**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**Form
          10-KSB/A**





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





For
      the
      fiscal year ended February 28, 2006





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


For
      the
      transition period from ____ to _____


**MEXORO
      MINERALS LTD.**


(Exact
      name of registrant as specified in its charter)





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





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





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





Title
      of
      each class


N/A





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





Common
      Stock


(Title
      of
      Class)








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





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





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





*--1--*




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





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





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





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





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





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




*--2--*


Explanatory
          note:
 
 This
          Form
          10-K/A is being filed solely for the purpose of amending the Description
          of
          Business, Management’s Discussion and Analysis, and Financial Statements in our
          Annual Report on Form 10-K for the year ended February 28, 2006, which
          was filed
          with the Securities and Exchange Commission, or SEC, on May 30, 2006 (“Original
          Form 10-K”). All other information is the same as that found in the Original
          Form 10-K.
 
 This
          Form
          10-K/A and the disclosures contained herein have not been updated to reflect
          events, results or developments that occurred after the date of the Original
          Form 10-K. Among other things, any forward looking statements contained
          in this
          Form 10-K/A that were included in the Original Form 10-K have not been
          revised
          to reflect events, results or developments that occurred or facts that
          became
          known to the Company after the date of the Original Form 10-K, and such
          forward
          looking statements should be read in their historical context.








PART
      I


**ITEM
      1.  DESCRIPTION OF BUSINESS**





**Background**




We
          were
          incorporated under the laws of the State of Colorado on August 27, 1997
          as
          Sunburst Acquisitions IV, Inc. On February 15, 2006, the name of our company
          changed to Mexoro Minerals Ltd. We were initially formed to seek out and
          acquire
          business opportunities. However, we are not a blank check company as that
          term
          is defined in Regulation C, Rule 419 of the Securities Act of 1933, and
          we do
          not intend to merge with or acquire another company in the foreseeable
          future.
          In accordance with our business plan, we have engaged in three separate
          acquisition transactions, described below. The first two of these transactions
          did not result in the acquisition of a profitable business. These acquisitions
          were of Prologic Systems, Inc., an Arizona corporation in August 1999
          (“Prologic”) and HollywoodBroadcasting.com, Inc., a Nevada corporation (“HBC”).
          There is no affiliation between Prologic, HBC and Sunburst Acquisitions
          IV, its
          officers, directors and affiliates. The third acquisition was of Sierra
          Minerals
          and Mining, Inc., a Nevada corporation (“Sierra Minerals”), as described below.
 
 We
          also
          engaged in a business venture during the fiscal years ended February 28,
          2003
          and 2004, in which 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,
          this
          business never developed and we sought other opportunities.
 
 On
          May
          25, 2004, we completed a share exchange transaction with Sierra Minerals
          and
          Mining, Inc., a Nevada corporation (“Sierra Minerals”), which caused Sierra
          Minerals to become our wholly-owned subsidiary.   . Mario Ayub was a major
          shareholder of Sierra Minerals and, concurrently with the transaction,
          became an
          officer and director of our company. There was no other affiliation between
          Sierra Minerals, Prologic and HBC and their officers, directors and affiliates.
          Pursuant to the terms of the share exchange agreement, we issued 860,000
          shares
          of our common stock in exchange for all of the outstanding shares of Sierra
          Minerals. As a result, Sierra Minerals became a wholly owned subsidiary
          of the
          Company.


*--3--*




Through
        this transaction, we acquired the rights that Sierra Minerals had to obtain
        and
        exploit the Cieneguita and Guazapares Properties. The description of this
        contract is fully described below. Because non-Mexican companies cannot own
        mineral concessions in Mexico, Sierra Minerals entered into a joint venture
        with
        MRT in order to explore the properties. Mario Ayub, an officer and director
        of
        our company, was and continues to be the President and a major shareholder
        of
        MRT.


In
        August
        2005, we created a wholly owned Mexican subsidiary, Sunburst de Mexico, S.A.
        de
        C.V. (“Sunburst de Mexico”), which entered into agreements with MRT, described
        below, that replaced the joint venture agreement between Sierra Minerals
        and
        MRT. This allowed us, through our wholly owned Mexican subsidiary, to obtain
        direct title to the mineral concessions for the properties discussed herein.
        Through our new subsidiary, we intend to explore these mining properties
        in
        Mexico.





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





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





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





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





**Prior
      Acquisitions**





*--4--*




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





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





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








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





HBC
      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 HBC 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.  HBC
      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 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, 2006.





**Prior
      Business Activities**





On
        February 27, 2002, we were assigned a sub-distributorship pursuant to a contract
        between 1357784 Ontario Ltd. and Romlight International, Inc., a company
        based
        in Toronto, Ontario Canada. There was no affiliation between 1357784 Ontario
        Ltd. and Romlight International, Inc. and Prologic, HBC, Sierra Minerals,
        Mexoro
        Minerals (formerly Sunburst acquisitions IV, Inc.) their officers, directors
        or
        affiliates. Pursuant to the sub-distributorship agreement, we became the
        exclusive worldwide distributor to the hydroponics industry of digital
        electronic lighting ballasts. This sub-distributorship agreement was




*--5--*




assigned
        to our wholly owned subsidiary, Sunburst Digital, Inc., a Canadian corporation.





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.
 
 Under
          the
          sub-distributorship agreement, we had an 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. In January 2003,
          both
          the contract between 1357784 Ontario Ltd. and Romlight International and
          our
          sub-distributorship agreement were cancelled. On April 2, 2003, Sunburst
          Digital, Inc., signed an agreement directly with Romlight containing terms
          and
          conditions substantially identical to the terms of the sub-distributorship
          agreement. This new agreement also included an annual purchase commitment
          of
          100,000 units that only became applicable if and when Romlight was able
          to
          resolve its production difficulties and commit itself to a reliable delivery
          schedule for completed ballasts. However, Romlight was not able to resolve
          these
          difficulties.
 
 We
          paid
          Romlight a deposit of $183,454 for the sub-distributorship. Due to quality
          control issues, the ballasts were never sold, and we wrote off our entire
          deposit and ceased to operate Sunburst Digital, Inc. Sunburst Digital,
          Inc. was
          administratively dissolved on March 31, 2006. We had no operations between
          the
          cessation of these activities and the acquisition of Sierra
          Minerals.


**Current
      Operations**





On
          May 3,
          2004, we entered into a Share Exchange Agreement with the shareholders
          of Sierra
          Minerals. As a result of this transaction, Sierra Minerals became our wholly
          owned subsidiary. Pursuant to the Share Exchange Agreement, we agreed to
          loan
          MRT, on behalf of Sierra Minerals, $147,500 to be evidenced by an 8% promissory
          note signed by MRT. In addition, and as a result of the closing of this
          Share
          Exchange Agreement, we paid a finders’ fee to two corporate entities whereby we
          issued an aggregate of 120,000 5-year options to purchase shares of our
          common
          stock, at a price of $0.50 per share, as compensation as follows: 60,000
          were
          issued to T.R. Winston & Company, LLC and 60,000 were issued to Liberty
          Management, LLC. T.R. Winston, Liberty Management, and their officers,
          directors
          and affiliates are not affiliates of Mexoro Minerals, Sierra Minerals,
          nor MRT
          or their officers, directors, and affiliates.
 
 Sierra
          Minerals had no operations between its date of incorporation and April
          26, 2005.
          Sierra Minerals was a party to a Joint Venture Agreement, dated April 26,
          2004
          and amended on June 1, 2004, by and between Sierra Minerals and MRT. MRT
          had
          interests in exploration properties, which it received in an agreement
          with
          Corporative Minero, S.A. de C.V., a Mexican corporation (“Corporative Minero”).
          Because Sierra Minerals was not a Mexican corporation, it could not hold
          title
          to the mineral interests itself, which is why the joint venture with MRT
          was
          needed. Under the terms of the joint venture, MRT and Sierra Minerals planned
          to
          form a Mexican corporation, of which Sierra Minerals would own 60% and
          MRT would
          own 40%. Sierra Minerals was required to invest $1,000,000 in this corporation
          within 30 days of the signing of the joint venture agreement and to secure
          an
          additional $2,000,000 line of credit for the new company. In exchange,
          MRT would
          transfer its rights in the mineral concessions to the new corporation.
          MRT was
          appointed as the operator of the Cieneguita Property. Sierra Minerals advanced
          $167,500 to MRT, pursuant to the joint venture agreement, to pay for costs
          associated with the rights. However, Sierra Minerals did not meet the deadline
          of investing $1,000,000 into the new corporation. MRT retained the


*--6--*




$167,500
          as liquidated damages under the joint venture agreement; Sierra Minerals
          was not
          required to pay any additional damages.


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





(1)  MRT
          assigned to Sunburst de Mexico, with the permission of the Cieneguita Owner
          (Corporative Minero), all of MRT’s rights and obligations acquired under a
          previous agreement, the Cieneguita Option Agreement, including the exclusive
          option to acquire the Cieneguita Concessions for a price of $2,000,000.
          We must
          make yearly payments on May 6 of each year in the amount of $120,000 per
          year
          for the next 13 years and a final payment of the outstanding balance owed
          on the
          $2,000,000 in the 14 th year to
          the concession owners to keep the option in good standing. Once the full
          $2,000,000 payment has been made, we will own the concessions. Yearly payments
          will need to be made from working capital. We do not have the capital at
          this
          time to fund the ongoing payments. We will need to raise the funds through
          the
          sale of debt or equity. We do not have any sources for such capital at
          this
          time. In the alternative, if the Cieneguita property is put into production,
          of
          which there is no guarantee, we must pay the Cieneguita owners $20 per
          ounce of
          gold produced, if any, from the Cieneguita Concessions up to the total
          $2,000,000 due. In the event that the price of gold is above $400 per ounce,
          the
          property payments payable to the Cieneguita Owners from production will
          be
          increased by $0.10 for each dollar increment over $400 per ounce. The total
          payment of $2,000,000 does not change with fluctuations in the price of
          gold.
          Non-payment of any portion of the $2,000,000 total payment will constitute
          a
          default. In such case, the Cieneguita Owners will retain ownership of the
          concessions, but we will not incur any additional default penalty. MRT
          retained
          no interest in the Cieneguita Property.
 
 (2)  MRT
          assigned Sunburst de Mexico, with the consent of the Guazapares Concessions
          Owner (Compañía
          Minera De Namiquipa S.A. de C.V., a Mexican company) ,
          MRT’s
          rights and obligations concerning the Guazapares Property, including the
          exclusive option, for a term of 4 years, to purchase 7 of the Guazapares
          concessions upon payment of $910,000. In return, Sunburst de Mexico granted
          MRT
          a 2.5% Net Smelter Royalty (NSR) and the right to extract from the Guazapares
          concessions up to 5,000 tons per month of rock material; this right will
          terminate on exercise of the option to purchase the concessions. MRT retained
          no
          interest in the Guazapares Property.
 
 (3)  Sunburst
          de Mexico purchased two of the Encino Gordo concessions from MRT for a
          price of
          1,000 Pesos (approximately US$100), and MRT assigned to Sunburst de Mexico
          a
          first right of refusal to acquire three additional Encino Gordo concessions.


*--7--*




(4)  MRT
          assigned to Sunburst de Mexico, for a term of 60 months, commencing from
          June
          25, 2004 (the “Option Period”), with the consent of the San Francisco
          Concessions Owner (Minera Rachasa, S.A. de C. V., a Mexican company), MRT’s
          rights and obligations acquired under the San Francisco Option Agreement,
          including the option to purchase the San Francisco Concession for a price
          of
          $250,000 (the “Purchase Price”). MRT and the San Francisco Owner reserved a
          combined 2.5% NSR. MRT reserved no other rights in the San Francisco Property.
          To maintain the option, Sunburst de Mexico assumed the obligation to pay
          to the
          San Francisco Owner cumulative annual payments totaling $90,000; if the
          option
          is exercised prior to the expiration of the Option Period by payment of
          the
          Purchase Price, the obligation to pay the annual payments will be
          terminated.
 
 (5)  MRT
          assigned to Sunburst de Mexico, with the consent of the San Antonio Concessions
          Owner (Rafael Fernando Astorga Hernández), MRT’s rights and obligations acquired
          under the San Antonio Option Agreement, including the option to purchase
          the San
          Antonio concessions for a price of $500,000 (the “Purchase Price”) for a term of
          60 months commencing from January 15, 2004, the date of signing of the
          San
          Antonio Option Agreement (the “Option Period”). MRT and the San Antonio owner
          reserved a combined 2.5% NSR to be paid to them. MRT reserved no other
          rights in
          the San Francisco Property. To maintain the option, Sunburst de Mexico
          assumed
          the obligation to pay to the San Antonio Owner cumulative annual payments
          totaling $140,000; if the option is exercised prior to the expiration of
          the
          Option Period by payment of the Purchase Price, the obligation to pay the
          annual
          payments will be terminated. The San Antonio Owner reserved the right to
          extract
          from the San Antonio concessions up to 50 tonnes per day of rock material;
          this
          right will terminate on the date of the exercise of the option.
 
 Also
          on
          August 25, 2005, the parties signed an Operator’s Agreement (which has
          subsequently been cancelled, as discussed below) pursuant to which Sunburst
          de
          Mexico engaged MRT as the Operator of the Cieneguita Property. MRT was
          to be
          paid an Operator’s fee based on the functions performed and an Operator’s bonus
          equal to 10% of the net proceeds of production if operating cash costs
          did not
          exceed $230 per ounce of gold produced from the Cieneguita Property. The
          Operator’s fee was to be: (a) with respect to Programs: (i) 2% for each
          individual contract which expressly includes an overhead charge by the
          party
          contracted; (ii) 5% for each individual contract which exceeds $50,000;
          (iii)
          15% of all other Costs not included; (b) with respect to Construction:
          2 % of
          all other such Costs; (c) 3.5% of Operating Costs after the completion
          of
          construction on Cieneguita. MRT’s duties were to (a) comply with the provisions
          of all agreements or instruments of title under which the Cieneguita Property
          or
          assets were held; (b) pay all Costs properly incurred promptly as and when
          due;
          (c) keep the Cieneguita Property and assets free of all liens and encumbrances
          arising out of the Mining Operations and, in the event of any lien being
          filed
          as aforesaid, proceed with diligence to contest or discharge the same;
          (d)
          perform such assessment work or make payments in lieu thereof and pay such
          rentals, taxes or other payments and do all such other things as may be
          necessary to maintain the Cieneguita Property in good standing, (f) maintain
          books of account in accordance with generally accepted accounting principles
          provided that the judgment of the Operator as to matters related to the
          accounting, shall govern if the Operator’s accounting practices are in
          accordance with accounting principles generally accepted in the mining
          industry
          in Canada; (g) perform its duties and obligations in accordance with sound
          mining and engineering practices and other practices customary in the Canadian
          mining industry, and in substantial compliance with all applicable federal,
          state and municipal laws of Mexico; and (h) prepare and deliver
          reports.
 
 The
          parties also signed a Share Option Agreement pursuant to which Sunburst
          granted
          to MRT the exclusive option to acquire up to 100% of all outstanding shares
          of
          Sunburst de Mexico if Mexoro did not (a) comply with the terms of the underlying
          Cieneguita Option Agreement, the San Antonio Option Agreement, the San
          Francisco
          Option Agreement and the Guazapares Option Agreement and (b) loan to Sunburst
          de
          Mexico the amounts of $1,000,000 US by December 31, 2005 and $1,000,000
          by April
          30,


*--8--*




2006.
        If
        the option to purchase 100% of the shares of the capital of Sunburst de Mexico
        were exercised by MRT, MRT was obligated to return to the Company for
        cancellation all of the shares of the capital of Mexoro issued by the Company
        to
        MRT and Mario Ayub.
        No
        finder’s fees were paid in these agreements.





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





The
      following are the material terms of the New Agreement:




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




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


(3)
              The
                  Property Agreements were modified to change the net smelter rate
                  to a
                  maximum of 2.5% for all properties covered by the Agreements. The
                  Property
                  Agreements contained net smelter rates ranging from 0.5% to
                  7%.


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


(5)
                The
                    Company agreed to issue 1,000,000 additional shares of Mexoro
                    common stock
                    to MRT if and when the Cieneguita Property is put into production
                    and it
                    reaches 85% of production capacity over a 90-day period, as defined
                    in the
                    New Agreement.
 
 (6)
                The
                    New Agreement gave MexoroSunburst de Mexico the option to obtain
                    three
                    additional concessions in the Encino Gordo
                    region.
 (7)
                The
                    Share Option Agreement with MRT was
                    cancelled.
 
  Unless
          explicitly superseded or terminated by the New Agreement, as discussed
          above,
          the terms of the Property Agreements remain in effect. Under the New Agreement,
          MRT has assigned to Sunburst de Mexico rights it acquired in a contract
          with
          Corporative Minero. MRT entered into an agreement with Corporative Minero
          on
          January 12, 2004 by which it acquired the right to explore and exploit
          the
          Cieneguita Property and purchase it for $2,000,000. This agreement gave
          MRT the
          exclusive right and option, but not the obligation, to purchase, during
          the term
          of the mining concessions of the property, an undivided 100% title to the
          mining
          concessions and the exclusive right to carry out mining activities on any
          portion of the mining concessions. Under our
          agreements with MRT, MRT has assigned this agreement to us. As of the date
          of
          this annual report, $360,000 of the $2,000,000 has been paid to Corporative
          Minero. Sunburst de Mexico had the obligation of bringing the property
          to
          production on or prior to May 6, 2006. As of the date of this prospectus,
          the
          Cieneguita Property is not in production and, therefore, Sunburst de Mexico
          had
          the obligation to pay $120,000 to Corporative Minero on May 6, 2006 to
          extend
          the contract. Through discussions with Mexoro, Corporative Minero agreed
          to
          reduce the obligation to $60,000, of which $10,000 was paid in April 2006.
          Sunburst de Mexico was then required to pay the remaining $50,000 by May
          6,
          2006. We made this payment to Corporative Minero, and the contract was
          extended.
          We have the obligation to pay a further $120,000 per year on May 6 of each
          year,
          until the total of $2,000,000 is paid. If the property is put into production,
          of which there is no assurance, then the contract calls for the remaining
          payments to be paid from the sale of gold, up to a total of $2,000,000.
          The
          payments, if the property should


*--9--*




go
          into
          production, would be as follows: The remainder of the $2,000,000 payment
          would
          be paid out of production from the Cieneguita Property at a
          rate of
          $20 dollars per ounce of gold sold. However, in the event that the price
          of gold
          exceeds $400, then Sunburst de Mexico would be required to pay an additional
          $.10 per each ounce for every dollar over $400. Once $2,000,000 is paid,
          there
          is no further obligation to Corporative Minero. Non-payment of any portion
          of
          the $2,000,000 total payment will constitute a default. In such case,
          Corporativo Minero would retain ownership of the concessions, but we will
          not
          incur any additional default penalty. Corporative Minero has the obligation
          to
          pay from the funds they receive from us any royalties that may be outstanding
          on
          the properties from prior periods. Corporative Minero has informed us that
          there
          were royalties up to 7% Net Smelter Return owned by various former owners
          of the
          property. They have informed us that the corporations holding those royalties
          have been dissolved and that there is no further legal requirement to make
          these
          royalty payments. We can make no assurance, though, that we ultimately
          may be
          responsible to pay all or some of the 4% Net Smelter Return to these former
          royalty holders if the property was ever put into production. MRT no longer
          has
          any ownership interest or payment obligations with respect to any of the
          concessions discussed herein.
 
 Through
          Sunburst de Mexico, we are engaged in the exploration and development of
          three
          gold and silver exploration properties: the Cieneguita property, the Guazapares
          property, and the Encino Gordo property. In addition, we intend to identify
          and
          option additional gold and silver properties within the Chihuahua region
          if
          possible. We will utilize our management’s contacts in the Mexican mining
          community in order to find additional potential properties that may be
          available. No assurance may be given that we will be able to obtain additional
          properties should any become available to us.


**Principal
        Product** **s**





Our
        principal product is the exploration for, and, if warranted, the mining and
        sale
        of precious minerals. Because our properties have yet to be explored by us,
        there is no guarantee that any ore body will be found.





Mario
        Ayub is a past President of the National Miners Association of Mexico and
        of the
        Chihuahua Miners Association, and through his network, he has been able to
        discuss and obtain information on potential mining properties. A potential
        mining property is identified first by a visit to the property by a
        geologist. If the property has potential based upon the geologist’s findings,
        another visit is made to gather more information by taking surface samples
        and
        mapping the property. Also, geophysical work (in this case mineral exploration
        techniques using electro magnetic instruments to measure the conductivity
        of the
        rocks underground) may be performed before entering into the negotiation
        process
        for a particular property.





*Overview*





The
        properties owned or optioned by Mexoro are located in the state of Chihuahua.
        Historically, significant mining activities have occurred in the State of
        Chihuahua.





**GLOSSARY
        OF CERTAIN MINING TERMS**





ASSAY
        --
        A chemical test performed on a sample of ores or minerals to determine the
        amount of valuable metals contained.





AURIFEROUS
        ZONE - An area of gold bearing rock.





*--10--*




BRECCIA
          -- A rock in which angular fragments are surrounded by a mass of fine-grained
          minerals.
 
 COLUMN
          TEST -- The process of putting sample ore in a PVC pipe 500 cm in diameter
          and
          2-3 meters high and applying lime and a cyanide solution. The purpose of
          a
          column leach test is to collect kinetic information on the ore being evaluated
          so that scale-up equations can be validated which will allow the projection
          of
          the commercial heap leach operation's performance under different operating
          scenarios.
 
 DEVELOPMENT
          DRILLING -- Drilling to establish accurate estimates of mineral
          reserves.
 
 DILUTION
          (mining) -- Rock that is, by necessity, removed along with the mineralized
          ore
          in the mining process, subsequently lowering the grade of the ore.
 
 EPITHERMAL
          DEPOSIT -- A mineral deposit consisting of veins and replacement bodies,
          usually
          in volcanic or sedimentary rocks, containing precious metals, or, more
          rarely,
          base metals.
 
 EXPLORATION
          -- Work involved in searching for ore, usually by sampling rocks, drilling
          or
          driving a drift.
 
