**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

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**FORM      10-Q/A**

**Amendment      No. 2 **

**x**
**      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE **

**SECURITIES      EXCHANGE ACT OF 1934**

** **
** o**
**      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE**

**SECURITIES      EXCHANGE ACT OF 1934**

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**KID      CASTLE EDUCATIONAL CORPORATION**

| **Florida**                                                                                                      | **59-2549529**                                   |
|------------------------------------------------------------------------------------------------------------------|--------------------------------------------------|
| (State                or other jurisdiction of incorporation or organization)                                    | (IRS                Employer Identification No.) |
|                                                                                                             |                                             |
| **8th                Floor, No. 98 Min Chuan Road, Hsien Tien****Taipei,                Taiwan ROC**             |
| (Address                of principal executive offices)                                                          |
|                                                                                                             |
| **011-886-22218                5996**                                                                            |
| (Registrant’s                telephone number, including area code)                                        |
|                                                                                                             |
| **NONE**                                                                                                         |
| (Former                name, former address and former fiscal year, if changed since last                report) |

** **
** **
** **

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**  **

** **
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**EXPLANATORY      NOTE**
**:**

| (1) | The                negative amount of $140,634 in the form of “Advances to ex-CFO” is                inserted in the section entitled “Cash Flows From Investing Activities”                under the column “Six months ended June 30, 2004” in the Condensed                Consolidated Statement of Cash Flows for the second quarter ended                June 30,                2004 |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | The                positive amount of $140,634 in the form of “Repayments of advances to                ex-CFO” is inserted in the section entitled “Cash Flows From Investing                Activities” under the column “Six months ended June 30, 2004” in the                Condensed Consolidated Statement of Cash Flows for the second quarter                ended June 30, 2004 |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | The                disclosures under the Notes of the Condensed Consolidated Financial                Statements are revised by adding Note 2.1 “Restatement” to reflect the                effects of such transaction on the Condensed Consolidated Financial                Statements. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Detailed                information is provided in footnote 2 of subsection                (vii) entitled “Amount due to (from) officers/shareholders” under Part B                of Note 10 to the Notes of the Condensed Consolidated Financial Statements                to reflect the above transactions. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | The                discussion under Item 2, “Management’s Discussion and Analysis of                Financial Condition and Results of Operations” is revised by adding a                paragraph to reflect the effects of such                transaction |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | The                discussion under Item 4, “Controls and Procedures” is revised in                order to reflect the effects of such                transactions. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**PART      I: FINANCIAL INFORMATION**

