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

FORM 10-QSB

(Mark One)

|      |                                                                                   
|----- | ----------------------------------------------------------------------------------
|[X]   | Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 
|      | For the quarterly period ended March 31, 2002.                                    
|     
|[   ] | Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934
|      | For the transition period from      to                                            

Commission file number:

NEW DRAGON ASIA CORP.
(Exact name of small business issuer as specified in its charter)

|                                                              |  |                                 
|------------------------------------------------------------- |  | --------------------------------
|Florida                                                       |  | 88-0404114                      
|                                                              |  |                                 
|(State or other jurisdiction ofIncorporation or organization) |  | (IRS EmployerIdentification No.)

Room 1304, 13/F Wing On Centre
111 Connaught Road Central
Hong Kong
(Address of principal executive offices)

011-852-2815-9892

(Issuers Telephone Number, Including Area Code)

N/A

---

(Former name, address and fiscal year, if changed since last report)


Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [   ]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant has filed all documents and reports required to be
filed by Sections 12, 13, or 15(d) of the Exchange Act subsequent to the
distribution of securities under a plan confirmed by a court.

Yes [X] No [   ]

APPLICABLE ONLY TO CORPORATE ISSUERS

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 25, 2002, there were 40,911,242 shares of common stock issued
and outstanding.





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TABLE OF CONTENTS



|           |                                                                   |                                                                |  |  |  |  |  | 
|---------- | ----------------------------------------------------------------- | -------------------------------------------------------------- |  |  |  |  |  | 
|           |                                                                   | Consolidated Balance Sheets                                   
|           |                                                                   | Consolidated Statements of Operations and Comprehensive Income
|           |                                                                   | Consolidated Statement of Stockholders Equity                
|           |                                                                   | Consolidated Statements of Cash Flows                         
|           |                                                                   | Notes to Consolidated Financial Statements                    
|           | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
|PART II   
|           | Item 4. Submission of Matters to a Vote of Security Holders      
|           | Item 5. Other Information                                        
|           | Item 6. Exhibits and Reports on Form 8-K                         
|SIGNATURES



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##### Table of Contents



FORM 10-QSB
NEW DRAGON ASIA CORP.

TABLE OF CONTENTS

|        |                                                           |  |                                            | 
|------- | --------------------------------------------------------- |  | ------------------------------------------ | 
|PART I 
|ITEM 1. | FINANCIAL STATEMENTS                                      | 
|        |                                                           |  | CONSOLIDATED BALANCE SHEET                 | 
|        |                                                           |  | CONSOLIDATED STATEMENTS OF OPERATIONS      | 
|        |                                                           |  | CONSOLIDATED STATEMENTS OF CASH FLOWS      | 
|        |                                                           |  | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | 
|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION | 
|PART II
|ITEM 6. | EXHIBITS AND REPORTS ON FORM 8-K                          | 





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NEW DRAGON ASIA CORP. AND SUBSIDIARIES




Consolidated Balance Sheets

(Unaudited)

