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


                                  FORM 10-KSB


(Mark One)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     For the fiscal year ended March 31, 2003

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

     For the transition period from _____ to _______


                         Commission file number 0-27845


                            VEGA-ATLANTIC CORPORATION
        _________________________________________________________________
        (Exact name of small business issuer as specified in its charter)


         COLORADO                                                 84-1304106
_______________________________                              ___________________
(State or other jurisdiction of                                (I.R.S. Employer
incorporation of organization)                               Identification No.)


                       435 Martin Street, Suite 2000
                         Blaine, Washington 98230
                    ________________________________________
                    (Address of Principal Executive Offices)


                                 (360) 332-3823
                           ___________________________
                           (Issuer's telephone number)


                                       n/a
            ____________________________________________________
            (Former name, former address and former fiscal year,
                         if changed since last report)


     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.


                                 Yes [X] No [ ]


     Check here if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this Form, and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

     State the issuer's revenues for its more recent fiscal year (ending March
31, 2003): $ -0-.

     State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was sold, or the average bid and asked prices of such common equity, as
of March 31, 2003: $88,286.20.

<PAGE>

     State the number of shares outstanding of each of the issuer's classes of
common equity, as of the most practicable date:

             Class                               Outstanding as of June 23, 2003

Common Stock, $.00001 par value                            1,106,778*

*Total issued and outstanding shares of Common Stock has been reduced in
accordance with a reverse stock split of one-for-twenty effected on
approximately April 2, 2003.

<PAGE>

                                      INDEX

                                                                            Page


ITEM 1. DESCRIPTION OF BUSINESS                                                3

ITEM 2. DESCRIPTION OF PROPERTIES                                             18

ITEM 3. LEGAL PROCEEDINGS                                                     18

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                   20

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER                      21
           MATTERS

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN                          25
           OF OPERATION

ITEM 7. FINANCIAL STATEMENTS                                                  33

        BALANCE SHEET                                           F-2

        STATEMENTS OF OPERATIONS AND                            F-3
           COMPREHENSIVE LOSS

        STATEMENT OF STOCKHOLDERS' DEFICIENCY             F-4 - F-5

        STATEMENTS OF CASH FLOWS                          F-6 - F-7

        NOTES TO FINANCIAL STATEMENTS                           F-8

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS OF                      34
           ACCOUNTING AND FINANCIAL DISCLOSURE

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND                          35
           CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a)
           OF THE EXCHANGE ACT

ITEM 10.EXECUTIVE COMPENSATION                                                37

ITEM 11.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS                       39
           AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

ITEM 12.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                        40

ITEM 13.EXHIBITS AND REPORTS ON FORM 8-K                                      41

ITEM 14. CONTROLS AND PROCEDURES                                              41

SIGNATURES                                                                    42

<PAGE>

ITEM 1. DESCRIPTION OF BUSINESS

         Vega-Atlantic Corporation, a Colorado corporation (the "Company"),
currently trades on the OTC Bulletin Board under the symbol "VGAC" and the
Frankfurt Stock Exchange under the symbol "VGA" (WKN: 936302). The Company has
previously sought to develop a diversified international resources exploration,
development and production program, and was previously engaged in the business
of minerals exploration, acquisition and development within the United States
and worldwide. Management of the Company currently has an investment opportunity
and business acquisition under review and the Company may, subject to due
diligence, consummate the transaction. Depending on the outcome of the
investment opportunity and acquisition under review, the Company may continue to
assess, or proceed into business opportunities outside the resource sector.

         The Company's principal place of business is located at 435 Martin
Street, Suite 2000, Blaine, Washington 98230. Its telephone number is
360.332.3823 and its facsimile number is 360.332.1643.

CURRENT BUSINESS OPERATIONS

POTENTIAL ACQUISITION OF TRANSAX LIMITED

         The Board of Directors of the Company recently approved the
execution of an Agreement in Principle dated June 19, 2003 (the "Agreement"), as
entered into among the Company, Transax Limited, a Colorado corporation
("Transax"), and certain shareholders of Transax. The Agreement, which is
presently subject to standard conditions precedent including, without
limitation, prior Board of Directors' and shareholders' ratification, due
diligence and the negotiation and execution of a formal agreement evidencing the
same, among others, is expected to be formalized and consummated before the end
of August of 2003.

         In accordance with the terms and conditions of the proposed Agreement,
and again subject to numerous conditions precedent: (i) Transax is expected to
become a wholly-owned subsidiary of the Company through the merger of Transax
with a wholly-owned subsidiary of the Company; (ii) the Company is expected to
change its name and, as a result, its trading symbol, to reflect the business
concerns of Transax; and (iii) the Company is expected to adopt and implement a
new stock option plan for key personnel of the Company. In conjunction with the
terms and conditions of the proposed Agreement, the Company's resulting
business, upon consummation of the Agreement, will be comprised of Transax's
business assets at that time, which shall include all of the then business
assets of Transax's wholly-owned subsidiaries.


PRIOR OPERATIONAL HISTORY

TUN RESOURCES, LTD.

         On May 2, 2000, the Company entered into a share purchase and sale
agreement with Golden Thunder Resources Ltd. ("Golden Thunder") to purchase from
Golden Thunder approximately eighty percent (80%) of the issued and outstanding
shares of common stock of Tun Resources Ltd., a Canadian corporation ("Tun
Resources"), with an option to purchase the remaining twenty percent (20%) of
the issued and outstanding shares of Tun Resources (the "Acquisition
Agreement"). Pursuant to the terms of the Acquisition Agreement, and extensions
thereto, the Company issued 1,600,000 (400,000 post-Reverse Stock Split) shares

<PAGE>

of its restricted Common Stock to Golden Thunder and provided approximately
$604,500 of funds to Tun Resources.

         During the prior fiscal year, and in accordance with the terms of the
Acquisition Agreement, the Company was unable to provide the required aggregate
amount of $1,180,000 by February 15, 2001. On February 9, 2001, the Company
provided an amended letter of offer to Golden Thunder that outlined an offer to:
(i) purchase the remaining twenty percent (20%) of Tun Resources; (ii)
repurchase all of the Company's 1,600,000 shares of Common Stock from Golden
Thunder; and (iii) request an extension to the funding commitment requirement
outlined in the Acquisition Agreement until such time as the shareholders of
Golden Thunder voted to accept or reject the offer (the "Letter Offer"). The
Letter Offer was presented to the shareholders of Golden Thunder for their
approval and such approval was not received.

         TUN RESOURCES LITIGATION

         On November 1, 2002, the Company, Tun Resources and Golden Thunder
entered into a settlement agreement and release of all claims (the "Settlement
Agreement"). Pursuant to the terms of the Settlement Agreement: (i) Tun
Resources and Golden Thunder paid to the Company $150,000.00; (ii) the Company
released Tun Resources and Golden Thunder from any and all claims arising
directly or indirectly from Action No. 5013872; and (iii) Golden Thunder
returned to the Company its stock certificate evidencing the 1,600,000 (400,000
post-Reverse Stock Split) shares of restricted Common Stock, which were
cancelled. See "ITEM 3. LEGAL PROCEEDINGS."

THE AILAOSHAN/XIAOSHUIJING GOLD PROJECT

         On May 4, 2000, the Company entered into a letter agreement with the
No. 1 Geological Brigade of the Yunnan Bureau of Geology and Mineral Resources
of Qujing City, Yunnan Province, China (the "Letter Agreement"), whereby the
Company acquired the right to acquire an approximate seventy percent (70%)
interest in the Ailaoshang gold concession and prospect with claims that include
the Xiaoshuijing gold resource located in the Chuxion Prefecture, Yunnan
Province, China.

         As of the date of this Annual Report management of the Company does not
believe that a definitive agreement will be consummated or that any other
China-based venues will be pursued.

ITEM 2. DESCRIPTION OF PROPERTIES

         The Company does not own any real estate or other properties. The
Company leases office space and its offices are located at 435 Martin Street,
Suite 2000, Blaine, Washington 98230.

ITEM 3. LEGAL PROCEEDINGS

TUN RESOURCES LITIGATION

         On July 8, 2001, the Company filed a Statement of Claim in the Supreme

<PAGE>

Court of British Columbia naming Golden Thunder and Tun Resources as defendants
("Action No. 5013872"). The Company alleged in its Statement of Claim that
certain representations were made by the defendants to the Company under the
Acquisition Agreement and otherwise as follows: (i) Tun Resources had good and
marketable title to its assets; (ii) the consideration paid by the Company was
good and valuable consideration for the acquisition of the shares in Tun
Resources; (iii) the intercorporate loan financing, which was to be provided by
financing arranged by private investments and, therefore, the joint ventures,
were marketable; and (iv) the control of Tun Resources would be transferred to
the Company upon closing of the Acquisition Agreement. The Company alleged in
its Statement of Claim that such representations were false and untrue and that
the defendants made the representations fraudulently or negligently knowing them
to be untrue, or recklessly without caring whether they were true or false, and
that: (i) the title Tun Resources had to the assets was not good and marketable
and was considerably lower in value than represented to the Company; (ii) the
consideration paid by the Company to acquire the shares of Tun Resources was
excessive and not good and valuable consideration; (iii) the intercorporate loan
financing could not be raised in the manner agreed upon by the Company and the
defendants; and (iv) the boards of directors of Golden Thunder and Tun Resources
refused or neglected to replace the board of directors of Tun Resources with the
board of directors of Golden Thunder. The Company further alleged in its
Statement of Claim that: (i) the defendants made such representations to the
Company in order to induce the Company to enter into the Acquisition Agreement;
(ii) the Company reasonably relied upon the representations made to it by the
Defendants; and (iii) such misrepresentations were breaches of material terms of
the Acquisition Agreement and have caused the Company loss and damages. The
Company sought general and special damages in excess of $800,000.00.

         On August 2, 2001, Tun Resources and Golden Thunder filed their
Statement of Defense in which they alleged that the Company breached the
Acquisition Agreement by its failure to provide funding in the amount of
$1,180,000 and that such failure to provide the required funding adversely
affected the value of assets to be purchased by the Company.

         On November 1, 2002, the Company, Tun Resources and Golden Thunder
entered into a settlement agreement and release of all claims (the "Settlement
Agreement"). Pursuant to the terms of the Settlement Agreement: (i) Tun
Resources and Golden Thunder paid to the Company $150,000.00; (ii) the Company
released Tun Resources and Golden Thunder from any and all claims arising
directly or indirectly from Action No. 5013872; and (iii) Golden Thunder
returned to the Company its stock certificate evidencing the 1,600,000 (400,000
post-Reverse Stock Split) shares of restricted Common Stock, which were
cancelled.

         Except as disclosed above, management is not aware of any other legal
proceedings contemplated by any governmental authority or other party involving
the Company or its properties. No director, officer or affiliate of the Company
is: (i) a party adverse to the Company in any legal proceedings; or (ii) has an
adverse interest to the Company in any legal proceedings. Management is not
aware of any other legal proceedings pending or that have been threatened
against the Company or its properties.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

INFORMATION STATEMENT

<PAGE>

         The Board of Directors of the Company, at a previous meeting,
authorized and approved, subject to shareholder approval, a reverse stock split
of up to one-for-twenty of the Company's issued and outstanding shares of Common
Stock (the "Reverse Stock Split"). As a result an Information Statement pursuant
to Section 14(c) of the Exchange Act (the "Information Statement") was prepared
and filed with the Securities and Exchange Commission on October 17, 2002 and
amended December 16, 2002.

         The Information Statement was circulated to the shareholders of the
Company in connection with the taking of corporate action without a meeting upon
the written consent of ten (10) or less shareholders holding of record a
majority of the outstanding shares of the Company's Common Stock (the "Written
Consent"). As of November 30, 2002 (the "Record Date"), there were 22,132,110
shares of the Company's Common Stock issued and outstanding. The names of the
shareholders who signed the Written Consent approving the Reverse Stock Split
and their respective equity ownership of the Company were as follows: (i)
TriStar Financial Services, Inc. ("TriStar") holding of record 1,216,214 shares
of Common Stock (5.40%); (ii) Investor Communications International, Inc.
("ICI") holding of record 6,071,244 shares of Common Stock (26.94%); (iii)
Alexander W. Cox holding of record 4,323,300 shares of Common Stock (19.19%);
and (iv) Brent Pierce holding of record 1,406,247 shares of Common Stock
(6.24%).

         The matters upon which action was taken pursuant to the Written Consent
by the shareholders dated March 25, 2003 included the approval and authorization
for the Board of Directors to effect the Reverse Stock Split, which was effected
by NASDAQ on approximately April 2, 2003.

