---

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 endedJuly 31,
2010

Commission file number 000-51068

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

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

1226 White Oaks Blvd., Suite 10A Oakville,
Ontario L6H 2B9 Canada(Address of principal executive offices
including zip code)

905-845-1073(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 July 31, 2010 was 41,839,535.

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PART I  FINANCIAL INFORMATION

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

TABLE OF CONTENTS

|                                                                                                                                                                            | Page No.          
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------
|                                                                                                                                                                            |                   
|Interim Consolidated
      Balance Sheets as at July 31, 2010 (unaudited) and April 30,
      2010  (audited).                                                              | F-2 to F3         
|                                                                                                                                                                            |                   
|Interim Consolidated
      Statements of Operations for the three months ended July 31,
      2010 and July 31, 2009 and the period from Inception to July 31,
      2010.  | F-4               
|                                                                                                                                                                            |                   
|Interim Consolidated
      Statements of Cash Flows for the three months ended July 31,
      2010  and
      July 31, 2009 and the period from Inception to July 31, 2010. | F-5               
|                                                                                                                                                                            |                   
|Interim Consolidated
      Statements of Changes in Stockholders Equity (Deficiency)
      from  Inception
      to July 31, 2010.                                         | F-6 to F9         
|                                                                                                                                                                            |                   
|Condensed Notes to
      Interim Consolidated Financial Statements.                                                                                                         | F-10 to
      F-23

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

|                                    |  | July 31, 2010 |  |  | April 30, 2010 | 
|----------------------------------- |  | ------------- |  |  | -------------- | 
|                                    |  | $             |  |  | $              | 
|ASSETS                              |  | (unaudited)   |  |  | (audited)      | 
|                                    |  |               |  |  |                | 
|CURRENT ASSETS                      |  |               |  |  |                | 
|                                    |  |               |  |  |                | 
|Cash and cash equivalents           |  | 2,910         |  |  | 1,533          | 
|Prepaid expenses and other (Note 4) |  | 13,275        |  |  | 12,748         | 
|                                    |  |               |  |  |                | 
|                                    |  | 16,185        |  |  | 14,281         | 
|                                    |  |               |  |  |                | 
|PROPERTY, PLANT AND EQUIPMENT       |  | 25,465        |  |  | 27,868         | 
|                                    |  | 41,650        |  |  | 42,149         | 

See condensed notes to the interim consolidated financial
statements.

APPROVED ON BEHALF OF THE BOARD

/s/ J. L. Guerra,
Jr.J. L. Guerra, Jr., Director and Chairman

/s/ Douglas
Oliver 
  Douglas Oliver, CEO and Director

F-2

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

|                                                        |  | July
      31, 2010 |   |  | April 30, 2010 |  
|------------------------------------------------------- |  | ------------------- | - |  | -------------- | -
|                                                        |  | $                   |   |  | $              |  
|LIABILITIES                                             |  | (unaudited)         |   |  | (audited)      |  
|                                                        |  |                     |   |  |                |  
|CURRENT LIABILITIES                                     |  |                     |   |  |                |  
|Loan from director (Note 10)                            |  | 117,798             |   |  | 102,000        |  
|Accounts payable and accrued liabilities                |  | 604,891             |   |  | 556,212        |  
|Obligation under Capital Leases                         |  | 1,555               |   |  | 2,454          |  
|Total Current Liabilities                               |  | 724,244             |   |  | 660,666        |  
|                                                        |  |                     |   |  |                |  
|GOING CONCERN (Note 2)                                  |  |                     |   |  |                |  
|COMMITMENTS AND CONTINGENCIES (Note 8)                  |  |                     |   |  |                |  
|RELATED PARTY TRANSACTIONS (Note 9)                     |  |                     |   |  |                |  
|SUBSEQUENT EVENTS (Note 11)                             |  |                     |   |  |                |  
|                                                        |  |                     |   |  |                |  
|                                                        |  |                     |   |  |                |  
|SHAREHOLDERS DEFICIENCY                                |  |                     |   |  |                |  
|                                                        |  |                     |   |  |                |  
|CAPITAL STOCK (Note 5)                                  |  | 4,184               |   |  | 4,184          |  
|                                                        |  |                     |   |  |                |  
|ADDITIONAL PAID-IN CAPITAL                              |  | 14,931,204          |   |  | 14,931,204     |  
|                                                        |  |                     |   |  |                |  
|ACCUMULATED OTHER COMPREHENSIVE LOSS                    |  | (108,640            | ) |  | (111,871       | )
|                                                        |  |                     |   |  |                |  
|DEFICIT, ACCUMULATED DURING THE EXPLORATION
      STAGE |  | (15,509,342         | ) |  | (15,442,034    | )
|                                                        |  | (682,594            | ) |  | (618,517       | )
|                                                        |  | 41,650              |   |  | 42,149         |  

See condensed notes to the interim consolidated financial
statements.

F-3

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

|                                           |  |                 |   |  | For the      |   |  | For the      |  
|------------------------------------------ |  | --------------- | - |  | ------------ | - |  | ------------ | -
|                                           |  |                 |   |  | three months |   |  | three months |  
|                                           |  |                 |   |  | ended        |   |  | ended        |  
|                                           |  | Cumulative      |   |  | July 31,     |   |  | July 31,     |  
|                                           |  | since inception |   |  | 2010         |   |  | 2009         |  
|                                           |  | $               |   |  | $            |   |  | $            |  
|                                           |  |                 |   |  |              |   |  |              |  
|OPERATING EXPENSES                         |  |                 |   |  |              |   |  |              |  
|                                           |  |                 |   |  |              |   |  |              |  
|General and administration                 |  | 7,476,596       |   |  | 65,267       |   |  | 114,131      |  
|Project expenses                           |  | 9,077,029       |   |  | -            |   |  | 5,454        |  
|Exploration Tax Credit                     |  | (605,716        | ) |  | -            |   |  | -            |  
|Amortization                               |  | 175,005         |   |  | 2,041        |   |  | 2,676        |  
|Loss on sale/disposal of capital assets    |  | 5,904           |   |  | -            |   |  | -            |  
|Gain on sale of mining property (Note 7)   |  | (110,306        | ) |  | -            |   |  | (110,306     | )
|                                           |  |                 |   |  |              |   |  |              |  
|TOTAL OPERATING EXPENSES                   |  | 16,018,512      |   |  | 67,308       |   |  | 11,955       |  
|                                           |  |                 |   |  |              |   |  |              |  
|LOSS BEFORE INCOME TAXES                   |  | (16,018,512     | ) |  | (67,308      | ) |  | (11,955      | )
|                                           |  |                 |   |  |              |   |  |              |  
|Income taxes recovery                      |  | 509,170         |   |  | -            |   |  | -            |  
|                                           |  |                 |   |  |              |   |  |              |  
|NET LOSS                                   |  | (15,509,342     | ) |  | (67,308      | ) |  | (11,955      | )
|                                           |  |                 |   |  |              |   |  |              |  
|Loss per share  basic and diluted         |  |                 |   |  | (0.00        | ) |  | (0.00        | )
|                                           |  |                 |   |  |              |   |  |              |  
|Weighted average common shares outstanding |  |                 |   |  | 41,839,535   |   |  | 40,489,535   |  

See condensed notes to the interim consolidated financial
statements.

F-4

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

|                                                                      |  |                 |   |  | For the three |   |  | For the three |  
|--------------------------------------------------------------------- |  | --------------- | - |  | ------------- | - |  | ------------- | -
|                                                                      |  |                 |   |  | month period  |   |  | month period  |  
|                                                                      |  |                 |   |  | ended         |   |  | ended         |  
|                                                                      |  | Cumulative      |   |  | July 31,      |   |  | July 31,      |  
|                                                                      |  | Since Inception |   |  | 2010          |   |  | 2009          |  
|                                                                      |  | $               |   |  | $             |   |  | $             |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                  |  |                 |   |  |               |   |  |               |  
|Net loss for the period                                               |  | (15,509,342     | ) |  | (67,308       | ) |  | (11,955       | )
|Items not requiring an outlay of cash:                                |  |                 |   |  |               |   |  |               |  
|Amortization and impairment                                           |  | 175,005         |   |  | 2,041         |   |  | 2,676         |  
|Loss on sale/disposal of capital assets                               |  | 5,904           |   |  | -             |   |  | -             |  
|Registration rights penalty expense                                   |  | 188,125         |   |  | -             |   |  | -             |  
|Shares issued for property payment                                    |  | 772,826         |   |  | -             |   |  | -             |  
|Common shares issued for settlement of                                |  |                 |   |  |               |   |  |               |  
|severance liability to ex-officer                                     |  | 113,130         |   |  | -             |   |  | -             |  
|Stock-based compensation                                              |  | 1,298,574       |   |  | -             |   |  | 1,943         |  
|Compensation expense on issue of warrants                             |  | 140,892         |   |  | -             |   |  | -             |  
|Issue of shares for professional services                             |  | 875,023         |   |  | -             |   |  | -             |  
|Gain on sale of mining property                                       |  | (110,306        | ) |  | -             |   |  | (110,306      | )
|Issue of units against settlement of debts                            |  | 20,077          |   |  | -             |   |  | -             |  
|Decrease (Increase) in prepaid expenses and
      other               |  | (960            | ) |  | (682          | ) |  | 53,515        |  
|Increase (Decrease) in accounts payable and accrued
      liabilities |  | 580,168         |   |  | 52,476        |   |  | (38,714       | )
|                                                                      |  |                 |   |  |               |   |  |               |  
|                                                                      |  |                 |   |  |               |   |  |               |  
|NET CASH USED IN OPERATING ACTIVITIES                                 |  | (11,450,884     | ) |  | (13,473       | ) |  | (102,841      |  
|                                                                      |  |                 |   |  |               |   |  |               |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                  |  |                 |   |  |               |   |  |               |  
|Purchase of property, plant and equipment                             |  | (222,309        | ) |  | -             |   |  | -             |  
|Investment in available for
      sale securities                     |  | (36,530         | ) |  | -             |   |  | -             |  
|Proceeds from sale of mining property                                 |  | 110,306         |   |  | -             |   |  | 110,306       |  
|                                                                      |  |                 |   |  |               |   |  |               |  
|NET CASH PROVIDED BY (USED IN) INVESTING
      ACTIVITIES             |  | (148,533        | ) |  | -             |   |  | 110,306       |  
|                                                                      |  |                 |   |  |               |   |  |               |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                  |  |                 |   |  |               |   |  |               |  
|Repayments from a shareholder                                         |  | 1,180           |   |  | -             |   |  | -             |  
|Proceeds from Demand promissory notes                                 |  | 317,798         |   |  | 15,798        |   |  | -             |  
|Proceeds from Convertible promissory notes converted                  |  | 200,500         |   |  | -             |   |  | -             |  
|Proceeds from the exercise of stock options                           |  | 61,000          |   |  | -             |   |  | -             |  
|Proceeds from exercise of warrants  net                              |  | 450,309         |   |  | -             |   |  | -             |  
|Proceeds from subscription of warrants 
      net                    |  | 525,680         |   |  | -             |   |  | -             |  
|Proceeds from subscription /issuance of units/shares  net            |  | 10,082,190      |   |  | -             |   |  | -             |  
|Proceeds from capital lease obligation                                |  | 2,454           |   |  | -             |   |  | -             |  

