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 September 30, 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: 333-140900

UNIVERSAL GOLD MINING CORP.

(Exact name of registrant as specified in its charter)

Nevada		20-4856983
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

c/o Mr. Craig Niven 18 Pall Mall, 2nd Floor London, United Kingdom	SW1Y 5LU
(Address of principal executive offices)	(Zip Code)

702-800-7323
(Registrant’s telephone number, including area code)
(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.

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 to Rule 405 of Regulation S-T (Sec.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. (Check One):

Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company x
		(Do not check if a smaller Reporting company)

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

As of November 11, 2011, there were 93,012,500 shares of the issuer’s common stock outstanding.

UNIVERSAL GOLD MINING CORP.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2011

TABLE OF CONTENTS

		PAGE

	PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited).	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	16

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	22

Item 4.	Controls and Procedures.	22

	PART II - OTHER INFORMATION

Item 1.	Legal Proceedings.	22

Item 1A.	Risk Factors.	23

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	23

Item 3.	Defaults Upon Senior Securities.	23

Item 4.	(Removed and Reserved).	23

Item 5.	Other Information.	23

Item 6.	Exhibits.	23

	SIGNATURES	26

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

	PAGE

Consolidated Balance Sheets (Unaudited) as of September 30, 2011 and December 31, 2010	4

Consolidated Statements of Operations (Unaudited) for the three and nine months ended September 30, 2011 and September 30, 2010 and the period from May 3, 2006 (Inception) through September 30, 2011	5

Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2011 and September 30, 2010 and the period from May 3, 2006 (Inception) through September 30, 2011	6

Notes to Consolidated Financial Statements (Unaudited)	7

Universal Gold Mining Corp. (f/k/a Federal Sports & Entertainment, Inc.)

(An Exploration Stage Company)

Consolidated Balance Sheets

(Unaudited)

	September 30,			December 31,
	2011			2010
ASSETS

Current Assets
Cash	$	455,160		$	947,153
Marketable securities – available for sale		411,485			-
Employee receivable		-			1,084
Related party receivable		-			5,258
Goods and Services tax refund receivable		-			16,328
Prepaid expenses and other current assets		-			1,866
Total Current Assets		866,645			971,689

Property and equipment, net		-			3,613
Investment in mining option		-			2,300,000

Total Assets	$	866,645		$	3,275,302


LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities
Accounts payable	$	130,986		$	326,228
Accounts payable-related party		16,000			65,183
Accrued liabilities		36,000			258,020
Total Current Liabilities		182,986			649,431

Total Liabilities		182,986			649,431

Commitments and contingencies

Stockholders’ Equity
Preferred stock, $0.001 par value, 10,000,000 shares authorized; 0 shares issued and outstanding as of September 30, 2011 and December 31, 2010		-			-
Common stock, $0.001 par value, 1,500,000,000 shares authorized; 93,012,500 shares issued and outstanding as of September 30, 2011 and December 31, 2010		93,013			93,013
Additional paid-in capital		5,962,581			5,866,408
Other comprehensive income (loss)		(326,465	)		2,136
Deficit accumulated in the exploration stage		(5,045,470	)		(3,335,686	)
Total Stockholders’ Equity		683,659			2,625,871

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	866,645		$	3,275,302

See notes to unaudited consolidated financial statements

Universal Gold Mining Corp. (f/k/a Federal Sports & Entertainment, Inc.)

(An Exploration Stage Company)

Consolidated Statements of Operations

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,						May 3, 2006 (Inception) Through September 30,
	2011			2010			2011			2010			2011
Revenues	$	-		$	-		$	-		$	-		$	-
		-			-			-			-			-
Expenses
General and administrative		167,165			432,759			1,052,217			1,112,535			4,036,734
Mineral expenditures		-			-			-			-			6,750
Depreciation		-			140			198			140			538
Loss on sale of mining option		-			-			660,015			-			660,015
Impairment loss (mineral claims and mining option)		-			-			-			-			376,410
Total Expenses		167,165			432,899			1,712,430			1,112,675			5,080,447

Other Income (Expense)
Foreign currency exchange gain		4,949			47,804			2,646			47,804			34,312
Interest income		-			137			-			349			161,827
Interest expense		-			-			-			-			(161,162	)
Total Other Income (Expense)		4,949			47,941			2,646			48,153			34,977

Net Loss	$	(162,216	)	$	(384,958	)	$	(1,709,784	)	$	(1,064,522	)	$	(5,045,470	)

Basic and Diluted Loss Per Common Share	$	(0.00	)	$	(0.00	)	$	(0.02	)	$	(0.01	)

Weighted Average Number of Common Shares Outstanding - Basic and Diluted		93,012,500			89,911,957			93,012,500			147,644,945

See notes to unaudited consolidated financial statements

Universal Gold Mining Corp. (f/k/a Federal Sports & Entertainment, Inc.)

(An Exploration Stage Company)

Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended						May 3, 2006 (Inception) Through
	September 30, 2011			September 30, 2010			September 30, 2011
Cash flows from operating activities
Net loss	$	(1,709,784	)	$	(1,064,522	)		(5,045,470	)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation		198			140			538
Stock-based compensation		96,173			496,138			695,114
Loss on disposal of fixed assets		3,518			-			3,518
Loss on sale of mining option		660,015			-			660,015
Impairment expense (mineral claims and mining options)		-			-			375,000
Accretion of discount on note receivable		-			-			(103,144	)
Amortization of deferred financing costs		-			-			103,144
Expenses paid by stockholder		-			14,500			14,500
Bad debt expense		2,803			-			69,170
Foreign currency exchange gain		(2,646	)		(47,804	)		(34,312	)
Changes in operating assets and liabilities:
Employee receivable		1,057			(7,085	)		-
Related party receivable		5,125			(9,192	)		-
Other receivable - GST		13,133			(52,662	)		(70,380	)
Prepaid expenses and other current assets		1,822			(138	)		2,505
Accounts payable		(195,155	)		203,223			259,351
Accounts payable – related party		(48,856	)		12,264			16,000
Accrued liabilities and expenses		(96,931	)		11,850			38,655
Net cash used in operating activities		(1,269,528	)		(443,248	)		(3,015,796	)

Cash flows from investing activities
Issuance of note receivable		-			-			(338,838	)
Purchases of property and equipment		-			(3,958	)		(4,045	)
Proceeds from sale of mining option		902,035			-			902,035
Purchase of put and call option/convertible note		-			(1,027,276	)		(1,027,276	)
Proceeds from exercise of put option on convertible note		-			-			1,059,100
Cash paid for investment in mining option		(125,000	)		(2,300,000	)		(2,675,000	)
Net cash provided (used) in investing activities		777,035			(3,331,234	)		(2,084,024	)

Cash flows from financing activities
Advances from stockholder		-			-			82,405
Repayment of advance from stockholder		-			(82,405	)		(82,405	)
Issuance of common stock, net of offering costs		-			4,707,428			5,214,928
Borrowings on debt, net of costs		-			-			338,838
Net cash provided by financing activities		-			4,625,023			5,553,766

Effect of exchange rates on cash activities		500			3,427			1,214

Net (Decrease) Increase in Cash		(491,993	)		853,968			455,160
Cash at Beginning of Period		947,153			-			-
Cash at End of Period	$	455,160		$	853,968		$	455,160

Supplemental Disclosures
Cash paid for:
Interest	$	-		$	-		$	-
Income taxes	$	-		$	-		$	-

Non-cash Investing and Financing Activities
Assignment of note receivable for satisfaction of note payable	$	-		$	500,000		$	500,000
Discount on note receivable	$	-		$	-		$	161,162
Contributed capital – payables settled by Stockholder	$	-		$	131,052		$	145,522
Contributed capital – shares acquired by Stockholder and cancelled	$	-		$	21,500		$	21,500
Investment in miming option- accrued and impaired	$	-		$	-		$	125,000
Receipt of marketable securities in sale of mining option	$	737,950		$	-		$	737,950
Change in unrealized loss on marketable securities	$	(326,465	)	$	-		$	(326,465	)

See notes to unaudited consolidated financial statements

Universal Gold Mining Corp. (f/k/a Federal Sports & Entertainment, Inc.)

