U.S. SECURITIES EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

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

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

For Quarter Ended:                               Commission File Number:
 March  25,  2004
                              NEW DRAGON ASIA CORP.
--------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

              FLORIDA                                  88-0404114
-----------------------------------      ---------------------------------------
(State  or  other  jurisdiction  of      (IRS  Employer  Identification  Number)
incorporation  or  organization)

                        2/F Kam Chung Commercial Building
                               19-21 Hennessy Road
                            Wanchai, Hong Kong 33301
--------------------------------------------------------------------------------
(Address  of  Principal  Executive  Offices)              (Zip  Code)

                                 (852) 2520-0220
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required to file such  reports) and (2) has been subject to filing  requirements
for the past 90 days.
                                Yes  X       No
                                    ----        ----

The  number  of  shares of Common  Stock  outstanding  as of March 25,  2004 was
45,061,342.

Transitional Small Business Disclosure Format (check one):  Yes       No  X
                                                               ----      ----


<PAGE>

ITEM 1. FINANCIAL STATEMENTS

                     NEW DRAGON ASIA CORP. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                       (THOUSANDS, EXCEPT PER SHARE DATA)


<TABLE>
<CAPTION>
                                                                    AS OF
                                                         -----------------------------
                                                           March 25,      DECEMBER 25,
                    A S S E T S                              2004             2003
                                                         (Unaudited)
                                                         ------------     ------------
Current Assets:
<S>                                                      <C>              <C>
  Cash and cash equivalents                              $        603     $      1,783
  Accounts receivable, net of allowance for doubtful
  accounts of $1,118 at March 25, 2004 and $993 at
  December 25, 2003                                             5,884            6,936
  Other receivables, deposits and prepayments                   2,939            1,282
  Inventories                                                   1,870            2,763
  Due from related companies                                      120              124
  Net assets held for sale                                      2,340               --
                                                         ------------     ------------
   Total current assets                                        13,756           12,888

Property, machinery and equipment, net                         15,234           17,471
Land use rights, net                                            3,678            3,998
                                                         ------------     ------------
   Total assets                                          $     32,668     $     34,357
                                                         ============     ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
 Short-term borrowings                                   $      2,616     $      2,845
 Accounts payable                                               3,624            4,565
 Other payables and accruals                                    1,128            1,234
 Taxes payable                                                    789              921
 Due to related companies                                         950            1,202
 Net liabilities held for sale                                    646               --
                                                         ------------     ------------
   Total current liabilities                                    9,753           10,767

Due to an immediate parent company                                  8              196
Due to joint venture partners                                     379            1,204
                                                         ------------     ------------
   Total liabilities                                           10,140           12,167
                                                         ------------     ------------
Stockholders' equity:
  Common stock, par value USD0.0001; authorized -
  107,000,000 shares, issued and outstanding -
  45,061,342 at March 25, 2004 and
  December 25, 2003                                                 4                4
 Additional paid-in-capital                                     9,909            9,909
 Retained earnings                                             12,615           12,277
                                                         ------------     ------------
   Total stockholders' equity                                  22,528           22,190
                                                         ------------     ------------

   Total liabilities and stockholders' equity            $     32,668     $     34,357
                                                         ============     ============
</TABLE>

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


<PAGE>

                     NEW DRAGON ASIA CORP. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME
                       (THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)


                                                                 FOR THE
                                                           THREE MONTHS ENDED
                                                                MARCH 25,
                                                       -------------------------
                                                         2004           2003
                                                       -------------------------

Net sales                                              $  7,398        $  6,548

Cost of goods sold                                       (6,065)         (5,701)
                                                       --------        --------
Gross profit                                              1,333             847


Selling and distribution expenses                          (389)           (242)

General and administrative
expenses                                                   (661)           (233)
                                                       --------        --------
Income from operations                                      283             372

Other income and expenses:
   Interest expense                                         (39)            (60)
   Interest income                                           12              52
   Other income                                             328              25
                                                       --------        --------
Income before provision for
income taxes                                                584             389