|                                                                           |  |            |   |  |        |   |  |        | 
|-------------------------------------------------------------------------- |  | ---------- | - |  | ------ | - |  | ------ | 
|NET CASH PROVIDED BY FINANCING ACTIVITIES                                  |  | 11,641,111 |   |  | 15,798 |   |  | -      | 
|                                                                           |  |            |   |  |        |   |  |        | 
|EFFECT OF FOREIGN CURRENCY EXCHANGE RATE
      CHANGES                     |  | (38,784    | ) |  | (948   | ) |  | 447    | 
|                                                                           |  |            |   |  |        |   |  |        | 
|NET INCREASE (DECREASE) IN CASH AND CASH
      EQUIVALENTS FOR THE QUARTER |  | 2,910      |   |  | 1,377  |   |  | 7,912  | 
|Cash and cash equivalents, beginning of period                             |  | -          |   |  | 1,533  |   |  | 9,349  | 
|                                                                           |  |            |   |  |        |   |  |        | 
|CASH AND CASH EQUIVALENTS, END OF PERIOD                                   |  | 2,910      |   |  | 2,910  |   |  | 17,261 | 
|INCOME TAXES PAID                                                          |  |            |   |  | -      |   |  | -      | 
|INTEREST PAID                                                              |  |            |   |  | -      |   |  | -      | 
|                                                                           |  |            |   |  |        |   |  |        | 
|                                                                           |  |            |   |  |        |   |  |        | 

See condensed notes to the interim consolidated financial
statements.

F-5

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YUKONGOLDCORPORATION,INC.(AnExplorationStageMiningCompany) InterimConsolidatedStatementsofChangesinStockholdersDeficiency FromInceptionto July 31, 2010(Amountsexpressedin USDollars)
(Unaudited-PreparedbyManagement)

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

F-6

---

YUKONGOLDCORPORATION,INC.(AnExplorationStageMiningCompany) InterimConsolidatedStatementsofChangesinStockholdersDeficiency FromInceptionto July 31, 2010
(Amountsexpressedin USDollars)

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

F-7

---

YUKONGOLDCORPORATION,INC.(AnExplorationStageMiningCompany) InterimConsolidatedStatementsofChangesinStockholdersDeficiency FromInceptionto July 31, 2010
(Amountsexpressedin USDollars)

|Issue of 400,000
      Special Warrants net                                    |  |            |  |  |       |  |  |           |  |  | 371,680   |   |  |            |   |  |            |   |  |        |  
|------------------------------------------------------------------------------ |  | ---------- |  |  | ----- |  |  | --------- |  |  | --------- | - |  | ---------- | - |  | ---------- | - |  | ------ | -
|Issue of 200,000 flow through warrants                                         |  |            |  |  |       |  |  |           |  |  | 154,000   |   |  |            |   |  |            |   |  |        |  
|Brokered private
      placement of shares- net                                |  | 5,331,327  |  |  | 533   |  |  | 2,910,375 |  |  |           |   |  |            |   |  |            |   |  |        |  
|Brokered Private placement of
      flow through Shares- net                   |  | 25,000     |  |  | 2     |  |  | 13,310    |  |  |           |   |  |            |   |  |            |   |  |        |  
|Exercise of
      stock options                                                |  | 10,000     |  |  | 1     |  |  | 5,499     |  |  |           |   |  |            |   |  |            |   |  |        |  
|Foreign currency translation                                                   |  | -          |  |  | -     |  |  | -         |  |  |           |   |  |            |   |  | (2,687     | ) |  | (2,687 | )
|Net loss for the
      year                                                    |  | -          |  |  | -     |  |  | -         |  |  |           |   |  | (1,855,957 | ) |  | (1,855,957 | ) |  | -      |  
|Balance at April 30, 2006                                                      |  | 16,366,728 |  |  | 1,637 |  |  | 5,301,502 |  |  | 525,680   |   |  | (3,231,792 | ) |  | (1,858,644 | ) |  | (5,162 | )
|                                                                               |  |            |  |  |       |  |  |           |  |  |           |   |  |            |   |  |            |   |  |        |  
|Exercise of warrants                                                           |  | 10,000     |  |  | 1     |  |  | 8,986     |  |  |           |   |  |            |   |  |            |   |  |        |  
|Exercise of
      warrants                                                     |  | 45,045     |  |  | 5     |  |  | 40,445    |  |  |           |   |  |            |   |  |            |   |  |        |  
|Exercise of warrants                                                           |  | 16,000     |  |  | 2     |  |  | 14,278    |  |  |           |   |  |            |   |  |            |   |  |        |  
|Common shares issued
      for settlement of severance liability to ex-officer |  | 141,599    |  |  | 14    |  |  | 113,116   |  |  |           |   |  |            |   |  |            |   |  |        |  
|Exercise of warrants                                                           |  | 43,667     |  |  | 4     |  |  | 39,364    |  |  |           |   |  |            |   |  |            |   |  |        |  
|Exercise of
      warrants                                                     |  | 17,971     |  |  | 2     |  |  | 15,937    |  |  |           |   |  |            |   |  |            |   |  |        |  
|Exercise of warrants                                                           |  | 43,667     |  |  | 4     |  |  | 38,891    |  |  |           |   |  |            |   |  |            |   |  |        |  
|Exercise of
      warrants                                                     |  | 16,000     |  |  | 2     |  |  | 14,251    |  |  |           |   |  |            |   |  |            |   |  |        |  
|Exercise of warrants                                                           |  | 158,090    |  |  | 16    |  |  | 141,616   |  |  |           |   |  |            |   |  |            |   |  |        |  
|Issue of common shares
      for property payment                              |  | 43,166     |  |  | 4     |  |  | 53,841    |  |  |           |   |  |            |   |  |            |   |  |        |  
|Exercise of warrants                                                           |  | 64,120     |  |  | 6     |  |  | 57,863    |  |  |           |   |  |            |   |  |            |   |  |        |  
|Exercise of
      warrants                                                     |  | 61,171     |  |  | 6     |  |  | 53,818    |  |  |           |   |  |            |   |  |            |   |  |        |  
|Exercise of stock options                                                      |  | 24,000     |  |  | 2     |  |  | 17,998    |  |  |           |   |  |            |   |  |            |   |  |        |  
|Issuance of common
      shares for professional services                      |  | 342,780    |  |  | 34    |  |  | 438,725   |  |  |           |   |  |            |   |  |            |   |  |        |  
|Brokered private placement of units-net                                        |  | 400,000    |  |  | 40    |  |  | 363,960   |  |  |           |   |  |            |   |  |            |   |  |        |  
|Brokered private
      placement of units- net                                 |  | 550,000    |  |  | 55    |  |  | 498,923   |  |  |           |   |  |            |   |  |            |   |  |        |  
|Stock based compensation-Directors and
      Officers                          |  |            |  |  |       |  |  | 451,273   |  |  |           |   |  |            |   |  |            |   |  |        |  
|Exercise of
      stock options                                                |  | 50,000     |  |  | 5     |  |  | 37,495    |  |  |           |   |  |            |   |  |            |   |  |        |  
|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 |   |  |            |   |  |            |   |  |        |  

