<PAGE>
UNITED STATES
SECURITIES 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 MARCH 31, 2000
OR
[ ] Transition report pursuant to Section 13 or 15(D) of the Securities
Exchange Act of 1934 (No Fee Required)
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 13-2610105
-------- ----------
(State of incorporation) (I.R.S. employer identification no.)
54 Kenilworth Road, Mineola, New York 11501
------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(516) 741-1352
--------------
(Registrant's telephone number, including area code)
Securities registered pursuant to section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
------------------- ------------------------
NONE OTC PINK SHEETS
Securities registered pursuant to section 12(g) of the Act:
(Title of class)
----------------
COMMON STOCK, PAR VALUE $.01 PER SHARE
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 [X] No [ ]
The number of shares of common stock, $.01 par value outstanding as of March 31,
2000:
63,582,768
<PAGE>
KENILWORTH SYSTEMS CORPORATION
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Condensed Balance Sheets as of March 31, 2000
(unaudited) and December 31, 1999
Consolidated Condensed Statement of Operations for the
three month periods ended March 31, 2000 and 1999
(unaudited).
Consolidated Condensed Statements of cash flows for the
three month periods ended March 31, 2000 and 1999
(unaudited).
Notes to Consolidated Condensed Financial Statements
(unaudited)
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
(unaudited)
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 Matters to a vote of Securities Holders:
Item 5. Other Information:
None
Item 6. Exhibits and Reports on Form 8-K
Signature
</TABLE>
<PAGE>
Financial Data Schedule (for electronic filing purposes)
KENILWORTH SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS, as of
<TABLE>
<CAPTION>
ASSETS March 31 December 31
2000 1999
<S> <C> <C>
------------- ----------- (unaudited)
Cash $ 6,746 $ 2
Due from related party $ 6,301 $ 9,032
-------------- ------------
TOTAL ASSETS $ 13,047 $ 9,034
============== ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Accrued Liabilities $ 20,702 $ 242
Convertible Promissory $ 5,000 $ 0
Note Payable -------------- ------------
TOTAL LIABILITIES $ 25,702 $ 242
Common Stock, $.01 par value, authorized
100,000,000 shares; issued and outstanding
62,289,018 in December 31, 1999 and
63,582,768 in March 31, 2000
$ 633,890 $ 622,890
Paid in capital $ 23,784,763 $ 23,784,763
Deficit (24,431,308) (24,398,861)
--------------- ------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) $ (12,655) $ 8,792
--------------- ------------
TOTAL LIABILITIES 13,047 9,034
AND STOCKHOLDERS' EQUITY (DEFICIT) ================ ============
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
<PAGE>
KENILWORTH SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS of OPERATION and DEFICIT
(Unaudited)
<TABLE> Three month ended
<CAPTION> March 31
<S> <C> <C>
2000 1999
-------------- ------------
Revenues:
Sales $ -0- $ -0-
Costs and Expenses:
Selling, general
and administrative 32,447 2,954
expenses 194
Interest expense (income)
Total Costs and 3,148
Expenses
Net income (loss)
before other income
and (losses) (3,148)
Net income (loss) (32,447) (3,148)
Deficit - Beginning
Of year (24,398,861) (24,387,031)
Deficit - End of
Of year (24,431,308) $(24,390.179)
============ =============
Earnings (Loss) per
Share of $ -0- $ -0-
common stock (Note 5)
Average number of 63,582,768 62,289,018
shares outstanding ============== =============
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
<PAGE>
KENILWORTH SYSTEMS CORPORATION AND SUBSIDIARIES
CONDENSED STATEMENTS of CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Three month ended
March 31
<S> <C> <C>
2000 1999
-------------- ------------
CASH FLOWS USED IN
OPERATING ACTIVITIES
Net Loss $(32,447) $(3,148)
Adjustments to reconcile
net income to net cash
used in operating activities
(Increase) decrease in due
from related party $ 3,481
Increase(Decrease)in accrued
Liabilities $ 23,098 (7,637)
-------------- ------------
TOTAL ADJUSTMENTS
NET CASH USED IN
OPERATING ACTIVITIES $ 17,500 $(10,785)
CASH FLOWS FROM
Conversion of Promissory Notes $ 12,500
FINANCING ACTIVITIES
Proceeds from issuance of
convertible Promissory Note $ 5,000
Net Increase (Decrease) in cash
CASH - BEGINNING OF PERIOD $ 2 $ 85
CASH - END OF PERIOD 6,746 6,746
</TABLE>
Non-cash transactions:
<PAGE>
KENILWORTH SYSTEMS CORPORATION and SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - Summary of Significant Accounting Policies
The Company and Nature of Business
Kenilworth Systems Corporation (the "Company") was incorporated in New York
in April 1968 and is now engaged in the business of developing, manufacturing,
and operating of casino machines, named Roulabette" terminals.
