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 December 31, 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 February 12, 2001
------                                      ------------------------------------

Common Stock, $.00001 par value             14,588,405

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)

                                  December 31, 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



                                       2

<PAGE>

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

                                                                  December 31,
                                                                     2000
                                                                  --
                                     ASSETS
CURRENT ASSETS
  Cash and cash equivalents                                       $     17,184
  Deposits                                                               1,156
                                                                  ------------

      Total Current Assets                                              18,340

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

                                                                  $     18,341
                                                                  ============


LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable                                                $    176,802
  Advances from related parties                                         41,586
  Notes payable - Technology sublicense (Note 4)                       600,000
  Directors fees payable                                                56,767
  Accrued interest payable                                              47,876
                                                                  ------------

      Total Current Liabilities                                        923,031
                                                                  ------------

STOCKHOLDERS' EQUITY (Note 2)
  Preferred stock, no par value;
     20,000,000 shares authorized at December 31, 2000
     Nil shares issued and outstanding at
     December 31, 2000                                                   --
  Common stock $.00001 par value;
     100,000,000 shares authorized at December 31, 2000;
    14,588,405 shares issued and outstanding at
    December 31, 2000                                                      344
  Additional paid - in capital                                       9,217,581
  Accumulated deficit through exploration stage                    (10,122,615)
                                                                  ------------

      Total Stockholders' Equity (Capital Deficiency)                 (904,690)
                                                                  ------------

                                                                  $     18,341
                                                                  ============


                See accompanying notes to financial statements.

                                       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 9 Months           1987) to
                                                                 Ended Dec. 31,                 Ended Dec. 31,          December 31,
                                                             2000            1999            2000           1999             2000
                                                         -----------     -----------     -----------     -----------     -----------
<S>                                                      <C>             <C>             <C>             <C>            <C>
EXPLORATION EXPENSES
  Research and development                               $      --       $      --       $      --       $      --       $   783,182
  Claims staking, exploration
    and maintenance                                             --             2,722            --            27,317         112,384
  Acquisition due diligence                                    1,726            --            94,648            --           147,794
  Joint Venture Acquisition Costs
    - Tun Resources                                           11,324            --         1,011,139            --         1,151,139
                                                         -----------     -----------     -----------     -----------     -----------
Total Exploration Expenses                                    13,050           2,722       1,105,787          27,317       2,194,499
                                                         -----------     -----------     -----------     -----------     -----------

ADMINISTRATIVE EXPENSES
   General and administration                                244,236         142,529         845,118         556,749       3,116,848
   Professional fees                                          45,969           4,827         134,190           8,394         221,946
   Director's fees                                             3,000           1,500           9,000           4,500          45,000
   Interest expense                                            9,130          33,166          31,931          85,895         187,778
   Stock-based compensation                                     --              --           262,247            --           262,247
   Loss on settlement of convertible
    promissory notes                                       1,754,917            --         1,754,917            --         1,754,917
   Consulting fees                                              --              --            36,675            --           132,751
                                                         -----------     -----------     -----------     -----------     -----------

      Total Administrative Expenses                        2,057,252         182,022       3,074,078         655,538       5,721,487
                                                         -----------     -----------     -----------     -----------     -----------

Loss from Continuing Operations                            2,070,302         184,744       4,179,865         682,855       7,915,986
                                                         -----------     -----------     -----------     -----------     -----------
Discontinued Operations
   Loss from discontinued operations of
      Century Manufacturing, Inc.                               --              --              --              --         2,206,629
                                                         -----------     -----------     -----------     -----------     -----------

NET LOSS                                                 $ 2,070,302     $   184,744     $ 4,179,865     $   682,855     $10,122,615
                                                         ===========     ===========     ===========     ===========     ===========

Loss Per Share - Basic and fully diluted                 $     0.298     $     0.042     $     0.674     $     0.155
                                                         ===========     ===========     ===========     ===========

Weighted Average Number of
 Common Shares Outstanding
 (restated for 4 for 1 rollback)                           6,958,322       4,396,250       6,202,836       4,396,250
                                                         ===========     ===========     ===========     ===========


                                       See the accompanying notes to financial statements.

