SECURITIES AND EXCHANGE COMMISSION

FORM 10-QSB

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

FOR THE QUARTERLY PERIOD ENDED October 31, 2007

OR

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

FOR THE TRANSITION PERIOD FROM ________ TO __________

REGISTRATION NUMBER 333-101960

YUKON GOLD CORPORATION, INC.

Delaware
      52-2243048(State or other jurisdiction of
      (I.R.S.
      Employerincorporation or organization)
      Identification No.)


55 York Street, Suite 401, Toronto, Ontario M5J 1R7 (Address of principal executive offices) (Zip Code)

Registrants telephone number, including area code: (416)
865-9790

Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15 (d) of the Exchange Act during the past 12 months (or
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.

YES
      [X]
      NO [   ]


State the number of shares outstanding of each of the
issuers classes of common equity, as of the latest practicable date:

Class
      Outstanding as of October 31, 2007Common Shares $ .001 par value
      25,479,782




---

YUKON GOLD CORPORATION, INC.(AN EXPLORATION STAGE COMPANY)
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2007
(Amounts expressed in US Dollars) 
(Unaudited-Prepared by Management)
TABLE OF CONTENTS

|                                                                                                                                                       | Page No
|------------------------------------------------------------------------------------------------------------------------------------------------------ | -------
|                                                                                                                                                       |        
|Interim Consolidated Balance
    Sheets as of October 31, 2007 and April 30, 2007                                                                      | 1-2    
|                                                                                                                                                       |        
|Interim Consolidated Statements
    of Operations for the six months and three months ended October 31, 2007 and
    October 31, 2006                  | 3      
|                                                                                                                                                       |        
|Interim Consolidated Statements
    of Cash Flows for the six months ended October 31, 2007 and October 31, 2006                                       | 4      
|                                                                                                                                                       |        
|Interim Consolidated Statements
    of Changes in Stockholders Equity for the six months ended October 31, 2007
    and the year ended April 30, 2007 | 5-6    
|                                                                                                                                                       |        
|Condensed Notes to Interim
    Consolidated Financial Statements                                                                                       | 7-17   





---

YUKON GOLD CORPORATION, INC.

(An Exploration Stage Company) Interim Consolidated Balance Sheets 
As at October 31, 2007 and April 30, 2007 
(Amounts expressed in US Dollars) 
(Unaudited)

|ASSETS                                                              |             |  |          
|------------------------------------------------------------------- | ----------- |  | ---------
|                                                                    |             |  |          
|                                                                    | October 31, |  | April 30,
|                                                                    | 2007        |  | 2007     
|                                                                    | $           |  | $        
|CURRENT ASSETS                                                      |             |  |          
|                                                                    |             |  |          
|Cash and cash equivalents                                           | 574,620     |  | 936,436  
|Prepaid expenses and other (note 10)                                | 787,389     |  | 464,371  
|Exploration Tax Credit Receivable (note 4)                          | 567,868     |  | 483,258  
|Short-term investment in available-for-sale
    securities (note 9) | 210,000     |  |         
|Restricted Deposit                                                  |            |  | 17,889   
|                                                                    | 2,139,877   |  | 1,901,954
|                                                                    |             |  |          
|RESTRICTED CASH (note 5)                                            |            |  | 2,266,602
|PROPERTY, PLANT AND EQUIPMENT                                       | 100,488     |  | 56,551   
|                                                                    |             |  |          
|                                                                    | 2,240,365   |  | 4,225,107

See condensed notes to the interim consolidated financial
statements.

APPROVED ON BEHALF OF THE BOARD

/s/ Kenneth J. HillKenneth J. Hill, Director

/s/ J.L. Guerra, JrJ.L. Guerra, Jr., Director

1

---

YUKON GOLD CORPORATION, INC.(An Exploration Stage Company) 
Interim Consolidated Balance Sheets 
As at October 31, 2007 and April 30, 2007 
(Amounts expressed in US Dollars) 
(Unaudited)

|LIABILITIES                                           
|------------------------------------------------------
|                                                      
|                                                      
|                                                      
|                                                      
|CURRENT LIABILITIES                                   
|                                                      
|Accounts payable and accrued liabilities (note
    11)
|Other Liability (note 12)                             
|Obligation under Capital Leases                       
|Total
    Current Liabilities                         
|                                                      
|Long Term Portion of:                                
|Obligation under Capital Lease                        
|                                                      
|TOTAL
    LIABILITIES                                 
|                                                      
|SHAREHOLDERS EQUITY                                  
|                                                      
|                                                      
|CAPITAL STOCK                                         
|                                                      
|ADDITIONAL PAID-IN CAPITAL                            
|                                                      
|ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)         
|                                                      
|DEFICIT, ACCUMULATED DURING THE EXPLORATION STAGE     
|                                                      
|                                                      
|                                                      
|                                                      

See condensed notes to the interim consolidated financial
statements.

2

---



YUKON GOLD CORPORATION, INC.

(An Exploration Stage Company) Interim Consolidated Statements of Operations 
For the six months and three months ended October 31, 2007 and October 31, 2006

(Amounts expressed in US Dollars) 
(Unaudited)

|                                               |              |            | For the     |            | For the     |            | For the      |            | For the     
|---------------------------------------------- | ------------ | ---------- | ----------- | ---------- | ----------- | ---------- | ------------ | ---------- | ------------
|                                               |              |            | six months  |            | six months  |            | three months |            | three months
|                                               | Cumulative   |            | ended       |            | ended       |            | ended        |            | ended       
|                                               | since        |            | October 31, |            | October 31, |            | October 31,  |            | October 31, 
|                                               | inception    |            | 2007        |            | 2006        |            | 2007         |            | 2006        
|                                               |              |            |             |            |             |            |              |            |             
|                                               | $            |            | $           |            | $           |            | $            |            | $           
|OPERATING EXPENSES                             |              |            |             |            |             |            |              |            |             
|                                               |              |            |             |            |             |            |              |            |             
|General and administration                     | 4,572,175    |            | 466,973     |            | 1,163,024   |            | 392,087      |            | 609,342     
|Project expenses                               | 6,806,615    |            | 2,997,811   |            | 1,695,854   |            | 2,023,086    |            | 823,967     
|Exploration Tax Credit                         | (605,716)    |            |            |            |            |            |             |            |            
|Amortization                                   | 25,023       |            | 7,089       |            | 6,307       |            | 4,156        |            | 3,149       
|Loss on sale/disposal of capital
    assets    | 5,904        |            |            |            |            |            |             |            |            
|                                               |              |            |             |            | _           |            |              |            |             
|TOTAL OPERATING EXPENSES                       | 10,804,001   |            | 3,471,873   |            | 2,865,185   |            | 2,419,329    |            | 1,436,458   
|                                               |              |            |             |            |             |            |              |            |             
|LOSS BEFORE INCOME TAXES                       | (10,804,001) |            | (3,471,873) |            | (2,865,185) |            | (2,419,329)  |            | (1,436,458) 
|                                               |              |            |             |            |             |            |              |            |             
|Income taxes
    recovery                      | 396,746      |            |            |            |            |            |             |            |            
|                                               |              |            |             |            |             |            |              |            |             
|NET LOSS                                       | (10,407,255) |            | (3,471,873) |            | (2,865,185) |            | (2,419,329)  |            | (1,436,458) 
|                                               |              |            |             |            |             |            |              |            |             
|Loss per share  basic and
    diluted         |              | (0.14)     |             | (0.17)     |             | (0.09)     |              | (0.08)    
|                                               |              |            |             |            |             |            |              |            |             
|Weighted average common shares
    outstanding |              | 23,999,421 |             | 17,151,588 |             | 25,078,649 |              | 17,646,550

See condensed notes to the interim consolidated financial statements.

3

---

YUKON GOLD CORPORATION, INC.(An Exploration Stage Company) Interim Consolidated Statements of Cash Flows 
For the six months ended October 31, 2007 and October 31, 2006 
(Amounts expressed in US Dollars) 
(Unaudited)
For the
    
    For thesix months
    
    six monthsCumulative
    
    ended
    
    endedsince
    
    October 31,
    
    October 31,inception
    
    2007
    
    2006$
    
    $
    
    $CASH FLOWS FROM OPERATING
    ACTIVITIESNet loss for the year
    (10,407,255)
    
    (3,471,873)
    
    (2,865,185)Items not requiring an outlay
    of cash:Amortization
    25,023
    
    7,089
    
    6,307Loss on sale/disposal of
    capital assets
    5,904
    
    
    
    Registration rights penalty
    expense
    188,125
    
    
    
    Shares issued for property
    payment
    525,339
    
    57,252
    
    53,845Common shares issued for
    Settlement of severance liability to ex-officer
    113,130
    
    
    
    113,130Stock-based compensation
    872,778
    
    196,259
    
    170,646Issue of shares for
    professional services
    852,523
    
    
    
    438,759Issue of units against
    settlement of debts
    20,077
    
    
    
    Increase in prepaid expenses
    and deposits
    (788,305)
    
    (215,720)
    
    (699,319)Increase in exploration tax
    credit receivable
    (567,868)
    
    
    
    Increase (Decrease) in accounts
    payable and accrued liabilities
    190,081
    
    (100,404)
    
    (48,169)Decrease in restricted cash
    
    
    2,266,602
    
    118,275Decrease in restricted deposit
    
    
    17,889
    
    Increase in other liabilities
    35,581
    
    35,381
    
    NET CASH USED IN OPERATING
    ACTIVITIES
    (8,934,867)
    
    (1,207,525)
    
    (2,711,711)CASH FLOWS FROM INVESTING
    ACTIVITIESPurchase of property, plant and
    equipment
    (122,258)
    
    (41,520)
    
    (1,437)Investment in available for
    sale securities
    (250,000)
    
    (250,000)
    
    Sale of available for sale
    securities
    140,000
    
    140,000
    
    NET CASH USED IN INVESTING
    ACTIVITIES
    (232,258)
    
    (151,520)
    
    (1,437)CASH FLOWS FROM FINANCING
    ACTIVITIESRepayments from a shareholder
    1,180
    
    
    
    Proceeds from demand promissory
    notes
    200,000
    
    
    
    Proceeds from Convertible
    promissory notes converted
    200,500
    
    
    
    Proceeds from exercise of stock
    options
    61,000
    
    
    
    18,000Proceeds from exercise of
    warrants-net
    450,309
    
    
    
    Proceeds from subscription of
    warrants-net
    525,680
    
    
    
    425,497Proceeds from issuance of units
    /shares-net
    8,114,808
    
    925,807
    
    862,978Proceeds (Repayments) from
    capital lease obligation
    11,069
    
    (880)
    
    (1,489)NET CASH PROVIDED BY FINANCING
    ACTIVITIES
    9,564,546
    
    924,927
    
    1,304,986EFFECT OF FOREIGN CURRENCY
    EXCHANGE RATE CHANGES
    177,199
    
    72,302
    
    (40,582)NET INCREASE (DECREASE) IN CASH
    AND CASH EQUIVALENTS FOR THE YEAR
    574,620
    
    (361,816)
    
    (1,448,744)Cash and cash equivalents,
    beginning of year
    
    
    936,436
    
    2,412,126CASH AND CASH EQUIVALENTS, END
    OF PERIOD
    574,620
    
    574,620
    
    963,382INCOME TAXES PAID
    
    
    
    
    INTEREST PAID
    
    
    
    
    See condensed notes to the interim consolidated financial
statements.

4

---

YUKON GOLD CORPORATION, INC.