The Company was in bankruptcy proceedings under Chapter 7 and 11 of the
Bankruptcy Code for the period from August 27, 1982 through September 23,
1998. (See Note 2). For the period of February 5, 1991 through September
23, 1998 the Company ceased all operations.
The Company emerged from Chapter 7 bankruptcy on September 23, 1998 and
plans to be engaged in the development, manufacturing, marketing and
operation of "Roulabette", a system that allows casino patrons to play along
with live table games in progress, via closed circuit television, on
"Roulabette" terminals located within the casino confines.
Principals of Consolidation
The consolidated financial statements include the accounts of Kenilworth
Systems Corporation and its wholly owned subsidiaries: Video Wagering
Systems Corporation and Roulabette Corporation. Neither subsidiary has
any assets or liabilities.
In September 1986 the Company exchanged 466,000 shares of its common
stock for all of the outstanding common stock of Video Wagering Corporation
("Video"). This transaction was accounted for under the purchase method of
accounting.
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
($.00), ($.00) and ($.07) for the year ended December 31, 1999,
the period November 24, 1998 to December 31, 1998 and the period
January 1, 1991 to November 23, 1998, respectively.
Diluted earnings per share has not been presented in the
accompanying financial statements because the effect of assumed
conversion of convertible promissory notes was anti-dilutive.
Income Taxes
The Company uses the liability method to account for income taxes
in accordance with requirements of SFAS No. 109.
<PAGE>
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.
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.
Convertible promissory notes at December 31, 1998, are stated at fair
market value, which management believes equal to their cost.
NOTE 2 - Bankruptcy Proceedings
Throughout the 1980's the Company experienced working capital shortages
that resulted in the Company filing a voluntary petition for
reorganization under Chapter 11 of the United States bankruptcy Code.
From August 31, 1982 to June 7, 1985 the Company operated during
reorganization proceedings. On June 7, 1985, a United States Bankruptcy
Judge confirmed the Company's Plan of Reorganization. On April 27, 1988,
the Bankruptcy Court entered a final decree in the case. On October 27,
1988, the case was re-opened on grounds the Debtor failed to consummate
its plan of reorganization and on February 25, 1991 the case was converted
to a case under Chapter 7 of the Bankruptcy Code. By order of the Court
dated June 19, 1991 the Chapter 7 was reconverted to a case under Chapter
11 of the Bankruptcy Code. A second plan of reorganization was approved
and a second order of confirmation was entered in connection with the
Chapter 11 case on October 2, 1991. However, the Debtor was unable to
consummate its second plan of reorganization, and by order dated November
25, 1991, the case was reconverted to a case under Chapter 7 of the
bankruptcy Code.
From February 1991 through September 1998, the Company was inactive. In
September 1998 a United States Bankruptcy Judge in the Eastern District
of New York approved the Final Report and Accounts submitted by the
Chapter 7 Trustee of the Estate of Kenilworth and after obtaining approval
from the U.S. Trustee, Kenilworth made a 100% cash distribution to the
creditors and paid in full all administrative fees and expenses. The
Company emerged from Bankruptcy on September 23, 1998 with no assets and
no liabilities. For the period September 24, 1998 through November 23,
1998 the Company was in the process of monitoring the payments by check t o
the creditors. No other activity occurred during that period.
