**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**Form
      10-KSB**








x ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For
      the
      fiscal year ended February 28, 2006





o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF
      1934


For
      the
      transition period from ____ to _____




**MEXORO
      MINERALS LTD.**


(Exact
      name of registrant as specified in its charter)





Colorado
            0-23561
            84-1431797(State
                or other jurisdiction of incorporation)
            (Commission
                File Number)
            (IRS
                Employer Identification Number)609
                Granville Street, Suite 880
              Vancouver,
                British Columbia
              Canada
            V7Y
                1G5(Address
                of principal executive offices)
            (Zip
                Code)





Registrant’s
      telephone number, including area code:  (800)
      661-7830





Securities
      to be registered under Section 12(b) of the Act:





Title
      of
      each class


N/A





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





Common
      Stock


(Title
      of
      Class)








Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Securities Exchange Act during the past 12 months (or for such
      shorter period that the registrant was required to file such reports), and
      (2)
      has been subject to such filing requirements for the past 90 days. Yes x No o





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant's knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB. ___





State
      issuer's revenue for its most recent fiscal year: $ 0.





State
      the
      aggregate market value of the voting stock held by non-affiliates computed
      by
      reference to the price at which the stock was sold, or the average bid and
      asked
      priced of such stock, as of a specified date within the past 60 days (See
      definition of affiliate in Rule 12b-2): $20,052,380 as of May 23,
      2006.





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          23




Note:
      If
      determining whether a person is an affiliate will involve an unreasonable effort
      and expense, the issuer may calculate the aggregate market value of the common
      equity held by non-affiliates on the basis of reasonable assumptions, if the
      assumptions are stated.





(Issuers
      involved in bankruptcy proceedings during the past five years):





Check
      whether the issuer has filed all documents and reports required to be filed
      by
      Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
      under a plan confirmed by a court. Yes _ X _
      No
      ___





(Applicable
      only to corporate registrants) State the number of shares outstanding of each
      of
      the issuer's classes of common equity, as of the latest practicable date:
      15,001,102 as of May 23, 2006.





(Documents
      incorporated by reference. If the following documents are incorporated by
      reference, briefly describe them and identify the part of the Form 10-KSB (e.g.
      Part I, Part II, etc.) into which the document is incorporated: (1) any annual
      report to security holders; (2) any proxy or information statement; and (3)
      any
      prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933
      (“Securities Act”). The listed documents should be clearly described for
      identification purposes.




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PART
      I


**ITEM
      1.  DESCRIPTION OF BUSINESS**





**Background**





Mexoro
      Minerals Ltd. (formerly Sunburst Acquisitions IV, Inc.) (the “Company,” or
“Mexoro”) was incorporated in the State of Colorado on August 27, 1997.  We
      were formed to seek out and acquire business opportunities.  Between 1997
      and 2003, we engaged in two business acquisitions and one business opportunity,
      none of which generated a significant profit or created a sustainable business
      for us.





On
      May
      25, 2004, we completed a share exchange transaction with Sierra Minerals and
      Mining, Inc., a Nevada corporation (“Sierra Minerals”), which caused Sierra
      Minerals to become our wholly-owned subsidiary.  Sierra Minerals held
      certain rights to properties in Mexico that we now own or option.  Through
      Sierra Minerals, we entered into a Joint Venture Agreement with Minera Rio
      Tinto, S.A. De C.V. (“MRT”), a company duly incorporated pursuant to the laws of
      the United Mexican States, which is controlled by Mario Ayub, Chief Operating
      Officer of Mexoro. In
      August
      2005, the Company cancelled the joint venture agreement in order to pursue
      directly the mineral exploration opportunities through a wholly owned Mexican
      subsidiary, Sunburst de Mexico, S.A. de C.V. (“Sunburst de Mexico”).  On
      August 25, 2005, Sunburst de Mexico, Mexoro and MRT entered into agreements
      providing Sunburst de Mexico the right to explore and exploit certain properties
      in Mexico. On January 20, 2006, Sierra Minerals was dissolved.





In
      August
      2005, we created a wholly owned Mexican subsidiary, Sunburst de Mexico, S.A.
      de
      C.V. (“Sunburst de Mexico”).  On August 25, 2005, Sunburst de Mexico,
      Mexoro, and MRT entered into agreements giving Sunburst de Mexico the right
      to
      explore and exploit certain properties in Mexico.





In
      December 2005, Mexoro and Sunburst de Mexico entered into a new agreement with
      MRT (the “New Agreement”).  Among other provisions, the New Agreement
      allowed Sunburst de Mexico to exercise an option to obtain two mining
      concessions referred to as the Encino Gordo properties in Guazapares, Chihuahua
      Mexico, as well as giving Mexoro the option to obtain three additional mining
      concessions in the Encino Gordo region.  We agreed to issue two million
      shares of the Company to MRT within four months of the date of the signing
      of
      the New Agreement.  These shares were issued on February 23, 2006.  We
      also agreed to issue one million additional shares of our common stock to MRT
      if
      and when production of the Cieneguita Property reaches 85% of production
      capacity, as defined in the New Agreement.   Under the terms of the
      New Agreement, MRT had the option to buy all of the outstanding shares of
      Sunburst de Mexico for $100 if the Company failed to transfer $1.5 million
      to
      Sunburst de Mexico by April 30, 2006.  However, in April 2006, the parties
      amended the New Agreement to delete both the required transfer of $1,500,000
      to
      Sunburst de Mexico and MRT’s option to purchase shares of Sunburst de
      Mexico.





Through
      Sunburst de Mexico, we are engaged in the exploration and development of three
      gold exploration properties, each made up of several mining concessions, located
      in the State of Chihuahua, Mexico.  These properties are generally referred
      to as the Cieneguita property, the Guazapares property and the Encino Gordo
      property. We will own 100% of the Cieneguita property upon completion of a
      payment of $2 million to Corporative Minero, S.A. de C.V. (“Corporative Minero),
      a Mexican corporation, and have the option to purchase the Guazapares property
      from MRT. In August 2005, we purchased two Encino Gordo mineral concessions
      from
      MRT for $100 and recently have exercised our option to purchase three additional
      Encino Gordo mineral concessions, which now comprise the Encino Gordo
      property.





We
      changed our name to Mexoro Minerals Ltd. on February 15, 2006. We are considered
      to be an exploration stage corporation because we are currently engaged in
      the
      search for mineral deposits. We have not engaged in the preparation of an
      established commercially mineable mineral deposit for extraction or in the
      exploitation of a mineral deposit.





On
      February 13, 2006, the shareholders of the Company approved a 1:50 reverse
      split
      of its issued and outstanding Common Stock with 1 new share issued for each
      50
      old shares. Prior to the reverse split, the Company had 189,994,324 shares
      of
      Common Stock issued and outstanding. Immediately following the reverse split,
      the Company had 3,799,887 shares issued and outstanding. All figures relating
      to
      shares of Common Stock or price of shares of Common Stock reflect the 1:50
      reverse split unless otherwise indicated.





**Prior
      Acquisitions**





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In
      August
      1999, we invested $1,000,000 in Prologic Management Systems, Inc. (“Prologic”),
      which was engaged in the business of providing systems integration services,
      networking services, software development and applications software for the
      commercial market. The investment in Prologic was made in anticipation of a
      business combination with that company. As part of that transaction, we acquired
      3,459,972 shares of Prologic. However, the agreement to complete a business
      combination was terminated prior to its consummation, and in March 2000, we
      charged off our investment to operations.





In
      January 2001, we entered into an agreement with Prologic to recover a portion
      of
      our investment. Pursuant to that agreement, on February 16, 2001, we completed
      the sale of 2,859,972 shares of stock in Prologic to Prologic, or its designees,
      for a total sales price of $400,000. The sales price was paid $325,000 in cash
      at closing and $75,000 through Prologic’s execution of a promissory note. The
      promissory note bore interest at the rate of 10% per annum and required payments
      of $25,000 principal, plus accrued interest, on each of April 12, 2001, July
      12,
      2001 and October 12, 2001. Thus far, no payments have been received by us.
      Subsequently, Prologic declared bankruptcy; therefore, we have written off
      this
      promissory note as uncollectible.





We
      retained ownership of a total of 600,000 shares of Prologic, which we
      subsequently sold. Such shares were “restricted securities” as defined in Rule
      144 under the Securities Act of 1933. The shares were sold in accordance with
      the provisions of Rule 144.


HollywoodBroadcasting.com.On
      December 4, 2000, the Company completed the closing under an Agreement for
      Share
      Exchange between it and HollywoodBroadcasting.com, Inc. (“HB.C”), a Nevada
      corporation. As a result of that closing, HB.C became a wholly-owned subsidiary
      of the Company.





HB.C
      is a
      development stage company formed for the purpose of developing and producing
      original entertainment and information programming for various media including
      domestic and foreign broadcast, cable and satellite television, home video,
      DVD
      sales and rentals and the Internet. The primary focus of HB.C was intended
      to
      be  development
      and production (or acquisition) of original entertainment and information
      programs for webcasting over the Internet from its HollywoodBroadcasting.com
      website.  HB.C
      and
      other content providers relied upon the availability of the specified revenue
      streams as the platform for their business model. The Company was not able
      to
      generate significant revenues from any of the sources it relied upon in
      establishing its business model, and it is now apparent that the model was
      based
      on false assumptions.





On
      September 28, 2001, the Company completed the sale of its wholly-owned
      subsidiary HollywoodBroadcasting.com for $1,000 in cash.





**Prior
      Business Activities**





On
      February 27, 2002, the Company signed a distribution agreement with EPI.
 EPI has a distribution agreement with Romlight, with offices at Stevmar
      House, Rockley, Christ Church Barbados, West Indies.  Under this agreement,
      the Company was to be the sole sub-distributor for the length of the
      contract.





The
      distribution agreement between Romlight and EPI was signed October 5, 2000.
       The initial purchase for the first year was 20,000 units of a Romlight
      ballast.  Romlight was not able to supply the ballasts in 2001, and
      therefore, the contract took effect in 2002 when Romlight could produce and
      deliver the ballasts.  During the 2003 fiscal year, the Company took
      delivery of 500 ballasts valued at approximately $45,000 (Cdn $70,000).  On
      January 23, 2003, the Company terminated its agreement with EPI and began an
      agreement with Romlight, the manufacturer of the ballasts.  During the
      fiscal year ended February 29, 2004, the Company received samples of 600-watt
      ballast produced for Romlight by a Korean manufacturer, but did not sell any
      of
      the product due to quality concerns.





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          23




A
      deposit
      of $183,454 (Cdn $245,920) was issued to Romlight through EPI pursuant to their
      agreement.  The deposit was to be applied to the last 1,000 ballasts and
      was to give the Company the exclusive rights to sell Romlight ballasts to the
      hydroponic market.  Management performed an impairment assessment on this
      long-term asset and determined that, due to quality controls issues, the asset
      was impaired and therefore wrote off the entire deposit.





**Current
      Operations**





On
      May 3,
      2004, we entered into a Share Exchange Agreement with the shareholders of Sierra
      Minerals. As a result of this transaction, Sierra Minerals became our wholly
      owned subsidiary. Pursuant to the Share Exchange Agreement, we agreed to loan
      MRT, on behalf of Sierra Minerals, $147,500 to be evidenced by an 8% promissory
      note signed by MRT. In addition, pursuant to this transaction, we issued an
      aggregate of 6,000,000 5-year options to purchase shares of our pre-split common
      stock, at a price of $0.01 per share as compensation for finders’ fees. Of such
      options, 3,000,000 were issued to T.R. Winston & Company, LLC and 3,000,000
      were issued to Liberty Management, LLC. Neither T.R. Winston nor Liberty
      Management are affiliates of Mexoro Minerals Ltd.





Sierra
      Minerals was a party to a Joint Venture Agreement, dated April 26, 2004 and
      amended on June 1, 2004, by and between Sierra Minerals and MRT. MRT had
      interests in exploration properties, which it received in an agreement with
      Corporative Minero, as explained below. Because Sierra Minerals was not a
      Mexican corporation, it could not hold title to the mineral interests itself,
      which is why the joint venture with MRT was needed.





On
      August
      25, 2005, we cancelled the Joint Venture Agreement and entered into a new
      arrangement with MRT. Instead of a joint venture, we formed a new wholly-owned
      subsidiary, Sunburst de Mexico, which is incorporated in Mexico. This
      restructuring allowed us to take title to the properties directly in the name
      of
      Sunburst de Mexico. We entered into agreements with MRT which gave Sunburst
      de
      Mexico options in the concessions of the Cieneguita and Guazapares properties
      and the right of first refusal on two Encino Gordo properties (collectively,
      the
“Property Agreements”). The parties also entered into an Operating Agreement
      which gave MRT the sole and exclusive right and authority to manage the
      Cieneguita Property.





On
      December 8, 2005, Mexoro and Sunburst de Mexico entered into a New Agreement
      with MRT (the “New Agreement’) to exercise their option under the August 18,
      2005 Sale and Purchase of Mining Concessions Agreement to obtain two mining
      concessions in the Encino Gordo region. The New Agreement also gave Mexoro
      the
      option to obtain three additional concessions in the Encino Gordo region. These
      properties are located in the State of Chihuahua, Mexico.





The
      following are the material terms of the New Agreement:




(1)
            The
                Operator’s Agreement with MRT was
                cancelled




(2)
            The
                Company granted MRT the option to buy all of the outstanding shares
                of
                Sunburst de Mexico for $100 if the Company failed to transfer $1.5
                million
                to Sunburst de Mexico by April 30, 2006. On April 6, 2006, MRT agreed
                to
                waive its option to purchase the shares of Sunburst de Mexico and
                also
                waived Mexoro’s obligation to transfer $1.5 million to Sunburst de
                Mexico.




(3)
            The
                Property Agreements were modified to change the net smelter rate
                to a
                maximum of 2.5% for all properties covered by the
                Agreements.




(4)
            The
                Company agreed to issue 2,000,000 shares of Mexoro to MRT within
                four
                months of the date of the signing of the New Agreement. These shares
                were
                issued to MRT and its assignee on February 23, 2006. This issuance
                fulfilled the Company’s payment obligations under the previous Property
                Agreements.




(5)
            The
                Company agreed to issue 1,000,000 additional shares of Mexoro common
                stock
                to MRT if and when the Cieneguita Property is put into production
                and it
                reaches 85% of production capacity over a 90-day period, as defined
                in the
                New Agreement.





