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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended May 31, 2011

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

For the transition period from ________to ________

COMMISSION FILE NUMBER:000-53556

YATERRA VENTURES CORP.(Exact name of registrant as specified in its charter)

|NEVADA                                                               | 75-3249571                          
|-------------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (I.R.S. Employer Identification No.)
|                                                                     |                                     
|240 Martin Street, #3                                                |                                     
|Blaine, WA                                                           | 98230                               
|(Address of principal executive offices)                             | (Zip Code)                          

(360) 510-8998(Registrant's telephone number,
including area code)

Not Applicable(Former name, former
address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [X]Yes[   ] No

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files).
[   ] Yes    [   ] No

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.

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

Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes [  
]     No [X]

Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable date:
As of July 19, 2011, the Issuer had 1,630,000 Shares of Common Stock
outstanding.

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PART I - FINANCIAL INFORMATION

ITEM
1.             
FINANCIAL STATEMENTS.

The accompanying unaudited financial statements have been
prepared in accordance with the instructions to Form 10-Q and Rule 8-03 of
Regulation S-X, and, therefore, do not include all information and footnotes
necessary for a complete presentation of financial position, results of
operations, cash flows, and stockholders' equity in conformity with generally
accepted accounting principles. In the opinion of management, all adjustments
considered necessary for a fair presentation of the results of operations and
financial position have been included and all such adjustments are of a normal
recurring nature. Operating results for the three and nine months ended May 31,
2011 are not necessarily indicative of the results that can be expected for the
year ending August 31, 2011.

As used in this Quarterly Report, the terms "we, "us, "our,
Yaterra and the Company mean Yaterra Ventures Corp. unless otherwise
indicated. All dollar amounts in this Quarterly Report are in U.S. dollars
unless otherwise stated.

2

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YATERRA VENTURES CORP.(An Exploration Stage Company)

THIRD QUARTER INTERIM CONDENSED FINANCIAL
STATEMENTS

NINE MONTHS ENDED MAY 31, 2011 AND
2010(Unaudited  see Notice to Reader)(Stated in
U.S. Dollars)

---

YATERRA VENTURES CORP.(An Exploration Stage Company)

INTERIM CONDENSED BALANCE SHEETS(Unaudited  see Notice to Reader)(Stated
in U.S. Dollars)

|                                                                                                                                                                                                                                                            |   | MAY
      31 |   |   | AUGUST
      31 |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------------ | - | - | --------------- | -
|                                                                                                                                                                                                                                                            |   | 2011         |   |   | 2010            |  
|                                                                                                                                                                                                                                                            |   |              |   |   |                 |  
|ASSETS                                                                                                                                                                                                                                                      |   |              |   |   |                 |  
|                                                                                                                                                                                                                                                            |   |              |   |   |                 |  
|Current                                                                                                                                                                                                                                                     |   |              |   |   |                 |  
|Cash                                                                                                                                                                                                                                                        | $ | -            |   | $ | 51              |  
|Prepaid
      expense                                                                                                                                                                                                                                       |   | 2,500        |   |   | -               |  
|                                                                                                                                                                                                                                                            |   | 2,500        |   |   | 51              |  
|                                                                                                                                                                                                                                                            |   |              |   |   |                 |  
|Computer Equipment(Note 4)                                                                                                                                                                                                                                  |   | -            |   |   | 98              |  
|Mineral Property Acquisition Costs(Note 5)                                                                                                                                                                                                                  |   | 24,855       |   |   | 24,362          |  
|                                                                                                                                                                                                                                                            |   |              |   |   |                 |  
|Total Assets                                                                                                                                                                                                                                                | $ | 27,355       |   | $ | 24,511          |  
|                                                                                                                                                                                                                                                            |   |              |   |   |                 |  
|LIABILITIES                                                                                                                                                                                                                                                 |   |              |   |   |                 |  
|                                                                                                                                                                                                                                                            |   |              |   |   |                 |  
|Current                                                                                                                                                                                                                                                     |   |              |   |   |                 |  
|Excess of checks issued
      over funds on deposit                                                                                                                                                                                                         | $ | 2,760        |   | $ | -               |  
|Accounts
      payable and accrued liabilities                                                                                                                                                                                                              |   | 138,628      |   |   | 116,739         |  
|Amounts payable to
      related parties (Note 8)                                                                                                                                                                                                           |   | 42,750       |   |   | 30,500          |  
|Promissory notes (Note 6)                                                                                                                                                                                                                                   |   | 247,980      |   |   | 161,091         |  
|Total Current Liabilities                                                                                                                                                                                                                                   |   | 432,118      |   |   | 308,330         |  
|                                                                                                                                                                                                                                                            |   |              |   |   |                 |  
|STOCKHOLDERS DEFICIENCY                                                                                                                                                                                                                                    |   |              |   |   |                 |  
|                                                                                                                                                                                                                                                            |   |              |   |   |                 |  
|Capital Stock(Note 7)                                                                                                                                                                                                                                       |   |              |   |   |                 |  
|Authorized: 
                      
      100,000,000 common voting stock with a par value
      of $0.001
      per
      share 
                        
      100,000,000 preferred stock with a par value of
      $0.001 per
      share  none issued |   |              |   |   |                 |  
|                                                                                                                                                                                                                                                            |   |              |   |   |                 |  
|Issued:                   
      1,630,000 common shares as at August 31, 2010 and May 31, 2011                                                                                                                                                             |   | 1,630        |   |   | 1,630           |  
|                                                                                                                                                                                                                                                            |   |              |   |   |                 |  
|Additional Paid-In Capital                                                                                                                                                                                                                                  |   | 189,370      |   |   | 189,370         |  
|Deficit Accumulated During The Exploration Stage                                                                                                                                                                                                            |   | (595,763     | ) |   | (474,819        | )
|Total Stockholders Deficiency                                                                                                                                                                                                                              |   | (404,763     | ) |   | (283,819        | )
|                                                                                                                                                                                                                                                            |   |              |   |   |                 |  
|Total Liabilities and Stockholders Deficiency                                                                                                                                                                                                              | $ | 27,355       |   | $ | 24,511          |  

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

---

YATERRA VENTURES CORP.(An Exploration Stage Company)

INTERIM CONDENSED STATEMENTS OF OPERATIONS(Unaudited  see Notice to Reader)(Stated in U.S.
Dollars)

CUMULATIVEPERIOD FROMTHREE
      
      
      NINE
      
      
      INCEPTIONMONTHS
      
      
      MONTHS
      
      
      NOVEMBER 20ENDED
      
      
      ENDED
      
      
      2006 TOMAY 31
      
      
      MAY 31
      
      
      MAY 312011
      
      
      2010
      
      
      2011
      
      
      2010
      
      
      2011ExpensesAccounting and audit
      $
      6,360
      
      $
      10,819
      
      $
      20,991
      
      $
      30,526
      
      $
      129,668Bank charges
        and interest
      
      6,363
      
      
      3,521
      
      
      16,365
      
      
      9,469
      
      
      33,790Consulting fees
      
      150
      
      
      150
      
      
      450
      
      
      450
      
      
      2,600Depreciation
      
      -
      
      
      99
      
      
      98
      
      
      296
      
      
      1,184Management fees
      
      12,000
      
      
      12,000
      
      
      36,000
      
      
      36,000
      
      
      183,500Mineral
        property exploration costs
      
      -
      
      
      -
      
      
      1,756
      
      
      5,560
      
      
      39,994Office and administrative
      
      3,836
      
      
      5,971
      
      
      15,783
      
      
      14,192
      
      
      59,138Professional
        fees
      
      3,339
      
      
      6,428
      
      
      21,702
      
      
      17,509
      
      
      107,360Transfer agent and filing
        fees
      
      3,369
      
      
      -
      
      
      7,325
      
      
      4,242
      
      
      22,720Travel
        and promotion
      
      140
      
      
      1,540
      
      
      474
      
      
      1,540
      
      
      15,809Net Loss For The Period
      $
      (35,557
      )
      $
      (40,528
      )
      $
      (120,944
      )
      $
      (119,784
      )
      $
      (595,763
      )Basic And
        Diluted Loss Per Share
      $
      (0.02
      )
      $
      (0.02
      )
      $
      (0.07
      )
      $
      (0.07
      )Weighted Average Number OfCommon Shares Outstanding
      
      1,630,000
      
      
      1,630,000
      
      
      1,630,000
      
      
      1,630,000


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

---

YATERRA VENTURES CORP.(An Exploration Stage Company)