(An Exploration Stage Company) 
Interim Consolidated Statements of Changes in Stockholders Equity 
From Inception to October 31, 2007 
(Amounts expressed in US Dollars)(Unaudited)

|                                                                                | Number of Common Shares | Common Shares Amount | Additional Paid-in 
    Capital | Subscription for 
    Warrants | Deficit,
    Accumulated during the Exploration Stage | Comprehen-
    sive 
    Income
    (loss) | Accumulated
    Other Comprehen-
    siveIncome
 (loss)
|------------------------------------------------------------------------------- | ----------------------- | -------------------- | ------------------------------- | ------------------------------ | ----------------------------------------------------- | ------------------------------------------ | -------------------------------------------------------
|                                                                                | #                       | $                    | $                               | $                              | $                                                     | $                                          | $                                                      
|Issuance of Common shares                                                       | 2,833,377               | 154,063              |                                |                               |                                                      |                                           |                                                       
|Issuance of warrants                                                            |                        |                     | 1,142                           |                               |                                                      |                                           |                                                       
|Foreign currency translation                                                    |                        |                     |                                |                               |                                                       | 604                                        | 604                                                    
|Net loss for the year                                                           |                        |                     |                                |                                | (124,783)                                             | (124,783)                                  |                                                       
|                                                                                |                         |                      |                                 |                                |                                                       |                                            |                                                        
|Balance as of April 30, 2003                                                    | 2,833,377               | 154,063              | 1,142                           |                               | (124,783)                                             | (124,179)                                  | 604                                                    
|                                                                                |                         |                      |                                 |                                |                                                       |                                            |                                                        
|Issuance of Common shares                                                       | 1,435,410               | 256,657              |                                |                               |                                                      |                                           |                                                        
|Issuance of warrants                                                            |                        |                     | 2,855                           |                               |                                                      |                                           |                                                        
|Shares repurchased                                                              | (240,855)               | (5,778)              |                                |                               |                                                      |                                           |                                                        
|Recapitalization pursuant to
    reverse acquisition                            | 2,737,576               | (404,265)            | 404,265                         |                               |                                                      |                                           |                                                        
|Issuance of Common shares                                                       | 1,750,000               | 175                  | 174,825                         |                               |                                                      |                                           |                                                        
|Issuance of Common shares for
    Property Payment                              | 300,000                 | 30                   | 114,212                         |                               |                                                      |                                           |                                                        
|Foreign currency translation                                                    |                        |                     |                                |                               |                                                      | (12,796)                                   | (12,796)                                               
|Net loss for the year                                                           |                        |                     |                                |                               | (442,906)                                             | (442,906)                                  |                                                       
|                                                                                |                         |                      |                                 |                                |                                                       |                                            |                                                        
|Balance as of April 30, 2004                                                    | 8,815,508               | 882                  | 697,299                         |                               | (567,689)                                             | (455,702)                                  | (12,192)                                               
|                                                                                |                         |                      |                                 |                                |                                                       |                                            |                                                        
|Issuance of Common shares for
    Property Payment                              | 133,333                 | 13                   | 99,987                          |                               |                                                      |                                           |                                                       
|Issuance of common shares on
    Conversion of Convertible Promissory note      | 76,204                  | 8                    | 57,144                          |                               |                                                      |                                           |                                                       
|Foreign currency translation                                                    |                        |                     |                                |                               |                                                      | 9,717                                      | 9,717                                                  
|Net loss for the year                                                           |                        |                     |                                |                               | (808,146)                                             | (808,146)                                  |                                                       
|                                                                                |                         |                      |                                 |                                |                                                       |                                            |                                                        
|Balance as of April 30, 2005                                                    | 9,025,045               | 903                  | 854,430                         |                               | (1,375,835)                                           | (798,429)                                  | (2,475)                                                
|                                                                                |                         |                      |                                 |                                |                                                       |                                            |                                                        
|Stock based compensation -
    Directors and officers                           |                         |                      | 216,416                         |                                |                                                       |                                            |                                                        
|Stock based compensation -
    Consultants                                      |                         |                      | 8,830                           |                                |                                                       |                                            |                                                        
|Issue of common shares and
    Warrants on retirement of Demand Promissory note | 369,215                 | 37                   | 203,031                         |                                |                                                       |                                            |                                                        
|Units issued to an outside
    company for professional services settlement     | 24,336                  | 2                    | 13,384                          |                                |                                                       |                                            |                                                        
|Units issued to an officer for
    professional services settlement             | 12,168                  | 1                    | 6,690                           |                                |                                                       |                                            |                                                        
|Issuance of common shares for
    professional services                         | 150,000                 | 15                   | 130,485                         |                                |                                                       |                                            |                                                        
|Units issued to shareholder                                                     | 490,909                 | 49                   | 269,951                         |                                |                                                       |                                            |                                                        
|Units issued to a director                                                      | 149,867                 | 15                   | 82,412                          |                                |                                                       |                                            |                                                        
|Units issued to outside
    subscribers                                         | 200,000                 | 20                   | 109,980                         |                                |                                                       |                                            |                                                        
|Issuance of common shares on
    Conversion of Convertible Promissory notes     | 59,547                  | 6                    | 44,654                          |                                |                                                       |                                            |                                                        
|Issuance of common shares on
    Exercise of warrants                           | 14,000                  | 2                    | 11,998                          |                                |                                                       |                                            |                                                        
|Issuance of common shares on
    Conversion of Convertible Promissory notes     | 76,525                  | 8                    | 57,386                          |                                |                                                       |                                            |                                                        
|Private placement of shares                                                     | 150,000                 | 15                   | 151,485                         |                                |                                                       |                                            |                                                        
|Issuance of Common shares for
    property payment                              | 133,333                 | 13                   | 99,987                          |                                |                                                       |                                            |                                                        
|Issuance of common shares on
    Conversion of Convertible Promissory notes     | 34,306                  | 4                    | 25,905                          |                                |                                                       |                                            |                                                        
|Issuance of common shares on
    Exercise of warrants                           | 10,000                  | 1                    | 8,771                           |                                |                                                       |                                            |                                                        
|Issuance of common shares on
    Conversion of Convertible Promissory notes     | 101,150                 | 10                   | 76,523                          |                                |                                                       |                                            |                                                        

5

---



*

|Issue of 400,000 Special
    Warrants net                                    |            |       |            | 371,680     |              |             |         
|---------------------------------------------------------------------------- | ---------- | ----- | ---------- | ----------- | ------------ | ----------- | --------
|Issue of 200,000 flow through
    warrants                                   |            |       |            | 154,000     |              |             |         
|Brokered private placement of
    shares- net                                | 5,331,327  | 533   | 2,910,375  |             |              |             |         
|Brokered Private placement of
    flow through Shares- net                   | 25,000     | 2     | 13,310     |             |              |             |         
|Exercise of stock options                                                    | 10,000     | 1     | 5,499      |             |              |             |         
|Foreign currency translation                                                 |           |      |           |             |              | (2,687)     | (2,687) 
|Net loss for the year                                                        |           |      |           |             | (1,855,957)  | (1,855,957) |        
|                                                                             |            |       |            |             |              |             |         
|Balance as of April 30, 2006                                                 | 16,366,728 | 1,637 | 5,301,502  | 525,680     | (3,231,792)  | (1,858,644) | (5,162) 
|                                                                             |            |       |            |             |              |             |         
|Exercise of warrants                                                         | 10,000     | 1     | 8,986      |             |              |             |         
|Exercise of warrants                                                         | 45,045     | 5     | 40,445     |             |              |             |         
|Exercise of warrants                                                         | 16,000     | 2     | 14,278     |             |              |             |         
|Common shares issued for
    settlement of severance liability to ex-officer | 141,599    | 14    | 113,116    |             |              |             |         
|Exercise of warrants                                                         | 43,667     | 4     | 39,364     |             |              |             |         
|Exercise of warrants                                                         | 17,971     | 2     | 15,937     |             |              |             |         
|Exercise of warrants                                                         | 43,667     | 4     | 38,891     |             |              |             |         
|Exercise of warrants                                                         | 16,000     | 2     | 14,251     |             |              |             |         
|Exercise of warrants                                                         | 158,090    | 16    | 141,616    |             |              |             |         
|Issue of common shares for
    property payment                              | 43,166     | 4     | 53,841     |             |              |             |         
|Exercise of warrants                                                         | 64,120     | 6     | 57,863     |             |              |             |         
|Exercise of warrants                                                         | 61,171     | 6     | 53,818     |             |              |             |         
|Exercise of stock options                                                    | 24,000     | 2     | 17,998     |             |              |             |         
|Issuance of common shares for
    professional services                      | 342,780    | 34    | 438,725    |             |              |             |         
|Brokered private placement of
    units-net                                  | 400,000    | 40    | 363,960    |             |              |             |         
|Brokered private placement of
    units-net                                  | 550,000    | 55    | 498,923    |             |              |             |         
|Stock based
    compensation-Directors and Officers                          |            |       | 451,273    |             |              |             |         
|Exercise of stock options                                                    | 50,000     | 5     | 37,495     |             |              |             |         
|Issuance of common shares for
    property payment                           | 133,334    | 13    | 99,987     |             |              |             |         
|Issuance of common shares for
    professional services                      | 160,000    | 16    | 131,184    |             |              |             |         
|Issuance of common shares for
    professional services                      | 118,800    | 12    | 152,052    |             |              |             |         
|Issue of shares for
    flow-through warrants                                | 200,000    | 20    | 153,980    | (154,000)   |              |             |         
|Issue of shares for special
    warrants                                     | 404,000    | 41    | 375,679    | (371,680)   |              |             |         
|Issue of 2,823,049 flow-
    through warrants -net                           |            |       |            | 1,916,374   |              |             |         
|Issue of 334,218 unit special
    warrants-net                               |            |       |            | 230,410     |              |             |         
|Issue of 3,105,358 common
    shares for 2,823,049 flow through warrants     | 3,105,358  | 310   | 1,916,064  | (1,916,374) |              |             |         
|Issue of 367,641 common shares
    for 334,218 unit special warrants         | 367,641    | 37    | 230,373    | (230,410)   |              |             |         
|Registration rights penalty
    expense                                      |            |       | 188,125    |             |              |             |         
|Foreign currency translation                                                 |            |       |            |             |              | (58,446)    | (58,446)
|Net loss for the year                                                        |            |       |            |             | (3,703,590)  | (3,703,590) |         
|                                                                             |            |       |            |             |              |             |         
|Balance as of April 30, 2007                                                 | 22,883,137 | 2,288 | 10,949,726 |            | (6,935,382)  | (3,762,036) | (63,608)
|                                                                             |            |       |            |             |              |             |         
|Issuance of common shares for
    property payment                           | 136,364    | 13    | 57,239     |             |             |            |        
|Stock based compensation                                                     |            |       | 196,259    |             |             |            |         
|Unrealized gain on
    available-for-sale securities                         |            |       |            |             |              | 100,000     | 100,000 
|Realized gain on
    available-for-sale securities                           |            |       |            |             |              | (40,000)    | (40,000)
|Issue of 543,615 flow through
    units                                      | 543,615    | 54    | 227,450    |             |              |             |         
|Issue of 1,916,666 units  net                                               | 1,916,666  | 192   | 698,110    |             |              |             |         
|Foreign currency translation                                                 |            |       |            |             |              | 281,303     | 281,303 
|                                                                             |            |       |            |             |              |             |         
|Net loss for the period                                                      |            |       |            |             |              |             |         
|Balance as of October
    31, 2007                                           | 25,479,782 | 2,547 | 12,128,784 |             | (10,407,255) | (3,130,570) | 277,695 

6

---

YUKON GOLD CORPORATION, INC. 
(An Exploration Stage Company) 
Condensed Notes to Interim Consolidated Financial Statements 
October 31, 2007 
(Amounts expressed in US Dollars) 
(Unaudited)

1. BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial
statements do not include all the information and footnotes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of all recurring
accruals) considered necessary for fair presentation have been included.
Operating results for the interim period are not necessarily indicative of the
results that may be expected for the year ended April 30, 2008. Interim
financial statements should be read in conjunction with the Companys annual
audited financial statements.
The interim consolidated financial statements include the
accounts of Yukon Gold Corporation, Inc. (the "Company") and its wholly owned
subsidiary Yukon Gold Corp. ("YGC"). All material inter-company accounts and
transactions have been eliminated.
2. GOING CONCERN
The Company has no source for operating revenue and expects
to incur significant expenses before establishing operating revenue. The Company
has a need for equity capital and financing for working capital and exploration
and development of its properties. Because of continuing operating losses, the
Companys continuance as a going concern is dependent upon its ability to obtain
adequate financing and to reach profitable levels of operation. The Companys
future success is dependent upon its continued ability to raise sufficient
capital, not only to maintain its operating expenses, but to explore for ore
reserves and develop those it has on its mining claims. There is no guarantee
that such capital will continue to be available on acceptable terms, if at all
or if the Company will attain profitable levels of operation.
Management has initiated plans to raise equity funding
through the issuance of common shares including flow-through shares. The Company
was successful in raising funds (net) of approximately $4 million during the
year ended April 30, 2006, which assisted the Company in meeting its commitments
and requirements for project expenses and general and administrative expenses.
The Company also raised (net) approximately $1.3 million during the six months
ended October 31, 2006. The company raised (net) approximately $1.9 million
through subscription of flow-through special warrants and raised (net)
approximately $230,000 through subscription of unit special warrants during the
three months ended January 31, 2007. The company further raised an additional
approximately $262,000 through subscription of flow-through units and raised
(net) approximately $698,000 through subscription of units during the three
months ended October 31, 2007. The Companys common shares are listed on the
Toronto Stock Exchange (the "TSX") and included for quotation on the Over-The-Counter
Bulletin Board maintained by the NASD in the United States. The trading of the
Companys stock in both the United States and Canada has expanded its investor
base, as the Company continues to explore sources of funding from both the
United States and Canada.
3. NATURE OF OPERATIONS
The Company is an exploration stage mining company and has
not yet realized any revenue from its operations. It is primarily engaged in
acquisition, exploration and development of its two mining properties, both
located in the Yukon Territory in Canada. The Company has not yet determined
whether these properties contain mineral reserves that are economically
recoverable. The business of mining and exploring for minerals involves a high
degree of risk and there can be no assurances that current exploration programs
will result in profitable mining operations.
4. EXPLORATION TAX CREDIT RECEIVABLE
The Company has a claim to the Yukon exploration tax credit,
since it maintains a permanent establishment in the Yukon and has incurred
eligible mineral exploration expenses as defined by the federal income tax
regulations of Canada. The Companys expectation of receiving this credit of
$567,868 (CDN$536,465) is based on the history of receiving past credits. The
Company will file tax returns to claim the 2007 credit of $386,630 (CDN$365,249)
and has previously filed for the 2006 credit of $181,238 (CDN$171,216).
7
YUKON GOLD CORPORATION, INC. 
(An Exploration Stage Company) 
Condensed Notes to Interim Consolidated Financial Statements 
October 31, 2007 
(Amounts expressed in US Dollars) 
(Unaudited)

5. RESTRICTED CASHUnder Canadian
income tax regulations, a company is permitted to issue flow-through shares
whereby the company agrees to incur qualifying expenditures and renounce the
related income tax deductions to the investors. Notwithstanding that, there is
no specific requirement to segregate the funds. The flow-through funds, which
are unexpended at the consolidated balance sheet date are considered to be
restricted and are not considered to be cash or cash equivalents. As of October
31, 2007 and April 30, 2007, unexpended flow-through funds were $nil and
$2,266,602 (CDN$2,516,155) respectively.

6. STOCK BASED COMPENSATION

Per SEC Staff Accounting Bulletin 107, Topic 14.F,
"Classification of Compensation Expense Associated with Share-Based Payment
Arrangements" stock based compensation expense is being presented in the same
lines as cash compensation paid.

The Company adopted a new Stock Option Plan at its
shareholders meeting on January 19, 2007 (the "2006 Stock Option Plan"). The
2006 Stock Option Plan will be administered by the board of directors of the
Company or, in the board of directors discretion, by a committee appointed by
the board of directors for that purpose. The TSX approved the 2006 Stock Option
plan on March 9, 2007.

Subject to the provisions of the 2006 Stock Option Plan, the
aggregate number of shares which may be issued under the 2006 Stock Option Plan
shall not exceed 2,000,000 shares ("Total Shares"). Any Stock Option granted
under the 2006 Stock Option Plan which has been exercised shall again be
available for subsequent grant under the 2006 Stock Option Plan, effectively
resulting in a re-loading of the number of shares available for grant under the
2006 Stock Option Plan. Any shares subject to an option granted under the 2006
Stock Option Plan which for any reason is surrendered, cancelled or terminated
or expires without having been exercised shall again be available for subsequent
grant under the 2006 Stock Option Plan.

Under the 2006 Stock Option Plan, at no time shall: (i) the
number of shares reserved for issuance pursuant to Stock Options granted to any
one optionee exceed 10% of the Total Shares; (ii) the number of shares, together
with all security based compensation arrangements of the Company in effect,
reserved for issuance pursuant to Stock Options granted to any "insiders" (as
that term is defined under the Securities Act (Ontario)) exceed 10% of
the total number of issued and outstanding shares. In addition, the number of
shares issued to insiders pursuant to the exercise of Stock Options, within any
one year period, together with all security based compensation arrangements of
the Company in effect, shall not exceed 10% of the total number of issued and
outstanding shares.

The purchase price (the "Price") per share under each Stock
Option shall be determined by the board of directors or a committee, as
applicable. The Price shall not be lower than the closing market price on the
TSX, or another stock exchange where the majority of the trading volume and
value of the Shares occurs, on the trading day immediately preceding the date of
grant, or if not so traded, the average between the closing bid and asked prices
thereof as reported for the trading day immediately preceding the date of the
grant; provided that if the shares have not traded on the TSX or another stock
exchange for an extended period of time, the "market price" will be the fair
market value of the shares at the time of grant, as determined by the board of
directors or committee. The board of directors or committee may determine that
the Price may escalate at a specified rate dependent upon the date on which an
option may be exercised by the Eligible Participant. The Company has adopted
SFAS123 (Revised) commencing May 1, 2005. During the six month period ended
October 31, 2007, the following stock options were granted under the 2006 stock
option plan:

a)

On August 15, 2007
Stock options to one consultant to purchase 125,000 common shares each at an
exercise price of $0.42 (CND $0.45) per share. These options were granted in
accordance with the terms of the Companys 2006 Stock Option Plan and shall vest
at 31,250 options each on November 15, 2007, February 15, 2008, May 15, 2008 and
August 15, 2008 respectively. The first exercise date of the option is August
15, 2008 and these options shall expire on August 15, 2010.

b)

On September 28,
2007 Stock Options to one officer to purchase 200,000 common shares at a price
of $0.38 (CDN$0.38) and to one employee to purchase 100,000 common shares at a
price of $0.39 (CDN$0.39) per share. These options were granted in accordance
with the terms of the Companys 2006 Stock Option Plan. Options to the officer
shall vest at the rate of one twelfth (1/12) each month, commencing, on the 1st
day of October 2007, for a period of twelve months. The options granted shall be
for a term of 5 years. Options to the employee shall vest at the rate of one
twenty-forth (1/24) each month, commencing on October 28, 2007, for a period of
24 months. The options granted shall be for a term of 5 years.

8

---

YUKON GOLD CORPORATION, INC. 
(An Exploration Stage Company) 
Condensed Notes to Interim Consolidated Financial Statements 
October 31, 2007 
(Amounts expressed in US Dollars) 
(Unaudited)

6. STOCK BASED COMPENSATION-Contd
For the six month period ended October 31, 2007, the Company
recognized in the financial statements, stock-based compensation costs as per
the following details. The fair value of each option used for the purpose of
estimating the stock compensation is based on the grant date using the Black-Scholes
option pricing model with the following weighted average assumptions:
19-Jan
    20-Mar
    28-Mar
    15-Aug
    28-Sept2007
    2007
    2007
    2007
    2007
    TOTALRisk
    free rate
    4.5%
    4.5%
    4.5%
    4.5%
    4.5%Volatility factor
    45.19%
    57.48%
    98.67%
    71.49%
    49.04%Stock-based compensation cost expensed during the six month period ended
    October 31, 2007
    $146,738
    $13,296
    $23,942
    $5,110
    $7,173
    $196,259Unexpended Stock based compensation cost deferred over the vesting period
    $25,092
    $36,826
    $19,481
    $19,111
    $49,230
    $149,740As of October 31, 2007 there was $149,740 of unrecognized
expenses related to non-vested stock-based compensation arrangements granted.
The stock-based compensation expense for the six month period ended October 31,
2007 was $196,259.
7. ISSUANCE OF COMMON SHARES
Year ended April 30, 2007
On May 29, 2006 the Company issued 10,000 common shares for
the exercise of 10,000 warrants at $0.89 (CDN$1.00) from a warrant holder in
consideration of $8,987 (CDN$10,000).
On May 29, 2006 the Company issued 45,045 common shares for
the exercise of 45,045 warrants at $0.89 (CDN$1.00) from a warrant holder in
consideration of $40,450 (CDN$45,045).
On May 29, 2006 the Company issued 16,000 common shares for
the exercise of 16,000 warrants at $0.89 (CDN$1.00) from a warrant holder in
consideration of $14,280 (CDN$16,000).
On May 30, 2006 the Company issued 141,599 common shares for
the settlement of an accrued liability to an ex officer and director. The
accrued severance amount of $113,130 (CDN$128,855) was converted to 141,599
common shares at $0.80 (CDN$0.91).
On June 22, 2006 the Company issued 43,667 common shares for
the exercise of 43,667 warrants at $0.90 (CDN$1.00) from a warrant holder in
consideration of $39,368 (CDN$43,667).
On June 28, 2006 the Company issued 17,971 common shares for
the exercise of 17,971 warrants at $0.89 (CDN$1.00) from a warrant holder in
consideration of $15,939 (CDN$17,971).
On June 28, 2006 the Company issued 43,667 common shares for
the exercise of 43,667 warrants at $0.89 (CDN$1.00) from a warrant holder in
consideration of $38,895 (CDN$43,667).
On June 28, 2006 the Company issued 16,000 common shares for
the exercise of 16,000 warrants at $0.89 (CDN$1.00) from a warrant holder in
consideration of $14,253 (CDN$16,000).
9
YUKON GOLD CORPORATION, INC. 
(An Exploration Stage Company) 
Condensed Notes to Interim Consolidated Financial Statements 
October 31, 2007 
(Amounts expressed in US Dollars) 
(Unaudited)

7. ISSUANCE OF COMMON SHARES-Contd
On June 29, 2006 the Company issued 158,090 common shares for the exercise of
158,090 warrants at $0.89 (CDN$1.00) from a warrant holder in consideration of
$141,632 (CDN$158,090).
On July 7, 2006 the Company issued 43,166 common shares in settlement of a
property payment on the Mount Hinton property. The shares represent $53,845
(CDN$60,000) payment and were valued $1.25 (CDN$1.39) each.
On July 7, 2006 the Company issued 64,120 common shares for the exercise of
64,120 warrants at $0.90 (CDN$1.00) from a warrant holder in consideration of
$57,869 (CDN$64,120).
On July 17, 2006 the Company issued 61,171 common shares for the exercise of
61,171 warrants at $0.88 (CDN$1.00) from a warrant holder in consideration of
$53,824 (CDN$61,171).
On August 11, 2006 the Company issued 817,980 restricted
shares in total to three consultants for services relating to business promotion
and development. These consultants assisted management in the preparation of
financial offerings and in arranging meetings and making presentations to the
brokerage community and institutional investors in both the United States and
Canada. Except for 342,780 common shares which were earned by these consultants
as of October 31, 2006, the balance of 475,200 common shares were held in escrow
to be released to each consultant in 8 monthly installments of 19,800 common
shares commencing November 1, 2006. Out of 475,200 common shares held in escrow,
the Company received back 356,400 common shares for cancellation.
On September 7, 2006 the Company issued 24,000 shares to an officer upon
exercising 24,000 vested stock options at $0.75 for a total of $18,000.
On October 3, 2006, the Company completed a brokered private
placement and issued 400,000 units, where each unit consisted of a common share
and a share purchase warrant. The units were priced at $1.00 per unit for a
total of $400,000. The Company paid a finders fee of 6% and reimbursed expenses
for 3% of the total consideration. The warrants have a two-year term and are
exercisable at $1.50 per share in the first twelve months of the term and $2.00
per share in the remaining twelve months of the term.
On October 3, 2006, the Company completed another brokered
private placement and issued 550,000 units, where each unit consisted of a
common share and a share purchase warrant. The units were priced at $1.00 per
unit for a total of $550,000. The Company paid a finders fee of $33,000 and
reimbursed expenses for $18,022 (CDN$20,000). The warrants have a two-year term
and are exercisable at $1.50 per share in the first twelve months of the term
and $2.00 per share in the remaining twelve months of the term.
On December 12, 2006 the Company issued 50,000 shares to a former officer
upon exercising of 50,000 vested stock options at $0.75 for a total of $37,500.
On December 6, 2006 the board of directors authorized the
issuance of 133,334 common shares in the amount of $100,000 for a property
payment to Atna Resources Ltd., along with a cash payment of $86,805
(CDN$100,000) as per terms of the agreement. The common shares along with the
cash payment were delivered to Atna Resources Ltd. on December 12, 2006. This
entire payment of $186,805 was expensed in the consolidated statements of
operations.
On December 19, 2006 the Company issued 160,000 common shares
to a consultant for services rendered. These services related to the consulting
agreement dated March 21, 2006. As per terms of that agreement, the Consultant
was to provide to the Company market and financial advice and expertise as may
be necessary relating to the manner of offering and pricing of securities. The
agreement was for a period of twelve months commencing the day of trading of the
Companys stock on the Toronto Stock Exchange (April 19, 2006). As per the
agreement, the Consultant was to be compensated a fee equal to 240,000
restricted common shares of the Company with a fair value of $196,800 and was to
receive these shares on a monthly basis. Each party was able to cancel the
agreement on 30 days notice. The Company cancelled the agreement as of November
30, 2006 and on December 19, 2006 issued 160,000 common shares as full and final
consideration.

