**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, 2005





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


For
      the
      transition period from ____ to _____





**SUNBURST
      ACQUISITIONS IV, INC.**


(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)


595
                Howe Street, Suite 206
              Vancouver,
                BC
            V6C
                2T5(Address
                of principal executive offices)
            (Zip
                Code)





Registrant’s
      telephone number, including area code: (604)
      684-1755





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): $1,877,967 as of June 2,
      2005.





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 ___ 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:
      86,894,324 as of June 10, 2005 .





(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.





2





PART
      I





**ITEM
      1.  DESCRIPTION OF BUSINESS**





**Background**





We
      were
      incorporated under the laws of the State of Colorado on August 27, 1997. We
      were
      formed to seek out and acquire business opportunities. In accordance with our
      business plan, we have engaged in three separate acquisition transactions which
      are described below. The first two of these transactions did not result in
      the
      acquisition of a viable operating business. The third acquisition was completed
      during the current fiscal year, but has not yet become operational. As a result,
      as of the end of its fiscal year ending February 28, 2005, we remain in the
      development stage.





In
      addition to the two previous acquisitions, for a period of two years before
      the
      current fiscal year we focused on the development of a business related to
      the
      marketing, distribution and sale of digital electronic ballasts, through our
      wholly-owned Canadian subsidiary, Sunburst Digital, Inc. However, due to
      problems with quality and delivery of the ballasts from the manufacturer, we
      have also sought other opportunities. On May 25, 2004 we completed a share
      exchange transaction with Sierra Minerals and Mining, Inc., a Nevada corporation
      (“Sierra”), pursuant to which Sierra became our wholly-owned subsidiary. Through
      our new subsidiary, we now intend to seek to develop several mining properties
      in Mexico.





**Prior
      Acquisitions**





Prologic
      Systems, Inc .  In
      August
      1999, the Company invested $1,000,000 in Prologic Systems, Inc., an Arizona
      corporation 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 and as part of that transaction, the
      Company acquired 3,459,972 shares of Prologic. However, the agreement to
      complete a business combination with Prologic was terminated prior to its
      consummation, and in March 2000, the Company charged off its investment to
      operations.




In
      January 2001, the Company entered into an agreement with Prologic to recover
      a
      portion of its investment. Pursuant to that agreement, on February 16, 2001,
      the
      Company 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 bears interest at the rate of 10% per
      annum
      and requires 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 the Company.




The
      Company retained ownership of a total of 600,000 shares of Prologic, which
      it
      has subsequently sold. See “Plan of Operations” below. Such shares were
“restricted securities” as defined in Rule 144 under the Securities Act of 1933.
      The terms of the agreement with Prologic required them to file a registration
      statement in order to register the Company’s shares for resale. This
      registration statement was not filed, and the shares were sold in accordance
      with the provisions of Rule 144(k).





3




HollywoodBroadcasting.com. On December 4, 2000, the Company completed the closing under an Agreement for
      Share Exchange between it and HollywoodBroadcasting.com, Inc., a Nevada
      corporation (“HB.C”). 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. The Company has begun
      the process of seeking out potential opportunities in other unrelated areas
      of
      business.





**Prior
      Business Activities**





On
      February 27, 2002, we were assigned a sub-distributorship pursuant to a contract
      between 1357784 Ontario Ltd (“EPI”) and Romlight International, Inc., a company
      based in Toronto, Ontario Canada. Pursuant to the sub-distributorship agreement,
      we became the exclusive worldwide distributor to the hydroponics industry of
      a
      digital electronic lighting ballast.





Romlight
      developed the ballast and is also currently the sole manufacturer. The Romlight
      product is a digital electronic ballast which may be produced in various sizes
      ranging from 70 watts to 1,000 watts, and which is designed to replace the
      traditional core and coil ballasts required to drive various types of lamp
      systems including High Density Discharge (HID) and Fluorescent lighting. At
      the
      core of the Romlight ballast system in the application and use of microprocessor
      technology and related component software.





The
      technology gives the ballast a number of unique features. It is a compact,
      modular and lightweight design which is intended to be easy to install. The
      light burns brighter and longer as compared to other traditional types of
      ballasts, it does not produce heat and it is able to be controlled by a dimmer.
      In addition, various test results of which we have been advised claim to
      demonstrate that the ballast can result in significant energy savings (ranging
      between 20-50%) as compared to traditional core and coil ballasts.





Under
      the subdistributorship agreement with EPI, we had a annual purchase commitment
      of 100,000 units. However, because of difficulties in obtaining delivery of
      finished product from the manufacturer, during the fiscal year ending February
      28, 2003, we took delivery of a total of only 500 400-watt ballasts. During
      the
      current fiscal year, both the contract between EPI and Romlight International
      and our sub-distributorship agreement were cancelled, and on April 2, 2003,
      our
      wholly-owned subsidiary, Sunburst Digital, Inc., signed an agreement directly
      with Romlight containing terms and conditions substantially identical to the
      terms of the sub-




4




distributorship
      agreement. This new agreement also includes an annual purchase commitment of
      100,000 units, but it only becomes applicable when Romlight is able to resolve
      its production difficulties and commit itself to a reliable delivery schedule
      for completed ballasts.





As
      a result of continuing problems with both quality and delivery of the product,
      as of the end of the fiscal end, all purchase orders were on hold. However,
      subsequent to the end of the fiscal year, we have been advised that Romlight
      has
      made arrangements for manufacture of the 600-watt ballast in Korea, and on
      May
      1, 2004, a total of 28 new samples were received from the new manufacturer.
      It
      is our intention to do significant testing of the new samples prior to making
      any new purchase orders.





In
      the event we do elect to order and take delivery of ballasts from the Korean
      manufacturer, we plan to market and distribute the units through independent
      sales representatives who will be compensated through payment of commissions.
      Our contract with the manufacturer gives us exclusive rights to market the
      ballasts in British Columbia, Canada, and the exclusive rights to market the
      products on a worldwide basis to the hydroponics industry. It is anticipated
      that initial marketing efforts will be directed primarily toward the hydroponics
      industry.








**Current
      Operations**





As
      indicated above, on May 25, 2004 we completed a share exchange transaction
      with
      Sierra Minerals and Mining, Inc., a Nevada corporation, pursuant to which Sierra
      became our wholly-owned subsidiary. Sierra is a party to a Joint Venture
      Agreement (the "JV Agreement"), dated April 26, 2004 and amended on June 1,
      2004, by and between Sierra and Minera Rio Tinto S.A. de C.V., a Mexican company
      ("MRT"), pursuant to which Sierra and MRT have agreed to explore and, if
      feasible, develop certain mining properties which MRT has the option to acquire.
      The properties are located in the state of Chihuahua, Mexico and it is intended
      that the joint venture will be owned 60% by Sierra and 40% by MRT.





Sierra,
      and its joint venture partner, MRT, have the option to acquire a number of
      mining properties located in the state of Chihuahua, Mexico. The first property
      being considered is "Cienguita" which is located in the state of Chihuahua,
      Mexico. Through Sierra, we are completing a report on this property and, through
      a private placement offering of our securities, plan to attempt to raise the
      required funding of US $1,500,000 to put the property back into production
      at an
      estimated rate of production of approximately 20,000 oz of gold per year.
      Previous drilling indicates that there are reserves of 100,000 oz of gold and
      the potential for expansion.





Sierra
      has a number of financial obligations under the terms of the JV Agreement.
      It is
      our intention to seek to raise capital through the offer and sale of our
      securities in order to assist Sierra in satisfying its financial obligations
      to
      the joint venture. There is no assurance that we will be able of raise
      sufficient capital to allow Sierra to satisfy is financial obligations to the
      joint venture.





The
      joint venture agreement between Sierra and MRT required Sierra to invest cash
      totalling $1,000,000 by December 31, 2004, and to secure a $2,000,000 line
      of
      credit by February 28, 2005. The Company has been able to make payments
      totalling $507,500 of the initial $1,000,000 cash investment through private
      placements of convertible debt and equity. We continue to seek additional
      capital to fund the remaining balance of the required $1,000,000 cash investment
      and to secure the $2,000,000 line of credit.





As
      at February 28, 2005, the Company is in default of the agreement. We are
      currently negotiating a further extension to raise the remaining $492,500 of
      the
      required $1,000,000 investment and to secure the $2,000,000 line of
      credit.





5





**Employees**




We
      currently have no employees and have no current plans to hire employees.
      Instead, we rely on members of management to handle all matters related to
      business development and business operations.




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





**** The
      Company currently maintains a mailing address at 595
      Howe Street, Suite 206


Vancouver,
      BC V6C 2T5 .
      Its
      telephone number at that address is (604) 684-1755. The Company pays no rent
      for
      use of this mailing address, and does not anticipate the need for maintaining
      a
      separate office until it has completed a business combination
      transaction.




