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:
 June 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 June 25,  2004 was
45,061,242.

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
                                                               --------------------------
                                                                   JUNE 25,  DECEMBER 25,
                    A S S E T S                                        2004          2003
                                                                (Unaudited)
                                                               ------------  ------------
<S>                                                            <C>         <C>
Current Assets:
  Cash and cash equivalents                                    $        442  $      1,783
  Accounts receivable, net of allowance for doubtful accounts
  of $936 at June 25, 2004 and $993 at December 25, 2003              6,226         6,936
  Other receivables, deposits and prepayments                         1,612         1,282
  Inventories                                                         2,869         2,763
  Due from related companies                                          1,095           124
                                                               ------------  ------------
   Total current assets                                              12,244        12,888

Property, machinery and equipment, net                               16,879        17,471
Land use rights, net                                                  3,878         3,998
                                                               ------------  ------------
   Total assets                                                $     33,001  $     34,357
                                                               ============  ============

LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS' EQUITY

Current liabilities:
 Short-term borrowings                                         $      1,411  $      2,845
 Accounts payable                                                     4,195         4,565
 Other payables and accruals                                          2,384         1,234
 Taxes payable                                                        1,303           921
 Due to related companies                                               519         1,202
                                                               ------------  ------------
   Total current liabilities                                          9,812        10,767


Due to an immediate parent company                                        3           196
Due to joint venture partners                                             3         1,204
                                                               ------------  ------------
   Total liabilities                                                  9,818        12,167
                                                               ------------  ------------

Minority interest                                                       116            --
                                                               ------------  ------------
Stockholders' equity:
  Common stock, par value $0.0001; authorized -
  107,000,000 shares; issued and outstanding -
  45,061,242 shares at June 25, 2004 and
  December 25, 2003                                                       4             4
 Additional paid-in-capital                                           9,909         9,909
 Retained earnings                                                   13,154        12,277
                                                               ------------  ------------
   Total stockholders' equity                                        23,067        22,190
                                                               ------------  ------------

   Total liabilities, minority interest and
   stockholders' equity                                        $     33,001  $     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 OPERATIONS
                       (THOUSANDS, EXCEPT PER SHARE DATA)
                                  (UNAUDITED)


                                      THREE MONTHS ENDED      SIX MONTHS ENDED
                                      -------------------   -------------------
                                      JUNE 25,   JUNE 25,   JUNE 25,   JUNE 25,
                                        2004       2003       2004       2003
                                      -------------------   -------------------

Net sales                             $  8,547   $  5,478   $ 15,945   $ 12,026

Cost of goods sold                      (6,986)    (5,345)   (13,051)   (11,046)
                                      --------   --------   --------   --------
Gross profit                             1,561        133      2,894        980


Selling and distribution expenses         (235)      (248)      (624)      (490)

General and administrative
expenses                                  (464)      (439)    (1,125)      (672)
                                      --------   --------   --------   --------
Income (loss) from operations              862       (554)     1,145       (182)

Other income (expenses):
   Interest expense                        (33)       (68)       (72)      (128)
   Interest income                           1         56         13        108
   Other income                            113          6        441         31
                                      --------   --------   --------   --------
Income (loss) before provision for
income taxes                               943       (560)     1,527       (171)

Provision for income taxes                (412)       (29)      (658)      (102)
                                      --------   --------   --------   --------
Income (loss) before minority
interest                                   531       (589)       869       (273)

Minority interest                            8         --          8         --
                                      --------   --------   --------   --------
Net income (loss)                     $    539   $   (589)  $    877   $   (273)
                                      ========   ========   ========   ========
Basic and diluted earnings (loss)
per common share                      $  0.012   $ (0.014)  $  0.019   $ (0.007)
                                      ========   ========   ========   ========
Weighted average shares used
to compute basic and diluted
earnings (loss) per common share        45,061     40,911     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)


