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, 2002

[ ]  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) 332-7734
                           (Issuer's telephone number)

                       4600 South Ulster Street, Suite 240
                             Denver, Colorado 80237
              (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, 2002): $ -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, 2002: $3,208,138.55.

     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 24, 2002

Common Stock, $.00001 par value            15,213,405

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                                                                            Page
PART I

ITEM 1. DESCRIPTION OF BUSINESS                                                3

ITEM 2. PROPERTIES                                                             5

ITEM 3. LEGAL PROCEEDINGS                                                      5

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                    9

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED                      9
           STOCKHOLDER MATTERS

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL                     10
           CONDITION AND RESULTS OF OPERATIONS

ITEM 7. FINANCIAL STATEMENTS                                                  15

        CONSOLIDATED BALANCE SHEET                                           F-2

        CONSOLIDATED STATEMENTS OF OPERATIONS AND                            F-3
           COMPREHENSIVE LOSS

        CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY             F-4 - F-6

        CONSOLIDATED STATEMENTS OF CASH FLOWS                                F-7

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                           F-8

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS OF                      16
           ACCOUNTING AND FINANCIAL DISCLOSURE

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND                          17
           CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a)
           OF THE EXCHANGE ACT

ITEM 10.EXECUTIVE COMPENSATION                                                18

ITEM 11.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS                       20
           AND MANAGEMENT

ITEM 12.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                        21

ITEM 13.EXHIBITS AND REPORTS ON FORM 8-K                                      21

SIGNATURES                                                                    21


                                       2
<PAGE>


                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

     Vega-Atlantic Corporation, a Colorado corporation, which currently trades
on the OTC Bulletin Board under the symbol "VATL" and the Frankfurt Stock
Exchange under the symbol "VGA" (WKN: 936302), is referred to in this Form
10-KSB as "VATL". VATL is primarily engaged in the business of minerals and oil
and gas exploration, acquisition and development within the United States and
worldwide.

CURRENT BUSINESS OPERATIONS

Tun Resources, Ltd.

     On May 2, 2000, VATL 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, VATL agreed to
(i) provide a total of $1,180,000 by February 15, 2001 to fund current Tun
Resources joint venture projects; (ii) issue 1,600,000 shares of its restricted
common stock to Golden Thunder in exchange for the approximate eighty percent
(80%) of the issued and outstanding shares of common stock of Tun Resources and
an option to purchase the remaining twenty percent (20%); and (iii) be solely
responsible for the future funding of Tun Resources and its joint ventures.

     As of the date of this Annual Report, VATL has issued 1,600,000 shares of
its restricted common stock to Golden Thunder (400,000 shares after the reverse
stock split) and has provided approximately $604,500 of funds to Tun Resources.
During the prior fiscal year, VATL was unable to timely provide the required
aggregate amount of $1,180,000 by February 15, 2001.

     On December 12, 2000 and as amended February 9, 2001, VATL provided a
letter of offer to Golden Thunder that outlined a revised offer to purchase the
remaining 20% of Tun Resources and to repurchase all of the VATL 400,000
(post-split) shares of common stock from Golden Thunder (the "Letter Offer").
VATL obtained verbal agreement from three of the four board members of Golden
Thunder that the Letter Offer would be provided to the shareholders of Golden
Thunder at their next annual meeting and to the CDNX (Canadian Stock Exchange)
for approval. On February 9, 2001, VATL 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
voted to accept or reject the Letter Offer.

     As of the date of this Annual Report, VATL has received an extension to the
funding commitment requirement in the Acquisition Agreement to the date of the
next annual meeting of the shareholders of Golden Thunder. As of the date of
this Annual Report, the Letter Offer has been presented to the shareholders of
Golden Thunder for their approval, such approval was not received.

                                       3
<PAGE>


     On July 8, 2001, VATL filed a Statement of Claim in the Supreme Court of
British Columbia naming Golden Thunder Resources Ltd. and Tun Resources Inc. as
defendants. VATL alleges in its Statement of Claim that certain representations
were made by the defendants to VATL which were untrue and upon which VATL
detrimentally relied thus suffering loss and damages, and that amounts provided
to Tun Resources by VATL were refundable debt advances until VATL's funding
requirement of providing a total of $1,180,000 to Tun Resources was complete.
See "Part I. Item 3. Legal Proceedings" for further disclosure. Accordingly, for
accounting purposes effective March 31, 2001, VATL ceased consolidating the
assets, liabilities and operations of Tun Resources in its financial statements.

     As previously reported, Tun Resources is the major stakeholder in one gold
exploration and development Sino Foreign joint venture in the Yunnan Province of
China named the Yuntong Sino Foreign Joint Venture.

The Ailaoshan/Xiaoshuijing Gold Project

     On May 4, 2000, VATL 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 VATL has
the right to acquire an approximate 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. Management plans to
conduct future due diligence on the gold resource to provide the basis for
negotiation of the final terms of the joint venture agreement, should the due
diligence warrant continuing such negotiations. According to the terms of the
Letter Agreement, VATL must invest up to $2,500,000 to expand the gold resource
and increase mine production, and that the No. 1 Geological Brigade will
contribute the property, exploration and mining rights, permits, land use rights
and other work to date completed on the gold resource.

     Management of VATL believes that exploration work conducted by the No. 1
Geological Brigade may indicate peripheral gold occurrences, which could
increase future gold resources. Until the completion of all due diligence, VATL
will not consider the acquisition of the Ailaoshang gold concession probable and
any further involvement may be subject to funding availability.

     VATL has formed Polar Explorations Ltd., a Belize corporation and the
wholly-owned subsidiary of VATL ("Polar Explorations"), to act as the joint
venture partner on behalf of VATL. The Ailaoshan/Xiaoshuijing Gold Project is
subject to obtaining adequate financing to proceed with the project.

The Vega Property and Settlement of Litigation

     As previously disclosed, on September 27, 1999, Geneva Resources, Inc.
("Geneva") and International Gold Corporation, a subsidiary of Intergold
Corporation ("INGC"), on behalf of Intergold Corporation ("IGCO"), initiated
legal proceedings against AuRIC Metallurgical Laboratories Inc. ("AuRIC") for
multiple breaches of contract stemming from an Agreement for Services and a
License Agreement and against Dames & Moore in a declaratory relief cause of
action (the "Lawsuit").

     VATL suspended exploration of the Vega Property due to (i) independent
assessment information which did not support the claims of AuRIC and Dames &
Moore; (ii) the existence of multiple breaches of contract by AuRIC and Dames &
Moore under the Agreement for Services and the License Agreement; and (iii) the
pending Lawsuit and further claims of action against AuRIC and Dames & Moore.
Moreover, VATL deemed the probability of commercial grade gold or silver located
in the Vega Property claims to be nil.

                                       4
<PAGE>


     On approximately September 25, 2001, Geneva, IGCO, INGC, and others entered
into settlement agreements and releases with Dames & Moore, et. al., and AuRIC
in which the parties agreed to settle in order to diminish the continuous
burden, cost and expense of protracted ongoing litigation. See "Part I. Item 3.
Legal Proceedings" for further disclosure.

Investment in Other Ventures

     As of the date of this Annual Report, management seeks to develop a
diversified international resources exploration, development and production
program. Management intends to focus VATL's business activities on
resource-based diversification to other commodities and opportunities under
consideration and evaluation. Management believes that it is in the best
interests of VATL to diversify VATL's business activities to avoid reliance on a
single commodity. In addition, activities in China have been difficult to
attract investment to fund exploration and development of initiatives; various
divestitures have resulted.

ITEM 2. DESCRIPTION OF PROPERTIES

     Except as described above, VATL does not own any other real estate or other
properties. VATL 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, VATL filed a Statement of Claim in the Supreme Court of
British Columbia naming Golden Thunder Resources Ltd. and Tun Resources Inc. as
defendants. VATL alleges in its Statement of Claim that certain representations
were made by the defendants to VATL as follows: (i) Tun Resources had good and
marketable title to its assets; (ii) the consideration paid by VATL was good and
valuable consideration for 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 VATL upon closing of the
Acquisition Agreement. VATL alleges 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 VATL; (ii) the consideration paid by VATL to
acquire the shares of Tun Resources was excessive and not good and valuable
consideration; (iii) the intercorporate loan could not be raised in the manner
agreed upon by VATL and defendants; and (iv) the board 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. VATL further
alleges in its Statement of Claim that (i) the defendants made such
representations to VATL in order to induce VATL to enter into the Acquisition
Agreement; (ii) VATL reasonably relied upon the representations made to it by
the Defendants; and (iii) such misrepresentations are breaches of material terms
of the Acquisition Agreement and have caused VATL loss and damages. VATL is
seeking general and special damages in excess of $800,000.00.