 HEAP
          LEACHING -- A process involving the percolation of a cyanide solution through
          crushed ore heaped on an impervious pad or base to dissolve minerals or
          metals
          out of the ore.
 
 HIGH
          GRADE -- Rich ore. As a verb, it refers to selective mining of the best
          ore in a
          deposit.
 
 HYDROTHERMAL
          -- An adjective applied to heated or hot magmatic emanations rich in water,
          to
          the processes in which they are concerned, and to the rocks, ore deposits,
          alteration products, and springs produced by them.
 
 LEACHABILITY
          - The ability for cyanide solution in a heap leach operation to leach the
          desirable minerals from the host rock and allow for recovery at an economic
          level.
 
 MINERAL
          -- A naturally occurring homogeneous substance having definite physical
          properties and chemical composition and, if formed under favorable conditions,
          a
          definite crystal form.
 
 MINERALIZATION
          -- The act or process of mineralizing.
 
 MINERALIZED
          MATERIAL OR DEPOSIT -- A mineralized body which has been delineated by
          appropriate drilling and/or underground sampling to support a sufficient
          tonnage
          and average grade of metal(s). Under SEC standards, such a deposit does
          not
          qualify as a reserve until a comprehensive evaluation, based upon unit
          cost,
          grade, recoveries, and other factors, concludes economic
          feasibility.
 
 MINING
          CONCESSION -- A term used to describe an area of land for which the owner
          of the
          concession has the right to explore for and develop mineral deposits. The
          rights
          to and ownership of the minerals in the concession are granted, in our
          case, by
          the Mexican Government to the former owners who then either transferred
          or
          optioned them to us. In Canada and the United States, the term is commonly
          referred to as a Mineral Right or Mining Claim.
 
 NET
          SMELTER RETURN (NSR) -- A share of the net revenues generated from the
          sale of
          metal produced by a mine.


*--11--*




ORE
          --
          Mineralized material that can be mined and processed at a positive cash
          flow.
  OREBODY
          -- A natural concentration of valuable material that can be extracted and
          sold
          at a profit.
 
 RECLAMATION
          -- The restoration of a site after mining or exploration activity is
          completed.
 
 ROYALTY
          -- An amount of money paid at regular intervals by the lessee or operator
          of an
          exploration or mining property to the owner of the ground. The royalty,
          generally, is based on a certain amount per ton or a percentage of the
          total
          production or profits. Also, the fee paid for the right to use a patented
          process.
 
 SILVER
          PAN AMALGAMATION MILL -- The raw ore is wet crushed with stamps, the crushed
          ore
          is separated from the slurry in a settling tank and then the crushed ore
          is
          charged with mercury (approximately 10 percent of the weight of the ore)
          in the
          amalgamation pan. The amalgam is separated from the slurry and the silver
          and
          gold is separated from the amalgam with a retort.
 
 STRIKE
          LENGTH - The actual or estimated length, generally measured in meters,
          of a
          mineralized structure.
 
 VEIN
          -- A
          mineralized zone having a more or less regular development in length, width
          and
          depth, which clearly separates it from neighboring rock.
 
 
 **PROPERTIES**
 
 All
          of
          the properties discussed below are located in the State of Chihuahua, Mexico.
          The following maps illustrate the locations of Chihuahua and of the
          properties:


*--12--*










*--13--*







*--14--*




***Cieneguita*** ***Property***




**Property
        Location**




Cieneguita
        is located in the Baja Tarahumara in Cieneguita Lluvia De Oro, an area of
        canyons in the Municipality of Urique, in southwest Chihuahua State, Mexico.
        The
        property is located within one half mile of the small village of Cieneguita
        Lluvia de Oro. Access to the property is by an all weather dirt road. There
        is
        available electrical power for the property generated by diesel generators
        at
        the village of Cieneguita Lluvia de Oro.





Claim
        Status and Licensing





The
          concessions of this project cover a total area of 822 Hectares (approximately
          2,031 acres).
 
 In
          April
          2006, we plan to apply to the Mexican government for a change of use of
          land
          permit for 30 hectares of the La Maravilla concession. The La Maravilla
          concession is the concession that contains the mineralized rock that is
          the
          interest of our exploration. The La Maravilla concession currently has
          no
          activity on it other than our exploration program. The purpose of the change
          of
          use permit is to allow us, if necessary, to extract the rock from this
          concession for the purposes of processing the rock to extract the precious
          metals that may be contained therein. Because the permitting process takes
          a
          period of time, we plan to make the application in advance of any known
          reserves
          being discovered on the property. We cannot assure that we will have sufficient
          ore reserves, if any, to commence extraction. This permit will require
          negotiations with the government and municipality concerning such things
          as the
          removal of timber, building and maintaining roads, and reclamation. The
          application fee for this permit will be approximately $800, but there will
          be an
          additional negotiated fee charged for the permit in the approximate amount
          of
          $67,000 (720,000 Mexican Pesos).
 
 In
          July
          2006, we plan to submit an environmental impact study and a risk analysis
          study
          to the Mexican government for a permit to build a heap leach mining operation
          on
          the Aurifero concession of our Cieneguita property. The purpose of this
          permit
          is to allow us to construct an ore processing facility through heap leach
          mining
          methods. We do not have any ore reserves on our Cieneguita properties and
          plan
          to apply for permits in advance of any conclusive results to partly limit
          our
          financial exposure to searching for precious metals. If we are unable to
          extract
          and process our discoveries, if any, then there is no need to continue
          exploration.
 
 The
          Cieneguita Property is currently owned by Corporative Minero, and Sunburst
          de
          Mexico has the option of purchasing the concessions under the payment plan
          discussed below. The following table is a summary of the concessions on
          the
          Cieneguita Property:


**Lot
                  Name**
              **Title
                  Number**
              **Area
                  (Ha)**
              **Term
                  of Validity**(2)
              **Royalties
                  and Payments**Aurifero
              196356
              492.00
              7/16/1993
                  to 7/15/2043
              (1)Aurifero
                  Norte
              196153
              60.00
              7/16/1993
                  to 7/15/2043
              (1)La
                  Maravilla
              190479
              222.00
              4/29/1991
                  to 4/24/2041
              (1)Aquilon
                  Uno
              208339
              48.00
              9/23/1998
                  to 9/22/2048
              (1)




*--15--*




(1)
          The
          Cieneguita concessions are all under an option to purchase for $2,000,000
          of
          which $410,000 has been paid. If the Cieneguita property is not in production
          by
          May 6, 2006, Sunburst de Mexico will be required to pay $120,000 to Corporative
          Minero to extend the contract. We have the obligation to pay a further
          $120,000
          per year for the next 13 years and the balance of payments in the 14 th year,
          until the total of $2,000,000 is paid. If the property is put into production,
          of which there is no assurance, then the contract calls for the remaining
          payments to be paid from the sale of gold, to avoid termination of the
          agreement. The payments, if the property should go into production, would
          be as
          follows: The remainder of the $2,000,000 payment will be paid out of production
          from the Cieneguita Property at a rate of $20 dollars per ounce of gold
          sold.
          However, in the event that the price of gold is in excess of $400, then
          Sunburst
          de Mexico is required to accelerate payments by an additional $.10 per
          each
          ounce for every dollar gold is priced over $400. The total payment we are
          liable
          for is $2,000,000. Once that amount is paid, we have no further obligation
          to
          Corporative Minero. Corporative Minero has the obligation to pay, from
          the funds
          they receive from us, any royalties that may be outstanding on the properties
          from prior periods. Corporative Minero has informed us that there were
          royalties
          up to 7% Net Smelter Return owned by various former owners of the property.
          They
          have informed us that the corporations holding those royalties have been
          dissolved and that there is no further legal requirement to make these
          royalty
          payments. We can make no assurances that we will not ultimately be responsible
          to pay all or some of the 7% Net Smelter Return to these former royalty
          holders
          if the property were ever put into production and Corporative Minero did
          not
          make the payments to the royalty holders. However, we do not see this potential
          for additional royalty payments as a material risk for us.
  
 (2)
          Amendments to the Mexican mining laws took effect with the publication
          on
          December 21, 2005, of certain amendments to the *Ley
          Federal de Derechos* ,
          the act
          that sets forth the mining taxes' rates. Effective January 1, 2006, this
          Mexican
          Government legislation has converted all of the former exploration concessions
          in Mexico, which carried a maximum 6 year life, and exploitive concessions,
          which had a 25 year life, into general concessions with a 50 year life
          from the
          date they were registered with the Mining Registry. The concessions are
          automatically registered as soon as the concession mining rights are paid
          and no
          further paper work is required. These claims are currently in good standing
          and
          held by Sunburst de Mexico. There will be no special documents sent to
          us to
          reflect this change.


History
 
 The
          Cieneguita mines were in limited production in the 1990s. Over a four-year
          period, the Cieneguita Gold Mine was operated by Mineral Glamis La Cieneguita
          S.
          De R.L. De C.V. (“Glamis”), a subsidiary of the Canadian company Glamis Gold
          Ltd. (“Glamis Gold”). According to Glamis’ records, Glamis mined and processed
          ore on the property in 1995. Glamis stopped production in the mid-1990s.
          At that
          time, Corporative Minero, the operator of the mine for Glamis, acquired
          the
          property. MRT entered into an agreement with Corporative Minero on January
          12,
          2004 pursuant to which MRT acquired all **** of
          the
          mineral rights from Corporative Minero to explore and exploit the Cieneguita
          concessions and to purchase them for $2,000,000. Under our agreements with
          MRT,
          MRT has assigned this agreement to us. As of the date of this prospectus,
          $410,000 of the $2,000,000 has been paid to Corporative Minero. We are
          obligated
          to make yearly payments on these concessions to Corporative Minero until
          the
          $2,000,000 has been paid. Also, the agreement calls for the balance of
          the
          purchase price remaining to be paid out of production, if any, on Cieneguita
          at
          a rate of $20 per ounce of gold sold. However, in the event that the price
          of
          gold were to exceed $400, then Sunburst de Mexico would be required to
          pay an
          additional $.10 per each ounce for every dollar gold trades at over $400.
          If
          Cieneguita is never put into production, we are still obligated to pay
          the
          $120,000 per year until the $2,000,000 is paid. Sunburst de Mexico will
          be
          required to make payments to the property owners of $120,000 in May 2006
          in
          lieu of its obligation of bringing the property to production on or prior
          to May
          6, 2006. Sunburst de Mexico has the obligation to pay $120,000 per year
          for the
          years subsequent to May 6, 2006, until the $2,000,000 is paid or the mine
          is put
          into production, if ever, in which case the remaining amount owed would
          be paid
          out of any production of the property, to avoid termination of the agreement.
          On
          termination of the agreement, there would be no further obligations by
          Mexoro to
          any parties except Mexoro would be responsible for any reclamation work
          that may
          need to be done as a result of its exploration or mining activity if any
          should
          occur.


*--16--*




**Geology**




Our
          exploration work shows that the geology in the mineralization in the zone
          of
          sulfides includes pyrite, galena, sphalerite, tennantite and tetrahedrite,
          pirargirite and traces of chalcopyrite and pyrhotite.   These minerals
          mainly occur as uniform disseminations and as micro-veins. The previous
          exploration drilling by Cominco and Glamis Gold delineated a zone of altered
          volcanics, represented by silica, sericite and argillite that are believed
          to be
          1,000 meters long (strike length) and up to 200 meters wide.   Within
          this zone, the oxidation has been shallow and reaches a maximum depth of
          20
          meters.
 
 Glamis
          Gold performed a test pilot heap leach operation on the property in the
          mid
          1990’s. The exploration on the property is still in its early stages and
          significant work needs to be completed before any type of ore reserve
          calculations, if any, could be made. Our operations are currently exploratory.
          We have done some initial sampling on the La Maravilla concessions as described
          below.
 
 A
          total
          of 51 diamond drill holes (6,700 meters) drilled by Cominco (now Teck Cominco
          Ltd.) defined an auriferous zone approximately 1,000 meters long by 200
          wide. On
          such a zone, two mineralized structures were drilled during their exploration
          program in 1981 and 1982. Later, two drilling programs were performed by
          Glamis:
          135 holes were drilled during 1994 and 62 holes were drilled during 1997.
          Both
          programs confirmed the delineation of the two mineralized ore bodies. We
          have
          had access to these reports from Cominco and Glamis. The initial exploration
          conducted by our company will focus on further delineating the oxide and
          mixed
          ore structures.
 
 The
          Cieneguita Property is without known reserves.




**Infrastructure**




The
        town
        site near the former mine has the following services: diesel generated
        electrical power, cellular phone, radio communication (CB), a health center
        and
        a school. Because the property was previously in production, it has existing
        infrastructure such as power, water, railroad transportation (within 20
        kilometers), and all weather road access year round. There are all weather
        roads
        to the area that was previously mined allowing easy access for exploration.
        Also, the haul roads to the heap leach pads from the open pit area are in
        good
        condition and have been maintained by third parties since Glamis halted
        production. Furthermore, the heap leach pads used in previous mining operations
        are still in place. It is our intention to use the existing pads and tailings
        site to reduce our costs to re-open the mine. Because some of the infrastructure
        exists, such as roads and pads, we believe that the investment needed to
        put
        this mine into production would be smaller than the investment which would
        be
        needed for a mine that was never in production. Because other operating mines
        exist in the area, infrastructure, such as roads, already exists. The roads
        are
        public, and we do not have to pay a fee to use them. There is no other equipment
        or facilities available to us on the property. Further study needs to be
        done on
        the feasibility of using the existing infrastructure of the old mine.





Budget





We
        estimate that the exploration program on the Cieneguita Property will cost
        approximately $200,000. We anticipate that putting the property into production
        will cost approximately $2,200,000. See “Plan of Operations” in the
“Management’s Discussion and Analysis” section for further
        information.





*--17--*




***Guazapares
        Property***





Property
        Location





The
          Guazapares Property is located in the Barranca section of Chihuahua State
          in
          Mexico, and according to data published by the Government of Mexico, at
          the
          interphase between the two main volcanic groups that form the bulk of the
          Sierra
          Madre Occidental. The location is 220 kilometers to the southwest of Chihuahua
          City. An all weather dirt road traverses the property. The property is
          accessible year round by air, rail and road. The area has available diesel
          generated power and water.
 
 The
          Guazapares Property, covering 1,514 Hectares (approximately 3,741 acres),
          is in
          a mining district with a history of large ore deposits. A large ore deposit
          would be defined as a property capable of producing in excess of 50,000
          ounces
          of gold equivalent per year.




**Claim
        Status & Licensing**




Sunburst
        de Mexico owns or has an option to purchase 100% of the concessions located
        in
        the Guazapares Concessions, as indicated below. If the exploration is successful
        on the optioned concessions, then Sunburst de Mexico intends to exercise
        its
        option to acquire the concessions. There is no penalty for not exercising
        our
        options. The concessions not owned by Sunburst de Mexico are owned by Compañía
        Minera De Namiquipa, S. A. de C. V., a company incorporated in Mexico. There
        is
        no relationship between Compañía Minera De Namiquipa, S. A. de C. V., and
        Mexoro, its officers, directors and affiliates. The following table sets
        forth concessions
        in the Guazapares area which Sunburst de Mexico owns or has the option to
        purchase:





**GUAZAPARES
                  CONCESSIONS OWNED BY SUNBRUST DE MEXICO (Property Payments Still
                  Due and
                  Owing)****Name**
              **Title
                  Number**
              **Area
                  (Ha)**
              **Term
                  of Validity (1)**
              **Royalties
                  and Payments**Guazapares
              209497
              30.99
              8/03/1999
                  to 8/02/2049
              Net
                  Smelter Return of 2.5% (2)Guazapares
                  1
              212890
              451.96
              2/13/2001
                  to 2/12/2051
              Net
                  Smelter Return of 2.5% (2)Guazapares
                  2
              226217
              402.43
              12/02/2005
                  to 12/01/2055
              Net
                  Smelter Return of 2.5% (2)Guazapares
                  3
              211040
              250.00
              3/24/2000
                  to 3/23/2050
              Net
                  Smelter Return of 2.5% (2)Guazapares
                  4
              223664
              69.8
              2/2/2005
                  to 2/1/2055
              Net
                  Smelter Return of 2.5% (2)Guazapares
                  5
              213572
              88.89
              5/18/2001
                  to 5/17/2051
              Net
                  Smelter Return of 2.5% (2)El
                  Cantilito
              220788
              35.03
              10/7/2003
                  to 10/6/2053
              Net
                  Smelter Return of 2.5% (2)




*--18--*




Vinorama
              226884
              
              3/17/2006
                  to 3/16/2056
              Net
                  Smelter Return of 2.5% (2)**GUAZAPARES
                  CONCESSIONS UNDER OPTION AGREEMENTS****Name**
              **Title
                  Number**
              **Area
                  (Ha)**
              **Term
                  of Validity (1)**
              **Royalties
                  and Payments**San
                  Antonio
              222869
              113.11
              9/14/2004
                  to 9/13/2054
              Net
                  Smelter Return of 2.5% (3)San
                  Antonio
              204385
              14.89
              2/13/1997
                  to 2/12/2047
              Net
                  Smelter Return of 2.5% (3)Ampliacia
                  on San Antonio
              196127
              20.92
              9/23/1992
                  to 9/22/2042
              Net
                  Smelter Return of 2.5% (3)San
                  Francisco
              191486
              38.16
              12/19/1991
                  to 12/18/2041
              Net
                  Smelter Return of 2.5% (4)





(1)  Amendments
          to the Mexican mining laws took effect with the publication on December
          21,
          2005, of certain amendments to the *Ley
          Federal de Derechos* ,
          the act
          that sets forth the mining taxes' rates. Effective January 1, 2006, this
          Mexican
          Government legislation has converted all of the former exploration concessions
          in Mexico, which carried a maximum 6 year life, and exploitive concessions,
          which had a 25 year life, into general concessions with a 50 year life
          from the
          date they were registered with the Mining Registry. The concessions are
          automatically registered as soon as the concession mining rights are paid
          and no
          further paper work is required. These claims are currently in good standing
          and
          held by Sunburst de Mexico. There will be no special documents sent to
          us to
          reflect this change.
 
 (2)  These
          concessions have been transferred to the Company. However, we must continue
          to
          make payments on these concessions in order to retain ownership. The total
          payments for us to acquire and retain 100% ownership of all 8 concessions
          are as
          follows: October 31, 2006 - $60,000, August 2, 2007 - $140,000, August
          2, 2008 -
          $110,000 and August 2, 2009 - $500,000. These scheduled payments must be
          made to
          keep our agreement in good standing. Failure to make the payments would
          cancel
          our agreements to acquire these concessions.
 
 (3)  These
          concessions are currently under option agreements. Title to the concessions
          has
          not yet been transferred to the Company. The total payments for us to acquire
          100% ownership of all 3 concessions are as follows: January 15, 2007 -
          $30,000,
          January 15, 2008 - $50,000, January 15, 2009 - $50,000 and January 15,
          2010 -
          $500,000. These scheduled payments must be made to keep our option to acquire
          these concessions in good standing. Failure to make the payments would
          cancel
          our options to acquire these concessions.
 
 (4)  This
          concession is currently under an option agreement. Title to the concession
          has
          not been transferred to the Company. The total payments for us to acquire
          100%
          ownership of this concession are as follows: June 25, 2006 - $20,000, June
          25,
          2007 - $30,000, June 25, 2008 - $40,000 and June 25, 2009 - $250,000. These
          payments must be made to keep our option to acquire these concessions in
          good
          standing. Failure to make the payments would cancel our options to acquire
          these
          concessions.
 
 History
 
 Old
          mining records in the public domain indicate that mining operations were
          commenced on this site in the 17th century. Most of the production on this
          site
          came from high-grade vein deposits mined by crude underground methods.
          These
          records indicate that the main Guazapares breccia veins were discovered
          in about
          1830. The major period of production was from 1870 to 1900, when there
          were four
          silver pan amalgamation mills in operation. Although the deposits contain
          both
          gold and silver, the early mills could not recover the gold as it is very
          fine
          and occurs along cleavage planes in the pyrite. The mills of the time could
          only
          process the oxidized portions of the veins, and the unoxidized, sulfide-bearing
          material was usually left in the mines as pillars. The principal mine owner
          died
          in 1890, after which the mines of


*--19--*




Guazapares
          slowly sank into disrepair and closed by 1900. In 1905, a U.S. company
          consolidated most of the properties and reopened some of the mine workings.
          The
          company ran into financial difficulties during 1907 and work halted. Ramon
          Valenzuela then acquired the properties and operated a mill until 1912.
          Noranda
          Exploration, Inc. briefly optioned concessions in the area in the early
          1990’s.
          Kennecott Utah Copper Corp. optioned the core concessions in 1993-94 and
          drilled
          a few holes in one of the concessions. ******
 
 On
          Guazapares #4 and on a property adjacent to it, War Eagle Mining Company,
          Inc.
          drilled a total of 5,552 meters in 50 holes on three mineralized zones
          between
          November 1991 and August 2002.
  **Geology**
  Public
          documents published by the Mexican Government show that the Guazapares
          district
          is underlain by both the lower and upper volcanic series that form most
          of the
          Sierra Madre Occidental. The volcanics uncomformably overlay Lower Cretaceous
          limestone and were deposited onto an erosional surface with low to moderate
          relief. Public records published by the Mexican Government indicate that
          the
          lower volcanic series is considered to be Upper Cretaceous-Lower Tertiary
          in age
          and is composed of subaerial andesite-rhyolite flows and tuff. These records
          also indicate that north of Guazapares, along the Chinipas River, the basal
          sequence of the lower section contains a thick section of a coarse-grained,
          massive rhyodacite tuff that is overlain by fluvially reworked andesite
          with
          conglomerate-grit interbeds. It is not known if the basal rhyodacite extends
          south to the Guazapares district. We do not know if we have any such structures
          on our concessions.
 
 Public
          records published by the Mexican Government indicate that the lower volcanic
          series is the host rock of epithermal precious-base metal deposits in the
          Sierra
          Madre Occidental. The mineral systems generally occur
          at
          or near the top of the series and are often associated with rhyolite stocks
          and/or flow domes that occur at the top of the lower volcanic series. These
          domes may represent the earliest stage of the upper series volcanism. The
          feeder
          stocks and dykes may be hydrothermally altered and weakly mineralized.
          The bulk
          of upper volcanic series is largely host-mineral and caps the partially
          eroded
          mineral systems. It is Middle Tertiary in age and is composed of felsic
          airfall
          tuff and ash flows. We do not know if we have such structures on our
          concessions.
 