Provision for income taxes                                 (246)            (73)
                                                       --------        --------
Net income                                             $    338        $    316
                                                       ========        ========
Basic and diluted earnings
per common share                                       $   0.01        $   0.01
                                                       ========        ========
Weighted average shares used
to compute basic and diluted
net income per common share                              45,061          40,911
                                                       ========        ========

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


<PAGE>

                     NEW DRAGON ASIA CORP. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (THOUSANDS)
                                   (UNAUDITED)


                                                             THREE MONTHS ENDED
                                                                  MARCH 25,
                                                             ------------------
                                                               2004       2003
                                                             -------    -------
Cash flows from operating activities:
 Net income                                                  $   338    $   316
 Adjustments to reconcile net income to net cash
   provided by operating activities:
   Amortization and Depreciation                                 310        350
   Gain on disposal of machinery and equipment                   (16)        --
   Provision for bad debts                                       396         56
   Changes in assets and liabilities:
     Accounts receivable                                         652       (461)
     Other receivables, deposits and prepayments              (1,661)       300
     Inventories                                                 803        353
     Accounts payable                                           (654)       382
     Other payables and accruals                                  21       (412)
     Taxes payable                                              (105)      (195)
                                                             -------    -------
Net cash provided by operating activities                         84        689
                                                             -------    -------
Cash flows from investing activities:
 Due from related companies                                        4        196
 Proceeds from sale of machinery and equipment                    22         23
 Purchases of property, machinery and equipment                   (1)       (38)
 Due to related companies                                       (252)        31
                                                             -------    -------
Net cash provided by (used in) investing activities             (227)       212
                                                             -------    -------
Cash flows from financing activities:
 Proceeds from short-term borrowings                             602        723
 Payments on short-term borrowings                              (626)       (12)
 Net decrease in due to an immediate parent company             (188)    (1,601)
 Net increase (decrease) in due to joint venture partners       (825)       337
                                                             -------    -------
Net cash used in financing activities                         (1,037)      (553)
                                                             -------    -------
Net increase (decrease) in cash and cash equivalents          (1,180)       348

Cash and cash equivalents at the beginning of the period       1,783        628
                                                             -------    -------
Cash and cash equivalents at the end of the period           $   603    $   976
                                                             =======    =======

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


<PAGE>


                     NEW DRAGON ASIA CORP. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

         (THREE MONTH PERIOD ENDED MARCH 25, 2004 AND 2003 IS 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 corporate office in
      Hong Kong.  The group of NDAC is  composed  of four  wholly-owned  limited
      liability  companies,  incorporated  under the laws of the British  Virgin
      Islands (BVI).  The limited  liability  companies are Mix Creation Limited
      ("MC"),  Rich Delta Limited ("RD"),  Noble Point Limited ("NP"),  and Keen
      General  Limited  ("KG").  Each  of the  wholly  owned  limited  liability
      companies owns a majority  interest in a contractual  joint venture in the
      PRC. A  contractual  joint  venture is an entity  established  between the
      wholly-owned subsidiary and another joint venture partner, with the rights
      and obligations of each party governed by a contract.  If the wholly-owned
      subsidiary  owns more than 50% of the joint  venture and is able to govern
      and  control  its  financial  and  operating  policies  and its  board  of
      directors,  such joint venture is considered a de facto subsidiary and has
      been accounted for as a subsidiary of the Group.

      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 the equity
      interests in 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.

      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.


<PAGE>

      CONCENTRATION  OF CREDIT RISK - Concentration  of credit risk with respect
      to customer  receivables  are limited due to the large number of customers
      comprising the Group's customer base, and their dispersion across the PRC.
      In  addition,  the  Group  performs  ongoing  credit  evaluations  of each
      customer's financial condition and maintains reserves for potential credit
      losses.  Such  losses  in the  aggregate  have not  exceeded  management's
      expectations.