                                                               SIX MONTHS ENDED
                                                                  JUNE 25,
                                                              -----------------
                                                                2004      2003
                                                              -------   -------
Cash flows from operating activities:
 Net income (loss)                                            $   877   $  (273)
 Adjustments to reconcile net income (loss) to net cash
   provided by operating activities:
   Depreciation and amortization                                  614       712
   (Gain) loss on sale of machinery and equipment                 (15)       37
   Provision for doubtful accounts                                (57)       92
   Minority interest                                               (8)       --
   Changes in operating assets and liabilities:
     Accounts receivable                                          767       505
     Other receivables, deposits and prepayments                 (330)      237
     Inventories                                                 (106)      517
     Accounts payable                                            (370)      (55)
     Other payables and accruals                                1,150      (255)
     Taxes payable                                                382      (720)
                                                              -------   -------
Net cash provided by operating activities                       2,904       797
                                                              -------   -------
Cash flows from investing activities:
 Due from related companies                                      (973)      203
 Proceeds from sale of machinery and equipment                  2,266         8
 Purchases of property, machinery and equipment                (2,151)      (30)
                                                              -------   -------
Net cash provided by (used in) investing activities              (858)      181
                                                              -------   -------
Cash flows from financing activities:
 Proceeds from short-term borrowings                              602     1,807
 Payments on short-term borrowings                             (2,036)   (1,096)
 Due to related companies                                        (683)      (69)
 Net decrease in due to an immediate parent company              (193)   (2,095)
 Net increase (decrease) in due to joint venture partners      (1,201)      506
 Capital contribution from minority interest                      124        --
                                                              -------   -------
Net cash used in financing activities                          (3,387)     (947)
                                                              -------   -------
Net (decrease) increase in cash and cash equivalents           (1,341)       31

Cash and cash equivalents at the beginning of the period        1,783       628
                                                              -------   -------
Cash and cash equivalents at the end of the period            $   442   $   659
                                                              =======   =======

  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

         (SIX MONTH PERIODS ENDED JUNE 25, 2004 AND 2003 ARE 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

Longkou City           The PRC                RMB         55% (e)      Manufacture,
Longyuan Packing       March 1, 2004       2,280,000                    marketing and
Material Company                                                        distribution of
Limited                                                                 packing materials
("LCLPM")
</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  prorated  annual  fee to the
               Chinese  joint  venture  partner of $18,072 has been  included in
               general and  administrative  expenses for the periods  ended June
               25, 2004 and 2003.  The  initial  capital  contribution  has been
               included as a component of the due to joint  venture  partners in
               the consolidated balance sheets.

<PAGE>

         (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 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  prorated
               annual fees to the Chinese joint venture  partners of $38,655 and
               $39,157 have been included in general and administrative expenses
               for the periods ended June 25, 2004 and 2003,  respectively.  The
               initial capital  contributions  have been included as a component
               of the due to joint venture partners in the consolidated  balance
               sheets.

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

         (e)   LCLPM is a subsidiary of RD established in PRC. In March 1, 2004,
               RD  contributed  55% of the  registered  capital  to  LCLPM.  The
               minority  interest was separately  disclosed in the  consolidated
               balance sheets and consolidated statements of operations.


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 reporting period. Actual results could
         differ from those  estimates.  U.S.  GAAP differs from that used in the
         statutory financial  statements of the major operating  subsidiaries of
         the  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.

         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.

<PAGE>

NOTE  3  -  INVENTORIES

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

                                    June 25,   December 25,
                                        2004          2003
                                  (Unaudited)
                                   ---------     ---------
               Raw materials       $   1,104     $   1,648
               Finished goods          1,765         1,115
                                   ---------     ---------
                                   $   2,869     $   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  -  DISPOSAL  OF  DALIAN  FACTORY

         In May 2004,  the Company  entered into an agreement with and unrelated
         third party ("Purchaser") whereby the Purchaser acquired the assets and
         assumed  certain  liabilities of New Dragon Asia Food (Dalian)  Company
         Limited. The Company has recorded a gain of approximately $162,000 as a
         result of this transaction.



NOTE  5  -  EARNINGS  (LOSS)  PER  COMMON  SHARE  -  BASIC  AND  DILUTED

         Basic earnings  (loss) per common share ("EPS") is computed by dividing
         net income  allocable to common  stockholders  by the  weighted-average
         number of common shares  outstanding for the period.  Diluted  earnings
         (loss) per common 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 June 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 and diluted EPS was  45,061,242 and 40,911,242 for the six months
         ended June 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, one of the PRC subsidiaries  within the
         Group is 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 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.