 We
          plan
          to complete our first phase of exploration, which consists of rock sampling
          and
          mapping, by the end of December 2006. Management will then decide whether
          the
          results warrant further exploration. If so, we will move on to the next
          phase of
          exploration. We plan to have one full time geologist working on the property
          collecting rock samples, line cutting, soil sampling, and completing geological
          mapping of the property. The geochemical sampling will be used to try to
          determine the types of minerals in the area. The ground based geophysical
          work
          will be used to identify geological structures that correspond with the
          mapping
          of the geochemical sampling. If any structures are identified that correspond
          to
          geological sampling, these areas will be the subject of trenching and sampling
          to further determine the types of structures that might be present on the
          property. We expect this second phase of exploration to be completed by
          the end
          of May 2007. This phase of the exploration program has the goal of determining
          whether subsequent exploration is warranted or if a drill program should
          be
          commenced. Our lead geologist for this project and our VP of Exploration
          will
          review all of the results of the exploration work, and based on this
          information, they will make a recommendation to management. Management
          will then
          review the exploration work and the conclusions of the geologist and our
          VP of
          Exploration to determine if additional funds should be expended on further
          exploration on the property which may include drilling. If management decides
          that no further work is warranted after this stage of exploration, we would
          most
          likely discontinue any further work and abandon the property. If management
          decides that further work is needed,


*--20--*




which
        may
        include drilling, we will have to raise additional capital and devise a
        definitive exploration plan for this stage. See “Plan of Operations” in the
“Management’s Discussion and Analysis” section for further information.




**Mineral
        Deposits**




We
        believe that the mineralization is fault-controlled and is hosted in andesite
        at
        the top of the lower volcanic sequence. Public documents published by the
        Mexican Government suggest that the Sierra Madre epithermal deposits exhibit a
        strong vertical zonation with high gold-silver-lead values near the top of
        the
        system that grade downward into a central silver-lead-zinc (gold) zone, which
        in
        turn, grades downward into a copper-zinc massive sulfide vein root zone.
        The
        various descriptions of the district lead us to believe that the top of the
        system is exposed in the historic workings at Guazapares. We do not know
        if we
        have such structures on our concessions.





The
        Guazapares property is without known reserves. Our proposed exploration programs
        are exploratory in nature.




**Infrastructure**




Guazapares
          has the infrastructure in place to support a mining operation. It has diesel
          generated electrical power, water, railroad transportation within 20 kilometers
          and all weather road access all year round. There is trained labor for
          mining
          available in the area.
 
 Budget
 
 We
          estimate that a proposed exploration program on the Guazapares Property
          will
          cost approximately $450,000 and will have the goal of identifying drill
          targets
          for a subsequent drilling program. We have budgeted approximately $100,000
          for
          our first phase of exploration, $100,000 for our second phase of exploration
          and
          $250,000 for our third phase of exploration. See “Plan of Operations” in the
“Management’s Discussion and Analysis” section for further
          information.
 
 ***Encino
          Gordo Property***
 
 Location
 
 The
          Encino Gordo project is located in the Barranca section of Chihuahua State
          in
          Mexico, and according to data publicly published by the Mexican Government,
          is
          at the interphase between the two main volcanic groups that form the bulk
          of the
          Sierra Madre Occidental. The Encino Gordo Property is 3.2 miles west of
          the
          Guazapares Property. The location is 220 kilometers to the southwest of
          Chihuahua City. The property is accessible by an all weather dirt road
          along the
          southwest side of the property.
 
 Claim
          Status
 
 Sunburst
          de Mexico owns two concessions (Title #225277 and #292013) and has the
          option to
          acquire 100% of the three other properties listed below, subject to a 2.5%
          net
          smelter royalty, after making the scheduled property payments as described
          below
          in Note 3.


*--21--*




The
        concessions not owned by Sunburst de Mexico are owned by MRT. The following
        table is a summary of the concessions on the Encino Gordo
        property:





**Lot
                  Name**
              **Title
                  Number**
              **Area
                  (Ha)**
              **Term
                  of Validity**(1)
              **Royalties
                  and Payments**Encino
                  Gordo
              225277
              450
              8/12/2005
                  to 8/11/2055
              None
                  (2)Encino
                  Gordo
              292013
              382
              8/12/2005
                  to 8/11/2055
              None
                  (2)El
                  Camuchin
              220149
              100
              6/17/2003
                  to 6/16/2053
              Net
                  Smelter Return of 2.5% (3)La
                  Paloma
              220148
              100
              6/17/2003
                  to 6/16/2053
              Net
                  Smelter Return of 2.5% (3)Encino
                  Gordo 2
              225276
              50
              8/12/2005
                  to 8/11/2055
              Net
                  Smelter Return of 2.5% (3)





(1)  Amendments
          to the Mexican mining laws took effect with the publication on December
          21,
          2005, of certain amendments to the *Ley
          Federal de Derechos* ,
          the act
          that sets forth the mining taxes' rates. Effective January 1, 2006, this
          Mexican
          Government legislation has converted all of the former exploration concessions
          in Mexico, which carried a maximum 6 year life, and exploitive concessions,
          which had a 25 year life, into general concessions with a 50 year life
          from the
          date they were registered with the Mining Registry. The concessions are
          automatically registered as soon as the concession mining rights are paid
          and no
          further paper work is required. These claims are currently in good standing
          and
          held by Sunburst de Mexico. There will be no special documents sent to
          us to
          reflect this change.
 
 (2)  Concessions
          are 100% owned by Sunburst de Mexico with no further payments to be
          made.
 
 (3)  The
          total
          payments for us to acquire 100% of these concessions from the concession
          owners
          are as follows: June 30, 2006 - $10,000, December 31, 2006 - $25,000, December
          31, 2007 - $50,000, December 31, 2008 - $75,000, and December 31, 2009
          -
          $100,000. These scheduled payments need to be made to keep our agreement
          in good
          standing. Failure to make the payments would cancel our agreements to acquire
          these concessions.
 
 History
 
 The
          Encino Gordo Property, covering 1,042 hectares (approximately 2,575 acres),
          is
          situated near an old mining district with a lengthy production history,
          according to records in the public domain. Old mining records indicate
          that
          mining operations were commenced 3 kilometers east of this site in the
          17th
          century. Most of the production from those mines came from high-grade vein
          deposits mined by crude underground methods. To the east of Encino Gordo,
          the
          main Guazapares breccia veins were discovered in about 1830. The major
          period of
          production was from 1870 to 1900 when there were four silver pan amalgamation
          mills in operation. Although those deposits contain both gold and silver,
          the
          early mills could not recover the gold as it is very fine and occurs along
          cleavage planes in the pyrite. The mills of the time could only process
          the
          oxidized portions of the veins, and the unoxidized, sulfide-bearing material
          was
          usually left in the mines as pillars. The principal mine owner of the properties
          east of Encino Gordo died in 1890, after which the mines of Guazapares
          slowly
          sank into disrepair and closed by 1900. In 1905, a US company consolidated
          most
          of the properties to the east of Encino Gordo and reopened some of the
          mine
          workings. That company ran into financial difficulties during 1907 and
          work
          halted. Ramon Valenzuela then acquired the properties to the east of Encino
          Gordo and operated a five stamp mill until 1912. Noranda Exploration, Inc.
          briefly optioned concessions in the area in the early 1990’s. Kennecott optioned
          the core


*--22--*




concessions
          east of Encino Gordo in 1993-94 and drilled a few holes in one of the
          concessions to the east of Encino Gordo. The Encino Gordo property has
          never
          been in production.
 
 Mineral
          Deposits
 
 Blackstone
          Resources Inc. hired Reliance Geological Services of Vancouver Canada in
          1996 to
          evaluate the results of a geological and geochemical exploration program
          on the
          Encino Gordo zone. The subsequent work revealed results that were judged
          worthy
          of a second phase of exploration. Our surface sampling has indicated the
          presence of mineralized structures, including gold and silver anomalies
          on the
          property. Several gold-copper anomalous areas were also identified. The
          property
          is at the very early stages of exploration, though, and much more work
          is needed
          before any decisions can be made as to the viability of the property.
 
 *Structure
          Empalme*
 
 The
          Empalme vein outcrops northwest of the Elyca structure, inside the Encino
          Gordo
          Property and has been mapped for approximately 150 meters. Workings on
          the
          breccia-vein consist of 2 old shafts now filled with water. The host rocks
          consist of a sequence of volcaniclastic sediments overlain by tuffaceous
          dacites
          with moderate silicification and supergene argillic alteration.
  *Cienega
          Vein*
 
 Our
          exploration shows that the Cienega vein outcrops at one location along
          a stream
          bed within the the Encino Gordo Property. It consists of brecciated quartz
          and
          contains 2-3% disseminated pyrite hosted by brown volcaniclastics.
 
 *Arroyo
          Los Laureles Vein*
 
 The
          vein
          outcrops in the southeast limit of the San Miguel claim in Arryo Los Laurels.
          The host rocks consist of intensely fractured volcaniclastic arenites,
          tuffs and
          dacites.
 
 The
          Encino Gordo Property is without known reserves. Our proposed exploration
          programs are exploratory in nature.
 
 Infrastructure
 
 The
          Encino Gordo Property is accessible year round by all weather road. There
          is no
          local electricity or water currently available. We will need to supply
          our own
          diesel generated electrical power.
 
 Budget
 
 We
          estimate that an initial geochemical and geophysical exploration program
          on the
          Encino Gordo Property will cost approximately $200,000 and will have the
          goal of
          identifying drill targets for a subsequent drilling program. The geochemical
          sampling and mapping is preliminary work which will allow the VP of Exploration
          to have sufficient information available to him to plan an exploration
          strategy
          and budget for this property. We have not conducted any exploration on
          this
          property other than preliminary sampling and mapping. See “Plan of Operations”
in the “Management‘s Discussion and Analysis” section for further information.


*--23--*





**Employees**





We
        currently have no employees. All mineral exploration and operations are
        contracted out to third parties. In the event that our exploration projects
        are
        successful and warrant the development of a mine, all such operations would
        be
        contracted out to third parties. Also, we rely on members of management to
        handle all matters related to business development and business
        operations.
  **ITEM
        2.**  **DESCRIPTION
        OF PROPERTY**
 
 We
        currently maintain an office at 609 Granville Street, Suite 880, Vancouver,
        BC,
        Canada, V7Y 1G5. Our telephone number is (800) 661-7830. The office is part
        of
        an “office service” arrangement for which we pay Cdn$400 ($344 USD) per month.
        It is on a month-to-month basis and is rented from MCSI, a company controlled
        by
        an officer and director of Mexoro. The office service package also supplies
        a
        receptionist, clerical help and access to a boardroom.
 
 We
        also
        maintain an office in Mexico for our wholly owned subsidiary, Sunburst de
        Mexico, located at Ave. Pascual Orozco No. 2117-Altos Col. La Cima C.P. 31310
        Chihuahua, Chih. Mexico. The lease is on a month-to-month basis and is part
        of
        an office service package where we have access to a receptionist, clerical
        help,
        and a boardroom. The office is leased from MRT, a company controlled by an
        officer and director of Mexoro and we pay $5,000 per month for this
        service.
 
 As
        described above, we have interests in the Cieneguita, Guazapares and Encino
        Gordo properties.
 
 **ITEM
        3.**  **LEGAL
        PROCEEDINGS**
 
 Neither
        Mexoro nor its property is the subject of any pending legal proceedings,
        and no
        such proceeding is known to be contemplated by any governmental authority.
        We
        are not aware of any legal proceedings in which any director, officer or
        affiliate of Mexoro, any owner of record or beneficially of more than 5%
        of any
        class of our voting securities, or any associate of any such director, officer,
        affiliate or security holder of Mexoro, is a party adverse to Mexoro or any
        of
        its subsidiaries or has a material interest adverse to Mexoro or any of its
        subsidiaries.
 
 **ITEM
        4.**  **SUBMISSION
        OF MATTERS TO A VOTE OF SECURITY HOLDERS**
 
 On
        February 13, 2006, the shareholders of the Company approved a name change
        form
        Sunburst Acquisitions IV, Inc. to Mexoro Minerals Ltd., and a reverse split
        of
        its issued and outstanding common stock with a ratio of 1 new share for each
        50
        old shares. Prior to the reverse split, the Company has 189,994,324 shares
        of
        Common Stock issued and outstanding. After the reverse stock split, there
        will
        be approximately 3,799,887 shares of Common Stock issued and
        outstanding.
  The
        shareholders of the Company also approved a Stock Compensation Program. The
        reverse split and the name change to Mexoro Minerals Ltd. were both effective
        as
        of the open of business on February 15, 2006.


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


*--24--*




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





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





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








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





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





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


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





SPECIAL
      NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS





Certain
        statements in this report, including statements in the following discussion,
        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.





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





*--25--*




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





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




Plan
        of Operations





(Note:
          This Plan of Operation describes our plan as of February 28, 2006. No subsequent
          events have been included.)
 
 Our
          business plan is to proceed with the exploration of our Mexican mineral
          properties to determine whether they contain commercially exploitable reserves
          of gold, silver or other metals. We believe that we have sufficient capital
          to
          fund our current exploration plans and meet our monthly general and
          administrative costs until April 2007 without the need to raise additional
          funds. After that time, we will neither have sufficient funds to continue
          our
          exploration plans nor funds for general administrative expenses. As a minimum,
          we will need to raise additional working capital to maintain basic operations.
          We would plan to raise those funds through the sale of equity or debt.
          At this
          time we do not have any sources to raise additional capital for the company
          and
          no assurance may be given that we will be able to find sources to raise
          additional capital. Failure to raise any additional capital would most
          likely
          require us to cease operations and abandon all of our exploration properties.
 
 In
          the
          event that our exploration program finds exploration targets that warrant
          additional exploration work, including exploration by drilling, we will
          not have
          enough cash available to fund an expanded exploration program. If we decide
          to
          expand our exploration program, we would need to raise additional capital
          to
          meet these needs. We currently do not have any sources of additional capital
          available to us and we may not have any in the future. The failure to raise
          additional capital would severely curtail our ability to conduct any additional
          exploration work that might be warranted because of the results of our
          current
          exploration program.
 
 We
          intend
          to hire a VP of Exploration by the end of November 2006. Without a VP of
          Exploration, we have not been able to formulate specific exploration plans
          and
          budgets for two of our properties, Encino Gordo and Sahauyacan. We cannot
          predict with any accuracy when we will have a plan formulated for these
          properties and when detailed exploration will begin. We are, however, obligated
          to continue to make property payments for these two properties.
 
 We
          are
          not involved in any research and development on our exploration properties.


***Cieneguita
        Property***





*--26--*





Because
          we already have data from the previous exploration programs and mining
          records
          from Glamis Gold, our exploration program, planned until the end of April
          2007,
          on the Cieneguita Property will focus mainly on identifying mineralized
          zones of
          economic grade to allow for the property to be put into production as an
          open
          pit heap leach mine. The following steps summarize the exploration we have
          done
          to date on the Cieneguita Property, as well as our plans.
 
 1.  Phase
          1
          Exploration.
 
 Budget:   We
          expect
          the Phase 1 exploration program to cost approximately $200,000. We have
          not yet
          spent any funds on this exploration. The funds will come from our general
          working capital.
 
 Milestones:  The
          milestones for the phase 1 exploration program include the review of available
          data to create a structural mineralization framework, detailed soil and
          rock
          sampling, resampling existing trenches, the extension of existing trenches,
          and
          the creation of new trenches. We will also conduct cyanide testing on the
          rock
          to determine the best method of leaching the precious metals from the rock.
          We
          plan to complete this phase by the end of December 2006.
 
 We
          intend
          to complete a sampling of the property that will include deep trenches
          from
          which we will take comprehensive channel sampling. From the walls of these
          trenches, we will take approximately 550 rock samples. One half of these
          samples
          will be sent to ALS Chemex’s laboratory in Chihuahua for assaying. The purpose
          of the sampling will be to further define the ore grade and potential of
          the
          property. We will also complete detailed soil sampling and rock sampling
          outside
          of the trenches.
 
 By
          December 2006, we will complete a detailed mapping of the property using
          existing information and drill results from previous operators, as well
          as
          incorporating our own data. We do not have any proven reserves on this
          property.
 
 The
          other
          half of the sample will be used to complete column tests to determine the
          leachability of the precious metals from the rock. In this test, the ore
          will be
          placed in PVC tubes, and different mixtures of a cyanide solution will
          be
          dripped over the top of the columns at different flow rates. The results
          from
          these tests will help determine the most effective solution to be used
          on the
          heap leach pads on the property. We hope that these tests will help us
          optimize
          the potential for extracting precious metals from the ore for the mining
          operation.
 
 2.  Phase
          2
          Exploration.
 
 Budget:  If
          we
          decide to comment phase 2, we will do so in March 2007 under the direction
          of
          our VP of Exploration. We anticipate spending $200,000 for the Phase 2
          Exploration; consisting of $50,000 for an additional trenching program,
          $50,000
          for general administrative expenses and $100,000 for the cost of a drilling
          program, assaying and supervision included.
 
 Milestones:  The
          objectives for phase 2 of the exploration plan will be to initiate a drill
          program and to continue the trenching program from phase 1 of exploration
          in
          order to further delineate the oxide ore mineralization to define where
          we plan
          to attempt to mine the ore. We plan to complete this second phase of exploration
          by the end of March 2007.
  Subject
          to the recommendation of our VP of Exploration, we may initiate a drill
          program
          consisting of 1,000 meters of reverse circulation drilling. At this time,
          there
          is a high demand for drill rigs, and we cannot predict with any accuracy
          the
          timing to start the drilling program. Once we do receive a rig, we


*--27--*




anticipate
          the drilling program will take approximately one month, with assay results
          available one month later. The funds for this drilling program will come
          from
          general working capital on hand. We hope that the results from this drilling
          will help us to better delineate the mineralization of the oxide zone and
          provide an ore reserve calculation. We do not intend to implement a feasibility
          study for the property in this phase of exploration. Six of the drill holes
          will
          be drilled to a depth of 200 meters to test the sulphide potential of the
          mineral system. The use of these deep holes will help us determine if there
          is
          an extension to the oxide mineralization in the underlying sulphides. Our
          onsite
          geologist will determine where the holes will be drilled based on our earlier
          exploration and mapping of the property. We have not determined any known
          reserves on this property to date.
 
 The
          trenching program will entail using a bulldozer to dig trenches. Our on-site
          geologist will direct the bulldozer operator as where to dig the trenches. ** T he
          geologist will base his decision on where to dig on the results of our
          previous
          exploration work. Once the trenches are dug, the geologist will take samples
          of
          rock from all levels of the walls of the trench as if it were rock from
          a drill
          core. The rock will be gathered up and marked from which part of the trench
          it
          came from. The ore is pulverized and shipped out for assays. The results
          from
          these assays are expected to be completed and mapped by May 2007, with
          the goal
          of further delineating the prospects of the property.
 
 Even
          though the rock is fractured, the objective of the drill program will be
          to
          provide us with accurate information to make an ore calculation of the
          grade of
          the ore and the size of the mineralized zones.
 
 One
          of
          the main purposes of this phase of exploration is to delineate the mineralized
          ore body and map the grade of the mineralization that will allow us to
          refine
          our plan to put the property into production. If the exploration program
          does
          not provide us with the results we deem necessary to continue exploration,
          then,
          on a recommendation from our senior geologist or VP of Exploration and
          managements’ concurrence on his findings, we will cease exploration on the
          property and any plans to put the property into production. If no further
          exploration is warranted, then we will discontinue any payments to the
          concession holders and allow our option to lapse. We will also then try
          to sell
          the mining equipment we have recently purchased. All of the
          money that we had invested in the exploration of the Cieneguita Property
          would
          be lost.
 
 3.  Cieneguita
          Mine Design.
 
 Budget:  We
          budgeted $50,000 from general working capital to be used to create the
          mine
          design for the Cieneguita property.
 
 Milestones:  Concurrently
          with the second phase of exploration, we will implement our plan to put
          the
          Cieneguita Property into production. The mine design will help determine
          where
          and how we will mine the Cieneguita Property. We plan to put the mine into
          production by the end of May 2007 if we are able to find available
          funding.
 
 Coinciding
          with phase 2 of our exploration program, we will commission a mine design
          to
          determine how to put the Cieneguita Property into production. At this time,
          we
          do not plan to implement a feasibility study for this property. The mine
          design
          will be commissioned to a third party contractor with expertise in heap
          leach
          mining. This contractor, an engineering firm, will review all of the data
          that
          we accumulate from Glamis Gold’s previous exploration and from the trenching and
          sampling we complete on the property. All of this information will be put
          on a
          map laying out the structure of the mineralized zone on our property to
          assist
          in mining the ore. The key purpose of this map is to help enable our on-site
          geologist to monitor grade control during mining. Additionally, from the
          information accumulated so far on the


*--28--*




Cieneguita
          Property, the mining engineer will design a heap leach mining operation
          best
          suited to the tonnage, grade of the ore and availability of land to build
          leaching pads.
  One
          of
          the key objectives at this stage of the mining operation will be grade
          control.
          The proper grade of ore shipped to the milling site is imperative to ensure
          a
          profitable operation. If the head grade is too low, we will not recover
          enough
          gold from the rock to maintain a profitable operation. Conversely, a head
          grade
          of ore that is too high will shorten the life of the mine.
 
 The
          milling of the ore at the mine site will also be contracted out to a third
          party. The following is a brief description of the mining process pursuant
          to
          our mine design. First, the ore is crushed by a crusher into a smaller
          size.
          Second, the rock is deposited on a conveyor belt and moved to the agglomorator.
          Third, the agglomorator mixes the rock with lime, and then the rock is
          moved to
          a stacker. A stacker is a moveable conveyor belt that oscillates back and
          forth,
          distributing the rock equally onto a heap leach pad. At that point, the
          rock is
          sprinkled with a cyanide mixture for approximately 30 days. The fluid from
          the
          percolation through the rock is then pumped through carbon filters. Waste
          rock
          is dumped into a ravine, per our permits, while the carbon filters are
          shipped
          to a third party for extraction of the precious metals. The waste rock
          is
          completely free of any harmful chemicals and is restored to the original
          ph it
          had prior to mining.
 
