VetaNova Inc. - Annual Report: 2011 (Form 10-K)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark one)

[X] Annual report under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Fiscal Year April 30, 2011

or

[   ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ______to _________

Commission file number: 000-51068

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

1226 White Oaks Blvd., Ste 10A,
Oakville, Ontario, Canada L6H 2B9
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: 905-845-1073

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, par value $0.0001 per share

Indicate by check mark if the registrant is a well-known seasoned issuer as defined by Rule 405 of the Securities Act

Yes [  ]      No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Rule 13 or Section 15(d) of the Act

Yes [  ]      No [X]

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant Rule 405 of Regulation S-T (s 220.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.

Yes [  ]      No [X]

Check if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

Indicate by check mark whether the registrant is a large accelerated filer, a non-accelerated filer or a smaller reporter.

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

Yes [   ]      No [X]

Issuer's revenues for its most recent fiscal year: $0.

The aggregate market value of the Common Stock held by non-affiliates of the issuer, as of April 30, 2011 was approximately $1,554,701 for the issuer’s Common Stock reported for such date on the OTC Bulletin Board. For purposes of this disclosure, shares of Common Stock held by persons who the issuer believes beneficially own more than 5% of the outstanding shares of Common Stock and shares held by officers and directors of the issuer have been excluded because such persons may be deemed to be affiliates of the issuer. This determination is not necessarily conclusive.

As of August 11, 2011, 29,632,336 shares of the issuer’s Common Stock were outstanding.

Transitional Small Business Disclosure

Yes [   ]      No [X]

TABLE OF CONTENTS

FINANCIAL STATEMENTS

YUKON GOLD CORPORATION, INC.
(AN EXPLORATION STAGE MINING COMPANY)
FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 2011 AND APRIL 30, 2010
Together With Report of Independent Registered Public Accounting Firm
(Amounts expressed in US Dollars)

TABLE OF CONTENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Yukon Gold Corporation, Inc.
(An Exploration Stage Mining Company)

We have audited the accompanying balance sheets of Yukon Gold Corporation, Inc. (the “Company”) as at April 30, 2011 and 2010 and the related statements of operations, cash flows and stockholders’ deficiency for the years ended April 30, 2011 and 2010 and for the period from incorporation to April 30, 2011. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Yukon Gold Corporation, Inc. as at April 30, 2011 and 2010 and the results of its operations and its cash flows for the years ended April 30, 2011 and 2010 and for the period from incorporation to April 30, 2011 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company is an exploration stage mining company and has no established source of revenues. These conditions raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding these matters are also described in note 2 to the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

As disclosed in Note 1 and Note 11, the financial statements have been adjusted for the retrospective presentation of the Company’s wholly-owned subsidiary as discontinued operations. Additionally, as discussed in Note 1 to the financial statements, the Company deconsolidated the assets and liabilities and results of operations of the wholly-owned subsidiary as of November 15, 2010.

"SCHWARTZ LEVITSKY FELDMAN LLP"
 

F-1

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Balance Sheets as at April 30, 2011 and April 30, 2010
(Amounts expressed in US Dollars)

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

APPROVED ON BEHALF OF THE BOARD

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

/s/ Howard Barth
Howard Barth, Director

F-2

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Balance Sheets as at April 30, 2011 and April 30, 2010
(Amounts expressed in US Dollars)

* Reflects the May 16, 2011 five-for-one reverse stock split (refer to Note 13 (a))

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

F-3

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Statements of Operations for the years ended April 30, 2011 and April 30, 2010
and for the period from inception to April 30, 2011
(Amounts expressed in US Dollars)

* Reflects the May 16, 2011 five-for-one reverse stock split from inception (refer to Note 13 (a))

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

F-4

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Statements of Cash Flows for the years ended April 30, 2011 and April 30, 2010
and for the period from inception to April 30, 2011
(Amounts expressed in US Dollars)

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

F-5

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Statements of Changes in Stockholders’ Deficiency
from inception to April 30, 2011
(Amounts expressed in US Dollars)

F-6

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Statements of Changes in Stockholders’ Deficiency
from inception to April 30, 2011
(Amounts expressed in US Dollars)

F-7

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Statements of Changes in Stockholders’ Deficiency
from inception to April 30, 2011
(Amounts expressed in US Dollars)

F-8

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Statements of Changes in Stockholders’ Deficiency
from inception to April 30, 2011
(Amounts expressed in US Dollars)

* Reflects the May 16, 2011 five-for-one reverse stock split from inception (refer to Note 13 (a))