NOTE 3 - Convertible Promissory Notes
At March 31, 2000, the Company had outstanding a convertible promissory
note for $5,000 bearing interest at prime and maturing in March, 2001.
The holder of the note has the right to convert all or part of the note
into fully paid non-assessable common stock at various stated conversion
prices.
<PAGE>
NOTE 4 - Income Taxes
The Company is a "C" Corporation for tax purposes.
The Company estimates that it has available approximately $8,000,000 in
net operating loss carryforwards, of which approximately $4,000,000 will
expire at various dates through 2005 with the remaining amount expiring
at various dates through 2018. Utilization of the NOL carryforward 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 $2,800,000 arising
from its net operating loss carryforwards. The deferred tax asset has
been fully reserved due to the uncertainty of future realization.
NOTE 5 - 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.
Management plans to develop a wagering system, called "Roulabette",
that allows patrons to play along with live casino table games. The
first step in the plan is to conduct testing. Unless the Company is
able to obtain sufficient funds, none of the tests and initial
development work can commence. The Company plans to obtain the necessary
funding by offerings its common stock, or private placement, Senior
Cumulative Convertible Preferred Shares, or selling limited joint venture
participants in future Roulabette franchises.
If initial testing is successful, the second step is to obtain the proper
licenses from the gaming control regulators. Upon successful licensing,
the Company plans to obtain financing from regular banking sources to
finance the manufacturing of the Roulabette terminals.
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.
Due from related party at March 31, 2000 and December 31, 1999
represents a receivable from a stockholder of the Company in connection
with the issuance of convertible promissory notes.
<PAGE>
ITEM 2 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
(a) Liquidity and Capital Resources:
Between February 5, 1991, when the Trustee for the Estate of Kenilworth
Systems Corporation was appointed, and September 23, 1998, when the
Trustee paid in cash one hundred (100) cents on the dollar of all
approved creditors' claims and administration fees and expenses, the
Company did not conduct any business and operations.
In November 1991 the Trustee, on orders from the Bankruptcy Court, sold
at public auction substantially all of the assets of the Kenilworth
Estate, for $2,800,000 (two million eight hundred thousand dollars) and
an additional $1,000,000 (one million dollars) escrow deposit to be
available to add to the purchase price, in order to pay all creditors
and other expenses one hundred (100) cents on the dollar. After the
Trustee paid all claims, the Trustee refunded $123,652.62 of the $1.0
million escrow deposit to the purchaser.
Thus, the Company emerged from bankruptcy proceedings with no assets,
no liabilities, and approximately $8,000,000 in available carry-forward
income tax credits.
Present plans are to develop a wagering system, dubbed "Roulabette", that
allows patrons visiting a casino and individuals at home, offices, clubs,
or other gathering places all over the industrialized world, to play
along on live casino table games, either via closed circuit television in
the casino confines, or the broadcast of the same live action via digital
direct satellite TV broadcast around the world.
The first step will be to conduct a three (3) month test of the system at
the proposed Company facility and, after successfully completing the test,
to test a system at a casino preferably located in Atlantic City. Each
test will be with ten (10) Roulabette terminals.
To conduct these two tests will require $3,000,000 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
mechanical design, for a period of eighteen (18) months, and from time to
time, consultants who will assist the design team.
Unless the Company is able to obtain these funds, none of the tests and
initial development work can commence.
The Company plans to obtain the necessary funding by offering in a
Private Placement, Common Shares, Cumulative Convertible Preferred Shares
and/or by the sale of limited joint venture participations in future
Roulabette franchises.
<PAGE>
When the tests are completed and the Company has obtained licenses from
the gaming control regulators for the sale of Roulabette systems to U.S.
casinos, the Company will obtain production financing from regular
banking sources to finance the manufacturing of the Roulabette terminals
leased or sold.