Details of the companies comprising the Group are as follows:

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

New Dragon Asia Flour    The PRC                    RMB              90% (b)    Manufacture,
(Yantai) Company         August 13, 1999         28,500,000                     marketing and
Limited                                                                         distribution of
("NDAFLY")                                                                      flour

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

New Dragon Asia Food     The PRC                    RMB              90% (c)    Manufacture,
(Yantai) Company         December 24, 1998       17,462,000                     marketing and
Limited ("NDAFY")                                                               distribution of
                                                                                instant noodles

Noble Point Limited      The British Virgin         US$             100%        Investment holding
("NP") (a)               Islands                  1,000,000
                         October 29, 1998

New Dragon Asia          The PRC                    RMB              90% (c)    Manufacture,
Food (Dalian) Company    December 28, 1998       17,430,000                     marketing and
Limited                                                                         distribution of
("NDAFD")                                                                       instant noodles

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

Sanhe New Dragon         The PRC                    RMB           79.64% (c)    Manufacture,
Asia Food Company        December 25, 1998       51,191,432                     marketing and
Limited                                                                         distribution of
("SNDAF")                                                                       instant noodles

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


      (a)   MC, RD, NP and KG are wholly-owned by New Dragon Asia Corporation.

      (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 for financial
            reporting purposes as 100% owned by the Group. The minority interest
            component has been included with General and Administrative expenses
            for the periods ended March 25, 2004 and 2003.

      (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  79.64% 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

<PAGE>

            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 for financial reporting purposes as 100% owned by
            the Group.  The minority  interest  component has been included with
            General and Administrative  expenses for the periods ended March 25,
            2004 and 2003.

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


NOTE 2 - BASIS OF PRESENTATION

      The interim consolidated  financial statements of the Group are unaudited.
      All significant intra-group balances and transactions have been eliminated
      in consolidation.

      The  unaudited   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  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-K/A for the year ended  December 25, 2003 of New Dragon Asia Corp.
      and  Subsidiaries,  as filed with the Securities and Exchange  Commission.
      The December 25, 2003 balance sheet was derived from audited  consolidated
      financial  statements,  but does not include all  disclosures  required by
      U.S. GAAP.

      In the  opinion of the  Group's  management,  the  accompanying  unaudited
      consolidated  financial statements contain all adjustments (which are of a
      normal recurring  nature) necessary for a fair presentation of the Group's
      consolidated financial position and results of operations. The results for
      interim periods are not  necessarily  indicative of results to be expected
      for the complete fiscal year.

NOTE 3 - INVENTORIES

      Inventories consist of the following (US $ '000):

                                   March 25,    December 25,
                                      2004          2003
                                   ---------     ---------
               Raw materials       $    945      $  1,648
               Finished goods           925         1,115
                                   ---------     ---------
                                   $  1,870      $  2,763
                                   =========     =========

      Inventories  are  stated at the lower of cost,  determined  on a  weighted
      average  basis.  Finished  goods are composed of direct  material,  direct
      labor and manufacturing overhead.

NOTE 4 - NET ASSETS AND LIABILITIES HELD FOR SALE

      The Group entered into an agreement with an unrelated  third party to sell
      certain assets and liabilities of NDAFD. The closing of the transaction is
      subject to certain  events  that have not yet  occurred.  Included  in net
      assets held for sale is property, plant, equipment, and land use rights.


<PAGE>


NOTE 5 - 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,  2004 and 2003,  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 45,061,342 and 40,911,342 for the three months
      ended March 25, 2004 and 2003, respectively.

NOTE 6 - INCOME TAXES

      The income of the Company is subject to PRC income taxes at rates  ranging
      from  27% to 33% of  which  24%  to  30% is  attributable  to the  central
      government  and  3% to  the  provincial  government.  On  application  and
      approval  by the tax  bureau,  the PRC  subsidiaries  within the Group are
      exempt from state income tax and local tax in respect of income earned for
      the first two years of  operation,  and then subject to a 50% reduction in
      state  income  tax  and a full  exemption  of  local  income  tax  for the
      following three years.  The Company and its  subsidiaries are in different
      stages of enjoying the above tax incentive program.

      The  Group's  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.