<PAGE>

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:

<TABLE>
<CAPTION>
                                                                  June 25,     June 25,
                                                                      2004         2003
                                                                (Unaudited)  (Unaudited)
                                                                  --------     --------
                                                                (US $ '000)  (US $ '000)
<S>                                                                <C>          <C>
         Sale of finished goods to:
           Joint Venture Partner:
            Shandong Longfeng Group Company                        $     -      $   184
         Related Parties:
           Sanhe (Yantai) Food Company Limited                           -            2
           Penglai Jinhai Food Company Limited                           -           12
                                                                  --------     --------
                                                                         -          198
                                                                  --------     --------

         Purchase of raw materials from:
           Related Parties:
            Sanhe (Yantai) Food Company Limited                          -            8
            Longkou City Longfeng Soybean Food Co Limited                8            -
            Longkou City Longfeng Packing Manufacturing Factory         83          526
                                                                  --------     --------
                                                                        91          534
                                                                  --------     --------
</TABLE>

         The amounts due from  related  companies  are  unsecured,  non-interest
         bearing and repayable upon demand.



NOTE  8  -  ACQUISITION OF A FLOUR MILLER

         The Group entered into an asset  purchase  agreement on May 25, 2004 to
         purchase  property,  machinery and equipment,  and land use rights of a
         flour miller in Penglai,  Shandong province, P.R.C. for US$1.33 million
         cash. The purchase price has been allocated as follows (US$'000):

                  Property, machinery and equipment                     $  1,105
                  Land use rights                                            226
                                                                       --------
                                                                        $  1,331
                                                                       ========

<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  placed  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.

The Dalian plant was established  ten years ago and the facilities  needed to be
overhauled   completely   in  order  to  meet  the  latest   PRC   environmental
requirements.  In consideration of the costs that would be incurred and the past
performance  of  the  operation,  management  decided  to  cease  the  operation
particularly  in view of the fact that the local  market can be satisfied by the
Yantai factory.  After negotiation with an unrelated third party in May 2004, an
agreement  was signed  whereby  the  purchaser  acquired  the assets and assumed
certain  liabilities of New Dragon Asia Food (Dalian) Company Limited ("NDAFD"),
a PRC  company of which we owned 90% of its equity.  The Company has  recorded a
gain of  approximately  $162,000  as a result  of this  transaction.  Management
believes  that the disposal of the Dalian  operation  will improve the Company's
profitability in the future.

<PAGE>

The Group entered into an asset  purchase  agreement on May 25, 2004 to purchase
property,  machinery  and  equipment,  and land use rights of a flour  miller in
Penglai,  Shandong  province,  P.R.C.  for US$1.33 million cash. The acquisition
will expand the Group's  production  capacity  by  approximately  30 percent and
contribute  additional  sales in coming  years.  It currently  serves the north,
northeast and central plains regions of China.


RESULTS  OF  OPERATIONS

Six months ended June 25, 2004 compared to six months ended June 25, 2003

Total revenue

      Total revenue for the six months ended June 25, 2004 was $15.94 million as
compared to $12.03  million for the six months ended June 25, 2003,  an increase
of 32% over the  comparable  period last year.  The increase comes from improved
sales in our flour  business  and  additional  sales from the newly  established
packaging factory in Yantai.

Net income

      Net income for the six months ended June 25, 2004 was $877,000 as compared
to a net loss of $273,000 for the corresponding period last year, an increase of
$1,142,000.  The result was  mainly due to an  increase  in sales from the flour
segment  and the  improvement  in sales  from the  negative  effects of the SARS
outbreak last year.

General and administrative expenses

      General and administrative expenses for the six months ended June 25, 2004
increased by $452,502, to $1,124,910, compared to $672,408 for the corresponding
period  in  2003.  The  increase  was  mainly  due  to the  additional  expenses
attributable to the newly  established  packaging factory in Yantai and the fact
that  professional  expenses related to the Company had been 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 six months ended June 25, 2004
increased  by $133,508 to $623,775  compared to $490,267  for the  corresponding
period of the prior year.  The increase was attributed to the  establishment  of
the  packaging  factory  in  Yantai  and  the  increased   transportation  costs
associated  with more stringent  maximum weight loading  restrictions  for truck
shipments.

