KENILWORTH SYSTEMS CORP - Quarter Report: 2005 March (Form 10-Q)

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 March 31, 2005

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

KENILWORTH SYSTEMS CORPORATION

(Exact name of registrant as specified in its charter)

New York		84-1641415
(State of incorporation)		(I.R.S. employer identification no.)

185 Willis Avenue, Mineola, New York		11501
(Address of principal executive offices)		(Zip Code)

(516) 741-1352
(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for 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

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

The number of shares of common stock, $.01 par value of the Registrant outstanding as of March 31, 2005 was 148,526,245.

Table of Contents

KENILWORTH SYSTEMS CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

INDEX

Part I.	Financial Information

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets (unaudited) - March 31, 2005 and December 31, 2004	4

	Condensed Consolidated Statements of Operation and Deficit (unaudited) - Three months ended March 31, 2005 and 2004, and the period from inception to March 31, 2005	5

	Condensed Consolidated Statements of Cash Flows (unaudited) - Three months ended March 31, 2005 and 2004, and the period from inception to March 31, 2005	6

	Condensed Notes to Consolidated Financial Statements (unaudited)	7-10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11-13

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2

Item 4.	Controls and Procedures

Part II.	Other Information

Item 1.	Legal Proceedings	14

Item 6.	Exhibits	16

Signature		15

CAUTIONARY STATEMENT FOR PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND RISK FACTORS

The information contained in this Form 10-Q and Kenilworth’s other filings with the Securities Exchange Commission may contain “forward-looking” statements within the meaning of section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and is subject to the safe harbors created thereby. Such information involves important risks and uncertainties that could significantly affect results in the future and, accordingly, such results may differ from those expressed in any forward looking statements herein. Future operating results may be adversely affected as a result of a number of factors.

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

RISKS

Specific reference is made to each of the risks described in Item 7 of the Form 10-K for December 31, 2004 under the discussion “Cautionary Statement For Purposes of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995 and Risk Factors”. Reference is also made to future filings under Forms 10-Q and Forms 10-K and filings under the Securities Exchange Act of 1934 as amended and as may be applicable under the Securities Act of 1933 as amended.

KENILWORTH SYSTEMS CORPORATION

AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	March 31 2005			December 31 2004

ASSETS

Cash	$	25,300		$	19,158
Due from Shareholders (subscriptions, see subsequent events page 14)	352,500			142,000
Secured Note Receivable	—			50,000
Prepaid Expenses	132,500			198,300
Security Deposits	9,000			5,302
Loans Receivable	17,100
Property, Plant and Equipment, Net	42,862			45,118
CURRENT ASSETS	579,262			$	459,878
Patent, Net	337,125			329,917
TOTAL ASSETS	$	916,387		$	789,795

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Accounts Payable	$	120,179		$	129,054
Payroll Taxes Payable	—			21,939
Notes Payable	22,282			22,282
Installment Payment (Auto)	5,674			6,382
TOTAL LIABILITIES	$	148,135		$	180,107

Common Stock, $.01 par value, authorized 200,000,000 shares; issued and outstanding 136,751,245 in December 31, 2004 and 148,526,245 on March 31, 2005	$	1,485,262		$	1,412,262

Paid in capital	27,450,242			27,081,184
Deficit	(28,167,252		)	(27,883,758		)
TOTAL STOCKHOLDERS’ EQUITY	$	768,252		$	609,688
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	916,387		$	789,795

See accompanying notes.