NOTE 7 - RELATED PARTY TRANSACTIONS

      Parties  are  considered  to be  related  if one party has the  liability,
      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  the Group and related
      companies are summarized below:

                                                       03/25/2004    03/25/2003
                                                       (US $ '000)   (US $ '000)
      Sale of finished goods to:
        Joint Venture Partner:
        Shandong Longfeng Group Company                         --          184
                                                       -----------  -----------
                                                                --          184
                                                       -----------  -----------

      Purchase of raw materials from:
        Related Parties:
         Sanhe (Yantai) Food Company Limited                    --            5
         Longkou City Longfeng Soybean Food Co Limited           1           --
         Longkou City Longfeng Packing Manufacturing
               Factory                                          83          300
                                                       -----------  -----------
                                                                84          305
                                                       -----------  -----------

NOTE 8 - SUBSEQUENT EVENT

      The Group has entered  into an  agreement,  subject to  completion  of due
      diligence, to acquire a flour miller to increase production capacity.


<PAGE>


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.


In  addition  to  historical   information,   this  Quarterly   Report  contains
forward-looking  statements.  Generally,  the words  "believes,"  "anticipates,"
"may," "will," "should," "expect," "intend," "estimate," "continue," and similar
expressions or the negative  thereof or comparable  terminology  are intended to
identify  forward-looking  statements.  Such  statements  are subject to certain
risks and uncertainties, including the matters set forth in this report or other
reports or documents we file with the  Securities and Exchange  Commission  from
time to time, which could cause actual results or outcomes to differ  materially
from   those   projected.   Undue   reliance   should  not  be  place  on  these
forward-looking  statements which speak only as of the date hereof. We undertake
no  obligation  to  update  these  forward-looking  statements.  Readers  should
carefully  review the risks  described in other documents the Company files from
time to time with the Securities and Exchange  Commission,  including the Annual
Report on Form 10-K for the fiscal year ended  December 25, 2003,  the Quarterly
Reports on Form 10-Q filed by the Company and Current Reports on Form 8-K by the
Company.

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.

OVERVIEW

On December 13, 2001, the Company  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,  on December 3, 2001
(the  "Closing"),  the Company acquired from New Dragon Asia Food Limited all of
the 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 hold 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.  At the closing, the Company transferred all of its assets to
Mr. Rutman and Mr. Rutman assumed all of the Company's liabilities. As such, the
following discussion relates to the consolidated financial results of New Dragon
Asia Limited only.

The consolidated financial statements are presented in US dollars.  Transactions
and monetary  assets  denominated  in  currencies  other than the US dollars are
translated into US dollars at the respective applicable exchange rates. Monetary
assets and  liabilities  denominated in other  currencies are translated into US
dollars at the applicable rate of exchange at the balance sheet date.  There are
no material  exchange  differences  as a result of the stability of the Renminbi
("RMB") during the periods covered by the consolidated financial statements.

PLAN OF OPERATIONS

Our  current  strategy  is  twofold:  (1)  expand  our  customer  sales base and
production  lines;  and (2) impose  ongoing  strict  control  on the  factories'
hygiene in view of prevention of SARS (Severe acute respiratory syndrome). Plans
for expansion of the existing  plants are expected to be funded through  current
working capital from ongoing sales.

Our long-term  growth  strategy  includes  strategic  acquisitions of additional
plants with regional brand  recognition to increase our market share in China. A
significant  acquisition  will require  additional  funds in the form of debt or
equity, or a combination thereof. However, there can be no assurance these funds
will be available.

In  December  2003,  the  Group's  management  decided to  temporarily  idle the
operations  of the  Company's  joint  venture  in Dalian,  New Dragon  Asia Food
(Dalian)  Company  Limited  ("NDAFL").  A down payment was received on April 17,
2004.  On  February  27,  2004,  the Group  received a letter of intent  from an
unrelated party to purchase the assets and assume certain  liabilities of NDAFD.
As required by PRC  regulations,  determination  of the final purchase price and
execution of a sales and purchase agreement is contingent upon a completed asset
valuation report which the Group's  management  expects will result in an amount
approximate  to the net carrying value of the assets.  Currently,  due diligence
and  valuation  are in progress and the Group's  management  believes  that this
transaction will be completed during the year ended December 25, 2004.


<PAGE>


RESULTS OF OPERATIONS

Three months ended March 25, 2004 compared to three months ended March 25, 2003
-------------------------------------------------------------------------------

Total  revenue

      Total  revenue for the three  months ended March 25, 2004 was $7.4 million
compared with $6.5  million,  an increase of 13% over the same period last year,
mainly due to our strategy of  increasing  sales in urban areas.  Our goal is to
expand New Dragon's  market share in the cities  through  supermarket  and chain
stores, a market not targeted by the Company in the past.

