<PAGE>
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON D.C. 20549

                                   FORM 10-QSB

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.

For the quarterly period ended March 31, 2003

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.

For the transition period from __________, 19____, to __________, 19____.

                       Commission File Number: 333-61286

                       KID CASTLE EDUCATIONAL CORPORATION
                      -----------------------------------
            (formerly King Ball International Technology Corporation)


               Florida
           ---------------                             59-2549529
    (State or Other Jurisdiction of               ---------------------
     Incorporation or Organization)      (I.R.S. Employer Identification Number)

                        8th Floor, No. 98 Mon Chuan Road
                         Hsien Tien, Taipei, Taiwan ROC

                                011-88622218 5996
                                -----------------
              (Registrant's Telephone Number, Including Area Code)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 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.

                        [ X ]  YES           [   ]  NO


There were 15,074,330 shares of the Registrant's no par value common stock
outstanding as of May 19, 2003.

       Transitional Small Business Format (check one) Yes [   ] NO [ X ]
<PAGE>
                                   FORM 10-QSB

                       KID CASTLE EDUCATIONAL CORPORATION

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----
PART I.     FINANCIAL INFORMATION

            Item 1.  Consolidated Financial Statements....................    i

            Item 2.  Management's Discussion and Analysis of
                     Financial Condition and Results of Operations........    3

            Item 3.  Controls and Procedures..............................    8

PART II.    OTHER INFORMATION

            Item 5.  Other Events.........................................    8

            Item 6.  Exhibits and Reports on Form 8-K.....................    8


SIGNATURES ...............................................................   10


                                     - 2 -
<PAGE>
                       KID CASTLE EDUCATIONAL CORPORATION
                   (FORMERLY KING BALL TECHNOLOGY CORPORATION)

                        FINANCIAL STATEMENTS (UNAUDITED)

                                 MARCH 31, 2003
<PAGE>
                       KID CASTLE EDUCATIONAL CORPORATION

         INDEX TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                                                                        Pages

Consolidated Balance Sheet                                               F-1

Consolidated Statements of Operations                                    F-2

Consolidated Statements of Comprehensive Income                          F-3

Consolidated Statements of Cash Flows                                 F-4 - F-5

Notes to Consolidated Condensed Financial Statements                  F-6 - F-13


                                     - i -
<PAGE>
                       KID CASTLE EDUCATIONAL CORPORATION

                           CONSOLIDATED BALANCE SHEET

(Expressed in US Dollars)

<TABLE>
<CAPTION>
                                                                   MARCH 31,
                                                                     2003
                                                                  -----------
                                                                  (UNAUDITED)
<S>                                                               <C>
ASSETS

CURRENT ASSETS
  Cash and bank balances                                          $   519,647
  Bank fixed deposits - pledged                                       228,768
  Accounts receivable, net                                          2,425,357
  Inventories, net (Note 3)                                         1,802,145
  Other receivables (Note 4)                                          125,038
  Prepayments and other current assets (Note 5)                       541,618
  Deferred income tax assets                                          645,736
                                                                  -----------

TOTAL CURRENT ASSETS                                                6,288,309
 Deferred income tax assets                                            92,739
 Interest in an associate (Note 6)                                    298,371
 Amount due from stockholder/director (Note 7)                        124,217
 Property, plant and equipment, net                                 1,857,575
 Intangible assets, net of amortization (Note 8)                    1,089,485
 Deposits paid                                                        119,427
                                                                  -----------

TOTAL ASSETS                                                      $ 9,870,123
                                                                  ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable                                                $ 2,112,679
  Accrued expenses                                                  1,209,400
  Amounts due to stockholders (Note 9)                                854,215
  Bank and other borrowings
           - maturing within one year (Note 10)                     1,071,931
  Other payables                                                      308,485
  Deposits received                                                   129,646
  Receipts in advance (Note 11)                                     1,559,763
  Obligation under capital leases due within one year                  27,377
                                                                  -----------

TOTAL CURRENT LIABILITIES                                           7,273,496
Bank and other borrowings - maturing after one year (Note 10)       1,446,217
Obligation under capital leases due after one year                     30,243
Deposits received                                                     379,141
Provision for pension fund                                            101,484
                                                                  -----------

TOTAL LIABILITIES                                                   9,230,581
                                                                  -----------

COMMITMENT (NOTE 13)

STOCKHOLDERS' EQUITY
  Common stock, no par value:
    25,000,000 shares authorized;
    15,074,329 shares issued and outstanding                        4,654,880
  Additional paid-in capital                                          194,021
  Legal reserve                                                        65,320
  Translation reserve                                                (163,037)
  Accumulated deficits                                             (4,111,642)
                                                                  -----------

                                                                      639,542
                                                                  -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                        $ 9,870,123
                                                                  ===========
</TABLE>

See accompanying notes to unaudited consolidated condensed financial statements.