Results of Operations
Since the Company emerged from bankruptcy proceedings on September 23,
1998, the Company had no revenue from operations, and therefore sustained
losses from general administration expenses amounting to $32,447 during
the quarterly period ended March 31, 2000, $11,830 in 1999.
Inflation
Inflation has not had in the past, nor does the Company expect it in the
future to have a significant impact on the Company's business.
Forward Looking and Cautionary Statements
This report contains "forward looking statements," including without
limitations; (a) statements of proposed financing, (b) assumptions that
casinos will participate in a test of Roulabette, and later actually
purchase, Roulabette systems; (c) granting of licenses from casino
regulatory agencies permitting the sale of Roulabette systems, (d)
proposed broadcasting of live casino games; (e) obtaining permission
from state and foreign governmental agencies allowing their residents
to watch on television and wager along with the live casino broadcast;
(f) the feasibility to profitably operate such play along casino games,
(g) changes in the competitive environment for Roulabette, and (h)
general economic factors in markets where the Company's products are
proposed to be offered, franchised and sold.
Item 4. Submission of Matters to a vote of Securities Holders:
The Company has not held a meeting of shareholders since 1988 because
the cost of soliciting proxies and holding a meeting for the large
number of persons (approximately 11,000) who own its shares is
excessively costly. The directors and officers continue to serve under
provisions of the By-Laws which allow them to continue in office until
their successors are elected and take office.
At the next Annual Meeting of Shareholders the shareholders of the Company
will be asked to ratify the following: (a) An amendment to the Company's
Certificate of Incorporation to increase the authorized number of Common
Shares from 61,000,000 shares to 100,000,000 shares, and to permit the
Company's Board of Directors, without further action by the shareholders, to
issue from time to time up to 1,000,000 authorized but unissued shares of
Preferred Stock, and to fix and determine the terms, limitations, relative
rights and preferences of the Preferred Stock, in order to obtain financing,
capital and/or acquire other businesses that can improve the performance or
growth of the Company. When any shares of Preferred Stock are issued, certain
rights of their holders may affect the rights of the holders of Common Stock.
In addition to any other powers conferred on the Preferred Stock, holders of
the Preferred Stock would have, under New York General Corporation Law, the
right to vote as a separate class on any increased, decrease or change in the
rights of the Preferred Stock. The affirmative vote of a majority of the
outstanding shares of Preferred Stock would be required for approval of
any such increase, decrease, or change. The authority of the Board of
Directors to issue shares of Preferred Stock with characteristics it determines
(such as preferential voting, conversion redemption and
liquidation rights) may have a deterrent effect on persons who might wish
to make a takeover BID to purchase shares of the Company at a price which
might be attractive to its shareholders. However, the Board of Directors
must fulfill its fiduciary obligation to the Company and its shareholders
in evaluating any takeover BID; and (b) The creation of a stock option
and stock award plan (the "Plan") which will authorize the grant of
options to purchase common shares of the Company to key employees
(including directors who are employees), which may be "incentive stock
options" (ISO's) within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended, or non-qualified options. The Plan also will
provide for the grant of stock appreciation rights and stock awards to
eligible participants subject to forfeiture restrictions; (c) The
creation of a Directors Stock Option Plan pursuant to which stock options
are awarded to those directors who are not officers or employees of the
Company ("outside directors"). Presently, there are no outside directors.
The plan will permit the Company to recruit and retain outside directors
who will use their best efforts to promote the success of the Company's
business, (d) The election of members to the Board of Directors; and (e)
Ratify the selection of Arthur Yorkes and Company as the independent
public accountant of the Company for the ensuing fiscal year.
Management at present does not know of any other matters that may be
presented to a vote at the Annual Meeting of Shareholders.
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 of 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this
report to be signed in its behalf by the undersigned thereunto duly authorized.