                                                               4


<PAGE>

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


                                                                                                              Inception
                                                                                                             (January 28,
                                                                                                               1987) to
                                                                     For the 9 Months Ended Dec. 31,         December 31,
                                                                         2000                1999               2000
                                                                    ------------        ------------        -------------

 CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                                         $ (4,179,865)       $   (682,855)       $(10,122,615)
   Adjustments to reconcile net loss to cash:
   Non-cash loss on sale of subsidiary                                      --                  --             1,687,000
   Non-cash research and development expense                                --                  --               783,182
   Non-cash interest recognized through
        discount adjustment                                                 --                26,250              31,818
   Non-cash stock issued in settlement of debt                              --                  --                84,992
   Non-cash loss due to impairment of joint venture interest             821,044                --               821,044
   Stock-based compensation                                              262,247                --               262,247
   Loss on settlement of convertible promissory notes                  1,754,917                --             1,754,917
   Changes in Assets and Liabilities
          Deposit                                                         (1,156)               --                (1,156)
          Accounts payable                                               (34,944)                519             181,802
          Directors fees payable                                           9,000               4,500              56,767
          Accrued interest payable                                        31,930              59,645             155,959
                                                                    ------------        ------------        ------------

       Net Cash Flows Used for Operating Activities                   (1,336,827)           (591,941)         (4,304,043)
                                                                    ------------        ------------        ------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Advances from affiliates  - net                                        44,661             601,900           1,245,205
   Sale of common stock                                                  970,000                --             3,077,000
   Interest paid                                                          (1,433)               --                (1,433)
   Convertible notes received                                             99,500                --                99,500
   Advances to Golden Cycle de Panama                                       --               (10,000)               --
                                                                    ------------        ------------        ------------

        Net Cash Flows Provided by
              Financing Activities                                     1,112,728             591,900           4,420,272
                                                                    ------------        ------------        ------------

 CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of subsidiaries, net of cash acquired                            955                --               (99,045)
                                                                    ------------        ------------        ------------

 Net increase in cash                                                   (223,144)                (41)             17,184

 Cash and cash equivalents -  Beginning of period                        240,328                 279                --
                                                                    ------------        ------------        ------------

 Cash and cash equivalents - End of period                          $     17,184        $        238        $     17,184
                                                                    ============        ============        ============


 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.
     During the 2001 fiscal year, the Company issued 7,976,900 shares of common
stock in settlement of $239,306 of debt and convertible notes.


                                        See the accompanying notes to financial statements.

                                                              5

</TABLE>
<PAGE>


                            VEGA-ATLANTIC CORPORATION
                         (An Exploration Stage Company)
               Notes to the December 31, 2000 Financial 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 nine month period ending December 31, 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 nine months ended December
        31, 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 December 31, 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 $904,691. 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, through its subsidiary Tun Resources Inc., has contractual
        rights to co-operative joint venture agreements with Chinese partners.
        All initial earn-in capital investments are recorded at cost until such
        time as the required joint venture contributions have been paid in full
        and the Company has earned its undivided interest in the joint venture.
        Direct 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.

                                       6

<PAGE>


                            VEGA-ATLANTIC CORPORATION
                         (An Exploration Stage Company)
               Notes to the December 31, 2000 Financial Statements
                                   (Unaudited)
--------------------------------------------------------------------------------


NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

        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 pre-consolidation 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 pre-consolidation shares for
        the settlement of accounts payable of the Corporation in the amount of
        $15,000.

        Pursuant to a Reg. S private placement offering memorandum dated March
        1, 2000, the Company offered 5,000,000 pre-consolidation shares of
        common stock at $.25 per share. This offering 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 December 31, 2000, 100% of the offering has been completed and the
        5,000,000 shares have been issued.

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

        On December 27, 2000 the Company issued 7,976,905 post-consolidation
        shares at $.03 per share with a fair value of $1,994,226 on the
        conversion of convertible promissory notes of $239,309, including
        accrued interest, resulting in a loss on conversion of $1,754,917. The
        7,976,905 post-consolidation shares represents 54.7% of the outstanding
        shares of the Company at December 31, 2000.

