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 September 30, 2000

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

                 For the transition period from _____ to _______

                         Commission file number 0-27845

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

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

                              4600 South Ulster St.
                                    Suite 240
                             Denver, Colorado 80237
                         -------------------------------
                    (Address of Principal Executive Offices)

                                 (800) 721-0016
                                 --------------
                           (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 November 14, 2000
------                                       -------------------------------

Common Stock, $.00001 par value             26,446,000

           Transitional Small Business Disclosure Format (check one)

                                 Yes              No      X

<PAGE>


PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
----------------------------




                            VEGA-ATLANTIC CORPORATION
                         (An Exploration Stage Company)

                              FINANCIAL STATEMENTS
                                   (Unaudited)

                                  September 30, 2000


                                TABLE OF CONTENTS


                                                                          Page
                                                                          ----

Table of Contents                                                            2

Balance Sheet                                                                3

Statements of Operations                                                     4

Statements of Cash Flows                                                     5

Notes to Financial Statements                                               6-12

Management's Discussion and Analysis or Plan of Operations                 13-18

Other Information                                                          18-20

Signatures                                                                  21

Exhibit




                                        2

<PAGE>

<TABLE>
<CAPTION>


                           VEGA-ATLANTIC CORPORATION
                         (An Exploration Stage Company)

                              FINANCIAL STATEMENTS
                                  (Unaudited)

                               September 30, 2000


<PAGE>
                                           VEGA-ATLANTIC CORPORATION
                                        (An Exploration Stage Company)
                                          Consolidated Balance Sheet
                                                (Unaudited)

                                                                                               September 30,
                                                                                                   2000
----------------------------------------------------------------------------------------------------------------
<S>                                                                                          <C>

                                                    ASSETS
CURRENT ASSETS
  Cash and cash equivalents                                                                  $        56,018
  Deposits                                                                                             5,000
                                                                                               --------------

      Total Current Assets                                                                            61,018

INTEREST IN MINERAL PROPERTIES (Note 3)                                                                    1
                                                                                               --------------

                                                                                             $        61,019
                                                                                               ==============


                                     LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable                                                                           $       129,903
  Advances from related parties                                                                       54,651
  Notes payable - Technology sublicense (Note 4)                                                     600,000
  Directors fees payable                                                                              53,767
  Accrued interest payable                                                                            51,309
                                                                                               --------------

      Total Current Liabilities                                                                      889,630
                                                                                               --------------


STOCKHOLDERS' EQUITY (Note 2)
  Preferred stock, no par value;
     20,000,000 shares authorized at September 30, 2000
     Nil shares issued and outstanding at September 30, 2000                                               -
  Common stock $.00001 par value;
     500,000,000 shares authorized at September 30, 2000;
     26,446,000 shares issued and outstanding at September 30, 2000                                      264
  Additional paid - in capital                                                                     7,223,438
  Accumulated deficit through exploration stage                                                   (8,052,313)
                                                                                               --------------

      Total Stockholders' Equity (Capital Deficiency)                                               (828,611)
                                                                                               --------------

                                                                                             $        61,019
                                                                                               ==============


                 See accompanying notes to financial statements.

</TABLE>


                                        3

<PAGE>

<TABLE>
<CAPTION>


                                                     VEGA-ATLANTIC CORPORATION
                                                  (An Exploration Stage Company)
                                                            (Unaudited)
                                               Consolidated Statements of Operations



                                                                                                               Inception
                                                                                                              (January 28,
                                                          For the 3 Months             For the 6 Months       1987) to
                                                           Ended Sep. 30                Ended Sep. 30         September 30,
                                                         2000           1999          2000         1999           2000
                                                      -------------------------    ------------------------   -------------
<S>                                                   <C>            <C>           <C>          <C>            <C>

EXPLORATION EXPENSES
  Research and development                            $         -    $        -    $        -   $         -    $  783,182
  Claims staking, exploration and maintenance                   -        24,595             -        24,595       112,384
  Acquisition due diligence                                33,652             -        92,922             -       146,068
  Joint Venture Acquisition Costs - Tun Resources         130,450             -       999,815             -     1,139,815
                                                      -----------   -----------   -----------   -----------    ----------
Total Exploration Expenses                                164,102        24,595     1,092,737        24,595     2,181,449
                                                      -----------   -----------   -----------   -----------    ----------

ADMINISTRATIVE EXPENSES
  General and administration                              343,987       169,762       600,794       414,220     2,872,524
  Professional fees                                        27,121             2        88,221         3,567       175,977
  Director's fees                                           3,000         1,500         6,000         3,000        42,000
  Interest expense                                          5,836        29,175        22,801        52,729       178,648
  Stock-based compensation                                      -             -       262,247             -       262,247
  Consulting fees                                           8,803             -        36,763             -       132,839
                                                      -----------   -----------   -----------   -----------    ----------
      Total Administrative Expenses                       388,747       200,439     1,016,826       473,516     3,664,235
                                                      -----------   -----------   -----------   -----------    ----------
Loss from Continuing Operations                           552,849       225,034     2,109,563       498,111     5,845,684
                                                      -----------   -----------   -----------   -----------    ----------
Discontinued Operations
  Loss from discontinued operations of
      Century Manufacturing, Inc.                               -             -             -             -     2,206,629
                                                      -----------   -----------   -----------   -----------    ----------

NET LOSS                                              $   552,849       225,034     2,109,563   $   498,111     8,052,313
                                                      ===========   ===========   ===========   ===========    ==========

Loss Per Share - Basic and fully diluted              $     0.021         0.013         0.091   $     0.028         1.157
                                                      ===========   ===========   ===========   ===========    ==========
Weighted Average Number of
 Common Shares Outstanding                             25,716,652    17,585,000    23,256,383    17,585,000     6,960,891
                                                      ===========   ===========   ===========   ===========    ==========


                                        See the accompanying notes to financial statements.