INTERIM CONDENSED STATEMENTS OF CASH FLOWS(Unaudited  see Notice to Reader)(Stated in U.S.
Dollars)

|                                                                         |   |          |   |   |             |   |   | CUMULATIVE  |  
|------------------------------------------------------------------------ | - | -------- | - | - | ----------- | - | - | ----------- | -
|                                                                         |   |          |   |   |             |   |   | PERIOD FROM |  
|                                                                         |   | NINE     |   |   | INCEPTION   |  
|                                                                         |   | MONTHS   |   |   | NOVEMBER 20 |  
|                                                                         |   | ENDED    |   |   | 2006 TO     |  
|                                                                         |   | MAY 31   |   |   | MAY 31      |  
|                                                                         |   | 2011     |   |   | 2010        |   |   | 2011        |  
|                                                                         |   |          |   |   |             |   |   |             |  
|Cash (Used In) Operating Activities                                      |   |          |   |   |             |   |   |             |  
|Net loss for the period                                                  | $ | (120,944 | ) | $ | (119,784    | ) | $ | (595,763    | )
|Depreciation                                                             |   | 98       |   |   | 296         |   |   | 1,184       |  
|Interest accrued on promissory notes                                     |   | 14,435   |   |   | 6,643       |   |   | 28,179      |  
|Changes
      in non-cash operating working capital items:               |   |          |   |   |             |   |   |             |  
|Accounts payable and accrued liabilities                                 |   | 21,889   |   |   | 31,518      |   |   | 138,628     |  
|Amounts due to related parties                                           |   | 12,250   |   |   | 7,210       |   |   | 42,750      |  
|Prepaid expense                                                          |   | (2,500   | ) |   | -           |   |   | (2,500      | )
|                                                                         |   | (74,772  | ) |   | (74,117     | ) |   | (387,522    | )
|Cash (Used In) Investing Activities                                      |   |          |   |   |             |   |   |             |  
|Mineral property
      acquisition costs                                 |   | (493     | ) |   | (960        | ) |   | (24,855     | )
|Computer equipment                                                       |   | -        |   |   | -           |   |   | (1,184      | )
|                                                                         |   | (493     | ) |   | (960        | ) |   | (26,039     | )
|Cash Provided By Financing Activities                                    |   |          |   |   |             |   |   |             |  
|Issue of
      share capital                                             |   | -        |   |   | -           |   |   | 191,000     |  
|Promissory notes                                                         |   | 75,051   |   |   | 73,195      |   |   | 222,398     |  
|Repayment
      of promissory notes                                      |   | (2,597   | ) |   | -           |   |   | (2,597      | )
|                                                                         |   | 72,454   |   |   | 73,195      |   |   | 410,801     |  
|                                                                         |   |          |   |   |             |   |   |             |  
|(Decrease) In Cash                                                       |   | (2,811   | ) |   | (1,882      | ) |   | (2,760      | )
|                                                                         |   |          |   |   |             |   |   |             |  
|Cash, Beginning Of Period                                                |   | 51       |   |   | 1,941       |   |   | -           |  
|                                                                         |   |          |   |   |             |   |   |             |  
|(Excess of Checks
      Issued Over Funds onDeposit) Cash, End Of Period | $ | (2,760   | ) | $ | 59          |   | $ | (2,760      | )
|                                                                         |   |          |   |   |             |   |   |             |  
|Supplemental Disclosure Of Cash FlowInformation                          |   |          |   |   |             |   |   |             |  
|Cash paid
      during the period for:                                   |   |          |   |   |             |   |   |             |  
|Interest                                                                 | $ | -        |   | $ | -           |   | $ | -           |  
|Income taxes                                                             | $ | -        |   | $ | -           |   | $ | -           |  

There were no material non-cash financing or investing
activities during the periods presented.

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

---

YATERRA VENTURES CORP.(An Exploration Stage Company)

NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS

MAY 31, 2011(Unaudited  see
Notice to Reader)(Stated in U.S. Dollars)

|1. | BASIS OF PRESENTATION AND NATURE OF
    OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | The unaudited financial information furnished herein
      reflects all adjustments which, in the opinion of management, are
      necessary to fairly state the Companys financial position and the results
      of its operations for the periods presented. These financial statements
      should be read in conjunction with the Companys financial statements and
      notes thereto included for the fiscal year ended August 31, 2010. The
      Company assumes that the readers of these interim financial statements
      herein have read, or have access to, the audited financial statements for
      the preceding fiscal year, and that the adequacy of additional disclosure
      needed for a fair presentation may be determined in that context.
      Accordingly, footnote disclosure, which would substantially duplicate the
      disclosure contained in the Companys financial statements for the fiscal
      year ended August 31, 2010, has been omitted. The results of operations
      for the nine month period ended May 31, 2011 are not necessarily
      indicative of results for the entire year ending August 31,
2011.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Organization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Yaterra Ventures Corp. (the Company) was incorporated
      in the State of Nevada, U.S.A., on November 20, 2006. The Companys
      principal executive offices are in Bellingham, Washington,
U.S.A.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Reverse Stock Split                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | During the year ended August 31, 2008, the Companys
      shareholders approved a decrease in the number of issued and outstanding
      shares on a one for ten (1:10) basis, such that each shareholder will hold
      one share for every ten shares held. Share and per share data (except par
      value) for the periods presented reflect the effects of this reverse stock
      split.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Exploration Stage Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | The Company has been in the exploration stage since its
      formation and has not yet realized any revenues from its planned
      operations. The Company was formed for the purpose of acquiring
      exploration and development stage natural resource properties. The Company
      has not commenced business operations. The Company is an exploration stage
      company as defined in the Securities and Exchange Commission (S.E.C.)
      Industry Guide No. 7.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

---

YATERRA VENTURES CORP.(An Exploration Stage Company)

NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS

MAY 31, 2011(Unaudited  see Notice to Reader)(Stated in U.S. Dollars)

|1. | BASIS OF PRESENTATION AND NATURE OF OPERATIONS(Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Going Concern                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The accompanying financial statements have been prepared assuming the Company will continue as a going concern.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | As shown in the accompanying financial statements, the Company has incurred a net loss of $595,763 for the period from November 20, 2006 (inception) to May 31, 2011, and has no sales. These factors raise substantial doubt
about the Company's ability to continue as a going concern. The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of its natural resource properties. Management
has plans to seek additional capital through a private placement and public offering of its common stock. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of
and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States. Because a precise determination of many assets and liabilities is dependent upon future
events, the preparation of financial statements for a period necessarily involves the use of estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The financial statements have been properly prepared within the framework of the significant accounting policies summarized below:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

---

YATERRA VENTURES CORP.(An Exploration Stage Company)

NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS

MAY 31, 2011(Unaudited  see Notice to Reader)(Stated in U.S. Dollars)

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | -----------------------------------------------------
|   |                                                      
|   | c)                                                   
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      

---

YATERRA VENTURES CORP.(An Exploration Stage Company)

NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS

MAY 31, 2011(Unaudited  see Notice to Reader)(Stated in U.S. Dollars)

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | -----------------------------------------------------
|   |                                                      
|   | d)                                                   
|   |                                                      
|   |                                                      
|   |                                                      
|   | e)                                                   
|   |                                                      
|   |                                                      
|   |                                                      
|   | f)                                                   
|   |                                                      
|   |                                                      
|   |                                                      
|   | g)                                                   
|   |                                                      
|   |                                                      
|   |                                                      
|   | h)                                                   
|   |                                                      
|   |                                                      

---

YATERRA VENTURES CORP.(An Exploration Stage Company)

NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS

MAY 31, 2011(Unaudited  see Notice to Reader)(Stated in U.S. Dollars)

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | -----------------------------------------------------
|   |                                                      
|   | i)                                                   
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      

| |    | The Company has an operating bank account held in
      Canadian dollars that may expose them to certain translation risks due to
      foreign exchange fluctuations between the Canadian and US
    currencies.                                                                                                                                                                                                                                                                                                                                                  
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | j) | Use of Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    | The preparation of financial statements, in conformity
      with generally accepted accounting principles, requires management to make
      estimates and assumptions that affect the amounts reported in the
      financial statements and accompanying disclosures. Actual results may
      differ from the estimates.                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | k) | Impairment of Long-Lived Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    | The Company records impairment losses on long-lived
      assets used in operations when indicators of impairment are present and
      the undiscounted cash flows estimated to be generated by those assets are
      less than the assets carrying amount. In such cases, the amount of the
      impairment is determined based on the relative fair values of the impaired
      assets. The Company tests the recoverability of the assets whenever events
      or changes in circumstances indicate that its carrying amount may not be
      recoverable.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | l) | Asset Retirement Obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    | An asset retirement obligation (ARO) is a legal
      obligation associated with the retirement of a tangible long-lived asset
      that the Company is required to settle. The Company recognizes the fair
      value of a liability for the ARO in the year in which it is incurred when
      a reasonable estimate of fair value can be made. The carrying amount of
      the related long-lived asset is increased by the same amount as the
      liability.                                                                                            

---

YATERRA VENTURES CORP.(An Exploration Stage Company)

NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS

MAY 31, 2011(Unaudited  see Notice to Reader)(Stated in U.S. Dollars)

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | -----------------------------------------------------
|   |                                                      
|   | l)                                                   
|   |                                                      
|   |                                                      
|   |                                                      
|   | m)                                                   
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   | n)                                                   
|   |                                                      
|   |                                                      

| | Level 1: | Observable inputs such as quoted prices in active
      markets;                                                                        
| | -------- | ----------------------------------------------------------------------------------------------------------------------------------------
| |          |                                                                                                                                         
| | Level 2: | Inputs, other than the quoted prices in active markets,
      that are observable either directly or indirectly; and                    
| |          |                                                                                                                                         
| | Level 3: | Unobservable inputs in which there is little or no market
      data, which require the reporting entity to develop its own assumptions.

