YUKON GOLD CORPORATION, INC.
(AN EXPLORATION STAGE MINING COMPANY)
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 2010
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Interim Consolidated Balance Sheets
As at ~~October~~July 31, ~~2009~~2010 (unaudited) and April 30, ~~2009~~2010 (audited)
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Interim Consolidated Balance Sheets
As at July 31, 2010 (unaudited) and April 30, 2010 (audited) (Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Interim Consolidated Statements of Operations
For the ~~six months and~~ three months ended ~~October~~July 31, 2010 and July 31, 2009 and ~~October 31, 2008 and~~
the period from Inception to ~~October~~July 31, ~~2009~~2010
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Interim Consolidated Statements of Cash Flows
For the ~~six~~three month period ended ~~October~~July 31, 2010 and July 31, 2009 and ~~October 31, 2008 and~~
the period from Inception to ~~October~~July 31, ~~2009~~2010
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)

YUKON GOLDCORPORATION, INC.
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)

Promissory note

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 of Demand Promissory note
369,215 37 203,031
Units issued to an outside company for professional services settlement
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 Convertible Promissory 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 Convertible

Promissory 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 Convertible Promissory 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-7
(AnExploration StageMiningCompany)
InterimConsolidatedStatements ofChanges inStockholders’Deficiency
FromInception to July 31, 2010
(Amountsexpressed in USDollars)

YUKON GOLDCORPORATION, INC.
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)

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

F-8
(AnExploration StageMiningCompany)
InterimConsolidatedStatements ofChanges inStockholders’Deficiency
FromInception to July 31, 2010
(Amountsexpressed in USDollars)

YUKON GOLDCORPORATION, INC.
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
(AnExploration StageMiningCompany)
InterimConsolidatedStatements ofChanges inStockholders’Deficiency
FromInception to July 31, 2010
(Amountsexpressed in USDollars)

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Condensed Notes to Interim Consolidated Financial Statements
~~October~~July 31, ~~2009~~2010
(Amounts expressed in US Dollars)
(Unaudited – Prepared by Management)

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 information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with U.S. generally accepted accounting principles (GAAP); however, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for a fair statement of the results for the interim periods. The ~~condensed~~ interim consolidated financial statements should be read in conjunction with the consolidated financial statements and ~~Notes~~notes thereto together with management’s discussion and analysis of financial condition and results of operations contained in the Company’s annual report on Form 10-K for the year ended April 30, ~~2009.~~2010. In the opinion of management, the accompanying ~~condensed~~ interim consolidated financial statements reflect all adjustments of a normal recurring nature considered necessary to fairly state the financial position of the Company at ~~October~~July 31, ~~2009~~2010 and April 30, ~~2009,~~2010, the results of its operations for the ~~three- and six-month~~three-month periods ended ~~October~~July 31, ~~2009~~2010 and ~~October~~July 31, ~~2008,~~2009, and its cash flows for the ~~six-month~~three-month periods ended ~~October~~July 31, ~~2009~~2010 and ~~October~~July 31, ~~2008.~~2009. 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~~three-month period ended ~~October~~July 31, ~~2009~~2010 are not necessarily indicative of results to be expected for the full year.

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.

The Company's interim consolidated 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. Further, the Company’s subsidiary has been ordered by an Ontario Superior Court of Justice to pay a penalty of $116,832 (CDN $120,138) for early termination of its office lease in Toronto, Ontario. 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. On August 31, 2010 the Company entered into an Agreement with Lance Capital Ltd. (Lance), an Ontario Canada corporation, pursuant to which, among other things, Lance is assisting the the Company in the settlement of certain debts of the Company and providing bridge financing, as more particularly described in Note 12 Subsequent Events.

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Condensed Notes to Interim Consolidated Financial Statements
July 31, 2010
(Amounts expressed in US Dollars)
(Unaudited – Prepared by Management)

These interim 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 interim consolidated financial statements.

~~YUKON GOLD CORPORATION, INC.~~
~~(An Exploration Stage Mining Company)~~
~~Notes to Interim Consolidated Financial Statements~~
~~October 31, 2009~~
~~(Amounts expressed in US Dollars)~~
~~(Unaudited – Prepared by Management)~~

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 initially capitalized in accordance with the ASC 805-20-55-37, previously referenced as EITF 04-2 when incurred. The Company assesses the carrying costs for impairment under Accounting Standards 930 Extractive Activities – Mining (AS 930) at each fiscal quarter end. An impairment is recognized when the sum of the expected undiscounted future cash flows is less than the carrying amount of the mineral property. Impairment losses, if any, are measured as the excess of the carrying amount of the mineral property over its estimated fair value. When it has been determined that a mineral property can be economically developed as a result of establishing proven and ~~development~~probable reserves, the costs incurred to develop such property will be capitalized. Once capitalized, such costs will be amortized using the units-of-production method over the estimated life of ~~its mining~~the probable reserves. If mineral properties ~~located in~~are subsequently abandoned or impaired, any capitalized costs will be charged to operations. The Company assesses the ~~Yukon Territory in Canada.~~carrying costs for impairment at each fiscal quarter end. The Company has ~~not yet~~ determined ~~whether these properties contain mineral reserves~~ that all property payments are ~~economically recoverable. The business of mining~~impaired 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.~~accordingly has written off the acquisition costs to project expense.

Included in prepaid expenses and other is an amount of ~~$9,381~~$11,428 (CDN$~~10,149)~~11,751) being Goods & Services tax receivable from the Federal Government of Canada. Included in prepaid expenses and 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.

~~40,489,535~~41,839,535 Common ~~shares.~~
shares (41,839,535 at April 30, 2010).

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 ~~has not~~ issued ~~any~~1,100,000 common shares.

On September 28, 2009 the Company entered into an employment agreement (“Agreement”) with Douglas Oliver (the “Employee”) to serve as its President and Chief Executive Officer. As per the terms of the said agreement, the Company issued to the Employee 250,000 common shares ~~during~~of the ~~six month~~Company’s common stock, 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.