F-8

---

YUKONGOLDCORPORATION,INC.(AnExplorationStageMiningCompany) InterimConsolidatedStatementsofChangesinStockholdersDeficiency FromInceptionto July 31, 2010
(Amountsexpressedin USDollars)

|Issue of 334,218 unit special
      warrants-net                             |  |            |  |  |       |  |  |            |   |  | 230,410    |   |  |             |   |  |            |   |  |          |  
|---------------------------------------------------------------------------- |  | ---------- |  |  | ----- |  |  | ---------- | - |  | ---------- | - |  | ----------- | - |  | ---------- | - |  | -------- | -
|Issue of 3,105,358 common shares for
    2,823,049 flow through warrants     |  | 3,105,358  |  |  | 310   |  |  | 1,916,064  |   |  | (1,916,374 | ) |  |             |   |  |            |   |  |          |  
|Issue of 367,641 common shares for
      334,218 unit special warrants       |  | 367,641    |  |  | 37    |  |  | 230,373    |   |  | (230,410   | ) |  |             |   |  |            |   |  |          |  
|Registration rights
      penalty expense                                    |  |            |  |  |       |  |  | 188,125    |   |  |            |   |  |             |   |  |            |   |  |          |  
|Foreign currency translation                                                 |  |            |  |  |       |  |  |            |   |  |            |   |  |             |   |  | (58,446    | ) |  | (58,446  | )
|Net loss for the year                                                        |  |            |  |  |       |  |  |            |   |  |            |   |  | (3,703,590  | ) |  | (3,703,590 | ) |  |          |  
|Balance April 30, 2007                                                       |  | 22,883,137 |  |  | 2,288 |  |  | 10,949,726 |   |  | 0          |   |  | (6,935,382  | ) |  | (3,762,036 | ) |  | (63,608  | )
|Shares for property
      payment                                            |  | 136,364    |  |  | 13    |  |  | 57,239     |   |  |            |   |  |             |   |  |            |   |  |          |  
|Stock based compensation                                                     |  |            |  |  |       |  |  | 584,328    |   |  |            |   |  |             |   |  |            |   |  |          |  
|Unrealized gain on
      available-for-sale securities net of deferred taxes |  |            |  |  |       |  |  |            |   |  |            |   |  |             |   |  | 9,000      |   |  | 9,000    |  
|543,615 flow through units                                                   |  | 543,615    |  |  | 54    |  |  | 227,450    |   |  |            |   |  |             |   |  |            |   |  |          |  
|1,916,666 units-net                                                          |  | 1,916,666  |  |  | 192   |  |  | 698,110    |   |  |            |   |  |             |   |  |            |   |  |          |  
|1,071,770 flow through units                                                 |  | 1,071,770  |  |  | 108   |  |  | 449,379    |   |  |            |   |  |             |   |  |            |   |  |          |  
|2,438,888 units-net                                                          |  | 2,438,888  |  |  | 244   |  |  | 1,036,622  |   |  |            |   |  |             |   |  |            |   |  |          |  
|Expenses relating to issue of units                                          |  |            |  |  |       |  |  | (141,080   | ) |  |            |   |  |             |   |  |            |   |  |          |  
|Compensation expense
      on issue of warrants                              |  |            |  |  |       |  |  | 123,079    |   |  |            |   |  |             |   |  |            |   |  |          |  
|Foreign currency translation                                                 |  |            |  |  |       |  |  |            |   |  |            |   |  |             |   |  | 251,082    |   |  | 251,082  |  
|Net loss for the year                                                        |  |            |  |  |       |  |  |            |   |  |            |   |  | (4,953,775  | ) |  | (4,953,775 | ) |  |          |  
|Balance as of April 30, 2008                                                 |  | 28,990,440 |  |  | 2,899 |  |  | 13,984,853 |   |  | -          |   |  | (11,889,157 | ) |  | (4,693,693 | ) |  | 196,474  |  
|Shares for property payment                                                  |  | 476,189    |  |  | 48    |  |  | 58,839     |   |  |            |   |  |             |   |  |            |   |  |          |  
|Shares for property payment                                                  |  | 6,838,906  |  |  | 684   |  |  | 187,916    |   |  |            |   |  |             |   |  |            |   |  |          |  
|Stock based compensation                                                     |  |            |  |  |       |  |  | 31,858     |   |  |            |   |  |             |   |  |            |   |  |          |  
|Compensation expense on issue
      of warrants                              |  |            |  |  |       |  |  | 17,813     |   |  |            |   |  |             |   |  |            |   |  |          |  
|4,134,000 flow through shares                                                |  | 4,134,000  |  |  | 413   |  |  | 577,696    |   |  |            |   |  |             |   |  |            |   |  |          |  
|Issuance of shares for
      professional services                           |  | 50,000     |  |  | 5     |  |  | 7,495      |   |  |            |   |  |             |   |  |            |   |  |          |  
|Realized gain on available-for-sale
      securities                         |  |            |  |  |       |  |  |            |   |  |            |   |  |             |   |  | (9,000     | ) |  | ( 9,000  | )
|Foreign currency translation                                                 |  |            |  |  |       |  |  |            |   |  |            |   |  |             |   |  | (282,694   | ) |  | (282,694 | )
|Net loss for the year                                                        |  |            |  |  |       |  |  |            |   |  |            |   |  | (3,017,265  | ) |  | (3,017,265 | ) |  | -        |  
|Balance as of April 30, 2009                                                 |  | 40,489,535 |  |  | 4,049 |  |  | 14,866,470 |   |  | -          |   |  | (14,906,422 | ) |  | (3,308,959 | ) |  | (95,220  | )
|Stock based
      compensation                                               |  |            |  |  |       |  |  | 5,869      |   |  |            |   |  |             |   |  |            |   |  |          |  
|Issuance of 1,100,000 shares for cash                                        |  | 1,100,000  |  |  | 110   |  |  | 43,890     |   |  |            |   |  |             |   |  |            |   |  |          |  
|Issuance of common shares for
      professional services                    |  | 250,000    |  |  | 25    |  |  | 14,975     |   |  |            |   |  |             |   |  |            |   |  |          |  
|Foreign currency translation                                                 |  |            |  |  |       |  |  |            |   |  |            |   |  |             |   |  | (16,651    | ) |  | (16,651  | )
|Net loss for the year                                                        |  |            |  |  |       |  |  |            |   |  |            |   |  | (535,612    | ) |  | (535,612   | ) |  | -        |  
|                                                                             |  |            |  |  |       |  |  |            |   |  |            |   |  |             |   |  |            |   |  |          |  
|Balance as of April 30, 2010                                                 |  | 41,839,535 |  |  | 4,184 |  |  | 14,931,204 |   |  | -          |   |  | (15,442,034 | ) |  | (552,263   | ) |  | (111,871 | )
|Foreign currency translation                                                 |  |            |  |  |       |  |  |            |   |  |            |   |  |             |   |  | 3,231      |   |  | 3,231    |  
|                                                                             |  |            |  |  |       |  |  |            |   |  |            |   |  |             |   |  |            |   |  |          |  
|Net loss for the period                                                      |  |            |  |  |       |  |  |            |   |  |            |   |  | (67,308     | ) |  | (67,308    | ) |  |          |  
|Balance as of July 31, 2010                                                  |  | 41,839,535 |  |  | 4,184 |  |  | 14,931,204 |   |  | -          |   |  | (15,509,342 | ) |  | (64,077    | ) |  | (108,640 | )

See condensed notes to the interim consolidated financial
statements

F-9

---

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

1.        BASIS OF
PRESENTATION

The accompanying unaudited interim consolidated financial
statements have been prepared in accordance with the instructions to Form 10-Q
and therefore do not include all information and footnotes necessary for a fair
presentation of financial position, results of operations and cash flows in
conformity with U.S. generally accepted accounting principles (GAAP); however,
such information reflects all adjustments (consisting solely of normal recurring
adjustments), which are, in the opinion of management, necessary for a fair
statement of the results for the interim periods. The interim consolidated
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto together with managements discussion and
analysis of financial condition and results of operations contained in the
Companys annual report on Form 10-K for the year ended April 30, 2010. In the
opinion of management, the accompanying interim consolidated financial
statements reflect all adjustments of a normal recurring nature considered
necessary to fairly state the financial position of the Company at July 31, 2010
and April 30, 2010, the results of its operations for the three-month periods
ended July 31, 2010 and July 31, 2009, and its cash flows for the three-month
periods ended July 31, 2010 and July 31, 2009. In addition, some of the
Companys statements in this quarterly report on Form 10-Q may be considered
forward-looking and involve risks and uncertainties that could significantly
impact expected results. The results of operations for the three-month period
ended July 31, 2010 are not necessarily indicative of results to be expected for
the full year.

The interim consolidated financial statements include the
accounts of Yukon Gold Corporation, Inc. (the Company) and its wholly owned
subsidiary Yukon Gold Corp. (YGC). All material inter-company accounts and
transactions have been eliminated.

2.        GOING CONCERN

The Company's interim consolidated financial statements are
presented on a going concern basis, which contemplates the realization of assets
and satisfaction of liabilities in the normal course of business. The Company
has no source for operating revenue and expects to incur significant expenses
before establishing operating revenue. Because of continuing operating losses,
negative working capital, stockholders deficiency and cash outflows from
operations, the Companys continuance as a going concern is dependent upon its
ability to obtain adequate financing and to reach profitable levels of
operation. In the event that the Company is unable to raise additional capital,
as to which there is no assurance, the Company will not be able to continue
doing business. Further, the Companys subsidiary has been ordered by an Ontario
Superior Court of Justice to pay a penalty of $116,832 (CDN $120,138) for early
termination of its office lease in Toronto, Ontario. The Companys future
success is dependent upon its continued ability to raise sufficient capital, not
only to maintain its operating expenses, but to explore for reserves. There is
no guarantee that such capital will be available on acceptable terms, if at all
or if the Company will attain profitable levels of operation.

The Company is actively pursuing equity and short-term bridge
loan financing, which may include financing backed by a pledge of some or all of
the Companys exploration property assets. The Company also is simultaneously
exploring opportunities to effect business combinations or joint ventures
involving additional mining assets that may provide opportunities for greater
long-term financing. On August 31, 2010 the Company entered into an Agreement
with Lance Capital Ltd. (Lance), an Ontario Canada corporation, pursuant to
which, among other things, Lance is assisting the the Company in the settlement
of certain debts of the Company and providing bridge financing, as more
particularly described in Note 12 Subsequent Events.

F-10

---

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

2.        GOING
CONCERN-Contd

These interim consolidated financial statements have been
prepared in accordance with United States generally acceptable accounting
principles applicable to a going concern. Accordingly, they do not give effect
to adjustments that would be necessary should the Company be unable to continue
as a going concern and therefore be required to realize its assets and liquidate
its liabilities and commitments in other than the normal course of business and
at amounts different from those in the accompanying interim consolidated
financial statements.