---

YATERRA VENTURES CORP.(An Exploration Stage Company)

NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS

MAY 31, 2011(Unaudited  see Notice to Reader)(Stated in U.S. Dollars)

|3. | RECENT ACCOUNTING PRONOUNCEMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | In May 2011, the FASB issued new authoritative guidance to provide a consistent definition of fair value and ensure that fair value measurements and disclosure requirements are similar between GAAP and International Financial
Reporting Standards. This guidance changes certain fair value measurement principles and enhances the disclosure requirements for fair value measurements. This guidance is effective for interim and annual periods beginning after December 15, 2011
and is applied prospectively. The Company does not expect that the adoption of this guidance will have a material impact on its financial statements.                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | In April 2010, the FASB provided an update to address the classification of an employee share-based payment award with an exercise price denominated in the currency of a market in which the underlying equity security trades. FASB
Accounting Standards Codification Topic 718, Compensation—Stock Compensation, provides guidance on the classification of a share-based payment award as either equity or a liability. A share-based payment award that contains a condition that is
not a market, performance, or service condition is required to be classified as a liability. This standard is effective for years beginning after December 15, 2010, and for subsequent interim and annual reporting periods thereafter. The Company does
not expect the adoption of this standard to have a significant effect on the Company's results of operations or financial position.             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | In January 2010, the FASB issued ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820), Improving Disclosures about Fair Value Measurements,amending ASC 820. ASU 2010-06 requires entities to provide new
disclosures and clarify existing disclosures relating to fair value measurements. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the
disclosures about purchases, sales, issuances, and settlements in Level 3 fair value measurements, which are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. The Company is currently
evaluating the impact of ASU 2010-06, but does not expect its adoption to have a material impact on the Company's financial position or results of operations.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | In October 2009, the FASB issued ASU 2009-13, Revenue Recognition (Topic 605), Multiple-Deliverable Revenue Arrangementsamending ASC 605. ASU 2009-13 requires entities to allocate revenue in an arrangement using estimated
selling prices of the delivered goods and services based on a selling price hierarchy. ASU 2009-13 eliminates the residual method of revenue allocation and requires revenue to be allocated using the relative selling price method. ASU 2009-13 is
effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The adoption of ASU 2009-13 did not have a material impact on the Company's financial position or results
of operations.                                                                                                                                               

---

YATERRA VENTURES CORP.(An Exploration Stage Company)

NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS

MAY 31, 2011(Unaudited  see Notice to Reader)(Stated in U.S. Dollars)

|4. | COMPUTER EQUIPMENT
|-- | ------------------

| |                    |   |       |  |   | MAY 31       |  |   |          |  |   | AUGUST 31 | 
| | ------------------ | - | ----- |  | - | ------------ |  | - | -------- |  | - | --------- | 
| |                    |   |       |  |   | 2011         |  |   |          |  |   | 2010      | 
| |                    |   |       |  |   | ACCUMULATED  |  |   | NET BOOK |  |   | NET BOOK  | 
| |                    |   | COST  |  |   | AMORTIZATION |  |   | VALUE    |  |   | VALUE     | 
| |                    |   |       |  |   |              |  |   |          |  |   |           | 
| | Computer equipment | $ | 1,184 |  | $ | 1,184        |  | $ | -        |  | $ | 98        | 

|5. | MINERAL PROPERTIES
|-- | ------------------

| |                    |   | AUGUST 31 |  |   |           |  |   | ABANDONED, |  |   | MAY 31 | 
| | ------------------ | - | --------- |  | - | --------- |  | - | ---------- |  | - | ------ | 
| |                    |   | 2010      |  |   | ADDITIONS |  |   | IMPAIRED   |  |   | 2011   | 
| | Mineral Property   |   |           |  |   |           |  |   |            |  |   |        | 
| |                    |   |           |  |   |           |  |   |            |  |   |        | 
| | Blue Jack claims   | $ | 16,000    |  | $ | -         |  | $ | -          |  | $ | 16,000 | 
| | Frances claims     |   | 2,362     |  |   | 493       |  |   | -          |  |   | 2,855  | 
| | Minnie Lode claims |   | 6,000     |  |   | -         |  |   | -          |  |   | 6,000  | 
| |                    |   |           |  |   |           |  |   |            |  |   |        | 
| |                    | $ | 24,362    |  | $ | 493       |  | $ | -          |  | $ | 24,855 | 

| |                    |   | AUGUST 31 |  |   |           |  |   | ABANDONED, |  |   | AUGUST 31 | 
| | ------------------ | - | --------- |  | - | --------- |  | - | ---------- |  | - | --------- | 
| |                    |   | 2009      |  |   | ADDITIONS |  |   | IMPAIRED   |  |   | 2010      | 
| | Mineral Property   |   |           |  |   |           |  |   |            |  |   |           | 
| |                    |   |           |  |   |           |  |   |            |  |   |           | 
| | Blue Jack claims   | $ | 16,000    |  | $ | -         |  | $ | -          |  | $ | 16,000    | 
| | Frances claims     |   | 443       |  |   | 1,919     |  |   | -          |  |   | 2,362     | 
| | Minnie Lode claims |   | 6,000     |  |   | -         |  |   | -          |  |   | 6,000     | 
| |                    |   |           |  |   |           |  |   |            |  |   |           | 
| |                    | $ | 22,443    |  | $ | 1,919     |  | $ | -          |  | $ | 24,362    | 

During the period ended August 31,
2007, the Company entered into a purchase agreement to acquire an undivided 100%
interest in a mineral claim (known as the Minnie Claim) located in the Leecher
Creek Mining District, Okanogan County, Washington. The consideration was $6,000
cash (paid) on execution of the agreement.

During the year ended August 31, 2009,
the Company entered into a purchase agreement to acquire an undivided interest
in a series of ten mineral claims (collectively referred to as the Blue Jack
Claims) located in Humboldt County, Nevada. The consideration was $16,000
(paid) on execution of the agreement.

---

YATERRA VENTURES CORP.(An Exploration Stage Company)

NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS

MAY 31, 2011(Unaudited  see Notice to Reader)(Stated in U.S. Dollars)

|5. | MINERAL PROPERTIES(Continued)                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | On July 14, 2009, the Company entered into an assignment
      agreement to acquire an undivided 60% interest in a mineral claim (known
      as the Frances claim) situated in the Vancouver Mining District, British
      Columbia, Canada. The Company paid $500 CDN on execution of the
      agreement.                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The assignment agreement was amended on October 27, 2009
      (the First Amendment Agreement), December 10, 2009 (the Second
      Amendment Agreement), February 11, 2010 (the Third Amendment
      Agreement), June 1, 2010 (the Fourth Amendment Agreement), September 1,
      2010 (the Fifth Amendment Agreement), and March 15, 2011 (the Sixth
      Amendment Agreement), and consideration for the claim is as
    follows:

| | 1. | $500 CDN on execution of the First Amendment Agreement
      (paid); $500 CDN on execution of the Second Amendment Agreement
      (paid); $500 CDN on execution of the Third Amendment Agreement (paid);
      $500 CDN on execution of the Fourth Amendment Agreement (paid);
      $500 CDN on execution of the Fifth Amendment Agreement (paid);
      $500 CDN on execution of the Sixth Amendment Agreement (paid June 14,
      2011);
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2. | incurring $10,000 CDN in exploration expenditures by
      September 15, 2011;                                                                                                                                                                                                                                                                                                                                                               
| | 3. | 2,000 common shares due on or before September 15,
      2011;                                                                                                                                                                                                                                                                                                                                                                               
| | 4. | additional $2,000 CDN on October 15, 2011;                                                                                                                                                                                                                                                                                                                                                                                                   
| | 5. | an additional 3,000 common shares due on or before
      October 15, 2011;                                                                                                                                                                                                                                                                                                                                                                   
| | 6. | additional $10,000 CDN on December 15, 2011;                                                                                                                                                                                                                                                                                                                                                                                                 
| | 7. | an additional 10,000 common shares due on or before
      December 15, 2011;                                                                                                                                                                                                                                                                                                                                                                 
| | 8. | incurring an additional $150,000 CDN in exploration
      expenditures by July 14, 2012.                                                                                                                                                                                                                                                                                                                                                     

