UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JulyOctober 31, 2009
Commission file number 000-51068
YUKON GOLD CORPORATION, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 52-2243048 |
| (State of incorporation) | (I.R.S. Employer Identification No.) |
139 Grand River St. N,. PO Box 510
Paris, Ontario N3L 3T6 Canada
(Address of principal executive offices including zip code)
210-355-3233
(Registrant's telephone number including area code)
With a copy to:
Jonathan H. GardnerKavinoky Cook LLP726 Exchange Street; Suite 800Buffalo, NY 14210Phone: 716-845-6000Fax: 716-845-6474
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 Q No £
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer £ | Accelerated filer £ | Non-accelerated filer £ | Smaller reporting company Q |
| (Do not check if a smaller reporting company) |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes £ No Q
The number of shares of registrant's common stock outstanding as of JulyOctober 31, 2009 was 40,489,535
PART I – FINANCIAL INFORMATION
YUKON GOLD CORPORATION, INC.(AN EXPLORATION STAGE MINING COMPANY)INTERIM CONSOLIDATED FINANCIAL STATEMENTSJULY 31, 2009(Amounts expressed in US Dollars)(Unaudited-Prepared by Management)
YUKON GOLD CORPORATION, INC. Interim Consolidated Balance Sheets as at Interim Consolidated Statements of Operations for the six months and three months ended Interim Consolidated Statements of Cash Flows for the Interim Consolidated Statements of Changes in Stockholders’ Equity (Deficiency) Condensed Notes to Interim Consolidated Financial Statements YUKON GOLD CORPORATION, INC. F-2 YUKON GOLD CORPORATION, INC. YUKON GOLD CORPORATION, INC. YUKON GOLD CORPORATION, INC. (An Exploration Stage Mining Company) From Inception to October 31, 2009 (Amounts expressed in US Dollars) (Unaudited-Prepared by Management) Issuance of Common shares Issuance of warrants Foreign currency translation Net loss for the year Balance as of April 30, 2003 Issuance of Common shares Issuance of warrants Shares repurchased Recapitalization pursuant to reverse acquisition Issuance of Common shares Issuance of Common shares for Property Payment Foreign currency translation Net loss for the year Balance as of April 30, 2004 Issuance of Common shares for Property Payment Issuance of common shares on Conversion of Convertible Promissory note Foreign currency translation Net loss for the year Balance as of April 30, 2005 Stock based compensation - Directors and officers Stock based compensation - Consultants Issue of common shares and Warrants on retirement of Demand Promissory note Units issued to an outside company for professional services settlement Units issued to an officer for professional services settlement Issuance of common shares for professional services Units issued to shareholder Units issued to a director Units issued to outside subscribers Issuance of common shares on Conversion of Convertible Promissory notes Issuance of common shares on Exercise of warrants Issuance of common shares on Conversion of Convertible Promissory notes Private placement of shares Issuance of Common shares for property payment Issuance of common shares on Conversion of Convertible Promissory notes Issuance of common shares on Exercise of warrants Issuance of common shares on Conversion of Convertible Promissory notes Issue of 400,000 Special Warrants net 371,680 Issue of 200,000 flow through warrants 154,000 Brokered private placement of shares- net 5,331,327 533 2,910,375 Brokered Private placement of flow through Shares- net 25,000 2 13,310 Exercise of stock options 10,000 1 5,499 Foreign currency translation - - - (2,687 ) (2,687 ) Net loss for the year - - - (1,855,957 ) (1,855,957 ) - Balance at April 30, 2006 16,366,728 1,637 5,301,502 525,680 (3,231,792 ) (1,858,644 (5,162 ) Exercise of warrants 10,000 1 8,986 Exercise of warrants 45,045 5 40,445 Exercise of warrants 16,000 2 14,278 Common shares issued for settlement of severance liability to ex-officer 141,599 14 113,116 Exercise of warrants 43,667 4 39,364 Exercise of warrants 17,971 2 15,937 Exercise of warrants 43,667 4 38,891 Exercise of warrants 16,000 2 14,251 Exercise of warrants 158,090 16 141,616 Issue of common shares for property payment 43,166 4 53,841 Exercise of warrants 64,120 6 57,863 Exercise of warrants 61,171 6 53,818 Exercise of stock options 24,000 2 17,998 Issuance of common shares for professional services 342,780 34 438,725 Brokered private placement of units-net 400,000 40 363,960 Brokered private placement of units- net 550,000 55 498,923 Stock based compensation-Directors and Officers 451,273 Exercise of stock options 50,000 5 37,495 YUKON GOLD CORPORATION, INC. 1. BASIS OF PRESENTATION The accompanying unaudited condensed interim consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all The interim consolidated financial statements include the accounts of Yukon Gold Corporation, Inc. (the “Company”) and its wholly owned subsidiary Yukon Gold Corp. (“YGC”). All material inter-company accounts and transactions have been eliminated. 2. GOING CONCERN The Company's financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has no source for operating revenue and expects to incur significant expenses before establishing operating revenue. Because of continuing operating losses, negative working capital, stockholders’ deficiency and cash outflows from operations, the Company’s continuance as a going concern is dependent upon its ability to obtain adequate financing and to reach profitable levels of operation. In the event that the Company is unable to raise additional capital, as to which there is no assurance, the Company will not be able to continue doing business. The Company’s future success is dependent upon its continued ability to raise sufficient capital, not only to maintain its operating expenses, but to explore for reserves. There is no guarantee that such capital will be available on acceptable terms, if at all or if the Company will attain profitable levels of operation. The Company is actively pursuing equity and short-term bridge loan financing, which may include financing backed by a pledge of some or all of the Company’s exploration property assets. The Company also is simultaneously exploring opportunities to effect business combinations or joint ventures involving additional mining assets that may provide opportunities for greater long-term financing. These consolidated financial statements have been prepared in accordance with United States generally acceptable accounting principles applicable to a going concern. Accordingly, they do not give effect to adjustments that would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and liquidate its liabilities and commitments in other than the normal course of business and at amounts different from those in the accompanying consolidated financial statements. F-10 YUKON GOLD CORPORATION, INC. 3. NATURE OF OPERATIONS The Company is an exploration stage mining company and has not yet realized any revenue from its operations. It is primarily engaged in acquisition, exploration and development of its mining properties located in the Yukon Territory in Canada. The Company has not yet determined whether these properties contain mineral reserves that are economically recoverable. The business of mining and exploring for minerals involves a high degree of risk and there can be no assurances that current exploration programs will result in profitable mining operations. 4. PREPAID EXPENSES AND OTHER Included in prepaid expenses and other is an amount of 5. CAPITAL STOCK a) Authorized 150,000,000 of Common shares, $0.0001 par value. b) Issued 40,489,535 Common shares. F-11 YUKON GOLD CORPORATION, INC. 5. CAPITAL STOCK-Cont’d c) Changes to Issued Share Capital Year ended April 30, 2009 On July 7, 2008, the Company issued 476,189 common shares in settlement of a property payment on the Mount Hinton property. These shares represent $58,887 (CDN$60,000), which is 40% of the contracted payment, and were valued at $0.123 (CDN$0.126) each. The balance of the property payment in the amount of $88,330 (CDN$90,000) was paid in cash. On May 16, 2008, the Company entered into a consulting agreement with Clarke Capital Group Inc. (“Clarke”) pursuant to which Clarke was retained to provide the Company with investor relations and business communications services for an initial term of 6 months, renewable thereafter for an additional 6-month term. Upon execution of the Clarke Agreement the Company paid Clarke $14,648 (CDN$15,000). Pursuant to the Clarke Agreement, the Company issued Clarke 50,000 shares of common stock on July 14, 2008 which was valued at market price for $7,500. On July 23, 2008, the Company closed a non-brokered private placement to $976,563 (CDN$1,000,000). The Company completed the sale of 4,134,000 common shares on a flow-through basis at a price of $0.15 (CDN$0.15) per share for gross proceeds of $613,778 (CDN$620,100). The Company paid a 5% finders fee on this private placement. The private placement was exempt from registration under the Securities Act of 1933, pursuant to an exemption afforded by Regulation S. The flow-through shares were issued at market without any additional price charged for sale of taxable benefits. The Company assumed the rights to acquire the Marg Property under a Property Purchase Agreement (“Agreement”) with Atna Resources Ltd. (“Atna”). The Company had agreed to make subsequent payments under the Agreement of: $163,066 (CDN$200,000) in cash and/or common shares of the Company (or some combination thereof to be determined) on or before December 12, 2008. On December 4, 2008 the Company and Atna Resources Ltd. (“Atna”) entered into a letter agreement (the “Amendment Agreement”) amending the purchase agreement by which the Company acquired its Marg Property (the “Marg Acquisition Agreement”). Under the terms of the Marg Acquisition Agreement the Company was required to pay to Atna $163,066 (CDN$200,000) (in cash or shares of the Company’s common stock) on December 12, 2008. In lieu of making such payment, the Amendment Agreement permits the Company to pay Atna $19,980 (CDN$25,000) in cash on December 12, 2008 (paid) and $188,600 (CDN$225,000) (payable in cash or shares of the Company’s common stock) on April 30, 2009. On April 30, 2009, the Company issued to Atna 6,838,906 common shares which represent $188,600 (CDN $225,000), whereby common shares were valued at $0.0276 (CDN $0.0329) each. During the six month period ended October 31, 2009, the Company received subscriptions for 1,100,000 common shares at $0.04 per share for a total consideration of $44,000 through a non-brokered private placement. The Company F-12 YUKON GOLD CORPORATION, INC. 6. STOCK BASED COMPENSATION Per SEC Staff Accounting Bulletin 107, Topic 14.F, “Classification of Compensation Expense Associated with Share-Based Payment Arrangements” stock based compensation expense is being presented in the same lines as cash compensation paid. The Company adopted a new Stock Option Plan at its shareholders meeting on January 19, 2007 (the “2006 Stock Option Plan”). The 2006 Stock Option Plan will be administered by the board of directors of the Company or, in the board of directors’ discretion, by a committee appointed by the board of directors for that purpose. The TSX approved the 2006 Stock Option plan on March 9, 2007. Subject to the provisions of the 2006 Stock Option Plan, the aggregate number of shares which may be issued under the 2006 Stock Option Plan shall not exceed 2,000,000 shares ("Total Shares"). On March 18, 2008 at the Annual and Special Meeting of Shareholders, the Shareholders of the Company approved an amendment to the 2006 Stock Option Plan increasing the number of Shares reserved for issuance there under from 2,000,000 to 2,899,044. Any Stock Option granted under the 2006 Stock Option Plan which has been exercised shall again be available for subsequent grant under the 2006 Stock Option Plan, effectively resulting in a re-loading of the number of shares available for grant under the 2006 Stock Option Plan. Any shares subject to an option granted under the 2006 Stock Option Plan which for any reason is surrendered, cancelled or terminated or expires without having been exercised shall again be available for subsequent grant under the 2006 Stock Option Plan. Under the 2006 Stock Option Plan, at no time shall: (i) the number of shares reserved for issuance pursuant to Stock Options granted to any one optionee exceed 10% of the Total Shares; (ii) the number of shares, together with all security based compensation arrangements of the Company in effect, reserved for issuance pursuant to Stock Options granted to any "insiders" (as that term is defined under theSecurities Act (Ontario)) exceed 10% of the total number of issued and outstanding shares. In addition, the number of shares issued to insiders pursuant to the exercise of Stock Options, within any one year period, together with all security based compensation arrangements of the Company in effect, shall not exceed 10% of the total number of issued and outstanding shares. F-13 YUKON GOLD CORPORATION, INC. 6. STOCK BASED COMPENSATION-Cont’d The purchase price (the “Price”) per share under each Stock Option shall be determined by the board of directors or a committee, as applicable. The Price shall not be lower than the closing market price on the TSX, or another stock exchange where the majority of the trading volume and value of the Shares occurs, on the trading day immediately preceding the date of grant, or if not so traded, the average between the closing bid and asked prices thereof as reported for the trading day immediately preceding the date of the grant; provided that if the shares have not traded on the TSX or another stock exchange for an extended period of time, the “market price” will be the fair market value of the shares at the time of grant, as determined by the board of directors or committee. The board of directors or committee may determine that the Price may escalate at a specified rate dependent upon the date on which an option may be exercised by the Eligible Participant. Options shall not be granted for a term exceeding Year ended April 30, 2009. During the year ended April 30, 2009, the following stock options were granted under the 2006 stock option plan: On July 28, 2008 the board of directors granted options to a consultant to acquire 250,000 shares, to vest 50,000 immediately and the balance of 50,000 each at three-month intervals. These options can be exercised over a period of five (5) years. The exercise price was set at $0.15 (CDN$0.15) per share. These options were granted under the Company’s 2006 stock option plan. On December 12, 2008, the Company and the consultant mutually agreed to terminate the agreement effective October 31, 2008 and cancelled the 250,000 options on January 31, 2009. The company did not issue any stock options during the For this F-14 YUKON GOLD CORPORATION, INC. As of On June 24, 2009 the Company cancelled 200,000 options granted to a former officer of the Company. On August 4, 2009 the Company recognized the expiration of 240,000 options granted to a former director of the Company and cancelled 100,000 options granted to such former director. On October 24, 2009, the Company cancelled 200,000 options issued to an officer of the Company. 