        At December 31, 2000, there were 14,588,405 post-consolidation 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 December 31, 2000 Financial 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 entered into the Yuntong JV agreement, which has the rights to
        four separate gold exploration and mining development properties, on
        August 8, 1994 with Yunnan Province Dianxi Geological Engineering
        Exploration Development Company in China. The agreement was amended on
        September 18, 1999 and February 12, 2000 whereby Tun Resources agreed to
        provide additional investment capital in consideration for an increase
        in its interest in the JV and additional properties were added to the
        JV. Tun Resources now has the right to acquire a 90% interest for a
        total investment of $1,940,000 of which $1,060,000 has been contributed
        to date. Tun Resources also owns the right to acquire 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. Tun
        Resources entered into the Lutong JV agreement on August 12, 1994 with
        China National Nuclear Corporation. The agreement was amended on October
        26, 1999 and the Company has the right to acquire up to an 80% interest
        for a total investment of $1,290,000 of which $790,000 has been
        contributed to date. The Yuntong and Lutong joint ventures are in the
        process of exploring their mineral properties and have not yet
        determined whether these properties contain reserves that are
        economically recoverable. Accordingly, the Company is carrying its
        interest in the joint ventures at a nominal value of $1 due to the
        uncertainty of recovery of the capital contributed to date.

        On May 2, 2000, the Company executed a definitive closing agreement to
        purchase the 80% interest in Tun Resources Inc. The 80% interest in Tun
        Resources was purchased in exchange for the funding commitment of
        $1,180,000 by August 15, 2000 and the issuance of 1,600,000
        pre-consolidation restricted shares in the capital of the Company valued
        at $672,000. As of December 31, 2000, the Company has advanced $604,519
        of the $1,180,000 funding commitment and the parties have agreed to an
        extension of the August 15, 2000 deadline. 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 cost of acquisition 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 write down of the initial acquisition cost 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 December 31, 2000 Financial Statements
                                   (Unaudited)
--------------------------------------------------------------------------------


NOTE 3: MINERAL PROPERTIES (Continued)

        Subsequent to December 31, 2000, Tun Resources decided to end funding
        obligations that are required for the Lutong joint venture due to
        negative exploration results. As a result, Tun Resources plans to
        organize the future dissolution of the Lutong Sino Foreign Cooperative
        Joint Venture.

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

                                       9

<PAGE>


                            VEGA-ATLANTIC CORPORATION
                         (An Exploration Stage Company)
               Notes to the December 31, 2000 Financial Statements
                                   (Unaudited)
--------------------------------------------------------------------------------

NOTE 3: MINERAL PROPERTIES (Continued)

        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. 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 pre-consolidation 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 1,950,000 stock options to certain
        officers, directors and consultants with an exercise price of $.25 per
        share. Pursuant to the terms of the employee stock option plan, the
        number of options granted and the exercise price of the outstanding
        options was modified to reflect the December 22, 2000 reverse stock
        split of the Company's common stock. As of December 31, 2000, 487,500
        share options with an exercise price of $1.00 per share of
        post-consolidation common stock had been granted, no options had been
        exercised or forfeited, and no options had expired. Selected information
        regarding the options as of December 31, 2000 and 1999 are as follows:

                                       10

<PAGE>


                            VEGA-ATLANTIC CORPORATION
                         (An Exploration Stage Company)
               Notes to the December 31, 2000 Financial Statements
                                   (Unaudited)
--------------------------------------------------------------------------------


NOTE 5: EMPLOYEE STOCK OPTION PLAN (Continued)
<TABLE>
<CAPTION>


                                          December 31, 2000                December 31, 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           487,500       $1.00/share           -0-             -0-
Exercisable at End of Period           487,500       $1.00/share           -0-             -0-
Options Granted                        487,500       $1.00/share           -0-             -0-
Options Exercised                        -0-              -0-              -0-             -0-
Options Forfeited                        -0-              -0-              -0-             -0-
Options Expired                          -0-              -0-              -0-             -0-

        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%.