10

---

YUKON GOLD CORPORATION, INC. 
(An Exploration Stage Company) 
Condensed Notes to Interim Consolidated Financial Statements 
October 31, 2007 
(Amounts expressed in US Dollars) 
(Unaudited)

7. ISSUANCE OF COMMON SHARES-Contd
On December 19, 2006 the Company issued 200,000 common shares
in lieu of sale of 200,000 Flow-Through Special Warrants made to a Canadian
accredited investor, for $180,000 (CDN$205,020) on December 30, 2005. Each
Flow-Through Special Warrant entitled the Holder to acquire one flow-through
common share of the Company at no additional cost.
On December 28, 2006, the Company completed a private
placement of 2,823,049 flow-through special warrants (which qualify as
flow-through shares for the purposes of the Canadian Income Tax Act) at a price
of $0.90 (CDN$1.05) per warrant and 334,218 unit special warrants at a price of
$0.77 (CDN$0.90) per warrant for aggregate gross proceeds to the Company of
$2,801,610 (CDN$3,264,996). Each flow-through special warrant entitles the
holder to acquire, for no additional consideration, one common share of the
Company. Each unit special warrant entitles the holder to acquire, for no
additional consideration, one common share and one common share purchase warrant
of the Company. Each common share purchase warrant entitles the holder to
acquire one common share of the Company at a price of $0.90 (CDN$1.05) for a
period of 24 months from the closing date. In connection with this private
placement, the Company agreed to file a prospectus in Canada qualifying the
issuance of the common shares and warrants issuable upon the exercise of the
special warrants as well as those common shares issuable on exercise of the
common share purchase warrants. In addition, the Company agreed to file a
registration statement in the United States covering the re-sale of common
shares underlying the units and warrants by the respective shareholders. The
Company subsequently declined to file a prospectus in Canada but did file the
registration statement in the United States. As a result of the Companys
decision not to file a prospectus in Canada, primarily because of the cost
involved, the Company was obligated to pay a penalty to the holders of the
securities issued in the private placement. As a result of the penalty, (i) each
flow-through special warrant entitles the holder to acquire 1.1 common shares on
exercise thereof and (ii) each unit special warrant entitles the holder to
acquire 1.1 common shares and 1.1 common share purchase warrants on exercise
thereof. In connection with the private placement, Northern Securities Inc., the
lead agent, received a cash commission of $171,164 (CDN$198,550) as well as
169,042 flow-through compensation options and 23,395 unit compensation options.
In addition, as part of the private placement, Limited Market Dealer Inc.
received a cash commission of $25,862 (CDN$30,000) as well as 28,571
flow-through compensation options and Novadan Capital Ltd. received a cash
payment of $28,362 (CDN$32,900) as well as 32,900 unit compensation options.
Each flow-through compensation option entitles the holder to acquire, for no
additional consideration, one flow-through compensation warrant, each
exercisable into one common share of the Company at a price of $0.90 (CDN$1.05)
for a period of 24 months from the closing date of December 28, 2006. Each unit
compensation option entitles the holder to acquire, for no additional
consideration, one unit compensation warrant, each exercisable at $0.81
(CDN$0.941) into one common share and one common share purchase warrant of the
Company at a price of $0.90 (CDN$1.05)
for a period of 24 months from the closing date of December 28, 2006. As a
result of the penalty, (i) each flow-through compensation option entitles the
holder to acquire 1.1 flow-through compensation warrants on exercise thereof and
(ii) each unit compensation option granted to Northern Securities, Inc. entitles
the holder to acquire 1.1 unit compensation warrants on exercise thereof. The
private placement was exempt from registration under the Securities Act of 1933,
as amended (the "Securities Act") pursuant to an exemption afforded by
Regulation S promulgated under the Securities Act ("Regulation S").

On January 11, 2007, the Company issued its obligated 400,000
common shares and an additional 4,000 common shares as penalty, in lieu of sale
of 400,000 Special Warrants to a Canadian accredited investor for $404,000 paid
on December 15, 2005. Each Special Warrant entitled its holder to acquire one
common share of the Company and one common share purchase warrant at no
additional cost. The Company was obligated to have a registration statement
become effective within 181 days of the closing. In the absence of a
registration statement being declared effective within 181 days of the closing,
the Company issued an additional 4,000 common shares to the Canadian accredited
investor at no extra cost as a penalty. The Company expensed an amount of $5,000
to registration rights penalty expense under the head General and Administration
and credited this to Additional paid in capital.

On April 25, 2007 the Company issued 2,823,049 common shares
and an additional 282,309 shares as a penalty, relating to the private placement
of 2,823,049 flow-through special warrants on December 28, 2006 (refer to note
above). The penalty shares were issued as the Company failed to obtain receipts
for the final prospectus or effectiveness of the registration statement by
February 26, 2007 (60 days from the closing date). The Company expensed an
amount of $163,739 to registration rights penalty expense under the head General
and Administration and credited this to Additional paid in capital.

11

---

YUKON GOLD CORPORATION, INC. 
(An Exploration Stage Company) 
Condensed Notes to Interim Consolidated Financial Statements 
October 31, 2007 
(Amounts expressed in US Dollars) 
(Unaudited)

7. ISSUANCE OF COMMON SHARES-Contd
On April 25, 2007 the Company issued 334,218 common shares
and an additional 33,423 shares as a penalty, relating to the private placement
of 334,218 unit special warrants on December 28, 2006 (refer to note above). The
penalty shares were issued as the Company failed to obtain receipts for the
final prospectus or effectiveness of the registration statement by February 26,
2007 (60 days from the closing date). The Company expensed an amount of $19,386
to registration rights penalty expense under the head General and Administration
and credited this to Additional paid in capital.
Six Months ended October 31, 2007
On July 7, 2007 the Company issued 136,364 common shares in
settlement of a property payment on the Mount Hinton property. The shares
represent $57,252 (CDN$60,000) which is 40% of the contracted payment and were
valued at $0.42 (CDN$0.44) each.
On August 16, 2007 the Company completed a private placement
(the "Financing") with Northern Securities Inc. ("Northern"), acting as agent.
The Financing was comprised of the sale of 1,916,666 units (the "Units") at
$0.42 (CDN$0.45) per Unit (the "Unit Issue Price") for gross proceeds of
$802,101 (CDN$862,499.70) and the sale of 543,615 flow-through units (the
"Flow-Through Units" which qualify as flow-through shares for the purposes of
the Canadian Income Tax Act) at $0.49 (CDN$0.52) per Flow-Through Unit (the
"Flow-Through Unit Issue Price") for gross proceeds of $262,884 (CDN$282,680).
The proceeds raised were allocated between the offering of shares and the sale
of tax benefits. A liability of $35,381 was recognized for the sale of taxable
benefits, which will be reversed and credited to income when the Company
renounces resource expenditure deduction to the investor. Each Unit consisted of
one non-flow through common share ("Common Share") and one half of one Common
Share purchase warrant (each whole warrant, a "Warrant"). Each Warrant is
exercisable into one Common Share until August 16, 2009 at an exercise price of
$0.56 (CDN$0.60) per share. Each Flow-Through Unit consisted of one flow-through
common share and one half of one Common Share purchase warrant (each whole
warrant, an "FT Warrant"). Each FT Warrant is exercisable into one Common Share
until August 16, 2009 at an exercise price of $0.66 (CDN$0.70) per share. The
Company paid Northern a commission equal to 8% of the aggregate gross proceeds
which amounted to $85,199 (CDN$91,614) and issued 153,333 "Unit Compensation
Options" and 43,489 "FT Unit Compensation Options". Each Unit Compensation
Option is exercisable into one Unit at the Unit Issue Price until August 16,
2009. Each FT Unit Compensation Option is exercisable into one Common Share and
one half of one FT Warrant at the Flow-Through Unit Issue Price until August 16,
2009. The Company reimbursed Northern expenses of $18,600 (CDN $20,000).
8. COMMITMENTS AND CONTINGENCIES
(a)  Mount
Hinton Property Mining Claims
On July 7, 2002 Yukon Gold Corp. ("YGC")
entered into an option agreement with the Hinton Syndicate to acquire a 75%
interest in the 273 unpatented mineral claims covering approximately 14,000
acres in the Mayo Mining District of the Yukon Territory, Canada. This agreement
was replaced with a revised and amended agreement (the "Hinton Option
Agreement") dated July 7, 2005 which superseded the original agreement and
amendments thereto. The new agreement is between the Company, its wholly owned
subsidiary YGC and the Hinton Syndicate.
YGC must make scheduled cash payments
and perform certain work commitments to earn up to a 75% interest in the mineral
claims, subject to a 2% net smelter return royalty in favor of the Hinton
Syndicate, as further described below.
The schedule of Property Payments and
Work Programs are as follows:

| | PROPERTY
    PAYMENTS                          |                                  
| | ---------------------------------------------- | ---------------------------------
| | On execution of the
    July 7, 2002 Agreement | $ 19,693
    (CDN$   25,000) Paid
| | On July 7, 2003                                | $ 59,078
    (CDN$   75,000) Paid
| | On July 7, 2004                                | $118,157
    (CDN$ 150,000) Paid 
| | On January 2, 2006                             | $125,313
    (CDN$ 150,000) Paid 
| | On July 7, 2006                                | $134,512
    (CDN$ 150,000) Paid 
| | On July 7, 2007                                | $141,979
    (CDN$ 150,000) Paid 
| | On July 7, 2008                                | $158,781
    (CDN$ 150,000)      
| | TOTAL                                          | $757,513
    (CDN$850,000)       

12

---

YUKON GOLD CORPORATION, INC. 
(An Exploration Stage Company) 
Condensed Notes to Interim Consolidated Financial Statements 
October 31, 2007 
(Amounts expressed in US Dollars) 
(Unaudited)

