<PAGE>

                 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:
 September  25,  2003
                              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 September  25, 2003 was
44,211,342.

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
                                                        -------------------------
                                                        SEPTEMBER 25, DECEMBER 25,
                    A S S E T S                                2003         2002
                                                          (Unaudited)
                                                        ------------  -----------
<S>                                                     <C>            <C>
Current Assets:
  Cash and cash equivalents                              $    2,135   $      628
  Restricted cash                                               181          181
  Accounts receivable, net of allowance for doubtful accounts
  of $493 at September 25, 2003 and $415 at December 25, 2002 8,408        7,328
  Other receivables, deposits and prepayments                   754        1,066
  Inventories                                                 3,128        5,202
  Due from related companies                                  2,177        2,499
                                                          ----------   ----------
   Total current assets                                      16,783       16,904

Property, machinery and equipment, net                       18,402       19,340
Land use rights, net                                          4,026        4,110
                                                          ----------   ----------
   Total assets                                          $   39,211   $   40,354
                                                          ==========   ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
 Short-term borrowings                                   $    4,325   $    3,614
 Accounts payable                                             4,608        4,728
 Other payables and accruals                                  1,856        1,282
 Taxes payable                                                  922          889
 Due to related companies                                     1,321          802
                                                          ----------   ----------
   Total current liabilities                                 13,032       11,315

Due to an immediate parent company                              541        5,782
Due to joint venture partners                                 6,032        5,571
                                                          ----------   ----------
   Total liabilities                                         19,605       22,668
                                                          ----------   ----------
Stockholders' equity:
  Common stock, par value USD0.0001; authorized -
  107,000,000 shares, issued and outstanding -
  44,211,342 at September 25, 2003 and
  40,911,342 at December 25, 2002                                 4            4
 Additional paid-in-capital                                   9,538        8,132
 Retained earnings                                           10,064        9,550
                                                          ----------   ----------
   Total stockholders' equity                                19,606       17,686
                                                          ----------   ----------

   Total liabilities and stockholders' equity            $   39,211   $   40,354
                                                          ==========   ==========
</TABLE>

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

                                       1
<PAGE>
                     NEW DRAGON ASIA CORP. AND SUBSIDIARIES

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


<TABLE>
<CAPTION>
                                         FOR THE                  FOR THE
                                   THREE MONTHS ENDED        NINE MONTHS ENDED
                                     SEPTEMBER 25,             SEPTEMBER 25,
                                  ----------------------- -----------------------
                                      2003       2002        2003         2002
                                  ----------------------- -----------------------

<S>                                 <C>         <C>        <C>         <C>
Net sales                           $ 8,194     $ 8,443    $ 20,220    $ 22,834

Cost of goods sold                   (6,472)     (7,167)    (17,518)    (18,789)
                                     -------     -------    --------    --------
Gross profit                          1,722       1,276       2,702       4,045


Selling and distribution expenses      (263)      (224)        (753)       (780)

General and administrative
expenses                               (468)      (227)      (1,140)       (654)
                                     -------     -------    --------    --------
Income from operations                  991        825          809       2,611

Other income and expenses:
   Interest expense                     (67)       (48)        (195)       (197)
   Interest income                       60         52          168         143
   Other income                          19          -           50           -
                                     -------     -------    --------    --------
Income before provision for
income taxes                          1,003        829          832       2,557

Provision for income taxes             (217)      (104)        (318)       (419)
                                     -------     -------    --------    --------
Net income                          $   786    $   725     $    514    $  2,138
                                     =======     =======    ========    ========
Basic and diluted earnings
per common share                    $ 0.02    $   0.02     $    0.01   $   0.05
                                     =======     =======    ========    ========
Weighted average shares used
to compute basic and diluted
net income per common share           41,700     40,911      41,175      40,911
                                     =======     =======    ========    ========
</TABLE>