|   | All other terms of the agreement remain
  unchanged.                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|6. | PROMISSORY NOTES                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | During the year ended August 31, 2010, the Company
      entered into various promissory note agreements, whereby it borrowed an
      additional $85,217 (2009 -$62,130) from arms length parties. These notes
      bear interest at 10% to 12% per annum, are unsecured and are repayable on
      demand. As at August 31, 2010, a total of $13,744 (2009  $2,209) has been
      accrued as interest on all of the outstanding notes.                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | During the nine month period ended May 31, 2011, the
      Company entered into additional promissory note agreements, whereby it
      borrowed an additional $72,454 from arms length parties and $2,597 from a
      related party, which was repaid during the period. These notes bear
      interest at 10%, are unsecured and are repayable on demand. As at May 31,
      2011, a total of $28,179 has been accrued as interest on all of the
      outstanding notes.

---

YATERRA VENTURES CORP.(An Exploration Stage Company)

NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS

MAY 31, 2011(Unaudited  see Notice to Reader)(Stated in U.S. Dollars)

|7. | CAPITAL STOCK                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | During the year ended August 31, 2009, the Company completed an offering of 120,000 shares of common stock at a price of $0.50 per share for gross proceeds of $60,000.                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | On August 12, 2008, the Company reduced the number of issued and outstanding shares of the Company's common stock on a one for ten basis (1:10). All references to the number of shares of common stock and per share amounts
(other than par value) have been adjusted to reflect the split for all periods presented.                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Included in issued share capital are 900,000 restricted common shares of the Company (August 31, 2010 – 900,000).                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                           
|8. | RELATED PARTY TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | During the nine month period ended May 31, 2011, the Company paid or accrued management fees for services performed in the amount of $31,500 (2010 - $31,500) to directors and also paid or accrued during the period,
$4,500 to two members of management (2010 - $4,500).                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | As at May 31, 2011, a total of $42,750 (August 31, 2010 - $30,500) is owing to a director and two members of management. These amounts are unsecured, do not bear interest and are due on demand.                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The Company carried out a number of transactions with related parties in the normal course of business. These transactions were recorded at their exchange amount, which is the amount of consideration established and agreed to by
the related parties.                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                           
|9. | COMMITMENTS AND CONTRACTUAL OBLIGATIONS                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The Company has no significant commitments or contractual obligations with any parties respecting executive compensation or consulting arrangements. Rental of premises is on a month-to-month basis.                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | On January 15, 2011, the Company entered into a letter of intent
        with nanoCrypt AG ("nanoCrypt") with respect to entering into
        a proposed business combination of the Company and nanoCrypt. NanoCrypt
        is the owner of a patented technology used for their mobile ticketing
        and coupon systems known as nanoTicketTM . The Company decided
        not to proceed with the proposed business combination.

---

YATERRA VENTURES CORP.(An Exploration Stage Company)

NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS

MAY 31, 2011(Unaudited  see Notice to Reader)(Stated in U.S. Dollars)

|10. | SEGMENT INFORMATION                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                   
|    | The Company has one reportable operating segment, being
      the acquisition and exploration of mineral properties. Details of
      identifiable assets by geographic segments are as
  follows:

| |                 |   |         |  |   | MINERAL   | 
| | --------------- | - | ------- |  | - | --------- | 
| |                 |   | CAPITAL |  |   | PROPERTY  | 
| |                 |   | ASSETS  |  |   | INTERESTS | 
| |                 |   |         |  |   |           | 
| | May 31, 2011    |   |         |  |   |           | 
| | USA             | $ | -       |  | $ | 22,000    | 
| | Canada          |   | -       |  |   | 2,855     | 
| |                 |   |         |  |   |           | 
| |                 | $ | -       |  | $ | 24,855    | 
| |                 |   |         |  |   |           | 
| | August 31, 2010 |   |         |  |   |           | 
| | USA             | $ | -       |  | $ | 22,000    | 
| | Canada          |   | 98      |  |   | 2,362     | 
| |                 |   |         |  |   |           | 
| |                 | $ | 98      |  | $ | 24,362    | 

|11. | SUBSEQUENT EVENT                                                                                                                                                                                                                                                                                
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                 
|    | Subsequent to May 31, 2011, the Company entered into six
      promissory note agreements whereby it borrowed a total of $10,983 from
      arms length parties and $4,135 from a related party. The notes bear
      interest at 10% per annum, are unsecured and are repayable on
    demand.

---

|ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
      CONDITION AND RESULTS OF OPERATIONS.
|------- | --------------------------------------------------------------------------------------------

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report
constitute "forward-looking statements. These statements, identified by words
such as plan, "anticipate, "believe, "estimate, "should, "expect" and
similar expressions include our expectations and objectives regarding our future
financial position, operating results and business strategy. These statements
reflect the current views of management with respect to future events and are
subject to risks, uncertainties and other factors that may cause our actual
results, performance or achievements, or industry results, to be materially
different from those described in the forward-looking statements. Such risks and
uncertainties include those set forth under the caption, "Part II - Item 1A.
Risk Factors, and elsewhere in this Quarterly Report.

Forward looking statements are based on the reasonable
assumptions, estimates, analysis and opinions of management made in light of its
experience and perception of trends, current conditions and expected
developments, as well as other factors that management believes to be relevant
and reasonable at the date the such statement are made.

We intend to discuss in our Quarterly Reports and Annual
Reports any events or circumstances that occurred during the period to which
such documents relate that are reasonably likely to cause actual events or
circumstances to differ materially from those disclosed in this Quarterly
Report. New factors emerge from time to time, and it is not possible for
management to predict all of such factors and to assess in advance the impact of
each such factor on the Companys business or the extent to which any factor, or
combination of such factors, may cause actual results to differ materially from
those contained in any forwarding looking statement.

We advise you to carefully review the reports and documents we
file from time to time with the United States Securities and Exchange Commission
(the SEC), particularly our periodic reports filed with the SEC pursuant to
the Securities Exchange Act of 1934 (the "Exchange Act").

OVERVIEW

We were incorporated on November 20, 2006 pursuant to the laws
of the State of Nevada.

We are an exploration stage company engaged in the acquisition
and exploration of mineral properties. Currently, we hold a 100% interest in two
mineral properties that we call the Blue Jack Property and the Minnie Claim.
The Blue Jack Property is comprised of 10 mineral claims coveringapproximately 206 acres located in Humboldt County, Nevada. The Minnie Claim
covers an area of 20 acres, located in the Leecher Creek Mining Division,
Washington State. We plan to focus our resources on the Blue Jack Property in
order to assess whether it possesses mineral deposits of lead, zinc, copper,
silver, gold or uranium capable of commercial extraction. Due to the potential
of the Blue Jack Property, we have suspended our exploration program on the
Minnie Claim.