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Unaudited)

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

Universal Gold Mining Corp. (f/k/a Federal Sports & Entertainment, Inc.) (“we,” “Universal” or the “Company”) was incorporated on May 3, 2006 under the laws of the State of Nevada.

On April 14, 2008, the Company filed Amended and Restated Articles of Incorporation changing its name from Rite Time Mining, Inc. to Federal Sports & Entertainment, Inc. to reflect the Company’s decision to engage in the business of acquiring and operating an independent, minor league baseball league. The Company was unsuccessful in this endeavor.

On April 9, 2010, the Company filed a Certificate of Amendment to its Articles of Incorporation changing its name from Federal Sports & Entertainment, Inc. to Universal Gold Mining Corp. and determined to shift its focus to the acquisition, exploration and development of gold mining deposits.

The Company is an exploration stage gold mining company with its efforts initially focused on what it believes to be under-explored countries. The Company has achieved no operating revenues to date.

NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited interim consolidated financial statements as of September 30, 2011 and December 31, 2010 and for the three and nine months ended September 30, 2011 and 2010 have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information, and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”) and on the same basis as the annual audited consolidated financial statements. The consolidated financial statements as of and for the three and nine months ended September 30, 2011 and 2010 are unaudited. In the opinion of management, these financial statements include all adjustments, which, unless otherwise disclosed, are of a normal recurring nature, necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented.

The results for interim periods are not necessarily indicative of results for the entire year. The balance sheet at December 31, 2010 has been derived from audited financial statements; however, the notes to the financial statements do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. The accompanying unaudited interim financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2010, as filed with the Securities and Exchange Commission (“SEC”) on March 31, 2011.

Change in Year End

On May 19, 2010, the Company determined to change its fiscal year from November 30 to December 31. As the transition period covered a period of one month, the Company was not required to file a transition report.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Universal Gold Holdings (Cayman) Ltd. (“UGH”), which was incorporated in the Cayman Islands on April 22, 2010, and UGMC Mining, Inc. (“UGMC”), which was incorporated in British Columbia on September 14, 2010. UGMC ceased operations as of February 2011 and was dissolved in October 2011. All material intercompany accounts and transactions have been eliminated.

Use of Estimates

Management uses estimates and assumptions in preparing these consolidated financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported revenues and expenses for the periods presented. Actual results could differ from those estimates.

Reclassifications

Certain amounts in prior periods have been reclassified to conform to current period presentation.

Cash and Cash Equivalents

The Company considers all highly liquid short-term investments purchased with an original maturity of three months or less to be cash equivalents. These investments are carried at cost, which approximates fair value. The Company maintains its cash in institutions insured by the Federal Deposit Insurance Corporation (“FDIC”). Beginning December 31, 2010 through December 31, 2012, all noninterest-bearing transaction accounts are fully insured, regardless of the balance of the account, at all FDIC-insured institutions. This unlimited insurance coverage is separate from, and in addition to, the insurance coverage provided to the depositor’s other accounts held by a FDIC-insured institution, which are insured for balances up to $250,000 per depositor until December 31, 2013. At September 30, 2011, the amounts held in banks exceeded the insured limit by $205,160. The Company has not incurred losses related to these deposits.

Marketable Securities

Marketable securities consist of equity securities, available for sale, which are publicly traded on national exchanges. At September 30, 2011, marketable securities consisted entirely of shares in Rio Novo Gold Inc., a company whose ordinary shares trade on the Toronto Stock Exchange (“Rio Novo”). For further information, see Note 4.

Accounts Receivable and Allowance for Doubtful Accounts

At December 31, 2010, the Company’s accounts receivable were composed primarily of receivables from employees, related parties and third parties. The Company performs credit evaluations prior to advancing funds or granting credit to third parties and generally does not require collateral. The Company maintains an allowance for doubtful accounts for amounts in which collection is not assured.

Goods and Services Tax Refund Receivable

The Canadian Government requires Canadian resident companies to collect sales taxes from customers when goods and services are sold in Canada. These taxes collected can be offset by taxes paid (tax credits) for goods and services purchased in Canada. Any sale outside of Canada is not taxed for this purpose. At the end of each quarter, all taxes paid on goods and services purchased are netted against the taxes due on sales of goods and services sold. Because the Company had more tax credits than taxes collected, as of December 31, 2010, the Company was due a refund of $16,328, which was refunded to the Company during the quarter ended September 30, 2011.

Property and Equipment

Property and equipment are carried at cost, with depreciation provided on a straight-line basis over their estimated useful lives of five years. During the nine months ended September 30, 2011 and the period from May 3, 2006 (Inception) through September 30, 2011, we recognized a loss of $3,518 on disposal of property and equipment held by UGMC, which is included in general and administrative expenses on the Company’s consolidated statements of operations.

Mineral Exploration and Development Costs

All exploration expenditures are expensed as incurred. Costs of acquisition and option costs of mineral rights are capitalized upon acquisition. Mine development costs incurred to develop new ore deposits, to expand the capacity of mines or to develop mine areas substantially in advance of production are also capitalized once proven and probable reserves exist, and the property is determined to be a commercially mineable property. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. If the Company does not continue with exploration after the completion of the feasibility study, the cost of mineral rights will be expensed at that time. Costs of abandoned projects, including related property and equipment costs, are charged to mining costs. To determine if these costs are in excess of their recoverable amount, periodic evaluations of the carrying value of capitalized costs and any related property and equipment costs are performed. These evaluations are based upon expected future cash flows and/or estimated salvage value.

Income Taxes

The Company accounts for its income taxes using the liability method, whereby deferred tax assets and liabilities are determined based on temporary differences between basis used for financial reporting and income tax reporting purposes. Income taxes are provided based on tax rates in effect at the time such temporary differences are expected to reverse. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize the tax assets through future operations.

Fair Value Measurements

The Company measures fair value in accordance with ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. ASC 820 defines fair value 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 (exit price). The Company’s financial instruments consist primarily of cash, marketable securities traded on national exchanges, and accounts payable. The Company believes the carrying value of its cash and accounts payable approximate fair value because of the short-term nature or maturity of the instruments.

Earnings (Loss) Per Share Information

Basic net earnings (loss) per common share are computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted net earnings (loss) per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, which is the case for all periods presented in these consolidated financial statements, the weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. Potentially dilutive securities consist of outstanding option grants to employees and directors and contained an exercise price that was greater than the value of the Company’s common stock at September 30, 2011.

Stock-Based Compensation

The Company’s Board of Directors approved the 2008 Equity Incentive Plan (the “2008 Plan”), under which the Company may issue stock options. The Company accounts for this plan under the recognition and measurement principles of ASC 718, Compensation — Stock Compensation, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the consolidated statement of operations based upon their estimated fair value as of the date of grant.

Foreign Currency

The financial statements of foreign subsidiaries are translated into U.S. dollars at period end exchange rates except for revenues and expenses, which are translated at average monthly rates. Translation adjustments are reflected as a separate component of stockholders’ equity and have no current effect on earnings or cash flows.

Foreign currency exchange transactions are recorded using the exchange rate at the earlier of either the date of settlement or the most recent intervening balance sheet date. The Company recognized a foreign currency exchange gain of $4,949 and $47,804 during the three months ended September 30, 2011 and 2010, respectively, and a net gain of $2,646 and $47,804 during the nine months ended September 30, 2011 and 2010, respectively. From May 3, 2006 (Inception) through September 30, 2011 the Company recognized a foreign currency exchange gain of $34,312.