                                       F-1
<PAGE>
                       KID CASTLE EDUCATIONAL CORPORATION

                      CONSOLIDATED STATEMENTS OF OPERATIONS

(Expressed in US Dollars)

<TABLE>
<CAPTION>
                                                            THREE MONTHS ENDED MARCH 31,
                                                           -------------------------------
                                                               2003              2002
                                                           -------------     -------------
                                                            (UNAUDITED)       (UNAUDITED)
<S>                                                        <C>               <C>
REVENUE
      Sales of goods                                       $  2,274,713      $  1,855,865
      Franchising income                                        431,651           201,052
                                                           ------------      ------------
                                                              2,706,364         2,056,917
                                                           ------------      ------------
OPERATING COST
      Cost of goods sold                                        724,047           729,088
      Cost of servicing                                         103,788            64,928
                                                           ------------      ------------
                                                                827,835           794,016
                                                           ------------      ------------
GROSS PROFIT                                                  1,878,529         1,262,901
OTHER OPERATING INCOME                                          111,857           164,054
ADVERTISING COSTS                                               (43,975)          (18,663)
OTHER OPERATING EXPENSES                                     (1,705,934)         (983,243)
                                                           ------------      ------------

PROFIT FROM OPERATIONS                                          240,477           425,049
INTEREST INCOME                                                   3,180             8,979
INTEREST EXPENSES                                               (77,201)          (33,206)
SHARE OF (LOSS)/PROFIT OF AN ASSOCIATE                          (12,710)            2,232
                                                           ------------      ------------
PROFIT BEFORE INCOME TAXES                                      153,746           403,054
INCOME TAXES                                                   (148,497)         (105,002)
                                                           ------------      ------------
NET PROFIT AFTER INCOME TAXES                              $      5,249      $    298,052
                                                           ============      ============
EARNINGS PER SHARE - BASIC AND DILUTED                     $       0.00      $       0.03
                                                           ============      ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
      OUTSTANDING FOR CALCULATION OF BASIC AND DILUTED
      EARNINGS PER SHARE                                     15,074,329        11,880,000
                                                           ============      ============
</TABLE>

See accompanying notes to unaudited consolidated condensed financial statements.


                                       F-2
<PAGE>
                       KID CASTLE EDUCATIONAL CORPORATION

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in US Dollars)

<TABLE>
<CAPTION>
                                                  THREE MONTHS ENDED MARCH 31,
                                                  ----------------------------
                                                     2003             2002
                                                  ---------         ---------
                                                 (UNAUDITED)       (UNAUDITED)
<S>                                              <C>               <C>
NET INCOME                                        $   5,249         $ 298,052


OTHER COMPREHENSIVE INCOME
      Foreign currency translation adjustment         2,273              (846)
                                                  ---------         ---------

COMPREHENSIVE INCOME                              $   7,522         $ 297,206
                                                  =========         =========
</TABLE>

See accompanying notes to unaudited consolidated condensed financial statements.


                                       F-3
<PAGE>
                       KID CASTLE EDUCATIONAL CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in US Dollars)

<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED MARCH 31,
                                                        ----------------------------
                                                            2003             2002
                                                        -----------      -----------
                                                        (UNAUDITED)      (UNAUDITED)
<S>                                                     <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net profit                                              $     5,249      $   298,052
      Adjustments to reconcile net profit to
            Net cash used in operating activities
      Depreciation of property, plant and equipment          61,037           20,889
      Share of loss/(profit) of an associate                 12,710           (2,232)
      Allowance for doubtful debts                           59,365           46,310
      Amortization of intangible assets                      38,970           38,654
      (Increase)/decrease in:
            Accounts receivable                          (1,141,855)      (1,562,103)
            Inventories                                    (361,172)         (29,538)
            Other receivables                               193,640          121,713
            Prepayments and other current assets            (49,499)          (4,220)
            Deferred income tax assets                      148,497          (26,326)
            Deposits paid                                   (13,726)          (8,502)
      Increase/(decrease) in:
            Accounts payable                                405,345           94,891
            Accrued expenses                                153,499          147,815
            Other payables                                   31,246           (7,511)
            Receipts in advance                             138,742          585,836
            Income taxes payable                                 --          131,328
            Deposits received                                20,340           30,910
            Provision for pension cost                       14,585           13,087
                                                        -----------      -----------

NET CASH USED IN OPERATING ACTIVITIES                      (283,027)        (110,947)
                                                        -----------      -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment                   (32,875)          (6,734)
Amount due from stockholder/director                         (1,814)              --
Bank fixed deposits - pledged                               (80,957)           8,014
                                                        -----------      -----------
NET CASH (USED IN)/PROVIDED BY INVESTING ACTIVITIES        (115,646)           1,280
                                                        -----------      -----------
</TABLE>

See accompanying notes to unaudited consolidated condensed financial statements.


