UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-Q

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

For the quarterly period ended October 31, 2008

Commission file number000-51068

YUKON GOLD CORPORATION,
INC.(Exact name of registrant as specified in its charter)

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

55 York Street, Suite 401, Toronto, Ontario M5J 1R7(Address of principal executive offices including zip code)

(416) 865-9790(Registrant's telephone number
including area code)

> Indicate by check mark whether the registrant (1) has filed all
> reports required to be filed by Section 13 or 15(d) of the Securities
> Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been
> subject to such filing requirements for the past 90 days.

Yes
[X]    No [   ]

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

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

Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).

Yes [   ]    No [X]

The number of shares of registrant's common stock outstanding as
of October 31, 2008 was 33,650,629.

---

PART I  FINANCIAL INFORMATION

YUKON GOLD CORPORATION, INC. (AN EXPLORATION STAGE
MINING COMPANY) INTERIM CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2008 (Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)

TABLE OF CONTENTS

|                                                                                                                                                                                                   | Page No.          
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------
|                                                                                                                                                                                                   |                   
|Interim
      Consolidated Balance Sheets as at October 31, 2008 (unaudited) and April
      30, 2008 (audited)                                                                                    | F-2
      to F3   
|                                                                                                                                                                                                   |                   
|Interim
      Consolidated Statements of Operations for the six months and three months
      ended October 31, 2008 and October 31, 2007 and the period from Inception
      to October 31, 2008. | F-4               
|                                                                                                                                                                                                   |                   
|Interim
      Consolidated Statements of Cash Flows for the six months ended October 31,
      2008 and October 31, 2007 and the period from Inception to October 31,
      2008.                  | F-5               
|                                                                                                                                                                                                   |                   
|Interim
      Consolidated Statements of Changes in Stockholders' Equity from Inception
      to October 31, 2008                                                                                  | F-6
      to F9   
|                                                                                                                                                                                                   |                   
|Condensed
      Notes to Interim Consolidated Financial Statements                                                                                                                                 | F-10
      to F-25

---

YUKON GOLD CORPORATION, INC.(An Exploration Stage Mining Company)Consolidated
Balance SheetsAs at October 31, 2008 and April 30, 2008(Amounts expressed in US Dollars) (Unaudited-Prepared by
Management)

|                                                                      |  | October 31, |  |  | April 30, | 
|--------------------------------------------------------------------- |  | ----------- |  |  | --------- | 
|                                                                      |  | 2008        |  |  | 2008      | 
|                                                                      |  | $           |  |  | $         | 
|ASSETS                                                                |  | (unaudited) |  |  | (audited) | 
|CURRENT ASSETS                                                        |  |             |  |  |           | 
|                                                                      |  |             |  |  |           | 
|Cash and cash equivalents                                             |  | 261,645     |  |  | 1,255,620 | 
|Prepaid expenses and other (note 5)                                   |  | 172,180     |  |  | 282,347   | 
|Short-term investment in available-for-sale securities
      (note 8) |  | -           |  |  | 31,500    | 
|Short term Deposit                                                    |  | 36,530      |  |  | -         | 
|                                                                      |  | 470,355     |  |  | 1,569,467 | 
|                                                                      |  |             |  |  |           | 
|RESTRICTED CASH (Note 4)                                              |  | -           |  |  | 817,092   | 
|PROPERTY, PLANT AND EQUIPMENT                                         |  | 131,754     |  |  | 140,041   | 
|                                                                      |  |             |  |  |           | 
|                                                                      |  | 602,109     |  |  | 2,526,600 | 

See condensed notes to the interim consolidated financial
statements.

APPROVED ON BEHALF OF THE BOARD

/s/ Robert Van
Tassell      Robert Van Tassell,
Director

/s/J. L. Guerra,
Jr.      J. L. Guerra, Jr.,
President, CEO and Director

F-2

---

YUKON GOLD CORPORATION, INC.(An Exploration Stage Mining Company)Consolidated
Balance SheetsAs at October 31, 2008 and April 30, 2008(Amounts expressed in US Dollars) (Unaudited-Prepared by
Management)

|                                                  |  | October 31, |   |  | April 30,   |  
|------------------------------------------------- |  | ----------- | - |  | ----------- | -
|                                                  |  | 2008        |   |  | 2008        |  
|                                                  |  | $           |   |  | $           |  
|LIABILITIES                                       |  | (unaudited) |   |  | (audited)   |  
|                                                  |  |             |   |  |             |  
|CURRENT LIABILITIES                               |  |             |   |  |             |  
|                                                  |  |             |   |  |             |  
|Accounts payable and accrued liabilities          |  | 198,544     |   |  | 221,222     |  
|Obligation under Capital Leases                   |  | 2,450       |   |  | 3,100       |  
|Total Current Liabilities                         |  | 200,994     |   |  | 224,322     |  
|                                                  |  |             |   |  |             |  
|Long -Term Portion of:                            |  |             |   |  |             |  
|Obligations under Capital Lease                   |  | 4,074       |   |  | 7,209       |  
|                                                  |  |             |   |  |             |  
|TOTAL LIABILITIES                                 |  | 205,068     |   |  | 231,531     |  
|GOING CONCERN (NOTE 2)                            |  |             |   |  |             |  
|COMMITMENTS AND CONTINGENCIES (Note 9)            |  |             |   |  |             |  
|                                                  |  |             |   |  |             |  
|SHAREHOLDERS' EQUITY                              |  |             |   |  |             |  
|                                                  |  |             |   |  |             |  
|CAPITAL STOCK (Note 6)                            |  | 3,365       |   |  | 2,899       |  
|                                                  |  |             |   |  |             |  
|ADDITIONAL PAID-IN CAPITAL                        |  | 14,671,519  |   |  | 13,984,853  |  
|                                                  |  |             |   |  |             |  
|ACCUMULATED OTHER COMPREHENSIVE INCOME            |  | 45,688      |   |  | 196,474     |  
|                                                  |  |             |   |  |             |  
|DEFICIT, ACCUMULATED DURING THE EXPLORATION STAGE |  | (14,323,531 | ) |  | (11,889,157 | )
|                                                  |  | 397,041     |   |  | 2,295,069   |  
|                                                  |  | 602,109     |   |  | 2,526,600   |  

See condensed notes to the interim consolidated financial
statements.

F-3

---

YUKON GOLD CORPORATION, INC.(An Exploration Stage Mining Company)Consolidated
Statements of OperationsFor the six months and three months ended
October 31, 2008 and October 31, 2007 and the period from Inception to
October 31, 2008(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)

For the
      
      
      For the
      
      
      For the
      
      
      For thesix months
      
      
      six months
      
      
      three months
      
      
      three monthsCumulative
      
      
      ended
      
      
      ended
      
      
      ended
      
      
      endedsince
      
      
      October 31,
      
      
      October 31,
      
      
      October 31,
      
      
      October 31,inception
      
      
      2008
      
      
      2007
      
      
      2008
      
      
      2007$
      
      
      $
      
      
      $
      
      
      $
      
      
      $OPERATING EXPENSESGeneral and administration
      
      6,497,459
      
      
      689,617
      
      
      466,973
      
      
      322,807
      
      
      392,087Project expenses
      
      8,874,124
      
      
      1,723,638
      
      
      2,997,811
      
      
      551,729
      
      
      2,023,086Exploration Tax Credit
      
      (605,716
      )
      
      -
      
      
      -
      
      
      -
      
      
      -Amortization
      
      60,930
      
      
      21,119
      
      
      7,089
      
      
      10,638
      
      
      4,156Loss on sale/disposal of capital assets
      
      5,904
      
      
      -
      
      
      -
      
      
      -
      
      
      -TOTAL OPERATING EXPENSES
      
      14,832,701
      
      
      2,434,374
      
      
      3,471,873
      
      
      885,174
      
      
      2,419,329LOSS BEFORE INCOME TAXES
      
      (14,832,701
      )
      
      (2,434,374
      )
      
      (3,471,873
      )
      
      (885,174
      )
      
      (2,419,329
      )Income taxes recovery
      
      509,170
      
      
      -
      
      
      -
      
      
      -
      
      
      -NET LOSS
      
      (14,323,531
      )
      
      (2,434,374
      )
      
      (3,471,873
      )
      
      (885,174
      )
      
      (2,419,329
      )Loss per share  basic and diluted
      
      
      
      
      (0.08
      )
      
      (0.14
      )
      
      (0.03
      )
      
      (0.09
      )Weighted average common shares
        outstanding
      
      
      31,592,332
      
      
      23,999,421
      
      
      33,650,629
      
      
      25,078,649


See condensed notes to the interim consolidated financial
statements

F-4

---

YUKON GOLD CORPORATION, INC.(An Exploration Stage Mining Company)Consolidated
Statements of Cash FlowsFor the six month period ended October 31,
2008 and October 31, 2007 and the period from Inception to October 31, 2008(Amounts expressed in US Dollars) (Unaudited-Prepared by
Management)

|                                                                      |  |                  |   |  | For the six  |   |  | For the six  |  
|--------------------------------------------------------------------- |  | ---------------- | - |  | ------------ | - |  | ------------ | -
|                                                                      |  |                  |   |  | month period |   |  | month period |  
|                                                                      |  |                  |   |  | ended        |   |  | ended        |  
|                                                                      |  | Cumulative Since |   |  | October 31,  |   |  | October 31,  |  
|                                                                      |  | Inception        |   |  | 2008         |   |  | 2007         |  
|                                                                      |  | $                |   |  | $            |   |  | $            |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                  |  |                  |   |  |              |   |  |              |  
|Net loss for the year                                                 |  | (14,323,531      | ) |  | (2,434,374   | ) |  | (3,471,873   | )
|Items not requiring an outlay of cash:                                |  |                  |   |  |              |   |  |              |  
|Amortization                                                          |  | 60,930           |   |  | 21,119       |   |  | 7,089        |  
|Loss on sale/disposal of property, plant
      and equipment          |  | 5,904            |   |  | -            |   |  | -            |  
|Registration rights penalty expense                                   |  | 188,125          |   |  | -            |   |  | -            |  
|Shares issued for property payment                                    |  | 584,226          |   |  | 58,887       |   |  | 57,252       |  
|Common shares issued for settlement of                                |  |                  |   |  |              |   |  |              |  
|severance liability to ex-officer                                     |  | 113,130          |   |  |              |   |  | -            |  
|Stock-based compensation                                              |  | 1,285,670        |   |  | 24,823       |   |  | 196,259      |  
|Compensation expense on issue of warrants                             |  | 140,892          |   |  | 17,813       |   |  | ---          |  
|Issue of shares for professional services                             |  | 860,023          |   |  | 7,500        |   |  | -            |  
|                                                                      |  |                  |   |  |              |   |  |              |  
|Issue of units against settlement of debts                            |  | 20,077           |   |  | -            |   |  | -            |  
|Decrease (Increase) in prepaid expenses
      and other               |  | (171,023         | ) |  | 73,140       |   |  | (215,720     | )
|Increase (Decrease) in accounts payable and accrued
      liabilities |  | 198,054          |   |  | 4,336        |   |  | (100,404     | )
|(Increase) Decrease in restricted cash                                |  | -                |   |  | 817,092      |   |  | 2,266,602    |  
|Decrease in restricted deposit                                        |  | -                |   |  | -            |   |  | 17,889       |  
|Increase in other liabilities                                         |  |                  |   |  |              |   |  | 35,381       |  
|                                                                      |  |                  |   |  |              |   |  |              |  
|NET CASH USED IN OPERATING ACTIVITIES                                 |  | (11,037,523      | ) |  | (1,409,664   | ) |  | (1,207,525   | )
|                                                                      |  |                  |   |  |              |   |  |              |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                  |  |                  |   |  |              |   |  |              |  
|Purchase of property, plant and equipment                             |  | (222,309         | ) |  | (38,978      | ) |  | (41,520      | )
|(Investment) sale in available for sale
      securities              |  | -                |   |  | 31,500       |   |  | (110,000     | )
|Short-term Deposit                                                    |  | (36,530          | ) |  | (36,530      | ) |  |              |  
|                                                                      |  |                  |   |  |              |   |  |              |  
|NET CASH USED IN INVESTING ACTIVITIES                                 |  | (258,839         | ) |  | (44,008      | ) |  | (151,520     | )
|                                                                      |  |                  |   |  |              |   |  |              |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                  |  |                  |   |  |              |   |  |              |  
|Repayments from a shareholder                                         |  | 1,180            |   |  | -            |   |  | -            |  
|Proceeds from Demand promissory notes                                 |  | 200,000          |   |  | -            |   |  | -            |  
|Proceeds from Convertible promissory
      notes converted            |  | 200,500          |   |  | -            |   |  | -            |  
|Proceeds from the exercise of stock options                           |  | 61,000           |   |  | -            |   |  | -            |  
|Proceeds from exercise of warrants  net                              |  | 450,309          |   |  | -            |   |  | -            |  
|Proceeds from subscription of warrants  net                          |  | 525,680          |   |  | -            |   |  | -            |  
|Proceeds from issuance of units/shares 
      net                    |  | 10,038,190       |   |  | 578,109      |   |  | 925,807      |  

