10-Q 1 form10q.htm FORM 10Q Yaterra Ventures Corp. - Form 10-Q - Filed by newsfilecorp.com

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

FORM 10-Q

(Mark One)

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

For the quarterly period ended February 28, 2011

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

For the transition period from ________ to ________

COMMISSION FILE NUMBER: 000-53556

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

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

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

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

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

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

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

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

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: As of April 19, 2011, the Registrant had 1,630,000 shares of common stock outstanding.

PART I - FINANCIAL INFORMATION

ITEM 1.                FINANCIAL STATEMENTS.

The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X, and, therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders' equity in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the three and six months ended February 28, 2011 are not necessarily indicative of the results that can be expected for the year ending August 31, 2011.

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

2

YATERRA VENTURES CORP.
(An Exploration Stage Company)

SECOND QUARTER FINANCIAL STATEMENTS

FEBRUARY 28, 2011
(Unaudited – see Notice to Reader)
(Stated in U.S. Dollars)

YATERRA VENTURES CORP.
(An Exploration Stage Company)

BALANCE SHEETS
(Unaudited – see Notice to Reader)
(Stated in U.S. Dollars)

    FEBRUARY 28     AUGUST 31  
    2011     2010  
             
ASSETS            
             
Current            
         Cash $  -   $  51  
             
Computer Equipment (Note 4)   -     98  
Mineral Property Acquisition Costs (Note 5)   24,855     24,362  
             
Total Assets $  24,855   $  24,511  
             
LIABILITIES            
             
Current            
         Excess of checks issued over funds on deposit $  2,502   $  -  
         Accounts payable and accrued liabilities   125,777     116,739  
         Amounts payable to related parties (Note 8)   38,250     30,500  
         Promissory notes (Note 6)   227,532     161,091  
Total Current Liabilities   394,061     308,330  
             
STOCKHOLDERS’ DEFICIENCY            
             
Capital Stock (Note 7)            
         Authorized: 
                  100,000,000 common voting stock with a par value of 
                      $0.001 per share 
                  100,000,000 preferred stock with a par value of 
                       $0.001 per share – none issued 		       
             
         Issued: 
                  1,630,000 common shares as at August 31, 2010 and 
                     February 28, 2011 		  1,630     1,630  
             
Additional Paid-In Capital   189,370     189,370  
Deficit Accumulated During The Exploration Stage   (560,206 )   (474,819 )
Total Stockholders’ Deficiency   (369,206 )   (283,819 )
             
Total Liabilities and Stockholders’ Deficiency $  24,855   $  24,511  

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

F-1

YATERRA VENTURES CORP.
(An Exploration Stage Company)

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

                            CUMULATIVE  
                            PERIOD FROM  
    THREE     SIX     INCEPTION  
    MONTHS     MONTHS     NOVEMBER 20  
    ENDED     ENDED     2006 TO  
    FEBRUARY 28     FEBRUARY 28     FEBRUARY 28  
    2011     2010     2011     2010     2011  
                               
Expenses                              
         Accounting and audit $  5,348   $  14,707   $  14,631   $  19,707   $  123,308  
         Bank charges and interest   5,585     3,345     10,002     5,948     27,427  
         Consulting fees   150     150     300     300     2,450  
         Depreciation   -     98     98     197     1,184  
         Management fees   12,000     12,000     24,000     24,000     171,500  
         Mineral property exploration costs   1,756     5,560     1,756     5,560     39,994  
         Office and administrative   9,178     4,129     11,947     8,221     55,302  
         Professional fees   8,954     6,930     18,363     11,081     104,021  
         Transfer agent and filing fees   3,956     2,961     3,956     4,242     19,351  
         Travel and promotion   162     -     334     -     15,669  
                               
Net Loss For The Period $  (47,089 ) $  (49,880 ) $  (85,387 ) $  (79,256 ) $  (560,206 )
                               
                               
Basic And Diluted Loss Per Share $  (0.03 ) $  (0.03 ) $  (0.05 ) $  (0.05 )      
                               
                               
Weighted Average Number Of
     Common Shares Outstanding 		  1,630,000     1,630,000     1,630,000     1,630,000      

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

F-2

YATERRA VENTURES CORP.
(An Exploration Stage Company)

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

                CUMULATIVE  
                PERIOD FROM  
    SIX     INCEPTION  
    MONTHS     NOVEMBER 20  
    ENDED     2006 TO  
    FEBRUARY 28     FEBRUARY 28  
    2011     2010     2011  
                   
