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, 2006
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)

 

 

(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  x   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, 2006 was 226,606,679.

 

 

 Table of Contents

KENILWORTH SYSTEMS CORPORATION AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

INDEX

 

Part I.		Financial Information
Item 1.		Financial Statements		4
		Condensed Consolidated Balance Sheets (unaudited) - March 31, 2006 and December 31, 2005		4
		Condensed Consolidated Statements of Operation and Deficit (unaudited) - Three months ended March 31, 2006 and 2005, and the period from inception, as a Development Stage Company, to March 31, 2006		5
		Condensed Consolidated Statements of Cash Flows (unaudited) - Three months ended March 31, 2006 and 2005, and the period from inception, as a Development Stage Company, to March 31, 2006		6
		Condensed Notes to Consolidated Financial Statements (unaudited)		8
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.		Quantitative and Qualitative Disclosures About Market Risk
Item 4.		Controls and Procedures
Part II.		Other Information		14
Item 1.		Legal Proceedings		14
Item 6.		Exhibits		14
Signature				15

 

FORWARD LOOKING STATEMENTS

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

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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/A Amendment No. 1 for December 31, 2005 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.

INTRODUCTORY NOTE

This FORM 10-Q is being filed as a “Development Stage Company” from the period beginning November 24, 1998 to the present at March 31, 2006, including a charge in the amount of $4,256,926, which was the amount the Company disbursed on September 28, 1998 to be discharged from Chapter 7 Bankruptcy Proceedings.

d) The Company issued 137,302,093 shares of its Restricted Common Stock since January 1, 2002.  All of the shares may have the restrictions lifted pursuant to Rule 144 and 144K within one (1) or two (2) years which may substantially depress the trading price of the Company’s Stock in the future.

During the three (3) month period ended September 30, 2005, the Company expensed the 25,000,000 shares to be issued to Herbert Lindo, the Chairman, CEO and Chief Financial Officer at the rate of $0.05 per share.  At the Shareholders Meeting held on September 13, 2005, the Shareholders approved the issuance of 25,000,000 shares to Herbert Lindo.

At the Shareholders Meeting held on May 28, 2003, the Shareholders approved the issuance of 20,000,000 shares to be issued to Herbert Lindo the Chairman and President of the Company.  Unlike the 25,000,000 shares issuable to Herbert Lindo, which were expensed, the 20,000,000 shares were not expensed.

Herbert Lindo requested to have the 45,000,000 shares issued during the period ended March 31, 2006.  The Company expensed the 20,000,000 shares during the period at the rate of $0.015 per share, which amounted to a reduced capital adjustment of 53,652 instead of $303,652.

During the period ended March 31, 2006, the Company made certain adjustments to the number of shares outstanding which did not require capital changes.

 

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KENILWORTH SYSTEMS CORPORATION
(A DEVELOPMENT STAGE COMPANY)

CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)

		March 31, 2006			December 31, 2005
ASSETS
CURRENT ASSETS
Cash		$	3,777		$	5,495
Prepaid expenses		160,000			280,000
Loan receivable — including from stockholders		26,300			26,300
Total current assets		190,077			311,795
PROPERTY AND EQUIPMENT — NET		49,010			49,010
PATENT REGISTRATION COSTS		78,552			76,763
SECURITY DEPOSIT		9,422			9,422
Total assets		$	327,061		$	446,990
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses		$	173,868		$	224,842
Payroll taxes payable and accrued expenses		87,756			43,878
Loans payable — automobile		705			2,820
Total current liabilities		262,329			271,540
STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred Stock - par value $.01 per share; authorized 2,000,000 shares; no shares issued and outstanding
Common stock - par value $.01 per share; authorized 500,000,000 shares; issued and outstanding 226,606,679 and 142,126,245 shares, respectively		2,266,066			2,000,362
Additional paid-in capital		29,913,108			29,859,456
Accumulated deficit		(32,243,906		)	(31,894,818		)
Total stockholders’ equity		64,732			175,450
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY		$	327,061		$	446,990

 

The accompanying notes are an integral part of these financial statements.

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KENILWORTH SYSTEMS CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT
ACCUMULATED DURING DEVELOPMENT STAGE
FOR THE THREE MONTHS ENDED MARCH 31,
(Unaudited)

		Three months ended March 31,						Period from November 24, 1998 to
		2006			2005			March 31, 2006
Revenues
Sales		0			0			0
Expenses
Selling, general and administrative		$	349,088		$	161,303		$	8,449,455
Other income (expenses)
Interest income		—			—			922
Interest expense		—			(54,062		)	(811,312		)
Total other income (expense)		—			(54,062		)	(810,390		)