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MRT
      entered into an agreement with Corporative Minero on January 12, 2004 by which
      it acquired the right to explore and exploit the Cieneguita Property and
      purchase it for $2,000,000. Under our
      agreements with MRT, MRT has assigned this agreement to us. As of the date
      of
      this annual report, $360,000 of the $2,000,000 has been paid to Corporative
      Minero. The parties intend that the remainder will be paid out of production
      from the Cieneguita Property at a rate of $20 dollars
      per ounce of gold sold. However, in the event that the price of gold is in
      excess of $400, then Sunburst de Mexico is required to pay an additional $.10
      per each ounce for every dollar over $400. Sunburst de Mexico has the obligation
      of bringing the property to production on or prior to May 6, 2006. If the
      Cieneguita mine is not in production by such time, Sunburst de Mexico has the
      obligation to pay $50,000 on May 6, 2006 and then $120,000 per year, until
      the
      total of $2 million is paid or the mine is put into production and the remaining
      payments are paid from the sale of gold, to avoid termination of the agreement.
      Corporative Minero has the obligation to pay from the funds they receive from
      us
      any royalties that may be outstanding on the properties from prior periods.
      Corporative Minero has informed us that there were royalties up to 4% Net
      Smelter Return owned by various former owners of the property. They have
      informed us that the corporations holding those royalties have been dissolved
      and that there is no further legal requirement to make these royalty payments.
      We can make no assurance, though, that we ultimately may be responsible to
      pay
      all or some of the 4% Net Smelter Return to these former royalty holders if
      the
      property was ever put into production.





Through
      Sunburst de Mexico, we are engaged in the exploration and development of three
      gold and silver exploration properties: the Cieneguita property, the Guazapares
      property, and the Encino Gordo property. In addition, we intend to identify
      and
      option additional gold and silver properties within the Chihuahua region if
      possible. We will utilize our management’s contacts in the Mexican mining
      community in order to find additional potential properties that may be
      available. No assurance may be given that we will be able to obtain additional
      properties should any become available to us.





**Employees**





We
      currently have no employees. All mineral exploration and operations are
      contracted out to third parties. In the event that our exploration projects
      are
      successful and warrant the development of a mine, all such operations would
      be
      contracted out to third parties. Also, we rely on members of management to
      handle all matters related to business development and business
      operations.




**ITEM
      2.**  **DESCRIPTION
      OF PROPERTY**





We
      currently maintain an office at 609 Granville Street, Suite 880, Vancouver,
      BC,
      Canada, V7Y 1G5. Our telephone number is (800) 661-7830. The office is part
      of
      an “office service” arrangement for which we pay Cdn$400 ($344 USD) per month.
      It is on a month-to-month basis and is rented from MCSI, a company controlled
      by
      an officer and director of Mexoro. The office service package also supplies
      a
      receptionist, clerical help and access to a boardroom.





We
      also
      maintain an office in Mexico for our wholly owned subsidiary, Sunburst de
      Mexico, located at Ave. Pascual Orozco No. 2117-Altos Col. La Cima C.P. 31310
      Chihuahua, Chih. Mexico. The lease is on a month-to-month basis and is part
      of
      an office service package where we have access to a receptionist, clerical
      help,
      and a boardroom. The office is leased from MRT, a company controlled by an
      officer and director of Mexoro and we pay $5,000 per month for this
      service.





As
      described above, we have interests in the Cieneguita, Guazapares and Encino
      Gordo properties.





**ITEM
      3.**  **LEGAL
      PROCEEDINGS**





Neither
      Mexoro nor its property is the subject of any pending legal proceedings, and
      no
      such proceeding is known to be contemplated by any governmental authority.
      We
      are not aware of any legal proceedings in which any director, officer or
      affiliate of Mexoro, any owner of record or beneficially of more than 5% of
      any
      class of our voting securities, or any associate of any such director, officer,
      affiliate or security holder of Mexoro, is a party adverse to Mexoro or any
      of
      its subsidiaries or has a material interest adverse to Mexoro or any of its
      subsidiaries.





**ITEM
      4.**  **SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS**





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On
      February 13, 2006, the shareholders of the Company approved a name change form
      Sunburst Acquisitions IV, Inc. to Mexoro Minerals Ltd., and a reverse split
      of
      its issued and outstanding common stock with a ratio of 1 new share for each 50
      old
      shares. Prior to the reverse split, the Company has 189,994,324 shares of Common
      Stock issued and outstanding. After the reverse stock split, there will be
      approximately 3,799,887 shares of Common Stock issued and
      outstanding.




The
      shareholders of the Company also approved a Stock Compensation Program. The
      reverse split and the name change to Mexoro Minerals Ltd. were both effective
      as
      of the open of business on February 15, 2006.




**PART
      II**




**ITEM
      5.**  **MARKET
      FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS**





The
      Company's common stock is currently traded on the Over the Counter, Bulletin
      Board under the symbol “MXOM”. The following table sets forth the Company's high
      and low closing prices for the Company's common stock as reported on the
      Bulletin Board for the periods indicated.





Fiscal
                Year Ending February 28, 2006
            
            High
            
            LowFirst
                Quarter
            
            $
            2.00
            
            $
            1.00Second
                Quarter
            
            $
            5.50
            
            $
            1.00Third
                Quarter
            
            $
            4.70
            
            $
            1.00Fourth
                Quarter
            
            $
            2.55
            
            $
            0.75





Fiscal
                Year Ending February 28, 2005
            
            High
            
            LowFirst
                Quarter
            
            $
            14.50
            
            $
            9.00Second
                Quarter
            
            $
            13.00
            
            $
            3.00Third
                Quarter
            
            $
            9.50
            
            $
            3.00Fourth
                Quarter
            
            $
            4.00
            
            $
            2.50




The
      prices presented are bid prices which represent prices between broker-dealers
      and do not include retail mark-ups and mark-downs or any commission to the
      dealer. The prices may not reflect actual transactions.





As
      of
      February 28, 2006, there were approximately 213 stockholders of record of the
      Company's common stock.





There
      have been no cash dividends declared or paid on the shares of common stock,
      and
      management does not anticipate payment of dividends in the foreseeable
      future.




**ITEM
      6.**  **MANAGEMENT'S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION**





SPECIAL
      NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS





Certain
      statements in this report, including statements in the following discussion
      which are not statements of historical fact, are what are known as "forward
      looking statements", which are basically statements about the future. For that
      reason, these statements involve risk and uncertainty since no one can
      accurately predict the future. Words such as "plans," "intends," "will,"
      "hopes," "seeks," "anticipates," "expects "and the like often identify such
      forward looking statements, but are not the only indication that a statement
      is
      a forward looking statement. Such forward looking statements include statements
      concerning our plans and objectives with respect to the present and future
      operations of the Company, and statements which express or imply that such
      present and future operations will or may produce revenues, income or profits.
      Numerous factors and future events could cause the Company to change such plans
      and objectives or fail to successfully implement such plans or achieve such
      objectives, or cause such present and future operations to fail to produce
      revenues, income or profits. Therefore, the reader is advised that the following
      discussion should be considered in light of the discussion of risks and other
      factors contained in this report on Form 10-KSB and in the Company's other
      filings with the Securities and Exchange Commission. No statements contained
      in
      the following discussion should be construed as a guarantee or assurance of
      future performance or future results.





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We
      are a
      start-up exploration stage company and have not yet generated or realized any
      revenues from our exploration or mining business operations, which we commenced
      in May 2004. We have sufficient cash to maintain our operations until April
      2007.





Our
      continued existence and plans for future growth depend on our ability to obtain
      the additional capital necessary to operate either through the generation of
      revenue or the issuance of additional debt or equity. While we believe that
      we
      raised sufficient funds in our recent private placement offering of convertible
      debentures to allow us to continue in business until April 2007, we may not
      be
      able to continue in business beyond that date unless we obtain additional
      capital. W e
      have
      not generated any revenues,
      and no revenues are anticipated unless and until mineralized material is
      discovered on the properties in which we have an interest.





We
      are
      not planning to buy or sell any plant or significant equipment in the next
      six
      month. In the event that our exploration is successful on our Cieneguita
      property, we anticipate spending approximately $1,100,000 on equipment and
      building a plant to put that property into production. The ability to buy such
      equipment would be dependent upon our cash position at that time and our ability
      to raise additional capital, if needed.





Plan
      of Operations





Our
      business plan is to proceed with the exploration of our Mexican mineral
      properties to determine whether they contain commercially exploitable reserves
      of gold, silver or other metals.





As
      we
      already have data from the previous exploration programs and mining records
      from
      Glamis Gold, our exploration program on the Cieneguita Property will focus
      mainly on identifying drill targets for a subsequent drilling program. We expect
      the cost to be approximately $200,000 over the next 12 months. The proposed
      pre-drilling exploration program would include the review of available data
      to
      create a structural mineralization framework, detailed soil and rock sampling,
      resampling existing trenches, the extension of existing trenches, the creation
      of new trenches, and the use of ground-based geophysics to measure the
      conductivity of underground rocks. Ground-based geophysics is a technique for
      exploring for minerals using electromagnetic impulses and the various resistance
      of the rocks to the conduction of the electromagnetic signals generated by
      the
      equipment. The conductivity of the rocks is compared to known rock formations
      to
      help indicate the types of rock that may be found underground where the
      geophysical work is done.





Concurrently
      with our exploration of Cieneguita, we have an exploration program, budgeted
      at
      approximately $450,000 for the next 12 months, on our Guazapares Property.
      This
      exploration program has the goal of determining whether subsequent exploration
      is warranted and if a drill program should be commenced. It will include
      reviewing available data to create a structural mineralization framework,
      detailed soil and rock sampling, and ground-based geophysics measurements. Most
      of
      the mining concessions being explored in the Guazapares area are epithermal
      silver deposits similar to the Cieneguita property. The geology from other
      properties in that area that have defined their deposit will serve as a guide
      when exploring the Guazapares property. As we do not have the same amount of
      detailed information on Guazapares as we do on Cieneguita, the exploration
      program will cost more than the exploration program on Cieneguita.





We
      have
      also planned an exploration program, budgeted at approximately $200,000 for
      the
      next 12 months, on our Encino Gordo Property. The property is comprised of
      four
      mining concessions that total 1,042 hectares (approximately 2,575 acres).
      Previous geochemical sampling indicates a presence of mineralized structures,
      including gold and silver anomalies. These anomalies will be investigated to
      determine if further exploration is warranted and to help refine the best
      drilling targets. Additional expenditures would be required before the
      determination of drill targets could be made.





Although
      two of our properties have been mined in the past, we are presently in the
      exploration stage and there is no assurance that a commercially viable mineral
      deposit exists in any of our properties. We do not have any proven or probable
      reserves on our properties.





8
          of
          23




Our
      exploration programs on our properties have only just commenced as of the date
      of this filing. We have one geologist doing some preliminary mapping and
      sampling on each of the properties. We have made a business decision to place
      a
      higher priority on the Cieneguita exploration program to define drill
      targets. However, we intend to proceed with exploration
      on all three properties simultaneously. We have engaged independent contractors
      to perform the exploration work with respect to the exploration programs. We
      do
      not anticipate buying equipment, other than transportation equipment, until
      construction of Cieneguita mine is initiated, if ever. We anticipate that the
      exploration program on our Cieneguita and Guazapares Properties will be
      completed within the next six months. If our exploration programs warrant
      drilling programs in the Cieneguita and Guazapares properties, we anticipate
      contracting two geologists and four assistants for supervising the drilling
      work
      and taking splits for the drilling samples.





Once
      we
      receive results from these exploration programs, our board of directors will
      assess whether to proceed to any further exploration phases. In making this
      determination, we will make an assessment as to whether the results are
      sufficiently positive to enable us to obtain the financing necessary to
      proceed.





Results
      of Operations





References
      in the discussion below to 2006 are to our current fiscal year ended February
      28, 2006, while references to 2005 are to our fiscal year ended February 28,
      2005.





**Year
      ended February 28, 2006 compared to the year ended February 28,
      2005.**





**Revenues**





We
      did
      not earn revenues during 2006 or 2005 as we did not have commercial production
      of any of our properties. Interest income is recorded under Other Income in
      the
      Statement of Operations in the financial statements.





**Operating
      Costs**





We
      did
      not incur any operating costs during the years ended 2006 and 2005 due to the
      fact that we did not achieve production from exploration activities during
      either year.





**Expenses**





Our
      expenses increased to $15,606,259 for 2006 compared to $1,437,665 for 2005,
      representing an increase of $14,168,594. The increase in expenses was primarily
      attributable to increases in our stock-based compensation and acquisition of
      resource properties during 2006. We anticipate that our cash expenses will
      increase in fiscal 2007 due to the fact that we have commenced exploration
      activities on our Mexican
      mineral properties .





Our
      increased activity on our mineral properties in 2006 resulted in an increase
      to
      our acquisition of resource properties to $2,310,922 for 2006 compared to
      $1,113,300 for 2005, representing an increase of $1,197,622. The increase in
      acquisition of resource properties was attributable to 2,000,000 shares issued
      at market price of $1.05 in February 2006. Again, we anticipate that exploration
      expenses will increase in fiscal 2007 as a result of exploration activities
      on
      our Mexican
      mineral properties .





Management
      fees increased to $187,000 in 2006 from $nil for 2005. The increase in 2006
      is
      attributable to a new management team appointed in fiscal 2006.





Stock-based
      compensation increased to $12,926,000 in 2006 from $262,755 in 2005. The
      increase in 2006 is primarily attributable to an $8,680,000 charge from a
      financing, and a $3,898,000 expense from warrants issued. There was also a
      $248,000 charge from options vested and $100,000 in shares issued for
      services.





**Loss**





9
          of
          23




Our
      loss
      increased to $16,194,635 for 2006 compared to $1,617,788 for 2005, representing
      an increase of $14,576,847. This increase in our loss was primarily attributable
      to the increase stock-based compensation and shares issued for acquisition
      of
      resource properties, as discussed above. We anticipate that we will continue
      to
      incur a loss until such time as
      we can
      commence the development stage of our operations and achieve significant
      revenues from sales of gold recovered from our Mexican
      mineral properties .
      There
      is no assurance that we will commence the development stage of our operations
      at
      any our Mexican
      mineral properties or
      achieve revenues.





Liquidity
      and Capital Resources





**Cash
      and Working Capital**





We
      had
      cash of $479,530 as of February 28, 2006, compared to cash of $35,122 as of
      February 28, 2005. We had working capital of $45,944 as of February 28, 2006,
      compared to a working capital deficiency of $722,213 as of February 28,
      2005.