|Proceeds (Repayments) from capital lease
      obligation |  | 6,524      |  |  | (2,097    | ) |  | (880     | )
|--------------------------------------------------------- |  | ---------- |  |  | --------- | - |  | -------- | -
|                                                          |  |            |  |  |           |   |  |          |  
|NET CASH PROVIDED BY FINANCING ACTIVITIES                 |  | 11,483,383 |  |  | 576,012   |   |  | 924,927  |  
|                                                          |  |            |  |  |           |   |  |          |  
|EFFECT OF FOREIGN CURRENCY                                |  |            |  |  |           |   |  |          |  
|EXCHANGE RATE CHANGES                                     |  | 74,624     |  |  | (116,315  | ) |  | 72,302   |  
|                                                          |  |            |  |  |           |   |  |          |  
|NET INCREASE (DECREASE) IN CASH AND CASH                  |  |            |  |  |           |   |  |          |  
|EQUIVALENTS FOR THE QUARTER                               |  | 261,645    |  |  | (993,975  | ) |  | (361,816 | )
|Cash and cash equivalents, beginning of quarter           |  | -          |  |  | 1,255,620 |   |  | 936,436  |  
|                                                          |  |            |  |  |           |   |  |          |  
|CASH AND CASH EQUIVALENTS, END OF QUARTER                 |  | 261,645    |  |  | 261,645   |   |  | 574,620  |  
|INCOME TAXES PAID                                         |  |            |  |  | -         |   |  | -        |  
|INTEREST PAID                                             |  |            |  |  | -         |   |  | -        |  

See condensed notes to the interim consolidated financial
statements

F-5

---

YUKONGOLDCORPORATION,INC.(AnExplorationStageMiningCompany) ConsolidatedStatementsofChangesinStockholders'Equity FromInceptiontoOctober31, 2008(Amountsexpressedin USDollars)

|                                                             |  |           |   |  |          |   |  |            |  |  |                    |  |  | Deficit,    |   |  |               |   |  |               |  
|------------------------------------------------------------ |  | --------- | - |  | -------- | - |  | ---------- |  |  | ------------------ |  |  | ----------- | - |  | ------------- | - |  | ------------- | -
|                                                             |  |           |   |  |          |   |  |            |  |  |                    |  |  | Accumulated |   |  |               |   |  | Accumulated   |  
|                                                             |  | Number of |   |  | Common   |   |  | Additional |  |  |                    |  |  | during the  |   |  |               |   |  | Other         |  
|                                                             |  | Common    |   |  | Shares   |   |  | Paid-in    |  |  | Subscription       |  |  | Exploration |   |  | Comprehensive |   |  | Comprehensive |  
|                                                             |  | Shares    |   |  | Amount   |   |  | Capital    |  |  | for
      Warrants |  |  | Stage       |   |  | Income (loss) |   |  | Income (loss) |  
|                                                             |  | #         |   |  | $        |   |  | $          |  |  | $                  |  |  | $           |   |  | $             |   |  | $             |  
|Issuance of Common shares                                    |  | 2,833,377 |   |  | 154,063  |   |  | -          |  |  | -                  |  |  | -           |   |  | -             |   |  | -             |  
|Issuance of warrants                                         |  | -         |   |  | -        |   |  | 1,142      |  |  | -                  |  |  | -           |   |  | -             |   |  | -             |  
|Foreign currency translation                                 |  | -         |   |  | -        |   |  | -          |  |  | -                  |  |  |             |   |  | 604           |   |  | 604           |  
|Net loss for the year                                        |  | -         |   |  | -        |   |  | -          |  |  |                    |  |  | (124,783    | ) |  | (124,783      | ) |  | -             |  
|                                                             |  |           |   |  |          |   |  |            |  |  |                    |  |  |             |   |  |               |   |  |               |  
|Balance as of April 30, 2003                                 |  | 2,833,377 |   |  | 154,063  |   |  | 1,142      |  |  | -                  |  |  | (124,783    | ) |  | (124,179      | ) |  | 604           |  
|                                                             |  |           |   |  |          |   |  |            |  |  |                    |  |  |             |   |  |               |   |  |               |  
|Issuance of Common shares                                    |  | 1,435,410 |   |  | 256,657  |   |  | -          |  |  | -                  |  |  | -           |   |  | -             |   |  |               |  
|Issuance of warrants                                         |  | -         |   |  | -        |   |  | 2,855      |  |  | -                  |  |  | -           |   |  | -             |   |  |               |  
|Shares repurchased                                           |  | (240,855  | ) |  | (5,778   | ) |  | -          |  |  | -                  |  |  | -           |   |  | -             |   |  |               |  
|Recapitalization pursuant to
      reverse acquisition       |  | 2,737,576 |   |  | (404,265 | ) |  | 404,265    |  |  | -                  |  |  | -           |   |  | -             |   |  |               |  
|Issuance of Common shares                                    |  | 1,750,000 |   |  | 175      |   |  | 174,825    |  |  | -                  |  |  | -           |   |  | -             |   |  |               |  
|Issuance of Common shares for
      Property Payment         |  | 300,000   |   |  | 30       |   |  | 114,212    |  |  | -                  |  |  | -           |   |  | -             |   |  |               |  
|Foreign currency translation                                 |  | -         |   |  | -        |   |  | -          |  |  | -                  |  |  | -           |   |  | (12,796       | ) |  | (12,796       | )
|Net loss for the year                                        |  | -         |   |  | -        |   |  | -          |  |  | -                  |  |  | (442,906    | ) |  | (442,906      | ) |  | -             |  
|                                                             |  |           |   |  |          |   |  |            |  |  |                    |  |  |             |   |  |               |   |  |               |  
|Balance as of April 30, 2004                                 |  | 8,815,508 |   |  | 882      |   |  | 697,299    |  |  | -                  |  |  | (567,689    | ) |  | (455,702      | ) |  | (12,192       | )
|                                                             |  |           |   |  |          |   |  |            |  |  |                    |  |  |             |   |  |               |   |  |               |  
|Issuance of Common shares for
      Property Payment         |  | 133,333   |   |  | 13       |   |  | 99,987     |  |  | -                  |  |  | -           |   |  | -             |   |  | -             |  
|Issuance of common shares on Conversion of
      Convertible |  | 76,204    |   |  | 8        |   |  | 57,144     |  |  | -                  |  |  | -           |   |  | -             |   |  | -             |  

F-6

---

|Promissory note                                                                   |  |           |  |  |     |  |  |         |  |  |   |  |  |            |   |  |          |   |  |        |  
|--------------------------------------------------------------------------------- |  | --------- |  |  | --- |  |  | ------- |  |  | - |  |  | ---------- | - |  | -------- | - |  | ------ | -
|Foreign currency translation                                                      |  | -         |  |  | -   |  |  | -       |  |  | - |  |  | -          |   |  | 9,717    |   |  | 9,717  |  
|Net loss for the year                                                             |  | -         |  |  | -   |  |  | -       |  |  | - |  |  | (808,146   | ) |  | (808,146 | ) |  | -      |  
|                                                                                  |  |           |  |  |     |  |  |         |  |  |   |  |  |            |   |  |          |   |  |        |  
|Balance as of April 30, 2005                                                      |  | 9,025,045 |  |  | 903 |  |  | 854,430 |  |  | - |  |  | (1,375,835 | ) |  | (798,429 | ) |  | (2,475 | )
|Stock based compensation - Directors and
      officers                           |  |           |  |  |     |  |  | 216,416 |  |  |   |  |  |            |   |  |          |   |  |        |  
|Stock based compensation - Consultants                                            |  |           |  |  |     |  |  | 8,830   |  |  |   |  |  |            |   |  |          |   |  |        |  
|Issue of common shares and Warrants on
      retirement of Demand Promissory note |  | 369,215   |  |  | 37  |  |  | 203,031 |  |  |   |  |  |            |   |  |          |   |  |        |  
|Units issued to an outside company for
      professional services settlement     |  | 24,336    |  |  | 2   |  |  | 13,384  |  |  |   |  |  |            |   |  |          |   |  |        |  
|Units issued to an officer for professional
      services settlement             |  | 12,168    |  |  | 1   |  |  | 6,690   |  |  |   |  |  |            |   |  |          |   |  |        |  
|Issuance of common shares for professional services                               |  | 150,000   |  |  | 15  |  |  | 130,485 |  |  |   |  |  |            |   |  |          |   |  |        |  
|Units issued to shareholder                                                       |  | 490,909   |  |  | 49  |  |  | 269,951 |  |  |   |  |  |            |   |  |          |   |  |        |  
|Units issued to a director                                                        |  | 149,867   |  |  | 15  |  |  | 82,412  |  |  |   |  |  |            |   |  |          |   |  |        |  
|Units issued to outside subscribers                                               |  | 200,000   |  |  | 20  |  |  | 109,980 |  |  |   |  |  |            |   |  |          |   |  |        |  
|Issuance of common shares on Conversion of Convertible
    Promissory notes       |  | 59,547    |  |  | 6   |  |  | 44,654  |  |  |   |  |  |            |   |  |          |   |  |        |  
|Issuance of common shares on Exercise of warrants                                 |  | 14,000    |  |  | 2   |  |  | 11,998  |  |  |   |  |  |            |   |  |          |   |  |        |  
|Issuance of common shares on Conversion of
      Convertible Promissory notes     |  | 76,525    |  |  | 8   |  |  | 57,386  |  |  |   |  |  |            |   |  |          |   |  |        |  
|Private placement of shares                                                       |  | 150,000   |  |  | 15  |  |  | 151,485 |  |  |   |  |  |            |   |  |          |   |  |        |  
|Issuance of Common shares for property payment                                    |  | 133,333   |  |  | 13  |  |  | 99,987  |  |  |   |  |  |            |   |  |          |   |  |        |  
|Issuance of common shares on Conversion of
      Convertible Promissory notes     |  | 34,306    |  |  | 4   |  |  | 25,905  |  |  |   |  |  |            |   |  |          |   |  |        |  
|Issuance of common shares on Exercise of
      warrants                           |  | 10,000    |  |  | 1   |  |  | 8,771   |  |  |   |  |  |            |   |  |          |   |  |        |  
|Issuance of common shares on Conversion of Convertible                            |  | 101,150   |  |  | 10  |  |  | 76,523  |  |  |   |  |  |            |   |  |          |   |  |        |  

