UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K/A
                                 AMENDMENT NO. 1
(MARK ONE)

(X)   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
      EXCHANGE ACT OF 1934.

      For the Fiscal year ended December 25, 2004

                                       OR

(_)   TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
      EXCHANGE ACT OF 1934.

      For the transition period From _________ to _________

                        Commission File Number: 001-15046

                              NEW DRAGON ASIA CORP.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

             FLORIDA                                    88-0404114
 (State or Other Jurisdiction of                      (IRS Employer
 Incorporation or Organization)                  Identification Number)

                   36/F, News Building, 2 Shen Nan Zhong Road,
                              Shenzhen, PRC, 518027
               (Address of Principal Executive Offices) (Zip Code)

                               (86 755) 2595-1100
              (Registrant's Telephone Number, Including Area Code)

        Securities registered pursuant Section 12(b) of the Exchange Act:
                                      None.

        Securities registered pursuant Section 12(g) of the Exchange Act:
                        Common Stock, $ 0.0001 par value

<PAGE>

Indicate by check mark whether the issuer:  (1) filed all reports required to be
filed by Section 13 or 15(d) of the  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 past 90 days.

Yes [X]   No [_]

Indicate  by check  mark if there  is no  disclosure  of  delinquent  filers  in
response to Item 405 of  Regulation  S-K is not  contained in this form,  and no
disclosure  will  be  contained  to  the  best  of  registrant's  knowledge,  in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K. [X]

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Exchange Act Rule 12b-2).

Yes [_]   No [X]

            State issuer's revenue for its most recent fiscal year:
                           approximately $39 million

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates  computed by reference to the price at which the common equity
as sold,  or the average bid and asked  price of such common  equity,  as of the
last  business day of the  registrant's  most recently  completed  second fiscal
quarter.  As of June 25, 2004 the  aggregate  market value of the common  equity
held by non-affiliates was approximately $ 7.9 million.

State the number of shares outstanding of each of the issuer's classes of common
equity,  as of the latest  practicable  date.  As of March 23, 2005,  there were
45,061,242 common shares outstanding.

Portions of the registrant's  definitive proxy statement (the "Proxy Statement")
related to the 2004 annual meeting of shareholders are incorporated by reference
into Part III of this Form 10-K.


                                      -2-
<PAGE>

                                     PART I

ITEM 1.   BUSINESS

This  amended  Annual  Report on Form 10-K/A  contains  the amended  Independent
Auditors'  Report of both  Grobstein,  Horwath & Company LLP,  dated February 4,
2005 along with amendments to note 12 to the financial  statements.  Each of the
foregoing  items have been amended to correct  certain  errors  contained in the
Form 10-KSB filed on March 24, 2005.


                                      -3-
<PAGE>

                                   SIGNATURES

In  accordance  with  Section 13 or 15(d) of the Exchange  Act,  the  registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                                  NEW DRAGON ASIA CORP.


Dated: June 13, 2005                              By /s/ Li Xia WANG
                                                  ------------------------------
                                                  Name: Li Xia WANG
                                                  Title: Chief Executive Officer


In accordance  with the  Securities  Exchange Act of 1934,  this report has been
signed below by the  following  persons on behalf of the  registrant  and in the
capacities and on the dates indicated.


Dated: June 13, 2005                              By /s/ Heng Jing Lu
                                                  ------------------------------
                                                  Name: Heng Jing Lu
                                                  Title: Chairman


Dated: June 13, 2005                              By /s/ Peter Mak
                                                  ------------------------------
                                                  Name: Peter Mak
                                                  Title: Chief Financial Officer


Dated: June 13, 2005                              By /s/ Ling Wang
                                                  ------------------------------
                                                  Name: Ling Wang
                                                  Title: Director


Dated: June 13, 2005                              By /s/ De Lin Yang
                                                  ------------------------------
                                                  Name: De Lin Yang
                                                  Title: Director



                                      -4-
<PAGE>

Dated: June 13, 2005                              By /s/ Zhi Yong Jiang
                                                  ------------------------------
                                                  Name: Zhi Yong Jiang
                                                  Title: Director


Dated: June 13, 2005                              By /s/ Qi Xue
                                                  ------------------------------
                                                  Name: Qi Xue
                                                  Title: Director


Dated: June 13, 2005                              By /s/ Feng Ju Chen
                                                  ------------------------------
                                                  Name: Feng Ju Chen
                                                  Title: Director





                                      -5-
<PAGE>

                              NEW DRAGON ASIA CORP.

                              FINANCIAL STATEMENTS

                                TABLE OF CONTENTS



                                                                            PAGE
                                                                            ----
                                                                             F-1
Report of Independent Registered Accounting Firm

Consolidated Balance Sheets as of December 25, 2004 and 2003                 F-2

Consolidated Statements of Income for each of the three years ended
December 25, 2004                                                            F-3

Consolidated Statements of Stockholders' Equity for each of the three years
ended December 25, 2004                                                      F-4

Consolidated Statements of Cash Flows for each of the three years ended
December 25, 2004                                                            F-5

Notes to Consolidated Financial Statements                                   F-6


<PAGE>

                REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM


To the Stockholders and Board of Directors of New Dragon Asia Corp. and
Subsidiaries

We have audited the accompanying  consolidated balance sheets of New Dragon Asia
Corp. and Subsidiaries  (the "Company") as of December 25, 2004 and 2003 and the
related consolidated  statements of income,  stockholders` equity and cash flows
for  each of the  three  years  ended  December  25,  2004.  These  consolidated
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audit  to  obtain  reasonable  assurance  about  whether  the
consolidated  financial statements are free of material  misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the  consolidated  financial  statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall consolidated  financial statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the consolidated  financial  position of New
Dragon Asia Corp.  and  Subsidiaries  as of December 25, 2004 and 2003,  and the
consolidated  results of their  operations  and cash flows for each of the three
years ended December 25, 2004 in conformity with accounting principles generally
accepted in the United States of America.

