to obtain the necessary personnel. There canbe no assurances of the availability of any such employees and consultants.

 

COMPETITION

 

Many segments of the gaming industry arecharacterized by intense competition, with a large number of companies offeringthe same type of wagering products and services. None of these companies, atpresent, are believed to offer the same or similar equipment or systems asintended by Roulabette. The most likely competition will come from slot machinemanufacturers who could relatively quickly adapt slot machines to play alongwith live casino table games. We believe there are three (3) major slotmachine manufacturers in the world, all of which have vastly greater capitalresources and substantially more personnel than the Company and may have underdevelopment systems that directly compete with Roulabette.

 

Our present plans are to license our technology tocompanies that own casinos throughout the industrialized world from which theywill broadcast the live casino table game. Other casino owners may start theirown broadcasts and have their own terminals manufactured that compete withKenilworth after Kenilworth has done all its pioneering for play-alongwagering.

 

PATENTS, TRADEMARKS AND INTELLECTUAL PROPERTY

 

Our most important assets are Patents we haveacquired.  Our patents are filed in fifty-one (51) industrializedcountries of the world and are approved, both in Russia and recently in Chinaand Japan, after a seven (7) year delay. The Patent granted onJune 10, 2003 titled “SYSTEM AND METHOD FOR REMOTE ROULABETTE AND OTHERGAME PLAY USING GAME TABLE AT A CASINO” and Patent Application filedOctober 15, 2003, entitled “METHOD AND SYSTEM FOR SUPPLYING FUNDS TO ATERMINAL FOR REMOTE WAGERING”, “MULTI-USE GAMING MACHINE” trademarks.

 

13

----

Table ofContents

 

GOVERNMENT REGULATIONS

 

Kenilworth has no licenses from any casinoregulating authorities and may not require any casino licenses at the presenttime and may never become able to obtain any licenses that may be required inthe future. Each state has its own regulations, and in states where Kenilworthdoes business, Kenilworth will have to comply with these regulations and therecan be no assurances that it will be able to do so or obtain the necessarylicense in an applicable jurisdiction. This discussion is not necessarilycomplete or current, regarding laws and regulations that may be applicable tous.  Any present laws are also subject to future change, amendment orcancellation and there is no assurance that Kenilworth will be able to meet thoserequirements.

 

Item2.     LEGAL PROCEEDINGS:

 

None

 

Item3.     CHANGE IN SECURITIES:

 

None

 

Item4.     DEFAULT UPON SENIOR SECURITIES:

 

None

 

Item 5.     OTHER INFORMATION:

 

The Company plans to hold its next Annual Meetingof Shareholders as soon as practicable with proxy materials mailed toshareholders of record at least twenty (20) days prior to the proposed meetingdate.  Our new management team, auditorsand counsel are anticipating a number of issues to be voted on at that time.

 

Item 7.     EXHIBITS ANDREPORTS ON FORM 8-K:

 

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

 

Ex 32.1 Certification of Chairman and ChiefExecutive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuantto Section 906 of the Sarbanes-Oxley Act of 2007.

 

SUBSEQUENT EVENTS:

 

As disclosed in the second quarter 10-Q, Mr. Lindothe Chairman and CEO passed away on July 25, 2010.  The Board ofDirectors implemented the Company’s succession plan, electing Mr. Dan 

 

14

----

Table of Contents

 

Snyder to carry on Mr. Lindo’sresponsibilities as Chief Executive Officer, Chairman of the Board, ChiefFinancial Officer, President, Treasurer and Director.

 

The Company issued 2,500,000 of restricted CommonShares through November 11, 2010 in connection with the sale of a StockPurchase and Option Agreement ($20,000).

 

The Board of Directors has met several times in theinterim to discuss and vote on issues and plans.  The formation of two (2) subsidiaries wasannounced on October 18, 2010 in a press release (see below).

 

**Kenilworth Systems ExpandsInternationally**

 

MINEOLA, NY—(Marketwire - November 10, 2010) -Kenilworth Systems Corp. (PINKSHEETS: KENS) today announced a significant stepforward in the corporate restructuring designed to focus the Company’s effortsto maximize shareholder value.

 

Dan W. Snyder III, President and CEO, said, “I ampleased to report that the management team has made significant progress inimplementing the plan approved by the Directors only a few weeks ago.”

 

“The Company has successfully completed theformation of subsidiary KenSysCo International Ltd. in Antigua, West Indies.Antigua, long known as one of the best regulated international gaming countriesin the world, is the ideal location for KenSysCo International to aggressivelymarket the Kenilworth technology,” Snyder noted.

 

“KenSysCo International is to conduct alloperations related to use of the Kenilworth patents by licensed gamingoperators outside of the USA. This move provides a significant opportunityto follow up on the interest expressed by substantial casino and online gamingoperators in the Caribbean, Central America and around the world.”

 

Kenilworth Systems Corporation is an integratedtechnology corporation with intellectual property assets and technicalcapabilities in the live online gaming sector. The Company is based inMineola, New York.

 

15

----

Theformation of KenSysCo International, Ltd., Antigua, West Indies was announcedon November 15, 2010 in a press release (see below).

** **

**Kenilworth Systems Expands Internationally**

** **

MINEOLA,NY--(Marketwire - November 10, 2010) - Kenilworth Systems Corp. (PINKSHEETS:KENS) today announced a significant step forward in the corporate restructuringdesigned to focus the Company's efforts to maximize shareholder value.

 

DanW. Snyder III, President and CEO, said, "I am pleased to report that themanagement team has made significant progress in implementing the plan approvedby the Directors only a few weeks ago."

 

"TheCompany has successfully completed the formation of subsidiary KenSysCoInternational Ltd. in Antigua, West Indies. Antigua, long known as one of thebest regulated international gaming countries in the world, is the ideallocation for KenSysCo International to aggressively market the Kenilworthtechnology," Snyder noted. 

 

"KenSysCoInternational is to conduct all operations related to use of the Kenilworthpatents by licensed gaming operators outside of the USA. This move provides asignificant opportunity to follow up on the interest expressed by substantialcasino and online gaming operators in the Caribbean, Central America and aroundthe world." 

 

KenilworthSystems Corporation is an integrated technology corporation with intellectualproperty assets and technical capabilities in the live online gaming sector.The Company is based in Mineola, New York.

 

16

----

Table of Contents

 

SIGNATURE

 

Pursuant to the requirements of the SecuritiesExchange Act of 1934, the Registrant has duly caused this report to be signedin its behalf by the undersigned thereunto duly authorized.

 
|   |   | KENILWORTH SYSTEMS CORPORATION                                                       |
|--------|--------|--------------------------------------------------------------------------------------|
|   |   |                                                                                 |
|   | By:    | /s/ Dan W. Snyder                                                                    |
|   |   | Chief Executive Officer, Chief Financial Officer,  President, Treasurer and Director |
|   |   |                                                                                 |
|   |   | November 15, 2010                                                               |

 

17

----