10-Q/A 1 v076504_10qa.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 10-Q/A
 
Amendment No. 1

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2005
or

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

Commission File Number: 333-39629
 
 
KID CASTLE EDUCATIONAL CORPORATION
(Exact name of Registrant as specified in its charter)

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)
 
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes o No x 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
 
Large Accelerated Filer  o Accelerated Filer o Non-accelerated filer x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No x
 
As of May 24, 2007,  there were 25,000,000 shares of the Registrant’s common stock outstanding.
 
 
EXPLANATORY NOTE:

Kid Castle Educational Corporation (the “Company”) is filing this Amendment No. 1 to the Quarterly Report on Form 10-Q/A (the “Amendment”) to amend and restate the Condensed Consolidated Statement of Cash Flows (the “Cash Flow Statement”) for the third quarter ended September 30, 2005 contained in the Quarterly Report on Form 10-Q for the third quarter ended September 30, 2005 filed with the Securities and Exchange Commission (“SEC”) on July 3, 2006 (the “Original Filing”).  

This Amendment amends and restates the Cash Flow Statement of the Original Filing to properly account for transactions that occurred during for the previous third quarter ended September 30, 2004 involving inappropriate withdrawals and subsequent repayments by Yu-En Chiu, a former Chief Financial Officer of the Company (“ex-CFO”).

This Amendment amends and restates as follows:

(1)
The negative amount of $353,361 in the form of “Advances to ex-CFO” is inserted in the section entitled “Cash Flows From Investing Activities” under the column “Nine Months Ended September 30, 2004” in the Condensed Consolidated Statement of Cash Flows for the third quarter ended September 30, 2005.

(2)
The positive amount of $353,361 in the form of “Repayments of advances to ex-CFO” is inserted in the section entitled “Cash Flows From Investing Activities” under the column “Nine Months Ended September 30, 2004” in the Condensed Consolidated Statement of Cash Flows for the third quarter ended September 30, 2005.
 
Accordingly, the Condensed Consolidated Statement of Cash Flows for the third quarter ended September 30, 2005, as amended and restated, is produced in this Amendment in its entirety. Unaffected items in the Original Filing have not been restated in this Amendment.
 
As a result of this Amendment, the certifications pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002, filed as exhibits to the Original Filing, have been re-executed and re-filed as of the date of this Amendment.

This Amendment does not otherwise reflect events occurring after the filing of the Original Filing, or otherwise update these disclosures. Accordingly, this Amendment should be read in conjunction with our filings with the SEC subsequent to the filing of the Original Filing.
 
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PART I: FINANCIAL INFORMATION

Kid Castle Educational Corporation
Condensed Consolidated Statements of Cash Flows
(Expressed in US Dollars)
(Unaudited)
 
  
Nine months ended
September 30,
  
 
  
2005
  
2004
  
 
  
 
  
(Restated)
  
Cash flows from operating activities
  
 
  
 
  
Net loss
  
$
(689,594
)
$
(785,171
)
Adjustments to reconcile net loss to net cash used in operating activities:
          
Depreciation and amortization
    
333,388
    
258,261
  
Allowance for doubtful debts and sales returns
    
1,231,289
    
172,537
  
Provision for allowance for loss on inventory obsolescence and slow-moving items
    
58,325
    
113,573
  
Gain on disposal of property and equipment
    
(30,333
)
  
(10,609
)
Decrease in deferred income tax assets
    
11,313
    
67,378
  
Minority interest in income
    
(16,017
)
  
2,611
  
Share of loss of investments
    
21,157
    
—
  
Changes in assets and liabilities:
          
Increase in notes and accounts receivable
    
(2,124,415
)
  
(561,081
)
Decrease in inventories
    
240,064
    
(403,744
)
Increase in other receivables
    
159,779
    
(99,282
)
Increase in prepayments and other current assets
    
(259,470
)
  
(250,194
)
Increase in other assets
    
(63,276
)
  
(122,453
)
Increase in notes and accounts payable
    
574,013
   
572,556
  
Increase in accrued expenses
    
406,985
    
(104,349
)
Increase in other payables
    
36,015
    
(88,561
)
Decrease in receipts in advance
    
(178,961
)
  
349,247
  
Increase in income taxes payable
    
111,039
    
42,967
  
Increase in deposits received
    
63,187
    
129,455
  
Increase in accrued pension liabilities
    
85,088
    
10,406
  
 
          
Net cash used in operating activities
    
(30,424
)
  
(706,453
)
 
          
Cash flows from investing activities
          
Purchases of property and equipment
    
(111,270
)
  
(197,389
)
Proceeds from disposal of property and equipment
    
78,661
    
79,135
  
Acquisition of long-term investments
    
—
    
(103,563
)
Acquisition of long-term notes receivable
    
(46,043
)
  
—
  
Advances to ex-CFO
    
(2,267,424
)
  
(353,361
)
Repayments of advances to ex-CFO
    
2,267,424
   
353,361
  
 
          
Net cash used in investing activities
    
(78,652
)
  
(221,817
)
 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
 
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Kid Castle Educational Corporation
Condensed Consolidated Statements of Cash Flows - Continued
(Expressed in US Dollars)
 
  
Nine months ended
September 30,
  
   
2005
  
2004
  
Cash flows from financing activities
  
 
  
(Restated)
  
Proceeds from bank borrowings
    
791,450
    
2,500,962
  
Repayment of bank borrowings
    
(994,388
)
  
(1,652,431
)
Repayment of capital leases
    
(18,365
)
  
(22,086
)
Repayment of loan from officers/shareholders
    
—
    
(581,228
)
Net cash consumed by financing activities
    
(221,303
)
  
245,217
  
 
          
Net decrease in cash and cash equivalents
    
(330,379
)
  
(683,053
)
 
          
Effect of changes in exchange rate on cash and cash equivalents
   
96,409
    
3,561
  
 
          
Cash and cash equivalents at beginning of period
    
507,895
    
1,478,612
  
 
          
Cash and cash equivalents at end of period
  
$
273,925
  
$
799,120
  
 
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 
 
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 24, 2007
BY:
/s/ SUANG-YI PAI
 
SUANG-YI PAI
 
CHIEF FINANCIAL OFFICER
 
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