         Subsequent to effectuation of the Reverse Stock Split, the Board of
Directors of the Company determined that applicable Colorado law requires the
written consent of all shareholders in the event that written consents are
utilized to obtain shareholder approval in lieu of a shareholders' meeting. As a
result the Board of Directors decided that it would be prudent to have the
shareholders of the Company ratify the prior actions of the shareholders taken
pursuant to the Written Consent approving the Reverse Stock Split and, as a
result, directed the filing of a proxy statement and a meeting of the
shareholders.

PROXY STATEMENT

         On June 16, 2003, the Board of Directors, pursuant to written consent
in lieu of a special meeting, approved and authorized certain corporate action,
including an amendment to the Company's Articles of Incorporation to effect a
proposed change in name and adoption of a stock option plan for the Company. The
Board of Directors further authorized and directed the filing with the
Securities and Exchange Commission, and subsequent distribution to the
shareholders of record as of May 30, 2003, a notice of special shareholders'
meeting and a proxy statement pursuant to Section 14(a) of the Exchange Act (the
"Proxy Statement"). The Company anticipates that its proposed Proxy Statement
will be distributed to all shareholders of the Company on or about July 3, 2003
or as soon thereafter, upon the Securities and Exchange Commissions review of
filing.

         Pursuant to the Proxy Statement a special meeting of shareholders is
expected to be held on or about July 23, 2003 for the following purposes: (i) to
approve a proposed amendment (the "Amendment") to the Company's Articles of
Incorporation, as amended (the "Articles"), to effectuate a proposed name change
of the Company (the "Name Change") to such name as may be approved by the Board
of Directors of the Company in its sole and absolute discretion; (ii) to approve

<PAGE>

a proposed stock option plan for key personnel of the Company (the "Stock Option
Plan"); and (iii) to ratify the prior actions by shareholders of the Company
taken pursuant to Written Consent dated March 25, 2003 approving the Reverse
Stock Split effectuated on approximately March 31, 2003.

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

         The Company's Common Stock is traded on the OTC Bulletin Board under
the symbol "VGAC" and on the Frankfurt Stock Exchange in the Euro currency under
the symbol "VGA". The market for the Company's Common Stock is limited, volatile
and sporadic. The following table sets forth the high and low sales prices
relating to the Company's Common Stock for the last two fiscal years. These
quotations reflect inter-dealer prices without retail mark-up, mark-down or
commissions, and may not reflect actual transactions.

                                         FISCAL YEARS ENDED
                          __________________________________________________
                            MARCH 31, 2003                MARCH 31, 2002
                          __________________________________________________
                          HIGH BID    LOW BID           HIGH BID    LOW BID
                          __________________________________________________

First Quarter*             $0.80       $0.07              $0.11      $0.05
Second Quarter             $0.24       $0.03              $0.28      $0.035
Third Quarter              $0.35       $0.10              $0.75      $0.15
Fourth Quarter             $0.26       $0.12              $0.87      $0.46

*Figures represent first quarters ended as of June 30, 2002 and 2001, second
quarters ended as of September 30, 2002 and 2001, third quarters ended as of
December 31, 2002 and 2001 and fourth quarters ended as of March 31, 2003 and
2002.

HOLDERS

         As of June 23, 2003, the Company had approximately 183 shareholders of
record.

DIVIDENDS

         No dividends have ever been declared by the Board of Directors of the
Company on its Common Stock. The Company's losses do not currently indicate the
ability to pay any cash dividends, and the Company does not indicate the
intention of paying cash dividends on its common stock in the foreseeable
future.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
<TABLE>
<CAPTION>

                      Equity Compensation Plan Information
_________________________________________________________________________________________________________

                           Number of Securities      Weighted-Average Exercise  Number of Securities
                            To be Issued Upon          Price of Outstanding    Remaining Available for
Plan Category          Exercise of Outstanding           Options, Warrants      Future Issuance Under
                          Options, Warrants                and Rights           Equity Compensation Plans
                              and Rights                                        (excluding column (a))
                                 (a)                          (b)                        (c)
_________________________________________________________________________________________________________
<PAGE>

<S>                               <C>                          <C>                        <C>
Equity Compensation               n/a                          n/a                        n/a
Plans Approved by
Security Holders

Equity Compensation               n/a                          n/a                        n/a
Plans Not Approved by
Security Holders

Total                             -0-

_________________________________________________________________________________________________________
</TABLE>

         In the event the proposed Agreement is consummated, and pursuant to its
proposed terms, the Company will be required to issue up to an aggregate of
4,100,000 non-transferable stock purchase warrants to the holders of all
existing stock purchase warrants of Transax then outstanding, on an equal
exchange basis and on the same exercise and pricing terms and conditions.
Pursuant to the terms and provisions of the proposed stock purchase warrants
under the Agreement, the holders thereof will have the right to convert such
warrants into shares of Common Stock on a one-to-one basis at certain rates.

RECENT SALES OF UNREGISTERED SECURITIES AND CHANGES IN CONTROL OF THE COMPANY

         As of the date of this Annual Report and during fiscal year ended March
31, 2003, and to provide capital, the Company sold stock in private placement
offerings, issued stock in exchange for debts of the Company or pursuant to
contractual agreements as set forth below. Therefore, there was a change in
control of the Company. See "Item 11. Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters."

         On August 22, 2002, the Board of Directors of the Company authorized
the execution of settlement agreements between the Company and certain creditors
of the Company, and the subsequent issuance of 7,318,705 pre-Reverse Stock Split
shares of its restricted Common Stock as follows:

         (a) The Company had incurred a debt inclusive of accrued interest in
the aggregate amount of $140,887.31 to ICI for prior services rendered by ICI on
behalf of the Company including, but not limited to, financial, administrative,
investor relations and minerals, oil and gas acquisition, exploration and
management. Therefore, the Company and ICI entered into a settlement agreement
dated August 22, 2002 (the "ICI Settlement Agreement"). Pursuant to the terms of
the ICI Settlement Agreement: (i) the Company agreed to settle the $140,887.31
debt due and owing ICI by the issuance of 4,696,244 pre-Reverse Stock Split
shares of its restricted Common Stock at the rate of $0.03 per share (which is
the average of the open and close price of the Company's Common Stock trading on
the OTC Bulletin Board on August 22, 2002); and (ii) ICI agreed to accept the
issuance of the 4,696,244 pre-Reverse Stock Split shares of restricted Common
Stock as settlement and full satisfaction of the aggregate debt due and owing it
as of the date of the ICI Settlement Agreement.

         (b) The Company had incurred a debt inclusive of accrued interest in
the aggregate amount of $36,486.42 to TriStar pursuant to prior advances made by
TriStar to the Company. Therefore, the Company and TriStar entered into a
settlement agreement dated August 22, 2002 (the "TriStar Settlement Agreement").
Pursuant to the terms of the TriStar Settlement Agreement: (i) the Company
agreed to settle the $36,486.42 debt due and owing TriStar by the issuance of
1,216,214 pre-Reverse Stock Split shares of its restricted Common Stock at the
rate of $0.03 per share (which is the average of the open and close price of the
Company's Common Stock trading on the OTC Bulletin Board on August 22, 2002);

<PAGE>

and (ii) TriStar agreed to accept the issuance of the 1,216,214 pre-Reverse
Stock Split shares of restricted Common Stock as settlement and full
satisfaction of the aggregate debt due and owing it as of the date of the
TriStar Settlement Agreement.

         (c) The Company had incurred a debt inclusive of accrued interest in
the aggregate amount of $42,187.41 to Brent Pierce, an individual ("Pierce"),
pursuant to prior advances made by Pierce to the Company. Therefore, the Company
and Pierce entered into a settlement agreement dated August 22, 2002 (the
"Pierce Settlement Agreement"). Pursuant to the terms of the Pierce Settlement
Agreement: (i) the Company agreed to settle the $42,187.41 debt due and owing
Pierce by the issuance of 1,406,247 pre-Reverse Stock Split shares of its
restricted Common Stock at the rate of $0.03 per share (which is the average of
the open and close price of the Company's common stock trading on the OTC
Bulletin Board on August 22, 2002); and (ii) Pierce agreed to accept the
issuance of the 1,406,247 pre-Reverse Stock Split shares of restricted Common
Stock as settlement and full satisfaction of the aggregate debt due and owing
him as of the date of the Pierce Settlement Agreement.

         As a result of the issuance of the 7,318,705 pre-Reverse Stock Split
shares of restricted Common Stock pursuant to the ICI Settlement Agreement, the
TriStar Settlement Agreement and the Pierce Settlement Agreement, there was a
change in control of the Company. The following table sets forth the name and
address, as of the date of this Annual Report, and the approximate number of
shares of Common Stock owned of record or beneficially by each person who owned,
of record, or was known by the Company to own beneficially, more than five
percent (5%) of the Company's Common Stock, and the name and shareholdings of
each officer and director and all officers and directors as a group. As of the
date of this Annual Report there are 1,106,778 shares of the Company's Common
Stock issued and outstanding.
________________________________________________________________________________

Title of Class    Name and Address of       Amount and Nature    Percent of
                    Beneficial Owner            of Class            Class
________________________________________________________________________________
                                                      (1)(2)
Common Stock      Alexander W. Cox              216,165            19.53%
                  428-755 Burrard St.
                  Vancouver, British Columbia
                  V6Z 1X6 Canada

                                                      (2)(3)
Common Stock      Pacific Rim Financial Inc.     56,665             5.12%
                  84 Brook Street
                  Mayfair, London W1K 5EH

                                                      (1)(2)(4)
Common Stock      Investor Communications       303,562            27.43%
                    International, Inc.
                  435 Martin Street
                  Suite 2000
                  Blaine, Washington 98320

                                                      (1)(2)
Common Stock      TriStar Financial              60,811             5.49%
                    Services, Inc.
                  435 Martin Street
                  Suite 2000
                  Blaine, Washington 98230
<PAGE>

                                                      (2)(5)
Common Stock      Brent Pierce                   73,312             6.62%
                  16377 Lincoln Woods Court
                  Surrey, British Columbia
                  Canada V3S 0J8

                                                      (1)(2)
Common Stock      All officers and directors        250              .02%
                   as a group (1 person)

_______________________________
     (1)  These are restricted shares of Common Stock.
     (2)  Shares held of record have been adjusted to take into account the
          Reverse Stock Split effected on approximately April 2, 2003.
     (3)  Of the 56,665 shares of Common Stock held of record by Pacific Rim
          Financial Inc., approximately 15,000 are free-trading.
     (4)  The Company and ICI entered into a two-year consulting services and
          management agreement dated April 1, 1999 and renewed on April 1, 2001
          for an additional two-year period (the "Consulting Agreement"),
          pursuant to which ICI performs a wide range of management,
          administrative, financial, marketing and public company services.  ICI
          continues to provide services on a month to month basis.
     (5)  Of the 70,312 shares of Common Stock held of record by Brent Pierce,
          approximately 3,000 are free-trading.


Moreover, and pursuant to the terms and conditions of the proposed Agreement,
and again subject to numerous conditions precedent, the Company anticipates that
it will (i) acquire, through a proposed merger with a wholly-owned subsidiary of
the Company, all of the issued and outstanding shares of common stock of Transax
in exchange for issuance to the Transax Shareholders of an aggregate of up to
11,066,207 shares of the Company's restricted Common Stock; (ii) grant and
exchange 4,500,000 stock options in and to the Company in order to replace all,
and an equivalent number of, stock options presently issued and outstanding in
Transax; (iii) grant and exchange 4,100,000 non-transferable common stock
purchase warrants to replace all, and an equivalent number of, common stock
purchase warrants presently outstanding in and to Transax; and (iv) issue up to
300,000 shares of the Company's restricted Common Stock as a finder's fee. In
the event the transaction is consummated and the Company issues the
above-referenced shares of its restricted Common Stock, there will be a change
in control of the Company.

         There are no arrangements or understandings among the entities and
individuals referenced above or their respective associates concerning election
of directors or any other matters which may require shareholder approval.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

         Statements made in this Form 10-KSB that are not historical or current
facts are "forward-looking statements" made pursuant to the safe harbor
provisions of Section 27A of the Securities Act of 1933 (the "Act") and Section
21E of the Exchange Act. These statements often can be identified by the use of
terms such as "may," "will," "expect," "believe," "anticipate," "estimate,"
"approximate" or "continue," or the negative thereof.