                                       F-4
<PAGE>
                       KID CASTLE EDUCATIONAL CORPORATION

                CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

(Expressed in US Dollars)

<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED MARCH 31,
                                                        ----------------------------
                                                            2003           2002
                                                         (UNAUDITED)    (UNAUDITED)
<S>                                                     <C>             <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of mortgage loan                               $ (13,425)     $ (12,292)
Proceeds from bank term loans                               66,139        126,540
Repayment of short term bank loan                          (86,555)            --
Repayment of capital element of capital leases                  --         (9,617)
Amounts due to stockholders                                250,289             --
Proceeds from other loan                                   577,034             --
                                                         ---------      ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES                  793,482        104,631
                                                         ---------      ---------
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS       394,809         (5,036)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
      CASH EQUIVALENTS                                        (968)            42

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD           125,806         32,842
                                                         ---------      ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD               $ 519,647      $  27,848
                                                         =========      =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid                                            $  77,201      $  33,206
Income taxes paid                                               --             --
                                                         =========      =========
</TABLE>

SUPPLEMENTAL DISCLOSURE OF SIGNIFICANT NON-CASH TRANSACTION:

During the period ended March 31, 2003, the Group entered into a capital lease
for purchase of transportation equipment totalling $57,703.


See accompanying notes to unaudited consolidated condensed financial statements.


                                       F-5
<PAGE>
                       KID CASTLE EDUCATIONAL CORPORATION

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Expressed in US Dollars)


NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

Kid Castle Internet Technologies Limited ("KCIT") was incorporated on December
17, 1999 under the provisions of the Company Law of the Republic of China
("Taiwan") as a limited liability company which was originally named as
Wonderland Internet Technologies Limited. KCIT is engaged in the business of
children education focusing on the English language. The business comprises
publication, sales and distribution of related books, magazines, audio and video
tapes and compact disc, franchising and sales of merchandises complementary to
the business.

KCIT commenced operations in April 2000 when it acquired the above business from
a related company, Kid Castle Enterprises Limited ("KCE") which was owned by two
directors and stockholders of KCIT.

On March 9, 2001, KCIT incorporated a wholly-owned subsidiary, Premier Holding
Investment Property Limited ("Premier") incorporated in the British Virgin
Islands, which held the entire common stock of Higoal Developments Limited
("Higoal") incorporated in the Cayman Islands on March 8, 2001. On September 10,
2001, Higoal established a wholly owned subsidiary, Kid Castle Educational
Software Development Company Limited ("KCES") in the People's Republic of China
(the "PRC"). The existing operations are principally located in Taiwan and are
being expanded in the PRC.

During the year ended December 31, 2002, KCIT has undertaken a series of group
restructuring. The wholly-owned subsidiary of KCIT, Premier, which held the
entire issued common stock of Higoal has been removed. Thereafter, KCIT became
an immediate holding company of Higoal.

On September 18, 2001, Higoal issued 11,880,000 common stock to the stockholders
of KCIT in exchange of 100% of the issued and fully paid up 11,880,000 common
stock of KCIT. As a result of this restructuring, KCIT became a wholly-owned
subsidiary of Higoal. This transaction was a reorganization as there was no
change in the stockholders of Higoal and KCIT before and after the transaction.

On October 1, 2002, Kid Castle Educational Corporation, formerly King Ball
International Technology Limited Corporation ("the Company") entered into an
exchange agreement with Higoal whereby the Company issued to the stockholders of
Higoal 11,880,000 authorized but unissued shares of common stock of the Company
in exchange of 100% of the issued and fully paid up capital of Higoal. The
closing date of this exchange transaction was October 1, 2002.

As a result of the acquisition, the former stockholders of Higoal hold a
majority interest in the combined entity of the Company. Generally accepted
accounting principles require in certain circumstances that a company whose
stockholders retain the majority voting interest in the combined business to be
treated as the acquirer for financial reporting purposes. Accordingly, the
acquisition has been accounted for as a "reverse acquisition" whereby Higoal is
deemed to have purchased the Company. However, the Company remains the legal
entity and the Registrant for Securities and Exchange Commission reporting
purposes. The Company, Higoal and its subsidiaries collectively are referred to
as the Group.


                                       F-6
<PAGE>
                       KID CASTLE EDUCATIONAL CORPORATION

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Expressed in US Dollars)


NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS - CONTINUED

The historical consolidated financial statements prior to October 1, 2002 are
those of Higoal. All shares and per share data prior to the acquisition have
been restated to reflect the stock issuance as a recapitalization of Higoal.

NOTE 2 - BASIS OF PRESENTATION

The accompanying financial data as of March 31, 2003 and for the three months
ended March 31, 2003 and 2002 have been prepared by the Company, without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. However,
the Company believes that the disclosures are adequate to make the information
presented not misleading. These financial statements should be read in
conjunction with the financial statements and the notes thereto included in the
Company's audited annual financial statements for the year ended December 31,
2002.