In addition to the Blue Jack Property and the Minnie Claim, we
also have an option to acquire a 60% interest (the Option) in a property
referred to as the Frances Property. The Frances Property consists of 206
hectares and is located in the Vancouver Mining District, British Columbia.
Under the terms of an option agreement dated July 14, 2009, as amended on
October 27, 2009 (the First Amendment Agreement), December 10, 2009 (the
Second Amendment Agreement), February 11, 2010 (the Third Amendment
Agreement), June 1, 2010 (the Fourth Amendment Agreement), September 1, 2010
(the Fifth Amendment Agreement) and March 15, 2011 (the Sixth Amendment
Agreement) between the Company and Geoffrey Goodall (the Optionor), in order
to exercise and maintain the Option, we are required to do the following:

|(a) | pay $500 CDN to the Optionor on execution of the option
      agreement (which amount has been paid);
|--- | -----------------------------------------------------------------------------------------------------

3

---

|(b) | pay $500 CDN to the Optionor on execution of the First
      Amendment Agreement (which amount has been paid); 
|--- | ---------------------------------------------------------------------------------------------------------------
|    |                                                                                                                
|(c) | pay $500 CDN to the Optionor on execution of the Second
      Amendment Agreement (which amount has been paid);
|    |                                                                                                                
|(d) | pay $500 CDN to the Optionor on execution of the Third
      Amendment Agreement (which amount has been paid); 
|    |                                                                                                                
|(e) | pay $500 CDN to the Optionor on execution of the Fourth
      Amendment Agreement (which amount has been paid);
|    |                                                                                                                
|(f) | pay $500 CDN to the Optionor on execution of the Fifth
      Amendment Agreement (which amount has been paid); 
|    |                                                                                                                
|(g) | pay $500 CDN to the Optionor on execution of the Sixth
      Amendment Agreement (which amount has been paid); 
|    |                                                                                                                
|(h) | pay an aggregate of $12,000 CDN to the Optionor as
      follows:                                              
|    |                                                                                                                
|    | (i)                                                                                                            
|    | (ii)                                                                                                           
|    |                                                                                                                
|(i) | issue an aggregate of 15,000 shares of our common stock
      to the Optionor as follows:                      
|    |                                                                                                                
|    | (i)                                                                                                            
|    | (ii)                                                                                                           
|    | (iii)                                                                                                          
|    |                                                                                                                
|(j) | incur exploration expenditures of $160,000 CDN on the
      Frances Property as follows:                       
|    |                                                                                                                
|    | (i)                                                                                                            
|    | (ii)                                                                                                           

We have not earned any revenues to date. We do not anticipate
earning revenues until such time as we enter into commercial production of our
mineral properties. We are presently in the exploration stage of our business
and we can provide no assurance that we will discover commercially exploitable
levels of mineral resources on our properties, or if such deposits are
discovered, that we will enter into further substantial exploration programs.
Our ability to exercise the Option will be subject to our obtaining additional
financing. There is no assurance that we will be able to exercise the Option in
order to acquire a 60% undivided interest in the Frances Property.

PLAN OF OPERATION

During the next twelve months and subject to our ability to
obtain additional financing, we intend to conduct mineral exploration activities
on the Blue Jack Property and the Frances Property in order to assess whether
they possess mineral reserves capable of commercial extraction. We have decided
to suspend our operations on the Minnie Claim in order to focus our resources on
our other mineral properties.

Blue Jack Property

Our plan is to conduct Phase Ia of our exploration program on
the Blue Jack Property in Fall 2011. However, we will require additional
financing in order to implement Phase Ia of our exploration program on the Blue
Jack Property. If we are able to raise additional financing, of which there is
no assurance, our plan for the Blue Jack Property is as follows:

4

---

Phase
      Recommended Exploration
      Program
      Estimated Cost
      StatusPhase Ia
    Detailed geological mapping and radiometric surveys.
    $15,150
    To be implemented in Fall 2011, subject to obtaining
      additional financing.Phase Ib
    Grid set up and soil sampling along grid.
    $28,250
    Planned for Fall 2011.Phase Ic
    Magnetometer survey and IP Survey (can be conducted
      concurrently with Phase Ib).
    $42,600
    Planned for Fall 2011.


We have commenced the first phase of our exploration program on
the Frances Property. We expect to complete the first phase of exploration work
by late July, 2011.

We anticipate that we will incur the following expenses over
the next twelve months:

Category
      Planned Expenditures Over The Next 12 Months (US$)Legal and Accounting Fees
    $30,000Office Expenses
    6,000Consulting Fees
    48,000Mineral Property Exploration Expenses
    86,000Mineral Property Option Payments
    12,000TOTAL
    $182,000


To date, we have not earned any revenues and we do not
anticipate earning revenues in the near future. As at May 31, 2011, we had no
cash on hand. As such, we do not have sufficient financial resources to meet the
anticipated costs of completing our exploration programs for the Blue Jack
Property and the option payments for the Frances Property. Accordingly, we will
need to obtain additional financing in order to complete our plan of operation
and meet our current obligations as they come due. We currently do not have any
arrangements for financing and we may not be able to obtain financing. Obtaining
additional financing would be subject to a number of factors outside of our
control, including the results from our exploration program, and any
unanticipated problems relating to our mineral exploration activities, such as
environmental assessments and additional costs and expenses that may exceed our
current estimates. These factors may make the timing, amount, terms or
conditions of additional financing unavailable to us in which case our business
will fail.

RESULTS OF OPERATIONS

Three Months and Nine Months Summary

Three
      Months
    
    
    Three
      Months
    
    
    Percentage
    
    
    Nine
      Months
    
    
    Nine
      Months
    
    
    PercentageEnded
    
    
    Ended
    
    
    Increase /
    
    
    Ended
    
    
    Ended
    
    
    Increase /May
      31, 2011
    
    
    May
      31, 2010
    
    
    (Decrease)
    
    
    May
      31, 2011
    
    
    May
      31, 2010
    
    
    (Decrease)Revenue
    $
    -
    
    $
    -
    
    
    n/a
    
    $
    -
    
    $
    -
    
    
    n/aExpenses
    
    (35,557
    )
    
    (40,528
    )
    
    (12.2)%
    
    
    (120,944
    )
    
    (119,784
    )
    
    (1.0)%Net Loss
    $
    (35,557
    )
    $
    (40,528
    )
    
    (12.2)%
    
    $
    (120,944
    )
    $
    (119,784
    )
    
    (1.0)%


Revenue

We have not earned any revenues to date. We do not anticipate
earning revenues until such time as we enter into commercial production of our
mineral properties. We are presently in the exploration stage of our business
and we can provide no assurance that we will discover commercially exploitable
levels of mineral resources on our properties, or if such deposits are
discovered, that we will enter into further substantial exploration
programs.

5

---

Expenses

Our expenses for the three and nine months ended May 31, 2011
and 2010 consisted of the following:

Three
      Months
    
    
    Three
      Months
    
    
    Percentage
    
    
    Nine
      Months
    
    
    Nine
      Months
    
    
    PercentageEnded
    
    
    Ended
    
    
    Increase /
    
    
    Ended
    
    
    Ended
    
    
    Increase /May
      31, 2011
    
    
    May
      31, 2010
    
    
    (Decrease)
    
    
    May
      31, 2011
    
    
    May
      31, 2010
    
    
    (Decrease)Accounting and Audit
    $
    6,360
    
    $
    10,819
    
    
    (41.2)%
    
    $
    20,991
    
    $
    30,526
    
    
    (31.2)%Bank Charges and Interest
    
    6,363
    
    
    3,521
    
    
    80.7%
    
    
    16,365
    
    
    9,469
    
    
    72.8%Consulting Fees
    
    150
    
    
    150
    
    
    n/a
    
    
    450
    
    
    450
    
    
    n/aDepreciation
    
    -
    
    
    99
    
    
    (100.0)%
    
    
    98
    
    
    296
    
    
    (66.9)%Management Fees
    
    12,000
    
    
    12,000
    
    
    n/a
    
    
    36,000
    
    
    36,000
    
    
    n/aMineral Property Exploration Costs
    
    -
    
    
    -
    
    
    n/a
    
    
    1,756
    
    
    5,560
    
    
    (68.4)%Office and Administrative
    
    3,836
    
    
    5,971
    
    
    (35.8)%
    
    
    15,783
    
    
    14,192
    
    
    11.2%Professional Fees
    
    3,339
    
    
    6,428
    
    
    (48.1)%
    
    
    21,702
    
    
    17,509
    
    
    23.9%Transfer Agent and Filing Fees
    
    3,369
    
    
    -
    
    
    100.0%
    
    
    7,325
    
    
    4,242
    
    
    72.7%Travel and Promotion
    
    140
    
    
    1,540
    
    
    (90.9)%
    
    
    474
    
    
    1,540
    
    
    (69.2)%Total Expenses
    $
    35,557
    
    $
    40,528
    
    
    (12.3)%
    
    $
    120,944
    
    $
    119,784
    
    
    1.0%


Our operating expenses decreased from $40,528, during the three
months ended May 31, 2010, to $35,557, during the three months ended May 31,
2011. The decrease is primarily as a result of decreases in accounting and audit
expenses, professional fees, office and administrative expenses and travel and
promotion. These amounts were partially offset by increases in bank charges, and
transfer agent and filing fees.

During the nine months ended May 31, 2011, our operating
expenses were $120,944 compared to $119,784, during the nine months ended May
31, 2010. The increase is a result of increases in bank charges and interest,
office and administrative expenses, professional fees and transfer agent and
filing fees. These amounts were partially offset by decreases in mineral
property exploration costs, accounting and audit and travel and promotion.

Audit and accounting expenses and professional expenses
primarily relate to expenses incurred in connection with meeting our ongoing
reporting requirements under the Exchange Act.

Management Fees consists of fees incurred to our executive
directors and officers.