GROBSTEIN, HORWATH & COMPANY LLP

Sherman Oaks, California
February 4, 2005


                                      F-1
<PAGE>

                     NEW DRAGON ASIA CORP. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                    (AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                             December 25, December 25,
                                                                2004         2003
                                                             -----------  ------------
<S>                                                            <C>         <C>
                                ASSETS

Current Assets:
    Cash and cash equivalents                                  $   219     $ 1,783
    Accounts receivable, net                                     6,414       6,936
    Deposits and prepayments, net                                2,520       1,282
    Inventories, net                                             3,990       2,763
    Due from related companies                                   1,183         124
                                                               -------     -------
      Total current assets                                      14,326      12,888

Property, machinery and equipment, net                          16,098      17,471
Land use rights, net                                             3,822       3,998
                                                               -------     -------
      Total assets                                             $34,246     $34,357
                                                               =======     =======

                 LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Short-term borrowings                                      $    --     $ 2,845
    Accounts payable                                             2,696       4,565
    Other payables and accruals                                  1,898       1,234
    Taxes payable                                                1,491         921
    Due to related companies                                       831       1,202
                                                               -------     -------
      Total current liabilities                                  6,916      10,767

Due to New Dragon Asia Food Limited                                303         196
Due to joint venture partners                                      110       1,204
                                                               -------     -------
      Total liabilities                                          7,329      12,167
                                                               -------     -------

Minority interests                                                  82          --
                                                               -------     -------
Stockholders' equity:
    Common stock, par value $0.0001; 107,000,000 shares
      authorized; 45,061,242 shares issued and outstanding
      at December 25, 2004 and 2003                                  4           4
    Additional paid-in capital                                   9,909       9,909
    Retained earnings                                           16,922      12,277
                                                               -------     -------
      Total stockholders' equity                                26,835      22,190
                                                               -------     -------
      Total liabilities and stockholders' equity               $34,246     $34,357
                                                               =======     =======
</TABLE>


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


                                      F-2
<PAGE>

                     NEW DRAGON ASIA CORP. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

                  (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)


<TABLE>
<CAPTION>
                                                          For the years Ended December 25,
                                                         ----------------------------------
                                                           2004         2003         2002
                                                         --------     --------     --------
<S>                                                      <C>          <C>          <C>
Net sales                                                $ 39,221     $ 30,773     $ 33,704
Cost of goods sold                                        (31,887)     (24,852)     (27,596)
                                                         --------     --------     --------
Gross profit                                                7,334        5,921        6,108
Selling and distribution expenses                          (1,178)      (1,330)      (1,161)
General and administrative expenses                        (1,611)      (2,398)        (601)
                                                         --------     --------     --------
Income from operations                                      4,545        2,193        4,346
Other income (expenses):
  Interest expense                                            (72)        (249)        (265)
  Interest income                                               3            4          194
  Other income, net                                         1,424        1,226          487
                                                         --------     --------     --------
Income before provision for income taxes and minority       5,900        3,174        4,762
interests
Provision for income taxes                                 (1,296)        (447)        (609)
                                                         --------     --------     --------
Income before minority interests                            4,604        2,727        4,153
Minority interests                                             41           --           --
                                                         --------     --------     --------
Net income                                               $  4,645     $  2,727     $  4,153
                                                         ========     ========     ========
Basic and diluted earnings per common share              $   0.10     $   0.06     $   0.10
                                                         ========     ========     ========
Weighted average common shares outstanding                 45,061       42,108       40,911
                                                         ========     ========     ========
</TABLE>


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


                                      F-3

<PAGE>

                     NEW DRAGON ASIA CORP. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                             (AMOUNTS IN THOUSANDS)


<TABLE>
<CAPTION>
                                          Common Stock       Additional                Total
                                      -------------------     Paid-in    Retained   Stockholders'
                                      Shares      Amount      Capital    Earnings      Equity
                                      -------     -------     -------    --------   ------------
<S>                                    <C>        <C>         <C>         <C>         <C>
Balance at December 25, 2001           40,911     $     4     $ 8,132     $ 5,397     $13,533

Net income for the year ended
  December 25, 2002                        --          --          --       4,153       4,153
                                      -------     -------     -------     -------     -------

Balance at December 25, 2002           40,911           4       8,132       9,550      17,686

Issuance of common stock in
 connection with:
   Private placement in September       3,300          --       1,405          --       1,405
   Private placement in October           850          --         372          --         372

Net income for the year ended
  December 25, 2003                        --          --          --       2,727       2,727
                                      -------     -------     -------     -------     -------

Balance at December 25, 2003           45,061           4       9,909      12,277      22,190

Net income for the year ended
  December 25, 2004                        --          --          --       4,645       4,645
                                      -------     -------     -------     -------     -------

Balance at December 25, 2004           45,061     $     4     $ 9,909     $16,922     $26,835
                                      =======     =======     =======     =======     =======
</TABLE>


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


                                      F-4
<PAGE>

                     NEW DRAGON ASIA CORP. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                 For the years ended December 25,
                                                                ---------------------------------
                                                                  2004         2003         2002
                                                                -------      -------      -------
<S>                                                             <C>          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                      $ 4,645      $ 2,727      $ 4,153