The
      Company currently has no investments in real estate, real estate mortgages,
      or
      real estate securities, and does not anticipate making any such investments
      in
      the future. However, the policy of the Company with respect to investment in
      real estate assets could be changed in the future without a vote of security
      holders.





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





The
      Company is not a party to any pending legal proceedings, and, as of the end
      of
      its fiscal year ending February 28, 2005, no such proceedings are known to
      be
      contemplated. No director, officer or affiliate of the Company, and no owner
      of
      record or beneficial owner of more than 5.0% of the securities of the Company,
      or any associate of any such director, officer or security holder is a party
      adverse to the Company or has a material interest adverse to the Company in
      reference to pending litigation.





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





No
      matters were submitted to a vote of the security holders of the Company during
      the fourth quarter of the fiscal year which ended February 28,
      2005.





**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 “SBAQ.” 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, 2005
            
            High
            
            LowFirst
                Quarter
            
            $
            0.29
            
            $
            0.18Second
                Quarter
            
            $
            0.26
            
            $
            0.06Third
                Quarter
            
            $
            0.19
            
            $
            0.06Fourth
                Quarter
            
            $
            0.08
            
            $
            0.05





6


Fiscal
                Year Ending February 29, 2004
            
            High
            
            LowFirst
                Quarter
            
            $
            0.09
            
            $
            0.041Second
                Quarter
            
            $
            0.08
            
            $
            0.05Third
                Quarter
            
            $
            0.11
            
            $
            0.041Fourth
                Quarter
            
            $
            0.26
            
            $
            0.045





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




As
      of February 28, 2005, there were approximately 188 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.





7




**Liquidity
      and Capital Resources**





We
      remain in the development stage. Since inception we have undergone two
      unsuccessful business combinations, which have caused us to incur significant
      liabilities and have resulted in the accumulation of a substantial deficit
      during the development stage. As of February 28, 2005, we have total current
      assets of $43,235 and total current liabilities of $765,448.





During
      the fiscal year ending February 28, 2005, the Company completed two private
      placements. The first private placement was completed on March 10, 2004, and
      the
      Company issued 3,650,000 shares of common stock for total proceeds of $73,000.
      The second private placement was completed on May, 2004, and the Company issued
      2,011,095 shares of common stock for net proceeds of $196,134. The Company
      also
      received total proceeds of $35,000 for the exercise of 1,000,000 stock options
      in March 2004 and 1,500,000 stock options in July 2004. On September 29, 2004,
      275,632 cashless warrants were exercised, and the Company issued 275,632 shares
      of common stock.




On
      May 25, 2004, we completed a share exchange transaction with Sierra Minerals
      and
      Mining, Inc., a Nevada corporation. Sierra is a party to a Joint Venture
      Agreement with Minera Rio Tinto S.A. de C.V., a Mexican company ("MRT"),
      pursuant to which Sierra and MRT have agreed to explore and, if feasible,
      develop certain mining properties which MRT has the option to acquire. The
      properties are located in the state of Chihuahua, Mexico. Under the terms of
      the
      Joint Venture Agreement, Sierra has a number of financial obligations which
      the
      Company has agreed to help it meet. 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.  As a result, Sierra became a wholly owned subsidiary of the
      Company.  The common shares were valued at $0.01 per share. 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 during the quarter ended
      May 31, 2004.





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 will not
      bear interest but will 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 will be $1,000,000.   The Debentures will be due and
      payable in full one year from the date of issuance. On August 30, 2004, the
      Company issued $551,250 face amount of Debentures for net proceeds of $347,500
      which included finder fees and commissions of $60,833. On October 19, 2004,
      the
      Company issued an additional $123,750 face amount of Debentures for net proceeds
      of $82,500, which included finder fees, and commissions of $9,167.





The
      issued and outstanding shares are 86,894,324 as of February 28, 2005. We had
      cash on hand of $35,122 as of February 28, 2005. We plan to use our cash on
      hand
      to pay on-going expenses related to compliance with our reporting obligations
      under the Securities Exchange Act of 1934.





The
      Company intends to seek to raise the necessary capital through private placement
      offerings and sale of its securities to fund the financial obligations of Sierra
      with regards to its Joint Venture Agreement with MRT. We also intend to continue
      to seek additional funding for working capital purposes.





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




8




operations.
      It has current assets of $43,235 and current liabilities totalling $765,448
      resulting in a current ratio of 0.056 as of February 28, 2005. Liquidity was
      achieved through the exercise of options and through the issuance of a
      convertible debenture, and not from operations. The Company has a cumulative
      deficit during the development stage of approximately $3,621,215 at February
      28,
      2005, $1,974,749 of which 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, either through its existing product lines, which include
      ballasts or potential cash flow from its new investment in a Mexican mining
      joint venture. In addition, the Company has conducted a private placement of
      convertible debt, which has generated a portion of the initial cash requirements
      of its planned mining joint venture.





**Plan
      of Operations**





We
      remain in the development stage. Our plan of operations for the next twelve
      months is to continue our efforts to raise the necessary capital to finance
      the
      joint venture obligations of Sierra Minerals and Mining.





As
      a result of continuing uncertainties relating to development and delivery of
      ballasts, we have continued to seek new opportunities. As described above,
      on
      May 25, 2004, we completed a share exchange with the shareholders of Sierra
      Minerals and Mining, Inc. "Sierra", a Nevada corporation.





Sierra,
      and its joint venture partner, Minera Rio Tinto S.A. de C.V., a Mexican company
      ("MRT"), have the option to acquire a number of mining properties located in
      the
      state of Chihuahua, Mexico. The first property being considered is "Cienguita"
      which is located in the state
      of Chihuahua, Mexico. Through Sierra, we are completing a report on this
      property and, through a private placement offering of our securities, plan
      to
      attempt to raise the required funding of US $1,500,000 to put the property
      back
      into production at an estimated rate of production of approximately 20,000
      oz of
      gold per year. Previous drilling indicates that there are reserves of 100,000
      oz
      of gold and the potential for expansion.





The
      joint venture agreement between Sierra and MRT requires Sierra to invest cash
      totalling $1,000,000 by June 30, 2004, and to secure a $2,000,000 line of credit
      for the joint venture within sixty days of signing the joint venture
      agreement.  MRT will contribute the properties.  The joint venture
      is
      to be owned 60% by Sierra and 40% by MRT, however, should Sierra fail to secure
      the line of credit, its interest shall be reduced to 30% and the interest of
      MRT
      shall be increased to 70%.





On
      October 1, 2004, the Company signed an extension to provide the required
      investment of $1,000,000 by November 10, 2004, and secure the $2,000,000 line
      of
      credit by November 30, 2004. On November 16, 2004 the Company signed a further
      extension to provide the required investment of $1,000,000 by December 31,
      2004
      and secure the $2,000,000 line of credit by February 28, 2005.





As
      at February 28, 2005, the Company has advanced a total of $507,500 of the
      $1,000,000 required investment. However, the Company is in default of the
      agreement and is currently negotiating a further extension for the remaining
      balance of the required $1,000,000 investment and securing a $2,000,000 line
      of
      credit.





There
      is no guarantee that the funds can be raised or that the targeted production
      rate of 20,000 ounces of gold per year can be achieved.




9





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



































**SUNBURST
                  ACQUISITION IV, INC.****(A
                  Development Stage Company)****Consolidated
                  Financial Statements****February
                  28, 2005****INDEX**
              **Page****Reports
                  of Independent Registered Public Accounting Firm**
              F-1
                  - F-2**Consolidated
                  Financial Statements**Consolidated
                  Balance Sheets
              F-3Consolidated
                  Statements of Stockholder’s Equity (Deficit)
              F-4
                  - F5Consolidated
                  Statements of Operations & Retained Earnings (Deficit)
              F-6Consolidated
                  Statements of Cash Flows
              F-7Notes
                  to Consolidated Financial Statements
              F-8
                  - F-16










**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**








**TO
      THE SHAREHOLDERS OF SUNBURST ACQUISITIONS IV, INC.**


**(A
      Development Stage Company)**





We
      have
      audited the accompanying consolidated balance sheet of Sunburst Acquisitions
      IV,
      Inc. (a development stage company) as at February 28, 2005 and the related
      consolidated statements of operations and retained earnings (deficit),
      stockholders’ equity (deficit) and cash flows for the year ended February 28,
      2005. 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 audit. The related balance sheet at February 29, 2004,
      and the statements of operations and retained earnings (deficit), stockholders’
      equity (deficit), and cash flows from inception of the development stage on
      August 27, 1997 through 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 statements of operations and retained earnings
      (deficit), stockholders’ equity (deficit) and cash flows from inception of the
      development stage on August 27, 1997 through February 28, 2005, insofar as
      it
      relates to amounts for prior periods through February 29, 2004, is solely based
      on the reports of other auditors.