|                                       |                                             |                                                  |                            |             |  |                |        |                   |  |        |  | 
|-------------------------------------- | ------------------------------------------- | ------------------------------------------------ | -------------------------- | ----------- |  | -------------- | ------ | ----------------- |  | ------ |  | 
|                                       |                                             |                                                  |                            |             |  | MARCH 25, 2002 |        | DECEMBER 25, 2001
|                                       |                                             |                                                  |                            |             |  | (US$'000)      |        | (US$'000)        
|                                       |                                             |                                                  |                            |             |  |                |        |                  
|                                       |                                             |                                                  |                            | A S S E T S |  |                |        |                   |  |        |  | 
|Current Assets:                        |                                             |                                                  |                            |             |  |                |        |                  
|                                       | Cash and bank deposits                      |                                                  | $                          | 1,173       |  |                | $      | 1,293             | 
|                                       | Accounts receivable                         |                                                  |                            | 5,032       |  |                |        | 5,110             | 
|                                       | Other receivables, deposits and prepayments |                                                  |                            | 1,033       |  |                |        | 1,048             | 
|                                       | Inventories                                 |                                                  |                            | 6,263       |  |                |        | 6,264             | 
|                                       | Due from related companies                  |                                                  |                            | 1,668       |  |                |        | 1,704             | 
|                                       |                                             |                                                  |                            |             |  |                |        |                  
|                                       |                                             |                                                  | Total Current Assets       |             |  | 15,169         |        |                   |  | 15,419 | 
|Property, machinery and equipment, net |                                             |                                                  | 23,377                     |             |  |                | 23,728 |                  
|Investment                             |                                             |                                                  |                           |             |  |                | 72     |                  
|                                       |                                             |                                                  |                            |             |  |                |        |                  
|                                       |                                             | $                                                | 38,546                     |             |  | $              | 39,219 |                  
|                                       |                                             |                                                  |                            |             |  |                |        |                  
|                                       |                                             | LIABILITIES AND STOCKHOLDERS
            EQUITY |                            |             |  |                |        |                   |  |       
|Current Liabilities:                   |                                             |                                                  |                            |             |  |                |        |                  
|                                       | Short-term borrowings                       |                                                  | $                          | 3,735       |  |                | $      | 3,554             | 
|                                       | Accounts payable                            |                                                  |                            | 3,464       |  |                |        | 3,440             | 
|                                       | Other payables and accruals                 |                                                  |                            | 932         |  |                |        | 738               | 
|                                       | Taxes payable                               |                                                  |                            | 2,853       |  |                |        | 2,130             | 
|                                       | Due to related companies                    |                                                  |                            | 3,591       |  |                |        | 3,784             | 
|                                       |                                             |                                                  |                            |             |  |                |        |                  
|                                       |                                             |                                                  | Total Current Liabilities  |             |  | 14,575         |        |                   |  | 13,646 | 
|Due to an immediate parent company     |                                             |                                                  | 5,421                      |             |  |                | 7,044  |                  
|Due to joint venture partners          |                                             |                                                  | 4,378                      |             |  |                | 4,996  |                  
|                                       |                                             |                                                  |                            |             |  |                |        |                  
|                                       |                                             |                                                  | Total Liabilities          |             |  | 24,374         |        |                   |  | 25,686 | 
|                                       |                                             |                                                  |                            |             |  |                |        |                  
|Stockholders Equity:                  |                                             |                                                  |                            |             |  |                |        |                  
|                                       | Common stock                                |                                                  |                            | 40          |  |                |        | 40                | 
|                                       | Additional Paid-In Capital                  |                                                  |                            | 8,096       |  |                |        | 8096              | 
|                                       | Retained earnings                           |                                                  |                            | 6,036       |  |                |        | 5,397             | 
|                                       |                                             |                                                  |                            |             |  |                |        |                  
|                                       |                                             |                                                  | Total Stockholders Equity |             |  | 14,172         |        |                   |  | 13,533 | 
|                                       |                                             |                                                  |                            |             |  |                |        |                  
|                                       |                                             | $                                                | 38,546                     |             |  | $              | 39,219 |                  
|                                       |                                             |                                                  |                            |             |  |                |        |                  

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



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NEW DRAGON ASIA CORP. AND SUBSIDIARIES




Consolidated Statements of Operations and Comprehensive Income

Three Months Ended March 25, (Unaudited)