Other Comprehensive Income

The Company’s other comprehensive income is attributable to unrealized gains/losses on foreign currency translation adjustments and gain/loss on change in fair value of marketable securities available for sale. During the three and nine months ended September 30, 2011, the Company recorded an unrealized loss on its marketable securities in the amount of $305,175 and $326,465, respectively. The Company did not hold any marketable securities during the three and nine months ended September 30, 2010. During the three and nine months ended September 30, 2011, the Company recognized a foreign currency translation loss of $4,009 and $2,136, respectively. The Company recognized a foreign currency translation gain of $1,800 during the three and nine months periods ended September 30, 2010. Since May 3, 2006 (Inception) through September 30, 2011, the Company recognized an unrealized loss on marketable securities of $326,465.

New Accounting Pronouncements

Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASU’s”) to the FASB’s Accounting Standards Codification. The Company considers the applicability and impact of all recent ASU’s. ASU’s not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position and results of operations.

In May 2011, the FASB issued amendments to disclosure requirements for common fair value measurement. These amendments, effective for the interim and annual periods beginning on or after December 15, 2011 (early adoption is prohibited), result in common definition of fair value and common requirements for measurement of and disclosure requirements between U.S. GAAP and IFRS. Consequently, the amendments change some fair value measurement principles and disclosure requirements. The implementation of this amended accounting guidance is not expected to have a material impact on our consolidated financial position or results of operations.

In June 2011, the FASB issued amendments to disclosure requirements for presentation of comprehensive income. This guidance, effective retrospectively for the interim and annual periods beginning on or after December 15, 2011 (early adoption is permitted), requires presentation of total comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The implementation of this amended accounting guidance is not expected to have a material impact on our consolidated financial position or results of operations.

NOTE 3 – GOING CONCERN

In the course of the Company’s exploration activities, the Company has sustained losses and expects such losses to continue unless and until the Company can achieve net operating revenues. Future issuances of the Company’s equity or debt securities will be required in order for the Company to continue to finance its operations and continue as a going concern. The Company currently has no revenue from operations and has incurred cumulative net losses of $5,045,470 since its inception. The Company’s consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities in the normal course of business. Realization values may be substantially different from carrying values as shown and the Company’s consolidated financial statements do not include any adjustments relating to the recoverability or classification of recorded asset amounts or the amount and classification of liabilities that might be necessary if the Company is unable to continue as a going concern.

The Company expects to finance its operations primarily through its existing cash and future financings. However, there exists substantial doubt about the Company’s ability to continue as a going concern because it will be required to obtain additional capital in the future to continue its operations and there is no assurance that the Company will be able to obtain such capital, through equity or debt financings, or any combination thereof, whether on satisfactory terms or at all. Additionally, no assurance can be given that any such financing, if obtained, will be adequate to meet the Company’s ultimate capital needs and to support its growth. If adequate capital cannot be obtained on a timely basis and on satisfactory terms, the Company’s operations would be materially negatively impacted. The Company’s ability to complete additional offerings is dependent on the state of the debt and equity markets at the time of any proposed offering, and such market’s reception of the Company and the offering terms. In addition, the Company’s ability to complete an offering may be dependent on the status of the Company’s business activities, which cannot be predicted.

NOTE 4 – INVESTMENT IN MINING OPTION

On June 4, 2010, the Company made the first payment under an Option Agreement (as amended, the “Option Agreement”), dated as of April 23, 2010, among the Company and Core Values Mining & Exploration Company, a Cayman Islands corporation (“CVMEC”), and Core Values Mining & Exploration Company’s wholly owned Colombian subsidiary (collectively, “CVME”). The Option Agreement provided the Company with the right to acquire up to a 50% interest in a 164 hectare gold prospect, which is located approximately 10 kilometers southeast of the city of Manizales in Colombia (the “Toldafria Prospect”).

The Option Agreement provided that the Company may earn a 25% interest in the Toldafria Prospect at the end of the first year of the Option Agreement, by paying $2,300,000 on or prior to June 4, 2010, which the Company paid. The Company had the opportunity to earn an additional 15% interest in the Toldafria Prospect at the end of the second year (June 2011), by paying $2,650,000 within 30 business days after completion of the first year. Finally, the Company had the opportunity to earn a further 10% interest in the Toldafria Prospect at the end of the third year (June 2012), by paying an additional $3,050,000 within 30 business days after completion of the second year, for a total of $8,000,000 under the Option Agreement.

CVME contracted to acquire the Toldafria Prospect from the person believed to be the registered owner thereof pursuant to a purchase agreement to which the Company was not a party (the “Toldafria Purchase Agreement”). CVME’s success in recording the transfer of the Toldafria Prospect, and therefore the Company’s earning of the interest therein, was contingent upon, among other things, approval of the relevant Colombian government authorities.

The Option Agreement provided that CVME carry out prospecting, exploration, development or other work as the operator on the Toldafria Prospect and CVME would receive payment of $30,000 per month, out of the funds earmarked for exploration and development activity, for its administrative and overhead costs in such capacity.

The Option Agreement provided for certain mechanisms by which CVME may, after the end of the third year of the Option Agreement, elect to (1) acquire shares of the Company’s common stock in exchange for CVME’s interest in the Toldafria Prospect at market based valuations, or (2) form a separate joint venture corporation that would hold both CVME’s and the Company’s interests in the Toldafria Prospect, and operate pursuant to an agreement to be entered into at such time.

In May 2011, UGH entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Rio Novo. Pursuant to the Asset Purchase Agreement, UGH sold to Rio Novo all of its rights, title and interest in the Option Agreement, and all its interest in the Toldafria Prospect.

In connection with the sale of the rights, title and interest in the Option Agreement, Rio Novo paid to UGH a total amount of $902,035, of which $300,000 was paid in cash and $602,035 was settled in cash by way of refunding to UGH an amount in escrow. Rio Novo also issued to the Company 500,000 of its ordinary shares, initially valued at $737,950. Rio Novo has also agreed to deliver to UGH or its designee an additional 766,667 Rio Novo ordinary shares (“Contingent Sales Proceeds”) upon (1) the Caldas State Government Mining Delegation (Colombia) granting a concession, exploitation or exploration right or any renewal or extension of any such existing right to Nestor Gutierrez, CVME, CVMEC, Rio Novo or any of their affiliates in connection with the Toldafria Prospect having a term of not less than 20 years and (2) confirmation by CorpoCaldas (the Caldas State Environment Authority) that the project mineral rights are excluded from the alleged existing Reserva de Foresta Regional covering certain parts of the Toldafria Prospect area so as to allow exploration and mining activities within the area covered by the Toldafria Prospect. Rio Novo now owns 100% of the Toldafria Prospect.

The Company recognized a loss on the sale of sale of its rights, title and interest in the Option Agreement and its interest in the Toldafria Prospect of $660,015. The Company did not record the Contingent Sales Proceeds as of September 30, 2011 due to uncertainty regarding its ultimate realization. Upon receipt of the Contingent Sales Proceeds, if receipt was to occur, the Company would record the additional shares of Rio Novo at the fair market value as of the date of receipt and reduce the loss recognized on the sale of its interest in the Option Agreement.

NOTE 5 – MARKETABLE SECURITIES AND FAIR VALUE CONSIDERATION

At September 30, 2011, the Company owned marketable securities available for sale, consisting of 500,000 Rio Novo ordinary shares that are traded on the Toronto Stock Exchange and valued at $411,485. The Company did not hold any marketable securities at December 31, 2010.

The fair value hierarchy set forth in ASC 820 gives the highest priority to Level 1 inputs, which consist of unadjusted quoted prices for identical instruments in active markets. Level 2 inputs consist of quoted prices for similar instruments. Level 3 valuations are derived from inputs that are significant and unobservable; therefore, these valuations have the lowest priority.

Financial assets are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. The valuation techniques that may be used to measure fair value include a market approach, an income approach and a cost approach. A market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. An income approach uses valuation techniques to convert future amounts to a single present amount based on current market expectations, including present value techniques, option-pricing models and excess earnings method. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement cost).