We
      conducted our audit in accordance with standards of the Public Company
      Accounting Oversight Board (United States). 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 audit provides 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, 2005 and the results of its operations, and its cash flows for the periods
      indicated above in conformity with generally accepted accounting principles
      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 6, the Company has
      sustained operating losses since its inception and has deficits in working
      capital and equity which raise 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 amount 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 10.











/s/
      Pannell Kerr Forster


Chartered
      Accountants


(registered
      with the PCAOB as “Smythe Ratcliffe”)





Vancouver,
      Canada


May
      31,
      2005





F-1





**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**











The
      Board of Directors and Stockholders of


Sunburst
      Acquisitions IV, Inc.








We
      have
      audited the accompanying consolidated balance sheet of Sunburst Acquisitions
      IV,
      Inc. and subsidiary (a development stage company) as of February 29, 2004,
      and
      the related consolidated statements of operations, stockholders’ equity, and
      cash flows for the year ended February 29, 2004, for the year ended February
      28,
      2003, and for the period from inception (August 27, 1997) to February 29, 2004.
      These financial statements are the responsibility of the Company’s management.
      Our responsibility is to express an opinion on these financial statements based
      on our audits.





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





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of Sunburst Acquisitions IV,
      Inc. as of February 29, 2004, and the results of its consolidated operations,
      cash flows and changes in stockholders’ equity for the year ended February 29,
      2004, for the year ended February 28, 2003, and for the period from inception
      (August 27, 1997) to February 29, 2004, in conformity with U.S. generally
      accepted accounting principles.





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As discussed in Note 6 to the financial
      statements, 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. Management’s plans in regard to
      these matters, which include a private placement of securities, are also
      described in Note 6. The financial statements do not include any adjustments
      related to the recoverability and classification of asset carrying amounts
      or
      the amount and classification of liabilities that might result should the
      Company be unable to continue as a going concern.








Denver,
      Colorado


May
      24,
      2004






/s/
              Comiskey
              & Company**PROFESSIONAL
              CORPORATION**




F-2




**SUNBURST
      ACQUISITIONS IV, INC.**


**(A
      Development Stage Company)**


**Consolidated
      Balance Sheets**


**February
                28,**
            **February
                29,****2005**
            **2004****Assets****Current**Cash
                and cash equivalents
            
            $
            35,122
            
            $
            22,077Accounts
                receivable
            
            
            -
            
            
            8,206Other
                current assets
            
            
            8,113
            
            
            6,480Total
                current assets
            
            
            43,235
            
            
            36,763**Other
                Assets**Investment
                in Sierra
            
            
            -
            
            
            57,500**Total
                Assets**
            
            $
            43,235
            
            $
            94,263**Liabilities****Current**Accounts
                payable and accrued liabilities
            
            $
            31,948
            
            $
            22,193Customer
                deposits
            
            
            -
            
            
            44,809Convertible
                debenture
            
            
            705,000
            
            
            30,000Notes
                payable - related parties (note 3)
            
            
            28,500
            
            
            28,500**Total
                Liabilities**
            
            
            765,448
            
            
            125,502**Stockholders’
                Equity (Deficit)****Capital
                Stock**Authorized:20,000,000
                Preferred shares without par value (note 2)200,000,000
                Common shares without par valueIssued86,894,324
                Common shares
            
            
            2,435,977
            
            
            1,768,868Additional
                paid-in capital
            
            
            457,146
            
            
            194,391Accumulated
                deficit during the development stage
            
            
            (3,621,215
            )
            
            (2,003,427
            )Accumulated
                other comprehensive income
            
            
            5,879
            
            
            8,929**Total
                Stockholders’ Equity (Deficit**)
            
            
            (722,213
            )
            
            (31,239
            )**Total
                Liabilities and Stockholders’ Equity (Deficit)**
            
            $
            43,235
            
            $
            94,263




F-3





**SUNBURST
      ACQUISITIONS IV, INC.**


**(A
      Development Stage Company)**


**Consolidated
      Statement of Stockholders’ Equity (Deficit)**


**Period
      from Inception (August 27, 1997) to February 28, 2005**


DeficitAccumulated
            
            Other
            
            TotalAdditional
            
            
            
            during
                the
            
            Comprehensive
            
            Stockholders’Number
            
            
            
            Paid-in
            
            Stock
            
            Development
            
            Income
            
            Equityof
                Shares
            
            Amount
            
            Capital
            
            Subscriptions
            
            Stage
            
            (Loss)
            
            (Deficit)Common
                stock issued for cashApril
                1999
            
            
            15,000,000
            
            $
            15,000
            
            $
            0
            
            $
            0
            
            $
            0
            
            $
            0
            
            $
            15,000May
                1999
            
            
            15,000,000
            
            
            15,000
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            15,000July
                1999
            
            
            2,500,000
            
            
            2,500
            
            
            22,500
            
            
            0
            
            
            0
            
            
            0
            
            
            25,000August
                1999
            
            
            1,500,000
            
            
            1,500
            
            
            13,500
            
            
            0
            
            
            0
            
            
            0
            
            
            15,000September
                1999
            
            
            136,667
            
            
            137
            
            
            81,863
            
            
            0
            
            
            0
            
            
            0
            
            
            82,000October
                1999
            
            
            100,000
            
            
            100
            
            
            59,900
            
            
            0
            
            
            0
            
            
            0
            
            
            60,000November
                1999
            
            
            376,667
            
            
            377
            
            
            225,623
            
            
            0
            
            
            0
            
            
            0
            
            
            226,000December
                1999
            
            
            546,667
            
            
            547
            
            
            327,453
            
            
            0
            
            
            0
            
            
            0
            
            
            328,000January
                2000
            
            
            521,667
            
            
            522
            
            
            312,478
            
            
            0
            
            
            0
            
            
            0
            
            
            313,000February
                2000
            
            
            150,000
            
            
            150
            
            
            89,850
            
            
            0
            
            
            0
            
            
            0
            
            
            90,000Net
                loss for period endedFebruary
                29, 2000
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            (536,237
            )
            
            0
            
            
            (536,237
            )Balance,
                February 29, 2000
            
            
            35,831,668
            
            
            35,833
            
            
            1,133,167
            
            
            0
            
            
            (536,237
            )
            
            0
            
            
            632,763Recapitalization
                ofHollywoodBroadcasting.comDecember
                4, 2000
            
            
            9,070,831
            
            
            1,309,283
            
            
            (1,133,167
            )
            
            0
            
            
            0
            
            
            0
            
            
            176,116Net
                loss for year endedFebruary
                28, 2001
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            (1,630,777
            )
            
            0
            
            
            (1,630,777
            )Balance,
                February 28, 2001
            
            
            44,902,499
            
            
            1,345,116
            
            
            0
            
            
            0
            
            
            (2,167,014
            )
            
            0
            
            
            (821,898
            )Cancellation
                of sharesDecember
                4, 2000
            
            
            (15,000,000
            )
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0Common
                stock issued for cashJune
                2001
            
            
            235,000
            
            
            7,050
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            7,050July
                2001
            
            
            945,000
            
            
            28,351
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            28,351August
                2001
            
            
            350,000
            
            
            10,500
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            10,500September
                2001
            
            
            350,000
            
            
            10,500
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            10,500October
                2001
            
            
            330,000
            
            
            9,900
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            9,900Net
                income for year endedFebruary
                28, 2002
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            721,350
            
            
            0
            
            
            721,350Balance,
                February 28, 2002
            
            
            32,112,499
            
            
            1,411,417
            
            
            0
            
            
            0
            
            
            (1,445,664
            )
            
            0
            
            
            (34,247
            )Common
                stock issued for cashSeptember
                2002
            
            
            1,082,098
            
            
            110,126
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            110,126November
                2002
            
            
            943,000
            
            
            94,300
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            94,300Common
                stock issued in exchange of debtSeptember
                2002
            
            
            220,000
            
            
            22,000
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            22,000Options
                issuedMarch
                2002
            
            
            0
            
            
            31,000
            
            
            31,000
            
            
            0
            
            
            0
            
            
            0
            
            
            62,000June
                2002
            
            
            0
            
            
            0
            
            
            17,320
            
            
            0
            
            
            0
            
            
            0
            
            
            17,320Options
                exercisedApril
                2002
            
            
            1,000,000
            
            
            30,000
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            30,000September
                2002`
            
            
            100,000
            
            
            3,000
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            3,000Foreign
                exchange translation adjustment
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            (5,810
            )
            
            (5,810
            )Net
                loss for year ended February 28, 2003
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            (200,802
            )
            
            0
            
            
            (200,802
            )Balance,
                February 28, 2003
            
            
            35,457,597
            
            
            1,701,843
            
            
            48,320
            
            
            0
            
            
            (1,646,466
            )
            
            (5,810
            )
            
            97,887Capital
                contribution
            
            
            0
            
            
            0
            
            
            16
            
            
            0
            
            
            0
            
            
            0
            
            
            16Stock
                subscriptions
            
            
            0
            
            
            0
            
            
            0
            
            
            67,025
            
            
            0
            
            
            0
            
            
            67,025Options
                issuedMarch
                2003
            
            
            0
            
            
            0
            
            
            146,055
            
            
            0
            
            
            0
            
            
            0
            
            
            146,055Foreign
                exchange translation adjustment
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            14,739
            
            
            14,739Net
                loss for year ended February 29, 2004
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            (356,961
            )
            
            0
            
            
            (356,961
            )Balance,
                February 28, 2004
            
            
            35,457,597
            
            $
            1,701,843
            
            $
            194,391
            
            $
            67,025
            
            $
            (2,003,427
            )
            $
            8,929
            
            $
            (31,239
            )




See
      notes to consolidated financial statements.