Adjustments to reconcile net income to net cash provided
by operating activities:
    Provision for doubtful accounts                                (218)         578          134
    Depreciation and amortization                                 1,187        1,425        1,251
    Gain on disposal of PRC subsidiary                             (162)          --           --
    Loss (gain) on disposal of machinery and equipment              199         (346)           5
    Minority interests                                              (41)          --           --
    Changes in operating assets and liabilities:
        Accounts receivable                                         735         (186)      (2,352)
        Deposits and prepayments                                 (1,242)        (216)         343
        Inventories                                              (1,313)       2,439          125
        Accounts payable                                         (1,583)        (163)       1,288
        Other payables and accruals                                 920          (48)         544
        Taxes payable                                               573           32          420
                                                                -------      -------      -------
    Net cash provided by operating activities                     3,700        6,242        5,911
                                                                -------      -------      -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease (increase) in amounts due from related companies          (706)       2,357         (795)
Decrease (increase) in investment                                    --           --           72
Decrease (increase) in amounts due to related companies            (371)         400       (2,982)
Purchases of property, machinery and equipment                   (2,207)         (92)        (978)
Proceeds from disposal of property, machinery and equipment         126          994           --
                                                                -------      -------      -------
    Net cash (used in) provided by investing activities          (3,158)       3,677       (4,683)
                                                                -------      -------      -------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock                               --        1,777           --
Decrease (increase) in restricted cash                               --          181         (181)
Proceeds from short-term borrowings                                  --        4,325        6,988
Payments on short-term borrowings                                (2,676)      (5,094)      (6,928)
Increase (decrease) in due to parent company                      1,127       (5,586)      (1,262)
Decrease in due to joint venture partners                          (681)      (4,367)        (510)
Capital contribution from minority interests                        124           --           --
                                                                -------      -------      -------
    Net cash used in provided by financing activities            (2,106)      (8,764)      (1,893)
                                                                -------      -------      -------
Net change in cash and cash equivalents                          (1,564)       1,155         (665)
Cash and cash equivalents at the beginning of the year            1,783          628        1,293
                                                                -------      -------      -------
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR                $   219      $ 1,783      $   628
                                                                =======      =======      =======
Supplemental disclosures of cash flows information:
Cash paid during the year for:
    Interest                                                    $    72      $   249      $   292
                                                                =======      =======      =======
    Income taxes                                                $    10      $   380      $   426
                                                                =======      =======      =======
</TABLE>

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

                                      F-5

<PAGE>

                     NEW DRAGON ASIA CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (AMOUNTED IN THOUSANDS, EXCEPT SHARE DATA)

NOTE 1.  ORGANIZATION AND NATURE OF OPERATIONS

New Dragon Asia  Corporation,  a United States  corporation  incorporated in the
 State of Florida, is principally engaged in the milling,  sale and distribution
 of flour and  related  products,  including  instant  noodles,  to  retail  and
 wholesale customers  throughout China through its foreign subsidiaries in China
 (collectively  the  "Company").   The  Company  is  headquartered  in  Shandong
 Province,  the People's  Republic of China ("PRC") and has its corporate office
 in Shenzhen, and five manufacturing plants in Yantai, Beijing and Penglai.

Details of the subsidiaries are as follows:

<TABLE>
<CAPTION>
                                     Domicile and Date         Paid-up        Percentage of
              Name                    of Incorporation         Capital          Ownership      Principal Activities
----------------------------------  --------------------------------------- ------------------ ----------------------
<S>                                 <C>                       <C>               <C>            <C>
Mix Creation Limited ("MC")         The British               US$1,500,000      100% (a)       Investment holding
                                    Virgin Islands
                                    November 7, 1997

Rich Delta Limited                  The British               US$1,000,000      100% (a)       Investment holding
("RD")                              Virgin Islands
                                    October 28,1998

Keen General Limited                The British               US$1,500,000      100% (a)       Investment holding
("KG")                              Virgin Islands
                                    July 20,1998

New Dragon Asia Flour (Yantai)      The PRC                  RMB28,500,000       90% (b)       Manufacture, marketing
Company limited                     August 13, 1999                                            and distribution of
("NDAFLY")                                                                                     flour

New Dragon Asia Food (Yantai)       The PRC                  RMB17,462,000       90% (c)       Manufacture, marketing
Company Limited                     December 24,1998                                           and distribution of
("NDAFY")                                                                                      instant noodles

New Dragon Asia Food (Sanhe)        The PRC                  RMB51,191,432     79.64% (c)      Manufacture, marketing
Company Limited                     December 25, 1998                                          and distribution of
("NDAFS")                                                                                      instant noodles

Penglai New Dragon Jin Qiao Food    The PRC                     US$850,000      100% (d)       Manufacture, marketing
Company Limited                     December 5,2003                                            and distribution of
("PNDJQ")                                                                                      flour

Longkou City Longyuan Packing       The PRC                   RMB2,280,000       55% (e)       Manufacture and sale of
Materials                           March 2004                                                 packing materials
Company Limited
("LCLPM")
</TABLE>

                                      F-6
<PAGE>

(a)  MC, RD and KG are wholly owned by the Company.