|                                       |                  |   |           |     |           |   |        |      |  
|-------------------------------------- | ---------------- | - | --------- | --- | --------- | - | ------ | ---- | -
|                                       |                  |   | 2002      |     | 2001     
|                                       |                  |   | (US$'000) |     | (US$'000)
|                                       |                  |   |           |     |          
|Net Sales                              |                  | $ | 6,893     |     |           | $ | 7,387  |     
|Cost of Goods Sold                     |                  |   | (5,524    | )   |           |   | (5,956 | )   
|                                       |                  |   |           |     |           |   |        |     
|Gross Profit                           |                  |   | 1,369     |     |           |   | 1,431  |     
|Selling and Distribution Expenses      |                  |   | (247      | )   |           |   | (318   | )   
|General and Administrative Expenses    |                  |   | (322      | )   |           |   | (354   | )   
|                                       |                  |   |           |     |           |   |        |     
|Income from Operations                 |                  |   | 800       |     |           |   | 759    |     
|Other Income and Expenses:             |                  |   |           |     |           |   |        |     
|                                       | Interest Expense |   |           | (61 | )         |   |        | (138 | )
|                                       | Interest Income  |   |           | 44  |           |   |        | 29   |  
|                                       | Other Income     |   |           | 5   |           |   |        |     |  
|                                       |                  |   |           |     |           |   |        |     
|Income Before Provision for Income Tax |                  |   | 788       |     |           |   | 650    |     
|Provision for Taxation                 |                  |   | (149      | )   |           |   | (56    | )   
|                                       |                  |   |           |     |           |   |        |     
|Net Income and Comprehensive Income    |                  | $ | 639       |     |           | $ | 594    |     
|                                       |                  |   |           |     |           |   |        |     
|Basic Earnings per Common Share        |                  | $ | 0.02      |     |           | $ | 0.02   |     
|                                       |                  |   |           |     |           |   |        |     

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



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NEW DRAGON ASIA CORP. AND SUBSIDIARIES




Consolidated Statement of Stockholders Equity

Three Months Ended March 25, 2002 and 2001 (Unaudited)
Thousands (000)

|                                                     |                                              |                                                   |    |         |    |            |       |          |       |               |       |       |     |   |        |  |       | 
|---------------------------------------------------- | -------------------------------------------- | ------------------------------------------------- | -- | ------- | -- | ---------- | ----- | -------- | ----- | ------------- | ----- | ----- | --- | - | ------ |  | ----- | 
|                                                     |                                              |                                                   |    | Class A |    | Additional |       |          |       |               |       | Total
|                                                     |                                              |                                                   |    | Common  |    | Paid-In    |       | Retained |       | Stockholders'
|                                                     |                                              |                                                   |    | Stock   |    | Capital    |       | Earnings |       | Equity       
|                                                     |                                              |                                                   |    |         |    |            |       |          |       |              
|Balance at December 25, 2000
(unaudited)             |                                              | $                                                 |   |         |    | $          |      |          |       | $             | 4,544 |       |     | $ | 4,544  | 
|Conversion of Bio Aqua Shares                        |                                              |                                                   | 2  |         |    |            |      |          |       |               |      |       |     |   | 2      | 
|                                                     | Issuance of common stock
in connection with: |                                                   |    |         |    |            |       |          |       |               |       |       |     |   |        |  |      
|                                                     |                                              | Exchange agreement                                |    |         | 37 |            |       |          | 4,963 |               |       |       | (13 | ) |        |  | 4,987 | 
|                                                     |                                              | Consulting, investment banking
and legal services |    |         | 1  |            |       |          | 3,133 |               |       |       |    |   |        |  | 3,134 | 
|Net Income for 2001                                  |                                              |                                                   |   |         |    |            |      |          |       |               | 866   |       |     |   | 866    | 
|                                                     |                                              |                                                   |    |         |    |            |       |          |       |               |       |       |     |   |        | 
|Balance at
December 25, 2001 (Audited)               |                                              | $                                                 | 40 |         |    | $          | 8,096 |          |       | $             | 5,397 |       |     | $ | 13,533 | 
|Net income for the three
Months ended March 25, 2002 |                                              |                                                   |   |         |    |            |      |          |       |               | 639   |       |     |   | 639    | 
|                                                     |                                              |                                                   |    |         |    |            |       |          |       |               |       |       |     |   |        | 
|Balance at
March 25, 2002 (Unaudited)                |                                              | $                                                 | 40 |         |    | $          | 8,096 |          |       | $             | 6,036 |       |     | $ | 14,172 | 
|                                                     |                                              |                                                   |    |         |    |            |       |          |       |               |       |       |     |   |        | 