 At
          this
          time, we do not know the cost associated with the process of having the
          precious
          metals extracted and minted into ore bars. If our head grade is not accurate
          or
          the heap leach process is not effective, we may not extract enough gold
          from the
          carbon filters to pay for this complete operation and we would lose money
          from
          the mining operation. If we lost money on the mining and milling operation,
          we
          may not be able to stay in business as we would expect the cash flow from
          operations to cover, at the minimum, the mining and milling operation.
          Furthermore, we do not have any proven reserves on our property and the
          ability
          to find enough ore could severely hinder any mining operations.
 
 We
          will
          engage an independent third part consultant to review the work of the
          engineering firm to verify and agree with the results of the mine design.
          The
          independent third party engineers will work with the mining engineering
          firm to
          agree on a final design. The mine design will cost approximately $50,000,
          and
          the funds will come from our general working capital. The milling equipment
          and
          cost of building the plant will be approximately $2,200,000. We estimate
          that we
          will need approximately $1,100,000 for working capital during the first
          four
          months of operation of the mine. There can be no assurance given that if
          the
          property is put into production that, after four months of operation, we
          will
          have recovered any precious metals from the milling process. We will need
          to
          continue to fund working capital if the precious metals are not in the
          ore as
          predicted. We will need to raise additional capital to put the property
          into
          production and to fund at least the first four months of working capital.
          The
          funds would be raised through the sale of debt or equity. We have not identified
          any additional sources of capital at this time. Furthermore, once we have
          commenced production, we can give no assurance that we will be profitable
          or
          recover any gold.
 
 ***Guazapares
          Property***
 
 1.  Phase
          1
          Exploration.
 
 Budget:  Concurrently
          with the exploration of the Cieneguita Property, we have budgeted approximately
          $450,000 of our general working capital for exploration on our Guazapares
          Property until April 2007. These funds will come from our general working
          capital.


*--29--*




Milestones:  The
          goals
          of the first phase of exploration on the Guazapares Property are to collect
          rock
          sample and complete the mapping of the property. This phase will be completed
          by
          the end of February 2007.
 
 We
          believe that most of the mining concessions being explored in the Guazapares
          area are epithermal silver deposits similar to the Cieneguita Property.
          However,
          because we do not have the same amount of detailed information on Guazapares
          as
          we do on Cieneguita, the exploration program will cost more than the exploration
          program on Cieneguita.
 
 The
          goal
          for this phase is the completion of mapping on the property at a scale
          of
          1:5,000 with individual veins being mapped at a scale of 1:1,000. Rock
          samples
          will be taken from the property. The rock samples from this phase will
          be sent
          to Chemex ALS in Chihuahua for chemical analysis and assaying. The results
          from
          this first phase of the exploration program have the goal of determining
          whether
          subsequent exploration is warranted and if a drill program should be commenced.
          This phase 1 of work will include reviewing available data to create a
          structural mineralization framework. We will map the topography and sample
          the
          entire underground workings along the main level of the San Antonio mine.
          The
          distribution of the veins, lithology and alteration will be mapped. If
          management reviews the results of this phase and determines, based on a
          recommendation from our lead geologist on the property, to continue to
          phase 2
          of exploration, we will continue to phase 2. Otherwise, we will cease making
          payments on the options and abandon the property.
 
 2.  Phase
          2
          Exploration.
 
 Budget:  We
          have
          budgeted $100,000 of the total of $450,000 for Phase 2 of exploration.
          Of this,
          $50,000 is budgeted for a ground based geophysical exploration that will
          concentrate mainly on the area around the San Antonio mine and $50,000
          for
          specific sampling and trenching on the San Francisco property. These funds
          will
          come from general working capital of the company.
 
 Milestones:  The
          goals
          of phase 2 of exploration are to conduct more detailed soil and rock sampling,
          perform ground-based geophysical measurements, map the topography, and
          sample
          trenches in order to define the structural framework of the mineralized
          zone to
          facilitate a drilling program, if warranted. This phase will commence in
          February 2007 and is expected to be completed by the end of May
          2007.
 
 The
          second phase of the exploration program, using two geologists, will include
          more
          detailed soil and rock sampling, ground-based geophysics measurements and
          mapping on all of the concessions at Guazaparez. One of the objectives
          of this
          stage of exploration will be to conduct a ground based geophysical exploration
          that will concentrate mainly on the area around the San Antonio mine. Another
          target will be to map the topography and sampled the surface trenches in
          the San
          Francisco area.
 
 The
          purpose of this phase of exploration will be to define the structural mainframe
          of the mineralized zone to facilitate the placing of drill holes. Once
          this
          information is obtained from phase two of the exploration project, our
          senior
          geologist and our VP of Exploration will review all of the data collected
          and
          make a recommendation to management. Management, at that time, will review
          the
          exploration data collected and the recommendations and make a determination
          whether additional work is advisable. If the management determines that
          additional exploration is not warranted, then we will likely discontinue
          exploration and make no further property payments, abandoning the concessions. If
          we
          abandon the Guazapares Property, we will not have to make any further property
          payments as per our property purchase agreements. We will, however, lose
          all the
          funds we have expended on the property to date including property


*--30--*




payments
          made to date. If management determines that further exploration is warranted,
          we
          will conduct phase 3 of our exploration program.
 
 3.  Phase
          3
          Drill Program.
 
 Budget:  If
          a
          drill program is warranted and implemented, we estimate that the initial
          expenditure will be $250,000 (the balance of the $450,000 budgeted for
          the
          property). We will need to raise additional capital through the sale of
          equity
          or debt to fund a complete drilling program as only a small portion of
          the funds
          budgeted will be left in our general working capital to initiate the program.
 
 Milestones:  The
          goal
          of the third phase of exploration would be to gather information to determine
          if
          we should put the property into production.
 
 We
          do not
          have enough information at this time to determine any specifics on how
          the
          drilling phase of the exploration program would be implemented. We will
          be able
          to make this determination once we have all of the information back from
          the
          second phase of exploration. Management and our VP of Exploration will
          review
          the information from phase 2 and decide whether or not to continue exploration.
          If the decision is to continue, we will begin the third phase of exploration.
          In
          this phase, if sufficient funds can be generated to pay for the drilling,
          and
          assuming drill rigs are available in the area, our plan would be to commence
          this program in June 2007, and it would last approximately 60 days. The
          results
          of this drill program would take approximately 90 days to be assayed and
          interpreted. Once those result are known, we would consult with our lead
          exploration geologists and our new VP of Exploration to determine whether
          to
          abandon the Guazapares Property or continue with further drilling exploration.
 
 If
          management decides to continue with further drilling, we would need to
          raise
          additional funding through the sale of debt or equity because we do not
          have
          sufficient capital to continue an exploration program. Additional drilling
          would
          cost a significant amount of money, and there is no assurance that we would
          be
          able to raise such additional amounts of money. We have not identified
          any
          sources of funds to implement such a program. If we could not obtain additional
          financing, we could seek a joint venture partner if the results warranted
          it. We
          do not have any joint venture partners at this time and can give no assurance
          that we would be able to find one if the Guazapares Property warranted
          such a
          joint venture.
 
 The
          Guazapares Property is without known reserves. Our proposed programs are
          exploratory in nature.
  ***Encino
          Gordo***
 
 The
          Encino Gordo Property comprises four mining concessions that total 1,042
          hectares (approximately 2,575 acres). We have limited information available
          to
          us about this property from previous exploration that was done by other
          companies. The previous geochemical sampling that was done suggests a presence
          of mineralized structures. These structures are being investigated by
          geochemical sampling to determine if further exploration is warranted and
          to
          help refine the best exploration plan for the concessions.
 
 1.  Phase
          1
          Exploration.
 
 Budget:  We
          have
          planned for an exploration program, budgeted at approximately $200,000
          from
          general working capital through April 2007, on our Encino Gordo Property.
          Of
          this, $50,000 will be used for mapping and sampling, which we anticipate
          completing by February 2007. The balance of the funds


*--31--*




will
          be
          spent as directed by our VP Exploration once he has reviewed all of the
          initial
          material on the property. The funds will come from general working
          capital.
  Milestones:  The
          goals
          of the first phase of exploration are to complete mapping of the property
          and to
          take geochemical samples from the property. The purpose of this initial
          program
          is to get a better understanding of the geology of the property. We expect
          to
          complete this phase of the exploration program by the end of February 2007.
 
 We
          intend
          to map the property at a scale of 1:5,000 with individual veins being mapped
          at
          a scale of 1:1,000. Stream sediment samples will be collected from the
          various
          arroyos cutting the property. Samples of this rock will be analyzed by
          Chemex
          ALS for gold content plus 27 other mineral elements associated with the
          rock. ****** The
          purpose of the sampling will be to further define the ore grade and potential
          of
          the property. We would expect the results by the end of February 2007.
 
 Our
          goal
          is to have this exploration completed by the end of February 2007, and
          a
          geological report prepared by our senior geologist on the Encino Gordo
          Property
          should be available 60 days thereafter. Depending on the results of the
          report,
          as determined by management, we intend to either abandon the Encino Gordo
          Property, in which case no further payments would be made or would be due
          under
          our agreements to acquire these concessions, or to make additional expenditures
          to determine potential drill targets.
 
 2.  Phase
          2
          Drill Program.
 
 Budget:   If
          management decides to continue exploration by initiating a drill program,
          a
          budget will be prepared at that time, and the amount and source of the
          capital
          needed for additional expenditures will be determined. If a drill program
          of any
          size is recommended, we do not have sufficient capital on hand to complete
          such
          a program because it would most likely require the expenditure of significant
          amounts of money. We would need to raise additional capital through the
          sale of
          debt or equity. We can give no assurance that we would be able to raise
          such
          capital, as we have not identified any source of capital for such a program
          at
          this time. If we could not raise additional funds ,
          we
          would consider seeking a joint venture partner if the results warranted
          it. We
          do not have any joint venture partners at this time and can give no assurance
          that we would be able to find one if the Encino Gordo Property warranted
          such a
          joint venture.
 
 Milestones:  The
          second phase of exploration would be a drill program to gather more information.
          Such information would be used to determine if we should put the property
          into
          production. We do not know when this phase of exploration could be completed,
          as
          discussed above. We estimate that the program would take approximately
          60 days
          to complete, with results from the program being returned about 90 days
          after
          completion. These are estimates, as the number of drill targets will determine
          the length of the drill program. Once the results from
          the
          drill program are known, we would consult with our lead exploration geologists
          and our new VP of Exploration to determine whether to abandon the Encino
          Gordo
          Property or continue with further drilling exploration.
 
 Management
          and the VP of Exploration will review the information provided by the first
          phase of exploration and determine whether a drill program is recommended.
          If a
          drill program is recommended and we have received our permits that have
          been
          applied for in advance, we do not have sufficient information at this time
          to
          estimate what that program would entail. We need extensive information
          to
          determine the number of drill holes to drill, where they would be located
          and to
          what depth they would be drilled. This information will be provided by
          the first
          phase of exploration.


*--32--*




The
          Encino Gordo Property is without known reserves. Our proposed programs
          are
          exploratory in nature.
 
 Although
          our properties have been mined in the past, we are presently in the exploration
          stage and there is no assurance that a commercially viable mineral deposit
          exists in any of our properties. We do not have any proven or probable
          reserves
          on our properties.
 
 We
          have
          made a business decision to place a higher priority on the Cieneguita
          exploration program to define mineralized ore. However, we intend to proceed
          with exploration on all four properties simultaneously. If
          our
          exploration programs warrant drilling programs
          on the properties, we anticipate contracting two geologists and four assistants
          for supervising the drilling work and taking splits for the drilling
          samples.
 
 Once
          we
          receive results from these exploration programs, our management will assess
          whether to proceed to any further exploration phases. In making this
          determination, we will make an assessment as to whether the results are
          sufficiently positive to enable us to obtain the financing necessary to
          proceed.
          The decision will be based mainly on the recommendations of our senior
          geologist
          and VP of Exploration. Other factors that will influence the production
          decision
          will be the current price of gold bullion, availability of mining equipment
          and
          a mining feasibility study.


Results
        of Operations




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





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





**Revenues**





We
        did
        not earn revenues during 2006 or 2005 as we did not have commercial production
        of any of our properties. We
        do not
        anticipate earning revenues until such time as we have entered into commercial
        production of our mineral properties, if ever. We are presently in the
        exploration stage of our business. We can provide no assurance that we will
        discover commercially exploitable levels of mineral resources on our properties
        or, if such resources are discovered, that we will enter into commercial
        production of our mineral properties. Interest
        income is recorded under Other Income in the Statement of Operations in the
        financial statements.





**Operating
        Costs**





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





**Expenses**





Our
        expenses decreased to $3,506,000 for 2006 compared to $13,320,000 for 2005,
        representing a decrease of $9,814,000. In 2006, there were compensation
        expenses, stock based-compensation expenses and shares issued for mineral
        properties amounting to $90,000, $735,000, and $2,100,000 respectively and
        totaling $2,925,000. In 2005, there were compensation expenses, stock
        based- compensation
        expenses and shares




*--33--*




issued
          pursuant to a share exchange agreement amounting to $1,523,000, $87,000,
          and
          $10,965,000 respectively and totaling $12,575,000.
 
 Impairment
          of mineral property costs in 2006 decreased to $2,311,000 compared to
          $12,996,000 for 2005, representing a decrease of $10,685,000. The 2006
          amount
          includes a $2,100,000 charge with respect to 2,000,000 shares issued at
          market
          price of $1.05 in February 2006 and $211,000 in exploration expenditures.
          The
          2005 amount includes a charge of $10,965,000 for shares issued pursuant
          to a
          share exchange agreement, a compensation expense of $1,523,000 for finders’ fees
          related to the share exchange agreement, and $508,000 as advances for
          exploration expenditures. We anticipate that exploration expenditures will
          increase in fiscal 2007 as a result of exploration activities on our Mexican
          mineral properties.
 
 Stock-based
          compensation increased to $735,000 in 2006 from $87,000 in 2005. The 2006
          amount
          relates to warrants issued and stock options granted to management and
          key
          personnel for $487,000 and $248,000 respectively. The 2005 amount relates
          to the
          balance of stock options vested from originally granted on March 1, 2003.
 
 Compensation
          expense decreased to $90,000 in 2006 from $1,523,000 in 2005. The 2006
          amount
          charged to general and administrative relates to $90,000 in shares issued
          for
          services. The 2005 amount charged to impairment of mineral property costs
          relates stock options issued as finders’ fees pursuant to a share exchange
          agreement.
 
 General
          and administrative expenses increased to $459,000 in 2006 compared to $237,000
          in 2005, representing an increase of $222,000. Management fees increased to
          $203,000 in 2006 from $4,000 for 2005. The increase in 2006 was attributable
          to
          a new management team appointed in fiscal 2006 and $90,000 charged at fair
          value
          as shares for services. Accounting and legal fees increased to $107,000
          in 2006
          compared to $81,000 in 2005, representing an increase of $26,000. The increase
          in fees was primarily attributable to revising and preparing acquisition
          agreements with respect to the Mexican mineral properties.
 
 **Loss**
 
 Our
          net
          loss decreased to $4,426,000 for 2006 compared to $13,912,000 for 2005,
          representing a decrease of $9,486,000. This decrease in our loss was primarily
          attributable to the decrease in stock-based compensation. ***.*** The
          net
          losses in both 2006 and 2005 were comprised substantially of items not
          requiring
          an outlay of cash. In 2006, the non-cash components of stock-based compensation,
          impairment of mineral property costs and beneficial conversion features
          were
          $735,000, $2,100,000 and $952,000 respectively, for a total of $3,787,000
          compared to the net loss for the year of $4,426,000. In 2005, the non-cash
          components of stock-based compensation, impairment of mineral property
          costs and
          beneficial conversion features were $1,610,000, $10,965,000, and $500,000
          respectively for a total of $13,075,000, compared to the net loss for the
          year
          of $13,912,000. The primary reasons for the difference in items not requiring
          an
          outlay of cash were that in 2006 we refinanced and restructured our affairs,
          whereas in 2005, we acquired our interests in the Mexican properties and
          undertook a smaller financing. We anticipate that we will continue to incur
          a
          loss until such time as we can commence the development stage of our operations
          and achieve significant revenues from sales of gold recovered from our
          Mexican
          mineral properties, if ever. There is no assurance that we will commence
          the
          development stage of our operations at any our Mexican mineral properties
          or
          achieve revenues.
 Liquidity
      and Capital Resources





*--34--*




**Cash
      and Working Capital**





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 exploration stage.  As of February 28,
        2006, we had total assets of $539,000, total liabilities of $1,144,000, and
        a
        deficit of $18,338,000 accumulated during the exploration stage.





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





**Cash
      Used in Operating Activities**





Cash
        used
        in operating activities decreased to $639,000 for the fiscal year ended February
        28, 2006 compared to $721,000 for the fiscal year ended February 28, 2005.
        The
        cash used in operating activities came primarily from equity sales of our
        shares
        of common stock and convertible debt. It was primarily used for General and
        Administrative costs and for the exploration programs on the
        properties.





**Financing
      Activities**





Cash
        provided by financing activities increased to $1,089,000 for the fiscal year
        ended February 28, 2006 compared to $737,000 for the fiscal year ended February
        28, 2005. All cash provided by financing activities was provided by convertible
        debt, exercise of warrants, and share issuances. Cash provided by financing
        activities was used to fund our operating and investing
        activities.





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





**Convertible
      Debt**





The
        amount of our convertible debt outstanding at February 28, 2006 was $652,000,
        compared to $617,500 at February 28, 2005.





In
        2005,
        $587,500 of the $617,500 convertible debt was issued for cash proceeds of
        $500,000 and $87,500 was charged as interest. In
        fiscal
        2006, a further $87,500 was charged as interest and the face value of this
        convertible debt was $675,000. On
        August
        10, 2005, the Company and the financiers agreed to retire the $675,000
        convertible debt including all associated principal, terms, warrants and
        rights
        for the amount of




*--35--*




$500,000
      plus 8% interest. On September 21, 2005, the Company repaid in full the
      principal of $500,000 plus interest charges of $41,815. As a result of this
      payment, the $675,000 convertible debt was terminated and the associated
      warrants and additional investment rights were cancelled.





Another
        convertible debenture in the amount of $30,000 was issued on January 15,
        2004.
        The conversion of principal and accrued interest (8% per year) was at the
        rate
        of $1.00 per share of common stock. On December 21, 2005, the Company repaid
        the
        $30,000 convertible debenture plus accrued interest of
        $4,645.





The
          Company issued $300,000 in convertible debentures in December 2005 to three
          lenders with
          a
          maturity date of December 8, 2006, accrued interest at 7% per year, and
          convertible at
          the
          option of the holder into
          shares of common stock at $0.15 per share .
          On
          January 6, 2006, this debenture was converted and the Company issued 2,000,000
          shares of common stock. Interest payments due and owing on these debentures
          were
          waived by the investors.
 
 In
          January 2006, the Company issued convertible debentures, with principal
          and
          accrued interest at 7% per year, convertible into units at
          the
          option of the holder . Each
          unit
          consists of a warrant to purchase 25,000 of the Company’s shares of common stock
          at $1.00 per share and $25,000 of debt, which may be converted to shares
          of
          common stock at $0.50 per share and is
          exercisable until April 30, 2008.  As at February 28, 2006, the Company had
          issued convertible debentures in the amount of $652,000.  In
          addition, the warrants are redeemable by the Company, at $.01 per share,
          in the
          event the Company’s Common Stock closes with a bid price, on average, over $3.00
          per share for a consecutive 20-day period and settled on a physical
          basis.
 
 In
          order
          to get assistance with financing activities, on January 30, 2006, the Company
          entered into a Consulting Agreement with G.M. Capital Partners, Ltd., a
          British
          Virgin Islands company (“GM Capital”). Under the agreement, GM Capital will
          provide the Company with a variety of services including financial public
          relations, strategic planning, acquisition consulting and assistance in
          securing
          equity or debt financing. Specifically, GM Capital agreed to provide financial
          public relations counsel services including (i) being a liaison between
          the
          Company and its stockholders; (ii) advising the Company with respect to
          existing
          and potential market makers, broker-dealers, underwriters and investors
          as well
          as being the liaison for the Company with respect to communications and
          information (e.g., interviews, press releases, stockholder reports, etc.)
          as
          well as planning, designing, developing, organizing, writing and distribution
          such communications and information; (iii) assisting the Company in establishing
          an investor relations program and advising the Company with respect to
          stockholder meetings, interviews of Company officers by the financial media,
          and
          interviews of Company officers by analysts, market markers, broker-dealers
          and
          other members of the financial community; and (iv) assisting in making
          the
          Company, its management, products and services, and financial situation
          and
          prospects, known to the financial press and publications, broker-dealers,
          mutual
          funds, institutional investors, market makers, analysts, investment advisors
          and
          other members of the financial community. GM Capital also agreed to provide
          strategic planning services, which included (i) consulting with the Company
          as
          to, the management, marketing, consulting, strategic planning, corporate
          organization and structure, financial matters in connection with the operation
          of the business of the Company, expansion of projects; (ii) reviewing and
          advising the Company regarding its overall progress, needs and condition;
          (iii)
          assisting the Company in the monitoring of services provided by the Company’s
          advertising firm, public relations firm and other non-legal professionals
          to be
          employed by the Company; and (iv) advising the Company on the continued
          development of an investor relations program and the stimulation of interest
          in
          the Company by institutional investors and other members of the financial
          community.