(b)  NDAFLY is a contractual joint venture established in the PRC to be operated
     for 50 years until August 13, 2049. In September  2000, MC contributed  90%
     of the  registered  capital to NDAFLY.  Under the joint  venture  agreement
     dated June 1, 1999 and the supplemental  agreement dated June 26, 1999, the
     Chinese  joint  venture  partner is  entitled  to receive a  pre-determined
     annual  fee and all  profits  or loss,  net of  annual  fees from the joint
     venture are to be allocated to NDAFLY effective from June 26, 1999. In view
     of the profit sharing  arrangement  NDAFLY is regarded as 100% owned by the
     Company.  The minority interest  component has been included as a component
     of General and  Administrative  Expenses  for the years ended  December 25,
     2004, 2003 and 2002.

(c)  NDAFY and NDAFS are contractual joint ventures established in the PRC to be
     operated  for  50  years  until  December  24,  2048.  In  March  1999,  RD
     contributed  90% of the registered  capital to NDAFY,  while KG contributed
     79.64%  of the  registered  capital  to  NDAFS.  Under  the  joint  venture
     agreements  dated November 28, 1998 and the  supplemental  agreement  dated
     December 26, 1998,  the PRC joint venture  partner is entitled to receive a
     pre-determined  annual fee and is not responsible for any profit or loss of
     NDAFY and NDAFS  effective  from  December 26, 1998.  In view of the profit
     sharing  arrangements,  NDAFY and NDAFS are  regarded  as 100% owned by the
     Company.

(d)  PNDJQ is a wholly owned subsidiary of MC established in the PRC.

(e)  LCLPM is a 55% owned  subsidiary of NDAFY  established  in the PRC in March
     2004.  The remaining 45% equity is owned by Longkou City Longyuan  Factory,
     our Chinese joint venture partner.


NOTE 2.   BASIS OF PRESENTATION

The  consolidated   financial  statements  include  the  consolidated  financial
statements  of New  Dragon  Asia Corp.  and its  subsidiaries.  All  significant
intra-group balances and transactions have been eliminated in consolidation.

The  consolidated   financial   statements  were  prepared  in  accordance  with
accounting  principles generally accepted in the United States of America ("U.S.
GAAP").  The  preparation of financial  statements in conformity  with U.S. GAAP
requires  management to make estimates and assumptions  that affect the reported
amounts of assets and  liabilities,  the  disclosure  of  contingent  assets and
liabilities as of the date of the financial  statements and the reported amounts
of revenues and expenses  during the  reporting  period.  Actual  results  could
differ from those  estimates.  U.S. GAAP differs from that used in the statutory
financial statements of the major operating  subsidiaries of the Company,  which
were  prepared  in  accordance  with  the  relevant  accounting  principles  and
financial  reporting  regulations  applicable  to joint venture  enterprises  as
established by the Ministry of Finance of the PRC. Certain accounting principles
stipulated under U.S. GAAP are not applicable in the PRC.


                                      F-7
<PAGE>

NOTE 3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REVENUE RECOGNITION

The Company recognizes sales in accordance with the United States Securities and
Exchange  Commission ("SEC") Staff Accounting Bulletin ("SAB") No. 104, "Revenue
Recognition."  Sales  represent the invoiced value of goods,  net of value added
tax ("VAT"),  supplied to customers,  and are recognized  upon delivery of goods
and passage of title.

All of the  Company's  sales made in Mainland  China are subject to the Mainland
Chinese  value-added tax at rates ranging from 13% to 17% ("output  VAT").  Such
output VAT is payable  after  offsetting  VAT paid by the  Company on  purchases
("input VAT").

Deposits  or advance  payments  from  customers  prior to  delivery of goods and
passage of title of goods are recorded as deposits from customers.

CASH AND CASH EQUIVALENTS

The  Company  considers  cash  on  hand,   deposits  in  banks,  and  short-term
investments  purchased with an original maturity date of three months or less to
be cash and cash equivalents. The carrying amounts reflected in the consolidated
balance sheets for cash and cash equivalents  approximate the fair values due to
the short maturities of these instruments.

FINANCIAL INSTRUMENTS

The  Company  accounts  for  financial   instruments  under  the  provisions  of
Statements of Financial  Accounting  Standards ("SFAS") No. 133: "Accounting for
Derivative  Instruments  and  Hedging  Activities",   which  requires  that  all
derivative  financial  instruments be recognized in the  consolidated  financial
statements and maintained at fair value  regardless of the purpose or intent for
holding them.  Changes in fair value of  derivative  financial  instruments  are
either recognized periodically in income or stockholders' equity (as a component
of comprehensive  income),  depending on whether the derivative is being used to
hedge changes in fair value or cash flows. The adoption of SFAS 133 did not have
a  material  impact on the  Company's  consolidated  financial  position  or its
results of operations because the Company does not currently hold any derivative
financial  instruments and does not engage in hedging  activities.  The carrying
amounts  for  cash and  cash  equivalents,  accounts  receivable,  deposits  and
prepayments,   short-term  borrowings,  accounts  payable,  other  payables  and
accruals  approximate  their fair values  because of the short maturity of those
instruments.


                                      F-8
<PAGE>

ACCOUNTS RECEIVABLE

Accounts  receivable is stated at cost, net of allowance for doubtful  accounts.
Based on current practice in the PRC,  management  provides for an allowance for
doubtful accounts equivalent to those accounts that are not collected within one
year.

Financial instruments, which potentially subject the Company to concentration of
credit risk, consist primarily of trade receivables.  However, concentrations of
credit risk are  limited due to the large  number of  customers  comprising  the
Company's  customer  base and their  dispersion  across  different  business and
geographic  areas.  The  Company  monitors  its  exposure  to credit  losses and
maintains  an allowance  for  anticipated  losses.  To reduce  credit risk,  the
Company performs credit checks on certain customers.