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

                                       2
<PAGE>
                     NEW DRAGON ASIA CORP. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (THOUSANDS)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                          NINE  MONTHS  ENDED
                                                             SEPTEMBER 25,
                                                       -------------------------
                                                            2003         2002
                                                       ------------ ------------
<S>                                                      <C>         <C>
Cash flows from operating activities:
 Net income                                              $     514   $  2,138
 Adjustments to reconcile net income to net cash
   provided by operating activities:
   Amortization                                                 84         83
   Depreciation of property, machinery and equipment           982      1,129
   Loss on disposal of machinery and equipment                  23          2
   Provision for bad debts                                      78          5
   Changes in assets and liabilities:
     Accounts receivable                                     1,158     (1,654)
     Other receivables, deposits and prepayments               312       (501)
     Inventories                                             2,074        321
     Accounts payable and accrued liabilities                  454      2,063
     Taxes payable                                              33        629
                                                          ---------   --------
Net cash provided by operating activities                    3,396      4,215
                                                          ---------   --------
Cash flows from investing activities:
 Due from related companies                                    322       (783)
 Due to related companies                                      519        (53)
 Decrease in investment                                          -         72
 Proceeds from sale of machinery and equipment                  11          4
 Purchases of property, machinery and equipment                (78)      (250)
                                                          ---------   --------
Net cash provided by (used in) investing activities            774     (1,010)
                                                          ---------   --------
Cash flows from financing activities:
 Issuance of common stock                                    1,406          -
 Proceeds from short-term borrowings                         2,771      3,735
 Payments on short-term borrowings                          (2,060)    (4,277)
 Net decrease in due to an immediate parent company         (5,241)    (2,091)
 Net increase (decrease) in due to joint venture partners      461       (310)
                                                          ---------   --------
Net cash used in financing activities                       (2,663)    (2,943)
                                                          ---------   --------
Net increase in cash and cash equivalents                    1,507        262

Cash and cash equivalents at the beginning of the period       628      1,293
                                                          ---------   --------
Cash and cash equivalents at the end of the period       $   2,135   $  1,555
                                                          =========   ========
</TABLE>

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

                                       3
<PAGE>
                     NEW DRAGON ASIA CORP. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(ALL INTERIM  INFORMATION  RELATING TO THE THREE- AND  NINE-MONTH  PERIODS ENDED
SEPTEMBER 25, 2003 AND 2002 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  principal
         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  own 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.

         Upon the closing of the share exchange, Max Rutman, Nestor Lagos, Pedro
         Sayes and Oscar  Cornejo  resigned  from the board of directors  and on
         December 14, 2001 Xue Jun Song,  Man Fai Leung,  Shu Hua Zhang and Wing
         Leung  Lai  became  members  of  Bio-Aqua's  board  of  directors.  The
         directors then elected Wing Leung Lai as the Chief  Financial  Officer,
         Shu Hua Zhang as the  Deputy  General  Manager  and Xue Jun Song as the
         Chief Executive Officer.

         As  conditions  of the  Exchange  Agreement,  the  Company  amended its
         Articles of Incorporation to :

         1)       Change the name of the Company to New Dragon Asia Corp.
         2)       Convert all the previously existing Class A and Class B common
                  stock into a single class of common stock
         3)       Increase its authorized capital stock to 107,000,000 shares.
         4)       Max Rutman (through his ownership  interest in Flagship Import
                  Export  LLC) and Atik  S.A.,  owners of all of the  previously
                  existing 1,700 000 shares of the Class B common stock,  agreed
                  to convert their Class B shares to Class A common stock.

         In connection with the terms and provisions of the Exchange  Agreement,
         Bio-Aqua  issued  1,335,912  shares  of  restricted   common  stock  to
         investment  advisors and attorneys in connection with services rendered
         to  effectuate  the exchange of shares.  At the date of issuance of the
         shares,  the AMEX  market  quotation  of the stock was $3.00 per share.

                                       4
<PAGE>

         NDAC  has  included  these  costs  approximating  $3,134,000  in  other
         expenses in the December 25, 2001 statements of consolidated operations
         and  comprehensive  income,  computed  utilizing a 20%  discount of the
         above AMEX market quotation due to the restricted nature of the stock.