**Kid      Castle Educational Corporation **

**Condensed      Consolidated Statements of Cash Flows **

**(Expressed      in US Dollars) **

|                                                                                                           |   | **Six                months ended June 30,**  |     |
|----------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------|----------|
|                                                                                                           |   | **2004**                                           |     | **2003**  |   |
|                                                                                                           |   | **(Restated)**                                     |     |   |   |
|                                                                                                           |   | **(Unaudited)**                                    |     |
| Cash                flows from operating activities                                                            |   |                                               |     |   |   |
| Net                (loss) income                                                                          |   | $                                                  | (930,292 | ) | $ | (1,203,578 | ) |
| Adjustments                to reconcile net loss to net cash used in operating activities                      |   |                                               |          |   |   |  |   |
| Depreciation                of property and equipment                                                          |   |                                               | 107,729  |   |   | 81,549 |   |
| Amortization                of intangible assets                                                               |   |                                               | 80,824   |   |   | 77,753 |   |
| (Reversal                of) provision for allowance for sales returns                                         |   |                                               | (13,126  | ) |   | 44,617 |   |
| Allowance                for doubtful debts                                                                    |   |                                               | 130,866  |   |   | 28,785 |   |
| Provision                for (reversal of) loss on inventory obsolescence and slow-moving                items |   |                                               | 34,970   |   |   | (168,989 | ) |
| Share                of (profit) loss of investments                                                      |   |                                               | (31,425  | ) |   | 12,681 |   |
| Loss                on write-off of an investment                                                              |   |                                               | —  |   |   | 132,116 |   |
| (Increase)/decrease                in:                                                                         |   |                                               |          |   |   |  |   |
| Notes                and accounts receivable                                                                   |   |                                               | 402,524  |   |   | (606,246 | ) |
| Inventories                                                                                                    |   |                                               | (185,880 | ) |   | (339,939 | ) |
| Other                receivables                                                                               |   |                                               | (202,283 | ) |   | (32,527 | ) |
| Prepayments                and other current assets                                                            |   |                                               | 9,484    |   |   | (123,391 | ) |
| Deferred                income tax assets                                                                      |   |                                               | 3,306    |   |   | 182,030 |   |
| Other                assets                                                                                    |   |                                               | (86,257  | ) |   | (39,644 | ) |
| Increase/(decrease)                in:                                                                         |   |                                               |          |   |   |  |   |
| Notes                and accounts payable                                                                      |   |                                               | 219,374  |   |   | (235,045 | ) |
| Accrued                expenses                                                                                |   |                                               | (36,063  | ) |   | 30,899 |   |
| Other                payables                                                                                  |   |                                               | 205,497  |   |   | 454,737 |   |
| Receipts                in advance                                                                             |   |                                               | (202,230 | ) |   | 31,030 |   |
| Income                taxes payable                                                                            |   |                                               | (3,306   | ) |   | — |   |
| Deposits                received                                                                               |   |                                               | 99,576   |   |   | 167,098 |   |
| Accrued                pension liabilities                                                                     |   |                                               | 8,882    |   |   | 29,102 |   |
|                                                                                                           |   |                                               |          |   |   |  |   |
| Net                cash used in operating activities                                                           |   |                                               | (387,830 | ) |   | (1,476,962 | ) |
|                                                                                                           |   |                                               |          |   |   |  |   |
| Cash                flows from investing activities                                                            |   |                                               |          |   |   |  |   |
| Purchase                of property and equipment                                                              |   |                                               | (47,371  | ) |   | (87,809 | ) |
| Amount                due from stockholder/director                                                            |   |                                               | —  |   |   | 122,300 |   |
| Acquisition                of long-term investments                                                            |   |                                               | (103,346 | ) |   | — |   |
| Bank                fixed deposits - pledged                                                                   |   |                                               | (111,678 | ) |   | (65,381 | ) |
| Pledged                notes receivable                                                                        |   |                                               | 11,407   |   |   | 37,873 |   |
| Advances                to ex-CFO (restated)                                                                   |   |                                               | (140,634 | ) |   | — |   |
| Repayments                of advances to ex-CFO (restated)                                                     |   |                                               | 140,634  |   |   | — |   |
|                                                                                                           |   |                                               |     |   |   |   |   |
| Net                cash (used in) provided by investing activities                                             |   |                                               | (250,988 | ) |   | 6,983 |   |

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**Kid      Castle Educational Corporation **