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

F-9

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Notes to Financial Statements
April 30, 2011 and April 30, 2010
(Amounts expressed in US Dollars)

1.             NATURE OF OPERATIONS

The Company is an exploration stage mining company and has not yet realized any revenue from its operations. On November 15, 2010, the Company’s wholly-owned Canadian subsidiary, Yukon Gold Corp. (“YGC”), declared bankruptcy with the Office of the Superintendent of Bankruptcy Canada and appointed a trustee under the Bankruptcy and Insolvency Act. A Certificate of Appointment, under Section 49 of the Act; Rule 85, was filed with the Office of the Superintendent of Bankruptcy Canada, in the District of Ontario, Hamilton Division. As a result of the bankruptcy, the Company’s ownership interest in YGC was cancelled. In the accompanying audited financial statements, the historic results of YGC have been reported as a discontinued operation (See Note 11 Bankruptcy of Yukon Gold Corp.). The Company is currently pursuing other mining opportunities.

Subsequent to the year ended April 30, 2011 on May 16, 2011, the Company merged into its wholly-owned subsidiary, a Nevada corporation, (referred to herein as the “Nevada Corporation”) being the surviving entity (the “Merger”). As a result, Yukon Gold Corporation, Inc. effected a re-domiciliation from the State of Delaware into the State of Nevada. The Nevada Corporation, also named “Yukon Gold Corporation, Inc.”, has authorized capital of 500,000,000 common shares. Pursuant to the terms of the Merger, each five (5) shares of the Company’s common stock immediately before the Merger were exchanged for one (1) share of common stock of the Nevada Corporation. As a result, 148,159,936 issued shares of the Company’s common stock were exchanged for 29,632,336 shares of the Nevada Corporation’s common stock (See Note 13 (a) Subsequent Events). The par value of the Company’s common shares remains at $0.0001 per share. All references to common shares and per common share amounts have been retroactively adjusted from the date of inception to reflect the five-for-one reverse stock split, unless otherwise noted.

2.             BASIS OF PRESENTATION AND GOING CONCERN

The Company's 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. Due to continuing operating losses and cash outflows from continuing 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. The Company’s future success is dependent upon its continued ability to raise sufficient capital, not only to maintain its operating expenses, but to acquire properties and 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.

These 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 financial statements.

F-10

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Notes to Financial Statements
April 30, 2011 and April 30, 2010
(Amounts expressed in US Dollars)

3.             SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a)             Use of Estimates

The Preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and related notes to the financial statements. These estimates are based on management's knowledge of current events and actions the Company may undertake in the future. Actual results may differ from such estimates. Significant estimates include accruals, valuation allowance of deferred tax asset and estimates for calculation of stock based compensation.

b)             Financial Instruments

The fair market value of the Company’s financial instruments comprising cash and accounts payable and accrued liabilities were estimated to approximate their carrying values due to immediate or short-term maturity of these financial instruments. The Company maintains cash balances at financial institutions. The Company has not experienced any material losses in such accounts.

Commodity Price Risk: The ability of the Company to develop its properties and the future profitability of the Company is directly related to the market price of certain minerals.

Foreign Exchange Risk: The Company conducts some of its operating activities in Canadian dollars. The Company is therefore subject to gains or losses due to fluctuations in Canadian currency relative to the US dollar. The Company does not use foreign currency hedging to mitigate the risk.

c)             Equipment

Equipment is recorded at cost less accumulated amortization. Amortization is provided over the estimated useful lives commencing in the month following acquisition using the following annual rate and method:

F-11

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Notes to Financial Statements
April 30, 2011 and April 30, 2010
(Amounts expressed in US Dollars)

3.             SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONT’D

c)             Equipment-Cont’d

d)             Income taxes

Deferred tax assets and liabilities are recorded for differences between the financial statement and tax basis of the assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is recorded for the amount of income tax payable or refundable for the period increased or decreased by the change in deferred tax assets and liabilities during the period.

e)             Revenue Recognition

The Company’s revenue recognition policies are expected to follow common practice in the mining industry. Revenue is recognized when concentrate or dore bars, in the case of precious metals, is produced in a mill processing ore from one or more mines. The only condition for recognition of revenue in these instances is the production of the dore or concentrate. In order to get the ore to a concentrate stage the ore must be mined and transported to a mill where it is crushed and ground. The ground product is then processed by gravity separation and/or flotation to produce a concentrate. In some circumstances chemical treatment is used to extract the precious metals from the concentrate into a solution. This solution is then subjected to various processes to precipitate the precious metals back to a solid state that can be melted down and poured into a mould to produce a dore bar (a combination of gold and silver).

