U.S. SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)

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

     For the quarterly period ended June 30, 2003

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

     For the transition period from        to
                                   ________  ________


                         Commission file number 0-27845


                            VEGA-ATLANTIC CORPORATION
        (proposing to change its name to "Transax International Limited")
        _________________________________________________________________
        (Exact name of small business issuer as specified in its charter)


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


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


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


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


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

          Yes  X    No
              ___      ___

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

               Class                          Outstanding as of August 7, 2003
  _______________________________             ________________________________

  Common Stock, $.00001 par value                        1,106,701*

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

Transitional Small Business Disclosure Format (check one)

          Yes       No  X
              ___      ___


<PAGE>


PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

         BALANCE SHEETS

         INTERIM STATEMENTS OF OPERATIONS

         INTERIM STATEMENTS OF CASH FLOWS

         NOTES TO INTERIM FINANCIAL STATEMENTS

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION           10

ITEM 3. CONTROLS AND PROCEDURES

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS                                                   16

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS                           21

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES                                     22

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                 22

ITEM 5.  OTHER INFORMATION                                                   22

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                                    22

SIGNATURES                                                                   23


<PAGE>


PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
____________________________


                            VEGA-ATLANTIC CORPORATION
                         (AN EXPLORATION STAGE COMPANY)

                          INTERIM FINANCIAL STATEMENTS

                                  JUNE 30, 2003
                                   (Unaudited)



BALANCE SHEETS

INTERIM STATEMENTS OF OPERATIONS

INTERIM STATEMENTS OF CASH FLOWS

NOTES TO INTERIM FINANCIAL STATEMENTS


<PAGE>

<TABLE>
<CAPTION>


                                              VEGA-ATLANTIC CORPORATION

                                            (A DEVELOPMENT STAGE COMPANY)

                                                  BALANCE SHEETS


                                                                                June 30,        March 31,
                                                                                    2003             2003
_________________________________________________________________________________________________________
                                                                             (Unaudited)
<S>                                                                         <C>               <C>
                                                             ASSETS

CURRENT ASSETS
   Cash                                                                     $     4,159       $        89
_________________________________________________________________________________________________________

                                                                            $     4,159       $        89
=========================================================================================================


                                   LIABILITIES AND STOCKHOLDERS' EQUITY (CAPITAL DEFICIENCY)

CURRENT LIABILITIES
   Accounts payable and accrued liabilities                                 $    48,585       $    62,557
   Due to related parties (Note 4)                                              556,406           445,988
_________________________________________________________________________________________________________

                                                                                604,991           508,545
_________________________________________________________________________________________________________

STOCKHOLDERS' EQUITY (CAPITAL DEFICIENCY) (Note 6)
   Preferred stock, no par value; 20,000,000 shares authorized,                       -                 -
      nil shares issued and outstanding
   Common stock, $.00001 par value, 100,000,000 shares authorized
      1,106,701 (March 31, 2003 - 1,106,701) post reverse-split shares
      issued and outstanding                                                        408               408
   Additional paid-in capital                                                 9,575,077         9,575,077
   Deficit accumulated during the development stage                         (10,176,317)      (10,083,941)
_________________________________________________________________________________________________________

   Total stockholders' equity (capital deficiency)                             (600,832)         (508,456)
_________________________________________________________________________________________________________

                                                                            $     4,159       $        89
=========================================================================================================


CONTINGENCIES (Note 1)


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

</TABLE>

<PAGE>

<TABLE>
<CAPTION>


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


                                                                                                                      January 28,
                                                                                                                             1987
                                                                                   Three months     Three months   (inception) to
                                                                                     ended June       ended June         June 30,
                                                                                       30, 2003         30, 2002             2003
_________________________________________________________________________________________________________________________________
<S>                                                                                 <C>              <C>             <C>

GENERAL AND ADMINISTRATIVE EXPENSES
  Consulting fees                                                                   $         -      $         -     $    260,872
  Directors' fees                                                                             -                -           49,500
  Office and general                                                                     51,982           30,046        3,792,293
  Interest expense                                                                       12,208            9,484          268,863
  Professional fees                                                                      28,186           11,560          361,642
  Stock-based compensation                                                                    -                -          262,247
  Gain on settlement of debt                                                                  -                -          (66,267)
_________________________________________________________________________________________________________________________________

  Total general and administrative expenses                                              92,376           51,090        4,929,150
_________________________________________________________________________________________________________________________________

LOSS BEFORE THE FOLLOWING                                                               (92,376)         (51,090)      (4,929,150)

  Mineral property acquisition and exploration costs                                          -                -       (2,174,005)
  Gain on sale of joint venture interest                                                      -                -           69,318
  Gain on settlement of lawsuit                                                               -                -          819,066
  Loss on settlement of convertible promissory notes                                          -                -       (1,754,917)
_________________________________________________________________________________________________________________________________

LOSS FROM CONTINUING OPERATIONS                                                         (92,376)         (51,090)      (7,969,688)

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

LOSS FOR THE PERIOD                                                                 $   (92,376)     $   (51,090)    $(10,176,317)
=================================================================================================================================



BASIC LOSS PER SHARE                                                                $     (0.08)     $     (0.07)
================================================================================================================

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                                            1,106,701          760,670
================================================================================================================




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

</TABLE>

<PAGE>

<TABLE>
<CAPTION>


                                              VEGA-ATLANTIC CORPORATION
                                            (A DEVELOPMENT STAGE COMPANY)
                                           ITERIM STATEMENTS OF CASH FLOWS
                                                     (UNAUDITED)


                                                                     Three months      Three months    January 28, 1987
                                                                            ended             ended      (inception) to
                                                                    June 30, 2003     June 30, 2002       June 30, 2003
_______________________________________________________________________________________________________________________
<S>                                                                    <C>               <C>              <C>

CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss for the period                                              $  (92,376)       $  (51,090)      $ (10,083,941)
  Adjustments to reconcile net loss to net cash from
  operating activities:
  - non-cash loss on sale of subsidiary                                         -                 -           1,687,000
  - non-cash gain on sale of joint venture                                      -                 -             (19,318)
  - non-cash research and development expense                                   -                 -             783,182
  - non-cash interest recognized through discount adjustment                    -                 -              31,818
  - common stock issued in settlement of debt                                   -                 -              84,992
  - impairment of interest in mineral properties                                -                 -           1,303,611
  - stock-based compensation                                                    -                 -             262,247
  - loss on settlement of convertible promissory notes                          -                 -           1,754,917
  - gain on settlement of debt, net of current period accrual                   -                 -             (61,267)
  - gain on sale of joint venture interest                                      -                 -             (50,000)
  - non-cash gain on settlement of lawsuit                                      -                 -            (663,316)
  - consulting and administration fees accrued                             47,800                 -             423,050
  - net changes in other working capital items                            (13,972)          (27,035)            358,096
_______________________________________________________________________________________________________________________

CASH FLOWS USED IN OPERATING ACTIVITIES                                   (58,548)          (78,125)         (4,281,305)
_______________________________________________________________________________________________________________________

CASH FLOWS FROM FINANCING ACTIVITIES
  Advances from related parties                                            62,618            77,179           1,502,009
  Interest paid                                                                 -                 -              (1,433)
  Convertible notes                                                             -                 -              99,500
  Sale of common stock                                                          -                 -           3,357,000
_______________________________________________________________________________________________________________________