*--36--*




Under
        the
        terms of the agreement, the Company will pay GM Capital the following: (i)
        a
        monthly fee of $10,000, (ii) 10% success fee for any financing facilitated
        by GM
        Capital outside of the United States, and (iii) the issuance of a total of
        5,000,000 warrants, each of which entitles the holder to purchase one share
        of
        the Company’s common stock.. The warrants are exercisable at the right of the
        holder, have no redemption features, and are settled on a physical basis.
        The
        warrants include 1,000,000 Series A Warrants exercisable at $0.50 per share,
        1,000,000 Series B Warrants exercisable at $0.75 per share, 1,000,000 Series
        C
        Warrants exercisable at $1.00 per share, 1,000,000 Series D Warrants exercisable
        at $1.25 per share, and 1,000,000 Series E Warrants exercisable at $1.50
        per
        share. The Series A Warrants will be fully vested upon issuance. They will
        be
        exercisable at any time following their issuance but will expire on June
        30,
        2007 if not fully exercised on or before that date. The remaining series
        of
        Warrants will each vest and become exercisable only at the time that the
        immediately preceding series has been fully exercised. Therefore, the Series
        B
        Warrants will vest only upon the timely exercise of all Series A Warrants,
        and
        the same restriction will apply to each of the succeeding series of warrants
        (i.e. the Series C, D and E Warrants). Unless terminated earlier as a result
        of
        failure to vest, the Series B and Series C Warrants will each expire on December
        31, 2007, and the Series D and Series E Warrants will each expire on December
        31, 2008. However, the Agreement also stipulates that G.M. Capital cannot
        exercise any warrants if, after the exercise, G.M. Capital would own 4.99%
        or
        more of the issued and outstanding common stock of Mexoro.
        G.M. Capital is an accredited investor. These warrants were issued pursuant
        an
        exemption from registration under Regulation S of the Securities Act of 1933,
        as
        amended. The fair value of the 5,000,000 warrants was determined using the
        Black-Scholes option pricing model using a ten-year expected life of the
        option,
        a volatility factor of 152%, a risk-free rate of 5% and no assumed dividend
        rate
        and totals $3,898,000 of s tock-based
        compensation expense which is amortized over the twenty four month term of
        the
        GM Capital contract at $487,250
        every quarter until November 30, 2007.





**Going
      Concern**





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





The
          Company has a history of operating losses and will need to raise additional
          capital to fund its planned operations. As at February 28, 2006, the Company
          had
          working capital of $46,000 (2005 - $635,000 working capital deficiency)
          and an
          accumulated deficit during the exploration stage of $18,338,000. These
          conditions raise substantial doubt about the Company’s ability to continue as a
          going concern.
 
 There
          is
          no assurance that our operations will be profitable. The Company has conducted
          private placements of convertible debt and common stock, which have generated
          funds to satisfy all of the initial cash requirements of its planned Mexican
          mining ventures.


**CRITICAL
      ACCOUNTING POLICIES**





*Critical
        Accounting Estimates*





*--37--*





The
          preparation of the Company’s financial statements requires management to make
          various judgments with respect to estimates and assumptions. On an ongoing
          basis, management regularly reevaluates its estimates and assumptions;
          however
          actual amounts could differ from those based on such estimates and assumptions.
 
 The
          Company has made certain accounting estimates that have a material bearing
          on
          the financial statements. The principal such estimates are:
 
 Stock-based
          compensation
 
 Stock-based
          compensation is a very significant expense for the Company but is based
          on
          estimates that have a subjective element. The Company employs the Black-Scholes
          option pricing model which in turn is based on (among other things) assumptions
          regarding rates of return and stock volatility. To estimate the risk-free
          rate
          of return, the Company uses the US Treasury bill rate for instruments with
          a
          similar term to the life of the option being granted.
 
 The
          Company has estimated the expected volatility of its stock at 152%. The
          following table shows the effect of a change in the expected volatility
          of
          10%:


**Hypothetical
                  10% Decrease in Expected Volatility**
              **As
                  Reported**
              **Hypothetical
                  10% Increase in Volatility**Expected
                  volatility
              136.8%
              152.0%
              167.2%Stock-based
                  compensation expense
              $ 784,436
              $
                  825,250
              $ 
                  866,405Loss
                  for the year
              $
                  4,385,071
              $(4,425,885)
              $(4,467,040)Loss
                  per share
              $(2.01)
              $ (2.03)
              $ 
                  (2.05)




Given
          the
          nature of the estimated volatility of a stock, it is not practical to provide
          a
          meaningful assessment of historical accuracy of the estimated volatility
          used.
          It is very likely that the expected volatility will change in future periods,
          and the changes could be material.
 
 Income
          Tax Valuation Allowance
 
 The
          Company has a potential $1,534,000 deferred income tax asset based on the
          difference in timing of certain deductions for income tax and accounting
          purposes. The ability of the Company to ultimately derive a benefit from
          the
          deferred tax asset depends on the existence of sufficient taxable income
          of the
          appropriate character within the carryforward period available under the
          tax
          law.


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




*--38--*








**MEXORO
          MINERALS LTD.**
 **(Formerly
          Sunburst Acquisition IV, Inc.)**
 **(An
          Exploration Stage Company)**
 
  Restated
          Consolidated Financial Statements
   February
          28, 2006
  **(U.S.
          Dollars)**





*--39--*


***Pannell
      Kerr Forster***




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








*REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM*





**TO
          THE SHAREHOLDERS OF MEXORO MINERALS LTD.**
 **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**


We
          have
          audited the accompanying consolidated balance sheets of Mexoro Minerals
          Ltd.
          (formerly Sunburst Acquisitions IV, Inc.) (An Exploration Stage Company)
          as at
          February 28, 2006 and 2005 and the consolidated statements of stockholders’
deficiency, operations and retained earnings (deficit), and cash flows
          for the
          years ended February 28, 2006 and 2005 and the period from inception of
          exploration stage (March 1, 2004) to February 28, 2006. These
          financial statements are the responsibility of the Company’s management. Our
          responsibility is to express an opinion on these financial statements based
          on
          our audits. The related statements of stockholders’ deficiency, operations and
          retained earnings (deficit), and cash flows from inception of the development
          stage on August 27, 1997 to February 29, 2004 were audited by other
          auditors whose reports dated May 24, 2004 and May 27, 2003 expressed
          unqualified opinions, with an explanatory paragraph discussing the Company’s
          ability to continue as a going-concern. Our opinion on the stockholders’
deficiency, statements of operations and retained earnings (deficit), and
          cash
          flows from inception of the development stage to February 29, 2004, is
          solely based on the reports of other auditors.
 
 We
          conducted our audits in accordance with standards of the Public Company
          Accounting Oversight Board (United States of America). Those standards
          require
          that we plan and perform an audit to obtain reasonable assurance whether
          the
          financial statements are free of material misstatement. An audit includes
          examining, on a test basis, evidence supporting the amounts and disclosures
          in
          the financial statements. An audit also includes assessing the accounting
          principles used and significant estimates made by management, as well as
          evaluating the overall financial statement presentation. We believe that
          our
          audits provide a reasonable basis for our opinion.
 
 In
          our
          opinion, the consolidated financial statements referred to above present
          fairly,
          in all material respects, the financial position of the Company as at February
          28, 2006 and 2005 and the results of its operations and its cash flows
          for the
          periods indicated above in conformity with accounting principles generally
          accepted in the United States of America.
 
 The
          accompanying financial statements have been prepared assuming that the
          Company
          will continue as a going-concern. As discussed in note 3, the Company has
          sustained operating losses since its inception and has deficits in working
          capital and equity, which raises substantial doubt about its ability to
          continue
          as a going-concern. The financial statements do not include any adjustments
          related to the recoverability and classification of asset carrying amounts
          or
          the amounts and classification of liabilities that might result should
          the
          Company be unable to continue as a going-concern. Management’s plans in regard
          to these matters, which include a private placement of securities, are
          also
          described in note 3.
 
 As
          discussed in note 2, the accompanying consolidated financial statements
          of the
          Company as at February 28, 2006 and 2005 and the consolidated statements of
          stockholders’ deficiency, operations and retained earnings (deficit), and cash
          flows for the years ended February 28, 2006 and 2005 and for the period
          from
          inception of exploration stage (March 1, 2004) to February 28, 2006
          have been restated.
 
 */s/
          Pannell Kerr Forster*
 
 Chartered
          Accountants
 (registered
          with the PCAOB as “Smythe Ratcliffe”)
 
 Vancouver,
          Canada
 May
          20,
          2006, except for notes 2(a), 2(b) 2(c) and 2(d) which are as of
 June
          28,
          2006, September 20, 2006, November 23, 2006 and February 28, 2007
          respectively


*--40--*


**MEXORO
          MINERALS LTD.**
 **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**
  *Consolidated
          Balance Sheets*
 **(U.S.
          Dollars)**
 **Restated
          - Note 2**


**February
                    28,**
                  2006
              
              **February
                    28,**2005**Assets****Current**Cash
                  and cash equivalents
              $
              479,530
              
              
              
              $
              35,122Accounts
                  receivable
              
              10,069
              
              
              
              
              -Prepaid
                  expenses
              
              48,269
              
              
              
              
              8,113537,868
              
              
              
              
              43,235**Equipment**(note
                  5)
              
              880
              
              
              
              
              -**Total
                  Assets**
              $
              538,748
              
              
              
              $
              43,235**Liabilities****Current**Accounts
                  payable and accrued liabilities
              $
              79,124
              
              
              
              $
              31,948Promissory
                  notes (note 7)
              
              412,800
              
              
              
              
              28,500Current
                  portion of convertible debentures (note 8)
              
              -
              
              
              
              
              617,500491,924
              
              
              
              
              677,948**Convertible
                  debentures (note 8)**
              
              652,000
              
              
              
              
              -**Total
                  liabilities**
              
              1,143,924
              
              
              
              
              677,948**Stockholders’
                  deficiency****Capital
                  stock**Preferred
                  stockAuthorized:
                  20,000,000 shares without par value (note 9)Issued:
                  nil
              
              -
              
              
              
              
              -Common
                  stockAuthorized:
                  200,000,000 shares without par valueIssued:
                  12,799,902 (2005 - 1,737,902) (note 10)
              
              15,573,977
              
              
              
              
              12,970,977Additional
                  paid-in capital
              
              3,991,596
              
              
              
              
              2,304,346Stock
                  subscriptions
              
              170,000
              
              
              
              
              -Accumulated
                  deficit from prior operations
              
              (2,003,427
              )
              
              
              
              (2,003,427
              )Accumulated
                  deficit during the exploration stage
              
              (18,338,373
              )
              
              
              
              (13,912,48
              )Other
                  comprehensive income
              
              1,051
              
              
              
              
              5,879**Total
                  stockholders’ deficiency**
              
              (605,176
              )
              
              
              
              (634,713
              )**Total
                  liabilities and stockholders’ deficiency**
              $
              538,748
              
              
              
              $
              43,235





Going-concern
          (note
          4)
 Commitments
          (note
          6)
 Contingent
          liability (note 15)
 Subsequent
          events
          (note 16)
 The
          Accompanying
          Notes are an Integral Part of These Financial
          Statements.


*--41--*


**MEXORO
              MINERALS LTD.**
 **(Formerly
              Sunburst Acquisitions IV, Inc.)**
 **(An
              Exploration Stage Company)**
  Consolidated
            Statements of Stockholders’ Deficiency
 Period
            from Inception August 27, 1997 to February 28, 2006
 **(U.S.
            Dollars)**
 **Restated
            - Note 2**


Number
                  of
                shares
              
              
              Amount
              
              
              Additional
                paid-in
                  capital
              
              
              Stock
                subscriptions
              
              
              Deficit
                accumulated
                from
                  prior
                operations
              
              
              Deficit
                accumulated
                during
                  the
                exploration
                stage
              
              
              Other
                comprehensive
                income
                  (loss
              )
              
              Total
                stockholders’
                deficiencyBalance
                  from prior operations,March
                  1, 2004
              709,168
              
              $
              1,701,843
              
              $
              194,391
              
              $
              67,025
              
              $
              (2,003,427
              )
              $
              -
              
              $
              8,929
              
              $
              (31,239
              )Common
                  stock issued in share exchange
              860,000
              
              
              10,965,000
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              10,965,000Options
                  issued as finders’ fees
              -
              
              
              -
              
              
              1,523,000
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              1,523,000Common
                  stock issued for cash
              113,222
              
              
              269,134
              
              
              -
              
              
              (67,025
              )
              
              -
              
              
              -
              
              
              -
              
              
              202,109Options
                  exercised
              50,000
              
              
              35,000
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              35,000Options
                  issued
              -
              
              
              -
              
              
              86,955
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              86,955Warrants
                  exercised
              5,512
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -Beneficial
                  conversion feature
              -
              
              
              -
              
              
              500,000
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              500,000Foreign
                  exchange translation adjustment
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (3,050
              )
              
              (3,050
              )Net
                  loss for year
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (13,912,488
              )
              
              -
              
              
              (13,912,488
              )Balance,
                  February 28, 2005
              1,737,902
              
              $
              12,970,977
              
              $
              2,304,346
              
              $
              -
              
              $
              (2,003,427
              )
              $
              (13,912,488
              )
              $
              5,879
              
              $
              (634,713
              )





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


*--42--*




**MEXORO
          MINERALS LTD.**
 **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**
  Consolidated
          Statements of Stockholders’ Deficiency (Continued)
 **Period
          from Inception August 27, 1997 to February 28, 2006**
 **(U.S.
          Dollars)**
 **Restated
          - Note 2**


Number
                  of
                shares
              
              
              Amount
              
              
              Additional
                paid-in
                  capital
              
              
              Stock
                subscriptions
              
              
              Deficit
                accumulated
                from
                  prior
                operations
              
              
              Deficit
                accumulated
                during
                  the
                exploration
                stage
              
              
              Other
                comprehensive
                income
                  (loss
              )
              
              Total
                stockholders’
                deficiencyBalance,
                  February 28, 2005
              1,737,902
              
              $
              12,970,977
              
              $
              2,304,346
              
              $
              -
              
              $
              (2,003,427
              )
              $
              (13,912,488
              )
              $
              5,879
              
              $
              (634,713
              )Common
                  stock issued for consultingservices
              30,000
              
              
              90,000
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              90,000Options
                  exercised
              32,000
              
              
              43,000
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              43,000Common
                  stock issued on conversion ofdebenture
              2,000,000
              
              
              300,000
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              300,000Common
                  stock issued in propertyacquisition
              2,000,000
              
              
              2,100,000
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              2,100,000Common
                  stock issued for cash
              7,000,000
              
              
              70,000
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              70,000Options
                  issued
              -
              
              
              -
              
              
              248,000
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              248,000Warrants
                  issued
              -
              
              
              -
              
              
              487,250
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              487,250Beneficial
                  conversion feature
              -
              
              
              -
              
              
              952,000
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              952,000Stock
                  subscriptions
              -
              
              
              -
              
              
              -
              
              
              170,000
              
              
              -
              
              
              -
              
              
              -
              
              
              170,000Foreign
                  exchange translation adjustment
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (4,828
              )
              
              (4,828
              )Net
                  loss for year
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (4,425,885
              )
              
              -
              
              
              (4,425,885
              )Balance,
                  February 28, 2006
              12,799,902
              
              $
              15,573,977
              
              $
              3,991,596
              
              $
              170,000
              
              $
              (2,003,427
              )
              $
              (18,338,373
              )
              $
              1,051
              
              $
              (605,176
              )




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





*--43--*
 
  **MEXORO
          MINERALS LTD.**
 **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**
  Consolidated
          Statements of Operations and Accumulated Deficit
 **(U.S.
          Dollars)**
 **Restated
          - Note 2**


**Year
                  Ended****February
                  28,**
                **2006**
              
              
              **February
                    28,**2005
              
              
              **Period
                            from**Inception ofExploration Stage(March
                      1, 2004)to February 28,2006**Expenses**General
                  and administrative
              $
              459,337
              
              $
              237,410
              
              $
              696,747Stock-based
                  compensation (note 11)
              
              735,250
              
              
              86,955
              
              
              822,205Impairment
                  of mineral property costs
              
              2,310,922
              
              
              12,995,500
              
              
              15,306,422**Operating
                  loss**
              
              (3,505,509
              )
              
              (13,319,865
              )
              
              (16,825,374
              )**Other
                  income (expenses)**Interest
              
              (1,053,561
              )
              
              (592,623
              )
              
              (1,646,184
              )Gain
                  on settlement of debt (note 8)
              
              133,185
              
              
              -
              
              
              133,185Loss
                  from operations
              
              (4,425,885
              )
              
              (13,912,488
              )
              
              (18,338,373
              )**Net
                  loss**
              
              (4,425,885
              )
              
              (13,912,488
              )
              
              (18,338,373
              )**Accumulated
                  deficit, beginning**
              
              (13,912,488
              )
              
              -
              
              
              -**Accumulated
                  deficit, ending**
              $
              (18,338,373
              )
              $
              (13,912,488
              )
              $
              (18,338,373
              )**Other
                  comprehensive income**Foreign
                  exchange gain on translation
              
              1,051
              
              
              5,879
              
              
              6,930**Total
                  comprehensive loss**
              $
              (4,424,834
              )
              $
              (13,906,609
              )
              $
              (18,331,443
              )**Total
                  loss per share**-
                  basic and diluted
              $
              (2.03
              )
              $
              (9.40
              )**Weighted
                  average number of shares of****Common
                  stock**-
                  basic and diluted
              
              2,184,686
              
              
              1,479,687




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





*--44--*




**MEXORO
          MINERALS LTD.**
 **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**
  Consolidated
          Statements of Cash Flows
 **(U.S.
          Dollars)**
 **Restated
          - Note 2**


Year
                  Ended**February
                    28,**2006
              
              
              **February
                    28,**2005
              
              
              **Period
                              from**Inception ofExploration Stage(March
                        1, 2004)to February 28,2006**Operating
                  activities**Net
                  loss
              $
              (4,425,885
              )
              $
              (13,912,488
              )
              $
              (18,338,373
              )Adjustments
                  to reconcile net income (loss) tonet
                  cash flowsWrite-off
                  of note receivable
              
              -
              
              
              57,500
              
              
              57,500Impairment
                  of mineral property costs for stock
              
              2,100,000
              
              
              10,965,000
              
              
              13,065,000Discount
                  on convertible debenture
              
              87,500
              
              
              87,500
              
              
              175,000Non-cash
                  component of gain on settlement of debt
              
              (175,000
              )
              
              -
              
              
              (175,000
              )Stock-based
                  compensation
              
              825,250
              
              
              1,609,955
              
              
              2,435,205Beneficial
                  conversion feature
              
              952,000
              
              
              500,000
              
              
              1,452,000Prepaid
                  expense
              
              (40,156
              )
              
              (1,633
              )
              
              (41,789
              )Accounts
                  receivable
              
              (10,069
              )
              
              8,206
              
              
              (1,863
              )Customer
                  deposits
              
              -
              
              
              (44,809
              )
              
              (44,809
              )Accounts
                  payable and accrued liabilities
              
              47,176
              
              
              9,755
              
              
              56,931**Cash
                  used in operating activities**
              
              (639,184
              )
              
              (721,014
              )
              
              (1,360,198
              )**Investing
                  activity**Purchase
                  of property and equipment
              
              (880
              )
              
              -
              
              
              (880
              )**Cash
                  used in investing activity**
              
              (880
              )
              
              -
              
              
              (880
              )**Financing
                  activities**Proceeds
                  from notes payable
              
              562,800
              
              
              -
              
              
              562,800Proceeds
                  from convertible debentures
              
              952,000
              
              
              500,000
              
              
              1,452,000Proceeds
                  from exercise of options
              
              43,000
              
              
              35,000
              
              
              78,000Repayment
                  of notes payable
              
              (178,500
              )
              
              -
              
              
              (178,500
              )Repayment
                  of convertible debentures
              
              (530,000
              )
              
              -
              
              
              (530,000
              )Stock
                  subscriptions
              
              170,000
              
              
              -
              
              
              170,000Issuance
                  of common stock
              
              70,000
              
              
              202,109
              
              
              272,109**Cash
                  provided by financing activities**
              
              1,089,300
              
              
              737,109
              
              
              1,826,409**Inflow
                  of cash and cash equivalents**
              
              449,236
              
              
              16,095
              
              
              465,331**Effect
                  of foreign currency translation on cash**
              
              (4,828
              )
              
              (3,050
              )
              
              (7,878
              )**Cash
                  and cash equivalents, beginning**
              
              35,122
              
              
              22,077
              
              
              22,077**Cash
                  and cash equivalents, ending**
              $
              479,530
              
              $
              35,122
              
              $
              479,530Supplemental
                  cash flow informationInterest
                  paid
              $
              101,561
              
              $
              5,123
              
              $
              106,684Common
                  stock issued on conversion of debt
              
              300,000
              
              
              -
              
              
              300,000Income
                  taxes paid
              
              -
              
              
              -
              
              
              -Shares
                  issued for services
              
              90,000
              
              
              -
              
              
              90,000




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


*--45--*


**MEXORO
          MINERALS LTD.**
 **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**
 Notes
          to Consolidated Financial Statements
 Years
          Ended February 28, 2006 and 2005
 **(U.S.
          Dollars)**
 **Restated
          - Note 2**


**1.**
                **BASIS
                    OF PRESENTATION**


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





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





On
        May
        25, 2004, the Company completed a share exchange transaction with Sierra
        Minerals and Mining, Inc. (“Sierra Minerals”), a Nevada corporation, which
        caused Sierra Minerals to become a wholly-owned subsidiary.  Sierra
        Minerals held certain rights to properties in Mexico that the Company now
        owns
        or has an option to acquire.  Through Sierra Minerals, the Company entered
        into a joint venture agreement with Minera Rio Tinto, S.A. De C.V. (“MRT”), a
        company duly incorporated pursuant to the laws of the United Mexican States,
        which is controlled by an officer of the Company. In August 2005, the Company
        cancelled the joint venture agreement in order to pursue directly the mineral
        exploration opportunities through a wholly-owned Mexican subsidiary, Sunburst
        Mining de Mexico S.A. de C.V. (“Sunburst de Mexico”).  On August 25, 2005,
        Sunburst de Mexico, Mexoro and MRT entered into agreements providing Sunburst
        de
        Mexico the right to explore and exploit certain properties in Mexico. In
        December 2005, the Company and Sunburst de Mexico entered into a new agreement
        with MRT (the “New Agreement”) (note 6). On January 20, 2006, Sierra Minerals
        was dissolved.