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.

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 tenyears (or such shorter or longer period as is permitted by the TSX) (the “Option Period”).~~

~~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 ~~six~~year ended April 30, 2010.

~~For this six~~The company did not issue any stock options during the three month period ended ~~October~~July 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:2010.

As of ~~October 31, 2009~~April 30, 2010 there was $nil of unrecognized expenses related to non-vested stock-based compensation arrangements granted. The stock-based compensation expense for the ~~six~~three month period ended ~~October~~July 31, ~~2009~~2010 was ~~$5,869.~~$nil.

On June 24, 2009 ~~the Company cancelled~~ 200,000 stock options ~~granted to~~held by a former officer ~~of the Company.~~were forfeited.

On August 4, 2009 ~~the Company recognized the expiration of 240,000~~340,000 stock options ~~granted to~~held by a former director ~~of the Company and cancelled 100,000 options granted to such former director.~~were forfeited.

On October 24, 2009 the Company cancelled 200,000 stock options ~~issued to an officer of the Company.~~held by a former officer.

~~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 ayments made by the Company to October 31, 2009 is as follows:

~~SALE OF MOUNT HINTON MINING PROPERTY CLAIMS-Cont’d~~On December 15, 2009 250,000 stock options held by a former director expired.

On January 19, 2010 350,000 stock options held by a former director were forfeited.

On January 29, 2010 400,000 stock options held by a former director were forfeited.

~~WORK PROGRAM-expenditures to be incurred in~~Cancellation/Expiration/Forfeiture of Stock Options:

**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.CLAIMS

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~~YGC of the following:

	If the payment is made to ~~Yukon Gold~~YGC within the ~~12-~~	~~$106,294~~
~~month~~12-month anniversary of the Closing: (This payment was not made within the 12-month anniversary of the Closing.)	$111,835 (CDN$115,000)

	If the payment is made to ~~Yukon Gold~~YGC after the ~~12-~~	~~$129,402~~
~~month~~12-month anniversary of the Closing but before the ~~24-~~	~~(CDN$140,000)~~
~~month~~24-month anniversary of the Closing:	$136,147 (CDN$140,000)

	If the payment is made to ~~Yukon Gold~~YGC after the ~~24-~~	~~$152,509~~
~~month~~24-month anniversary of the Closing but before the ~~36-~~	~~(CDN$165,000)~~
~~month~~36-month anniversary of the Closing:	$160,459 (CDN$165,000)

	If the payment is made to ~~Yukon Gold~~YGC after the ~~36-~~	~~$175,617~~
~~month~~36-month anniversary of the Closing but before the ~~48-~~	~~(CDN$190,000)~~
~~month~~48-month anniversary of the Closing:	$184,771 (CDN$190,000)

	If the payment is made to ~~Yukon Gold~~YGC after the ~~48-~~
~~month~~48-month anniversary of the Closing, it shall be increased
by ~~$23,107~~$24,312 (CDN$25,000) for each 12-month period
following the 49-month anniversary of the ~~Closing~~Closing.

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.

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 as amended 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 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)~~(CDN$0.0329) each. Upon the commencement of commercial production at the Marg Property, the Company will pay to Atna ~~$924,300~~$972,479 (CDN$1,000,000) in cash and/or common shares of the Company, or some combination thereof to be determined.

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.

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 reallocated 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.

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~~period covered by this report, the ~~Company~~following agreement was ~~unable to complete its due diligence, or to make the balance~~terminated by mutual consent 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.~~

parties, as described in Note 12 – Subsequent Events. 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~~wished to terminate the exclusivity of the Consultant, the Company ~~will~~could 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~~the Agreement, at which time the total amount accrued ~~shall~~would 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~~ 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~~July 31, ~~2009~~2010 on August 10, 2010 the ~~letter agreement terminated. The~~Consultant and the Company ~~is obligated~~signed an unconditional and absolute general release which terminated the Agreement.

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Condensed Notes to ~~pay a fee of $11,550 (CAD $12,500) for~~Interim Consolidated Financial Statements
July 31, 2010
(Amounts expressed in US Dollars)
(Unaudited – Prepared by Management)

Subsequent to the ~~services provided~~period covered by this report, the ~~agent on sale of~~Company has opened discussions to renegotiate and/or terminate the ~~property.~~

following agreement. 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~~July 31, ~~2009~~2010, 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.~~value. 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~~On December 20, 2009 the ~~date of these statements,~~agreement terminated and the Consultant was not successful in raising any financing. No services were provided under this agreement. The Company considers the agreement not consummated and has not issued the shares for that reason.

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 relatedSubsequent to the ~~$400,000 due diligence payments agreed to~~period covered by this report, the following agreement was terminated, as described 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.

Note 12 - Subsequent Events. On September 28, 2009 the Company entered into an employment agreement (“Agreement”) with Douglas Oliver (the “Employee”) to serve as ~~it’s~~its 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~~which were issued in the last quarter ~~and subsequent to~~of 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.~~year ending April 30, 2010. 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~~ Subsequent to the quarter ended July 31, 2010 on August 9, 2010 the Employee and 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.mutually agreed to terminate their Agreement without notice. The ~~Agreement continues until February 21, 2010 (the “Term”) with a further 24-month tail period (the “Tail Period”). For the Agents services~~Employee assigned all amounts owed by 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.Lance Capital Ltd.

On October 26, 2009 the Company entered into a letter agreement (the “Agreement”) with a former officer to act as a consultant providing accounting and administration services for ~~$1,849~~$1,945 (CDN$2,000) per month and to warehouse the Company records for ~~$462~~$486 (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.~~Agreement. Subsequent to the quarter ended July 31, 2010, on August 31, 2010, the consultant agreed to termination of the Agreement without notice and further agreed to accept $8,752 (CDN$9,000) as full payment for services rendered under the Agreement to be paid within 30 days. Lance Capital Ltd. agreed to advance the funds to the Company to cover this payment. See Note 12 - Subsequent Events herein.