                                                                                                         January 28, 1987
                                         Three months ended                     Nine months ended         (inception) to
                                              December 31,                         December 31,             December 31,
                                        2000              1999               2000             1999              2000
                                     ----------       -----------       -----------       -----------       -----------
                                          $                 $                 $                 $                 $
Net loss                             (2,070,302)         (184,744)       (4,179,865)         (682,855)      (10,122,615)

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

Pro-forma net loss                   (2,070,302)         (184,744)       (4,404,648)         (682,855)      (10,347,398)
                                    ===========       ===========       ===========       ===========       ===========

Pro-forma net loss per share             (0.298)           (0.042)           (0.710)           (0.155)
                                    ===========       ===========       ===========       ===========
</TABLE>


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.

                                       11

<PAGE>


                            VEGA-ATLANTIC CORPORATION
                         (An Exploration Stage Company)
               Notes to the December 31, 2000 Financial Statements
                                   (Unaudited)
--------------------------------------------------------------------------------


NOTE 6: CONTINGENCIES (Continued)

        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.

NOTE 7: RELATED PARTY TRANSACTIONS

During the nine months ended December 31, 2000 the Company incurred directors
fees of $9,000 to two directors. At December 31, 2000 $56,767 is owing to
directors and former directors for accrued fees.

During the nine months ended December 31, 2000 the Company incurred managerial,
administrative and investor relation services of $562,000 to Investor
Communications International, Inc. ("ICI") under a two year consulting services
and management agreement dated April 1, 1999. A director of the Company provides
consulting services to ICI and was paid approximately US$16,500 during the nine
months ended December 31, 2000. At December 31, 2000 $528,414 had been paid to
ICI for outstanding fees and interest and $41,586 plus $937 accrued interest is
owing to ICI.

                                       12


<PAGE>


     Statements made in this Form 10-QSB that are not historical or current
facts are "forward-looking statements" made pursuant to the safe harbor
provisions of Section 27A of the Securities Act of 1933 (the "Act") and Section
21E of the Securities Exchange Act of 1934. These statements often can be
identified by the use of terms such as "may," "will," "expect," "believe,"
"anticipate," "estimate," "approximate" or "continue," or the negative thereof.
The Company intends that such forward-looking statements be subject to the safe
harbors for such statements. The Company wishes to caution readers not to place
undue reliance on any such forward-looking statements, which speak only as of
the date made. Any forward-looking statements represent management's best
judgment as to what may occur in the future. However, forward-looking statements
are subject to risks, uncertainties and important factors beyond the control of
the Company that could cause actual results and events to differ materially from
historical results of operations and events and those presently anticipated or
projected. These factors include adverse economic conditions, highly speculative
nature of mineral acquisition and exploration, risks of foreign operation, entry
of new and stronger competitors, inadequate capital and unexpected costs. The
Company disclaims any obligation subsequently to revise any forward-looking
statements to reflect events or circumstances after the date of such statement
or to reflect the occurrence of anticipated or unanticipated events.

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

GENERAL

     The Company is a minerals exploration and development company concentrating
on gold, silver and zinc exploration and mining joint ventures in the Peoples
Republic of China and internationally.

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 December 31, 2000, the Company
issued 1,600,000 shares of its restricted common stock to Golden Thunder and has
provided approximately $604,500 of funds to Tun Resources. The Company has
received extensions pursuant to addendums to the Acquisition Agreement under
provisions that require a total of $1,180,000 be advanced to fund current Tun
Resources' joint venture by November 15, 2000, and the Acquisition Agreement is
in good standing.

     Tun Resources is the major stakeholder in two gold exploration and
development Sino Foreign joint ventures in the Yunnan Province of China.

     Yuntong Sino Foreign Joint Venture

                                       13

<PAGE>


     Tun Resources owns 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 Joint
Venture"). As of the date of this Quarterly Report, the Yuntong Joint Venture
projects consist of (i) the Shangzai gold deposit ("SZ Gold"); (ii) the
Bianfushan gold deposit ("BF Gold"); (iii) the Lannitang gold deposit ("LNT
Gold"); and (iv) the Daqiaoqing gold deposit ("DQQ Gold"). During the quarter
ended December 31, 2000, the various projects have undergone due diligence and
analysis by the Company of mining potential based upon receipt of detailed
geological reports, including column leach testing, concerning the gold
deposits.