**2.**
                **RESTATEMENTS**


(a)
 
 Management
          has determined that, in the year ended February 28, 2005, previous management
          used a nominal value to record the issuance of 860,000 shares of common
          stock
          (43,000,000 pre-split) pursuant to a share exchange agreement, and 120,000
          options (6,000,000 pre-split) issued as finders fees with respect to the
          share
          exchange agreement. Current management believes that a fair value should
          have
          been used and has restated each of these amounts. Management has also determined
          that in the year ending February 28, 2005, the Company should have recorded
          a
          beneficial conversion feature on convertible debentures that included conversion
          to shares of common stock, warrants and additional investment rights. Management
          has also reclassified stock-based compensation expense from general and
          administrative to stock-based compensation.
 In
          the
          year ending February 28, 2006, management has corrected a calculation error
          in
          the recording of a beneficial conversion feature on warrants issued with
          the
          convertible debentures. Management has also reclassified accrued interest
          from
          promissory notes to accounts payable and accrued interest.
 
 Management
          has accordingly restated the Company’s financial statements as at February 28,
          2006 and 2005 and for the years ended February 28, 2006 and
          2005.




*--46--*




**MEXORO
          MINERALS LTD.**
 **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**
 **Notes
          to Consolidated Financial Statements**
 **Years
          Ended February 28, 2006 and 2005**
 **(U.S.
          Dollars)**
 **Restated
          - Note 2**


**2.**  **RESTATEMENTS
        (Continued)**







The
        effect of these adjustments on the Company’s consolidated financial condition is
        as follows:




February
                  28, 2006
              February
                  28, 2005Restated
              Originally
                  Reported
              Restated
              Originally
                  ReportedAccounts
                  payable and accrued liabilities
              $
                  79,124
              $
                  71,865
              $
                  31,948
              $
                  31,948Promissory
                  notes
              412,800
              420,059
              28,500
              28,500Current
                  portion of convertible debentures
              -
              -
              617,500
              705,000Total
                  liabilities
              1,143,924
              1,143,924
              677,948
              765,448Common
                  stock
              15,583,977
              5,048,977
              12,970,977
              2,435,977Additional
                  paid-in capital
              16,082,346
              13,990,646
              2,304,346
              457,146Accumulated
                  deficit
              (30,439,123)
              (17,812,423)
              (13,912,488)
              (1,617,788)Total
                  stockholders’ deficiency
              (605,176)
              (605,176)
              (634,713)
              (722,213)





The
        effect of these adjustments on the Company’s consolidated results of operations
        is as follows:




Period
                  ended
              February
                  28, 2006
              February
                  28, 2005Restated
              Originally
                  Reported
              Restated
              Originally
                  ReportedGeneral
                  and administrative
              $
                  9,149,337
              $
                  9,149,337
              $
                  237,410
              $
                  324,365Stock-based
                  compensation
              4,146,000
              4,146,000
              86,955
              -Impairment
                  of mineral property costs
              2,310,922
              2,310,922
              12,995,500
              1,113,300Interest
                  expense
              (1,053,561)
              (721,561)
              (592,623)
              (180,123)Net
                  loss for the period
              (16,526,635)
              (16,194,635)
              (13,912,488)
              (1,617,788)Loss
                  per share
              $
                  (7.56)
              $
                  (7.41)
              $
                  (9.40)
              $
                  (1.09)







(b)
  After
          further review, management has determined that, in the year ended February
          28,
          2006, compensation expense recorded in the amount of $8,680,000 relating
          to the
          issuance of 7 million shares of common stock was incorrect. Accordingly,
          these
          shares were issued as consideration for receiving cash proceeds of $70,000.


*--47--*


**MEXORO
          MINERALS LTD.**
 **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**
 **Notes
          to Consolidated Financial Statements**
 **Years
          Ended February 28, 2006 and 2005**
 **(U.S.
          Dollars)**
 **Restated
          - Note 2**


**2.**  **RESTATEMENTS
        (Continued)**





Management
          has accordingly restated the Company’s financial statements as at February 28,
          2006 and for the year ended February 28, 2006.
 
 The
          effect of this adjustment on the Company’s consolidated financial condition is
          as follows :


February
                  28, 2006Restated
              Restated
                  from 2(a)Additional
                  paid-in capital
              $
                  7,402,346
              $
                  16,082,346Accumulated
                  deficit
              (21,759,123)
              (30,439,123)





The
        effect of this adjustment on the Company’s consolidated results of operations is
        as follows:







Period
                  ended
              February
                  28, 2006Restated
              Restated
                  from 2(a)General
                  and administrative
              $
                  469,337
              $
                  9,149,337Net
                  loss for the period
              (7,846,635)
              (16,526,635)Loss
                  per share
              $
                  (3.59)
              $
                  (7.56)







(c)
  After
          further review, management has determined that, in the year ending February
          28,
          2006, shares issued for services and recorded as compensation expense was
          overstated by $10,000. Accordingly, this amount originally recorded as
          a
          compensation expense totalling $100,000 has been corrected and is now recorded
          as $90,000.
 
 The
          effect of this adjustment on the Company’s consolidated financial condition is
          as follows :




February
                  28, 2006Restated
              Restated
                  from 2(b)Common
                  stock
              $15,573,977
              $15,583,977Accumulated
                  deficit
              (21,749,123)
              (21,759,123)





The
        effect of this adjustment on the Company’s consolidated results of operations is
        as follows:





Period
                  ended
              February
                  28, 2006Restated
              Restated
                  from 2(b)General
                  and administrative
              459,337
              469,337Net
                  loss for the period
              (7,836,635)
              (7,846,635)Loss
                  per share
              $
                  (3.59)
              $
                  (3.59)




*--48--*




**MEXORO
          MINERALS LTD.**
 **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**
 **Notes
          to Consolidated Financial Statements**
 **Years
          Ended February 28, 2006 and 2005**
 **(U.S.
          Dollars)**
 **Restated
          - Note 2**


**2.**  **RESTATEMENTS
        (continued)**





In
          addition, in the year ending February 28, 2006, management revised
          the disclosure in the consolidated statement of cash flows respecting the
          non-cash component of the gain on settlement of debt.
 
 The
          effect of this adjustment on the Company’s consolidated statement of cash flows
          is as follows:


Period
                  ended
              February
                  28, 2006Restated
              Originally
                  Reported**Operating
                  activities**Non-cash
                  component of gain on settlement of debt
              $
                  (175,000)
              $
                  -**Financing
                  activities**Repayment
                  of convertible debenture
              $
                  530,000
              $
                  705,000





(d)
 After
          further review, management has determined that, in the year ended February
          28,
          2006, shares issued for services and recorded as compensation expense was
          overstated by $3,410,750. A compensation expense totalling $3,898,000 should
          be
          amortized over the term of the contract. Accordingly, this amount has been
          corrected and is now recorded as $487,250 per quarter.
 
 The
          effect of this adjustment on the Company’s consolidated financial condition is
          as follows :


February
                  28, 2006Restated
              Restated
                  from 2(c)Additional
                  paid-in capital
              $
                  3,991,596
              $
                  7,402,346Accumulated
                  deficit
              (18,338,373)
              (21,749,123)





The
        effect of this adjustment on the Company’s consolidated results of operations is
        as follows:





Period
                  ended
              February
                  28, 2006Restated
              Restated
                  from 2(c)Stock-based
                  compensation
              $
                  735,250
              $
                  4,146,000Net
                  loss for the period
              (4,425,885)
              (7,836,635)Loss
                  per share
              $
                  (2.03)
              $
                  (3.59)





*--49--*


**MEXORO
              MINERALS LTD.**
 **(Formerly
              Sunburst Acquisitions IV, Inc.)**
 **(An
              Exploration Stage Company)**
 **Notes
              to Consolidated Financial Statements**
 **Years
              Ended February 28, 2006 and 2005**
 **(U.S.
              Dollars)**
 **Restated
              - Note 2** 
 **3.**
                        **SIGNIFICANT
                            ACCOUNTING POLICIES**


(a)
              Principles
                  of consolidation




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




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


*--50--*


**MEXORO
          MINERALS LTD.**
 **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**
 **Notes
          to Consolidated Financial Statements**
 **Years
          Ended February 28, 2006 and 2005**
 **(U.S.
          Dollars)**
 **Restated
          - Note 2**


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





(b)  Financial
          instruments (continued)
 
 (ii)
                Interest
                    rate risk
 
 The
          Company is not exposed to significant interest rate risk due to the short-term
          maturity of its monetary current assets and current liabilities. The convertible
          debentures are not exposed to interest rate risk because the interest rate
          is
          fixed to maturity.
 
 (iii)
                Credit
                    risk
 
 The
          Company's financial assets that are exposed to credit risk consist primarily
          of
          cash that is placed with major financial institutions.
 
 (iv)
                Translation
                    risk
 
 The
          Company translates the results of non-US operations into US currency using
          rates
          approximating the average exchange rate for the year. The exchange rate
          may vary
          from time to time. This risk is considered moderate, as the Company’s mining
          project expenses are recorded in Mexican pesos and converted to US
          currency.
 
 (c)
                Equipment
 
 Equipment
          is recorded at cost. Depreciation is
          provided on a declining-balance basis at 30%.
 
 (d)
                Cash
                    and cash equivalents
 
 The
          Company considers all highly liquid debt instruments purchased with an
          original
          maturity of three months or less to be cash equivalents.
 
 (e)
                Mineral
                    property costs
 
 The
          Company has been in the exploration stage since its inception on March
          1, 2004,
          and has not yet realized any revenues from its planned operations. It is
          primarily engaged in the acquisition and exploration of mining properties.
          Mineral property exploration costs are expensed as incurred. Mineral property
          acquisition costs are initially capitalized when incurred using the guidance
          in
          EITF 04-02, “Whether Mineral Rights Are Tangible or Intangible Assets”. The
          Company assesses the carrying costs for impairment under SFAS No. 144,
          “Accounting for Impairment or Disposal of Long Lived Assets” at each fiscal
          quarter end. When it has been determined that a mineral property can be
          economically developed as a result of establishing proven and probable
          reserves,
          the costs then incurred to develop such property, are capitalized. Such
          costs
          will be amortized using the units-of-production method over the estimated
          life
          of the probable reserve. If mineral properties are subsequently abandoned
          or
          impaired, any capitalized costs will be charged to operations.


*--51--*


**MEXORO
          MINERALS LTD.**
 **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**
 **Notes
          to Consolidated Financial Statements**
 **Years
          Ended February 28, 2006 and 2005**
 **(U.S.
          Dollars)**
 **Restated
          - Note 2**


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




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





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





(g)
              Impairment
                  or disposal of long-lived assets





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





(h)
              Use
                  of estimates





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





(i)
              Consideration
                  of other comprehensive income items





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




*--52--*


**MEXORO
          MINERALS LTD.**
 **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**
 **Notes
          to Consolidated Financial Statements**
 **Years
          Ended February 28, 2006 and 2005**
 **(U.S.
          Dollars)**
 **Restated
          - Note 2**


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





(j)
              Stock-based
                  compensation





Effective
        March 1, 2004, the Company adopted the fair value based method of accounting
        for
        stock-based employee compensation in accordance with the provisions of SFAS
        No.
        123 “Accounting for Stock-Based Compensation”, using the prospective transition
        method. Accordingly the Company recognized the fair value of stock-based
        employee compensation for all awards made after March 1, 2004. The Company
        is in
        accordance with Emerging Issues Task Force No. 96-18 "Accounting for Equity
        Instruments That are Issued to Other than Employees for Acquiring, or in
        Conjunction with Selling, Goods or Services" ("EITF 96-18"), with respect
        to
        options and warrants issued to non-employees.





Effective
        March 1, 2005, the Company adopted the fair value recognition provisions
        of SFAS
        No. 123R “Share Based Payments”, using the modified prospective transition
        method. Under that transition method, compensation cost is recognized for
        all
        share-based payments granted prior to, but not yet vested as of March 1,
        2005,
        based on the grant date fair value estimated in accordance with the original
        provisions of SFAS No. 123, and compensation cost for all share-based payments
        granted subsequent to March 1, 2004, based on the grant-date fair value
        estimated in accordance with the provisions of SFAS 123R. Results for prior
        periods have not been restated. As of March 1, 2004, there were no unvested
        options; and therefore, there was no effect on the Company’s reported loss from
        operations, cash flows or loss per share as a result of adopting SFAS No.
        123R.





All
        transactions in which goods or services are the consideration received for
        the
        issuance of equity instruments are accounted for based on the fair value
        of the
        consideration received or the fair value of the equity instrument issued,
        whichever is more reliably measurable. Equity instruments issued to employees
        and the cost of the services received as consideration are measured and
        recognized based on the fair value of the equity instruments issued (see
        note
        11).





(k)
              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.





(l)
              Foreign
                  currency translation





Mexoro
        and its subsidiary Sunburst de Mexico maintain accounting records in their
        functional currencies, U.S. dollars and Mexican pesos, respectively.





Mexoro
        and Sunburst de Mexico translate foreign currency transactions into the
        respective functional currencies in the following manners: at the transaction
        date, each asset, liability, revenue and expense is translated into the
        functional currency by the use of the exchange rate in effect at that date;
        at
        the period end, foreign currency monetary assets and liabilities are
        re-evaluated into the functional currency by using the exchange rate in effect
        at the balance sheet date. The resulting foreign exchange gains and losses
        are
        included in operations.




*--53--*


**MEXORO
          MINERALS LTD.**
 **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**
 **Notes
          to Consolidated Financial Statements**
 **Years
          Ended February 28, 2006 and 2005**
 **(U.S.
          Dollars)**
 **Restated
          - Note 2**


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





(l)  Foreign
          currency translation (continued)
 
 In
          preparing consolidated financial statements, the Company translates the
          assets
          and liabilities of its subsidiary into U.S. dollars at the exchange rate
          in
          effect at the balance sheet date. Revenue and expenses are translated into
          U.S.
          dollars at the average exchange rate for the applicable period. Any gain
          or loss
          from such translations are included in stockholders’ equity as a component of
          other comprehensive income.
 
 (m)
                Recent
                    accounting pronouncements
 
 (i)
                In
                    December 2004, FASB issued a revision of Statement No. 123(R),*“Accounting
                    for Stock-Based Compensation”*.
                    This statement supersedes APB 25 and its related implementation
                    guidance.
                    The revised pronouncement requires that all stock options and
                    warrants be
                    accounted for using the fair value method. This pronouncement
                    does not
                    impact the Company, as the Company has no employees and currently
                    accounts
                    for all options and warrants using the fair value
                    method.
 
 (ii)
                In
                    December 2004, the FASB issued SFAS Statement No. 153, “Exchanges of
                    Non-Monetary Assets.” The statement is an amendment of APB Opinion No. 29
                    to eliminate the exception for non-monetary exchanges of similar
                    productive assets and replaces it with a general exception for
                    exchanges
                    of non-monetary assets that do not have commercial substance.
                    The Company
                    believes that the adoption of this standard will have no material
                    impact
                    on its financial statements.The
                    Company accounts for income taxes in accordance with SFAS No.
                    109 -*“Accounting
                    for Income Taxes”*.
                    Deferred tax assets and liabilities are recognized with respect
                    to the tax
                    consequences attributable to differences between the financial
                    statement
                    carrying values and tax basis of existing assets and liabilities.
 
 (iii)
                In
                    March 2005, FASB issued Interpretation No. 47 (“FIN 47”),*“Accounting
                    for Conditional Asset Retirement Obligations”*.
                    FIN 47 clarifies that the term “conditional
                    asset retirement obligation”
                    as used in FASB Statement No. 143,*“Accounting
                    for Asset Retirement Obligation”*,
                    refers to a legal obligation to perform an asset retirement activity
                    in
                    which the timing and/or method of settlement are conditional
                    on a future
                    event that may or may not be within the control of the entity.
                    Accordingly, an entity is required to recognize a liability for
                    the fair
                    value of a conditional asset retirement obligation if the fair
                    value of
                    the liability can be reasonably estimated. FIN 47 is effective
                    no later
                    than the end of fiscal years ending after December 15, 2005. This
                    pronouncement does not impact the Company for the current
                    year.
 
 (iv)
                In
                    May 2005, FASB issued SFAS No. 154 “*Accounting
                    Changes and Error Corrections - a replacement of APB Opinion
                    No. 20 and
                    FASB Statement No. 3”*.
                    This Statement replaces APB Opinion No. 20, “*Accounting
                    Changes”*,
                    and FASB Statement No. 3, “*Reporting
                    Accounting Changes in Interim Financial Statements”*,
                    and changes the requirements for the accounting for and reporting
                    of a
                    change in accounting principles. This statement applies to all
                    voluntary
                    changes in accounting principles. It also applies to changes
                    required by
                    an accounting pronouncement in the unusual instance that the
                    pronouncement
                    does not include specific transition provisions. When a pronouncement
                    includes specific transition provisions, those provisions should
                    be
                    followed.


*--54--*


**MEXORO
          MINERALS LTD.**
 **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**
 **Notes
          to Consolidated Financial Statements**
 **Years
          Ended February 28, 2006 and 2005**
 **(U.S.
          Dollars)**
 **Restated
          - Note 2**


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





(m)  Recent
          accounting pronouncements (continued)
 
 (v)
                This
                    statement is effective for accounting changes and corrections
                    of errors
                    made in fiscal years beginning after December 15,
                    2005
 
 (vi)
                In
                    February 2006, the FASB issued SFAS No. 155, “*Accounting
                    for Certain Hybrid Financial Instruments, an amendment of FASB
                    Statements
                    No. 133 and 140”.*This statement permits fair value re-measurement for any hybrid
                    financial
                    instrument that contains an embedded derivative that otherwise
                    would
                    require bifurcation. It establishes a requirement to evaluate
                    interests in
                    securitized financial assets to identify interests that are freestanding
                    derivatives or that are hybrid financial instruments that contain
                    an
                    embedded derivative requiring bifurcation. In addition, SFAS
                    155 clarifies
                    which interest-only strips and principal-only strips are not
                    subject to
                    the requirements of Statement 133. It also clarifies that concentrations
                    of credit risk in the form of subordination are not embedded
                    derivatives.
                    SFAS 155 amends Statement 140 to eliminate the prohibition on
                    a qualifying
                    special purpose entity from holding a derivative financial instrument
                    that
                    pertains to a beneficial interest other than another derivative
                    financial
                    instrument. This statement is effective for all financial instruments
                    acquired or issued after the beginning of an entity’s first fiscal year
                    that begins after September 15, 2006. The adoption of this standard
                    is not
                    expected to have a material effect on the Company’s results of operations
                    or financial position.
 **4.**
                **GOING
                    CONCERN**
 
 The
          accompanying financial statements have been prepared on a going-concern
          basis.
          The Company has a history of operating losses and will need to raise additional
          capital to fund its planned operations. As at February 28, 2006, the Company
          had
          working capital of $45,944 (2005 - $634,713 working capital deficiency)
          and a
          cumulative loss of $18,338,373 (2005 - $13,912,488). These conditions raise
          substantial doubt about the Company’s ability to continue as a going
          concern.
 
 The
          Company intends to reduce its cumulative loss through the attainment of
          profitable operations, from its investment in a Mexican mining venture
          (note 6). In addition, the Company has conducted private placements of
          convertible debt and common stock (notes 8, 10 and 15), which have
          generated a portion of the initial cash requirements of its planned Mexican
          mining ventures (notes 6 and 15).


*--55--*




**MEXORO
          MINERALS LTD.**
 **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**
 **Notes
          to Consolidated Financial Statements**
 **Years
          Ended February 28, 2006 and 2005**
 **(U.S.
          Dollars)**
 **Restated
          - Note 2**





**5.**
              **EQUIPMENT**


February
                  28, 2006
              
              February
                  28, 2005AccumulatedCost
              
              Depreciation
              
              Net
              
              NetOffice
                  equipment
              $
              880
              $
              -
              $
              880
              $
              -




**6.**
              **MINERAL
                  PROPERTIES**





On
          May 3,
          2004, the Company entered into a share exchange agreement with the shareholders
          of Sierra Minerals. Pursuant to the terms of the share exchange agreement,
          the
          Company issued 860,000 shares of its common stock (43,000,000 pre-split)
          in
          exchange for all of the outstanding shares of Sierra Minerals. As a result,
          Sierra Minerals became a wholly-owned subsidiary of the Company.  The
          common stock issued was valued at $12.75 per share ($0.255 pre-split) or
          $10,965,000; which represents the fair value based on the date of the share
          exchange agreement (May 3, 2004).  Finders’ fees of 120,000 options
          (6,000,000 pre-split) to purchase the same number of shares of the Company’s
          common stock at $0.50 per share (0.01 pre-split) were issued to non-related
          parties in connection with this share exchange. The fair value of these
          options
          issued as finders’ fees was $1,523,000; this amount was determined using the
          Black-Scholes formula with a 5-year expected life, a volatility factor
          of 191%,
          a risk-free rate of 5% and no assumed dividend rate. Due to the uncertainty
          of
          the future revenue to be generated from this property, the cost of the
          acquisition of $10,965.000, compensation expense of 1,523,000, and advances
          totaling $507,500 were charged to operations in the year ended February
          28,
          2005.
 
 Sierra
          Minerals was a party to a joint venture agreement dated April 26, 2004
          and
          amended on June 1, 2004, by and between Sierra Minerals and MRT a Mexican
          company, which held interests in Mexican exploration properties.
 
 On
          August
          25, 2005, the joint venture agreement was cancelled and the Company entered
          into
          a new arrangement with MRT.  Instead of a joint venture, the Company
          incorporated a Mexican wholly-owned subsidiary, Sunburst de Mexico. This
          restructuring allowed the Company to take title to the properties directly
          in
          the name of Sunburst de Mexico.  The Company entered into agreements with
          MRT, which provided Sunburst de Mexico options on the concessions of the
          Cieneguita and Guazapares properties and the right of first refusal on
          two
          Encino Gordo properties (collectively, the “Property Agreements”).  The
          parties also entered into an operating agreement, which gave MRT the sole
          and
          exclusive right and authority to manage the Cieneguita Property.


*--56--*




**MEXORO
          MINERALS LTD.**
 **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**
 **Notes
          to Consolidated Financial Statements**
 **Years
          Ended February 28, 2006 and 2005**
 **(U.S.
          Dollars)**
 **Restated
          - Note 2**


**6.**  **MINERAL
        PROPERTIES (Continued)**





On
          December 8, 2005, the Company and Sunburst de Mexico entered into the New
          Agreement with MRT to exercise their option under the August 18, 2005 sale
          and
          purchase of mining concessions agreement to obtain two mining concessions
          in the
          Encino Gordo region. The New Agreement also provided the Company the option
          to
          obtain three additional concessions in the Encino Gordo region.  These
          properties are located in the state of Chihuahua, Mexico.
 