The Company subsidiary YGC has been served by an Ontario Court order to pay a penalty of $116,832 (CDN $120,138) for early termination of its office lease. The Company’s former landlord had made the said claim in the Ontario Superior Court of Justice. On June 17, 2010 our subsidiary’s bank remitted $1,271 (CDN$1,307) to the Ontario Superior Court of Justice, being the balance of funds in YGC’s bank account.

The Company and its subsidiary expensed a total of $nil in consulting fees &and wages to three Company Directors, and ~~$4,593~~$55,896 to ~~two~~three of its officers.

No director or officer exercised stock options during the three month period ended ~~October~~July 31, ~~2009.~~

The Company and its subsidiary expensed a total of ~~$80,015~~$nil in consulting fees &and wages to ~~five~~three Company Directors and ~~$174,159~~$66,339 to ~~five~~three of its officers.

No director or officer exercised stock options during the three month period ended ~~October~~July 31, ~~2008.~~2009.

The Company received loans for $64,500 on September 21, 2009, ~~and~~ $37,500 on October 5, 2009, $8,000 on June 28, 2010, and $7,798 on July 20, 2010 for a total of ~~$102,000 during the quarter ended October 31, 2009~~$117,798 from a director of the Company. The Company issued Promissory Notes to the director which ~~carries~~carry 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. Subsequent to the quarter ended July 31, 2010, on August 6, 2010 the Company received a loan for $9,900 from this same director of the Company. The Company issued a Promissory Note to the director 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 Note, but no later than three years from the date of the loan. Subsequent to the quarter ended July 31, 2010, on August 10, 2010, the director assigned all of the demand loans, interest and expenses owed to the director to Lance Capital Ltd. See Note 12 - Subsequent Events for the assignment of this demand loan and interest.

On ~~May 4, 2009 Mr. Howard Barth resigned as~~August 6, 2010 the Company received a loan for $9,900 from a director of the Company. The Company issued a Promissory Note to the director 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 Note, but no later than three years from the date of the loan.

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~~August 9, 2010 Douglas Oliver, President 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~~CEO of the Company ~~would be terminated effective September 4, 2009~~(the Employee), and the Company mutually agreed to terminate their Agreement without notice. The Employee assigned all amounts due to ~~the down-sizing~~Lance Capital Ltd.

On August 10, 2010 a director assigned all of the ~~Company. Mrs. Chapman will remain Interim Corporate Secretary of~~demand loans, interest and expenses owed to the ~~Company and Corporate Secretary of YGC, the Company’s wholly-owned Canadian subsidiary.~~director to Lance Capital Ltd.

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.August 10, 2010 a debtor assigned an agreed debt totaling $66,923 to Lance Capital Ltd.

~~CHANGES IN DIRECTORS AND OFFICERS-Cont’d~~On August 10, 2010 a consultant and the Company signed an unconditional and absolute general release which terminated the Agreement dated August 28, 2009 with a Panamerican corporation.

On August 15, 2010 62,500 stock options granted to a consulting company expired.

On August 23, 2010 the Company changed its mailing address to 1226 White Oaks Blvd, Suite 10A, Oakville, Ontario L6H 2B9 Canada.

On August 31, 2010, a consultant agreed to termination of an Agreement dated October 26, 2009 without notice and further agreed to accept $8,752 (CDN$9,000) as full payment for services rendered under the Agreement to be paid within 30 days. Lance Capital Ltd. agreed to advance the funds to the Company to cover this payment .

As of August 31, 2010, Yukon Gold Corporation, Inc. (the “Company”) and Lance Capital Ltd, an Ontario company (“Lance”), entered into a Note Purchase and Security Agreement (the “Agreement”) pursuant to which the Company has issued to Lance a Secured Convertible Promissory Note with a face amount of $375,000, bearing interest at 5% per annum and convertible into common shares of the Company at a conversion rate of $0.0025 per share (the “Note”). The Note matures on December 31, 2011. The Note is secured by a first lien and security interest in the Marg Property, a group of mineral claims located in the Mayo Mining District of the Yukon Territory, Canada (the “Marg Property”). Upon registration of the lien, the Agreement will be complete. The Marg Property is owned by the Company’s wholly-owned Canadian subsidiary.

The Note was issued by the Company to Lance as consideration for: (i) the assumption by Lance of certain of the Company’s obligations to three creditors totaling $382,545 as of August 31, 2010 which amounts were settled for $356,835 and (ii) a loan from Lance to the Company of $18,165 to cover certain ongoing expenses of the Company. This note totaling $375,000 replaces the payables assumed by Lance and the loan of $18,165.

Lance is engaged in efforts to resolve outstanding obligations of the Company and raise working capital for the Company. In its sole discretion, Lance may continue to fund operating expenses of the Company for a limited period of time while it explores the feasibility of private placement or other financing for the Company. In the event that Lance exercises its option to convert the Note into Shares, Lance would become the principal shareholder of the Company and would effectively control the Company. Completion of the Agreement is awaiting registration of the lien.

On September ~~28, 2009~~2, 2010 the Company’s board of directors accepted the resignation of Rakesh Malhotra as Chief Financial Officer effective September 1, 2010. There were no material disagreements between Mr. Malhotra, the Company or its board with respect to the Company’s operations or public disclosures.

On September 2, 2010, the Company’s board of directors appointed ~~Mr. Douglas Oliver President and~~Mrs. Kathy Chapman, Chief ~~Executive~~Financial Officer and ~~a director~~Corporate Secretary of the Company.

~~On September 28, 2009~~ Mrs. Chapman is also the ~~board of directors appointed Mr. Paul Pitman Vice President of Corporate Development and Exploration,~~ Corporate Secretary ~~and a director~~ of ~~the Company.~~YGC.