KENILWORTH SYSTEMS CORPORATION

AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

CONDENSED CONSOLIDATED STATEMENTS
OF OPERATION AND DEFICIT

(UNAUDITED)

	Three-month ended March 31					PERIOD FROM SEPT. 28, 1998 (INCEPTION OF DEVELOPMENT STAGE COMPANY) TO
	2005			2004		DEC. 31, 2004

Revenues:	$	0		$	0	$	0
Sales
Costs and Expenses:
Selling, general and administrative expenses	$	283,494		$	365,939	8,100,367
Total Costs and Expenses	$	283,494		365,393		8,100,367

Net loss before other income	$	283,494		$	365,939	8,100,367
Net loss	$	283,494		$	365,939
Deficit — Beginning of period	(27,883,758		)	(26,449,396
Deficit — End of period	(28,167,252		)	(26,815,335		(28,167,252		)

Loss per Share of common stock	$	0.001		0.003
Average number of shares outstanding	148,526,245			121,295,121

See accompanying notes.

KENILWORTH SYSTEMS CORPORATION

AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Three-month ended March 31						PERIOD FROM SEPT. 28, 1998 (INCEPTION OF DEVELOPMENT STAGE COMPANY) TO
	2005			2004			DEC. 31, 2004

CASH FLOWS USED IN OPERATING ACTIVITIES

Net Loss	$	283,494		$	365,939		8,100,367
Adjustments to reconcile net income to net cash used in operating activities
Changes in Accounts Receivable and Prepaid Expense	(37,100		)	112,500			37,500
Depreciation and amortization	(19,851		)
Increase (decrease) in due to related party	65,527			(87,809		)
Increase (Decrease) in accrued liabilities	89,467			(58,668		)

NET CASH USED IN OPERATING ACTIVITIES	381,537			(399,916		)	381,537

Cash flows from Investing Activities
Purchase of Equipment	$	0		$	0		42,862
Amortization of Patent	7,208			5,251
CASH FLOWS FROM
Conversion of Promissory Notes	380,471			513,800			4,334,070

FINANCING ACTIVITIES
Increase (decrease) in due to Affiliate	—			—
Proceeds from issuance of Convertible Promissory Note	—			—
Net cash provided by financing Activities	$	387,679		$	513,800
Net Increase (Decrease) in cash	6,142			119,136
CASH — BEGINNING OF PERIOD	19,158			7,136
CASH — END OF PERIOD	$	25,300		$	126,272

See accompanying notes.

KENILWORTH SYSTEMS CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION

In the opinion of management, the accompanying unaudited condensed consolidated financial statements of Kenilworth Systems Corporation and subsidiaries (“Kenilworth”) beginning as of January 1, 2005 contain all adjustments (consisting of only normal accruals) necessary to present fairly the consolidated balance sheets as of March 31, 2005 and December 31, 2004 and the related statements of operations and cash flows for the three (3) month periods ended March 31, 2005 and 2004.

The results of operations for the three (3) month period ended March 31, 2005 are not necessarily indicative of the results for the entire year.

NOTE 2 - THE COMPANY AND NATURE OF BUSINESS

Kenilworth Systems Corporation (the “Company”) was incorporated in New York in April 1968 and since emerging from bankruptcy proceedings now plans to be engaged in the business of developing and having terminals and other equipment manufactured and design systems that permit individuals from remote locations, to play along with live in progress casino table games via TV (simulcast) satellite and satellite cable broadcast around the world.

The Company was in bankruptcy proceedings under Chapter 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 the accounts of Kenilworth Systems Corporation and its wholly owned subsidiaries: Video Wagering Systems Corporation, Roulabette™ Nevada Corporation, Kenilworth Systems Nevada Corporation, Kenilworth Systems (UK) Limited and Kenilworth Satellite Broadcasting Corporation (a Delaware Corporation). None of these subsidiaries has any assets or liabilities.

NOTE 4 - EARNINGS PER SHARE

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

Basic loss per share is based on the weighted-average number of shares of common stock outstanding for the period, which were ($0.010), ($0.001), and ($0.003) respectively for the year ended December 31, 2004, and the periods March 31, 2005 and March 31, 2004.

Diluted earnings per share have not been presented in the accompanying financial statements because the effect of conversion of convertible promissory notes was anti-dilutive.