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 the
acquisition and exploration of mining properties. Mineral property exploration
costs are expensed as incurred. Mineral property payments are initially
capitalized in accordance with the ASC 805-20-55-37, previously referenced as
EITF 04-2 when incurred. The Company assesses the carrying costs for impairment
under Accounting Standards 930 Extractive Activities  Mining (AS 930) at each
fiscal quarter end. An impairment is recognized when the sum of the expected
undiscounted future cash flows is less than the carrying amount of the mineral
property. Impairment losses, if any, are measured as the excess of the carrying
amount of the mineral property over its estimated fair value. When it has been
determined that a mineral property can be economically developed as a result of
establishing proven and probable reserves, the costs incurred to develop such
property will be capitalized. Once capitalized, such costs will be amortized
using the units-of-production method over the estimated life of the probable
reserves. If mineral properties are subsequently abandoned or impaired, any
capitalized costs will be charged to operations. The Company assesses the
carrying costs for impairment at each fiscal quarter end. The Company has
determined that all property payments are impaired and accordingly has written
off the acquisition costs to project expense.

4.        PREPAID EXPENSES
AND OTHER

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

5.        CAPITAL STOCK

a)        Authorized

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

b)        Issued

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

F-11

---

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

5.        CAPITAL
STOCK-Contd

c)        Changes to Issued
Share Capital

Year ended April 30, 2010

The Company received subscriptions for 1,100,000 common shares
at $0.04 per share for a total consideration of $44,000 through a non-brokered
private placement. The Company issued 1,100,000 common shares.

On September 28, 2009 the Company entered into an employment
agreement (Agreement) with Douglas Oliver (the Employee) to serve as its
President and Chief Executive Officer. As per the terms of the said agreement,
the Company issued to the Employee 250,000 common shares of the Companys common
stock, The Employee acknowledges that such shares will be restricted shares
subject to limitations on re-sale. The Employee further acknowledges that he
will be considered as affiliate for purposes of Rule 144.

Three months ended July 31, 2010

During the three-month period ended July 31, 2010, the Company
did not issue any shares.

6.        STOCK BASED
COMPENSATION

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

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

Subject to the provisions of the 2006 Stock Option Plan, the
aggregate number of shares which may be issued under the 2006 Stock Option Plan
shall not exceed 2,000,000 shares ("Total Shares"). On March 18, 2008 at the
Annual and Special Meeting of Shareholders, the Shareholders of the Company
approved an amendment to the 2006 Stock Option Plan increasing the number of
Shares reserved for issuance there under from 2,000,000 to 2,899,044. Any Stock
Option granted under the 2006 Stock Option Plan which has been exercised shall
again be available for subsequent grant under the 2006 Stock Option Plan,
effectively resulting in a re-loading of the number of shares available for
grant under the 2006 Stock Option Plan. Any shares subject to an option granted
under the 2006 Stock Option Plan which for any reason is surrendered, cancelled
or terminated or expires without having been exercised shall again be available
for subsequent grant under the 2006 Stock Option Plan.

F-12

---

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

6.        STOCK-BASED
COMPENSATION-Contd

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

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

Year ended April 30, 2010

The company did not issue any stock options during the year
ended April 30, 2010.

Three month period ended July 31, 2010

The company did not issue any stock options during the three
month period ended July 31, 2010.

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

Cancellation/Expiration/Forfeiture of Stock Options:

Year ended April 30, 2010

On June 24, 2009 200,000 stock options held by a former officer
were forfeited.

On August 4, 2009 340,000 stock options held by a former
director were forfeited.

On October 24, 2009 the Company cancelled 200,000 stock options
held by a former officer.

F-13

---

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

6.        STOCK-BASED
COMPENSATION-Contd

On December 15, 2009 250,000 stock options held by a former
director expired.

On January 5, 2010 12,000 stock options held by an officer
expired.

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

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

Cancellation/Expiration/Forfeiture of Stock Options:

For the three months ended July 31, 2010

No stock options were cancelled,
expired or forfeited.

F-14

---

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

7.        SALE OF MOUNT
HINTON MINING PROPERTY CLAIMS

On May 21, 2009, the Company, through its wholly owned
subsidiary, YGC, sold its interest in the Mount Hinton Property to the Hinton
Syndicate. All of the claims comprising the Mount Hinton Property were conveyed
by the Companys subsidiary to a member of the Hinton Syndicate. The Hinton
Syndicate paid the Company (i) $110,306 (CDN$125,000) on May 21, 2009 and (ii)
granted to the Companys subsidiary a 2% Net Smelter Royalty (an NSR) on the
Mount Hinton Property claims. Such 2% NSR may be terminated at any time by
payment to YGC of the following:

| | If the payment is made to YGC within the
      12-month anniversary of the Closing: (This payment was not made within
      the 12-month anniversary of the Closing.)                                                    | $111,835 
      (CDN$115,000)
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -----------------------------
| |                                                                                                                                                                                                                          |                              
| | If the payment is made to YGC after the
      12-month anniversary of the Closing but before the 24-month anniversary of
      the Closing:                                                                              | $136,147 
      (CDN$140,000)
| |                                                                                                                                                                                                                          |                              
| | If the payment is made to YGC after the
      24-month anniversary of the Closing but before the 36-month anniversary of
      the Closing:                                                                              | $160,459 
      (CDN$165,000)
| |                                                                                                                                                                                                                          |                              
| | If the payment is made to YGC after the
      36-month anniversary of the Closing but before the 48-month anniversary of
      the Closing:                                                                              | $184,771 
      (CDN$190,000)
| |                                                                                                                                                                                                                          |                              
| | If the payment is made to YGC after the
      48-month anniversary of the Closing, it shall be increased by $24,312
      (CDN$25,000) for each 12-month period following the 49-month anniversary
      of the Closing. |                              

F-15

---

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

8.        COMMITMENTS AND
CONTINGENCIES

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 as amended the Company paid $119,189
(CDN$150,000) cash and 133,333 common shares as a down payment. The Company made
payments under the Agreement for $43,406 (CDN$50,000) cash and an additional
133,333 common shares of the Company on December 12, 2005; $86,805 (CDN$100,000)
cash and an additional 133,334 common shares of the Company on December 12,
2006. On December 12, 2007 the Company paid $98,697 (CDN$100,000) being the next
payment then due.

The Company agreed to make subsequent payments under the
Agreement of: $167,645 (CDN$200,000) in cash and/or common shares of the Company
(or some combination thereof to be determined) on or before December 12, 2008.
On December 4, 2008 the Company and Atna Resources Ltd. (Atna) entered into a
letter agreement (the Amendment Agreement) amending the purchase agreement by
which the Company acquired its Marg Property (the Marg Acquisition Agreement).
Under the terms of the Marg Acquisition Agreement the Company was required to
pay to Atna $167,645 (CDN$200,000) (in cash or shares of the Companys common
stock) on December 12, 2008. In lieu of making such payment, the Amendment
Agreement permitted the Company to pay Atna $19,980 (CDN$25,000) in cash on
December 12, 2008 (paid) and $188,600 (CDN$225,000) (payable in cash or shares
of the Companys common stock) on April 30, 2009. On April 30, 2009, the Company
issued to Atna 6,838,906 common shares which represent $188,600 (CDN $225,000),
whereby the common shares were valued at $0.0276 (CDN$0.0329) each. Upon the
commencement of commercial production at the Marg Property, the Company will pay
to Atna $972,479 (CDN$1,000,000) in cash and/or common shares of the Company, or
some combination thereof to be determined.

Subsequent to the period covered by this report, the following
agreement was terminated by mutual consent of the parties, as described in Note
12  Subsequent Events. On October 1, 2009 the Companys board of directors
ratified a retainer agreement (the Agreement) dated August 28, 2009 with a
Panamerican corporation (the Consultant) to provide certain exclusive advisory
services for financing, acquisition, collaboration, product or services sales
transactions and strategies, for a period of twelve (12) months (the Term)
from the date of execution. If at any time during the Term the Company wished to
terminate the exclusivity of the Consultant, the Company could give the
Consultant ten (10) days prior written notice and pay the Consultant $200,000.
The Agreement states that a monthly cash fee of $50,000 and the Consultants
out-of-pocket expenses shall accrue and be payable only at such time as the
Company secures a minimum of $5,000,000 in financing during the Term of the
Agreement, at which time the total amount accrued would be due and payable in
full without interest. In the event that the Company fails to timely pay any of
the compensation, as defined in the Agreement, each shall bear interest at the
rate of six percent (6%) until paid in full. The Consultant has the right upon
written notice to the Company of its election to receive gold or other minerals
in lieu of cash prior to or concurrent with the closing of any financing
transactions (Financing Transactions). Compensation payable in kind shall not
bear any interest.

F-16

---

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

8.        COMMITMENTS AND
CONTINGENCIES  Contd

If an acquisition or divestiture is consummated during the Term
  of the Agreement or for a period of one (1) year thereafter, the Company shall
  pay a transaction fee (TF) to the Consultant based on the following
  transaction values (TVs): (i) 5% TF up to and including $1,000,000
  TVs, plus (ii) 4% TF on all TVs from $1,000,000 to $1,999,999, plus (iii) 3%
  TF on all TVs from $2,000,000 to $2,999,999, plus (iv) 2% on all TVs from $3,000,000
  to $3,999,999, plus (v) 1% on all TVs from $4,000,000 to $4,999,999, plus (vi)
  1% on all TVs equal to and exceeding $5,000,000. During the Term of the Agreement
  or for a period of one (1) year after termination, the Company will pay the
  Consultant a finders fee equal to two percent (2%) of the total amount
  of each and every Financing Transaction successfully undertaken by the Company.
  In addition the Company shall grant to the Consultant options to purchase that
  number of shares of the Companys common stock determined by multiplying
  two percent (2%) equal to the total number of equity shares placed and/or issued,
  or if convertible debt, two percent (2%) of the number of common equity shares
  as if the convertible debt was converted at its earliest possible date. Such
  options shall be exercisable for a period of five (5) years at an exercise price
  equal to the five-day weighted average trading price (WATP) for the five (5)
  consecutive trading days immediately prior to the granting of the Companys
  stock options. In addition to the foregoing fees, the Company shall grant to
  the Consultant a fully-vested option (Equity Fee) to acquire a number
  of shares equal to eight and one-half percent (8.5%) of the total common shares
  issued and outstanding at the time of the execution of the Agreement. Such options
  shall be exercisable for a period of five (5) years at an exercise price equal
  to the five-day WATP for the five (5) consecutive trading days immediately prior
  to the granting of the Companys stock options. The number of stock options
  shall be subject to any and all adjustments of the common shares during the
  five-year exercise period. Upon the Company entering into any definitive agreement,
  during the Term, to acquire any properties/projects, as defined in the Agreement,
  an additional fully-vested performance option shall be granted to the Consultant
  to acquire a number of shares equal to eight and one-half percent (8.5%) of
  the then issued and outstanding common shares of the Company. Such options shall
  be exercisable for a period of five (5) years at an exercise price equal to
  the five-day WATP for the five (5) consecutive trading days immediately prior
  to the execution of the definitive agreement. The number of performance options
  shall be subject to any and all adjustments of the common shares during the
  five-year exercise period. If any acquisition transaction is contemplated by
  the Company during the Term or for a period of one (1) year after the Company
  will grant to the Consultant the absolute right to participate, on a pro rata
  basis, in up to a ten percent (10%) interest in the Companys acquisition.