F-4





**SUNBURST
      ACQUISITIONS IV, INC.**


**(A
      Development Stage Company)**


**Consolidated
      Statement of Stockholders’ Equity (Deficit)**


**(Continued)**


DeficitAccumulated
              
              Other
              
              TotalAdditional
              
              
              
              during
                  the
              
              Comprehensive
              
              Stockholders’Number
              
              
              
              Paid-in
              
              Stock
              
              Development
              
              Income
              
              Equityof
                  Shares
              
              Amount
              
              Capital
              
              Subscriptions
              
              Stage
              
              (Loss)
              
              (Deficit)Balance,
                  February 28, 2004
              
              
              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
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              430,000Common
                  stock issued for cashMarch
                  2004
              
              
              3,650,000
              
              
              73,000
              
              
              0
              
              
              (67,025
              )
              
              0
              
              
              0
              
              
              5,975May
                  2004
              
              
              2,011,095
              
              
              196,134
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              196,134Options
                  exercisedMarch
                  2004
              
              
              1,000,000
              
              
              20,000
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              20,000July
                  2004
              
              
              1,500,000
              
              
              15,000
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              15,000Options
                  issuedMay
                  2004
              
              
              0
              
              
              0
              
              
              175,800
              
              
              0
              
              
              0
              
              
              0
              
              
              175,800March
                  2004
              
              
              0
              
              
              0
              
              
              86,955
              
              
              0
              
              
              0
              
              
              0
              
              
              86,955Warrants
                  exercised
              
              
              275,632
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0Foreign
                  exchange translation adjustment
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              (3,050
              )
              
              (3,050
              )Net
                  loss for year ended February 28, 2005
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              (1,617,788
              )
              
              0
              
              
              (1,617,788
              )Balance,
                  February 28, 2005
              
              
              86,894,324
              
              $
              2,435,977
              
              $
              457,146
              
              $
              0
              
              $
              (3,621,215
              )
              $
              5,879
              
              $
              (722,213
              )







See
      notes to consolidated financial statements.




F-5





**SUNBURST
      ACQUISITIONS IV, INC.**


**(A
      Development Stage Company)**


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





Period**from**inceptionYear
              Ended
            
            (August
              27, 1997)**February
                28,**
            
            **February
                29,**
            
            **to
                February 28,****2005**
            
            **2004**
            
            **2005****Revenues**
            
            $
            -
            
            $
            13,580
            
            $
            246,395**Expenses**Cost
                of goods sold
            
            
            -
            
            
            8,082
            
            
            24,721Selling,
                general and administrative
            
            
            324,365
            
            
            357,879
            
            
            1,756,867**Total
                Expenses**
            
            
            324,365
            
            
            365,961
            
            
            1,781,588**Net
                Operating Loss**
            
            
            (324,365
            )
            
            (352,381
            )
            
            (1,535,193
            )**Other
                Income and Expense**Interest
                expense
            
            
            (180,123
            )
            
            (4,580
            )
            
            (221,364
            )Gain
                on sale of securities
            
            
            -
            
            
            -
            
            
            469,863Acquisition
                of resource properties
            
            
            (1,113,300
            )
            
            -
            
            
            (1,113,300
            )**Net
                Loss from Continuing Operations**
            
            
            (1,617,788
            )
            
            (356,961
            )
            
            (2,399,994
            )**Discontinued
                Operations******Loss
                from operations of****HolywoodBroadcasting.com
            
            
            -
            
            
            -
            
            
            (2,066,371
            )Gain
                on disposition of discontinued operations
            
            
            -
            
            
            -
            
            
            845,150**Net
                Loss**
            
            
            (1,617,788
            )
            
            (356,961
            )
            
            (3,621,215
            )**Accumulated
                Deficit, Beginning of Period**
            
            
            (2,003,427
            )
            
            (1,646,466
            )
            
            -**Accumulated
                Deficit, End of Period**
            
            $
            (3,621,215
            )
            $
            (2,003,427
            )
            $
            (3,621,215
            )**Other
                Comprehensive Income (Loss)**Foreign
                exchange gain on translation
            
            
            5,879
            
            
            14,739
            
            
            14,807**Total
                Comprehensive Loss**
            
            $
            (1,611,911
            )
            $
            (342,222
            )
            $
            (3,606,408
            )**Total
                Loss Per Share**
            
            $
            (0.02
            )
            $
            (0.01
            )**Weighted
                Average Number of Shares of****Common
                Stock and Common Stock****Equivalents
                Outstanding**
            
            
            73,984,330
            
            
            35,457,597




See
      notes to consolidated financial
      statements.




F-6





**SUNBURST
      ACQUISITIONS IV, INC.**


**(A
      Development Stage Company)**


**Consolidated
      Statements of Cash Flows**





Period
              fromInceptionYear
              Ended
            
            (August
              27, 1997)**February
                28,**
            
            **February
                29,**
            
            **to
                February 28,****2005**
            
            **2004**
            
            **2005****Operating
                Activities**Net
                loss
            
            $
            (1,617,788
            )
            $
            (356,961
            )
            $
            (3,621,215
            )**Adjustments
                to reconcile net income (loss) to****net
                cash flows**Write-off
                of note receivable
            
            
            57,500
            
            
            -
            
            
            57,500Acquisition
                of resources properties for shares
            
            
            430,000
            
            
            -
            
            
            430,000Discount
                on Convertible Debenture
            
            
            175,000
            
            
            -
            
            
            175,000Gain
                on sale of securities
            
            
            -
            
            
            -
            
            
            (469,863
            )Effect
                of Foreign Currency translation on cash
            
            
            10,096
            
            
            14,739
            
            
            19,025Issuance
                of options
            
            
            262,755
            
            
            146,055
            
            
            488,130Allowance
                for doubtful accounts
            
            
            -
            
            
            -
            
            
            88,360Discontinued
                operations
            
            
            -
            
            
            -
            
            
            (846,150
            )Increase
                (decrease) in inventory
            
            
            -
            
            
            22,245
            
            
            (57,705
            )Increase
                (decrease) in other assets
            
            
            1,633
            
            
            84,380
            
            
            (480,104
            )Increase
                (decrease) in accounts receivable
            
            
            (8,206
            )
            
            13,038
            
            
            (37,910
            )Increase
                in accrued expenses
            
            
            -
            
            
            4,580
            
            
            150,218Increase
                (decrease) in customer deposits
            
            
            (44,809
            )
            
            44,809
            
            
            -Increase
                (decrease) in accounts payable andaccrued
                liabilities
            
            
            9,755
            
            
            74
            
            
            134,987Amortization
            
            
            -
            
            
            -
            
            
            52,332**Operating
                Cash Flow**
            
            
            (724,064
            )
            
            (27,041
            )
            
            (3,917,395
            )**Investing
                Activities**Purchase
                of investment
            
            
            -
            
            
            -
            
            
            (22,353
            )Maturity
                of investment
            
            
            -
            
            
            -
            
            
            22,353Proceeds
                from sale of securities
            
            
            -
            
            
            -
            
            
            394,863Purchase
                of property and equipment
            
            
            -
            
            
            -
            
            
            (208,585
            )**Cash
                Provided by Investing Activities**
            
            
            -
            
            
            -
            
            
            186,278**Financing
                Activities**Issuance
                of note receivable
            
            
            -
            
            
            (57,500
            )
            
            (57,500
            )Related
                party debt
            
            
            -
            
            
            -
            
            
            691,056Proceeds
                from notes payable to stockholders
            
            
            -
            
            
            -
            
            
            548,191Proceeds
                from notes payable
            
            
            -
            
            
            -
            
            
            100,500Proceeds
                from convertible debenture
            
            
            500,000
            
            
            30,000
            
            
            530,000Proceeds
                from exercise of options
            
            
            35,000
            
            
            -
            
            
            68,000Stock
                subscriptions
            
            
            -
            
            
            67,025
            
            
            67,025Paid-in
                capital
            
            
            -
            
            
            16
            
            
            16Issuance
                of common stock
            
            
            201,109
            
            
            -
            
            
            1,818,951737,109
            
            
            39,541
            
            
            3,766,239**Inflow
                of Cash and Cash Equivalents**
            
            
            13,045
            
            
            12,500
            
            
            35,122**Cash
                and Cash Equivalents, Beginning of Year**
            
            
            22,077
            
            
            9,577
            
            
            0**Cash
                and Cash Equivalents, End of Year**
            
            $
            35,122
            
            $
            22,077
            
            $
            35,122




See
      notes to consolidated financial
      statements.