The Company classifies the fair value of its marketable securities as Level 1 instruments, in that the fair value is determined using unadjusted quoted prices on national exchanges. At September 30, 2011, the aggregate Level 1 fair value of the Rio Novo ordinary shares was $411,485. There were no reclassifications between levels during the periods presented.

NOTE 6 – OTHER RECEIVABLES

At September 30, 2011 and December 31, 2010, the Company had other receivables of $0 and $66,367, respectively, resulting from the Company’s advancement of funds to an unrelated party that shared office space with UGMC and for amounts due to the Company as reimbursement by the unrelated party for shared office expenses. These receivables are not collateralized, are interest free and are due on demand. The Company established an allowance for doubtful accounts at December 31, 2010 for the full amount of the receivables, based upon its assessment that these receivables are uncollectible. During the nine months ended September 30, 2011, the Company wrote off the full amount of these receivables against the allowance. The Company had no other third party receivables outstanding at September 30, 2011 and December 31, 2010.

NOTE 7 – HEMCO OPTION – ACQUISITION COSTS

On November 30, 2010, the Company entered into an agreement, referred to as the “Hemco Option Agreement,” with N.C.G.A. Project Acquisition Corp. (“NCGA”), an entity controlled by certain of the Company’s minority shareholders, whereby the Company would, at its option (the “Hemco Option”), be entitled to acquire, and to require NCGA to transfer to the Company, all of the issued shares in RNC (Hemco) Limited (“Hemco”), and all minority interests in certain subsidiaries of Hemco not owned by Hemco (collectively, the “Hemco Assets”). The Hemco Assets were to be acquired by NCGA pursuant to the terms and conditions of a Share Purchase Agreement, dated as of November 30, 2010 (the “Share Purchase Agreement”), among NCGA and TWL Investments Ltd., Thomas William Lough (“Lough”), James Randall Martin (“Martin”) and Sergio Rios Molina (“Rios” and together with TWL and Martin, “Sellers”). The Share Purchase Agreement provided that NCGA would acquire from Sellers all of the issued common shares of RNC (Management) Limited, which owned 100% of the interest in Hemco. Conditional upon the sale, Lough and Martin would also transfer to NCGA for no additional consideration, all of the minority interests not already owned by Hemco in its Nicaraguan subsidiary, Hemco-Nicaragua S.A. (“HemcoNic”). HemcoNic is a private Nicaraguan company which operates the Bonanza gold and silver mine located in Nicaragua, Central America.

The Hemco Option Agreement provided that if the Company exercised the Hemco Option, it would, among other things, be able to acquire the Hemco Assets from NCGA for $64,750,000, which was equal to the balance of the $65,000,000 purchase price ($250,000 of which had already been paid in the form of a non-refundable deposit) that NCGA would be required to pay to Sellers at the closing of the transactions under the Share Purchase Agreement.

As of December 31, 2010, the Hemco Option Agreement was amended (the “Hemco Option Agreement Amendment”). The Hemco Option Agreement Amendment included, among other things, the Company’s consent to NCGA’s entry into Amendment No. 1, dated as of December 31, 2010, to the Share Purchase Agreement (the “Share Purchase Agreement Amendment”). The Share Purchase Agreement Amendment, among other things: extended from December 31, 2010 to February 15, 2011 the date by which the parties to the Share Purchase Agreement were permitted to terminate such agreement and included an agreement to pay an additional non-refundable $125,000 upon the execution of the Share Purchase Agreement Amendment and an additional $125,000 upon the closing of the Share Purchase Agreement, as amended. The non-refundable $125,000 was paid on January 4, 2011.

The Share Purchase Agreement and the transactions contemplated thereunder were terminated because the closing did not occur on or before February 15, 2011 and, accordingly, the Company determined not to exercise the Hemco Option. The Company determined not to proceed with a private placement of its securities to obtain proceeds that would have been used to acquire the Hemco Assets. Through September 30, 2011, the Company incurred total costs and impairment expense of $1,622,261, of which $353,694 and $0 costs were incurred during the nine months ended September 30, 2011 and 2010, respectively, in connection with the Company’s execution of the Hemco Option Agreement and the Hemco Option Agreement Amendment and its efforts to raise the funding necessary to exercise the Hemco Option. The costs are included in general and administrative expenses on the Company’s consolidated statements of operations.

NOTE 8 – RELATED PARTY TRANSACTIONS

Accounts Payable – Related Party

At September 30, 2011 and December 31, 2010, the Company owed $16,000 and $65,183, respectively, to certain members of its Board of Directors (“Directors”) for director fees and consulting fees.

Employee and related party receivables

The Company had no outstanding employee or related party receivables at September 30, 2011. At December 31, 2010, the Company had outstanding employee receivables of $1,084 related to the Company’s payment of employee payroll taxes on behalf of certain non-officer employees. At December 31, 2010, the Company had outstanding related party receivables of $5,258, due from Yellowhead Mining, Inc. (“Yellowhead”). A former director of the Company serves as Yellowhead’s Chief Operating Officer. Yellowhead shared office space with UGMC, and the receivables are reimbursement of shared office expenses paid by the Company.

Compensation of directors

Director fees totaled $6,000 and $9,500 for the three months ended September 30, 2011 and 2010, respectively, and $18,174 and $12,500 for the nine months ended September 30, 2011 and 2010, respectively. Consulting fees paid to directors totaled $30,000 and $105,188 for the three months ended September 30, 2011 and 2010, respectively, and $130,000 and $126,824 for the nine months ended September 30, 2011 and 2010, respectively. Director fees and consulting fees paid to directors are included in general and administrative expense on the consolidated statements of operations.

NOTE 9 – COMMITMENTS AND CONTINGENCIES

Office Space

Since March 2011, the Company no longer leases office space in Vancouver, British Columbia.

Litigation

From time to time, the Company may become involved in lawsuits and legal proceedings that arise in the ordinary course of business. The Company is currently not aware of any such legal proceedings or claims that could have, individually or in the aggregate, a material adverse affect on its business, financial condition, operating results or cash flows.

Liquidated Damages

In connection with the Company’s July 2010 private placement of common shares, the Company granted registration rights to the investors. The Company was not able to file the registration statement by the date required by the Offering and the Company is obligated to pay liquidated damages of $36,000. As of September 30, 2011 and December 31, 2010, the Company had recorded an accrual for liquidated damages of $36,000, which is included in accrued liabilities.

NOTE 10 – PROVISION FOR INCOME TAXES

No provision for federal income taxes has been recognized for the nine months ended September 30, 2011 and 2010 as the Company incurred a net operating loss for income tax purposes in each period and has no carryback potential.

Deferred tax assets and liabilities at September 30, 2011 and December 31, 2010 totaled a net deferred tax asset of approximately $1,535,000 and $877,000, respectively, and consisted primarily of deferred tax assets resulting from net operating loss carryforwards totaling approximately $4,385,000. We have provided a full valuation allowance due to uncertainty regarding the realizability of these tax assets. The Company’s effective tax rate differs from the statutory rate due to an approximate $33,000 and $657,000 increase in the valuation allowance for the three and nine months ended September 30, 2011, respectively.

NOTE 11 – STOCK OPTIONS

The 2008 Plan allows for equity awards to employees and directors, and, in certain instances, consultants, covering up to 10,000,000 shares of common stock. If an incentive award granted under the 2008 Plan expires, terminates, is unexercised or is forfeited, or if any shares are surrendered to us in connection with an incentive award, the shares subject to such award and the surrendered shares will become available for future awards under the 2008 Plan.

The Company recognizes the fair value of share-based payments over the service or vesting periods of the awards. Compensation expense related to options granted totaled $28,852 and $60,228 for the three months ended September 30, 2011 and 2010, respectively, and $96,173 and $301,138 for the nine months ended September 30, 2011 and 2010, respectively. Measured, but unrecognized stock-based compensation expense at September 30, 2011 was $43,277, which is expected to be recognized as expense over a weighted-average period of 0.75 year.