</TABLE>



                                                                 4

<PAGE>

<TABLE>
<CAPTION>


                                                     VEGA-ATLANTIC CORPORATION
                                                   (An Exploration Stage Company)
                                               Consolidated Statements of Cash Flows
                                  (Unaudited)
                                                                                                    Inception
                                                                                                   (January 28,
                                                                                                     1987) to
                                                                 For the 6 Months Ended Sep. 30,   September 30,
                                                                   2000             1999              2000
                                                             -----------------------------------   -------------
<S>                                                          <C>                <C>              <C>

 CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                                  $    (2,109,563)   $    (498,111)   $    (8,052,313)
   Adjustments to reconcile net loss to cash
   Non-cash loss on sale of subsidiary                                     -                -          1,687,000
   Non-cash research and development expenses                              -                -            783,182
    Non-cash interest recognized through
        discount adjustment                                                -           17,500             31,818
    Non-cash stock issued in settlement of debt                       15,000                -             99,992
   Non-cash loss due to impairment of joint venture interest         672,000                -            672,000
   Stock-based compensation                                          262,247                -            262,247
    Changes in Assets and Liabilities
          Deposit                                                     (5,000)               -             (5,000)
         Accounts payable                                            (86,844)          (7,368)           129,902
          Directors fees payable                                       6,000            3,000             53,767
         Accrued interest payable                                     22,801           35,230            146,830
                                                              --------------    -------------     --------------
       Net Cash Flows Used for Operating Activities               (1,223,359)        (449,749)        (4,190,575)
                                                              --------------    -------------     --------------
 CASH FLOWS FROM FINANCING ACTIVITIES
   Advances from affiliates  - net                                   (70,951)         450,135          1,129,593
   Sale of common stock                                            1,250,000                -          3,217,000
                                                              --------------    -------------     --------------
        Net Cash Flows Provided by
              Financing Activites                                  1,179,049          450,135          4,346,593
                                                              --------------    -------------     --------------
 CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of subsidiary                                                  -                -           (100,000)
                                                              --------------    -------------     --------------
 Net increase in cash                                                (44,310)             386             56,018
 Cash and cash equivalents -  Beginning of period                    100,328              279                  -
                                                              --------------    -------------     --------------
 Cash and cash equivalents - End of period                   $        56,018    $         665    $        56,018
                                                              ==============    =============     ==============

 SIGNIFICANT NON-CASH TRANSACTIONS
     During the 2001 fiscal year, the Company issued 200,000 shares of common stock in settlement of $15,000 of debt.
     During the 2001 fiscal year, the Company issued 1,600,000 common shares valued at $672,000 in exchange for an 80%
       interest in Tun Resources, Inc.


                                        See the accompanying notes to financial statements.


</TABLE>

                                       5

<PAGE>


                            VEGA-ATLANTIC CORPORATION
                         (An Exploration Stage Company)
               Notes to the September 30, 2000Financial Statements
                                   (Unaudited)
--------------------------------------------------------------------------------

NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

                  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-Q and Rule 10-01 of  Regulation  S-X.
                  Accordingly,  they  do not  include  all the  information  and
                  footnotes required by generally accepted accounting principles
                  for  complete   financial   statements.   In  the  opinion  of
                  management,   adjustments   (consisting  of  normal  recurring
                  accruals)  considered necessary for a fair representation have
                  been  included.  Operating  results for the  six-month  period
                  ending  September 30, 2000, are not necessarily  indicative of
                  the results  that may be expected for the year ended March 31,
                  2001.  For  further   information,   refer  to  the  financial
                  statements  and  footnotes  included in the  Company's  annual
                  report on Form 10-K for the year ended March 31, 2000.

                  Principles of Consolidation
                  ---------------------------

                  The consolidated financial statements for the six months ended
                  September 30, 2000 include the accounts of the Company and its
                  80% owned  subsidiary,  Tun Resources,  Inc. (Note 3). The 80%
                  interest  in Tun  Resources,  Inc.  ("Tun")  was  acquired  by
                  purchase  on May 1,  2000.  The  acquisition  of Tun has  been
                  accounted  for by  the  purchase  method  of  accounting.  All
                  significant  intercompany  transactions  and account  balances
                  have been eliminated.

                  Going Concern and Continued Operations
                  --------------------------------------

                  As of September 30, 2000, there is substantial doubt regarding
                  the  Company's  ability to continue as a going  concern as the
                  Company has not generated any revenues  from  operations,  and
                  has a working capital deficiency of ($828,611).  The Company's
                  future  operations  and movement  into an operating  basis are
                  contingent on the  development of the lode mining  claims,  or
                  other joint  ventures  detailed in Note 3, and the  continuing
                  ability to raise  capital  financing.  The Company  intends to
                  finance   operations   for  the  next  twelve  months  through
                  additional common stock offerings, advances from directors and
                  shareholders, and convertible debt instruments.

                  Mineral property joint ventures
                  -------------------------------

                  The Company has contractual  rights to co-operative  joint
                  venture  agreements with Chinese partners. All  capital
                  investments  are  recorded  at cost  until  such  time as the
                  required  joint  venture contributions have been paid in full.
                  Direct

                                       6

<PAGE>

                            VEGA-ATLANTIC CORPORATION
                         (An Exploration Stage Company)
               Notes to the September 30, 2000Financial Statements
                                   (Unaudited)
--------------------------------------------------------------------------------


NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

                  exploration  costs  incurred by the  Company  are  expensed as
                  incurred. When uncertainty of realization of the investment in
                  the joint ventures  exists,  the Company records an impairment
                  provision for all  contributions to date and the investment is
                  carried at a nominal value.

                  Stock-based Compensation
                  ------------------------

                  The Company  accounts for stock-based  compensation in respect
                  to stock options  granted to employees and officers  using the
                  intrinsic  value based method in  accordance  with  Accounting
                  Principles  Board Opinion No. 25,  Accounting for Stock Issued
                  to  Employees   ("APB  No.25").   APB  No.  25  requires  that
                  compensation  cost be recorded for the excess,  if any, of the
                  quoted  market  price of the common  stock  over the  exercise
                  price at the date the options are  granted.  Stock  options to
                  non-employees are accounted for using the fair value method in
                  accordance with SFAS No. 123. In addition, as required by SFAS
                  No. 123 in respect to options  granted to  non-employees,  the
                  company  provides  pro-forma   disclosure  of  the  impact  of
                  applying the fair value method of SFAS No. 123.