NOTE 5 - INCOME TAXES

The Company uses the liability method 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 it has available approximately twelve million dollars ($12,000,000) in net operating loss carry-forwards, which expire at various dates through 2020. Utilization of the NOL carry forward may be limited under various sections of the Internal Revenue Code depending on the nature of the Company’s operations.

The Company has a deferred tax asset of approximately two million eight hundred thousand dollars ($2,800,000) arising from its net operating loss carry-forwards. The deferred tax asset has been fully reserved due to the uncertainty of future realization.

NOTE 6 - USE OF ESTIMATES IN THE FINANCIAL STATEMENTS

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

NOTE 7 - FAIR VALUE OF FINANCIAL INSTRUMENTS

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

NOTE 8 - PROPERTY AND EQUIPMENT

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

		YEARS
Office Equipment		5
Vehicles		5
Patents		17

Property and Equipment consist of the following as of March 31, 2005 and March 31, 2004:

	Three-month ended March 31
	2005		2004

Office Equipment	$	27,180	$	3,351
Leasehold Improvements	$	26,582
Vehicles	11,500		11,500
	$	65,262	$	14,851
Less-Accumulated Amortization	22,400		2,549
Total Property and Equipment, Net	$	42,862	$	12,302

Depreciation expense for the quarters ended March 31, 2005 and March 31, 2004 was $23,400 and $2,549 respectively.

NOTE 9 - GOING CONCERN UNCERTAINTY

As indicated in Note 2, the Company emerged 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 a going-concern and continue in business. Management plans to develop a wagering system that allows casino

patrons and individuals outside the casino to play along remotely with live in-progress casino table games. The Company plans to obtain the necessary funding by offering its Common Stock, Senior Cumulative Convertible Preferred Shares and/or continue to sell Convertible Promissory Notes in private placements, or selling limited joint venture participations in future “play along with casino game” franchises. There can be no assurances the Company can be successful in obtaining such financing.

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

NOTE 10 – NON CASH TRANSACTIONS

During the year ended December 31, 2002 the Company issued 10,411,355 shares of restricted Common Stock in payments for services rendered in the amount of $498,627 an average price of $0.099 per share. The amount includes five million (5,000,000) shares for services rendered by Directors of the Company. (See Note 11)

During the year ended December 31, 2003 the Company issued 7,395,558 shares of restricted Common Stock in payment for services rendered in the amount of $596,440 an average price of $ 0.08 per share. The amount includes two million five hundred thousand (2,500,000) shares for services rendered by the Directors of the Company. (See Note 11)

During the year ended December 31, 2004 the Company issued 16,758,793 shares of restricted Common Stock in payment for services rendered in the amount of $1,330,122 an average price of $0.086 per share. The amount did not include 2,500,000 shares for the services rendered by the Directors of the Company (See Note 13).

During the First Quarter period ended March 31, 2005 the Company issued 750,000 shares of restricted Common Stock in payments for services rendered in the amount of $72,500, an average price of $0.096 per share.

In connection with the emergence from bankruptcy in September 1998 the trustee distributed four million three hundred thousand four hundred and three dollars ($4,300,403) to pay one hundred percent (100%) of all approved claims.

NOTE 11 - COMMITMENTS AND CONTINGENCIES

OUTSTANDING PAYROLL TAXES

NONE at March 31, 2005

NOTE 12 – CONVERTIBLE PROMISSORY NOTES

During the year 2002, the Company sold one (1) year Convertible Promissory Notes totaling two hundred ninety thousand dollars ($290,000). At the option of the Note holders, the Notes were convertible into Common Stock of the Company at the rate of between one (1) share for each $.10 to $.15 of face value of the indebtedness represented by the Notes, together with interest at the annual rate of two percent (2%) above the prime rate quoted by Citibank of N.A. Management believed it was unable to repay the Notes when they became due. In order to induce the Note Holders to convert the Notes by year end 2002 when the quoted price per Common Share, as traded on the Pink Sheet Market was between $.02 and $.08 per share, the Company offered to convert the Notes at the rate of one (1) share for each $.05 of indebtedness represented by each Note, together with accrued interest. As a result of the Company’s offer, all Note Holders converted their Notes into five million seven hundred seventy seven thousand seven hundred and fifty (5,777,750) shares of Common Stock, including accrued interest, at an average price of $0.05 share.