                                       5
<PAGE>


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

     As of the date of this Annual Report, management intends to aggressively
pursue all such legal actions and review further legal remedies against Golden
Thunder and Tun Resources.

VEGA PROPERTY LITIGATION AND SETTLEMENT

     On September 27, 1999, Geneva and INGC, on behalf of IGCO, initiated legal
proceedings against AuRIC and Dames & Moore by filing its complaint in the
District Court of the Third Judicial District for Salt Lake City, State of Utah,
for: (i) multiple breaches of contract relating to the Agreement for Services
and the License Agreement, respectively, including, but not limited to,
establishment and facilitation of the proprietary technology and fire assay
procedures developed by AuRIC at an independent assay lab and failure to deliver
the proprietary technology and procedures to IGCO and Geneva; (ii) breach of the
implied covenant of good faith and fair dealing; (iii) negligent
misrepresentation; (iv) specific performance, (v) non-disclosure injunction;
(vi) failure by AuRIC to repay advances, and (vii) quantum meruit/unjust
enrichment. INGC, on behalf of IGCO, also named Dames & Moore in the legal
proceeding in a declaratory relief cause of action (collectively, the
"Lawsuit").

     On October 8, 1999, Geneva and INGC, on behalf of IGCO, amended its
complaint by naming as defendants AuRIC, Dames & Moore, Ahmet Altinay, General
Manager of AuRIC, and Richard Daniele, Chief Metallurgist for Dames & Moore and
specifying damages in excess of $10,000,000. The damages sought by Geneva and
INGC, on behalf of IGCO, were based on the general claims and causes of action
set forth in the amended complaint relating to reliance on the assays and
representations made by AuRIC, the actions and engineering reports produced by
Dames & Moore and, specifically, the negligent misrepresentations and
inaccuracies contained within some or all of those Dames & Moore reports and
breaches of contract by AuRIC and Dames & Moore.

     On or about November 17, 1999, AuRIC, Dames & Moore, Richard Daniele and
Ahmet Altinay filed separate answers to the amended complaint, along with
counterclaims and a third party complaint against Geneva, INCG, IGCO and Brent
Pierce for breach of contract against Geneva, breach of contract against INCG
and others, defamation against IGCO, INCG, Geneva and others, injunctions
against IGCO, INCG, Geneva and others, amongst other claims. In their defamation
claim against IGCO, the plaintiffs sought damages and punitive damages in an
amount to be determined at trial, as well as attorney's fees and costs. In
connection with the cause of action for preliminary and permanent injunctions
against IGCO, AuRIC and Ahmet Altinay sought attorney's fees and costs.

     On approximately June 14, 2000, Dames & Moore filed an action against IGCO,
INGC and others in the District Court of the Fifth Judicial District of the
State of Idaho, in and for the County of Lincoln (the "Idaho Lawsuit"). In the
Idaho Lawsuit, Dames & Moore sought foreclosure of a lien against IGCO and/or
INGC which purportedly arose in favor of Dames & Moore. INGC dropped the bulk of
its mining claims, except for a small group related to this litigation, as IGCO
and INGC believed that the mining claims contain no commercial quantifies of
gold and silver. Dames & Moore sought to have the mining claims sold to
compensate Dames & Moore for its services, materials and equipment. Dames &
Moore also sought its fees and costs incurred in enforcing its claimed lien.
IGCO and INGC filed an answer on or about August 8, 2000.

                                       6
<PAGE>


     On June 21, 2000, Geneva and INGC, on behalf of IGCO, filed a second
amended complaint in the District Court of the Third Judicial District for Salt
Lake City, State of Utah. The second amended complaint increased detail
regarding the alleged breaches of contract and increased causes of action
against other parties involved by adding two new defendants, MBM Consulting, and
Dr. Michael B. Merhtens, who provided consulting services to INGC. The amendment
also added certain claims of other entities involved through Geneva against the
defendants. The proprietary technology formed the basis of claims made by Geneva
and INGC, on behalf of IGCO, in the complaints as filed with the District Court.
Geneva and INGC, on behalf of IGCO, alleged that the proprietary technology does
not exist and that Geneva and INGC were fraudulently, recklessly and/or
negligently deceived by AuRIC, Dames & Moore, and other parties to the lawsuit.

     Geneva and INGC subsequently obtained an order from the District Court to
grant its Motion to Compel. The Order required that AuRIC and Dames & Moore
produce the proprietary technology for Geneva's and INGC's restricted use by its
legal counsel and industry experts. Geneva and INGC, on behalf of IGCO, obtained
an expert opinion as to the absence of validity and ineffectiveness of the
proprietary technology.

     On November 10, 2000, Geneva and INGC filed motions for partial summary
judgment against Dames & Moore and AuRIC. Subsequently, on March 19, 2001, the
motions for partial summary judgment were denied. The court, however, provided a
ninety-day period during which both parties were required to prepare for trial,
and after such period the court would set a date for trial. At a scheduling
conference held on July 31, 2001, the court set trial for a period of fifteen
days commencing October 16, 2001. The court date was subsequently changed to
October 26, 2001 pursuant to mutual consent of the parties in an attempt to
mediate the dispute. Such mediation was unsuccessful.

Agreements Relating to Litigation

     VATL and Geneva entered into an assignment agreement dated May 9, 2000 (the
"Assignment Agreement") that transferred and conveyed to Geneva the potential
claims and causes of action that VATL may have under the Sub-License Agreement
with Geneva.

     On June 22, 2001, IGCO, INGC, Geneva, Brent Pierce, MBM Consultants, Inc.
and Michael B. Mehrtens entered into a settlement agreement (the "Mehrtens
Settlement Agreement"). Pursuant to the terms of the Mehrtens Settlement
Agreement, the parties agreed to treat the contents of the Mehrtens Settlement
Agreement as strictly confidential and to not disclose such terms and
provisions.

     As IGCO has not generated revenues and has no liquid assets to commit to
fund the significant estimated future expenses associated with ongoing
litigation, on June 28, 2001, Geneva, IGCO, INGC, Tristar Financial Services,
Inc. ("Tristar") and Alexander Cox ("Cox") entered into a funds sharing
agreement (the "Funds Sharing Agreement"). Pursuant to the terms of the Funds
Sharing Agreement, (i) Tristar would fund the direct costs of the litigation on
a best efforts basis relating to the Lawsuit for the period from April 1, 2001
to the date that the Lawsuit was settled; (ii) as consideration therefore,
Tristar would receive thirty percent (30%) of the gross proceeds received by
Geneva, IGCO and INGC from any and all settlements relating to the Lawsuit, plus
the repayment of all payments and advances made by Tristar (the "Tristar
Payment"); and (iii) the Tristar Payment would be shared with Cox in proportion
to (a) the funds advanced and paid by Cox to Tristar for the purpose of funding
the costs of the litigation, (b) divided by the total amount of funds advanced
by and paid by Tristar, (c) times the amount of the Tristar Payment. Cox is a
shareholder of IGCO and as of the date of this Quarterly Report, holds an
approximate 17.12% equity interest in IGCO.

                                       7
<PAGE>


     On September 21, 2001, Geneva, IGCO, INGC and others entered into a
settlement agreement with AuRIC and Ahmet Altinay (the "AuRIC Settlement
Agreement"). Pursuant to the terms of the AuRIC Settlement Agreement, the
parties agreed that: (i) significant additional expense and time would be
incurred to proceed with and resolve the Lawsuit and therefore desired to settle
the Lawsuit; (ii) AuRIC would pay $10,000; (iii) AuRIC would return three
promissory notes in the principal amounts of $250,000 marked cancelled payable
to AuRIC by VATL, Goldstate Corporation and IGCO, respectively; (iii) AuRIC
would return all stock certificates received from VATL, Goldstate Corporation
and IGCO, respectively; (iv) the parties would execute and jointly file a motion
to dismiss the parties' respective claims and counterclaims in the Lawsuit; (v)
the parties would release one another from any and all claims and liabilities,
whether known or unknown, arising from or based upon the Lawsuit; and (vi) the
Agreement for Services, the License Agreement and the related Sub-License
Agreement would be deemed null, void and without further force or effect.