F-7

---

|Promissory notes                                                               |  |            |  |  |       |  |  |           |  |  |         |  |  |            |   |  |            |   |  |        |  
|------------------------------------------------------------------------------ |  | ---------- |  |  | ----- |  |  | --------- |  |  | ------- |  |  | ---------- | - |  | ---------- | - |  | ------ | -
|Issue of 400,000 Special Warrants net                                          |  |            |  |  |       |  |  |           |  |  | 371,680 |  |  |            |   |  |            |   |  |        |  
|Issue of 200,000 flow through warrants                                         |  |            |  |  |       |  |  |           |  |  | 154,000 |  |  |            |   |  |            |   |  |        |  
|Brokered private placement of shares- net                                      |  | 5,331,327  |  |  | 533   |  |  | 2,910,375 |  |  |         |  |  |            |   |  |            |   |  |        |  
|Brokered Private placement of flow through
      Shares- net                   |  | 25,000     |  |  | 2     |  |  | 13,310    |  |  |         |  |  |            |   |  |            |   |  |        |  
|Exercise of stock options                                                      |  | 10,000     |  |  | 1     |  |  | 5,499     |  |  |         |  |  |            |   |  |            |   |  |        |  
|Foreign currency translation                                                   |  | -          |  |  | -     |  |  | -         |  |  |         |  |  |            |   |  | (2,687     | ) |  | (2,687 | )
|Net loss for the year                                                          |  | -          |  |  | -     |  |  | -         |  |  |         |  |  | (1,855,957 | ) |  | (1,855,957 | ) |  | -      |  
|                                                                               |  |            |  |  |       |  |  |           |  |  |         |  |  |            |   |  |            |   |  |        |  
|Balance 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    |  |  |         |  |  |            |   |  |            |   |  |        |  

F-8

---

|Issuance of common shares for property payment                               |  | 133,334    |  |  | 13    |  |  | 99,987     |   |  |            |   |  |             |   |  |            |   |  |          |  
|---------------------------------------------------------------------------- |  | ---------- |  |  | ----- |  |  | ---------- | - |  | ---------- | - |  | ----------- | - |  | ---------- | - |  | -------- | -
|Issuance of common shares for professional services                          |  | 160,000    |  |  | 16    |  |  | 131,184    |   |  |            |   |  |             |   |  |            |   |  |          |  
|Issuance of common shares for professional
      services                    |  | 118,800    |  |  | 12    |  |  | 152,052    |   |  |            |   |  |             |   |  |            |   |  |          |  
|Issue of shares for flow-through warrants                                    |  | 200,000    |  |  | 20    |  |  | 153,980    |   |  | (154,000   | ) |  |             |   |  |            |   |  |          |  
|Issue of shares for special warrants                                         |  | 404,000    |  |  | 41    |  |  | 375,679    |   |  | (371,680   | ) |  |             |   |  |            |   |  |          |  
|Issue of 2,823,049 flow- through warrants -net                               |  |            |  |  |       |  |  |            |   |  | 1,916,374  |   |  |             |   |  |            |   |  |          |  
|Issue of 334,218 unit special warrants-net                                   |  |            |  |  |       |  |  |            |   |  | 230,410    |   |  |             |   |  |            |   |  |          |  
|Issue of 3,105,358 common shares for 2,823,049
      flow through warrants   |  | 3,105,358  |  |  | 310   |  |  | 1,916,064  |   |  | (1,916,374 | ) |  |             |   |  |            |   |  |          |  
|Issue of 367,641 common shares for 334,218 unit special
    warrants         |  | 367,641    |  |  | 37    |  |  | 230,373    |   |  | (230,410   | ) |  |             |   |  |            |   |  |          |  
|Registration rights penalty expense                                          |  |            |  |  |       |  |  | 188,125    |   |  |            |   |  |             |   |  |            |   |  |          |  
|Foreign currency translation                                                 |  |            |  |  |       |  |  |            |   |  |            |   |  |             |   |  | (58,446    | ) |  | (58,446  | )
|Net loss for the year                                                        |  |            |  |  |       |  |  |            |   |  |            |   |  | (3,703,590  | ) |  | (3,703,590 | ) |  |          |  
|                                                                             |  |            |  |  |       |  |  |            |   |  |            |   |  |             |   |  |            |   |  |          |  
|Balance April 30, 2007                                                       |  | 22,883,137 |  |  | 2,288 |  |  | 10,949,726 |   |  | 0          |   |  | (6,935,382  | ) |  | (3,762,036 | ) |  | (63,608  | )
|                                                                             |  |            |  |  |       |  |  |            |   |  |            |   |  |             |   |  |            |   |  |          |  
|Shares for property payment                                                  |  | 136,364    |  |  | 13    |  |  | 57,239     |   |  |            |   |  |             |   |  |            |   |  |          |  
|Stock based compensation                                                     |  |            |  |  |       |  |  | 584,328    |   |  |            |   |  |             |   |  |            |   |  |          |  
|Unrealized gain on available-for-sale securities
      net of deferred taxes |  |            |  |  |       |  |  |            |   |  |            |   |  |             |   |  | 9,000      |   |  | 9,000    |  
|543,615 flow through units                                                   |  | 543,615    |  |  | 54    |  |  | 227,450    |   |  |            |   |  |             |   |  |            |   |  |          |  
|1,916,666 units-net                                                          |  | 1,916,666  |  |  | 192   |  |  | 698,110    |   |  |            |   |  |             |   |  |            |   |  |          |  
|1,071,770 flow through units                                                 |  | 1,071,770  |  |  | 108   |  |  | 449,379    |   |  |            |   |  |             |   |  |            |   |  |          |  
|2,438,888 units-net                                                          |  | 2,438,888  |  |  | 244   |  |  | 1,036,622  |   |  |            |   |  |             |   |  |            |   |  |          |  
|Expenses relating to issue of units                                          |  |            |  |  |       |  |  | (141,080   | ) |  |            |   |  |             |   |  |            |   |  |          |  
|Compensation expense on issue of warrants                                    |  |            |  |  |       |  |  | 123,079    |   |  |            |   |  |             |   |  |            |   |  |          |  
|Foreign currency translation                                                 |  |            |  |  |       |  |  |            |   |  |            |   |  |             |   |  | 251,082    |   |  | 251,082  |  
|Net loss for the year                                                        |  |            |  |  |       |  |  |            |   |  |            |   |  | (4,953,775  | ) |  | (4,953,775 | ) |  |          |  
|                                                                             |  |            |  |  |       |  |  |            |   |  |            |   |  |             |   |  |            |   |  |          |  
|Balance as of April 30, 2008                                                 |  | 28,990,440 |  |  | 2,899 |  |  | 13,984,853 |   |  |            |   |  | (11,889,157 | ) |  | (4,693,693 | ) |  | 196,474  |  
|                                                                             |  |            |  |  |       |  |  |            |   |  |            |   |  |             |   |  |            |   |  |          |  
|Shares for property payment                                                  |  | 476,189    |  |  | 48    |  |  | 58,839     |   |  |            |   |  |             |   |  |            |   |  |          |  
|Stock based compensation                                                     |  |            |  |  |       |  |  | 24,823     |   |  |            |   |  |             |   |  |            |   |  |          |  
|Compensation expense on issue of warrants                                    |  |            |  |  |       |  |  | 17,813     |   |  |            |   |  |             |   |  |            |   |  |          |  
|4,134,000 flow through shares                                                |  | 4,134,000  |  |  | 413   |  |  | 577,696    |   |  |            |   |  |             |   |  |            |   |  |          |  
|Issuance of common shares for professional
      services                    |  | 50,000     |  |  | 5     |  |  | 7,495      |   |  |            |   |  |             |   |  |            |   |  |          |  
|Realized gain on available-for-sale securities                               |  |            |  |  |       |  |  |            |   |  |            |   |  |             |   |  | (9,000     | ) |  | ( 9,000  | )
|Foreign currency translation                                                 |  |            |  |  |       |  |  |            |   |  |            |   |  |             |   |  | (141,786   | ) |  | (141,786 | )
|Net loss for the period                                                      |  |            |  |  |       |  |  |            |   |  |            |   |  | (2,434,374  | ) |  | (2,434,374 | ) |  | -        |  
|                                                                             |  |            |  |  |       |  |  |            |   |  |            |   |  |             |   |  |            |   |  |          |  
|Balance as of October 31, 2008                                               |  | 33,650,629 |  |  | 3,365 |  |  | 14,671,519 |   |  |            |   |  | (14,323,531 | ) |  | (2,585,160 | ) |  | 45,688   |  

See condensed notes to the interim consolidated financial
statements

F-9

---

YUKON GOLD CORPORATION, INC.(An Exploration
Stage Mining Company) Notes to Interim Consolidated Financial
Statements October 31, 2008 (Amounts expressed in US Dollars)
(Unaudited  Prepared by Management)

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, 2009. 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
current deterioration in economic conditions and market volatility, 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 (net)
approximately $227,000 through subscription of flow-through units and raised
(net) approximately $557,000 through subscription of units during the three
months ended October 31, 2007. The Company further raised approximately (net)
$450,000 through subscription of flow-through units and raised (net)
approximately $1,037,000 through subscription of units during the three months
ended January 31, 2008. The Company further raised approximately (net) $578,109
through issue of flow-through shares during the three months ended July 31,
2008. Further, Management has commenced monitoring costs and is initiating
measures to reduce costs wherever appropriate. The Company's common shares are listed on the Toronto Stock Exchange (the
TSX) and included for quotation on the OTC Bulletin Board® 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.

F-10

---

**YUKON GOLD CORPORATION, INC. (An Exploration Stage
Mining Company)** **Notes to Interim Consolidated Financial
Statements** **October 31, 2008 (Amounts expressed in US
Dollars) (Unaudited  Prepared by Management)**

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 and exploration of its two mining properties, both located in the
province of Yukon 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.        RESTRICTED
CASH

Under 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 short term
deposits or cash or cash equivalents. As of October 31, 2008 and April 30, 2008
unexpended flow-through funds were $nil (April 30, 2008: $817,092) which were
restricted cash.

5.        PREPAID
EXPENSES AND OTHER

Included in prepaid expenses and other is an amount of $87,777
(CDN$105,727) being Goods & Services tax receivable from the Federal
Government of Canada. Subsequent to the quarter ended October 31, 2008 on
November 12, 2008 the Company received $26,140 (CDN$31,486) of this amount.

6.        CAPITAL STOCK

a)        Authorized

150,000,000 of Common shares, $0.0001 par value

b)        Issued

33,650,629 Common shares

F-11

---

**YUKON GOLD CORPORATION, INC. (An Exploration Stage
Mining Company)** **Notes to Interim Consolidated Financial
Statements** **October 31, 2008 (Amounts expressed in US
Dollars) (Unaudited  Prepared by Management)**

6.        CAPITAL
STOCK-Cont'd

c)        Changes to Issued
Share Capital

Year ended April 30, 2008

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. The balance 60% payment was paid in cash.

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$862,500) 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 was reversed and credited to income when the Company renounced
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 $0.60
(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 $0.70 (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
Warrants and 43,489 FT Unit Compensation Warrants. Each Unit Compensation
Warrant is exercisable into one Unit at the Unit Issue Price until August 16,
2009. Each FT Unit Compensation Warrant 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. The Company reimbursed Northern expenses of $18,600
(CDN$20,000) and legal fees of $18,600 (CDN$20,000).