CASH FLOWS FROM FINANCING ACTIVITIES                                       62,618            77,179           4,957,076
_______________________________________________________________________________________________________________________

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

CASH FLOWS USED IN INVESTING ACTIVITIES                                         -                 -            (671,612)
_______________________________________________________________________________________________________________________

INCREASE (DECREASE) IN CASH                                                 4,070              (946)              4,159

CASH, BEGINNING OF PERIOD                                                      89             1,196                   -
_______________________________________________________________________________________________________________________

                                                                       $    4,159        $      250          $    4,159
=======================================================================================================================

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

</TABLE>

<PAGE>


                           VEGA-ATLANTIC CORPORATION
                         (A DEVELOPMENT STAGE COMPANY)
                    NOTES TO THE INTERIM FINANCIAL STATEMENTS
________________________________________________________________________________
                                 JUNE 30, 2003
                                  (Unaudited)


NOTE 1:  NATURE AND CONTINUANCE OF OPERATIONS
________________________________________________________________________________

The Company is a  development  stage  company and to date has not  commenced any
commercial  operations or generated any revenues.  Due to the inability to raise
sufficient capital,  the Company has either sold or disposed of its interests in
mineral  properties.  The Company is continuing to assess new business  ventures
for possible  acquisition or merger and such businesses may or may not be in the
minerals  exploration  or oil and gas  industries.  Subsequent  to year  end the
Company  entered into an Agreement in Principle to acquire Transax  Limited,  an
electronic  data  transaction  based  solutions  provider.  Refer  to  Note  7 -
Subsequent Events.

At June 30, 2003, the Company had a working  capital  deficiency of $600,832 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.

UNAUDITED INTERIM FINANCIAL STATEMENTS

The accompanying  unaudited interim  financial  statements have been prepared in
accordance with generally accepted  accounting  principles for interim financial
information and with the  instructions to Form 10-QSB of Regulation S-B. They do
not  include all  information  and  footnotes  required  by  generally  accepted
accounting  principles for complete  financial  statements.  However,  except as
disclosed  herein,  there  have  been no  material  changes  in the  information
disclosed in the notes to the financial  statements for the year ended March 31,
2003  included in the  Company's  Annual  Report on Form  10-KSB  filed with the
Securities and Exchange  Commission.  The interim unaudited financial statements
should be read in conjunction  with those financial  statements  included in the
Form 10-KSB. In the opinion of Management,  all adjustments considered necessary
for a fair presentation, consisting solely of normal recurring adjustments, have
been made.  Operating  results for the three  months ended June 30, 2003 are not
necessarily  indicative  of the results that may be expected for the year ending
March 31, 2004.


NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
________________________________________________________________________________

USE OF ESTIMATES AND ASSUMPTIONS

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

CASH AND CASH EQUIVALENTS

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

FOREIGN CURRENCY TRANSLATION

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


<PAGE>


VEGA-ATLANTIC CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
________________________________________________________________________________
JUNE 30, 2003
(Unaudited)


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

MINERAL PROPERTIES

The Company's resource property  acquisition,  exploration and development costs
are expensed as incurred. Once the Company has determined that a property can be
economically   developed,   further   exploration  and  development   costs  are
capitalized.  The capitalized costs are depleted on a property by property basis
over  the  estimated  useful  lives  of  the  properties  upon  commencement  of
commercial  production using the  unit-of-production  method.  Capitalized costs
relating to mineral  properties which are sold or abandoned are written off when
such events  occur.  The proceeds  received from  property  options  granted are
applied against the costs of the related  property and any excess is included in
earnings  for the period.  The Company  reviews the  carrying  value of resource
properties  whenever  events  or  changes  in  circumstances  indicate  that the
carrying value may not be recoverable, at which time a write-down is recorded.

NET EARNINGS (LOSS) PER COMMON SHARE

Basic earnings (loss) per share includes no dilution and is computed by dividing
income available to common stockholders by the weighted average number of common
shares  outstanding for the period.  Dilutive earnings (loss) per share reflects
the  potential  dilution of  securities  that could share in the earnings of the
Company.  The  accompanying  presentation  is only of basic earnings  (loss) per
share as the potentially  dilutive  factors are  anti-dilutive to basic earnings
(loss) per share.

INCOME TAXES

The Company  follows the  liability  method of accounting  for income taxes,  in
accordance  with SFAS No. 109,  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.

STOCK-BASED COMPENSATION

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

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

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


<PAGE>


VEGA-ATLANTIC CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
________________________________________________________________________________
JUNE 30, 2003
(Unaudited)


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

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

RECENT ACCOUNTING PRONOUNCEMENTS

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

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


NOTE 3:  STOCK OPTION PLAN
________________________________________________________________________________

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

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

On July 22, 2003, the Board of Directors of the Company unanimously approved and
adopted a Stock Option Plan (SOP) to replace the New SOP which was cancelled. In
all respects the SOP is identical to the New SOP,  described above,  except that
the SOP provides  authorization to the Board of Directors to grant Stock Options
to  purchase a total  number of shares of Common  Stock of the  Company,  not to
presently exceed 4,500,000 shares  (post-Reverse Stock Split), as at the date of
adoption by the Board of Directors  of the Stock  Option Plan.  The SOP has been
adopted  pursuant to the terms of the Transax Merger  Agreement.  (Refer to Note
7.)

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


<PAGE>


VEGA-ATLANTIC CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
________________________________________________________________________________
JUNE 30, 2003
(Unaudited)


NOTE 4:       RELATED PARTY TRANSACTIONS
________________________________________________________________________________

During the three month period ended June 30, 2003 the Company incurred  expenses
for managerial, administrative, consulting and investor relation services in the
amount of $47,800  (2002 - $59,550)  to Investor  Communications  International,
Inc. ("ICI") under a consulting services and management agreement dated April 1,
1999 which  provides for  compensation  for  services  rendered in an amount not
greater than $75,000 per month or $900,000 per year. The Company accrued $11,421
in interest payable to ICI for the three months ended June 30, 2003. At June 30,
2002 ICI had made net cash  advances  of  $28,600.  A  director  of the  Company
provides consulting services to ICI and was paid approximately $6,250 during the
three  month  period  ended  June 30,  2003  (2002 - $0).  As at June 30,  2003,
$485,810 plus $25,250 in accrued  interest at 10% per annum is owed to ICI (2002
- $315,393 plus $30,809 accrued  interest).  The balance of amounts owing to ICI
is unsecured and payable on demand.

During the three months ended June 30, 2003, the Company  received cash advances
of $21,810 and accrued $787 in interest due to certain shareholders.  As at June
30, 2003, $45,346 is owing to certain shareholders for cash advances and accrued
interest  at 10% per annum (2002 -  $98,358).  The  balance of amounts  owing to
certain shareholders are unsecured and without any specified terms of repayment.

________________________________________________________________________________

NOTE 5:  INCOME TAXES

As of June 30,  2003 the  Company  had net  operating  loss  carry  forwards  of
approximately  $6,700,000  that may be available to reduce future years' taxable
income and will expire between the years 2003 and 2023.  Due to the  uncertainty
of realization the Company has provided a full valuation  allowance for deferred
tax assets resulting from these loss carryforwards.


NOTE 6:       STOCKHOLDERS' EQUITY
________________________________________________________________________________

COMMON STOCK

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

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

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

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

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

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

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

On  October  3, 2002 the  Company  converted  $140,887  of debt owing to ICI for
234,812 shares of common stock.