     On September 25, 2001, Geneva, IGCO, INGC, and others entered into a
settlement agreement and release with Dames & Moore, et. al. (the "Dames & Moore
Settlement Agreement"). Pursuant to the terms of the Dames & Moore Settlement
Agreement, the parties agreed that: (i) solely to save the burden, cost and
expense of continued litigation, the Lawsuit and the Idaho Lawsuit would be
settled without any admission of liability by any party; (ii) the parties would
execute and jointly file a motion to dismiss the parties' respective claims and
counterclaims in the Lawsuit and the Idaho Lawsuit with prejudice; (iii) the
parties would release one another from any and all claims and liabilities,
whether known or unknown, arising from or based upon the Lawsuit and the Idaho
Lawsuit, including those arising from or related to the Blackhawk projects,
mining claims and property; (iv) each party would bear its own respective
attorneys' fees and costs incurred in connection with the Lawsuit, the Idaho
Lawsuit and the Dames & Moore Settlement Agreement; and (v) Dames & Moore would
pay $798,000.

Results of Settlement

     Pursuant to the Assignment Agreement, VATL transferred and conveyed to
Geneva the potential claims and causes of action that VATL may have had under
the Sub-License Agreement with Geneva. The amount of damages to be recovered by
Geneva and INGC pursuant to the Dames & Moore Settlement Agreement and the AuRIC
Settlement Agreement were primarily used for payment of attorneys fees, expert
witness fees, and associated costs of litigation. VATL, therefore, was not in a
position to retain any portion of the cash settlement damages.

     IGCO and INGC had paid an aggregate of $938,805 in cash to AuRIC and Dames
& Moore for services before the litigation commenced. IGCO and INGC also owed
$219,469 to Dames & Moore for disputed but unpaid services. Prior to the
litigation, (i) AuRIC received 1,000,000 pre-consolidation shares of Common
Stock from VATL and a promissory note in the principal amount of $250,000, and
(ii) Geneva received 500,000 pre-consolidation shares of Common Stock from VATL,
a promissory note in the principal amount of $250,000 and a promissory note in
the principal amount of $100,000.

                                       8
<PAGE>


     As of the date of this Annual Report, VATL has received: (i) the share
certificate issued to AuRIC representing 1,000,000 shares of Common Stock, which
has been returned to VATL and cancelled; (ii) the share certificate issued to
Geneva representing 500,000 shares of Common Stock, which has been returned to
VATL and cancelled; (iii) the promissory note in the principal amount of
$250,000 payable by VATL to AuRIC, which has been cancelled; (iv) the promissory
note in the principal amount of $250,000 payable by VATL to Geneva, which has
been cancelled; and (v) the promissory note in the principal amount of $100,000
payable by VATL to Geneva, which has been cancelled.

     Geneva, IGCO, INGC and other parties also received an aggregate of $808,000
in settlement proceeds. An aggregate in excess of approximately $2,000,000 was
incurred as legal fees and associated direct costs relating to the litigation.
Of the $808,000 in settlement proceeds, $345,000 was paid for outstanding
amounts due and owing to legal counsel relating to the litigation, $10,000 was
paid to GDSA, and the remaining $453,000 was paid to Tristar to provide a
partial recovery in excess of $900,000 paid by Tristar pursuant to the
provisions of the Funds Sharing Agreement.

     At the time the respective settlement agreements were entered into, after
incurring in excess of $2,000,000 in legal fees and associated direct costs
relating to the litigation, management of IGCO estimated that future litigation
costs to continue through the trial stage could have reached an additional
$1,000,000, with no guarantee of either outcome or award. Management of IGCO
further believed that if the litigation proceeded to trial, any positive future
monetary award in favor of IGCO and INGC could have been subjected to a lengthy
appeals process and further legal costs. While Dames & Moore, currently a
subsidiary of URS Corporation, has approximately $2 billion in annual revenues
representing a formidable resource for future legal expenses, IGCO has not
generated revenues and has no liquid assets to commit to such significant
estimated future expenses associated with ongoing litigation. Management of IGCO
believes, therefore, that settlement of the litigation and execution of the
respective settlement agreements was in the best interests of IGCO, VATL and
respective shareholders.

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

     No matters were submitted to a vote of VATL' shareholders through the
solicitation of proxies or otherwise during fiscal year ended March 31, 2002.


                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

     Vega-Atlantic Corporation's common stock is traded on the OTC Bulletin
Board under the symbol "VATL" and on the Frankfurt Stock Exchange in the Euro
currency under the symbol "VGA". The market for VATL's common stock is limited,
volatile and sporadic. The following table sets forth the high and low sales
prices relating to VATL'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.

                                       9
<PAGE>


                                         FISCAL YEARS ENDED
                          --------------------------------------------------
                            MARCH 31, 2002                MARCH 31, 2001
                          --------------------------------------------------
                          HIGH BID    LOW BID           HIGH BID    LOW BID
                          --------------------------------------------------

First Quarter*             $0.11       $0.05              $0.68      $0.180
Second Quarter             $0.28       $0.035             $0.593     $0.25
Third Quarter              $0.75       $0.15              $0.625     $0.04
Fourth Quarter             $0.87       $0.46              $1.00      $0.09

*Figures represent first quarters ended as of June 30, 2001 and 2000, second
quarters ended as of September 30, 2001 and 2000, third quarters ended as of
December 31, 2001 and 2000 and fourth quarters ended as of March 31, 2002 and
2001.

HOLDERS

     As of June 24, 2002, VATL had approximately 61 shareholders of record.

DIVIDENDS

     No dividends have ever been declared by the board of directors of VATL on
its common stock. VATL's losses do not currently indicate the ability to pay any
cash dividends, and VATL does not indicate the intention of paying cash
dividends on its common stock in the foreseeable future.

SHARE ISSUANCES

     In conjunction with the Dames & Moore Settlement Agreement, certain stock
certificates evidencing an aggregate of 1,500,000 pre-consolidation shares of
Common Stock were returned to VATL and cancelled. Aggregate issued and
outstanding shares of Common Stock were reduced by 375,000 (taking into effect
the reverse stock split of 4 for 1 shares on February 13, 2001) when the stock
certificates were cancelled and the shares returned to treasury.

     On December 27, 2001, VATL and Investor Communications International Inc.
("ICI") entered into a settlement agreement (the "Settlement Agreement").
Pursuant to the terms of the Settlement Agreement, VATL issued 1,000,000 shares
of its Common Stock at approximately $0.15 per share for an aggregate
consideration of $150,000 as payment and partial settlement of an aggregate
principal of $164,103 plus $18,034 in accrued interest due and owing ICI. See
"Part II. Item 6. Management's Discussion and Analysis of Financial Condition
and Results of Operation" and "Part II. Item 9. Directors, Executive Officers,
Promoters and Control Persons; Compliance with Section 16(a) of the Exchange
Act".

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 Securities Exchange Act of 1934. 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.
VATL intends that such forward-looking statements be subject to the safe harbors
for such statements. VATL 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 VATL 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. VATL 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.

                                       10
<PAGE>


GENERAL

     VATL is a minerals and oil and gas exploration and development company
within the United States and internationally. As of the date of this Annual
Report, VATL has not generated revenues from operations. During the prior fiscal
years, VATL focused primarily on the exploration of the Vega Property and
generated no revenues. During those prior fiscal years, VATL relied upon
internally generated funds and advances, funds from the sale of shares of stock
and loans from its shareholders and private investors to finance its operations
and growth. As of the date of this Annual Report, intends to continue its search
for other business opportunities in any geographical area involving the
exploration of minerals and oil and gas or other resource based commodities.

RESULTS OF OPERATION

For Fiscal Year Ended March 31, 2002 compared with Fiscal Year Ended March 31,
2001

     VATL's net income for fiscal year ended March 31, 2002 was approximately
$418,824 compared to a net loss of approximately $4,298,771 for fiscal year
ended March 31, 2001 resulting from the gain on the settlement of the Lawsuit.
See "Part I. Item 3. Legal Proceedings".

     During fiscal year ended March 31, 2002, VATL recorded operating expenses
of approximately $354,509, which were offset by recognized gains aggregating
$773,333, resulting in a recognized income from continuing operations of
$418,824. During fiscal year ended March 31, 2001, VATL recorded operating
expenses of $2,543,854 (a decrease of $2,189,345).

     During fiscal year ended March 31, 2002, VATL did not incur any exploration
expenses as compared to exploration expenses of $1,085,293 incurred during
fiscal year ended March 31, 2001. The decrease in exploration expenses during
fiscal year ended March 31, 2002 was primarily due to decreased investment
relating to its Chinese joint venture projects as compared to the payments made
by VATL during fiscal year ended March 31, 2001 pertaining to the acquisition
costs of Tun Resources and related joint venture capital contributions.