 The
          following are additional material terms of the New Agreement:
 
 (a)  The
          operator’s agreement with MRT was cancelled;
 
 (b)
                The
                    Company granted MRT the option to buy all of the outstanding
                    shares of
                    Sunburst de Mexico for $100 if the Company failed to transfer
                    $1,500,000
                    to Sunburst de Mexico by April 30, 2006
                    (note 16);
 
 (c)
                The
                    Property Agreements were modified to change the net smelter rate
                    to a
                    maximum of 2.5% for all properties covered by the agreements;
 
 (d)  The
          Company agreed to issue 2,000,000 shares of the Company’s common stock to MRT
          within four months of the date of the signing of the New Agreement.  These
          shares were issued to MRT and its assignee at the market value of $1.05
          per
          share on February 23, 2006 and $2,100,000 was charged to operations for the
          year ended February 28, 2006. This issuance fulfilled the Company’s payment
          obligations under the previous Property Agreements; and
 
 (e)
                The
                    Company agreed to issue 1,000,000 additional shares of the Company’s
                    common stock to MRT if and when the Cieneguita Property is put
                    into
                    production and reaches 85% of production capacity over a 90-day
                    period, as
                    defined in the New Agreement.
 **7.**
                **PROMISSORY
                    NOTES**
  As
          at
          February 28, 2006, the Company had $412,800 (2005 - $28,500) promissory
          notes
          outstanding bearing interest of 7% per year (2005 - 6.09%) and due on or
          before
          December 31, 2006 (note 16).
 
 As
          at
          February 28, 2006 there was accrued interest of $7,259 (2005 - $18,578)
          on the
          outstanding promissory notes.




*--57--*




**MEXORO
          MINERALS LTD.**
 **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**
 **Notes
          to Consolidated Financial Statements**
 **Years
          Ended February 28, 2006 and 2005**
 **(U.S.
          Dollars)**
 **Restated
          - Note 2**


**8.**
              **CONVERTIBLE
                  DEBENTURES**





On
          August
          25, 2004, the Company entered into a securities purchase agreement (the
          “Agreement”), with Bristol Investment Fund, Ltd., Alpha Capital AG and
          Stonestreet LP (the “Purchasers”). Pursuant to the Agreement, the Purchasers
          agreed to purchase up to $1,350,000 in face amount of secured convertible
          debentures (the “Debentures”) from the Company.  The Debentures did not
          bear interest but were to be issued at a 26% discount to the face amount.
          Accordingly, the cash purchase price for the full $1,350,000 face amount
          of the
          Debentures was $1,000,000.   The Debentures were due and payable in
          one full year from the date of issuance.
 
 The
          Purchasers also had the right to convert the full-face amount of the Debentures
          to common stock of the Company at a price of $5.00 per share ($0.10 pre-split).
           Under the Agreement, the Purchasers were also to receive warrants and
          additional investment rights to purchase shares of the Company’s common stock.
          The warrants were exercisable at a price of $6.00 per share ($0.12 pre-split)
          for a period of five years and additional investment rights were exercisable
          at
          a price of $5.00 per share ($0.10 pre-split).
 
 The
          Purchasers purchased a total of $675,000 in face amount for cash proceeds
          of
          $500,000 and the $175,000 discount was charged as interest over the term
          of the
          debenture; $87,500 in the year ending February 28, 2005 and the $87,500
          in the
          year ending February 28, 2006. The Company paid $20,000 in legal fees and
          $50,000 administration fees.
 
 A
          beneficial conversion feature expense of $500,000 resulting from the anticipated
          conversion of the debentures, and the exercise of the associated warrants
          and
          additional investment rights of the above debentures was recorded as interest
          expense for the year ending February 28, 2005.
 
 On
          August
          10, 2005, the Company and the Purchasers agreed to retire the Debentures
          including all associated principal, terms, warrants and rights for the
          amount of
          $500,000 plus 8% interest. On September 21, 2005, the Company repaid in
          full
          $500,000 plus interest charges of $41,815 to the Purchasers. As a result
          of this
          payment, the Debentures were terminated and the associated warrants and
          additional investment rights were cancelled. A gain of $133,185 was recorded
          for
          settlement of this debt.
 
 Another
          convertible debenture in the amount of $30,000 was issued on January 15,
          2004.
          The conversion of principal and accrued interest (8% per year) was at the
          rate
          of $1.00 ($0.02 pre-split) per share of common stock. On December 21, 2005,
          the
          Company repaid the $30,000 convertible debenture plus accrued interest
          of
          $4,645.
 
 The
          Company issued $300,000 in convertible debentures in December 2005 to three
          lenders with a maturity date of December 8, 2006, accrued interest at 7%
          per
          year, and convertible at the option of the holder into shares of common
          stock at
          $0.15 per share. On January 6, 2006, these debentures were converted and
          the
          Company issued 2,000,000 shares of common stock (100,000,000 pre-split).
          A
          beneficial conversion feature of $300,000 was recorded in interest expense
          as to
          the anticipated conversion of these debentures, with a corresponding increase
          in
          additional paid in capital.


*--58--*
 
  **MEXORO
          MINERALS LTD.**
 **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**
 **Notes
          to Consolidated Financial Statements**
 **Years
          Ended February 28, 2006 and 2005**
 **(U.S.
          Dollars)**
 **Restated
          - Note 2**


**8.**  **CONVERTIBLE
        DEBENTURES (Continued)**





In
          January 2006, the Company began issuing convertible debentures, with principal
          and accrued interest at 7% per year, convertible into units at
          the
          option of the holder . Each
          unit
          consists of a warrant to purchase 25,000 shares of common stock at $1.00
          per
          share and $25,000 of debt, which may be converted to shares of common stock
          at
          $0.50 per share and is
          exercisable until April 30, 2008.  As at February 28, 2006, the Company had
          issued convertible debentures in the amount of $652,000 (note 16). In
          addition, the warrants are redeemable by the Company, at $.01 per share,
          in the
          event the Company’s Common Stock closes with a bid price, on average, over $3.00
          per share for a consecutive 20-day period. A beneficial conversion feature of $489,000 was recorded in interest expense
          as to
          the anticipated conversion of these debentures. Also included in interest
          expense is $163,000 representing the relative fair value of the warrants
          (immediately exercisable) in relation to the convertible debt (EITF 00-27).
          All
          of the foregoing interest expense has been recorded with a corresponding
          increase in additional paid in capital.
 
 The
          fair
          value of the warrants attached to the convertible debentures as discussed
          above
          was estimated at the date of grant using the Black-Scholes option pricing
          model
          using the following weighted average assumptions:


112,500
                  Warrants - attached to $675,000 Convertible Debenture
              135,000
                  Additional Rights Warrants - attached to $675,000 Convertible
                  Debenture
              652,000
                  WarrantsExpected
                  life
              5
                  years
              5
                  years
              2
                  yearsExpected
                  volatility
              107%
              107%
              107%Risk
                  free interest rate
              5%
              5%
              5%Expected
                  dividends
              -
              -
              -Exercise
                  price
              $6.00
              $5.00
              $1.00Weighted
                  average fair value of warrant
              $6.00
              $5.00
              $1.00Stock
                  price at date of grant
              $6.50
              $6.50
              $1.45




*--59--*




**MEXORO
          MINERALS LTD.**
 **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**
 **Notes
          to Consolidated Financial Statements**
 **Years
          Ended February 28, 2006 and 2005**
 **(U.S.
          Dollars)**
 **Restated
          - Note 2**


**9.**
              **PREFERRED
                  STOCK**




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






**10.**
              **COMMON
                  STOCK**




In
          August
          2005 the Company issued 20,000 shares of common stock (1,000,000 pre-split)
          at
          $1.25 per share from the exercise of stock options. In August 2005, the
          Company issued a total of 10,000 shares of common stock (500,000 pre-split)
          at
          $2.00 per share to an officer as compensation for services pursuant to
          the terms
          of a Consulting Agreement entered into July 1, 2005.
 
 In
          September 2005, the Company issued a total of 20,000 shares of common stock
          (1,000,000 pre-split) at $4.00 per share to an officer as compensation
          for
          services pursuant to the terms of a Consulting Agreement entered into September
          1, 2005. In
          October 2005 the Company issued 12,000 shares of common stock (600,000
          pre-split) at $1.50 per share from the exercise of stock options.
 
 In
          January 2006, the Company issued 2,000,000 shares of common stock (100,000,000
          pre-split) on conversion of a $300,000 debenture (see note 8).
 
 On
          February 16, 2006, the Company completed a reverse stock split of 50 old
          shares
          of common stock for 1 new common share. In February 2006, the Company issued
          a
          total of 7,000,000 shares of common stock for total proceeds of $70,000.
          The
          Company also issued 2,000,000 shares of common stock in an impairment of
          mineral
          property costs (see note 6).
 
 In
          February 2006, the Company began accepting subscriptions for a unit offering.
          Units consist of one share of common stock and one-half of one warrant.
          Each
          full warrant entitles the investor to purchase an additional share of the
          Company’s common stock at a price of $1.00 per share and is exercisable until
          April 30, 2008.  The units were priced at $0.50 each. As at February 28,
          2006, the Company had received subscriptions for units in the amount of
          $170,000
          (note 16).
 
 In
          March
          2004, the Company completed a private placement of 73,000 shares of common
          stock
          (3,650,000 pre-split) for total proceeds of $73,000. Also in March 2004,
          the
          Company issued 20,000 shares of common stock (1,000,000 pre-split) at $1.00
          per
          share from the exercise of stock options.


*--60--*




**MEXORO
          MINERALS LTD.**
 **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**
 **Notes
          to Consolidated Financial Statements**
 **Years
          Ended February 28, 2006 and 2005**
 **(U.S.
          Dollars)**
 **Restated
          - Note 2**


**10.**  **COMMON
        STOCK (Continued)**





In
          May
          2004, the Company issued 860,000 shares of common stock (43,000,000 pre-split) in
          exchange for all of the outstanding shares of Sierra Minerals (see
          note 6). The Company also completed a private placement of 40,222 shares
          of
          common stock (2,011,095 pre-split) for net proceeds of $196,134.
 
 In
          July
          2004, the Company issued 30,000 shares of common stock (1,500,000 pre-split)
          at
          $0.50 per share from the exercise of stock options.
 
 On
          September 29, 2004, 5,512 cashless warrants (275,632 pre-split) were exercised,
          and the Company issued 5,512 shares of common stock (275,632
          pre-split).


**11.**
              **STOCK
                  COMPENSATION PROGRAM**





On
          December 9, 2005, the Company’s board of directors approved a stock compensation
          program, which was subsequently ratified at an extraordinary meeting of
          shareholders held on February 13, 2006. In order to maintain flexibility
          in the
          award of stock benefits, the program constitutes a single “omnibus” plan, but is
          composed of three parts. The first part is the qualified incentive stock
          option
          plan (the “ISO Plan”), which provides grants of qualified incentive stock
          options (“ISOs”).  The second part is the non-qualified stock option plan
          (“NQSO Plan”), which provides grants of nonqualified stock options (“NQSOs”).
 The third part is the restricted shares plan (“Restricted Shares Plan”),
          which provides grants of restricted shares of the Company’s common stock
          (“Restricted Shares”). The maximum number of shares of common stock that may be
          purchased under the plan is 6,000,000. Options granted under the plan include
          incentive and non-qualified stock options as well as actual shares of common
          stock, with vesting determined on the grant date, not to exceed 10 years,
          and
          are exercisable over a 10-year maximum period at a price to approximate
          the fair
          market value of the common stock at the date of grant.
 
 Pursuant
          to a Consulting Agreement (the “Agreement”) between the Company and GM Capital
          Partners Inc. (“GM Capital”) ,
          signed
          January 31, 2006, the Company granted 5,000,000 warrants (see note 12).
          The
          Agreement provides for the provisions of financial public relations services
          from December 1, 2005 to November 30, 2007. The fair value of the 5,000,000
          warrants was determined using the Black-Scholes option pricing model using
          a
          ten-year expected life of the option, a volatility factor of 152%, a risk-free
          rate of 5% and an assumed dividend rate of 0% and totals $3,898,000. This
          amount
          will be amortized over the 24-month term of the contract and the Company
          will
          record $487,250 as a stock-based compensation expense and an offsetting
          credit
          to additional paid-in capital every quarter until November 30, 2007.
 
 On
          February 27, 2006, the Company granted 800,000 ISOs under the ISO Plan
          to
          directors and officers (600,000 stock options) and consultants (200,000
          stock
          options) at a price of $0.50 per common stock for a period of ten years.
          The
          ISOs vest in four equal instalments, at the time of the grant and then
          every six
          months thereafter. Compensation
          cost, being the fair value of the options, is calculated to be $982,000
          of which
          $248,000 is expensed on the date of issue and as the remainder vest.
 
 The
          fair
          value of the 800,000 options was determined using the Black-Scholes option
          pricing model using a ten-year expected life of the option, a volatility
          factor
          of 152%, a risk-free rate of 5% and an assumed dividend rate of 0%.


*--61--*




**MEXORO
          MINERALS LTD.**
 **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**
 **Notes
          to Consolidated Financial Statements**
 **Years
          Ended February 28, 2006 and 2005**
 **(U.S.
          Dollars)**
 **Restated
          - Note 2**


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





The
        options are summarized as follows:





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




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





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





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




*--62--*




**MEXORO
          MINERALS LTD.**
 **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**
 **Notes
          to Consolidated Financial Statements**
 **Years
          Ended February 28, 2006 and 2005**
 **(U.S.
          Dollars)**
 **Restated
          - Note 2**


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





Stock-based
        compensation consists of the following:





**2006**
              
              **2005***Compensation
                  expense*Shares
                  issued for services
              $
              90,000
              $
              -Options
                  issued as finders’ fees
              
              -
              
              1,523,000Stock-based
                  compensationWarrants
              
              487,250
              
              -Options
              
              248,000
              
              86,955$
              825,250
              $
              1,609,955





Pursuant
          to a consulting agreement signed on July 1, 2006 and September 1, 2006,
          an
          officer of the Company received a total of 30,000 shares of common stock
          (1,500,000 pre-split) from the Company for services, and the Company recorded
          management fees of $90,000. Compensation expense of $90,000 is included
          in
          general and administrative expense for fiscal 2006.
 
 In
          February 2006 the Company granted 800,000 ISOs; 600,000 were granted to
          employees and 200,000 were granted to non-employees. The fair value of
          the
          vested stock options was $248,000 and was recorded as a stock-based compensation
          expense.
 
 Stock-based
          compensation of $735,250 was recorded for fiscal 2006.
 
 In
          May
          2004, the Company issued a total of 120,000 options (6,000,000 pre-split)
          as
          finders’ fees related to a mineral property transaction (see note 6), and
          recorded compensation expense of $1,523,000. Compensation expense of $1,523,000
          is included in impairment of mineral property costs for fiscal
          2005.
 
 On
          March
          1, 2003, the Company issued 60,000 stock options (3,000,000 pre-split)
          which
          vested 50% at date of issue and 50% on March 1, 2004. The Company recorded
          $86,955 as a stock-based compensation expense for fiscal 2005.
 
 Other
          equity instruments issued to non-employees for services were stock options.
          The
          fair value of the stock options granted during the period was estimated
          at the
          date of the grant using the Black-Scholes option pricing model using the
          following assumptions:




*--63--*




**MEXORO
          MINERALS LTD.**
 **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**
 **Notes
          to Consolidated Financial Statements**
 **Years
          Ended February 28, 2006 and 2005**
 **(U.S.
          Dollars)**
 **Restated
          - Note 2**


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





200,000
                  stock options
                to
                  non-employees
              120,000
                  stock options to non-employees for finders feesExpected
                  life
              10
                  years
              5
                  yearsExpected
                  volatility
              152%
              1.07%Risk
                  free interest rate
              5%
              5%Expected
                  dividends
              -
              -Exercise
                  price
              $0.50
              $0.50Weighted
                  average fair value of stock option
              $0.84
              $0.08Stock
                  price at date of grant
              $1.25
              $12.75





Other
        equity instruments issued to non-employees for services were warrants. The
        fair
        value of the warrants granted during the period was estimated at the date
        of the
        grant using the Black-Scholes option pricing model using the following
        assumptions:





1,000,000
                  Warrants issued to GM Capital - Series A
              1,000,000
                  Warrants issued to GM Capital - Series B
              1,000,000
                  Warrants issued to GM Capital - Series C
              1,000,000
                  Warrants issued to GM Capital - Series D
              1,000,000
                  Warrants issued to GM Capital - Series EExpected
                  life (years)
              1.58
              2.08
              2.08
              3.08
              3.08Expected
                  volatility
              152%
              152%
              152%
              152%
              152%Risk
                  free interest rate
              5%
              5%
              5%
              5%
              5%Expected
                  dividends
              -
              -
              -
              -
              -Exercise
                  price
              $0.50
              $0.75
              $1.00
              $1.25
              $1.50Weighted
                  average fair value of warrant
              $0.78
              $0.78
              $0.74
              $0.81
              $0.79Stock
                  price at date of grant
              $1.00
              $1.00
              $1.00
              $1.00
              $1.00





*--64--*


**MEXORO
          MINERALS LTD.**
 **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**
 **Notes
          to Consolidated Financial Statements**
 **Years
          Ended February 28, 2006 and 2005**
 **(U.S.
          Dollars)**
 **Restated
          - Note 2**


**12.**
              **WARRANTS**





The
          Company has a total of 5,652,000 (2005 - 270,000) warrants outstanding
          to
          purchase common stock. Each warrant entitles the holder to purchase one
          share of
          the Company’s common stock. The Company has reserved 5,652,000 shares of common
          stock in the event that these warrants are exercised.
 
 The
          warrants include 1,000,000 Series A Warrants exercisable at $0.50 per share,
          1,000,000 Series B Warrants exercisable at $0.75 per share, 1,000,000 Series
          C
          Warrants exercisable at $1.00 per share, 1,000,000 Series D Warrants exercisable
          at $1.25 per share, and 1,000,000 Series E Warrants exercisable at $1.50
          per
          share; of which all are exercisable at the option of the holder ,
          have no
          redemption features, and are settled on a physical basis. The
          Series A Warrants were fully vested upon issuance. They are exercisable
          at any
          time following their issuance but will expire on June 30, 2007 to the extent
          they are not exercised. The remaining Series of Warrants will become exercisable
          only at the time that the immediately preceding Series has been fully exercised.
 
 Unless
          terminated earlier as a result of failure to vest, the Series B and Series
          C
          Warrants will each expire on December 31, 2007, and the Series D and Series
          E
          Warrants will each expire on December 31, 2008. Stock-based compensation
          for
          these warrants of $3,898,000 is being amortized over the twenty four month
          term
          of the GM Capital contract; $487,250
          will be recorded as a stock-based compensation expense every quarter until
          November 30, 2007.
 
 Additionally,
          as at February 28, 2006, the Company had issued 652,000 warrants exercisable
          at
          $1.00 each pursuant to the issuance of convertible debentures. These warrants
          expire on April 30, 2008, are
          redeemable by the Company, at $0.01 per share, in the event the Company’s Common
          Stock closes with a bid price, on average, over $3.00 per share for a
          consecutive 20 day period, and are settled on a physical basis.
 
 The
          fair
          value of the warrants discussed above was estimated at the date of grant
          using
          the Black-Scholes option pricing model using the following weighted average
          assumptions:


652,000
                  Warrants
              1,000,000
                  Warrants issued to GM Capital - Series A
              1,000,000
                  Warrants issued to GM Capital - Series B
              1,000,000
                  Warrants issued to GM Capital - Series C
              1,000,000
                  Warrants issued to GM Capital - Series D
              1,000,000
                  Warrants issued to GM Capital - Series EExpected
                  life (years)
              2
              1.58
              2.08
              2.08
              3.08
              3.08Expected
                  volatility
              107%
              152%
              152%
              152%
              152%
              152%Risk
                  free interest rate
              5%
              5%
              5%
              5%
              5%
              5%Expected
                  dividends
              -
              -
              -
              -
              -
              -Exercise
                  price
              $1.00
              $0.50
              $0.75
              $1.00
              $1.25
              $1.50Weighted
                  average fair value of warrant
              $1.10
              $0.78
              $0.78
              $0.74
              $0.81
              $0.79Stock
                  price at date of grant
              $1.45
              $1.00
              $1.00
              $1.00
              $1.00
              $1.00




*--65--*




**MEXORO
          MINERALS LTD.**
 **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**
 **Notes
          to Consolidated Financial Statements**
 **Years
          Ended February 28, 2006 and 2005**
 **(U.S.
          Dollars)**
 **Restated
          - Note 2**


**13.**
              **RELATED
                  PARTY TRANSACTIONS**





The
          Company paid management fees of $147,000 (2005 - $nil) to certain officers
          and
          directors and to companies controlled by directors. The Company paid $23,357
          (2005 - $nil) to certain officers and directors and to companies controlled
          by
          directors for travel, office and other related expenses.
 
 The
          Company paid consulting fees of $15,000 (2005 - $4,000) to a former officer
          and
          director.
 
 As
          at
          February 28, 2006, accounts payable of $8,175 (2005 - $nil) were owing
          to
          certain officers and directors of the Company and $14,799 (2005 - $nil)
          was
          owing to companies controlled by directors.
 
 As
          of
          February 28, 2005, the Company had notes payable to related entities in
          the
          amount of $28,500. Interest on these notes has been imputed at a rate of
          6.09%
          and totalled $18,578 cumulatively at February 28, 2005. These notes and
          accrued
          interest were paid during the year ended February 28, 2006.
 
 All
          related party transactions are in the normal course of business at the
          exchange
          amount agreed to by each party.