<PAGE>


VEGA-ATLANTIC CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
________________________________________________________________________________
JUNE 30, 2003
(Unaudited)


NOTE 6:  STOCKHOLDERS' EQUITY (CONT'D)
________________________________________________________________________________

On  October  3, 2002 the  Company  converted  $36,487  or debt owing to Tri Star
Financial Services, Ltd. for 60,811 shares of common stock.

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

REVERSE STOCK SPLITS

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

Effective  March 31,  2003,  the  Company  completed  a reverse  stock  split of
one-for-twenty  of  the  Company's  outstanding  common  stock,  resulting  in a
reduction of the  outstanding  common stock from 22,132,110 to 1,106,701 with no
change in the authorized common stock.

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

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


NOTE 7:  SUBSEQUENT EVENT
________________________________________________________________________________

On June 19, 2003 the Company  entered into an Agreement in Principle,  which was
superceded  by a formal  Merger  Agreement  dated  July 22,  2003  (the  "Merger
Agreement"),  with Transax Limited  ("Transax"),  a private Colorado corporation
engaged  in  the  business  of  providing  electronic  data  transaction  based,
information network solutions for healthcare  providers and insurance companies.
The Merger  Agreement is subject to a number of conditions  precedent  including
satisfactory  completion of due  diligence,  Board of Directors and  shareholder
approval.  The Merger  Agreement  proposes that Transax will be acquired through
the merger (the "Merger") of Transax with a newly formed wholly-owned subsidiary
of the Company,  with Transax being the surviving and resulting company from the
completion of the Merger.

The  proposed  terms of Merger  provide  for the  acquisition  by the  Company's
subsidiary  of all of the issued and  outstanding  shares of the common stock of
Transax in consideration of the issuance by the Company, through its subsidiary,
of an aggregate of 11,066,207  shares of the Company's  restricted common stock,
the grant and exchange of  4,500,000  stock  options,  the grant and exchange of
4,100,000  non-transferable  common stock purchase  warrants and the issuance of
300,000  shares of the Company's  restricted  common stock as a finder's fee. In
the event the  Merger is  consummated  there  will be a change in control of the
Company  and the  acquisition  will be  accounted  for as a reverse  merger with
Transax being treated as the  accounting  acquirer and the Company being treated
as the accounting subsidiary.

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


<PAGE>


         Statements made in this Form 10-QSB (the  "Quarterly  Report") 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. as
amended (the "Act"), and Section 21E of the Securities  Exchange Act of 1934, as
amended.  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.  Vega-Atlantic  Corporation  (proposing to
change its name to "Transax International  Limited"; the "Company") intends that
such  forward-looking  statements  be  subject  to the  safe  harbors  for  such
statements. The Company wishes to caution readers not to place undue reliance on
any such forward-looking  statements,  which speak only as of the date made. Any
forward-looking  statements represent  management's best judgment as to what may
occur in the future. However,  forward-looking  statements are subject to risks,
uncertainties and important factors beyond the control of the Company that could
cause actual results and events to differ materially from historical  results of
operations  and events  and those  presently  anticipated  or  projected.  These
factors  include  adverse  economic  conditions,   entry  of  new  and  stronger
competitors,  inadequate capital and unexpected costs. The Company disclaims any
obligation  subsequently  to revise any  forward-looking  statements  to reflect
events or  circumstances  after the date of such  statement  or to  reflect  the
occurrence of anticipated or unanticipated events.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

GENERAL

         Vega-Atlantic  Corporation  (proposing  to change its name to  "Transax
International  Limited"), is a corporation organized under the laws of the State
of Colorado.  The Company  currently  trades on the OTC Bulletin Board under the
symbol "VGAC" and on the  Frankfurt  Stock  Exchange  (FWB) in Germany under the
symbol "VGA1".

         As of the date of this Quarterly Report,  the Company is expected to be
a provider of information  network  solutions for the  healthcare  providers and
health insurance companies, using proprietary software trademarked as "MedLink".
See "Part II.  Other  Information.  Item 4.  Submission  of Matters to a Vote of
Security Holders."

CURRENT BUSINESS OPERATIONS

ACQUISITION OF TRANSAX LIMITED

         The Board of Directors of the Company (the "Board of Directors"),  at a
special meeting,  approved the execution of an agreement in principle dated June
19, 2003 and a subsequent  merger  agreement and its ancillary  documents  dated
July  22,  2203  (collectively,  the  "Merger  Agreement")  among  the  Company,
Vega-Atlantic  Acquisition  Corporation,  the Company's wholly-owned  subsidiary
(Vega-Atlantic"),  Transax  Limited,  a Colorado  corporation  ("Transax"),  and
certain selling  shareholders of Transax. The Merger Agreement and the Company's
anticipated   acquisition   of  Transax  is  expected  to  be   consummated   by
approximately August 14, 2003, but in any event no later than August 31, 2003.


<PAGE>


         THE MERGER AGREEMENT

         In accordance  with the terms and  conditions of the Merger  Agreement:
(i) Vega-Atlantic is expected to merge with Transax so that Transax shall become
a wholly-owned subsidiary of the Company and, correspondingly, the shareholders,
warrantholders   and   optionholders   of  Transax  will  become   shareholders,
warrantholders  and  optionholders of the Company;  (ii) the Company's  business
operations   would  become  that  of  Transax,   primarily   consisting  of  the
development,   acquisition,   provider  and  marketing  of  information  network
solutions for healthcare  providers and health insurance  companies  world-wide;
(iii) the Company  plans to change its name to "Transax  International  Limited"
and its trading  symbol;  and (iv) the Company  shall  adopt and  implement  its
current "Stock Option Plan" for key personnel of the Company.

         Pursuant  to the terms and  conditions  of the Merger  Agreement  and a
corresponding  contribution  agreement,  as entered into between the Company and
Vega-Atlantic, on the closing date of the Merger Agreement: (i) the Company will
contribute to  Vega-Atlantic  11,066,207  shares of its restricted  common stock
(the "Common  Stock") and 4,500,000  stock options and 4,100,000  share purchase
warrants  to  acquire  any  equivalent  number of shares of Common  Stock of the
Company;   (ii)   Vega-Atlantic   will  exchange   therefore  with  all  Transax
shareholders  an  aggregate of  11,066,207  shares of the  Company's  restricted
Common Stock (on the basis of each two Transax shares of common stock  exchanged
into the  right to  receive  one share of Common  Stock of the  Company);  (iii)
Vega-Atlantic  will  exchange  therefore  with  all  Transax   optionholders  an
aggregate of 4,500,000  stock  options to acquire up to 4,500,000  shares of the
Company's  Common Stock to replace all stock options  presently  outstanding  in
Transax (on the basis of each two Transax stock options exchanged into the right
to  receive  one  stock  option of the  Company);  and (iv)  Vega-Atlantic  will
exchange  therefore  with all Transax  warrantholders  an aggregate of 4,100,000
share  purchase  warrants  to  acquire up to a further  4,100,000  shares of the
Company's  Common  Stock  to  replace  all  share  purchase  warrants  presently
outstanding in Transax (on the basis of each two Transax share purchase warrants
exchanged into the right to receive one share purchase warrant of the Company.