Cash Provided by (Used In) Operating Activities
         Net loss for the period $  (85,387 ) $  (79,256 ) $  (560,206 )
                   Depreciation   98     197     1,184  
                   Interest accrued on promissory notes   8,969     4,542     22,713  
                   
          Changes in non-cash operating working capital items:            
                   
                   Accounts payable and accrued liabilities   9,038     18,194     125,777  
                   Amounts due to related parties   7,750     4,210     38,250  
    (59,532 )   (52,113 )   (372,282 )
Cash Used In Investing Activities                  
         Mineral property acquisition costs   (493 )   (960 )   (24,855 )
         Computer equipment   -     -     (1,184 )
    (493 )   (960 )   (26,039 )
Cash Provided By Financing Activities                  
         Issue of share capital   -     -     191,000  
         Promissory notes   57,472     55,585     204,819  
    57,472     55,585     395,819  
                   
(Decrease) Increase In Cash   (2,553 )   2,512     (2,502 )
                   
Cash, Beginning Of Period   51     1,941     -  
                   
(Excess of Checks Issued Over Funds on Deposit) Cash, End Of Period $  (2,502 ) $  4,453   $  (2,502 )
                   
Supplemental Disclosure Of Cash Flow Information            
         Cash paid during the period for:                  
                   Interest $  -   $  -   $  -  
                   Income taxes $  -   $  -   $  -  

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

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

F-3

YATERRA VENTURES CORP.
(An Exploration Stage Company)

CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS

FEBRUARY 28, 2011
(Unaudited – see Notice to Reader)
(Stated in U.S. Dollars)

1.

BASIS OF PRESENTATION AND NATURE OF OPERATIONS
   

The unaudited financial information furnished herein reflects all adjustments which, in the opinion of management, are necessary to fairly state the Company’s financial position and the results of its operations for the periods presented. These financial statements should be read in conjunction with the Company’s financial statements and notes thereto included for the fiscal year ended August 31, 2010. The Company assumes that the readers of these interim financial statements herein have read, or have access to, the audited financial statements for the preceding fiscal year, and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. Accordingly, footnote disclosure, which would substantially duplicate the disclosure contained in the Company’s financial statements for the fiscal year ended August 31, 2010, has been omitted. The results of operations for the six month period ended February 28, 2011 are not necessarily indicative of results for the entire year ending August 31, 2011.
   

Organization
   

Yaterra Ventures Corp. (“the Company”) was incorporated in the State of Nevada, U.S.A., on November 20, 2006. The Company’s principal executive offices are in Bellingham, Washington, U.S.A.
   

Reverse Stock Split
   

During the year ended August 31, 2008, the Company’s shareholders approved a decrease in the number of issued and outstanding shares on a one for ten (1:10) basis, such that each shareholder will hold one share for every ten shares held. Share and per share data (except par value) for the periods presented reflect the effects of this reverse stock split.
   

Exploration Stage Activities
   

The Company has been in the exploration stage since its formation and has not yet realized any revenues from its planned operations. The Company was formed for the purpose of acquiring exploration and development stage natural resource properties. The Company has not commenced business operations. The Company is an exploration stage company as defined in the Securities and Exchange Commission (“S.E.C.”) Industry Guide No. 7.

F-4


1.

BASIS OF PRESENTATION AND NATURE OF OPERATIONS (Continued)
     

Going Concern
     

The accompanying financial statements have been prepared assuming the Company will continue as a going concern.
     

As shown in the accompanying financial statements, the Company has incurred a net loss of $560,206 for the period from November 20, 2006 (inception) to February 28, 2011, and has no sales. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of its natural resource properties. Management has plans to seek additional capital through a private placement and public offering of its common stock. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
     

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates.
     
2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     

The financial statements have been properly prepared within the framework of the significant accounting policies summarized below:
     
a)

Organization and Start-up Costs
     

Costs of start up activities, including organizational and incorporation costs, are expensed as incurred.
     
b)

Exploration Stage Enterprise
     

The Company’s financial statements are prepared using the accrual method of accounting. Until such properties are acquired and developed, the Company will continue to prepare its financial statements and related disclosures in accordance with entities in the exploration stage.

F-5

YATERRA VENTURES CORP.
(An Exploration Stage Company)

CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS

FEBRUARY 28, 2011
(Unaudited – see Notice to Reader)
(Stated in U.S. Dollars)


2.

SIGNIFICANT ACCOUNTING POLICIES (Continued)
     
c)

Mineral Property Interests
     

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, exploration and development of mining properties. Exploration costs are expensed as incurred regardless of the stage of development or existence of reserves. Costs of acquisition are capitalized subject to impairment testing when fact and circumstances indicate impairment may exist.
     