F-7




**SUNBURST
        ACQUISITIONS IV, INC.**
 **(A
        Development Stage Company)**
 **Notes
        to Consolidated Financial Statements**
 **Years
        Ended February 28, 2005 and 2004**


**1.**
              **SIGNIFICANT
                  ACCOUNTING POLICIES**
 
 (a)
              Development
                  stage activities and basis of
                  presentation
 
 Sunburst
        Acquisitions IV, Inc. (a development stage company) (the “Company”) was formed
        to seek out and acquire business opportunities. In August 1999, the Company
        invested $1,000,000 in Prologic Management Systems, Inc. (“Prologic”), an
        Arizona corporation in the software industry, in anticipation of a business
        combination with that company. The agreement to acquire Prologic was terminated
        prior to its consummation, and the Company charged off the investment to
        operations in March 2000. Since that time, the Company has entered into an
        agreement with Prologic to recover a portion of its investment and, to date,
        has
        received $325,000 in funds related thereto (see note 5).
 
 In
        December 2000, the Company acquired all of the issued and outstanding common
        stock of HollywoodBroadcasting.com (“HBC”) in exchange for 35,831,668 shares of
        the Company’s stock in a transaction accounted for as a recapitalization of HBC.
        HBC was incorporated under the laws of the State of Nevada on March 19, 1999.
        It
        was created to provide live, daily, interactive programming for the internet.
        On
        September 28, 2001, the Company completed the sale of its wholly-owned
        subsidiary HollywoodBroadcasting.com for $1,000 in cash (see note
        8).
 
 On
        February 27, 2002, the Company signed an agreement with 1357784 Ontario Ltd.
        (“EPI”) to distribute 1,000-watt ballasts. On January 23, 2003, the Company
        terminated its agreement with EPI and began an agreement with Romlight
        International, Inc. (“Romlight”), the manufacturer of the ballasts (see note
        7).
 
 The
        Company is a new enterprise in the development stage as defined by Statement
        No.
        7 of the Financial Accounting Standards Board, since it has derived only
        minimal
        revenues from its activities to date.
 
 (b)
              Accounting
                  method
 
 The
        company records income and expenses on the accrual method.
 
 (c)
              Fiscal
                  year
 
 The
        fiscal year of the Company is the last day of February.
 
 (d)
              Principles
                  of consolidation
 
 The
        accompanying financial statements include all of the accounts and activity
        of
        Sunburst Acquisitions IV, Inc., and its wholly-owned subsidiaries, Sunburst
        Digital Inc., and Sierra Minerals and Mining Inc. All intercompany transactions
        have been eliminated in consolidation.
 
 (e)
              Accounts
                  receivable
 
 The
        Company writes off accounts receivable as bad debts when they are determined
        to
        be uncollectible. For certain notes and interest receivable, an allowance
        has
        been recorded to reflect the fair value of the related assets.
  F-8
  **SUNBURST
        ACQUISITIONS IV, INC.**
 **(A
        Development Stage Company)**
 **Notes
        to Consolidated Financial Statements**
 **Years
        Ended February 28, 2005 and 2004**
 
  **1.**
              **SIGNIFICANT
                  ACCOUNTING POLICIES**(Continued)
 
 (f)
              Financial
                  instruments
 
 Unless
        otherwise indicated, the fair value of all financial assets and liabilities
        that
        represent financial instruments (none of which are held for trading purposes)
        approximate their carrying values.
 
 (g)
              Advertising
                  costs
 
 Costs
        associated with advertising are expensed in the year incurred.
 
 (h)
              Cash
                  and cash equivalents
 
 For
        purposes of the statements of cash flows, the Company considers all highly
        liquid debt instruments purchased with an original maturity of three months
        or
        less to be cash equivalents.
 
 (i)
              Loss
                  per share
 
 Loss
        per share has been calculated based upon the weighted average number of shares
        outstanding. Diluted loss per share has not been presented separately as
        the
        outstanding stock options are anti-dilutive.
 
 (j)
              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 during the 2004 fiscal year. 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.
 
 See
        note 7 for discussion of evaluation of deposit on merchandise and subsequent
        impairment write-down for the fiscal year ending February 29, 2004.
 
 (k)
              Use
                  of estimates
 
 The
        preparation of financial statements in conformity with Canadian generally
        accepted accounting principles requires management to make estimates and
        assumptions that affect the reported amounts of assets and liabilities and
        disclosure 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.
 
 (l)
              Consideration
                  of other comprehensive income items
 
 SFAS
        No. 130 - Reporting Comprehensive Income, requires companies to present
        comprehensive income (consisting primarily of net income plus other direct
        equity changes and credits) and its components as part of the basic financial
        statements.
  F-9
  **SUNBURST
        ACQUISITIONS IV, INC.**
 **(A
        Development Stage Company)**
 **Notes
        to Consolidated Financial Statements**
 **Years
        Ended February 28, 2005 and 2004**
 
  **1.**
              **SIGNIFICANT
                  ACCOUNTING POLICIES**(Continued)
 
 (m)
              Stock-based
                  compensation
 
 SFAS
        No. 123 - 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. 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 (see note o
        below).
 
 In
        2004, FASB issued a revision of FASB Statement No. 123. This Statement
        supersedes APB Opinion No. 25 and its related implementation guidance. This
        revised pronouncement requires that all stock options and warrants be accounted
        for using the fair value method. This pronouncement will have the effect
        of
        future stock-based compensation resulting in a fair value charge to the Company.
 
 Had
        compensation expense for the 2004 fiscal year been determined as provided
        in
        SFAS 123 using the Black-Scholes option-pricing model, the pro-forma effect
        on
        the Company’s net loss and per share amounts would have been as
        follows:


**2003**Net
                    loss, as
                    reported:
                $
                356,961FAS
                    123 fair
                    value of options granted in the year:
                $
                232,410Net
                    loss,
                    pro-forma:
                $
                589,371Net
                    loss per
                    share, pro-forma
                $
                0.02
  During
        the year ended February 28, 2005, the Company issued 6,000,000 options as
        finder’s fees (note 11) and recorded $175,800 as stock compensation expense
        under the fair value method.
 
 (n)
              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.
 
 (o)
              Recent
                  accounting pronouncements
 
 i.
              In
                  January 2003 the FASB issued interpretation No. 46, Consolidation
                  of
                  Variable Interest Entities, an interpretation of Accounting Research
                  Bulletin No. 51, Consolidated Financial Statements. Interpretation
                  46
                  establishes accounting guidance for consolidation of variable interest
                  entitles that function to support the activities of the primary
                  beneficiary. Interpretation 46 applies to any business enterprise
                  both
                  private and public that has a controlling interest, contractual
                  relationship or other business relationship with a variable interest
                  entity. The company has no investment in or contractual relationship
                  or
                  other business relationship with a variable interest entity and
                  therefore
                  the adoption did not have any impact on the Company’s consolidated
                  financial position, results of operations or cash
                  flows.
 