INVENTORIES

Inventories  are stated at the lower of cost,  determined on a weighted  average
basis,  and net  realizable  value.  Work-in-progress  and  finished  goods  are
composed  of direct  material,  direct  labor  and an  attributable  portion  of
manufacturing  overhead. Net realizable value is the estimated selling price, in
the ordinary course of business, less estimated costs to complete and dispose.

PROPERTY, MACHINERY AND EQUIPMENT

Property,   machinery  and  equipment  is  stated  at  cost,  less   accumulated
depreciation and  amortization.  Depreciation and amortization is computed using
the  straight-line  method over the estimated useful lives of the related assets
that range from 5 to 50 years.  Leasehold  improvements  are amortized using the
straight-line  method over the estimated useful life of the asset or the term of
the lease,  whichever is shorter.  Costs for normal repairs and  maintenance are
expensed to operations as incurred,  while renewals and major refurbishments are
capitalized.

Assessments  of whether  there has been a permanent  impairment  in the value of
property,  machinery  and equipment are  periodically  performed by  considering
factors such as expected future operating income, trends and prospects,  as well
as the effects of demand,  competition  and other economic  factors.  Management
believes no permanent impairment has occurred.

LAND USE RIGHTS

Land use rights are stated at cost, less accumulated amortization.  Amortization
is computed  using the  straight-line  method over the  estimated  useful  lives
ranging from 27 to 50 years.  In  accordance  with SFAS No. 142,  "Goodwill  and
Other  Intangible  Assets,"  intangible  assets with finite lives are subject to
amortization,  and  impairment  reviews are  performed in  accordance  with SFAS
No.144,  "Accounting  for the  Impairment or Disposal of Long-Lived  Assets." No
event has occurred that would trigger an impairment  assessment of the Company's
intangible assets with finite lives.


                                      F-9
<PAGE>

ADVERTISING EXPENSES

Advertising expenses are expensed in the period when incurred.

INCOME TAXES

The  Company  accounts  for  income  taxes in  accordance  with  SFAS  No.  109,
"Accounting  for Income  Taxes".  Under this method,  deferred  income taxes are
recognized  for the estimated tax  consequences  in future years of  differences
between the tax bases of assets and liabilities  and their  financial  reporting
amounts  and each  year-end  based on  enacted  tax  laws  and  statutory  rates
applicable  to the  periods  in which the  differences  are  expected  to affect
taxable  income.  Valuation  allowances are  established to reduce  deferred tax
assets to the amount expected to be realized when, in management's  opinion,  it
is more likely than not that some portion of the deferred tax assets will not be
realized. The provision for income taxes represents current taxes payable net of
the change during the period in deferred tax assets and liabilities.

OPERATING LEASES

Operating leases represent those leases under which  substantially all the risks
and rewards of ownership of the leased  assets  remain with the lessors.  Rental
payments  under  operating  leases are  charged to expense on the  straight-line
basis over the period of the relevant leases.

FOREIGN CURRENCY TRANSLATION

The  functional  currency  of the  Company  is  Renminbi  ("RMB").  Transactions
denominated  in  foreign  currencies  are  translated  into  RMB at the  unified
exchange  rates quoted by the People's Bank of China  prevailing at the dates of
the  transactions.  Monetary  assets  and  liabilities  denominated  in  foreign
currencies are translated into RMB using the applicable  unified  exchange rates
prevailing at the balance sheet date. There are no material exchange differences
as a result of the  stability  of the RMB  during  the  periods  covered  by the
consolidated financial statements.

Translations  of amounts from RMB into United States dollars  ("US$") were at US
$1.00 = RMB 8.3 for each of the years ended December 25, 2004, 2003 and 2002. No
representation  is made that the Renminbi  amounts could have been, or could be,
converted into United States dollars at that rate or at any other rate.

EARNINGS PER SHARE

Basic earnings per common share ("EPS") is computed in accordance  with SFAS No.
128:   "Earnings  Per  Share"  by  dividing  net  income   available  to  common
stockholders by the weighted-average number of common shares outstanding for the
period.  Diluted  earnings per share reflects the potential  dilution that could
occur if securities or other  contracts to issue common stock were  exercised or
converted into common stock.


                                      F-10
<PAGE>

RECENTLY ISSUED ACCOUNTING STANDARDS

(a)  In December  2003,  the FASB issued  Interpretation  No. 46R ("FIN 46R"), a
     revision to FIN 46, "Consolidation of Variable Interest Entities".  FIN 46R
     clarifies some of the provisions of FIN46 and exempts certain entities from
     its  requirements.  FIN 46R is  effective  at the end of the first  interim
     period ending after March 15, 2004. Entities that have adopted FIN 46 prior
     to this effective date can continue to apply the provisions of FIN 46 until
     the  effective  date of Fin 46R.  The  adoption of FIN 46R did not have any
     effect on our consolidated financial statements.

(b)  In  November  2004,  the FASB  issued  Statement  of  Financial  Accounting
     Standards (SFAS) No. 151,  Inventory Costs,  which clarifies the accounting
     for abnormal amounts of idle facility expense, freight, handling costs, and
     wasted  material.  SFAS  No.  151 will be  effective  for  inventory  costs
     incurred  during  fiscal years  beginning  after June 15,  2005.  We do not
     believe  the  adoption  of SFAS No. 151 will have a material  impact on our
     financial statements.