**Condensed      Consolidated Statements of Cash Flows - Continued **

**(Expressed      in US Dollars) **

|                                                                                                                                                                                            |   |  **Six                months ended June 30,**  |       |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------|------------|
|                                                                                                                                                                                            |   | **2004**                                                 |       | **2003**  |   |
|                                                                                                                                                                                            |   | **(Restated)**                                           |       |   |   |
|                                                                                                                                                                                            |   | **(Unaudited)**                                          |       |
| Cash                flows from financing activities                                                                                                                                             |   |                                                     |       |   |   |
| Proceeds                from bank borrowings                                                                                                                                                    |   | $                                                        | 2,865,929  |   | $ | 618,415 |   |
| Repayment                of bank borrowings                                                                                                                                                     |   |                                                     | (2,346,878 | ) |   | (201,489 | ) |
| Repayment                of capital leases                                                                                                                                                      |   |                                                     | (13,933    | ) |   | (6,585 | ) |
| Proceeds                from loan from officers/stockholders                                                                                                                                    |   |                                                     | —    |   |   | 31,427 |   |
| Repayment                of loan from officers/stockholders                                                                                                                                     |   |                                                     | (585,006   | ) |   | — |   |
| Stock                subscriptions received in advance                                                                                                                                          |   |                                                     | —    |   |   | 2,181,578 |   |
|                                                                                                                                                                                            |   |                                                     |            |   |   |  |   |
| Net                cash provided by financing activities                                                                                                                                        |   |                                                     | (79,888    | ) |   | 2,623,346 |   |
|                                                                                                                                                                                            |   |                                                     |            |   |   |  |   |
| Net                (decrease) increase in cash and cash equivalents                                                                                                                        |   |                                                     | (718,706   | ) |   | 1,153,367 |   |
| Effect                of exchange rate changes on cash and cash equivalents                                                                                                                     |   |                                                     | (12,829    | ) |   | 3,033 |   |
| Cash                and cash equivalents at beginning of period                                                                                                                                 |   |                                                     | 1,273,723  |   |   | 125,806 |   |
|                                                                                                                                                                                            |   |                                                     |            |   |   |  |   |
| Cash                and cash equivalents at end of period                                                                                                                                       |   | $                                                        | 542,188    |   | $ | 1,282,206 |   |
|                                                                                                                                                                                            |   |                                                     |            |   |   |  |   |
| Supplemental                disclosure of cash flow information Interest paid                                                                                                                   |   | $                                                        | 32,885     |   | $ | 247,149 |   |
|                                                                                                                                                                                            |   |                                                     |            |   |   |  |   |
| Income                taxes paid                                                                                                                                                                |   | $                                                        | 1,222      |   | $ | 1,729 |   |
|                                                                                                                                                                                            |   |                                                     |            |   |   |  |   |
| **Supplemental                disclosure of significant non-cash transactions**                                                                                                                 |   |                                                     |            |   |   |  |   |
| Capital                lease of transportation equipment                                                                                                                                        |   | $                                                        | —    |   | $ | 57,571 |   |
|                                                                                                                                                                                            |   |                                                     |            |   |   |  |   |
| Increase                (decrease) of notes receivable and pledged notes receivable                corresponding to the increase (decrease) in the following                accounts: |   |                                                     |            |   |   |  |   |
| Other                receivables - related parties                                                                                                                                              |   | $                                                        | —    |   | $ | (259,308 | ) |
|                                                                                                                                                                                            |   |                                                     |            |   |   |  |   |
| Accrued                expenses                                                                                                                                                                 |   | $                                                        | —    |   | $ | 5,181 |   |
|                                                                                                                                                                                            |   |                                                     |            |   |   |  |   |
| Deposits                received                                                                                                                                                                |   | $                                                        | 20,924     |   | $ | — |   |
|                                                                                                                                                                                            |   |                                                     |            |   |   |  |   |
| Other                payables                                                                                                                                                                   |   | $                                                        | 32,900     |   | $ | — |   |
|                                                                                                                                                                                            |   |                                                     |            |   |   |  |   |
| Receipts                in advance                                                                                                                                                              |   | $                                                        | (200,303   | ) | $ | 533,472 |   |

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**Kid      Castle Educational Corporation **

**Condensed      Consolidated Statements of Cash Flows - Continued **

**(Expressed      in US Dollars) **

|                                                                        |   | **Six                months ended June 30,**  |    |
|-----------------------------------------------------------------------------|--------|----------------------------------------------------|---------|
|                                                                        |   | **2004**                                      |    | **2003**  |   |
|                                                                        |   | (Restated)                                         |    |   |   |
|                                                                        |   | **(Unaudited)**                                    |    |
| Write-off                of an associate investment against deferred income |   |                                               |    |   |   |
| Balance                of an associate investment                           |   | $                                                  | — |   | $ | 298,113 |   |
| Balance                of deferred income                                   |   |                                               | — |   |   | (165,997 | ) |
|                                                                        |   |                                               |         |   |   |  |   |
| Loss                on write-off of an associate investment                 |   | $                                                  | — |   | $ | 132,116 |   |