     The Shangzai Gold Deposit. During the quarter ended December 31, 2000,
construction process on the SZ Gold was completed consisting of retaining wall
construction, mine quarter leveling and leach pad construction. Two heap leach
pads were completed and the Company moved into the production phases. Management
of the Company anticipates that the SZ Gold mine will operate until the rainy
season, which begins in May 2001, and may process a total of 24,000 tons of ore
over three 60-day cycles. Management further anticipates that the grade is
expected to average 5.5 g/t and, combined with expected recovery of
approximately 65%, projects a production of 2,500 to 2,800 ounce of gold before
the ending of June 30, 2001 quarter period. Management of the Company believes
that the direct cash cost of such gold produced may be $100.00 per ounce.

     On January 15, 2001, the first gold bars were poured from the SZ Gold
project. The commencement of SZ Gold production, although small, represents
approximately half of the gold stripped from the ore leached in the introductory
heap leach cycle. Management anticipates that the balance of the contained gold
from the first leach will be stripped at the end of February 2001. Management
plans to treat a total of approximately 20,000 tonnes of ore before the end of
June 30, 2001.

     The Lannitang Gold Deposit. The LNT Gold project represents the second
project the Company plans to develop into an operational mine. During the
quarter ended December 31, 2000, work plans for future mining operations were
prepared and analyzed by the Company. As a result of the continued work and
geologist reports on the LNT Gold deposit, the Company plans to commence an
exploration audit in April 2001, subject to financing. Future plans, subject to
the provision of $3,000,000 in financing, are to develop a 250 ton per day mine
capable of producing approximately 15,000 ounces of gold per annum from year
round production.

     Management of the Company estimates a gold resource of approximately
400,000 ounces based upon the drilling and tunneling work conducted previously.
Management believes that the LNT Gold project offers the Company a unique
opportunity to develop a property while making a profit to cover research and
development costs for a larger financial target, which would include opening the
ground for a more complete evaluation of accessing the remaining 9 tonnes of
gold estimated to be present in lower levels.

     The Bianfushan Gold Deposit. During the quarter ended December 31, 2000,
the Company changed its operational schedule for production of the BF Gold
project. The BF Gold deposit topography is similar to the SZ Gold deposit but
more difficult. Management intends to engage in planned, staged, production
development at a controlled pace. All necessary permits have been obtained.
Based upon geographical reports, management believes that the BF Gold deposit
provides favorable local topography and that sites for extraction leach pads are
available. Management anticipates that after completion of the LNT Gold project,
the Company will commence operational production activities and complete
exploration work required.

                                       14

<PAGE>


     The Daqiaoqing Gold Deposit. As of the date of this Quarterly Report, the
DQQ Gold project is undergoing due diligence by the Company. Although the DQQ
Gold project is undergoing due diligence, management believes that the DQQ Gold
deposit contains an indicated resource of gold and could potentially provide an
estimated production target of 12,000 ounces of gold. During February 2000, Tun
Resources, through the Yuntong Joint Venture, entered into a definitive
agreement to acquire the DQQ Gold deposit, which is subject to completion of due
diligence and final negotiations.

     The Lutong Sino Foreign Cooperative Joint Venture

     Tun Resources owns an approximate eighty percent (80%) joint venture
interest in the Lutong Sino Foreign Cooperative Joint Venture, which consists of
a gold exploration concession comprising approximately 100 square kilometers in
the same province (the "Lutong Joint Venture"). As of the date of this Quarterly
Report, the Company has engaged in due diligence.. Based upon current geological
reports, no defined reserves have been identified. The Company has decided to
end funding obligations that are required for this joint venture due to negative
exploration results. As a result, Tun Resources plans to organize the future
dissolution of the Lutong Sino Foreign Cooperative Joint Venture.

The Ailaoshan/Xiaoshuijing Gold Project

     On May 4, 2000, the Company entered into a letter agreement with the No. 1
Geological Brigade of the Yunnan Bureau of Geology and Mineral Resources of
Qujing City, Yunnan Province, China (the "Letter Agreement"), whereby the
Company has the right to acquire an approximate 70% interest in the Ailaoshang
gold concession and prospect with claims that include the Xiaoshuijing gold
resource located in the Chuxion Prefecture, Yunnan Province, China. Management
plans to conduct future due diligence on the gold resource 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 may invest up to
$2,500,000 to expand the gold resource and increase mine production, and that
the No. 1 Geological Brigade will contribute the property, exploration and
mining rights, permits, land use rights and other work to date completed on the
gold resource.