(c)  In December  2004, the FASB issued SFAS No.  123(R),  Share-Based  Payment,
     which  establishes  standards for transactions in which an entity exchanges
     its equity  instruments  for goods or services.  This  standard  requires a
     public entity to measure the cost of employee services received in exchange
     for an award of equity  instruments  based on the grant-date  fair value of
     the award.  This  eliminates the exception to account for such awards using
     the intrinsic  method  previously  allowable under APB Opinion No. 25. SFAS
     No.  123(R)  will be  effective  for  interim or annual  reporting  periods
     beginning on or after June 15, 2005. We do not believe the adoption of SFAS
     No. 123(R) will not have a material impact on our financial statements.

RECLASSIFICATION FROM PRIOR YEAR AUDITED FINANCIAL STATEMENTS

Certain prior year comparative  figures have been reclassified to conform to the
current year presentation.

 NOTE 4.   ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following:

<TABLE>
<CAPTION>
                                                          December 25,          December 25,
                                                              2004                  2003
                                                      -------------------    -----------------
<S>                                                             <C>                  <C>
           Accounts receivable                                  $  7,189             $  7,929
           Less: Allowance for doubtful accounts                    (775)                (993)
                                                      -------------------    -----------------
                                                                $  6,414             $  6,936
                                                      ===================    =================
</TABLE>


                                      F-11
<PAGE>



NOTE 5.   DEPOSITS AND PREPAYMENTS

Deposits and prepayments consist of the following:

<TABLE>
<CAPTION>
                                                             December 25,          December 25,
                                                                 2004                  2003
                                                          ------------------    -----------------
<S>                                                                <C>                  <C>
           Deposits for raw materials                              $  2,291             $  1,508
           Advances to staff                                             33                   63
           Others                                                       303                   11
           Less: Allowance for deposits                                (107)                (300)
                                                          ------------------    -----------------
                                                                  2,520                 $  1,282
                                                          ==================    =================
</TABLE>

Advances to staff are unsecured, non-interest bearing and repayable on demand.


NOTE 6.   INVENTORIES

Inventories consisted of the following:

<TABLE>
<CAPTION>
                                                             December 25,          December 25,
                                                                 2004                  2003
                                                          ------------------    -----------------
<S>                                                                <C>                  <C>
           Raw materials (including packing materials)             $  2,812             $  2,222
           Finished goods                                             1,725                1,123
                                                          ------------------    -----------------
                                                                      4,537                3,345
           Less: Provision for inventory obsolescence                  (547)                (582)
                                                          ------------------    -----------------
                                                                   $  3,990             $  2,763
                                                          ==================    =================
</TABLE>

NOTE 7.  PROPERTY, MACHINERY AND EQUIPMENT

Property, machinery and equipment consisted of the following:

<TABLE>
<CAPTION>
                                                             December 25,          December 25,
                                                                 2004                  2003
                                                          ------------------    -----------------
<S>                                                                <C>                  <C>
           Buildings                                                 $  9,415             $  9,551
           Machinery and equipment                                     11,940               12,818
                                                           -------------------    -----------------
                                                                       21,355               22,369
           Less: Accumulated depreciation and amortization             (5,257)              (4,898)
                                                           -------------------    -----------------
                                                                    $  16,098             $ 17,471
                                                           ===================    =================
</TABLE>

Depreciation  and  amortization  expense was  approximately  $1,187,  $1,314 and
$1,141 for the years ended December 25, 2004, 2003 and 2002, respectively.


                                      F-12
<PAGE>

NOTE 8.   LAND USE RIGHTS

Land use rights consisted of the following:

<TABLE>
<CAPTION>
                                                             December 25,          December 25,
                                                                 2004                  2003
                                                          ------------------    -----------------
<S>                                                                <C>                  <C>
           Land use rights                                          $  4,432             $    4,575
           Less: Accumulated amortization                               (610)                  (577)
                                                           ------------------    -------------------
                                                                    $  3,822               $  3,998
                                                           ==================    ===================
</TABLE>

Private  ownership of land is not allowed in Mainland  China.  Rather,  entities
acquire the right to use land for a designated term. As of December 25, 2004 and
2003, the land use rights consisted of three parcels of land located in Mainland
China with a net book value of  approximately  $3,822 and $3,998,  respectively,
held under land use rights of 27 to 50 years through 2025 to 2047.

Amortization  expense was approximately  $103, $112 and $110 for the years ended
December 25, 2004, 2003 and 2002, respectively.


NOTE 9.   SHORT-TERM BORROWINGS

Short-term borrowings consisted of the following:

<TABLE>
<CAPTION>
                                                             December 25,          December 25,
                                                                 2004                  2003
                                                          ------------------    -----------------
<S>                                                        <C>                  <C>
           Bank loans                                                  $   --             $  2,518
           Bills payable                                                   --                  327
                                                          -------------------    -----------------
                                                                       $   --             $  2,845
                                                          ===================    =================
</TABLE>

Bank loans were secured by corporate  guarantees provided by a PRC joint venture
partner and a third party and bore interest at  prevailing  lending rates in the
PRC ranging from 6.01% to 6.435% per annum and were fully repaid during the year
ended December 25, 2004.

Bills payable are a form of bank borrowing with payment due within 180 days.