The preparation of financial statements in conformity with general accepted
accounting principles requires management to make estimates that affect the
reported amounts of assets, liabilities, revenues and expenses and the
disclosure of contingent assets and liabilities. Actual results could differ
from these estimates.

In the opinion of Management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position as of
March 31, 2003 and the results of operations for the three months ended March
31, 2003 and 2002 have been made. The results of operations for the three months
ended March 31, 2003 and 2002 are not necessarily indicative of the operating
results for the full year.

NOTE 3 - INVENTORIES

<TABLE>
<CAPTION>
                                                                     MARCH 31,
                                                                       2003
                                                                    -----------
                                                                    (UNAUDITED)
<S>                                                                 <C>
Work in progress                                                    $    22,338
Finished goods and other merchandises                                 2,319,245
                                                                    -----------
                                                                      2,341,583
Less: Allowance for obsolete inventories                               (539,438)
                                                                    -----------
                                                                    $ 1,802,145
                                                                    ===========
</TABLE>


                                       F-7
<PAGE>
                       KID CASTLE EDUCATIONAL CORPORATION

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Expressed in US Dollars)


NOTE 4 - OTHER RECEIVABLES

<TABLE>
<CAPTION>
                                                                     MARCH 31,
                                                                       2003
                                                                    -----------
                                                                    (UNAUDITED)
<S>                                                                 <C>
Tax paid on behalf of landlord                                       $    873
Advances to staff                                                       8,679
Penalties receivable                                                   17,835
Other receivables                                                      56,268
                                                                     --------
Third parties                                                          83,655
Amount due from a related company - KCE (note i)                       15,177
Amount due from an associate
      - Global International Education Investment Ltd. (note ii)       26,206
                                                                     --------
                                                                     $125,038
                                                                     ========
</TABLE>

Notes:

(i)   The amount due from KCE is unsecured, carries interest at 6% per annum and
      has no fixed repayment term.

(ii)  The amount due from Global International Education Investment Ltd. is
      unsecured, carries interest at 6% per annum and has no fixed repayment
      term.

NOTE 5 - PREPAYMENTS AND OTHER CURRENT ASSETS

<TABLE>
<CAPTION>
                                                                      MARCH 31,
                                                                        2003
                                                                     -----------
                                                                     (UNAUDITED)
<S>                                                                  <C>
Prepayments                                                           $ 181,367
Temporary payments                                                      314,578
Others                                                                   45,673
                                                                      ---------
                                                                      $ 541,618
                                                                      =========
</TABLE>


                                       F-8
<PAGE>
                       KID CASTLE EDUCATIONAL CORPORATION

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Expressed in US Dollars)


NOTE 6 - INTEREST IN AN ASSOCIATE

<TABLE>
<CAPTION>
                                                                      MARCH 31,
                                                                        2003
                                                                      ---------
                                                                     (UNAUDITED)
<S>                                                                  <C>
Global International Education Investment Ltd.
      ("Global International")
      Investment cost                                                 $ 300,000
      Translation adjustment                                              2,065
      Share of loss                                                      (3,694)
                                                                      ---------
                                                                      $ 298,371
                                                                      =========
</TABLE>

On May 16, 2001, the Group entered into an agreement with other subscribers of
Global International, a company incorporated in the British Virgin Islands which
is principally engaged in operation of kindergartens and schools under the
franchise of the Group in the PRC, whereby the Group is required to be
responsible for the management and operation of Global International's
English-teaching schools. In return, six shares of common stock valued at
$50,000 each of Global International were allotted to the Group. As the six
shares of common stock account for 15% equity interest in Global International
and the chairman of the Group has been appointed as the chairman of Global
International it has been determined that the Group has significant influence
and should therefore account for its interest on the equity method.

The cost of investment in Global International is accounted for in the financial
statements based on the amount of the cash per share that was contributed by the
other investors.

NOTE 7 - AMOUNT DUE FROM STOCKHOLDER/DIRECTOR

 The balance represents an amount due from a stockholder and officer of the
Company. The amount was loaned to the officer to finance his individual
investment in Global International. The loan is unsecured, carries interest at
6% per annum and has no fixed payment term, however, the Company expects it to
be repaid in full in 2003.

                                       F-9
<PAGE>
                       KID CASTLE EDUCATIONAL CORPORATION

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Expressed in US Dollars)


NOTE 8 - INTANGIBLE ASSETS

<TABLE>
<CAPTION>
                                                                     MARCH 31,
                                                                       2003
                                                                    -----------
                                                                    (UNAUDITED)
<S>                                                                 <C>
GROSS CARRYING AMOUNT
Franchise                                                           $   980,204
Copyrights                                                              576,203
                                                                    -----------

                                                                      1,556,407
                                                                    -----------
LESS: ACCUMULATED AMORTIZATION
Franchise                                                              (294,061)
Copyrights                                                             (172,861)
                                                                    -----------
                                                                       (466,922)
                                                                    -----------
                                                                    $ 1,089,485
                                                                    ===========
</TABLE>

Amortization charged to operations was $ 38,970 for the three months ended March
31, 2003.