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



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NEW DRAGON ASIA CORP. AND SUBSIDIARIES




Consolidated Statements of Cash Flows

Three Months Ended March 25, 2002 and 2001 (Unaudited)

|                                         |                                                                                   |                                                   |       |                                             |     |           |       |           |     |  |        |  
|---------------------------------------- | --------------------------------------------------------------------------------- | ------------------------------------------------- | ----- | ------------------------------------------- | --- | --------- | ----- | --------- | --- |  | ------ | -
|                                         |                                                                                   |                                                   |       |                                             |     | 2002      |       | 2001     
|                                         |                                                                                   |                                                   |       |                                             |     | (US$'000) |       | (US$'000)
|                                         |                                                                                   |                                                   |       |                                             |     |           |       |          
|Cash Flows from Operating Activities:    |                                                                                   |                                                   |       |                                             |     |           |       |          
|                                         | Net income                                                                        |                                                   | $     | 639                                         |     |           | $     | 594       |    
|                                         | Adjustments to reconcile net income to net cash
provided by operating activities: |                                                   |       |                                             |     |           |       |           |    
|                                         |                                                                                   | Amortization of land use rights                   |       |                                             | 27  |           |       |           | 27  | 
|                                         |                                                                                   | Depreciation of property, machinery and equipment |       |                                             | 245 |           |       |           | 213 | 
|                                         |                                                                                   | (Increase) decrease in operating assets:          |       |                                             |     |           |       |           |     | 
|                                         |                                                                                   |                                                   |       | Accounts receivable, net                    |     |           | 78    |           |     |  | (252   | )
|                                         |                                                                                   |                                                   |       | Other receivables, deposits and prepayments |     |           | 14    |           |     |  | 175    |  
|                                         |                                                                                   |                                                   |       | Inventories                                 |     |           | 1     |           |     |  | 2,583  |  
|                                         |                                                                                   |                                                   |       | Prepaid rental expense                      |     |           |      |           |     |  | 465    |  
|                                         |                                                                                   |                                                   |       | Due from related companies                  |     |           | 36    |           |     |  |       |  
|                                         |                                                                                   | Increase (decrease) in operating liabilities:     |       |                                             |     |           |       |           |     | 
|                                         |                                                                                   |                                                   |       | Accounts payable                            |     |           | 24    |           |     |  | (2,792 | )
|                                         |                                                                                   |                                                   |       | Other payables and accruals                 |     |           | 194   |           |     |  | 150    |  
|                                         |                                                                                   |                                                   |       | Tax payables                                |     |           | 723   |           |     |  | 271    |  
|                                         |                                                                                   |                                                   |       | Due to related companies                    |     |           | (193  | )         |     |  |       |  
|                                         |                                                                                   |                                                   |       |                                             |     |           |       |          
|Net cash flows from operating activities |                                                                                   |                                                   | 1,788 |                                             |     |           | 1,434 |          
|                                         |                                                                                   |                                                   |       |                                             |     |           |       |          
|Cash Flows from Investing Activities:    |                                                                                   |                                                   |       |                                             |     |           |       |          
|                                         | Decrease in investment                                                            |                                                   |       | 72                                          |     |           |       |          |    
|                                         | Acquisition of property, machinery and equipment                                  |                                                   |       | (183                                        | )   |           |       | (739      | )  
|                                         |                                                                                   |                                                   |       |                                             |     |           |       |          
|Net Cash Used in Investing Activities    |                                                                                   |                                                   | (111  | )                                           |     |           | (739  | )        
|                                         |                                                                                   |                                                   |       |                                             |     |           |       |          

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



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NEW DRAGON ASIA CORP. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Continued)