NOTE 10.   OTHER PAYABLES AND ACCRUALS

Other payables and accruals consisted of the following:


                                      F-13
<PAGE>

<TABLE>
<CAPTION>
                                                             December 25,          December 25,
                                                                 2004                  2003
                                                          ------------------    -----------------
<S>                                                        <C>                  <C>

           Deposits from customers                                   $   554               $  612
           Accruals for staff salaries, bonus and benefit                515                  510
           Utilities and accrued expenses                                829                  112
                                                          -------------------    -----------------
                                                                    $  1,898             $  1,234
                                                          ===================    =================
</TABLE>

NOTE 11.  TAXATION

The PRC  subsidiaries  within the Company are subject to PRC income  taxes on an
entity basis on income arising in or derived from the tax  jurisdiction in which
they operate.  The group companies that are incorporated under the International
Business  Companies Act of the British Virgin Islands are exempt from payment of
the British Virgin Islands income tax.

For the years ended December 25, 2004, 2003 and 2002,  substantially  all of the
Company's  income was generated in the PRC, which is subject to PRC income taxes
at  rates  ranging  from  24% to a  statutory  rate  of  33%.  Two  of  the  PRC
subsidiaries  of the Company will be eligible to be exempt from income taxes for
a two-year period and then subject to a 50% reduction in income taxes,  starting
from their first profitable year. Several PRC subsidiaries  receive preferential
tax rates in regions in which they operated and are also entitled to partial tax
refunds from those tax bureaus.

As of December 25, 2004, 2003 and 2002, there are not any material  deferred tax
assets or deferred tax liabilities.

A  reconciliation  of the provision for income taxes determined at the statutory
average  state and local income tax rate to the Company's  effective  income tax
rate is as follows:

<TABLE>
<CAPTION>
                                                     2004             2003            2002
                                                 -------------    -------------   -------------
<S>                                                       <C>              <C>             <C>
           Statutory income tax                           33%              33%             33%
           Reduction for preferential tax rate            (9)               --              --
           Impact of effective tax holiday                 --             (21)            (21)
           Various differences                            (2)                2               1
                                                 -------------    -------------   -------------
           Effective rate                                 22%              14%             13%
                                                 =============    =============   =============
</TABLE>

NOTE 12.   COMMON STOCK

On September 4, 2003, the Company issued 3,300,000 shares of common stock for an
aggregate  purchase  amount of  $1,650,000  or $0.50 per share.  The shares were
issued pursuant to an exemption  provided by Section 4(2) of the Securities Act.
The purchasers  were also issued  warrants to purchase  1,650,000  shares of the
Company's  common  stock  which have a term of 5 years at an  exercise  price of
$0.99 per share. As of December 25, 2004, no warrants were exercised.


                                      F-14
<PAGE>

On October 7, 2003,  the Company  issued  850,000  shares of common stock for an
aggregate purchase amount of $425,000 or $0.50 per share. The shares were issued
pursuant to an  exemption  provided by Section 4(2) of the  Securities  Act. The
purchasers were also issued warrants to purchase 850,000 shares of the Company's
common  stock  which have a term of 5 years and an  exercise  price of $0.98 per
share. As of December 25, 2004, no warrants were exercised.

Transaction  costs  related to the private  placements  amounted to $298,000 and
have been presented as a reduction of the proceeds from the sale of shares.

Currently the Company is authorized to issue 107,000,000  shares of common stock
and 5,000,000  shares of preferred stock all at $.0001 par value. As of December
25, 2004 the Company had approximately  45,061,242 shares of common stock issued
and outstanding. No preferred stock has been issued.

NOTE 13.   COMMITMENTS

LEASE COMMITMENTS

The Company leases manufacturing and warehouse facilities under operating leases
which expire at various  dates  through  March 2031.  At December 25, 2004,  the
Company's future minimum lease payments under operating leases were as follows:


           YEARS ENDING DECEMBER 25,
           ----------------------------

               2005                             $   123
               2006                                 123
               2007                                 123
               2008                                 123
               2009                                 123
               Thereafter                            47
                                           -------------
                     Total                      $   662
                                           =============

Total lease  expenses  were $187,  $46 and $74 for the years ended  December 25,
2004, 2003 and 2002, respectively.

ANNUAL FEES

Under the supplementary joint venture  agreements,  the Company has committed to
pay predetermined  annual fees of $114 to the Chinese joint venture partners for
each of the years in the period from  December 26, 1998 to 2049.  As of December
25, 2004, total commitments under these arrangements were as follows:

           Payable during the period:
             Within one year                                     $    108
             Over one year but not exceeding two years                108
             Over two year but not exceeding three years              108
             Over three year but not exceeding four years             108
             Over four year but not exceeding five years              108
             Over five years                                        4,234
                                                               -----------
               Total                                             $  4,774
                                                               ===========


                                      F-15
<PAGE>

NOTE 14.   RELATED PARTY TRANSACTIONS

Parties are  considered to be related if one party has the ability,  directly or
indirectly,  to control the other party or exercise  significant  influence over
the other party in making financial and operational decisions.  Parties are also
considered  to be  related  if they are  subject  to  common  control  or common
significant influence.