The estimated aggregate amortization expenses for each of the five succeeding
fiscal years are as follows:

<TABLE>
<S>                                                                    <C>
2004                                                                   $ 155,880
2005                                                                     155,880
2006                                                                     155,880
2007                                                                     155,880
2008                                                                     155,880
                                                                       ---------
                                                                       $ 779,400
                                                                       =========
</TABLE>


                                      F-10
<PAGE>
                       KID CASTLE EDUCATIONAL CORPORATION

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Expressed in US Dollars)


NOTE 9 - AMOUNTS DUE TO STOCKHOLDERS

The amounts due to stockholders are unsecured, carry interest at 10% to 25% per
annum and have no fixed repayment terms.

NOTE 10 - BANK AND OTHER BORROWINGS

During the period ended March 31, 2003, there was no significant change in the
Group's bank borrowings. On March 31, 2003, the Group obtained a loan of
US$576,203 from a financial institution which is pledged by the Group's bank
fixed deposits of US$115,241 and guaranteed by two directors/stockholders of the
Company, to finance Group's operations. The loan carries interest at 7.7% per
annum and is repayable by 18 equal monthly installments. The last installment
falls due on September 30, 2004. No interest expense was charged to the
operations for the period ended March 31, 2003.

NOTE 11 - RECEIPTS IN ADVANCE

The balance comprises:

<TABLE>
<CAPTION>
                                                                      MARCH 31,
                                                         NOTES          2003
                                                                   -------------
                                                                    (UNAUDITED)
<S>                                                      <C>       <C>
Sales deposits received                                   (i)      $     453,580
Franchising income received                              (ii)            867,664
Subscription fees received                               (iii)           236,628
Others                                                                     1,891
                                                                   -------------
                                                                   $   1,559,763
                                                                   =============
</TABLE>

Notes:

(i)   The balance represents receipts in advance from customers for goods sold
      to them.

(ii)  The balance mainly represents franchising income received in advance which
      is attributable to the periods after the respective year end dates.

(iii) The balance represents subscription fees received in advance for
      subscription of magazines published by the Group.


                                      F-11
<PAGE>
                       KID CASTLE EDUCATIONAL CORPORATION

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Expressed in US Dollars)


NOTE 12 - GEOGRAPHICAL SEGMENTS

The Group is principally engaged in the business of children education focusing
on English language in Taiwan and the PRC. Accordingly, the Group has two
reportable geographic segments: Taiwan and the PRC. The Group evaluates the
performance of each geographic segment based on its net income or loss. The
Group also accounts for inter-segment sales as if the sales were made to third
parties. Information concerning the operations in these geographical segment is
as follows:

<TABLE>
<CAPTION>
                              TAIWAN                   THE PRC                    TOTAL                CORPORATE
                      ----------------------  --------------------------  ----------------------  -----------------------
                       MARCH 31,   MARCH 31,    MARCH 31,     MARCH 31,    MARCH 31,   MARCH 31,   MARCH 31,    MARCH 31,
                         2003        2002         2003          2002         2003        2002        2003         2002
<S>                   <C>         <C>         <C>           <C>           <C>         <C>         <C>          <C>
REVENUE
External sales        $2,472,515  $2,007,406  $   233,849   $    49,511   $2,706,364  $2,056,917  $       --   $       --
Inter-segment sales       26,646     204,943           --            --       26,646     204,943          --           --
                      ----------  ----------  -----------   -----------   ----------  ----------  ----------   ----------
                      $2,499,161  $2,212,349  $   233,849   $    49,511   $2,733,010  $2,261,860  $       --   $       --
                      ==========  ==========  ===========   ===========   ==========  ==========  ==========   ==========
PROFIT/(LOSS) FROM
     OPERATIONS       $  688,398  $  711,773  $  (375,547)  $  (286,724)  $  312,851  $  425,049  $   (3,686)  $       --
                      ==========  ==========  ===========   ===========   ==========  ==========  ==========   ==========
CAPITAL EXPENDITURES  $   84,936  $       --  $     5,642   $     6,734   $   90,578  $    6,734  $       --   $       --
                      ==========  ==========  ===========   ===========   ==========  ==========  ==========   ==========
TOTAL ASSETS          $8,547,854  $8,551,828  $ 1,196,388   $   747,517   $9,744,242  $9,299,345  $  299,080   $  302,665
                      ==========  ==========  ===========   ===========   ==========  ==========  ==========   ==========
</TABLE>