Three Months Ended March 25, 2002 and 2001 (Unaudited)

|                                                  |                                                      |   |           |        |           |   |       |      |  
|------------------------------------------------- | ---------------------------------------------------- | - | --------- | ------ | --------- | - | ----- | ---- | -
|                                                  |                                                      |   | 2002      |        | 2001     
|                                                  |                                                      |   | (US$'000) |        | (US$'000)
|                                                  |                                                      |   |           |        |          
|Cash Flows from Financing Activities:             |                                                      |   |           |        |           |   |       |     
|                                                  | Increase in short-term borrowings                    |   | $         | 181    |           |   | $     |     |  
|                                                  | Repayment of short-term borrowings                   |   |           |       |           |   |       | (127 | )
|                                                  | Decrease in due to an immediate parent company       |   |           | (1,623 | )         |   |       | (915 | )
|                                                  | (Decrease) increase in due to joint venture
Partners |   |           | (355   | )         |   |       | 627  |  
|                                                  |                                                      |   |           |        |           |   |       |     
|Net Cash Used in Financing Activities             |                                                      |   | (1,797    | )      |           |   | (415  | )   
|                                                  |                                                      |   |           |        |           |   |       |     
|Net (Decrease) increase in Cash and Bank Deposits |                                                      |   | (120      | )      |           |   | 280   |     
|Cash and Bank Deposits  Beginning of Period      |                                                      |   | 1,293     |        |           |   | 1,013 |     
|                                                  |                                                      |   |           |        |           |   |       |     
|Cash and Bank Deposits  End of Period            |                                                      | $ | 1,173     |        |           | $ | 1,293 |     
|                                                  |                                                      |   |           |        |           |   |       |     

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



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NEW DRAGON ASIA CORP. AND SUBSIDIARIES




Notes to Consolidated Financial Statements

Three Months Ended March 25, 2002 and 2001 (Unaudited)

NOTE 1  ORGANIZATION AND NATURE OF OPERATIONS

| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | New Dragon Asia Corporation (formerly Bio-Aqua Systems, Inc.) and its
subsidiaries (the Group or NDAC), a United States corporation
incorporated in the State of Florida, is principally engaged in the
manufacturing, marketing and distribution of instant noodles and flour
in the Peoples Republic of China (PRC). NDAC has its principal
offices in Hong Kong. The group of NDAC is composed of four limited
liability companies, incorporated under the laws of the British Virgin
Islands (BVI).                                                                                                                                                                                                                                                                          
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | Prior to December 2001, Bio-Aqua Systems, Inc. (Bio-Aqua) owned
majority interests in Tepual, S.A. and Krisel, S.A., Chilean
corporations principally engaged in the business of (1) research,
consulting, development and control of the production of meals for
feed used by the aquaculture, poultry and cattle farming industries,
(2) sales of vaccine products, and (3) krill fishing in Uruguay.                                                                                                                                                                                                                                                                                                                                                                               
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | Due to lack of working capital, Bio-Aqua suspended all of its
operations during 2001. On August 7, 2001, it was announced that it
would seek to divest its current operations and acquire a new
operating company with the goal of enhancing shareholder value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | On December 13, 2001 Bio-Aqua entered into a Share Exchange Agreement
with Max Rutman, Flagship Import Export LLC, a Nevada limited
liability company and New Dragon Asia Food Limited, a company
organized under the laws of the British Virgin Islands. Pursuant to
the Share Exchange Agreement, Bio-Aqua acquired from New Dragon Asia
Food Limited all of its equity interests of four companies organized
under the laws of the British Virgin Islands (each a Subsidiary and,
collectively the Subsidiaries) each of which in turn holds an
interest in a separate sino-foreign joint venture, which equity
interests constituted all of the issued and outstanding equity
interests of the Subsidiaries in exchange for 37,963,263 shares of
common stock of the Registrant.
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | Upon the closing of the share exchange, Max Rutman, Nestor Lagos,
Pedro Sayes and Oscar Cornejo resigned from the board of directors and
on December 14, 2001 Xue Jun Song, Man Fai Leung, Shu Hua Zhang and
Wing Leung Lai became members of Bio-Aquas board of directors. The
directors then elected Wing Leung Lai as the Chief Financial Officer,
Shu Hua Zhang as the Deputy General manager and Xue Jun Song as the
Chief Executive Officer.                                                                                                                                                                                                                                                                                                                                     
| |  | As conditions of the Share Exchange Agreement, the Company amended its
Articles of Incorporation to:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    