Particulars  of  significant  transactions  between  New Dragon  Asia Corp.  and
related companies are summarized below:

<TABLE>
<CAPTION>
                                                                  2004       2003       2002
                                                                -------    -------    -------
<S>                                                             <C>        <C>        <C>
Sale of finished goods to:
  A joint venture partner, Shandong Longfeng Group Company      $     2    $    --    $   419
  Related parties                                                    33        113      1,334
                                                                -------    -------    -------
                                                                $    35    $   113    $ 1,753
                                                                =======    =======    =======

Sale of machinery to Shandong Longfeng Group Company            $    --    $   993         --
                                                                =======    =======    =======

Purchasing of raw materials from:
  A joint venture partner, Shandong Longfeng Group Company      $    --    $    --    $     8
  Related parties                                                   914      1,344      1,649
                                                                -------    -------    -------
                                                                $   914    $ 1,344    $ 1,657
                                                                =======    =======    =======

Pre-determined annual fee charged by joint venture partners:
  Shandong Longfeng Group Company                               $    72    $    78    $    78
  Shandong Longfeng Flour Company Limited                            36         36         36
                                                                -------    -------    -------
                                                                $   108    $   114    $   114
                                                                =======    =======    =======

Interest income from short-term advances to parent company      $    --    $    --    $   188
                                                                =======    =======    =======

Interest expenses paid to a joint venture partner:
  Shandong Longfeng Group Company                               $     3    $    17    $    18
                                                                =======    =======    =======

Rental expenses paid to related companies                       $   120         --         --
                                                                =======    =======    =======

Rental income from a joint venture partner:
  Shandong Longfeng Group Company                               $    64    $    64    $    64
                                                                =======    =======    =======
  Shandong Longfeng Group Company                               $    --    $    64    $    64
                                                                =======    =======    =======
</TABLE>


                                      F-16
<PAGE>

A summary of related party balances is as follows:

                                                December 25,  December 25,
                                                    2004          2003
                                                 ---------     ---------

Due to parent company                            $     303     $     196
                                                 ---------     ---------

Due to joint venture partners, consisting of:
  Shandong Longfeng Group Company                    1,027         1,034
  Shandong Longfeng Flour Company Limited             (917)          170
                                                 ---------     ---------
                                                 $     110     $   1,204
                                                 =========     =========

Due from related companies                       $   1,183     $     124
                                                 =========     =========

Due to related companies                         $     831     $   1,202
                                                 =========     =========

The amounts due to parent  company and joint  venture  partners  are  unsecured,
non-interest bearing and repayable upon demand.

NOTE 15.   DISPOSAL OF SUBSIDIARY

On December 20,  2004,  the Company  sold its 100%  shareholding  in Noble Point
Limited ("NP") which in turn owned a 90% equity interest in New Dragon Asia Food
(Dalian) Company limited  ("NDAFD"),  to its parent company and assumed its loan
due to the parent company, at a consideration of US$20,000 which approximates to
the net asset value of NP and NDAFD in  aggregate  after the  assignment  of the
loan. NP had no business other than the investment holding in NDAFD whilst NDAFD
had ceased business in December 2003.

NOTE 16.   SEGMENT INFORMATION

The Company  classifies  its products  into two core business  segments,  namely
instant  noodles  and  flour.  In view of the  fact  that the  Company  operates
principally in Mainland China, no geographical segment information is presented.

    Net Sales
                                          2004          2003          2002
                                       ----------    ----------    ----------

           Instant noodles             $   12,909    $   11,702    $   10,847
           Flour                           26,312        19,070        22,857
                                       ----------    ----------    ----------
                                       $   39,221    $   30,773    $   33,704
                                       ==========    ==========    ==========


                                      F-17
<PAGE>

Income from Operations

                                          2004          2003          2002
                                       ----------    ----------    ----------

           Instant noodles             $      607    $      296    $    1,621
           Flour                            3,938         1,897         2,725
                                       ----------    ----------    ----------
                                       $    4,545    $    2,193    $    4,346
                                       ==========    ==========    ==========
Interest Income
                                          2004          2003          2002
                                       ----------    ----------    ----------

           Instant noodles             $        2    $        2    $      192
           Flour                                1             2             2
                                       ----------    ----------    ----------
                                       $        3    $        4    $      194
                                       ==========    ==========    ==========

Interest Expenses
                                          2004          2003          2002
                                       ----------    ----------    ----------

           Instant noodles             $        6    $       22    $       18
           Flour                               66           227           247
                                       ----------    ----------    ----------
                                       $       72    $      249    $      265
                                       ==========    ==========    ==========

Depreciation and Amortization
                                          2004          2003          2002
                                       ----------    ----------    ----------

           Instant noodles             $      587    $      867    $      703
           Flour                              660           557           548
                                       ----------    ----------    ----------
                                       $    1,187    $    1,424    $    1,251
                                       ==========    ==========    ==========

Identifiable Long-term Assets
                                          2004          2003
                                       ----------    ----------

           Instant noodles             $   12,031    $   14,001
           Flour                            7,889         7,468
                                       ----------    ----------
                                       $   19,920    $   21,469
                                       ==========    ==========


                                      F-18
<PAGE>

NOTE 17.   MAJOR CUSTOMERS

No single customer  accounted for more than 5%, 5% and 6% of sales for the years
ended December 25, 2004, 2003 and 2002, respectively.


NOTE 18.   RETIREMENT PLAN

As stipulated by the regulations of the PRC government, companies of the Company
operating  in the PRC have  defined  contribution  retirement  plans  for  their
employees.  The PRC government is responsible for the pension liability to these
retired employees.  Commencing January 1, 2002, the Company was required to make
specified  contributions  to the  state-sponsored  retirement plan at 20% of the
basic salary cost of their staff.  Each of the employees of the PRC subsidiaries
is  required  to  contribute  6% of  his/her  basic  salary.  For the year ended
December  25,  2004,  2003 and  2002,  contributions  made by the  Company  were
approximately $122, $151 and $97, respectively.


NOTE 19.   OTHER INCOME

Other income consists  primarily of VAT tax credits of  approximately  1478, 699
and 0 for the years ended December 25, 2004, 2003 and 2002, respectively.



                                      F-19