<TABLE>
<CAPTION>
                            ELIMINATION             CONSOLIDATED
                      ------------------------  ----------------------
                       MARCH 31,    MARCH 31,   MARCH 31,    MARCH 31,
                         2003         2002        2003         2002
<S>                   <C>         <C>           <C>         <C>
REVENUE
External sales        $      --   $        --   $2,706,364  $2,056,917
Inter-segment sales     (26,646)     (204,943)          --          --
                      ---------   -----------   ----------  ----------
                      $ (26,646)  $  (204,943)  $2,706,364  $2,056,917
                      =========   ===========   ==========  ==========
PROFIT/(LOSS) FROM
     OPERATIONS       $ (68,688)  $        --   $  240,477  $  425,049
                      =========   ===========   ==========  ==========
CAPITAL EXPENDITURES  $      --   $        --   $   90,578  $    6,734
                      =========   ===========   ==========  ==========
TOTAL ASSETS          $(173,199)  $        --   $9,870,123  $9,602,010
                      =========   ===========   ==========  ==========
</TABLE>


                                      F-12
<PAGE>
                       KID CASTLE EDUCATIONAL CORPORATION

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Expressed in US Dollars)


NOTE 13 - COMMITMENT

During the period ended March 31, 2003, the Company entered into an agreement
with two PRC parties to establish a subsidiary in Beijing , the PRC. Pursuant to
the agreement, the total registered capital of the subsidiary which will be 65%
owned by the Company is approximately $1,381,000. The Company has agreed to
contribute 65% of the registered capital totalling $898,000 attributable to its
equity interest and 5% of the registered capital totalling $69,000 for one of
the PRC parties. As at March 31, 2003, no capital was contributed by the Company
to the subsidiary.

NOTE 14 - SUBSEQUENT EVENT

Pursuant to a special resolution passed on April 2, 2003, the Company resolved
to issue 6,000,000 shares of common stock at a subscription price of $0.7 per
share to existing stockholders of the Company.


                                      F-13
<PAGE>
ITEM 2      MANAGEMENT'S DISCUSSION AND ANALYSIS
            OF FINANCIAL CONDITION AND RESULTS OF OPERATION

      The purpose of the following discussion and analysis is to explain the
major factors and variances between periods of the Company's financial condition
and results of operations. The following discussion of the Company's financial
condition and results of operations should be read in conjunction with the
historical consolidated financial statements and notes thereto appearing
elsewhere in this Report.

GENERAL

      The Company is engaged in the business of children's education focusing on
the publication and sale of kindergarten language school and primary school
teaching materials and magazines, and providing management and consulting
services in running kindergarten's and language schools through franchise or
cooperation arrangements. Children's teaching materials include books, audio
tapes, video tapes and compact discs. A major portion of the Company's
educational materials focuses on English language education. The Company also
sells educational tools and equipment that are complementary to its business.
Currently, the Company's business is in Taiwan. In 2001, the Company started its
expansion program in the People's Republic of China ("PRC"). The Company
officially opened its Shanghai operations in April 2002. As in Taiwan, the
Company brings advanced teaching materials and tools, and a monthly magazine to
provide children ranging from two to twelve years of age a chance to learn
exceptional English language and computer skills, and to provide a pre-school
education program.

CRITICAL ACCOUNTING POLICIES

      The Company has identified critical accounting policies with respect to
revenue recognition and valuation of accounts receivable and inventories.

REVENUE RECOGNITION AND ACCOUNTS RECEIVABLE VALUATION

      The Company recognizes sales of teaching materials and educational tools
and equipment


                                       -3-
<PAGE>
as revenue recognized when title to the product and risk of ownership are
transferred to the customer, which occurs at the time of delivery, or when the
goods arrives at the customer designated location depending on the associated
shipping terms. Additionally, the Company delivers products sold by its
distributors directly to the distributors' customers and as such the delivered
goods are recognized as revenue similar to sales to the Company's direct
customers. The Company recognizes franchise income on a straight-line basis over
the terms of the franchise agreements, which is usually for a period of three
years.

      Customers have the right to return purchased products within 30 days, 60
days and 90 days after delivery of sales to franchise schools, distributors and
primary schools, respectively.

      The preparation of financial statements requires the Company's management
to make estimates and assumptions that affect the reported amount of assets at
the date of the financial statements and the reported amounts of revenues and
expenses during the reported period. Specifically, management must make
estimates of potential future product returns related to current period revenue.
Management analyzes historical returns, current economic trends, changes in
education teaching methods and social trends particularly with regards to
English language learning when evaluating the adequacy of sales returns.
Significant management judgments and estimates must be made and used in
connection with establishing the sales returns in any accounting period. Actual
results could be different from those estimates. Similarly, the Company's
management must make estimates of the uncollectability of accounts receivable.
Management specifically analyzes customer payment terms and reviews individual
customer financial position when evaluating the adequacy of allowance for
doubtful accounts. As of March 31, 2003 and 2002, management believed that
adequate provision had been made.