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**NOTES      TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE      2.1 — RESTATEMENT**

|                                                               |   | As                Previously Reported |     | Restated                Amount |   |
|--------------------------------------------------------------------|--------|---------------------------------------|----------|--------------------------------|--------|
| Advances                to ex-CFO                                  |   |                                  | -        |                           |   | (140,634 | ) |
| Repayments                of advances to ex-CFO                    |   |                                  | -        |                           |   | 140,634 |   |
| Net                cash (used in) provided by investing activities |   |                                  | (250,988 | )                              |   | (250,988 | ) |

**NOTE 10 —      RELATED PARTY TRANSACTIONS**

|                                                                       |   |   | **June                30,** |   |   | **December 31,** |   |
|----------------------------------------------------------------------------|--------|--------|-----------------------------|--------|--------|-----------------------|--------|
|                                                                       |   |   | **2004**                    |   |   | **2003**              |   |
|                                                                       |   |   |                        |   |   |                  |   |
| Mr.                Kuo-An Wang and Mr. Yu-En Chiu (Note 1 and 2) |   | $      | —                     |   | $      | 572,160               |   |
|                                                                       |   |   |                             |   |   |                       |   |
|                                                                       |   | $      | —                     |   | $      | 572,160               |   |

| 1. | Prior                to 2003, the Group had borrowings from one of its shareholders. In                December 2003, the Group repaid $70,000 of the borrowings and, in                January                2004, the Group repaid the remaining balance of principal and interest                in                the total amount of $572,160. |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2. | During                the six months ended June 30, 2004, certain inappropriate withdrawals                and                subsequent repayments by the Company’s then Chief Financial Officer, Yu-En                Chiu, have been recognized in the restated Consolidated Statement                of Cash                Flow as short term non-interest bearing advances to Mr. Chiu. During                the                six months ended June 30, 2004, the highest balance of the advances                to                Mr. Yu-En Chiu was $89,767. As of June 30, 2004, Mr. Yu-En Chiu                had repaid all outstanding advances to the Company and there were                no                material amounts due from other officers of the Company. For further                information subsequent to June 30, 2004 related to such transaction,                please refer to 2004 Form 10-K/A and 2005 Form 10-K filed on March                8,                2007. |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| **ITEM 2.** | ***MANAGEMENT’S                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF                OPERATION*** |
|------------------|--------------------------------------------------------------------------------------------------------------------------------|

| **ITEM              4.** | ***CONTROLS                AND PROCEDURES*** |
|--------------------------|----------------------------------------------|

**PART      II: OTHER INFORMATION**

| **ITEM              6.** | ***EXHIBITS*** |
|--------------------------|----------------|

**EXHIBIT      INDEX** 

| Exhibit                No. |   | Exhibit                                                                                                                      |
|----------------------------|--------|------------------------------------------------------------------------------------------------------------------------------|
|                       |   |                                                                                                                         |
| 31.1                       |   | Rule 13a-14(a)                Certification of Principal Executive Officer                                              |
|                       |   |                                                                                                                         |
| 31.2                       |   | Rule 13a-14(a)                Certification of Principal Financial Officer                                              |
|                       |   |                                                                                                                         |
| 32.1                       |   | Section 1350                Certification of Principal Executive Officer and Principal Financial                Officer |

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**SIGNATURES**

|                            |                                                              |                                              |
|---------------------------------|-------------------------------------------------------------------|---------------------------------------------------|
| Dated              May 24, 2007 | BY:                                                     | */s/              SUANG-YI PAI*    |
|                            | SUANG-YI                PAICHIEF                FINANCIAL OFFICER |

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