KENILWORTH SYSTEMS CORPORATION
By: Herbert Lindo
Herbert Lindo, President and Treasurer
(b) Reports on Form 8-K
The Company filed Current reports on Form 8-K on March 15, 2000 to explain
the reason for the delisting from the NASDAQ Bulletin Board and March 30,
2000 to give notice that the Company is current with its SEC financial
reporting requirements.
<PAGE> EXHIBITS:
CONVERTIBLE PROMISSORY NOTE
$0,000 Dated: 2000
Due: 2001
FOR VALUE RECEIVED, KENILWORTH SYSTEMS CORPORATION, a New York
corporation (herein called the "Company"), Promises to pay to the
order of _____________________________________________________________
(herein called the "Holder") or registered assigns, at the principal
office of the Company (presently located at 54 Kenilworth Road, Mineola,
New York 11501) in lawful monies of the United States of America, the
principal sum of DOLLARS (received by the Company
in cash) with accrued and unpaid interest thereon, at the prevailing
prime rate as quoted by Citibank, on or before June 14, 2000. The first
quarterly interest accrual date on the unpaid principal amount shall
be ___________________ and all other accrual dates every three months
thereafter.
This note may be prepaid in whole or in part at any time and from time
to time, without penalty, but with interest on the amount prepaid to
the date of prepayment.
The Holder of this note has the right at any time through _____________
2000, to convert all or any part of the indebtedness represented by this
note, including the accrued interest, through the date of conversion,
into fully paid and non-assessable common stock, par value $.01 per share,
of the Company at the conversion price of one (1) share for the lower of
(a) $.06 per share or (b) the bid price, at any time from date hereof to
date of exercise, for the shares of the Company as traded in the public
market, of unpaid principal and accrued interest. If the Holder shall
elect to exercise such conversion right, then he/she shall notify the
Company, in writing of such election, specifying the principal amount
and interest to be converted, and shall, if the Note shall be converted
in full, surrender the Note to the Company for cancellation and, if this
Note be converted in part, shall surrender this Note to the Company so
that there may be endorsed thereof the reduction of the principal and
interest the same which has been converted, after which the Note shall
be returned to the Holder.
Prior to due presentment for registration or transfer of this Note,
the Company and its agents may deem and treat the person in whose name
this Note shall be registered upon the books of the Company as the
absolute owner of this Note (whether or not this Note shall be overdue
and notwithstanding any notation of ownership or other writing thereon)
for the purpose of receiving payment of or on account of the principal
hereof and interest due hereon and for all other purposes, and neither
the Company nor its agents shall be affected by any notice to the contrary.
Neither this Convertible Promissory Note nor the common shares issuable
on conversion thereof (in whole or in part) have been registered under
the Securities Act of 1933 (the "Act") and may not be sold, transferred,
pledged, or offered for sale in the absence of an effective registration
statement relating to these securities under said Act, or an opinion of
counsel to the Company that such registration is not required, or an
exemption from the Act is available.
<PAGE>
If during the convertible period of this Note the Company shall (i) pay a
stock dividend or make a distribution of its common stock into a greater
number of shares, (ii) combine its outstanding stock into a smaller number
of shares, or (iii) issue by reclassification of its common stock any
shares of capital stock of the Company then the conversion right shall be
adjusted so that the holder thereof, if he/she shall elect to convert the
same, after the record date or the effective date of any such event as the
case may be, shall be entitled to receive the number of shares of common
stock or other capital stock of the Company which he/she would have owned
or have been entitled to receive after any of the events described above,
had the Note been converted at the record date in the case of a stock
dividend or stock distribution or the effective date in the case of a
subdivision, combination or reclassification.
The Company agrees that in the event it shall hereafter file a registration
statement under the Act which includes shares on behalf of any shareholders,
that it will give notice in writing of said registration to the Holder thereof.