NOTE 2:           STOCKHOLDERS' EQUITY

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

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

                  On May 29, 2000,  the Company  issued  200,000  shares for the
                  settlement  of  accounts  payable  of the  Corporation  in the
                  amount of $15,000.

                  Pursuant  to a Reg. S private  placement  offering  memorandum
                  dated March 1, 2000, the Company offered  5,000,000  shares of
                  common stock at $.25 per share.  This  offering is intended to
                  be  used  for   continued   financing   of  the   exploration,
                  development and expansion  programs  currently being conducted
                  on the Company's joint venture  projects in China,  consulting
                  fees,  and to provide  working  capital.  As of September  30,
                  2000,  100%  of  the  offering  has  been  completed  and  the
                  5,000,000 shares have been issued.

                  At September 30, 2000, there were 26,446,000  shares of common
                  stock  outstanding.  Refer to Note 5 - Employee  Stock  Option
                  Plan.

                                       7

<PAGE>


                            VEGA-ATLANTIC CORPORATION
                         (An Exploration Stage Company)
               Notes to the September 30, 2000Financial Statements
                                   (Unaudited)
--------------------------------------------------------------------------------


NOTE 3:           MINERAL PROPERTIES

                  ACQUISITIONS
                  ------------

                  80% interest in Tun Resources  Inc.: On January 12, 2000,  the
                  Company  entered  into a letter of intent with Golden  Thunder
                  Resources  Ltd.  ("Golden  Thunder")  to purchase  from Golden
                  Thunder  80% of the  issued and  outstanding  shares of common
                  stock of Tun  Resources  Inc.,  a Canadian  corporation  ("Tun
                  Resources"),  with an option to purchase the  remaining 20% of
                  the issued and  outstanding  shares of Tun  Resources  at fair
                  market value.  Tun Resources is the major  stakeholder  in two
                  gold exploration and development  joint ventures in the Yunnan
                  Province  of  China.   Tun  Resources   owns  an   approximate
                  eighty-two percent (82%) joint venture interest in the Yuntong
                  Sino-Foreign  Joint  Venture,  which  has the  rights  to four
                  separate gold exploration and mining development properties in
                  China.  Tun Resources also owns an approximate  eighty percent
                  (80%) joint venture interest in the Lutong  Sino-Foreign Joint
                  Venture,  which  consists  of a  gold  exploration  concession
                  comprising  approximately  100 square  kilometers  in the same
                  province.

                  On May 2, 2000,  the  Company  executed a  definitive  closing
                  agreement to purchase the 80% interest in Tun  Resources  Inc.
                  The Company is proceeding with funding initiatives pursuant to
                  Tun  Resources'  two  majority  owned  gold   exploration  and
                  development  joint  ventures in the Yunnan  Province of China.
                  The 80% interest in Tun  Resources  was  purchased in exchange
                  for the funding  commitment  of  $1,180,000 by August 15, 2000
                  and the  1,600,000  restricted  shares in the  capital  of the
                  Company  valued at  $672,000.  As of September  30, 2000,  the
                  Company  has  advanced  $598,268  of  the  $1,180,000  funding
                  commitment.   At  the   date   of   acquisition,   Tun  had  a
                  stockholders'  deficit of $149,044.  The Company allocated the
                  stockholder's  deficit as well as the $672,000 in stock as the
                  value  of  the  underlying  joint  venture  interests.  As the
                  Company has not determined  whether the underlying  properties
                  contain proven economically  recoverable reserves, the Company
                  recognized a $821,044  impairment loss on the value of the Tun
                  joint venture interest. Of the $821,044,  $681,044 was written
                  off  during  the  first  quarter  of  fiscal  2001,  while the
                  remaining $140,000 was written off during the year ended March
                  31,  2000.  The $140,000  represented  advances to Tun through
                  March 31, 2000.


                                       8

<PAGE>


                            VEGA-ATLANTIC CORPORATION
                         (An Exploration Stage Company)
               Notes to the September 30, 2000Financial Statements
                                   (Unaudited)
--------------------------------------------------------------------------------


 NOTE 3: MINERAL PROPERTIES (Continued)


                  POTENTIAL ACQUISITIONS
                  ----------------------


                  "Baotong" Zinc Joint Venture  Proposal:  The Company announced
                   -------------------------------------
                  on June 8, 2000, that the Company had executed an agreement in
                  principle to joint venture with the No. 4 Geological  Brigade,
                  Yunnan Bureau of Geological  Exploration  and  Development  to
                  cooperatively  explore two separate  Zinc and Lead deposits in
                  the south  western  Yunnan  Province.  On July 19,  2000,  the
                  Company   announced  that  it  has  completed   joint  venture
                  negotiations,  has executed a Sino-Foreign  Cooperative  Joint
                  Venture Contract, and is in the process of forming its limited
                  liability joint venture company.


                  Further due  diligence  will be conducted  during the next few
                  months   to   undertake   independent    geological   reports,
                  metallurgical   testing,   and  preliminary   exploration  and
                  development  scoping.  Subject to the outcome of due diligence
                  efforts   under  way,  the  Company  has  committed  to  spend
                  $1,000,000  on  exploration  (drilling and  tunneling)  over a
                  two-year period in return for a 70% interest in the Baotong JV
                  Company.  According to the JV Contract signed, the Company can
                  acquire up to an 85% interest by providing  further capital if
                  its  Sino  JV  partner  elects  a no  investment  15%  carried
                  interest.  Until  the  completion  of all  due  diligence  the
                  Company will not consider the acquisition probable.