<PAGE>

The Company intends that such forward-looking statements be subject to the safe
harbors for such statements. The Company wishes to caution readers not to place
undue reliance on any such forward-looking statements, which speak only as of
the date made. Any forward-looking statements represent management's best
judgment as to what may occur in the future. However, forward-looking statements
are subject to risks, uncertainties and important factors beyond the control of
the Company that could cause actual results and events to differ materially from
historical results of operations and events and those presently anticipated or
projected. These factors include adverse economic conditions, highly speculative
nature of mineral and oil and gas acquisition, exploration and development,
risks of foreign operation, entry of new and stronger competitors, inadequate
capital and unexpected costs. The Company disclaims any obligation subsequently
to revise any forward-looking statements to reflect events or circumstances
after the date of such statement or to reflect the occurrence of anticipated or
unanticipated events.

         The following discussions of the results of operations and financial
position of the Company should be read in conjunction with the financial
statements and notes pertaining to them that appear elsewhere in this Form
10-KSB.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION

FOR FISCAL YEAR ENDED MARCH 31, 2003 COMPARED WITH FISCAL YEAR ENDED MARCH 31,
2002

         The Company's net loss for the fiscal year ended March 31, 2003 was
approximately ($261,243) compared to a net income of approximately $418,824 for
the fiscal year ended March 31, 2002.

         During the fiscal year ended March 31, 2003 and 2002, the Company did
not incur any property exploration expenses primarily due to the decrease in
investment relating to its Chinese joint venture projects.

         During the fiscal year ended March 31, 2003, the Company incurred
general and administrative expenses of $423,243 compared to general and
administrative expenses of $354,509 incurred during the fiscal year ended March
31, 2002 (an increase of $68,734). Although the Company incurred $423,243 of
general and administrative expenses during the fiscal year ended March 31, 2003,
such expenses were offset by $162,000 realized as a gain from settlement of the
litigation with Tun Resources and Golden Thunder, resulting in a net loss of
($261,243). In addition, although the Company actually incurred $354,509 of
general and administrative expenses during the fiscal year ended March 31, 2002,
such expenses were offset by $66,267 as a gain from settlement of debt, $50,000
as a gain from the sale of Alaskan Explorations Corp., and its related Lemachang
silver deposit Sino-Foreign joint venture interest, and $657,066 realized as a
gain from settlement of the litigation with Tun Resources and Golden Thunder,
resulting in net income of $418,824.

         The increase in general and administrative expenses during the fiscal
year ended March 31, 2003 compared to the fiscal year ended March 31, 2002 was
primarily due to an increase in consulting fees relating to identification and
negotiation of potential investment opportunities in other ventures. During the
fiscal year ended March 31, 2003, the Company's general and administrative
expenses consisted of: (i) $128,121 in consulting fees; (ii) $226,890 in office
and general expenses; (iii) $35,501 in professional fees; and (iv) $32,731 in

<PAGE>

interest expense. During the fiscal year ended March 31, 2002, the Company's
general and administrative expenses consisted of (i) $268,830 in office and
general expenses; (ii) $58,307 in professional fees; and (iii) $27,372 in
interest expense. General and administrative expenses generally include
corporate overhead, financial and administrative contracted services, consulting
costs and professional fees.

         Of the $423,243 incurred as general and administrative expenses, the
Company incurred to ICI approximately: (i) $375,250 for amounts due and owing
for managerial, administrative, financial and consulting services rendered by
ICI; (ii) $27,483 as accrued interest; and (iii) $19,957 as advances payable.
During the fiscal year ended March 31, 2003, the Company repaid $133,200 to ICI.
Furthermore, the Company and ICI entered into the ICI Settlement Agreement on
pursuant to which: (i) the Company agreed to settle an aggregate debt of
$140,887.31 due and owing to ICI as of August 22, 2002, including accrued
interest, by the issuance of 4,696,244 pre-Reverse Stock Split shares of its
restricted Common Stock at the rate of $0.03 per share (which was the average of
the opening and the closing price of the Company's Common Stock trading on the
OTC Bulletin Board from July 1, 2002 through August 22, 2002, discounted by
25%); and (ii) ICI agreed to accept the issuance of the 4,696,244 pre-Reverse
Stock Split shares of restricted Common Stock as settlement and full
satisfaction of the aggregate debt due and owing it. "Item 5. Market for Common
Equity and Related Stockholder Matters - Recent Sales of Unregistered Securities
and Changes in Control of the Company."

         The sole director of the Company is contracted by ICI and is part of
the management team provided by ICI to the Company. During the fiscal year ended
March 31, 2003, Grant Atkins received an aggregate of $17,325 from ICI for
services provided to the Company.

         The Company and ICI entered into a two-year Consulting Agreement dated
April 1, 1999 and on April 1, 2001 renewed for an additional two-year period.
Pursuant to the terms of the Consulting Agreement ICI performs a wide range of
management, administrative, financial, marketing and public company services
including, but not limited to, the following: (i) international business
relations and strategy development, (ii) investor relations and shareholder
liaison, (iii) corporate public relations, press release and public information
distribution, (iv) administration, including auditor and legal liaison, media
liaison, corporate minutebook maintenance and record keeping, corporate
secretarial services, printing and production, office and general duties, and
(v) financial and business planning services, including capital and operating
budgeting, banking, bookkeeping, documentation, database records, preparation of
financial statements and creation of annual reports.

         As of the date of this Annual Report such services provided by ICI
include not only those services listed above related to administration, public
company operations and maintenance of the Company, but also involve the
negotiation and due diligence of certain contractual agreements, including the
Agreement, relating to proposed investment opportunities in other ventures and
the negotiation and settlement of the litigation with Tun Resources and Golden
Thunder. Other services provided by ICI include the securing of short-term
advance financing and the sourcing of private placement funding.

         As discussed above, the incurrence of a net loss during the fiscal year
ended March 31, 2003 compared to net income realized during the fiscal year
ended March 31, 2002 is attributable primarily to the gain of $657,066 realized
from the settlement of the litigation with Tun Resources and Golden Thunder, the

<PAGE>

gain of $50,000 realized from the sale of the joint venture interest and the
gain of $66,267 realized from settlement of debt during the fiscal year ended
March 31, 2002. The Company's net loss during the fiscal year ended March 31,
2003 was approximately ($261,243) or ($0.28) per common share compared to net
income of approximately $418,824 or $0.57 per common share during the fiscal
year ended March 31, 2002. The weighted average number of shares outstanding
were 933,164 for the fiscal year ended March 31, 2003 compared to 738,924 for
the fiscal year ended March 31, 2002.

LIQUIDITY AND CAPITAL RESOURCES

FOR THE FISCAL YEAR ENDED MARCH 31, 2003

         The Company's financial statements have been prepared assuming that it
will continue as a going concern and, accordingly, do not include adjustments
relating to the recoverability and realization of assets and classifications of
liabilities that might be necessary should the Company be unable to continue in
operations.

         As of March 31, 2003, the Company's current assets were $89 and its
current liabilities were $508,545, which resulted in a working capital deficit
of $508,456. As of the fiscal year ended March 31, 2002, the Company's current
assets were $1,196 and its current liabilities were $455,969, which resulted in
a working capital deficit of $454,773.

         The increase in current liabilities during the fiscal year ended March
31, 2003 from the fiscal year ended March 31, 2002 was due primarily to an
increase in advances from related parties.

         Stockholders' deficit increased from ($454,773) for the fiscal year
ended March 31, 2002 to ($508,456) for the fiscal year ended March 31, 2003.

         For the fiscal year ended March 31, 2003, net cash flows provided by
operating activities was $81,474 compared to ($363,312) net cash flows used in
operating activities for the fiscal year ended March 31, 2002. As noted above,
the increase in cash provided by operating activities was primarily comprised
of: (i) a net loss of ($261,243) incurred during the fiscal year ended March 31,
2003 compared to net income of $418,824 realized during the fiscal year ended
March 31, 2002; (ii) consulting and administration fees accrued of $375,250
during the fiscal year ended March 31, 2003 compared to $-0- during the fiscal
year ended March 31, 2002; and (iii) adjustment of ($12,000) from the settlement
of the litigation with Tun Resources and Golden Thunder during the fiscal year
ended March 31, 2003 compared to adjustment of ($651,316) during the fiscal year
ended March 31, 2002.

         Net cash flows used in financing activities during the fiscal year
ended March 31, 2003 were ($82,581) resulting primarily from advances repaid to
related parties compared to net cash flows from financing activities of $313,066
during the fiscal year ended March 31, 2002 resulting from advances received
from related parties.

         Net cash flows from investing activities was $-0- during the fiscal
year ended March 31, 2003 compared to net cash flows from investing activities
of $50,000 during the fiscal year ended March 31, 2002 resulting from proceeds
from sale of joint venture interest.

PLAN OF OPERATION

<PAGE>

FUNDING

         As of the date of this Annual Report there is substantial doubt
regarding the Company's ability to continue as a going concern as the Company
has not generated sufficient cash flow to funds its business operations and
material commitments. The Company's future success and viability, therefore, may
be dependent upon the Company's ability to consummate the Agreement and its
ongoing ability to continue to generate capital financing.

         In the event the Agreement is consummated, management of the Company
anticipates an increase in operating expenses over the next three years to pay
expenses associated with the business operations. The Company must raise
additional funds. The Company may finance these expenses with further issuances
of Common Stock of the Company. The Company believes that any anticipated
private placements of equity capital and debt financing, if successful, may be
adequate to fund the Company's operations over the next twelve months.
Thereafter, the Company expects it will need to raise additional capital to meet
long-term operating requirements. If the Company raises additional funds through
the issuance of equity or convertible debt securities other than to current
shareholders, the percentage ownership of its current shareholders would be
reduced, and such securities might have rights, preferences or privileges senior
to its existing Common Stock. In addition, additional financing may not be
available upon acceptable terms, or at all. If adequate funds are not available,
or are not available on acceptable terms, the Company may not be able to conduct
its proposed business operations successfully, which could significantly and
materially restrict the Company's overall business operations.

         Based upon a twelve-month work plan proposed by management, it is
anticipated that such a work plan would require approximately $1,000,000 of
financing designed to fund various commitments and business operations. >From
the date of this Annual Report management believes that the Company can satisfy
its cash requirements for approximately the next six months based on its ability
to successfully raise capital and to obtain advances from certain investors and
related parties, as necessary. The Company must, however, raise additional
capital. Furthermore, the Company has not generated sufficient cash flow in the
past to fund its operations and activities. Historically, the Company has relied
upon internally generated funds, funds from the sale of shares of stock and
loans from its shareholders and private investors to finance its operations and
growth. The Company's future success and viability are primarily dependent upon
the Company's current management to consummate the Agreement, generate revenues
from business operations and raise additional capital through further private
offerings of its stock or loans from private investors. There can be no
assurance, however, that the Company will be able to raise additional capital.
The Company's failure to successfully raise additional capital will have a
material and adverse affect upon the Company and its shareholders.

MATERIAL COMMITMENTS


         A significant and estimated commitment for the Company for its fiscal
year April 1, 2003 through March 31, 2004 pertaining to contractual arrangements
and work orders is an amount not greater than $900,000 to ICI. The contractual
arrangement between the Company and ICI regarding compensation for services
rendered for the day-to-day operations of the Company are based on a fee not to
exceed $75,000 per month based upon the performance of actual services rendered
by ICI on an ongoing basis commensurate with the needs and requirements of the

<PAGE>

Company for that particular month, including services related to exploration,
administrative, public company operations and maintenance.

OFF-BALANCE SHEET ARRANGEMENTS

         As of the date of this Annual Report the Company does not have any
off-balance sheet arrangements that have or are reasonably likely to have a
current or future effect on the Company's financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that are material to investors. The
term "off-balance sheet arrangement" generally means any transaction, agreement
or other contractual arrangement to which an entity unconsolidated with the
Company is a party, under which the Company has: (i) any obligation arising
under a guarantee contract, derivative instrument or variable interest; or (ii)
a retained or contingent interest in assets transferred to such entity or
similar arrangement that serves as credit, liquidity or market risk support for
such assets.

AUDIT COMMITTEE

         As of the date of this Annual Report the Company has not appointed
members to an Audit Committee and, therefore, the respective role of an Audit
Committee has been conducted by the Board of Directors of the Company. When
established, the Audit Committee's primary function will be to provide advice
with respect to the Company's financial matters and to assist the Board of
Directors in fulfilling its oversight responsibilities regarding finance,
accounting, tax and legal compliance. The Audit Committee's primary duties and
responsibilities will be to: (i) serve as an independent and objective party to
monitor the Company's financial reporting process and internal control system;
(ii) review and appraise the audit efforts of the Company's independent
accountants; (iii) evaluate the Company's quarterly financial performance as
well as its compliance with laws and regulations; (iv) oversee management's
establishment and enforcement of financial policies and business practices; and
(v) provide an open avenue of communication among the independent accountants,
management and the Board of Directors.