 F-10
 
 **SUNBURST
        ACQUISITIONS IV, INC.**
 **(A
        Development Stage Company)**
 **Notes
        to Consolidated Financial Statements**
 **Years
        Ended February 28, 2005 and 2004**
 
 **1.**
              **SIGNIFICANT
                  ACCOUNTING POLICIES**(Continued)
 
 ii.
              On
                  April 30, 2003 the FASB issued Statement No. 149, Amendment of
                  Statement
                  133 on Derivative Instruments and Hedging Activities. Statement
                  149 is
                  intended to result in more consistent reporting of contracts as
                  either
                  freestanding derivative instruments subject to Statement 133 in
                  its
                  entirety, or as hybrid instruments with debt host contracts and
                  embedded
                  derivative features. In addition, Statement 149 clarifies the definition
                  of a derivative by providing guidance on the meaning of initial
                  net
                  investments related to derivatives. Statement 149 is effective
                  for
                  contracts entered into or modified after June 30, 2003. The adoption
                  of
                  Statement 149 did not have any effect on the Company’s consolidated
                  financial position, results of operation or cash
                  flows.
 
 iii.
              On
                  May 15, 2003 the FASB issued Statement No. 150, Accounting For
                  Certain
                  Financial Instruments with Characteristics both Liabilities and
                  Equity.
                  Statement 150 establishes standards for classifying and measuring
                  as
                  liabilities certain financial instruments that embody obligations
                  of the
                  issuer and have characteristics of both liabilities and equity.
                  Statement
                  150 represents a significant change in practice in the accounting
                  for a
                  number of financial instruments, including mandatory redeemable
                  equity
                  instruments and certain equity derivatives that frequently are
                  used in
                  connection with share repurchase programs. Statement 150 is effective
                  for
                  all financial instruments created or modified after May 31, 2003
                  and to
                  other instruments as of September 1, 2003. The adoption of Statement
                  150
                  on June 1, 2003 did not have any impact on its consolidated financial
                  position, results of operations or cash
                  flows.
 
 iv.
              In
                  2004, FASB issued a revision of FASB Statement No. 123, Accounting
                  for
                  Stock-Based Compensation. This Statement supersedes APB Opinion
                  No. 25,
                  Accounting for Stock Issued to Employees, 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
                  will impact on the Company, as the Company currently accounts for
                  all
                  options and warrants using the Intrinsic Value
                  Method.
 
 v.
              FIN
                  46(R), Consolidation of Variable Interest Entities, applies at
                  different
                  dates to different types of enterprises and entitles, and special
                  provisions apply to enterprises that have fully or partially applied
                  Interpretation 46 prior to issuance of Interpretation 46®. Application of
                  Interpretation 46 or Interpretation 46® is required in financial
                  statements of public entities that have public interests in variable
                  interest entities or potential variable interest entities commonly
                  referred to as special-purpose entities for periods ending after
                  December
                  15, 2003. Application by public entities (other than small business
                  issuers) for all other types of entities is required in financial
                  statements for periods ending after March 15, 2004. Application
                  by small
                  business issuers to entities other than special-purpose entitles
                  and by
                  non-public entities is required at various dates in 2004 and 2005.
                  There
                  is no impact on the Company’s financial
                  statements.
 
 vi.
              In
                  December 2004, the FASB issued SFAS Statement No. 153, “Exchanges of
                  Nonmonetary Assets.” The statement is an amendment of APB Opinion No. 29
                  to eliminate the exception for nonmonetary exchanges of similar
                  productive
                  assets and replaces it with a general exception for exchanges of
                  nonmonetary 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.
 F-11
  **SUNBURST
          ACQUISITIONS IV, INC.**
 **(A
          Development Stage Company)**
 **Notes
          to Consolidated Financial Statements**
 **Years
          Ended February 28, 2005 and 2004**
  **2.**
              **STOCKHOLDERS’
                  EQUITY**
 
 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.
 
 **3.**
              **RELATED
                  PARTY TRANSACTIONS**
 
 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. As of February 28,
        2005,
        the Company had accounts payable to related entities in the amount of
        $6,040.
 
 
 **4.**
              **INCOME
                  TAXES**
 
 A
        deferred tax asset of $1,687,000 at February 28, 2005 (2004 - $337,000) relates
        to net operating losses and deductible temporary differences due to development
        stage costs. Management does not consider it likely that the deferred tax
        asset
        will be realized. Therefore, a full valuation allowance has been established
        against the deferred tax asset. The net operating losses will begin to expire
        in
        2020.
 
 
 **5.**
              **INVESTMENT
                  IN PROLOGIC MANAGEMENT SYSTEMS,
                  INC.**
 
 On
        February 16, 2001, the Company completed the sale of 2,859,972 shares of
        its
        stock in Prologic Management Systems, Inc. (“Prologic”), an Arizona corporation,
        to Prologic, or its designees, for a total sales price of $400,000, or
        approximately $0.1399 per share. The sale was completed pursuant to the terms
        of
        a Settlement Agreement and Release, dated January 26, 2001. This investment
        had
        been charged to operations in August 2000 by the Company.
 
 The
        sales price was paid to $325,000 in cash at closing and $75,000 through
        Prologic’s execution of a promissory note. The promissory note bears interest at
        the rate of 10% per annum and requires payments of $25,000 each on both the
        principal and interest, as of April 12, 2001, July 12, 2001 and October 12,
        2001. No payments have been made to date. The Company does not expect to
        receive
        payment from Prologic. The Company has accrued an allowance for doubtful
        accounts covering the $75,000 note and the corresponding interest in the
        amount
        of $13,360.
 
 In
        February 2004, all assets of Prologic were taken under foreclosure in
        bankruptcy. The Company has removed the note and interest and related allowance
        from its balance sheet.
 
 F-12
  **SUNBURST
        ACQUISITIONS IV, INC.**
 **(A
        Development Stage Company)**
 **Notes
        to Consolidated Financial Statements**
 **Years
        Ended February 28, 2005 and 2004**
 
 **6.**
              **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. It has current assets of $43,235
        and
        current liabilities totalling $765,448 resulting in a current ratio of 0.056
        as
        of February 28, 2005. Liquidity was achieved through the exercise of options
        and
        through the issuance of a convertible debenture, and not from operations.
        The
        Company has a cumulative deficit during the development stage of approximately
        $3,621,215 at February 28, 2005, $1,974,749 of which 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, either through its existing product lines, which include
        ballasts (see note 7) or potential cash flow from its new investment in a
        Mexican mining joint venture (see note 11). In addition, the Company has
        conducted a private placement of convertible debt (see note 10), which has
        generated a portion of the initial cash requirements of its planned mining
        joint
        venture (see note 11).
 
 **7.**
              **DISTRIBUTION
                  AGREEMENT**
 
 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 will
        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.
 
 A
        deposit of $183,454 (Cdn $245,920) was issued to Romlight through EPI pursuant
        to their agreement. The deposit will be applied to the last 1,000 ballasts
        and
        also gives the Company exclusive rights to sell Romlight ballasts to the
        hydroponic market. Management has performed an impairment assessment on this
        long-term asset and determined that, due to quality controls issues, the
        asset
        is impaired and has written off the entire deposit.
 
 **8.**
              **SALE
                  OF DISCONTINUED OPERATIONS**
 
 On
        September 28, 2001, the Company completed the sale of its wholly-owned
        subsidiary HollywoodBroadcasting.com for $1,000 in cash.
 
 Operating
        results of HollywoodBroadcasting.com are shown separately in the accompanying
        statement of operations as loss from discontinued operations in the column
        for
        the period from inception (August 27, 1997) to February 28, 3005.
  F-13
  **SUNBURST
        ACQUISITIONS IV, INC.**
 **(A
        Development Stage Company)**
 **Notes
        to Consolidated Financial Statements**
 **Years
        Ended February 28, 2005 and 2004**
 
  **9.**
              **STOCK
                  COMPENSATION PROGRAM**
 
 On
        March 14, 2002, the Company’s Board of Directors approved a Stock Compensation
        Program and an Incentive Stock Option Plan (the “Plans”). The maximum number of
        shares that may be purchased to the Plans is 6,000,000. Options granted under
        the Plans 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
        ten years, and are exercisable over a ten-year maximum period at a price
        to
        approximate the fair market value of the common stock at the date of
        grant.
 
 On
        March 1, 2003, the Company granted 3,900,000 options under its Incentive
        Stock
        Option Plan. 2,450,000 options vested immediately (date of grant) and the
        remaining 1,450,000 on March 1, 2004 (the one year anniversary of the date
        of
        grant). Compensation expense was recognized for the 2005 fiscal year totalling
        $86,955 for these options (2004 - $146,055). These options are exercisable
        at
        prices between $0.02 and $0.03 per share. On May 25, 2004, 1,000,000 options
        were exercised at $0.02 per share.
 
 On
        May
        25, 2004, the Company issued 6,000,000 options as a finder’s fee in connection
        with the acquisition of Sierra Minerals and Mining Inc. (see note 11). These
        options are exercisable to May, 2009 (the five year anniversary of the date
        of
        grant). On July 16, 2004, 1,500,000 options were exercised at $0.01 per
        share.
 