During the year 2003, the Company sold one (1) year Convertible Promissory Notes totaling four hundred and six thousand ($406,000). At the option of the Note Holders, the Notes were convertible into restricted Common Stock of the Company at the rate of between one (1) share for each $0.07 and $0.10 of face value of the indebtedness represented by the Notes together with accrued interest at the annual rate of two percent (2%) above the prime rate quoted by Citibank of N.A. Management believed it was unable to repay the Notes when they become due, in order to induce the Note Holders to convert the Notes by year end 2003 when the quoted price per Common Share, as traded on the Pink Sheet Market was between $0.035 and $0.06 per share, the Company offered to convert the Notes at the rate of one (1) share for each $0.05 of indebtedness represented by each Note, together with accrued interest. As the result of the Company’s offer, all Note Holders converted their Notes into 7,712,606 restricted shares of authorized but unissued Common Stock, including accrued interest, at an average price of $0.05 per share.

During the year 2004, the Company sold one (1) year Convertible Promissory Notes totaling $1,049,500. At the option of the Note Holders, the Notes were convertible into restricted Common Stock of the Company at a rate of between one (1) share for each $0.10 to $0.12 of face value of the indebtedness represented by the Notes together with accrued interest, if any, at the annual rate of two percent (2%) above the prime rate quoted by Citibank of N.A. Management believed it was unable to repay the Notes when they become due, in order to induce the Note Holders to convert the Notes by year end 2004 when the quoted price per Common Share, as traded on the Pink Sheet Market was between $0.07 and $0.08 per share, the Company offered to convert the Notes at the rate of one (1) share for each $0.05 of indebtedness represented by each Note, together with accrued interest. As the result of the Company’s offer, all Note Holders converted their Notes into 20,054,699 restricted shares of authorized but unissued Common Stock, including accrued interest, at an average price of $0.05 per share.

During the first quarter period ended March 31, 2005, the Company sold one (1) year Convertible Promissory Notes totaling $317,500 which were converted. At the option of the Note Holders, the Notes were convertible into Restricted Common Stock of the rate of between one (1) share for each $0.08 to $0.10 of face value of the indebtedness represented by the Notes together with accrued interest, if any, at the annual rate of two percent (2%) above the prime rate quoted by Citibank, N.A. All Note Holders converted their Notes into 6,350,000 restricted shares.

The Company accepted the orders for the Convertible Promissory Notes conditioned upon the Board of Directors of the Company would approve the sale of the Notes. The entire Board was unable to meet until Sunday, May 8, 2005, when the Board unanimously voted to accept the purchase of the Notes. In order to reflect the Note purchase during the first quarter period ended March 31, 2005, the Company reported the purchase of the $282,500 in Notes as paid starting on May 11, 2005 when the Company processed the previously issued checks totaling $282,500. All checks cleared and are reported as Subsequent Events. $20,000 of subscription of Notes unrelated to the before mentioned transactions have been extended to the end of the second quarter period ended June 30, 2005.

NOTE 13 – PREPAID ITEMS

At the Board of Directors Meeting held on December 1, 2004 the Board approved the issuance of two million five hundred thousand (2,500,000) shares of authorized but unissued Common Stock of the Corporation to the Directors in lieu of Director’s Compensation and Director’s Liability insurance for the ensuing year: Gino Scotto, Kit Wong, Patrick J. McDevitt, Joyce Clark and Maureen Plovnick each were issued five hundred thousand (500,000) shares of restricted Common Stock of the Company at a price of ten cents ($0.10) per share, the equivalent of fifty thousand dollars ($50,000) for each Director, a total of $250,000. The $250,000 is recorded for shares issued as paid in capital in the fourth quarter period in 2004.