~~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.

~~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.~~

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
FOR THE ~~SIX~~THREE MONTH PERIOD
ENDED ~~OCTOBER~~JULY 31, ~~2009~~2010

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 ~~October~~July 31, ~~2009,~~2010, we had accumulated losses of ~~$15,144,074.~~$15,509,342. 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.

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.

The only gain generated by the Company during the six month period ended October 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.

The Company's expenses are reflected in the Interim 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:

Included in operating expenses for the ~~six~~three months ended ~~October~~July 31, ~~2009~~2010 is general and administrative expense of ~~$330,360~~$65,267 as compared to ~~$689,617~~$114,131 for the ~~six~~three months ended ~~October~~July 31, ~~2008.~~2009. General and administrative ~~expense~~expenses have decreased substantially during the period ended July 31, 2010 as compared to the period ended July 31, 2009 due to ~~Management’s endeavor~~efforts by management to reduce costs.

Included in operating expenses for the ~~six~~three months ended ~~October~~July 31, ~~2009~~2010 is project expenses of ~~$12,104~~$nil as compared with ~~$1,723,638~~$5,454 for the ~~six~~three months ended ~~October~~July 31, ~~2008. Project expense was a significant expense in the prior period where it represented approximately 70.8% of the total operating expense for the six months ended October 31, 2008.~~2009. The Company has incurred ~~very~~ little ~~costs~~or no project expenses during ~~this quarter~~these periods due to lack of funding.

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.

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~~YGC retained a 2% ~~“Net Smelter Royalty (an “NSR”)~~NSR on the ~~Mount Hinton Property claims.~~property sold with the following provisions and rights. Such 2% NSR may be terminated at any time by payment to ~~Yukon Gold~~YGC of the following:

	If the payment is made to ~~Yukon Gold~~YGC within the ~~12-~~	~~$106,294~~
~~month~~12-month anniversary of the Closing: (This payment was not made within the 12-month anniversary of the Closing.)	$111,835 (CDN$115,000)

	If the payment is made to ~~Yukon Gold~~YGC after the ~~12-~~	~~$129,402~~
~~month~~12-month anniversary of the Closing but before the ~~24-~~	~~(CDN$140,000)~~
~~month~~24-month anniversary of the Closing:	$136,147 (CDN$140,000)

	If the payment is made to ~~Yukon Gold~~YGC after the ~~24-~~	~~$152,509~~
~~month~~24-month anniversary of the Closing but before the ~~36-~~	~~(CDN$165,000)~~
~~month~~36-month anniversary of the Closing:	$160,459 (CDN$165,000)

	If the payment is made to ~~Yukon Gold~~YGC after the ~~36-~~	~~$175,617~~
~~month~~36-month anniversary of the Closing but before the ~~48-~~	~~(CDN$190,000)~~
~~month~~48-month anniversary of the Closing:	$184,771 (CDN$190,000)

	If the payment is made to ~~Yukon Gold~~YGC after the ~~48-~~
~~month~~48-month anniversary of the Closing, it shall be increased
by ~~$23,107~~$24,312 (CDN$25,000) for each 12-month period
following the 49-month anniversary of the Closing

provided: (i) that where a cost or expense otherwise constituting a Permissible Deduction is incurred by the Payor in a transaction with a party with whom it is not dealing at arm’s length (as that term is defined in theIncome Tax Act (Canada)), such costs or expenses may be deducted, but only as to the lesser of the actual cost incurred by the Payor and the fair market value thereof considering the time of such transaction and under all the circumstances thereof; and (ii) transportation costs and milling costs at another site, prior to the smelting and refining shall not be included in the definition of Permissible Deductions.

4. The NSR shall be calculated and paid within 30 days after the end of each calendar quarter ending March 31, June 30, September 30 and December 31 of each year. Smelter settlement sheets, if any, and a statement setting forth calculations in sufficient detail to show how the payment was derived (the “Statement”) shall be submitted with the payment.

5. In ~~addition, Yukon Gold’s subsidiary assigned its work permit~~the event that final amounts required for the calculation of the NSR are not available within the time period referred to in paragraph 4 of this Schedule, then provisional amounts shall be established, the NSR shall be paid on the basis of such provisional amounts and positive or negative adjustments shall be made to the payment in the succeeding quarter, as necessary.

6. All NSR payments shall be considered final and in full satisfaction of all obligations of the Payor with respect thereto, unless the Payee delivers to the Payor a written notice (the “Objection Notice”) describing and setting forth a specific objection to the calculation thereof within 60 days after receipt by the Payee of the Statement. If the Payee objects to a ~~member~~particular Statement as herein provided, the Payee shall, for a period of 60 days after the Payor’s receipt of such Objection Notice, have the right, upon reasonable notice and at a reasonable time, to have the Payor’s accounts and records relating to the calculation of the ~~Hinton Syndicate and the Hinton Syndicate became responsible for any reclamation costs imposed~~NSR in question audited by the ~~government~~auditors of ~~Yukon~~the Payor. If such audit determines that there has been a deficiency or an excess in ~~connection~~the payment made to the Payee, such deficiency or excess will be resolved by adjusting the next monthly NSR payment due hereunder. The Payee shall pay all the costs and expenses of such audit unless a deficiency of 2 1/2% or more of the amount due is determined to exist. The Payor shall pay the costs and expenses of such audit if a deficiency of 2 1/2% or more of the amount due is determined to exist. All books and records used and kept by the Payor to calculate the NSR due hereunder shall be kept in accordance with Canadian generally accepted accounting principles. Failure on the ~~work permit. As~~part of ~~May 21, 2009, Yukon Gold~~the Payee to make claim against the Payor for adjustment in such 60 day period by delivery of an Objection Notice shall conclusively establish the correctness and ~~its subsidiary have no further interest~~sufficiency of the Statement and NSR payment in respect of the applicable quarter.