F-12

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Notes to Financial Statements
April 30, 2011 and April 30, 2010
(Amounts expressed in US Dollars)

3.             SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONT’D

f)             Impairment of Long-Lived Assets

The Company records impairment of long-lived assets to be held, used or to be disposed of when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amount. The Company did not record any impairment as of April 30, 2011 and April 30, 2010.

g)             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 will assess 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.

h)             Stock Based Compensation

All awards granted to employees and non-employees after October 31, 2005 are valued at fair value by using the Black-Scholes option pricing model and recognized on a straight line basis over the service periods of each award. The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees using the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earlier of a performance commitment or completion of performance by the provider of goods or services. As of April 30, 2011 and April 30, 2010, there was $nil and $nil of unrecognized expense related to non-vested stock-based compensation arrangements granted. The total stock-based compensation expense relating to all employees and non-employees for the years ended April 30, 2011 and 2010 was $nil and $5,869 respectively.

i)             Earnings or Loss per Share

Basic loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the year. Diluted loss per share is computed by dividing net loss by the weighted average number of common shares outstanding plus common stock equivalents (if dilutive) related to stock options and warrants for each year. The dilutive shares are excluded from the computation of diluted earnings loss per share when a net loss is recorded for the period, as their effect would be anti-dilutive.

F-13

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Notes to Financial Statements
April 30, 2011 and April 30, 2010
(Amounts expressed in US Dollars)

3.             SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONT’D

 j)             Recent Pronouncements

Recently Adopted Accounting Guidance

On May 1, 2010, the Company adopted FASB ASU 2010-04, Fair Value Measurements and Disclosures (ASU 2010-06). ASU 2010-06 updates FASB ASC 820, Fair Value Measurements. ASU 2010-06 requires additional disclosures about fair value measurements including transfers in and out of levels 1 and 2 and a higher level of disaggregation for the different types of financial instruments. There was no material impact on the Company’s financial statements related to the adoption of this guidance.

Business Combinations: In December 2010, the FASB issued ASU 2010-29, “Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations.” The new guidance specifies that when comparative financial statements are presented, the revenue and earnings of the combined entity should be disclosed as though the business combination that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The new guidance applies prospectively to us for business combinations which occur on or after May 1, 2011. The impact of these new provisions on our consolidated financial statements will depend upon the nature, terms and size of the acquisitions we consummate in the future.

Fair Value: In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” The new guidance does not extend the use of fair value accounting, but provides guidance on how it should be applied where its use is already required or permitted by other standards within GASP or International Financial Reporting Standards (“IFRSs”). The new guidance also changes the working used to describe many requirements in GAAP for measuring fair value and for disclosing information about fair value measurements and it clarifies the FASB’s intent about the application of existing fair value measurements. The new guidance applies prospectively and is effective for interim and annual periods beginning after December 15, 2011. We will adopt the provisions of this new guidance on January 1, 2012. We do not expect the adoption of the new provisions to have a material impact on our financial condition or results of operations.

Comprehensive Income: In June 2011, the FASB issued ASU 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income.” The new guidance requires that all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both cases, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. If presented in a single continuous statement, the entity is required to present the components of net income and total net income, the components of other comprehensive income and a total for other comprehensive income, along with a total of comprehensive income in that statement. If presented in the two-statement approach, the first statement which is the statement of net income, should present components of net income and total net income followed consecutively by a second statement which is the statement of other comprehensive income, that should present the components of other comprehensive income, total other comprehensive income and a total amount for comprehensive income. Regardless of the method used, the entity if required to present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statement where the components of net income and the components of other comprehensive income are presented. The new guidance is effective retrospectively for fiscal years, and interim periods within those fiscal years beginning after December 15, 2011. We will adopt the provisions of this new guidance on January 1, 2012. We do not expect the adoption of the new provisions to have a material impact on our financial condition or results of operations.