INVENTORY

      The Company values its inventory at the lower of cost or market. Cost
includes all costs of purchase, cost of conversion and other costs incurred in
bringing the inventories to their present location and condition. Cost is
calculated using the weighted average method. Market value is determined by
reference to sales proceeds of items sold in the ordinary course of business
after the balance sheet date or based on the management's estimate on prevailing
market


                                       -4-
<PAGE>
conditions and assessment on the Company's ability to dispose them at a price
greater than cost. When market value is less than cost, the Company writes down
the related inventory to that value. The Company also continuously evaluates the
composition of its inventory and identifies slow-moving inventories. Inventory
items identified as slow-moving are evaluated to determine if reserves are
required. Training materials for kindergarten and magazines are susceptible to
obsolescence issue because they have relatively shorter market period. If the
Company is unable to achieve its expectations of the net realizable value of the
inventory at its carrying value, the Company would have to adjust its reserves
accordingly. The allowance for obsolete inventories as of March 31, 2003 and
2002 amounted to $539,438 and $2,175,859, respectively.

RESULTS OF OPERATIONS

      Comparison of the three months ended March 31, 2003 and 2002

      Revenues increased by $649,447, or 32%, to $2,706,364 in the 2003 period
from $2,056,917 in the 2002 period. The increase was mostly attributable to
teaching materials and magazines, which increased 19% to $1,837,355 for the 2003
period from $1,543,650 for the 2002 period, and an increase in franchising
income, which increased 115% to $431,651 for the 2003 period from $201,052 for
the 2002 period. Sales of magazines increased 54% to $359,374 for the 2003
period from $232,869 for the 2002 period as the Company changed the distribution
channel of its magazines from third party distributors to direct marketing
starting in November 2001. The result meets the Company's expectation of
stabilizing the sales volume of magazines in 2003.

      Gross profit increased by $615,628, or 49%, to $1,878,529 in the 2003
period from $1,262,901 in the 2002 period. The increase is mainly attributable
to an increase in sales of magazines through direct marketing.

      The Company's other operating income represents income from other
activities and services such as training of teachers, arranging for personal
English language tutors and organizing field trips and educational fairs. Other
operating income decreased by $52,197, or


                                      -5-
<PAGE>
32%, to $111,857 for the 2003 period from $164,054 for the 2002 period was
mainly due to decrease in income from the Company's share of entrance fees it
receives from the Transportation Museum, a facility where educational
exhibitions of the Company held. The Transportation Museum held no exhibitions
in the first quarter of 2003.

      Total operating expenses increased by $748,003, or 75% to $1,749,909 for
the 2003 period from $1,001,906 for the 2002 period. Advertising costs increased
by $25,312, or 136% to $43,975 for the 2003 period from $18,663 for the 2002
period due to the increase in promotional activities in direct marketing. Other
operating expenses increased by $722,691, or 74% to $1,705,934 for the 2003
period from $983,243 for the 2002 period, principally because of the increase in
commission fees to distributors and incremental expenses incurred in maintaining
the Shanghai office that was newly established in April 2002. Commission fees
increased by $46,367 or 95% to $95,321 for the 2003 period from $48,954,for the
2002 period as the Company changed its distribution strategy through greater
alliance with its distributors, particularly as the Company faced stiff
competition in the primary school market. On January 27, 2003 the Company
entered into an sponsorship agreement with a PRC entity whereby the Company paid
a sponsorship fee of $231,000 to a PRC charity fund to ameliorate the
"psychology, nutrition and constitution" of children in the PRC. Interest
expense increased by $43,995, or 132%, to $77,201 for the 2003 period from
$33,206 for the 2002 period, primarily due to the loans from stockholders in
2002 (please refer to Note 9 to the consolidated financial statements) that
carry a monthly interest of 2.1%.

      Income tax for the 2003 period was $148,497 or 97% on income before income
taxes of $153,746 compared to an income tax expense for the 2002 period of
$105,002 or 26% on income before income taxes of $403,054.

LIQUIDITY AND CAPITAL RESOURCES

      The Company's had cash and cash equivalents of $491,799 at March 31, 2003.

      Working capital (deficit) for the three month period ended March 31, 2003
was ($985,187), as compared to $570,790 for the three month period ended March
31, 2002. This


                                      -6-
<PAGE>
decrease was mainly due to expenditures to fund the daily operations of the
Shanghai office amounting to $600,000 and the donation to the PRC Charity Fund
amounting to $250,000.

      Net cash used in operations was $283,027 in the first quarter of 2003 as
compared to $110,947 in the first quarter of 2002. This $172,080 change was
primarily attributed to the decrease in the net income of $292,803 for the first
quarter of 2003 as compared to 2002.