                  Lemachang  Silver Mine Joint  Venture  Proposal:  On March 27,
                  -----------------------------------------------
                  2000, the Company  entered into an agreement in principle with
                  the No. 1 Geological  Brigade of Yunnan  Bureau of Geology and
                  Mineral  Resources of Qujing City,  Yunnan  Province,  Peoples
                  Republic  of China  ("PRC")  to  acquire  via  joint  venture,
                  majority  control  in the  producing  Lemachang  silver  mine,
                  located in the Ludian County Seat, Yunnan Province of the PRC,
                  subject to completion of due diligence.


                  Under terms of the further joint venture agreement executed on
                  July 26, 2000, the Company will partner the formation of a new
                  joint venture company which will invest up to US $8 million to
                  increase  production,  expand  reserves,  and improve  overall
                  silver  recovery  in return for an 85%  interest in the silver
                  mine  and  deposit  areas.  Until  the  completion  of all due
                  diligence,  the  Company  will not  consider  the  acquisition
                  probable.


                  Ailaoshang Joint Venture Proposal:  On May 4, 2000 the Company
                  ---------------------------------
                  entered into an agreement with the No. 1 Geological Brigade of
                  the Yunnan  Bureau of Geology and Mineral  Resources of Qujing
                  City,  Yunnan Province,  Peoples Republic of China whereby the
                  Company  has the  right to  acquire  via  joint  venture a 70%
                  interest in the Ailaoshang  gold  concession and prospect with
                  claims that  include  the  "Xiaoshuijing"  350,000  ounce gold
                  resource

                                       9

<PAGE>

                            VEGA-ATLANTIC CORPORATION
                         (An Exploration Stage Company)
               Notes to the September 30, 2000Financial Statements
                                   (Unaudited)
--------------------------------------------------------------------------------


 NOTE 3: MINERAL PROPERTIES (Continued)


                  POTENTIAL ACQUISITIONS (Continued)
                  ----------------------


                  located in the Chuxion Prefecture, Yunnan Province, PRC,
                  subject to completion of due diligence.


                  The Company  will  invest up to US $2.5  million to expand the
                  reserves and increase  mine  production.  The No. 1 Geological
                  Brigade will contribute the Ailaoshang  property,  exploration
                  and mining rights, permits, land use rights, and other work to
                  date   completed  on  the  Ailaoshang   property.   Until  the
                  completion of all due diligence, the Company will not consider
                  the acquisition probable.


NOTE 4:  NOTES PAYABLE

                  Pursuant to the Technology  Sub-license  agreement with Geneva
                  Resources,  Inc., the Company issued  promissory notes to both
                  Geneva and AuRIC in the amount of  $250,000  to each  company.
                  These are 3% interest  bearing  notes and are payable upon the
                  transfer of the  technology.  These notes have been discounted
                  to bear an  imputed  interest  rate  of 10%.  Pursuant  to the
                  agreement,  the  company has issued a  convertible  promissory
                  note to Geneva in the amount of $100,000  that is  convertible
                  to 500,000  restricted  common  shares upon demand,  and bears
                  interest  at the rate of 8% per  annum  and  issued  1,000,000
                  restricted  common  shares to AuRIC.  These  promissory  notes
                  become due and payable  upon the  transfer of the  technology.
                  Transfer of the technology or any  settlement  thereto will be
                  contingent on the outcome of the lawsuit described in Note 6.


 NOTE 5: EMPLOYEE STOCK OPTION PLAN


                  On May 1, 2000, the shareholders of the Company as represented
                  by 51% of the  issued  and  outstanding  common  shares of the
                  Corporation voted to approve the creation of an employee stock
                  option plan.  The plan extends for a 10-year term and consists
                  of 2,000,000 share options at $0.25 per share.

                  All options granted expire April 30, 2010. Shares which may be
                  acquired  through  the plan  may be  authorized  but  unissued
                  shares of common  stock or issued  shares of common stock held
                  in the Company's treasury. Options granted under the plan will
                  not be in lieu of salary of other compensation for services.

                  During the quarter ended June 30, 2000, the Board of Directors
                  of the  Company  authorized  the  grant  of stock  options  to
                  certain officers,  directors and consultants.  As of September
                  30, 2000, 1,950,000 share options with an

                                       10


<PAGE>

                            VEGA-ATLANTIC CORPORATION
                         (An Exploration Stage Company)
               Notes to the September 30, 2000Financial Statements
                                   (Unaudited)
--------------------------------------------------------------------------------


 NOTE 5: EMPLOYEE STOCK OPTION PLAN (Continued)

                  exercise  price of $.25 per  share of  common  stock  had been
                  granted,  no options had been  exercised or forfeited,  and no
                  options  had  expired.   Selected  information  regarding  the
                  options as of September 30, 2000 and 1999 are as follows:

<TABLE>
<CAPTION>


                                           September 30, 2000              September 30, 1999
                                     Number                               Number
                                      of                 Exercise          of             Exercise
                                     Options              Price          Options           Price
                                    ---------------------------------------------------------------
<S>                                       <C>              <C>              <C>                <C>

Outstanding at Beg. of Period            -0-              -0-              -0-                -0-
Outstanding at End of Period        1,950,000        $.25/share            -0-                -0-
Exercisable at End of Period        1,950,000        $.25/share            -0-                -0-
Options Granted                     1,950,000        $.25/share            -0-                -0-
Options Exercised                        -0-              -0-              -0-                -0-
Options Forfeited                        -0-              -0-              -0-                -0-
Options Expired                          -0-              -0-              -0-                -0-

</TABLE>
                  As of September 30,2000,  there are 1,950,000 options that are
                  exercisable  at an exercise  price of $.25 per share of common
                  stock for a period of 10 years.