Stock option activity and related information for the nine months ended September 30, 2011 is as follows:

	Number of Options		Weighted Average Exercise Price		Aggregate Intrinsic Value
Outstanding at December 31, 2010		6,666,667	$	0.20	$	-
Granted		-		-
Exercised		-
Forfeited		2,000,000	$	0.20
Outstanding at September 30, 2011		4,666,667			$	-

Vested at September 30, 2011		3,333,333	$	0.20	$	-

Exercisable at September 30, 2011		-

Outstanding options had $0 intrinsic value at September 30, 2011 and December 31, 2010, due to the exercise price being greater than the value of the Company’s common stock at each respective date.

On February 28, 2011, Andrew Neale resigned from his position as a member of the Company’s Board of Directors and any committees thereof effective as of that date. During 2010, Mr. Neale was granted 2,000,000 options, of which 666,667 options were fully vested as of Mr. Neale’s resignation date. The 1,333,333 unvested options granted to Mr. Neale were forfeited as of Mr. Neale’s termination date. Mr. Neale had until March 30, 2011 to exercise the remaining 666,667 vested options, but did not notify the Company that he wished to do so and such shares then became available for future issuance pursuant to the 2008 Plan. As of September 30, 2011, 5,333,333 shares remain available for issuance under the 2008 Plan.

NOTE 12 – SUBSEQUENT EVENTS

In October 2011, the Company dissolved its wholly owned Canadian subsidiary UGMC, which was incorporated in British Columbia on September 14, 2010.

On October 18, 2011, David Cather resigned from his positions as Interim Chief Executive Officer and as a member of the Company’s Board of Directors and any committees thereof effective as of that date. Mr. Craig Niven will act as the Company’s Interim Chief Executive Officer until his successor is duly appointed and qualified or until his earlier resignation or removal. During 2010, Mr. Cather was granted 2,000,000 options, of which 1,333,333 options were fully vested as of Mr. Cather’s resignation date. The 666,667 unvested options granted to Mr. Cather were forfeited as of Mr. Cather’s termination date. Mr. Cather has until November 17, 2011 to exercise the remaining 1,333,333 vested options.

In accordance with ASC 855-10, the Company’s management reviewed all material events through the issuance date of this quarterly report on Form 10-Q and there are no other material subsequent events to report.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This quarterly report on Form 10-Q contains forward-looking statements. All statements other than statements of historical facts included in this quarterly report including, without limitation, statements in the Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this quarterly report on Form 10-Q, regarding our financial condition, estimated working capital, business strategy, the plans and objectives of our management for future operations and those statements preceded by, followed by or that otherwise include the words “believe,” “expects,” “anticipates,” “intends,” “estimates,” “projects,” “target,” “goal,” “will,” “plans,” “objective,” “should,” or similar expressions or variations on such expressions are forward-looking statements. We can give no assurances that the assumptions upon which the forward-looking statements are based will prove to be correct. Because forward-looking statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. There are a number of risks, uncertainties and other important factors that could cause our actual results to differ materially from the forward-looking statements. A description of some of the risks and uncertainties that could cause our actual results to differ materially from those described by the forward-looking statements in this quarterly report on Form 10-Q appears in the section captioned “Risk Factors” in our annual report on Form 10-K filed with the SEC on March 31, 2011.

The following discussion is designed to provide a better understanding of significant trends related to our financial condition and results of operations. The discussion should be read in conjunction with our consolidated financial statements and notes thereto included in this quarterly report on Form 10-Q, as well as the Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements and Notes thereto included in our annual report on Form 10-K.

Except as otherwise required by the federal securities laws, we disclaim any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained in this quarterly report on Form 10-Q to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Plan of Operation

We are an exploration stage gold mining exploration and production company focusing our initial operations on what we believe to be under-explored countries. We have achieved no operating revenues to date. In April 2010, we entered into the Toldafria Option Agreement, as amended, which gave us the right to acquire up to a 50% interest in a Colombian gold prospect (see “—Toldafria Prospect”). In May 2011, we sold such option to Rio Novo Gold. Inc., a company whose ordinary shares trade on the Toronto Stock Exchange (“Rio Novo”) (See “Financial Statements—Note 4—Investment in Mining Option”). In November 2010, we entered into the Hemco Option Agreement, as amended, which gave us the right to acquire all of the issued shares in RNC (Hemco) Limited, which, through its Hemco Nicaragua S.A. subsidiary, operates the Bonanza gold and silver mine located in Nicaragua, Central America. In February 2011, we determined not to exercise the option pursuant to the Hemco Option Agreement. (See “Financial Statements—Note 7—Hemco Option—Acquisition Costs”).

We currently own 500,000 ordinary shares of Rio Novo, an emerging gold company focused on the acquisition, exploration and development of gold mineral resource properties in mineral jurisdictions in South America, whose stock trades on the Toronto Stock Exchange.

In the course of our development activities, we have sustained losses and expect such losses to continue unless and until we can achieve net operating revenues. We expect to finance our operations primarily through our existing cash and future financings. However, substantial doubt exists about our ability to continue as a going concern because we will be required to obtain additional capital in the future to continue our operations and there is no assurance that we will be able to obtain such capital, through equity or debt financings, or any combination thereof, or on satisfactory terms or at all. Additionally, no assurance can be given that any such financing, if obtained, will be adequate to meet our ultimate capital needs and to support our growth. If adequate capital cannot be obtained on a timely basis and on satisfactory terms, our planned operations would be materially negatively impacted. Our ability to complete additional financings is dependent on the state of the debt and equity markets at the time of any proposed financing, and such market’s reception of us and the financing terms. In addition, our ability to complete a financing may be dependent on the status of our business activities, which cannot be predicted.

We were incorporated under the name Rite Time Mining, Inc. in the State of Nevada on May 3, 2006, to engage in the acquisition, exploration and development of mineral deposits and reserves. We were unsuccessful in this area and subsequently determined to engage in the business of operating an independent, minor league baseball league. In connection therewith, on April 14, 2008, we changed our name to Federal Sports & Entertainment, Inc. and increased our authorized capital stock to an aggregate of 310,000,000 shares, consisting of 300,000,000 shares of common stock and 10,000,000 shares of preferred stock with preferences and rights to be determined by our Board of Directors. Additionally, our Board of Directors approved a forward stock split in the form of a dividend with a record date of April 25, 2008, and effective on May 6, 2008, as a result of which each share of our common stock then issued and outstanding converted into two shares of our common stock. All share amounts have been retroactively restated for such stock split. On March 22, 2010, our Board of Directors approved a 20 for 1 forward stock split in the form of a dividend. The record date for the stock dividend was April 19, 2010, and the payment date and the ex-dividend date were May 7, 2010, and May 10, 2010, respectively. All share amounts have been retroactively restated for this stock split as well. On December 29, 2010, we increased our authorized capital stock to an aggregate of 1,510,000,000 shares, consisting of 1,500,000,000 shares of common stock and 10,000,000 shares of preferred stock.

The Company conducts its operations through its wholly owned subsidiaries, Universal Gold Holdings (Cayman) Ltd. (“UGH”), which was incorporated in the Cayman Islands on April 22, 2010, and UGMC Mining, Inc. (“UGMC”), which was incorporated in British Columbia on September 14, 2010. UGMC ceased operations as of February 2011 and was dissolved in October 2011.

Change in Fiscal Year End

On May 19, 2010, the Company determined to change its fiscal year from November 30 to December 31. As the transition period covers a period of one month, the Company was not required to file a transition report.

Toldafria Prospect

The following summary of the material terms of the Toldafria Option Agreement, the Toldafria Option Agreement Amendment and the Asset Purchase Agreement does not purport to be complete and is subject to, and qualified in its entirety by reference to, all the provisions of such agreements. Because the following is only a summary, it does not contain all information that you may find useful. For more complete information, you should read each of the Toldafria Option Agreement, the Toldafria Option Agreement Amendment and the Asset Purchase Agreement, each of which is referenced as an exhibit to this quarterly report on Form 10-Q.