         In the event  certain  Transax  Shareholders,  but not more than  9.5%,
demand in writing  payment  for such shares of common  stock of Transax  held of
record, in accordance with applicable  Colorado law, such shares of common stock
of Transax will not be converted  into shares of restricted  Common Stock of the
Company and such Transax  Shareholders  will be entitled to receive  payment for
the value of the shares of common stock of Transax  held of record.  The Company
is informed that no shareholders of Transax exercised their dissent rights prior
to  Transax's  annual and general  meeting on August 8, 2003 at which the Merger
Agreement was approved.

         TRANSAX - CORPORATE PROFILE

         Transax is the holding company of TDS  Telecommunications  Data Systems
Ltds.  ("TDS")  (being  renamed  "Transax  Brazil  Ltds").  TDS  is a  solutions
provider.  Through a licensing agreement from Transax,  TDS is using proprietary
software  trademarked  "MedLink",  which is currently  operating in Brazil,  and
employs approximately 40 staff and contract personnel.


<PAGE>


         The MedLink solution has been specifically  designed for the healthcare
and  health  insurance  industry  to allow  insurance  companies  to  connect to
healthcare providers and electronically undertake authorization of health claims
in real time. A transaction fee is charged to the insurer for use of the MedLink
system.  MedLink has been  developed as a "total  connectivity"  solution  where
Transax  is able to  provide an  insurer  with the  ability to cost  effectively
process all of the  transactions  generated  regardless of location of method of
generation.

         An in-house  authorization  system for  approximately  1300  healthcare
provider locations was developed by MedLink's software development team and sold
to  Sul  America/Aetna  Life.  Management  of  the  Company  believes  that  Sul
America/Aetna  Life is the second largest  private health  insurance  company in
Brazil. This stand-alone system is currently in use and processes  approximately
350,000 claims monthly.

         The  strategic  focus of Transax  is to become a premier  international
provider of  information  network  solutions  for the  healthcare  providers and
health insurance companies, enabling the real time automation of routine patient
eligibility   verifications,   authorization,   claims  processing  and  payment
functions that are currently performed manually.

OFFICERS AND DIRECTORS

         In accordance with the terms and provisions of the Merger Agreement the
Board of Directors  will: (i) appoint  Stephen  Walters as a director and as the
President  and Chief  Executive  Officer of the Company  effective on August 14,
2003;  (ii) appoint  Nathalie  Pilon,  CMA, as the Chief  Financial  Officer and
Secretary  of the Company  effective  on August 14,  2003;  (iii)  nominate  and
appoint the following  additional persons effective  approximately on August 22,
2003 to serve as directors of the Company  until the next annual  meeting of the
Company's   shareholders  or  until  their  successors  have  been  elected  and
qualified;  and (iv)  nominate  and appoint  the  following  additional  persons
effective approximately on August 22, 2003 to serve as officers of the Company.

       Name               Age                  Position with the Company
__________________        ___              _________________________________

Stephen Walters            44              President/Chief Executive Officer
                                           and Director

Graeme Smith               42              Vice President and Director


Nathalie Pilon CMA         35              Chief Financial Officer/Secretary

Laurie Bewes BBA           51              Director

David M. Bouzaid           49              Director

Grant Atkins               43              Director

         STEPHEN  WALTERS  will be appoint  as the  President,  Chief  Executive
Officer and a director of the Company  effective on August 14, 2003. Mr. Walters
currently is the President,  Chief Executive  Officer and a director of Transax.


<PAGE>


Mr.  Walters has more than 15 years of business  experience in the  Asia-Pacific
Region. He is responsible for corporate development initiatives that have seen a
successful  restructuring  of the predecessor  company.  Mr. Walters is also the
founder and principal of the Carlingford  Group of companies based in Singapore.
In the past  twenty-four  months,  Mr.  Walters has raised over  $6,000,000  for
investment in promising early stage technology companies  principally from North
America and to expand their  operations to the  Asia-Pacific  region through the
establishment   of  joint  ventures  with   strategic   partners  and  licensing
arrangements.  The  Carlingford  Group  focuses on companies in the  biomedical,
computer  network  and  wireless  telecommunications   industries.  Mr.  Walters
possesses an in depth knowledge of the public markets having previously acted as
President  and Chief  Executive  Officer  of a US public  company.  Mr.  Walters
currently  is a  director  of a  number  of  private  companies  in  Canada  and
Singapore.

         GRAEME SMITH has been nominated to be appointed as a Vice President and
a director of the Company effective on approximately  August 22, 2003. Mr. Smith
currently is a Vice President and a director of Transax. During the past several
years,  Mr.  Smith was a former  general  manager  of  Telstra  Technologies  of
Australia  and  managing  director of Telstra  Corporation's  customer  premises
equipment business with a responsibility for a workforce of over 5,500 staff and
a cash flow of over $1 billion.  Mr. Smith's  principal  expertise is related to
business   development,    marketing   and   strategic   planning   within   the
telecommunications  industry.  More  recently,  Mr.  Smith  co-founded a private
telecommunications  company and  successfully  raised  over $100  million in the
capital markets for mergers and acquisition  purposes.  Currently,  Mr. Smith is
also Chairman and President of an  organization  that  specializes  in assisting
telecommunication companies seeking entry into the global marketplace.

         NATHALIE  PILON will be  appointed as the Chief  Financial  Officer and
Secretary of the Company  effective on August 14, 2003.  Ms. Pilon  currently is
the Chief  Financial  Officer and  secretary  of Transax.  Over the past several
years,  Ms. Pilon has gained  significant  experience in finance,  international
accounting,  management  and strategic  planning  while acting as Controller for
development  stage  corporations,  such as Lorus  Therapeutics,  Inc.  (formerly
Imutec  Corporation  Inc.). Ms. Pilon was also formerly Chief Financial  Officer
for MIV Therapeutics Inc., an OTCBB listed company. Over the past few years, Ms.
Pilon consulted with various biotech and high tech companies,  including Chromos
Molecular Systems and International Hydro Cut. Ms. Pilon holds a CMA designation
and obtained her bachelor's  degree in Business  Administration  from Sherbrooke
University in 1990.

         LAURIE  BEWES has been  nominated  to be appointed as a director of the
Company  effective on  approximately  August 22, 2003. Mr. Bewes  currently is a
director of Transax. Mr. Bewes has a Bachelor of Business  Administration (RMIT)
and is a member of the Australian  Institute of Company Directors  (MAICD).  His
business  background  over the past 20 years includes joint  ventures,  business
development,  mergers,  infrastructure  privatization and start-ups across South
America  (Argentina and Brazil),  Asia  (Indonesia,  Singapore and Malaysia) and
Australia/New  Zealand.  Mr.  Bewes  has  worked  in  various  senior  executive
positions for companies such as P & O, ANL and TNT.

         DAVID  BOUZAID has been  nominated to be appointed as a director of the
Company  effective on approximately  August 22, 2003. Mr. Bouzaid currently is a
director of Transax.  Mr. Bouzaid has  accumulated  27 years'  experience in the
health insurance  industry within Asia and the Australasia  region.  Mr. Bouzaid
specializes in New Business Development within the health insurance industry and


<PAGE>


over the  past  four  years he has  gained a  wealth  of  experience  in  Global
Healthcare Insurance.  Mr. Bouzaid is currently regional director (Asia-Pacific)
for Interglobal Insurance Services Ltd. based in Bangkok, Thailand.