                  Stock-based compensation

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

<TABLE>
<CAPTION>


                                                                                                                January 28, 1987
                                                 Three months ended                Six months ended              (inception) to
                                                    September 30,                    September 30,               September 30,
                                                2000            1999             2000              1999               2000
                                            -------------- --------------- ------------------ --------------- ---------------------
<S>                                              <C>            <C>              <C>               <C>                 <C>

                                                  $              $                 $                $                  $
Net loss                                         (552,849)       (225,034)        (2,109,563)       (498,111)           (8,052,313)

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

Pro-forma net loss                               (552,849)       (225,034)        (2,334,346)       (498,111)           (8,277,096)
                                                 ========        ========        ===========       =========          ============

Pro-forma net loss per share                       (0.021)         (0.013)            (0.100)         (0.028)
                                                 ========        ========        ===========       =========

</TABLE>

                                       11

<PAGE>


                            VEGA-ATLANTIC CORPORATION
                         (An Exploration Stage Company)
               Notes to the September 30, 2000Financial Statements
                                   (Unaudited)
--------------------------------------------------------------------------------


NOTE 6: CONTINGENCIES

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

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

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


                                       12

<PAGE>


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

GENERAL

The Vega Property

     The Company is engaged in the  exploration of gold,  silver and zinc within
the United States and  internationally.  Pursuant to a joint  venture  agreement
with Geneva Resources,  Inc. ("Geneva") dated March 28, 1998 (the "Joint Venture
Agreement"),  the Company previously owned a fifty-one percent (51%) of a future
profit  sharing  interest in profits to be realized from the  exploration of 213
unpatented lode mining claims located in Camus County,  in  south-central  Idaho
(the "Vega Property").  In accordance with the terms and provisions of the Joint
Venture  Agreement,  the  Company  was to conduct  any work  programs  involving
exploration  of the  mining  claims  on  the  Vega  Property.  The  Company  has
subsequently ceased exploration of the Vega Property and no longer maintains the
Vega Property  claims due to the ongoing result of litigation by other companies
described below.

     On March 18, 1999, Intergold Corporation, a Nevada corporation ("IGCO") and
its  wholly-owned   subsidiary,   International   Gold  Corporation,   a  Nevada
corporation  ("INGC")  entered into an agreement  for services  ("Agreement  for
Services") with AuRIC Metallurgical Laboratories,  LLC., of Salt Lake City, Utah
("AuRIC").  Pursuant to the terms of the Agreement for Services, AuRIC agreed to
perform certain  services,  including the development of proprietary  technology
and  know-how  relating  to fire and  chemical  assay  analysis  techniques  and
metallurgical  ore  extraction   procedures   developed   specifically  for  the
exploration of properties of IGCO. Dames & Moore subsequently  verified the fire
and  chemical  assay  techniques  and  procedures   developed  by  AuRIC,  their
repeatability,  and confirmed preliminary  metallurgical recovery testing. AuRIC
and Geneva  Resources,  Inc.,  a Nevada  corporation  ("Geneva")  entered into a
technology  license  agreement  dated  March 17, 1999 (the  "Technology  License
Agreement"), whereby AuRIC agreed to supply the proprietary technology to Geneva
and grant to Geneva the right to sub-license the  proprietary  technology to the
Company for use on the Vega  Property.  The Company  and Geneva  entered  into a
technology   sub-license  agreement  dated  March  18,  1999  (the  "Sub-License
Agreement")  whereby the Company  acquired from Geneva a sub-license  to utilize
AuRIC's  proprietary testing and chemical leach analysis of core samples derived
from any subsequent drilling on the Vega Property.

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

     The  proprietary  technology  forms the basis of claims  made by Geneva and
INGC,  on behalf of IGCO, in the  complaints  as filed with the District  Court.
Geneva and INGC allege that the  proprietary  technology does not exist and that
Geneva and INGC were  fraudulently,  recklessly and/or  negligently  deceived by
AuRIC,  Dames & Moore,  and other parties to the lawsuit.  Management  deems the
proprietary  technology  crucial with respect to successful  exploration  of the
Vega  Property.  Management,  therefore,  has suspended  exploration of the Vega
Property indefinitely until resolution of the legal proceedings,  and due to its
belief that the Vega  Property  contains  no  commercial  quantities  of gold or
silver. See "Part II. Item 1. Legal Proceedings" for additional disclosure.

                                       13

<PAGE>

Tun Resources, Ltd.

     On May 1,  2000,  the  Company  entered  into a  share  purchase  and  sale
agreement with Golden Thunder Resources Ltd. ("Golden Thunder") to purchase from
Golden  Thunder  eighty  percent (80%) of the issued and  outstanding  shares of
common stock of Tun Resources Ltd., a Canadian  corporation  ("Tun  Resources"),
with an option to purchase the remaining  twenty percent (20%) of the issued and
outstanding shares of Tun Resources (the "Acquisition  Agreement").  Pursuant to
the terms of the Acquisition Agreement,  the Company will (i) provide a total of
$1,180,000  by November 15, 2000 to fund  current Tun  Resources  joint  venture
projects,  (ii) issue 1,600,000 shares of its restricted  common stock to Golden
Thunder in exchange for the eighty  percent (80%) of the issued and  outstanding
shares of common stock of Tun  Resources and an option to purchase the remaining
twenty percent (20%), and (iii) be solely  responsible for the future funding of
Tun Resources  and its joint  ventures.  As of September  30, 2000,  the Company
issued 1,600,000 shares of its restricted common stock to Golden Thunder and has
provided approximately $598,268 of funds to Tun Resources.

     Tun  Resources  is the  major  stakeholder  in  two  gold  exploration  and
development  Sino Foreign joint  ventures in the Yunnan  Province of China.  Tun
Resources  owns  (i) an  approximate  eighty-two  percent  (82%)  joint  venture
interest in the Yuntong Sino Foreign Joint Venture, which consists of a gold
concession  comprising  approximately  30 square  kilometers  (the "Yuntong Gold
Concession");  and  (ii) an  approximate  eighty  percent  (80%)  joint  venture
interest in the Lutong Project,  which consists of a gold exploration concession
comprising approximately 100 square kilometers (the "Lutong Gold Concession").