         The Group is subject to, among others, the following operating risks:

         COUNTRY RISK - As all of the Group's  operations  are  conducted in the
         PRC,  the Group is subject to special  considerations  and  significant
         risks  not  typically  associated  with  companies  operating  in North
         America and Western Europe.  These include risks associated with, among
         others,  the  political,  economic and legal  environments  and foreign
         currency  exchange.  The Group's  results may be adversely  affected by
         changes in the  political  and  social  conditions  in the PRC,  and by
         changes in governmental  policies with respect to laws and regulations,
         anti-inflationary  measures, currency conversion and remittance abroad,
         and rates and methods of taxation, among other things.

         In  addition,  all of the Group's  revenue is  denominated  in Renminbi
         ("RMB") which must be converted into other currencies before remittance
         out of the PRC. Both the conversion of RMB into foreign  currencies and
         the remittance of foreign  currencies  abroad require  approvals of the
         PRC government.

         OPERATING  RISK  - The  Group  conducts  its  manufacturing  and  sales
         operations  through joint  ventures  established  between the Group and
         certain PRC parties. Any deterioration of these strategic relationships
         may have an adverse effect on the operations of the Group.

         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>

                         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

</TABLE>


                                       5
<PAGE>

         (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  September 25,
                  2003 and 2002.

         (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 minority  interest  component has been
                  included  with  General and  Administrative  expenses  for the
                  periods ended September 25, 2003 and 2002.

NOTE  2  -  BASIS  OF  PRESENTATION

         The   unaudited   consolidated   financial   statements   include   the
         consolidated financial statements of MC and its subsidiary (NDAFLY), RD
         and its subsidiary  (NDAFY),  NP and its subsidiary  (NDAFD) and KG and
         its subsidiary  (SNDAF),  as they are enterprises  controlled by NDAFL.
         All  significant   intra-group  balances  and  transactions  have  been
         eliminated in consolidation.

         The  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,
         2002 of New  Dragon  Asia  Corp.  and  Subsidiaries,  as filed with the
         Securities and Exchange Commission. The December 25, 2002 balance sheet
         was derived from audited consolidated  financial  statements,  but does
         not include all disclosures required by U.S. GAAP.


                                       6
<PAGE>

         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 (in thousands):

                               September 25,  December 25,
                                       2003          2002
                                   ---------     ---------
               Raw  materials      $  1,750      $  2,981
               Finished  goods        1,378         2,221
                                   ---------     ---------
                                   $  3,128      $  5,202
                                   =========     =========

NOTE  4  - ISSUANCE OF COMMON STOCK

         The  Company  closed  on a  private  placement  with a select  group of
         institutional  investors (the  "Purchasers")  on September 4, 2003. The
         Company  sold  3,300,000  shares  of its  Class A common  stock  for an
         aggregate  purchase  amount  of  $1,650,000  or $0.50  per  share.  The
         Purchasers  of the  Class A common  stock  were also  issued  five year
         warrants  to purchase up to  1,650,000  shares at an exercise  price of
         $0.99 per share.

         The proceeds from this offering were originally intented for use in the
         acquisition  of an entity the Company had identified and was conducting
         due diligence. Upon completion of due diligence, the Company choose not
         to acquire the entity and has now decided to utilize the  proceeds  for
         working capital needs.

         The securities  were offered to accredited  investors in reliance on an
         exemption from the  registration  requirements of the Securities Act of
         1933,  as  amended  (the  "Securities  Act").  In  connection  with the
         offering,  New Dragon  Asia has  agreed,  subject to certain  terms and
         conditions,  to file a registration  statement under the Securities Act
         covering the resale of the shares  purchased  and shares  issuable upon
         exercise of the warrants.