F-14

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Notes to Financial Statements
April 30, 2011 and April 30, 2010
(Amounts expressed in US Dollars)

4.             EQUIPMENT

F-15

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Notes to Financial Statements
April 30, 2011 and April 30, 2010
(Amounts expressed in US Dollars)

5.             ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

F-16

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Notes to Financial Statements
April 30, 2011 and April 30, 2010
(Amounts expressed in US Dollars)

6.             CAPITAL STOCK

Subsequent to the year ended April 30, 2011 on May 16, 2011, the Company merged into its wholly-owned subsidiary, a Nevada corporation, (referred to herein as the “Nevada Corporation”) being the surviving entity (the “Merger”). As a result, Yukon Gold Corporation Inc. effected a re-domiciliation from the State of Delaware into the State of Nevada. The Nevada Corporation, also named “Yukon Gold Corporation, Inc.”, has authorized capital of 500,000,000 common shares. Pursuant to the terms of the Merger, each five (5) shares of the Company’s common stock immediately before the Merger were exchanged for one (1) share of common stock of the Nevada Corporation. As a result, 148,159,936 issued shares of the Company’s common stock were exchanged for 29,632,336 shares of the Nevada Corporation’s common stock (See Note 13 (a) Subsequent Events). The par value of the Company's common shares remains at $0.0001 per share. All references to common shares and per common share amounts have been retroactively adjusted from the date of inception to reflect the five-for-one reverse stock split, unless otherwise noted.

a)             Authorized

500,000,000 Common shares, $0.0001 par value (See Note 13 (a) Subsequent Events)

b)             Issued

29,632,336 Common shares (8,367,907 in 2010) (As adjusted for the reverse stock split described above and in Note 13 (a) Subsequent Events)

c)             Changes to Issued Share Capital (All common share issuances have been adjusted by a reverse stock split described above and in Note 13 (a) Subsequent Events)

Year ended April 30, 2011

On September 23, 2010 the Company accepted nine (9) subscriptions for a total of 17,464,080 common shares for a total consideration of $218,300 through a non-brokered private placement. The proceeds of the private placement were held in escrow pending the Company’s receipt of a Certificate of Good Standing from the Delaware Secretary of State. On October 28, 2010 the Company was issued the Certificate of Good Standing. On November 1, 2010, the balance of the proceeds from the private placement were released from escrow and transferred to the Company. On November 5, 2010 the 17,464,080 common shares were issued by the Company. Of that amount, 16,000,080 of the shares issued in connection with the private placement were exempt from registration under the Securities Act pursuant to Regulation S promulgated thereunder. The balance of 1,464,000 shares issued were exempt from registration under the Securities Act pursuant to Regulation D promulgated thereunder.

On November 3, 2010 the Company accepted one (1) subscription for 2,400,000 common shares for a total consideration of $30,000 through a non-brokered private placement and the shares were issued on November 5, 2010. The private placement was exempt from registration under the Securities Act pursuant to an exemption afforded by Regulation S promulgated thereunder.

On January 27, 2011 the Company accepted six (6) subscriptions for a total of 1,400,349 common shares for a total consideration of $17,500 through a non-brokered private placement. On February 3, 2011 the shares were issued. The private placement was exempt from registration under the Securities Act pursuant to Regulation S promulgated thereunder.

All of the investors that participated in such private placements are non-“U.S.-Persons.”

Year ended April 30, 2010

The Company received subscriptions for 220,000 common shares for a total consideration of $44,000 through a non-brokered private placement. The Company issued 220,000 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 Agreement, the Company issued to the Employee 50,000 common shares of the Company’s common stock. The Employee acknowledged that such shares will be “restricted shares” subject to limitations on re-sale. The Employee further acknowledged that he will be considered as an affiliate for purposes of Rule 144.

F-17

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Notes to Financial Statements
April 30, 2011 and April 30, 2010
(Amounts expressed in US Dollars)

6.             CAPITAL STOCK-CONT'D

d)             Purchase Warrants

The Company did not issue any stock purchase warrants during the years ended April 30, 2011 and April 30, 2010 respectively.

* Reflects the May 16, 2011 five-for-one reverse stock split (described herein and in Note 13 (a) Subsequent Events)

The warrants do not confer upon the holders any rights or interest as a shareholder of the Company.

At April 30, 2011 and April 30, 2010, the weighted average contractual term of the total outstanding, and the total exercisable warrants were as follows:

F-18

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Notes to Financial Statements
April 30, 2011 and April 30, 2010
(Amounts expressed in US Dollars)

7.             STOCK BASED COMPENSATION

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

The Company adopted a new Stock Option Plan at its shareholders meeting on January 19, 2007 (the “2006 Stock Option Plan”). The 2006 Stock Option Plan will be administered by the board of directors of the Company or, in the board of directors’ discretion, by a committee appointed by the board of directors for that purpose. 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 thereunder from 2,000,000 to 2,899,044. Any Stock Option granted under the 2006 Stock Option Plan which has been exercised shall again be available for subsequent grant under the 2006 Stock Option Plan, effectively resulting in a re-loading of the number of shares available for grant under the 2006 Stock Option Plan. Any shares subject to an option granted under the 2006 Stock Option Plan which for any reason is surrendered, cancelled or terminated or expires without having been exercised shall again be available for subsequent grant under the 2006 Stock Option Plan.