7. SALE OF MOUNT HINTON MINING PROPERTY The Mount Hinton Property is adjacent to the Keno Hill Mining Camp in central Yukon Territory. It consists of 186 staked claims under the Yukon Quartz Mining Act, covering approximately 9300 acres. On July 7, 2002 YGC, the Company’s wholly owned subsidiary, entered into an option agreement with the Hinton Syndicate to acquire a 75% interest in the 273 unpatented mineral claims covering approximately 14,000 acres in the Mayo Mining District of Yukon, Canada. This agreement was replaced with a revised and amended agreement (the “Hinton Option Agreement”) dated July 7, 2005 which superseded the original agreement and amendments thereto. The new agreement was between the Company, its wholly owned subsidiary YGC and the Hinton Syndicate. The schedule of Property Payments and Work Program F-15 YUKON GOLD CORPORATION, INC. 7. SALE OF MOUNT HINTON MINING PROPERTY CLAIMS-Cont’d WORK PROGRAM-expenditures to be incurred in the following periods; YUKON GOLD CORPORATION, INC. 7. SALE OF MOUNT HINTON MINING PROPERTY CLAIMS-Cont’d **By letter agreement dated February 29, 2008, the Company gave notice to the Hinton Syndicate that all of the Work Program expenditures scheduled to be incurred by December 31, 2008 would be deferred until December 31, 2009. Subsection 2.2(f) of the Hinton Option Agreement provides that if Yukon Gold has earned at least 25% of the right, title and interest in the Property as provided for in Subsection 2.2(e) of the Hinton Option Agreement and is unable to meet its next year's Work Program expenditures as set out in Section 2.2 of the Hinton Option Agreement, it shall be entitled to extend the time required to incur the Work Program expenditures from year to year by giving notice to the Hinton Syndicate to such effect; provided that the full amount of the Work Program expenditures has been incurred by December 31, 2009. On May 21, 2009, the Company, through its wholly owned subsidiary, YGC, sold its interest in the Mount Hinton Property to the Hinton Syndicate. All of the claims comprising the Mount Hinton Property were conveyed by the Company’s subsidiary to a member of the Hinton Syndicate. The Hinton Syndicate paid the Company (i) $110,306 (CDN$125,000) on May 21, 2009 and (ii) granted to the Company’s subsidiary a 2% “Net Smelter Royalty (an “NSR”) on the Mount Hinton Property claims. Such 2% NSR may be terminated at any time by payment to Yukon Gold of the following: In addition, Yukon Gold’s subsidiary assigned its work permit to a member of the Hinton Syndicate and the Hinton Syndicate became responsible for any reclamation costs imposed by the government of Yukon in connection with the work permit. As of May 21, 2009, Yukon Gold and its subsidiary have no further interest or obligations with respect to the Mount Hinton Property. F-17 YUKON GOLD CORPORATION, INC. The Marg Property In March 2005, the Company acquired rights to purchase 100% of the Marg Property, which consists of 402 contiguous mineral claims covering approximately 20,000 acres located in the Mayo Mining District of the Yukon Territory of Canada. Title to the claims is registered in the name of YGC. The Company assumed the rights to acquire the Marg Property under a Property Purchase Agreement (“Agreement”) with Atna Resources Ltd. (“Atna”). Under the terms of the Agreement the Company paid $119,189 (CDN$150,000) cash and 133,333 common shares as a down payment. The Company made payments under the Agreement for $43,406 (CDN$50,000) cash and an additional 133,333 common shares of the Company on December 12, 2005; $86,805 (CDN$100,000) cash and an additional 133,334 common shares of the Company on December 12, 2006. On December 12, 2007 the Company paid $98,697 (CDN$100,000) being the next payment then due. The Company On April 2, 2007 the Company accepted a proposed work program, budget and cash call schedule for the Marg project. The Company has paid cash calls in the amount of $2,100,528 (CDN$2,281,880) for the 2007 Work Program. The Company had approximately $515,561 (CDN$550,000) on deposit left over from the 2006 cash call schedule. On May 15, 2007 the Company paid $703,037 (CDN$750,000), on June 15, 2007 the Company paid $703,037 (CDN$750,000), and on July 15, 2007 the Company paid $703,037 (CDN$750,000) being three of the four cash call payments. F-18 YUKON GOLD CORPORATION, INC. 8. COMMITMENTS AND CONTINGENCIES-Cont’d The fourth and final payment of $402,244 (CDN$380,000) was paid on August 15, 2007. On August 31, 2007 the Company re-allocated $537,864 (CDN$508,120) being the balance of the third cash call payment for the Mount Hinton 2007 Work Program from cash call funds previously allocated to the Marg Project. These On September 17, 2009, the Company, Bellhaven Copper and Gold, Inc. (“Bellhaven”) and Minera Cerro Quema S.A., a private company organized under the laws of Panama that is a subsidiary of Bellhaven (“Minera”) fully executed a Memorandum of Understanding (the “MOU”) dated as of September 15, 2009 pursuant to which Bellhaven granted to the Company an option to buy a 75% equity interest in Minera. Minera owns the Cerro Quema development stage gold project located the Tonosi, Province of Los Santos, Republic of Panamá. The MOU called for a 60-day due diligence period during which the Company was required to make a series of non-refundable deposits totaling $400,000 as milestones for due diligence and development of definitive documents . The total consideration for the Minera interest was $19,915,000, which included the purchase price and project financing to be provided by the Company. Upon exercise of the "Option to Purchase" Yukon Gold would own 75% of the outstanding shares of Minera and Bellhaven would hold the remaining 25%. The Property was also subject to a 2% NSR (net smelter royalty) in favor of Compania de Exploracion Minera S.A. and a 9% NPI in favor of Bellhaven. Yukon Gold agreed to purchase the 9% NPI from Bellhaven for consideration of $75,000, payable at Closing. While it performed due diligence, the Company was seeking financing for the transaction. On September 21, 2009 the Company paid $37,500 of the $75,000 being the first non-refundable due diligence deposit milestone. October 5, 2009 the Company paid the balance $37,500. Subsequent to the quarter ended October 31, 2009 the Company was unable to complete its due diligence, or to make the balance of the non-refundable due diligence deposits, or to raise the $19,915,000. On November 13, 2009 Bellhaven issued a press release stating that they were terminating the MOU with the Company. On October 1, 2009 the Company’s board of directors ratified a retainer agreement (the “Agreement”) dated August 28, 2009 with a Panamerican corporation (the “Consultant”) to provide certain exclusive advisory services for financing, acquisition, collaboration, product or services sales transactions and strategies, for a period of twelve (12) months (the “Term”) from the date of execution. If at any time during the Term the Company wishes to terminate the exclusivity of the Consultant, the Company will give the Consultant ten (10) days prior written notice and pay the Consultant $200,000. The Agreement states that a monthly cash fee of $50,000 and the Consultant’s out-of-pocket expenses shall accrue and be payable only at such time as the Company secures a minimum of $5,000,000 in financing during the Term of this agreement at which time the total amount accrued shall be due and payable in full without interest. In the event that the Company fails to timely pay any of the compensation, as defined in the Agreement, each shall bear interest at the rate of six percent (6%) until paid in full. The Consultant has the right upon written notice to the Company of its election to receive gold or other minerals in lieu of cash prior to or concurrent with the closing of any financing transactions (“Financing Transactions”). Compensation payable in kind shall not bear any interest. F-19 YUKON GOLD CORPORATION, INC. 8. COMMITMENTS AND CONTINGENCIES-Cont’d If an acquisition or divestiture is consummated during the Term of the Agreement or for a period of one (1) year thereafter, the Company shall pay a transaction fee (“TF”) to the Consultant based on the following transaction values (“TVs”): (i) 5% TF up to and including $1,000,000 TVs, plus (ii) 4% TF on all TVs from $1,000,000 to $1,999,999, plus (iii) 3% TF on all TVs from $2,000,000 to $2,999,999, plus (iv) 2% on all TVs from $3,000,000 to $3,999,999, plus (v) 1% on all TVs from $4,000,000 to $4,999,999, plus (vi) 1% on all TVs equal to and exceeding $5,000,000. During the Term of the Agreement or for a period of one (1) year after termination, the Company will pay the Consultant a finder’s fee equal to two percent (2%) of the total amount of each and every Financing Transaction successfully undertaken by the Company. In addition the Company shall grant to the Consultant options to purchase that number of shares of the Company’s common stock determined by multiplying two percent (2%) equal to the total number of equity shares placed/and or issued, or if convertible debt, two percent (2%) of the number of common equity shares as if the convertible debt was converted at its earliest possible date. Such options shall be exercisable for a period of five (5) years at an exercise price equal to the five-day weighted average trading price (WATP) for the five (5) consecutive trading days immediately prior to the granting of the Company’s stock options. In addition to the foregoing fees, the Company shall grant to the Consultant a fully-vested option (“Equity Fee”) to acquire a number of shares equal to eight and one-half percent (8.5%) of the total common shares issued and outstanding at the time of the execution of the Agreement. Such options shall be exercisable for a period of five (5) years at an exercise price equal to the five-day WATP for the five (5) consecutive trading days immediately prior to the granting of the Company’s stock options. The number of stock options shall be subject to any and all adjustments of the common shares during the five-year exercise period. Upon the Company entering into any definitive agreement, during the Term, to acquire any properties/projects, as defined in the Agreement, an additional fully-vested performance option shall be granted to the Consultant to acquire a number of shares equal to eight and one-half percent (8.5%) of the then issued and outstanding common shares of the Company. Such options shall be exercisable for a period of five (5) years at an exercise price equal to the five-day WATP for the five (5) consecutive trading days immediately prior to the execution of the definitive agreement. The number of performance options shall be subject to any and all adjustments of the common shares during the five-year exercise period. If any acquisition transaction is contemplated by the Company during the Term or for a period of one (1) year after the Company will grant to the Consultant the absolute right to participate, on a pro rata basis, in up to a ten percent (10%) interest in the Company’s acquisition. The Consultant shall also be responsible for all pro rata future development and operating costs of said acquisition when paid by the parties owning the other 90% interests. Notwithstanding anything within the Agreement to the contrary, any stock or equity-based compensation must be pre-cleared by the Toronto Stock Exchange (TSX). If any Financing Transaction(s) described in paragraphs 2 A and B of Schedule A to this Agreement are concluded during the Term, or for a period of one (1) year thereafter, provided such Financing Transaction(s) results from parties identified in writing by the Consultant in performing the Services, the Company will pay to the Consultant, or a designee of the Consultant, the following: (i) with respect to any equity financing, a cash fee equal to seven percent (7%) of the total amount of the Financing Transaction (gross proceeds, without offset for costs or fees), (ii) with respect to any debt financing, a cash fee equal to four percent (4%) of the total amount of such Financing Transaction (gross proceeds, without offset for costs or fees), and (iii) in addition, upon the completion of any Financing Transaction of the Company or its, parents, subsidiaries or affiliates, the Company shall grant to the Consultant the right and option to purchase that number of shares, units or interests in the Company determined by dividing five percent (5%) of the amount of the Financing Transaction by an amount equal to equal to the five-day WATP for the five (5) consecutive trading days immediately prior to the payment of Yukon Gold Corporation stock options. F-20 YUKON GOLD CORPORATION, INC. 8. COMMITMENTS AND CONTINGENCIES-Cont’d Such rights shall be exercisable, for a period of five (5) years, from date of issue and shall possess “most favored nation” registration rights, i.e., registration rights equal to the best/most favorable rights/treatment of any issued/outstanding registration rights provisions applicable to any securities of the Company, specifically including, but not limited to demand and “piggy back” registration rights, including the right to include such shares in any offering undertaken by the Company, i.e., “tag-along” rights. Such Fee shall be paid by the Company to the Consultant within ten (10) calendar days after the closing of each Financing Transaction, or, if such Financing Transaction closes in several tranches, within ten (10) calendar days after the closing of each tranche, until paid in full. On October 1, 2009 the Company’s board of directors ratified a letter agreement dated September 10, 2009 with a former officer to act as an agent to facilitate the sale of the Company’s Marg property and to secure bridge loan financing. The Company has agreed to pay the agent a fee equal to five percent (5%) of the transaction value of each completed transaction. The letter agreement has a term of three months. Subsequent to the quarter ended Oct 31, 2009 the letter agreement terminated. The Company is obligated to pay a fee of $11,550 (CAD $12,500) for the services provided by the agent on sale of the property. On October 1, 2009 the Company’s board of directors ratified a consulting agreement (the “Agreement”), dated September 20, 2009, with an individual to provide services as a special advisor (the “Consultant”). The Agreement states that the Consultant will receive 450,000 restricted common shares no later than ten (10) business days from the date of signing the Agreement. During the quarter and subsequent to the period ended October 31, 2009 the Company has not issued these shares to the Consultant but the Company has expensed the cost at fair value using guidance as per EITF 96-18. The Consultant is entitled to receive a cash fee of two and one-half percent (2.5%) on the aggregate value of a financing(s) or transaction(s) entered into by the Company during the term