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  September  25,  2003 and 2002,  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 41,175,342 and
         40,911,342  for the nine  months  ended  September  25,  2003 and 2002,
         respectively.  The weighted-average number of common shares outstanding
         for computing  basic EPS was  41,700,472  and  40,911,342 for the three
         months ended September 25, 2003 and 2002, 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.


                                       7
<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>
                                                          09/25/2003   09/25/2002
                                                          (US $ '000)  (US $ '000)
<S>                                                               <C>          <C>
         Sale of finished goods to:
           Joint Venture Partner:
            Shandong Long Feng Group Company                      184          121
           Related Parties:
             Shandong Long Feng Penglai Flour Company Limited       -            2
             Sanhe (Yantai) Food Company Limited                    2            -
             Penglai Jinhai Food Company Limited                   12          237
                                                             ----------------------
                                                                  198          360
                                                             ----------------------

         Purchase of raw materials from:
           Joint Venture Partner:
             Shandong Long Feng Group Company                        -           5
           Related Parties:
             Sanhe (Yantai) Food Company Limited                     8          19
             Shandong Long Feng Penglai Flour Company Limited (1)    -          35
             Ningbo Hai Fu Sheng Penglai Jinhai Food Co Ltd          8           -
             Longkou City Longfeng Soybean Food Co Limited           1           -
             Longkou City Long Feng Packing Manufacturing Factory  913           -
             Longkou City Long Feng Colour Printing Packing Factory  -         514
             Longkou City Long Feng Cartoon Printing Packing Factory -         369
                                                             ----------------------
                                                                   930         942
                                                             ----------------------
</TABLE>

NOTE  8  -  CLOSURE  OF  OPERATIONS

         There was a closure of a  subcontracted  factory in Xinxiang in January
         2003 due to the end of the  subcontracting  agreement.  Total assets of
         the Xinxiang factory were  approximately  $33 thousand and $26 thousand
         transferred  to New Dragon  Asia  Flour  (Yantai)  Co Ltd and  Xinxiang
         Guoliang Flour Company Limited,  the lessor of the factory. The rest of
         the assets of the  factory,  in the amount of $27  thousand,  have been
         written off.

         Due to the  negative  effects of SARS,  the Company  closed its Xinxian
         factory  in  May  2003.  Fixed  assets  of  the  Xinxian  factory  were
         approximately  $44 thousand,  of which $26 thousand were transferred to
         New Dragon Asia Flour (Yantai)  Company  Limited and the Taian factory.
         Approximately  $8  thousand  of the fixed  assets were sold to Shandong
         Long Feng Flour Company  Limited,  a related entity,  and the remaining
         $10  thousand  were  written  off.   Inventory  and  related  packaging
         materials amounting to $45 thousand have been written off to operations
         for period ended June 25,  2003.  The Company also charged $30 thousand
         of penalties and taxes  related to the  termination  of the lease,  $10
         thousand  of  salaries  and  severance  pay and $28  thousand  of other
         operating expenses to operations.

NOTE  9  -  SUBSEQUENT EVENT

         A  second  private  placement  with a  select  group  of  institutional
         investors closed on October 7, 2003. The Company sold 850,000 shares of
         its Class A common stock for an aggregate  purchase  amount of $425,000
         or $0.50 per share.  The  Purchasers  of the Class A common  stock were
         also  issued five year  warrants  to  purchase up to 425,000  shares of
         common stock at an exercise price of $0.98 per share.  This offering is
         subject  to the same  terms and  conditions  as the  September  4, 2003
         private placement (Note 4).

                                       8
<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. The forward-looking statements contained herein are
subject to certain risks and  uncertainties  that could cause actual  results to
differ  materially  from  those  reflected  in the  forward-looking  statements.
Factors that might cause such a difference include, but are not limited to those
discussed in this section.  Readers are cautioned not to place undue reliance on
these forward-looking statements, which reflect management's analysis only as of
the date hereof.  The Company  undertakes no obligation to publicly revise these
forward-looking  statements to reflect events or circumstances  that arise after
the date thereof.  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/A for the fiscal year ended
December 25, 2002, the Quarterly Reports on Form 10-QSB 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

New Dragon Asia Corp.,  formerly Bio-Aqua Systems,  Inc., a Florida  corporation
(the  "Company"),  was  incorporated  in March 1999.  On December 13,  2001,  we
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"),  we 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, in exchange for 37,963,263 shares of common
stock of the Company. At the closing,  the Company transferred all of the assets
of the Company  immediately  prior to the Closing to Mr.  Rutman and Mr.  Rutman
assumed all of the liabilities associated with the transferred assets.