         GRANT   ATKINS  is  a  director   of  the  Company  and  has  been  the
President/Chief Executive Officer, Secretary,  Treasurer/Chief Financial Officer
since  October  15,  1998.  For  the  past  six  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.
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 is also a member of the board of
directors of  Intergold  Corporation,  a publicly  traded  corporation  formerly
engaged  in the  exploration  of gold and  silver,  and a member of the board of
directors of GeneMax Corp., a publicly traded corporation.

     As of the date of this  Statement no director or  Executive  Officer of the
Company is or has been  involved  in any legal  proceeding  concerning:  (i) any
bankruptcy  petition filed by or against any business of which such person was a
general  partner or executive  officer  either at the time of the  bankruptcy or
within  two  years  prior  to that  time;  (ii)  any  conviction  in a  criminal
proceeding or being subject to a pending criminal proceeding  (excluding traffic
violations  and other minor  offenses)  within the past five years;  (iii) being
subject to any order,  judgment or decree permanently or temporarily  enjoining,
barring,  suspending or otherwise limiting  involvement in any type of business,
securities or banking  activity;  or (iv) being found by a court, the Securities
and Exchange  Commission or the  Commodity  Futures  Trading  Commission to have
violated a federal or state  securities or commodities law (and the judgment has
not been reversed, suspended or vacated).

AUDIT COMMITTEE

     As of the date of this  Quarterly  Report  the  Company  has not  appointed
members to an Audit Committee.  As of the date of this Quarterly Report no Audit
Committee exists.  Therefore,  the role of an Audit Committee has been conducted
by the Board of Directors.

     The  Company  intends  to  establish  an Audit  Committee  with  additional
appointments  to the Board of Directors,  as the case may be. When  established,
the Audit Committee will be comprised of at least two  disinterested  members of
the Board of Directors. When established, the Audit Committee's primary function
will be to provide advice with respect to the Company's financial matters and to
assist the Board of  Directors  in  fulfilling  its  oversight  responsibilities
regarding finance,  accounting,  tax and legal compliance. The Audit Committee's
primary duties and responsibilities  will be: (i) to serve as an independent and
objective  party to  monitor  the  Company's  financial  reporting  process  and
internal  control  system;  (ii) to review and appraise the audit efforts of the
Company's  independent  accountants;  (iii) to evaluate the Company's  quarterly
financial performance as well as its compliance with laws and regulations;  (iv)
to oversee management's  establishment and enforcement of financial policies and
business practices; and (v) to provide an open avenue of communication among the
independent accountants, management and the Board of Directors.


<PAGE>


     The  Board of  Directors  has  considered  whether  the  provision  of such
non-audit   services  would  be  compatible   with   maintaining  its  principal
independent accountant's independence. The Board of Directors considered whether
the Company's  principal  independent  accountant was  independent and concluded
that its principal  independent  accountant for the previous  fiscal years ended
March 31, 2002 and March 31, 2003, was independent.

EXECUTIVE COMPENSATION

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

   Grant Atkins, the current President, Secretary, Treasurer and director of the
Company,  derives  remuneration  from the Company  indirectly  through  Investor
Communications  International,  Inc.,  which provides a wide range of financial,
consulting,   administrative  and  management  services  to  the  Company  on  a
month-to-month basis as needed.

RESULTS OF OPERATION

THREE-MONTH PERIOD ENDED JUNE 30, 2003 COMPARED TO THREE-MONTH PERIOD ENDED JUNE
30, 2002

         The Company's net loss for the  three-month  period ended June 30, 2003
was approximately  ($92,376)  compared to a net loss of approximately  ($51,090)
for the  three-month  period ended June 30, 2002 (an  increase of  approximately
$41,286).

         During  the  three-month  periods  ended  June 30,  2003 and 2002,  the
Company did not incur any property  exploration expenses due to the cessation of
investment relating to its resource industry based operational projects.

         During the three-month period ended June 30, 2003, the Company incurred
general and administrative expenses of approximately $92,376 compared to general
and  administrative  expenses  of  approximately  $51,090  incurred  during  the
three-month period ended June 30, 2002 (an increase of $41,286).

         The  increase  in  general  and  administrative   expenses  during  the
three-month  period ended June 30, 2003 compared to the three-month period ended
June 30, 2002 was primarily due to an increase in office and general expense and
professional  fees  relating to  identification  and  negotiation  of  potential
investment  opportunities  in  other  ventures,  including  the  acquisition  of
Transax.  During the  three-month  period  ended June 30,  2003,  the  Company's
general  and  administrative  expenses  consisted  of: (i) $51,982 in office and
general  expenses;  (ii)  $28,186 in  professional  fees;  and (iii)  $12,208 in
interest  expense.  During  the  three-month  period  ended June 30,  2002,  the
Company's general and administrative expenses consisted of (i) $30,046 in office
and general  expenses;  (ii) $11,560 in  professional  fees; and (iii) $9,484 in
interest  expense.   General  and  administrative   expenses  generally  include
corporate overhead, financial and administrative contracted services, consulting
costs and professional fees.


<PAGE>


         Of the $92,376  incurred as general and  administrative  expenses,  the
Company  incurred  to  Investor  Communications   International,   Inc.  ("ICI")
approximately:   (i)  $47,800   for  amounts  due  and  owing  for   managerial,
administrative,  financial  and  consulting  services  rendered by ICI; and (ii)
$11,421 as accrued interest.  As of June 30, 2003, the Company owes an aggregate
of $485,810 plus $25,250 in accrued interest to ICI.

         The current and sole director of the Company is presently contracted by
ICI and is part of the  management  team provided by ICI to the Company.  During
the three-month  period ended June 30, 2003,  Grant Atkins received an aggregate
of $6,250 from ICI for services provided to the Company.

         The Company and ICI entered into a two-year consulting  agreement dated
April 1, 1999 and on April 1, 2001 renewed for an  additional  two-year  period.
Pursuant to the terms of the consulting agreement, ICI performed 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) shareholder liaison,  (iii) corporate
public  relations,  press  release  and public  information  distribution,  (iv)
administration,  including auditor and legal liaison,  media liaison,  corporate
minutebook  maintenance  and record  keeping,  corporate  secretarial  services,
printing  and  production,  office and general  duties,  and (v)  financial  and
business planning services, including capital and operating budgeting,  banking,
bookkeeping,   documentation,   database   records,   preparation  of  financial
statements  and  creation of annual  reports.  As of the date of this  Quarterly
Report it is expected that the Company's present  consulting  agreement with ICI
will be terminated in favor of a revised consulting  services  arrangement to be
entered into with the completion of the Merger Agreement.

         Pursuant  to the terms and  provisions  of the  Merger  Agreement,  the
Company and ICI are expected to enter into a new consulting  services  agreement
to be effective with the closing thereof (the "Consulting Services  Agreement").
Pursuant to the provisions of the Consulting  Services  Agreement:  (i) ICI will
provide to the Company  such finance and general  managerial  services as may be
determined  by the Board of  Directors,  from time to time,  and in its sole and
absolute  discretion,  in order to develop the various business interests of the
Company in the information  network  solutions  industry,  including the MedLink
solution;  and (ii) the  Company  will  pay to ICI a fee  commensurate  with the
services  provided  by ICI on a  monthly  basis,  but not to  exceed  $10,000.00
monthly,  plus  direct  expenditures  incurred on behalf of the  Company.  Grant
Atkins,  the current and sole director of the Company,  will continue to consult
directly  to ICI and form part of the  management  team  provided  by ICI to the
Company,  and may  continue to derive  remuneration  from ICI for such  services
rendered to the Company.