of the Agreement or within the twelve (12) months following the term of this Agreement if the discussions regarding the financial transaction(s) were initiated by the Consultant during the term of this Agreement. Further it was agreed that the Consultant would receive a bonus of up to 1,000,000 restricted common shares of the Company of any financing or transaction, such bonus to be awarded on transactions values (“TV”) as follows: (i) up to a $1,000,000 TV, 200,000 shares (ii) between a $1,000,000 up to a $6,000,000 TV, an additional 300,000 shares and (iii) over a $6,000,000 TV, an additional 500,000 shares. Upon receipt of an itemized invoice the Consultant will be reimbursed for all traveling and other actual legitimate expenses. The Agreement is for a three month minimum term and may be extended by the mutual agreement of both parties in writing. As of the date of these statements, the Consultant was not successful in raising any financing. F-21 YUKON GOLD CORPORATION, INC. 8. COMMITMENTS AND CONTINGENCIES-Cont’d On October 1, 2009 the Company’s board of directors ratified an engagement letter dated September 24, 2009 with two limited market dealers (collectively referred to herein as the “Agents”) to arrange a bridge financing, within two weeks of signing the engagement letter, in the amount of $500,000 related to the $400,000 due diligence payments agreed to in the Bellhaven MOU and to provide working capital. In exchange for the Agents successfully completing the bridge financing the Company agreed to pay the Agents collectively a fee of ten percent (10%) and issue common share purchase warrants (“Broker Warrants”) equal to ten percent (10%) of the total units sold by the Agents under the financing. Each Broker Warrant entitles the holder to acquire one additional common share of the Company for a period of 24 months from the date of issue exercisable at a price of $0.05 per share. The Company also agreed to reimburse the Agents for out of pocket expenses. The engagement letter has a term of six months and is non-exclusive. Either party may terminate the agreement upon 30 days written notice. As of the date of these statements, the Agents were not successful in raising any of the $500,000. On September 28, 2009 the Company entered into an employment agreement (“Agreement”) with Douglas Oliver (the “Employee”) to serve as it’s President and Chief Executive Officer. During the employment term, the Company will pay the Employee a base salary at the annual rate of one hundred and eighty thousand ($180,000) dollars per year ("Base Salary"). Half of the Employee’s Base Salary shall be deferred and shall accrue interest at the LIBOR rate plus five percent (5%). Deferred Base Salary shall be payable to the Employee with interest no sooner than the Cerro Quema gold project entering production but may be further deferred at the Employee’s discretion. In the event that this Agreement is terminated for any reason, the Employee shall be entitled to all deferred Base Salary, with interest, to be paid within three (3) months of such termination. The Agreement further states that the Employee immediately shall be awarded 250,000 shares of the Company’s common stock, however during the quarter and subsequent to the period ended October 31, 2009 the 250,000 shares have not been issued to the Employee, but the Company has expensed the cost at fair value using guidance as per EITF 96-18. The Employee acknowledges that such shares will be “restricted shares” subject to limitations on re-sale. The Employee further acknowledges that he will be considered as affiliate for purposes of Rule 144. The Company agrees to register such shares as part of any registration statement it files under the Securities Act of 1933. Additional stock options shall be awarded to Employee based upon the Company’s achieving certain production goals and in accordance with the Company’s 2006 Stock Option Plan. Employee and the Company shall agree upon the goals and option amounts within two (2) months of the execution of this Agreement. As of the date of these statements, the option amounts were not agreed upon. The Employeemay terminate employment at any time after providing forty-five (45) days’ prior written notice to the Company. The Company may terminate the Employee's employment without cause at any time after providing written notice to Employee and paying all unpaid salaries and benefits. F-22 YUKON GOLD CORPORATION, INC. 8. COMMITMENTS AND CONTINGENCIES-Cont’d In addition, an amount equal to twelve (12) months of Base Salary (at the rate in effect as of the date of the Employee’s termination without cause) will be paid to the Employee if this Agreement is terminated by the Company at any time prior to the second anniversary of the date of this Agreement. On October 23, 2009 the Company accepted a letter agreement (the “Agreement”) dated October 21, 2009 with an exclusive placement agent (the “Agent”) in connection with the offer and proposed sale (the “Financing(s)”) of the Company’s common shares (the “Equity Securities”) on an Efforts Basis. The Agreement continues until February 21, 2010 (the “Term”) with a further 24-month tail period (the “Tail Period”). For the Agents services the Company agrees to pay a cash placement fee (the “Cash Fee”) equal to seven percent (7%) of the gross proceeds of the Financing(s) completed during the Term, except for those completed under the consulting agreement dated September 20, 2009. In addition the Agent shall also receive broker warrants (the “Broker Warrants”) entitling the Agent to purchase from the Company such number of common shares as is equal to seven percent (7%) of the number of Equity Securities issued in the Financing (together with the Cash Fee set forth herein, the “Financing Fee”). The Broker Warrants shall be assignable and shall expire 24 months from the date of issuance. The exercise price of the Broker Warrants shall be equal to the purchase price of the Equity Securities sold under the Financing. For financings completed under the consulting agreement dated September 20, 2009, the Agent will receive 20% of the fees, cash and broker warrants, paid under said consulting agreement, payable upon closing of the financing. The Agreement states further that the Company grants to the Agent a first right of refusal to act as any future financings for a period of twelve (12) months commencing on the closing of the Financing. The Agreement also states that the Company shall pay to the Agent the Financing Fee in respect of each Financing completed or entered into during the Tail Period. As of the date of these statements, the Agent was not successful in raising any financing. On October 26, 2009 the Company entered into a letter agreement with a former officer to act as a consultant providing accounting and administration services for $1,849 (CDN$2,000) per month and to warehouse the Company records for $462 (CDN$500) per month. The Company further agreed to reimburse the consultant for any out of pocket expenses and that either party may give 30 days notice in writing of their intention to terminate the letter agreement. 9. RELATED PARTY TRANSACTIONS The Company and its subsidiary expensed a total of $nil in consulting fees & wages to three Company Directors, and No director or officer exercised stock options during the three month period ended F-23 YUKON GOLD CORPORATION, INC. RELATED PARTY TRANSACTIONS-Cont’d The Company and its subsidiary expensed a total of No director or officer exercised stock options during the three month period ended 10. DEMAND LOAN FROM DIRECTOR The Company received loans for $64,500 on September 21, 2009 and $37,500 on October 5, 2009 for a total of $102,000 during the quarter ended October 31, 2009 from a director of the Company which carries simple interest at the rate of seven percent (7%) of the outstanding principal balance per annum. The entire principal balance outstanding and any interest thereon shall be payable on demand by the holder of the Promissory Notes, but no later than three years from the date of the loan. 11. CHANGES IN DIRECTORS AND OFFICERS On May 4, 2009 Mr. Howard Barth resigned as a director of the Company. On May 13, 2009 the board of directors of YGC, the Company’s wholly owned Canadian subsidiary, appointed Mrs. Kathy Chapman Corporate Secretary of YGC. On June 19, 2009 the Company advised Mrs. Lisa Rose that her employment as Corporate Secretary and Administrator were terminated due to the down-sizing of the Company. On July 10, 2009 the Company advised Mrs. Kathy Chapman that her employment as Chief Administrative Officer of the Company would be terminated effective September 4, 2009 due to the down-sizing of the Company. Mrs. Chapman will remain Interim Corporate Secretary of the Company and Corporate Secretary of YGC, the Company’s wholly-owned Canadian subsidiary. On September 28, 2009 the board of directors accepted the resignation of J.L. Guerra, Jr. as President and Chief Executive Officer of the Company. Mr. Guerra, Jr. remains the Chairman of the Board of Directors of the Company. F-24 YUKON GOLD CORPORATION, INC. 11. CHANGES IN DIRECTORS AND OFFICERS-Cont’d On September 28, 2009 the board of directors appointed Mr. Douglas Oliver President and Chief Executive Officer and a director of the Company. On September 28, 2009 the board of directors appointed Mr. Paul Pitman Vice President of Corporate Development and Exploration, Corporate Secretary and a director of the Company. On October 21, 2009 Mr. Paul Pitman resigned as Vice President of Corporate Development and Exploration, Corporate Secretary and a director of the Company. On October 19, 2009 Mr. Robert Van Tassell resigned as a director and member of the Audit Committee of the Company. On October 23, 2009 the board of directors appointed Mr. Charles William Reed a director and member of the Audit Committee of the Company. On October 29, 2009 Mr. Kenneth J. Hill resigned as a director and member of both the Audit and Executive Committee of the Company and as a director of Yukon Gold Corp., the Company’s wholly owned Canadian subsidiary. 12. SUBSEQUENT EVENTS The company has reviewed On On On November 16, 2009, MANAGEMENT'S DISCUSSION AND ANALYSIS OF Discussion of Operations & Financial Condition Yukon Gold has no source of revenue and we continue to operate at a loss. We expect our operating losses to continue for so long as we remain in an exploration stage and perhaps thereafter. As at As described in greater detail below, the Company’s major endeavor over the year has been its effort to raise additional capital to meet its administrative expenses and pursue its exploration activities. The Company does not currently have sufficient working capital to continue as a reporting company in the United States and Canada. We are working urgently to obtain additional financing, which may entail the acquisition of additional properties in order to attract such financing. Gain on sale of mining property The only gain generated by the Company during the Net Loss The Company's expenses are reflected in the Consolidated Statements of Operations under the category of Operating Expenses. To meet the criteria of United States generally accepted accounting principles (“GAAP”), all exploration and general and administrative costs related to projects are charged to operations in the year incurred. The significant components of expense that have contributed to the total operating expense are discussed as follows: (a)General and Administrative Expense Included in operating expenses for the (b)Project Expense Included in operating expenses for the Agreement with Hinton Syndicate Concerning our Former Mount Hinton Property The following disclosure relates to our former property known as the “Mount Hinton” property. Our interest in the Mount Hinton property was sold on May 21, 2009. On July 7, 2002 YGC, the Company’s wholly owned subsidiary, entered into an option agreement with the Hinton Syndicate to acquire a 75% interest in the 273 unpatented mineral claims covering approximately 14,000 acres in the Mayo Mining District of Yukon, Canada. This agreement was replaced with a revised and amended agreement (the “Hinton Option Agreement”) dated July 7, 2005 which superseded the original agreement and amendments thereto. The new agreement was between the Company, its wholly owned subsidiary YGC and the Hinton Syndicate. The Hinton Option Agreement pertained to an “area of interest” which included the area within ten kilometres of the outermost boundaries of the 273 mineral claims, which constituted our mineral properties. Either party to the Hinton Option Agreement could stake claims outside the 273 mineral claims, but each must notify the other party if such new claims were within the “area of interest.” The non-staking party could then elect to have the new claims included within the Hinton Option Agreement. As of December 11, 2006, there were an additional 24 claims staked, known as the “Gram Claims” which became subject to the Hinton Option Agreement. On May 21, 2009, Gram Claims 1-24 were conveyed by the Company’s wholly owned subsidiary to a member of the Hinton Syndicate. On June 16, 2008 an additional 18 claims were staked (#25-#42), known as the “Gram Claims”, at a cost of $8,679 (CDN$8,887), which became subject to the Hinton Option Agreement. On May 5, 2009 the Company transferred all of its interest in Gram Claims 25-42 to a member of the Hinton Syndicate. On May 21, 2009, the Company, through its wholly owned subsidiary, YGC, sold its interest in the Mount Hinton Property to the Hinton Syndicate. All of the claims comprising the Mount Hinton Property were conveyed by the Company’s subsidiary to a member of the Hinton Syndicate. The Hinton Syndicate paid the Company (i) $110,306 (CDN$125,000) on May 21, 2009 and (ii) granted to the Company’s subsidiary a 2% “Net Smelter Royalty (an “NSR”) on the Mount Hinton Property claims. Such 2% NSR may be terminated at any time by payment to Yukon Gold of the following: In addition, Yukon Gold’s subsidiary assigned its work permit to a member of the Hinton Syndicate and the Hinton Syndicate became responsible for any reclamation costs imposed by the government of Yukon in connection with the work permit. As of May 21, 2009, Yukon Gold and its subsidiary have no further interest or obligations with respect to the Mount Hinton Property. Exploration During the year ended April 30, 2009, the Company completed its acquisition of the Marg property and currently owns it outright. The Marg Property consists of 402 contiguous mineral claims covering approximately 20,000 acres. Access to the claim group is possible either by helicopter, based in Mayo, Yukon Territory, Canada, located approximately 80 km to the southwest or by small aircraft to a small airstrip located near the Marg deposit. A 50 kilometer winter road from Keno City to the property boundary was completed in 1997. The camp site on the property provides accommodation for up to 12 people. Presently the hydroelectric power grid terminates at Keno City some 50km to the southwest and water is available from the Keno Ladue River, which flows through the