| | 1) |  | Change the name of the Company to New Dragon
      Asia Corp.                                                                                                                                                                                                                                                                                                                                                                       
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2) |  | To increase its authorized capital stock to
      107,000,000 shares, increasing the authorized Class A common stock
      to 100,000 shares.                                                                                                                                                                                                                                                                                       
|
| | 3) |  | Max Rutman (through his ownership interest
      in Flagship Import Export LLC) and Atik S.A., owners of all 1,700,000 shares
      of the Class B common stock, have agreed to convert their Class B shares
      to Class A common stock. Immediately after the share exchange, Bio-Aqua
      will carry on New Dragon Asia Food Groups business, under the leadership
      of New Dragon Asia Food Groups current management.





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NEW DRAGON ASIA CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | NOTE 1  ORGANIZATION AND NATURE OF OPERATIONS (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  | New Dragon Asia Food Limited and its subsidiaries (the Group or
NDAC) a United States corporation incorporated in the State of
Florida, is principally engaged in the manufacturing, marketing and
distribution of instant noodles and flour in the Peoples Republic of
China (PRC).                                                                                                                                                                                                                                                                                                                                                                                                  
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  | In connection with the terms and provisions of the amended and
restated exchange agreement, Bio-Aqua issued 1,335,912 shares of
restricted common stock to investment advisors and attorneys in
connection with services rendered to effectuate the exchange of
shares. At the date of issuance of the shares, the AMEX market
quotation of the stock was $3.00 per share. NDAC included these costs
approximating $3,134,000 in other expenses in the December 25, 2001
statements of consolidated operations and comprehensive income,
computed utilizing a 20% discount of the above AMEX market quotation
due to the restricted nature of the stock.                                     
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  | The Group is subject to, among others, the following operating risks:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  | Country Risk As all of the Groups operations are conducted in the
PRC, the Group is subject to special considerations and significant
risks not typically associated with companies operating in North
America and Western Europe. These include risks associated with,
among others, the political, economic and legal environments and
foreign currency exchange. The Groups results may be adversely
affected by changes in the political and social conditions in the PRC,
and by changes in governmental policies with respect to laws and
regulations, anti-inflationary measures, currency conversion and
remittance abroad, and rates and methods of taxation, among other
things.
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  | In addition, all of the Groups revenue is denominated in Renminbi
(RMB) which must be converted into other currencies before
remittance out of the PRC. Both the conversion of RMB into foreign
currencies and the remittance of foreign currencies abroad require
approvals of the PRC government.                                                                                                                                                                                                                                                                                                                                                                                       
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  | Operating Risk The Group conducts its manufacturing and sales
operations through joint ventures established between the Group and
certain PRC parties. Any deterioration of these strategic
relationships may have an adverse effect on the operations of the
Group.                                                                                                                                                                                                                                                                                                                                                                                                                        





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NEW DRAGON ASIA CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

NOTE 1  ORGANIZATION AND NATURE OF OPERATIONS (Continued)

Details of the companies comprising the Group are as follows:

|                         |  |                            |  |            |  |                 |         |            |  |                          
|------------------------ |  | -------------------------- |  | ---------- |  | --------------- | ------- | ---------- |  | -------------------------
|                         |  |                            |  |            |  | Percentage of   |         |           
|                         |  | Domicile and               |  |            |  | Equity Interest |         |           
|                         |  | Date of                    |  | Paid-Up    |  | Attributable to |         | Principle 
|Name                     |  | Incorporation              |  | Capital    |  | the Group       |         | Activities
|                         |  |                            |  |            |  |                 |         |           
|Mix Creation Limited     |  | The British Virgin Islands |  | US$1       |  |                 | 100%    |            |  | Investment holding       
|(MC) (a)               |  | November 7, 1997           |  |            |  |                 |         |            |  |                          
|New Dragon Asia Flour    |  | The PRC                    |  | RMB        |  |                 | 90% (b) |            |  | Manufacture, marketing   
|(Yantai) Company Limited |  | August 13, 1999            |  | 28,000,000 |  |                 |         |            |  | and distribution of flour
|(NDAFLY)               |  |                            |  |            |  |                 |         |            |  |                          
|Rich Delta Limited       |  | The British Virgin Islands |  | US$1       |  |                 | 100%    |            |  | Investment holding       
|(RD) (a)               |  | October 28, 1998           |  |            |  |                 |         |            |  |                          
|New Dragon Asia Food     |  | The PRC                    |  | RMB        |  |                 | 90% (c) |            |  | Manufacture, marketing   
|(Yantai) Company Limited |  | December 24, 1998          |  | 17,462,000 |  |                 |         |            |  | and distribution of      
|(NDAFY)                |  |                            |  |            |  |                 |         |            |  | instant noodles          
|Noble Point Limited      |  | The British Virgin Islands |  | US$1       |  |                 | 100%    |            |  | Investment holding       
|(NP) (a)               |  | October 29, 1998           |  |            |  |                 |         |            |  |                          
|New Dragon Asia Food     |  | The PRC                    |  | RMB        |  |                 | 90% (c) |            |  | Manufacture, marketing   
|(Dalian) Company Limited |  | December 25, 1998          |  | 17,430,000 |  |                 |         |            |  | and distribution of      
|(NDAFD)                |  |                            |  |            |  |                 |         |            |  | instant noodles          
|Keen General Limited     |  | The British Virgin Islands |  | US$1       |  |                 | 100%    |            |  | Investment holding       
|(KG) (a)               |  | July 20, 1998              |  |            |  |                 |         |            |  |                          
|Sanhe New Dragon Asia    |  | The PRC                    |  | RMB        |  |                 | 80% (c) |            |  | Manufacture, marketing   
|Food Company Limited     |  | December 25, 1998          |  | 51,191,432 |  |                 |         |            |  | and distribution of      
|(SNDAF)                |  |                            |  |            |  |                 |         |            |  | instant noodles          



| | (a) |  | MC, RD, NP and KG are wholly owned by New Dragon Asia
Food Limited (NDAFL) a company incorporated in the British
Virgin Islands. NDAFL is 51% owned by New Dragon International
Investment Limited and 49% owned by Long Feng Food (Overseas)
Company Limited, both incorporated in the British Virgin Islands,
through a number of intermediate holding companies.                                                                                                                                                                                                  
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (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 is not responsible for any profit or loss to NDAFLY
effective from June 26, 1999. In view of the profit sharing
arrangement NDAFLY is regarded as 100% owned by the Group.





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##### Table of Contents



NEW DRAGON ASIA CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

NOTE 1  ORGANIZATION AND NATURE OF OPERATIONS (Continued)



| | (c) |  | NDAFY, NDAFD and SNDAF are contractual joint ventures
established in the PRC to be operated for 50 years until December
24, 2048. In March 1999, RD and NP contributed 90% of the
registered capital to NDAFY and NDAFD, respectively, while KG
contributed 80% of the registered capital to SNDAF. 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, NDAFD
and SNDAF effective from December 26, 1998. In view of the
profit sharing arrangements, NDAFY, NDAFD and SNDAF are regarded
as 100% owned by the Group.
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