7. All profits and losses resulting from the Payor engaging in any commodity futures trading, option trading, metals trading, gold loans or ~~obligations~~any combination thereof, and any other hedging transactions with respect to mineral products (collectively, “Hedging Transactions”) are specifically excluded from calculations of the ~~Mount Hinton Property.~~NSR pursuant to this Schedule, it being understood by the parties that both the Payor and Payee may engage in speculative hedging trading activities for their own account. All Hedging Transactions by the Payor and all profits or losses associated therewith, if any, shall be solely for the Payor’s account, irrespective of whether or not mineral products are delivered in fulfilment of such obligations. When necessary to give effect to the provisions of this paragraph 7, Gross Revenue from mineral products subject to Hedging Transactions by the Payor shall be determined pursuant to subclause 3.1(a)(ii), rather than 3.1(a)(i) hereof.

8. Fair market value shall be determined by using, for gold, the quarterly average price of gold which shall be calculated by dividing the sum of all London Bullion Market Association P.M. Gold Fix prices reported for the calendar quarter in question by the number of days for which such prices were quoted and, for silver and other metals, the quarterly average price which shall be calculated by dividing the sum of all New York Commodity Exchange (“COMEX”) prices reported for silver and the other metal quoted by and at the closing of COMEX for the calendar quarter in question by a number of days for which such prices were quoted, less, in each case, an amount reasonably equivalent to the deductions permitted by clause 3.2 hereof.

During the year ended April 30, 2009, the Company completed its acquisition of the Marg ~~property~~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. The Company on August 31, 2010 granted Lance Capital Ltd. a security interest of $375,000 to be registered against the Marg Property. The Company also credited YGC with an equal amount of the amount owed to the Company. See Part II Item 5 Other Information.

~~.For more information regarding our exploration activities on our properties during~~Liquidity and Capital Resources

The following table summarizes the ~~fiscal year ended April 30, 2009, see Item 2 "Description of Property"~~Company's cash flows and cash in ~~the 10K filed for year ended April 30, 2009.~~hand:

As at ~~October~~July 31, ~~2009~~2010 the Company had working capital deficit of ~~$(354,043)~~$708,059 as compared to a working capital deficit of ~~$269,361~~$ 179,973 in the previous period. During the current period the Company ~~raised $44,000 from subscription of shares and~~ received demand ~~loan~~loans of ~~$102,000~~$15,798, and an additional $9,900 subsequent to the quarter, all 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).~~

The Company has no Off-Balance Sheet Arrangement as of ~~October~~July 31, ~~2009~~2010 and April 30, ~~2009.~~2010.

The Company 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 ~~$924,300~~$972,479 (CDN$1,000,000) in cash and/or common shares of the Company, or some combination thereof to be determined.

On April 2, 2007 the Company accepted a proposed work program, budget and cash call schedule for the Marg project. The Company 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.

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~~period covered by this report, the ~~Company~~following agreement was ~~unable to complete its due diligence, or to make~~terminated by the ~~balance~~mutual consent 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.~~

parties. 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~~ $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~~ 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~~July 31, ~~2009~~2010 on August 10, 2010 the ~~letter agreement terminated.~~Consultant and the Company signed an unconditional and absolute general release which terminated the Agreement.

Subsequent to the period covered by this report, the Company has opened discussions to renegotiate and/or terminate the following agreement. 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~~July 31, ~~2009~~2010 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.~~value. 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~~On December 20, 2009 the ~~date of these statements,~~agreement terminated and the Consultant was not successful in raising any financing. No services were provided under this agreement. The Company considers the agreement not consummated and has not issued the shares for that reason.

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 relatedSubsequent to the ~~$400,000 due diligence payments agreed~~period covered by this report, the following agreement was terminated, as described in Note 12 (Subsequent Events) 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.

our Financial Statements contained herein. 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~~which were issued in the last quarter ~~and subsequent to~~of 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.~~year ending April 30, 2010. 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.

~~On October 23, 2009~~ Subsequent to the quarter ended July 31, 2010 on August 9, 2010 the Employee and the Company ~~accepted a letter~~mutually agreed to terminate their Agreement without notice. The Employee assigned all amounts owed by the Company to Lance Capital Ltd. See Part II Item 5 Other Information for termination of this 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)”)~~assignment 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.balance due.

On October 26, 2009 the Company entered into a letter agreement (the “Agreement”) with a former officer to act as a consultant providing accounting and administration services for ~~$1,849~~$1,945 (CDN$2,000) per month and to warehouse the Company records for ~~$462~~$486 (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. Subsequent to the quarter ended July 31, 2010, on August 31, 2010, the consultant agreed to Agreement without notice and further agreed to accept $8,752 (CDN$9,000) as full payment for services rendered under the Agreement to be paid within 30 days. Lance Capital Ltd. agreed to advance the funds to the Company to cover this payment .See Part II Item 5 Other Information for termination of this agreement.

The Company subsidiary YGC has been served an Ontario Court order to pay a penalty for $116,832 (CDN $120,138) for early termination for its office lease. The prior landlord had made the said claim in the Ontario Superior Court of Justice. On June 17, 2010 the Company’s subsidiary’s financial institution remitted $1,271 (CDN$1,307) to the Ontario Superior Court of Justice being the balance of funds in YGC’s bank account.

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.

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 initially capitalized ~~only~~in accordance with the ASC 805-20-55-37, previously referenced as EITF 04-2 when incurred. The Company assesses the carrying costs for impairment under Accounting Standards 930 Extractive Activities – Mining (AS 930) at each fiscal quarter end. An impairment is recognized when the sum of the expected undiscounted future cash flows is less than the carrying amount of the mineral property. Impairment losses, if any, are measured as the ~~Company is able to allocate any economic value beyond proven and probable reserves.~~excess of the carrying amount of the mineral property over its estimated fair value. 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~~reserves. If mineral properties are subsequently abandoned or impaired, any capitalized costs will ~~also~~ be ~~capitalized in accordance with~~charged to operations. The Company assesses the ~~FASB Emerging Issues Task Force (“EITF”) Issue 04-2 when management~~carrying costs for impairment at each fiscal quarter end. The Company 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. Mineralall property payments are ~~expensed as incurred if~~impaired and accordingly has written off the ~~criteria for capitalization is not met.~~

~~To date, mineral property exploration~~acquisition 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.to project expense.