property. .For more information regarding our exploration activities on our properties during the fiscal year ended April 30, 2009, see Item 2 "Description of Property" in the 10K filed for year ended April 30, 2009. As at Off-Balance Sheet Arrangement The Company has no Off-Balance Sheet Arrangement as of Contractual Obligations and Commercial Commitments a) The Marg Property In March 2005, the Company acquired rights to purchase 100% of the Marg Property, which consists of 402 contiguous mineral claims covering approximately 20,000 acres located in the Mayo Mining District of the Yukon Territory of Canada. Title to the claims is registered in the name of YGC. The Company assumed the rights to acquire the Marg Property under a Property Purchase Agreement (“Agreement”) with Atna Resources Ltd. (“Atna”). Under the terms of the Agreement the Company paid $119,189 (CDN$150,000) cash and 133,333 common shares as a down payment. The Company made payments under the Agreement for $43,406 (CDN$50,000) cash and an additional 133,333 common shares of the Company on December 12, 2005; $86,805 (CDN$100,000) cash and an additional 133,334 common shares of the Company on December 12, 2006. On December 12, 2007 the Company paid $98,697 (CDN$100,000) being the next payment then due. The Company On April 2, 2007 the Company accepted a proposed work program, budget and cash call schedule for the Marg project. The Company The fourth and final payment of $402,244 (CDN$380,000) was paid on August 15, 2007. On August 31, 2007 the Company re-allocated $537,864 (CDN$508,120) being the balance of the third cash call payment for the Mount Hinton 2007 Work Program from cash call funds previously allocated to the Marg Project. These On September 17, 2009, the Company, Bellhaven Copper and Gold, Inc. (“Bellhaven”) and Minera Cerro Quema S.A., a private company organized under the laws of Panama that is a subsidiary of Bellhaven (“Minera”) fully executed a Memorandum of Understanding (the “MOU”) dated as of September 15, 2009 pursuant to which Bellhaven granted to the Company an option to buy a 75% equity interest in Minera. Minera owns the Cerro Quema development stage gold project located the Tonosi, Province of Los Santos, Republic of Panamá. The MOU called for a 60-day due diligence period during which the Company was required to make a series of non-refundable deposits totaling $400,000 as milestones for due diligence and development of definitive documents . The total consideration for the Minera interest was $19,915,000, which included the purchase price and project financing to be provided by the Company. Upon exercise of the "Option to Purchase" Yukon Gold would own 75% of the outstanding shares of Minera and Bellhaven would hold the remaining 25%. The Property was also subject to a 2% NSR (net smelter royalty) in favor of Compania de Exploracion Minera S.A. and a 9% NPI in favor of Bellhaven. Yukon Gold agreed to purchase the 9% NPI from Bellhaven for consideration of $75,000, payable at Closing. While it performed due diligence, the Company was seeking financing for the transaction. On September 21, 2009 the Company paid $37,500 of the $75,000 being the first non-refundable due diligence deposit milestone. October 5, 2009 the Company paid the balance $37,500. Subsequent to the quarter ended October 31, 2009 the Company was unable to complete its due diligence, or to make the balance of the non-refundable due diligence deposits, or to raise the $19,915,000. On November 13, 2009 Bellhaven issued a press release stating that they were terminating the MOU with the Company. On October 1, 2009 the Company’s board of directors ratified a retainer agreement (the “Agreement”) dated August 28, 2009 with a Panamerican corporation (the “Consultant”) to provide certain exclusive advisory services for financing, acquisition, collaboration, product or services sales transactions and strategies, for a period of twelve (12) months (the “Term”) from the date of execution. If at any time during the Term the Company wishes to terminate the exclusivity of the Consultant, the Company will give the Consultant ten (10) days prior written notice and pay the Consultant $200,000. The Agreement states that a monthly cash fee of $50,000 and the Consultant’s out-of-pocket expenses shall accrue and be payable only at such time as the Company secures a minimum of $5,000,000 in financing during the Term of this agreement at which time the total amount accrued shall be due and payable in full without interest. In the event that the Company fails to timely pay any of the compensation, as defined in the Agreement, each shall bear interest at the rate of six percent (6%) until paid in full. The Consultant has the right upon written notice to the Company of its election to receive gold or other minerals in lieu of cash prior to or concurrent with the closing of any financing transactions (“Financing Transactions”). Compensation payable in kind shall not bear any interest. If an acquisition or divestiture is consummated during the Term of the Agreement or for a period of one (1) year thereafter, the Company shall pay a transaction fee (“TF”) to the Consultant based on the following transaction values (“TVs”): (i) 5% TF up to and including $1,000,000 TVs, plus (ii) 4% TF on all TVs from $1,000,000 to $1,999,999, plus (iii) 3% TF on all TVs from $2,000,000 to $2,999,999, plus (iv) 2% on all TVs from $3,000,000 to $3,999,999, plus (v) 1% on all TVs from $4,000,000 to $4,999,999, plus (vi) 1% on all TVs equal to and exceeding $5,000,000. During the Term of the Agreement or for a period of one (1) year after termination, the Company will pay the Consultant a finder’s fee equal to two percent (2%) of the total amount of each and every Financing Transaction successfully undertaken by the Company. In addition the Company shall grant to the Consultant options to purchase that number of shares of the Company’s common stock determined by multiplying two percent (2%) equal to the total number of equity shares placed/and or issued, or if convertible debt, two percent (2%) of the number of common equity shares as if the convertible debt was converted at its earliest possible date. Such options shall be exercisable for a period of five (5) years at an exercise price equal to the five-day weighted average trading price (WATP) for the five (5) consecutive trading days immediately prior to the granting of the Company’s stock options. In addition to the foregoing fees, the Company shall grant to the Consultant a fully-vested option (“Equity Fee”) to acquire a number of shares equal to eight and one-half percent (8.5%) of the total common shares issued and outstanding at the time of the execution of the Agreement. Such options shall be exercisable for a period of five (5) years at an exercise price equal to the five-day WATP for the five (5) consecutive trading days immediately prior to the granting of the Company’s stock options. The number of stock options shall be subject to any and all adjustments of the common shares during the five-year exercise period. Upon the Company entering into any definitive agreement, during the Term, to acquire any properties/projects, as defined in the Agreement, an additional fully-vested performance option shall be granted to the Consultant to acquire a number of shares equal to eight and one-half percent (8.5%) of the then issued and outstanding common shares of the Company. Such options shall be exercisable for a period of five (5) years at an exercise price equal to the five-day WATP for the five (5) consecutive trading days immediately prior to the execution of the definitive agreement. The number of performance options shall be subject to any and all adjustments of the common shares during the five-year exercise period. If any acquisition transaction is contemplated by the Company during the Term or for a period of one (1) year after the Company will grant to the Consultant the absolute right to participate, on a pro rata basis, in up to a ten percent (10%) interest in the Company’s acquisition. The Consultant shall also be responsible for all pro rata future development and operating costs of said acquisition when paid by the parties owning the other 90% interests. Notwithstanding anything within the Agreement to the contrary, any stock or equity-based compensation must be pre-cleared by the Toronto Stock Exchange (TSX). If any Financing Transaction(s) described in paragraphs 2 A and B of Schedule A to this Agreement are concluded during the Term, or for a period of one (1) year thereafter, provided such Financing Transaction(s) results from parties identified in writing by the Consultant in performing the Services, the Company will pay to the Consultant, or a designee of the Consultant, the following: (i) with respect to any equity financing, a cash fee equal to seven percent (7%) of the total amount of the Financing Transaction (gross proceeds, without offset for costs or fees), (ii) with respect to any debt financing, a cash fee equal to four percent (4%) of the total amount of such Financing Transaction (gross proceeds, without offset for costs or fees), and (iii) in addition, upon the completion of any Financing Transaction of the Company or its, parents, subsidiaries or affiliates, the Company shall grant to the Consultant the right and option to purchase that number of shares, units or interests in the Company determined by dividing five percent (5%) of the amount of the Financing Transaction by an amount equal to equal to the five-day WATP for the five (5) consecutive trading days immediately prior to the payment of Yukon Gold Corporation stock options. Such rights shall be exercisable, for a period of five (5) years, from date of issue and shall possess “most favored nation” registration rights, i.e., registration rights equal to the best/most favorable rights/treatment of any issued/outstanding registration rights provisions applicable to any securities of the Company, specifically including, but not limited to demand and “piggy back” registration rights, including the right to include such shares in any offering undertaken by the Company, i.e., “tag-along” ; rights. Such Fee shall be paid by the Company to the Consultant within ten (10) calendar days after the closing of each Financing Transaction, or, if such Financing Transaction closes in several tranches, within ten (10) calendar days after the closing of each tranche, until paid in full. On October 1, 2009 the Company’s board of directors ratified a letter agreement dated September 10, 2009 with a former officer to act as an agent to facilitate the sale of the Company’s Marg property and to secure bridge loan financing. The Company has agreed to pay the agent a fee equal to five percent (5%) of the transaction value of each completed transaction. The letter agreement has a term of three months. Subsequent to the quarter ended Oct 31, 2009 the letter agreement terminated. On October 1, 2009 the Company’s board of directors ratified a consulting agreement (the “Agreement”), dated September 20, 2009, with an individual to provide services as a special advisor (the “Consultant”). The Agreement states that the Consultant will receive 450,000 restricted common shares no later than ten (10) business days from the date of signing the Agreement. During the quarter and subsequent to the period ended October 31, 2009 the Company has not issued these shares to the Consultant but the Company has expensed the cost at fair value using guidance as per EITF 96-18. The Consultant is entitled to receive a cash fee of two and one-half percent (2.5%) on the aggregate value of a financing(s) or transaction(s) entered into by the Company during the term of the Agreement or within the twelve (12) months following the term of this Agreement if the discussions regarding the financial transaction(s) were initiated by the Consultant during the term of this Agreement. Further it was agreed that the Consultant would receive a bonus of up to 1,000,000 restricted common shares of the Company of any financing or transaction, such bonus to be awarded on transactions values (“TV”) as follows: (i) up to a $1,000,000 TV, 200,000 shares (ii) between a $1,000,000 up to a $6,000,000 TV, an additional 300,000 shares and (iii) over a $6,000,000 TV, an additional 500,000 shares. Upon receipt of an itemized invoice the Consultant will be reimbursed for all traveling and other actual legitimate expenses. The Agreement is for a three month minimum term and may be extended by the mutual agreement of both parties in writing. As of the date of these statements, the Consultant was not successful in raising any financing. On October 1, 2009 the Company’s board of directors ratified an engagement letter dated September 24, 2009 with two limited market dealers (collectively referred to herein as the “Agents”) to arrange a bridge financing, within two weeks of signing the engagement letter, in the amount of $500,000 related to the $400,000 due diligence payments agreed to in the Bellhaven MOU and to provide working capital. In exchange for the Agents successfully completing the bridge financing the Company agreed to pay the Agents collectively a fee of ten percent (10%) and issue common share purchase warrants (“Broker Warrants”) equal to ten percent (10%) of the total units sold by the Agents under the financing. Each Broker Warrant entitles the holder to acquire one additional common share of the Company for a period of 24 months from the date of issue exercisable at a price of $0.05 per share. The Company also agreed to reimburse the Agents for out of pocket expenses. The engagement letter has a term of six months and is non-exclusive. Either party may terminate the agreement upon 30 days written notice. As of the date of these statements, the Agents were not successful in raising any of the $500,000. On September 28, 2009 the Company entered into an employment agreement (“Agreement”) with Douglas Oliver (the “Employee”) to serve as it’s President and Chief Executive Officer. During the employment term, the Company will pay the Employee a base salary at the annual rate of one hundred and eighty thousand ($180,000) dollars per year ("Base Salary"). Half of the Employee’s Base Salary shall be deferred and shall accrue interest at the LIBOR rate plus five percent (5%). Deferred Base Salary shall be payable to the Employee with interest no sooner than the Cerro Quema gold project entering production but may be further deferred at the Employee’s discretion. In the event that this Agreement is terminated for any reason, the Employee shall be entitled to all deferred Base Salary, with interest, to be paid within three (3) months of such termination. The Agreement further states that the Employee immediately shall be awarded 250,000 shares of the Company’s common stock, however during the quarter and subsequent to the period ended October 31, 2009 the 250,000 shares have not been issued to the Employee, but the Company has expensed the cost at fair value using guidance as per EITF 96-18. The Employee acknowledges that such shares will be “restricted shares” subject to limitations on re-sale. The