         The Board of Directors has considered whether the regulatory provision
of non-audit services is compatible with maintaining the principal independent
accountant's independence.

AUDIT FEES

         During the fiscal year ended March 31, 2003, the Company incurred
approximately $13,000 in fees to its principal independent accountant for
professional services rendered in connection with preparation and audit of the
Company's financial statements for the fiscal year ended March 31, 2003 and for
the review of the Company's financial statements for the quarters ended June 30,
2002, September 30, 2002 and December 31, 2002.

FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES

         During the fiscal year ended March 31, 2003, the Company did not incur
any fees for professional services rendered by its principal independent
accountant for certain information technology services which may include, but is
not limited to, operating or supervising or managing the Company's information
or local area network or designing or implementing a hardware or software system
that aggregate source data underlying the financial statements.

<PAGE>

ALL OTHER FEES

         During the fiscal year ended March 31, 2003, the Company did not incur
any other fees for professional services rendered by its principal independent
accountant for all other non-audit services which may include, but is not
limited to, tax-related services, actuarial services or valuation services.

ITEM 7. FINANCIAL STATEMENTS

         The information required under Item 310(a) of Regulation S-B is
included in this Annual Report as set forth in the "Index to Consolidated
Financial Statement".

Index to Financial Statements

         Independent Auditor's Report dated June 3, 2003.
         Balance Sheets for fiscal years ended March 31, 2003 and
           March 31, 2002.
         Statements of Operations for fiscal years ended March 31, 2003 and
           March 31, 2002, and from inception (January 28, 1987) to March 31,
           2003.
         Statements of Cash Flows for fiscal years ended March 31, 2003 and
           March 31, 2002, and from inception (January 28, 1987) to March 31,
           2003.
         Statements of Stockholders' Equity for the period from January 28, 1987
           (inception) to March 31, 2003.
         Notes to Financial Statements for March 31, 2003 and 2002.


<PAGE>


                            VEGA-ATLANTIC CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                              FINANCIAL STATEMENTS

                                 MARCH 31, 2003












AUDITORS' REPORT

BALANCE SHEETS

STATEMENTS OF OPERATIONS

STATEMENT OF STOCKHOLDERS' EQUITY

STATEMENTS OF CASH FLOWS

NOTES TO FINANCIAL STATEMENTS


<PAGE>



LABONTE & CO.                                     610 - 938 HOWE STREET
________________________________________          VANCOUVER, BC  CANADA
C H A R T E R E D  A C C O U N T A N T S          V6Z 1N9
________________________________________          TELEPHONE      (604) 682-2778
                                                  FACSIMILE      (604) 689-2778
                                                  EMAIL    INFO@LABONTECO.COM


                          INDEPENDENT AUDITORS' REPORT
________________________________________________________________________________

To the Stockholders and Board of Directors of Vega-Atlantic Corporation

We have audited the balance sheets of  Vega-Atlantic  Corporation (a Development
Stage  Company) as at March 31, 2003 and 2002 and the  statements of operations,
stockholders'  equity and cash flows for the years then ended.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audits in accordance with Canadian and United States  generally
accepted auditing standards. Those standards require that we plan and perform an
audit to obtain reasonable  assurance whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audit  provides a  reasonable  basis for our
opinion.

In our opinion,  these  financial  statements  present  fairly,  in all material
respects,  the  financial  position of the Company as at March 31, 2003 and 2002
and the  results  of its  operations  and its  cash  flows  and the  changes  in
stockholders'  equity for the years then ended in accordance  with United States
generally accepted accounting principles.

                                                                 "LABONTE & CO."

                                                           CHARTERED ACCOUNTANTS

Vancouver, B.C.
June 3, 2003 (except for Note 9 which is dated June 25, 2003)


COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA-UNITED STATES REPORTING
DIFFERENCES
________________________________________________________________________________

In the United  States,  reporting  standards  for  auditors  would  require  the
addition of an explanatory  paragraph  following the opinion  paragraph when the
financial statements are affected by conditions and events that cast substantial
doubt on the  Company's  ability to continue as a going  concern,  such as those
described in Note 1. Our report to the stockholders and Board of Directors dated
June 3, 2003 is expressed in accordance with Canadian reporting  standards which
do not permit a reference to such conditions and events in the auditors'  report
when these are adequately disclosed in the financial statements.

                                                                 "LABONTE & CO."

                                                           CHARTERED ACCOUNTANTS



Vancouver, B.C.
June 3, 2003 (except for Note 9 which is dated June 25, 2003)

<PAGE>



                            VEGA-ATLANTIC CORPORATION

                          (A DEVELOPMENT STAGE COMPANY)

                                 BALANCE SHEETS



                                                  March 31, 2003  March 31, 2002
________________________________________________________________________________

                                     ASSETS

CURRENT ASSETS
   Cash                                              $        89     $    1,196
________________________________________________________________________________

                                                     $        89     $    1,196
================================================================================


            LIABILITIES AND STOCKHOLDERS' EQUITY (CAPITAL DEFICIENCY)

CURRENT LIABILITIES
   Accounts payable and accrued liabilities          $    62,557     $  142,284
   Due to related parties (Note 5)                       445,988        313,685
________________________________________________________________________________

                                                         508,545        455,969
________________________________________________________________________________

STOCKHOLDERS' EQUITY (CAPITAL DEFICIENCY) (Note 8)
   Preferred stock, no par value; 20,000,000 shares
      authorized, nil shares issued and outstanding            -              -
   Common stock, $.00001 par value, 100,000,000
      shares  authorized  1,106,778 (March 31, 2002
      - 760,670) post reverse-split shares issued
      and outstanding                                        408            339
   Additional paid-in capital                          9,575,077      9,367,586
   Deficit accumulated during the development stage  (10,083,941)    (9,822,698)
________________________________________________________________________________

   Total stockholders' equity (capital deficiency)      (508,456)      (454,773)
________________________________________________________________________________

                                                     $        89     $    1,196
================================================================================

CONTINGENCIES (Note 1)











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


<PAGE>
<TABLE>
<CAPTION>

                            VEGA-ATLANTIC CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                            STATEMENTS OF OPERATIONS


                                                                                                        January 28,
                                                                                                               1987
                                                                        Year ended      Year ended   (inception) to
                                                                         March 31,       March 31,        March 31,
                                                                              2003            2002             2003
_____________________________________________________________________________________________________________________

<S>                                                                     <C>              <C>           <C>
GENERAL AND ADMINISTRATIVE EXPENSES
  Consulting fees                                                       $ 128,121        $       -     $    260,872
  Directors' fees                                                               -                -           49,500
  Office and general                                                      226,890          268,830        3,740,311
  Interest expense                                                         32,731           27,372          256,655
  Professional fees                                                        35,501           58,307          333,456
  Stock-based compensation                                                      -                -          262,247
  Gain on settlement of debt                                                    -          (66,267)         (66,267)
  Gain on sale of joint venture interest (Note 3)                               -          (50,000)         (69,318)
_____________________________________________________________________________________________________________________

  Total general and administrative expenses                               423,243          238,242        4,767,456
_____________________________________________________________________________________________________________________

LOSS BEFORE THE FOLLOWING                                                (423,243)        (238,242)      (4,767,456)

  Mineral property acquisition and exploration costs                            -                -       (2,174,005)
  Gain on settlement of lawsuit (Note 6)                                  162,000          657,066          819,066
  Loss on settlement of convertible promissory notes                            -                -       (1,754,917)
_____________________________________________________________________________________________________________________

INCOME (LOSS) FROM CONTINUING OPERATIONS                                 (261,243)         418,824       (7,877,312)

DISCONTINUED OPERATIONS
  Loss from discontinued operations of Century Manufacturing, Inc.              -                -       (2,206,629)
_____________________________________________________________________________________________________________________

NET INCOME (LOSS) FOR THE YEAR                                          $(261,243)       $ 418,824     $(10,083,941)
=====================================================================================================================



BASIC INCOME (LOSS) PER SHARE                                           $   (0.28)       $    0.57
=====================================================================================================================

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                                933,164          738,924
=====================================================================================================================
</TABLE>







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

<PAGE>
<TABLE>
<CAPTION>

                            VEGA-ATLANTIC CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                        STATEMENT OF STOCKHOLDERS' EQUITY
       FOR THE PERIOD FROM JANUARY 28, 1987 (INCEPTION) TO MARCH 31, 2003

                                                                                                Deficit
                                                                                              Accumulated
                                                     Common Stock             Additional        During
                                              ___________________________     Paid - in       Development
                                                Shares          Amount         Capital          Stage          Total
                                              ____________    ___________     __________    _____________   __________
<S>                                             <C>           <C>            <C>            <C>             <C>
Stock issued for services performed,
  February 25, 1987 ($.0125 per share)             20,000     $        1     $      249     $         -     $      250

Stock issued for services performed,
  February 25, 1987 ($.02 per share)                5,000              -            100               -            100

Stock issued for services performed,
  February 25 ($.0007 per share)                  725,000              7            493               -            500

Net Loss, Year ended December 31, 1987                  -              -              -          (8,791)        (8,791)
                                              ____________    ___________     __________    _____________   __________

Balance, December 31, 1987                        750,000              8            842          (8,791)        (7,941)

Net loss, Year ended December 31, 1998                  -              -              -          (1,000)        (1,000)
                                              ____________    ___________     __________    _____________   __________

Balance, December 31, 1988                        750,000              8            842          (9,791)        (8,941)

Stock issued for services performed,
  July 20, 1989 ($.0001 per share)              4,250,000             42            958               -          1,000

Net loss, Year ended December 31, 1989                  -              -              -          (2,700)        (2,700)
                                              ____________    ___________     __________    _____________   __________

Balance, December 31, 1989                      5,000,000             50          1,800         (12,491)       (10,641)

Net loss, Year ended December 31, 1990                  -              -              -            (875)          (875)
                                              ____________    ___________     __________    _____________   __________

Balance, December 31, 1990                      5,000,000             50          1,800         (13,366)       (11,516)

Net loss, Year ended December 31, 1991                  -              -              -          (2,900)        (2,900)
                                              ____________    ___________     __________    _____________   __________

Balance, December 31, 1991                      5,000,000             50          1,800         (16,266)       (14,416)

Net loss, Year ended December 31, 1992                  -              -              -          (1,235)        (1,235)
                                              ____________    ___________     __________    _____________   __________

Balance,  December 31, 1992                     5,000,000             50          1,800         (17,501)       (15,651)

Net loss, Year ended December 31, 1993                  -              -              -          (6,775)        (6,775)
                                              ____________    ___________     __________    _____________   __________

Balance,  December 31, 1993                     5,000,000             50          1,800         (24,276)       (22,426)

Net loss, Year ended December 31, 1994                  -              -              -          (4,875)        (4,875)
                                              ____________    ___________     __________    _____________   __________

Balance, December 31, 1994                      5,000,000             50          1,800         (29,151)       (27,301)

Capital Contribution from Shareholder,
  April 17, 1995                                        -              -         27,301               -         27,301

Stock issued for cash, May 8, 1995
  ($1.02 per share)                               100,000              1        101,999               -        102,000

Net loss, year ended December 31, 1995                  -              -              -         (95,574)       (95,574)
                                              ____________    ___________     __________    _____________   __________

Balance, December 31, 1995                      5,100,000     $       51     $  131,100     $  (124,725)    $    6,426
                                              ____________    ___________     __________    _____________   __________

</TABLE>


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

<PAGE>
<TABLE>
<CAPTION>

                            VEGA-ATLANTIC CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                        STATEMENT OF STOCKHOLDERS' EQUITY
       FOR THE PERIOD FROM JANUARY 28, 1987 (INCEPTION) TO MARCH 31, 2003
                                   (Continued)
                                                                                                Deficit
                                                                                              Accumulated
                                                     Common Stock             Additional        During
                                              ___________________________     Paid - in       Development
                                                Shares          Amount         Capital          Stage          Total
                                              ____________    ___________     __________    _____________   __________

<S>                                             <C>           <C>            <C>            <C>             <C>
Balance, December 31, 1995                      5,100,000     $       51     $  131,100        (124,725)    $    6,426

Issuance of stock to purchase subsidiary,
March 28, 1996 ( $1.687 per share)              1,000,000             10      1,686,990               -      1,687,000

Net loss, quarter ended March 31, 1996                  -              -              -         (23,357)       (23,357)
                                              ____________    ___________     __________    _____________   __________