 The
        options are summarized as follows:
  WeightedAverageExerciseShares
              
              PriceOutstanding
                  at February 28, 2003
              
              
              1,000,000
              
              $
              0.03Granted
              
              
              3,900,000
              
              
              0.026Cancelled
              
              
              -
              
              
              -Exercised
              
              
              -
              
              
              -Outstanding
                  at February 29, 2004
              
              
              4,900,000
              
              
              0.027Granted
              
              
              6,000,000
              
              
              0.01Cancelled
              
              
              -
              
              
              -Exercised
              
              
              (2,500,000
              )
              
              0.014Outstanding
                  at February 28, 2005
              
              
              8,400,000
              
              
              0.019
  The
        following table summarizes options outstanding at February 28,
        2005:
  Weighted
              WeightedOutstanding
              Average
              AverageRange
              Number
              Life
              Price
              Exerciseable$
                  0.01 - $ 0.03
              8,400,000
              5.22
              $
                  0.019
              8,400,000
 
 The
        fair value of each option grant was calculated using the following weighted
        average assumptions:
  Expected
                    life (years)
                10
                5Risk
                    free interest rate
                4.00%
                4.00%Expected
                    volatility
                179.30%
                179.30%Expected
                    dividend yield
                0%
                0%
 F-14
  **SUNBURST
          ACQUISITIONS IV, INC.**
 **(A
        Development Stage Company)**
 **Notes
        to Consolidated Financial Statements**
 **Years
        Ended February 28, 2005 and 2004**
 
 **10.**
              **CONVERTIBLE
                  DEBENTURE**
 
 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 will not
        bear interest but will 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 will be $1,000,000.   The Debentures will be due
        and
        payable in full one year from the date of issuance.
 
 The
        Purchasers have 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.  The conversion
        price is subject to adjustment in the event the market price of the Company’s
        common stock falls below $0.10 per share for 10 days during any consecutive
        20-day period. Under the Agreement, the Purchasers will also receive Warrants
        and Additional Investment Rights to purchase shares of the Company’s common
        stock.  The Warrants are exercisable at a price of $0.12 per share
        for a
        period of 5 years and give the holders the right to purchase the same number
        of
        shares as the total number of shares issuable upon conversion of the Debentures.
         The Additional Investment Rights are exercisable at a price of $0.10
        per
        share and give the holders the right to purchase the same number of shares
        as
        the total number of shares issuable upon conversion of the Debentures. The
        Additional Investment Rights will generally be exercisable for a period of
        six
        months following the effective date of a registration statement (the
“Registration Statement”) to be filed for purposes of registering the common
        stock underlying the Debentures, the Warrants and the Additional Investment
        Rights.  The Company is obligated to file the Registration Statement
        within
        30 days after the initial closing under the Agreement.
 
 On
        August 30, 2004, the Company issued $551,250 of face amount Debenture of
        which
        $142,917 has been charged as interest. The cash purchase price of the Debenture
        was $408,333 less finder fees and commissions of $60,833 for net proceeds
        of
        $347,500.
 
 On
        October 19, 2004, the Company issued $123,750 of face amount Debenture of
        which
        $32,083 has been charged as interest. The cash purchase price of the Debenture
        was $91,667 less finder fees and commissions of $9,167 for net proceeds of
        $82,500.
 
 **11.**   **ACQUISITION
        OF SIERRA MINERALS AND MINING, INC.**
 During
        the quarter ending May 31, 2004, the Company completed a share exchange with
        the
        shareholders of Sierra Minerals and Mining, Inc. (“Sierra”).  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.  As a result, Sierra 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 common
        stock
        of the Company at $0.01 per share are payable to non-related parties in
        connection with this share exchange.  The options were issued on May
        25,
        2004 and an amount of $175,800 was recorded as finders’ fees and additional paid
        in capital.  Sierra is a company incorporated in the state of Nevada
        that
        was incorporated just prior to the share exchange with the Company. 
        Sierra
        had no activities or operations other than having an option to acquire an
        interest in a property in Mexico, as noted below.  Due to the uncertainty
        of the future revenue to be generated from this property the cost of the
        acquisition of $430,000 has been charged to operations for the quarter ending
        May 31, 2004.
 
 F-15
  **SUNBURST
        ACQUISITIONS IV, INC.**
 **(A
        Development Stage Company)**
 **Notes
        to Consolidated Financial Statements**
 **Years
        Ended February 28, 2005 and 2004**
 
 **11.**
              **ACQUISITION
                  OF SIERRA MINERALS AND MINING, INC.**(Continued)
 
 Sierra
        is a party to a joint venture agreement with Minera Rio Tinto S.A. de C.V.,
        a
        Mexican company (“MRT”) pursuant to which Sierra and MRT have agreed to explore
        and develop, if feasible, certain mining properties in the state of Chihuahua,
        Mexico.  During the quarter ended May 31, 2004 the Company loaned
        a total
        of $195,000  to MRT pursuant to an unsecured promissory note payable
        due
        August 31, 2004 with interest at 8% per annum (the Company had previously
        advanced $57,500 during the year ended February 29, 2004 under similar terms).
 
 These
        amounts would be applied to the $1,000,000 requirement investment as stated
        below. Due to the uncertainty of the future revenue to be generated from
        this
        property the $195,000 loan as well as the $57,500 advance was charged to
        operations along with the $430,000 described above for the quarter ending
        May
        31, 2004.
 
 The
                  joint venture agreement between Sierra and MRT requires Sierra
                  to invest
                  cash totalling $1,000,000 by June 30, 2004, and to secure a $2,000,000
                  line of credit for the joint venture within sixty days of signing
                  the
                  joint venture agreement.  MRT will contribute the properties. 
                  The joint venture is to be owned 60% by Sierra and 40% by MRT,
                  however,
                  should Sierra fail to secure the line of credit, its interest shall
                  be
                  reduced to 30% and the interest of MRT shall be increased to 70%.
  On
        October 1, 2004, the Company signed an extension to provide the required
        investment of $1,000,000 by November 10, 2004. The Company will also have
        until
        November 30, 2004, to secure the $2,000,000 line of credit. On November 16,
        2004
        the Company signed a further extension to provide the required investment
        of
        $1,000,000 by December 31, 2004. The Company will also have until February
        28,
        2005, to secure the $2,000,000 line of credit.
  As
        at
        February 28, 2005, the Company has advanced a total of $507,500 of the
        $1,000,000 required investment. As at February 28, 2005, the Company is in
        default of the agreement and is negotiating an additional extension for the
        remaining balance of the required $1,000,000 investment and $2,000,000 line
        of
        credit.
  **12.**
              **SUBSEQUENT
                  EVENTS**
  **Sierra
        Minerals and Mining, Inc.**
  As
        of
        May 31, 2005, the Company is continuing to negotiate a further extension
        and
        seek additional funding for the remaining balance of the required $1,000,000
        investment and $2,000,000 line of credit as stated in the joint venture
        agreement between Sierra and MRT (see note 11).




F-16






**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.  During the two most
      recent fiscal years (ended February 29, 2004 and February 28, 2003) and during
      the subsequent interim period from March 1, 2004 up to the date of this report,
      there have been no disagreements with Comiskey & Co. on any matter of
      accounting principles or practices, financial statement disclosure, or auditing
      scope or procedure.   There were no reportable events, as described
      in
      Item 304(a)(1)(v) of Regulation S-K, during the Company's two most recent fiscal
      years (ended February 29, 2004 and February 28, 2003) and from March 1, 2004
      to
      the date of this Report.





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, 7 th 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
      Corporation 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 Corporation's management, including its Chief Executive
      Officer 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 Corporation'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 Corporation's consolidated financial statements
      for the year ended February 28, 2005, the Corporation'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




11




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. The Corporation considered these
      matters in connection with the period-end closing of accounts and preparation
      of
      related consolidated financial statements.





The
      size of the Corporation has prevented us from being able to employ sufficient
      resources to enable us to have adequate segregation of duties within our
      internal control system. If the Mexican property as identified in this document
      is successful and able to go into production, then the Company believes that
      it
      would be able to address the segregation of duties control deficiency addressed
      above. As for the other control deficiencies identified, the Company is
      currently reviewing appropriate measures to identify, rectify and implement
      suitable action to correct them.





As
      required by the SEC rules, we have evaluated the effectiveness of the design
      and
      operation of the Corporation'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 Chief Executive Officer and Chief Financial Officer. Based upon
      that evaluation, the Chief Executive Officer and Chief Financial Officer
      concluded that the Corporation's controls and procedures were not effective,
      for
      the reasons noted above.





There
      have been no changes in the Company’s internal procedures to the date of filing
      of this report.





**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
            TenureTerry
                Fields
            61
            President
                and Secretary since May 2001; Director since January
                2001Mario
                Ayub
            
            Director
                since May 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'




12




meeting.
      Officers will hold their positions at the pleasure of the board of directors,
      absent 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:





Terry
      Fields.





Mr.
      Fields is a self-employed Attorney-at-Law in the state of California. Mr. Fields
      was called to the bar on June 15, 1969, and he has been a director of a number
      of public companies.





Mario
      Ayub.





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.