         As of the date of this Quarterly  Report,  Tun  Resources,  through the
Yuntong  Sino  Foreign  Joint  Venture,   is  currently   engaged  in  the  mine
construction phases of the Yuntong Gold Concession, which management anticipates
will be completed by the beginning of fiscal quarter  ending  December 31, 2000.
The Yuntong Gold  Concession is fully  permitted by the Chinese  government  and
management of the Company  anticipates  that the Yuntong Gold Concession will be
in mining production  operations  approximately during the fiscal quarter ending
December 31, 2000.

Ailaoshan/Xiaoshuijing Gold Project

     On May 4, 2000, the Company entered into a letter  agreement with the No. 1
Geological  Brigade of the Yunnan  Bureau of Geology  and Mineral  Resources  of
Qujing  City,  Yunnan  Province,  China (the  "Letter  Agreement"),  whereby the
Company has the right to acquire an  approximate  70% interest in the Ailaoshang
gold  concession  and prospect  with claims that include the  Xiaoshuijing  gold
resource located in the Chuxion Prefecture,  Yunnan Province,  China. Management
plans to conduct due  diligence on the gold  resource by  confirmation  and test
drilling, and expects geological reports to provide the basis for negotiation of
the final terms of the joint venture agreement, should the due diligence warrant
continuing such  negotiations.  According to the terms of the Letter  Agreement,
management  anticipates  that the Company will invest up to $2,500,000 to expand
the gold  resource and increase mine  production,  and that the No. 1 Geological
Brigade will contribute the property,  exploration  and mining rights,  permits,
land use rights and other work to date completed on the gold resource.

                                       14

<PAGE>

         As of the date of this Quarterly Report,  the No 1. Geological  Brigade
is conducting heap leach mine testing,  therefore,  mining production operations
are limited.  Management of the Company believes that exploration work conducted
by the No. 1 Geological Brigade indicates  peripheral gold occurrences  located,
which could increase future gold resources.  Management further anticipates that
mining  production  operations  will  increase  during the dry  season  (October
through May).  Until the completion of all due  diligence,  the Company will not
consider the acquisition of the Ailaoshang gold concession probable.

         The Company has formed Polar Explorations Ltd.,a Belize corporation and
the wholly-owned subsidiary of the Company ("Polar Explorations"), to act as the
joint venture partner on behalf of the Company.

Lemachang Silver Project

     On March 27, 2000,  the Company  entered  into an agreement  with the No. 1
Geological  Brigade of Yunnan Bureau of Geology and Mineral  Resources of Qujing
City,  Yunnan  Province,  China,  whereby  the  Company  would have the right to
acquire a majority interest in the Lemachang silver mine located in the Ludian
County  Seat,  Yunnan  Province.   On  July  26,  2000,  the  Company  completed
negotiations  and executed a joint venture  agreement  with the No. 1 Geological
Brigade of Yunnan  Bureau of Geology and Mineral  Resources  of Qujing City (the
"Lemachang Agreement"),  whereby the Company will (i) partner the formation of a
new joint  venture  company and provide  funding in the amount of  $4,000,000 to
accelerate  the drilling on the  Lemachang  silver mine to increase  production,
expand resources and improve overall silver recovery, (ii) undertake feasibility
studies to  ultimately  increase  production  and output to an annual  target of
1,000,000  ounces of  metallic  silver,  and (iii)  receive an  approximate  85%
interest  in the silver  mine and  deposit  areas.  Pursuant to the terms of the
Lemachang Agreement,  the Company will further provide an additional  $4,000,000
over a five-year period from its portion of operating  profits to repay existing
silver project capital loans currently outstanding to the Chinese banks.

         As of the date of this Quarterly Report,  the Company (i) is conducting
metallurgical test work to produce a feasibility study of metallurgical  process
upgrades,  and (ii) has hired  engineers  to  provide  detailed  studies  of the
current  mining  operations  to develop  new mining  methods  for the upgrade of
mining  expansion.  Management of the Company  expects  engineering  feasibility
reports,  metallurgical  testing  results and  financial  audit  information  to
provide the basis for consummation of the  acquisition.  Until the completion of
all due diligence,  the Company will not consider the acquisition  probable.  In
the event that due diligence is successfully completed, the Company will receive
an 85%  interest  in the cash  flow from  operating  profits,  which  management
anticipates  may  commence  at the date that the  Chinese  business  license  is
granted during fiscal quarter ended December 31, 2000.

         The Company has formed Alaskan Explorations Corp., a Turks & Caicos
corporation and wholly-owned subsidiary of the Company ("Alakskan"), to act as
the joint venture partner on behalf of the Company.

                                       15

<PAGE>

Baotong Zinc and Lead Project

     On June 8, 2000,  the  Company  entered  into an  agreement  with the No. 4
Geological Brigade of Yunnan Bureau of Geological Exploration and Development to
cooperatively  explore  two  separate  zinc and  lead  deposits  located  in the
southwestern  Yunnan  Province.  On July 19,  2000,  the Company  completed  its
negotiations and has executed a joint venture agreement (the "Baotong
Agreement").  Pursuant to the  Baotong  Agreement,  the Company  will (i) form a
limited  liability joint venture company (the "Baotong  Mineral  Exploration and
Development Co."), (ii) have the right to acquire an approximate 70% interest in
the  Baotong  Mineral  Exploration  and  Development  Co.,  (iii)  conduct  risk
exploration  and  development of the two possible zinc and lead  deposits,  (iv)
provide up to $1,000,000  over a two year period for  exploration,  drilling and
tunneling of the possible zinc and lead  deposits and conduct risk  exploration,
and (v) have  rights to  acquire  up to an 85%  joint  venture  interest  in the
Baotong Mineral Exploration and Development Co. with further funding.

         As  of  the  date  of  this  Quarterly  Report,   the  Baotong  Mineral
Exploration  and  Development  Co. has been  formed.  The  Company is  currently
conducting  further due diligence on the zinc and lead deposits,  which includes
exploration   and   development   scoping,   independent   geological   reports,
metallurgical  testing,  and  assessment  of mining  potential.  Should  the due
diligence  warrant  continuation,  the Company  will proceed with payment of its
contractual   obligations   under  the  Baotong  Agreement  and  consummate  the
acquisition of its joint venture interest in the Baotong Mineral Exploration and
Development Co.