In the event the Holder shall in writing addressed and delivered to the
Company elect to exercise such conversion right hereinbefore granted
within the time period specified in said notice, then the Company agrees
to include so much of said stock as the Holder shall be entitled to
receive as a result of said conversion proportionately to the other
shareholders included in the registration statement and to file same
with the Securities and Exchange Commission and agrees to use its best
efforts to cause the same to become effective under the said Act as
promptly as possible, so that the stock may be publicly offered and
sold by the Holder after such effectiveness in compliance with the
requirements of said Act and other applicable provisions of federal
and state securities laws.
If this Note is not paid when due, whether at maturity or by
acceleration by other events, the Company agrees to pay reasonable
costs of collection and such costs shall include without limitation
all costs, attorney's fees and expenses incurred by the Holder
hereof in connection with any insolvency, bankruptcy, reorganization,
arrangement or similar proceedings involving the Company, or
involving any endorser or guarantor hereof, which in any way affect
the exercise by the Holder hereof of his/her rights and remedies
under this Note.
Presentment, demand, protest, notices of protest, dishonor and
nonpayment of this Note and all notices of every kind are waived.
The issuance and execution of this Note has been authorized and
approved by the Board of Directors of the Company.
The terms "Company" and "Holder" used herein shall be construed to
include their respective heirs, personal representatives,
successors, subsequent holders, and assigns.
This Convertible Promissory Note shall be enforced in accordance with
the laws of the State of New York, U.S.A., and shall be construed in
accordance thereof.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Convertible
Promissory Note as of the day and year first above written.
KENILWORTH SYSTEMS CORPORATION
By:______Herbert Lindo____________
Herbert Lindo, President
May 5,2000
ATTEST:
* * * * * * * * * *
In the event of conversion, the
Holder agrees to accept any
shares for investment and
consents to the endorsement
on said shares of an
appropriate legend
* * * * * * * * * *
- ----------------------------
<PAGE>
EXHIBITS:
January 4, 2000
Jeffrey Erb
This letter serves to confirm that Kenilworth Systems
Corporation ("Kenilworth" or the "Company") will cause to be
issued to you, or your designee, one hundred thousand (100,000)
shares of its Common Stock, par value $.01 per share in full
consideration for services you rendered and will render as a
consultant to the Company in connection with all its SEC EDGAR
filings during calendar years 1999 and 2000. This service includes
all amended financial and other statements the Company may have to
file as a result of the audit for the years ended December 31, 1998
and 1999.
The shares to be issued will be duly and validly issued, fully paid
and non-assessable and will be issued as "Restricted Securities" as
that term is defined under the Securities Act of 1933, as amended
(the "Securities Act"), pursuant to an exemption afforded under
Section 4(2) of the Act.
All corporate action necessary for the issuance for the shares has
been made. The Certificates represented by the Shares will be
issued as promptly as possible after March 30, 2000, the Company's
audit reporting date with the SEC. Each certificate to be issued
for the Shares will bear the following legend:
"The Shares represented by the certificates have not been
registered under the Securities Act of 1933, as amended. The
Shares have been acquired for investment and may not be sold,
transferred or assigned in the absence of an effective registration
statement for the Shares under the Securities Act of 1933 or an
opinion of the Company's counsel that registration is not required
under the Act".
If the aforementioned terms meet with your approval, please execute
this letter agreement and return a copy to us.
KENILWORTH SYSTEMS CORPORATION ACCEPTED AND AGREED:
Herbert Lindo Jeffrey Erb
President Date: January 12, 2000
<PAGE>
THIS SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED
FROM THE BALANCE SHEET AND STATEMENT OF OPERATIONS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<TABLE>
<S> <C>
Cash $ 6,746
Marketable Securities -0-
Notes and Accounts Receivable 6,301
Allowance for Doubtful Accounts -0-
Inventory -0-
Total Current Assets 13,047
Property, Plant and Equipment -0-
Accumulated Depreciation -0-
Total Assets 13,047
Total Current Liabilities 25,702
Bonds, Mortgage and Similar Debt -0-
Preferred Stock/Mandatory Redemption -0-
Preferred Stock/No Mandatory Redemption -0-
</TABLE>