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.**





No
      officer or director received any cash remuneration from the Company during
      the
      fiscal year. Until the Company acquires additional capital, it is not intended
      that any officer or director will receive cash compensation from the Company
      other than reimbursement for out-of-pocket expenses incurred on behalf of the
      Company. See “Certain Relationships and Related Transactions.” In March 2002,
      the Company adopted a Stock Compensation Plan for the benefit of directors,
      officers, employees, consultants and advisors. On or about March 1, 2003, the
      Board granted Terry Fields, the Company’s President an option to acquire a total
      of up to 600,000 shares at an exercise price of $0.03 per share. The option
      is
      valid for a period of 10 years from the date of its grant. On March 1, 2003,
      the
      Board also granted options to four other persons who are not officers or
      directors of the Company, giving such persons the right to acquire a total
      of up
      to 3,300,000 shares at an exercise price of between $0.02 and $0.03 per share.
      Such options are all valid for periods of between 5 and 10 years from the date
      of grant.





13




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





The
      following table sets forth, as of February 28, 2005, the stock ownership of
      each
      executive officer and director of Sunburst Acquisitions, Inc., of all executive
      officers and directors as a group, and of each person known by Sunburst
      Acquisitions, Inc. 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 Sunburst Acquisitions, Inc., except as may be otherwise
      noted.





Name
                and Address
            Number
                of Shares
              Owned
                Beneficially
            %
                of Class OwnedCharles
                Malette
              1550
                35thAvenue West
              Vancouver,
                B.C.
              Canada,
                V6M1H2
            13,500,000
            15.54%Terry
                Fields(1)
              No.
                3 Poipu Drive
              Honolulu,
                HI 96825
            600,000(2)
            0.69%Mario
                Ayub(1)
              Pascual
                Orozco
              #2117-A
              Chihuahua,
                Chic.
              Mexico
                31310
            12,900,000(3)
            14.85%Paul
                Kessler
              6363
                Sunset Boulevard, 5thFl.
              Hollywood,
                CA 90028
            6,525,000(4)
            7.51%Paul
                Purewal
              9431
                Ryan Crescent
              Richmond,
                B.C., Canada V7A 2H1
            7,166,667
            8.25%Patrick
                Kephart
              424
                East Central Blvd., Ste. 342
              Orlando,
                FL 32801
            10,666,666(5)
            12.28%All
                directors and executive officers (2 persons)
            13,500,000
            15.54%





(1) The
      person listed is an officer, a director, or both, of the Company.





(2) Includes 600,000 shares of Common Stock which Mr. Fields has an option to
      acquire for a purchase price of $0.03 per share at any time on or before
      February 28, 2013.





14




(3) On May 25, 2004, the Company completed a share exchange with the shareholders
      of
      Sierra Mineral and Mining, Inc., a Nevada corporation. In the exchange, the
      Company issued 43,000,000 shares of its common stock, representing approximately
      51.7% of the Company’s then-outstanding common stock, to the Sierra shareholders
      in exchange for all of the shares of Sierra capital stock. The 12,900,000 shares
      are owned of record by MRT Investments, Inc., a Nevada corporation which is
      controlled by Mr. Ayub. Therefore, these shares may be deemed to be directly
      and
      beneficially owned by Mr. Ayub.





(4) Includes
      (i) 2,000,000 shares of the Company's Common Stock which Mr. Kessler has an
      option to acquire for a purchase price of $0.03 per share at any time on or
      before February 25, 2007, and (ii) 1,500,000 shares of the Company's Common
      Stock which may be acquired by Bristol Capital, LLC pursuant to a convertible
      debenture dated January 16, 2004, which shares are deemed to be beneficially
      owned by Paul Kessler as an authorized signatory of Bristol Capital, LLC who
      has
      voting and investment control over the shares owned by Bristol Capital, LLC.
      The
      outstanding principal amount of the debenture and, at the option of the Company,
      the accrued interest on the debenture is convertible into shares of the
      Company's Common Stock at the rate of $0.02 per share. Pursuant to the terms
      of
      the stock option agreement, Mr. Kessler may not exercise the option if the
      result of such exercise would cause Mr. Kessler and his affiliates to
      beneficially own a number of shares of the Company's Common Stock which would
      exceed 4.9% of the Company's outstanding Common Stock. Pursuant to the terms
      of
      the debenture, Bristol Capital, LLC may not effect a conversion of the debenture
      if the result of such conversion would cause Bristol Capital, LLC and its
      affiliates to beneficially own a number of shares of the Company's Common Stock
      which would exceed 4.9% of the Company's outstanding Common Stock.





(5) Includes the following shares of which Mr. Kephart may be deemed to be the
      beneficial owner:(i) 5,733,333 shares owned by Tenfold Services Incorporated,
      which is beneficially owned by the trustee of an irrevocable trust of which
      Mr.
      Kephart is the grantor and also one of the beneficiaries. Mr. Kephart has no
      power to vote, buy or sell these shares; (ii) 1,216,667 shares owned by Liberty
      Management, LLC Definend Benefit Plan, which is an ERISA-qualified plan with
      a
      third party administrator. Mr. Kephart is the Managing Member of Liberty
      Management, LLC.
      Also Includes the following shares of which Mr. Kephart may be deemed to be
      the
      beneficial owner: (iii), 358,333 shares owned by Jack F. Kephart - UTMA, of
      which Mr. Kephart is the grantor; (iv) 358,333 shares owned by Annabelle S.
      Kephart - UTMA, of which Mr. Kephart is the grantor; and (v) an option to
      acquire up to 3,000,000 shares of the Company's Common Stock for a purchase
      price of $0.01 per share at any time on or before May 25, 2009. These options
      were granted to Liberty Management as a finder's fee in connection with a share
      exchange 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




15




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.




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.





16





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




(a)
                  The Exhibits listed below are filed as part of this Annual
                  Report.31.1
              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).31.2
              Bylaws
                  (incorporated by reference from Registration Statement on Form
                  10-SB/A
                  filed with the Securities and Exchange Commission on December 29,
                  1997).32.1
              Certification
                  pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange
                  Act
                  of 1934, as amended.32.2
              Certification
                  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                  906 of
                  the Sarbanes-Oxley Act of 2002.4.1
              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).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).




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





The
      aggregate fees billed by Pannell
      Kerr Forster (registered with the PCAOB as “Smythe Ratcliffe”) for audit of the Company's annual financial statements were $6000 for the fiscal
      year ended February 28, 2005, and $ 0 for the fiscal year ended February 29,
      2004. The
      aggregate fees billed by Comiskey & Co., P.C. for audit of the Company's
      annual financial statements were $0 for the fiscal year ended February 28,
      2005
      and $5,000 for the fiscal year ended February 29, 2004. 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 $16,657during the period ended February 28, 2005,
      and
      $ 0 during the period ended February 29, 2004. The
      aggregate fees billed by Comiskey & Co. for review of the Company's
      financial statements included in its quarterly reports on Form 10-QSB were
      $0
      for the period ended February 28, 2005 and $1,315 during the period ended
      February 29, 2004.




17





Audit-Related
      Fees




Pannell
      Kerr Forster (registered with the PCAOB as “Smythe Ratcliffe”) did not bill the Company any amounts for assurance and related services that
      were related to its audit or review of the Company's financial statements during
      the fiscal years ending February 28, 2005 or February 29, 2004. Comisky &
      Co., P.C. did not bill the Company any amounts for assurance and related
      services that were related to its audit or review of the Company's financial
      statements during the fiscal years ending February 28, 2005 or February 29,
      2004.





Comiskey
      & Co., P.C. did not bill the Company any amounts for assurance and related
      services that were related to its audit or review of the Company's financial
      statements during the fiscal years ending February 28, 2005 and February 29,
      2004.




Tax
      Fees




The
      aggregate fees billed by Pannell
      Kerr Forster (registered with the PCAOB as “Smythe Ratcliffe”) for
      tax compliance, advice and planning were $2,000 for the fiscal year
      ended
      February 28, 2005 and $ 0 for the fiscal year ended February 29, 2004. The
      aggregate fees billed by Comiskey & Co. P.C. for tax compliance, advice and
      planning were $0 for the fiscal year ended February 28, 2005 and $3,800 for
      the
      fiscal year ended February 29, 2004.




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, 2005 and February 29,
      2004 . Comiskey
      & Co., P.C. did not bill the Company for any products and services other
      than the foregoing during the fiscal years ended February 28, 2005 and February
      29, 2004 .





18





**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.








**SUNBURST
      ACQUISITIONS IV, INC.**








By:
      /S/ TERRY FIELDS


Terry
      Fields, President and Director





Date:
      June 2, 2005





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/ TERRY FIELDS


Terry
      Fields, President and Director








By:
      /S/ MARIO AYUB


Mario
      Ayub, Director







Date:
      June 2, 2005




19