F-17

---

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

8.        COMMITMENTS AND
CONTINGENCIES-Contd

The Consultant shall also be responsible for all pro rata
future development and operating costs of said acquisition when paid by the
parties owning the other 90% interests. Notwithstanding anything within the
Agreement to the contrary, any stock or equity-based compensation must be
pre-cleared by the Toronto Stock Exchange (TSX). If any Financing Transaction(s)
described in paragraphs 2 A and B of Schedule A to this Agreement are concluded
during the Term, or for a period of one (1) year thereafter, provided such
Financing Transaction(s) results from parties identified in writing by the
Consultant in performing the Services, the Company will pay to the Consultant,
or a designee of the Consultant, the following: (i) with respect to any equity
financing, a cash fee equal to seven percent (7%) of the total amount of the
Financing Transaction (gross proceeds, without offset for costs or fees), (ii)
with respect to any debt financing, a cash fee equal to four percent (4%) of the
total amount of such Financing Transaction (gross proceeds, without offset for
costs or fees), and (iii) in addition, upon the completion of any Financing
Transaction of the Company or its, parents, subsidiaries or affiliates, the
Company shall grant to the Consultant the right and option to purchase that
number of shares, units or interests in the Company determined by dividing five
percent (5%) of the amount of the Financing Transaction by an amount equal to
equal to the five-day WATP for the five (5) consecutive trading days immediately
prior to the payment of Yukon Gold Corporation stock options. Such rights shall
be exercisable, for a period of five (5) years, from date of issue and shall
possess most favored nation registration rights, i.e., registration rights
equal to the best/most favorable rights/treatment of any issued/outstanding
registration rights provisions applicable to any securities of the Company,
specifically including, but not limited to demand and piggy back registration
rights, including the right to include such shares in any offering undertaken by
the Company, i.e., tag-along rights. Such Fee shall be paid by the Company to
the Consultant within ten (10) calendar days after the closing of each Financing
Transaction, or, if such Financing Transaction closes in several tranches,
within ten (10) calendar days after the closing of each tranche, until paid in
full. Subsequent to the quarter ended July 31, 2010 on August 10, 2010 the
Consultant and the Company signed an unconditional and absolute general release
which terminated the Agreement.

F-18

---

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

8.        COMMITMENTS AND
CONTINGENCIES-Contd

Subsequent to the period covered by this report, the Company
has opened discussions to renegotiate and/or terminate the following agreement.
On October 1, 2009 the Companys board of directors ratified a consulting
agreement (the Agreement), dated September 20, 2009, with an individual to
provide services as a special advisor (the Consultant). The Agreement states
that the Consultant will receive 450,000 restricted common shares no later than
ten (10) business days from the date of signing the Agreement. During the
quarter and subsequent to the period ended July 31, 2010, the Company has not
issued these shares to the Consultant but the Company has expensed the cost at
fair value. The Consultant is entitled to receive a cash fee of two and one-half
percent (2.5%) on the aggregate value of a financing(s) or transaction(s)
entered into by the Company during the term of the Agreement or within the
twelve (12) months following the term of this Agreement if the discussions
regarding the financial transaction(s) were initiated by the Consultant
during the term of this Agreement. Further it was agreed that the Consultant
would receive a bonus of up to 1,000,000 restricted common shares of the Company
of any financing or transaction, such bonus to be awarded on transactions values
(TV) as follows: (i) up to a $1,000,000 TV, 200,000 shares (ii) between a
$1,000,000 up to a $6,000,000 TV, an additional 300,000 shares and (iii) over a
$6,000,000 TV, an additional 500,000 shares. Upon receipt of an itemized invoice
the Consultant will be reimbursed for all traveling and other actual legitimate
expenses. The Agreement is for a three month minimum term and may be extended by
the mutual agreement of both parties in writing. On December 20, 2009 the
agreement terminated and the Consultant was not successful in raising any
financing. No services were provided under this agreement. The Company considers
the agreement not consummated and has not issued the shares for that reason.

Subsequent to the period covered by this report, the following
agreement was terminated, as described in Note 12 - Subsequent Events. On
September 28, 2009 the Company entered into an employment agreement
(Agreement) with Douglas Oliver (the Employee) to serve as its President and
Chief Executive Officer. During the employment term, the Company will pay the
Employee a base salary at the annual rate of one hundred and eighty thousand
($180,000) dollars per year ("Base Salary"). Half of the Employees Base Salary
shall be deferred and shall accrue interest at the LIBOR rate plus five percent
(5%). Deferred Base Salary shall be payable to the Employee with interest no
sooner than the Cerro Quema gold project entering production but may be further
deferred at the Employees discretion. In the event that this Agreement is
terminated for any reason, the Employee shall be entitled to all deferred Base
Salary, with interest, to be paid within three (3) months of such termination.
The Agreement further states that the Employee immediately shall be awarded
250,000 shares of the Companys common stock, which were issued in the last
quarter of the year ending April 30, 2010. The Employee acknowledges that such
shares will be restricted shares subject to limitations on re-sale. The
Employee further acknowledges that he will be considered as affiliate for
purposes of Rule 144. The Company agrees to register such shares as part of any
registration statement it files under the Securities Act of 1933. Additional
stock options shall be awarded to Employee based upon the Companys achieving
certain production goals and in accordance with the Companys 2006 Stock Option
Plan. Employee and the Company shall agree upon the goals and option amounts
within two (2) months of the execution of this Agreement. As of the date of
these statements, the option amounts were not agreed upon. The Employeemay terminate employment at any time after providing forty-five (45) days
prior written notice to the Company. The Company may terminate the Employee's
employment without cause at any time after providing written notice to Employee
and paying all unpaid salaries and benefits.

F-19

---

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

8.        COMMITMENTS AND
CONTINGENCIES-Contd

In addition, an amount equal to twelve (12) months of Base
Salary (at the rate in effect as of the date of the Employees termination
without cause) will be paid to the Employee if this Agreement is terminated by
the Company at any time prior to the second anniversary of the date of this
Agreement. Subsequent to the quarter ended July 31, 2010 on August 9, 2010 the
Employee and the Company mutually agreed to terminate their Agreement without
notice. The Employee assigned all amounts owed by the Company to Lance Capital Ltd.

On October 26, 2009 the Company entered into a letter agreement
(the Agreement) with a former officer to act as a consultant providing
accounting and administration services for $1,945 (CDN$2,000) per month and to
warehouse the Company records for $486 (CDN$500) per month. The Company further
agreed to reimburse the consultant for any out of pocket expenses and that
either party may give 30 days notice in writing of their intention to terminate
the Agreement. Subsequent to the quarter ended July 31, 2010, on August 31, 2010, the consultant agreed to
termination of the Agreement without notice and further agreed to accept $8,752
(CDN$9,000) as full payment for services rendered under the Agreement to be paid
within 30 days. Lance Capital Ltd.  agreed to advance the funds to the
Company to cover this payment. See Note 12 - Subsequent Events herein.

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

9.        RELATED PARTY
TRANSACTIONS

Three month period ended July 31, 2010

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

No director or officer exercised stock options during the three
month period ended July 31, 2010.

Three month period ended July 31, 2009

The Company and its subsidiary expensed a total of $nil in
consulting fees and wages to three Company Directors and $66,339 to three of its
officers.

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

F-20

---

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

11.      DEMAND LOAN FROM
DIRECTOR

The Company received loans for $64,500 on September 21, 2009,
$37,500 on October 5, 2009, $8,000 on June 28, 2010, and $7,798 on July 20, 2010
for a total of $117,798 from a director of the Company. The Company issued
Promissory Notes to the director which carry simple interest at the rate of
seven percent (7%) of the outstanding principal balance per annum. The entire
principal balance outstanding and any interest thereon shall be payable on
demand by the holder of the Promissory Notes, but no later than three years from
the date of the loan. Subsequent to the quarter ended July 31, 2010, on August
6, 2010 the Company received a loan for $9,900 from this same director of the
Company. The Company issued a Promissory Note to the director which carries
simple interest at the rate of seven percent (7%) of the outstanding principal
balance per annum. The entire principal balance outstanding and any interest
thereon shall be payable on demand by the holder of the Promissory Note, but no
later than three years from the date of the loan. Subsequent to the quarter
ended July 31, 2010, on August 10, 2010, the director assigned
all of the demand loans, interest and expenses owed to the director  to Lance Capital Ltd. See Note 12 - Subsequent
Events for the assignment of this demand loan and interest.

12.      SUBSEQUENT EVENTS

On August 6, 2010 the Company received a loan for $9,900 from a
director of the Company. The Company issued a Promissory Note to the director
which carries simple interest at the rate of seven percent (7%) of the
outstanding principal balance per annum. The entire principal balance
outstanding and any interest thereon shall be payable on demand by the holder of
the Promissory Note, but no later than three years from the date of the loan.