Net income

      Net  income for the first  quarter  of 2003  increased  to  $338,000  from
$316,000 a year ago The increase was  primarily due to a change in product sales
mix from flour for general  use to flour for  specific  usage,  as well as a tax
refund from the government.

Administrative  and  general  expenses

      General and  Administrative  expenses for the three months ended March 25,
2004  increased  by  $428,000  to  $661,000 ,  compared  with  $233,000  for the
corresponding  period in 2003.  The  increase  was mainly  due to an  additional
provision for doubtful debt.  Furthermore,  professional expenses related to the
Company were previously borne by the ultimate holding company in the group base.
Such expenses are now borne by the Company itself.

Selling  and  distribution  expenses

      Selling and  distribution  expenses  for the three  months ended March 25,
2004 were $389,000  compared with $242,000 for the  corresponding  period of the
prior year. The increase in expenses was mainly due to fees  associated with the
company's  new sales  strategy  to enter urban areas  through  supermarkets  and
additional  expenses  incurred in relation  to sales to KFC,  such as  repacking
materials  and storage  charges.  Moreover,  expenses were impacted by increased
transportation  costs  associated  with more  stringent  maximum  weight loading
restrictions for truck shipments.

Income taxes

      The income of the Company is subject to PRC income taxes at rates from 27%
to 33%, of which 24% to 30% is attributable to the central  government and 3% to
the provincial  government.  On application and approval by the tax bureau,  the
PRC subsidiaries within the Group are exempt from state income tax and local tax
with  regard to income  earned  for the first two years of  operation,  and then
subject to a 50%  reduction  in state  income tax and a full  exemption of local
income tax for the following three years.  The Company and its  subsidiaries are
in different stages of benefiting the above tax incentive program.

      The subsidiaries  companies of the Group 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.


LIQUIDITY AND CAPITAL RESOURCES

      The Company's primary  liquidity needs are to fund  inventories,  accounts
receivable  and  capital  expenditures.  The Company  has  financed  its working
capital  requirements  through  a  combination  of  internally  generated  cash,
short-term bank loans and advances from affiliates.

      Cash  and cash  equivalents  were  $603,000  as of March  25,  2004.  This
represents a decrease of $373,000  from March 25, 2003.  The decrease was mainly
due to the  repayment  from  customers and  reduction in  liabilities.  Net cash
provided by operating  activities  for the three months ended March 25, 2004 was
approximately  $84,000.  Net cash flows from the Company's operating  activities
are  attributable  to the Company's  income and changes in operating  assets and
liabilities.


<PAGE>


      Accounts  receivable  decreased by 15% and accounts  payable  decreased by
21%, from December 25, 2003 to March 25, 2004.  There was a decrease in accounts
receivable  due to the  repayment  from  customers.  The Company  evaluates  the
allowance  level from time to time by applying the Company's  provision  policy.
Apart from the above,  there has been no other  significant  change in financial
condition  and  liquidity  since the fiscal year ended  December 25,  2003.  The
Company  believes that  internally  generated funds together with available bank
credit will be sufficient to satisfy its  anticipated  working capital needs for
at least the next twelve months.

INFLATION AND CHANGING PRICES

      The Company  does not foresee  any  adverse  effects on its  earnings as a
result of inflation or changing prices.

FOREIGN CURRENCY RISK

      Substantially  all  of the  revenues  and  expenses  of  the  Company  are
denominated in Renminbi,  which is the official currency of China.  However,  we
use the United States dollar for financial reporting purposes.  With effect from
January 1, 1994,  conversion of Renminbi into foreign currencies is regulated by
The People's  Bank of China  through a unified  floating  exchange  rate system.
Although  the PRC  government  has stated its  intention to support the value of
Renminbi,  there  can be no  assurance  that such  exchange  rate will not again
become volatile or that Renminbi will not devalue  significantly  against the US
dollar.  Exchange rate fluctuations may adversely affect the value, in US dollar
terms,  of the Group's net assets and income  derived from its operations in the
PRC.