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

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

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

The Company’s exploration activities are subject to various laws and regulations governing the protection of the environment. These laws are continually changing, generally becoming more restrictive. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations.

F-6

YATERRA VENTURES CORP.
(An Exploration Stage Company)

CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS

FEBRUARY 28, 2011
(Unaudited – see Notice to Reader)
(Stated in U.S. Dollars)


2.

SIGNIFICANT ACCOUNTING POLICIES (Continued)
     
d)

Cash
     

Cash consists of cash on deposit with high quality major financial institutions, and to date has not experienced losses on any of its balances. The carrying amounts approximate fair market value due to the liquidity of these deposits.
     
e)

Computer Equipment
     

Computer equipment is recorded at cost and will be depreciated over an estimated useful life of three years on a straight-line basis.
     
f)

Financial Instruments
     

The Company’s financial instruments include cash, accounts payable and accrued liabilities, accounts payable to related parties and promissory notes. As at February 28, 2011, the fair values of these financial instruments approximate their carrying values due to their short term to maturity.
     
g)

Basic and Diluted Loss Per Share
     

Basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. At February 28, 2011, the Company has no common stock equivalents that were anti-dilutive and excluded in the earnings per share computation. Share and per share amounts have been adjusted to reflect a one-for-ten reverse stock split.
     
h)

Income Taxes
     

The Company uses the asset and liability approach for financial accounting and reporting on income taxes. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized.

F-7

YATERRA VENTURES CORP.
(An Exploration Stage Company)

CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS

FEBRUARY 28, 2011
(Unaudited – see Notice to Reader)
(Stated in U.S. Dollars)


2.

SIGNIFICANT ACCOUNTING POLICIES (Continued)
       
i)

Foreign Currency Translation
       

The Company’s functional currency is the US dollar. Transactions in foreign currency are translated into U.S. dollars as follows:
       
i)

monetary items are translated at the exchange rate prevailing at the balance sheet date;
ii)

non-monetary items are translated at the historical exchange rate;
iii)

revenue and expenses are translated at the average rate in effect during the applicable accounting period.
       

The Company has an operating bank account held in Canadian dollars that may expose them to certain translation risks due to foreign exchange fluctuations between the Canadian and US currencies.
       
j)

Use of Estimates
       

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

Impairment of Long-Lived Assets
       

The Company records impairment losses on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount. In such cases, the amount of the impairment is determined based on the relative fair values of the impaired assets. The Company tests the recoverability of the assets whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.
       
l)

Asset Retirement Obligations
       

An asset retirement obligation (“ARO”) is a legal obligation associated with the retirement of a tangible long-lived asset that the Company is required to settle. The Company recognizes the fair value of a liability for the ARO in the year in which it is incurred when a reasonable estimate of fair value can be made. The carrying amount of the related long-lived asset is increased by the same amount as the liability.

F-8

YATERRA VENTURES CORP.
(An Exploration Stage Company)

CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS

FEBRUARY 28, 2011
(Unaudited – see Notice to Reader)
(Stated in U.S. Dollars)


2.

SIGNIFICANT ACCOUNTING POLICIES (Continued)
     
l)

Asset Retirement Obligations (Continued)
     

The cost of the tangible asset, including the initially recognized ARO, is depleted, such that the cost of the ARO is recognized over the useful life of the asset. The ARO is recorded at fair value, and accretion expense is recognized over time as the discounted liability is accreted to its expected settlement value. The fair value of the ARO is measured using expected future cash flows, discounted at the Company’s credit-adjusted risk-free interest rate. To date, no significant asset retirement obligation exists due to the early stage of exploration. Accordingly, no liability has been recorded.
     
m)

Environmental Protection and Reclamation Costs
     

The operations of the Company have been, and may in the future be affected from time to time in varying degrees by changes in environmental regulations, including those for future removal and site restorations costs. Both the likelihood of new regulations and their overall effect upon the Company may vary from region to region and are not predictable.
     

Environmental expenditures that relate to ongoing environmental and reclamation programs are charged against the statement of operations as incurred or capitalized and amortized depending upon their future economic benefits. The Company does not currently anticipate any material capital expenditures for environmental control facilities because its property holding is at an early stage of exploration.
     
n)

Fair Value of Financial Instruments
     

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market. The Company uses a three-tier fair value hierarchy which prioritizes the inputs in measuring fair value as follows:

  Level 1:

Observable inputs such as quoted prices in active markets;

   

  Level 2:

Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

   

  Level 3:

Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.