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

     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.

The 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

                                       15

<PAGE>


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 continuing with
final due diligence and further negotiations; (ii) is reviewing an internal
management report on the current status of the mine, including metallurgical
test work which resulted in a feasibility study of metallurgical process
upgrades, (iii) has hired engineers to provide detailed studies of the current
mining operations to develop new mining methods for the upgrade of mining
expansion, and (iv) has engaged in re-engineering and geological reports and
process test work. Management of the Company expects engineering feasibility
reports, metallurgical testing results and financial audit information to
provide the basis for consummation of the acquisition. As of the date of this
Quarterly Report, geological reports have provided directives for the controlled
development and re-definition of existing underground reserves. Positive initial
results have also been conducted on waste ore extraction procedures that could
provide for production from waste ore on site. Management believes that there is
approximately 800,000 tons of waste ore available. Until the completion of all
due diligence, the Company will not consider the acquisition probable. Moreover,
management estimates that a budget of $1,500,000 will be required to convert and
refurbish existing process systems to bring the mine to profitable operation.
The Company is waiting on completion of its due diligence and receipt of funding
commitments before proceeding on the planning efforts. In the event that due
diligence is successfully completed, the Company will receive an 85% interest in
the cash flow from operating profits.

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

The 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.

                                       16

<PAGE>


     As of the date of this Quarterly Report, the Baotong Mineral Exploration
and Development Co. has been formed. The Company has and is continuing to
conduct further due diligence on the zinc and lead deposits, which includes (i)
review of the internally prepared report of the exploration prospect; (ii)
sending rock samples to the United States and the United Kingdom for assay
testing. 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 is also evaluating possible early
stage financing relationships with other mining firms that may have an interest
in the Baotong Zinc and Lead Project.

     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.

The Vega Property

     The Company is currently engaged in the exploration of gold, silver and
zinc in the Peoples Republic of China. Previous activity included a joint
venture agreement with Geneva Resources, Inc. ("Geneva") dated March 28, 1998
(the "Joint Venture Agreement"), whereby the Company 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.

     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

                                       17

<PAGE>


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. Further
evidence provided in the legal proceedings form management's opinion that there
are no commercial quantities of gold or silver on the Vega Property. See "Part
II. Item 1. Legal Proceedings" for additional disclosure.

COMPANY UNAUDITED FINANCIAL STATEMENTS
RESULTS OF OPERATION

Nine-Month Period Ended December 31, 2000 Compared to Nine-Month Period Ended
December 31, 1999

     For the nine-month period ended December 31, 2000, the Company recorded a
net loss of $4,179,865 compared to a net loss of $682,855 in the corresponding
period of 1999. During the nine-month period ended December 31, 2000 and
December 31, 1999, the Company recorded no income.

     During the nine-month period ended December 31, 2000, the Company recorded
exploration expenses of $1,105,787 as compared to $27,317 of exploration
expenses recorded in the same period for 1999. Property exploration expenses
were incurred during the nine-month period ended December 31, 2000 were
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) of the various gold exploration
and development projects as follows: (i) $1,011,139 for Tun Resources (the
Yuntong Sino Foreign Joint Venture and the Lutong Sino Foreign Cooperative Joint
Venture) and (ii) $94,648 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
$2,418,540 during the nine-month period ended December 31, 2000 from the
$655,538 incurred during the nine-month period ended December 31, 1999 to the
$3,074,078 incurred during the nine-month period ended December 31, 2000. This
increase is due primarily to the (i) increase in general and administration, and
professional fees of $288,369 and $125,796, respectively, associated with the
increased scale and scope of overall business activity; (ii) loss of $1,754,917
on settlement of convertible promissory notes; (iii) recording of $262,247 for
compensation cost relating to the excess of the quoted market price of the

                                       18

<PAGE>


common stock over the exercise price of the Company's stock options; and (iv)
incurrence of $36,675 of consulting fees. Of the $3,074,078 incurred as
administrative expenses during the nine-month period ended December 31, 31,
2000, $528,414 was paid to Investor Communications International, Inc. ("ICI")
towards the amount of $570,000 due and owing relating to advances made by ICI
and services rendered by ICI including, but not limited to, financial,
administrative, and metals exploration management.