OFF-BALANCE SHEET ARRANGEMENTS

      The Company has no  off-balance  sheet  arrangements  that are  reasonably
likely to have a current or future effect on the Company's financial  condition,
changes in  financial  condition,  revenue or expenses,  results of  operations,
liquidity, capital expenditures or capital resources.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      The Company is exposed to changes in financial  market  conditions  in the
normal  course of  business  due to its use of  certain  financial  instruments.
Market risk generally represents the risk that losses may occur in the values of
financial  instruments  as a result of  movements  in interest  rates and equity
prices.

Currency Fluctuations and Foreign Currency Risk

      As all of the  Company's  operations  are  conducted in the PRC except for
some export business and limited foreign purchases of raw materials, most of our
products  are sold and raw  materials  are  sourced  within  the PRC in  Chinese
Renminbi  ("RMB").  Thus,  the  effect of the  currency  fluctuations  should be
minimal.

      With  respect to foreign  currency  exchange  rates,  the Company does not
believe that a devaluation  or fluctuation of the RMB against the USD would have
a detrimental  effect on the Company's  operations,  since the Company  conducts
virtually  all of its  business in China,  and the sale of its  products and the
purchase  of raw  materials  and  services  is settled  in RMB.  The effect of a
devaluation or fluctuation of the RMB against the USD would affect the Company's
results of operations,  financial position and cash flows, when presented in USD
(based on a current exchange rate) as compared to RMB.

Interest Rate Risk

      The Company does not have any interest rate risk,  as the  Company's  debt
obligations are primarily short-term in nature, with fixed interest rates.


ITEM 4.  CONTROLS  AND  PROCEDURES

(a)   Evaluation of Disclosure  Controls and Procedures  Disclosure Controls and
      procedures  are  designed  to  ensure  that  information  required  to  be
      disclosed  in the reports  filed or  submitted  under the  Exchange Act is
      recorded,  processed,  summarized  and  reported  within the time  periods
      specified in the SEC's rules and forms. Disclosure controls and procedures
      include,  without  limitation,  controls and procedures designed to ensure
      that information  required to be disclosed in the reports filed under 0the


<PAGE>


      Exchange Act is accumulated and communicated to management,  including the
      Chief Executive Officer and Chief Financial  Officer,  as appropriate,  to
      allow timely decisions regarding disclosure.

      Within 90 days prior to the filing of this report,  the Group  carried out
      an evaluation,  under the  supervision and with the  participation  of the
      Group's  management,  including  the Group's Chief  Executive  Officer and
      Chief Financial Officer,  of the effectiveness of the design and operation
      of the Group's  disclosure  controls and procedures.  Based upon and as of
      the  date of that  evaluation,  the  Chief  Executive  Officer  and  Chief
      Financial  Officer  concluded  that the  Group's  disclosure  control  and
      procedures  are  effective to ensure that the  information  required to be
      disclosed  in the reports the Group files and submits  under the  exchange
      act is recorded, processed, summarized and reported as and when required.

(b)   Change in Internal  Controls There were no changes in the Group's internal
      controls or in the other  factors that could have  significantly  affected
      those  controls  subsequent  to  the  date  of  the  Group's  most  recent
      evaluation.


<PAGE>


                           PART II. OTHER INFORMATION


Item 1. Legal Proceedings

            None.

Item 2. Changes in Securities and Use of Proceeds.

            None

Item 3. Defaults Upon Senior Securities

            None.

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:

            Exhibit 31.1:  Section 302 Sarbanes Oxley Certification of the
                           Chief Financial Officer

            Exhibit 31.2:  Section 302 Sarbanes Oxley Certification of the
                           Chief Executive Officer

            Exhibit 32.1:  Section 906 Sarbanes Oxley Certification of both
                           the Chief Financial Officer and the Chief Executive
                           Officer

            (b) Reports on Form 8-K:

                None.


<PAGE>


                                   SIGNATURES


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


Dated:  May   10,  2004

                                            NEW DRAGON ASIA CORP.




                                            By:  /s/  Heng Jing Lu
                                                 -------------------------------
                                            Name:  Heng Jing Lu
                                            Title: Chief Executive Officer