We
      will
      require additional financing during the current fiscal year due to our current
      working capital deficiency, our plan of operations for our Mexican
      mineral properties ,
      our
      planned exploration activities and our plan to continue to pursue financing
      through the issuance of our common stock and debt. We plan to spend
      approximately $850,000 in the next twelve months to carry out exploration and
      administration activities on our Mexican
      mineral properties and in the event that our exploration is successful on our
      Cieneguita property, we anticipate spending a further $1,100,000 on equipment
      and building a plant to put that property into production .
      We
      anticipate spending approximately $480,000 during the next twelve months on
      general and administrative costs. We presently have sufficient financing to
      enable us to proceed with these plans, but will require additional financing
      to
      perform future exploration work our Mexican
      mineral properties .
      Our
      actual expenditures on these activities will depend on the actual amount of
      funds that we have available as a result of our financing efforts. There is
      no
      assurance that we will be able to raise the necessary financing.





**Cash
      Used in Operating Activities**





Cash
      used
      in operating activities increased to $1,183,771 for 2006 compared to $724,064
      for 2005. We funded the cash used in operating activities primarily through
      equity sales of our common shares, convertible debt, and issuing promissory
      notes.




**Financing
      Activities**





Cash
      provided by financing activities increased to $1,629,059 for 2006 compared
      to
      $737,109 for 2005. All cash provided by financing activities was provided by
      convertible debt, promissory notes, exercise of stock options, and share
      issuances. Cash provided by financing activities was used to fund our operating
      and investing activities.





We
      anticipate continuing to rely on equity sales of our common stock or issuance
      of
      debt in order to continue to fund our business operations. Issuances of
      additional shares will result in dilution to our existing shareholders.
      Subsequent to February 28, 2006, we have closed two private placements through
      the issuance of common stock and debt and raised gross proceeds of $3,242,500
      which includes $652,000 debentures issued and $170,000 subscriptions received
      at
      February 28, 2006.





**Convertible
      Debt**





The
      amount of our convertible debt outstanding at February 28, 2006 was $652,000,
      compared to $705,000 at February 28, 2005.





In
      2005,
      $675,000 of the $705,000 convertible debt was issued for cash proceeds of
      $500,000 and $175,000 was charged as interest. On August 10, 2005, the Company
      and the financiers agreed to retire the $675,000 convertible debt including
      all
      associated principal, terms, warrants and rights for the amount of $500,000
      plus
      8% interest. On September 21, 2005, the Company repaid in full the principal
      of
      $500,000 plus interest charges of $41,815. As a result of this payment, the
      $675,000 convertible debt was terminated and the associated warrants and
      additional investment rights were cancelled.





10
          of
          23




Another
      convertible debenture in the amount of $30,000 was issued on January 15, 2004.
      The conversion of principal and accrued interest (8% per year) was at the rate
      of $0.02 per share of common stock. On December 21, 2005, the Company repaid
      the
      $30,000 convertible debenture plus accrued interest of $4,645.





The
      Company issued $300,000 in convertible debentures in December 2005 to three
      lenders. These funds were unsecured, non-interest bearing and had no specific
      date of repayment. On January 6, 2006, this debenture was converted and the
      Company issued 100,000,000 shares of common stock.





In
      January 2006, the Company issued convertible debentures, with principal and
      accrued interest at 7% per year, convertible into units at
      the
      option of the holder . Each
      unit
      consists of a warrant to purchase 25,000 of the Company’s common shares at $1.00
      and $25,000 of debt, which may be converted to common shares at $0.50 per
      share and is
      exercisable until April 30, 2008.  As at February 28, 2006, the Company had
      issued convertible debentures in the amount of $652,000.





**Going
      Concern**





Our
      financial statements have been prepared on a going concern basis, which assumes
      the realization of assets and settlement of liabilities in the normal course
      of
      business. Our ability to continue as a going concern is dependent upon our
      ability to generate profitable operations in the future and/ or to obtain the
      necessary financing to meet our obligations and repay our liabilities arising
      from normal business operations when they become due. The outcome of these
      matters cannot be predicted with any certainty at this time and raise
      substantial doubt that we will be able to continue as a going concern. Our
      financial statements do not include any adjustments to the amount and
      classification of assets and liabilities that may be necessary should we be
      unable to continue as a going concern.





The
      Company has a history of operating losses and will need to raise additional
      capital to fund its planned operations. As at February 28, 2006, the Company
      had
      working capital of $45,944 (2005 - $722,213 working capital deficiency) and
      a
      cumulative loss of $19,815,850 (2005 - $3,621,215) of which $17,812,423 was
      incurred within the past two fiscal years. These conditions raise substantial
      doubt about the Company’s ability to continue as a going concern.





The
      Company intends to reduce its cumulative loss through the attainment of
      profitable operations, from its investment in a Mexican mining venture. In
      addition, the Company has conducted private placements of convertible debt
      and
      common stock, which have generated a portion of the initial cash requirements
      of
      its planned Mexican mining ventures.





**CRITICAL
      ACCOUNTING POLICIES**





**Use
      of estimates**





The
      preparation of financial statements in conformity with US generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the reported amounts of assets and liabilities and disclosures of
      contingent assets and liabilities at the date of the financial statements and
      the reported amounts of revenues and expenses during the reporting period.
      Actual results could differ from those estimates and would impact future results
      of operations and cash flows.





**Foreign
      currency translation**





The
      Company’s functional and reporting currency is the United States dollar.
      Monetary assets and liabilities denominated in foreign currencies are translated
      to United States dollars in accordance with SFAS No. 52 *“Foreign
      Currency Translation”* using
      the exchange rate prevailing at the balance sheet date. Gains and losses arising
      on translation or settlement of foreign currency denominated transactions or
      balances are included in the determination of income. Foreign currency
      transactions are primarily undertaken in Canadian dollars. The Company has
      not,
      to the date of these financials statements, entered into derivative instruments
      to offset the impact of foreign currency fluctuations.





**Stock-based
      compensation**





11
          of
          23




SFAS
      No.
      123(R) - Accounting for Stock-Based Compensation allows companies to choose
      whether to account for stock-based compensation under the method prescribed
      in
      Accounting Principles Board Opinion No. 25 (“APB 25”) or use the fair value
      method described in SFAS No. 123(R). For purposes of options granted to
      employees, the Company continues to follow the accounting measurement provisions
      of APB 25 and implements the disclosure provisions of SFAS No.
      123(R).





During
      the year ended February 28, 2006, the Company issued 800,000 options under
      its
      incentive stock option plan.





**Mineral
      claim payments and exploration costs**





We
      expense all costs related to the acquisition, maintenance and exploration of
      mineral claims in which we have secured exploration rights prior to
      establishment of proven and probable reserves. To date, we have not established
      the commercial feasibility of our exploration prospects, therefore, all costs
      are being expensed.





**ITEM
      7.**  **FINANCIAL
      STATEMENTS AND EXHIBITS**




**MEXORO
      MINERALS LTD.**


**(Formerly
      Sunburst Acquisition IV, Inc.)**


**(An
      Exploration Stage Company)**





**Consolidated
      Financial Statements**


**February
      28, 2006**


**(U.S.
      Dollars)**








**Index**
            **Page****Report
              of Independent Registered Public Accounting Firm**
            F-1**Consolidated
              Financial Statements**Consolidated
              Balance Sheets
            F-2Consolidated
              Statements of Stockholders’ Deficiency
            F-3Consolidated
              Statements of Operations and Retained Earnings (Deficit)
            F-4Consolidated
              Statements of Cash Flows
            F-5Notes
              to Consolidated Financial Statements
            F-6
                -
                F-17









**Pannell
          Kerr Forster**
  
 International
  7th
        Floor, Marine Building
 355
        Burrard Street,
 Vancouver,
        B.C.,
 Canada,
        V6C 2G8
 Telephone:
        604.687.1231
 Facsimile:
        604.688.4675







**REPORT
      OF
      INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**





**TO
      THE
      SHAREHOLDERS OF MEXORO MINERALS LTD.**


**(Formerly
      Sunburst Acquisitions IV, Inc.)**


**(An
      Exploration Stage Company)**





We
      have audited the
      accompanying consolidated balance sheets of Mexoro Minerals Ltd. (formerly
      Sunburst Acquisitions IV, Inc.) (An Exploration Stage Company) as at February
      28, 2006 and 2005 and the consolidated statements of stockholders’ deficiency,
      operations and retained earnings (deficit), and cash flows for the years ended
      February 28, 2006 and 2005 and the period from inception of exploration stage
      (March 1, 2004) to February 28, 2006. These financial statements are
      the responsibility of the Company’s management. Our responsibility is to express
      an opinion on these financial statements based on our audits. The related
      statements of stockholders’ deficiency, operations and retained earnings
      (deficit), and cash flows from inception of the development stage on August
      27,
      1997 to February 29, 2004 were audited by other auditors whose reports
      dated May 24, 2004 and May 27, 2003 expressed unqualified opinions, with an
      explanatory paragraph discussing the Company’s ability to continue as a
      going-concern. Our opinion on the stockholders’ deficiency, statements of
      operations and retained earnings (deficit), and cash flows from inception of
      the
      development stage to February 29, 2004, is solely based on the reports of
      other auditors.





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





In
      our opinion, the
      consolidated financial statements referred to above present fairly, in all
      material respects, the financial position of the Company as at February 28,
      2006
      and 2005 and the results of its operations and its cash flows for the periods
      indicated above in conformity with accounting principles generally accepted
      in
      the United States of America.





The
      accompanying
      financial statements have been prepared assuming that the Company will continue
      as a going-concern. As discussed in note 3, the Company has sustained operating
      losses since its inception and has deficits in working capital and equity,
      which
      raises substantial doubt about its ability to continue as a going-concern.
      The
      financial statements do not include any adjustments related to the
      recoverability and classification of asset carrying amounts or the amounts
      and
      classification of liabilities that might result should the Company be unable
      to
      continue as a going-concern. Management’s plans in regard to these matters,
      which include a private placement of securities, are also described in
      note 3.











*/s/
      Pannell Kerr
      Forster*








Chartered
      Accountants


(registered
      with the
      PCAOB as “Smythe Ratcliffe”)





Vancouver,
      Canada


May
      20,
      2006




F-1




**MEXORO
      MINERALS LTD.**


**(Formerly
      Sunburst Acquisitions IV, Inc.)**


**(An
      Exploration Stage Company)**


**Consolidated
      Balance Sheets**


**(U.S.
      Dollars)**





**February
                28,**
              **2006**
            
            
            **February
                28,**
              **2005****Assets****Current**Cash
                and cash
                equivalents
            $
            479,530
            
            $
            35,122Accounts
                receivable
            
            10,069
            
            
            -Prepaid
                expenses
            
            48,269
            
            
            8,113537,868
            
            
            43,235**Equipment**(note 4)
            
            880
            
            
            -**Total
                Assets**
            $
            538,748
            
            $
            43,235**Liabilities****Current**Accounts
                payable and accrued liabilities
            $
            71,865
            
            $
            31,948Promissory
                notes (note 6)
            
            420,059
            
            
            28,500Current
                portion of convertible debentures (note 7)
            
            -
            
            
            705,000491,924
            
            
            765,448**Convertible
                Debentures** (note 7)
            
            652,000
            
            
            -**Total Liabilities**
            
            1,143,924
            
            
            765,448**Stockholders’
                Deficiency****Capital
                Stock**Preferred
                stockAuthorized:
                20,000,000 shares without par value (note 8)Issued:
                nil
            
            -
            
            
            -Common
                stockAuthorized:
                200,000,000 shares without par valueIssued:
                12,799,902 (2005 - 1,737,902)
            
            5,048,977
            
            
            2,435,977Additional
                paid-in capital
            
            13,990,646
            
            
            457,146Stock
                subscriptions
            
            170,000
            
            
            -Accumulated
                deficit from prior operations
            
            (2,003,427
            
            
            (2,003,427
            )Accumulated
                deficit during the exploration stage
            
            (17,812,423
            
            
            (1,617,788
            )Other
                comprehensive income
            
            1,051
            
            
            5,879**Total
                Stockholders’ Deficiency**
            
            (605,176
            
            
            (722,213
            )**Total
                Liabilities and Stockholders’ Deficiency**
            $
            538,748
            
            $
            43,235





Continuing
      operations (note 3)


Commitments
      (note
      5)


Subsequent
      events
      (note 13)




The
            Accompanying Notes are an Integral Part of These Financial
            Statements.
 F-2




**MEXORO
        MINERALS LTD.**
 **(Formerly
        Sunburst Acquisitions IV, Inc.)**
 **(An
        Exploration Stage Company)**
 **Consolidated
        Statements of Stockholders’ Deficiency**
 **Period
        from
        Inception August 27, 1997 to February 28, 2006**
 **(U.S.
        Dollars)**




Number
                  of
                Shares
              
              
              Amount
              
              
              Additional
                Paid-in
                  Capital
              
              
              Stock
                Subscriptions
              
              
              Deficit
                Accumulated
                from
                  Prior
                Operations
              
              
              Deficit
                Accumulated
                During
                  the
                Exploration
                Stage
              
              
              Other
                Comprehensive
                Income
                  (Loss
              )
              
              Total
                Stockholders’
                DeficiencyBalance
                  from
                  prior operations,March
                  1,
                  200
              
              
              35,457,597
              
              $
              1,701,843
              
              $
              194,391
              
              $
              67,025
              
              $
              (2,003,427
              )
              $
              -
              
              $
              8,929
              
              $
              (31,239
              )Common
                  stock
                  issued in share exchange
              
              
              43,000,000
              
              
              430,000
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              430,000Common
                  stock
                  issued for cash
              
              
              5,661,095
              
              
              269,134
              
              
              -
              
              
              (67,025
              )
              
              -
              
              
              -
              
              
              -
              
              
              202,109Options
                  exercised
              
              
              2,500,000
              
              
              35,000
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              35,000Options
                  issued
              
              
              -
              
              
              -
              
              
              262,755
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              262,755Warrants
                  exercised
              
              
              275,632
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -Foreign
                  exchange translation adjustment
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (3,050
              )
              
              (3,050
              )Net
                  loss for
                  year
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (1,617,788
              )
              
              -
              
              
              (1,617,788
              )Balance,
                  February 28, 2005
              
              
              86,894,324
              
              
              2,435,977
              
              
              457,146
              
              
              -
              
              
              (2,003,427
              )
              
              (1,617,788
              )
              
              5,879
              
              
              (722,213
              )Common
                    stock
                    issued for consulting services
              
              
              1,500,000
              
              
              100,000
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              100,000Options
                  exercised
              
              
              1,600,000
              
              
              43,000
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              43,000Common
                  stock
                  issued on conversion of debenture
              
              
              100,000,000
              
              
              300,000
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              300,0001:50
                  consolidation of common stock
              