NOTE 2  BASIS OF PRESENTATION

| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The unaudited consolidated financial statements include the
consolidated financial statements of MC and its subsidiary (NDAFLY),
RD and its subsidiary (NDAFY), NP and its subsidiary (NDAFD) and KG
and its subsidiary (SNDAF), as they are enterprises controlled by
NDAFL. All significant intra-group balances and transactions have
been eliminated in consolidation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | The 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 report 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 Group, 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.
|
| |  | The accompanying unaudited consolidated financial statements, which
are for interim periods, do not include all disclosures provided in
the annual consolidated financial statements. These unaudited
consolidated financial statements should be read in conjunction with
the consolidated financial statements and the footnotes thereto
contained in the Annual Report on Form 10-KSB for the year ended
December 25, 2001 of New Dragon Asia Corp. and Subsidiaries, as filed
with the Securities and Exchange Commission. The summary December
25, 2001 balance sheet was derived from audited consolidated financial
statements, but does not include all disclosures required by generally
accepted accounting principles.                                                                                                                                                                                                                                                                 
|
| |  | In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments (which are of a normal
recurring nature) necessary for a fair presentation of the financial
statements. The results for interim periods are not necessarily
indicative of results to be expected for the complete fiscal year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                





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##### Table of Contents



NEW DRAGON ASIA CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

NOTE 3  EARNINGS PER SHARE  BASIC

| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Basic earnings per common share (EPS) is computed by dividing 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. As of March 25, 2002 and 2001, the diluted share base
excludes incremental shares relating to stock options and warrants
since their effect was anti-dilutive. The weighted-average number of
common shares outstanding for computing basic EPS was 40,911,242.





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##### Table of Contents






ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following discussion and analysis should be read in conjunction with the
consolidated financial statements and the notes thereto, included as part of
this Quarterly Report.

Results of Operations

Total revenues for the three months ended March 31, 2002 were USD6,893,132 as
compared to USD7,386,563, a decline of 7% for the same quarter a year ago.
This decrease is attributable mainly to increased competition in the lower
priced instant noodle segment.

Net income for the first quarter of 2002 increased 7% to USD638,380 compared to
USD593,943 for last year quarter. Our improving net earnings are due primarily
to increasing sales of premium-priced products, together with increases in
operating margins reflecting improvements in our manufacturing process over the
period.

Administrative and general expenses decreased from USD354,072 for the three
months ended March 31, 2001 to USD321,649 for the three months ended March 31,
2002, due to the improved controls on administrative overhead for the period.

Selling and distribution expenses decreased by 22% from USD317,645 for the
three months ended March 31, 2001 to USD246,803 for the same quarter this year.
The decrease is attributable to increased efficiency in use of transportation
for product delivery and enhanced control in selling expenses.

The Company reduced its financial expenses through better use of cash flow and
repayment of bank loans. Interest expense was reduced from USD138,018 for the
three months ended March 31, 2001 to USD61,724 for the three months ended March
31, 2002.




PART II

Item 1. Legal Proceedings

None.

Item 2. Changes in Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities

None.





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##### Table of Contents






Item 4. Submission of Matters to a Vote of Security Holders

None.




Item 5. Other Information

None.




Item 6. Exhibits and Reports on Form 8-K



| | (a) |  | Exhibits:           
| | --- |  | --------------------
|
| |     |  | None                
|
| | (b) |  | Reports on Form 8-K:
|
| |     |  | None.               





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##### Table of Contents






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: May 16, 2002 | By                                                          | /s/ Xue Jun Song
|                    |                                                            
|                    | Name: Xue Jun Song
Title: Chief Executive Officer, Director

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: May 16, 2002 | By /s/ Xue Jun Song                                         
|                    |                                                             
|                    | Name: Xue Jun SongTitle: Chief Executive Officer, Director  
|                    |                                                             
|Dated: May 16, 2002 | By /s/ Shu Hua Zhang                                        
|                    |                                                             
|                    | Name: Shu Hua ZhangTitle: Deputy General Manager, Director  
|                    |                                                             
|Dated: May 16, 2002 | By /s/ Wing Leung Lai                                       
|                    |                                                             
|                    | Name: Wing Leung LaiTitle: Chief Financial Officer, Director
|                    |                                                             
|Dated: May 16, 2002 | By/s/ Man Fai Leung                                         
|                    |                                                             
|                    | Name: Man Fai LeungTitle: Director