Employee further acknowledges that he will be considered as affiliate for purposes of Rule 144. The Company agrees to register such shares as part of any registration statement it files under the Securities Act of 1933. Additional stock options shall be awarded to Employee based upon the Company’s achieving certain production goals and in accordance with the Company’s 2006 Stock Option Plan. Employee and the Company shall agree upon the goals and option amounts within two (2) months of the execution of this Agreement. As of the date of these statements, the option amounts were not agreed upon. The Employeemay terminate employment at any time after providing forty-five (45) days’ prior written notice to the Company. The Company may terminate the Employee's employment without cause at any time after providing written notice to Employee and paying all unpaid salaries and benefits. In addition, an amount equal to twelve (12) months of Base Salary (at the rate in effect as of the date of the Employee’s termination without cause) will be paid to the Employee if this Agreement is terminated by the Company at any time prior to the second anniversary of the date of this Agreement. On October 23, 2009 the Company accepted a letter agreement (the “Agreement”) dated October 21, 2009 with an exclusive placement agent (the “Agent”) in connection with the offer and proposed sale (the “Financing(s)”) of the Company’s common shares (the “Equity Securities”) on an Efforts Basis. The Agreement continues until February 21, 2010 (the “Term”) with a further 24-month tail period (the “Tail Period”). For the Agents services the Company agrees to pay a cash placement fee (the “Cash Fee”) equal to seven percent (7%) of the gross proceeds of the Financing(s) completed during the Term, except for those completed under the consulting agreement dated September 20, 2009. In addition the Agent shall also receive broker warrants (the “Broker Warrants”) entitling the Agent to purchase from the Company such number of common shares as is equal to seven percent (7%) of the number of Equity Securities issued in the Financing (together with the Cash Fee set forth herein, the “Financing Fee”). The Broker Warrants shall be assignable and shall expire 24 months from the date of issuance. The exercise price of the Broker Warrants shall be equal to the purchase price of the Equity Securities sold under the Financing. For financings completed under the consulting agreement dated September 20, 2009, the Agent will receive 20% of the fees, cash and broker warrants, paid under said consulting agreement, payable upon closing of the financing. The Agreement states further that the Company grants to the Agent a first right of refusal to act as any future financings for a period of twelve (12) months commencing on the closing of the Financing. The Agreement also states that the Company shall pay to the Agent the Financing Fee in respect of each Financing completed or entered into during the Tail Period. As of the date of these statements, the Agent was not successful in raising any financing. On October 26, 2009 the Company entered into a letter agreement with a former officer to act as a consultant providing accounting and administration services for $1,849 (CDN$2,000) per month and to warehouse the Company records for $462 (CDN$500) per month. The Company further agreed to reimburse the consultant for any out of pocket expenses and that either party may give 30 days notice in writing of their intention to terminate the letter agreement. Critical Accounting Policies The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, requires us to make estimates and assumptions that affect reported amounts of assets and liabilities at the date of the financial statements, the reported amount of revenues and expenses during the reporting period and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and judgments, particularly those related to the determination of the estimated Canadian exploration tax credit receivable and accrued liabilities. To the extent actual results differ from those estimates, our future results of operations may be affected. Besides this critical accounting policy on use of estimates, we believe the following critical accounting policy affects the preparation of our consolidated financial statements. Acquisition, Exploration and Evaluation Expenditures The Company is an exploration stage mining company and has not yet realized any revenue from its operations. It is primarily engaged in the acquisition and exploration of mining properties. Mineral property exploration costs are expensed as incurred. Mineral property payments are capitalized only if the Company is able to allocate any economic value beyond proven and probable reserves. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property will be capitalized. For the purpose of preparing financial information, the Company is unable to allocate any economic value beyond proven and probable reserves and hence all property payments are considered to be impaired and accordingly written off to project expense. All costs associated with a property that has the potential to add to the Company’s proven and probable reserves are expensed until a final feasibility study demonstrating the existence of proven and probable reserves is completed. No costs have been capitalized in the periods covered by these financial statements. Once capitalized, such costs will be amortized using the units-of-production method over the estimated life of the probable reserve. Mineral property acquisition costs will also be capitalized in accordance with the FASB Emerging Issues Task Force (“EITF”) Issue 04-2 when management has determined that probable future benefits consisting of a contribution to future cash inflows have been identified and that adequate financial resources are available or are expected to be available as required to meet the terms of property acquisition and budgeted exploration and development expenditures. Mineral property payments are expensed as incurred if the criteria for capitalization is not met. To date, mineral property exploration costs have been expensed as incurred. As of the date of these financial statements, the Company has incurred only property payments and exploration costs which have been expensed. To date the Company has not established any proven or probable reserves on its mineral properties. CONTROLS AND PROCEDURES Disclosure Controls and Procedures. The Company's management, with the participation of the principal executive officer and principal financial officer, respectively, has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as at Internal Control Over Financial Reporting. There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended Limitations on the Effectiveness of Controls. We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. DISCLOSURE AND FINANCIAL CONTROLS AND PROCEDURES The board of directors has concluded that the Company's disclosure controls and procedures are effective. There have been no significant changes in these controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Internal financial controls and procedures have been designed under the supervision of the Company's board of PART II-OTHER INFORMATION Item 1. LEGAL PROCEEDINGS None. Item 1A. RISK FACTORS WE HAVE VERY LIMITED WORKING CAPITAL AND MAY NOT BE ABLE TO CONTINUE TO COMPLY WITH APPLICABLE REGULATORY REQUIREMENTS AND THE REQUIREMENTS OF THE EXCHANGES ON WHICH OUR SHARES TRADE. Yukon Gold does not have sufficient working capital to maintain its ongoing operations, to prepare and file regular reports required to meet the disclosure requirements of the Securities and Exchange Commission or the Ontario Securities Commission or to meet the requirements of the exchanges on which our stock trades. We run the risk of being de-listed on all exchanges on which our stock currently trades. On August 26, 2009, the Toronto Stock Exchange ("TSX"), announced that it would de-list the Company’s common shares, effective at the close of the market on September 25, 2009. The decision was based upon the Company’s failure to meet multiple listing requirements of the TSX. The Company On November 2, 2009 the Company’s stock began trading on NEX after successfully meeting its requirements. 2. WE MAY HAVE TO PURCHASE Yukon Gold must immediately secure additional financing to remain viable. Management of Yukon Gold believes that we must identify and purchase new mineral properties in order to obtain such financing. 3. WE DO NOT HAVE AN OPERATING BUSINESS. Yukon Gold has rights in certain mineral claims located in Yukon, Canada. To date we have done limited exploration of the property covered by our mineral claims. We do not have a mine or a mining business of any kind. There is no assurance that we will develop an operating business in the future. 4. WE HAVE NO SOURCE OF OPERATING REVENUE AND EXPECT TO INCUR SIGNIFICANT EXPENSES BEFORE ESTABLISHING AN OPERATING COMPANY, IF WE ARE ABLE TO ESTABLISH AN OPERATING COMPANY AT ALL. Currently, we have no source of revenue, we do not have working capital to complete our exploration programs (including feasibility studies) and we do not have any commitments to obtain additional financing. We have no operating history upon which an evaluation of our future success or failure can be made. Our ability to achieve and maintain profitability and positive cash flow is dependent upon: our ability to raise the capital necessary to conduct this exploration and preserve our interest our ability to raise capital to develop the Marg Property, establish a mining operation, and our ability to raise capital to purchase additional properties that may make our business Failure to raise the necessary capital to continue exploration and development could cause us to go out of business. 5. GOING CONCERN QUALIFICATION. The Company has included a “going concern” qualification in the Consolidated Financial Statements to the effect that we are an exploration stage company and have no established sources of revenue. In the event that we are unable to raise additional capital and/or locate mineral resources, as to which in each case there can be no assurance, we may not be able to continue our operations. In addition, the existence of the “going concern” qualification in our auditor’s report may make it more difficult for us to obtain additional financing. If we are unable to obtain additional financing, you may lose all or part of your investment. 6. THERE ARE PENNY STOCK SECURITIES LAW CONSIDERATIONS THAT COULD LIMIT YOUR ABILITY TO SELL YOUR SHARES. Our common stock is considered a "penny stock" and the sale of our stock by you will be subject to the "penny stock rules" of the Securities and Exchange Commission. The penny stock rules require broker-dealers to take steps before making any penny stock trades in customer accounts. As a result, our shares could be illiquid and there could be delays in the trading of our stock which would negatively affect your ability to sell your shares and could negatively affect the trading price of your shares. 7. OUR BUSINESS IS SUBJECT TO CURRENCY RISKS. The Company conducts the majority of its business activities in Canadian dollars. Consequently, the Company is subject to gains or losses due to fluctuations in Canadian currency relative to the US dollar. Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS None Item 3. DEFAULTS UPON SENIOR SECURITIES None. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. Item 5. OTHER INFORMATION The company has reviewed subsequent events up to December 10, 2009. On November 2, 2009 the Company’s common shares began trading on the NEX exchange. On November 13, 2009 Bellhaven issued a press release stating that they were terminating the MOU with the Company. On November 16, 2009, 2,036,180 warrants held by shareholders of the Company expired. Item 6. EXHIBITS & REPORTS ON FORM 8-K Exhibits Rule 13a-14(a)/15d-14(a)Certification of Chief Executive Officer. (a) Rule 13a-14(a)/15d-14(a)Certification of Chief Financial Officer. Current Report on Form 8-K "Item Current Report on Form 8-K "Item 8.01 - Other Events" dated August 28, 2009. SIGNATURE Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.TABLE OF CONTENTSPART I – FINANCIAL INFORMATION
(AN EXPLORATION STAGE MINING COMPANY)
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2009
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)TABLE OF CONTENTS
Page No. JulyOctober 31, 2009 (unaudited) and April 30, 2009(audited)2009 (audited) F-2 to F3 July 31,2009October 31, 2009 and JulyOctober 31, 2008 and the period from Inception to JulyOctober 31, 2009.F-4 threesix months ended July 31,2009October 31, 2009 and JulyOctober 31, 2008 and the period from Inception to JulyOctober 31, 2009.F-5 fromInceptionfrom Inception to JulyOctober 31, 2009F-6 to F8F9F-9F-10 to F-19F-25YUKON GOLD CORPORATION, INC.(An Exploration Stage Mining Company)Consolidated Balance SheetsAs at July 31, 2009 and April 30, 2009(Amounts expressed in US Dollars)(Unaudited-Prepared by Management) July 31, 2009 April 30, 2009 $ $ ASSETS (unaudited) (audited) CURRENT ASSETS Cash and cash equivalents 17,261 9,349 Prepaid expenses and other (Note 4) 18,290 64,852 - 35,551 74,201 PROPERTY, PLANT AND EQUIPMENT 34,717 33,898 70,268 108,099 See condensed notes to the interim consolidated financial statements.APPROVED ON BEHALF OF THE BOARD/s/ J. L. Guerra, Jr. J. L. Guerra, Jr., Director and ChairmanF-2
(An Exploration Stage Mining Company)
Consolidated Balance Sheets
As at JulyOctober 31, 2009 and April 30, 2009
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management) October 31, 2009 April 30, 2009 $ $ (unaudited) (audited) ASSETS CURRENT ASSETS Cash and cash equivalents 39,402 9,349 Prepaid expenses and other (Note 4) 19,344 64,852 - 58,746 74,201 PROPERTY, PLANT AND EQUIPMENT 31,773 33,898 90,519 108,099 See condensed notes to the interim consolidated financial statements. APPROVED ON BEHALF OF THE BOARD /s/ J. L. Guerra, Jr. J. L. Guerra, Jr., Director and Chairman /s/ Douglas Oliver Douglas Oliver, CEO and Director YUKON GOLD CORPORATION, INC. (An Exploration Stage Mining Company) Consolidated Balance Sheets As at October 31, 2009 and April 30, 2009 (Amounts expressed in US Dollars) (Unaudited-Prepared by Management) October 31, April 30, 2009 2009 $ $ (unaudited) (audited) LIABILITIES CURRENT LIABILITIES Loan from director (Note 10) 102,000 - Accounts payable and accrued liabilities 308,109 234,134 Obligation under Capital Leases 2,680 2,617 Total Current Liabilities 412,789 236,751 Long -Term Portion of: Obligations under Capital Lease 2,104 2,471 TOTAL LIABILITIES 414,893 239,222 GOING CONCERN (Note 2) COMMITMENTS AND CONTINGENCIES (Note 8) RELATED PARTY TRANSACTIONS (Note 9) SUBSEQUENT EVENTS (Note 12) SHAREHOLDERS’ DEFICIENCY CAPITAL STOCK (Note 6) 4,049 4,049 ADDITIONAL PAID-IN CAPITAL 14,916,339 14,866,470 ACCUMULATED OTHER COMPREHENSIVE LOSS (100,688 ) (95,220 ) DEFICIT, ACCUMULATED DURING THE EXPLORATION STAGE (15,144,074 ) (14,906,422 ) (324,374 ) (131,123 ) 90,519 108,099 See condensed notes to the interim consolidated financial statements.