In June 2010, our wholly owned subsidiary, UGH made the first payment under an Option Agreement (as amended, the “Toldafria Option Agreement”), dated as of April 23, 2010, among Core Values Mining & Exploration Company, a Cayman Islands corporation, and Core Values Mining & Exploration Company’s wholly owned Colombian subsidiary (collectively, “CVME”) and UGH. The Toldafria Option Agreement provided us with the right to acquire, through UGH, up to a 50% interest in a 164 hectare gold prospect (licence GEWM-12), which is located approximately 10 kilometers southeast of the city of Manizales in Colombia (the “Toldafria Prospect”). On June 4, 2010, UGH and CVME entered into an amendment to the Toldafria Option Agreement (the “Toldafria Option Agreement Amendment”) which included a bring-down of representations and warranties made by CVME in the Toldafria Option Agreement.

The Toldafria Option Agreement, as amended, provided that UGH may earn a 25% interest in the Toldafria Prospect at the end of the first year of the Toldafria Option Agreement, as amended, by paying an aggregate amount of $2,300,000 on or prior to June 4, 2010, which UGH paid. UGH had the opportunity to earn an additional 15% interest in the Toldafria Prospect at the end of the second year (June 2011), by paying an additional aggregate amount of $2,650,000 within 30 business days after completion of the first year. Finally, UGH had the opportunity to earn a further 10% interest in the Toldafria Prospect at the end of the third year (June 2012), by paying an additional aggregate amount of $3,050,000 within 30 business days after completion of the second year. No assurance was given that UGH would have had sufficient capital to pay for the additional interests in the Toldafria Prospect.

CVME contracted to acquire the Toldafria Prospect from the person believed to be the registered owner thereof pursuant to a purchase agreement to which we were not a party (the “Toldafria Purchase Agreement”).

The Toldafria Option Agreement provided that CVME would carry out prospecting, exploration, development or other work approved by a technical committee as the operator on the Toldafria Prospect, and CVME would receive payment of $30,000 per month, out of the funds earmarked for exploration and development activity, for its administrative and overhead costs in such capacity.

CVME’s success in recording the transfer of the Toldafria Prospect was contingent upon, among other things, approval of the relevant Colombian government authorities. In the event that CVME would not be ultimately successful in meeting its obligations or recording the transfer of the Toldafria Prospect free of encumbrances, then the Toldafria Prospect would not have been valuable.

In connection with the sale of the rights, title and interest in the Option Agreement, Rio Novo paid to UGH a total amount of $902,035, of which $300,000 was paid in cash and $602,035 was settled in cash by way of refunding to UGH an amount in escrow. Rio Novo also issued to the Company 500,000 of its ordinary shares. Rio Novo has also agreed to deliver to UGH or its designee an additional 766,667 Rio Novo ordinary shares upon (1) the Caldas State Government Mining Delegation (Colombia) granting a concession, exploitation or exploration right or any renewal or extension of any such existing right to Nestor Gutierrez, CVME, CVMEC, Rio Novo or any of their affiliates in connection with the Toldafria Prospect having a term of not less than 20 years and (2) confirmation by CorpoCaldas (the Caldas State Environment Authority) that the project mineral rights are excluded from the alleged existing Reserva de Foresta Regional covering certain parts of the Toldafria Prospect area so as to allow exploration and mining activities within the area covered by the Toldafria Prospect. Rio Novo now owns 100% of the Toldafria Prospect.

As of September 30, 2011, the Company did not record the additional 766,667 Rio Novo ordinary shares that may be received in the future due to uncertainty regarding their ultimate realization.

Hemco Option

The following summary of the material terms of the Hemco Option Agreement, the Share Purchase Agreement, the Hemco Option Agreement Amendment and the Share Purchase Agreement Amendment does not purport to be complete and is subject to, and qualified in its entirety by reference to, all the provisions of such agreements. Because the following is only a summary, it does not contain all information that you may find useful. For more complete information, you should read each of the Hemco Option Agreement, the Share Purchase Agreement, the Hemco Option Agreement Amendment and the Share Purchase Agreement Amendment, each of which is referenced as an exhibit to this quarterly report on Form 10-Q.

We entered into an option agreement effective as of November 30, 2010 (the “Hemco Option Agreement”), with N.C.G.A. Project Acquisition Corp., a Cayman Islands corporation (“NCGA”), an entity controlled by certain of our minority shareholders, whereby we would, at our option (the “Hemco Option”), be entitled to acquire, and to require NCGA to transfer to us, all of the issued shares in RNC (Hemco) Limited (“Hemco”), and all minority interests in certain subsidiaries of Hemco not owned by Hemco (collectively, the “Hemco Assets”). The Hemco Assets were to be acquired by NCGA pursuant to the terms and conditions of a Share Purchase Agreement, dated as of November 30, 2010 (the “Share Purchase Agreement”), among NCGA, TWL Investments Ltd. (“TWL”), Thomas William Lough (“Lough”), James Randall Martin (“Martin”) and Sergio Rios Molina (“Rios” and together with TWL and Martin, “Sellers”). The Share Purchase Agreement provided that NCGA would acquire from Sellers all of the issued common shares of RNC (Management) Limited, which owned 100% of the interest in Hemco. Conditional upon the sale, Lough and Martin would also transfer to NCGA for no additional consideration, all of the minority interests not already owned by Hemco in its Nicaraguan subsidiary, Hemco-Nicaragua S.A. (“HemcoNic”). HemcoNic is a private Nicaraguan company which operates the Bonanza gold and silver mine located in Nicaragua, Central America.

The Hemco Option Agreement provided that if we exercised the Hemco Option, we would be able to acquire the Hemco Assets from NCGA for $64,750,000, which is equal to the balance of the $65,000,000 purchase price ($250,000 of which had already been paid in the form of a non-refundable deposit) that NCGA would be required to pay to Sellers at the closing of the transactions under the Share Purchase Agreement.

As of December 31, 2010, the Hemco Option Agreement was amended (the “Hemco Option Agreement Amendment”). The Hemco Option Agreement Amendment included, among other things, our consent to NCGA’s entry into Amendment No. 1, dated as of December 31, 2010, to the Share Purchase Agreement (the “Share Purchase Agreement Amendment”).

The Share Purchase Agreement Amendment, among other things:

extended from December 31, 2010 to February 15, 2011, the date by which the parties to the Share Purchase Agreement were permitted to terminate such agreement if the closing of such agreement did not occur on or before such date; and

included an agreement to pay an additional $125,000 upon the execution of the Share Purchase Agreement Amendment and an additional $125,000 upon the closing of the Share Purchase Agreement, as amended.

The Share Purchase Agreement and the transactions contemplated thereunder were terminated because the closing did not occur on or before February 15, 2011 and, accordingly, we determined not to exercise the Hemco Option and expensed all the associated costs and option payments.

Other Developments

On January 26, 2011, we held a special meeting of our stockholders for the purpose of approving amendments to UGMC’s Amended and Restated Articles of Incorporation, as amended, to (1) effect a reverse stock split in a ratio ranging from one-for-five to one-for-fifty of all UGMC’s issued and outstanding shares of common stock and to effect a reduction in the number of authorized shares of common stock in an amount ranging from 30% to 75% of the current authorized number, in both cases in a ratio and amount to be determined by our Board of Directors if it determines to proceed with such reverse stock split and (2) include provisions that are primarily protective to UGMC’s stockholders. Our Board of Directors is in the process of determining if and when to proceed with such reverse stock split.

On February 16, 2011, the British Columbia Securities Commission (the “BCSC”) issued an order (the “Order”) that trading in our securities cease until we have filed certain documents with the BCSC, such documents to include an independent technical report on our Toldafria property and all documents filed with the SEC, and the executive director of the BCSC makes an order revoking the Order. The BCSC has asserted that we are a reporting issuer under BC Instrument 51-509, “Issuers Quoted in the U.S. Over-the-Counter Markets”, as it alleges that our business was directed or administered from British Columbia and our securities are quoted on the OTC Bulletin Board. We believe that the Order will not affect trades of our securities that have no connection to the Province of British Columbia. The Company has ceased all operations in Canada as of February 2011 and in October 2011, dissolved its wholly owned Subsidiary UGMC Mining, Inc., which was incorporated in British Columbia on September 14, 2010. We are currently seeking legal advice in connection with additional steps to address the Order.