      Net cash (used in) provided by investment activities amounted to
($115,646) in 2003 as compared to $1,280 in 2002. This decrease was mainly due
to the increase in bank fixed deposits of $80,957 representing the amount
pledged to secure loans from a financial institution, and cash purchases of
certain property and equipment.

      Net cash provided by financing activities in 2003 was $793,482 as compared
to $104,631 provided in 2002. The $688,851 difference was primarily attributable
to loan of $577,034 obtained by the Company from a financial institution and
loans of $250,289 from the Company's stockholders.

      As of March 31, 2003, the Company has a total line of credit of $2,160,000
from certain banks and an unused credit facility of $218,816.

      During the period ended March 31, 2003, the Company entered into a
preliminary agreement with two PRC parties to establish a subsidiary in Beijing,
the PRC. Under the terms of the agreement, total registered capital of the
subsidiary which is 65% owned by the Company is approximately $1, 381,000. The
Company has agreed to contribute 65% of the registered capital totaling $898,000
attributable to its equity interest and 5% of the registered capital totaling
$69,000 for one of the PRC parties. As of March 31, 2003, the Company has not
contributed any capital to the subsidiary.[ On April 2, 2003, the board of
directors approved the issuance of 6,000,000 shares of its common stock, in a
private offering pursuant to Reg S, at a subscription price of $0.7 per share.
The Company intends to use the proceeds from the issuance of the stock for
working capital in connection with the Company's expansion in Beijing, the PRC.


                                      -7-
<PAGE>
ITEM 3      CONTROLS AND PROCEDURES

      Within the 90 days prior to the date of filing this Quarterly Report on
Form 10-QSB, the Company carried out an evaluation, under the supervision and
with the participation of the Company's management, including the Chief
Executive Officer and the Chief Financial Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures
pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the Chief
Executive Officer and the Chief Financial Officer concluded that the Company's
disclosure controls and procedures are effective in timely alerting them to
material information relating to the Company required to be included in the
Company's periodic SEC filings.

                                    PART II.

                                OTHER INFORMATION

ITEM 5      OTHER INFORMATION

            During the period ended March 31, 2003, the Company entered into a
            preliminary agreement with two PRC parties to establish a subsidiary
            in Beijing, the PRC. Under the terms of the agreement, total
            registered capital of the subsidiary which is to be 65% owned by the
            Company, is approximately $1, 381,000. The Company has agreed to
            contribute 65% of the registered capital totaling $898,000
            attributable to its equity interest and 5% of the registered capital
            totaling $69,000 for one of the PRC parties. As of March 31, 2003,
            the Company has not contributed any capital to the subsidiary.

ITEM 6      EXHIBITS AND REPORTS ON FORM 8-K

A.  Exhibits

99.1  Certification of Kuo-An Wang pursuant to 18 U.S.C. 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


99.2  Certification of Yu-En Chiu pursuant to 18 U.S.C. 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

B.  Reports on Form 8-K

January 31, 2003  Announcement of a change in control transaction in
                  which the Company acquired all of the issued and outstanding
                  shares of Hi Goal Developments


                                       -8-
<PAGE>
                  Ltd. in exchange for 11,880,000 shares of the Company's common
                  stock, representing 80% of the Company's outstanding stock at
                  that time.

May 15, 2003      Amendment of the January 31, 2003 8-K, attaching the
                  audited financial statements of the Company for the fiscal
                  years ended December 31, 2001 and 2000 and for the quarterly
                  period ended September 30, 2002.


                                       -9-
<PAGE>
                                   SIGNATURES

      In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

Dated:   May 20, 2003


                                    By:       /s/ Kuo An Wang
                                          ------------------------------
                                          Name:   Kuo-An Wang
                                          Title:  Chief Executive Officer
<PAGE>
                 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, KUO-AN WANG, President and Chief Executive Officer (principal executive
officer) of Kid Castle Educational Corporation (the "Registrant"), certifies
that:

1. I have reviewed this quarterly report on Form 10-QSB of Kid Castle
Educational Corporation.

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

      a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

      b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

      c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

      a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

      b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and


                                     1 of 2
<PAGE>
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

/s/ Kuo An Wang
--------------------------------
Kuo-An Wang
Date:  May 20, 2003


                                     2 of 2
<PAGE>
                 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, YU-EN CHIU, Chief Financial Officer (principal financial officer) of Kid
Castle Educational Corporation (the "Registrant"), certifies that:

1. I have reviewed this quarterly report on Form 10-QSB of Kid Castle
Educational Corporation.

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

      a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

      b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

      c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

      a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

      b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

      6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could


                                     1 of 2
<PAGE>
significantly affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.

    /s/ Yu-En Chiu
---------------------------------
Yu-En Chiu
Date:  May 20, 2003


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