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

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

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

F-21

---

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

12.      SUBSEQUENT EVENTS-Contd

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

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

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

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

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

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

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

F-22

---

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

12.      SUBSEQUENT EVENTS-Contd

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

On September 2, 2010, the Companys board of directors
appointed Mrs. Kathy Chapman, Chief Financial Officer and Corporate Secretary of
the Company. Mrs. Chapman is also the Corporate Secretary of YGC.

F-23

---

MANAGEMENT'S DISCUSSION AND ANALYSIS OFFINANCIAL
CONDITION AND RESULTS OF OPERATIONFOR THE THREE MONTH PERIODENDED JULY 31, 2010

Discussion of Operations & Financial Condition

Yukon Gold has no source of revenue and we continue to operate
at a loss. We expect our operating losses to continue for so long as we remain
in an exploration stage and perhaps thereafter. As at July 31, 2010, we had
accumulated losses of $15,509,342. These losses raise substantial doubt about
our ability to continue as a going concern. Our ability to emerge from the
exploration stage and conduct mining operations is dependent, in large part,
upon our raising additional equity financing.

As described in greater detail below, the Companys major
endeavor over the year has been its effort to raise additional capital to meet
its administrative expenses and pursue its exploration activities. We are
working urgently to obtain additional financing, which may entail the
acquisition of additional properties in order to attract such financing.

SELECTED INFORMATION

|                                 | Three months  | Three months 
|-------------------------------- | ------------- | -------------
|                                 | ended         | ended        
|                                 | July 31, 2010 | July 31, 2009
|                                 |               |              
|Revenues                         | Nil           | Nil          
|Net Loss                         | $67,308       | $11,955      
|Loss per share-basic and diluted | $ (0.00)      | $ (0.00)     

|                                  | As at         | As at         
|--------------------------------- | ------------- | --------------
|                                  | July 31, 2010 | April 30, 2010
|                                  |               |               
|Total Assets                      | $41,650       | $42,149       
|Total Liabilities                 | $724,244      | $660,666      
|Cash dividends declared per share | Nil           | Nil           

The Company's expenses are reflected in the Interim
Consolidated Statements of Operations under the category of Operating Expenses.
To meet the criteria of United States generally accepted accounting principles
(GAAP), all exploration and general and administrative costs related to
projects are charged to operations in the year incurred.

The significant components of expense that have contributed to
the total operating expense are discussed as follows:

(a) General and Administrative Expense

Included in operating expenses for the three months ended July
31, 2010 is general and administrative expense of $65,267 as compared to
$114,131 for the three months ended July 31, 2009. General and administrative
expenses have decreased substantially during the period ended July 31, 2010 as
compared to the period ended July 31, 2009 due to efforts by management to
reduce costs.

---

(b) Project Expense

Included in operating expenses for the three months ended July
31, 2010 is project expenses of $nil as compared with $5,454 for the three
months ended July 31, 2009. The Company has incurred little or no project
expenses during these periods due to lack of funding.

Agreement with Hinton Syndicate Concerning our Former
Mount Hinton Property

The following disclosure relates to our former property known
as the Mount Hinton property. Our interest in the Mount Hinton property was
sold on May 21, 2009.

On May 21, 2009, the Company, through its wholly owned
subsidiary, YGC, sold its interest in the Mount Hinton Property to the Hinton
Syndicate. YGC retained a 2% NSR on the property sold with the following
provisions and rights. Such 2% NSR may be terminated at any time by payment to
YGC of the following:

| | If the payment is made to YGC within the
      12-month anniversary of the Closing: (This payment was not made within
      the 12-month anniversary of the Closing.)                                                   | $111,835 (CDN$115,000)
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------
| |                                                                                                                                                                                                                         |                       
| | If the payment is made to YGC after the
      12-month anniversary of the Closing but before the 24-month anniversary of
      the Closing:                                                                             | $136,147 (CDN$140,000)
| |                                                                                                                                                                                                                         |                       
| | If the payment is made to YGC after the
      24-month anniversary of the Closing but before the 36-month anniversary of
      the Closing:                                                                             | $160,459 (CDN$165,000)
| |                                                                                                                                                                                                                         |                       
| | If the payment is made to YGC after the
      36-month anniversary of the Closing but before the 48-month anniversary of
      the Closing:                                                                             | $184,771 (CDN$190,000)
| |                                                                                                                                                                                                                         |                       
| | If the payment is made to YGC after the
      48-month anniversary of the Closing, it shall be increased by $24,312
      (CDN$25,000) for each 12-month period following the 49-month anniversary
      of the Closing |                       

Calculation and payment of the NSR are as follows

| | 1.  | The NSR which may be payable to a
      party (the Payee) by a party (the Payor) shall be calculated and paid
      to the Payee in accordance with the terms of this Schedule.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                    
| | 2.  | The NSR shall be calculated on a
      calendar quarterly basis.                                                                                                                   
| |     |                                                                                                                                                                                    
| | 3.  | The following words shall have
      the following meanings:                                                                                                                       
| |     |                                                                                                                                                                                    
| | 3.1 | Gross Revenue shall mean the aggregate of the following
      amounts received in each quarterly period:                                                                         

| | (a) | (i) | all revenue received by the Payor in such quarter from
      arms length purchasers of mineral products, or
| | --- | --- | ------------------------------------------------------------------------------------------------------------

---

| | (ii) | the fair market value of all mineral products sold by the
      Payor in such quarter to persons not dealing at arms length with the
      Payor; and
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | any proceeds of insurance received in such quarter due to
      losses or damages in respect to mineral
products.
| | --- | -----------------------------------------------------------------------------------------------------------------

| | 3.2 | Permissible Deductions shall mean the aggregate of the
      following charges (to the extent not previously deducted or accrued in
      computing Gross Revenue) that are paid in each quarterly period:
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                             
| |     | (a)                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                             
| |     | (b)                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                             
| |     | (c)                                                                                                                                                                                                         

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

| | 3.3 | Net Smelter Returns shall mean Gross Revenue less
      Permissible Deductions in respect to such quarter.
| | --- | ------------------------------------------------------------------------------------------------------------
| |     |                                                                                                             
| | 3.4 | NSR shall mean Net Smelter
Returns.                                                                       

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

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

6.      All
NSR payments shall be considered final and in full satisfaction of all
obligations of the Payor with respect thereto, unless the Payee delivers to the
Payor a written notice (the Objection Notice) describing and setting forth a
specific objection to the calculation thereof within 60 days after receipt by
the Payee of the Statement. If the Payee objects to a particular Statement as
herein provided, the Payee shall, for a period of 60 days after the Payors
receipt of such Objection Notice, have the right, upon reasonable notice and at
a reasonable time, to have the Payors accounts and records relating to the
calculation of the NSR in question audited by the auditors of the Payor. If such
audit determines that there has been a deficiency or an excess in the payment
made to the Payee, such deficiency or excess will be resolved by adjusting the
next monthly NSR payment due hereunder. The Payee shall pay all the costs and
expenses of such audit unless a deficiency of 2 1/2% or more of the amount due
is determined to exist. The Payor shall pay the costs and expenses of such audit
if a deficiency of 2 1/2% or more of the amount due is determined to exist. All
books and records used and kept by the Payor to calculate the NSR due hereunder
shall be kept in accordance with Canadian generally accepted accounting
principles. Failure on the part of the Payee to make claim against the Payor for
adjustment in such 60 day period by delivery of an Objection Notice shall
conclusively establish the correctness and sufficiency of the Statement and NSR
payment in respect of the applicable quarter.

---

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

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

Exploration

During the year ended April 30, 2009, the Company completed its
acquisition of the Marg Property and currently owns it outright. The Marg
Property consists of 402 contiguous mineral claims covering approximately 20,000
acres. Access to the claim group is possible either by helicopter, based in
Mayo, Yukon Territory, Canada, located approximately 80 km to the southwest or
by small aircraft to a small airstrip located near the Marg deposit. A 50
kilometer winter road from Keno City to the property boundary was completed in
1997. The camp site on the property provides accommodation for up to 12 people.
Presently the hydroelectric power grid terminates at Keno City some 50km to the
southwest and water is available from the Keno Ladue River, which flows through
the property. The Company on August 31, 2010 granted Lance Capital Ltd. a
security interest of $375,000 to be registered against the Marg Property. The
Company also credited YGC with an equal amount of the amount owed to the
Company. See Part II Item 5 Other Information.

Liquidity and Capital Resources

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

|                                             |   | July 31, 2010 |   |   | July 31, 2009 |  
|-------------------------------------------- | - | ------------- | - | - | ------------- | -
|                                             |   |               |   |   |               |  
|Cash and cash equivalent                     | $ | 2,910         |   | $ | 17,261        |  
|Working capital deficit                      | $ | (708,059      | ) | $ | (179,973      | )
|Cash used in operating
      activities      | $ | (13,473       | ) | $ | (102,841      | )
|Cash provided (used) in investing activities | $ | Nil           |   | $ | 110,306       |  
|Cash provided in financing
      activities  | $ | 15,798        |   | $ | Nil           |  

---

As at July 31, 2010 the Company had working capital deficit of
$708,059 as compared to a working capital deficit of $ 179,973 in the previous
period. During the current period the Company received demand loans of $15,798,
and an additional $9,900 subsequent to the quarter, all carrying interest of 7%
per annum from a director of the Company.

Off-Balance Sheet Arrangement

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

Contractual Obligations and Commercial Commitments

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 as amended the Company paid $119,189
(CDN$150,000) cash and 133,333 common shares as a down payment. The Company made
payments under the Agreement for $43,406 (CDN$50,000) cash and an additional
133,333 common shares of the Company on December 12, 2005; $86,805 (CDN$100,000)
cash and an additional 133,334 common shares of the Company on December 12,
2006. On December 12, 2007 the Company paid $98,697 (CDN$100,000) being the next
payment then due.