     The Company's net earnings (losses) during the nine-month period ended
December 31, 2000 were approximately ($4,179,865) or ($0.674) per common share
compared to a net loss of approximately ($682,855) or ($0.155) per common share
during the nine-month period ended December 31, 1999. The weighted average
number of shares outstanding (restated for a 4 to 1 reverse stock split) was
6,202,836 for the nine-month period ended December 31, 2000 compared to
4,396,250 for the nine-month period ended December 31, 1999.

Three-Month Period Ended December 31, 2000 Compared to Three-Month Period Ended
December 30, 1999

     For the three-month period ended December 31, 2000, the Company recorded a
net loss of $2,070,302 compared to a net loss of $184,744 in the corresponding
period of 1999. During the three-month period ended December 31, 2000 and
December 31, 1999, the Company recorded no income.

     During the three-month period ended December 31, 2000, the Company recorded
exploration expenses of $13,050 as compared to $2,722 of exploration expenses
recorded in the same period in 1999. Property exploration expenses were incurred
during the three-month period ended December 31, 2000 were 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) of the various gold exploration and
development projects as follows: (i) $11,324 for Tun Resources (the Yuntong Sino
Foreign Joint Venture and the Lutong Sino Foreign Cooperative Joint Venture) and
(ii) $1,728 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
$1,875,230 during the three-month period ended December 31, 2000 from the
$182,022 incurred during the three-month period ended December 31, 1999 to the
$2,057,252 incurred during the three-month period ended December 31, 2000. This
increase is due primarily to the (i) increase in general and administration, and
professional fees of $101,707 and $41,142, respectively, associated with the
increased scale and scope of overall business activity; and (ii) loss of
$1,754,917 on settlement of convertible promissory notes. Of the $2,057,252
incurred as administrative expenses during the three-month period ended December
31, 2000, $ 144,414 was paid to ICI towards the amount of $183,000 due and owing
relating to advances made by ICI and services rendered by ICI including, but not
limited to, financial, administrative and metals exploration management.

     The Company's net earnings (losses) during the three-month period ended
December 31, 2000 were approximately ($2,070,302) or ($0.298) per common share
compared to a net loss of approximately ($184,744) or ($0.042) per common share
during the three-month period ended December 31, 1999. The weighted average
number of shares outstanding (restated for a 4 to 1 reverse stock split) was
6,958,322 for the three-month period ended December 31, 2000 compared to
4,396,250 for the three-month period ended December 31, 1999.

                                       19

<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 nine-month period ended December 31, 2000, the Company's total
assets were $18,341. This decrease in assets from fiscal quarter ended September
30, 2000 is due to decrease in cash and cash equivalents and deposits.

     As of the nine-month period ended December 31, 2000, the Company's total
liabilities were $923,031. The total liabilities increased during the
three-month period ended December 31, 2000 from the three-month period ended
September 30, 2000 due primarily to an increase in accounts payable. As of
December 31, 2000, the total liabilities exceeded total assets by $904,690.

     Stockholders' Equity (Deficit) increased from ($828,611) for the six-month
period ended September 30, 2000 to ($904,690) for the nine-month period ended
December 31, 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.

                                       20

<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 November 10, 2000, Geneva and INGC filed a motion for partial 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. A professional witness has been
obtained and reports provided on behalf of Geneva and INGC. 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 indefinitely until
resolution of the legal proceedings. Management believes that the legal
proceedings will prove that the alleged Proprietary Technology is invalid.

     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

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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.

     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

     On December 15, 2000, the Company entered into certain convertible
promissory notes (the "Note(s)") with the entity or individual identified below.
Pursuant to the terms of the Notes, the holder thereof had the option to convert
the principal and accrued interest thereon into shares of the Company's common
stock at the conversion price of $0.12 per share. The Notes further provided
that in the event the Company and its shareholders approved a reclassification
involving a reverse stock split, the conversion price would be adjusted.
Pursuant to a Definitive Proxy Statement dated November 6, 2000, a shareholders'
special meeting was held on December 15, 2000 in which the shareholders of the
Company voted and approved a reverse stock split of the Company's common stock.
Based upon approval of the reverse stock split by the shareholders and the
Company, the conversion price of the Notes were adjusted to and effected at
$0.03 per share.