Balance, March 31, 1996                         6,100,000             61      1,818,090        (148,082)     1,670,069

Stock issued for cash, May 6, 1996 ($1.00
  per share)                                       50,000              1         49,999                         50,000
Stock issued for cash, May 8, 1996 ($1.00
  per share)                                      120,000              1        119,999                        120,000
Stock issued for cash, May 13, 1996
  ($1.00 per share)                                35,000                        35,000                         35,000
Stock issued for cash, March 12, 1997
  ($.25 per share)                              1,800,000             18        449,982                        450,000
Stock issued for cash, April 15, 1997
  ($.20 per share)                                250,000              3         49,997                         50,000

Issuance of stock in repayment of
advances, March 12, 1997 ($.25 per share)         200,000              2         49,998                         50,000

Net loss, year ended March 31, 1997                                                          (2,776,800)    (2,776,800)
                                              ____________    ___________     __________    _____________   __________

Balance, March 31, 1997                         8,555,000             86      2,573,065      (2,924,882)      (351,731)

Stock issued for cash, March 13, 1998
  ($15 per share)                               3,000,000             30        449,970                        450,000
Stock issued for cash, March 24, 1998
  ($.15 per share)                              1,333,333             13        199,987                        200,000
Stock issued for cash, March 25, 1998
  ($.15 per share)                              1,306,667             13        195,987                        196,000
Stock issued for cash, March 26, 1998
  ($.15 per share)                                360,000              4         53,996                         54,000

Net loss, year ended March 31, 1998                                                            (712,457)      (712,457)
                                              ____________    ___________     __________    _____________   __________

Balance, March 31, 1998                        14,555,000            146      3,473,005      (3,637,339)      (164,188)

Issuance of common shares in exchange
  for $5,841 of accounts payable, Jan. 15,
  1999 ($.195 per share)                           30,000              -          5,841               -          5,841

Issuance of common shares in exchange
  for technology license agreement, Mar.
  15, 1999 ($.14 per share)                     1,000,000             10        139,990               -        140,000

Issuance of common shares in exchange
  for profit sharing interest, March 28,
  1999 ($.15 per share)                           500,000              5         74,995               -         75,000

Issuance of SEC Reg D-504 common
  shares for cash, March 31, 1999
  ($.20 per share)                              1,500,000             15        299,985               -        300,000

Net loss, Year ended March 31, 1999                     -              -              -      (1,213,701)    (1,213,701)
                                              ____________    ___________     __________    _____________   __________

Balance, March 31, 1999                        17,585,000     $      176     $3,993,816      (4,851,040)    $ (857,048)
                                              ____________    ___________     __________    _____________   __________
</TABLE>


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

<PAGE>
<TABLE>
<CAPTION>
                            VEGA-ATLANTIC CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                        STATEMENT OF STOCKHOLDERS' EQUITY
       FOR THE PERIOD FROM JANUARY 28, 1987 (INCEPTION) TO MARCH 31, 2003
                                   (Continued)

                                                                                                Deficit
                                                                                              Accumulated
                                                     Common Stock             Additional        During
                                              ___________________________     Paid - in       Development
                                                Shares          Amount         Capital          Stage          Total
                                              ____________    ___________     __________    _____________   __________

<S>                                             <C>           <C>            <C>            <C>             <C>
Balance,  March 31, 1999                       17,585,000     $      176     $3,993,816      (4,851,040)    $ (857,048)

Stock issued in settlement of
  advances payable, March 29, 2000
  ($.50 per share)                              2,061,000             20      1,030,443               -      1,030,463

Stock subscription for Reg S common
  shares ($.25 per share)                         560,000              6        139,994               -        140,000

Net loss, Year ended March 31, 2000                     -              -              -      (1,091,711)    (1,091,711)
                                              ____________    ___________     __________    _____________   __________

Balance, March 31, 2000                        20,206,000            202      5,164,253      (5,942,751)      (778,296)

Stock issued for interest in Tun
  Resources Inc., May 1, 2000 ($.42 per
  share)                                        1,600,000             16        671,984                        672,000

Stock issued in settlement of debt,
  May 30, 2000 ($.075 per share)                  200,000              2         14,998               -         15,000

Stock issued for cash, June 30, 2000
  ($.25 per share)                              2,900,000             29        724,971               -        725,000

Stock subscription for Reg S common
  shares ($.25 per share)                        (560,000)            (6)      (139,994)              -       (140,000)

Stock issued for cash, July 7, 2000
  ($.25 per share)                                100,000              1         24,999               -         25,000

Stock issued for cash, July 11, 2000
  ($.25 per share)                                800,000              8        199,992               -        200,000

Stock issued for cash, August 17, 2000
  ($.25 per share)                              1,200,000             12        299,988               -        300,000

Stock based compensation                                -              -        262,247               -        262,247

4:1 Reverse stock-split, December 22,
  2000                                        (19,834,495)             -              -               -              -

Stock issued in settlement of debt,
  December 27, 2000 ($.03 per share)            7,976,900             80        239,226               -        239,306

Loss on settlement of debt                              -              -      1,754,917               -      1,754,917

Net loss, Year ended March 31, 2001                     -              -              -      (4,298,771)    (4,298,771)
                                              ____________    ___________     __________    _____________   __________

Balance, March 31, 2001                        14,588,405            344      9,217,581     (10,241,522)    (1,023,597)

Return of stock to treasury and
  cancellation, October 31, 2001                 (375,000)           (15)            15               -              -

Stock issued in settlement of debt,
  November 13, 2001 ($.15 per share)            1,000,000             10        149,990               -        150,000

Net income, Year ended March 31, 2002                   -              -              -         418,824        418,824
                                              ____________    ___________     __________    _____________   __________

Balance, March 31, 2002                        15,213,405     $      339     $9,367,586      (9,822,698)    $ (454,773)
                                              ____________    ___________     __________    _____________   __________
</TABLE>


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

<PAGE>
<TABLE>
<CAPTION>
                            VEGA-ATLANTIC CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                        STATEMENT OF STOCKHOLDERS' EQUITY
       FOR THE PERIOD FROM JANUARY 28, 1987 (INCEPTION) TO MARCH 31, 2003
                                   (Continued)

                                                                                                Deficit
                                                                                              Accumulated
                                                     Common Stock             Additional        During
                                              ___________________________     Paid - in       Development
                                                Shares          Amount         Capital          Stage          Total
                                              ____________    ___________     __________    _____________   __________

<S>                                             <C>           <C>            <C>            <C>             <C>
Balance, March 31, 2002                        15,213,405     $      339      9,367,586     $(9,822,698)    $ (454,773)

Stock issued in settlement of debt,
  October 3, 2002                               7,318,705             73        219,487               -        219,560

Return of stock to Treasury and
  cancellation, October 3, 2002                  (400,000)            (4)       (11,996)              -        (12,000)

20:1 Reverse stock-split, March 31, 2003      (21,025,332)             -              -               -              -

Net loss, Year ended March 31, 2003                                                            (261,243)      (261,243)
                                              ____________    ___________     __________    _____________   __________

Balance, March 31, 2003                         1,106,778     $      408      9,575,077    $(10,083,941)    $ (508,456)
                                              ============    ===========     ===========   =============   ==========
</TABLE>







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

<PAGE>
<TABLE>
<CAPTION>



                            VEGA-ATLANTIC CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                            STATEMENTS OF CASH FLOWS
                                                                                Year ended        Year ended    January 28, 1987
                                                                            March 31, 2003   March 31, 2002       (inception) to
                                                                                                                 March 31, 2003
_________________________________________________________________________________________________________________________________

<S>                                                                           <C>                <C>              <C>
CASH FLOWS PROVIDED BY (USED IN)
OPERATING ACTIVITIES
  Net income (loss) for the year                                              $ (261,243)        $  418,824       $ (10,083,941)
  Adjustments to reconcile net income (loss) to net cash from
  operating activities:
  - non-cash loss on sale of subsidiary                                                 -                 -           1,687,000
  - non-cash gain on sale of joint venture                                              -                 -             (19,318)
  - non-cash research and development expense                                           -                 -             783,182
  - non-cash interest recognized through discount adjustment                            -                 -              31,818
  - common stock issued in settlement of debt                                           -                 -              84,992
  - impairment of interest in mineral properties                                        -                 -           1,303,611
  - stock-based compensation                                                            -                 -             262,247
  - loss on settlement of convertible promissory notes                                  -                 -           1,754,917
  - gain on settlement of debt, net of current period accrual                           -           (61,267)            (61,267)
  - gain on sale of joint venture interest                                              -           (50,000)            (50,000)
  - non-cash gain on settlement of lawsuit                                        (12,000)         (651,316)           (663,316)
  - consulting and administration fees accrued                                    375,250                 -             375,250
  - net changes in other working capital items                                    (20,533)          (19,553)            372,068
_________________________________________________________________________________________________________________________________

CASH FLOWS USED IN OPERATING ACTIVITIES                                            81,474          (363,312)         (4,222,757)
_________________________________________________________________________________________________________________________________

CASH FLOWS FROM FINANCING ACTIVITIES
  Advances from (repaid to) related parties - net                                 (82,581)          313,066           1,439,391
  Interest paid                                                                         -                 -              (1,433)
  Convertible notes                                                                     -                 -              99,500
  Sale of common stock                                                                  -                 -           3,357,000
_________________________________________________________________________________________________________________________________

CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES                                    (82,581)          313,066           4,894,458
_________________________________________________________________________________________________________________________________

CASH FLOWS FROM INVESTING ACTIVITIES
  Mineral property acquisition and exploration                                          -                 -            (622,567)
  Purchase of subsidiaries, net of cash acquired                                        -                 -             (99,045)
  Proceeds from sale of joint venture interest                                          -            50,000              50,000
_________________________________________________________________________________________________________________________________

CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES                                          -            50,000            (671,612)
_________________________________________________________________________________________________________________________________

INCREASE (DECREASE) IN CASH                                                        (1,107)             (246)                 89

CASH, BEGINNING OF YEAR                                                             1,196             1,442                   -
_________________________________________________________________________________________________________________________________

CASH, END OF YEAR                                                             $        89        $    1,196       $          89
=================================================================================================================================
SUPPLEMENTAL CASH FLOW INFORMATION:
During the year ended March 31, 2003, the Company issued 365,935 common shares
in settlement of debt of $219,561. (See Notes 5 and 8.)
During the year ended March 31, 2002, the Company issued 50,000 common shares in
settlement of debt of $150,000.
During the year ended March 31, 2002, in connection with the settlement of the
lawsuit described in Note 6, the Company wrote off its notes payable and accrued
interest resulting in a gain of $657,066.
</TABLE>

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


<PAGE>


                           VEGA-ATLANTIC CORPORATION
                         (A DEVELOPMENT STAGE COMPANY)
                       NOTES TO THE FINANCIAL STATEMENTS
________________________________________________________________________________
                                 MARCH 31, 2003



NOTE 1:  NATURE AND CONTINUANCE OF OPERATIONS
________________________________________________________________________________

The Company is a  development  stage  company and to date has not  commenced any
commercial  operations or generated any revenues.  Due to the inability to raise
sufficient capital,  the Company has either sold or disposed of its interests in
mineral  properties.  The Company is continuing to assess new business  ventures
for possible  acquisition or merger and such businesses may or may not be in the
minerals  exploration  or oil and gas  industries.  Subsequent  to year  end the
Company  entered into an Agreement in Principle to acquire  Transax  Limited,  a
telecommunications technology company. Refer to Note 9 - Subsequent Events.

At March 31, 2003, the Company had a working capital  deficiency of $508,456 and
has incurred  substantial  losses to date and further losses are  anticipated in
the future.  These  factors  raise  substantial  doubt  regarding  the Company's
ability to continue as a going  concern.  The Company's  future  operations  are
dependent  on its ability to raise  additional  working  capital,  settling  its
outstanding debts and ultimately on generating  profitable operations from a new
business venture.


NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
________________________________________________________________________________

USE OF ESTIMATES AND ASSUMPTIONS
Preparation of the Company's  financial  statements in conformity with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions that affect certain  reported amounts and disclosures.  Accordingly,
actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS
The Company considers all liquid investments, with an original maturity of three
months or less when purchased, to be cash equivalents.

FOREIGN CURRENCY TRANSLATION
The financial  statements are presented in United States dollars.  In accordance
with  Statement of Financial  Accounting  Standards  No. 52,  "Foreign  Currency
Translation", foreign denominated monetary assets and liabilities are translated
to their United States dollar  equivalents  using foreign  exchange  rates which
prevailed at the balance  sheet date.  Revenue and expenses  are  translated  at
average rates of exchange during the year. Related  translation  adjustments are
reported as a separate  component  of  stockholders'  equity,  whereas  gains or
losses resulting from foreign  currency  transactions are included in results of
operations.