Mineral property costs, during the nine months ended May 31,
2011 and 2010, primarily consisted of option payments on the Frances Property
and annual payments to maintain its properties in good standing.

If we are able to obtain sufficient financing to proceed with
our plan of operation, of which there is no assurance, we expect that our
expenses will increase significantly as we engage in mining and exploration
activities.

6

---

LIQUIDITY AND CAPITAL RESOURCES

|Working Capital         |   |                    |   |   |                 |   |  |            | 
|----------------------- | - | ------------------ | - | - | --------------- | - |  | ---------- | 
|                        |   |                    |   |   |                 |   |  | Percentage | 
|                        |   | As at              |   |   | As at           |   |  | Increase / | 
|                        |   | May
      31, 2011 |   |   | August 31, 2010 |   |  | (Decrease) | 
|Current Assets          | $ | 2,500              |   | $ | 51              |   |  | 4,802.0%   | 
|Current Liabilities     |   | (432,118           | ) |   | (308,330        | ) |  | 40.1%      | 
|Working Capital Deficit | $ | (429,618           | ) | $ | (308,279        | ) |  | 39.4%      | 

|Cash Flows                                        |   |                    |   |   |                    |  
|------------------------------------------------- | - | ------------------ | - | - | ------------------ | -
|                                                  |   | Nine Months Ended  |   |   | Nine Months Ended  |  
|                                                  |   | May
      31, 2011 |   |   | May
      31, 2010 |  
|Cash Flows Used In Operating
      Activities     | $ | (74,772            | ) | $ | (74,117            | )
|Cash Flows Used in Investing Activities           |   | (493               | ) |   | (960               | )
|Cash Flows Provided By
      Financing Activities |   | 72,454             |   |   | 73,195             |  
|Decrease In Cash During Period                    | $ | (2,811             | ) | $ | (1,882             | )

As of May 31, 2011, we had no cash on hand and a working
capital deficit of $429,618. The increase in our working capital deficit is
primarily a result of: (i) an increase in accounts payable due to a lack of
capital to meet our ongoing expenditures; and (ii) the fact that we received
additional short term loans of $72,454 from arms length parties. The loans bear
interest at 10% per annum, are unsecured and due on demand.

Future Financings

We currently do not have sufficient financial resources to
implement our exploration program on the Blue Jack Property and the Frances
Property. Therefore, we will need to obtain additional financing in order to
implement our exploration program on the Blue Jack Property and the Frances
Property.

We anticipate relying on equity sales of our common stock or
loans in order to continue to fund our business operations. Issuance of
additional securities will result in dilution to shareholders. There is no
assurance that we will achieve any additional sales of our equity securities or
arrange for debt or other financing to fund our planned business activities.
Currently, we do not have any arrangements for additional financing.

Our plan of operation calls for us to spend significantly more
than our current capital resources or the amount of financing that we have been
able to obtain to date. As such, there is a substantial doubt that we will be
able to raise significant financing to complete our stated plan of operation.
Any substantial financing that we are able to obtain is expected to be in the
form of equity financing.

OFF-BALANCE SHEET ARRANGEMENTS

We have no significant off-balance sheet arrangements that have
or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that is
material to stockholders.

CRITICAL ACCOUNTING POLICIES

Our significant accounting policies are disclosed in Note 2 of
our interim financial statements included in this Quarterly Report. We have
identified certain accounting policies, described below, that are most important
to the portrayal of our current financial condition and results of operations.

7

---

Use of Estimates

The preparation of financial statements, in conformity with
generally accepted accounting principles, requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying disclosures. Actual results may differ from the estimates.

Exploration Stage Enterprise

Our financial statements are prepared using the accrual method
of accounting. Until such properties are acquired and developed, we will
continue to prepare our financial statements and related disclosures in
accordance with entities in the exploration stage.

Mineral Property Interests

We are an exploration stage mining company and have not yet
realized any revenue from our operations. We are primarily engaged in the
acquisition, exploration and development of mining properties. Exploration costs
are expensed as incurred regardless of the stage of development or existence of
reserves. Costs of acquisition are capitalized subject to impairment testing.

We regularly perform evaluations of any investment in mineral
properties to assess the recoverability and/or the residual value of our
investments in these assets. All long-lived assets are reviewed for impairment
whenever events or circumstances change which indicate the carrying amount of an
asset may not be recoverable.

Our management periodically reviews the carrying value of our
investments in mineral leases and claims with internal and external mining
related professionals. A decision to abandon, reduce or expand a specific
project is based upon many factors including general and specific assessments of
mineral deposits, anticipated future mineral prices, anticipated future costs of
exploring, developing and operating a producing mine, the expiration term and
ongoing expenses of maintaining mineral properties and the general likelihood
that we will continue exploration on such project. We do not set a
pre-determined holding period for properties with unproven deposits; however,
properties which have not demonstrated suitable metal concentrations at the
conclusion of each phase of an exploration program are re-evaluated to determine
if future exploration is warranted, whether there has been any impairment in
value and that their carrying values are appropriate.

If an area of interest is abandoned or it is determined that
its carrying value cannot be supported by future production or sale, the related
costs are charged against operations in the year of abandonment or determination
of value. The amounts recorded as mineral leases and claims represent costs to
date and do not necessarily reflect present or future values.

Our exploration activities and proposed mine development are
subject to various laws and regulations governing the protection of the
environment. These laws are continually changing, generally becoming more
restrictive. We have made, and expect to make in the future, expenditures to
comply with such laws and regulations.

ITEM
3.             
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM
4.             
CONTROLS AND PROCEDURES.

Under the supervision and with the participation of our
management, including our Principal Executive Officer and Principal Accounting
Officer, we have evaluated the effectiveness of our disclosure controls and
procedures as required by Exchange Act Rules 13a-15(e) and 15(d)-15(e) as of May
31, 2011, (Evaluation Date). Based upon that evaluation, our Principal
Executive Officer and Principal Accounting Officer concluded that our disclosure
controls and procedures were not effective as of the Evaluation Date as a result
of the material weaknesses in internal control over financial reporting discussed in our Annual Report on Form 10-K for the year ended
August 31, 2010 (the "2010 Annual Report").

8

---

Notwithstanding the assessment that our internal control over
financial reporting was not effective and that there were material weaknesses as
identified in our 2010 Annual Report, we believe that our financial statements
contained in our Quarterly Report on Form 10-Q for the quarter ended May 31,
2011 fairly present our financial condition, results of operations and cash
flows in all material respects.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial
reporting that occurred during the fiscal quarter ended May 31, 2011 that have
materially affected, or that are reasonably likely to materially affect, our
internal control over financial reporting.

9

---

PART II - OTHER INFORMATION

ITEM
1.             
LEGAL PROCEEDINGS.

None.

ITEM
1A.           RISK
FACTORS.

The following are some of the important factors that could
affect our financial performance or could cause actual results to differ
materially from estimates contained in our forward-looking statements. We may
encounter risks in addition to those described below. Additional risks and
uncertainties not currently known to us, or that we currently deem to be
immaterial, may also impair or adversely affect our business, financial
condition or results of operation.

If we do not obtain additional financing, our business will
fail.

As at May 31, 2011, we had no cash on hand. Our ability to
implement our exploration programs on the Blue Jack Property and the Frances
Property will be subject to our obtaining additional financing. We will also
require additional financing in order to meet our obligations under the option
agreement to acquire a 60% undivided interest in the Frances Property. Our
ability to obtain additional financing could be subject to a number of factors
outside of our control, including the results from our exploration program, and
any unanticipated problems relating to our mineral exploration activities,
including environmental assessments and additional costs and expenses that may
exceed our current estimates. If we are unable to obtain additional financing in
the amounts and when needed, our business could fail.

Because of the unique difficulties and uncertainties
inherent in mineral exploration ventures, we face a high risk of business
failure.

Investors should be aware of the difficulties normally
encountered by new mineral exploration companies and the high rate of failure of
such enterprises. The likelihood of success must be considered in light of the
problems, expenses, difficulties, complications and delays encountered in
connection with the exploration of the mineral properties that we plan to
undertake. These potential problems include, but are not limited to,
unanticipated problems relating to exploration, and additional costs and
expenses that may exceed current estimates. Our mineral properties do not
contain a known body of commercial ore and, therefore, any program conducted on
our mineral properties would be an exploratory search of ore. There is no
certainty that any expenditures made in the exploration of our mineral
properties will result in discoveries of commercial quantities of ore. Most
exploration projects do not result in the discovery of commercially mineable
deposits of ore. Problems such as unusual or unexpected formations and other
conditions are involved in mineral exploration and often result in unsuccessful
exploration efforts. If the results of our exploration program do not reveal
viable commercial mineralization, we may decide to abandon our claim and acquire
new claims for new exploration. The acquisition of additional claims will be
dependent upon our possessing sufficient capital resources to purchase such
claims. If we do not have sufficient capital resources and are unable to obtain
sufficient financing, we may be forced to abandon our operations.