The Company agreed to make subsequent payments under the
Agreement of: $167,645 (CDN$200,000) in cash and/or common shares of the Company
(or some combination thereof to be determined) on or before December 12, 2008.
On December 4, 2008 the Company and Atna Resources Ltd. (Atna) entered into a
letter agreement (the Amendment Agreement) amending the purchase agreement by
which the Company acquired its Marg Property (the Marg Acquisition Agreement).
Under the terms of the Marg Acquisition Agreement the Company was required to
pay to Atna $167,645 (CDN$200,000) (in cash or shares of the Companys common
stock) on December 12, 2008. In lieu of making such payment, the Amendment
Agreement permitted the Company to pay Atna $19,980 (CDN$25,000) in cash on
December 12, 2008 (paid) and $188,600 (CDN$225,000) (payable in cash or shares
of the Companys common stock) on April 30, 2009. On April 30, 2009, the Company
issued to Atna 6,838,906 common shares which represent $188,600 (CDN $225,000),
whereby the common shares were valued at $0.0276 (CDN$0.0329) each. Upon the
commencement of commercial production at the Marg Property, the Company will pay
to Atna $972,479 (CDN$1,000,000) in cash and/or common shares of the Company, or
some combination thereof to be determined.

---

Subsequent to the period covered by this report, the following
agreement was terminated by the mutual consent of the parties. On October 1,
2009 the Companys board of directors ratified a retainer agreement (the
Agreement) dated August 28, 2009 with a Panamerican corporation (the
Consultant) to provide certain exclusive advisory services for financing,
acquisition, collaboration, product or services sales transactions and
strategies, for a period of twelve (12) months (the Term) from the date of
execution. If at any time during the Term the Company wishes to terminate the
exclusivity of the Consultant, the Company will give the Consultant ten (10)
days prior written notice and pay the Consultant $200,000. The Agreement states
that a monthly cash fee of $50,000 and the Consultants out-of-pocket expenses
shall accrue and be payable only at such time as the Company secures a minimum
of $5,000,000 in financing during the Term of this agreement at which time the
total amount accrued shall be due and payable in full without interest. In the
event that the Company fails to timely pay any of the compensation, as defined
in the Agreement, each shall bear interest at the rate of six percent (6%) until
paid in full. The Consultant has the right upon written notice to the Company of
its election to receive gold or other minerals in lieu of cash prior to or
concurrent with the closing of any financing transactions (Financing
Transactions). Compensation payable in kind shall not bear any
interest. If an acquisition or divestiture is consummated during the Term of the Agreement or for a period of one (1) year thereafter, the Company shall pay a transaction fee (TF) to the Consultant based on the following transaction
values (TVs): (i) 5% TF up to and including $1,000,000 TVs, plus (ii) 4% TF on all TVs from $1,000,000 to $1,999,999, plus (iii) 3% TF on all TVs from $2,000,000 to $2,999,999, plus (iv) 2% on all TVs from
$3,000,000 to $3,999,999, plus (v) 1% on all TVs from $4,000,000 to $4,999,999, plus (vi) 1% on all TVs equal to and exceeding $5,000,000. During the Term of the Agreement or for a period of one (1) year after termination, the
Company will pay the Consultant a finders fee equal to two percent (2%) of the total amount of each and every Financing Transaction successfully undertaken by the Company. In addition the Company shall grant to the Consultant options to
purchase that number of shares of the Companys common stock determined by multiplying two percent (2%) equal to the total number of equity shares placed and/or issued, or if convertible debt, two percent (2%) of the number of common equity
shares as if the convertible debt was converted at its earliest possible date. Such options shall be exercisable for a period of five (5) years at an exercise price equal to the five-day weighted average trading price (WATP) for the five (5)
consecutive trading days immediately prior to the granting of the Companys stock options. In addition to the foregoing fees, the Company shall grant to the Consultant a fully-vested option (Equity Fee) to acquire a number of shares
equal to eight and one-half percent (8.5%) of the total common shares issued and outstanding at the time of the execution of the Agreement. Such options shall be exercisable for a period of five (5) years at an exercise price equal to the five-day
WATP for the five (5) consecutive trading days immediately prior to the granting of the Companys stock options.  The number of stock options shall be subject to any and all adjustments of the common shares during the five-year exercise period.
 Upon the Company entering into any definitive agreement, during the Term, to acquire any properties/projects, as defined in the Agreement, an additional fully-vested performance option shall be granted to the Consultant to acquire a number of
shares equal to eight and one-half percent (8.5%) of the then issued and outstanding common shares of the Company. Such options shall be exercisable for a period of five (5) years at an exercise price equal to the five-day WATP for the five (5)
consecutive trading days immediately prior to the execution of the definitive agreement. The number of performance options shall be subject to any and all adjustments of the common shares during the five-year exercise period. If any acquisition
transaction is contemplated by the Company during the Term or for a period of one (1) year after the Company will grant to the Consultant the absolute right to participate, on a pro rata basis, in up to a ten percent (10%) interest in the
Companys acquisition. The Consultant shall also be responsible for all pro rata future development and operating costs of said acquisition when paid by the parties owning the other 90% interests. Notwithstanding anything within the Agreement
to the contrary, any stock or equity-based compensation must be pre-cleared by the Toronto Stock Exchange (TSX). If any Financing Transaction(s) described in paragraphs 2 A and B of Schedule A to this Agreement are concluded during the Term, or for
a period of one (1) year thereafter, provided such Financing Transaction(s) results from parties identified in writing by the Consultant in performing the Services, the Company will pay to the Consultant, or a designee of the Consultant, the
following: (i) with respect to any equity financing, a cash fee equal to seven percent (7%) of the total amount of the Financing Transaction (gross proceeds, without offset for costs or fees), (ii) with respect to any debt financing, a cash fee
equal to four percent (4%) of the total amount of such Financing Transaction (gross proceeds, without offset for costs or fees), and (iii) in addition, upon the completion of any Financing Transaction of the Company or its, parents, subsidiaries or
affiliates, the Company shall grant to the Consultant the right and option to purchase that number of shares, units or interests in the Company determined by dividing five percent (5%) of the amount of the Financing Transaction by an amount equal to
equal to the five-day WATP for the five (5) consecutive trading days immediately prior to the payment of Yukon Gold Corporation stock options. Such rights shall be exercisable, for a period of five (5) years, from date of issue and shall possess
most favored nation registration  rights, i.e., registration rights equal to
 the best/most favorable rights/treatment of any issued/outstanding registration rights provisions applicable to any securities of the Company, specifically including, but not limited to demand and piggy back registration rights,
including the right to include such shares in any offering undertaken by the Company, i.e., tag-along rights. Such Fee shall be paid by the Company to the Consultant within ten (10) calendar days after the closing of each Financing
Transaction, or, if such Financing Transaction closes in several tranches, within ten (10) calendar days after the closing of each tranche, until paid in full.  Subsequent to the quarter ended July 31, 2010 on August 10, 2010 the Consultant and the
Company signed an unconditional and absolute general release which terminated the Agreement.

---

Subsequent to the period covered by this report, the Company has opened discussions to renegotiate and/or terminate the following agreement.  On October 1, 2009 the Companys board of directors ratified a consulting agreement (the
Agreement), dated September 20, 2009, with an individual to provide services as a special advisor (the Consultant). The Agreement states that the Consultant will receive 450,000 restricted common shares no later than ten (10)
business days from the date of signing the Agreement.  During the quarter and subsequent to the period ended July 31, 2010 the Company has not issued these shares to the Consultant but the Company has expensed the cost at fair value. The Consultant
is entitled to receive a cash fee of two and one-half percent (2.5%) on the aggregate value of a financing(s) or transaction(s) entered into by the Company during the term of the Agreement or within the twelve (12) months following the term of this
Agreement if the discussions regarding the financial transaction(s) were initiated by the Consultant during the term of this Agreement. Further it was agreed that the Consultant would receive a bonus of up to 1,000,000 restricted common shares of
the Company of any financing or transaction, such bonus to be awarded on transactions values (TV) as follows: (i) up to a $1,000,000 TV, 200,000 shares (ii) between a $1,000,000 up to a $6,000,000 TV, an additional 300,000
shares and (iii) over a $6,000,000 TV, an additional 500,000 shares.  Upon receipt of an itemized invoice the Consultant will be reimbursed for all traveling and other actual legitimate expenses. The Agreement is for a three month minimum term
and may be extended by the mutual agreement of both parties in writing.  On December 20, 2009 the agreement terminated and the Consultant was not successful in raising any financing. No services were provided under this agreement. The Company
considers the agreement not consummated and has not issued the shares for that reason.

Subsequent to the period covered by this report, the following agreement was terminated, as described in Note 12 (Subsequent Events) to our Financial Statements contained herein. On September 28, 2009 the Company entered into an employment agreement
(Agreement) with Douglas Oliver (the Employee) to serve as its President and Chief Executive Officer. During the employment term, the Company will pay the Employee a base salary at the annual rate of one hundred and
eighty thousand ($180,000) dollars per year ("Base Salary"). Half of the Employees Base Salary shall be deferred and shall accrue interest at the LIBOR rate plus five percent (5%). Deferred Base Salary shall be payable to the Employee with
interest no sooner than the Cerro Quema gold project entering production but may be further deferred at the Employees discretion. In the event that this Agreement is terminated for any reason, the Employee shall be entitled to all deferred
Base Salary, with interest, to be paid within three (3) months of such termination. The Agreement further states that the Employee immediately shall be awarded 250,000 shares of the Companys common stock, which were issued in the last quarter
of the year ending April 30, 2010. The Employee acknowledges that such shares will be restricted shares subject to limitations on re-sale. The Employee further acknowledges that he will be considered as affiliate for purposes of Rule
144. The Company agrees to register such shares as part of any registration statement it files under the Securities Act of 1933. Additional stock options shall be awarded to Employee based upon the Companys achieving certain production goals
and in accordance with the Companys 2006 Stock Option Plan.  Employee and the Company shall agree upon the goals and option amounts within two (2) months of the execution of this Agreement. As of the date of these statements, the option
amounts were not agreed upon. The Employeemay terminate employment at any time after providing forty-five (45) days prior written notice to the Company.  The Company may terminate the Employee's employment without cause at any time
after providing written notice to Employee and paying all unpaid salaries and benefits. In addition, an amount equal to twelve (12) months of Base Salary (at the rate in effect as of the date of the Employees termination without cause) will be
paid to the Employee if this Agreement is terminated by the Company at any time prior to the second anniversary of the date of this Agreement. Subsequent to the quarter ended July 31, 2010 on August 9, 2010 the Employee and the Company mutually
agreed to terminate their Agreement without notice. The Employee assigned all
amounts owed by the Company to Lance Capital Ltd. See Part II Item 5 Other Information for termination of this agreement and
assignment of the balance due.