     During fiscal year ended March 31, 2002, VATL incurred general and
administrative expenses of $354,509, which primarily consisted of $268,830 as
office and general expenses, $58,307 as professional fees, and $27,372 as
interest expense. During fiscal year ended March 31, 2001, VATL incurred general
and administrative expenses of $1,477,379, which consisted primarily of $972,860
as office and general expenses, $262,247 as stock-based compensation, $151,892
as professional fees, $40,705 as interest expense, and $36,675 as consulting
fees. The decrease in general and administrative expenses during fiscal year
ended March 31, 2002 compared to fiscal year ended March 31, 2001 was primarily
due to a decrease in office and general expenses, which related to the scale and
scope of overall business activity during such period. Administrative expenses
generally include corporate overhead, financial and administrative contracted
services, consulting costs and professional fees.

                                       11
<PAGE>


     Although VATL actually incurred $354,509 of general and administrative
expenses during fiscal year ended March 31, 2002, such expenses were offset by
the recognition of $773,333 resulting from (i) $66,267 gain on settlement of
debt; (ii) $50,000 realized as gain on the sale of Alaskan Explorations Corp.
and related Lemachang silver deposit Sino-Foreign joint venture interest; and
(iii) $657,066 realized as a gain on the settlement of the Lawsuit. During
fiscal year ended March 31, 2002, this resulted in a recognized income from
continuing operations of $418,824.

     Of the $354,509 incurred as general and administrative expenses, VATL
incurred to Investor Communications International, Inc. ("ICI") approximately
(i) $260,675 for amounts due and owing for managerial, administrative and
financial services rendered; and (ii) $15,667 for advances made by ICI. This
resulted in an aggregate of $276,342 due and owing ICI during fiscal year ended
March 31, 2002. During fiscal year ended March 31, 2002, VATL issued 1,000,000
shares of restricted common stock for partial settlement of an aggregate
principal of $150,000 due and owing ICI. As of March 31, 2002, $251,128 plus
$23,508 accrued interest is due and owing ICI. One of the directors of VATL is
contracted by ICI and is part of the management team provided by ICI to VATL.
During fiscal year ended March 31, 2002, Mr. Grant Atkins received from ICI
approximately $12,500 as compensation.

     VATL and ICI entered into a two-year consulting services and management
agreement dated April 1, 1999 whereby 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. On April 1, 2001, VATL and ICI
renewed its consulting services and management agreement for an additional
two-year period.

     As VATL has not and currently is not in the operational stage of generating
revenues, the services provided by ICI decreased during fiscal year ended March
31, 2002 as compared to the same period during 2001. As of the date of this
Annual Report, such services provided by ICI include not only those services
listed above related to exploration, administration, public company operations
and maintenance of VATL, but also involve the negotiation of the Letter Offer
and addendums thereto relating to Tun Resources and the negotiation and due
diligence of the Letter Agreement relating to the Ailaoshan joint venture and
other joint venture projects that VATL has divested. Moreover, with commencement
of the legal proceedings against Tun Resources and Golden Thunder, and the
ultimate finalization of the legal proceedings involving INGC/Geneva and
AuRIC/Dames & Moore, ICI is continuously sourcing, identifying, investigating
and negotiating new business opportunities to present to the board of directors
of VATL. Other services provided by ICI include securing of short-term advance
financing and sourcing of private placement funding.

                                       12
<PAGE>


     As discussed above, the recognition of net income during fiscal year ended
March 31, 2002 as compared to the net loss incurred during fiscal year ended
March 31, 2001 is attributable primarily to the (i) realization of a gain on the
settlement of the Lawsuit, (ii) the decrease in exploration expenses and general
and administrative expenses during fiscal year ended March 31, 2002; and (iii)
the recording of a loss on $1,754,917 on settlement of convertible promissory
notes during fiscal year ended March 31, 2001. VATL's net income during fiscal
year ended March 31, 2002 was approximately $418,824 or $0.03 per common share
compared to a net loss of approximately ($4,298,711) or ($0.52) per common share
during fiscal year ended March 31, 2001. The weighted average number of diluted
shares outstanding were 14,778,473 for fiscal year ended March 31, 2002 compared
to 8,266,032 for fiscal year ended March 31, 2001 (which were restated to take
into account the reverse stock split of 4 to 1).

LIQUIDITY AND CAPITAL RESOURCES

For Fiscal Year Ended March 31, 2002

     VATL'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 VATL be unable to continue in
operations.

     As of the date of this Annual Report, there is substantial doubt regarding
VATL's ability to continue as a going concern as VATL has not generated
sufficient cash flow to funds its business operations and material commitments.
VATL's future success and viability, therefore, are dependent upon VATL's
ability to successfully develop new business prospects under consideration,
joint ventures, and the continuing ability to generate capital financing.
Management is optimistic that VATL will be successful in its capital raising
efforts; however, there can be no assurance that VATL will be successful in
raising additional capital. The failure to raise additional capital may have a
material and adverse effect upon VATL and its shareholders.

     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 VATL can satisfy its cash
requirements for approximately the next six months based on its ability to
successfully litigate its claims against Tun Resources and Golden Thunder and to
obtain advances from certain investors and related parties, as necessary.

     As of March 31, 2002, VATL's current assets were $1,196 and its current
liabilities were $455,969. As of March 31, 2002, the current liabilities
exceeded current assets by $454,773. As of fiscal year ended March 31, 2001, the
Company's current assets were $2,942 and its current liabilities were
$1,026,539. As of March 31, 2001, the current liabilities exceeded current
assets by $1,023,597.

                                       13
<PAGE>


     The decrease in current liabilities during fiscal year ended March 31, 2002
from fiscal year ended March 31, 2001 was due primarily to a decrease in notes
payable due to settlement of the Lawsuit and a decrease in directors' fees
payable. See "Part I. Item 3. Legal Proceedings".

     Stockholders' deficit decreased from ($1,023,597) for fiscal year ended
March 31, 2001 to ($454,773) for fiscal year ended March 31, 2002.

     VATL has not generated positive cash flows from operating activities. For
fiscal year ended March 31, 2002, net cash used in operating activities was
$363,312 compared to $1,192,021 of net cash used in operating activities for
fiscal year ended March 31, 2001 (a decrease of $828,709). As noted above, the
main decrease was comprised of a net income of $418,824 for fiscal year ended
March 31, 2002 compared to a net loss of $4,298,771 for fiscal year ended March
31, 2001 (a decrease of $3,879,947).

     Net cash from financing activities was $313,066 for fiscal year ended March
31, 2002 compared to cash flow from investing activities of $1,496,429 for
fiscal year ended March 31, 2001. Net cash provided by financing activities
during fiscal year ended March 31, 2002 resulted primarily from advances from
related parties in the amount of $313,066. Net cash provided by financing
activities during fiscal year ended March 31, 2001 resulted from (i) $1,250,000
in proceeds from sale of stock; (ii) $99,500 in proceeds from issuance of
convertible notes; and (iii) $148,362 in advances from related parties.

     Cash flows from investing activities was $50,000 for fiscal year ended
March 31, 2002 compared to cash flow used in investing activities of $403,294
for fiscal year ended March 31, 2001. Cash provided from investing activities
during fiscal year ended March 31, 2002 resulted primarily from $50,000 realized
as proceeds from the sale of VATL's joint venture interest. Net cash used in
investing activities during fiscal year ended March 31, 2001 resulted from
$404,249 used for mineral property acquisition and exploration.

MATERIAL COMMITMENTS

     A significant and estimated commitment for VATL for fiscal year April 1,
2002 through March 31, 2003 pertaining to contractual arrangements is VATL's
contractual funding obligations under the Acquisition Agreement. Pursuant to the
terms of the Acquisition Agreement, VATL was to provide an aggregate of
$1,180,000 by February 15, 2001 to fund current Tun Resources joint venture
projects. As of the date of this Annual Report, VATL has provided approximately
$604,500 of funds to Tun Resources.

     VATL will not be consolidating the financing records of Tun Resources into
its financial statements. VATL is assessing its legal options with respect to
the various agreements and representations made by Golden Thunder and Tun
Resources.



     A significant and estimated commitment for VATL for fiscal year April 1,
2002 through March 31, 2003 pertaining to contractual arrangements and work
orders is an amount not greater than $900,000 to ICI. The contractual
arrangement between VATL and ICI regarding compensation for services rendered
for the day-to-day operations of VATL 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 VATL for that
particular month, including services related to exploration, administrative,
public company operations, and maintenance.