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

F-19

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Notes to Financial Statements
April 30, 2011 and April 30, 2010
(Amounts expressed in US Dollars)

7.             STOCK BASED COMPENSATION-CONT'D

The purchase price (the “Price”) per share under each Stock Option shall be determined by the board of directors or a committee, as applicable. The Price shall not be lower than the closing market price on the OTCBB, 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 OTCBB or another stock exchange for an extended period of time, the “market price” will be the fair market value of the shares at the time of grant, as determined by the board of directors or committee. The board of directors or committee may determine that the Price may escalate at a specified rate dependent upon the date on which an option may be exercised by the Eligible Participant.

Options shall not be granted for a term exceeding ten years (the “Option Period”).

Year ended April 30, 2011

The company did not issue any stock options during the year ended April 30, 2011.

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

As of April 30, 2011 and 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 years ended April 30, 2011 and April 30, 2010 was $nil and $5,869 respectively.

F-20

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Notes to Financial Statements
April 30, 2011 and April 30, 2010
(Amounts expressed in US Dollars)

7.             STOCK BASED COMPENSATION-CONT'D

Cancellation/Expiration/Forfeiture of Stock Options :

Year ended April 30, 2011

On August 15, 2010, 62,500 stock options held by a consultant expired.

On December 1, 2010, 325,000 stock options held by a former officer were forfeited.

On December 13, 2010, 250,000 stock options held by a director expired.

On December 13, 2010, 76,000 stock options held by a former officer expired.

On December 13, 2010, 88,000 stock options held by an officer expired.

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.

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.

F-21

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Notes to Financial Statements
April 30, 2011 and April 30, 2010
(Amounts expressed in US Dollars)

7.             STOCK BASED COMPENSATION-CONT'D

The following table summarizes the options outstanding as at April 30:

* Reflects the May 16, 2011 five-for-one reverse stock split (described elsewhere and in Note 13 (a) Subsequent Events)

The number of options in the year 2010 have not been restated to reflect the reverse stock split except for those options that are still outstanding at April 30, 2011.

F-22

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Notes to Financial Statements
April 30, 2011 and April 30, 2010
(Amounts expressed in US Dollars)

7.             STOCK BASED COMPENSATION-CONT’D

* Reflects the May 16, 2011 five-for-one reverse stock split (described elsewhere and in Note 13 (a) Subsequent Events)

At April 30, 2011 and April 30, 2010, the weighted average contractual term of the total outstanding, and the total exercisable options under the Stock Option Plan were as follows:

F-23

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Notes to Financial Statements
April 30, 2011 and April 30, 2010
(Amounts expressed in US Dollars)

8.             COMMITMENTS AND CONTINGENCIES

On October 1, 2010, the Company entered into a consulting agreement (the “Agreement”) with Lance Capital Ltd. (“Lance”) to provide bookkeeping, administrative and other services for $7,500 per month. The Company further agreed to reimburse Lance for all expenses incurred with respect to the administrative services provided to the Company, provided that these expenses are incurred substantially in accordance with monthly and annual budgets to be prepared by Lance and approved by the Board of Directors of the Company from time to time. The term of this Agreement is one (1) year and automatically renews from year to year unless terminated upon 30 days prior written notice by either party.

F-24

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Notes to Financial Statements
April 30, 2011 and April 30, 2010
(Amounts expressed in US Dollars)

9.             RELATED PARTY TRANSACTIONS

The following transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

Year ended April 30, 2011

The Company expensed a total of $nil in consulting fees and wages to the Company’s Board of Directors, and $102,643 to five of its officers.

No director or officer exercised stock options during the year ended April 30, 2011.

Year ended April 30, 2010

The Company expensed a total of $nil in consulting fees and wages to the Company’s Board of Directors, and $13,903 to two of its officers.

No director or officer exercised stock options during the year ended April 30, 2010.