              
              (186,194,422
              )
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -Common
                  stock
                  issued in property acquisition
              
              
              2,000,000
              
              
              2,100,000
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              2,100,000Common
                  stock
                  issued for cash
              
              
              7,000,000
              
              
              70,000
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              70,000Stock-based
                  compensation for February2006
                  issue
              
              
              -
              
              
              -
              
              
              8,680,000
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              8,680,000Options
                  issued
              
              
              -
              
              
              -
              
              
              248,000
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              248,000Warrants
                  issued
              
              
              -
              
              
              -
              
              
              3,898,000
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              3,898,000Intrinsic
                    value of beneficial conversionoption of
                  convertible debentures
              
              
              -
              
              
              -
              
              
              707,500
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              707,500Stock
                  subscriptions
              
              
              -
              
              
              -
              
              
              -
              
              
              170,000
              
              
              -
              
              
              -
              
              
              -
              
              
              170,000Foreign
                  exchange translation adjustment
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (4,828
              )
              
              (4,828
              )Net
                  loss for
                  year
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (16,194,635
              )
              
              -
              
              
              (16,194,635
              )Balance,
                  February 28, 2006
              
              
              12,799,902
              
              $
              5,048,977
              
              $
              13,990,646
              
              $
              170,000
              
              $
              (2,003,427
              )
              $
              (17,812,423
              )
              $
              1,051
              
              $
              (605,176
              )


The
              Accompanying Notes are an Integral Part of These Financial
              Statements.
 F-3




**MEXORO
      MINERALS LTD.**


**(Formerly
      Sunburst Acquisitions IV, Inc.)**


**(An
      Exploration Stage Company)**


**Consolidated
      Statements of Operations and Retained Earnings (Deficit)**


**(U.S.
      Dollars)**




**Year
                  Ended**
              
              **Period
                  of Inception of**
                **Exploration
                  Stage**
                **(March
                  1, 2004)****February
                  28,**
                **2006**
              
              
              **February
                    28,**
                  **2005**
              
              
              **to
                  February 28**
                **2006****Expenses**General
                  and
                  administrative
              
              $
              9,149,337
              
              $
              324,365
              
              $
              9,473,702Stock-based
                  compensation
              
              
              4,146,000
              
              
              -
              
              
              4,146,000Acquisition
                  of resource properties
              
              
              2,310,922
              
              
              1,113,300
              
              
              3,424,222**Operating
                  Loss**
              
              
              (15,606,259
              )
              
              (1,437,665
              )
              
              (17,043,924
              )**Other
                  Income (Expenses)**Interest
              
              
              (721,561
              )
              
              (180,123
              )
              
              (901,684
              )Gain
                  on
                  settlement of debt (note 7)
              
              
              133,185
              
              
              -
              
              
              133,185**Loss
                  from Operations**
              
              
              (16,194,635
              )
              
              (1,617,788
              )
              
              (17,812,423
              )**Net
                  Loss**
              
              
              (16,194,635
              )
              
              (1,617,788
              )
              
              (17,812,423
              )**Accumulated
                  Deficit, Beginning**
              
              
              (1,617,788
              )
              
              -
              
              
              -**Accumulated
                  Deficit, Ending**
              
              $
              (17,812,423
              )
              $
              (1,617,788
              )
              $
              (17,812,423
              )**Other
                  Comprehensive Income**Foreign
                  exchange gain on translation
              
              
              1,051
              
              
              5,879
              
              
              15,858**Total
                  Comprehensive Loss**
              
              $
              (16,193,584
              )
              $
              (1,611,909
              )
              $
              (17,796,565
              )**Total
                  Loss Per Share** - basic and diluted
              
              $
              (7.41
              )
              $
              (1.09
              )**Weighted
                  Average Number of Shares of****Common
                  Stock** - basic and diluted
              
              
              2,184,686
              
              
              1,479,687




The
              Accompanying Notes are an Integral Part of These Financial
              Statements.
 F-4




**MEXORO
      MINERALS LTD.**


**(Formerly
      Sunburst Acquisitions IV, Inc.)**


**(An
      Exploration Stage Company)**


**Consolidated
      Statements of Cash Flows**


**(U.S.
      Dollars)**





**Year
                Ended**
            
            **Period
                from**
              **Inception
                of**
              **Exploration
                Stage**
              **(March
                1, 2004)****February
                28,**
              **2006**
            
            
            **February
                28,**
              2005
            
            
            **to
                  February 28,**2006**Operating
                Activities******Net
                loss
            
            $
            (16,194,635
            )
            $
            (1,617,788
            )
            $
            (17,812,423
            )Adjustments
                to reconcile net income (loss) to net cash flowsAcquisition
                of resource properties for stock
            
            
            2,100,000
            
            
            487,500
            
            
            2,587,500Discount
                on
                convertible debenture
            
            
            -
            
            
            175,000
            
            
            175,000Effect
                of
                foreign currency translation on cash
            
            
            (4,828
            )
            
            (3,050
            )
            
            14,199Stock-based
                compensation
            
            
            12,926,000
            
            
            262,755
            
            
            13,188,755Beneficial
                conversion feature
            
            
            707,500
            
            
            -
            
            
            707,500Prepaid
                expense
            
            
            (40,156
            )
            
            (1,633
            )
            
            (41,789
            )Accounts
                receivable
            
            
            (10,069
            )
            
            8,206
            
            
            (1,863
            )Customer
                deposits
            
            
            -
            
            
            (44,809
            )
            
            (44,809
            )Accounts
                payable and accrued liabilities
            
            
            39,917
            
            
            9,755
            
            
            49,672**Cash
                Used in Operating Activities**
            
            
            (476,271
            )
            
            (724,064
            )
            
            (1,178,258
            )**Investing
                Activity**Purchase
                of
                property and equipment
            
            
            (880
            )
            
            -
            
            
            (880
            )**Cash
                Used in Investing Activity**
            
            
            (880
            )
            
            -
            
            
            (880
            )**Financing
                Activities**Proceeds
                from
                notes payable
            
            
            562,800
            
            
            -
            
            
            562,800Proceeds
                from
                convertible debentures
            
            
            952,000
            
            
            500,000
            
            
            1,452,000Proceeds
                from
                exercise of options
            
            
            43,000
            
            
            35,000
            
            
            78,000Repayment
                of
                notes payable
            
            
            (171,241
            )
            
            -
            
            
            (171,241
            )Repayment
                of
                convertible debentures
            
            
            (705,000
            )
            
            -
            
            
            (705,000
            )Stock
                subscriptions
            
            
            170,000
            
            
            -
            
            
            170,000Issuance
                of
                common stock
            
            
            70,000
            
            
            202,109
            
            
            272,109**Cash
                Provided by Financing Activities**
            
            
            921,559
            
            
            737,109
            
            
            1,658,668**Inflow
                of Cash and Cash Equivalents**
            
            
            444,408
            
            
            13,045
            
            
            479,530**Cash
                and Cash Equivalents, Beginning**
            
            
            35,122
            
            
            22,077
            
            
            -**Cash
                and Cash Equivalents, Ending**
            
            $
            479,530
            
            $
            35,122
            
            $
            479,530**Supplemental
                Cash Flow Information**Interest
                paid
            
            $
            721,561
            
            $
            180,123
            
            $
            901,684Common
                stock
                issued on conversion of debt
            
            $
            300,000
            
            
            -
            
            $
            300,000Shares
                issued
                for services
            
            $
            100,000
            
            
            -
            
            $
            100,000




The
              Accompanying Notes are an Integral Part of These Financial
              Statements.
 F-5
 
  **MEXORO
          MINERALS LTD.**
 **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**
 **Notes
          to
          Consolidated Financial Statements**
 **Years
          Ended
          February 28, 2006 and 2005**
 **(U.S.
          Dollars)**


Mexoro
      Minerals
      Ltd. (formerly Sunburst Acquisitions IV, Inc.) ("Mexoro" or the “Company”) was
      incorporated in the state of Colorado on August 27, 1997 and on February 15,
      2006 its name was changed to Mexoro Minerals Ltd.  The Company was formed
      to seek out and acquire business opportunities.  Between 1997 and 2003, the
      Company engaged in two business acquisitions and one business opportunity,
      none
      of which generated a significant profit or created a sustainable business.
      All
      were sold or discontinued. Currently the main focus of the Company’s operations
      is in Mexico.





The
      Company had
      previously been pursuing various business opportunities and, effective
      March 1, 2004, the Company changed its principal operations to mineral
      exploration. Accordingly, as of March 1, 2004 the Company is considered an
      exploration stage company.





On
      May 25, 2004,
      the Company completed a share exchange transaction with Sierra Minerals and
      Mining, Inc. (“Sierra Minerals”), a Nevada corporation, which caused Sierra
      Minerals to become a wholly-owned subsidiary.  Sierra Minerals held certain
      rights to properties in Mexico that the Company now owns or has an option to
      acquire.  Through Sierra Minerals, the Company entered into a joint venture
      agreement with Minera Rio Tinto, S.A. De C.V. (“MRT”), a company duly
      incorporated pursuant to the laws of the United Mexican States, which is
      controlled by an officer of the Company. In August 2005, the Company cancelled
      the joint venture agreement in order to pursue directly the mineral exploration
      opportunities through a wholly-owned Mexican subsidiary, Sunburst de Mexico,
      S.A. de C.V. (“Sunburst de Mexico”).  On August 25, 2005, Sunburst de
      Mexico, Mexoro and MRT entered into agreements providing Sunburst de Mexico
      the
      right to explore and exploit certain properties in Mexico. In December 2005,
      the
      Company and Sunburst de Mexico entered into a new agreement with MRT (the “New
      Agreement”) (note 5). On January 20, 2006, Sierra Minerals was dissolved.





**2.**
            **SIGNIFICANT
                ACCOUNTING POLICIES**





(a)
            Principles
                of
                consolidation





The
      accompanying
      financial statements include the accounts and activities of Mexoro Minerals
      Ltd.
      and its wholly-owned subsidiary, Sunburst de Mexico. All intercompany
      transactions have been eliminated in consolidation.





(b)
            Financial
                instruments





(i)
            Fair
                value





The
      carrying values
      of cash and cash equivalents, accounts receivable, and accounts payable and
      accrued liabilities approximate their fair values because of the short-term
      maturity of these financial instruments. The carrying value of convertible
      debentures approximates their fair value because these instruments earn interest
      at the market rate.





(ii)
            Interest
                rate
                risk





The
      Company is not
      exposed to significant interest rate risk due to the short-term maturity of
      its
      monetary current assets and current liabilities. The convertible debentures
      are
      not exposed to interest rate risk because the interest rate is fixed to
      maturity.




F-6




**MEXORO
        MINERALS LTD.**
 **(Formerly
        Sunburst Acquisitions IV, Inc.)**
 **(An
        Exploration Stage Company)**
 **Notes
        to
        Consolidated Financial Statements**
 **Years
        Ended
        February 28, 2006 and 2005**
 **(U.S.
        Dollars)**




**2.**
            **SIGNIFICANT
                ACCOUNTING POLICIES**
                (Continued)





(b)
            Financial
                instruments (Continued)





(iii)
            Credit
                risk





The
      Company's
      financial assets that are exposed to credit risk consist primarily of cash
      that
      is placed with major financial institutions.





(iv)
            Translation
                risk





The
      Company
      translates the results of non-US operations into US currency using rates
      approximating the average exchange rate for the year. The exchange rate may
      vary
      from time to time. This risk is considered nominal, as the Company does not
      incur any significant transactions in-non-US currency.





(c)
            Equipment





Equipment
      is
      recorded at cost. Depreciation is provided on a declining-balance basis at
      30%.





(d)
            Cash
                and cash
                equivalents





The
      Company
      considers all highly liquid debt instruments purchased with an original maturity
      of three months or less to be cash equivalents.





(e)
            Basic
                and
                diluted income (loss) per share





The
      Company
      computes income (loss) per share in accordance with SFAS No. 128, "*Earnings
      per Share*", which requires presentation of both basic and diluted earnings
      per share (EPS) on the face of the statement of operations and deficit. Basic
      EPS is computed by dividing income (loss) available to common shareholders
      (numerator) by the weighted average number of shares outstanding (denominator)
      during the period. Diluted EPS gives effect to all dilutive potential common
      shares outstanding during the period using the treasury stock method and
      convertible preferred stock using the if-converted method. In computing diluted
      EPS, the average stock price for the period is used in determining the number
      of
      shares assumed to be purchased from the exercise of stock options or warrants.
      Diluted EPS excludes all dilutive potential shares if their effect is
      anti-dilutive. All previously stated share and per share balances have been
      restated to give retroactive effect to the 1:50 share consolidation that
      occurred on February 15, 2006.




F-7




**MEXORO
        MINERALS LTD.**
 **(Formerly
        Sunburst Acquisitions IV, Inc.)**
 **(An
        Exploration Stage Company)**
 **Notes
        to
        Consolidated Financial Statements**
 **Years
        Ended
        February 28, 2006 and 2005**
 **(U.S.
        Dollars)**




**2.**
            **SIGNIFICANT
                ACCOUNTING POLICIES**
                (Continued)





(f)
            Impairment
                or
                disposal of long-lived assets





In
      August 2001, the
      FASB issued Statement No. 144, *“Accounting for the Impairment or Disposal of
      Long-Lived Assets”* (“FAS 144”). FAS 144 clarifies the accounting for the
      impairment of long-lived assets and for long-lived assets to be disposed of,
      including the disposal of business segments and major lines of business. The
      Company has implemented FAS 144. Long-lived assets are reviewed when facts
      and
      circumstances indicate that the carrying value of the asset may not be
      recoverable. When necessary, impaired assets are written down to estimate fair
      value based on the best information available. Estimated fair value is generally
      based on either appraised value or measured by discounting estimated future
      cash
      flows. Considerable management judgment is necessary to estimate discounted
      future cash flows. Accordingly, actual results could vary significantly from
      such estimates.





(g)
            Use
                of
                estimates





The
      preparation of
      financial statements in conformity with US generally accepted accounting
      principles requires management to make estimates and assumptions that affect
      the
      reported amounts of assets and liabilities and disclosures of contingent assets
      and liabilities at the date of the financial statements and the reported amounts
      of revenues and expenses during the reporting period. Actual results could
      differ from those estimates and would impact future results of operations and
      cash flows.





(h)
            Consideration
                of other comprehensive income items





SFAS
      No. 130 -
*“Reporting Comprehensive Income”*, requires companies to present
      comprehensive income (consisting primarily of net loss plus other direct equity
      changes and credits) and its components as part of the basic financial
      statements.