8. COMMITMENTS AND CONTINGENCIES-Contd
WORK PROGRAM-expenditures to be incurred in the
    following periods;July 7/02 to July 6/03
    $ 118,157
    (CDN$     150,000) IncurredJuly 7/03 to July 6/04
    $ 196,928
    (CDN$     250,000) IncurredJuly 7/04 to July 6/05
    $ 256,006
    (CDN$     325,000) IncurredJuly 7/05 to Dec.
    31/06
    $ 667,795
    (CDN$     750,000) IncurredJan. 1/07 to Dec.
    31/07
    $ 937,383
    (CDN$  1,000,000) IncurredJan. 1/08 to Dec.
    31/08
    $1,323,171
    (CDN$  1,250,000)Jan. 1/09 to Dec.
    31/09
    $1,587,806
    (CDN$  1,500,000)TOTAL
    $5,087,246
    (CDN$5,225,000)By letter agreement dated August 17,
2006, the Hinton Syndicate agreed to allow the Company to defer a portion of the
Work Program expenditure scheduled to be incurred by December 31, 2006. The
agreement to defer such Work program expenditures was due to the mechanical
break-down of drilling equipment and the unavailability of replacement drilling
equipment at the Mount Hinton site. As a result, the Company was allowed to
defer the expenditure of approximately $220,681 (CDN$235,423) until December 31,
2007. The Company has incurred that expenditure in addition to the expenditure
for January 1 to December 31, 2007 as at October 31, 2007. All other Property
Payments and Work Program expenditures due have been made and incurred.
Provided all Property Payments have
been made that are due prior to the Work Program expenditure levels being
attained, YGC shall have earned a:
25% interest upon completion of Work
Program expenditures of $1,587,806 (CDN$1,500,000)
50% interest upon completion of Work
Program expenditures of $2,646,343 (CDN$2,500,000)
75% interest upon completion of Work
Program expenditures of $5,087,246 (CDN$5,225,000)
YGC earned a 50% interest in the
claims covered by the Hinton Option Agreement as at October 31, 2007. In some
cases, payments made to service providers include amounts advanced to cover the
cost of future work. These advances are not loans but are considered "incurred"
exploration expenses under the terms of the Hinton Option Agreement. Section
2.2(a) of the Hinton Option Agreement defines the term, "incurred" as follows:
"Costs shall be deemed to have been "incurred" when YGC has contractually
obligated itself to pay for such costs or such costs have been paid, whichever
should first occur." Consequently, the term, "incurred" includes amounts
actually paid and amounts that YGC has obligated itself to pay. Under the Hinton
Option Agreement there is also a provision that YGC must have raised and have
available the Work Program funds for the period from July 7, 2005 to December
31, 2006, by May 15 of 2006. This provision was met on May 15, 2006.
The Hinton Option Agreement
contemplates that upon the earlier of: (i) a production decision or (ii)
investment of $5,087,246 (CDN$5,225,000) or (iii) YGC has a minority interest
and decides not to spend any more money on the project, YGCs relationship with
the Hinton Syndicate will become a joint venture for the further development of
the property. Under the terms of the Hinton Option Agreement, the party with the
majority interest would control the joint venture. Although YGC has earned a 50%
interest as at October 31, 2007, if the relationship is converted to a joint
venture currently, YGCs interest would automatically be reduced to a 45%
interest in the joint venture (by the terms of the Hinton Option Agreement) and
the Hinton Syndicate would control the joint venture. Once the 75% interest is
earned, as described above, YGC has a further option to acquire the remaining
25% interest in the mineral claims for a further payment of $5,292,685
(CDN$5,000,000).
The Hinton Option Agreement provides
that the Hinton Syndicate receive a 2% "net smelter return royalty." In the
event that the Company exercises its option to buy-out the remaining 25%
interest of the Hinton Syndicate (which is only possible if the Company has
reached a 75% interest, as described above) then the "net smelter return
royalty" would become 3% and the Hinton Syndicate would retain this royalty
interest only. The "net smelter return royalty" is a percentage of the gross
revenue received from the sale of the ore produced from the mine less certain
permitted expenses.
The Hinton Option Agreement entitles
the Hinton Syndicate to recommend for appointment one member to the board of
directors of the Company.

13

---

YUKON GOLD CORPORATION, INC. 
(An Exploration Stage Company) 
Condensed Notes to Interim Consolidated Financial Statements 
October 31, 2007 
(Amounts expressed in US Dollars) 
(Unaudited)

8. COMMITMENTS AND CONTINGENCIES-Contd
The Hinton Option Agreement provides
both parties (YGC and the Hinton Syndicate) with rights of first refusal in the
event that either party desires to sell or transfer its interest.
The Hinton Syndicate members each
have the option to receive their share of property payments in stock of the
Company at a 10% discount to the market. YGC and the Company have a further
option to pay 40% of any property payment due after the payment on January 2,
2006 with common stock of the Company. On July 7, 2007 the Company issued
136,364 common shares, with the approval of the TSX, in settlement of 40% of the
property payment due on July 7, 2007. The shares represent $57,252 (CDN$60,000)
which is 40% of the contracted payment and were valued at $0.42 (CDN$0.44) each.
The $84,727 (CDN$90,000) balance was paid in cash to the members of the Hinton
Syndicate on July 7, 2007. This entire issuance of shares and cash payment was
expensed as project expense.
The Hinton Option Agreement pertains
to an "area of interest" which includes the area within ten kilometers of the
outermost boundaries of the 273 mineral claims, which constitute our mineral
properties. Either party to the Hinton Option Agreement may stake claims outside
the 273 mineral claims, but each must notify the other party if such new claims
are within the "area of interest." The non-staking party may then elect to have
the new claims included within the Hinton Option Agreement. As of December 11,
2006, there were an additional 24 claims staked, known as the "Gram Claims"
which became subject to the Hinton Option Agreement.
On April 2, 2007 the Company accepted
a proposed work program, budget and cash call schedule for the Mount Hinton
project which was revised on May 15, 2007, totaling $1,517,194 (CDN$1,505,200)
for the 2007 Work Program. The Company had approximately $70,304 (CDN$75,000) on
deposit left over from the 2006 cash call schedule. On May 15, 2007 the Company
paid $180,164 (CDN$200,000), on June 15, 2007 the Company paid $202,684
(CDN$225,000), being two of the four cash call payments. Due to delays in the
drilling program the third payment of $635,123 (CDN$600,000) which was due on
July 31, 2007 was changed to August 31, 2007. On August 15, 2007 the Company
paid $97,259 (CDN$91,880) towards the third cash call payment for the Mount
Hinton 2007 Work Program. On August 31, 2007 the Company re-allocated $537,864
(CDN$508,120) being the balance of the third cash call payment from cash call
funds previously allocated to the Marg Project. These re-allocated funds were
not needed for the Marg Project. The fourth payment of $428,919 (CDN$405,200)
which was originally due on August 15, 2007 was changed to and paid on September
15, 2007.
b)  The Marg
Property
In March 2005, the Company acquired
rights to purchase 100% of the Marg Property, which consists of 402 contiguous
mineral claims covering approximately 20,000 acres located in the Mayo Mining
District of the Yukon Territory of Canada. Title to the claims is registered in
the name of YGC.
The Company assumed the rights to
acquire the Marg Property under a Property Purchase Agreement ("Agreement") with
Atna Resources Ltd. ("Atna"). Under the terms of the Agreement the Company paid
$119,189 (CDN$150,000) cash and 133,333 common shares as a down payment. The
Company made payments under the Agreement for $43,406 (CDN$50,000) cash and an
additional 133,333 common shares of the Company on December 12, 2005; $86,805
(CDN$100,000) cash and an additional 133,334 common shares of the Company on
December 12, 2006.
The Company has agreed to make
subsequent payments under the Agreement of: (i) $105,854 (CDN$100,000) cash on
or before December 12, 2007 and this cash payment was made subsequently; and
(ii) $211,708 (CDN$200,000) in cash and/or common shares of the Company (or some
combination thereof to be determined) on or before December 12, 2008. Upon the
commencement of commercial production at the Marg Property, the Company will pay
to Atna $1,058,537 (CDN$1,000,000) in cash and/or common shares of the Company,
or some combination thereof to be determined.
On April 2, 2007 the Company accepted
a proposed work program, budget and cash call schedule for the Marg project
totaling $3,026,916 (CDN$3,180,000) for the 2007 Work Program. The Company had
approximately $515,561 (CDN$550,000) on deposit left over from the 2006 cash
call schedule. On May 15, 2007 the Company paid $703,037 (CDN$750,000), on June
15, 2007 the Company paid $703,037 (CDN$750,000), and on July 15, 2007 the
Company paid $703,037 (CDN$750,000) being three of the four cash call payments.
The fourth and final payment of $402,244 (CDN$380,000) was paid on August 15,
2007. On August 31, 2007 the Company re-allocated $537,864 (CDN$508,120) being
the balance of the third cash call payment for the Mount Hinton 2007 Work
Program from cash call funds previously allocated to the Marg Project. These
re-allocated funds were not needed for the Marg Project.

14

---

YUKON GOLD CORPORATION, INC. 
(An Exploration Stage Company) 
Condensed Notes to Interim Consolidated Financial Statements 
October 31, 2007 
(Amounts expressed in US Dollars) 
(Unaudited)

8. COMMITMENTS AND CONTINGENCIES-Contd
c) On August 15, 2007 the Company
entered into an investor relations marketing agreement with a consultant for a
one year term, with the option to renew for an additional 12 months. In return
for services rendered, the Company will pay the consultant $2,117 (CDN$2,000)
per month. On August 31, 2007 the Company paid $3,787 (CDN$4,000) being the
first and last payments of the contract. On September 15, 2007 the Company paid
$1,941 (CDN$2,000) and on October 15, 2007 the Company paid $2,048 (CDN$2,000),
being the second and third payments respectively. Subsequently on November 15,
2007 the Company paid $2,117 (CDN$2,000) being the fourth payment of the
contract. .In addition, the consultant has been granted an option to purchase
125,000 shares of the Company at $0.48 (CDN$0.45) per share, with the option
vesting in equal quarterly amounts of 31,250 shares on November 15, 2007,
February 15, 2008, May 15, 2008 and August 15, 2008, and the first exercise date
being August 15, 2008 and an expiry date of August 15, 2010.
9. SHORT-TERM INVESTMENT IN AVAILABLE- FOR- SALE SECURITIES
The Company entered into a subscription agreement dated as of
April 3, 2007 (the "Agreement") with Industrial Minerals, Inc. ("Industrial
Minerals") to acquire (i) 5,000,000 common shares of Industrial Minerals at a
price of $0.05 per share and (ii) a Warrant entitling the holder: (a) to
purchase 5,000,000 common shares of Industrial Minerals at a purchase price of
$0.05 per share (the "option price") or, at the option of the holder, (b) to
surrender the Warrant for a number of common shares to be determined by
application of an anti-dilution formula which would result in a larger number of
shares issued to the holder if the market price of the common stock is less than
the option price at the time of exercise. The Warrant expires on April 3, 2008.
The total subscription price paid by the Company was $250,000. The Company
entered into the Agreement as of May 14, 2007. The common stock of Industrial
Minerals is quoted on the Over-the-Counter Bulletin Board under the symbol, "IDSM."
The Company accounted for this investment as a short term investment in
available-for-sale securities. The unrealized gain of $100,000 as at October 31,
2007 has been excluded from earnings and reported as Other Comprehensive
Income. On August 17, 2007, the Company entered into an agreement with Global
Capital SPE-1 LLC ("Global") pursuant to which Global agreed to purchase 2
million shares of Industrial Minerals Inc. ("IDSM") held by the Company for
consideration of $140,000. Pursuant to the Agreement, Global has the option to
purchase from the Company an additional 3 million shares of IDSM for
consideration of $210,000. The Company also assigned to Global 5 million
warrants to purchase IDSM stock. The Company will receive up to $100,000 in the
event that Global exercises all or a portion of the warrants. Global consummated
the purchase of the first 2 million shares of IDSM on September 6, 2007 and paid
the Company $140,000. The Company accounted for $40,000 as realized gain on sale
of securities as a credit to the general and administrative expenses and reduced
the unrealized gain of $100,000 by $40,000.
10. PREPAID EXPENSES AND OTHER
Included in prepaid expenses and other is an amount of
$189,017 (CDN$178,564) being Goods and Services tax receivable from the Federal
Government of Canada. Included in prepaid expenses and other is a deposit of
$543,871 (CDN $513,795) with a geological company for conducting exploration
activities at the Mount Hinton and Marg properties.
11. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
The Company entered into a one year consulting agreement with
a consultant on December 28, 2006 commencing January 1, 2007. As per terms of
the agreement, the consultant was to provide consulting services which included
market awareness, financial and strategic advice. The Company was to compensate
the consultant with a fee of 500,000 restrictive shares over a period of twelve
months with shares to be delivered on a monthly basis. The Company had accrued
the cost of $136,668 in the April 30, 2007 statements, although in the opinion
of the Company, it was not obligated to issue stock as the consultant was in
breach of the contract due to non performance of the agreed services. The
Company received a cancellation and waiver of the agreement from the consultant
and reversed this accrual to the credit of general and administrative expense
during the quarter ended July 31, 2007.
On August 22, 2007 the Company entered into an agreement with
a consultant. In return for services rendered, the Company will pay the
consultant $37,608 (CDN$40,000) in installments as set out in the agreement. The
first installment was paid on August 22, 2007 for $12,537 (CDN$13,333) and the
second installment was paid on October 1, 2007 for $4,483 (CDN$4,444). The third
and fourth installments were each paid subsequently on November 1, 2007 and
December 1, 2007 for $4,704 (CDN$4,444). The balance is payable on January 1,
February 1 and March 1, 2008 for $4,704 (CDN $4,444) respectively.
15
YUKON GOLD CORPORATION, INC. 
(An Exploration Stage Company) 
Condensed Notes to Interim Consolidated Financial Statements 
October 31, 2007 
(Amounts expressed in US Dollars) 
(Unaudited)