F-9

YATERRA VENTURES CORP.
(An Exploration Stage Company)

CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS

FEBRUARY 28, 2011
(Unaudited – see Notice to Reader)
(Stated in U.S. Dollars)


2.

SIGNIFICANT ACCOUNTING POLICIES (Continued)
     
n)

Fair Value of Financial Instruments (Continued)
     

The following table presents information about the Company’s financial assets and liabilities that have been measured at fair value as of February 28, 2011, and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair values:

            QUOTED     SIGNIFICANT        
      FAIR VALUE     PRICES     OTHER        
      AT     IN ACTIVE     OBSERVABLE     UNOBSERVABLE  
      FEBRUARY 28     MARKETS     INPUTS     INPUTS  
  DESCRIPTION   2011     (LEVEL 1)     (LEVEL 2)     (LEVEL 3)  
                           
  Financial Liabilities:                        
                           
  Excess of checks issued over
   funds on deposit 		$  2,502   $  2,502   $  -   $  -  
                           
  Financial liabilities measured at
   fair value at February 28, 2011 		$  2,502   $  2,502   $  -   $  -  

3.

RECENT ACCOUNTING PRONOUNCEMENTS
   

In April 2010, the FASB provided an update to address the classification of an employee share-based payment award with an exercise price denominated in the currency of a market in which the underlying equity security trades. FASB Accounting Standards Codification Topic 718, Compensation—Stock Compensation, provides guidance on the classification of a share-based payment award as either equity or a liability. A share-based payment award that contains a condition that is not a market, performance, or service condition is required to be classified as a liability. This standard is effective for years beginning after December 15, 2010, and for subsequent interim and annual reporting periods thereafter. The Company does not expect the adoption of this standard to have a significant effect on the Company's results of operations or financial position.
   

In January 2010, the FASB issued ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820), Improving Disclosures about Fair Value Measurements, amending ASC 820. ASU 2010-06 requires entities to provide new disclosures and clarify existing disclosures relating to fair value measurements. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in Level 3 fair value measurements, which are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. The Company is currently evaluating the impact of ASU 2010-06, but does not expect its adoption to have a material impact on the Company’s financial position or results of operations.

F-10

YATERRA VENTURES CORP.
(An Exploration Stage Company)

CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS

FEBRUARY 28, 2011
(Unaudited – see Notice to Reader)
(Stated in U.S. Dollars)


3.

RECENT ACCOUNTING PRONOUNCEMENTS (Continued)
   

In October 2009, the FASB issued ASU 2009-13, Revenue Recognition (Topic 605), Multiple-Deliverable Revenue Arrangements amending ASC 605. ASU 2009-13 requires entities to allocate revenue in an arrangement using estimated selling prices of the delivered goods and services based on a selling price hierarchy. ASU 2009-13 eliminates the residual method of revenue allocation and requires revenue to be allocated using the relative selling price method. ASU 2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The adoption of ASU 2009-13 did not have a material impact on the Company’s financial position or results of operations.
   
4.

COMPUTER EQUIPMENT

      FEBRUARY 28     AUGUST 31  
            2011           2010  
            ACCUMULATED     NET BOOK     NET BOOK  
      COST     AMORTIZATION     VALUE     VALUE  
                           
  Computer equipment $  1,184   $  1,184   $  -   $  98  

5.

MINERAL PROPERTIES

      AUGUST 31           ABANDONED,     FEBRUARY 28  
      2010     ADDITIONS     IMPAIRED     2011  
  Mineral Property                        
                           
  Blue Jack claims $  16,000   $  -   $  -   $  16,000  
  Frances claims   2,362     493     -     2,855  
  Minnie Lode claims   6,000     -     -     6,000  
                           
    $  24,362   $  493   $  -   $  24,855  

F-11

YATERRA VENTURES CORP.
(An Exploration Stage Company)

CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS

FEBRUARY 28, 2011
(Unaudited – see Notice to Reader)
(Stated in U.S. Dollars)


5.

MINERAL PROPERTIES (Continued)

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

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

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

On July 14, 2009, the Company entered into an assignment agreement to acquire an undivided 60% interest in a mineral claim (known as the “Frances” claim) situated in the Vancouver Mining District, British Columbia, Canada. The Company paid $500 CDN on execution of the agreement.

The assignment agreement was amended on October 27, 2009 (the “First Amendment Agreement”), December 10, 2009 (the “Second Amendment Agreement”), February 11, 2010 (the “Third Amendment Agreement”), June 1, 2010 (the “Fourth Amendment Agreement”), and September 1, 2010 (the “Fifth Amendment Agreement”),and consideration for the claim is as follows:

  1.