                                       14
<PAGE>


AUDIT COMMITTEE

     As of the date of this Annual Report, VATL 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 VATL. When established, the audit
committee's primary function will be to provide advice with respect to VATL'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 VATL's financial
reporting process and internal control system; (ii) review and appraise the
audit efforts of VATL's independent accountants; (iii) evaluate VATL'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 fiscal year ended March 31, 2002, VATL incurred approximately
$13,000 in fees to its principal independent accountant for professional
services rendered in connection with preparation and audit of VATL's financial
statements for fiscal year ended March 31, 2002 and for the review of VATLs
financial statements for the quarters ended June 30, 2001, September 30, 2001
and December 31, 2001.

FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES

     During fiscal year ended March 31, 2002, VATL 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 VATL's information or local area
network or designing or implementing a hardware or software system that
aggregate source data underlying the financial statements.

ALL OTHER FEES

     During fiscal year ended March 31, 2002, VATL 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-relates 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 report as set forth in the "Index to Consolidated Financial Statement".

Index to Consolidated Financial Statements

     Independent Auditor's Report dated April 30, 2002.
     Consolidated Balance Sheets for fiscal years ended March 31, 2002 and
       March 31, 2001.
     Consolidated Statements of Operations for fiscal years ended March 31,
       2002 and March 31, 2001, and from inception (January 28, 1987) to March
       31, 2002.
     Consolidated Statements of Cash Flows for fiscal years ended March 31,
       2002 and March 31, 2001, and from inception (January 28, 1987) to March
       31, 2002.
     Consolidated Statements of Stockholders' Equity (Deficit) for years
       ended March 31, 1987 through fiscal year ended March 31, 2002.
     Notes to Consolidated Financial Statements for March 31, 2002 and 2001.

                                       15
<PAGE>




                            VEGA-ATLANTIC CORPORATION
                         (An Exploration Stage Company)

                        CONSOLIDATED FINANCIAL STATEMENTS

                             MARCH 31, 2002 AND 2001











AUDITORS' REPORT

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED STATEMENTS OF OPERATIONS

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

CONSOLIDATED STATEMENTS OF CASH FLOWS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


<PAGE>

                                                 1205 - 1095 West Pender Street
             LABONTE & CO.                       Vancouver, BC  Canada
----------------------------------------         V6E 2M6
C H A R T E R E D  A C C O U N T A N T S         Telephone      (604) 682-2778
----------------------------------------         Facsimile      (604) 689-2778
                                                 Email    rjl@labonteco.com



                                AUDITORS' REPORT
--------------------------------------------------------------------------------


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

We have audited the consolidated balance sheets of Vega-Atlantic Corporation. as
at March 31, 2002 and 2001 and the consolidated 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 consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at March 31, 2002
and 2001 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.


                                                              /s/ LaBonte & Co.
                                                              -----------------
                                                                 "LaBonte & Co."

                                                           CHARTERED ACCOUNTANTS


Vancouver, B.C.
April 30, 2002


          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
April 30, 2002 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.
April 30, 2002


                                      F-1
<PAGE>
<TABLE>
<CAPTION>

                                         VEGA-ATLANTIC CORPORATION

                                      (An Exploration Stage Company)

                                        CONSOLIDATED BALANCE SHEETS



                                                                              March 31, 2002  March 31, 2001
                                                                              --------------  --------------

                                                  ASSETS

CURRENT ASSETS
<S>                                                                            <C>             <C>
   Cash                                                                        $      1,196    $      1,442
   Accounts receivable                                                                 --             1,500
                                                                               ------------    ------------

                                                                               $      1,196    $      2,942
                                                                               ============    ============


                              LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
   Accounts payable and accrued liabilities                                    $    142,284    $    163,337
   Advances from related parties (Note 8)                                           313,685         150,619
   Notes payable - Technology sublicense (Notes 4 and 7)                               --           651,316
   Directors' fees payable (Note 8)                                                    --            61,267
                                                                               ------------    ------------

                                                                                    455,969       1,026,539
                                                                               ------------    ------------

STOCKHOLDERS' EQUITY (DEFICIT) (Note 5)
   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
      15,213,405 (March 31, 2001 - 14,588,405) shares issued and outstanding            339             344
   Additional paid-in capital                                                     9,367,586       9,217,581
   Deficit accumulated during the exploration stage                              (9,822,698)    (10,241,522)
                                                                               ------------    ------------

   Total stockholders' equity (deficit)                                            (454,773)     (1,023,597)
                                                                               ------------    ------------

                                                                               $      1,196    $      2,942
                                                                               ============    ============


CONTINGENCIES (Note 1)



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

                                                    F-2
<PAGE>


                                           VEGA-ATLANTIC CORPORATION
                                        (An Exploration Stage Company)
                                     CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                                                       January 28,
                                                                                                             1987
                                                                       Year ended      Year ended     (inception)
                                                                         March 31,       March 31,    to March 31,
                                                                             2002            2001            2002
                                                                     ------------    ------------    ------------

EXPLORATION EXPENSES
  Joint venture acquisition costs                                    $       --      $  1,085,293    $  1,278,439
  Claims staking and exploration                                             --              --           112,384
  Research and development                                                   --              --           783,182
                                                                     ------------    ------------    ------------

  Total exploration expenses                                                 --         1,085,293       2,174,005
                                                                     ------------    ------------    ------------

GENERAL AND ADMINISTRATIVE EXPENSES
  Consulting fees                                                            --            36,675         132,751
  Directors' fees                                                            --            13,000          49,500
  Office and general                                                      268,830         972,860       3,513,421
  Interest expense                                                         27,372          40,705         223,924
  Professional fees                                                        58,307         151,892         297,955
  Stock-based compensation                                                   --           262,247         262,247
  Gain on settlement of debt                                              (66,267)           --           (66,267)
  Gain on sale of joint venture interest (Note 3)                         (50,000)        (19,318)        (69,318)
                                                                     ------------    ------------    ------------

  Total general and administrative expenses                               238,242       1,458,561       4,344,213
                                                                     ------------    ------------    ------------

LOSS BEFORE THE FOLLOWING                                                (238,242)     (2,543,854)     (6,518,218)

  Gain on settlement of lawsuit (Notes 4 and 7)                           657,066            --           657,066
  Loss on settlement of convertible promissory notes                         --        (1,754,917)     (1,754,917)
                                                                     ------------    ------------    ------------

INCOME (LOSS) FROM CONTINUING OPERATIONS                                  418,824      (4,298,771)     (7,616,069)

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

NET INCOME (LOSS) FOR THE PERIOD                                     $    418,824    $ (4,298,771)   $ (9,822,698)
                                                                     ============    ============    ============



BASIC INCOME (LOSS) PER SHARE                                        $       0.03    $      (0.52)
                                                                     ============    ============

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                             14,778,473       8,266,032
                                                                     ============    ============



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

                                                        F-3
<PAGE>

                                            VEGA-ATLANTIC CORPORATION
                                          (An Exploration Stage Company)
                                        STATEMENT OF STOCKHOLDERS' EQUITY
                       For the period from January 28, 1987 (inception) to March 31, 2002

                                                                                            Deficit
                                                                                          Accumulated
                                                           Common Stock        Additional    During
                                                       ---------------------    Paid - in  Exploration
                                                        Shares      Amount      Capital      Stage        Total
                                                       ---------   ---------   ---------   ---------    ---------
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
                                                       ---------   ---------   ---------   ---------    ---------


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

                                                     F-4
<PAGE>


                                                  VEGA-ATLANTIC CORPORATION
                                               (An Exploration Stage Company)
                                              STATEMENT OF STOCKHOLDERS' EQUITY
                             For the period from January 28, 1987 (inception) to March 31, 2002
                                                         (Continued)

                                                                                                       Deficit
                                                                                                     Accumulated
                                                                Common Stock           Additional      During
                                                         --------------------------    Paid - in     Exploration
                                                           Shares         Amount         Capital        Stage          Total
                                                         -----------    -----------    -----------   -----------    -----------
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 ofaccounts payable, Jan. 15, 1999
 (total $.195 per share)                                      30,000           --            5,841          --            5,841

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

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

 Issuance of SEC Reg D-504 common
 shares for cash, March 31, 1999
 (total $.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)
                                                         -----------    -----------    -----------   -----------    -----------


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

                                                          F-5
<PAGE>

                                                     VEGA-ATLANTIC CORPORATION
                                                  (An Exploration Stage Company)
                                                 STATEMENT OF STOCKHOLDERS' EQUITY
                                For the period from January 28, 1987 (inception) to March 31, 2002
                                                            (Continued)