12. OTHER LIABILITY
On August 16, 2007 the Company completed a brokered private
placement through the issuance of 543,615 flow-through units at a price of $0.49
(CDN$0.52) per Flow-Through Unit for gross proceeds of $262,884 (CDN$282,680).
The proceeds raised were allocated between the offering of shares and the sale
of tax benefits. A liability of $35,381 was recognized for the sale of taxable
benefits, which will be reversed and credited to income when the Company
renounces resource expenditure deduction to the investor.
13. CHANGES IN OFFICERS AND DIRECTORS
On October 30, 2007, the Companys Board of Directors
accepted the resignation of Chester Idziszek in his capacity as director,
effective as of October 22, 2007. Mr. Idziszek stated in his resignation that
due to other commitments he can no longer serve the Company as director. There
were no disagreements between the Company and Mr. Idziszek with respect to the
Companys operations, policies or practices.
14. SUBSEQUENT EVENTS
a) Subsequent issue of common shares:
On November 19, 2007 the Company announced that it completed the second part of a
private placement (the "Financing") with Northern Securities Inc. ("Northern"),
acting as agent. The Financing was comprised of the sale of 2,438,888 units (the
"Units") at $0.48 (CDN$0.45) per Unit (the "Unit Issue Price") for gross
proceeds of $1,161,744 (CDN$1,097,500) and the sale of 1,071,770 flow through
units (the "Flow-Through Units") at $0.55 (CDN$0.52) per Flow-Through Unit (the
"Flow-Through Unit Issue Price") for gross proceeds of $589,944 (CDN$557,320),
raising aggregate gross proceeds of approximately $1,751,688 (CDN$1,654,820).
The closing represented the final tranche of a $2,816,673 (CDN$2.8 million)
private placement with Northern announced on July 24, 2007. Each Unit consists
of one non-flow through common share ("Common Share") and one half of one Common
Share purchase warrant (each whole warrant, a "Warrant"). Each Warrant is
exercisable into one Common Share until November 16, 2009 at an exercise price
of $0.64 (CDN$0.60) per share. Each Flow-Through Unit consists of one
flow-through common share and one half of one Common Share purchase warrant
(each whole warrant, an "FT Warrant"). Each FT Warrant is exercisable into one
Common Share until November 16, 2009 at an exercise price of $0.74 (CDN$0.70)
per share. Yukon Gold paid Northern a commission equal to 8% of the aggregate
gross proceeds and issued 195,111 "Unit Compensation Options" and 85,741 "FT
Unit Compensation Options". Each Unit Compensation Option is exercisable into
one Unit at the Unit Issue Price until November 16, 2009. Each FT Unit
Compensation Option is exercisable into one Common Share and one half of one
Warrant at the Flow-Through Unit Issue Price until November 16, 2009. The
proceeds of the Financing will be used for the exploration and development of
Yukon Golds properties, and for working capital.
b) Subsequent Commitments & Contingencies:
Under the terms of a Property Purchase Agreement
("Agreement") with Atna Resources Ltd. ("Atna"), the Company paid a Property
Payment of $105,854 (CDN$100,000) cash on December 12, 2007. (Refer to Note 8
b))
On December 5, 2007 the Company entered into an agreement
with a consultant to create investor awareness for a period of five months,
commencing on December 5, 2007 and continuing through May 6, 2008 for a fee of
$20,000 and 300,000 restricted common shares to be issued in equal tranches of
50,000 shares at the end of each month during the term of the agreement. On
December 6, 2007 the Company received conditional approval from the TSX to issue
the 300,000 restricted shares as per the terms of the agreement. The consulting
fee of $20,000 was paid on December 11, 2007.
c) Subsequent Changes in Officers and Directors
On December 6, 2007 the board appointed Howard Barth to fill
the vacancy left by Chester Idziszek on the Audit Committee. The term of such
appointment shall expire on April 30, 2008.
On December 13, 2007, Paul A. Gorman resigned as the Chief
Executive Officer and as a director of the Company. There were no disagreements
between the Company and Mr. Gorman with respect to the Companys operations,
policies or practices.
16
YUKON GOLD CORPORATION, INC. 
(An Exploration Stage Company) 
Condensed Notes to Interim Consolidated Financial Statements 
October 31, 2007 
(Amounts expressed in US Dollars) 
(Unaudited)

14. SUBSEQUENT EVENTS-Contd
d) Subsequent Extension of Warrant Expiry Dates
On November 27, 2007 the board of directors passed a motion to extend the
expiry dates of the following warrants by one (1) year:
1.

those expiring on March 28, 2008
exercisable at $0.90 per warrant to March 28, 2009;

2.

those expiring on October 4, 2008 which
are exercisable at $2.00 per warrant to October 4, 2009; and

3.

those Broker warrants expiring on March
28, 2008 exercisable at $0.60 per Unit to March 28, 2009





17

---

MANAGEMENTS DISCUSSION AND ANALYSIS
OF 
FINANCIAL CONDITION AND RESULTS OF OPERATION 
FOR THE THREE AND SIX MONTH PERIODS 
ENDED OCTOBER 31, 2007
Discussion of Operations & Financial Condition

Yukon Gold has no source of revenue and we continue to
operate at a loss. We expect our operating losses to continue for so long as we
remain in an exploration stage and perhaps thereafter. As at October 31, 2007,
we had accumulated losses of $10,407,255. These losses raise substantial doubt
about our ability to continue as a going concern. Our ability to emerge from the
exploration stage and conduct mining operations is dependent, in large part,
upon our raising additional equity financing.
As described in greater detail below, the Companys major
endeavor over the quarter ended October 31, 2007 has been its effort to raise
additional capital to meet its ongoing obligations under both the Hinton Option
Agreement and the Marg Acquisition Agreement and to pursue its exploration
activities.
Having obtained material financing, we implemented exploration programs at
both the Mount Hinton and Marg Properties.
SELECTED INFORMATION

|                                      | Three months ended | Three months ended
|------------------------------------- | ------------------ | ------------------
|                                      | October 31, 2007   | October 31, 2006  
|                                      |                    |                   
|Revenues                              | Nil                | Nil               
|Net Loss                              | $2,419,329         | $1,436,458        
|Loss per share-basic
    and diluted  | $ (0.09)           | $ (0.08)          
|                                      |                    |                   
|                                      |                    |                   
|                                      | Six months ended   | Six months ended  
|                                      | October 31, 2007   | October 31, 2006  
|                                      |                    |                   
|Revenues                              | Nil                | Nil               
|Net Loss                              | $3,471,873         | $2,865,185        
|Loss per share-basic
    and diluted  | $(0.14)            | $ (0.17)          
|                                      |                    |                   
|                                      |                    |                   
|                                      | As at              | As at             
|                                      | October 31, 2007   | April 30, 2007    
|                                      |                    |                   
|Total Assets                          | $2,240,365         | $4,225,107        
|Total Liabilities                     | $238,594           | $272,083          
|Cash dividends
    declared per share | Nil                | Nil               



---

Revenues
No revenue was generated by the Companys operations during
the quarter and six month period ended October 31, 2007 and the quarter and six
month period ended October 31, 2006.
Net Loss
The Companys expenses are reflected in the Consolidated
Statements of Operations under the category of Operating Expenses. To meet the
criteria of United States generally accepted accounting principles ("GAAP"), all
exploration and general and administrative costs related to projects are charged
to operations in the year incurred.
The significant components of expense that have contributed
to the total operating expense are discussed as follows:
(a) General and Administrative
Expense
Included in operating expenses for
the six months ended October 31, 2007 is general and administrative expense of
$466,973 as compared to $1,163,024 for the six months ended October 31, 2006.
General and administrative expense represents approximately 13.5% of the total
operating expense for the six months ended October 31, 2007 and approximately
40.6% of the total operating expense for the six months ended October 31, 2006.
(b) Project Expense
Included in operating expenses for
the six months ended October 31, 2007 is project expenses of $2,997,811 as
compared with $1,695,854 for the six months ended October 31, 2006. Project
expense is a significant expense and it represents approximately 86.3% of the
total operating expense for the six months ended October, 2007 and approximately
59.2% of the total operating expense for the six months ended October 31, 2006.
Exploration Expenditures at the Companys Properties
Mount Hinton
On April 2, 2007 the Company accepted a proposed work
program, budget and cash call schedule for the Mount Hinton project which was
revised on May 15, 2007, totaling $1,517,194 (CDN$1,505,200) for the 2007 Work
Program. The Company had approximately $70,304 (CDN$75,000) on deposit left over
from the 2006 cash call schedule. On May 15, 2007 the Company paid $180,164
(CDN$200,000), on June 15, 2007 the Company paid $202,684 (CDN$225,000), being
two of the four cash call payments. Due to delays in the drilling program the
third payment of $635,123 (CDN$600,000) which was due on July 31, 2007 was
changed to August 31, 2007. On August 15, 2007 the Company paid $97,259
(CDN$91,880) towards the third cash call payment for the Mount Hinton 2007 Work
Program. On August 31, 2007 the Company re-allocated $537,864 (CDN$508,120)
being the balance of the third cash call payment from cash call funds previously
allocated to the Marg Project. These re-allocated funds were not needed for the
Marg Project. The fourth payment of $428,919 (CDN$405,200) which was originally
due on August 15, 2007 was changed to and paid on September 15, 2007.
By letter agreement dated August 17, 2006, the Hinton
Syndicate agreed to allow the Company to defer a portion of the Work Program
expenditure scheduled to be incurred by December 31, 2006. The agreement to
defer such Work program expenditures was due to the mechanical break-down of
drilling equipment and the unavailability of replacement drilling equipment at
the Mount Hinton site. As a result, the Company was allowed to defer the
expenditure of approximately $220,681 (CDN$235,423) until December 31, 2007. The
Company has incurred that expenditure in addition to the expenditure for January
1 to December 31, 2007 as at October 31, 2007. All other Property Payments and
Work Program expenditures due have been made and incurred.

The Hinton Option
Agreement contemplates that upon the earlier of: (i) a production decision or
(ii) investment of $5,087,246 (CDN$5,225,000) or (iii) YGC has a minority
interest and decides not to spend any more money on the project, YGCs
relationship with the Hinton Syndicate will become a joint venture for the
further development of the
property. Under the terms of the Hinton
Option Agreement, the party with the majority interest would control the joint
venture. Although YGC has earned a 50% interest as at October 31, 2007, if the
relationship is converted to a joint venture currently, YGCs interest would
automatically be reduced to a 45% interest in the joint venture (by the terms of
the Hinton Option Agreement) and the Hinton Syndicate would control the joint
venture. Once the 75% interest is earned, as described above, YGC has a further
option to acquire the remaining 25% interest in the mineral claims for a further
payment of $5,292,685 (CDN$5,000,000).

The Hinton Option Agreement pertains to an "area of interest"
which includes the area within ten kilometers of the outermost boundaries of the
273 mineral claims, which constitute our mineral properties. Either party to the
Hinton Option Agreement may stake claims outside the 273 mineral claims, but
each must notify the other party if such new claims are within the "area of
interest." The non-staking party may then elect to have the new claims included
within the Hinton Option Agreement. As of December 11, 2006, there were an
additional 24 claims staked, known as the "Gram Claims" which became subject to
the Hinton Option Agreement.