MINERAL PROPERTIES
Mineral property acquisition costs, capital  contributions and exploration costs
are  expensed as  incurred  until such time as proven  economically  recoverable
reserves are established.

NET EARNINGS (LOSS) PER COMMON SHARE
Basic earnings (loss) per share includes no dilution and is computed by dividing
income available to common stockholders by the weighted average number of common
shares  outstanding for the period.  Dilutive earnings (loss) per share reflects
the  potential  dilution of  securities  that could share in the earnings of the
Company.  The  accompanying  presentation  is only of basic earnings  (loss) per
share as the potentially  dilutive  factors are  anti-dilutive to basic earnings
(loss) per share.  The  comparative  net earnings  (loss) per share figures have
been  restated to give effect to the reverse split of common shares as described
in Note 8.

INCOME TAXES
The Company follows the liability  method of accounting for income taxes.  Under
this method,  deferred  income tax assets and liabilities are recognized for the
estimated tax  consequences  attributable  to differences  between the financial
statement  carrying  values and their  respective  income  tax basis  (temporary
differences).  The effect on  deferred  income tax assets and  liabilities  of a
change in tax rates is  recognized  in income in the period  that  includes  the
enactment date.


<PAGE>


VEGA-ATLANTIC CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
________________________________________________________________________________
MARCH 31, 2003


NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
________________________________________________________________________________

STOCK-BASED COMPENSATION
In December  2002, the Financial  Accounting  Standards  Board issued  Financial
Accounting  Standard  No.  148,  "Accounting  for  Stock-Based   Compensation  -
Transition  and  Disclosure"   ("SFAS  No.  148"),  an  amendment  of  Financial
Accounting Standard No. 123 "Accounting for Stock-Based Compensation" ("SFAS No.
123").  The  purpose of SFAS No. 148 is to: (1) provide  alternative  methods of
transition for an entity that voluntarily changes to the fair value based method
of accounting for stock-based  employee  compensation,  (2) amend the disclosure
provisions  to require  prominent  disclosure  about the effects on reported net
income of an entity's  accounting  policy  decisions with respect to stock-based
employee compensation, and (3) to require disclosure of those effects in interim
financial information.  The disclosure provisions of SFAS No. 148 were effective
for the Company for the year ended December 31, 2002.

The  Company  has  elected to  continue  to  account  for  stock-based  employee
compensation  arrangements  in  accordance  with the  provisions  of  Accounting
Principles  Board Opinion No. 25,  "Accounting  for Stock Issued to  Employees",
("APB No.  25") and comply  with the  disclosure  provisions  of SFAS No. 123 as
amended by SFAS No. 148 as described above. In addition, in accordance with SFAS
No. 123 the  Company  applies  the fair  value  method  using the  Black-Scholes
option-pricing model in accounting for options granted to consultants. Under APB
No. 25, compensation  expense is recognized based on the difference,  if any, on
the date of grant  between the estimated  fair value of the Company's  stock and
the amount an employee  must pay to acquire the stock.  Compensation  expense is
recognized  immediately  for past services and pro-rata for future services over
the option-vesting period.

The Company accounts for equity  instruments  issued in exchange for the receipt
of goods or services from other than  employees in accordance  with SFAS No. 123
and the  conclusions  reached  by the  Emerging  Issues  Task Force in Issue No.
96-18,  "Accounting  for  Equity  Instruments  That Are  Issued  to  Other  Than
Employees for Acquiring or in Conjunction with Selling Goods or Services" ("EITF
96-18").  Costs  are  measured  at  the  estimated  fair  market  value  of  the
consideration  received or the  estimated  fair value of the equity  instruments
issued,  whichever is more reliably measurable.  The value of equity instruments
issued for  consideration  other than  employee  services is  determined  on the
earlier of a performance commitment or completion of performance by the provider
of goods or services as defined by EITF 96-18.

The  Company  has  also  adopted  the  provisions  of the  Financial  Accounting
Standards  Board  Interpretation  No.44,  Accounting  for  Certain  Transactions
Involving  Stock  Compensation - An  Interpretation  of APB Opinion No. 25 ("FIN
44"),  which provides  guidance as to certain  applications of APB 25. FIN 44 is
generally  effective July 1, 2000 with the exception of certain events occurring
after December 15, 1998.

RECENT ACCOUNTING PRONOUNCEMENTS
In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 141 ("SFAS 141"), "Business Combinations",
which  eliminates  the pooling  method of accounting  for business  combinations
initiated  after June 30, 2001. In addition,  SFAS 141 addresses the  accounting
for  intangible  assets and goodwill  acquired in a business  combination.  This
portion of SFAS 141 is effective for business combinations  completed after June
30,  2001.  The  adoption  of SFAS  141 has not  had a  material  impact  on the
Company's financial position or results of operations.

In July 2001, the FASB issued  Statement of Financial  Accounting  Standards No.
142 ("SFAS 142"), "Goodwill and Intangible Assets", which revises the accounting
for  purchased  goodwill and  intangible  assets.  Under SFAS 142,  goodwill and
intangible  assets with indefinite lives will no longer be amortized and will be
tested for impairment annually or whenever events or circumstances indicate that
the estimated  fair value is less than the related  carrying value as determined
on a reporting  unit basis.  SFAS 142 is effective  for fiscal  years  beginning
after December 15, 2001, with earlier adoption  permitted.  The adoption of SFAS
142 has not had a material impact on the Company's financial position or results
of operations.


<PAGE>

VEGA-ATLANTIC CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
________________________________________________________________________________
MARCH 31, 2003


NOTE 3:  INTEREST IN MINERAL PROPERTIES
________________________________________________________________________________

LEMACHANG  SILVER MINE JOINT  VENTURE  PROPOSAL:  Effective  July 26, 2000,  the
Company,   through  its  then  wholly-owned   subsidiary  Alaskan   Explorations
Corporation,  a British  West Indies  Corporation  ("Alaskan"),  entered  into a
Sino-Foreign  Cooperative  Joint Venture whereby the Company had agreed to joint
venture  with the No. 1  Geological  Brigade  of Yunnan  Bureau of  Geology  and
Mineral Resources and acquire majority control in the producing Lemachang silver
mine, located in the Ludian County Seat, of the Yunnan Province, PRC.

Subject to the completion of its due diligence,  the Company  committed to spend
$8,000,000 to increase  production,  expand  reserves and improve overall silver
recovery in return for an 85% interest in the silver mine and deposit areas. The
Board of Directors of the Company determined that the Company was unable to meet
it's funding  obligations and consequently by agreement dated May 11, 2001, sold
100% of its interest in Alaskan and forfeited all of the rights and  obligations
under the JV  Contract  in  consideration  of  $50,000,  resulting  in a gain of
$50,000.


NOTE 4:  EMPLOYEE STOCK OPTION PLAN
________________________________________________________________________________

On May 1, 2000,  the  shareholders  of the Company as  represented by 51% of the
issued and  outstanding  common shares of the  Corporation  voted to approve the
creation of an employee stock option plan (the "Old SOP"). The plan extended for
a 10-year term and consisted of 500,000 pre  reverse-split  share options priced
at $1.00 per share.  The Company's Old SOP was cancelled and the options  issued
thereon were cancelled on March 25, 2003.

By Directors'  Resolution  dated November 19, 2002 and effective March 25, 2003,
the Company  adopted a New Stock Option Plan ("New  SOP").  The New SOP shall be
deemed to be effective as of March 25, 2003. The New SOP provides  authority for
the Board to grant Options,  for the purchase of a total number of shares of the
Company's  post  reverse-split  common  stock,  not  to  exceed  3,000,000  post
reverse-split shares. The New SOP also provides that in no event may the maximum
number of shares  reserved for any one  individual  exceed 15% of the issued and
outstanding  share capital of the Company.  The option period of options granted
under the New SOP shall be up to 10 years and the option  price per share  shall
be no less than the fair market  value of a share of common stock on the date of
grant of the stock option.

As at March  31,  2003 no  options  have been  granted  under the New SOP and no
options  are  outstanding.  All  options to be granted  will expire on or before
April  30,  2010.  Shares  which  may be  acquired  through  the  New SOP may be
authorized but unissued  shares of common stock or issued shares of common stock
held in the Company's treasury. Options granted under the New SOP will not be in
lieu of salary or other compensation for services.

Refer to Note 9 - Subsequent Events.


NOTE 5:       RELATED PARTY TRANSACTIONS
________________________________________________________________________________

During  the  year  ended  March  31,  2003 the  Company  incurred  expenses  for
managerial,  administrative,  consulting and investor  relation  services in the
amount of $375,250 (2002 - $260,675) to Investor  Communications  International,
Inc. ("ICI") under a consulting services and management agreement dated April 1,
1999 which  provides for  compensation  for  services  rendered in an amount not
greater than $75,000 per month or $900,000 per year. The Company accrued $27,483
in interest  payable,  received  advances of $19,957 and repaid  $133,200 to ICI
during 2003. A director of the Company provides  consulting  services to ICI and
was paid  approximately  $17,325  during the year ended  March 31,  2003 (2002 -
$12,500).  Additionally,  the Company  issued  234,812  common  shares to ICI in
satisfaction of $140,887 in debts.  As at March 31, 2003,  $409,410 plus $13,829
in  accrued  interest  at 10% per  annum is owed to ICI  (2002 -  $251,128  plus
$23,508 accrued interest).  The balance of amounts owing to ICI is unsecured and
without any specified terms of repayment.


<PAGE>

VEGA-ATLANTIC CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
________________________________________________________________________________
MARCH 31, 2003


NOTE 5:       RELATED PARTY TRANSACTIONS (CONT'D)
________________________________________________________________________________

During the year ended March 31,  2003,  the Company  received  cash  advances of
$3,603 and accrued $5,074 in interest due to certain shareholders. Additionally,
the Company  issued  131,123  common  shares to these  certain  shareholders  in
satisfaction of $78,674 in outstanding  debts. As at March 31, 2003,  $22,749 is
owing to certain  shareholders for cash advances and accrued interest at 10% per
annum (2002 - $92,746). The balance of amounts owing to certain shareholders are
unsecured and without any specified terms of repayment.

________________________________________________________________________________

NOTE 6:  LITIGATION

AURIC, DAMES & MOORE, ET AL
On  September  27,  1999,  Intergold  Corporation  ("IGCO"),  its  wholly  owned
subsidiary, International Gold Corporation ("IGC"), and Geneva initiated a legal
complaint against AuRIC, Dames & Moore, Ahmet Altinay, General Manager of AuRIC,
and Richard Daniele, Chief Metallurgist for Dames & Moore. The damages sought by
IGCO/IGC/Geneva were to be determined in court.

The damages incurred stemmed from reliance on assays and representations made by
AuRIC and upon actions and engineering reports produced by Dames & Moore related
to the  Blackhawk  claims.  IGCO/IGC/Geneva  also alleged there were breaches of
contract by AuRIC and Dames and Moore,  as well as other causes of action.  This
legal  proceeding  affected the timing of alleged  technology to be  transferred
from Geneva to the Company that was scheduled initially before the end of 2000.

On May 8, 2000, the Company  executed an assignment  agreement that  transferred
and conveyed the potential claims and causes of action that the Company may have
in  connections  with the  Sub-license  Agreement  with Geneva.  If amounts were
recovered by the lawsuit initiated by International Gold Corporation and Geneva,
the  Company  would  receive  the  equivalent  pro rata  share of the  Claims in
relation  to all other  claims  and  causes of action  for which any  damages of
settlement amounts were recovered.

During the year ended  March 31, 2002 a  settlement  was reached and the parties
agreed to have the lawsuit dismissed. As part of the settlement,  the promissory
notes  totaling  $600,000 plus accrued  interest of $57,066 that were payable by
the  Company to AuRIC and Geneva were  cancelled,  and 12,500  shares  issued to
AuRIC and 6,250 common  shares issued to Geneva were returned to the Company for
subsequent  cancellation.  All cash recovered through the settlement was paid to
Tristar Financial Services,  Inc. as partial repayment for legal fees and direct
litigation  costs it had incurred on behalf of the  plaintiffs  according to the
terms  of a  lawsuit  funding  agreement  between  the  plaintiffs  and  Tristar
Financial Services, Inc. As total litigation costs incurred by Tristar Financial
Services, Inc. exceeded the cash recovered through the settlement,  there was no
surplus  available for  application  to the losses  incurred by the Company with
respect to the litigation. The plaintiff's settlement included $808,000 in cash,
of which  $345,000 was paid for  outstanding  legal  costs,  $10,000 was paid to
Goldstate Corporation, and $453,000 was paid to Tristar Financial Services, Inc.
Cash paid to Tristar  Financial  Services,  Inc. was less than costs incurred by
Tristar Financial Services, Inc. under the lawsuit funding agreement between the
plaintiffs and Tristar Financial Services, Inc.