We have no known mineral reserves and if we cannot find any,
we may have to cease operations.

We are in the initial phases of our exploration programs for
the Blue Jack Property and the Frances Property. It is unknown whether these
properties contain viable mineral reserves. If we do not find a viable mineral
reserve, or if we cannot exploit the mineral reserve, either because we do not
have the money to do it or because it will not be economically feasible to do
it, we may have to cease operations and investors may lose their investment.
Mineral exploration is a highly speculative endeavor. It involves many risks and
is often non-productive. Even if mineral reserves are discovered on our
properties our production capabilities will be subject to further risks and
uncertainties including:

10

---

| | (i)   | Costs of bringing the property into production including
      exploration work, preparation of production feasibility studies, and
      construction of production facilities, all of which we have not budgeted
      for;
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii)  | Availability and costs of financing;                                                                                                                                                                                         
| | (iii) | Ongoing costs of production; and                                                                                                                                                                                             
| | (iv)  | Environmental compliance regulations and
    restraints.                                                                                                                                                                     

The marketability of any minerals acquired or discovered may be
affected by numerous factors which are beyond our control and which cannot be
accurately predicted, such as market fluctuations, the lack of milling
facilities and processing equipment near the Blue Jack Property or the Frances
Property, and such other factors as government regulations, including
regulations relating to allowable production, importing and exporting of
minerals, and environmental protection.

We face significant competition in the mineral exploration
industry.

We compete with other mining and exploration companies
possessing greater financial resources and technical facilities than we do. Due
to our weaker competitive position, we may have greater difficulty in hiring and
retaining qualified personnel to conduct our planned exploration activities,
which could cause delays in our exploration programs. In addition, there is
significant competition for a limited number of mineral properties. Due to our
weaker financial position, we may be unable to acquire rights to new mineral
properties on a continuing basis.

Because of the inherent dangers involved in mineral
exploration, there is a risk that we may incur liability or damages as we
conduct our business.

The search for valuable minerals involves numerous hazards. As
a result, we may become subject to liability for such hazards, including
pollution, cave-ins and other hazards against which we cannot insure or against
which we may elect not to insure. At the present time we have no coverage to
insure against these hazards. The payment of such liabilities may result in our
inability to complete our planned exploration program and/or obtain additional
financing to fund our exploration program.

As we undertake exploration of our mineral properties, we
will be subject to compliance with government regulations that may increase the
anticipated cost of our exploration program.

There are several governmental regulations that materially
restrict mineral exploration. We may be required to obtain work permits, post
bonds and perform remediation work for any physical disturbance to the land in
order to comply with these laws. If we enter the production phase, the cost of
complying with permit and regulatory environment laws will be greater because
the impact on the project area is greater. Permits and regulations will control
all aspects of the production program if the project continues to that stage.
Examples of regulatory requirements include:

| | (i)   | Water discharge will have to meet drinking water
      standards;                                                                               
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii)  | Dust generation will have to be minimal or otherwise
      re-mediated;                                                                         
| | (iii) | Dumping of material on the surface will have to be
      re-contoured and re-vegetated with natural vegetation;                                 
| | (iv)  | An assessment of all material to be left on the surface
      will need to be environmentally benign;                                           
| | (v)   | Ground water will have to be monitored for any potential
      contaminants;                                                                    
| | (vi)  | The socio-economic impact of the project will have to be
      evaluated and if deemed negative, will have to be re-mediated;
  and             
| | (vii) | There will have to be an impact report of the work on the
      local fauna and flora including a study of potentially endangered
      species.

At this stage of our development, the annual cost of complying
with regulatory requirements in the State of Nevada is expected to be minimal.
There is a risk that new regulations could increase our costs of doing business
and prevent us from carrying out our exploration program. We will also have to
sustain the cost of reclamation and environmental remediation for all
exploration work undertaken. Both reclamation and environmental remediation
refer to putting disturbed ground back as close to its original state as
possible. Other potential pollution or damage must be cleaned-up and renewed
along standard guidelines outlined in the usual permits. Reclamation is the
process of bringing the land back to its natural state after completion of exploration activities. Environmental remediation refers to the
physical activity of taking steps to remediate, or remedy, any environmental
damage caused. The amount of these costs is not known at this time as we do not
know the extent of the exploration program that will be undertaken beyond
completion of the recommended work program. If remediation costs exceed our cash
reserves we may be unable to complete our exploration program and have to
abandon our operations.

11

---

Because our executive officers and directors do not have
formal training specific to the technicalities of mineral exploration, there is
a higher risk that our business will fail.

None of our executive officers and directors has any formal
training as a geologist. With the exception of Mr. Gorrill, our executive
officers and directors have only limited training in the technical aspects of
managing a mineral exploration company. With very limited direct training or
experience in these areas, our management may not be fully aware of the specific
requirements related to working within this industry. Our management's decisions
and choices may not take into account standard engineering or managerial
approaches mineral exploration companies commonly use. Consequently, our
operations, earnings, and ultimate financial success could suffer irreparable
harm due to management's lack of experience in this industry.

If we are unable to hire and retain key personnel, we may
not be able to implement our business plan and our business will fail

Our success will largely depend on our ability to hire highly
qualified personnel with experience in geological exploration. These individuals
may be in high demand and we may not be able to attract the staff we need. In
addition, we may not be able to afford the high salaries and fees demanded by
qualified personnel, or may lose such employees after they are hired. Currently,
we have not hired any key personnel. Our failure to hire key personnel when
needed could have a significant negative effect on our business.

Because the prices of metals fluctuate, if the price of
metals for which we are exploring decreases below a specified level, it may no
longer be profitable to explore for those metals and we will cease operations.

Metal prices are determined by such factors as expectations for
inflation, the strength of the United States dollar, global and regional supply
and demand, and political and economic conditions and production costs in metals
producing regions of the world. The aggregate effect of these factors on metal
prices is impossible for us to predict. In addition, the prices of metals such
as lead, zinc, copper, silver, gold or uranium are sometimes subject to rapid
short-term and/or prolonged changes because of speculative activities. The
current demand for and supply of these metals affect the metal prices, but not
necessarily in the same manner as current supply and demand affect the prices of
other commodities. The supply of these metals primarily consists of new
production from mining. If the prices of the metals are, for a substantial
period, below our foreseeable cost of production, it may not be economical for
us to continue operations and investors could lose their entire investment.

Because our President, Secretary, Treasurer and Director,
Jarrett F. Bousquet, owns 55.2% of our outstanding common stock, investors may
find that corporate decisions controlled by Mr. Bousquet are inconsistent with
the interests of other stockholders.

Jarrett F. Bousquet, our President, Secretary, Treasurer, and
Director, controls 55.2% of our issued and outstanding shares of common stock.
Accordingly, in accordance with our Articles of Incorporation and Bylaws, Mr.
Bousquet is able to control who is elected to our board of directors and thus
could act, or could have the power to act, as our management. Since Mr. Bousquet
is not simply a passive investor, but is also our principal executive officer,
his interests as an executive officer may, at times, be adverse to those of
passive investors. Where those conflicts exist, our shareholders will be
dependent upon Mr. Bousquet exercising, in a manner fair to all of our
shareholders, his fiduciary duties as an officer or as a member of our board of
directors. Also, due to his stock ownership position, Mr. Bousquet will have:
(i) the ability to control the outcome of most corporate actions requiring
stockholder approval, including amendments to our Articles of Incorporation;
(ii) the ability to control corporate combinations or similar transactions that
might benefit minority stockholders which may be rejected by Mr. Bousquet to
their detriment, and (iii) control over transactions between him and Yaterra.

12

---

We will likely conduct further offerings of our equity
securities in the future, in which case our stockholders interest may become
diluted.

Since our inception, we have relied on such sales of our common
stock to fund our operations. We will likely be required to conduct additional
equity offerings in the future to finance our current projects or to finance
subsequent projects that we decide to undertake. If common stock is issued in
return for additional funds, the price per share could be lower than that paid
by our current stockholders. We anticipate continuing to rely on equity sales of
our common stock in order to fund our business operations. If we issue
additional stock, stockholders' percentage interest in us could become diluted.

The quotation price of our common stock may be volatile,
with the result that an investor may not be able to sell any shares acquired at
a price equal to or greater than the price paid by the investor.