F-25

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Notes to Financial Statements
April 30, 2011 and April 30, 2010
(Amounts expressed in US Dollars)

10.             INCOME TAXES

a)             Deferred Income Taxes

The Company has deferred income tax assets as follows:

Reconciliation between the statutory federal income tax rate and the effective income tax rate of income tax expense for the period ended April 30, 2011 and 2010 is as follows:

The Company has determined that realization of a deferred tax asset is not likely and therefore a valuation allowance has been recorded against this deferred income tax asset.

b)             Current Income Taxes

As of April 30, 2011 the Company has non-capital losses of approximately $13,786,055 available to offset future taxable incomes which expire as follows:

F-26

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Notes to Financial Statements
April 30, 2011 and April 30, 2010
(Amounts expressed in US Dollars)

11.             BANKRUPTCY OF YUKON GOLD CORP.

YGC had material outstanding obligations with its creditors who strongly indicated an unwillingness to settle. As neither YGC nor the Company had an ability to satisfy these material obligations, on October 6, 2010, the Company’s board of directors resolved to cause YGC to seek relief in a bankruptcy proceeding in Ontario, Canada where YGC was domiciled.

On November 15, 2010, the Company’s wholly-owned subsidiary, YGC declared bankruptcy with the Office of the Superintendent of Bankruptcy Canada and appointed a trustee under the Bankruptcy and Insolvency Act. A Certificate of Appointment, under Section 49 of the Act; Rule 85, was filed in the Office of the Superintendent of Bankruptcy Canada, in the District of Ontario, Hamilton Division.

Prior to the bankruptcy proceedings, on August 31, 2010, the Company and its subsidiary YGC, entered into a Note Purchase and Security Agreement with Lance Capital Ltd. (“Lance”) granting a security interest of $375,000 in settlement of certain payables of the Company that had been purchased by Lance. The Note Purchase and Security Agreement was registered by Lance against its mineral property (the “Marg Property”) on October 15, 2010. Subsequent to the bankruptcy of YGC, on November 23, 2010, Lance issued a Notice of Default to the Company and the Trustee in bankruptcy, in accordance with the provisions of Article 5 of the Note Purchase and Security Agreement and further, in accordance with the provision of Article 6, demanded payment in full of the entire amount of the $375,000 note plus accrued interest. The trustee arranged settlement of the liability with Lance by way of transfer of title to the Marg Property and as a result YGC lost its interest in the Marg Property. Effective November 15, 2010, the Company’s ownership interests in YGC were cancelled. Consequently, the results of YGC are not included in the results of the Company subsequent to November 15, 2010. The deconsolidation of the Canadian subsidiary YGC in November 2010 resulted in the elimination of the accumulated deficit attributable to YGC from Yukon Gold Corporation, Inc.’s consolidated stockholders’ deficiency and elimination of the accumulated other comprehensive loss on translation during consolidation. Net income of the discontinued operation for the nine month period ended January 31, 2011 was comprised of:

The comparative figures for the year ended April 30, 2010 in the balance sheet have been reclassified in accordance with the current period’s presentation. All balance sheet figures of YGC included as part of the consolidation for the year ended April 30, 2010, are included as the discontinued operation. Similarly the comparative figures in the income statement and in the cash flow statement for the year ended April 30, 2010 have been reclassified in accordance with the current period’s presentation. All prior period figures relating to YGC included as part of the consolidation for the year ended April 30, 2010, have been included in the discontinued operation. As a result, the earnings (loss) per share for the period has been reclassified as earnings (loss) per share from continued operations as well as from the discontinued operation.

F-27

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Notes to Financial Statements
April 30, 2011 and April 30, 2010
(Amounts expressed in US Dollars)

12.             FINANCIAL INSTRUMENTS

FASB defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, which are the following:

• Level 1 - Quoted prices in active markets for identical assets or liabilities

• Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The fair values of financial assets and financial liabilities measured in the balance sheet as of April 30, 2011 are as follows:

The fair values of financial assets and financial liabilities measured in the balance sheet as April 30, 2010 are as follows:

Fair value measurements of the Company’s cash are classified under Level 2 because such measurements are determined using quoted prices in active markets for identical assets.

Fair value measurements of accounts payable and accrued liabilities, and loan from director are classified under Level 3 because inputs are generally unobservable and reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.

F-28

YUKON GOLD CORPORATION, INC.
(An Exploration Stage Mining Company)
Notes to Financial Statements
April 30, 2011 and April 30, 2010
(Amounts expressed in US Dollars)

13.             SUBSEQUENT EVENTS

a) Subsequent to the year ended April 30, 2011 on May 16, 2011, the Company merged into its wholly-owned subsidiary, a Nevada corporation, (referred to herein as the “Nevada Corporation”) being the surviving entity (the “Merger”). As a result, Yukon Gold Corporation Inc. effected a re-domiciliation from the State of Delaware into the State of Nevada. The Nevada Corporation, also named “Yukon Gold Corporation, Inc.”, has authorized capital of 500,000,000 common shares. Pursuant to the terms of the Merger, each five (5) shares of the Company’s common stock immediately before the Merger were exchanged for one (1) share of common stock of the Nevada Corporation. As a result, 148,159,936 issued shares of the Company’s common stock were exchanged for 29,632,336 shares of the Nevada Corporation’s common stock. In addition 500,000 warrants and 500,000 stock options of the Company were exchanged for 100,000 warrants and 100,000 stock options of the Nevada Corporation.