                                                                                                         Deficit
                                                                                                       Accumulated
                                                               Common Stock             Additional       During
                                                       ----------------------------     Paid - in      Exploration
                                                          Shares         Amount          Capital          Stage           Total
                                                       ------------    ------------    ------------    ------------    ------------
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
(total $.50 per share)                                    2,061,000              20       1,030,443            --         1,030,463

Stock subscription for Reg S common
shares (total $.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 (total $.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

Rollback, 4:1, 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, 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)
                                                       ============    ============    ============    ============    ============


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

                                                             F-6
<PAGE>


                                              VEGA-ATLANTIC CORPORATION
                                           (An Exploration Stage Company)
                                        CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                                           January 28,
                                                                                                                 1987
                                                                             Year ended     Year ended (inception) to
                                                                               March 31,      March 31,      March 31,
                                                                                   2002           2001           2002
                                                                            -----------    -----------    -----------
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income (loss) for the period                                          $   418,824    $(4,298,771)   $(9,822,698)
  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)       (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                                   --        1,085,293      1,303,611
  - stock-based compensation                                                       --          262,247        262,247
  - loss on settlement of convertible promissory notes                             --        1,754,917      1,754,917
  - gain on settlement of debt, net of current period accrual                   (61,267)          --          (61,267)
  - gain on settlement of lawsuit, net of current period interest accrual      (651,316)          --         (651,316)
  - gain on sale of joint venture interest                                      (50,000)          --          (50,000)
  - net changes in working capital items                                        (19,553)        23,611        392,601
                                                                            -----------    -----------    -----------

CASH FLOWS USED IN OPERATING ACTIVITIES                                        (363,312)    (1,192,021)    (4,304,231)
                                                                            -----------    -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES
  Advances from related parties - net                                           313,066        148,362      1,521,972
  Interest paid                                                                    --           (1,433)        (1,433)
  Convertible notes                                                                --           99,500         99,500
  Sale of common stock                                                             --        1,250,000      3,357,000
                                                                            -----------    -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES                                            313,066      1,496,429      4,977,039
                                                                            -----------    -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES
  Mineral property acquisition and exploration                                     --         (404,249)      (622,567)
  Purchase of subsidiaries, net of cash acquired                                   --              955        (99,045)
  Proceeds from sale of joint venture interest                                   50,000           --           50,000
                                                                            -----------    -----------    -----------

CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES                                   50,000       (403,294)      (671,612)
                                                                            -----------    -----------    -----------

INCREASE (DECREASE) IN CASH                                                        (246)       (98,886)         1,196

CASH, BEGINNING OF PERIOD                                                         1,442        100,328           --
                                                                            -----------    -----------    -----------

CASH, END OF PERIOD                                                         $     1,196    $     1,442    $     1,196
                                                                            ===========    ===========    ===========


OTHER NON-CASH TRANSACTIONS:
1. In connection with the settlement of the lawsuit described in Note 7, during the year ended March 31, 2002, the
   Company wrote off its notes payable and accrued interest resulting in a gain of $657,066.
2. During the year ended March 31, 2002, the Company issued 1,000,000 shares in settlement of debt of $150,000.



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

                                                       F-7
</TABLE>
<PAGE>

                           VEGA-ATLANTIC CORPORATION
                         (An Exploration Stage Company)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
                            MARCH 31, 2002 AND 2001


NOTE 1: NATURE AND CONTINUANCE OF OPERATIONS

The Company is an exploration 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. Refer to Note 3.

At March 31, 2002, the Company had a working capital deficiency of $454,773
(2001 - $1,023,597) 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

Principles of Consolidation
The consolidated financial statements for the year ended March 31, 2002 include
the accounts of the Company and its 100% owned subsidiaries, Polar Explorations
Ltd. and Alaskan Explorations Corp. which was sold during May, 2001 All
significant intercompany transactions and account balances have been eliminated.

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.

Interest in 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 Loss per Common Share
Basic earnings 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 per share reflect the potential
dilution of securities that could share in the earnings of the Company. The
accompanying presentation is only of basic loss per share as the potentially
dilutive factors are anti-dilutive to basic loss per share.

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.

                                      F-8
<PAGE>

                            VEGA-ATLANTIC CORPORATION
                         (An Exploration Stage Company)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
                             MARCH 31, 2002 AND 2001


NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (con't)

Stock-Based Compensation
The Company accounts for stock-based compensation in respect to stock options
granted to employees and officers using the intrinsic value based method in
accordance with APB 25. Stock options granted to non-employees are accounted for
using the fair value method in accordance with SFAS No. 123. In addition, with
respect to stock options granted to employees, the Company provides pro-forma
information as required by SFAS No. 123 showing the results of applying the fair
value method using the Black-Scholes option pricing model.

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. 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
earliest of a performance commitment or completion of performance by the
provider of goods or services as defined by EITF 96-18.

On March 31, 2000, the Financial Accounting Standards Board ("FASB") issued FASB
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. The Company has determined that the implementation of this
standard does not have a material impact on its financial statements.


NOTE 3: INTEREST IN MINERAL PROPERTIES

Tun Resources Inc.: 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.

Tun Resources is the major stakeholder in a gold exploration and development
joint venture in the Yunnan Province of China. Tun Resources entered into the
Yuntong JV agreement, which has the rights to four separate gold exploration and
mining development properties, on August 8, 1994 with Yunnan Province Dianxi
Geological Engineering Exploration Development Company in China. The Yuntong
joint venture is in the process of exploring its mineral properties and has not
yet determined whether these properties contain proven reserves. Accordingly,
the Company has expensed acquisition costs and JV capital contributions incurred
to date.

On May 2, 2000, the Company executed a definitive closing agreement to purchase
the 80% interest in Tun Resources Inc. 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
400,000 restricted shares in the capital of the Company valued at $672,000. At
the date of acquisition, Tun Resources had a stockholders' deficit of $149,044.
The Company accounted for its acquisition of Tun Resources using the purchase
method and allocated the stockholder's deficit of Tun Resources as well as the
$672,000 cost of acquisition to the carrying value of the underlying joint
venture interests to which a full impairment provision was recorded.

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 400,000 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 Resources, Inc. 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 has initiated legal
proceedings against Golden Thunder and Tun Resources for breaches of the
Acquisition Agreement and other causes of action, and seeks damages of in excess
of $800,000. Golden Thunder and Tun Resources have filed a statement of defense
alleging that the Company breached the acquisition agreement. Accordingly, for
accounting purposes effective March 31, 2001 the Company ceased consolidating
the assets, liabilities and operations of Tun Resources in its financial
statements.

                                      F-9
<PAGE>

                            VEGA-ATLANTIC CORPORATION
                         (An Exploration Stage Company)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
                             MARCH 31, 2002 AND 2001


NOTE 3: INTEREST IN MINERAL PROPERTIES (con't)

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
meets 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: NOTES PAYABLE

Pursuant to a Technology Sub-license agreement with Geneva Resources, Inc.
("Geneva"), the Company issued promissory notes to both Geneva and AuRIC
Metallurgical Laboratories LLC ("AuRIC") in the amount of $250,000 to each
company. These were 3% interest bearing notes and were payable upon the transfer
of the technology. Pursuant to the agreement, the Company had issued a
convertible promissory note to Geneva in the amount of $100,000 that was
convertible to 125,000 restricted common shares upon demand, and bore interest
at the rate of 8% per annum and issued 250,000 restricted common shares to
AuRIC. These promissory notes were due and payable upon the transfer of the
technology. Upon the settlement of the lawsuit described in Note 7, the
promissory notes to AuRIC and Geneva totaling $600,000 were cancelled during the
year as well as $57,066 in accrued interest resulting in a gain of $657,066 from
the write-off of these debts.


NOTE 5: STOCKHOLDERS' EQUITY

Common Stock
------------

On May 1, 2000, the Company issued 1,600,000 pre-consolidation shares at $0.42
per share, totaling $672,000, for the purchase of an 80% interest in Tun
Resources, Inc. (Refer to Note 3)

On May 29, 2000, the Company issued 200,000 pre-consolidation shares 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 5,000,000 pre-consolidation shares of common stock at $.25
per share. 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
5,000,000 shares had been issued.

On December 22, 2000 the Company completed a reverse stock split
("consolidation") of one-for-four of the Company's outstanding common stock,
resulting in a reduction of 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.