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

RESULTS OF OPERATIONS

Since we emerged from bankruptcy proceedings on September 23, 1998 we have had no revenues from operations. We sustained substantial losses from general administrative expenses amounting of $1,434,361 and $832,168 in year 2004 and 2003 and for the three-months ended March 31, 2005 we sustained losses from general administrative expenses amounting to $283,494 compared to a loss of $365,939 for the quarter ending March 31, 2004. Kenilworth has had no revenues from operations during the past twelve (12) years and there can be no assurances that it will ever have revenues from present planned operations.

LIQUIDITY AND CAPITAL RESOURCES

Our present plans are to develop a wagering system dubbed “Roulabette™” that would allow patrons in the industrialized world to play and wager on live in-progress simulcast casino table games on terminals placed in hotels, resorts, bars and other public gathering places and in homes and offices on personal computers (PC’s) or television sets connected to set top boxes for Interactive TV via digital satellite and digital cable broadcasts emanating from strictly regulated casinos.

GENERAL

Since early in the year 2000 we have been solely engaged in developing patents, markets and investigating how best to obtain Governmental approvals, by engaging lobbyists and consultants that would allow television satellite and cable subscribers throughout the industrialized world to play and wager along with live, in-progress casino table games (Roulette, Craps, Baccarat and more) from strictly regulated casinos located in the United States and other locations around the world.

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

Kenilworth titled the overall proposed project “Roulabette™”. There are 120 million TV subscribers in the United States and more than 300 million subscribers throughout the rest of the world (“The Market”). On average, households in the U.S. have 2 ½ TV’s. (It is important since the satellite and cable companies will charge a separate fee for transmitting the table games). Public gathering places can accommodate (be able to network) up to 200 TV sets with a simple satellite receiving dish or direct cable connections. With wagering possible in homes, hotel rooms, resort rooms, pubs, restaurants, race tracks and other public gathering places the Company believes will become a more than $500 billion net win Market within five (5) years throughout the industrialized world.

To best market the casino games, the Company is selecting lotteries throughout the world to manage and operate the distribution and cash handling (deposits to play and paying winnings) using the lotteries’ existing databases for the sale of lottery tickets, and paying winnings at regular lottery licensed terminal locations.

All forty one (41) lotteries in the United States are owned and operated by County and State agencies. Throughout the rest of the world lotteries are owned by government agencies or non profit charitable agencies that distribute the net earnings to benefit social and charitable programs, or by private entities that pay a percentage of their net win to designated government agencies.

These foreign lotteries also have the same databases as lotteries in the United States, except most lotteries throughout Europe pool their lotteries between countries, not unlike Mega Millions and PowerBall in the

United States, which makes the distribution simpler and very cost effective for both Kenilworth and the lotteries.

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

The lotteries will receive forty percent (40%) of the net win without costs of any kind. In addition, the States’ general fund will receive five percent (5%) of the net win, also without costs of any kind.

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

In addition, throughout the United States there are five hundred (500) facilities that simulcast live in-progress horse/dog races. At all facilities there are several large TV screens that show the races from the different tracks with general theater type seating for patrons and at private cubicles with television sets outfitted with touch screens. The cubicles rent for additional fees. After players open an account and select pin numbers, they can watch each race offered on the different tracks on the TV and place wagers on the different races by simply changing channels. The players may also watch sporting events, the news, the Stock market reports, and in the near future Roulabette™, live, in-progress casino table games. The simulcast centers have their own databases to manage the cash deposit and pay winnings on the horse/dog races and will be able to manage the casino games, on the same methods as the lotteries will manage Roulabette™. With fifty to one hundred (50-100) private TV’s, available in simulcast centers, especially at night, when fewer tracks are operating.

When playing along with live table games from a highly regulated jurisdiction, players will be assured that the game results are exactly what they see; and, playing along with live casino table games such as Roulette, Craps and Baccarat we believe will provide interaction, fun and far more excitement than playing make believe animated (virtual) games. It is the next best thing, we believe, to actually being at the table in the casino.