$500 CDN on execution of the First Amendment Agreement (paid); $500 CDN on execution of the Second Amendment Agreement (paid); $500 CDN on execution of the Third Amendment Agreement (paid); $500 CDN on execution of the Fourth Amendment Agreement (paid); $500 CDN on execution of the Fifth Amendment Agreement (paid);
  2.

2,000 common shares due on or before March 15, 2011
  3.

incurring $10,000 CDN in exploration expenditures by March 15, 2011;
  4.

an additional $2,500 CDN due on or before April 15, 2011;
  5.

an additional 3,000 common shares due on or before April 15, 2011;
  6.

an additional $10,000 CDN due on or before July 14, 2011;
  7.

an additional 10,000 common shares due on or before July 14, 2011;
  8.

incurring an additional $150,000 CDN in exploration expenditures by July 14, 2012.

All other terms of the agreement remain unchanged. The Company is currently negotiating the terms of the assignment agreement.

F-12

YATERRA VENTURES CORP.
(An Exploration Stage Company)

CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS

FEBRUARY 28, 2011
(Unaudited – see Notice to Reader)
(Stated in U.S. Dollars)


6.

PROMISSORY NOTES
   

During the year ended August 31, 2010, the Company entered into various promissory note agreements, whereby it borrowed an additional $85,217 (2009 -$62,130) from arms’ length parties. These notes bear interest at 10% to 12% per annum, are unsecured and are repayable on demand. As at August 31, 2010, a total of $13,744 (2009 – $2,209) has been accrued as interest on all of the outstanding notes.
   

During the six month period ended February 28, 2011, the Company entered into additional promissory note agreements, whereby it borrowed an additional $57,472 from arms’ length parties. These notes bear interest at 10%, are unsecured and are repayable on demand. As at February 28, 2011, a total of $22,713 has been accrued as interest on all of the outstanding notes.
   
7.

CAPITAL STOCK
   

During the year ended August 31, 2009, the Company completed an offering of 120,000 shares of common stock at a price of $0.50 per share for gross proceeds of $60,000.
   

On August 12, 2008, the Company reduced the number of issued and outstanding shares of the Company’s common stock on a one for ten basis (1:10). All references to the number of shares of common stock and per share amounts (other than par value) have been adjusted to reflect the split for all periods presented.
   

Included in issued share capital are 900,000 restricted common shares of the Company (August 31, 2010 – 900,000).


F-13

YATERRA VENTURES CORP.
(An Exploration Stage Company)

CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS

FEBRUARY 28, 2011
(Unaudited – see Notice to Reader)
(Stated in U.S. Dollars)


8.

RELATED PARTY TRANSACTIONS
   

During the six month period ended February 28, 2011, the Company paid or accrued management fees for services performed in the amount of $21,000 (2010 - $21,000) to directors and also paid or accrued during the period, $3,000 to two members of management (2010 - $3,000).
   

As at February 28, 2011, a total of $38,250 (August 31, 2010 - $30,500) is owing to a director and two members of management. These amounts are unsecured, do not bear interest and are due on demand.
   

The Company carried out a number of transactions with related parties in the normal course of business. These transactions were recorded at their exchange amount, which is the amount of consideration established and agreed to by the related parties.
   
9.

COMMITMENTS AND CONTRACTUAL OBLIGATIONS
   

The Company has no significant commitments or contractual obligations with any parties respecting executive compensation or consulting arrangements. Rental of premises is on a month-to-month basis.
   

On January 15, 2011, the Company entered into a letter of intent with nanoCrypt AG (“nanoCrypt”) with respect to entering into a proposed business combination of the Company and nanoCrypt. NanoCrypt is the owner of a patented technology used for their mobile ticketing and coupon systems known as nanoTicketTM .
   

The Company decided not to proceed with the proposed business combination.

F-14

YATERRA VENTURES CORP.
(An Exploration Stage Company)

CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS

FEBRUARY 28, 2011
(Unaudited – see Notice to Reader)
(Stated in U.S. Dollars)


10.

SEGMENT INFORMATION
   

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

            MINERAL  
      CAPITAL     PROPERTY  
      ASSETS     INTERESTS  
               
  February 28, 2011            
           USA $  -   $  22,000  
           Canada   -     2,855  
               
    $  -   $  24,855  
               
  August 31, 2010            
           USA $  -   $  22,000  
           Canada   98     2,362  
               
    $  98   $  24,362  

11.

