NEW DRAGON ASIA (NYSE:NWD)

On April 15, 2011, the registrant received notification from Ms. Ling Wang that effective immediately, she resigned from her position as Chief Financial Officer of New Dragon Asia Corp. due to health reasons. There were no disagreements between Ms. Wang and the Company on any matter relating to the Company’s operations, policies or practices, which resulted in her resignation.

Effective April 18, 2011, the Board of Directors of the Company appointed Mr. Qi Xue, age 58, as Chief Financial Officer of the Company and accepted his resignation as a director of the Company. Prior to his appointment as Chief Financial Officer of the Company, Mr. Xue served as an independent non-executive director of the Company since March 2003. Mr. Xue was also a member of the audit committee. He graduated in 1987 from The Official Institute of Beijing Chemical Industry Management with a diploma of higher education specializing in industrial accounting. He is an associate member of The Chinese Institute of Certified Public Accountants.

The Company believes that it has enough cash available and expects to have enough income and cash flow from operations to operate for the next 12 months.

OPERATION PLAN

Our strategy for growth is to capitalize on our strong brand name and pursue strategic partnerships and acquisitions that will enhance our sales. The following are some of the key elements of our business growth strategy:

• Acquire additional locations to increase our production capacity
• Build strategic alliances with multinational food groups to enhance product range and capitalize on our China distribution network

Plans for expansion of the existing plants are expected to be funded through current working capital from ongoing sales. Acquisitions of plants will require an additional infusion of funds in the form of debt or equity, or a combination of both. However, there can be no assurance these funds will be available

Net revenue for the year ended December 25, 2010 was $27.37 million, an increase of $4.15 million, or 17.87%, as compared to $23.22 million for the prior year. Revenues increased in instant noodle and flour segments by 59% and 20% as the global economy began to recover and the demand for our products gradually strengthened. However, revenue decreased in soybean segment by 12%, as the Company is gradually ceasing the production of lower-margin products and planning to concentrate on high-margin products, such as soybean-protein powder in the future. During the transition period, revenue of soybean segment is expected to be temporarily lower.

During their appointment on December 20, 2010 and through March 8, 2011, there have been some disagreements within the meaning of Item 304(a)(1)(iv) of Regulation S-K between UHY and us over the accounting treatment of land use right, constructions in progress and inventories in previous years.  The legal title of a land use right being processed to be transferred from a third party to the Company in 2006 was found unsuccessful in September 2010 and the owner of the land and the Company reached an agreement on September 30, 2010 that the monies paid for acquisition of the land previously amounted to RMB 14,500,000 as at December 25, 2009 would be regarded as a loan to the owner of the land with interest of 7.2% per annum accrued from the date of payment in May 2006, and simultaneously an annual rental charge of approximately RMB 920,000 will be imposed for the land occupied by the Company with effect from May 2006.  The amortization for the land use right amounted to approximately RMB 2,700,000 made in previous years was also reversed in the financial statements by the Company for the year ended December 25, 2010.  In addition, as agreed between the Company and the independent contractor for building the plants on the land on September 30, 2010, the payments made for building the constructions in progress amounted to approximately RMB 16,400,000 as at December 25, 2009 will be also regarded as a loan to the contractor with interest of 7.2% per annum accrued from the date of payment in April 2007, and an annual rental charge of approximately RMB 1,100,000 to the contractor for the use of plants will be imposed with effect from May 2007 as the legal title of the land could not be transferred to the Company and the contractor assumed the control and ownership of all constructions in progress pertaining to the land. UHY has concluded that the above event would materially impact the fairness and reliability of previously issued audit reports.  However, the Company does not consider necessary for the restatement of the financial statements for the year ended December 25, 2009.  Moreover, UHY could not obtain sufficient evidence regarding the existence and ownership of inventories amounted to approximately RMB 17,000,000 as at December 25, 2010 and 2009.   The Company disagreed to the writing off of these inventories in the current year and the restatement of 2009 figures which UHY considers necessary.

During this engagement period, in addition to the above disagreement mentioned which would constitute a “reportable event" as described in Item 304(a)(1)(v) of Regulation S-K, UHY reported that although the Company had provided all the year-end bank statements, the Company and its subsidiaries could not provide the full set of bank statements for each month during the year 2010 to UHY for performing the necessary audit procedures and testings in connection with completing its audit.  Due to the accountant's resignation, UHY did not so expand the scope of its audit or conduct such further investigation.  Other than the above, there were no other reportable events within the meaning of Item 304(a)(1)(v) of Regulation S-K for the fiscal year ended December 25, 2010.

On February 4, 2011, New Dragon Asia Corp. received a notice from NYSE Amex, LLC indicating that the Exchange intends to suspend trading in the common stock of the Company and to apply to the Securities and Exchange Commission to delist the Company’s common stock because the Company is not in compliance with certain of the Exchange’s continued listing standards.  Furthermore, because of the nature and severity of the continued listing deficiencies, the Exchange has indicated that it will truncate the procedures regarding continued listing evaluation and follow-up as specified in Section 1009 of the NYSE Amex Company Guide (the “Company Guide”).
 
The staff of the Exchange (the “Staff”) has informed the Company that it is not in compliance with the following continued listing standards:

• Sections 132(e) and 1003(d) of the Company Guide, in that the Company failed to adequately respond to the Exchange’s information requests;
  
• Section 704 of the Company Guide, in that the Company failed to hold an annual meeting during the 2010 fiscal year;
  
• Section 301 of the Company Guide, in that the Company has failed to provide a supplemental listing application in relation to all issued shares that have not been previously authorized by the Exchange;
  
• Section 1003(f)(v) of the Company Guide, in that the Exchange informed the Company on October 5, 2010 that the selling price of the Company’s Class A common stock was abnormally low and that the selling price continues to be abnormally low and it is unclear when the Company will be able to hold a shareholders’ meeting to obtain the authorization for a reverse stock split to cure this deficiency; and
  
• Section 1003(f)(iii) of the Company Guide, in that the Company or its management has engaged in operations, which, in the opinion of the Exchange, are contrary to the public interest by invalidly issuing approximately 19.5 million shares (the “Excess Shares”) in excess of the 100 million shares authorized for issuance under the Company’s certificate of incorporation.  The Company has failed to provide a satisfactory response as to how and when it will resolve the problem of the Excess Shares as it is unclear when the Company will be able to hold its annual meeting and whether the proposed ratification of the issuance of the Excess Shares at that meeting would be effective under Florida law
  

New Dragon Asia Corporation announced that on October 5, 2010 it received a letter from NYSE Amex LLC (“AMEX”) indicating that it failed to satisfy certain of AMEX’s continued listing standards. Specifically, Section 1003(f)(v) of the NYSE Amex Company Guide provides that AMEX may delist a security when it sells for a substantial period of time at a low price per share, if the issuer shall fail to effect a reverse split of such shares within a reasonable time after being notified that AMEX deems such action to be appropriate under all the circumstances.