     On December 27, 2000, the board of directors of the Company approved and
authorized settlement agreements (the "Settlement Agreement(s)") with certain
individuals. Pursuant to the Settlement Agreements, the Company agreed to issue
shares of its common stock at $0.03 per share as payment and settlement of
amounts due and owing for interest accrued on previous advances made to the
Company.

     Therefore, on December 27, 2000, the board of directors of the Company
authorized and approved the issuance to certain entities/individuals an
aggregate of 7,976,900 shares of the Company's common stock at $0.03 per share
for an aggregate consideration of $239,305.66 pursuant to the terms of the Notes
and the Settlement Agreements. Such issuance represented approximately 54.7% of
the issued and outstanding shares of Common Stock and resulted in a change in
control of the Company as follows:

     On December 27, 2000, the following Note holders converted their respective
amounts of principal into shares of common stock at the conversion price of
$0.03 per share:

     (i)  Newport Capital Corp. converted its Note in the aggregate amount of
          $29,601.59, and the Company issued 986,759 shares of common stock;
     (ii) Calista Capital Corp. converted its Note in the aggregate amount of
          $27,500.00, and the Company issued 916,700 shares of common stock;
    (iii) Pacific Rim Financial, Inc. converted its Note in the aggregate
          amount of $25,000.00, and the Company issued 833,300 shares of common
          stock;
     (iv) Alexander W. Cox converted his Note in the aggregate amount of
          $99,075.31, and the Company issued 3,302,510 shares of common stock;

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     (v)  Rising Sun Capital Corp. converted its Note in the aggregate amount of
          $20,000.00, and the Company issued 666,700 shares of common stock;

     (vi) Roy Hunter converted his Note in the aggregate amount of $9,000.00,
          and the Company issued 300,000 shares of common stock; and

    (vii) NPN Corp. converted its Note in the aggregate amount of $18,000.00,
          and the Company issued 600,000 shares of common stock.

     On December 27, 2000, in accordance with the Settlement Agreements, the
Company (i) issued 100,141 shares of its common stock to Newport Capital Corp.
as payment and settlement of $3,004.23 in accrued interest; and (ii) issued
270,790 shares of its common stock to Alexander W. Cox as payment and settlement
of $8,124.53 in accrued interest.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     No report required.

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

     Pursuant to a Definitive Proxy Statement dated November 6, 2000, a
shareholders' special meeting was held on December 15, 2000 in which the
shareholders of the Company voted and approved certain proposals as follows:

     (i)  the adoption of an amendment to the Company's Articles of
          Incorporation, as amended, which reduced the number of authorized
          shares of common stock from 500,000,000 shares of common stock to
          100,000,000 shares of common stock (19,224,851 votes for and -0- votes
          against);

     (ii) the authorization of the board of directors of the Company to effect a
          reverse stock split of one-for-four (the "Reverse Stock Split") of the
          Company's outstanding common stock, which the board of directors
          authorized and effectuated in the best interests of the Company and
          its Shareholders (19,229,851 votes for and 1,000 votes against);

     (ii) the election of the following three (3) persons to serve as directors
          of the Company until their successor shall have been elected and
          qualified: Grant Atkins (19,224,851 votes for and -0- votes against),
          John Frederick William Bowles (19,224,851 votes for and -0- votes
          against), and Gary Powers (19,224,851 votes for and -0- votes
          against); and

    (iii) the ratification of the selection of LaBonte & Co. as the independent
          public accountants of the Company for the fiscal year ending March 31,
          2001 (19,224,851 votes for and -0- votes against).

ITEM 5. OTHER INFORMATION

     No report required.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a) Report on Form 8-K filed February 13, 2001.

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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: February 13, 2001                         By: /s/ Grant Atkins
                                                 ------------------------------
                                                 Grant Atkins, President


Dated: February 13, 2001                         By: /s/ Herb Ackerman
                                                 ------------------------------
                                                 Herb Ackerman, Secretary

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