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 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.

~~None.~~On June 17, 2010 the Company’s bank received a Notice of Garnishment from the Ontario Superior Court of Justice, Canada, dated June 15, 2010, in the amount of $118,269 (CDN$120,138) with the Company’s former landlord named as the creditor, the Company’s wholly owned Canadian subsidiary (YGC) named as the debtor, and the Company’s bank as the garnishee. On June 17, 2010 our subsidiary’s bank remitted $1,271 (CDN$1,307) to the Ontario Superior Court of Justice, being the balance of funds in YGC’s bank account. YGC did not have the funds to fully settle the Notice of Garnishment. It is possible that one or more other creditors of YGC will bring an action to enforce a debt.

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 was unsuccessful at appealing this decision and at the close of the market on September 25, 2009 the Company was de-listed from the TSX.

~~On November 2, 2009 the Company’s stock began trading on NEX after successfully meeting its requirements.~~

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.

Yukon Gold has rights in certain mineral claims located in the Yukon Territory, 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.

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:

Failure to raise the necessary capital to continue exploration and development could cause us to go out of business.

The Company has included a “going concern” qualification in the Interim 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.

On August 31, 2010 the Company entered into an Agreement with Lance Capital Ltd. (Lance) an Ontario Canada corporation regarding the settlement of certain debts of the Company. Lance is continuing to assist the Company with financing going forward as more particularly described in Item 5 Other Information.

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.

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.

On August 6, 2010 the Company received a loan for $9,900 from a director of the Company. The Company issued a Promissory Note to the director 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 Note, but no later than three years from the date of the loan.

On August 9, 2010 Douglas Oliver, President and CEO of the Company (the Employee), and the Company mutually agreed to terminate their Agreement without notice. The Employee assigned all amounts due to Lance Capital Ltd.

On August 10, 2010 a director assigned all of the demand loans, interest and expenses owed to the director to Lance Capital Ltd.

On August 10, 2010 a debtor assigned an agreed debt totaling $66,923 to Lance Capital Ltd.

On August 10, 2010 a consultant and the Company signed an unconditional and absolute general release which terminated the Agreement dated August 28, 2009 with a Panamerican corporation.

On August 15, 2010 62,500 stock options granted to a consulting company expired.

On August 23, 2010 the Company changed its mailing address to 1226 White Oaks Blvd, Suite 10A, Oakville, Ontario L6H 2B9 Canada.

As of August 31, 2010, Yukon Gold Corporation, Inc. (the “Company”) and Lance Capital Ltd, an Ontario company (“Lance”), entered into a Note Purchase and Security Agreement (the “Agreement”) pursuant to which the Company has issued to Lance a Secured Convertible Promissory Note with a face amount of $375,000, bearing interest at 5% per annum and convertible into common shares of the Company at a conversion rate of $0.0025 per share (the “Note”). The Note matures on December 31, 2011. The Note is to be secured by a first lien and security interest in the Marg Property, a group of mineral claims located in the Mayo Mining District of the Yukon Territory, Canada (the “Marg Property”). Upon registration of the lien, the Agreement will be complete. The Marg Property is owned by the Company’s wholly-owned Canadian subsidiary.

The ~~company has reviewed subsequent events up~~Note was issued by the Company to ~~December 10, 2009.~~Lance as consideration for: (i) the assumption by Lance of certain of the Company’s obligations to three creditors totaling $382,545 as of August 31, 2010 which amounts were settled with Lance for $356, 835 and (ii) a loan from Lance to the Company of $18,165 to cover certain ongoing expenses of the Company. This note totaling $375,000 replaces the payables assumed by Lance and the loan of $18,165.

On ~~November~~September 2, ~~2009~~2010 the Company’s ~~common shares began trading on~~board of directors accepted the ~~NEX exchange.~~resignation of Rakesh Malhotra as Chief Financial Officer effective September 1, 2010. There were no material disagreements between Mr. Malhotra, the Company or its board with respect to the Company’s operations or public disclosures.

On ~~November~~September 2, 2010, the Company’s board of directors appointed Mrs. Kathy Chapman, Chief Financial Officer and Corporate Secretary of the Company. Mrs. Chapman is also the Corporate Secretary of YGC. Mrs. Chapman has over 30 years of experience in internal accounting and administration and 13 ~~2009 Bellhaven issued a press release stating that they were terminating~~years of experience in public company disclosure in the ~~MOU~~United States and Canada. Mrs. Chapman also is employed by Lance Capital Ltd. Lance does not have any relationship with the ~~Company.~~Company, except as described above. Mrs. Chapman also owns and operates an award winning bed and breakfast establishment in Paris, Ontario, which she has managed since July, 2000. She is currently the Co-Chair of Women in Mining Toronto Branch, based in Toronto, Canada. The focus of this group is to assist women in pursuing careers in the mining sector through mentorship, job opportunities and networking venues.

~~On November 16, 2009, 2,036,180 warrants held by shareholders of the Company expired.~~

~~Current Report on Form 8-K "Item 5.02 - Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers" dated September 29, 2009.~~

~~Current 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.~~

~~Current Report on Form 8-K "Item 8.01 - Other Events" dated August 28, 2009.~~

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.

Delaware	52-2243048
(State of incorporation)	(I.R.S. Employer Identification No.)

Large accelerated filer £[ ]	Accelerated filer £[ ]	Non-accelerated filer £[ ]	Smaller reporting company Q[X]
		(Do not check if a smaller reporting company)

~~PART I – FINANCIAL INFORMATION~~ ~~YUKON GOLD CORPORATION, INC.~~ ~~(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.