F-12

---

**YUKON GOLD CORPORATION, INC. (An Exploration Stage
Mining Company)** **Notes to Interim Consolidated Financial
Statements** **October 31, 2008 (Amounts expressed in US
Dollars) (Unaudited  Prepared by Management)**

6.        CAPITAL
STOCK-Cont'd

c)        Changes to Issued
Share Capital-Cont'd

On November 16, 2007 the Company completed the second part of a
private placement (the Second Financing) with Northern acting as agent. The
Second Financing was comprised of the sale of 2,438,888 units (the Units) at
$0.46 (CDN$0.45) per Unit (the Unit Issue Price) for gross proceeds of
$1,127,028 (CDN$1,097,500) and the sale of 1,071,770 flow through units (the
Flow-Through Units) at $0.53 (CDN$0.52) per Flow-Through Unit (the
Flow-Through Unit Issue Price) for gross proceeds of $572,315 (CDN$557,320).
The proceeds raised were allocated between the offering of shares and the sale
of tax benefits. A liability of $77,043 was recognized for the sale of taxable
benefits, which was reversed and credited to income when the Company renounced
resource expenditure deduction to the investor. 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 $0.60 (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 November 16, 2009 at an
exercise price of $0.70 (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 Warrants and 85,741 FT Unit Compensation Warrants. Each Unit
Compensation Warrant is exercisable into one Common Share and one half of one
Common Share purchase warrant at the Unit Issue Price until November 16, 2009.
Each full Common share purchase warrant is exercisable at $0.60 (CDN$0.60) .
Each FT Unit Compensation Warrant is exercisable into one Common Share and one
half of one Common Share purchase warrant at the Flow-Through Unit Issue Price.
Each full Common Share purchase warrant is exercisable at $0.70 (CDN$0.70) .

The foregoing private placements were undertaken pursuant to an
exemption offered by Regulation S promulgated under the Securities Act of 1933,
as amended.

Six months ended October 31, 2008

On July 7, 2008, the Company issued 476,189 common shares in
settlement of a property payment on the Mount Hinton property. These shares
represent $58,887 (CDN$60,000) which is 40% of the contracted payment and were
valued at $0.123 (CDN$0.126) each. The balance of the property payment in the
amount of $88,330 (CDN$90,000) was paid in cash.

F-13

---

**YUKON GOLD CORPORATION, INC. (An Exploration Stage
Mining Company)** **Notes to Interim Consolidated Financial
Statements** **October 31, 2008 (Amounts expressed in US
Dollars) (Unaudited  Prepared by Management)**

6.        CAPITAL
STOCK-Cont'd

c)        Changes to Issued
Share Capital-Cont'd

On May 16, 2008 the Company entered into a consulting agreement
with Clarke Capital Group Inc. (Clarke) pursuant to which Clarke was retained
to provide the Company with investor relations and business communications
services for an initial term of 6 months, renewable thereafter for an additional
6 month term. Upon execution of the Clarke Agreement the Company paid Clarke
$14,648 (CDN$15,000). Pursuant to the Clarke Agreement, the Company issued
Clarke 50,000 shares of common stock on July 14, 2008.

On July 23, 2008 the Company closed a non-brokered private
placement of up to $976,563 (CDN$1,000,000). The Company completed the sale of
4,134,000 common shares on a flow-through basis at a price of $0.15 (CDN$0.15)
per share for gross proceeds of $613,778 (CDN$620,100). The Company paid a 5%
finders fee on this private placement. The private placement was exempt from
registration under the Securities Act of 1933, pursuant to an exemption afforded
by Regulation S. The flow through shares were issued at market without any
additional price charged for sale of taxable benefits.

7.        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.

On March 18, 2008 at the Annual and Special Meeting of
Shareholders the shareholders of the Company approved an amendment to the 2006
Stock Option Plan increasing the number of Shares reserved for issuance
thereunder from 2,000,000 to 2,899,044.

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.

F-14

---

**YUKON GOLD CORPORATION, INC. (An Exploration Stage
Mining Company)** **Notes to Interim Consolidated Financial
Statements** **October 31, 2008 (Amounts expressed in US
Dollars) (Unaudited  Prepared by Management)**

7.        STOCK BASED
COMPENSATION-Cont'd

The purchase price (the Price) per share under each Stock
Option shall be determined by the board of directors or a committee, as
applicable. The Price shall not be lower than the closing market price on the
TSX, or another stock exchange where the majority of the trading volume and
value of the Shares occurs, on the trading day immediately preceding the date of
grant, or if not so traded, the average between the closing bid and asked prices
thereof as reported for the trading day immediately preceding the date of the
grant; provided that if the shares have not traded on the TSX or another stock
exchange for an extended period of time, the market price will be the fair
market value of the shares at the time of grant, as determined by the board of
directors or committee. The board of directors or committee may determine that
the Price may escalate at a specified rate dependent upon the date on which an
option may be exercised by the Eligible Participant.

Options shall not be granted for a term exceeding tenyears (or such shorter or longer period as is permitted by the TSX) (the
Option Period).

During the six month period ended October 31, 2008, the
following stock options were granted under the 2006 stock option plan:

On July 28, 2008 the board of directors granted options to a
consultant to acquire 250,000 shares, to vest 50,000 immediately and the balance
of 50,000 each at three month intervals. These options can be exercised over a
period of five (5) years. The exercise price was set at $0.15 (CDN$0.15) per
share. These options were granted under the Company's 2006 stock option
plan. Subsequent to the quarter ended October 31, 2008 on December 12, 2008 the
Company and the consultant mutually agreed to terminate the agreement effective
October 31, 2008.

For this six month period ended October 31, 2008, the Company
has recognized in the financial statements, stock-based compensation costs as
per the following details. The fair value of each option used for the purpose of
estimating the stock compensation is based on the grant date using the
Black-Scholes option pricing model with the following weighted average
assumptions:

|                                 | 19-    | 20-    | 28-    | 15-    | 28-     | 18-     | 14-    | 21-    | 25-    | 8-     | 28-    |        
|-------------------------------- | ------ | ------ | ------ | ------ | ------- | ------- | ------ | ------ | ------ | ------ | ------ | -------
|                                 | Jan    | Mar    | Mar    | Aug    | Sept    | Dec     | Jan    | Feb    | Mar    | Apr    | July   |        
|                                 | 2007   | 2007   | 2007   | 2007   | 2007    | 2007    | 2008   | 2008   | 2008   | 2008   | 2008   | TOTAL  
|                                 |        |        |        |        |         |         |        |        |        |        |        |        
|                                 |        |        |        |        |         |         |        |        |        |        |        |        
|                                 |        |        |        |        |         |         |        |        |        |        |        |        
|Risk free rate                   | 4.5%   | 4.5%   | 4.5%   | 5%     | 4.5%    | 5.0%    | 5.0%   | 5.0%   | 5.0%   | 5.0%   | 5.0%   |        
|                                 |        |        |        |        |         |         |        |        |        |        |        |        
|Volatility factor                | 45.19% | 57.48% | 98.67% | 91.68% | 92.20%  | 101.61% | 95.77% | 94.49% | 94.92% | 94.49% | 97.44% |        
|                                 |        |        |        |        |         |         |        |        |        |        |        |        
|                                 |        |        |        |        |         |         |        |        |        |        |        |        
|Stock-based compensation cost    |        |        |        |        |         |         |        |        |        |        |        |        
|expensed during the six          |        |        |        |        |         |         |        |        |        |        |        |        
|month period ended               |        |        |        |        |         |         |        |        |        |        |        |        
|October 31, 2008                 | -      | -      | -      | -      | $13,551 | -       | -      | -      | -      | -      | 11,272 | $24,823
|                                 |        |        |        |        |         |         |        |        |        |        |        |        
|Unexpended Stock based           |        |        |        |        |         |         |        |        |        |        |        |        
|compensation cost
      deferred |        |        |        |        |         |         |        |        |        |        |        |        
|over the vesting period          | -      | -      | -      | -      | $12,904 | -       | -      | -      | -      | -      | 16,906 | $29,810

F-15

---

**YUKON GOLD CORPORATION, INC. (An Exploration Stage
Mining Company)** **Notes to Interim Consolidated Financial
Statements** **October 31, 2008 (Amounts expressed in US
Dollars) (Unaudited  Prepared by Management)**

7.        STOCK BASED
COMPENSATION-Cont'd

As of October 31, 2008, there was $29,810 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,
2008 was $24,823.

On June 11, 2008, the Company cancelled 200,000 stock options
held by a former officer.

8.        SHORT-TERM
INVESTMENT IN AVAILABLE- FOR- SALE SECURITIES

During the six month period ended October 31, 2008, the Company
sold the balance of 450,000 shares of Industrial Minerals, Inc. at an average
selling price of $.0655 for a total consideration of $29,460 in the open market.

9.        COMMITMENTS
AND CONTINGENCIES

a)        Mount Hinton
Property Mining Claims

The Mount Hinton Property is adjacent to the Keno Hill Mining
Camp in central Yukon Territory. It consists of 186 staked claims under the
Yukon Quartz Mining Act, covering approximately 9300 acres.

On July 7, 2002, the Company's wholly owned subsidiary, 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 Yukon, Canada. This agreement was replaced with a revised and
amended agreement (the Hinton Option Agreement) dated July 7, 2005 which
superseded the original agreement and amendments thereto. The new agreement 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.

F-16

---

**YUKON GOLD CORPORATION, INC. (An Exploration Stage
Mining Company)** **Notes to Interim Consolidated Financial
Statements** **October 31, 2008 (Amounts expressed in US
Dollars) (Unaudited  Prepared by Management)**

9.        COMMITMENTS
AND CONTINGENCIES-Cont'd

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                            | $146,484 (CDN$ 150,000) Paid
|TOTAL                                      | $745,216 (CDN$850,000)      

WORK PROGRAM-expenditures to be incurred in the following
periods;

|July 7/02 to July 6/03  | $ 118,157 (CDN$ 150,000)
      Incurred  
|----------------------- | -----------------------------------------
|July 7/03 to July 6/04  | $ 196,928 (CDN$ 250,000) Incurred        
|July 7/04 to July 6/05  | $ 256,006 (CDN$ 325,000)
      Incurred  
|July 7/05 to Dec. 31/06 | $ 667,795 (CDN$ 750,000) Incurred        
|Jan. 1/07 to Dec. 31/07 | $ 937,383 (CDN$ 1,000,000)
      Incurred
|Jan. 1/08 to Dec. 31/08 | $1,037,775 (CDN$ 1,250,000)**Deferred    
|Jan. 1/09 to Dec. 31/09 | $1,245,330 (CDN$ 1,500,000)              
|TOTAL                   | $4,459,374 (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 had
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.

F-17

---

**YUKON GOLD CORPORATION, INC. (An Exploration Stage
Mining Company)** **Notes to Interim Consolidated Financial
Statements** **October 31, 2008 (Amounts expressed in US
Dollars) (Unaudited  Prepared by Management)**

9.        COMMITMENTS
AND CONTINGENCIES-Cont'd

**By letter agreement dated February
29, 2008, the Company gave notice to the Hinton Syndicate that all of the Work
Program expenditures scheduled to be incurred by December 31, 2008 would be
deferred until December 31, 2009. Subsection 2.2(f) of the Hinton Option
Agreement provides that if Yukon Gold has earned at least 25% of the right,
title and interest in the Property as provided for in Subsection 2.2(e) of the
Hinton Option Agreement and is unable to meet its next year's Work Program
expenditures as set out in Section 2.2 of the Hinton Option Agreement, it shall
be entitled to extend the time required to incur the Work Program expenditures
from year to year by giving notice to the Hinton Syndicate to such effect;
provided that the full amount of the Work Program expenditures has been incurred
by December 31, 2009.

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 $1,245,330 (CDN$1,500,000)

50% interest upon completion of Work
Program expenditures of $2,075,550 (CDN$2,500,000)

75% interest upon completion of Work
Program expenditures of $4,459,374 (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.

The Hinton Option Agreement contemplates that upon the earlier
of: (i) a production decision or (ii) investment of $4,459,374 (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 had 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 $4,151,100 (CDN$5,000,000).