     The Company has formed Epicon  Resources  Group Ltd., a Belize  corporation
and  wholly-owned  subsidiary  of the  Company  ("Epicon"),  to act as the joint
venture  partner  on behalf  of the  Company.  As of the date of this  Quarterly
Report, the Company has not provided any funding until the completion of all due
diligence,  the Company will not consider the acquisition of the Baotong Mineral
Exploration and Development Company exploration concession probable.

COMPANY UNAUDITED FINANCIAL STATEMENTS
RESULTS OF OPERATION

Six-Month  Period Ended  September 30, 2000  Compared to Six-Month  Period Ended
September 30, 1999

     For the six-month  period ended September 30, 2000, the Company  recorded a
net loss of $2,109,563  compared to a net loss of $498,111 in the  corresponding
period of 1999.  During  the  six-month  period  ended  September  30,  2000 and
September 30, 1999, the Company recorded no income.

     During the six-month period ended September 30, 2000, the Company recorded
exploration  expenses  of  $1,092,737  as  compared  to $24,595  of  exploration
expenses  recorded in the same period for 1999.  Property  exploration  expenses
were incurred during the six-month period ended September 30, 2000 primarily due
to payment  of  advances  pursuant  to  contractual  arrangements  and/or  costs
associated  with  the  due  diligence  (preliminary  exploration,  metallurgical
testing and preparation of geological reports) as follows:  (i) $999,815 for Tun
Resources (the Yuntong Gold Concession and the Lutong Gold  Concession) and (ii)
$92,922 for general  acquisition due diligence  costs. The costs associated with
Tun Resources  have been impaired in the financial  statements  since any future
cash flows to be received by the Company from the joint venture  interest cannot
be quantified.

                                       16

<PAGE>

     Administrative  expenses  also  increased  in  the  approximate  amount  of
$543,310 during the six-month  period ended September 30, 2000 from the $473,516
incurred during the six-month period ended September 30, 1999 as compared to the
$1,106,826  incurred during the six-month  period ended September 30, 2000. This
increase is due primarily to the increased  scale and scope of overall  business
activity.  Of the  $1,106,826  incurred as  administrative  expenses  during the
six-month  period  ended  September  30,  2000,  $379,000  was paid to  Investor
Communications  International,  Inc.  ("ICI")  for  amounts  due and  owing  for
services rendered including, but not limited to, financial,  administrative, and
metals exploration management.

     The  Company's  net earnings  (losses)  during the  six-month  period ended
September 30, 2000 were approximately  ($2,109,563) or ($0.091) per common share
compared to a net loss of approximately ($498,111) or ($0.028) per common share
during the  six-month  period ended  September  30, 1999.  The weighted  average
number of shares  outstanding  was  23,256,383  for the  six-month  period ended
September  30, 2000  compared  to  17,585,000  for the  six-month  period  ended
September 30, 1999.

Three-Month Period Ended September 30, 2000 Compared to Three-Month Period Ended
September 30, 1999

         For the  three-month  period  ended  September  30,  2000,  the Company
recorded  a net  loss of  $552,849  compared  to a net loss of  $225,034  in the
corresponding  period of 1999. During the three-month period ended September 30,
2000 and September 30, 1999, the Company recorded no income.

         During the  three-month  period ended  September 30, 2000,  the Company
recorded  exploration expenses of $164,102 as compared to $24,595 of exploration
expenses recorded in the same period in 1999. Property exploration expenses were
incurred during the three-month period ended September 30, 2000 primarily due to
payment of advances pursuant to contractual arrangements and/or costs associated
with the due  diligence  (preliminary  exploration,  metallurgical  testing  and
preparation  of geological  reports) as follows:  (i) $130,450 for Tun Resources
(the  Yuntong  Gold  Concession)  and (ii)  33,652 for general  acquisition  due
diligence  costs.  The costs associated with Tun Resources have been impaired in
the  financial  statements  since any future  cash flows to be  received  by the
Company from the joint venture interest cannot be quantified.

         Administrative  expenses also  increased in the  approximate  amount of
$188,308  during  the  three-month  period  ended  September  30,  2000 from the
$200,439  incurred  during the  three-month  period ended  September 30, 1999 as
compared to the $388,747 incurred during the three-month  period ended September
30, 2000.  This increase is due  primarily to the  increased  scale and scope of
overall business activity.  Of the $388,747 incurred as administrative  expenses
during the three-month period ended September 30, 2000, $200,000 was paid to ICI
for amounts due and owing for services rendered  including,  but not limited to,
financial, administrative and metals exploration management.

         The Company's net earnings (losses) during the three-month period ended
September  30, 2000 were  approximately  ($552,849) or ($0.021) per common share
compared to a net loss of approximately  ($225,034) or ($0.013) per common share
during the  three-month  period ended  September 30, 1999. The weighted  average
number of shares  outstanding  was 25,716,652 for the  three-month  period ended
September  30, 2000  compared to  17,585,000  for the  three-month  period ended
September 30, 1999.

                                       17

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

     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
operation.

     As of the six-month period ended September 30, 2000, the Company's total
assets were $61,019.  This decrease in assets from fiscal quarter ended June 30,
2000  is  due to  decrease  in  cash  and  cash  equivalents  and  subscriptions
receivable.

     As of the six-month period ended September 30, 2000, the Company's total
liabilities  were  $889,630.   The  total   liabilities   decreased  during  the
three-month  period ended September 30, 2000 from the  three-month  period ended
June 30, 2000 due primarily to a decrease in accounts  payable.  As of September
30, 2000, the total liabilities exceeded total assets by $828,611.