Interim Consolidated Balance Sheets as at July 31, 2010 (unaudited) and April 30, 2010 (audited).	~~Page No.~~F-2 to F3

Interim Consolidated ~~Balance Sheets as at October~~Statements of Operations for the three months ended July 31, 2010 and July 31, 2009 ~~(unaudited)~~ and ~~April 30, 2009 (audited)~~the period from Inception to July 31, 2010.	~~F-2 to F3~~F-4

~~Interim 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.~~	~~F-4~~

Interim Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~October~~July 31, ~~2009~~2010 and ~~October~~July 31, ~~2008~~2009 and the period from Inception to ~~October~~July 31, ~~2009.~~2010.	F-5

Interim Consolidated Statements of Changes in Stockholders’ Equity (Deficiency) from Inception to ~~October~~July 31, ~~2009~~2010.	F-6 to F9

Condensed Notes to Interim Consolidated Financial ~~Statements~~Statements.	F-10 to ~~F-25~~F-23

	July 31, 2010	April 30, 2010
	$	$
ASSETS	(unaudited)	(audited)

CURRENT ASSETS

Cash and cash equivalents	2,910	1,533
Prepaid expenses and other (Note 4)	13,275	12,748

	16,185	14,281

PROPERTY, PLANT AND EQUIPMENT	25,465	27,868
	41,650	42,149

	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

				For the		For the		For the		For the				For the		For the
				six months		six months		three months		three months				three months		three months
		Cumulative		ended		ended		ended		ended				ended		ended
												Cumulative		July 31,		July 31,
		since inception		October 31, 2009		October 31, 2008		October 31, 2009		October 31, 2008		since inception		2010		2009
		$		$		$		$		$		$		$		$

OPERATING EXPENSES

General and administration		7,125,738		330,360		689,617		216,229		322,807		7,476,596		65,267		114,131
Project expenses		9,070,481		12,104		1,723,638		6,650		551,729		9,077,029		-		5,454
Exploration Tax Credit		(605,716	)	-		-		-		-		(605,716	)	-		-
Amortization		167,143		5,494		21,119		2,818		10,638		175,005		2,041		2,676
Loss on sale/disposal of capital assets		5,904		-		-		-		-		5,904		-		-
Gain on sale of mining property (Note7)		(110,306)		(110,306	)	-		-		-
Gain on sale of mining property (Note 7)												(110,306	)	-		(110,306	)

TOTAL OPERATING EXPENSES		15,653,244		237,652		2,434,374		225,697		885,174		16,018,512		67,308		11,955

LOSS BEFORE INCOME TAXES		(15,653,244	)	(237,652	)	(2,434,374	)	(225,697	)	(885,174	)	(16,018,512	)	(67,308	)	(11,955	)

Income taxes recovery		509,170		-		-		-		-		509,170		-		-

NET LOSS		(15,144,074	)	(237,652	)	(2,434,374	)	(225,697	)	(885,174	)	(15,509,342	)	(67,308	)	(11,955	)

Loss per share – basic and diluted				(0.01	)	(0.08	)	(0.01	)	(0.03	)			(0.00	)	(0.00	)

Weighted average common shares outstanding	Weighted average common shares outstanding			40,489,532		31,592,332		40,489,535		33,650,629				41,839,535		40,489,535

See condensed notes to the interim consolidated financial statements F-4

			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-5

			For the three		For the three
			month period		month period
			ended		ended
	Cumulative		July 31,		July 31,
	Since Inception		2010		2009
	$		$		$
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period	(15,509,342	)	(67,308	)	(11,955	)
Items not requiring an outlay of cash:
Amortization and impairment	175,005		2,041		2,676
Loss on sale/disposal of capital assets	5,904		-		-
Registration rights penalty expense	188,125		-		-
Shares issued for property payment	772,826		-		-
Common shares issued for settlement of
severance liability to ex-officer	113,130		-		-
Stock-based compensation	1,298,574		-		1,943
Compensation expense on issue of warrants	140,892		-		-
Issue of shares for professional services	875,023		-		-
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	(960	)	(682	)	53,515
Increase (Decrease) in accounts payable and accrued liabilities	580,168		52,476		(38,714	)


NET CASH USED IN OPERATING ACTIVITIES	(11,450,884	)	(13,473	)	(102,841

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment	(222,309	)	-		-
Investment in available for sale securities	(36,530	)	-		-
Proceeds from sale of mining property	110,306		-		110,306

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	(148,533	)	-		110,306

CASH FLOWS FROM FINANCING ACTIVITIES
Repayments from a shareholder	1,180		-		-
Proceeds from Demand promissory notes	317,798		15,798		-
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		-		-
Proceeds from capital lease obligation	2,454		-		-


NET CASH PROVIDED BY FINANCING ACTIVITIES	11,641,111		15,798		-

EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES	(38,784	)	(948	)	447

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS FOR THE QUARTER	2,910		1,377		7,912
Cash and cash equivalents, beginning of period	-		1,533		9,349

CASH AND CASH EQUIVALENTS, END OF PERIOD	2,910		2,910		17,261
INCOME TAXES PAID			-		-
INTEREST PAID			-		-

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)

							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 of Convertible	76,204		8		57,144	-	-		-		-


F-6

							Deficit,
	Number						Accumulated		-		Accumulated
	of		Common		Additional		during the		Comprehensive		Other
	Common		Shares		Paid-in	Subscription	Exploration		Income		Comprehensive
	Shares		Amount		Capital	for Warrants	Stage		(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 of Convertible Promissory note	76,204		8		57,144	-	-		-		-

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)


Promissory note
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 of Demand Promissory note	369,215	37	203,031
Units issued to an outside company for professional services settlement	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 Convertible Promissory 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 Convertible
Promissory 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 Convertible Promissory 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-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)