F-18

---

**YUKON GOLD CORPORATION, INC. (An Exploration Stage
Mining Company)** **Notes to Interim Consolidated Financial
Statements** **October 31, 2008 (Amounts expressed in US
Dollars) (Unaudited  Prepared by Management)**

9.        COMMITMENTS
AND CONTINGENCIES-Cont'd

The Hinton Option Agreement provides that the Hinton Syndicate
receives 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.

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.
On July 7, 2008, the Company issued 476,189 common shares in settlement of a
property payment on the Mount Hinton property. These shares represent $58,887
(CDN$60,000) which is 40% of the contracted payment and were valued at $0.126
(CDN$0.126) each. The balance of the property payment in the amount of $88,331
(CDN$90,000) was paid in cash.

The Hinton Option Agreement pertains to an area of interest
which includes the area within ten kilometres 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 June 16, 2008 an additional 18 claims were
staked (#25-#42), known as the Gram Claims, at a cost of $8,679 (CDN$8,887),
which became subject to the Hinton Option Agreement. On 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. The Company paid cash
calls in the amount of $2,152,317 (CDN$2,105,200) for the 2007 Work Program. The
Company had approximately $70,304 (CDN$75,000) on deposit left over from the
2006 cash call schedule.

F-19

---

**YUKON GOLD CORPORATION, INC. (An Exploration Stage
Mining Company)** **Notes to Interim Consolidated Financial
Statements** **October 31, 2008 (Amounts expressed in US
Dollars) (Unaudited  Prepared by Management)**

9.        COMMITMENTS AND
CONTINGENCIES-Cont'd

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. On December 12, 2007 the Company paid $98,697 (CDN$100,000) being the next
payment due.

The Company has agreed to make subsequent payments under the
Agreement of: $166,044 (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.
Subsequent to the quarter ended October 31, 2008 the Company entered into a
letter agreement with Atna, amending the terms of the payments due under the
Agreement. See Note 13 SUBSEQUENT EVENTS below. Upon the commencement of
commercial production at the Marg Property, the Company will pay to Atna
$830,220 (CDN$1,000,000) in cash and/or common shares of the Company, or some
combination thereof to be determined.

On April 2, 2007 the Company accepted a proposed work program,
budget and cash call schedule for the Marg project. The Company has paid cash
calls in the amount of $2,100,528 (CDN$2,281,880) for the 2007 Work Program. The
Company had approximately $515,561 (CDN$550,000) on deposit left over from the
2006 cash call schedule. On May 15, 2007 the Company paid $703,037
(CDN$750,000), on June 15, 2007 the Company paid $703,037 (CDN$750,000), and on
July 15, 2007 the Company paid $703,037 (CDN$750,000) being three of the four
cash call payments.

F-20

---

**YUKON GOLD CORPORATION, INC. (An Exploration Stage
Mining Company)** **Notes to Interim Consolidated Financial
Statements** **October 31, 2008 (Amounts expressed in US
Dollars) (Unaudited  Prepared by Management)**

9.        COMMITMENTS
AND CONTINGENCIES-Cont'd

The fourth and final payment of $402,244 (CDN$380,000) was paid
on August 15, 2007. On August 31, 2007 the Company re-allocated $537,864
(CDN$508,120) being the balance of the third cash call payment for the Mount
Hinton 2007 Work Program from cash call funds previously allocated to the Marg
Project. These re-allocated funds were not needed for the Marg Project. On
January 23, 2008 the Company was refunded $388,524 (CDN$390,000) as these funds
were not needed for the Marg Project.

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
$1,992 (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. On
November 15, 2007 the Company paid $2,030 (CDN$2,000) being the fourth payment
of the contract. On December 14, 2007 the Company paid $1,967 (CDN$2,000) and on
January 15, 2008 the Company paid $1,967 (CDN$2,000), being the fifth and sixth
payments of the contract respectively. In addition, the consultant has been
granted an option to purchase 125,000 shares of the Company at $0.45 (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 February 12, 2008 the Company terminated the contract and the Company
received a refund on March 11, 2008 of $1,295(CDN$1,300) previously paid on
August 31, 2007 to cover the last payment of the one year term. The 31,250
options granted under the contract to vest on each of May 15, 2008 and August
15, 2008 respectively were also cancelled.

d)        On December
5, 2007 the Company entered into an agreement with a consultant to create
investor awareness for a period of six months, commencing on December 5, 2007
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. The
Company had accrued the expense of $22,000 for 100,000 shares to be issued to
January 31, 2008 . Due to non-performance of the agreement by the consultant,
the Company has obtained legal opinion that it is not obligated to issue any of
the restricted 300,000 common shares. The consulting expense accrual for $22,000
set up during the quarter ended January 31, 2008 was reversed and credited back
to income in the quarter ended April 30, 2008. The Company has also paid the
requisite fee to the TSX for cancellation of all of these shares.

F-21

---

**YUKON GOLD CORPORATION, INC. (An Exploration Stage
Mining Company)** **Notes to Interim Consolidated Financial
Statements** **October 31, 2008 (Amounts expressed in US
Dollars) (Unaudited  Prepared by Management)**

9.        COMMITMENTS AND
CONTINGENCIES-Cont'd

e)        Effective as of
December 15, 2007 the Company entered into a consulting agreement with Ronald
Mann (the Mann Agreement), pursuant to which Mr. Mann was retained as the
Company's President and Chief Executive Officer. The board of directors of the
Company appointed Mr. Mann to fill a vacancy on the board of directors, also
effective as of December 15, 2007. The Mann Agreement has a one-year term
commencing on December 15, 2007, and is automatically renewable thereafter,
unless terminated pursuant to the terms of the Mann Agreement. Pursuant to the
Mann Agreement, the parties agreed that Mr. Mann and the Company shall indicate
their respective intentions to renew the term after the passage of eight (8)
months from the date of the Mann Agreement. Pursuant to the Mann Agreement, Mr.
Mann will receive an annual consulting fee of $124,533 (CDN$150,000). In
addition, Mr. Mann received 500,000 warrants to purchase shares of the Company's
common stock (the Mann Warrants). The Mann Warrants shall have a term of 5
years and an exercise price of $0.20 (CDN$0.24) . 250,000 of the Mann Warrants
were fully vested upon issuance, and the remaining 250,000 vested 6 months from
the date of issuance, on June 15, 2008. Subsequent to the quarter ended October
31, 2008 Mr. Mann resigned as an Officer and as a Director of the Company. See
Note 13, SUBSEQUENT EVENTS below.

f)        As of
December 18, 2007 the Company entered into a consulting agreement with Cletus
Ryan (the Ryan Agreement) pursuant to which Mr. Ryan was retained as the
Company's Vice President, Corporate Development. The Ryan Agreement has a
six-month term commencing on December 18, 2007 and is automatically renewable
thereafter, unless terminated pursuant to the terms of the Ryan Agreement.
Pursuant to the Ryan Agreement, Mr. Ryan will receive an annual consulting fee
of $99,626 (CDN$120,000). In addition, Mr. Ryan received 200,000 options to
purchase shares of the Company's common stock (the Ryan Options). The Ryan
Options were fully vested upon the date of issuance and have an exercise price
of $0.20 (CDN $0.24) . On March 7, 2008 the Company renewed the Ryan Agreement
for an additional six months.

g)        On February 11,
2008 by letter engagement agreement the Company contracted the services of a
Corporate Secretarial company to fill the role of Mrs. Lisa Rose during her
maternity leave for a monthly fee of $1,121 (CDN$1,350) plus eligible expenses.

h)        On February 18,
2008 the Company and YGC, it's wholly-owned subsidiary, signed a surface
drilling contract with a diamond drilling company for the Marg Project to
commence on or about June 18, 2008. On February 18, 2008 the Company paid
$148,928 (CDN$150,000) as a deposit per the terms of the contract. During the
quarter ended July 31, 2008 the Company paid $281,581 (CDN$288,339) to the
contractor. During the quarter ended October 31, 2008 the Company paid $224,283
(CDN$270,149) to the contractor and on August 30, 2008 the drilling program was
demobilized. The balance of the deposit in the amount of $8,515 (CDN$10,256) is
being held by the diamond drilling company as a deposit on the 2009 drilling
program.

F-22

---

**YUKON GOLD CORPORATION, INC. (An Exploration Stage
Mining Company)** **Notes to Interim Consolidated Financial
Statements** **October 31, 2008 (Amounts expressed in US
Dollars) (Unaudited  Prepared by Management)**

9.        COMMITMENTS
AND CONTINGENCIES-Cont'd

i)        On March 10,
2008 the Company entered into a contract with a global mining consultancy
business for a scoping study and to prepare a report pursuant to the terms of
Canadian National Instrument 43-101, regarding the Marg Deposit at an estimated
cost of $76,675 (CDN$81,300). The Company paid $18,579 (CDN$18,713) at April 30,
2008. During the quarter ended July 31, 2008 the Company paid an additional
$41,042 (CDN$42,027). During the quarter ended October 31, 2008 the Company paid
a further $17,054 (CDN$20,542) to the consultant.

j)        On March 18,
2008 the Company entered into a consulting agreement with Gary Cohoon (the
Cohoon Agreement) pursuant to which Mr. Cohoon was retained as Vice-President,
Exploration, of the Company. The Cohoon Agreement has a one-year term commencing
on March 18, 2008 and is automatically renewable thereafter, unless terminated
pursuant to its terms. Pursuant to the Cohoon Agreement, Mr. Cohoon will receive
an annual consulting fee of $116,231 (CDN$140,000). Additionally, Mr. Cohoon
received 200,000 options to purchase shares of the Company's common stock (the
Cohoon Options). The Cohoon Options fully vested upon issuance and have an
exercise price of $0.18 (CDN$0.22) .

k)        On April 10, 2008
by letter agreement the Company procured the services of Galina Morozova through
a contract position as a Geologist with YGC, the Company's wholly-owned
subsidiary commencing April 15, 2008 until August 31, 2008. Ms. Morozova
received $6,454 (CDN$6,500) per month until the project began at the Marg
Property on approximately June 15, 2008, whereupon Ms. Morozova received $405
(CDN$500) per day plus expenses for the duration of the term of the letter
agreement. The contract position ended on August 28, 2008.

l)        On April 29,
2008 the Company entered into a letter agreement with R. Andrew Hureau for a
contract position as Senior Geologist with YGC, the Company's wholly-owned
subsidiary. Mr. Hureau's position commenced on May 1, 2008 at a rate of $623
(CDN$750) per day plus expenses. The letter agreement states that the term is on
commencement and for the duration of drilling on the Marg Project, approximately
mid June, 2008 to the end of August, 2008, on a regular schedule. The contract
position ended on September 3, 2008.

m)        On May 5, 2008 the
Company entered into an investor relations agreement (the Equicom Agreement)
with Equicom Group Inc. (Equicom) pursuant to which Equicom was retained to
provide the Company with general marketing and business consulting services for
an initial term of one year, then renewable thereafter. Equicom will receive an
annual work fee of $49,813 (CDN$60,000), payable in monthly installments of
$4,151 (CDN$5,000). The initial prorated retainer in the amount of $4,248
(CDN$4,350) and the June 1-30, 2008 installment of $4,883 (CDN$5,000) were made
on May 30, 2008. On July 1, 2008 the installment covering July 1-31, 2008 of
$4,883 (CDN$5,000) was paid. By letter on July 23, 2008 the Company terminated
the Equicom Agreement with such termination taking effect September 18, 2008.
Payments were made on August 1, 2008 of $4,151 (CDN$5,000) and on September 1,
2008 of $2,491 (CDN$3,000) representing the balance due on the contract.