(i)
            Stock-based
                compensation





SFAS
      No. 123(R) -
*“Accounting for Stock-Based Compensation”*, allows companies to choose
      whether to account for stock-based compensation under the method prescribed
      in
      Accounting Principles Board Opinion No. 25 (“APB 25”) or use the fair value
      method described in SFAS No. 123(R). For purposes of options granted to
      employees, the Company continues to follow the accounting measurement provisions
      of APB 25 and implements the disclosure provisions of SFAS No. 123(R) (note
      9).





(j)
            Income
                taxes





The
      Company
      accounts for income taxes in accordance with SFAS No. 109 - *“Accounting for
      Income Taxes”*. Deferred tax assets and liabilities are recognized with
      respect to the tax consequences attributable to differences between the
      financial statement carrying values and tax basis of existing assets and
      liabilities. Deferred tax assets and liabilities are measured using enacted
      tax
      rates expected to apply to taxable income in the years in which these temporary
      differences are expected to be recovered or settled. Further, the effect on
      deferred tax assets and liabilities of changes in tax rates is recognized in
      income in the period that includes the enactment.




F-8




**MEXORO
        MINERALS LTD.**
 **(Formerly
        Sunburst Acquisitions IV, Inc.)**
 **(An
        Exploration Stage Company)**
 **Notes
        to
        Consolidated Financial Statements**
 **Years
        Ended
        February 28, 2006 and 2005**
 **(U.S.
        Dollars)**




**2.**
            **SIGNIFICANT
                ACCOUNTING POLICIES**
                (Continued)





(k)
            Foreign
                currency translation





The
      Company’s
      functional and reporting currency is the United States dollar. Monetary assets
      and liabilities denominated in foreign currencies are translated to United
      States dollars in accordance with SFAS No. 52,*“Foreign Currency
      Translation”*, using the exchange rate prevailing at the balance sheet date.
      Gains and losses arising on translation or settlement of foreign currency
      denominated transactions or balances are included in the determination of
      income. Foreign currency transactions are primarily undertaken in Canadian
      dollars. The Company has not, to the date of these financials statements,
      entered into derivative instruments to offset the impact of foreign currency
      fluctuations.





(l)
            Recent
                accounting pronouncements





(i)
            In
                December
                2004, FASB issued a revision of Statement No. 123(R), *“Accounting for
                Stock-Based Compensation”*. This statement supersedes APB 25 and its
                related implementation guidance. The revised pronouncement requires
                that
                all stock options and warrants be accounted for using the fair value
                method. This pronouncement does not impact the Company, as the Company
                has
                no employees and currently accounts for all options and warrants
                using the
                fair value method.





(ii)
            In
                December
                2004, the FASB issued SFAS Statement No. 153, “Exchanges of Non-Monetary
                Assets.” The statement is an amendment of APB Opinion No. 29 to eliminate
                the exception for non-monetary exchanges of similar productive assets
                and
                replaces it with a general exception for exchanges of non-monetary
                assets
                that do not have commercial substance. The Company believes that
                the
                adoption of this standard will have no material impact on its financial
                statements. The Company accounts for income taxes in accordance with
                SFAS
                No. 109 - *“Accounting for Income Taxes”*. Deferred tax assets and
                liabilities are recognized with respect to the tax consequences
                attributable to differences between the financial statement carrying
                values and tax basis of existing assets and liabilities.





(iii)
            In
                March
                2005, FASB issued Interpretation No. 47 (“FIN 47”), *“Accounting for
                Conditional Asset Retirement Obligations”*. FIN 47 clarifies that the
                term “conditional asset retirement obligation” as used in FASB Statement
                No. 143, *“Accounting for Asset Retirement Obligation”*, refers to
                a legal obligation to perform an asset retirement activity in which
                the
                timing and/or method of settlement are conditional on a future event
                that
                may or may not be within the control of the entity. Accordingly,
                an entity
                is required to recognize a liability for the fair value of a conditional
                asset retirement obligation if the fair value of the liability can
                be
                reasonably estimated. FIN 47 is effective no later than the end of
                fiscal
                years ending after December 15, 2005. This pronouncement does not
                impact the Company for the current
                year.




F-9




**MEXORO
        MINERALS LTD.**
 **(Formerly
        Sunburst Acquisitions IV, Inc.)**
 **(An
        Exploration Stage Company)**
 **Notes
        to
        Consolidated Financial Statements**
 **Years
        Ended
        February 28, 2006 and 2005**
 **(U.S.
        Dollars)**




**2.**
            **SIGNIFICANT
                ACCOUNTING POLICIES**
                (Continued)





(l)
            Recent
                accounting pronouncements
                (Continued)





(iv)
            In
                May 2005,
                FASB issued SFAS No. 154 “*Accounting Changes and Error Corrections - a
                replacement of APB Opinion No. 20 and FASB Statement No. 3”*. This
                Statement replaces APB Opinion No. 20, “*Accounting Changes”*, and
                FASB Statement No. 3, “*Reporting Accounting Changes in Interim
                Financial Statements”*, and changes the requirements for the
                accounting for and reporting of a change in accounting principles.
                This
                statement applies to all voluntary changes in accounting principles.
                It
                also applies to changes required by an accounting pronouncement in
                the
                unusual instance that the pronouncement does not include specific
                transition provisions. When a pronouncement includes specific transition
                provisions, those provisions should be followed. This statement is
                effective for accounting changes and corrections of errors made in
                fiscal
                years beginning after December 15,
                2005





(v)
            In
                February
                2006, the FASB issued SFAS No. 155, “*Accounting for Certain Hybrid
                Financial Instruments, an amendment of FASB Statements No. 133 and
                140”.* This statement permits fair value re-measurement for any hybrid
                financial instrument that contains an embedded derivative that otherwise
                would require bifurcation. It establishes a requirement to evaluate
                interests in securitized financial assets to identify interests that
                are
                freestanding derivatives or that are hybrid financial instruments
                that
                contain an embedded derivative requiring bifurcation. In addition,
                SFAS
                155 clarifies which interest-only strips and principal-only strips
                are not
                subject to the requirements of Statement 133. It also clarifies that
                concentrations of credit risk in the form of subordination are not
                embedded derivatives. SFAS 155 amends Statement 140 to eliminate
                the
                prohibition on a qualifying special purpose entity from holding a
                derivative financial instrument that pertains to a beneficial interest
                other than another derivative financial instrument. This statement
                is
                effective for all financial instruments acquired or issued after
                the
                beginning of an entity’s first fiscal year that begins after September 15,
                2006. The adoption of this standard is not expected to have a material
                effect on the Company’s results of operations or financial
                position.





**3.**
            **GOING-CONCERN**





The
      accompanying
      financial statements have been prepared on a going-concern basis. The Company
      has a history of operating losses and will need to raise additional capital
      to
      fund its planned operations. As at February 28, 2006, the Company had working
      capital of $45,944 (2005 - $722,213 working capital deficiency) and a cumulative
      loss of $19,815,850 (2005 - $3,621,215) of which $17,812,423 was incurred within
      the past two fiscal years. These conditions raise substantial doubt about the
      Company’s ability to continue as a going-concern.





The
      Company intends
      to reduce its cumulative loss through the attainment of profitable operations,
      from its investment in a Mexican mining venture (note 5). In addition, the
      Company has conducted private placements of convertible debt and common stock
      (notes 7 and 13), which have generated a portion of the initial cash
      requirements of its planned Mexican mining ventures (notes 5 and
      13).




F-10




**MEXORO
        MINERALS LTD.**
 **(Formerly
        Sunburst Acquisitions IV, Inc.)**
 **(An
        Exploration Stage Company)**
 **Notes
        to
        Consolidated Financial Statements**
 **Years
        Ended
        February 28, 2006 and 2005**
 **(U.S.
        Dollars)**




**4.**
            **EQUIPMENT**





**February
                  28,**
                **2006**
              
              
              
              
              
              **February
                  28,**
                **2005**Cost
              
              
              Accumulated
                Depreciation
              
              
              Net
              
              
              NetOffice
                  equipment
              
              $
              880
              
              $
              -
              
              $
              880
              
              $
              -


**5.**
            **MINERAL
                PROPERTIES**





On
      May 3, 2004, the
      Company entered into a share exchange with the shareholders of Sierra Minerals.
      Pursuant to the terms of the share exchange agreement, the Company issued
      43,000,000 shares of its common stock in exchange for all of the outstanding
      shares of Sierra Minerals. As a result, Sierra Minerals became a wholly-owned
      subsidiary of the Company.  The common stock was valued at $0.01 per
      share.  Finder’s fees of 6,000,000 options to purchase the same number of
      shares of the Company’s common stock at $0.01 per share were issued to
      non-related parties in connection with this share exchange.  Due to the
      uncertainty of the future revenue to be generated from this property, the cost
      of the acquisition of $430,000 was charged to operations in the year ended
      February 28, 2005.





Sierra
      Minerals was
      a party to a joint venture agreement, dated April 26, 2004 and amended on June
      1, 2004, by and between Sierra Minerals and MRT, a Mexican company. MRT had
      interests in exploration properties.





On
      August 25, 2005,
      the joint venture agreement was cancelled and the Company entered into a new
      arrangement with MRT.  Instead of a joint venture, the Company incorporated
      a Mexican wholly-owned subsidiary, Sunburst de Mexico. This restructuring
      allowed the Company to take title to the properties directly in the name of
      Sunburst de Mexico.  The Company entered into agreements with MRT, which
      provided Sunburst de Mexico options on the concessions of the Cieneguita and
      Guazapares properties and the right of first refusal on two Encino Gordo
      properties (collectively, the “Property Agreements”).  The parties also
      entered into an operating agreement, which gave MRT the sole and exclusive
      right
      and authority to manage the Cieneguita Property.





On
      December 8,
      2005, the Company and Sunburst de Mexico entered into the New Agreement with
      MRT
      to exercise their option under the August 18, 2005 sale and purchase of mining
      concessions agreement to obtain two mining concessions in the Encino Gordo
      region. The New Agreement also provided the Company the option to obtain three
      additional concessions in the Encino Gordo region.  These properties are
      located in the state of Chihuahua, Mexico.





The
      following are
      additional material terms of the New Agreement:





(a)
            The
                operator’s agreement with MRT was cancelled;





(b)
            The
                Company
                granted MRT the option to buy all of the outstanding shares of Sunburst
                de
                Mexico for $100 if the Company failed to transfer $1,500,000 to Sunburst
                de Mexico by April 30, 2006
                (note 13);





(c)
            The
                Property
                Agreements were modified to change the net smelter rate to a maximum
                of
                2.5% for all properties covered by the agreements;




F-11




**MEXORO
        MINERALS LTD.**
 **(Formerly
        Sunburst Acquisitions IV, Inc.)**
 **(An
        Exploration Stage Company)**
 **Notes
        to
        Consolidated Financial Statements**
 **Years
        Ended
        February 28, 2006 and 2005**
 **(U.S.
        Dollars)**




**5.**
            **MINERAL
                PROPERTIES**(Continued)





(d)
            The
                Company
                agreed to issue 2,000,000 shares of the Company’s common stock to MRT
                within four months of the date of the signing of the New Agreement.
                 These shares were issued to MRT and its assignee at the market value
                of $1.05 per share on February 23, 2006. This issuance fulfilled the
                Company’s payment obligations under the previous Property Agreements; and





(e)
            The
                Company
                agreed to issue 1,000,000 additional shares of the Company’s common stock
                to MRT if and when the Cieneguita Property is put into production
                and
                reaches 85% of production capacity over a 90-day period, as defined
                in the
                New Agreement.





**6.**
            **PROMISSORY
                NOTES**





As
      at February 28,
      2006, the Company had issued promissory notes bearing interest at 7% per year
      in
      the amount of $412,800 (2005 - $28,500) with accrued interest of $7,259 for
      a
      total of $420,059. These notes are due on December 31, 2006 (note
      13).





**7.**
            **CONVERTIBLE
                DEBENTURES**





On
      August 25, 2004,
      the Company entered into a securities purchase agreement (the “Agreement”), with
      Bristol Investment Fund, Ltd., Alpha Capital AG and Stonestreet LP (the
“Purchasers”). Pursuant to the Agreement, the Purchasers agreed to purchase up
      to $1,350,000 in face amount of secured convertible debentures (the
“Debentures”) from the Company.  The Debentures did not bear interest but
      were to be issued at a 26% discount to the face amount. Accordingly, the cash
      purchase price for the full $1,350,000 face amount of the Debentures was
      $1,000,000.   The Debentures were due and payable in full one year
      from the date of issuance.





The
      Purchasers also
      had the right to convert the full-face amount of the Debentures to common stock
      of the Company at a price of $0.10 per share.  Under the Agreement, the
      Purchasers were also to receive warrants and additional investment rights to
      purchase shares of the Company’s common stock. The warrants were exercisable at
      a price of $0.12 per share for a period of five years and additional investment
      rights were exercisable at a price of $0.10 per share of common stock.





The
      Purchasers
      purchased a total of $675,000 in face amount for cash proceeds of $500,000
      and
      $175,000 charged as interest. The Company paid $20,000 in legal fees and $50,000
      administration fees.





On
      August 10, 2005,
      the Company and the Purchasers agreed to retire the Debentures including all
      associated principal, terms, warrants and rights for the amount of $500,000
      plus
      8% interest. On September 21, 2005, the Company repaid in full $500,000 plus
      interest charges of $41,815 to the Purchasers. As a result of this payment,
      the
      Debentures were terminated and the associated warrants and additional investment
      rights were cancelled (note 10). A gain of $133,185 was recorded for settlement
      of this debt.





Another
      convertible
      debenture in the amount of $30,000 was issued on January 15, 2004. The
      conversion of principal and accrued interest (8% per year) was at the rate
      of
      $0.02 per share of common stock. On December 21, 2005, the Company repaid the
      $30,000 convertible debenture plus accrued interest of $4,645.





F-12




**MEXORO
        MINERALS LTD.**
 **(Formerly
        Sunburst Acquisitions IV, Inc.)**
 **(An
        Exploration Stage Company)**
 **Notes
        to
        Consolidated Financial Statements**
 **Years
        Ended
        February 28, 2006 and 2005**
 **(U.S.
        Dollars)**




**7.**
            **CONVERTIBLE
                DEBENTURES**(Continued)





The
      Company issued
      $300,000 in convertible debentures in December 2005 to three lenders. These
      funds were unsecured, non-interest bearing and had no specific date of
      repayment. On January 6, 2006, these debentures were converted and the Company
      issued 100,000,000 pre-consolidated shares of common stock.





