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UNITED STATES
SECURITIES AND 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
     
    For the quarterly period ended: September 25, 2004
     
(_)   TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
     
     

001-15046

Commission File Number:

 

 

 

 

 

 

NEW DRAGON ASIA CORP.

(Exact name of Registrant as specified in its charter)

 

 

 

 

FLORIDA

 

 88-0404114

 

 

 

(State or other jurisdiction of incorporation or organization)

 

 (IRS Employer Identification Number)

 

 

 

36/F, News Building

2 Shen Nan Zhong Road

Shenzhen, PRC, 518027

(Address of Principal Executive Offices)

 

(Zip Code)

 

 

 

(86 755) 2595-1100

(Registrant's telephone number, including area code)

 

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, 2004 was 45,061,242.

Transitional Small Business Disclosure Format (check one): Yes [_] No [X]


 
  -1-  
 

NEW DRAGON ASIA CORP.
  
FORM 10-Q
  
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 25, 2004
  
TABLE OF CONTENTS
  
     
Page
PART I:
FINANCIAL INFORMATION
    
       
ITEM 1.
Consolidated Financial Statements:
    
       
 
Consolidated Balance Sheets as of September 25, 2004 (unaudited) and December 25, 2003
 
3
       
 
Consolidated Statements of Income (unaudited) for the three and nine months ended September 25, 2004 and 2003
  
4
       
 
Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 25, 2004 and 2003
 
5
       
 
Notes to Consolidated Financial Statements (unaudited)
  
6
       
ITEM 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
  
8
       
ITEM 3.
Quantitative and Qualitative Disclosures About Market Risk
  
13
       
ITEM 4.
Controls and Procedures
  
14
       
PART II:
OTHER INFORMATION
    
       
ITEM 1.
Legal Proceedings
  
15
       
ITEM 2.
Changes in Securities and Use of Proceeds
  
15
       
ITEM 3.
Defaults Upon Senior Securities
  
15
       
ITEM 4.
Submission of Matters to a Vote of Security Holders
  
15
       
ITEM 5.
Other Information
  
15
       
ITEM 6.
Exhibits and Reports on Form 8-K
  
15
       
SIGNATURES
  
16
     
EXHIBITS
  
17


 
  -2-  
 


PART I: FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

NEW DRAGON ASIA CORP. AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS
 
(Amounts in thousands, except share data)

   
September 25,
2004
  
December 25,
2003
  
   
(Unaudited)
      
ASSETS
          
           
Current Assets:
              
Cash and cash equivalents
  
$
182
  
$
1,783
  
Accounts receivable, net of allowance for doubtful accounts of $1,249 at September 25, 2004 and $993 at December 25, 2003
    
6,202
    
6,936
  
Other receivables, deposits and prepayments
    
2,214
    
1,282
  
Inventories, net
    
2,980
    
2,763
  
Due from related companies
    
1,305
    
124
  
Total current assets
    
12,883
    
12,888
  
               
Property, machinery and equipment, net
    
16,637
    
17,471
  
Land use rights, net
   
3,850
    
3,998
  
Total assets
  
$
33,370
  
$
34,357
  
               
LIABILITIES AND STOCKHOLDERS' EQUITY
              
               
Current liabilities:
              
Short-term borrowings
  
$
327
  
$
2,845
  
Accounts payable
    
4,150
    
4,565
  
Other payables and accruals
    
2,409
    
1,234
  
Taxes payable
    
1,571
    
921
  
Due to related companies
    
477
    
1,202
  
Total current liabilities
    
8,934
    
10,767
  
               
Due to parent company
    
47
    
196
  
Due to joint venture partners
    
17
    
1,204
  
Total liabilities
    
8,998
    
12,167
  
               
Minority interest
    
113
    
—
  
Stockholders' equity:
              
Common stock, par value $0.0001; 107,000,000 shares authorized; 45,061,242 shares issued and outstanding at September 25, 2004 and December 25, 2003
    
4
    
4
  
Additional paid-in-capital
    
9,909
    
9,909
  
Retained earnings
    
14,346
    
12,277
  
Total stockholders’ equity
    
24,259
    
22,190
  
Total liabilities and stockholders' equity
 
$
33,370
  
$
34,357
  
 
The accompanying notes are an integral part of these consolidated financial statements.

 
  -3-  
 


 
NEW DRAGON ASIA CORP. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF INCOME
 
(Amounts in thousands, except per share data; unaudited)

 
   
Three months ended
September 25,
  
Nine months ended
September 25,
  
   
2004
  
2003
  
2004
  
2003
  
Net sales
  
$
9,886
  
$
8,194
  
$
25,831
  
$
20,220
  
Cost of goods sold
    
(7,958
)
  
(6,472
)
  
(21,009
)
  
(17,518
)
Gross profit
    
1,928
    
1,722
    
4,822
    
2,702
  
Selling and distribution expenses
    
(198
)
  
(263
)
  
(822
)
  
(753
)
General and administrative expenses
    
(686
)
  
(468
)
  
(1,811
)
  
(1,140
)
Income from operations
    
1,044
    
991
    
2,189
    
809
  
Other income (expenses):
                          
Interest expense
    
(1
)
  
(67
)
  
(73
)
  
(195
)
Interest income
    
—
    
60
    
13
    
168
  
Other income
    
492
    
19
   
933
    
50
  
Income before taxes
    
1,535
    
1,003
    
3,062
    
832
  
Provision for income taxes
    
(346
)
  
(217
)
  
(1,004
)
  
(318
)
Income before minority interests
    
1,189
    
786
    
2,058
    
514
  
Minority interest
    
3
    
—
    
11
    
—
  
Net income
  
$
1,192
  
$
786
  
$
2,069
  
$
514
  
Basic and diluted earnings per common share
  
$
0.03
  
$
0.02
  
$
0.05
  
$
0.01
  
Weighted average common shares outstanding
    
45,061
    
41,700
    
45,061
    
41,175
  


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


 
  -4-  
 

NEW DRAGON ASIA CORP. AND SUBSIDIARIES