F-23

---

**YUKON GOLD CORPORATION, INC. (An Exploration Stage
Mining Company)** **Notes to Interim Consolidated Financial
Statements** **October 31, 2008 (Amounts expressed in US
Dollars) (Unaudited  Prepared by Management)**

9.        COMMITMENTS
AND CONTINGENCIES-Cont'd

n)        On May 16,
2008 the Company entered into a consulting agreement (the Clarke Agreement)
with Clarke Capital Group Inc. (Clarke) pursuant to which Clarke was retained
to provide the Company with investor relations and business communications
services for an initial term of 6 months, renewable thereafter for an additional
6 month term. Upon execution of the Clarke Agreement the Company paid Clarke
$14,648 (CDN$15,000). Clarke will also receive a monthly work fee of $2,906
(CDN$3,500) during the term of the agreement. Upon renewal, Clarke will receive
an additional payment of $8,302 (CDN$10,000). Pursuant to the Clarke Agreement,
the Company issued Clarke 50,000 shares of common stock on July 14, 2008, with
an additional 50,000 shares issuable upon renewal. The Company paid the June and
July installments on their respective due dates. The Company paid the August,
September and October installments on their respective due dates. Subsequent to
the quarter ended October 31, 2008 the Company advised Clarke that it was
terminating the Clarke Agreement and would not be issuing any further
installment payments.

o)        On May 20,
2008 YGC, the Company's wholly-owned subsidiary entered into a service provision
agreement with a company to provide cooking and first aid services on the Marg
Property from June 15, 2008 to September 30, 2008. On June 4, 2008 the Company
paid a $9,766 (CDN$10,000) advance to the service provider as per the terms of
the agreement. During the quarter ended July 31, 2008 the Company also paid
$15,178 (CDN$15,543) to the service provider. During the quarter ended October
31, 2008 the Company paid an additional $24,233 (CDN$29,189) and the contractor
refunded the balance of the advance in the amount of $382 (CDN$460) to the
Company.

p)        On July 28, 2008
the Company entered into a consulting agreement with First Canadian Capital
(First Canadian) pursuant to which First Canadian will provide general
marketing and business consulting services for an initial term of one year,
renewable thereafter. The Company will pay First Canadian $4,864 (CDN$6,000) per
month. The Company paid the first three months of such fees in advance. In
addition on July 28, 2008 the Company issued 250,000 stock options to buy the
Company's shares at a purchase price of $0.12 (CDN$0.15) per share. The stock
options shall vest over the initial term of the agreement. Subsequent to the
quarter ended October 31, 2008, on December 12, 2008 the Company and the
consultant mutually agreed to terminate the agreement effective October 31,
2008.

10.      RELATED PARTY
TRANSACTIONS

Six Months ended October 31, 2008

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

No director or officer exercised stock options during the six
month period ended October 31, 2008.

F-24

---

**YUKON GOLD CORPORATION, INC. (An Exploration Stage
Mining Company)** **Notes to Interim Consolidated Financial
Statements** **October 31, 2008 (Amounts expressed in US
Dollars) (Unaudited  Prepared by Management)**

11.      CHANGES IN OFFICERS AND
DIRECTORS

On August 1, 2008 the board of directors appointed Kathy
Chapman Chief Administrative Officer of the Company.

On December 11, 2008 the Company accepted G.E. Ted Creber's
resignation as a Director.

On December 12, 2008 the Company accepted Ronald Mann's
resignation as Chief Executive Officer and President and as a Director, and as
an Officer and Director of YGC, the Company's wholly-owned subsidary. There were
no disagreements between the Company and Mr. Mann with regards to the Company's
operations or public disclosures. The Company has agreed to pay Mr. Mann
severance of $20,756 (CDN$25,000), payable in two installments.

On December 12, 2008 the Company appointed J.L. Guerra, Jr.
President and Chief Executive Officer. Mr. Guerra is also the Chairman of the
Company's Board of Directors.

12.      EXPIRY OF WARRANTS

On August 22, 2008 245,455 warrants held by J.L. Guerra, Jr.,
Chairman of the Board, expired.

13.      SUBSEQUENT EVENTS

On November 7, 2008 the Company received written permission
from the TSX to extend the meeting date of their Annual and Special Meeting of
Shareholders to January 31, 2009.

On November 12, 2008 the Company filed a Form 8-K to disclose
that the Company has commenced a normal course issuer bid to purchase up to
1,682,531 shares of its common stock, representing approximately 5% of the
Company's outstanding shares. Blackmont Capital Corporation, based in Vancouver,
British Columbia, will conduct the bid. The Company will pay prevailing market
prices for the shares. Purchases pursuant to the bid will be made through the
facilities of the Toronto Stock Exchange, subject to the rules of the Toronto
Stock Exchange and applicable rules promulgated under the Securities Exchange
Act of 1934, as amended. The bid will terminate on the earlier of November 13,
2009, or the date on which all of the shares to be acquired under the bid have
been purchased.

On November 12, 2008 the Company received $26,140
(CDN$31,486) being an accrued portion of the Goods & Services tax receivable
from the Federal Government of Canada.

On December 4, 2008 the Company and Atna Resources Ltd. ("Atna")
entered into a letter agreement (the "Amendment Agreement") amending the
purchase agreement by which the Company acquired its Marg Property (the "Marg
Acquisition Agreement"). Under the terms of the Marg Acquisition Agreement the
Company was required to pay to Atna $166,044 (CDN$200,000) (in cash or shares of
the Company's common stock) on December 12, 2008. In lieu of making such
payment, the Amendment Agreement permits the Company to pay Atna $20,756
(CDN$25,000) in cash on December 12, 2008 and $186,800 (CDN$225,000) (payable in
cash or shares of the Company's common stock) on April 30, 2009.

On December 11, 2008 the Company accepted G.E. "Ted" Creber's
resignation as a Director.

On December 12, 2008 the Company accepted Ronald Mann's
resignation as Chief Executive Officer and President and as a Director, and as
an Officer and Director of YGC, the Company's wholly-owned subsidiary. There
were no disagreements between the Company and Mr. Mann with regards to the
Company's operations or public disclosures. The Company has agreed to pay Mr.
Mann a severance payment in the amount of $20,756 (CDN$25,000), payable in two installments.

On December 12, 2008 the Company appointed J.L. Guerra, Jr.
President and Chief Executive Officer. Mr. Guerra is also the Chairman of the
Company's Board of Directors.

On December 12, 2008 the Company and a consultant mutually
agreed to terminate a consulting agreement, entered into on July 28, 2008,
effective October 31, 2008.

F-25

---

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONFOR THE THREE AND SIX MONTH PERIODS
ENDED OCTOBER 31, 2008

Discussion of Operations & Financial Condition

Yukon Gold has no source of revenue, operates at a loss and
expects operating losses to continue as long as it remains in an exploration
stage and perhaps thereafter. As at October 31, 2008, we had accumulated losses
of $14,323,531. 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, 2008 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 an
exploration program at the Marg Property.

SELECTED INFORMATION

|                                  | Three months     | Three months   
|--------------------------------- | ---------------- | ---------------
|                                  | ended            | ended          
|                                  | October 31,2008  | October 31,2007
|                                  |                  |                
|Revenues                          | Nil              | Nil            
|Net Loss                          | $885,174         | $2,419,329     
|Loss per share-basic and diluted  | $ (0.03)         | $ (0.09)       
|                                  |                  |                
|                                  |                  |                
|                                  | Six months       | Six months     
|                                  | ended            | ended          
|                                  | October 31, 2008 | October 31,2007
|                                  |                  |                
|Revenues                          | Nil              | Nil            
|Net Loss                          | $2,434,374       | $3,471,873     
|Loss per share-basic and diluted  | $(0.08)          | $ (0.14)       
|                                  |                  |                
|                                  |                  |                
|                                  | As at            | As at          
|                                  | October 31, 2008 | April 30, 2008 
|                                  |                  |                
|Total Assets                      | $602,109         | $2,526,600     
|Total Liabilities                 | $205,068         | $231,531       
|Cash dividends declared per share | Nil              | Nil            

- 29 -

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Revenues

No revenue was generated by the Company's operations during the
six month and three month period ended October 31, 2008 and October 31, 2007
respectively.

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
three months ended October 31, 2008 is general and administrative expense of
$322,807 as compared to $392,087 for the three months ended October 31, 2007.
General and administrative expense for the six month period ended October 31,
2008 was $689,617 as compared with $466,973 for the six month period ended
October 31, 2007. General and administrative expense represents approximately
36.46% of the total operating expense for the three months ended October 31,
2008 and approximately 16.2% of the total operating expense for the three months
ended October 31, 2007. During the prior quarter ended July 31, 2007, the
Company had credited $136,668 to General and Administration expense relating to
the cancellation and waiver of an agreement with a consultant for which the
Company had accrued for this amount as payable.

(b) Project Expense

Included in operating expenses for the
three months ended October 31, 2008 is project expenses of $551,729 as compared
with $2,023,086 for the three months ended October 31, 2007. Project expenses
for the six month period ended October 31, 2008 was $1,723,638 as compared with
$2,997,811 for the six month period ended October 31, 2007. Project expense is a
significant expense and it represents approximately 62.3% of the total operating
expense for the three months ended October 31, 2008 and approximately 83.62% of
the total operating expense for the three months ended October 31, 2007. Due to
lower cash availability, project expenses during the current quarter was
significantly less than the prior quarter.

Exploration Expenditures at the Company's
Properties

Mount Hinton

The Mount Hinton Property is adjacent to the Keno Hill Mining
Camp in central Yukon Territory. It consists of 186 staked claims under the
Yukon Quartz Mining Act, covering approximately 9300 acres.

On 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 $2,152,317 (CDN$2,105,200) 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 reallocated $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.

- 30 -

---

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 had
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.

By letter agreement dated February 29, 2008, the Company gave
notice to the Hinton Syndicate that all of the Work Program expenditures
scheduled to be incurred by December 31, 2008 would be deferred until December
31, 2009. Subsection 2.2(f) of the Hinton Option Agreement provides that if
Yukon Gold has earned at least 25% of the right, title and interest in the
Property as provided for in Subsection 2.2(e) of the Hinton Option Agreement and
is unable to meet its next year's Work Program expenditures as set out in
Section 2.2 of the Hinton Option Agreement, it shall be entitled to extend the
time required to incur the Work Program expenditures from year to year by giving
notice to the Hinton Syndicate to such effect; provided that the full amount of
the Work Program expenditures has been incurred by December 31, 2009.

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
  $1,245,330 (CDN$1,500,000);

50% interest upon completion of Work Program expenditures of
  $2,075,550 (CDN$2,500,000); and

75% interest upon completion of Work Program expenditures of
  $4,459,374 (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.

All Property Payments and Work Program expenditures have been
made and incurred.

The Hinton Option Agreement contemplates that upon the earlier
of: (i) a production decision or (ii) investment of $4,459,374 (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 had 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 $4,151,100 (CDN$5,000,000).

- 31 -

---

The Hinton Option Agreement provides that the Hinton Syndicate
receive a 2% net smelter returns royalty. In the event that we exercise our
option to buy the entire interest of the Hinton Syndicate (which is only
possible if we have reached a 75% interest, as described above) then the "net
smelter returns royalty" would become 3% and the Hinton Syndicate would retain
this royalty interest only. The net smelter returns royalty is a percentage of
the gross revenue received from the sale of the ore produced from our mine less
certain permitted expenses.

The Hinton Option Agreement entitles the Hinton Syndicate to
recommend for appointment (but not nominate) one member to the board of
directors of Yukon Gold.