In
      January 2006,
      the Company issued convertible debentures, with principal and accrued interest
      at 7% per year, convertible into units at the option of the holder.  Each
      unit consists of a warrant to purchase 25,000 post-consolidation common shares
      at $1.00 and $25,000 of debt, which may be converted to common shares at $0.50
      per share and is exercisable until April 30, 2008.  As at February 28,
      2006, the Company had issued convertible debentures in the amount of $652,000
      (note 13).





A
      beneficial
      conversion feature expense of $707,500 resulting from the anticipated conversion
      of the above debentures was recorded as interest expense in the 2006 fiscal
      year.





**8.**
            **PREFERRED
                STOCK**





The
      Company is
      authorized to issue 20,000,000 shares of preferred stock. The Company’s board of
      directors is authorized to divide the preferred stock into series, and with
      respect to each series, to determine the preferences and rights and
      qualifications, limitations or restrictions thereof, including the dividend
      rights, conversion rights, voting rights, redemption rights and terms,
      liquidation preferences, sinking fund provisions, and the number of shares
      constituting the series and the designations of such series. The board of
      directors could, without stockholder approval, issue preferred stock with voting
      and other rights that could adversely affect the voting rights of the holders
      of
      common stock, which issuance could have certain anti-takeover
      effects.





**9.**
            **STOCK
                COMPENSATION PROGRAM**





On
      December 9,
      2005, the Company’s board of directors approved a stock compensation program,
      which was subsequently ratified at an extraordinary meeting of shareholders
      held
      on February 13, 2006. In order to maintain flexibility in the award of stock
      benefits, the program constitutes a single “omnibus” plan, but is composed of
      three parts. The first part is the qualified incentive stock option plan (the
      “ISO Plan”), which provides grants of qualified incentive stock options
      (“ISOs”).  The second part is the non-qualified stock option plan (“NQSO
      Plan”), which provides grants of nonqualified stock options (“NQSOs”).  The
      third part is the restricted shares plan (“Restricted Shares Plan”), which
      provides grants of restricted shares of the Company’s common stock (“Restricted
      Shares”). The maximum number of common shares that may be purchased under the
      plan is 6,000,000. Options granted under the plan include incentive and
      non-qualified stock options as well as actual shares of common stock, with
      vesting determined on the grant date, not to exceed 10 years, and are
      exercisable over a 10-year maximum period at a price to approximate the fair
      market value of the common stock at the date of grant.





On
      February 27,
      2006, the Company granted 800,000 ISOs under the ISO Plan to directors, officers
      and consultants at a price of $0.50 per common stock for a period of ten years.
      The ISOs vest in four equal instalments, at the time of the grant and then
      every
      six months thereafter. Compensation cost, being the fair value of the options,
      is calculated to be $982,000 of which $248,000 is expensed on the date of issue
      and as the remainder vest.




F-13


**MEXORO
          MINERALS LTD.**
 **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**
 **Notes
          to
          Consolidated Financial Statements**
 **Years
          Ended
          February 28, 2006 and 2005**
 **(U.S.
          Dollars)**


**9.**
            **STOCK
                COMPENSATION PROGRAM
                (Continued)**





The
      fair value of
      the 800,000 options was determined using the Black-Scholes option pricing model
      using a ten-year expected life of the option, a volatility factor of 152%,
      a
      risk-free rate of 5% and no assumed dividend rate.





The
      options are
      summarized as follows:





Options
            
            
            Weighted
              Average
              Exercise
              PriceOutstanding
                at February 29, 2004
            
            
            98,000
            
            $
            1.35Granted
            
            
            120,000
            
            $
            0.50Exercised
            
            
            (50,000
            )
            $
            0.70Outstanding
                at February 28, 2005
            
            
            168,000
            
            $
            0.94Granted
            
            
            800,000
            
            $
            0.50Cancelled
            
            
            (6,000
            )
            $
            1.50Exercised
            
            
            (32,000
            )
            $
            1.34Outstanding
                at February 28, 2006
            
            
            930,000
            
            $
            0.54





The
      following table
      summarizes options outstanding at February 28, 2006:





Exercise
                Price
            
            Number
                of Options Issued
            
            Number
                of Options Exercisable
            
            Remaining
                Contractual Life (Years)$0.50
            
            
            890,000
            
            
            290,000
            
            
            9.31$1.50
            
            
            40,000
            
            
            40,000
            
            
            4.00930,000
            
            
            330,000





The
      Company has
      reserved 930,000 common shares in the event that these options are
      exercised.




F-14
 
  **MEXORO
        MINERALS LTD.** **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**
 **Notes
          to
          Consolidated Financial Statements**
 **Years
          Ended
          February 28, 2006 and 2005**
 **(U.S.
          Dollars)**




**9.**
            **STOCK
                COMPENSATION PROGRAM**(Continued)





Stock-based
      compensation consists of the following:





**2006**
            
            
            **2005**Compensation
                expensePrivate
                placement at $0.01 per share
            
            $
            8,680,000
            
            $
            -Shares
                issued
                for services
            
            
            100,000
            
            
            -Stock-based
                compensationWarrants
            
            
            3,898,000
            
            
            -Options
            
            
            248,000
            
            
            -$
            12,926,000
            
            $
            -





Compensation
      expense of $8,960,000 is included in general and administrative expense for
      fiscal 2006.





**10.**
            **WARRANTS**





The
      Company has a
      total of 5,652,000 (2005 - 270,000) warrants outstanding to purchase common
      stock. Each warrant entitles the holder to purchase one share of the Company’s
      common stock. The Company has reserved 5,652,000 common shares in the event
      that
      these warrants are exercised.





The
      warrants
      include 1,000,000 Class A Warrants exercisable at $0.50 per share, 1,000,000
      Class B Warrants exercisable at $0.75 per share, 1,000,000 Class C Warrants
      exercisable at $1.00 per share, 1,000,000 Class D Warrants exercisable at $1.25
      per share, and 1,000,000 Class E Warrants exercisable at $1.50 per share. The
      Class A Warrants were fully vested upon issuance. They are exercisable at any
      time following their issuance but will expire on June 30, 2007 to the extent
      they are not exercised. The remaining classes of Warrants will each vest and
      become exercisable only at the time that the immediately preceding class has
      been fully exercised.





Unless
      terminated
      earlier as a result of failure to vest, the Class B and Class C Warrants will
      each expire on December 31, 2007, and the Class D and Class E Warrants will
      each
      expire on December 31, 2008. Stock-based compensation of $3,898,000 has been
      recorded on these warrants.





Additionally,
      as at
      February 28, 2006, the Company had issued 652,000 warrants exercisable at $1.00
      each pursuant to the issuance of convertible debentures. There warrants expire
      on April 30, 2008.





F-15




**MEXORO
      MINERALS LTD.** **(Formerly
        Sunburst Acquisitions IV, Inc.)**
 **(An
        Exploration Stage Company)**
 **Notes
        to
        Consolidated Financial Statements**
 **Years
        Ended
        February 28, 2006 and 2005**
 **(U.S.
        Dollars)**




**11.**
            **RELATED
                PARTY TRANSACTIONS**





The
      Company paid
      management fees of $157,000 (2005 - $nil) to certain officers and directors
      and
      to companies controlled by directors. The Company paid $23,357 (2005 - $nil)
      to
      certain officers and directors and to companies controlled by directors for
      travel, office and other related expenses.





The
      Company paid
      consulting fees of $15,000 (2005 - $4,000) to a former officer and
      director.





As
      at February 28,
      2006, accounts payable of $8,175 (2005 - $nil) were owing to certain officers
      and directors of the Company and $14,799 (2005 - $18,000) was owing to companies
      controlled by directors.





As
      of February 28,
      2005, the Company had notes payable to related entities in the amount of
      $28,500. Interest on these notes has been imputed at a rate of 6.09% and
      totalled $18,578 cumulatively at February 28, 2005.





All
      related party
      transactions are in the normal course of business at the exchange amount agreed
      to by each party.





**12.**
            **INCOME
                TAXES**





Deferred
      income
      taxes reflect the tax effect of the temporary differences between the carrying
      amounts of assets and liabilities for financial reporting purposes and the
      amounts used for tax purposes. The components of the net deferred income tax
      assets are as follows:





**2006**
            
            
            **2005**Deferred
                income tax assetsNet
                operating
                loss and credit carry forwards
            
            $
            1,534,400
            
            $
            1,352,800Gross
                deferred tax assets
            
            
            1,534,400
            
            
            1,352,800Valuation
                allowance
            
            
            (1,534,400
            )
            
            (1,352,800
            )$
            -
            
            $
            -





As
      at February 28,
      2006, the Company's net operating loss carry-forwards for income tax
      purposes were approximately $3,894,500 (2005 - $3,433,500). If not utilized,
      they will start to expire in 2020.




F-16
 
  **MEXORO
        MINERALS LTD.** **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**
 **Notes
          to
          Consolidated Financial Statements**
 **Years
          Ended
          February 28, 2006 and 2005**
 **(U.S.
          Dollars)**




**13.**
            **SUBSEQUENT
                EVENTS**





(a)
            Mineral
                properties





Subsequent
      to
      February 28, 2006, MRT agreed to waive its option to purchase the shares of
      Sunburst de Mexico and also waived the Company’s obligation to transfer
      $1,500,000 to Sunburst de Mexico by April 30, 2006 (note 5).





(b)
            Promissory
                notes





Subsequent
      to
      February 28, 2006, promissory notes in the amount of $412,800 (note 6) were
      settled in exchange for 1,651,200 shares of the Company’s common
      stock.





(c)
            Private
                placement and convertible
                debentures





Subsequent
      to
      February 28, 2006, the Company raised a total of $3,242,500 through the issuance
      of convertible debentures ($2,867,500) and through subscriptions for units
      ($375,000).





The
      convertible
      debentures, with principal and accrued interest at 7% per year are convertible
      into units at the option of the holder.  Each unit consists of a warrant to
      purchase 25,000 of the Company’s common shares at $1.00 and $25,000 of debt,
      which may be converted to common shares at $0.50 per share and is exercisable
      until April 30, 2008.  As at February 28, 2006, the Company had issued
      convertible debentures in the amount of $652,000.  None of the convertible
      debentures have been converted.





Under
      the unit
      offering, units consist of one share of common stock and one-half of one
      warrant.  Each full warrant entitles the investor to purchase an additional
      share of the Company’s common stock at a price of $1.00 per share and is
      exercisable until April 30, 2008.  The units were priced at $0.50 each. As
      at February 28, 2006, the Company had received subscriptions for units in the
      amount of $170,000.




F-17




**ITEM
      8.** **CHANGES IN AND DISAGREEMENTS WITH
      ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.**





On
      or
      about June 17, 2004, Comiskey & Co., PC of Denver, Colorado, notified the
      Company that effective as of July 9, 2004, it was resigning as the Company’s
      auditor for the fiscal year ending February 28, 2005, and subsequent years
      because of the partner rotation requirements of the Sarbanes-Oxley Act of
      2002.





The
      reports of Comiskey & Co. on the Company's financial statements for the
      fiscal years ending February 29, 2004 and February 28, 2003 did not contain
      any
      adverse opinion or disclaimer of opinion with respect to audit scope or
      accounting principle, but were modified as to uncertainty concerning the
      Company's ability to continue as a going concern.





On
      July
      15, 2004, the Board of Directors of the Company engaged the firm of Pannell
      Kerr
      Forster (registered with the PCAOB as “Smythe Ratcliffe”), Chartered
      Accountants, 7th Floor, Marine Building, 355 Burrard Street,
      Vancouver, B.C., Canada V6C 2G8, as independent accountant to audit the
      Company’s financial statements for the period ending February 28,
      2005.




**ITEM
      8A.** **CONTROLS AND
      PROCEDURES.**





The
      Company maintains disclosure controls and procedures that are designed to ensure
      that information required to be disclosed in its SEC reports are recorded,
      processed, summarized and reported within the time periods specified in the
      SEC's rules and forms, and that such information is accumulated and communicated
      to the Company’s management, including its President and Chief Financial
      Officer, as appropriate, to allow timely decisions regarding required
      disclosure. In designing and evaluating the disclosure controls and procedures,
      management recognized that any controls and procedures, no matter how well
      designed and operated, can provide only reasonable assurance of achieving the
      desired control objectives, as the Company’s are designed to do, and management
      necessarily was required to apply its judgment in evaluating the cost-benefit
      relationship of possible controls and procedures.





In
      connection with the audit of the Company’s consolidated financial statements for
      the year ended February 28, 2005, the Company’s independent registered public
      accounting firm advised the Audit Committee and management of certain
      significant internal control deficiencies that they considered to be in the
      aggregate a material weakness. These consist of, inadequate staffing and
      supervision leading to adequate segregation of duties, the identification and
      resolution of certain accounting matters; substantiation and evaluation of
      certain account balances; lack of procedures or expertise required to prepare
      all required disclosures. Day to day operations of the Company are under the
      management of a non-director major shareholder who has signing authority over
      the bank account requiring only one signature. The independent registered public
      accounting firm indicated that they considered these deficiencies to be a
      material weakness and a reportable
      condition as that term is defined under standards established by the American
      Institute of Certified Public Accountants. A material weakness is a significant
      deficiency in one or more of the internal control components that alone or
      in
      the aggregate precludes our internal controls from reducing to an appropriately
      low level of risk that a material misstatement in our financial statements
      will
      not be prevented or detected on a timely basis.





13
          of 23




The
      Company is currently reviewing appropriate measures to identify, rectify and
      implement suitable action to correct them. The following changes to the
      management occurred on the respective dates. On December 2, 2005, Terry Fields,
      President and Director, resigned from the Company. His resignation was not
      the
      result of any disagreement with the Company. On December 4, 2005, the Company's
      remaining director, Mario Ayub, appointed Robert Knight and Tracy A. Moore
      as
      directors to fill vacancies on the Board of Directors. Also on the same date,
      the Company's Board of Directors appointed Robert Knight as President, Tracy
      A.
      Moore as Chief Financial Officer, and Mario Ayub as Chief Operating Officer.
      Prior to his appointment as Chief Financial Officer, from July 1, 2005 until
      December 3, 2005, Tracy A. Moore was the Company's Chief Operating Officer.
      The
      Company also opened new bank accounts requiring dual signatures of the President
      and Chief Financial Officer who also oversee day to day operations. All previous
      bank accounts are inactive and will be closed in the near future. Further,
      all
      contracts and agreements entered into by the Company or its subsidiaries, which
      may have a material impact, require Board approval. The Company is also working
      off budgets for future operational and exploration costs.