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.  The
resulting  exchange gains or losses are credited or charges to the  consolidated
statements of operations.  Currency translation adjustments arising from the use
of different  exchange rates from period to period are included in comprehensive
income.

PLAN  OF  OPERATIONS

Our  current  strategy  is twofold:  (1) to 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.

                                       9
<PAGE>

RESULTS  OF  OPERATIONS

Nine months ended September 25, 2003 compared to nine months ended September 25,
2002
--------------------------------------------------------------------------------

Net sales

         Total revenue for the nine months ended  September 25, 2003 was USD20.2
million as compared  to USD22.8  million,  a decrease of 11% for the  comparable
period last year.  Management  believes  that the SARS  outbreak  had a negative
impact on our business. However, as the epidemic has been contained,  management
believes that our business will return to at least the pre-SARS levels.


Net  income

         Net  income  for the first  nine  months of 2003  decreased  from $2.14
million for the  corresponding  period last year to $0.51  million.  The results
were  adversely  affected  by the  deterioration  in  consumer  demand on retail
commodities  caused by the widespread  public concerns over the outbreak of SARS
during the period from March to June.


SARS  Effect
The outbreak of SARS negatively impacted our business as follows:

1) Blockage of Distribution Network
         As our major  markets are in rural  areas,  the  transportation  of our
         products was adversely  affected as some  villagers  tried to block the
         roads and set up their own  quarantine  areas to prevent  the spread of
         SARS.

2) Incurred Additional Operating Expenses
         Manufacturing  expenses were increased because additional expenses were
         incurred  for  preventative  steps  related  to SARS such as using more
         hygienic products.

3) Sales and Promotional Activities Halted
         During that period, the provincial  governments  imposed strict control
         on citizens  traveling.  Our staff was also prohibited from leaving the
         factory area. These  restrictions  affected our sales  activities,  and
         promotional events of our products were also cancelled.

4) Deterioration in Consumer Demand
         As consumers  were reluctant to go out, they had more time available at
         home to prepare  their meals  resulting in less demand for  convenience
         food such as instant noodles.


Administrative  and  general  expenses

         Administrative and general expenses for the nine months ended September
25, 2003 increased by USD468 thousand to USD1,140  thousand,  compared to USD654
thousand for the  corresponding  period in 2002.  The increase was mainly due to
expenses related to the closure of two  sub-contracting  factories  resulting in
the write off of inventory  and  deferred  expenses.  The  Xinxiang  factory was
closed due to the expiry of the contract.  The Xinxian factory was closed due to
the sudden  decrease in demand in the SARS  period.  The closure was designed to
help the Company utilize its internal  resources more efficiently.  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 nine months ended September
25, 2003 were USD753  thousand,  which was comparable to USD780 thousand for the
corresponding  period of the prior year. During the current period,  the Company
encountered  abrupt  disruption of its sales caused by the outbreak of the SARS.
Thus, selling and distribution expenses decreased accordingly.


                                       10
<PAGE>

Three months ended  September 25, 2003 compared to three months ended  September
25, 2002
--------------------------------------------------------------------------------

Net  sales

         Net Sales for the second  quarter of 2003  decreased  slightly by 3% to
USD8.19  million  compared to USD8.44 million for the  corresponding  quarter of
2002.  The  Company  is  recovering  from the  effect  of SARS as the net  sales
increased nearly 50% to USD8.19 million for the quarter ended September 25, 2003
compared to only USD5.48  million for the last quarter ended June 25, 2003.  The
Company is expecting better sales performance by the end of this year.