SUBSEQUENT EVENT
   

Subsequent to February 28, 2011, the Company entered into seven promissory note agreements whereby it borrowed a total of $9,269 from arms’ length parties. The notes bear interest at 10% per annum, are unsecured and are repayable on demand.

F-15


ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

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

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

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

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

OVERVIEW

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

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

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

(a)

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

   
(b)

pay $500 CDN to the Optionor on execution of the First Amendment Agreement (which amount has been paid);

3


(c)

pay $500 CDN to the Optionor on execution of the Second Amendment Agreement (which amount has been paid);

   
(d)

pay $500 CDN to the Optionor on execution of the Third Amendment Agreement (which amount has been paid);

   
(e)

pay $500 CDN to the Optionor on execution of the Fourth Amendment Agreement (which amount has been paid);

   
(f)

pay $500 CDN to the Optionor on execution of the Fifth Amendment Agreement (which amount has been paid);

   
(g)

pay an aggregate of $12,500 CDN to the Optionor as follows:


  (i)

$2,500 CDN on or before April 15, 2011; and

  (ii)

$10,000 CDN on or before July 14, 2011;


(h)

issue an aggregate of 15,000 shares of our common stock to the Optionor as follows:


  (i)

2,000 shares on or before March 15, 2011;

  (ii)

3,000 shares on or before April 15, 2011; and

  (iii)

10,000 shares on or before July 14, 2011; and


(i)

incur exploration expenditures of $160,000 CDN on the Frances Property as follows:


  (i)

$10,000 CDN on or before on or before March 15, 2011; and

  (ii)

$150,000 CDN on or before July 14, 2012.

We are currently in the process of negotiating an extension to the option agreement with the Optionor. Our ability to exercise the Option will be subject to our obtaining additional financing. There is no assurance that we will be able to exercise the Option in order to acquire a 60% undivided interest in the Frances Property.

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

LETTER OF INTENT - NANOCRYPT

On January 18, 2010, we entered into a letter of intent with nanoCrypt AG ("nanoCrypt") with respect to entering into a proposed business combination with nanoCrypt. NanoCrypt is the owner of a patented technology used for their mobile ticketing and coupon systems known as nanoTicket™ and nanoCoupon™ respectively. Under the letter of intent, we agreed to complete a business combination such that following completion of the business combination, nanoCrypt or its shareholders will own 60% of the common shares of the resulting entity and our shareholders immediately prior to the business combination will own the remaining 40%.

The parties agreed to use reasonable commercial efforts to prepare and execute formal documents for the business combination within 60 days of the date of the letter of intent. We were unable to finalize a formal agreement for the proposed business combination. As a result, we have chosen not to proceed with the proposed business combination with nanoCrypt.

PLAN OF OPERATION

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

4

Our exploration program on the Blue Jack Property is designed to explore for commercially viable deposits of lead, zinc, copper, silver, gold or uranium mineralization. We have not, nor has any predecessor, identified any commercially exploitable reserves of these minerals on our mineral properties.

Blue Jack Property

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


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

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


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

To date, we have not earned any revenues and we do not anticipate earning revenues in the near future. As at February 28, 2011, we had no cash on hand. As such, we do not have sufficient financial resources to meet the anticipated costs of completing our exploration program for the Blue Jack Property and the option payments for the Frances Property. Accordingly, we will need to obtain additional financing in order to complete our plan of operation and meet our current obligations as they come due. We currently do not have any arrangements for financing and we may not be able to obtain financing. Obtaining additional financing would be subject to a number of factors outside of our control, including the results from our exploration program, and any unanticipated problems relating to our mineral exploration activities, such as environmental assessments and additional costs and expenses that may exceed our current estimates. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us in which case our business will fail.

RESULTS OF OPERATIONS

Three and Six Months Summary

    Three Months Ended     Percentage     Six Months Ended     Percentage  
    February 28,     February 28,     Increase /     February 28,     February 28,     Increase /  
    2011     2010     (Decrease)     2011     2010     (Decrease)  
Revenue $  -   $  -     n/a   $  -   $  -     n/a  
Expenses   (47,089 )   (49,880 )   (5.6)%   (85,387 )   (79,256 )   7.7%  
Net Loss $  (47,089 ) $  (49,880 )   (5.6)% $  (85,387 ) $  (79,256 )   7.7%  

5

Revenue

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

Expenses

Our expenses for the three and six months ended February 28, 2011 and 2010 consisted of the following:

    Three     Three                          
    Months     Months           Six Months     Six Months        
    Ended     Ended     Percentage     Ended     Ended     Percentage  
    February 28,     February 28,     Increase /     February 28,     February 28,     Increase /  
    2011     2010     (Decrease)     2011     2010     (Decrease)  
Accounting and Audit $  5,348   $  14,707     (63.6)% $  14,631   $  19,707     (25.8)%
Bank Charges and Interest   5,585     3,345     67.0%     10,002     5,948     68.2%  
Consulting Fees   150     150     0.0%     300     300     0.0%  
Depreciation   -     98     (100)%     98     197     (50.3)%  
Management Fees   12,000     12,000     0.0%     24,000     24,000     0.0%  
Mineral Property Exploration Costs   1,756     5,560     (68.4)%     1,756     5,560     (68.4)%
Office and Administrative   9,178     4,129     122.3%     11,947     8,221     45.3%  
Professional Fees   8,954     6,930     29.2%     18,363     11,081     65.7%  
Transfer Agent and Filing Fees   3,956     2,961     33.6%     3,956     4,242     (6.7)%
Travel and Promotion   162     -     100%     334     -     100%  
Total Expenses $  47,089   $  49,880     (5.6)% $  85,387   $  79,256     7.7%  

Our operating expenses decreased from $49,880, during the three months ended February 28, 2010, to $47,089, during the three months ended February 28, 2011. The decrease was primarily due to decreases in accounting and audit expenses and mineral exploration costs. This was partially offset by increases in bank charges and interest, office and administrative expenses, professional fees and transfer agent and filing fees.

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

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

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

6

LIQUIDITY AND CAPITAL RESOURCES

Working Capital                  
                Percentage  
    As at     As at     Increase /  
    February 28, 2011     August 31, 2010     (Decrease)  
Current Assets $  -   $  51     (100)%  
Current Liabilities   394,061     308,330     27.8%  
Working Capital Deficit $  (394,061 ) $  (308,279 )   27.8%  

Cash Flows            
    Six Months Ended     Six Months Ended  
    February 28, 2011     February 28, 2010  
Cash Flows Used In Operating Activities $  (59,532 ) $  (52,113 )
Cash Flows Used in Investing Activities   (493 )   (960 )
Cash Flows Provided By Financing Activities   57,472     55,585  
Increase (Decrease) In Cash During Period $  (2,553 ) $  2,512  

As of February 28, 2011, we had no cash on hand and a working capital deficit of $394,061. The increase in our working capital deficit is primarily a result of: (i) an increase in accounts payable due to a lack of capital to meet our ongoing expenditures; and (ii) the fact that we received $57,472 in short term loans from arms length parties. The loans bear interest at 10%, are unsecured and due on demand.

Since our inception, we have used our common stock to raise money for our operations and to fund our property acquisitions. We have not obtained profitable operations and are dependent upon obtaining additional financing to pursue our plan of operation.

Future Financings

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

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

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

OFF-BALANCE SHEET ARRANGEMENTS

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

CRITICAL ACCOUNTING POLICIES

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

7

Use of Estimates

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

Exploration Stage Enterprise

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

Mineral Property Interests

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

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

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

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

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

ITEM 3.                QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

8

ITEM 4T.              CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Accounting Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rules 13a-15(e) and 15(d)-15(e) as of February 28, 2011, (“Evaluation Date”). Based upon that evaluation, our Principal Executive Officer and Principal Accounting Officer concluded that our disclosure controls and procedures were not effective as of the Evaluation Date as a result of the material weaknesses in internal control over financial reporting discussed in our Annual Report on Form 10-K for the year ended August 31, 2010 (the "2010 Annual Report").

Disclosure controls and procedures are those controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Notwithstanding the assessment that our internal control over financial reporting was not effective and that there were material weaknesses as identified in our 2010 Annual Report, we believe that our financial statements contained in our Quarterly Report on Form 10-Q for the quarter ended February 28, 2011 fairly present our financial condition, results of operations and cash flows in all material respects.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended February 28, 2011 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

9

PART II - OTHER INFORMATION

ITEM 1.                LEGAL PROCEEDINGS.

None.

ITEM 1A.              RISK FACTORS.

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

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

As at February 28, 2011, we had no cash on hand. Our ability to implement Phases 1a, 1b and 1c of our exploration program on the Blue Jack Property and meet our obligations under the option agreement to acquire a 60% undivided interest in the Frances Property will be subject to our obtaining additional financing. Our ability to obtain additional financing could be subject to a number of factors outside of our control, including the results from our exploration program, and any unanticipated problems relating to our mineral exploration activities, including environmental assessments and additional costs and expenses that may exceed our current estimates. If we are unable to obtain additional financing in the amounts and when needed, our business could fail.