F-3
(An Exploration Stage Mining Company)
Consolidated Statements of Operations
For the six months and three months ended October 31, 2009 and October 31, 2008 and
the period from Inception to October 31, 2009
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management) July 31, April 30, 2009 2009 $ $ LIABILITIES (unaudited) (audited) CURRENT LIABILITIES Accounts payable and accrued liabilities 212,644 234,134 Obligation under Capital Leases 2880 2,617 Total Current Liabilities 215,524 236,751 Long -Term Portion of: Obligations under Capital Lease 2,753 2,471 TOTAL LIABILITIES 218,277 239,222 GOING CONCERN (Note 2) COMMITMENTS AND CONTINGENCIES (Note 8) RELATED PARTY TRANSACTIONS (Note 9) SHAREHOLDERS’ DEFICIENCY CAPITAL STOCK (Note 6) 4,049 4,049 ADDITIONAL PAID-IN CAPITAL 14,868,413 14,866,470 ACCUMULATED OTHER COMPREHENSIVE LOSS (102,094 ) (95,220 ) DEFICIT, ACCUMULATED DURING THE EXPLORATION STAGE (14,918,377 ) (14,906,422 ) (148,009 ) (131,123 ) 70,268 108,099 See condensed notes to the interim consolidated financial statements.F-3 For the For the For the For the six months six months three months three months Cumulative ended ended ended ended since inception October 31, 2009 October 31, 2008 October 31, 2009 October 31, 2008 $ $ $ $ $ OPERATING EXPENSES General and administration 7,125,738 330,360 689,617 216,229 322,807 Project expenses 9,070,481 12,104 1,723,638 6,650 551,729 Exploration Tax Credit (605,716 ) - - - - Amortization 167,143 5,494 21,119 2,818 10,638 Loss on sale/disposal of capital assets 5,904 - - - - Gain on sale of mining property (Note7) (110,306) (110,306 ) - - - TOTAL OPERATING EXPENSES 15,653,244 237,652 2,434,374 225,697 885,174 LOSS BEFORE INCOME TAXES (15,653,244 ) (237,652 ) (2,434,374 ) (225,697 ) (885,174 ) Income taxes recovery 509,170 - - - - NET LOSS (15,144,074 ) (237,652 ) (2,434,374 ) (225,697 ) (885,174 ) Loss per share – basic and diluted (0.01 ) (0.08 ) (0.01 ) (0.03 ) Weighted average common shares outstanding 40,489,532 31,592,332 40,489,535 33,650,629 See condensed notes to the interim consolidated financial statements
F-4
(An Exploration Stage Mining Company)
Consolidated Statements of OperationsCash Flows
For the three monthssix month period ended JulyOctober 31, 2009 and JulyOctober 31, 2008 and
the period from Inception to JulyOctober 31, 2009
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management) For the three For the three month month period period Cumulative ended ended since July 31, July 31, inception 2009 2008 $ $ $ OPERATING EXPENSES General and administration 6,909,509 114,131 366,810 Project expenses 9,063,831 5,454 1,171,909 Exploration Tax Credit (605,716 ) - - Amortization 164,325 2,676 10,481 Loss on sale/disposal of property, plant and equipment 5,904 - Gain on sale of mining property (note 7) (110,306 ) (110,306 ) TOTAL OPERATING EXPENSES 15,427,547 11,955 1,549,200 LOSS BEFORE INCOME TAXES (15,427,547 ) (11,955 ) (1,549,200 ) Income taxes recovery 509,170 - - NET LOSS (14,918,377 ) (11,955 ) (1,549,200 ) Loss per share - basic and diluted (0.00 )) (0.05 )) Weighted average common shares outstanding 40,489,535 29,534,035 For the six For the six month period month period ended ended Cumulative October 31, October 31, Since Inception 2009 2008 $ $ $ CASH FLOWS FROM OPERATING ACTIVITIES Net loss for the period (15,144,074 ) (237,652 ) (2,434,374 ) Items not requiring an outlay of cash: Amortization and impairment 167,143 5,494 21,119 Loss on sale/disposal of capital assets 5,904 - - Registration rights penalty expense 188,125 - - Shares issued for property payment 772,826 - 58,887 Common shares issued for settlement of severance liability to ex-officer 113,130 - Stock-based compensation 1,298,574 5,869 24,823 Compensation expense on issue of warrants 140,892 - 17,813 Issue of shares for professional services 860,023 - 7,500 Gain on sale of mining property (110,306 ) (110,306 ) - Issue of units against settlement of debts 20,077 - - Decrease (Increase) in prepaid expenses and other (18,187 ) 52,168 73,140 Increase (Decrease) in accounts payable and accrued liabilities 307,619 57,475 4,336 (Increase) Decrease in restricted cash - - 817,092 NET CASH USED IN OPERATING ACTIVITIES (11,398,254 ) (226,952 ) (1,409,664 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment (222,309 ) - (38,978 ) Sale of available for sale securities - 31,500 Short-term Deposit - - (36,530 ) Proceeds from sale of mining property 110,306 110,306 NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (112,003 ) 110,306 (44,008 ) CASH FLOWS FROM FINANCING ACTIVITIES Repayments from a shareholder 1180 - - Proceeds (Repayments) from Demand promissory notes 302,000 102,000 - Proceeds from Convertible promissory notes converted 200,500 - - Proceeds from the exercise of stock options 61,000 - - Proceeds from exercise of warrants – net 450,309 - - Proceeds from subscription of warrants – net 525,680 - - Proceeds from subscription /issuance of units/shares – net 10,082,190 44,000 578,109 Proceeds (Repayments) from capital lease obligation 5,088 - (2,097) )) NET CASH PROVIDED BY FINANCING ACTIVITIES 11,627,947 146,000 576,012 EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES (78,288 ) 699 (116,315 ) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS FOR THE QUARTER 39,402 30,053 (993,975 ) Cash and cash equivalents, beginning of quarter - 9,349 1,255,620 CASH AND CASH EQUIVALENTS, END OF QUARTER 39,402 39,402 261,645 INCOME TAXES PAID - - INTEREST PAID - - See condensed notes to the interim consolidated financial statements
F-5See condensed notes to the interim consolidated financial statements Consolidated Statements of Changes in Stockholders’ Equity (Deficiency) Deficit, Accumulated Accumulated Number of Common Additional during the Other Common Shares Paid-in Subscription Exploration Comprehensive Comprehensive Shares Amount Capital for Warrants Stage Income (loss) Income (loss) # $ $ $ $ $ $ 2,833,377 154,063 - - - - - - - 1,142 - - - - - - - - 604 604 - - - (124,783 ) (124,783 ) - 2,833,377 154,063 1,142 - (124,783 ) (124,179 ) 604 1,435,410 256,657 - - - - - - 2,855 - - - (240,855 ) (5,778 ) - - - - 2,737,576 (404,265 ) 404,265 - - - 1,750,000 175 174,825 - - - 300,000 30 114,212 - - - - - - - - (12,796 ) (12,796 ) - - - - (442,906 ) (442,906 ) - 8,815,508 882 697,299 - (567,689 ) (455,702 ) (12,192 ) 133,333 13 99,987 - - - - 76,204 8 57,144 - - - - F-6 YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Consolidated Statements of Changes in Stockholders’ Equity (Deficiency)
From Inception to October 31, 2009
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management) - - - - - 9,717 9,717 - - - - (808,146 ) (808,146 ) - 9,025,045 903 854,430 - (1,375,835 ) (798,429 ) (2,475 ) 216,416 8,830 369,215 37 203,031 24,336 2 13,384 12,168 1 6,690 150,000 15 130,485 490,909 49 269,951 149,867 15 82,412 200,000 20 109,980 59,547 6 44,654 14,000 2 11,998 76,525 8 57,386 150,000 15 151,485 133,333 13 99,987 34,306 4 25,905 10,000 1 8,771 101,150 10 76,523 F-7 YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Consolidated Statements of Changes in Stockholders’ Equity (Deficiency)
From Inception to October 31, 2009
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)
F-8 YUKON GOLD CORPORATION, INC. (An Exploration Stage Mining Company) Consolidated Statements of Changes in Stockholders’ Equity (Deficiency) From Inception to October 31, 2009 (Amounts expressed in US Dollars) (Unaudited-Prepared by Management) Issuance of common shares for property payment 133,334 13 99,987 Issuance of common shares for professional services 160,000 16 131,184 Issuance of common shares for professional services 118,800 12 152,052 Issue of shares for flow-through warrants 200,000 20 153,980 (154,000 ) Issue of shares for special warrants 404,000 41 375,679 (371,680 ) Issue of 2,823,049 flow- through warrants -net 1,916,374 Issue of 334,218 unit special warrants-net 230,410 Issue of 3,105,358 common shares for 2,823,049 flow through warrants 3,105,358 310 1,916,064 (1,916,374 ) Issue of 367,641 common shares for 334,218 unit special warrants 367,641 37 230,373 (230,410 ) Registration rights penalty expense 188,125 Foreign currency translation (58,446 ) (58,446 ) Net loss for the year (3,703,590 ) (3,703,590 ) Balance April 30, 2007 22,883,137 2,288 10,949,726 0 (6,935,382 ) (3,762,036 ) (63,608 ) Shares for property payment 136,364 13 57,239 Stock based compensation 584,328 Unrealized gain on available-for-sale securities net of deferred taxes 9,000 9,000 543,615 flow through units 543,615 54 227,450 1,916,666 units-net 1,916,666 192 698,110 1,071,770 flow through units 1,071,770 108 449,379 2,438,888 units-net 2,438,888 244 1,036,622 Expenses relating to issue of units (141,080 ) Compensation expense on issue of warrants 123,079 Foreign currency translation 251,082 251,082 Net loss for the year (4,953,775 ) (4,953,775 ) Balance as of April 30, 2008 28,990,440 2,899 13,984,853 (11,889,157 ) (4,693,693 ) 196,474 Shares for property payment 476,189 48 58,839 Shares for property payment 6,838,906 684 187,916 Stock based compensation 31,858 Compensation expense on issue of warrants 17,813 4,134,000 flow through shares 4,134,000 413 577,696 Issuance of shares for professional services 50,000 5 7,495 Realized gain on available-for-sale securities (9,000 ) ( 9,000 ) Foreign currency translation (282,694 ) (282,694 ) Net loss for the period (3,017,265 ) (3,017,265 ) - Balance as of April 30, 2009 40,489,535 4,049 14,866,470 (14,906,422 ) (3,308,959 ) (95,220 ) Stock based compensation 5,869 Subscription for 1,100,000 shares @$0.04 per share 44,000 Foreign currency translation (5,468 ) (5,468 ) Net loss for the period (237,652 ) (237,652 ) Balance as of October 31, 2009 40,489,535 4,049 14,916,339 (15,144,074 ) (243,120 ) (100,688 ) See condensed notes to the interim consolidated financial statements F-4F-9
(An Exploration Stage Mining Company)Consolidated Statements of Cash FlowsFor the three month period ended July 31, 2009 and July 31, 2008 and the period from Inception to July 31, 2009(Amounts expressed in US Dollars)(Unaudited-Prepared by Management) For the three month For the three Cumulative period month period Since ended ended Inception July 31, 2009 July 31, 2008 $ $ $ CASH FLOWS FROM OPERATING ACTIVITIES Net loss for the period (14,918,377 ) (11,955 ) (1,549,200 ) Items not requiring an outlay of cash: Amortization and impairment 164,325 2,676 10,481 Loss on sale/disposal of capital assets 5,904 - - Registration rights penalty expense 188,125 - - Shares issued for property payment 772,826 - 58,887 Common shares issued for settlement ofseverance liability to ex-officer 113,130 - Stock-based compensation 1,294,648 1,943 15,611 Compensation expense on issue of warrants 140,892 - 17,813 Issue of shares for professional services 860,023 - 7,500 Gain on sale of mining property (110,306 ) (110,306 ) - Issue of units against settlement of debts 20,077 - - Decrease (Increase) in prepaid expenses and other (17,133 ) 53,515 (5,331 ) Increase (Decrease) in accounts payable and accrued liabilities 212,154 (38,714 ) 237,142 (Increase) Decrease in restricted cash - - 211,528 NET CASH USED IN OPERATING ACTIVITIES (11,273,712 ) (102,841 ) (995,569 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment (222,309 ) - (38,978 ) Sale of available for sale securities - 31,500 (Investment) sale in available for sale securities - - (42,969 ) Proceeds from sale of mining property 110,306 110,306 NET CASH PROVIDED BY (USED IN) INVESTINGACTIVITIES (112,003 ) 110,306 (50,447 ) CASH FLOWS FROM FINANCING ACTIVITIES Repayments from a shareholder 1180 - - Proceeds (Repayments) from Demand promissory notes 200,000 - - Proceeds from Convertible promissory notes converted 200,500 - - Proceeds from the exercise of stock options 61,000 - - Proceeds from exercise of warrants – net 450,309 - - Proceeds from subscription of warrants – net 525,680 - - Proceeds from issuance of units/shares – net 10,038,190 - 578,109 Proceeds (Repayments) from capital lease obligation 5,088 - (1,761 )) NET CASH PROVIDED BY FINANCING ACTIVITIES 11,481,947 - 576,348 EFFECT OF FOREIGN CURRENCYEXCHANGE RATE CHANGES (78,971 ) 447 (31,569 ) NET INCREASE (DECREASE) IN CASH AND CASHEQUIVALENTS FOR THE QUARTER 17,261 7,912 (501,237 ) Cash and cash equivalents, beginning of quarter - 9,349 1,255,620 CASH AND CASH EQUIVALENTS, END OF QUARTER 17,261 17,261 754,383 INCOME TAXES PAID - - INTEREST PAID - - See condensed notes to the interim consolidated financial statementsF-5YUKON GOLDCORPORATION, INC.(AnExploration StageMiningCompany)ConsolidatedStatements ofChanges inStockholders’ Equity(Deficiency)FromInception to July 31, 2009(Amountsexpressed in USDollars)(Unaudited-Prepared byManagement) Deficit, Accumulated Accumulated Number of Common Additional during the Other Common Shares Paid-in Subscription Exploration Comprehensive Comprehensive Shares Amount Capital for Warrants Stage Income (loss) Income (loss) # $ $ $ $ $ $ Issuance of Common shares 2,833,377 154,063 - - - - - Issuance of warrants - - 1,142 - - - - Foreign currency translation - - - - 604 604 Net loss for the year - - - (124,783 ) (124,783 ) - Balance as of April 30, 2003 2,833,377 154,063 1,142 - (124,783 ) (124,179 ) 604 Issuance of Common shares 1,435,410 256,657 - - - - Issuance of warrants - - 2,855 - - - Shares repurchased (240,855 ) (5,778 ) - - - - Recapitalization pursuant to reverse acquisition 2,737,576 (404,265 ) 404,265 - - - Issuance of Common shares 1,750,000 175 174,825 - - - Issuance of Common shares for Property Payment 300,000 30 114,212 - - - Foreign currency translation - - - - - (12,796 ) (12,796 ) Net loss for the year - - - - (442,906 ) (442,906 ) - Balance as of April 30, 2004 8,815,508 882 697,299 - (567,689 ) (455,702 ) (12,192 ) Issuance of Common shares for Property Payment 133,333 13 99,987 - - - - Issuance of common shares on Conversion ofConvertiblePromissory note 76,204 8 57,144 - - - - F-6YUKON GOLD CORPORATION, INC.