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

F-8

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 year							(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
Issuance of 1,100,000 shares for cash	1,100,000	110	43,890
Issuance of common shares for professional services	250,000	25	14,975
Foreign currency translation									(16,651	)	(16,651	)
Net loss for the year							(535,612	)	(535,612	)	-

Balance as of April 30, 2010	41,839,535	4,184	14,931,204		-		(15,442,034	)	(552,263	)	(111,871	)
Foreign currency translation									3,231		3,231

Net loss for the period							(67,308	)	(67,308	)
Balance as of July 31, 2010	41,839,535	4,184	14,931,204		-		(15,509,342	)	(64,077	)	(108,640	)


	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

~~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)~~

~~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~~

SELECTED INFORMATION
	Three months	Three months
	ended	ended
	October 31,2009	October 31,2008

Revenues	Nil	Nil
Net Loss	$225,697	$885,174
Loss per share-basic and diluted	$ (0.01)	$ (0.03)

	Six months	Six months
	ended	ended
	October 31, 2009	October 31,2008

Revenues	Nil	Nil
Net Loss	$237,652	$2,434,374
Loss per share-basic and diluted	$(0.01)	$ (0.08)

	As at	As at
	October 31, 2009	April 30, 2009

Total Assets	$90,519	$108,099
Total Liabilities	$414,893	$239,222
Cash dividends declared per share	Nil	Nil

	1.	The NSR which may be payable to a party (the “Payee”) by a party (the “Payor”) shall be calculated and paid to the Payee in accordance with the terms of this Schedule.

	2.	The NSR shall be calculated on a calendar quarterly basis.

	3.	The following words shall have the following meanings:

	3.1	“Gross Revenue” shall mean the aggregate of the following amounts received in each quarterly period:

3.2	“Permissible Deductions” shall mean the aggregate of the following charges (to the extent not previously deducted or accrued in computing Gross Revenue) that are paid in each quarterly period:

	(a)	sales charges levied by any sales agent in respect to the sale of mineral products;

	(b)	all costs, expenses and charges of any nature whatsoever which are either paid or incurred by the Payor in connection with the refinement or beneficiation of mineral products after leaving the Property, including all weighing, sampling, assaying and representation costs, metal losses, any umpire charges and any penalties charged by the processor, refinery or smelter, and;

	(c)	all other insurance costs in respect of mineral products;

	3.3	“Net Smelter Returns” shall mean Gross Revenue less Permissible Deductions in respect to such quarter.

	3.4	“NSR” shall mean Net Smelter Returns.

		July 31, 2010			July 31, 2009

Cash and cash equivalent	$	2,910		$	17,261
Working capital deficit	$	(708,059	)	$	(179,973	)
Cash used in operating activities	$	(13,473	)	$	(102,841	)
Cash provided (used) in investing activities	$	Nil		$	110,306
Cash provided in financing activities	$	15,798		$	Nil

Liquidity and Capital Resources

The following table summarizes the Company's cash flows and cash in hand:
		October 31, 2009			October 31, 2008

Cash and cash equivalent	$	39,402		$	261,645
Working capital (deficit)	$	(354,043	)	$	269,361
Cash used in operating activities	$	(226,952	)	$	(1,409,664	)
Cash provided (used) in investing activities	$	110,306		$	(44,008	)
Cash provided in financing activities	$	146,000		$	576,012

(a)	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 ~~October~~July 31, ~~2009.~~2010. 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)	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 ~~October~~July 31, ~~2009~~2010 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

(c)	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.

1.	THE COMPANY IS RELYING ON A THIRD PARTY TO SETTLE OUTSTANDING DEBTS AND RETURN THE COMPANY’S BUSINESS TO ECONOMIC VIABILITY

	As of August 31, 2010, the Company and Lance Capital Ltd, an Ontario company (“Lance”), entered into an agreement pursuant to which Lance is engaged in efforts to resolve outstanding obligations of the Company and raise working capital for the Company. In its sole discretion, Lance may continue to fund operating expenses of the Company for a limited period of time while it explores the feasibility of private placement or other financing for the Company. Under the terms of the Agreement Lance was issued a Convertible Promissory Note in the amount of $375,000 secured by the Marg Property owned by YGC. In the event that Lance exercises its option to convert the Convertible Promissory Note issued by the Company into Shares, Lance would become the principal shareholder of the Company and would effectively control the Company. There is no assurance that Lance will be successful in its efforts to reorganize the Company’s affairs.

2.	WE HAVE ~~VERY LIMITED~~NO 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.

2.
	Yukon Gold has no 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. On August 26, 2009, the Toronto Stock Exchange ("TSX"), announced the de-listing of 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 TSX. On November 2, 2009 the Company’s common shares began trading on the NEX exchange. Effective at the close of business on April 7, 2010, and in accordance with NEX Policy, section 15, the common shares of Yukon Gold were delisted from NEX, for failure to pay their NEX Listing Maintenance Fee. The Company continues to trade on OTCBB. We run the risk of being de-listed on all exchanges in which our stock currently trades.

3.	WE MAY HAVE TO PURCHASE ADDITIONAL MINERAL PROPERTIES TO SECURE FINANCNG AND REMAIN VIABLE.

	o	our ability to raise the capital necessary to conduct this exploration and preserve our interest in these mineral claims;

	o	our ability to raise capital to develop the Marg Property, establish a mining operation, and operate this mine in a profitable manner; and.

	o	our ability to raise capital to purchase additional properties that may make our business more attractive to investors in exploration stage mining companies.

(a)	31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
~~(a)~~
	31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.

	32.1	Certificate of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

		By:/s/ Douglas Oliver
Dated: ~~December 14, 2009~~	September 13, 2010	Douglas Oliver
		Chief Executive Officer

		By:/s/ ~~Rakesh Malhotra~~Kathy Chapman
		~~Rakesh Malhotra~~	Kathy Chapman
		Chief Financial Officer