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

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

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

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

  (i)

Costs of bringing the property into production including exploration work, preparation of production feasibility studies, and construction of production facilities, all of which we have not budgeted for;

  (ii)

Availability and costs of financing;

10


  (iii)

Ongoing costs of production; and

  (iv)

Environmental compliance regulations and restraints.

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

We face significant competition in the mineral exploration industry.

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

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

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

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

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

  (i)

Water discharge will have to meet drinking water standards;

  (ii)

Dust generation will have to be minimal or otherwise re-mediated;

  (iii)

Dumping of material on the surface will have to be re-contoured and re-vegetated with natural vegetation;

  (iv)

An assessment of all material to be left on the surface will need to be environmentally benign;

  (v)

Ground water will have to be monitored for any potential contaminants;

  (vi)

The socio-economic impact of the project will have to be evaluated and if deemed negative, will have to be re-mediated; and

  (vii)

There will have to be an impact report of the work on the local fauna and flora including a study of potentially endangered species.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

1.

contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;

   
2.

contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of securities laws;

   
3.

contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price;

   
4.

contains a toll-free telephone number for inquiries on disciplinary actions;

   
5.

defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and

   
6.

contains such other information and is in such form, including language, type, size and format, as the SEC shall require by rule or regulation.

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

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

None.

ITEM 3.                DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 5.                OTHER INFORMATION.

None.

ITEM 6.                EXHIBITS.

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

Exhibit

Number

Description of Exhibits

3.1

Articles of Incorporation.(1)

3.2

Bylaws, as amended.(1)

10.1

Purchase Agreement (Minnie Claim) dated March 28, 2007 between Yaterra and Multi Metal Mining Corp.(1)

10.2

Purchase Agreement (Blue Jack Property) dated August 29, 2008 between Yaterra and Howard V. Metzler. (1)

10.3

Option Agreement (Frances Property) dated July 14, 2009 between Yaterra and Geoffrey Goodall.(2)

10.4

Amendment Agreement (Frances Property) dated October 27, 2009 between Yaterra and Geoffrey Goodall.(3)

10.5

Second Amendment Agreement (Frances Property) dated December 10, 2009 between Yaterra and Geoffrey Goodall.(3)

10.6

Third Amendment Agreement (Frances Property) dated February 11, 2010 between Yaterra and Geoffrey Goodall.(4)

10.7

Fourth Amendment Agreement (Frances Property) dated June 1, 2010 between Yaterra and Geoffrey Goodall. (5)

10.8

Fifth Amendment Agreement (Frances Property) dated for reference September 1, 2010 between Yaterra and Geoffrey Goodall. (7)

14.1

Code of Ethics.(3)

31.1

Certification of Principal Executive Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Principal Accounting Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certification of Principal Executive Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certification of Principal Accounting Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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Exhibit  
Number Description of Exhibits
99.1 Audit Committee Charter.(3)
99.2 Letter of Intent between the Company and Healthcare of Today, Inc. (6)
99.3 Letter of Intent between the Company and NanoCrypt AG.(8)

Notes:

 
(1)

Previously filed as an exhibit to our Registration Statement on Form S-1 originally filed with the SEC on December 8, 2008, as amended January 8, 2009 and declared effective January 13, 2009.

(2)

Previously filed as an exhibit to our Quarterly Report on Form 10-Q filed with the SEC on July 16, 2009.

(3)

Previously filed as an exhibit to our Annual Report on Form 10-K filed with the SEC on December 15, 2009.

(4)

Previously filed as an exhibit to our Quarterly Report on Form 10-Q filed with the SEC on April 19, 2010.

(5)

Previously filed as an exhibit to our Quarterly Report on Form 10-Q filed with the SEC on July 15, 2010.

(6)

Previously filed as an exhibit to our Current Report on Form 8-K filed with the SEC on November 10, 2010.

(7)

Previously filed as an exhibit to our Annual Report on Form 10-K filed with the SEC on December 14, 2010.

(8)

Previously filed as an exhibit to our Quarterly Report on Form 10-Q filed with the SEC on January 19, 2011.

15

SIGNATURES

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

        YATERRA VENTURES CORP.
         
         
         
Date: April 19, 2011   By: /s/ Jarrett F. Bousquet
        JARRETT F. BOUSQUET
        President, Secretary and Treasurer
        (Principal Executive Officer)
         
         
         
         
Date: April 19, 2011   By: /s/ David K. Ryan
        DAVID K. RYAN
        Vice President, Finance
        (Principal Accounting Officer)