On December 27, 2000 the Company issued 7,976,905 post-consolidation shares at
$.03 per share 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 7,976,905 post-consolidation shares represented
54.7% of the outstanding shares 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 250,000 post-consolidation shares in
the name of AuRIC Metallurgical Laboratories and 125,000 post consolidation
shares in the name of Geneva Resources Inc. (Refer to Note 7)

                                      F-10
<PAGE>

                            VEGA-ATLANTIC CORPORATION
                         (An Exploration Stage Company)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
                             MARCH 31, 2002 AND 2001


NOTE 5: STOCKHOLDERS' EQUITY (con't)

On November 13, 2001 the Company converted $150,000 of debt owing to Investors
Communications for 1,000,000 common shares of the Company's stock at $0.15 per
share. (Refer to Note 8)

The weighted average number of shares outstanding for the year ended March 31,
2001 have been restated to reflect the 4:1 share consolidation on December 22,
2000.

At March 31, 2002, there were 15,213,405 post-consolidation shares of common
stock outstanding.


NOTE 6: 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 plan extends for a 10-year term
and consists of 500,000 share options priced at $1.00 per share.

All options granted expire on April 30, 2010. Shares which may be acquired
through the plan 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
plan will not be in lieu of salary of other compensation for services.

As of March 31, 2002, 487,500 share options with an exercise price of $1.00 per
share of common stock are outstanding and during the period, no options had been
exercised or forfeited, and no options had expired.

<TABLE>
<CAPTION>

                                                              2002                                 2001
                                                  Number of     Weighted average       Number of     Weighted average
                                                    options       exercise price         options       exercise price
                                                ------------ --------------------    ------------ --------------------
  <S>                                           <C>              <C>                       <C>                  <C>
   Outstanding at Beginning of Period               487,500          $1.00/share               0                    0
   Options Granted                                        0                    0         487,500          $1.00/share
   Options Exercised                                      0                    0               0                    0
   Options Forfeited                                      0                    0               0                    0
   Options Expired                                        0                    0               0                    0
                                                ------------ --------------------    ------------ --------------------
   Outstanding at End of Period                     487,500          $1.00/share         487,500          $1.00/share
                                                ============ ====================    ============ ====================

   Exercisable at End of Period                     487,500          $1.00/share         487,500          $1.00/share
                                                ============ ====================    ============ ====================
</TABLE>

Stock-based compensation
The following pro-forma information is provided as required by SFAS No. 123
showing the results of applying the fair value method using the Black-Scholes
option pricing model assuming a dividend yield of 0%, a risk-free interest rate
of 5%, an expected life of ten years and an expected volatility range of 204%.


                                                        Year ended
                                                         March 31,
                                                     2002          2001
                                                 -----------   -----------

     Net income (loss)                           $   418,824   $(4,298,771)

     Pro-forma  stock-based compensation                --        (224,783)
                                                 -----------   -----------

     Pro-forma net income (loss)                 $   418,824   $(4,523,554)
                                                 ===========   ===========

     Pro-forma net income (loss) per share       $      0.03   $     (0.55)
                                                 ===========   ===========

                                      F-11
<PAGE>


                            VEGA-ATLANTIC CORPORATION
                         (An Exploration Stage Company)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
                             MARCH 31, 2002 AND 2001


NOTE 7: SETTLEMENT OF LAWSUIT

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 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 accrured interest of $51,066 to AuRIC and Geneva were cancelled,
and 250,000 post consolidation shares issued to AuRIC and 125,000 post
consolidation shares issued to Geneva were returned 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 law suit 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.


NOTE 8: RELATED PARTY TRANSACTIONS

During the year ended March 31, 2002 the Company has written off previously
incurred directors fees of $66,267 to current and former directors of which
$5,000 was accrued during the year. At March 31, 2002, there are no directors
fees owing.

During the year ended March 31, 2002 the Company incurred managerial,
administrative and investor relation services of $260,675 (2001 - $643,400) to
Investor Communications International, Inc. ("ICI") under a consulting services
and management agreement dated April 1, 1999. A director of the Company provides
consulting services to ICI and was paid approximately $12,500 (2001 - $27,500)
during the year. At March 31, 2002 ICI had made net cash advances of $15,667
(2001 - $518,614 was repaid to ICI). In addition, the Company issued 1,000,000
common shares for $150,000 in debt and at March 31, 2002 $251,128 plus $23,508
accrued interest (2001 - $124,786 plus $3,473 accrued interest) is owing to ICI.

In addition, at March 31, 2002 $35,685 plus $3,364 accrued interest is owing to
certain shareholders for cash advances. These are unsecured and without any
terms of repayment.


NOTE 9: INCOME TAXES

As at March 31, 2002 the Company has net operating loss carryforwards of
approximately $1,410,000 which result in deferred tax assets. The carryforwards
will expire, it not utilized, between 2008 and 20017. Management believes that
the realization of the benefits from these deferred tax assets appears uncertain
due to the Company's history of operating losses. Accordingly, a full deferred
tax asset valuation allowance has been provided and no deferred tax asset
benefit has been recorded. No tax provision has been recorded in the current
year as the Company have sufficient loss carryforwards to offset all taxable
income recorded in the year.



                                      F-12
<PAGE>


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

     On October 20, 2000, Johnson, Holscher & Company, P.C. ("JH&C"), the
principal independent accountant of VATL, resigned because of a business
decision made by management of JH&C to cease rendering services for clients
which involve services or representation under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended. During VATL's two
most recent fiscal years and any subsequent interim period preceding the
resignation of JH&C, there were no disagreements with JH&C which were not
resolved on any matter concerning accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if
not resolved to the satisfaction of JH&C, would have caused JH&C to make
reference to the subject matter of the disagreements in connection with its
reports. JH&C, as VATL's principal independent accountant, did not provide an
adverse opinion or disclaimer of opinion to VATL's financial statements, nor
modify its opinion as to uncertainty, audit scope or accounting principles. The
principal independent accountant did modify its opinion due to going concern
uncertainties.

     On October 20, 2000, the board of directors of VATL approved and authorized
the engagement of LaBonte & Co., Chartered Accountants, #1205 - 1095 West Pender
Street, Vancouver, British Columbia V6E 2M6 as the principal independent
accountant for VATL.

     Since October 20, 2000 and to date, there have been no disagreements with
LaBonte & Co. which were not resolved on any matter concerning accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of LaBonte &
Co., would have caused LaBonte & Co. to make reference to the subject matter of
the disagreements in connection with its reports. LaBonte & Co, as VATL's
current principal independent accountant, has not provided an adverse opinion or
disclaimer of opinion to VATL's financial statements, nor modify its opinion as
to uncertainty, audit scope or accounting principles. The principal independent
accountant did modify its opinion due to going concern uncertainties.


                                       16
<PAGE>


                                    PART III

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

Identification of Directors and Executive Officers

     The directors and executive officers of VATL are as follows:

Name                         Age                   Position with VATL
----                         ---                   ------------------

Grant Atkins                 42                    Director and President

John Frederick               59                    Director/Secretary
    William Bowles

Gary Powers                  56                    Director

     GRANT ATKINS has been a Director and the President of VATL since October
15, 1998. Mr. Atkins has also been a director and the secretary/treasurer of
Intergold Corporation since September of 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. Industry experience includes a one-year role in 1998-99 as
interim Chief Financial Officer of Emergency Communications for Southwest
British Columbia ("E-Comm"). During 1998 and 1999, Mr. Atkins was a consultant
through the private management consulting companies of Tristar Financial
Services, Inc. and Investor Communications International, Inc. Mr. Atkins was
retained to conduct financial consulting and project coordination services for
the British Columbia Ambulance Service on a part-time basis through 1999. Mr.
Atkins has provided organization and controller duties to VATL since October of
1998.

     JOHN FREDERICK WILLIAM BOWLES, BSc., Ph.D, FGS, FIMM, CEng., CGeol.,
EurGeol. Dr. Bowles has been a director of VATL since November 23, 1999, and is
a Mineralogist and Economic Geologist. Mr. Bowles graduated from the University
of London with honors and earned both Bachelor and Doctorate degrees. In
addition, Mr. Bowles has Chartered Engineer, Chartered Geologist, and European
Geologist designations and has memberships and active association with the
Mineralogical Society, the Mineralogical Society of America, and the Irish
Association for Economic Geology. Mr. Bowles is a Fellow of the Mineralogical
Society, the Geological Society, and the Institution of Mining and Metallurgy.
Mr. Bowles retains honorary senior research fellowships with the Geology
Department of Manchester University and the Department of Earth Sciences of
Kingston University, both located in the United Kingdom. Mr. Bowles has authored
over fifty scientific research papers during the past 25 years for numerous
trade and industry publications worldwide. For the past 14 years, Mr. Bowles has
acted as the managing director of Mineral Science Ltd. of Chesham, UK. Mineral
Science Ltd. is an international geological and mineralogical consultancy
specializing in the assessment of metalliferous minerals in relation to
commercial mining operations.