On February 28, 2011, Andrew Neale resigned from his position as member of our Board of Directors and any committees thereof effective as of that date.

On October 18, 2011, David Cather resigned from his positions as Interim Chief Executive Officer and as a member of our Board of Directors and any committees thereof effective as of that date.

The remaining members of the Company’s Board of Directors have appointed Craig Niven, 55, our current Interim Chief Financial Officer and Assistant Secretary, as Interim Chief Executive Officer, by written consent in lieu of a meeting, effective as of October 18, 2011. Mr. Niven will act as our sole officer until we appoint additional officers. Mr. Niven will serve as our Interim Chief Executive Officer until his successor is duly appointed and qualified or until his earlier resignation or removal.

Results of Operations

Revenues

We have had no revenues since our inception.

Expenses

Total operating expenses decreased $265,734, or 61%, to $167,165 for the three months ended September 30, 2011, compared to $432,899 for the three months ended September 30, 2010. This overall decrease is due to the lower general and administrative expenses as the result of the ceased operations of UGMC, lower headcount and lower stock based compensation, combined with expenses incurred during the prior year quarter that did not recur in the current year quarter related to accounting and legal fees associated with a private placement offering of our common stock.

Total operating expenses increased $599,755, or 54%, to $1,712,430 for the nine months ended September 30, 2011, compared to $1,112,675 for the nine months ended September 30, 2010. This overall increase is primarily due to a loss on sale of the Toldafria mining option of $660,015 during the quarter ended June 30, 2011.

Other Income (Expenses)

Other Income (Expense) decreased $42,992, or 90%, to $4,949 for the three months ended September 30, 2011, compared to $47,941 for the three months ended September 30, 2010, primarily due to a $42,855 decrease in foreign currency exchange gain.

Other Income (Expense) decreased $45,507, or 95%, to $2,646 for the nine months ended September 30, 2011, compared to $48,153 for the nine months ended September 30, 2010, primarily due to a $45,158 decrease in foreign currency exchange gain.

Net Loss

We incurred a net loss for the three months ended September 30, 2011 of $162,216 compared to net loss of $384,958 for the three months ended September 30, 2010. We incurred a net loss for the nine months ended September 30, 2011 of $1,709,784, compared to a net loss for the nine months ended September 30, 2010 of $1,064,522. The increase in net loss for the three and nine months ended September 30, 2011 was directly attributable to increased expenses as discussed above.

Liquidity and Capital Resources

At September 30, 2011 and December 31, 2010, our cash and cash equivalents balance was $455,160 and $947,153, respectively. During the nine months ended September 30, 2011, cash used in operations totaled $1,269,528 versus cash used in operations of $443,248 in the equivalent 2010 period. The increase in cash used in operations was primarily due to costs incurred in the terminated Hemco transaction. During the nine months ended September 30, 2011, cash provided by investing activities totaled $777,035, which represents $902,035 in proceeds from the sale of the Toldafria mining option pursuant to the Asset Purchase Agreement with Rio Novo, partially offset by $125,000 paid in January 2011 upon the execution of the Share Purchase Agreement Amendment related to the terminated Hemco Option Agreement. During the nine month period ended September 30, 2010, the Company had negative cash flow from investing activities of $3,331,234 which resulted from a $2,300,000 payment for the investment in the Toldafria mining option, $1,027,276 used for the purchase of a put and call option/convertible note and $3,958 payment to purchase property and equipment. We did not have any cash from financing activities during the nine months ended September 30, 2011. During the nine months ended September 30, 2010, cash provided by financing activities was $4,625,023, comprised of $4,707,428 net proceeds from the issuance of common stock, partially offset by $82,405 used for the repayment of stockholder advances.

Future issuances of our equity or debt securities will be required in order for us to continue to finance our operations and to continue as a going concern. We have not generated any cash flow from operations since inception and currently have no revenue from operations. As of September 30, 2011, we have incurred cumulative net losses of $5,045,470 since inception and require additional capital for our contemplated operational and acquisition activities to take place. Our ability to raise additional capital through future issuances of our common stock is unknown. The acquisition of additional financing, the successful development of our contemplated plan of operations and our transition, ultimately, to the attainment of profitable operations are necessary for us to continue operations. The uncertainty about our ability to successfully resolve these factors raises substantial doubt about our ability to continue as a going concern.

Off-Balance Sheet Arrangements

We do not have any 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 investors.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our most significant judgments and estimates used in preparation of our consolidated financial statements.

Mineral Exploration and Development Costs

All exploration expenditures are expensed as incurred. Costs of acquisition and option costs of mineral rights are capitalized upon acquisition. Mine development costs incurred to develop new ore deposits, to expand the capacity of mines or to develop mine areas substantially in advance of current production are also capitalized once proven and probable reserves exist and the property is determined to be a commercially mineable property. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. If we do not continue with exploration after the completion of the feasibility study, the cost of mineral rights will be expensed at that time. Costs of abandoned projects are charged to mining costs, including related property and equipment costs. To determine if these costs are in excess of their recoverable amount, periodic evaluation of the carrying value of capitalized costs and any related property and equipment costs are based upon expected future cash flows and/or estimated salvage value in accordance with ASC 360-10-35-15, Impairment or Disposal of Long-Lived Assets.

Stock-Based Compensation

We account for the grant of options to employees and the grant of shares to non-employees pursuant to the provisions of FASB ASC 718, Compensation – Stock Compensation, which establishes accounting for equity instruments exchanged for services. We utilize the Black-Scholes option pricing model to estimate the fair value of employee stock options at the date of grant, which requires the input of highly subjective assumptions, including expected volatility and expected life.

Recent Accounting Pronouncements

The Company has review recently issued accounting standards, none of which are expected to have a material impact on the Company’s financial position or results of operations.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, we are not required to provide disclosure under this Item 3.

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls Procedures

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Disclosure and control procedures are also designed to ensure that such information is accumulated and communicated to management, including the interim chief executive officer and interim chief financial officer, to allow timely decisions regarding required disclosures.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of management, including our interim chief executive officer and interim chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. In designing and evaluating the disclosure controls and procedures, management recognizes that there are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their desired control objectives. Additionally, in evaluating and implementing possible controls and procedures, management is required to apply its reasonable judgment. We also do not have an audit committee. Based on the evaluation described above, and as a result, in part, of not having an audit committee and having one individual serve as our sole officer, our interim chief executive officer and interim chief financial officer has concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were not effective.

As funds become available to us, we expect to implement additional measures to improve disclosure controls and procedures.

Changes in internal controls over financial reporting

There was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

Officer’s Certifications

Appearing as an exhibit to this quarterly report on Form 10-Q are “Certifications” of our Chief Executive and Financial Officer. The Certifications are required pursuant to Sections 302 of the Sarbanes-Oxley Act of 2002 (the “Section 302 Certifications”). This section of the quarterly report on Form 10-Q contains information concerning the Controls Evaluation referred to in the Section 302 Certifications. This information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.

PART II – OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

We may, from time to time, be involved in litigation and claims arising out of our operations in the ordinary course of business. We are currently not aware of any pending legal proceedings to which we are a party or of which any of our property is the subject, nor are we aware of any such proceedings that are contemplated by any governmental authority.

ITEM 1A.

RISK FACTORS

As a smaller reporting company, we are not required to provide disclosure under this Item 1A.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.

(REMOVED AND RESERVED)

ITEM 5.

OTHER INFORMATION

ITEM 6.

EXHIBITS

The agreements included as exhibits to this quarterly report on Form 10-Q are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the other parties to the agreements. The agreements may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the parties to the applicable agreement and:

•

should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;

•

have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;

•

may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and

•

were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about the Company may be found elsewhere in this quarterly report on Form 10-Q and the Company’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.