b) Yukon Gold’s shares continue to trade on the OTC Bulletin Board under the symbol “YGDC”. The Board of Directors and management of Yukon Gold were not changed as a result of the merger. All of the assets, rights and liabilities of the Company were assumed by the surviving Nevada Corporation. The Merger was approved by the written consent of a majority of the Company’s shareholders.

c) Subsequent to the year ended April 30, 2011 Lance Capital Ltd. loaned the Company a total of $40,644 (CDN$39,500) to cover operating costs.

F-29

PART I

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which include, without limitation, statements about our explorations, development, efforts to raise capital, expected financial performance and other aspects of our business identified in this Annual Report, as well as other reports that we file from time to time with the Securities and Exchange Commission. Any statements about our business, financial results, financial condition and operations contained in this Annual Report that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes,” “anticipates,” “expects,” “intends,” “projects,” or similar expressions are intended to identify forward-looking statements. Our actual results could differ materially from those expressed or implied by these forward-looking statements as a result of various factors, including the risk factors described below and elsewhere in this report. We undertake no obligation to update publicly any forward-looking statements for any reason, except as required by law, even as new information becomes available or other events occur in the future.

Item 1. Description of Business and Risk Factors

In this report, the terms “Yukon Gold”, “Company,” “we,” “us” and “our” refer to Yukon Gold Corporation, Inc. The term “common stock” refers to the Company’s common stock, par value $0.0001 per share.

Yukon Gold is an exploration stage mining company. Our objective is to acquire, explore and, if warranted and feasible, to develop mineralized material on the mineral claims.

RISK FACTORS

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. If we are unable to meet the reporting requirements of the Securities and Exchange Commission we could lose our listing on the OTC Bulletin Board and the shareholders could lose their entire investment.

The Company has included a “going concern” qualification in the accompanying audited financial statements to the effect that we are an exploration stage mining company and have no established sources of revenue. In the event that we are unable to raise additional capital, acquire new mineral properties and 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.

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.

1

We do not have a mineral property or a mine or a mining business of any kind at this time. We have lost our primary claim asset, known as the Marg Property, as these claims, previously owned by our wholly-owned Canadian subsidiary Yukon Gold Corp. (“YGC”), were lost when, on November 15, 2010 YGC declared bankruptcy. As a result of the bankruptcy of YGC, the Company no longer has an interest in the Marg Property.

Currently, we have no source of revenue, we do not have working capital 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:

• our ability to acquire new mineral properties that may make our business more attractive to investors in exploration stage mining companies.

• our ability to raise capital to develop any new mineral properties, establish a mining operation, and operate the mine in a profitable manner.

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

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

The Company conducts some 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. Description of Property

The Company and its subsidiary Yukon Gold Corp. (“YGC”), on August 31, 2010, entered into a Note Purchase and Security Agreement with Lance granting a security interest of $375,000 which was registered against the Marg Property on October 15, 2010. The Company also credited the Company’s wholly-owned Canadian subsidiary, YGC with an equal amount from the amount owed to the Company. On November 15, 2010 YGC declared bankruptcy. As a result of the bankruptcy of YGC, the Company no longer has an interest in the Marg Property.

2

Corporate Mailing Office

The Company’s mailing address, as of the date of this report is 1226 White Oaks Blvd., Suite 10A, Oakville, Ontario, Canada L6H 2B9.

Item 3. Legal Proceedings

Subsequent to the period covered by this report, in May, 2011 Sheldon Huxtable Professional Corporation (“Sheldon”) filed suit against the Company in the Province of Ontario pertaining to a dispute regarding legal fees allegedly owed to Sheldon by the Company’s wholly-owned Canadian subsidiary, Yukon Gold Corp. Management believes this suit is without merit and the Company has filed a defense against the suit and will continue to vigorously defend against it.