Marg Property

On April 2, 2007 the Company accepted a proposed work
program, budget and cash call schedule for the Marg project totaling $3,026,916
(CDN$3,180,000) for the 2007 Work Program. The Company had approximately
$515,561(CDN $550,000) on deposit left over from the 2006 cash call schedule. On
May 15, 2007 the Company paid $703,037 (CDN$750,000), on June 15, 2007 the
Company paid $703,037 (CDN$750,000), and on July 15, 2007 the Company paid
$703,037 (CDN$750,000) being three of the four cash call payments. The fourth
and final payment of $402,244 (CDN$380,000) was paid on August 15, 2007. On
August 31, 2007 the Company re-allocated $537,864 (CDN$508,120) being the
balance of the third cash call payment for the Mount Hinton 2007 Work Program
from cash call funds previously allocated to the Marg Project. These
re-allocated funds were not needed for the Marg Project.

Under the terms of the Property Purchase Agreement ("Agreement") with Atna
Resources Ltd. ("Atna"), the Company paid a Property Payment of $105,854
(CDN$100,000) cash on December 12, 2007. (Refer to Note 8 b))

Liquidity and Capital Resources

The following table summarizes the Companys cash flows and cash in hand:

|                                          | October 31, 2007 | October 31, 2006
|----------------------------------------- | ---------------- | ----------------
|                                          |                  |                 
|Cash and cash
    equivalent              | $                | 574,620         
|Working capital
    (deficiency)          | $                | 1,910,988       
|Cash used in operating
    activities     | $                | 1,207,525       
|Cash used in investing
    activities     | $                | 151,520         
|Cash provided in
    financing activities | $                | 924,927         

Off-Balance Sheet Arrangement

The Company has no Off-Balance Sheet Arrangement as of October 31, 2007.

Contractual Obligations and Commercial Commitments

In addition to the contractual obligations and commitments of
the Company to acquire its mineral properties as described in Note 8 to our
Financial Statements included with this report, the Company has additional
commitments for its office lease and to pay minimum lease payments under its
capital lease. Refer to our annual financial statements for April 30, 2007 for
future obligation payments.

---



Flow-Through and Unit Share Subscriptions

The Company entered into flow-through share subscription
agreements during the year ended April 30, 2007 whereby it was committed to
incur on or before December 31, 2007, a total of $3,966,718 (CDN$2,964,200) of
qualifying Canadian Exploration expenses as described in the Income Tax Act of
Canada. As of April 30, 2007 an expenditure of $133,363 (CDN$148,046) had been
incurred and as of the quarter ended July 31, 2007 $852,352 (CDN$909,289) had
been incurred resulting in $2,981,003 (CDN$2,816,154) not yet being spent. As of
the quarter ended October 31, 2007 the full amount committed to has been spent.
Commencing March 1, 2007 the Company was liable to pay a tax of approximately 5%
per annum, calculated monthly on the unspent portion of the commitment.

The Company entered into share subscription agreements in
August of 2007 and November of 2007.

On August 16, 2007 the Company completed a private placement
(the "Financing") with Northern Securities Inc. ("Northern"), acting as agent.
The Financing was comprised of the sale of 1,916,666 units (the "Units") at
$0.42 (CDN$0.45) per Unit (the "Unit Issue Price") for gross proceeds of
$802,101 (CDN$862,499.70) and the sale of 543,615 flow-through units (the
"Flow-Through Units" which qualify as flow-through shares for the purposes of
the Canadian Income Tax Act) at $0.49 (CDN$0.52) per Flow-Through Unit (the
"Flow-Through Unit Issue Price") for gross proceeds of $262,884 (CDN$282,680).
The proceeds raised were allocated between the offering of shares and the sale
of tax benefits. A liability of $35,381 was recognized for the sale of taxable
benefits, which will be reversed and credited to income when the Company
renounces resource expenditure deduction to the investor. Each Unit consisted of
one non-flow through common share ("Common Share") and one half of one Common
Share purchase warrant (each whole warrant, a "Warrant"). Each Warrant is
exercisable into one Common Share until August 16, 2009 at an exercise price of
$0.56 (CDN$0.60) per share. Each Flow-Through Unit consisted of one flow-through
common share and one half of one Common Share purchase warrant (each whole
warrant, an "FT Warrant"). Each FT Warrant is exercisable into one Common Share
until August 16, 2009 at an exercise price of $0.66 (CDN$0.70) per share. The
Company paid Northern a commission equal to 8% of the aggregate gross proceeds
which amounted to $85,199 (CDN$91,614) and issued 153,333 "Unit Compensation
Options" and 43,489 "FT Unit Compensation Options". Each Unit Compensation
Option is exercisable into one Unit at the Unit Issue Price until August 16,
2009. Each FT Unit Compensation Option is exercisable into one Common Share and
one half of one FT Warrant at the Flow-Through Unit Issue Price until August 16,
2009. The Company reimbursed Northern expenses of $18,600 (CDN $20,000).

On November 19, 2007 the Company announced that it completed the second part of a
private placement (the "Financing") with Northern Securities Inc. ("Northern"),
acting as agent. The Financing was comprised of the sale of 2,438,888 units (the
"Units") at $0.48 (CDN$0.45) per Unit (the "Unit Issue Price") for gross
proceeds of $1,161,744 (CDN$1,097,500) and the sale of 1,071,770 flow through
units (the "Flow-Through Units") at $0.55 (CDN$0.52) per Flow-Through Unit (the
"Flow-Through Unit Issue Price") for gross proceeds of $589,944 (CDN$557,320),
raising aggregate gross proceeds of approximately $1,751,688 (CDN$1,654,820).
The closing represented the final tranche of a $2,816,673 (CDN$2.8 million)
private placement with Northern announced on July 24, 2007.

Each Unit consists of one non-flow through common share
("Common Share") and one half of one Common Share purchase warrant (each whole
warrant, a "Warrant"). Each Warrant is exercisable into one Common Share until
November 16, 2009 at an exercise price of $0.64 (CDN$0.60) per share. Each
Flow-Through Unit consists of one flow-through common share and one half of one
Common Share purchase warrant (each whole warrant, an "FT Warrant"). Each FT
Warrant is exercisable into one Common Share until November 16, 2009 at an
exercise price of $0.74 (CDN$0.70) per share.

Yukon Gold paid Northern a commission equal to 8% of the
aggregate gross proceeds and issued 195,111 "Unit Compensation Options" and
85,741 "FT Unit Compensation Options". Each Unit Compensation Option is
exercisable into one Unit at the Unit Issue Price until November 16, 2009. Each
FT Unit Compensation Option is exercisable into one Common Share and one half of
one Warrant at the Flow-Through Unit Issue Price until November 16, 2009.

---



The proceeds of the Financing will be used for the
exploration and development of Yukon Golds properties, and for working capital.

Consulting Agreements

On August 15, 2007 the Company entered into an investor
relations marketing agreement with a consultant for a one year term, with the
option to renew for an additional 12 months. In return for services rendered,
the Company will pay the consultant $2,117 (CDN$2,000) per month. On August 31,
2007 the Company paid $3,787 (CDN$4,000) being the first and last payments of
the contract. On September 15, 2007 the Company paid $1,941 (CDN$2,000) and on
October 15, 2007 the Company paid $2,048 (CDN$2,000), being the second and third
payments respectively. Subsequently on November 15, 2007 the Company paid $2,117
(CDN$2,000) being the fourth payment of the contract. .In addition, the
consultant has been granted an option to purchase 125,000 shares of the Company
at $0.48 (CDN$0.45) per share, with the option vesting in equal quarterly
amounts of 31,250 shares on November 15, 2007, February 15, 2008, May 15, 2008
and August 15, 2008, and the first exercise date being August 15, 2008 and an
expiry date of August 15, 2010.

On August 22, 2007 the Company entered into an agreement with
a consultant. In return for services rendered, the Company will pay the
consultant $37,608 (CDN$40,000) in installments as set out in the agreement. The
first installment was paid on August 22, 2007 for $12,537 (CDN$13,333) and the
second installment was paid on October 1, 2007 for $4,483 (CDN$4,444). The third
and fourth installments were each paid subsequently on November 1, 2007 and
December 1, 2007 for $4,704 (CDN$4,444). The balance is payable on January 1,
February 1 and March 1, 2008 for $4,704 (CDN $4,444) respectively.

On December 5, 2007 the Company entered into an agreement
with a consultant to create investor awareness for a period of five months,
commencing on December 5, 2007 and continuing through May 6, 2008 for a fee of
$20,000 and 300,000 restricted common shares to be issued in equal tranches of
50,000 shares at the end of each month during the term of the agreement. On
December 6, 2007 the Company received conditional approval from the TSX to issue
the 300,000 restricted shares as per the terms of the agreement. The consulting
fee of $20,000 was paid on December 11, 2007.

Critical Accounting Policies

The preparation of financial statements in accordance with
accounting principles generally accepted in the United States of America
requires us to make estimates and assumptions that affect reported amounts of
assets and liabilities at the date of the financial statements, the reported
amount of revenues and expenses during the reporting period and related
disclosure of contingent assets and liabilities. On an ongoing basis, we
evaluate our estimates and judgments, particularly those related to the
determination of the estimated Canadian exploration tax credit receivable and
accrued liabilities. To the extent actual results differ from those estimates,
our future results of operations may be affected. Besides this critical
accounting policy on use of estimates, we believe the following critical
accounting policy affects the preparation of our consolidated financial
statements.

Acquisition, Exploration and Evaluation Expenditures

Mineral property acquisition costs will be capitalized in
accordance with the FASB Emerging Issues Task Force ("EITF") Issue 04-2 when
management has determined that probable future benefits consisting of a
contribution to future cash inflows have been identified and that adequate
financial resources are available or are expected to be available as required to
meet the terms of property acquisition and budgeted exploration and development
expenditures. Mineral property acquisition costs are expensed as incurred if the
criteria for capitalization is not met.

To date, mineral property exploration costs have been
expensed as incurred. If it is determined that a mineral property can be
economically developed as a result of establishing proven and probable reserves
(if ever), the costs incurred to develop such property will be capitalized. As
of the date of these financial statements, the Company has incurred only
acquisition and exploration costs which have been expensed. To date the Company
has not established any proven or probable reserves on its mineral properties.

---

CONTROLS AND PROCEDURES

(a)
Disclosure
Controls and Procedures. The Companys management, with the participation of
the principal executive officer and principal financial officer, respectively,
has evaluated the effectiveness of the Companys disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") as at October
31, 2007. Based on such evaluation, the principal executive officer and
principal financial officer of the Company, respectively, have concluded that,
as of the end of the current quarter, the Companys disclosure controls and
procedures are effective.
(b)
Internal
Control Over Financial Reporting. There have not been any changes in the
Companys internal control over financial reporting (as such term is defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended
October 31,2007 that have materially affected, or are reasonably likely to
materially affect, the Companys internal control over financial reporting.
(c)
Limitations on
the Effectiveness of Controls. We believe that a control system, no matter
how well designed and operated, cannot provide absolute assurance that the
objectives of the control system are met, and no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within a company have been detected.
RISK FACTORS

1.
WE DO NOT HAVE AN
OPERATING BUSINESS.
The Company has rights in certain
mineral claims located in the Yukon Territory, Canada. To date we have done
limited exploration of the property covered by our mineral claims. We do not
have a mine or a mining business of any kind. There is no assurance that we will
develop an operating business in the future.
2.
WE HAVE NO SOURCE
OF OPERATING REVENUE AND EXPECT TO INCUR SIGNIFICANT EXPENSES BEFORE
ESTABLISHING AN OPERATING COMPANY, IF WE ARE ABLE TO ESTABLISH AN OPERATING
COMPANY AT ALL.
Currently, we have no source of
revenue, we do not have sufficient working capital to complete our exploration
programs (including feasibility studies) and we do not have any commitments to
obtain additional financing. Further, we do not have enough working capital to
meet all of our contractual commitments to acquire our mineral properties. We
have no operating history upon which an evaluation of our future success or
failure can be made. Our ability to achieve and maintain profitability and
positive cash flow is dependent upon:
  further exploration of the Mount Hinton
  Property and the results of that exploration;
  our ability to raise the capital
  necessary to conduct this exploration and preserve our interest in these
  mineral claims; and

our ability to raise capital to explore
  the Marg Property.