To conduct the initial broadcast Kenilworth believes it will require ten million dollars ($10,000,000) and there are no assurances we will ever be able to obtain any of such money. At present, the Company does not have the funds readily available but hopes to obtain same, from investors, as soon as Kenilworth can commence broadcasting from a casino in the United States or other casinos throughout the world.

In prior years, Kenilworth completed a prototype system that allowed casino patrons to play along with live in-progress casino table games only within the confines of a casino, via closed circuit television. Also in 1990, we developed and delivered for the TAB (Totalizator Agency Board) a quasy government agency of the State of Victoria, Australia, a cashless slot machine system. Both systems required debit cards and central mainframe computers to manage the wagers. By making use of the expertise applied in the development of the aforementioned systems we plan to develop a second-generation system that will manage the wagers by the microprocessor installed in TV set-top boxes to receive satellite broadcasts. This as planned would allow a player in an interactive manner, at a remote location (outside the casino confines), to experience the actual play and excitement at the casino table game and to make wagers on the various games, without having to be physically present at the casino or casino table. There are no assurances we will be able to successfully develop any system.

The proposed “Roulabette™” system also will provide Roulabette™ terminals that may be placed in resorts, racetracks or other gathering places which consists of a personal computer (PC) with two (2) monitors. One (1) monitor will display the live in-progress casino table game play as well as advertising. The second, which will be outfitted with a touch screen, allows a player to place wagers directly over the games displayed on the first monitor. It will also have a variable denomination bill acceptor and a bar code ticket dispenser. Both monitors will be housed in an attractive enclosure. The Roulabette™ terminal will

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

Where authorized, hotels, resorts clubs and other public gathering places will be able to offer casino table game action in their establishments without incurring the costs to operate a casino. The Roulabette™ terminal is expected to offer an alternative to slot machine players. There are now believed to be more than ten (10) million slot machines played throughout the world.

Kenilworth will seek to promote to state lotteries and foreign jurisdictions, and other state regulated entities, the ability to operate websites that will manage the wagers. The program will ask state legislatures to amend their lottery horse/dog racing and OTB legislation to include Roulabette™ wagering or promulgate new legislation. There are no assurances that the necessary approvals will be granted.

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

Project Roulabette™ is a concept intended to be developed and there can be no assurances that it will ever be developed successfully. The Patented microprocessors to be installed in the TV set top boxes or the Television set directly have not been designed. We have as at March 31, 2005, no firm developed agreement, customers except for proposals submitted for future business and there can be no assurances that we will ever have same.

Kenilworth plans to obtain the necessary funding by offering in Private Placements, Common Shares, Convertible Promissory Notes, and Cumulative Convertible Preferred Shares and/or by the sale of limited joint venture participations in future Roulabette™ franchises. There can be no assurances that the Company will be able to secure any of these funds.

PART II.
OTHER INFORMATION

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.		OTHER INFORMATION:

The Company plans to hold its Annual Meeting of Shareholders on or about June 14, 2005 or any adjournment thereof with proxy materials mailed to shareholders of record on May 24, 2005 prior to the proposed meeting dates.

SUBSEQUENT EVENTS

The Company received $282,500 from the sale and conversion of the Notes dated February 7, 2005. $20,000 of previous Notes Payable has been extended into the second quarter.

Item 6.		EXHIBITS AND REPORTS ON FORM 8-K:

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

FORM 10-Q

Section 1350 Certifications

Quarter ended March 31, 2005

I, Herbert Lindo, Chairman, President and Principal Financial Officer of Kenilworth Systems Corporation (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:

(1) the Quarterly Report on Form 10-Q of the Company for the first quarter ended March 31, 2005 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 16, 2005

	/s/ Herbert Lindo
	Herbert Lindo
	Chairman, President and Principal Financial Officer

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to 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
	May 16, 2005