                                       17
<PAGE>


     GARY J. POWERS has been a director of VATL since December 2000. Mr. Powers
has worked in the public sector at a senior Canadian governmental level and has
private sector experience in project development and business management. His
background in the process of government and the needs of business will aid in
the course of developing infrastructure and resources. For the past six years,
Mr. Powers has worked for Guest Investments Ltd. as a management and education
consultant and for Helen Kupper Enterprises, Ltd. as a business manager.

SECTION 16 OF THE EXCHANGE ACT

     Section 16(a) of the 1934 Securities Exchange Act, as amended (the
"Exchange Act") requires VATL's directors and officers, and the persons who
beneficially own more than ten percent of the common stock of VATL, 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 VATL
pursuant to Rule 16a-3 promulgated under the Exchange Act. Based solely on the
reports received by VATL and on the representations of the reporting persons,
VATL believes that these persons have complied with all applicable filing
requirements during the fiscal year ended March 31, 2002.

ITEM 10. EXECUTIVE COMPENSATION

COMPENSATION OF OFFICERS AND DIRECTORS

     As of fiscal year ended March 31, 2002, VATL accrued since inception
approximately $66,267 in directors' fees and paid none of these fees to its
directors as executive compensation. VATL has written off these previously
incurred directors' fees of $66,267; therefore, as of the date of this Annual
Report, there are no directors' fees due and owing.

     Directors and officers of VATL are reimbursed for any out-of-pocket
expenses incurred by them on behalf of VATL. Executive compensation is subject
to change concurrent with VATL requirements. Neither Mr. Atkins nor Dr. Bowles
nor Mr. Powers is a director or officer of ICI, nor does VATL own of record
capital stock of ICI. Of the amounts paid to ICI, Dr. Bowles did not receive any
compensation directly or indirectly from ICI. During the fiscal year ended March
31, 2002, Mr. Atkins received approximately $12,500 from ICI for work conducted
relating to the management and administration of VATL.

SUMMARY COMPENSATION TABLE

                       Annual Compensation      Awards     Payouts
                      ---------------------   ----------   -------
                              $       $       $       $       #      $      $
Name and Position          Salary   Bonus   Other    RSA   Options  LTIP  Other
-----------------          ------   -----   -----    ---   -------  ----  -----
                                                 (1)
Grant Atkins        2000     0        0       6,000   0       0      0      0
Pres./Director      2001     0        0     $30,000   0       0      0      0
                    2002     0        0     $12,500   0       0      0      0

John Bowles         2000     0        0     $ 1,500   0       0      0      0
Director            2001     0        0          0    0       0      0      0
                    2002     0        0          0    0       0      0      0

Herb Ackerman       2000     0        0          0    0       0      0      0
                    2001     0        0          0    0       0      0      0

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

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

                                       18
<PAGE>


NON-QUALIFIED STOCK OPTION PLAN

     On May 1, 2000, the board of directors of VATL adopted the Non-Qualified
Stock Option Plan (the "SOP"), which initially provides for the grant of options
to purchase an aggregate of 2,000,000 shares of Common Stock at $0.25 per share.
The purpose of the SOP is to make options available to directors, management and
significant contractors of VATL in order to encourage them to secure an interest
or an increase on reasonable terms of stock ownership in VATL and to remain in
the employ of VATL, and to provide them compensation for past services rendered.

     The SOP is administered by the board of directors which determines the
persons to be granted options under the SOP, the number of shares subject to
such options, the exercise price of such option and the option period, and the
expiration date, if any, of such options. The exercise of an option may be less
than fair market value of the underlying shares of Common Stock. No options
granted under the SOP will be transferable by the optionee other than by that
provided by the Option Grant Agreement or will or the laws of descent and
distribution, and each option will be exercisable during the lifetime of the
optionee, only by such optionee.

     The exercise price of an option granted pursuant to the SOP may be paid in
cash, by the surrender of options, in Common Stock, in other property, including
the optionee's promissory note, or by a combination of the above.

     During the quarter ended June 30, 2000, the board of directors granted
options in the aggregate of 1,950,000 shares at an exercise price of $0.25 per
share to the individuals reflected in the table below. The table has been
revised, however, to take into consideration the reverse stock split of four to
one. The options are thus exercisable at $1.00 per share. As of the date of this
Annual Report, options have been granted in the aggregate of 487,500 shares. All
options granted are exercisable by the respective individual from the date of
grant through the date of expiration. No share options have been exercised as of
the date of this Annual Report.

Aggregated Options/SAR Exercises and Fiscal Year End Options/SAR Value Table
--------------------------------------------------------------------------------
    Name               Number of      Date of Grant   Exercise Date    Date of
                     Shares Granted                                   Expiration
--------------------------------------------------------------------------------

Grant Atkins            25,000           05/01/00        05/01/00      04/30/10
Herb Ackerman           25,000           05/01/00        05/01/00      04/30/10
John Bowles             25,000           05/01/00        05/01/00      04/30/10
Brent Pierce           125,000           05/01/00        05/01/00      04/30/10
Gary Powers             25,000           05/01/00        05/01/00      04/30/10
Marcus Johnson          25,000           05/01/00        05/01/00      04/30/10
Gino Cicci              25,000           05/01/00        05/01/00      04/30/10
Harold Gooding          25,000           05/01/00        05/01/00      04/30/10
Tun Resources Ltd.     125,000           05/01/00        05/01/00      04/30/10
Rudolf Heinz            62,500           06/21/00        06/21/00      04/30/10

Total                  487,500

                                       19
<PAGE>


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     As of the date of this Annual Report, there are 15,213,405 shares of Common
Stock issued and outstanding. 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 VATL to own beneficially, more than five percent (5%)
of VATL's Common Stock, and the name and shareholdings of each officer and
director and all officers and directors as a group.

--------------------------------------------------------------------------------
Title of Class    Name and Address of        Amount and Nature     Percent of
                   Beneficial Owner              of Class             Class
--------------------------------------------------------------------------------
                                                         (1)
Common Stock      Alexander W. Cox               4,323,300            28.42%
                  428 - 755 Burrard Street
                  Vancouver, British Columbia
                  Canada V6Z 1X6
                                                         (1)
Common Stock      Newport Capital Corp.            934,975             6.16%
                  P.O. Box W-960
                  St. Johns, Antigua
                                                         (1)
Common Stock      Pacific Rim Financial, Inc.    1,133,300             7.45%
                  60 Market Square
                  P.O. Box 364
                  Belize City, Belize
                                                         (1)
Common Stock      Calista Capital Corp.            916,700             6.03%
                  P.O. Box W-961
                  St. Johns, Antigua
                                                         (1)
Common Stock      Investor Communications        1,375,000             9.04%
                    International, Inc.
                  435 Martin Street
                  Suite 2000
                  Blaine, Washington 98230
                                                         (2)
Common Stock      All officers and directors         5,000              .003%
                  as a group (3 persons)
--------------------------------------------------------------------------------
  (1)
     These are restricted shares of Common Stock with the exception: (i) of the
4,323,300 shares held by Alexander W. Cox, 3,000,000 shares are free trading;
(ii) of the 1,316,950 shares held by Calista Capital Corp., 400,250 are free
trading; and (iii) of the 1,308,006 shares held by Newport Capital Corp., 13,031
are free trading.

  (2)
     Includes the assumption of the exercise of options by each option holder
pursuant to the terms of the Non-Qualified Stock Option Plan to purchase an
aggregate of 75,000 shares of restricted Common Stock at $0.25 per share.

                                       20
<PAGE>


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     As of the date of this Annual Report, VATL has not entered into any
contractual arrangements with related parties other than those transactions
relating to the contractual arrangements with ICI and those resulting primarily
from advances made by related parties to VATL and subsequent issuance of notes.
Mr. Atkins is a director and the president of VATL, and is a member of the
management team provided by ICI. The board of directors of VATL has not adopted
or approved any policy regarding possible future transactions with related third
parties.

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

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits.

          None.

     (b)  Reports.

     The following Reports on Form 8-K were filed during fiscal year ended March
31, 2002 and to date of this Annual Report.

Item              Date

8-K               April 5, 2001
8-K               June 6, 2001

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 28, 2002                     By: /s/ Grant Atkins
                                         --------------------
                                         Grant Atkins, President



                                       21