     Stockholders'   Equity   (Deficit)   increased  from   ($375,762)  for  the
three-month  period ended June 30, 2000 to ($828,611)  for the six-month  period
ended  September  30,  2000.   Stockholders'  Equity  (Deficit)  increased  from
($778,296)  for fiscal year ended March 31, 2000 to ($828,611) for the six-month
period ended September 30, 2000.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     On  September  27,  1999,   International  Gold  Corporation  (INGC"),  the
subsidiary  of  Intergold  Corporation  ("IGCO")  and  Geneva  Resources,   Inc.
("Geneva") initiated legal proceedings against AuRIC Metallurgical Laboratories,
LLC, a Utah limited  liability  company  ("AuRIC") and Dames & Moore, a Delaware
corporation  ("Dames & Moore"), by filing its complaint in the District Court of
the Third Judicial District for Salt Lake City, State of Utah.

     INGC, on behalf of IGCO, and Geneva  initiated  legal  proceedings  against
AuRIC  alleging  (i)  multiple  breaches  of  contract  relating  to the Service
Agreement and the License Agreement,  respectively,  including,  but not limited
to, establishment and facilitation of the proprietary  technology and fire assay
procedures  developed  by AuRIC at an  independent  assay lab (the  "Proprietary
Technology") and failure to deliver the Proprietary Technology and procedures to
International  Gold  Corporation,  Geneva and Dames & Moore;  (ii) breach of the
implied   covenant   of  good   faith   and  fair   dealing;   (iii)   negligent
misrepresentation;  (iv) specific  performance;  (v) non-disclosure  injunction;
(vi)  failure  by AuRIC to  repay  advances;  and  (vii)  quantum  meruit/unjust
enrichment.  INGC,  on behalf  of IGCO,  also  named  Dames & Moore in the legal
proceeding in a declaratory relief cause of action.

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

                                       18

<PAGE>

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

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

     On  or  about  November  10,  2000,  Geneva  and  INGC  filed a motion  for
summary judgment against Dames & Moore and AuRIC.

     As of the date of this Quarterly Report, various depositions have been
taken by various parties to the lawsuit.  Discovery and document production have
been conducted by both sides to the dispute. Geneva and INGC, on behalf of IGCO,
continue to pursue all such legal  actions  and review  further  legal  remedies
against AuRIC and Dames & Moore.  Management  deems the  Proprietary  Technology
crucial with respect to successful exploration of the Vega Property.  Management
has  suspended  exploration  of the Vega  Property and  maintenance  of the Vega
Property  claims   indefinitely  until  resolution  of  the  legal  proceedings.
Management  believes  that the legal  proceedings  will prove  that the  alleged
Proprietary  Technology  is invalid.  Management  does not believe that the Vega
Property contains commercial quantities of gold or silver.

     If the Proprietary Technology is proven to be invalid and not transferable,
and  INGC/Geneva are not successful in the outcome of the litigation and damages
are not awarded, the Company may not be able to recover its potential losses and
expenses  incurred  due to the breach of the  Sub-License  Agreement  by Geneva.
However,  if  the  Proprietary  Technology  is  proven  to be  invalid  and  not
transferable,  and  INGC/Geneva are successful in the outcome of the litigation,
INGC/Geneva  may then  receive  damages  from AuRIC and Dames & Moore.  Geneva's
damages  result  primarily  from  its  inability  to  transfer  the  Proprietary
Technology to the Company in accordance  with the provisions of the  Sub-License
Agreement. Management believes that the Company will, under these circumstances,
be entitled to receive a pro-rata  portion of the awarded  damages for potential
losses incurred due to the breach of the Sub-License Agreement by Geneva.

     The Company and Geneva have entered into an assignment  agreement dated May
9, 2000 (the "Assignment Agreement") that transferred and conveyed to Geneva the
potential  claims  and  causes of action  that the  Company  may have  under the
Sub-License  Agreement  with  Geneva.  If damages are  recovered  in the lawsuit
initiated by Geneva and INGC, on behalf of the Company, the Company will receive
a pro rata share of such damages  relating to its claims and causes of action in
relation  to all  other  claims  and  causes of action  for  which  damages  are
recovered.  Thus,  Geneva  will  receive  any such pro rata share of the damages
recovered pursuant to the terms and provisions of the Assignment Agreement.  The
Company is not involved in the INGC/Geneva  litigation or any other  litigation,
except to the  extent  that it has sought to  protect  its  claims  for  damages
incurred in connection with execution of the Assignment Agreement.

                                       19

<PAGE>

     Management  has suspended  exploration  of the Vega  Property  indefinitely
until  resolution  of the  INGC/Geneva  legal  proceedings.  INGC and Geneva are
reviewing  further legal remedies  against AuRIC and Dames & Moore and intend to
aggressively pursue any all such actions.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

          o On March 1, 2000,  the  Company  commenced  an  offering in which it
          planned to raise  $1,250,000  under Regulation S of the Securities Act
          of 1933, as amended (the "1933 Securities Act"),  pursuant to which it
          will offer and sell 5,000,000 shares of its restricted common stock at
          $0.25 per  share to  non-residents  of the  United  States.  As of the
          six-month  period ended  September  30,  2000,  the Company has issued
          5,000,000 shares of common stock and has closed the offering. All of
             the investors are "non-residents" of the United States as that term
          is  defined  in  Regulation  S. The  investors  executed  subscription
          agreements and acknowledged  that the securities to be issued have not
          been  registered  under the 1933  Securities  Act,  that the investors
          understood the economic risk of an investment in the  securities,  and
          that the investors had the opportunity to ask questions of and receive
          answers from the Company's  management  concerning any and all matters
          related to the  acquisition of securities.  No underwriter is involved
          in the transactions,  and no commissions or other remuneration will be
          paid in connection with the offer and sale of the securities.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     No report required.

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

     No report required.

ITEM 5. OTHER INFORMATION

     No report required.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Report on Form 8-K filed October 22, 2000.


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<PAGE>

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: November 14, 2000                           By: /s/ Grant Atkins
                                                 ------------------------------
                                                 Grant Atkins, President


Dated: November 14, 2000                           By: /s/ Herb Ackerman
                                                 ------------------------------
                                                 Herb Ackerman, Secretary









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