GOLDEN THUNDER RESOURCES LTD.
On January 12,  2000,  the Company  entered  into a letter of intent with Golden
Thunder  Resources  Ltd.  ("Golden  Thunder"),  a Canadian  public  company,  to
purchase from Golden Thunder 80% of the issued and outstanding  shares of common
stock of Tun Resources Inc., a Canadian  corporation ("Tun Resources"),  with an
option to purchase the remaining 20% of the issued and outstanding shares of Tun
Resources at fair market value.

On May 2, 2000, the Company executed a definitive  closing agreement to purchase
the 80%  interest  in Tun  Resources.  The 80%  interest  in Tun  Resources  was
purchased in exchange for the funding  commitment  of  $1,180,000  by August 15,
2000  (subsequently  extended to February 15, 2001, and further  extended to the
date of the vendor's next annual shareholder meeting) and the issuance of 20,000
restricted common shares in the capital of the Company valued at $672,000.


<PAGE>

VEGA-ATLANTIC CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
________________________________________________________________________________
MARCH 31, 2003


NOTE 6:  LITIGATION (CONT'D)
________________________________________________________________________________

On December 12, 2000,  as amended on February 9, 2001,  the Company  provided an
offer to Golden  Thunder that outlined a revised offer to purchase the remaining
20% of Tun Resources and to repurchase all of the Company's 20,000 common shares
owned by Golden Thunder in consideration for $113,750. The Company also issued a
letter to Golden  Thunder  requesting  an  extension  to the funding  commitment
requirement  outlined  in the  Acquisition  Agreement  until  such  time  as the
shareholders  of Golden Thunder have voted to accept or reject the amended offer
dated  February 9, 2001.  Subsequently,  the amended  offer was  rejected by the
shareholders  of Golden Thunder.  The Company then initiated  legal  proceedings
against  Golden  Thunder  and Tun  Resources  for  breaches  of the  Acquisition
Agreement  and other  causes  of  action,  and  sought  damages  of in excess of
$800,000.  Golden  Thunder and Tun  Resources  then filed a statement of defense
alleging that the Company breached the acquisition agreement.

During the year ended  March 31,  2003 for  consideration  of  $150,000  and the
return to Treasury of the 20,000  common  shares owned by Golden  Thunder with a
fair value of $12,000,  the Company  entered into an agreement in  settlement of
its  lawsuit  with  Golden  Thunder  and Tun  Resources  resulting  in a gain on
settlement of $162,000.  Effective  November 1, 2002,  upon receipt of the final
$25,000,  the Company  released all of its claims against Golden Thunder and Tun
Resources.  On October 3,  2002,  the 20,000  common  shares  were  returned  to
Treasury and cancelled.

________________________________________________________________________________

NOTE 7:  INCOME TAXES

Income taxes are provided pursuant to SFAS No. 109, Accounting for Income Taxes.
The statement  requires the use of an asset and liability approach for financial
reporting for income  taxes.  If it is more likely than not that some portion or
all of a deferred  tax asset will not be  realized,  a  valuation  allowance  is
recognized.  Accordingly,  as the  realization and use of the net operating loss
carryforward is not probable,  the tax benefit of the loss carryforward has been
offset by a valuation allowance of the same amount.


NOTE 8:  STOCKHOLDERS' EQUITY
________________________________________________________________________________

COMMON STOCK

On May 1, 2000,  the Company  issued  20,000  shares of common stock with a fair
value of $672,000,  for the purchase of an 80% interest in Tun  Resources,  Inc.
(Refer to Note 3)

On May 29,  2000,  the  Company  issued  2,500  shares of  common  stock for the
settlement of accounts payable of the Corporation in the amount of $15,000.

Pursuant to a Reg S private placement  offering  memorandum dated March 1, 2000,
the Company offered 62,500 post  reverse-split  shares of common stock for total
proceeds of  $1,250,000.  This  offering was  intended to be used for  continued
financing of the exploration, development and expansion programs being conducted
on the  Company's  joint  venture  projects in China,  consulting  fees,  and to
provide  working  capital.  As of  March  31,  2001,  100% of the  offering  was
completed and the 62,500 shares of common stock had been issued.

On December 27, 2000 the Company  issued  398,845  shares of common stock with a
fair value of $1,994,226 on the  conversion of convertible  promissory  notes of
$239,309,  including  accrued  interest,  resulting in a loss on  conversion  of
$1,754,917.  The  398,845  shares  of  common  stock  represented  54.7%  of the
outstanding  shares  of  common  stock  of the  Company  at March  31,  2001 and
accordingly  the  conversion  of the  promissory  notes  resulted in a change in
control of the Company.

On October 31, 2001 the Company  cancelled  12,500 shares of common stock in the
name of AuRIC Metallurgical Laboratories and 6,250 shares of common stock in the
name of Geneva Resources Inc. (Refer to Note 6)

<PAGE>

VEGA-ATLANTIC CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
________________________________________________________________________________
MARCH 31, 2003


NOTE 8:  STOCKHOLDERS' EQUITY (CONT'D)
________________________________________________________________________________

On November 13, 2001 the Company  converted  $150,000 of debt owing to Investors
Communications for 50,000 shares of common stock.

On October 3, 2002 the Company  converted $42,187 of debt owing to a Shareholder
of the Company for 70,312 shares of common stock. (Refer to Note 5)

On October 3, 2002 the Company  converted  $140,887  of debt owing to  Investors
Communications for 234,812 shares of common stock. (Refer to Note 5)

On  October  3, 2002 the  Company  converted  $36,487  or debt owing to Tri Star
Financial for 60,811 shares of common stock. (Refer to Note 5)

On October 3, 2002,  as part of the  lawsuit  settlement,  the 20,000  shares of
common stock issued to Tun Resources  were  returned to Treasury and  cancelled.
(Refer to Note 6)

REVERSE STOCK SPLITS
Effective  December  22,  2000 the Company  completed  a reverse  stock split of
one-for-four of the Company's outstanding common stock, resulting in a reduction
of the then outstanding common stock from 26,446,000 to 6,611,500.  In addition,
authorized common stock was reduced from 500,000,000 to 100,000,000.

Effective  March 31,  2003,  the  Company  completed  a reverse  stock  split of
one-for-twenty  of  the  Company's  outstanding  common  stock,  resulting  in a
reduction of the  outstanding  common stock from 22,132,110 to 1,106,778 with no
change in the authorized common stock.

The par  value of the  Company's  common  stock was not  changed  as a result of
either of the above reverse stock splits.

Except for in the Statement of Stockholders' Equity, unless otherwise noted, all
references to common stock, common shares outstanding, average numbers of common
shares outstanding and per share amounts in these Financial Statements and Notes
to Financial  Statements prior to the effective date of the reverse stock splits
have been restated to reflect the  one-for-four  and the  one-for-twenty  common
stock splits on a retroactive basis.


NOTE 9:  SUBSEQUENT EVENTS
________________________________________________________________________________

On June 19, 2003 the Company entered into an Agreement in Principle ("AIP") with
Transax  Limited  ("Transax"),  a private  Colorado  corporation  engaged in the
business of providing information network solutions for healthcare providers and
insurance  companies.  The AIP is  subject to a number of  conditions  precedent
including  satisfactory  completion  of due  diligence,  Board of Directors  and
shareholder approvals and execution of a formal agreement. The AIP proposes that
Transax  will be  acquired  through  the merger of Transax  with a newly  formed
wholly-owned subsidiary of the Company.

The proposed terms of acquisition of all of the issued and outstanding shares of
the common stock of Transax  include the issuance of up to 11,066,207  shares of
the Company's restricted common stock, the grant and exchange of 4,500,000 stock
options,  the grant and  exchange of  4,100,000  non-transferable  common  stock
purchase warrants and the issuance of 300,000 shares of the Company's restricted
common  stock as a finder's  fee. In the event the  transaction  is  consummated
there will be a change in control of the Company.

The  Company  has also  agreed to use its  commercially  reasonable  efforts  to
advance up to $250,000 to Transax by way of a loan bearing  interest at the rate
of 10% per annum.

<PAGE>

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

         The Company's principal independent accountant from October 20, 2000 to
the present is LaBonte & Co., Chartered Accountants, 610 - 938 Howe Street,
Vancouver, British Columbia V6Z 1N9.

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT

IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS

     As of the date of this Annual Report, the directors and executive officers
of the Company are as follows:

<PAGE>


    Name                     Age                     Position with VGAC
____________                 ___                   _______________________

Grant Atkins                 43                    Director and President/CEO
                                                   Secretary and Treasurer/CFO

         GRANT ATKINS has been a director and the President/Chief Executive
Officer and Treasurer/Chief Financial Officer of the Company since October 15,
1998. For the past five years Mr. Atkins has been self-employed and has acted as
a financial and project coordination consultant to clients in government and
private industry. He has extensive multi-industry experience in the fields of
finance, administration and business development. Mr. Atkins is a consultant
through the private management consulting company, Investor Communications
International, Inc. Mr. Atkins is also a member of the Board of Directors of
Intergold Corporation, a publicly traded corporation formerly engaged in the
exploration of gold and silver, a member of the Board of Directors of Petrogen
Corp., a public traded corporation specializing in domestic oil and gas
production, and a member of the Board of Directors of GeneMax Corp., a publicly
traded corporation specializing in immunotherapies for cancer.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

         Section 16(a) of the 1934 Exchange Act requires the Company's directors
and officers, and the persons who beneficially own more than ten percent (10%)of
the Common Stock of the Company, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Copies of all filed
reports are required to be furnished to the Company pursuant to Rule 16a-3
promulgated under the Exchange Act. Based solely on the reports received by the
Company and on the representations of the reporting persons, the Company
believes that these persons have complied with all applicable filing
requirements during the fiscal year ended March 31, 2003.

ITEM 10. EXECUTIVE COMPENSATION

COMPENSATION OF OFFICERS AND DIRECTORS

         As of the date of this Annual Report none of the officers or directors
of the Company are compensated for their roles as directors or executive
officers of the Company as the Company is only in the development stage and has
not yet realized substantial revenues from business operations. Officers and
directors, however, are reimbursed for any out-of-pocket expenses incurred by
them on behalf of the Company. None of the Company's directors or executive
officers are party to employment agreements with the Company. The Company
presently has no pension, health, annuity, insurance, stock options, profit
sharing or similar benefit plans.

         Grant Atkins, the current President/Chief Executive Officer, Treasurer/
Chief Financial Officer and director of the Company, derives remuneration from
the Company indirectly through ICI, which provides a wide range of financial,
consulting, administrative and management services to the Company on a
month-to-month basis as needed. During the fiscal year ended March 31, 2003, Mr.
Atkins received approximately $17,325 from ICI for work conducted relating to
the management and administration of the Company.

SUMMARY COMPENSATION TABLE

                        Annual Compensation    Awards      Payouts
                        ___________________ ____________   _______
                              $       $       $       $       #      $      $
Name and Position          Salary   Bonus   Other    RSA   Options  LTIP  Other
_________________          ______   _____   _____    ___   _______  ____  _____
<PAGE>
                                                 (1)
Grant Atkins        2001     0        0     $30,000   0       0      0      0
Pres./CEO           2002     0        0     $12,000   0       0      0      0
Director            2003     0        0     $17,325   0       0      0      0

John Bowles         2001     0        0     $    0    0       0      0      0
Prior Director      2002     0        0          0    0       0      0      0
                    2003     0        0          0    0       0      0      0

Herb Ackerman       2001     0        0          0    0       0      0      0
Prior Director      2002     0        0          0    0       0      0      0
                    2003     0        0          0    0       0      0      0

                                                 (1)
Gary Powers         2001     0        0     $30,000   0       0      0      0
Prior Director      2002     0        0          0    0       0      0      0
                    2003     0        0          0    0       0      0      0

         (1) Annual compensation based on the fiscal year of April 1st to March
31st and paid according to individual contractual arrangements.