On October 26, 2009 the Company entered into a letter agreement (the Agreement) with a former officer to act as a consultant providing accounting and administration services for $1,945 (CDN$2,000) per month and to warehouse the
Company records for $486 (CDN$500) per month.  The Company further agreed to reimburse the consultant for any out of pocket expenses and that either party may give 30 days notice in writing of their intention to terminate the Agreement.
Subsequent to the quarter ended July 31, 2010, on August 31, 2010, the consultant agreed to
Agreement without notice and further agreed to accept $8,752 (CDN$9,000) as full payment for services rendered under the Agreement to be paid within 30 days. Lance Capital Ltd.
agreed to advance the funds to the Company to cover this payment .See Part II
Item 5 Other Information for termination of this agreement.

---

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

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 initially capitalized in accordance with the ASC 805-20-55-37, previously referenced as EITF 04-2 when incurred. The Company assesses the carrying costs for impairment under Accounting Standards 930 Extractive
Activities  Mining (AS 930) at each fiscal quarter end. An impairment is recognized when the sum of the expected undiscounted future cash flows is less than the carrying amount of the mineral property. Impairment losses, if any, are measured
as the excess of the carrying amount of the mineral property over its estimated fair value. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs
incurred to develop such property will be capitalized. Once capitalized, such costs will be amortized using the units-of-production method over the estimated life of the probable reserves. If mineral properties are subsequently abandoned or
impaired, any capitalized costs will be charged to operations. The Company assesses the carrying costs for impairment at each fiscal quarter end. The Company has determined that all property payments are impaired and accordingly has written off the
acquisition costs to project expense.

---

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 July 31, 2010. Based on
      such evaluation, the principal executive officer and principal financial
      officer of the Company, respectively, have concluded that, as of the end
      of the current quarter, the Company's disclosure controls and procedures
      are effective.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(b) | Internal Control Over Financial Reporting. There have not
      been any changes in the Company's internal control over financial
      reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under
      the Exchange Act) during the quarter ended July 31, 2010 that have
      materially affected, or are reasonably likely to materially affect, the
      Company's internal control over financial reporting.                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(c) | Limitations on the Effectiveness of Controls. We believe
      that a control system, no matter how well designed and operated, cannot
      provide absolute assurance that the objectives of the control system are
      met, and no evaluation of controls can provide absolute assurance that all
      control issues and instances of fraud, if any, within a company have been
      detected.                                                                                                                                                                                                                                                                                                                       

DISCLOSURE AND FINANCIAL CONTROLS AND PROCEDURES

The board of directors has concluded that the Company's
disclosure controls and procedures are effective. There have been no significant
changes in these controls or in other factors that could significantly affect
these controls subsequent to the date of their evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.

Internal financial controls and procedures have been designed
under the supervision of the Company's board of 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

On June 17, 2010 the Companys bank received a Notice of
Garnishment from the Ontario Superior Court of Justice, Canada, dated June 15,
2010, in the amount of $118,269 (CDN$120,138) with the Companys former landlord
named as the creditor, the Companys wholly owned Canadian subsidiary (YGC)
named as the debtor, and the Companys bank as the garnishee. On June 17, 2010
our subsidiarys bank remitted $1,271 (CDN$1,307) to the Ontario Superior Court
of Justice, being the balance of funds in YGCs bank account. YGC did not have
the funds to fully settle the Notice of Garnishment. It is possible that one or
more other creditors of YGC will bring an action to enforce a debt.

---

Item 1A.   RISK FACTORS

|1. | THE COMPANY IS RELYING ON A THIRD PARTY TO SETTLE
      OUTSTANDING DEBTS AND RETURN THE COMPANYS BUSINESS TO ECONOMIC
      VIABILITY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | As of August 31, 2010, the Company and Lance Capital Ltd,
      an Ontario company (Lance), entered into an agreement pursuant to which
      Lance is engaged in efforts to resolve outstanding obligations of the
      Company and raise working capital for the Company. In its sole discretion,
      Lance may continue to fund operating expenses of the Company for a limited
      period of time while it explores the feasibility of private placement or
      other financing for the Company. Under the terms of the Agreement Lance
      was issued a Convertible Promissory Note in the amount of $375,000 secured
      by the Marg Property owned by YGC. In the event that Lance exercises its
      option to convert the Convertible Promissory Note issued by the Company
      into Shares, Lance would become the principal shareholder of the Company
      and would effectively control the Company. There is no assurance that
      Lance will be successful in its efforts to reorganize the Companys
      affairs.                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|2. | WE HAVE NO WORKING CAPITAL AND MAY NOT BE ABLE TO
      CONTINUE TO COMPLY WITH APPLICABLE REGULATORY REQUIREMENTS AND THE
      REQUIREMENTS OF THE EXCHANGES ON WHICH OUR SHARES TRADE.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Yukon Gold has no working capital to maintain its ongoing
      operations, to prepare and file regular reports required to meet the
      disclosure requirements of the Securities and Exchange Commission or the
      Ontario Securities Commission or to meet the requirements of the exchanges
      on which our stock trades. On August 26, 2009, the Toronto Stock Exchange
      ("TSX"), announced the de-listing of the Companys common shares,
      effective at the close of the market on September 25, 2009. The decision
      was based upon the Companys failure to meet multiple listing requirements
      of TSX. On November 2, 2009 the Companys common shares began trading on
      the NEX exchange. Effective at the close of business on April 7, 2010, and
      in accordance with NEX Policy, section 15, the common shares of Yukon Gold
      were delisted from NEX, for failure to pay their NEX Listing Maintenance
      Fee. The Company continues to trade on OTCBB. We run the risk of being
      de-listed on all exchanges in which our stock currently trades.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|3. | WE MAY HAVE TO PURCHASE ADDITIONAL MINERAL PROPERTIES TO
      SECURE FINANCNG AND REMAIN VIABLE.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

Yukon Gold must immediately secure
additional financing to remain viable. Management of Yukon Gold believes that we
must identify and purchase new mineral properties in order to obtain such
financing.

|4. | WE DO NOT HAVE AN OPERATING
BUSINESS.
|-- | -------------------------------------

Yukon Gold has rights in certain
mineral claims located in the Yukon Territory, Canada. To date we have done
limited exploration of the property covered by our mineral claims. We do not
have a mine or a mining business of any kind. There is no assurance that we will
develop an operating business in the future.

|5. | WE HAVE NO SOURCE OF OPERATING REVENUE AND EXPECT TO
      INCUR SIGNIFICANT EXPENSES BEFORE ESTABLISHING AN OPERATING COMPANY, IF WE
      ARE ABLE TO ESTABLISH AN OPERATING COMPANY AT ALL.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Currently, we have no source of
revenue, we do not have working capital to complete our exploration programs
(including feasibility studies) and we do not have any commitments to obtain
additional financing. We have no operating history upon which an evaluation of
our future success or failure can be made. Our ability to achieve and maintain
profitability and positive cash flow is dependent upon:

---

| | o | our ability to raise the capital necessary to conduct
      this exploration and preserve our interest in these mineral claims;                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                          
| | o | our ability to raise capital to develop the Marg
      Property, establish a mining operation, and operate this mine in a
      profitable manner; and.                  
| |   |                                                                                                                                                                          
| | o | our ability to raise capital to purchase additional
      properties that may make our business more attractive to investors in
      exploration stage mining companies.

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

|6. | GOING CONCERN QUALIFICATION.
|-- | ----------------------------

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

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

|7. | 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.

|8. | OUR BUSINESS IS SUBJECT TO CURRENCY
  RISKS.
|-- | --------------------------------------------

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

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

None

Item 3.    DEFAULTS UPON SENIOR
SECURITIES

None.

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

None.

---

Item 5.    OTHER INFORMATION

On August 6, 2010 the Company received a loan for $9,900 from a
director of the Company. The Company issued a Promissory Note to the director
which carries simple interest at the rate of seven percent (7%) of the
outstanding principal balance per annum. The entire principal balance
outstanding and any interest thereon shall be payable on demand by the holder of
the Promissory Note, but no later than three years from the date of the loan.

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

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

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

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

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

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

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

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

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

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

---

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

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

Item 6.    EXHIBITS & REPORTS ON
FORM 8-K

Exhibits

|(a) | 31.1 | Rule 13a-14(a)/15d-14(a) Certification
      of Chief Executive Officer.                                                                                                                           
|--- | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |      |                                                                                                                                                                                                    
|    | 31.2 | Rule 13a-14(a)/15d-14(a)
        Certification of Chief Financial Officer.                                                                                                                         
|    |      |                                                                                                                                                                                                    
|    | 32.1 | Certificate
        of Chief Executive Officer and Chief Financial Officer pursuant to 18
        U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002

---

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.

|                          | By: /s/ Douglas Oliver 
|------------------------- | -----------------------
|Dated: September 13, 2010 | Douglas Oliver         
|                          | Chief Executive Officer
|                          |                        
|                          | By: /s/ Kathy Chapman  
|                          | Kathy Chapman          
|                          | Chief Financial Officer

---