The Hinton Syndicate members each have the option to receive
their share of property payments in stock of Yukon Gold at a 10% discount to the
market. YGC and Yukon Gold also have the option to pay 40% of any property
payment due after the payment on January 2, 2006 with common stock of Yukon
Gold. As of July 7, 2006, Yukon Gold issued to the Hinton Syndicate 43,166
shares of its common stock, based upon a valuation adopted by the board of Yukon
Gold of $1.24 (CDN$1.39) per share, as partial payment of the July 7, 2006
Property Payment. On July 7, 2006 the Company issued 43,166 common shares and
paid $80,501 (CDN$90,000) in cash in settlement of the property payment due on
July 7, 2006 on the Mount Hinton Property. The shares represented 40% of the
total $134,168 (CDN$150,000) payment and were valued at $1.24 (CDN$1.39) each.
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 July 7, 2008, the Company issued 476,189 common shares in
settlement of a property payment on the Mount Hinton property. These shares
represent $58,887 (CDN$60,000) which is 40% of the contracted payment and were
valued at $0.126 (CDN$0.126) each. The balance of the property payment in the
amount of $88,331 (CDN$90,000) was paid in cash.

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 June 16, 2008 an additional 18 claims were
staked (#25-#42), known as the Gram Claims, at a cost of $8,679 (CDN$8,887),
which became subject to the Hinton Option Agreement.

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.

Under the Hinton Option Agreement, the Hinton Syndicate is
responsible for any environmental liability claims arising from the status of
the property prior to the effective date of the Hinton Option Agreement.

Under the terms of the Hinton Option Agreement three of the
syndicate members are entitled to bid on work we propose to carry out and if
their price is competitive they are entitled to do the work. There is no
requirement in the Hinton Option Agreement that these parties perform
exploration work.

- 32 -

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Marg Property

In March 2005, the Company acquired rights to purchase 100% of
the Marg Property, which consists of 402 contiguous mineral claims covering
approximately 20,000 acres located in the Mayo Mining District of the Yukon
Territory of Canada. Title to the claims is registered in the name of YGC.

The Company assumed the rights to acquire the Marg Property
under a Property Purchase Agreement (Agreement) with Atna Resources Ltd.
(Atna). Under the terms of the Agreement the Company paid $119,189
(CDN$150,000) cash and 133,333 common shares as a down payment. The Company made
payments under the Agreement for $43,406 (CDN$50,000) cash and an additional
133,333 common shares of the Company on December 12, 2005; $86,805 (CDN$100,000)
cash and an additional 133,334 common shares of the Company on December 12,
2006. On December 12, 2007 the Company paid $98,697 (CDN$100,000) being the next
payment due.

The Company has agreed to make subsequent payments under the
Agreement of: $195,313 (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.
Subsequent to the quarter ended October 31, 2008 on December 4, 2008 the Company
by letter agreement with Atna (the Amendment Agreement) was granted a deferral
of the payment due on December 12, 2008. The Amendment Agreement allows the
Company, in lieu of making such payment, to pay Atna $20,756
(CDN$25,000) in cash on December 12, 2008 and $186,800 (CDN$225,000) (payable in
cash or shares of the Company's common stock) on April 30, 2009. Upon the
commencement of commercial production at the Marg Property, the Company will pay
to Atna $830,220 (CDN$1,000,000) in cash and/or common shares of the Company, or
some combination thereof to be determined.

On April 2, 2007 the Company accepted a proposed work program,
budget and cash call schedule for the Marg project. The Company has paid cash
calls in the amount of $2,100,528 (CDN$2,281,880) for the 2007 Work Program. The
Company had approximately $515,561(CDN $550,000) on deposit left over from the
2006 cash call schedule. On May 15, 2007 the Company paid $703,037
(CDN$750,000), on June 15, 2007 the Company paid $703,037 (CDN$750,000), and on
July 15, 2007 the Company paid $703,037 (CDN$750,000) being three of the four
cash call payments. The fourth and final payment of $402,244 (CDN$380,000) was
paid on August 15, 2007. On August 31, 2007 the Company re-allocated $537,864
(CDN$508,120) being the balance of the third cash call payment for the Mount
Hinton 2007 Work Program from cash call funds previously allocated to the Marg
Project. These re-allocated funds were not needed for the Marg Project. On
January 23, 2008 the Company was refunded $388,524 (CDN$390,000) as these funds
were not needed for the Marg Project.

Liquidity and Capital Resources

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

|                                      |   | October 31, 2008 |   |   | October 31, 2007 |  
|------------------------------------- | - | ---------------- | - | - | ---------------- | -
|                                      |   |                  |   |   |                  |  
|Cash and cash equivalent              | $ | 261,645          |   | $ | 574,620          |  
|Working capital                       | $ | 269,361          |   | $ | 1,910,988        |  
|Cash used in operating activities     | $ | (1,409,664       | ) | $ | (1,207,525       | )
|Cash used in investing activities     | $ | (44,008          | ) | $ | (151,520         | )
|Cash provided in financing activities | $ | 576,012          |   | $ | 924,927          |  

Off-Balance Sheet Arrangement

The Company has no Off-Balance Sheet Arrangement as of October
31, 2008.

- 33 -

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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 9 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, 2008 for
future obligation payments.

Flow-Through and Unit Share Subscriptions

2007-2008

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$862,500) 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 was reversed and credited to income when the Company renounced
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 $0.60
(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 $0.70 (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 16, 2007 the Company completed the second tranche
of the Financing with Northern acting as agent. The second tranche of the
Financing was comprised of the sale of 2,438,888 units (the Units) at $0.46
(CDN$0.45) per Unit (the Unit Issue Price) for gross proceeds of $1,127,028
(CDN$1,097,500) and the sale of 1,071,770 flow through units (the Flow-Through
Units) at $0.53 (CDN$0.52) per Flow-Through Unit (the Flow-Through Unit Issue
Price) for gross proceeds of $572,315 (CDN$557,320) . The proceeds raised were
allocated between the offering of shares and the sale of tax benefits. A
liability of $77,043 was recognized for the sale of taxable benefits, which was
reversed and credited to income when the Company renounced resource expenditure
deduction to the investor. 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 $0.60 (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 $0.70 (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 Common Share and one half of one Common Share purchase warrant at the Unit Issue
Price until November 16, 2009. Each full Common share purchase warrant is
exercisable at $0.60 (CDN$0.60) . Each FT Unit Compensation Option is
exercisable into one Common share and one half of one Common share purchase
warrant at the Flow-Through Unit Issue Price. Each full Common share purchase
warrant is exercisable at $0.70 (CDN$0.70) .

- 34 -

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2008-2009

On July 23, 2008 the Company closed a non-brokered private
placement of up to $976,563 (CDN$1,000,000). The Company completed the sale of
4,134,000 common shares on a flow-through basis at a price of $0.15 (CDN$0.15)
per share for gross proceeds of $613,778 (CDN$620,100). The Company paid a 5%
finders fee on this private placement. The private placement was exempt from
registration under the Securities Act of 1933, pursuant to an exemption afforded
by Regulation S. The flow through shares were issued at market without any
additional price charged for sale of taxable benefits. The proceeds of the
Financing are being used for the exploration and development of Yukon Gold's
properties.

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 $1,992 (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. On November 15, 2007 the Company paid $2,030 (CDN$2,000)
being the fourth payment of the contract. On December 14, 2007 the Company paid
$1,967 (CDN$2,000) and on January 15, 2008 the Company paid $1,967 (CDN$2,000),
being the fifth and sixth payments of the contract respectively. In addition,
the consultant has been granted an option to purchase 125,000 shares of the
Company at $0.45 (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 February 12, 2008 the Company
terminated the contract and the Company received a refund on March 11, 2008 of
$1,295(CDN$1,300) previously paid on August 31, 2007 to cover the last payment
of the one year term. The 31,250 options granted under the contract to vest on
each of May 15, 2008 and August 15, 2008 respectively were also cancelled.

On December 5, 2007 the Company entered into an agreement with
a consultant to create investor awareness for a period of six months, commencing
on December 5, 2007 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. The
Company had accrued the expense of $22,000 for 100,000 shares to be issued to
January 31, 2008. Due to non-performance of the agreement by the consultant, the
Company has obtained legal opinion that it is not obligated to issue any of the
restricted 300,000 common shares. The consulting expense accrual for $22,000 set
up during the quarter ended January 31, 2008 was reversed and credited back to
income during the quarter ended April 30, 2008. The Company has also paid the
requisite fee to the TSX for cancellation of all of these shares.

Effective as of December 15, 2007 the Company entered into a
consulting agreement with Ronald Mann (the Mann Agreement), pursuant to which
Mr. Mann was retained as the Company's President and Chief Executive Officer.
The board of directors of the Company appointed Mr. Mann to fill a vacancy on
the board of directors, also effective as of December 15, 2007. The Mann
Agreement has a one-year term commencing on December 15, 2007, and is
automatically renewable thereafter, unless terminated pursuant to the terms of
the Mann Agreement. Mr. Mann and the Company shall indicate their respective
intentions to renew the term after the passage of eight (8) months from the date
of the Mann Agreement. Pursuant to the Mann Agreement,

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Mr. Mann will receive an annual consulting fee of $124,533
(CDN$150,000). In addition, Mr. Mann received 500,000 warrants to purchase
shares of the Company's common stock (the Mann Warrants). The Mann Warrants
shall have a term of 5 years and an exercise price of $0.20 (CDN$0.24) . 250,000
of the Mann Warrants were fully vested upon issuance, and the remaining 250,000
vested 6 months from the date of issuance, on June 15, 2008. Subsequent to the
quarter ended October 31, 2008 Mr. Mann resigned as an Officer and Director of
the Company. For more information see the section entitled Subsequent Events
below.

As of December 18, 2007 the Company entered into a consulting
agreement with Cletus Ryan (the Ryan Agreement) pursuant to which Mr. Ryan was
retained as the Company's Vice President, Corporate Development. The Ryan
Agreement has a six-month term commencing on December 18, 2007 and is
automatically renewable thereafter, unless terminated pursuant to the terms of
the Ryan Agreement. Pursuant to the Ryan Agreement, Mr. Ryan will receive an
annual consulting fee of $99,626 (CDN$120,000). In addition, Mr. Ryan received
200,000 options to purchase shares of the Company's common stock (the Ryan
Options) at an exercise price of $0.20 (CDN$0.24) . The Ryan Options were fully
vested upon the date of issuance. On March 7, 2008 the Company renewed the Ryan
Agreement for an additional six months.

On February 11, 2008 by letter engagement agreement the Company
contracted the services of a Corporate Secretarial company to fill the role of
Mrs. Lisa Rose during her maternity leave for a monthly fee of $1,121
(CDN$1,350) plus eligible expenses.

On February 18, 2008 the Company and YGC, it's wholly-owned
subsidiary, signed a surface drilling contract with a diamond drilling company
for the Marg Project to commence on or about June 18, 2008. On February 18, 2008
the Company paid $148,928 (CDN$150,000) as a deposit per the terms of the
contract. During the quarter ended July 31, 2008 the Company paid $281,581
(CDN$288,339) to the contractor. During the quarter ended October 31, 2008 the
Company paid $224,283 (CDN$270,149) to the contractor and on August 30, 2008 the
drilling program was demobilized. The balance of the deposit in the amount of
$8,515 (CDN$10,256) is being held by the diamond drilling company as a deposit
on the 2009 drilling program.

On March 10, 2008 the Company entered into a contract with a
global mining consultancy business for a scoping study and to prepare a report
pursuant to the terms of Canadian National Instrument 43-101, regarding the Marg
Deposit at an estimated cost of $76,675 (CDN$81,300). The Company paid $18,579
(CDN$18,713) at April 30, 2008. During the quarter ended July 31, 2008 the
Company paid an additional $41,042 (CDN$42,027). During the quarter ended
October 31, 2008 the Company paid a further $17,054 (CDN$20,542) to the
consultant.