Minority interest

      Minority  interest of $8,000 was reported during the six months ended June
25, 2004 as compared to $0 during the six months ended June 25,  2003.  Minority
interest  reflects  the  minority  shareholder's  proportionate  interest in the
losses of Longkou City Longyuan Packing Material Company Limited.

Three months ended June 25, 2004 compared to three months ended June 25, 2003

Total revenue

      Total revenue for the three months ended June 25, 2004 was $8.5 million as
compared to $5.5 million for the three  months ended June 25, 2003,  an increase
of 56% over the comparable  period last year. The increase was  attributable  to
improved sales of flour,  together with the addition of the packaging factory in
Yantai in the second quarter of 2004.

Net income

      Net  income  for the three  months  ended June 25,  2004 was  $539,000  as
compared to a net loss of $589,000 for the  corresponding  period last year,  an
increase of $1,128,000.  The increase was primarily due to the improved sales of
flour.  The result was mainly due to an increase in sales from the flour segment
and the improvement in sales from the negative effects of the SARS outbreak last
year.

<PAGE>

General and administrative expenses

      General and  administrative  expenses  for the three months ended June 25,
2004  increased  by  $25,000,  to  $464,000,  compared  with  $439,000  for  the
corresponding  period in 2003. The increase was mainly due to an addition of the
factory in Yantai and the fact that professional expenses related to the Company
had been  previously  borne by the ultimate  holding  company in the group base,
such  expenses  are now borne by the  Company  itself.  The  addition of the new
established  factory  resulted  in $202,000 of  additional  expenses  which were
partially offset by the reduction in the allowance for doubtful  accounts in the
flour segment.

Selling and distribution expenses

      Selling and distribution expenses for the three months ended June 25, 2004
were $235,000 compared with $248,000 for the  corresponding  period in 2003. The
expenses  slightly  decreased  based  upon  certain  changes  in  the  Company's
marketing policies.

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, one of
the PRC subsidiaries  within the Group is 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 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.

Minority interest

      Minority  interest of $8,000 was  reported  during the three  months ended
June 25,  2004 as compared to $0 during the three  months  ended June 25,  2003.
Minority interest reflects the minority shareholder's  proportionate interest in
the losses of Longkou City Longyuan Packing Material Company Limited.

LIQUIDITY AND CAPITAL RESOURCES

      The Company's primary liquidity needs are to purchase inventories and fund
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  $442,000  as of June  25,  2004.  This
represents a decrease of  $1,341,000  from  December 25, 2003.  The decrease was
mainly due to the payment for the  acquisition  of assets for the Penglai  plant
and the purchase of assets for the Sanhe factory. Net cash provided by operating
activities for the six months ended June 25, 2004 was approximately  $2,904,000.
Net cash flows from the Company's  operating  activities are attributable to the
Company's income and changes in operating assets and liabilities.

      Accounts receivable decreased by 10% and accounts payable decreased by 8%,
from  December  25,  2003 to June 25,  2004.  There was a decrease  in  accounts
receivable  due to the  repayment  from  customers and the selling of the Dalian
factory in which the accounts  receivable were also acquired by the third party.
The Company  evaluates the allowance for doubtful  accounts 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.  Conversion of
<PAGE>

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
believed to have a current or future effect on the Company's financial position,
changes in  financial  position,  increase in 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

         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  the  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  controls
         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.

<PAGE>

(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

          On  May  14,  2004,   the  Company   held  its  Annual   Meeting  of
          Stockholders.  At the meeting, seven directors were elected based on
          the following votes:

          Name                      For            Against           Withheld
          ----                      ---            -------           --------
          Heng Jing Lu           44,404,534        44,500                -
          Li Xia Wang            44,404,534        44,500                -
          Ling Wang              44,404,534        44,500                -
          Zhi Yong Jiang         44,404,534        44,500                -
          De Lin Yang            44,404,534        44,500                -
          Qi Xue                 44,404,534        44,500                -
          Feng Ju Chen           44,404,534        44,500                -

          Additionally,  the  selection of Grobstein  Horwath & Company LLP as
          the Company's independent registered accountants for the year ending
          December  25, 2004 was  ratified  with  44,404,534  votes in favour,
          44,500 against and none withheld.

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: August 13, 2004

                                            NEW DRAGON ASIA CORP.



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