As
      required by the SEC rules, we have evaluated the effectiveness of the design
      and
      operation of the Company’s disclosure controls and procedures as of the end of
      the period covered by this Annual Report. This evaluation was performed under
      the supervision and with the participation of the Company's management,
      including the President and Chief Financial Officer. Based upon that evaluation,
      the President and Chief Financial Officer concluded that the Company’s controls
      and procedures are now effective, for the reasons noted above.




**ITEM
      8B.     OTHER INFORMATION.**





Not
      applicable.





**PART
      III**




**ITEM
      9.**  **DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION
      16(a)
      OF THE EXCHANGE ACT.**





The
      directors and executive officers currently serving the Company are as
      follows:


Name
            Age
            TenureMario
                Ayub
            52
            COO
                and Director since May 2005Robert
                Knight
            49
            CEO
                and Director since December 2005Tracy
                A. Moore
            53
            CFO
                and Director since December 2005





The
      directors named above will serve until the next annual meeting of the Company’s
      stockholders. Thereafter, directors will be elected for one-year terms at the
      annual stockholders' meeting. Officers will hold their positions at the pleasure
      of the board of directors, absent of any employment agreement, of which none
      currently exists or is contemplated. There is no arrangement, plan or
      understanding between any of the directors or officers of the Company and any
      other person pursuant to which any director or officer was or is to be selected
      as a director or officer, and there is no arrangement, plan or understanding
      as
      to whether non-management shareholders will exercise their voting rights to
      continue to elect the current directors to the Company's board. There are also
      no arrangements, agreements or understandings between non-management
      shareholders and management under which non-management shareholders may directly
      or indirectly participate in or influence the management of the Company's
      affairs.





Biographical
      Information of Directors and Executive Officers follows:





Mario
      Ayub





14 of
          23




Mr.
      Ayub
      has been a chemical engineer and metallurgical researcher. He is President
      of
      Minera Rio Tinto and a director for the Metalline Mining Company. Mr. Ayub
      is
      also President of the Chihuahua Mining Association, a member of the Board of
      the
      Chihuahua Economic Counsel, and a Member of the National Technical Board of
      Consejo de Recursos Minerales, a federal government exploration agency in
      Mexico.





Robert
      Knight





Since
      September 1994, Mr. Knight has been the President of Knight Financial Ltd.,
      where he has organized and participated in many corporate finance transactions.
      From September 1998 to January 12, 2005, Mr. Knight served as the president,
      secretary-treasurer and a director of Synova Healthcare Group, Inc. (OTC-BB:
      SNVH.OB), a US reporting company formerly known as Advanced Global Industries
      Ltd. and Centaur BioResearch Corp., which distributes non-invasive medical
      diagnostic tools mainly for women. Mr. Knight served as director of Invisa,
      Inc.
      (OTC-BB: INSA.OB), a reporting company in the United States whose shares trade
      on the OTC Bulletin Board from September 1998 until April 2005. Invisa Inc.
      is
      involved in the safety sensing industry. From July 1998 to December 22, 2005,
      Mr. Knight served as a Director of Heartland Oil and Gas Corp. (OTC-BB:
      HOGC.OB), a reporting company in the United States whose shares are quoted
      on
      the OTC Bulletin Board. Heartland Oil and Gas Corp. is involved in the
      exploration and development of coal bed methane gas properties in the United
      States. Mr. Knight served as President of Heartland Oil and Gas Corp. from
      July
      1998 until September 2002, as its Chief Financial Officer from September 2002
      until November 2004 and as its corporate Secretary from July 1998 until November
      2004.





Tracy
      A.
      Moore





Mr.
      Moore
      has served as Chief Financial Officer since December 5, 2005 and served as
      the
      Company’s Chief Operating Officer from June 2005 to December 2005. Mr. Moore is
      the President of MCSI Consulting Group of Vancouver, Canada, a financial
      consulting firm that specializes in corporate finance matters, strategic
      planning and business planning services. Mr. Moore founded MCSI in 1990 and
      is
      responsible for overall client contact and relations, project management,
      planning, and quality control. As part of his consulting practice he serves
      on
      boards of directors and advises boards on corporate finance matters, business
      planning issues, mergers, acquisitions and divestitures.





The
      Company's officers, directors and principal shareholders have each filed initial
      statements of beneficial ownership of securities on Form 3.




**ITEM
      10.    EXECUTIVE COMPENSATION.**





The
      following table sets forth executive compensation for fiscal years ended
      February 28, 2006, 2005 and 2004. We have not paid any salaries or bonuses
      to
      any of our officers from our inception through the date hereof. We refer to
      all
      of these officers collectively as our "named executive officers".





**Summary
      Compensation Table**





**Annual
                Compensation**
            **Long
                Term Compensation****Name
                And Principal Position**
            **Fiscal
                year Ended Feb. 28**
            **Salary**
            **Bonus**
            **Securities
                Underlying Options**Mario
                Ayub, COO, Director
            2006
              2005
              2004
            $12,000
              $0
              $0
            ---
            200,000Robert
                Knight, CEO, Director
            2006
              2005
              2004
            $15,000
              $0
              $0
            ---
            200,000Tracy
                A. Moore, CFO, Director
            2006
              2005
              2004
            $115,000(1)
              $0
              $0
            ---
            200,000





15 of
          23


(1)
            Includes
                $15,000 salary which Mr. Moore received as CFO of Mexoro, as well
                as
                compensation he received from consulting work done for Mexoro during
                the
                fiscal year ended February 28, 2006. For the months of July, August
                and
                September of 2005, Mr. Moore received 500,000 pre-split shares of
                Common
                Stock of Mexoro, which were valued at a price of $0.04 per share,
                for
                consulting services. For October, November, and December of 2005,
                Mr.
                Moore received 1,000,000 pre-split shares, valued at a price of $0.08
                per
                share, for consulting services he rendered. Mr. Moore’s total consulting
                compensation for July 2005 through December 2005 was valued at $100,000.
                Mr. Moore was also the Company’s Chief Operating Officer from June 2005
                through December 2005.





**Options
      Grants During the Last Fiscal Year**





We
      did
      not grant options to our named executive officers during the year ended February
      28, 2005. However, on February 13, 2006, we adopted a Stock Compensation Program
      with the purpose of (a) ensuring the retention of the services of existing
      executive personnel, key employees, and directors of the Company or its
      affiliates; (b) attracting and retaining competent new executive personnel,
      key
      employees, and directors; (c) providing incentive to all such personnel,
      employees and directors to devote their utmost effort and skill to the
      advancement and betterment of the Company, by permitting them to participate
      in
      the ownership of the Company and thereby in the success and increased value
      of
      the Company;
      and (d) allowing vendors, service providers, consultants, business associates,
      strategic partners, and others, with or that the Board of Directors anticipates
      will have an important business relationship with the Company or its affiliates,
      the opportunity to participate in the ownership of the Company and thereby
      to
      have an interest in the success and increased value of the Company. The Program
      constitutes a single “omnibus” plan, but is composed of three parts.  The
      first part is the Qualified Incentive Stock Option Plan (the “ISO Plan”) which
      provides grants of qualified incentive stock options (“ISOs”).  The second
      part is the Nonqualified Stock Option Plan (“NQSO Plan”) which provides grants
      of nonqualified stock options (“NQSOs”).  The third part is the Restricted
      Shares Plan (“Restricted Shares Plan”), which provides grants of restricted
      shares of Company common stock (“Restricted Shares”). This plan allows for a
      maximum of 6,000,000 options to be granted. On February 27, 2006 we granted
      800,000 options to certain officers, directors and consultants at an exercise
      price of $0.50 per share for a period of ten years. The options vest in four
      equal installments, at the time of issuance and every six months
      thereafter.





**Aggregate
      Option Exercises in Last Fiscal Year**





None
      of
      the named executive officers exercised options during the year ended February
      28, 2006.





**Director
      Compensation**





We
      do not
      currently compensate our directors for their services as directors. Directors
      are reimbursed for their reasonable out-of-pocket expenses incurred with
      attending board or committee meetings.





**Employment
      Agreements**





We
      presently do not have any written employment agreements.





**CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS**





Sunburst
      de Mexico is a party to an agreement with MRT, pursuant to which Sunburst de
      Mexico and MRT have agreed to explore and develop, if feasible, certain mining
      properties in the State of Chihuahua, Mexico. Mr. Ayub, our Chief Operating
      Officer and a director of our company, has served as the President of MRT since
      1994 and is a principal shareholder of MRT.





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In
      May
      2004, we loaned, on behalf of Sierra Minerals, a total of $227,500 to MRT.
       Of this amount, $167,500 was pursuant
      to an unsecured promissory note payable due August 31, 2004 with interest at
      8%
      per annum.  In addition, on February 28, 2004, we loaned $57,500 pursuant
      to an unsecured promissory note payable, due April 9, 2004 at a rate of 8%.
       The remaining funds of $2,500 have no terms and are non-interest bearing.
 The amounts loaned are not recoverable pursuant to the joint venture
      agreement because Sierra Minerals failed to complete the terms of the agreement.
       As such, we wrote off the $57,500 previously advanced on February 28,
      2004, as well as the $170,000 loaned to MRT during the first quarter ended
      May
      31, 2004, for a total charge to operations of $227,500. One of the shareholders
      of Sierra and the controlling shareholder of MRT was Mario Ayub, our Chief
      Operating Officer and a director of Mexoro.





On
      May
      25, 2004, we completed a share exchange transaction with Sierra Minerals.
      Pursuant to the terms of the share exchange agreement, we issued 43,000,000
      pre-split shares of our common stock in exchange for all of the outstanding
      shares of Sierra Minerals. One of the shareholders of Sierra Minerals was Mario
      Ayub, our Chief Operating Officer and a director of Mexoro.





On
      February 16, 2006, we issued 400,000 shares of common stock to 391566 B.C.
      Ltd.
      Robert Knight, our CEO, is the President and a shareholder of this entity.
      This
      issuance was part of a larger transaction in which we repaid a debt through
      the
      issuance of shares. In December 2005, we received a loan
      of a
      total of $70,000 from several parties, one of which was 391566 B.C. Ltd. On
      February 16, 2006, we settled this debt through the issuance of shares at the
      price of $0.01 per share. A total of 7,000,000 shares were issued in full
      settlement of this debt.





On
      February 23, 2006, we issued 2,000,000 shares to MRT and MRT’s assignee pursuant
      to our obligations under the New Agreement. The controlling shareholder of
      MRT
      is Mario Ayub, our Chief Operating Officer and a director.





In
      August
      and September of 2005, we issued a total of 1,5000,000 pre-split shares to
      Tracy
      A. Moore, our Chief Financial Officer, as compensation for consulting services.
      For the months of July, August and September of 2005, Mr. Moore received 500,000
      pre-split shares of Common Stock of Mexoro, which were valued at a price of
      $0.04 per share, for consulting services. For October, November, and December
      of
      2005, Mr. Moore received 1,000,000 pre-split shares, valued at a price of $0.08
      per share, for consulting services he rendered. Mr. Moore’s total consulting
      compensation for July 2005 through December 2005 was valued at $100,000. Mr.
      Moore was also the Company’s Chief Operating Officer from June 2005 through
      December 2005.





We
      currently rent two offices. The first office is part of an “office service”
arrangement for which we pay $400 CAD ($344 USD) per month. It is on a
      month-to-month basis and is rented from MCSI, a company controlled by an officer
      and director of our company. The office service package also supplies a
      receptionist, clerical help and access to a board room. The second office is
      for
      our wholly-owned subsidiary, Sunburst de Mexico in Mexico. The lease is on
      a
      month-to-month basis and is part of an office service package where we have
      access to a receptionist, clerical help, geologists, engineers and a board
      room.
      The office is leased from Minera Rio Tinto, a company controlled by an officer
      and director of the company and we pay $5,000 per month for this
      service.





As
      of
      December 2005, we have been paying monthly management fees of $5,000 to Robert
      Knight, our CEO, $5,000 to Tracy A. Moore, our CFO, and $4,000 Mario Ayub,
      our
      COO.





**ITEM
      11.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT.**





The
      following table sets forth, as of February 28, 2006, the stock ownership of
      each
      executive officer and director of Mexoro Minerals Ltd. of all executive officers
      and directors as a group, and of each person known by Mexoro Minerals Ltd.
      to be
      a beneficial owner of 5% or more of its Common Stock. Except as otherwise noted,
      each person listed below is the sole beneficial owner of the shares and has
      sole
      investment and voting power as such shares. No person listed below has any
      options, warrants or other rights to acquire additional securities of Mexoro
      Minerals Ltd., except as may be otherwise noted.





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**Name
                and Address**
            **Number
                of Shares Beneficially Owned**
            **Percent
                of Class**Robert
                Knight(1)
              114
                W. Magnolia Street
              Suite
                446
              Bellingham,
                WA 98225
            450,000
                (2)
            3.00%Mario
                Ayub(1)
              Pascual
                Orozco# 2117-A
              Chihuahua,
                Chih. 31310
              Mexico
            1,502,000
                (3)
            9.90%Tracy
                A. Moore(1)
              609
                Granville Street, Suite 880
              Vancouver,
                BC V7Y 1G5
              Canada
            50,000
                (4)
            .33%**All
                officers and directors as a Group (3 in number)**
            **2,002,000**
            **13.23%**Etson,
                Inc. (5)
              6100
                Neil Road Suite 500
              Reno,
                NV 89511
            972,000
            6.41%GM
                Capital Partners Ltd. (6)
              Usteristrasse
                19, 8023
              Zurich,
                Switzerland
            5,000,000(7)
            17.7%





(1)
      Officer and/or director of our company.





(2)
      Includes 400,000 shares owned by 391566 B.C. Ltd., which is controlled by Mr.
      Knight.  Also includes 50,000 vested options, which are owned by Mr.
      Knight.





(3)
      Includes 1,452,000 shares held by MRT Investments, Inc., which is controlled
      by
      Mr. Ayub.  Also includes 50,000 vested options owned by Mr.
      Ayub.





(4)
      Includes 50,000 vested options owned by Mr. Moore.





(5)
      Jacob
      Ayub is the president and controlling shareholder of Etson, Inc.  Jacob
      Ayub is the brother of Mario Ayub, our Chief Operating Officer.





(6)
      J.A.
      Michie is a director, and Mark Hartmann is a shareholder of this
      entity.





(7)
      Warrants issued pursuant to a consulting agreement.