Because we have no operating revenue,
we expect to incur operating losses in future periods as we continue to expend
funds to explore and develop the Mount Hinton and Marg Properties. Failure to
raise the necessary capital to continue exploration and development could cause
us to go out of business.

3.

OUR STOCK PRICE
WILL BE HEAVILY INFLUENCED BY THE RESULTS OF DRILLING TESTS.

We cannot predict the results of the
drilling tests as exploration of our properties proceeds. The results of these
tests will heavily influence our decisions on further exploration at the Marg
Property and the Mount Hinton Property and are likely to affect the trading
price of our stock.

---



4.

WE MUST MAKE
REGULAR ONGOING INVESTMENTS IN ORDER TO MAINTAIN OUR MINERAL CLAIMS.

We have an option agreement with a
private syndicate, known as the Hinton Syndicate, to acquire an interest in the
mineral claims described in this report as the "Mount Hinton Property". Our
agreement with the Hinton Syndicate requires us to make regular ongoing
investments. If we fail to make these investments, we will not earn an interest
in these mineral claims and we may lose all of our rights in the Mount Hinton
Property. The Marg Acquisition Agreement also requires the Company to make
material deferred payments on December 12 of 2007 and 2008. If we are unable to
raise sufficient capital to make these payments we may lose all of our rights in
the Marg Property.

5.

WEATHER
INTERRUPTIONS IN THE YUKON TERRITORY MAY DELAY OUR PROPOSED EXPLORATION
OPERATIONS.

Weather factors will significantly
affect our exploration efforts. Currently, we can only work above ground at the
Mount Hinton and Marg Properties from late May until early October of each year,
depending upon how early snowfall occurs.

6.

WE COULD ENCOUNTER
REGULATORY AND PERMITTING DELAYS.

We could face delays in obtaining
permits to operate on the Mount Hinton and Marg Properties. Such delays could
jeopardize financing, if any is available, in which case we would have to delay
or abandon work on one or both of the properties.

7.

GOING CONCERN
QUALIFICATION

The Company has included a "going
concern" qualification in the Consolidated Interim Financial Statements to the
effect that we are an exploration stage company and have no established sources
of revenue. In the event that we are unable to raise additional capital and/or
locate mineral resources, as to which in each case there can be no assurance, we
may not be able to continue our operations. In addition, the existence of the
"going concern" qualification in our auditors report may make it more difficult
for us to obtain additional financing. If we are unable to obtain additional
financing, you may lose all or part of your investment.

8.

THERE ARE PENNY
STOCK SECURITIES LAW CONSIDERATIONS THAT COULD LIMIT YOUR ABILITY TO SELL YOUR
SHARES.

Our common stock is considered a
"penny stock" and the sale of our stock by you will be subject to the "penny
stock rules" of the Securities and Exchange Commission. The penny stock rules
require broker-dealers to take steps before making any penny stock trades in
customer accounts. As a result, our shares could be illiquid and there could be
delays in the trading of our stock which would negatively affect your ability to
sell your shares and could negatively affect the trading price of your shares.

9.

OUR BUSINESS IS
AFFECTED BY CHANGES IN COMMODITY PRICES.

Our ability to develop our mineral
properties and the future profitability of the Company is directly related to
the market price of certain minerals. The sharp rise in commodity prices over
the past year has resulted in increased investor interest in mineral exploration
companies. The Company has benefited from this trend, but like other companies
in this sector, the Company would be negatively affected if commodity prices
were to fall.

10.

OUR BUSINESS IS
SUBJECT TO CURRENCY RISKS.

The Company conducts the majority of
its business activities in Canadian dollars. Consequently, the Company is
subject to gains or losses due to fluctuations in Canadian currency relative to
the U.S. dollar.

---

DISCLOSURE AND FINANCIAL CONTROLS AND PROCEDURES

In connection with the Companys compliance with securities
laws and rules, its board of directors evaluated the Companys disclosure
controls and procedures. The board of directors has concluded that the Companys
disclosure controls and procedures are effective. There have been no significant
changes in these controls or in other factors that could significantly affect
these controls subsequent to the date of their evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Internal financial controls and procedures have been designed
under the supervision of the Companys board of directors and reviewed by an
independent auditor. The internal financial controls provide reasonable
assurance regarding the reliability of the Companys financial reporting and
preparation of financial statements in accordance with generally accepted
accounting principals. There have been no significant changes in these controls
or in other factors that could significantly affect these controls since they
were instituted, including any corrective actions with regard to significant
deficiencies and material weaknesses.

---

PART II-OTHER INFORMATION
Item 1.
LEGAL PROCEEDINGS

None.
Item 2.
UNREGISTERED SALES
OF EQUITY SECURITIES AND USE OF PROCEEDS

On August 16, 2007 the Company completed the first tranche of
a private placement (the "Financing") with Northern Securities Inc.
("Northern"), acting as agent. The Financing was comprised of the sale of
1,916,666 units (the "Units") at $0.42 (CDN$0.45) per Unit (the "Unit Issue
Price") for gross proceeds of $808,446 (CDN$862,499.70) and the sale of 543,615
flow -through units (the "Flow-Through Units") at $0.49 (CDN$0.52) per
Flow-Through Unit (the "Flow-Through Unit Issue Price") for gross proceeds of
$264,979 (CDN$282,679.80), raising aggregate gross proceeds of approximately
$1,073,425 (CDN$1,145,180). Each Unit consisted of one non-flow through common
share ("Common Share") and one half of one Common Share purchase warrant (each
whole warrant, a "Warrant"). Each Warrant is exercisable into one Common Share
until August 16, 2009 at an exercise price of $0.56 (CDN$0.60) per share. Each
Flow-Through Unit consisted of one flow-through common share and one half of one
Common Share purchase warrant (each whole warrant, an "FT Warrant"). Each FT
Warrant is exercisable into one Common Share until August 16, 2009 at an
exercise price of $0.66 (CDN$0.70) per share. Yukon Gold paid Northern a
commission equal to 8% of the aggregate gross proceeds of the first tranche of
the Financing and issued 153,333 "Unit Compensation Options" and 43,489 "FT Unit
Compensation Options". Each Unit Compensation Option is exercisable into one
Unit at the Unit Issue Price until August 16, 2009. Each FT Unit Compensation
Option is exercisable into one Common Share and one half of one FT Warrant at
the Flow-Through Unit Issue Price until August 16, 2009. Yukon Gold also granted
Northern an option (the "Over-Allotment Option") exercisable until October 15,
2007 to offer for sale up to an additional $468,691 (CDN$500,000) of Units
and/or Flow-Through Units on the same terms and conditions. The Company paid a
$70,304 (CDN$75,000) due diligence fee to Northern at closing and reimbursed
Northern for its expenses.
On November 19, 2007 the Company announced that it completed
the second part of a private placement (the "Financing") with Northern
Securities Inc. ("Northern"), acting as agent. The Financing was comprised of
the sale of 2,438,888 units (the "Units") at $0.48 (CDN$0.45) per Unit (the
"Unit Issue Price") for gross proceeds of $1,161,744 (CDN$1,097,500) and the
sale of 1,071,770 flow through units (the "Flow-Through Units") at $0.55
(CDN$0.52) per Flow-Through Unit (the "Flow-Through Unit Issue Price") for gross
proceeds of $589,944 (CDN$557,320), raising aggregate gross proceeds of
approximately $1,751,688 (CDN$1,654,820). The closing represented the final
tranche of a $2,816,673 (CDN$2.8 million) private placement with Northern
announced on July 24, 2007. Each Unit consists of one non-flow through common
share ("Common Share") and one half of one Common Share purchase warrant (each
whole warrant, a "Warrant"). Each Warrant is exercisable into one Common Share
until November 16, 2009 at an exercise price of $0.64 (CDN$0.60) per share. Each
Flow-Through Unit consists of one flow-through common share and one half of one
Common Share purchase warrant (each whole warrant, an "FT Warrant"). Each FT
Warrant is exercisable into one Common Share until November 16, 2009 at an
exercise price of $0.74 (CDN$0.70) per share. Yukon Gold paid Northern a
commission equal to 8% of the aggregate gross proceeds and issued 195,111 "Unit
Compensation Options" and 85,741 "FT Unit Compensation Options". Each Unit
Compensation Option is exercisable into one Unit at the Unit Issue Price until
November 16, 2009. Each FT Unit Compensation Option is exercisable into one
Common Share and one half of one Warrant at the Flow-Through Unit Issue Price
until November 16, 2009. The proceeds of the Financing will be used for the
exploration and development of Yukon Golds properties, and for working capital.
The foregoing placements were undertaken pursuant to an
exemption offered by Regulation S promulgated under the Securities Act of 1933,
as amended.

---

Item 3.
DEFAULTS UPON SENIOR SECURITIES

None.
Item 4.
SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS

On September 14, 2007 the shareholders of the Company
approved a proposal to sell: (i) up to 3,677,379 "units," where each unit
consisted of one common share and one-half of one common share purchase warrant
(each whole such warrant being referred to herein as a "unit warrant") and (ii)
up to 1,956,385 "flow-through units", where each flow-through unit consisted of
one common share issued on a "flow-through" basis (a "flow-through share") and
one-half of one common share purchase warrant (each whole such warrant being
referred to herein as a "flow-through warrant"); provided that the gross
proceeds of the private placement was not to exceed $1,751,689 (CDN$1,654,820),
subject to the Over-Allotment Option described below; and further provided that
at least $674,817 (CDN$637,500) of units must be sold under the private
placement (the foregoing, including the Over-Allotment Option, being referred to
herein as the " Northern Financing"). Each unit was priced at $0.48 (CDN$0.45)
and each flow-through unit was priced at $0.55 (CDN$0.52). The unit warrants
have a term of two years and have an exercise price of $0.63 (CDN$0.60) per
share. The flow-through warrants have a term of two years and have an exercise
price of $0.74 (CDN$0.70) per share. So called, "flow-through" shares entitle
the holder to an allocation of certain tax credits under Canadian tax law.
Northern Securities Inc. ("Northern") and its affiliate, Northern Financial
Corporation have agreed to purchase for their own account any units and
flow-through units not placed with investors in accordance with the terms of the
Northern Financing. In addition, Northern was granted an option (the
"Over-Allotment Option") pursuant to which up to an additional $529,269
(CDN$500,000) of units and/or flow-through units could be placed. The
shareholder approval was obtained pursuant to a consent solicitation of the
Company using a consent solicitation statement filed on Schedule 14C.
VOTES
    ITEM BEFOREFOR
    SHAREHOLDERS13,018,782
    To approve the Northern FinancingITEM 5:
OTHER INFORMATION:
On December 13, 2007, following the resignation by Paul Gorman as a Director
and as the Chief Executive Officer of the Company, Ken Hill was appointed acting
Chief Executive Officer.
ITEM 6:
EXHIBITS & REPORTS ON FORM 8-K
Exhibits
(a)
31.1 Certification of Interim
Chief Executive Officer. 31.2 Certification of Chief Financial Officer. 32.1 Certificate of Interim Chief Executive Officer and Chief Financial Officer.
Reports on Form 8-K
(b)
Current Report on Form 8-K, "Item
5.02- Departure of Directors of Principal Officers", dated December 13, 2007 
Current Report on Form 8-K, "Item 3.02- Unregistered Sales of Equity
Securities", dated November 11, 2007 
Current Report on Form 8-K, "Item 5.02- Departure of Directors of Principal
Officers", dated November 1, 2007 
Current Report on Form 8-K, "Item 8.01- Other Events", dated September 5, 2007

Current Report on Form 8-K, "Item 3.02-Unregistered Sales of Equity Securities",
dated August 17, 2007 
Current Report on Form 8K, "Item 8.01-Other Events", dated August 8, 2007
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: December 14th,
    2007
    By:
    /s/Kenneth J. HillKenneth J.
    HillInterim
    Chief Executive Officer and Director





---