Our stock is quoted on the OTC Bulletin Board under the symbol
"YTRV. Companies quoted on the OTC Bulletin Board have traditionally
experienced extreme price and volume fluctuations. In addition, our stock price
may be adversely affected by factors that are unrelated or disproportionate to
our operating performance. Market fluctuations, as well as general economic,
political and market conditions such as recessions, interest rates or
international currency fluctuations may adversely affect the market price of our
common stock. As a result of this potential volatility and potential lack of a
trading market, an investor may not be able to sell any of our common stock that
they acquire at a price equal or greater than the price paid by the investor.

Because our stock is a penny stock, shareholders will be
more limited in their ability to sell their stock.

The SEC has adopted rules that regulate broker-dealer practices
in connection with transactions in penny stocks. Penny stocks are generally
equity securities with a price of less than $5.00, other than securities
registered on certain national securities exchanges or quoted on the Nasdaq
system, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or quotation system.
Because our securities constitute penny stocks within the meaning of the
rules, the rules apply to us and to our securities. The rules may further affect
the ability of owners of shares to sell our securities in any market that might
develop for them. As long as the trading price of our common stock is less than
$5.00 per share, the common stock will be subject to Rule 15g-9 under the
Exchange Act. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock, to deliver a standardized risk disclosure document
prepared by the SEC, that:

|1. | contains a description of the nature and level of risk in
      the market for penny stocks in both public offerings and secondary
      trading;                                                                                        
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                          
|2. | contains a description of the brokers or dealers duties
      to the customer and of the rights and remedies available to the customer
      with respect to a violation to such duties or other requirements of
      securities laws;
|   |                                                                                                                                                                                                                                          
|3. | contains a brief, clear, narrative description of a
      dealer market, including bid and ask prices for penny stocks and the
      significance of the spread between the bid and ask price;                                           
|   |                                                                                                                                                                                                                                          
|4. | contains a toll-free telephone number for inquiries on
      disciplinary actions;                                                                                                                                                       
|   |                                                                                                                                                                                                                                          
|5. | defines significant terms in the disclosure document or
      in the conduct of trading in penny stocks; and                                                                                                                             
|   |                                                                                                                                                                                                                                          
|6. | contains such other information and is in such form,
      including language, type, size and format, as the SEC shall require by
      rule or regulation.                                                                              

The broker-dealer also must provide, prior to effecting any
transaction in a penny stock, the customer with: (a) bid and offer quotations
for the penny stock; (b) the compensation of the broker-dealer and its
salesperson in the transaction; (c) the number of shares to which such bid and
ask prices apply, or other comparable information relating to the depth and
liquidity of the market for such stock; and (d) a monthly account statements
showing the market value of each penny stock held in the customers account. In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those rules; the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchasers written acknowledgment of the receipt of a risk disclosure
statement, a written agreement to transactions involving penny stocks, and a
signed and dated copy of a written suitably statement. These disclosure
requirements may have the effect of reducing the trading activity in the
secondary market for our stock.

13

---

ITEM
2.             
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM
3.             
DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM
5.             
OTHER INFORMATION.

On March 7, 2011, we entered into a sixth amendment agreement
dated for reference March 15, 2011 (the "Sixth Amendment Agreement") with
Geoffrey Goodall whereby Mr. Goodall agreed to extend the due date of certain
payments, expenses and share issuances under the Frances Option Agreement.

ITEM
6.             
EXHIBITS.

The following exhibits are either provided with this Quarterly
Report or are incorporated herein by reference:

|Exhibit |                                                                                                                                             
|------- | --------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of Exhibits                                                                                                                     
|        |                                                                                                                                             
|3.1     | Articles of
        Incorporation.(1)                                                                                                       
|        |                                                                                                                                             
|3.2     | Bylaws, as amended.(1)                                                                                                                      
|        |                                                                                                                                             
|10.1    | Purchase Agreement
        (Minnie Claim) dated March 28, 2007 between Yaterra and Multi Metal Mining
        Corp.(1)                      
|        |                                                                                                                                             
|10.2    | Purchase Agreement
        (Blue Jack Property) dated August 29, 2008 between Yaterra and Howard
        V. Metzler. (1)                    
|        |                                                                                                                                             
|10.3    | Option Agreement
        (Frances Property) dated July 14, 2009 between Yaterra and Geoffrey Goodall.(2)                                    
|        |                                                                                                                                             
|10.4    | Amendment Agreement
        (Frances Property) dated October 27, 2009 between Yaterra and Geoffrey
        Goodall.(3)                      
|        |                                                                                                                                             
|10.5    | Second Amendment
        Agreement (Frances Property) dated December 10, 2009 between Yaterra and
        Geoffrey Goodall.(3)              
|        |                                                                                                                                             
|10.6    | Third Amendment
        Agreement (Frances Property) dated February 11, 2010 between Yaterra and
        Geoffrey Goodall.(4)               
|        |                                                                                                                                             
|10.7    | Fourth Amendment
        Agreement (Frances Property) dated June 1, 2010 between Yaterra and Geoffrey
        Goodall. (5)                  
|        |                                                                                                                                             
|10.8    | Fifth Amendment
        Agreement (Frances Property) dated for reference September 1, 2010 between
        Yaterra and Geoffrey Goodall. (7)
|        |                                                                                                                                             
|10.9    | Sixth Amendment
        Agreement (Frances Property) dated for reference March 15, 2011 between
    Yaterra and Geoffrey Goodall.           
|        |                                                                                                                                             
|14.1    | Code of Ethics.(3)                                                                                                                          
|        |                                                                                                                                             
|31.1    | Certification
        of Principal Executive Officer as adopted pursuant to Section 302 of the
        Sarbanes-Oxley Act of 2002.          
|        |                                                                                                                                             
|31.2    | Certification
        of Principal Accounting Officer as adopted pursuant to Section 302 of
        the Sarbanes-Oxley Act of 2002.         

14

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|Exhibit |                                                                                                                                    
|------- | -----------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of Exhibits                                                                                                            
|        |                                                                                                                                    
|32.1    | Certification
        of Principal Executive Officer as adopted pursuant to Section 906 of the
        Sarbanes-Oxley Act of 2002. 
|        |                                                                                                                                    
|32.2    | Certification
        of Principal Accounting Officer as adopted pursuant to Section 906 of
        the Sarbanes-Oxley Act of 2002.
|        |                                                                                                                                    
|99.1    | Audit Committee
        Charter.(3)                                                                                                
|        |                                                                                                                                    
|99.2    | Letter of Intent
        between the Company and Healthcare of Today, Inc. (6)                                                     
|        |                                                                                                                                    
|99.3    | Letter of Intent
        between the Company and NanoCrypt AG.(8)                                                                  

Notes:

|(1) | Previously filed as an exhibit to our Registration
      Statement on Form S-1 originally filed with the SEC on December 8, 2008,
      as amended January 8, 2009 and declared effective January 13,
  2009.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Previously filed as an exhibit to our Quarterly Report on
      Form 10-Q filed with the SEC on July 16, 2009.                                                                                               
|(3) | Previously filed as an exhibit to our Annual Report on
      Form 10-K filed with the SEC on December 15, 2009.                                                                                              
|(4) | Previously filed as an exhibit to our Quarterly Report on
      Form 10-Q filed with the SEC on April 19, 2010.                                                                                              
|(5) | Previously filed as an exhibit to our Quarterly Report on
      Form 10-Q filed with the SEC on July 15, 2010.                                                                                               
|(6) | Previously filed as an exhibit to our Current Report on
      Form 8-K filed with the SEC on November 10, 2010.                                                                                              
|(7) | Previously filed as an exhibit to our Annual Report on
      Form 10-K filed with the SEC on December 14, 2010.                                                                                              
|(8) | Previously filed as an exhibit to our Quarterly Report on
      Form 10-Q filed with the SEC on January 19, 2011.                                                                                            

15

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.

|      |               |  |     | YATERRA VENTURES CORP.                  
|----- | ------------- |  | --- | ----------------------------------------
|      |               |  |     |                                         
|      |               |  |     |                                         
|      |               |  |     |                                         
|Date: | July 20, 2011 |  | By: | /s/ Jarrett F. Bousquet                 
|      |               |  |     | JARRETT F. BOUSQUET                     
|      |               |  |     | President, Secretary and
      Treasurer
|      |               |  |     | (Principal Executive Officer)           
|      |               |  |     |                                         
|      |               |  |     |                                         
|      |               |  |     |                                         
|      |               |  |     |                                         
|Date: | July 20, 2011 |  | By: | /s/ David K. Ryan                       
|      |               |  |     | DAVID K. RYAN                           
|      |               |  |     | Vice President, Finance                 
|      |               |  |     | (Principal Accounting Officer)          

---