(An Exploration Stage Mining Company)Consolidated Statements of Changes in Stockholders’ Equity (Deficiency)From Inception to July 31, 2009(Amounts expressed in US Dollars)(Unaudited -Prepared by Management) Foreign currency translation - - - - 9,717 9,717 Net loss for the year - - - - (808,146 ) (808,146 ) - Balance as of April 30, 2005 9,025,045 903 854,430 - (1,375,835 ) (798,429 ) (2,475 ) Stock based compensation - Directors and officers 216,416 Stock based compensation - Consultants 8,830 Issue of common shares and Warrants on retirement ofDemand Promissory note 369,215 37 203,031 Units issued to an outside company for professional servicessettlement 24,336 2 13,384 Units issued to an officer for professional services settlement 12,168 1 6,690 Issuance of common shares for professional services 150,000 15 130,485 Units issued to shareholder 490,909 49 269,951 Units issued to a director 149,867 15 82,412 Units issued to outside subscribers 200,000 20 109,980 Issuance of common shares on Conversion of ConvertiblePromissory notes 59,547 6 44,654 Issuance of common shares on Exercise of warrants 14,000 2 11,998 Issuance of common shares on Conversion of ConvertiblePromissory notes 76,525 8 57,386 Private placement of shares 150,000 15 151,485 Issuance of Common shares for property payment 133,333 13 99,987 Issuance of common shares on Conversion of ConvertiblePromissory notes 34,306 4 25,905 Issuance of common shares on Exercise of warrants 10,000 1 8,771 Issuance of common shares on Conversion of Convertible 101,150 10 76,523 F-7YUKON GOLD CORPORATION, INC.(An Exploration Stage Mining Company)Consolidated Statements of Changes in Stockholders’ Equity (Deficiency)From Inception to April 30, 2009(Amounts expressed in US Dollars)(Unaudited -Prepared by Management)Promissory notes Issue of 400,000 Special Warrants net 371,680 Issue of 200,000 flow through warrants 154,000 Brokered private placement of shares- net 5,331,327 533 2,910,375 Brokered Private placement of flow through Shares- net 25,000 2 13,310 Exercise of stock options 10,000 1 5,499 Foreign currency translation - - - (2,687 ) (2,687 ) Net loss for the year - - - (1,855,957 ) (1,855,957 ) - Balance at April 30, 2006 16,366,728 1,637 5,301,502 525,680 (3,231,792 ) (1,858,644 ) (5,162 ) Exercise of warrants 10,000 1 8,986 Exercise of warrants 45,045 5 40,445 Exercise of warrants 16,000 2 14,278 Common shares issued for settlement of severance liability toex-officer 141,599 14 113,116 Exercise of warrants 43,667 4 39,364 Exercise of warrants 17,971 2 15,937 Exercise of warrants 43,667 4 38,891 Exercise of warrants 16,000 2 14,251 Exercise of warrants 158,090 16 141,616 Issue of common shares for property payment 43,166 4 53,841 Exercise of warrants 64,120 6 57,863 Exercise of warrants 61,171 6 53,818 Exercise of stock options 24,000 2 17,998 Issuance of common shares for professional services 342,780 34 438,725 Brokered private placement of units-net 400,000 40 363,960 Brokered private placement of units- net 550,000 55 498,923 Stock based compensation-Directors and Officers 451,273 Exercise of stock options 50,000 5 37,495 F-8YUKON GOLD CORPORATION, INC.(An Exploration Stage Mining Company)Consolidated Statements of Changes in Stockholders’ Equity (Deficiency)From Inception to April 30, 2009(Amounts expressed in US Dollars)(Unaudited -Prepared by Management)Issuance of common shares for property payment 133,334 13 99,987 Issuance of common shares for professional services 160,000 16 131,184 Issuance of common shares for professional services 118,800 12 152,052 Issue of shares for flow-through warrants 200,000 20 153,980 (154,000 ) Issue of shares for special warrants 404,000 41 375,679 (371,680 ) Issue of 2,823,049 flow- through warrants -net 1,916,374 Issue of 334,218 unit special warrants-net 230,410 Issue of 3,105,358 common shares for 2,823,049 flow throughwarrants 3,105,358 310 1,916,064 (1,916,374 ) Issue of 367,641 common shares for 334,218 unit specialwarrants 367,641 37 230,373 (230,410 ) Registration rights penalty expense 188,125 Foreign currency translation (58,446 ) (58,446 ) Net loss for the year (3,703,590 ) (3,703,590 ) Balance April 30, 2007 22,883,137 2,288 10,949,726 0 (6,935,382 ) (3,762,036 ) (63,608 ) Shares for property payment 136,364 13 57,239 Stock based compensation 584,328 Unrealized gain on available-for-sale securities net of deferredtaxes 9,000 9,000 543,615 flow through units 543,615 54 227,450 1,916,666 units-net 1,916,666 192 698,110 1,071,770 flow through units 1,071,770 108 449,379 2,438,888 units-net 2,438,888 244 1,036,622 Expenses relating to issue of units (141,080 ) Compensation expense on issue of warrants 123,079 Foreign currency translation 251,082 251,082 Net loss for the year (4,953,775 ) (4,953,775 ) Balance as of April 30, 2008 28,990,440 2,899 13,984,853 (11,889,157 ) (4,693,693 ) 196,474 Shares for property payment 476,189 48 58,839 Shares for property payment 6,838,906 684 187,916 Stock based compensation 31,858 Compensation expense on issue of warrants 17,813 4,134,000 flow through shares 4,134,000 413 577,696 Issuance of shares for professional services 50,000 5 7,495 Realized gain on available-for-sale securities (9,000 ) ( 9,000 ) Foreign currency translation (282,694 ) (282,694 ) Net loss for the period (3,017,265 ) (3,017,265 ) - Balance as of April 30, 2009 40,489,535 4,049 14,866,470 (14,906,422 ) (3,308,959 ) (95,220 ) Stock based compensation 1,943 Foreign currency translation (6,874 ) 6,874 ) Net loss for the period (11,955 ) (11,955 ) Balance as of July 31, 2009 40,489,535 4,049 14,868,413 (14,918,377 ) (18,829 ) (102,094 ) See condensed notes to the interim consolidated financial statementsF-9YUKON GOLD CORPORATION, INC.(An Exploration Stage Mining Company)
Notes to Interim Consolidated Financial StatementsJulyOctober 31, 2009
(Amounts expressed in US Dollars)
(Unaudited – Prepared by Management)the information and footnotes required bynecessary for a fair presentation of financial position, results of operations and cash flows in conformity with U.S. generally accepted accounting principles for complete financial statements. In(GAAP); however, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, all adjustments (consisting of all recurring accruals) considered necessary for a fair presentation have been included. Operatingstatement of the results for the interim period are not necessarily indicative of the results that may be expected for the year ended April 30, 2009. Interimperiods. The condensed interim consolidated financial statements should be read in conjunction with the consolidated financial statements and Notes thereto together with management’s discussion and analysis of financial condition and results of operations contained in the Company’s annual auditedreport on Form 10-K for the year ended April 30, 2009. In the opinion of management, the accompanying condensed interim consolidated financial statements.statements reflect all adjustments of a normal recurring nature considered necessary to fairly state the financial position of the Company at October 31, 2009 and April 30, 2009, the results of its operations for the three- and six-month periods ended October 31, 2009 and October 31, 2008, and its cash flows for the six-month periods ended October 31, 2009 and October 31, 2008. In addition, some of the Company’s statements in this quarterly report on Form 10-Q may be considered forward-looking and involve risks and uncertainties that could significantly impact expected results. The results of operations for the six -month period ended October 31, 2009 are not necessarily indicative of results to be expected for the full year.
(An Exploration Stage Mining Company)
Notes to Interim Consolidated Financial StatementsJulyOctober 31, 2009
(Amounts expressed in US Dollars)
(Unaudited – Prepared by Management)$6,797$9,381 (CDN$7,324)10,149) being Goods & Services tax receivable from the Federal Government of Canada. Included in “prepaidprepaid expenses and other”other is also a deposit of $nil (prior year: $148,928 (CDN $150,000) with a contractor for diamond drilling at drill sites to be selected by the Company. Also included in prepaid expenses is an amount of $6,932 (CDN$7,500) being the NEX yearly listing fee.
(An Exploration Stage Mining Company)
Notes to Interim Consolidated Financial StatementsJulyOctober 31, 2009
(Amounts expressed in US Dollars)
(Unaudited – Prepared by Management)ThreeSix months ended JulyOctober 31, 2009didhas not issueissued any shares during the threesix month period ended JulyOctober 31, 20092009.
(An Exploration Stage Mining Company)
Notes to Interim Consolidated Financial StatementsJulyOctober 31, 2009
(Amounts expressed in US Dollars)
(Unaudited – Prepared by Management)
(An Exploration Stage Mining Company)
Notes to Interim Consolidated Financial StatementsJulyOctober 31, 2009
(Amounts expressed in US Dollars)
(Unaudited – Prepared by Management)tenyearstenyears (or such shorter or longer period as is permitted by the TSX) (the “Option Period”).ThreeSix month period ended JulyOctober 31, 2009threesix month period ended JulyOctober 31, 2009.threesix month period ended JulyOctober 31, 2009, the Company has recognized in the financial statements, stock-based compensation costs as per the following details. The fair value of each option used for the purpose of estimating the stock compensation is based on the grant date using the Black-Scholes option pricing model with the following weighted average assumptions:
(An Exploration Stage Mining Company)
Notes to Interim Consolidated Financial Statements
October 31, 2009
(Amounts expressed in US Dollars)
(Unaudited – Prepared by Management)YUKON GOLD CORPORATION, INC.(An Exploration Stage Mining Company)Notes to Interim Consolidated Financial StatementsJuly 31, 2009(Amounts expressed in US Dollars)(Unaudited – Prepared by Management)6.6. STOCK BASED COMPENSATION-Cont’d 19- 20- 28- 15- 28- 18- 14- 21- 25- 8- 28- Jan Mar Mar Aug Sept Dec Jan Feb Mar Apr July 2007 2007 2007 2007 2007 2007 2008 2008 2008 2008 2008 TOTAL Risk free rate 4.5% 4.5% 4.5% 5% 4.5% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% Volatility factor 94.49% 57.48% 98.67% 91.68% 92.20% 101.61% 45.19% 95.77% 94.92% 94.49% 97.44% Stock-based �� compensation cost expensed during the period ended July 31, 2009 $1,943 $1,943 Unexpended Stock based compensation cost deferred over the vesting period $nil 19- 20- 28- 15- 28- 18- 14- 21- 25- 8- 28- Jan Mar Mar Aug Sept Dec Jan Feb Mar Apr July 2007 2007 2007 2007 2007 2007 2008 2008 2008 2008 2008 TOTAL Risk free rate 4.5% 4.5% 4.5% 5% 4.5% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% Volatility factor 94.49% 57.48% 98.67% 91.68% 92.20% 101.61% 45.19% 95.77% 94.92% 94.49% 97.44% Stock-based compensation cost expensed during the period ended July 31, 2009 $5,869 $5,869 Unexpended Stock based compensation cost deferred over the vesting period $nil JulyOctober 31, 2009 there was $nil of unrecognized expenses related to non-vested stock-based compensation arrangements granted. The stock-based compensation expense for the threesix month period ended JulyOctober 31, 2009 was $1,943.$5,869.CLAIMS:CLAIMSF-15YUKON GOLD CORPORATION, INC.(An Exploration Stage Mining Company)Notes to Interim Consolidated Financial StatementsJuly 31, 2009(Amounts expressed in US Dollars)(Unaudited – Prepared by Management)7.SALE OF MOUNT HINTON MINING PROPERTY CLAIMS-Cont’dPaymentsayments made by the Company to JulyOctober 31, 2009 is as follows:
(An Exploration Stage Mining Company)
Notes to Interim Consolidated Financial Statements
October 31, 2009
(Amounts expressed in US Dollars)
(Unaudited – Prepared by Management)PROPERTY PAYMENTS On execution of the July 7, 2002 Agreement $ 19,693 (CDN$ 25,000) Paid On July 7, 2003 $ 59,078 (CDN$ 75,000) Paid On July 7, 2004 $118,157 (CDN$ 150,000) Paid On January 2, 2006 $125,313 (CDN$ 150,000) Paid On July 7, 2006 $134,512 (CDN$ 150,000) Paid On July 7, 2007 $141,979 (CDN$ 150,000) Paid On July 7, 2008 $146,484 (CDN$ 150,000) Paid TOTAL $745,216 (CDN$850,000) WORK PROGRAM-expenditures to be incurred in the following periods;July 7/02 to July 6/03 $ 118,157 (CDN$ 150,000) Incurred July 7/03 to July 6/04 $ 196,928 (CDN$ 250,000) Incurred July 7/04 to July 6/05 $ 256,006 (CDN$ 325,000) Incurred July 7/05 to Dec. 31/06 $ 667,795 (CDN$ 750,000) Incurred Jan. 1/07 to Dec. 31/07 $ 937,383 (CDN$ 1,000,000) Incurred Jan. 1/08 to Dec. 31/08 $1,047,779 (CDN$ 1,250,000)**Deferred Jan. 1/09 to Dec. 31/09 $1,392,111 (CDN$ 1,500,000) TOTAL $4,616,159 (CDN$5,225,000) F-16 F-16
(An Exploration Stage Mining Company)
Notes to Interim Consolidated Financial StatementsJulyOctober 31, 2009
(Amounts expressed in US Dollars)
(Unaudited – Prepared by Management)If the payment is made to Yukon Gold within the 12-month12-$106,294 month anniversary of the Closing: $89,453(CDN$(CDN$115,000) If the payment is made to Yukon Gold after the 12-month12-$129,402 month anniversary of the Closing but before the 24-month24-(CDN$140,000) month anniversary of the Closing: $129,930(CDN$140,000) If the payment is made to Yukon Gold after the 24-month24-$152,509 month anniversary of the Closing but before the 36-month36-(CDN$165,000) month anniversary of the Closing: $153,132(CDN$165,000) If the payment is made to Yukon Gold after the 36-month36-$175,617 month anniversary of the Closing but before the 48-month48-(CDN$190,000) month anniversary of the Closing: $176,334(CDN$190,000) If the payment is made to Yukon Gold after the 48-month48-month anniversary of the Closing, it shall be increasedby $23,202increasedby $23,107 (CDN$25,000) for each 12-month periodfollowingperiodfollowing the 49-month anniversary of the Closing
(An Exploration Stage Mining Company)
Notes to Interim Consolidated Financial StatementsJulyOctober 31, 2009
(Amounts expressed in US Dollars)
(Unaudited – Prepared by Management)
8.8.COMMITMENTS AND CONTINGENCIES has agreed to make subsequent payments under the Agreement of: $167,645 (CDN$200,000) in cash and/or common shares of the Company (or some combination thereof to be determined) on or before December 12, 2008. On December 4, 2008 the Company and Atna Resources Ltd. (“Atna”) entered into a letter agreement (the “Amendment Agreement”) amending the purchase agreement by which the Company acquired its Marg Property (the “Marg Acquisition Agreement”). Under the terms of the Marg Acquisition Agreement the Company was required to pay to Atna $167,645 (CDN$200,000) (in cash or shares of the Company’s common stock) on December 12, 2008. In lieu of making such payment, the Amendment Agreement permitted the Company to pay Atna $19,980 (CDN$25,000) in cash on December 12, 2008 (paid) and $188,600 (CDN$225,000) (payable in cash or shares of the Company’s common stock) on April 30, 2009. On April 30, 2009, the Company issued to Atna 6,838,906 common shares which represent $188,600 (CDN $225,000), whereby the common shares were valued at $0.0276 (CDN $0.0329) each. Upon the commencement of commercial production at the Marg Property, the Company will pay to Atna $838,223$924,300 (CDN$1,000,000) in cash and/or common shares of the Company, or some combination thereof to be determined.