         As discussed  above,  the  increase in net loss during the  three-month
period ended June 30, 2003  compared to net loss during the  three-month  period
ended June 30,  2002 is  attributable  primarily  to an  increase  in office and
general expense and professional fees relating to identification and negotiation
of potential  investment  opportunities in other ventures,  including some costs
relating  to the  acquisition  of  Transax.  The  Company's  net loss during the
three-month period ended June 30, 2003 was approximately  ($92,376),  or ($0.08)
per share,  compared to a net loss of  approximately  ($51,090),  or ($0.07) per
share,  during the three-month  period ended June 30, 2002. The weighted average


<PAGE>


number of shares  outstanding  were 1,106,701 for the  three-month  period ended
June 30, 2003 compared to 760,670 for the three-month period ended June 30, 2002
(which were  restated to take into account the "Reverse  Stock Split"  discussed
below).

LIQUIDITY AND CAPITAL RESOURCES

FOR THREE-MONTH PERIOD ENDED JUNE 30, 2003

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

     As of June 30,  2003,  the  Company's  current  assets  were $4,159 and its
current  liabilities were $604,991,  which resulted in a working capital deficit
of  $600,832.  As of fiscal year ended March 31,  2003,  the  Company's  current
assets were $89 and its current  liabilities were $508,545,  which resulted in a
working capital deficit of $508,456.

         The increase in current liabilities during the three-month period ended
June 30, 2003 from fiscal  year ended  March 31,  2003 was due  primarily  to an
increase in advances from related parties.

         Stockholders'  deficit  increased from ($508,456) for fiscal year ended
March 31, 2003 to ($600,832) for the three-month period ended June 30, 2003.

         For the three-month  period ended June 30, 2003, net cash flows used in
operating  activities was ($58,548) compared to ($78,125) of net cash flows used
in operating activities for the three-month period ended June 30, 2002. As noted
above,  the change in cash  flows used in  operating  activities  was  primarily
comprised of: (i) a net loss of ($92,376) incurred during the three-month period
ended June 30, 2003  compared  to a net loss of  ($51,090)  incurred  during the
three-month  period  ended June 30,  2002;  (ii) net changes in working  capital
items of ($13,972) during the three-month period ended June 30, 2003 compared to
net changes in working  capital  items of ($27,035) for the  three-month  period
ended June 30, 2002;  and (iii) $47,800 in consulting  and  administration  fees
accrued  during the  three-month  period  ended June 30,  2003  compared to $-0-
accrued during the three-month period ended June 30, 2002.

         Net cash flows from financing  activities during the three-month period
ended June 30, 2003 was $62,618  resulting  primarily from advances from related
parties  compared to net cash flows from financing  activities of $77,179 during
the three-month period ended June 30, 2002.

         Net cash flows from investing  activities were $-0- during  the  three-
month  periods ended June 30, 2003 and 2002.

PLAN OF OPERATION

         Notwithstanding the Transax proposed merger (the "Merger") process, and
as of the date of this Quarterly  Report,  there is substantial  doubt regarding
the  Company's  ability to  continue  as a going  concern as the Company has not
generated  sufficient  cash flow to funds its business  operations  and material
commitments.  The  Company's  future  success  and  viability,   therefore,  are
dependent  upon the  Company's  ability  to  successfully  complete  the  Merger


<PAGE>


transaction,  and  subsequently  develop,  provide  and market  its  anticipated
information network solutions to healthcare provides, health insurance companies
and other end-users,  and the continuing  ability to generate capital financing.
Management  is  optimistic  that the Company will be  successful in its business
operations and capital raising efforts;  however, there can be no assurance that
the Company  will be  successful  in  generating  revenue or raising  additional
capital. The failure to generate sufficient revenues or raise additional capital
may have a material and adverse effect upon the Company and its shareholders.

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

         Based upon a  twelve-month  work plan  proposed  by  management,  it is
anticipated  that such a work plan would  require  approximately  $1,000,000  of
financing designed to fund various  commitments and business  operations.  As at
the date of this  Quarterly  Report  management  believes  that the  Company can
satisfy its cash requirements for approximately the next six months based on its
ability to  successfully  raise  capital  and to obtain  advances  from  certain
investors and related  parties,  as necessary.  The Company's future success and
viability  are primarily  dependent  upon the  Company's  current  management to
generate revenues from business  operations and raise additional capital through
further private  offerings of its stock or loans from private  investors.  There
can be no assurance,  however, that the Company will be able to raise additional
capital.  The Company's  failure to successfully  raise additional  capital will
have a material and adverse affect upon the Company and its shareholders.

ITEM III. CONTROLS AND PROCEDURES

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


<PAGE>


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

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

         No report required.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

THE MERGER AGREEMENT

         Pursuant  to the terms and  conditions  of the Merger  Agreement  and a
corresponding  contribution  agreement,  as entered into between the Company and
Vega-Atlantic, on the closing date of the Merger Agreement: (i) the Company will
contribute to Vega-Atlantic 11,066,207 shares of its restricted Common Stock and
4,500,000  stock options and 4,100,000  share  purchase  warrants to acquire any
equivalent number of shares of Common Stock of the Company;  (ii)  Vega-Atlantic
will exchange therefore with all Transax shareholders an aggregate of 11,066,207
shares  of the  Company's  restricted  Common  Stock  (on the  basis of each two
Transax shares of common stock  exchanged into the right to receive one share of
Common Stock of the Company);  (iii)  Vega-Atlantic will exchange therefore with
all Transax  optionholders an aggregate of 4,500,000 stock options to acquire up
to 4,500,000  shares of the Company's  Common Stock to replace all stock options
presently outstanding in Transax (on the basis of each two Transax stock options
exchanged  into the right to receive one stock option of the Company);  and (iv)
Vega-Atlantic  will  exchange  therefore  with  all  Transax  warrantholders  an
aggregate  of  4,100,000  share  purchase  warrants  to  acquire up to a further
4,100,000  shares of the  Company's  Common Stock to replace all share  purchase
warrants  presently  outstanding  in Transax  (on the basis of each two  Transax
share purchase  warrants  exchanged into the right to receive one share purchase
warrant of the Company.

REVERSE STOCK SPLIT

         The Board of Directors of the Company, at a special meeting, authorized
and  approved,  subject  to  shareholder  approval,  a  Reverse  Stock  Split of
one-for-twenty  of the Company's issued and outstanding  shares of Common Stock.
As a result an Information Statement pursuant to Section 14(c) of the Securities
Exchange Act of 1934, as amended (the "Information  Statement") was prepared and
filed with the  Securities  and  Exchange  Commission  on October  17,  2002 and
amended  December 16, 2002.  The  Information  Statement  was  circulated to the
shareholders  of the Company in connection  with the taking of corporate  action
without a meeting  upon the  written  consent  of 10 or less  shareholders  then
holding of record a majority of the outstanding  shares of the Company's  Common
Stock (the "Written Consent").  The matters upon which action was taken pursuant
to the  Written  Consent by  shareholders  dated  March 25,  2003  included  the
approval  and  authorization  for the Board of  Directors  to effect the Reverse
Stock Split,  which was  effected on  approximately  April 2, 2003.  The Reverse
Stock Split reduced the Company's issued and outstanding  shares of Common Stock
from 22,532,110 shares to 1,106,701 shares of Common Stock.