Net  income

         The  Company  recorded a net income of  USD0.79  million  for the third
quarter of 2003 as compared to USD0.73 million for the corresponding  quarter of
2002. The change in sale of product mix of flour products has improved the gross
profit margin of the Company.


Administrative  and  general  expenses

         Administrative  and general expenses increased from USD227 thousand for
the third  quarter  of 2002 to USD468  thousand  for the third  quarter of 2003,
mainly due to  recognition  of the  professional  expenses  of the  Company  and
additional  provision  for  receivables  in Dalian.  The  professional  expenses
related to the Company were previously  borne by the ultimate holding company in
group base but from this quarter period, such expenses were borne by the Company
itself.

Selling  and  distribution  expenses

         Selling and  distribution  expenses  increased from USD224 thousand for
the third quarter of 2002 to USD263 thousand for the  corresponding  period this
year.  The increase was  attributable  to additional  shipping costs incurred on
export sales which commenced in the current year.


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
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.



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 USD2.1 million as of September 25, 2003.
This  represents  an increase of USD580  thousand from  September 25, 2002.  The
increase was mainly due to proceed  from the issuance of 3,300,000  common stock
and five year warrants to purchase 1,650,000 shares of common stock on September
4, 2003.  The Company has closed on a private  placement  with a select group of
institutional  investors  with gross proceeds of USD1.65  million.  The proceeds
from this offering were  originally  intented for use in the  acquisition  of an
entity the  Company  had  identified  and was  conducting  due  diligence.  Upon
completion of due  diligence,  the Company  choose not to acquire the entity and
has now decided to utilize the  proceeds  for working  capital  needs.  Net cash
provided by operating  activities  for the nine months ended  September 25, 2003
was  approximately  USD3.4  million  as  compared  to net  cash  generated  from
operating  activities  of  approximately  USD4.2  million for the  corresponding
period in 2002.  Net cash  flows from the  Company's  operating  activities  are
attributable  to the  Company's  income  and  changes  in  operating  assets and
liabilities.

                                       11
<PAGE>

         Accounts  receivable  increased by 14.7% and accounts payable decreased
by 2.5%, from December 25, 2002 to September 25, 2003.  There was an increase in
accounts receivable due to the additions of new 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, 2002.
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.

See, Part II, Item 2.

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.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company  does not have any market risk with respect to such factors
as commodity prices,  equity prices, and other market changes that affect market
risk sensitive investments.

         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.

         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  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.


                                       12
<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.

                                       13
<PAGE>

                           PART II. OTHER INFORMATION


Item  1.          Legal  Proceedings

                  None.

Item  2.          Changes  in  Securities  and  Use  of  Proceeds.

                  The Company sold 3,300,000  shares of its Class A common stock
                  and five year warrants to purchase  1,650,000 shares of common
                  stock through a private placement closed on September 4, 2003.

                  There was a secong  placement on October 7, 2003.  The Company
                  sold 850,000 shares of its Class A common stock and five years
                  warrants to purchase 425,000 shares of common stock.

                  The  proceeds  from  these  offerings  will be used as working
                  capital of the Company.

                  The  securities  were sold  pursuant to an exemption  from the
                  registration  requirements  of the  Securities Act of 1933, as
                  amended, under Section 4(2)  thereof.  The Company has filed a
                  registration covering the resale of the shares of common stock
                  including  shares  issuable  pursuant  to the  exercise of the
                  warrants.  The  registration  statement  became  effective  on
                  November 4, 2003.  The  Company  paid to the  placement  agent
                  aggregate commissions of USD214 thousand.

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.

                                       14
<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:  November 7,  2003
                                            NEW  DRAGON  ASIA  CORP.


                                            By:  /s/  Wing  Leung  Lai
                                                 -------------------------------
                                            Name:  Wing  Leung  Lai
                                            Title: Chief Financial Officer


                                       15