(An Exploration Stage Mining Company)
Notes to Interim Consolidated Financial StatementsJulyOctober 31, 2009
(Amounts expressed in US Dollars)
(Unaudited – Prepared by Management)re-allocatedreallocated funds were not needed for the Marg Project. On January 23, 2008 the Company was refunded $388,524 (CDN$390,000) as these funds were not needed for the Marg Project.
(An Exploration Stage Mining Company)
Notes to Interim Consolidated Financial Statements
October 31, 2009
(Amounts expressed in US Dollars)
(Unaudited – Prepared by Management)
(An Exploration Stage Mining Company)
Notes to Interim Consolidated Financial Statements
October 31, 2009
(Amounts expressed in US Dollars)
(Unaudited – Prepared by Management)
(An Exploration Stage Mining Company)
Notes to Interim Consolidated Financial Statements
October 31, 2009
(Amounts expressed in US Dollars)
(Unaudited – Prepared by Management)
(An Exploration Stage Mining Company)
Notes to Interim Consolidated Financial Statements
October 31, 2009
(Amounts expressed in US Dollars)
(Unaudited – Prepared by Management)ThreeSix month period ended JulyOctober 31, 2009$66,339$4,593 to threetwo of its officers.JulyOctober 31, 2009.
(An Exploration Stage Mining Company)
Notes to Interim Consolidated Financial Statements
October 31, 2009
(Amounts expressed in US Dollars)
(Unaudited – Prepared by Management)
9.ThreeSix month period ended JulyOctober 31, 2008$47,637$80,015 in consulting fees & wages to five Company Directors, and $85,248$174,159 to five of its officers.JulyOctober 31, 2008. SUBSEQUENT EVENTS
(An Exploration Stage Mining Company)
Notes to Interim Consolidated Financial Statements
October 31, 2009
(Amounts expressed in US Dollars)
(Unaudited – Prepared by Management) its subsequent events up to September 18th,December 10, 2009. The subsequent events are as follows:August 4,November 2, 2009 the Company recognizedCompany’s common shares began trading on the expiration of 240,000 options granted to a former director of the Company and cancelled 100,000 options granted to such former director.NEX exchange.AugustNovember 13, 2009 Bellhaven issued a press release stating that they were terminating the MOU with the Company.1,426,9612,036,180 warrants held by shareholders of the Company expired.On August 26, 2009 the Company’s mailing address changed to 139 Grand River St. N., PO Box 510, Paris, Ontario Canada N3L 3T6. As of August 26, 2009, the Company relinquished its office in Toronto, Ontario.On August 26, 2009, the Toronto Stock Exchange ("TSX"), announced that it would de-list the Company’s common shares, effective as of the close of market on September 25, 2009. The delisting was imposed for failure by the Company to meet multiple listing requirements of TSX. The Company is appealing this decision.On September 2, 2009, the Ontario Securities Commission issued a “cease trade” order covering the Company’s shares because the Company had failed to timely file its annual report. The cease trade order was lifted as of September 15, 2009 upon filing by the Company of its annual report on Form 10-K for the year ended April 30, 2009.F-19F-25
FINANCIAL CONDITION AND RESULTS OF OPERATION
FOR THE THREESIX MONTH PERIOD
ENDED JULYOCTOBER 31, 2009JulyOctober 31, 2009, we had accumulated losses of $14,918,377.$15,144,074. These losses raise substantial doubt about our ability to continue as a going concern. Our ability to emerge from the exploration stage and conduct mining operations is dependent, in large part, upon our raising additional equity financing.SELECTED INFORMATION Three months Three months ended Three months ended ended July 31, 2009 July 31, 2008 October 31,2009 October 31,2008 Revenues Nil Net Loss $ 11,955 $ 1,549,200 $225,697 $885,174 Loss per share-basic and diluted $ (0.00 ) $ (0.05 ) $ (0.01) $ (0.03) Six months As at As at ended July 31, 2009 April 30, 2009 October 31, 2009 October 31,2008 Revenues Nil Net Loss $237,652 $2,434,374 Loss per share-basic and diluted $(0.01) $ (0.08) As at October 31, 2009 April 30, 2009 Total Assets $ 70,268 108,099 $90,519 $108,099 Total Liabilities $ 218,277 239,222 $414,893 $239,222 Cash dividends declared per share Nil Nil Nil threesix month period ended JulyOctober 31, 2009 was the sale of the Mount Hinton property for a total cash consideration of $110,306 (CDN$125,000). As all costs incurred in acquisition and exploration had been expensed, the entire cash proceeds are recognized as gain during the quarter.20threesix months ended JulyOctober 31, 2009 is general and administrative expense of $114,131$330,360 as compared to $366,810$689,617 for the threesix months ended JulyOctober 31, 2008. General and administrative expense decreased substantially due to Management’s endeavor to reduce costs.threesix months ended JulyOctober 31, 2009 is project expenses of $5,454$12,104 as compared with $1,171,909$1,723,638 for the threesix months ended JulyOctober 31, 2008. Project expense was a significant expense in the prior period where it representsrepresented approximately 75.6%70.8% of the total operating expense for the threesix months ended July,October 31, 2008. The Company incurred very little costs during this quarter due to lack of funding.21If the payment is made to Yukon Gold within the 12-month12-$106,294 month anniversary of the Closing: $89,453(CDN$(CDN$115,000) If the payment is made to Yukon Gold after the 12-month12-$129,402 month anniversary of the Closing but before the 24-month24-(CDN$140,000) month anniversary of the Closing: $129,930(CDN$140,000) If the payment is made to Yukon Gold after the 24-month24-$152,509 month anniversary of the Closing but before the 36-month36-(CDN$165,000) month anniversary of the Closing: $153,132(CDN$165,000) If the payment is made to Yukon Gold after the 36-month36-$175,617 month anniversary of the Closing but before the 48-month48-(CDN$190,000) month anniversary of the Closing: $176,334(CDN$190,000) If the payment is made to Yukon Gold after the 48-month48-month anniversary of the Closing, it shall be increasedby $23,202increasedby $23,107 (CDN$25,000) for each 12-month periodfollowingperiodfollowing the 49-month anniversary of the Closing 22Liquidity and Capital ResourcesThe following table summarizes the Company's cash flows and cash in hand:Liquidity and Capital Resources The following table summarizes the Company's cash flows and cash in hand: The following table summarizes the Company's cash flows and cash in hand: July 31, 2009 July 31, 2008 October 31, 2009 October 31, 2008 Cash and cash equivalent $ 17,261 $ 754,383 $ 39,402 $ 261,645 Working capital (deficit) $ (179,973 ) $ 623,616 $ (354,043 ) $ 269,361 Cash used in operating activities $ (102,841 ) $ (995,569 ) $ (226,952 ) $ (1,409,664 ) Cash provided by (used in) investing activities $ 110,306 $ (50,447 ) Cash provided (used) in investing activities $ 110,306 $ (44,008 ) Cash provided in financing activities -- $ 576,348 $ 146,000 $ 576,012 JulyOctober 31, 2009 the Company had working capital deficit of $(179,973)$(354,043) as compared to a working capital of $623,616$269,361 in the previous period. During the current period the Company did not raise any funds.raised $44,000 from subscription of shares and received demand loan of $102,000 carrying interest of 7% per annum from a director of the Company. The Company however sold all its interests in the Mount Hinton Property for a consideration of $110,306 (CDN $125,000).JulyOctober 31, 2009 and April 30, 2009. has agreed to make subsequent payments under the Agreement of: $167,645 (CDN$200,000) in cash and/or common shares of the Company (or some combination thereof to be determined) on or before December 12, 2008. On December 4, 2008 the Company and Atna Resources Ltd. (“Atna”) entered into a letter agreement (the “Amendment Agreement”) amending the purchase agreement by which the Company acquired its Marg Property (the “Marg Acquisition Agreement”). Under the terms of the Marg Acquisition Agreement the Company was required to pay to Atna $167,645 (CDN$200,000) (in cash or shares of the Company’s common stock) on December 12, 2008. In lieu of making such payment, the Amendment Agreement permitted the Company to pay Atna $19,980 (CDN$25,000) in cash on December 12, 2008 (paid) and $188,600 (CDN$225,000) (payable in cash or shares of the Company’s common stock) on April 30, 2009. On April 30, 2009, the Company issued to Atna 6,838,906 common shares which represent $188,600 (CDN $225,000), whereby the common shares were valued at $0.0276 (CDN$0.0329) each. Upon the commencement of commercial production at the Marg Property, the Company will pay to Atna $928,074$924,300 (CDN$1,000,000) in cash and/or common shares of the Company, or some combination thereof to be determined.23 has paid cash calls in the amount of $2,100,528 (CDN$2,281,880) for the 2007 Work Program. The Company had approximately $515,561 (CDN$550,000) on deposit left over from the 2006 cash call schedule. On May 15, 2007 the Company paid $703,037 (CDN$750,000), on June 15, 2007 the Company paid $703,037 (CDN$750,000), and on July 15, 2007 the Company paid $703,037 (CDN$750,000) being three of the four cash call payments.re-allocatedreallocated funds were not needed for the Marg Project. On January 23, 2008 the Company was refunded $388,524 (CDN$390,000) as these funds were not needed for the Marg Project.24(a) JulyOctober 31, 2009. Based on such evaluation, the principal executive officer and principal financial officer of the Company, respectively, have concluded that, as of the end of the current quarter, the Company's disclosure controls and procedures are effective. (b) JulyOctober 31, 2009 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. (c) directors and reviewed by an independent auditor.directors. The internal financial controls provide reasonable assurance regarding the reliability of the Company's financial reporting and preparation of financial statements in accordance with generally accepted accounting principals. There have been no significant changes in these controls or in other factors that could significantly affect these controls since they were instituted, including any corrective actions with regard to significant deficiencies and material weaknesses.1. 25iswas unsuccessful at appealing this decision.decision and at the close of the market on September 25, 2009 the Company was de-listed from the TSX.ADDITIONADDITIONAL MINERAL PROPERTIES TO SECURE FINANCNG AND REMAIN VIABLE.inthesein these mineral claims;operatethisoperate this mine in a profitable manner; and.moreattractivemore attractive to investors in exploration stage mining companies.2631.1 31.2 32.1
In addition, the following report isreports are incorporated by reference.2.015.02 - CompletionDeparture of AcquisitionDirectors or DispositionPrincipal Officers; Election of Assets"Directors; Appointment of Principal Officers" dated May 21, 2009
September 29, 2009.27Current Report on Form 8-K"Item 8.01 - Other Events, and Item 3.01 - Notice of De-Listing or Failure to Satisfy a Continued Listing Rule or Standard" dated September 22, 2009. By:/s/ Douglas Oliver By:/s/ J.L. Guerra, Jr.Dated: September 18,December 14, 2009 J. L. Guerra, Jr.Douglas Oliver Chief Executive Officer By:/s/ Rakesh Malhotra Rakesh Malhotra Chief Financial Officer 28