         Subsequent to the  completion  of the Reverse Stock Split,  the Company
determined  that  applicable  Colorado law  required the written  consent of all
shareholders  in the  event  that a  written  consent  was  utilized  to  obtain


<PAGE>


shareholder approval in lieu of a shareholders' meeting. Therefore, the Board of
Directors  decided  that it would be  prudent  to have the  shareholders  of the
Company  ratify the prior  actions of the  shareholders  taken  pursuant  to the
Written Consent approving the Reverse Stock Split and, as a result, directed the
filing of a "Proxy  Statement"  and the meeting of the  shareholders  consequent
thereon.

         On August 8, 2003,  the  shareholders  of the Company  voted  either in
person or through proxy  ratification  of the prior actions of the  shareholders
taken  pursuant to the Written  Consent  approving the Reverse Stock Split.  See
"Part II. Item 4. Submission of Matters to a Vote of Security Holders."

CHANGE IN CONTROL

         As a result of the  proposed  issuance of  restricted  shares of Common
Stock and the grant of common stock  options and purchase  warrants  pursuant to
the Merger  Agreement,  there will be a change in control of the Company.  As of
the date of  consummation  of the Merger  Agreement it is  anticipated  that the
Company will issue an aggregate of 11,066,207  shares of its  restricted  Common
Stock to the  Transax  Shareholders  and will grant an  aggregate  of  4,100,000
warrants  and  4,500,000  options to the  existing  Transax  warrantholders  and
optionholders.  The table below  reflects  ownership  assuming  all  issuance of
Common  Stock have been made and all grants of options  and  warrants  have been
made in accordance with the terms of the Merger Agreement.

         The Board of Directors  hereby set forth the names and  addresses,  and
the approximate number of shares of Common Stock owned of record, or to be owned
of record,  or beneficially by each person who owned, or is known by the Company
to own beneficially,  more than five percent (5%) of the Company's Common Stock,
and the name and shareholdings of each officer and director and all officers and
directors of the Company as a group.

         After  completion  of the  issuances  of Common  Stock and  options and
warrants  as  required  by the  Merger  Agreement,  management  of  the  Company
anticipates  that the total  estimated  capitalization  of the  Company  will be
12,172,908  shares of Common Stock issued and outstanding on a non-fully diluted
basis.

________________________________________________________________________________

Title of Class     Name and Address         Amount and Nature         Percent of
                 of Beneficial Owner     of Beneficial Ownership       of Class
________________________________________________________________________________
                                                       (1)(2)
Common Stock       Carlingford               11,427,425                  76.83%
                   Investments Limited
                   80 Raffles Place
                   #16-20 UOB Plaza II
                   Singapore 048624

                                                       (1)(3)
Common Stock       Cardlink Worldwide Inc.    1,191,870                   9.79%
                   Flat 3, Elstree Court
                   61 Bisham Road
                   Bonsucesso Rio de Janeiro
                   Brazil


<PAGE>


                                                      (1)(4)
Common Stock       Stephen Walters            1,000,000                   7.59%
                   Bali View Block A4/7
                   Jl. Cirendeu Raya 40
                   Jakarta Seletan 13419
                   Indonesia

                                                       (1)(5)
Common Stock       Graeme Smith                 150,000                   1.22%
                   25 South Harper's Rd.
                   Woodend
                   Victoria, Australia
                   3442

                                                       (1)(6)
Common Stock       Nathalie Pilon               100,000                   0.08%
                   2919 Ontario Street
                   Vancouver, British Columbia
                   Canada V5T 2Y3

                                                       (1)(7)
Common Stock       Laurie Bewes                 200,000                   0.16%
                   429 Willarong Road
                   Caringbah, Australia
                   N5W 2229

                                                       (1)(8)
Common Stock       David Bouzaid                200,000                   0.16%
                   Jl. Bangka 7
                   Dalam No. 3A
                   Kemang
                   Jakarta Selata 12730
                   Indonesia

                                                       (1)
Common Stock       Grant Atkins                     -0-                      0%
                   435 Martin Street
                   Suite 2000
                   Blaine, Washington 98230

                                                       (9)
Common Stock       All officers and           1,425,000                  10.48%
                   directors
                   as a group (6 persons)

________________________________________________________________________________

(1)
  These are restricted shares of Common Stock.
(2)
  This figure  includes (a) an aggregate of 8,727,425  shares of Common Stock of
which  4,039,079  shares held of record by  Carlingford  Investments  Limited as
trustee on behalf of approximately eighty-five investors will be issued directly
to  such  investors  upon  the  closing  of the  Merger  Agreement;  and  (b) an
assumption of the exercise of an aggregate of 2,700,000  warrants,  to be issued
by the  Company  upon  the  closing  of the  Merger  Agreement,  exercisable  by
Carlingford  Investments  Limited as trustee on behalf of several investors into
2,700,000  shares of Common  Stock at the rate of $1.00  per share  expiring  on
August 14, 2008.  Mr.  Walters is, at present,  the sole director of Carlingford
Investments Limited.


<PAGE>


(3)
  The  1,191,870  shares of  Common  Stock  will be held of  record by  Cardlink
Worldwide  Inc.  as  trustee  on behalf of several  underlying  shareholders  of
Cardlink Worldwide Inc.
(4)
  Represents  an  assumption  of the exercise by Mr.  Walters of an aggregate of
1,000,000  options to be granted by the  Company  upon the closing of the Merger
Agreement,  to  acquire  1,000,000  shares  of  Common  Stock at $0.50 per share
expiring August 14, 2008.
(5)
  Represents  an  assumption  of the  exercise by Mr.  Smith of an  aggregate of
150,000  options  to be granted by the  Company  upon the  closing of the Merger
Agreement, to acquire 150,000 shares of Common Stock at $0.50 per share expiring
August 14, 2008.
(6)
  This  figure  includes  50,000  shares  of  Common  Stock  presently  held  by
Carlingford  Investments  Limited  on behalf of Ms.  Pilon  which will be issued
directly to Ms. Pilon upon the closing of the Merger Agreement. This figure also
represents an assumption of the exercise by Ms. Pilon of an aggregate of 100,000
options to be granted by the Company  upon the closing of the Merger  Agreement,
to acquire 100,000 shares of Common Stock at $0.50 per share expiring August 14,
2008.
(7)
  Represents  an  assumption  of the  exercise by Mr.  Bewes of an  aggregate of
200,000  options  to be granted by the  Company  upon the  closing of the Merger
Agreement, to acquire 200,000 shares of Common Stock at $0.50 per share expiring
August 14, 2008.
(8)
  Represents  an  assumption  of the exercise by Mr.  Bouzaid of an aggregate of
200,000  Stock  Options to acquire  200,000  shares of common stock at $0.50 per
share expiring December 31, 2007.
(9)
  This  figure  includes  the  assumption  of the  exercise of an  aggregate  of
1,650,000 options into 1,650,000 shares of Common Stock.

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

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     No report required.

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

         On July 22,  2003,  the  Board of  Directors  approved  and  authorized
certain  corporate action,  including an amendment to the Company's  Articles of
Incorporation to effect a proposed change in name and adoption of a stock option
plan for the Company. The Board of Directors further authorized and directed the


<PAGE>


filing with the Securities and Exchange Commission,  and subsequent distribution
to  the  shareholders  of  record  as of May  30,  2003,  a  notice  of  special
shareholders'   meeting  and  a  proxy  statement   (collectively,   the  "Proxy
Statement"). On approximately July 20, 2003, the Proxy Statement was distributed
to all shareholders of the Company.