The following exhibits are filed as part of (or are furnished with, as indicated below) this quarterly report on Form 10-Q or, where indicated, were heretofore filed and are hereby incorporated by reference.

Exhibit No.		Description
2.1*		Hemco Option Agreement, dated as of November 30, 2010, between Registrant and N.C.G.A Project Acquisition Corp. (Previously filed on December 6, 2010 as exhibit 2.1 of Universal Gold Mining Corp.’s Current Report on Form 8-K (File No. 333-140900))

2.2*		Share Purchase Agreement, dated as of November 30, 2010, among N.C.G.A. Project Acquisition Corp., TWL Investments Ltd., Thomas William Lough, James Randall Martin and Sergio Rios Molina (Previously filed on December 6, 2010 as exhibit 2.2 of Universal Gold Mining Corp.’s Current Report on Form 8-K (File No. 333-140900))

2.3*		Amendment No. 1 to the Hemco Option Agreement, dated as of December 31, 2010, between N.C.G.A. Project Acquisition Corp. and Registrant (Previously filed on January 6, 2011 as exhibit 2.1 of Universal Gold Mining Corp.’s Current Report on Form 8-K (File No. 333-140900))

2.4*		Amendment No. 1 to the Share Purchase Agreement, dated as of December 31, 2010, among N.C.G.A. Project Acquisition Corp., TWL Investments Ltd., Thomas William Lough, James Randall Martin and Sergio Rios Molina (Previously filed on January 6, 2011 as exhibit 2.2 of Universal Gold Mining Corp.’s Current Report on Form 8-K (File No. 333-140900))

3.1*		Amended and Restated Articles of Incorporation of Registrant as filed with the Nevada Secretary of State on April 14, 2008 (Previously filed on April 18, 2008 as exhibit 3.1 of Universal Gold Mining Corp.’s Current Report on Form 8-K (File No. 333-140900))

3.2*		Certificate of Amendment to Amended and Restated Articles of Incorporation of Registrant as filed with the Nevada Secretary of State on April 9, 2010 (Previously filed on April 15, 2010 as exhibit 3.1 of Universal Gold Mining Corp.’s Current Report on Form 8-K (File No. 333-140900))

3.3*		Certificate of Amendment to Amended and Restated Articles of Incorporation of Registrant as filed with the Nevada Secretary of State on December 29, 2010 (Previously filed on January 3, 2011 as exhibit 3.1 of Universal Gold Mining Corp.’s Current Report on Form 8-K (File No. 333-140900))

3.4*		Amended and Restated Bylaws of Registrant (Previously filed on March 31, 2011 as exhibit 3.4 of Universal Gold Mining Corp.’s Annual Report on Form 10-K (File No. 333-140900))

10.1*		2008 Equity Incentive Plan (Previously filed on March 2, 2009 as exhibit 10.1 of Universal Gold Mining Corp.’s Annual Report on Form 10-K (File No. 333-140900))

10.2*		Assignment of Promissory Note and Release dated as of February 3, 2010, by and between Registrant and the John Thomas Bridge and Opportunity Fund, LP (Previously filed on June 10, 2010 as exhibit 10.6 of Universal Gold Mining Corp.’s Current Report on Form 8-K (File No. 333-140900))

10.3*		Option Agreement among Core Values Mining & Exploration Company, Core Values Mining & Exploration Company Sucursal Colombia and the Registrant, dated as of April 23, 2010 (Previously filed on June 10, 2010 as exhibit 10.7 of Universal Gold Mining Corp.’s Current Report on Form 8-K (File No. 333-140900))

10.4*		Cancellation Agreement between the Registrant and Linda Farrell, dated May 24, 2010 (Previously filed on June 10, 2010 as exhibit 10.8 of Universal Gold Mining Corp.’s Current Report on Form 8-K (File No. 333-140900))

10.5*		Amendment Number 1 to 2008 Equity Incentive Plan (Previously filed on June 10, 2010 as exhibit 10.9 of Universal Gold Mining Corp.’s Current Report on Form 8-K (File No. 333-140900))

10.6*		Amendment to Option Agreement among Core Values Mining & Exploration Company, Core Values Mining & Exploration Company Sucursal Colombia and the Registrant, dated as of June 4, 2010 (Previously filed on June 10, 2010 as exhibit 10.10 of Universal Gold Mining Corp.’s Current Report on Form 8-K (File No. 333-140900))

10.7*		Put and Call Option Agreement dated June 29, 2010 between Grafton Resource Investments Ltd. and Universal Hold Holdings (Cayman) Ltd. (Previously filed on August 23, 2010 as exhibit 10.5 of Universal Gold Mining Corp.’s Quarterly Report on Form 10-Q (File No. 333-140900))


10.8*		Deed of Variation to Put and Call Option Agreement dated June 29, 2010, dated August 24, 2010 (Previously filed on August 26, 2010 as exhibit 10.1 of Universal Gold Mining Corp.’s Current Report on Form 8-K (File No. 333-140900))

10.9*		Form of Subscription Agreement between the Registrant and each purchaser of Registrant’s common stock at $0.10 per share (Previously filed on May 27, 2010 as exhibit 10.1 of Universal Gold Mining Corp.’s Current Report on Form 8-K (File No. 333-140900))

10.10*		Form of Registration Rights Agreement between the Registrant and the purchasers of common stock at $0.10 per share, dated as of May 24, 2010 (Previously filed on May 27, 2010 as exhibit 10.2 of Universal Gold Mining Corp.’s Current Report on Form 8-K (File No. 333-140900))

10.11*		Form of Subscription Agreement between the Registrant and each purchaser of Registrant’s common stock at $0.40 per share (Previously filed on November 15, 2010 as exhibit 10.2 of Universal Gold Mining Corp.’s Quarterly Report on Form 10-Q (File No. 333-140900))

10.12*		Form of Registration Rights Agreement between the Registrant and the purchasers of common stock at $0.40 per share, dated as of September 20, 2010 (Previously filed on November 15, 2010 as exhibit 10.3 of Universal Gold Mining Corp.’s Quarterly Report on Form 10-Q (File No. 333-140900))

10.13*		Form of Indemnification Agreement (Previously filed on January 28, 2011 as exhibit 10.1 of Universal Gold Mining Corp.’s Current Report on Form 8-K (File No. 333-140900))

10.14*		Asset Purchase Agreement between Rio Novo Gold Inc. and Universal Gold Holdings (Cayman) Limited dated May 27, 2011 (Previously filed on June 3, 2011 as exhibit 10.1 of Universal Gold Mining Corp.’s Current Report on Form 8-K (File No. 333-140900))

31.1 and 31.2**		Rule 13a-14(d) / 15d-14(a) Certification of Chief Executive Officer and Chief Financial Officer

32.1 and 32.2**§		Rule 1350 Certification of Chief Executive Officer and Chief Financial Officer

101**§§		Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets (Unaudited) as of September 30, 2011 and December 31, 2010, (ii) the Consolidated Statements of Operations (Unaudited) for the three and nine months ended September 30, 2011 and September 30, 2010 and the period from May 3, 2006 (Inception) through September 30, 2011, (iii) Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2011 and September 30, 2010 and the period from May 3, 2006 (Inception) through September 30, 2011, and (iv) the notes to Consolidated Financial Statements (unaudited).

*	Previously filed and incorporated by reference.

**	Filed herewith

§ This certification is being furnished and shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

§§ Pursuant to Rule 406T of Regulation S-T, the XBRL files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for the purposes of Section 18 of the Exchange Act, and otherwise are not subject to liability under those sections.

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.

	UNIVERSAL GOLD MINING CORP.

Dated: November 14, 2011	By:	/s/ Craig Niven
		Name: Craig Niven
		Title: Interim Chief Executive Officer, Interim Chief Financial Officer and Assistant Secretary

UNIVERSAL GOLD MINING CORP. 10-Q