On March 18, 2008 the Company entered into a consulting
agreement with Gary Cohoon (the Cohoon Agreement) pursuant to which Mr. Cohoon
was retained as Vice-President, Exploration, of the Company. The Cohoon
Agreement has a one-year term commencing on March 18, 2008 and is automatically
renewable thereafter, unless terminated pursuant to its terms. Pursuant to the
Cohoon Agreement, Mr. Cohoon will receive an annual consulting fee of $116,231
(CDN$140,000). Additionally, Mr. Cohoon received 200,000 options to purchase
shares of the Company's common stock (the Cohoon Options). The Cohoon Options
fully vested upon issuance and have an exercise price of $0.18 (CDN$0.22) .

On April 10, 2008 by letter agreement the Company procured the
services of Galina Morozova through a contract position as a Geologist with YGC,
the Company's wholly-owned subsidiary commencing April 15, 2008 until August 31,
2008. Ms. Morozova received $6,454 (CDN$6,500) per month until the project began
at the Marg Property on approximately June 15, 2008, whereupon Ms. Morozova
received $405 (CDN$500) per day plus expenses for the duration of the term of
the letter agreement. The contract position ended on August 28, 2008.

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On April 29, 2008 the Company entered into a letter agreement
with R. Andrew Hureau for a contract position as Senior Geologist with YGC, the
Company's wholly-owned subsidiary. Mr. Hureau's position commenced on May 1,
2008 at a rate of $623 (CDN$750) per day plus expenses. The letter agreement
states that the term is on commencement and for the duration of drilling on the
Marg Project, approximately mid June, 2008 to the end of August, 2008, on a
regular schedule. The contract position ended on September 3, 2008.

On May 5, 2008 the Company entered into an investor relations
agreement (the Equicom Agreement) with Equicom Group Inc. (Equicom) pursuant
to which Equicom was retained to provide the Company with general marketing and
business consulting services for an initial term of one year, then renewable
thereafter. Equicom will receive an annual work fee of $49,813 (CDN$60,000),
payable in monthly installments of $4,151 (CDN$5,000). The initial prorated
retainer in the amount of $4,248 (CDN$4,350) and the June 1-30, 2008 installment
of $4,883 (CDN$5,000) were made on May 30, 2008. On July 1, 2008 the installment
covering July 1-31, 2008 of $4,883 (CDN$5,000) was paid. By letter on July 23,
2008 the Company terminated the Equicom Agreement with such termination taking
effect September 18, 2008. During the quarter ended October 31, 2008, the
Company paid on August 1, 2008 $4,151 (CDN$5,000) and on September 1, 2008
$2,491 (CDN$3,000) being the balance payments on the contract.

On May 16, 2008 the Company entered into a consulting agreement
(the Clarke Agreement) with Clarke Capital Group Inc. (Clarke) pursuant to
which Clarke was retained to provide the Company with investor relations and
business communications services for an initial term of 6 months, renewable
thereafter for an additional 6 month term. Upon execution of the Clarke
Agreement the Company paid Clarke $14,648 (CDN$15,000). Clarke will also receive
a monthly work fee of $2,906 (CDN$3,500) during the term of the agreement. Upon
renewal, Clarke will receive an additional payment of $8,302 (CDN$10,000).
Pursuant to the Clarke Agreement, the Company issued Clarke 50,000 shares of
common stock on July 14, 2008, with an additional 50,000 shares issuable upon
renewal. The Company paid the June and July installments on their respective due
dates. During the quarter ended October 31, 2008 the Company paid the August,
September and October installments on their due dates. Subsequent to the quarter
ended October 31, 2008 the Company advised Clarke that it was terminating the
Clarke Agreement and would not be issuing any further installment payments.

On May 20, 2008 YGC, the Company's wholly-owned subsidiary
entered into a service provision agreement with a company to provide cooking and
first aid services on the Marg Property from June 15, 2008 to September 30,
2008. On June 4, 2008 the Company paid a $9,766 (CDN$10,000) advance to the
service provider as per the terms of the agreement. During the quarter ended
July 31, 2008 the Company also paid $15,178 (CDN$15,543) to the service
provider. During the quarter ended October 31, 2008 the Company paid an
additional $24,233 (CDN$29,189) and the contractor refunded the balance of the
advance in the amount of $382 (CDN$460) to the Company.

On July 28, 2008 the Company entered into a consulting
agreement with First Canadian Capital (First Canadian) pursuant to which First
Canadian will provide general marketing and business consulting services for an
initial term of one year, renewable thereafter. The Company will pay First
Canadian $4,981 (CDN$6,000) per month. The Company paid the first three months
of such fees in advance. In addition on July 28, 2008 the Company issued 250,000
stock options to buy the Company's shares at a purchase price of $0.12
(CDN$0.15) per share. The stock options shall vest over the initial term of the
agreement. Subsequent to the quarter ended October 31, 2008 on December 12, 2008
the Company and the consultant mutually agreed to terminate the agreement
effective October 31, 2008.

Subsequent Events

On November 12, 2008 the Company filed a Form 8-K to disclose
that the Company has commenced a normal course issuer bid to purchase up to
1,682,531 shares of its common stock, representing approximately 5% of the
Company's outstanding shares. Blackmont Capital Corporation, based in Vancouver,
British Columbia, will conduct the bid. The Company will pay prevailing market
prices for the shares. Purchases pursuant to the bid will be made through the
facilities of the Toronto Stock Exchange, subject to the rules of the Toronto
Stock Exchange and applicable rules promulgated under the Securities Exchange
Act of 1934, as amended. The bid will terminate on the earlier of November 13,
2009, or the date on which all of the shares to be acquired under the bid have
been purchased.

On December 4, 2008 the Company and Atna Resources Ltd. ("Atna")
entered into a letter agreement (the "Amendment Agreement") amending the
purchase agreement by which the Company acquired its Marg Property (the "Marg
Acquisition Agreement"). Under the terms of the Marg Acquisition Agreement the
Company was required to pay to Atna $166,044 (CDN$200,000) (in cash or shares of
the Company's common stock) on December 12, 2008. In lieu of making such
payment, the Amendment Agreement permits the Company to pay Atna $20,756
(CDN$25,000) in cash on December 12, 2008 and $186,800 (CDN$225,000) (payable in
cash or shares of the Company's common stock) on April 30, 2009.

On December 11, 2008 the Company accepted the resignation of
G.E. "Ted" Creber as a Director.

On December 12, 2008, the Company accepted the resignation of
Ronald K. Mann as the Company's Chief Executive Officer and President, and as a
Director, and as an Officer and Director of Yukon Gold Corp., the Company's
wholly-owned subsidiary. There were no disagreements between the Company and Mr.
Mann with regards to the Company's operations or public disclosures. The
Company agreed to pay Mr. Mann a severance payment in the amount of $20,756 (CDN$25,000),
payable in two installments.

- 37 -

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On December 12, 2008 J.L. Guerra, Jr. the Chairman of the
Company's Board of Directors, was appointed President and Chief Executive
Officer of the Company.

Critical Accounting Policies

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

Acquisition, Exploration and Evaluation Expenditures

The Company is an exploration stage mining company and has not
yet realized any revenue from its operations. It is primarily engaged in the
acquisition and exploration of mining properties. Mineral property exploration
costs are expensed as incurred. Mineral property payments are capitalized only
if the Company is able to allocate any economic value beyond proven and probable
reserves. When it has been determined that a mineral property can be
economically developed as a result of establishing proven and probable reserves,
the costs incurred to develop such property will be capitalized. For the purpose
of preparing financial information, the Company is unable to allocate any
economic value beyond proven and probable reserves and hence all property
payments are considered to be impaired and accordingly written off to project
expense. All costs associated with a property that has the potential to add to
the Company's proven and probable reserves are expensed until a final
feasibility study demonstrating the existence of proven and probable reserves is
completed. No costs have been capitalized in the periods covered by these
financial statements. Once capitalized, such costs will be amortized using the
units-of-production method over the estimated life of the probable reserve.

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

To date, mineral property exploration costs have been expensed
as incurred. As of the date of these financial statements, the Company has
incurred only property payments and exploration costs, which have been expensed.
To date the Company has not established any proven or probable reserves on its
mineral properties

CONTROLS AND PROCEDURES

|(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, 2008. 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.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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, 2008 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.                                

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. 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 1A. RISK FACTORS

|1. | WE DO NOT HAVE AN OPERATING BUSINESS.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The Company has rights in certain mineral claims located
      in Yukon, Canada. To date we have done limited exploration of the property
      covered by our mineral claims. We do not have a mine or a mining business
      of any kind. There is no assurance that we will develop an operating
      business in the future.                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|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:

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| | • | 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, as amended, also
      requires the requires the Company to make a material payment on April 30,
      2009. If we are unable to raise sufficient capital to make this payment we
      may lose all of our rights in the Marg Property.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|5. | WEATHER INTERRUPTIONS IN YUKON 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.                                       

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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 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.                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|11. | CURRENT LEVELS OF MARKET VOLATILITY COULD HAVE ADVERSE
      IMPACTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | The capital and credit markets have been experiencing
      volatility and disruption. If the current levels of market disruption and
      volatility continue or worsen, there can be no assurance that the Company
      will not experience adverse effects, which may be material. These effects
      may include, but are not limited to, difficulties in raising additional
      capital or debt and a smaller pool of investors and funding sources. There
      is thus no assurance the Company will have access to the equity capital
      markets to obtain financing when necessary or desirable.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|12. | A GENERAL DETERIORATION IN ECONOMIC CONDITIONS MAY HAVE
      ADVERSE IMPACTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | The current economic environment is challenging and
      uncertain. The consequences of a prolonged recession may include a lower
      level of economic activity and uncertain regarding commodity markets.
      Further, the risks associated with industries in which the Company
      operates become more acute in periods of a slowing economy or slow
      growth.                                                                                                                                                                                                                                   

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

On July 23, 2008 the Company closed a non-brokered private
placement of up to $976,563 (CDN$1,000,000). The Company completed the sale of
4,134,000 common shares on a flow-through basis at a price of $0.15 (CDN$0.15)
per share for gross proceeds of $613,778 (CDN$620,100). The Company paid a 5%
finders fee on this private placement. The flow-through shares were issued at
market without any additional price charged for sale of taxable benefits. The
private placement was exempt from registration under the Securities Act of 1933,
as amended, pursuant to an exemption afforded by Regulation S.

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On July 7, 2008, the Company issued 476,189 common shares in
settlement of a property payment on the Mount Hinton property. These shares
represent $58,887 (CDN$60,000) which is 40% of the contracted payment and were
valued at $0.123 (CDN$0.126) each. The balance of the property payment in the
amount of $88,330 (CDN$90,000) was paid in cash.

On June 18, 2008 the Company approved the issuance of 100,000
shares of common stock to a consultant as payment for investor relations and
business communications services. Of that amount, 50,000 shares were issued July
14, 2008 with the balance of 50,000 shares to be issued upon renewal of the
consulting agreement.

Item 3.        DEFAULTS
UPON SENIOR SECURITIES

None.

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

None.

Item 5.       
OTHER INFORMATION

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Item 6. EXHIBITS & REPORTS ON FORM 8-K

|Exhibits |     
|-------- | ----
|         |     
|(a)      | 31.1
|         |     
|         | 31.2
|         |     
|         | 32.1

|(b) | In addition, the following reports are incorporated by
      reference:                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                    
|    | Current Report on Form 8-k Item 5.01-Departure of
      Directors or Certain Officers, dated December 11, 2008                   
|    |                                                                                                                                    
|    | Current Report on Form 8-K Item 8.01-Other Events dated
      November 12, 2008                                                  
|    |                                                                                                                                    
|    | Current Report on Form 8-K Item 1.01-Entry into an
      Amendment of a Material Definitive Agreement, dated December 4,
    2008

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 15, 2008 | By: | /s/ Kathy Chapman                 
|------------------------ | --- | ----------------------------------
|                         |     | Kathy Chapman                     
|                         |     | Chief
      Administrative Officer

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