         Pursuant to the Proxy Statement a special  meeting of shareholders  was
held on August  8,  2003 (the  "Meeting")  for the  following  purposes:  (i) to
approve a proposed  amendment to the  Company's  Articles of  Incorporation,  as
amended (the  "Amendment"),  to effectuate a proposed name change of the Company
(the "Name Change") to such name as may be approved by the Board of Directors in
its sole and absolute  discretion;  (ii) to approve a proposed stock option plan
for key personnel of the Company (the "Stock Option Plan");  and (iii) to ratify
the prior actions by  shareholders  of the Company  taken  pursuant to a written
consent of  shareholders  dated March 25, 2003  approving a reverse  stock split
effectuated approximately April 2, 2003 (the "Reverse Stock Split").

         Only  shareholders  of record at the close of  business on June 9, 2003
(the "Record  Date") were entitled to notice of and to vote the shares of Common
Stock,  $0.00001  par  value,  of the  Company  held by them on such date at the
Meeting or any and all adjournments  thereof. As of the Record Date an aggregate
1,126,606 shares of Common Stock were  outstanding.  There was no other class of
voting securities outstanding at that date.

     Each share of Common Stock held by a shareholder  entitled such shareholder
to one vote on each matter that was voted upon at the Meeting. The presence,  in
person or by proxy,  of the holders of a majority of the  outstanding  shares of
Common Stock was necessary to constitute a quorum at the Meeting.  Assuming that
a quorum was present:  (i) the affirmative  vote of the holders of a majority of
the shares of Common  Stock  outstanding  was  required to approve the  proposed
Amendment to effectuate the proposed Name Change to such name as may be approved
by the  Board  of  Directors  in its  sole  and  absolute  discretion;  (ii) the
affirmative  vote of the  holders  of a majority  of the shares of Common  Stock
outstanding  was required to approve the proposed  Stock Option Plan;  and (iii)
the affirmative  vote of the holders of a majority of the shares of Common Stock
outstanding was required to ratify the prior actions of the  shareholders  taken
pursuant to the written consent of  shareholders  dated March 25, 2002 approving
the Reverse Stock Split.

         On  August 8,  2003,  the  Meeting  of  shareholders  was held with the
resulting votes cast either in person or proxy as follows: (i) 822,251 votes FOR
approval of the Name Change and 93 votes  AGAINST  approval of the Name  Change;
(ii) 732,782  votes FOR approval of the Stock Option Plan and 126 votes  AGAINST
approval of the Stock Option Plan; and (iii) 822,201 votes FOR  ratification  of
the Reverse Stock Split and 118 votes AGAINST  ratification of the Reverse Stock
Split.

         Moreover,  on August 8,  2003,  the  shareholders  of  Transax  holding
approximately  92.16% of the issued and  outstanding  shares of common  stock of
Transax  approved  the terms and  conditions  of the  Merger  Agreement  and its
related materials.

         It is anticipated  that  consummation  of the Merger  Agreement will be
effective  approximately on August 14, 2003.  Commensurate  with consummation of
the Merger  Agreement,  the Board of Directors  shall appoint Stephen Walters as
the  President,  Chief  Executive  Officer  and a director of the  Company,  and
Nathalie  Pilon,  CMA,  as the Chief  Financial  Officer  and  Secretary  of the


<PAGE>


Company, both effective on August 14, 2003.  Commensurate with the effectiveness
of this  Statement the  following  additional  officers and  directors  shall be
appointed to their respective positions with the Company effective approximately
on August 22, 2003.

         STOCK OPTION PLAN

         On July 22, 2003,  the Board of  Directors  of the Company  unanimously
approved  and adopted a Stock Option  Plan.  The purpose of the  proposed  Stock
Option Plan is to advance the interests of the Company and its  shareholders  by
affording  key  personnel of the Company an  opportunity  for  investment in the
Company and the incentive advantages inherent in stock ownership in the Company.
Pursuant to the  provisions  of the Stock Option Plan stock  options (the "Stock
Options")  will be  granted  only to key  personnel  of the  Company;  generally
defined as a person  designated by the Board of Directors  upon whose  judgment,
initiative  and efforts the Company may rely  including any  director,  officer,
employee or consultant of the Company. This Stock Option Plan replaces the stock
option plan  adopted by the Company  effective  March 25, 2003 and its terms are
identical to such stock option plan,  except that the Stock Option Plan provides
authorization  to the Board of  Directors  to grant Stock  Options to purchase a
total number of shares of Common  Stock of the Company not to  presently  exceed
4,500,000 shares (post-Reverse Stock Split).

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

         In the event  that an  optionee,  who is a  director  or officer of the
Company,  ceases  to serve  in that  position,  any  Stock  Option  held by such
optionee  generally may be  exercisable  within up to 90 calendar days after the
effective  date that such  position  ceases,  and after such  90-day  period any
unexercised Stock Option shall expire. In the event that an optionee,  who is an
employee or consultant of the Company, ceases to be employed by the Company, any
Stock Option held by such optionee  generally may be exercisable within up to 60
calendar  days (or up to 30  calendar  days  where the  optionee  provided  only
investor  relations  services to the Company) after the effective date that such
employment  ceases,  and after such 60- or 30-day period any  unexercised  Stock
Option shall expire.

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


<PAGE>


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

         INCENTIVE STOCK OPTIONS

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

         As of the date of this  Quarterly  Report,  and in accordance  with the
terms  of  the  anticipated  Merger  Agreement,   the  Company  plans  to  grant
approximately  4,500,000 Stock Options to all Transax  optionholders  to replace
all stock  options  presently  outstanding  in Transax (on the basis of each two
Transax  stock options  exchanged  into the right to receive one Stock Option of
the Company).  In accordance  with the Company's  Stock Option Plan, the Company
anticipates  filing with the  Securities  and Exchange  Commission  registration
statements on "Form S-8 - For  Registration  Under the Securities Act of 1933 of
Securities to Be Offered to Employees  Pursuant to Employee Benefit Plans" (each
an "S-8")  registering Stock Options and Incentive Stock Options under its Stock
Option Plan in the amount of up to 4,500,000  post-Reverse Stock Split shares at
various exercise prices.  In accordance with receipt of shareholder  approval of
the Stock Option Plan,  the Board of Directors is  authorized,  without  further
shareholder  approval,  to grant such Stock Options from time to time to acquire
up to an aggregate of up to 4,500,000 shares of the Company's  restricted Common
Stock.

ITEM 5. OTHER INFORMATION

         No report required.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

         31.1 Form 302 Certification - CEO
         31.2 Form 302 Certification - CFO
         32.1 Form 906 Certification - CEO
         32.2 Form 906 Certification - CFO
         99.1 Stock Option Plan.



<PAGE>


(b)      Reports

         Report on Form 8-K filed on July 28, 2003.


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: August 13, 2003                      By:  /s/
                                            ____________________________________
                                            Grant Atkins, President and Chief
                                            Executive Officer


Dated: August 14, 2003                      By:  /s/
                                            ____________________________________
                                            Grant Atkins, Treasurer and Chief
                                            Financial Officer