STOCK OPTION PLAN

         On June 16, 2003, the Board of Directors of the Company unanimously
approved and adopted a Stock Option Plan. The purpose of the Stock Option Plan
is to advance the interests of the Company and its shareholders by affording key
personnel of the Company an opportunity for investment in the Company and the
incentive advantages inherent in stock ownership in the Company. Pursuant to the
provisions of the Stock Option Plan stock options (the "Stock Options") will be
granted only to key personnel of the Company; generally defined as a person
designated by the Board of Directors upon whose judgment, initiative and efforts
the Company may rely including any director, officer, employee or consultant of
the Company.

         The Stock Option Plan is to be administered by the Board of Directors
of the Company, which shall determine: (i) the persons to be granted Stock
Options under the Stock Option Plan; (ii) the number of shares subject to each
Stock Option and the exercise price of each Stock Option; and (iii) whether the
Stock Option shall be exercisable at any time during the option period of up to
ten years or whether the Stock Option shall be exercisable in installments or by
vesting only. The Stock Option Plan provides authorization to the Board of
Directors to grant Stock Options to purchase a total number of shares of Common
Stock of the Company, not to presently exceed 4,500,000 shares (post-Reverse
Stock Split), as at the date of adoption by the Board of Directors of the Stock
Option Plan. At the time a Stock Option is granted under the Stock Option Plan
the Board of Directors shall fix and determine the exercise price at which
shares of Common Stock of the Company may be acquired; provided, however, that
any such exercise price shall not be less than that permitted under the rules
and policies of any stock exchange or over-the-counter market which is
applicable to the Company at that time.

         In the event that a Stock Option optionee, who is a director or officer
of the Company, ceases to serve in that position, any Stock Option held by such
optionee generally may be exercisable within up to 90 calendar days after the
effective date that such position ceases, and after such 90-day period any
unexercised Stock Option shall expire. In the event that an optionee, who is an
employee or consultant of the Company, ceases to be employed by the Company, any

<PAGE>

Stock Option held by such optionee generally may be exercisable within up to 60
calendar days (or up to 30 calendar days where the optionee provided only
investor relations services to the Company) after the effective date that such
employment ceases, and after such 60- or 30-day period any unexercised Stock
Option shall expire.

         No Stock Options granted under the Stock Option Plan will be
transferable by an optionee, and each Stock Option will be exercisable during
the lifetime of the optionee subject to the option period of up to ten years and
the limitations described above. Any Stock Option held by an optionee at the
time of his death may be exercised by his estate within one year of his death or
such longer period as the Board of Directors may determine.

         The exercise price of a Stock Option granted pursuant to the Stock
Option Plan shall be paid in cash or certified funds upon exercise of the Stock
Option.

Incentive Stock Options

         The Stock Option Plan further provides that, subject to the provisions
of the Stock Option Plan and prior shareholder approval, the Board of Directors
may grant to any key personnel of the Company who is an employee eligible to
receive Stock Options one or more incentive Stock Options to purchase the number
of shares of Common Stock allotted by the Board of Directors (the "Incentive
Stock Options"). The option price per share of Common Stock deliverable upon the
exercise of an Incentive Stock Option shall be not less than fair market value
of a share of Common Stock on the date of grant of the Incentive Stock Option.
In accordance with the terms of the proposed Stock Option Plan, "fair market
value" of an Incentive Stock Option as of any date shall not be less than the
closing price for the shares of Common Stock on the last trading day preceding
the date of grant. The option term of each Incentive Stock Option shall be
determined by the Board of Directors, which shall not commence sooner than from
the date of grant and shall terminate no later than up to ten years from the
date of grant of the Incentive Stock Option, subject to possible earlier
termination as described above.

         As of the date of this Annual Report no Stock Options or Incentive
Stock Options under the Stock Option Plan have been granted (which does not
include those stock options previously granted). See " - Non-Qualified Stock
Option Plan" below. In accordance with the Company's proposed Stock Option Plan,
and subject to approval by the shareholders, the Company anticipates filing with
the Commission registration statements on "Form S-8 - For Registration Under the
Securities Act of 1933 of Securities to Be Offered to Employees Pursuant to
Employee Benefit Plans" (each an "S-8") registering Stock Options and Incentive
Stock Options under its proposed Stock Option Plan in the amount of up to
4,500,000 post-Reverse Stock Split shares at various exercise prices. Upon
approval by the shareholders of the proposed Stock Option Plan the Board of
Directors will be authorized, without further Shareholder approval, to grant
such Stock Options from time to time to acquire up to an aggregate of up to
4,500,000 shares of the Company's Common Stock.

NON-QUALIFIED STOCK OPTION PLAN

         On May 1, 2000, the then Board of Directors of the Company adopted a
Non-Qualified Stock Option Plan (the "Non-Qualified SOP"), which provided for
the grant of 500,000 options to purchase an aggregate of 500,000 shares of
restricted Common Stock at $1.00 per share.

<PAGE>

         During the prior fiscal years 2001 and 2002, the then Board of
Directors granted 487,500 stock options pursuant to the Non-Qualified SOP to
acquire up to an aggregate of 487,500 shares of restricted Common Stock at $1.00
per share. No stock options granted under the Non-Qualified SOP were exercised
by the optionees thereof.

         Subsequent to December 31, 2002, and as of the date of the Proxy
Statement, the Board of Directors of the Company voted to terminate the
Non-Qualified SOP and to unilaterally cancel the 487,5000 stock options as
granted. The Board of Directors based its decision regarding cancellation of the
stock options on the fact that the Non-Qualified SOP and subsequent grants of
stock options were done at a time when management anticipated that the Company
would have a viable and ongoing business development venture relating to certain
mining claims. The then optionees did not perform the services intended as the
mining claims did not contain any gold and associated business operations
failed. The business venture was subject to litigation (as described above) and
is no longer being pursued by the Company.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         As of the date of this Annual Report there are 1,106,778 shares of
Common Stock issued and outstanding. The following table sets forth information
as of the Record Date concerning: (i) each person who is known by the Company to
own beneficially more than five percent (5%) of the Company's outstanding Common
Stock; (ii) each of the Company's executive officers, directors and key
employees; and (iii) all executive officers and directors as a group. Common
Stock not outstanding but deemed beneficially owned by virtue of the right of an
individual to acquire shares within 60 days is treated as outstanding only when
determining the amount and percentage of Common Stock owned by such individual.
Except as noted, each person or entity has sole voting and sole investment power
with respect to the shares of Common Stock shown.

NAME                             POSITION      AMOUNT AND NATURE OF   PERCENT OF
                                               BENEFICIAL OWNERSHIP   OWNERSHIP
________________________________________________________________________________
                                                          (1)(2)
Alexander W. Cox                Shareholder          216,165            19.53%
428-755 Burrard St.
Vancouver, British Columbia
V6Z 1X6 Canada

                                                          (2)(3)
Pacific Rim Financial Inc.      Shareholder           56,665            5.12%
84 Brook Street
Mayfair, London  W1K 5EH

                                                          (1)(2)(4)
Investor Communications         Shareholder          303,562           27.43%
 International, Inc.
435 Martin Street, Suite 2000
Blaine, Washington 98320

                                                         (1)(2)
TriStar Financial               Shareholder          60,811             5.49%
 Services Inc.
435 Martin Street, Suite 2000
Blaine, Washington 98230

<PAGE>

                                                         (2)(5)
Brent Pierce                    Shareholder          73,312             6.62%
16377 Lincoln Woods Court
Surrey, British Columbia
Canada V3S 0J8

                                                         (1)(2)
All officers and directors      Shareholder             250              .02%
 as a group (1 person)

_______________________________
     (6)  These are restricted shares of Common Stock.
     (7)  Shares held of record have been adjusted to take into account the
          Reverse Stock Split effected on approximately April 2, 2003.
     (8)  Of the 56,665 shares of Common Stock held of record by Pacific Rim
          Financial Inc., approximately 15,000 are free trading.
     (9)  The Company and ICI entered into a two-year Consulting Agreement dated
          April 1, 1999, and renewed on April 1, 2001 for an additional two-year
          period, pursuant to which ICI performs a wide range of management,
          administrative, financial, marketing and public company services for
          the Company. ICI continues to provide services on a month to month
          basis.
     (10) Of the 73,312 shares of Common Stock held of record by Brent Pierce,
          approximately 3,000 are free trading.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         With the exception of the current contractual relations between the
Company and ICI, as of the date of this Annual Report the Company has not
entered into any contractual arrangements with related parties other than those
transactions resulting primarily from advances made by related parties to the
Company. Mr. Atkins is a director and the President, Secretary and Treasurer of
the Company, and is a member of the management team provided by ICI. The Board
of Directors of the Company has not adopted or approved any policy regarding
possible future transactions with related third parties.

         Mr. Atkins is engaged in other businesses, either individually or
through partnerships and corporations in which he may have an interest, hold an
office or serve on the Boards of Directors. The sole director of the Company,
Mr. Atkins, has other business interests to which he may devote a major or
significant portion of his time. Certain conflicts of interest, therefore, may
arise between the Company and its directors. Such conflicts can be resolved
through the exercise by such directors of judgment consistent with their
fiduciary duties to the Company. The directors intend to resolve such conflicts
in the best interests of the Company. Moreover, the directors will devote their
time to the affairs of the Company as they deem necessary.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits.

               None.

(b)      Reports.

               None.

<PAGE>


ITEM 14. CONTROLS AND PROCEDURES

         The Company, under the supervision of the President, has conducted an
evaluation of the effectiveness of the design and operation of the Company's
disclosure controls and procedures within ninety (90) days of the filing date of
this Annual Report. Based upon the results of this evaluation, the Company
believes that they maintain proper procedures for gathering, analyzing and
disclosing all information in a timely fashion that is required to be disclosed
in its reports under the Securities Exchange Act of 1934, as amended. There have
been no significant changes in the Company's controls subsequent to the
evaluation date.

         There were no significant changes in the Company's internal control or
in other factors that could significantly affect the Company's internal controls
subsequent to the evaluation date.

         Grant Atkins, a member of the Board of Directors and executive officer,
is signing this Annual Report in his capacity as the President/Chief Executive
Officer and as the Treasurer/Chief Financial Officer.


SIGNATURES

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

                                         VEGA-ATLANTIC CORPORATION


Dated: June 23, 2003                     By: /s/ GRANT ATKINS
                                         ___________________________
                                         Grant Atkins, President and
                                         Chief Executive Officer



                                         By: /s/ GRANT ATKINS
                                         ___________________________
                                         Grant Atkins, Treasurer and
                                         Chief Financial Officer



<PAGE>

                                  CERTIFICATION

I, Grant Atkins, certify that:


    1. I have reviewed this annual report on Form 10-KSB of Vega-Atlantic
    Corporation;

    2. Based on my knowledge, this annual report does not contain any untrue
    statement of a material fact or omit to state a material fact necessary to
    make the statements made, in light of the circumstances under which such
    statements were made, not misleading with respect to the period covered by
    this annual report;

    3. Based on my knowledge, the financial statements, and other financial
    information included in this annual report, fairly present in all material
    respects the financial condition, results of operations and cash flows of
    the registrant as of, and for, the periods presented in this annual report;

    4. The registrant's other certifying officer and I are responsible for
    establishing and maintaining disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-14 and 15 d-14) for the registrant and we have:

       (a) designed such disclosure controls and procedures to ensure that
       material information relating to the registrant, including its
       consolidated subsidiaries, is made known to us by others within those
       entities, particularly during the period in which this quarterly report
       is being prepared;

       (b) evaluated the effectiveness of the registrant's disclosure controls
       and procedures as of a date within 90 days prior to the filing date of
       this annual report (the "Evaluation Date"); and

       (c) presented in this annual report our conclusions about the
       effectiveness of the disclosure controls and procedures based on our
       evaluation as of the Evaluation Date;

    5. The registrant's other certifying officer and I have disclosed, based on
    our most recent evaluation, to the registrant's auditors and the audit
    committee of registrant's board of directors:

       (a) all significant deficiencies in the design or operation of internal
       controls which could adversely affect the registrant's ability to record,
       process, summarize and report financial data and have identified for the
       registrant's auditors any material weaknesses in internal controls; and

       (b) any fraud, whether or not material, that involves management or other
       employees who have a significant role in the registrant's internal
       controls; and

    6. The registrant's other certifying officer and I have indicated in this
    annual report whether or not there were significant changes in internal
    controls or in other factors that could significantly affect internal
    controls subsequent to the date of our most recent evaluation, including any
    corrective actions with regard to significant deficiencies and material
    weaknesses.



                                       /s/ GRANT ATKINS
                                       ___________________________
                                           Grant Atkins
                                           President/Chief Executive Officer and
                                           Treasurer/Chief Financial Officer

Date: June 23, 2003