**ITEM
      12.    CERTAIN RELATIONSHIPS AND RELATED
      TRANSACTIONS.**





Indemnification
      of Officers and Directors





As
      permitted by Colorado law, the Company’s Articles of Incorporation provide that
      the Company will indemnify its directors and officers against expenses and
      liabilities they incur to defend, settle, or satisfy any civil or criminal
      action brought against them on account of their being or having been Company
      directors or officers unless, in any such action, they are adjudged to have
      acted with gross negligence or willful misconduct. Insofar as indemnification
      for liabilities arising under the Securities Act of 1933 may be permitted to
      directors, officers or persons controlling the Company pursuant to the foregoing
      provisions, the Company has been informed that, in the opinion of the Securities
      and Exchange Commission, such indemnification is against public policy as
      expressed in that Act and is, therefore, unenforceable.





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Exclusion
      of Liability





Pursuant
      to the Colorado Corporation Code, the Company’s Articles of Incorporation
      exclude personal liability for its directors for monetary damages based upon
      any
      violation of their fiduciary duties as directors, except as to liability for
      any
      breach of the duty of loyalty, acts or omissions not in good faith or which
      involve intentional misconduct or a knowing violation of law, acts in violation
      of Section 7-5-114 of the Colorado Corporation Code, or any transaction from
      which a director receives an improper personal benefit. This exclusion of
      liability does not limit any right which a director may have to be indemnified
      and does not affect any director's liability under federal or applicable state
      securities laws.





Conflicts
      of Interest





None
      of
      the officers of the Company will devote more than a portion of their time to
      the
      affairs of the Company. There will be occasions when the time requirements
      of
      the Company’s business conflict with the demands of the officers’ other business
      and investment activities. Such conflicts may require that the Company attempt
      to employ additional personnel. There is no assurance that the services of
      such
      persons will be available or that they can be obtained upon terms favorable
      to
      the Company.





**ITEM
      13.**  **EXHIBITS**




The
      following exhibits are filed in reference:




2.1
            Securities
              Purchase Agreement dated as of August 25, 2004 among Sunburst Acquisitions
              IV, Inc. (and identified purchasers) (incorporated by reference from
              Current Report on Form 8-K and filed with the Securities and Exchange
              Commission on August 31, 2004).  2.2
            Share Exchange Agreement, dated May 3, 2004, by
              and among
              Sunburst Acquisitions IV, Inc., a Colorado corporation, Sierra Minerals
              and Mining, Inc., a Nevada corporation, and the shareholders of Sierra
              Minerals & Mining, Inc. (incorporated
              by reference from Current Report on Form 8-K/A and filed with the
              Securities and Exchange Commission on August 9,
              2004).  2.3
            Joint
              Venture Agreement, dated April 26, 2004 and amended on June 1, 2004,
              by
              and between Sierra Mining and Minerals, Inc., a Nevada corporation,
              and
              Minera Rio Tinto S.A. de C.V., a Mexican company(incorporated
              by reference from Current Report on Form 8-K/A and filed with the
              Securities and Exchange Commission on August 9,
              2004).  2.4
            Amendment
              to Joint Venture Agreement dated June 1, 2004 (incorporated by reference
              from Current Report on Form 8-K/A and filed with the Securities and
              Exchange Commission on August 9, 2004).  3
                (i)
            Articles
                of Incorporation (incorporated by reference from Registration Statement
                on
                Form 10-SB/A filed with the Securities and Exchange Commission on
                December
                29, 1997).





3
                (ii)
            Bylaws
                (incorporated by reference from Registration Statement on Form 10-SB/A
                filed with the Securities and Exchange Commission on December 29,
                1997).  4.1
            Specimen
              Common Stock Certificate (incorporated by reference from Registration
              Statement on Form 10-SB/A filed with the Securities and Exchange
              Commission on December 29, 1997).





4.2
            Registration
                Agreement dated April 20, 2004, by and among Sunburst Acquisitions
                IV,
                Inc., a Colorado company, and each of the purchasers in a private
                placement of shares of Sunburst(incorporated
                by reference from Current Report on Form 8-K/A and filed with the
                Securities and Exchange Commission on August 9,
                2004).





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          23




10.1
            Distribution
                Agreement between EPI and Sunburst Acquisitions IV, Inc. (incorporated
                by
                reference from Form 10-KSB filed with the Securities and Exchange
                Commission on May 20, 2002).




10.2
            Distribution
              Agreement by and between Romlight International, Inc. and Sunburst
              Digital, Inc. (incorporated by reference from Form 10-KSB filed with
              the
              Securities and Exchange Commission on June 11,
              2003).  10.3
            Promissory
                Note between Sunburst Acquisitions IV, Inc. andMinera
                Rio Tinto S.A. de C.V. in the amount of $ 57,500 dated January 9,
                2004(incorporated
                by reference from Current Report on Form 8-K/A and filed with the
                Securities and Exchange Commission on August 9,
                2004).





10.4
            Promissory
                Note between Sierra Mineral and Mining, Inc. andMinera
                Rio Tinto S.A. de C.V. in the amount of $ 167,500, dated May 3, 2004(incorporated
                by reference from Current Report on Form 8-K/A and filed with the
                Securities and Exchange Commission on August 9,
                2004).





10.5
            Funds
                Escrow Agreement dated July 2005, among Sunburst Acquisitions IV,
                Inc.,
                Investment Fund, Ltd., Alpha Capital AG and Stonestreet LP, and Grushko
                & Mittman, P.C. (herein incorporated by reference from the Company’s
                current report on Form 8-K dated July 1, 2005 and filed with the
                Securities and Exchange Commission on August 17,
                2005).





10.6
            Repayment
                Agreement dated July 15, 2005 by and among Sunburst Acquisitions
                IV, Inc.
                and Investment Fund, Ltd., Alpha Capital AG and Stonestreet LP. (herein
                incorporated by reference from the Company’s current report on Form 8-K
                dated July 1, 2005 and filed with the Securities and Exchange Commission
                on August 17, 2005).





10.7
            Consulting
                Agreement dated July 1, 2005 between Tracy A. Moore and Sunburst
                Acquisitions IV, Inc. (herein incorporated by reference from the
                Company’s
                current report on Form 8-K dated July 1, 2005 and filed with the
                Securities and Exchange Commission on August 17,
                2005).







10.8
            SHARE
                OPTION AGREEMENT among Minera Rio Tinto, S.A. de C.V. a corporation
                duly
                incorporated and validly existing pursuant to the laws of the United
                Mexican States and having an office at Pascual Orozco No. 2117 -
                A
                Chihuahua, State of Chihuahua, Mexico 31310 and Sunburst Acquisitions
                IV,
                Inc., a corporation duly incorporated and validly existing pursuant
                to the
                laws of the State of Colorado, USA and having an office at Suite
                206, 595
                Howe St., Vancouver, B.C. Canada V6C 2T5 (herein incorporated by
                reference
                from the Company’s report on Form 8-K for report date August 22, 2005 and
                filed with the Securities and Exchange Commission on August 25,
                2005).




10.9
            AGREEMENT
                made and entered in the City of Chihuahua, State of Chihuahua as
                of the
                18th day of August, 2005 among COMPAÑÍA MINERA DE NAMIQUIPA, S. A. DE C.
                V. a company duly incorporated and validly existing pursuant to the
                laws
                of the United Mexican States, and MINERA RIO TINTO, S. A. DE C. V.
                a
                company duly incorporated and validly existing pursuant to the laws
                of the
                United Mexican States, and MARIO HUMBERTO AYUB TOUCHE having a domicile
                at
                San Antonio No. 2036 Chihuahua, Chihuahua and SUNBURST MINING DE
                MÉXICO,
                S. A. DE C. V., a company duly incorporated and validly existing
                pursuant
                to the laws of the United Mexican States (herein incorporated by
                reference
                from the Company’s report on Form 8-K for report date August 22, 2005 and
                filed with the Securities and Exchange Commission on August 25,
                2005).




10.10
            AGREEMENT
                made and entered at the City of Chihuahua, State of Chihuahua on
                this the
                18th day of August of the year 2005, among MINERA RIO TINTO, S. A.
                DE C.
                V. a company duly incorporated and validly existing pursuant to the
                laws
                of the United Mexican States, and SUNBURST MINING DE MÉXICO, S. A. DE C.
                V. a company duly incorporated and validly existing pursuant to the
                laws
                of the United Mexican States (herein incorporated by reference from
                the
                Company’s report on Form 8-K for report date August 22, 2005 and filed
                with the Securities and Exchange Commission on August 25,
                2005).




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10.11
            OPERATOR’S
                AGREEMENT dated effective as of the 18th day of August, 2005, among
                Minera
                Rio Tinto, S.A. de C.V. a corporation duly incorporated and validly
                existing pursuant to the laws of the United Mexican States and having
                an
                office at Pascual Orozco No. 2117 - A Chihuahua, State of Chihuahua,
                Mexico 31310, and Sunburst de Mexico, S.A. de C.V. a corporation
                duly
                incorporated and validly existing pursuant to the laws of the United
                Mexican States and having an office at Suite 5, Avenida del Mar No.1022
                Zona Costera, Mazatlan, State of Sinaloa, Mexico (herein incorporated
                by
                reference from the Company’s report on Form 8-K for report date August 22,
                2005 and filed with the Securities and Exchange Commission on August
                25,
                2005).




10.12
            ASSIGNMENT
                OF CONTRACT AGREEMENT made and entered in the City of Chihuahua,
                State of
                Chihuahua as of this the 18th day of August, 2005 among MINERA RIO
                TINTO,
                S. A. DE C. V. a company duly incorporated and validly existing pursuant
                to the laws of the United Mexican States, and CORPORATIVO MINERO,
                S.A. DE
                C.V. a company duly incorporated and validly existing pursuant to
                the laws
                of the United Mexican States, and SUNBURST MINING DE MÉXICO, S. A. DE C.
                V. a company duly incorporated and validly existing pursuant to the
                laws
                of the United Mexican States (herein incorporated by reference from
                the
                Company’s report on Form 8-K for report date August 22, 2005 and filed
                with the Securities and Exchange Commission on August 25,
                2005).




10.13
            ASSIGNMENT
                OF CONTRACT AGREEMENT made and entered in the City of Chihuahua,
                State of
                Chihuahua as of this the 18th day of August, 2005, among MINERA RIO
                TINTO,
                S. A. DE C. V. a company duly incorporated and validly existing pursuant
                to the laws of the United Mexican States, and RAFAEL FERNANDO ASTORGA
                HERNÁNDEZ, having a domicile at Calle República de Uruguay No. 706 of the
                City of Chihuahua, Chih, and SUNBURST MINING DE MÉXICO, S. A. DE C. V. a
                company duly incorporated and validly existing pursuant to the laws
                of the
                United Mexican States (herein incorporated by reference from the
                Company’s
                report on Form 8-K for report date August 22, 2005 and filed with
                the
                Securities and Exchange Commission on August 25,
                2005).




10.14
            ASSIGNMENT
                OF CONTRACT AGREEMENT made and entered in the City of Chihuahua,
                State of
                Chihuahua as of this the 18th day of August, 2005 among MINERA RIO
                TINTO,
                S. A. DE C. V. a company duly incorporated and validly existing pursuant
                to the laws of the United Mexican States, having an office at Av.
                Pascual
                Orozco Number 2117- Altos, La Cima, C. P. 31310, Chihuahua, Chihuahua,
                and
                MINERA RACHASA, S.A. DE C.V., a company duly incorporated and validly
                existing pursuant to the laws of the United Mexican States, and having
                an
                office atNiños Héroes No. 410 Colonia Centro, Chihuahua, Chihuahua (RFC
                BMM-900120-8B6), and SUNBURST MINING DE MÉXICO, S. A. DE C. V. a company
                duly incorporated and validly existing pursuant to the laws of the
                United
                Mexican States (herein incorporated by reference from the Company’s report
                on Form 8-K for report date August 22, 2005 and filed with the Securities
                and Exchange Commission on August 25,
                2005).




10.15
            THE
                NEW AGREEMENT entered into on December 8, 2005 among the Company,
                Sunburst
                Mexico, and MRT (herein incorporated by reference from the Company’s
                current report on Form 8-K for report date December 8, 2005 and filed
                with
                the Securities and Exchange Commission on December 14,
                2005).





31.1
            Certification
                of Chief Executive Officer of
                Sunburst Acquisitions IV, Inc. pursuant to Rule 13a-14(a)/15d-14(a).*





31.2
            Certification
                of Chief Financial Officer of
                Sunburst Acquisitions IV, Inc. pursuant to Rule 13a-14(a)/15d-14(a).*





32.1
            Certification
                of Chief Executive Officer of
                Sunburst Acquisitions IV, Inc. pursuant to 18 U.S.C. Section 1350.
                *





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32.2
            Certification
                of Chief Financial Officer of Sunburst
                Acquisitions IV, Inc. pursuant to 18 U.S.C. Section 1350.*





*filed
      herewith


**ITEM
      14.**  **PRINCIPAL
      ACCOUNTANT FEES AND SERVICES**





The
      aggregate fees accrued by the Company for  Pannell
      Kerr Forster (registered with the PCAOB as “Smythe Ratcliffe”)  for
      audit
      of the Company's annual financial statements were $20,000 for the fiscal year
      ended February 28, 2006, and the aggregate fees billed were $24,476 for the
      fiscal year ended February 28, 2005.  The
      aggregate fees billed by Pannell Kerr Forster (registered with the PCAOB as
“Smythe Ratcliffe”)  for
      review of the Company's financial statements included in its quarterly reports
      on Form 10QSB were $13,510 during the period ended February 28, 2006, and
      $16,657 during the period ended February 28, 2005.





Tax
      Fees





The
      aggregate fees billed by  Pannell
      Kerr Forster (registered with the PCAOB as “Smythe Ratcliffe”) for tax
      compliance, advice and planning were $0 for the fiscal year ended February
      28, 2006 and $2,000 for the fiscal year ended February 28, 2005.





All
      Other
      Fees





Pannell
      Kerr Forster (registered with the PCAOB as “Smythe Ratcliffe”)  did
      not
      bill the Company for any products and services other than the foregoing during
      the fiscal years ended February 28, 2006 and February 28, 2005 .





**SIGNATURES**





In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.






**MEXORO
      MINERALS LTD.**








By:
      /s/ ROBERT
      KNIGHT


Robert
      Knight, CEO and Director





Date:
      May
      30, 2006





In
      accordance with the Exchange Act, this report has been signed below by the
      following persons on behalf of the registrant and in the capacities and on
      the
      dates indicated.








By:
      /s/ ROBERT
      KNIGHT


Robert
      Knight, CEO and Director




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By:
      /s/ MARIO
      AYUB


Mario
      Ayub, COO and Director








By:
      /s/ TRACY
      A.
      MOORE


Tracy
      A.
      Moore, CFO and Director








Date:
      May
      30, 2006





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