Item 4. Removed and Reserved

3

PART II

Item 5. Market for Common Equity and Related Stockholder Matters

Subsequent to the year ended April 30, 2011 on May 16, 2011, the Company merged into its wholly-owned subsidiary, a Nevada corporation, (referred to herein as the “Nevada Corporation”) being the surviving entity (the “Merger”). As a result, Yukon Gold Corporation, Inc. effected a re-domiciliation from the State of Delaware into the State of Nevada. The Nevada Corporation, also named “Yukon Gold Corporation, Inc.”, has authorized capital of 500,000,000 common shares. Pursuant to the terms of the Merger, each five (5) shares of the Company’s common stock immediately before the Merger were exchanged for one (1) share of common stock of the Nevada Corporation. As a result, 148,159,936 issued shares of the Company’s common stock were exchanged for 29,632,336 shares of the Nevada Corporation’s common stock. The par value of the Company common shares remains at $0.0001 per share. All references to common shares and per common share amounts have been retroactively adjusted from the date of inception to reflect the five-for-one reverse stock split, unless otherwise noted. As of August 11, 2011, there were 29,632,336 common shares of the Company outstanding, held by 619 shareholders of record.

Year ended April 30, 2010

The Company received subscriptions for 220,000 common shares for a total consideration of $44,000 through a non-brokered private placement. The Company issued 220,000 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 Agreement, the Company issued to the Employee 50,000 common shares of the Company’s common stock. The Employee acknowledged that such shares will be “restricted shares” subject to limitations on re-sale. The Employee further acknowledged that he will be considered as an affiliate for purposes of Rule 144.

Year ended April 30, 2011

On September 23, 2010 the Company accepted nine (9) subscriptions for a total of 17,464,080 common shares for a total consideration of $218,300 through a non-brokered private placement. The proceeds of the private placement were held in escrow pending the Company’s receipt of a Certificate of Good Standing from the Delaware Secretary of State. On October 28, 2010 the Company was issued the Certificate of Good Standing. On November 1, 2010, the balance of the proceeds from the private placement were released from escrow and transferred to the Company. On November 5, 2010 the 17,464,080 common shares were issued by the Company. Of that amount, 16,000,080 of the shares issued in connection with the private placement were exempt from registration under the Securities Act pursuant to Regulation S promulgated thereunder. The balance of 1,464,000 shares issued were exempt from registration under the Securities Act pursuant to Regulation D promulgated thereunder.

On November 3, 2010 the Company accepted one (1) subscription for 2,400,000 common shares for a total consideration of $30,000 through a non-brokered private placement and the shares were issued on November 5, 2010. The private placement was exempt from registration under the Securities Act pursuant to an exemption afforded by Regulation S promulgated thereunder.

On January 27, 2011 the Company accepted six (6) subscriptions for a total of 1,400,349 common shares for a total consideration of $17,500 through a non-brokered private placement. On February 3, 2011 the shares were issued. The private placement was exempt from registration under the Securities Act pursuant to Regulation S promulgated thereunder.

All of the investors that participated in such private placements were non-“U.S.-Persons.”

4

Other Sales or Issuances of Unregistered Securities

Year ended April 30, 2010

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 50,000 common shares of the Company’s common stock on April 29, 2010. The Employee acknowledged that such shares will be “restricted shares” subject to limitations on re-sale. The Employee further acknowledged that he will be considered as an affiliate for purposes of Rule 144.

Year ended April 30, 2011

There were no other sales or issuances of unregistered securities during the year ended April 30, 2011. Purchase Warrants The following table summarizes the warrants outstanding as of the year ended April 30, 2011.

* Reflects the May 16, 2011 five-for-one reverse stock split described herein.

The warrants do not confer upon the holders any rights or interest as a shareholder of the Company. Outstanding Share Data As at August 11, 2011, 29,632,336 common shares of the Company were outstanding.

Of the options to purchase common shares issued to the Company’s directors, officers and consultants under the Company’s 2003 stock option plan, nil remained outstanding at April 30, 2011. The Company cannot issue any further options under the 2003 Plan. As of December 13, 2010 there were no longer any options reserved to be granted under the 2003 Plan.

Of the 2,899,044 options available to purchase common shares by the Company’s directors, officers and consultants under the Company’s 2006 stock option plan, 100,000 granted options remained outstanding with exercise prices ranging from $1.05 (CDN$1.00) to $2.05 (CDN$1.95) and expiry dates ranging from September 28, 2012 to April 8, 2013. If exercised, 100,000 common shares of the Company would be issued, generating proceeds of $166,420 (CDN$157,500).

On April 30, 2011, 100,000 share purchase warrants were exercisable at $1.25 (CDN$1.20) with an expiry date of December 19, 2012. If exercised, 100,000 common shares would be issued, generating proceeds of $125,000.

5