**14.**
              **INCOME
                  TAXES**





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





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





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





*--66--*


**MEXORO
          MINERALS LTD.**
 **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**
 **Notes
          to Consolidated Financial Statements**
 **Years
          Ended February 28, 2006 and 2005**
 **(U.S.
          Dollars)**
 **Restated
          - Note 2**


**15.**
              **CONTINGENT
                  LIABILITY**





Pursuant
        to the Agreement between the Company and GM Capital, the Agreement contains
        registration rights which requires the Company to use best efforts to file
        a
        registration statement registering the warrant shares within 45 days upon
        demand
        of 50% of the warrant holders and thereafter to use best efforts to cause
        such
        registration statement to be declared effective as soon as reasonably possible.
        Otherwise, the Company is obligated to sell to GM Capital as liquidated damages
        payment comprising of 1,000 shares per day at $0.001 per share until the
        default
        is cured. As at February 28, 2006, GM Capital had not demanded the Company
        to
        file a registration statement. (note 16).





**16.**
              **SUBSEQUENT
                  EVENTS**





(a)  Mineral
          properties
 
 Subsequent
          to February 28, 2006, MRT agreed to waive its option to purchase the shares
          of
          Sunburst de Mexico and also waived the Company’s obligation to transfer
          $1,500,000 to Sunburst de Mexico by April 30, 2006 (note 6).
 
 (b)  Promissory
          notes
 
 Subsequent
          to February 28, 2006, promissory notes in the amount of $412,800 (note
          7) were
          settled in exchange for 1,651,200 shares of the Company’s common
          stock.
 
 (c)  Private
          placement and convertible debentures
 
 Subsequent
          to February 28, 2006, the Company closed a private placement for total
          proceeds
          of $375,000. As at February 28, 2006, the Company had received $170,000
          of
          subscriptions for units. Units consist of one share of common stock and
          one-half
          of one warrant.  Each full warrant entitles the investor to purchase an
          additional share of the Company’s common stock at a price of $1.00 per share and
          is exercisable until April 30, 2008. The units were priced at $0.50 each.
 
 Subsequent
          to February 28, 2006, the Company raised a total of $2,265,500 through
          the
          issuance of convertible debentures. The convertible debentures, with principal
          and accrued interest at 7% per year are convertible into units at the option
          of
          the holder.  Each unit consists of a warrant to purchase 25,000 of the
          Company’s shares of common stock at $1.00 and $25,000 of debt, which may be
          converted to shares of common stock at $0.50 per share and is exercisable
          until
          April 30, 2008. In
          addition, the warrants are redeemable by the Company, at $.01 per share,
          in the
          event the Company’s Common Stock closes with a bid price, on average, over $3.00
          per share for a consecutive 20-day period. As
          at
          February 28, 2006, the Company had issued convertible debentures in the
          amount
          of $652,000.  All of the convertible debentures have been
          converted.


*--67--*




**MEXORO
          MINERALS LTD** .
 **(Formerly
          Sunburst Acquisitions IV, Inc.)**
 **(An
          Exploration Stage Company)**
 **Notes
          to Consolidated Financial Statements**
 **Years
          Ended February 28, 2006 and 2005**
 **(U.S.
          Dollars)**
 **Restated
          - Note 2**


**16.**  **SUBSEQUENT
        EVENTS (Continued)**





(d)  Contingent
          liability
 
 Pursuant
          to the Agreement signed between the Company and GM Capital, the Company
          must use
          best efforts to file a registration statement registering the warrant shares
          within 45 days upon demand of 50% of the warrant holders and thereafter
          to use
          best efforts to cause such registration statement to be declared effective
          as
          soon as reasonably possible. Otherwise, the Company is obligated to sell
          to GM
          Capital as liquidated damages payment comprising of 1,000 shares every
          day at
          $0.001 per share until the default is cured. Subsequent to February 28,
          2006, GM
          Capital had not demanded the Company to file a registration statement
          registering the warrant shares and the Company filed a registration statement
          on
          April 7, 2006. In the Company’s opinion best efforts have been made to effect
          the registration of the warrant shares. Accordingly, the Company does not
          believe a liability exists at this time and no provision has been made
          in the
          financial statements in this regard.




*--68--*





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





On
        or
        about June 17, 2004, Comiskey & Co., PC of Denver, Colorado, notified the
        Company that effective as of July 9, 2004, it was resigning as the Company’s
        auditor for the fiscal year ending February 28, 2005, and subsequent years
        because of the partner rotation requirements of the Sarbanes-Oxley Act of
        2002.
 
 The
        reports of Comiskey & Co. on the Company's financial statements for the
        fiscal years ending February 29, 2004 and February 28, 2003 did not contain
        any
        adverse opinion or disclaimer of opinion with respect to audit scope or
        accounting principle, but were modified as to uncertainty concerning the
        Company's ability to continue as a going concern.
 
 On
        July
        15, 2004, the Board of Directors of the Company engaged the firm of Pannell
        Kerr
        Forster (registered with the PCAOB as “Smythe Ratcliffe”), Chartered
        Accountants, 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
        Company maintains disclosure controls and procedures that are designed to
        ensure
        that information required to be disclosed in its SEC reports are recorded,
        processed, summarized and reported within the time periods specified in the
        SEC's rules and forms, and that such information is accumulated and communicated
        to the Company’s management, including its President and Chief Financial
        Officer, as appropriate, to allow timely decisions regarding required
        disclosure. In designing and evaluating the disclosure controls and procedures,
        management recognized that any controls and procedures, no matter how well
        designed and operated, can provide only reasonable assurance of achieving
        the
        desired control objectives, as the Company’s are designed to do, and management
        necessarily was required to apply its judgment in evaluating the cost-benefit
        relationship of possible controls and procedures.
 
 In
        connection with the audit of the Company’s consolidated financial statements for
        the year ended February 28, 2005, the Company’s independent registered public
        accounting firm advised the Audit Committee and management of certain
        significant internal control deficiencies that they considered to be in the
        aggregate a material weakness. These consist of, inadequate staffing and
        supervision leading to adequate segregation of duties, the identification
        and
        resolution of certain accounting matters; substantiation and evaluation of
        certain account balances; lack of procedures or expertise required to prepare
        all required disclosures. Day to day operations of the Company are under
        the
        management of a non-director major shareholder who has signing authority
        over
        the bank account requiring only one signature. The independent registered
        public
        accounting firm indicated that they considered these deficiencies to be a
        material weakness and a reportable condition as that term is defined under
        standards established by the American Institute of Certified Public Accountants.
        A material weakness is a significant deficiency in one or more of the internal
        control components that alone or in the aggregate precludes our internal
        controls from reducing to an appropriately low level of risk that a material
        misstatement in our financial statements will not be prevented or detected
        on a
        timely basis.
 
 The
        Company is currently reviewing appropriate measures to identify, rectify
        and
        implement suitable action to correct them. The following changes to the
        management occurred on the


*--69--*




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





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




**ITEM
      8B.     OTHER INFORMATION.**





Not
      applicable.




**PART
      III**


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





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




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





The
      directors named above will serve until the next annual meeting of the Company’s
      stockholders. Thereafter, directors will be elected for one-year terms at the
      annual stockholders' meeting. Officers will hold their positions at the pleasure
      of the board of directors, absent 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.




*--70--*


Biographical
      Information of Directors and Executive Officers follows:





Mario
      Ayub





Mr.
      Ayub
      has served as a director of the Company since May 25, 2004. He has served as
      the
      President of Minera Rio Tinto S.A. de C.V., a Mexican company since 1994. From
      1997 to 2001 he was a director on the Board of Metalline Mining Company (OTC-BB:
      MMGG.OB), a US reporting company and Sheffield Resources, a Canadian reporting
      company trading on the TSX-V exchange.  He is currently the President of
      the Chihuahua Mining Association and was the President of the National Miners
      Association of Mexico from 1998 through 2000. He graduated in 1976 from the
      Universidad Iberoamericana in Mexico City with a degree in chemical engineering,
      and he has completed post-graduate studies in metallurgy at Comision de Fomento
      Minero and South Dakota University.





Robert
      Knight





Mr.
      Knight has served as a director since December 4, 2005. Since September 1994,
      Mr. Knight has been the President of Knight Financial Ltd., where he has
      organized and participated in many corporate finance transactions. From
      September 1998 to January 12, 2005, Mr. Knight served as the president,
      secretary-treasurer and a director of Synova Healthcare Group, Inc. (OTC-BB:
      SNVH.OB), a US reporting company formerly known as Advanced Global Industries
      Ltd. and Centaur BioResearch Corp., which distributes non-invasive medical
      diagnostic tools mainly for women. Mr. Knight served as director of Invisa,
      Inc.
      (OTC-BB: INSA.OB), a reporting company in the United States whose shares trade
      on the OTC Bulletin Board from September 1998 until April 2005. Invisa Inc.
      is
      involved in the safety sensing industry. From July 1998 to December 22, 2005,
      Mr. Knight served as a Director of Heartland Oil and Gas Corp. (OTC-BB:
      HOGC.OB), a reporting company in the United States whose shares are quoted
      on
      the OTC Bulletin Board. Heartland Oil and Gas Corp. is involved in the
      exploration and development of coal bed methane gas properties in the United
      States. Mr. Knight served as President of Heartland Oil and Gas Corp. from
      July
      1998 until September 2002, as its Chief Financial Officer from September 2002
      until November 2004 and as its corporate Secretary from July 1998 until November
      2004. He also served as director and treasurer of Advertain On-Line, an online advertising
      software development firm from March 2000 until June 2003. Mr. Knight was
      awarded an MBA degree from Edinburgh School of Business, Herriot-Watt University
      in December 1998.





Tracy
      A.
      Moore





Mr.
      Moore
      has served as Chief Financial Officer since December 5, 2005 and served as
      the
      Company’s Chief Operating Officer from June 2005 to December 2005. Mr. Moore is
      the President of MCSI Consulting Group of Vancouver, Canada, a financial
      consulting firm that specializes in corporate finance matters, strategic
      planning and business planning services. Mr. Moore founded MCSI in 1990 and
      is
      responsible for overall client contact and relations, project management,
      planning, and quality control. As part of his consulting practice he serves
      on
      boards of directors and advises boards on corporate finance matters, business
      planning issues, mergers, acquisitions and divestitures. In addition, he has
      served as a director of Alberta Star Development Corp. (TSX Venture Exchange)
      since September 2005, which engages in mineral exploration. From January 2003
      through February 2004, Mr. Moore served as a director of Buffalo Gold Ltd.
      (TSX
      Venture Exchange), which engages in mineral exploration. From August 2002 to
      February 2004, he was the chief financial officer of SHEP Technologies Inc.
      (OTC
      BB), and was also a director of that company from August 2002 to November 2004.
      SHEP Technologies, Inc. designs a stored hydraulic energy propulsion technology
      system for transportation applications. From




*--71--*




September
      2000 to October 2002, Mr. Moore was a director of Illusion Systems, Inc. (TSX
      Venture Exchange), an entertainment company specializing in developing
      interactive simulation and multi-media products for the entertainment and
      education industries. From October 2000 to May 2002, he was a director of Avance
      Venture Corp. (TSX Venture Exchange), which considered capital investment in
      e-business, communication, and entertainment related technologies. Mr. Moore
      qualified as a Chartered Accountant in 1979, and between 1976 and 1990, he
      was
      employed by three different international accounting firms in restructuring,
      consulting and audit positions. Mr. Moore received a Bachelor of Commerce in
      Accounting and Management Information Systems from the University of British
      Columbia in 1976 and was admitted as a member of the Institute of Chartered
      Accountants in British Columbia in 1979.





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




**ITEM
      10.    EXECUTIVE COMPENSATION.**





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





**Summary
      Compensation Table**





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





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





**Options
      Grants During the Last Fiscal Year**




*--72--*


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





**Aggregate
      Option Exercises in Last Fiscal Year**





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





**Director
      Compensation**





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





**Employment
      Agreements**





We
      presently do not have any written employment agreements.





**CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS**





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





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




*--73--*




$227,500.
      One of the shareholders of Sierra and the controlling shareholder of MRT was
      Mario Ayub, our Chief Operating Officer and a director of Mexoro.





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





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





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





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





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





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





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





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




*--74--*




any
      options, warrants or other rights to acquire additional securities of Mexoro
      Minerals Ltd., except as may be otherwise noted.




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





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





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





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





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





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





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





(7)
      Warrants issued pursuant to a consulting agreement.





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





Indemnification
      of Officers and Directors





*--75--*




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





Exclusion
      of Liability





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





Conflicts
      of Interest





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





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




The
      following exhibits are filed in reference:





Exhibit
                Number
              Description3.1
              Articles
                  of Incorporation, as amended on December 10, 2001 and February
                  13, 2006
                  (Herein incorporated by reference from the Registration Statement
                  on Form
                  SB-2 filed with the Securities and Exchange Commission on April
                  7,
                  2006).3.2
              Bylaws
                  of the Corporation (Herein incorporated by reference from the Registration
                  Statement on Form SB-2/A filed with the Securities and Exchange
                  Commission
                  on September 25, 2006.)4.1
              Registration
                  Agreement dated April 20, 2004, by and among Sunburst Acquisitions
                  IV,
                  Inc., a Colorado company, and each of the purchasers in a private
                  placement of shares of Sunburst (Herein incorporated by reference
                  from the
                  Registration Statement on Form SB-2/A filed with the Securities
                  and
                  Exchange Commission on September 25, 2006.)4.2
              Promissory
                  Note between Sunburst Acquisitions IV, Inc. and Minera Rio Tinto
                  S.A. de
                  C.V. in the amount of $ 57,500 dated January 9, 2004 (incorporated
                  by
                  reference from Current Report on Form 8-K filed with the Securities
                  and
                  Exchange Commission on June 3,
                  2004).




*--76--*




4.3
              Promissory
                  Note between Sierra Mineral and Mining, Inc. and Minera Rio Tinto
                  S.A. de
                  C.V. in the amount of $ 167,500, dated May 3, 2004 (incorporated
                  by
                  reference from Current Report on Form 8-K filed with the Securities
                  and
                  Exchange Commission on June 3, 2004).4.4
              Securities
                  Purchase Agreement with exhibits entered in connection with the
                  $1,350,000
                  original issued discount secured convertible debenture financing
                  dated
                  August 25, 2004 (Herein incorporated by reference from the Registration
                  Statement on Form SB-2/A filed with the Securities and Exchange
                  Commission
                  on September 25, 2006.)4.5
              Secured
                  Convertible Debenture by and between Bristol Capital, LLC and Sunburst
                  Acquisitions IV, Inc. dated January 15, 2004 (Herein incorporated
                  by
                  reference from the Registration Statement on Form SB-2/A filed
                  with the
                  Securities and Exchange Commission on July 10, 2006).4.6
              Transaction
                  Fee Agreement dated April 22, 2004 between Sunburst Acquisitions
                  IV Inc.
                  and T.R. Winston & Company LLC ( Herein incorporated by reference from
                  the Registration Statement on Form SB-2 filed with the Securities
                  and
                  Exchange Commission on April 7, 2006).4.7
              Finder’s
                  Fee Agreement dated 2004 between Sunburst Acquisitions IV, Inc.
                  and
                  Liberty Management, LLC (Herein incorporated by reference from
                  the
                  Registration Statement on Form SB-2/A filed with the Securities
                  and
                  Exchange Commission on September 25, 2006.)4.9
              Stock
                  option plan approved by the shareholders of Mexoro Minerals, Ltd.
                  on
                  February 13, 2006. (Herein incorporated by reference from the Registration
                  Statement on Form SB-2 filed with the Securities and Exchange Commission
                  on April 7, 2006).4.11
              Convertible
                  Debentures issued December 8, 2005 to Daimler Capital, James Longshore,
                  and Spectrum International in the amount of $300,000 (Herein incorporated
                  by reference from the Registration Statement on Form SB-2/A filed
                  with the
                  Securities and Exchange Commission on September 25,
                  2006.)10.1
              Share
                  Exchange Agreement, dated May 3, 2004, by and among Sunburst Acquisitions
                  IV, Inc., a Colorado corporation, Sierra Minerals and Mining, Inc.,
                  a
                  Nevada corporation, and the shareholders of Sierra Minerals & Mining,
                  Inc. (Herein incorporated by reference from the Registration Statement
                  on
                  Form SB-2/A filed with the Securities and Exchange Commission on
                  September
                  25, 2006.)10.2
              Joint
                  Venture Agreement, dated April 26, 2004 and amended on June 1,
                  2004, by
                  and between Sierra Mining and Minerals, Inc., a Nevada corporation,
                  and
                  Minera Rio Tinto S.A. de C.V., a Mexican company (Herein incorporated
                  by
                  reference from the Registration Statement on Form SB-2/A filed
                  with the
                  Securities and Exchange Commission on September 25,
                  2006.)10.3
              Amendment
                  to Joint Venture Agreement dated June 1, 2004. (Herein incorporated
                  by
                  reference from the Registration Statement on Form SB-2/A filed
                  with the
                  Securities and Exchange Commission on September 25,
                  2006.)10.4
              SHARE
                  OPTION AGREEMENT among Minera Rio Tinto, S.A. de C.V. a corporation
                  duly
                  incorporated and validly existing pursuant to the laws of the United
                  Mexican States and having an office at Pascual Orozco No. 2117
                  - A
                  Chihuahua, State of Chihuahua, Mexico 31310 and Sunburst Acquisitions
                  IV,
                  Inc., a corporation duly incorporated and validly existing pursuant
                  to the
                  laws of the State of Colorado, USA and having an office at Suite
                  206, 595
                  Howe St., Vancouver, B.C. Canada V6C 2T5 (Herein incorporated by
                  reference
                  from the Registration Statement on Form SB-2/A filed with the Securities
                  and Exchange Commission on September 25,
                  2006.)




*--77--*




10.5
              AGREEMENT
                  made and entered in the City of Chihuahua, State of Chihuahua as
                  of the
                  18th day of August, 2005 among COMPAÑÍA MINERA DE NAMIQUIPA, S. A. DE C.
                  V. a company duly incorporated and validly existing pursuant to
                  the laws
                  of the United Mexican States, and MINERA RIO TINTO, S. A. DE C.
                  V. a
                  company duly incorporated and validly existing pursuant to the
                  laws of the
                  United Mexican States, and MARIO HUMBERTO AYUB TOUCHE having a
                  domicile at
                  San Antonio No. 2036 Chihuahua, Chihuahua and SUNBURST MINING DE
                  MÉXICO,
                  S. A. DE C. V., a company duly incorporated and validly existing
                  pursuant
                  to the laws of the United Mexican States (herein incorporated by
                  reference
                  from the Registration Statement on Form SB-2/A filed with the Securities
                  and Exchange Commission on December 18, 2006.)10.6
              AGREEMENT
                  made and entered at the City of Chihuahua, State of Chihuahua on
                  this the
                  18th day of August of the year 2005, among MINERA RIO TINTO, S.
                  A. DE C.
                  V. a company duly incorporated and validly existing pursuant to
                  the laws
                  of the United Mexican States, and SUNBURST MINING DE MÉXICO, S. A. DE C.
                  V. a company duly incorporated and validly existing pursuant to
                  the laws
                  of the United Mexican States (Encino Gordo) (Herein incorporated
                  by
                  reference from the Registration Statement on Form SB-2/A filed
                  with the
                  Securities and Exchange Commission on September 25,
                  2006.)10.7
              OPERATOR’S
                  AGREEMENT dated effective as of the 18th day of August, 2005, among
                  Minera
                  Rio Tinto, S.A. de C.V. a corporation duly incorporated and validly
                  existing pursuant to the laws of the United Mexican States and
                  having an
                  office at Pascual Orozco No. 2117 - A Chihuahua, State of Chihuahua,
                  Mexico 31310, and Sunburst de Mexico, S.A. de C.V. a corporation
                  duly
                  incorporated and validly existing pursuant to the laws of the United
                  Mexican States and having an office at Suite 5, Avenida del Mar
                  No.1022
                  Zona Costera, Mazatlan, State of Sinaloa, Mexico (Herein incorporated
                  by
                  reference from the Registration Statement on Form SB-2/A filed
                  with the
                  Securities and Exchange Commission on September 25,
                  2006.)10.8
              ASSIGNMENT
                  OF CONTRACT AGREEMENT made and entered in the City of Chihuahua,
                  State of
                  Chihuahua as of this the 18th day of August, 2005 among MINERA
                  RIO TINTO,
                  S. A. DE C. V. a company duly incorporated and validly existing
                  pursuant
                  to the laws of the United Mexican States, and CORPORATIVO MINERO,
                  S.A. DE
                  C.V. a company duly incorporated and validly existing pursuant
                  to the laws
                  of the United Mexican States, and SUNBURST MINING DE MÉXICO, S. A. DE C.
                  V. a company duly incorporated and validly existing pursuant to
                  the laws
                  of the United Mexican States (herein incorporated by reference
                  from the
                  Company’s report on Form 8-K for report date August 22, 2005 and filed
                  with the Securities and Exchange Commission on August 25,
                  2005).10.9
              ASSIGNMENT
                  OF CONTRACT AGREEMENT made and entered in the City of Chihuahua,
                  State of
                  Chihuahua as of this the 18th day of August, 2005, among MINERA
                  RIO TINTO,
                  S. A. DE C. V. a company duly incorporated and validly existing
                  pursuant
                  to the laws of the United Mexican States, and RAFAEL FERNANDO ASTORGA
                  HERNÁNDEZ, having a domicile at Calle República de Uruguay No. 706 of the
                  City of Chihuahua, Chih, and SUNBURST MINING DE MÉXICO, S. A. DE C. V. a
                  company duly incorporated and validly existing pursuant to the
                  laws of the
                  United Mexican States (San Antonio) (herein incorporated by reference
                  from
                  the Registration Statement on Form SB-2/A filed with the Securities
                  and
                  Exchange Commission on December 18,
                  2006.)




*--78--*




10.10
              ASSIGNMENT
                  OF CONTRACT AGREEMENT made and entered in the City of Chihuahua,
                  State of
                  Chihuahua as of this the 18th day of August, 2005 among MINERA
                  RIO TINTO,
                  S. A. DE C. V. a company duly incorporated and validly existing
                  pursuant
                  to the laws of the United Mexican States, having an office at Av.
                  Pascual
                  Orozco Number 2117- Altos, La Cima, C. P. 31310, Chihuahua, Chihuahua,
                  and
                  MINERA RACHASA, S.A. DE C.V., a company duly incorporated and validly
                  existing pursuant to the laws of the United Mexican States, and
                  having an
                  office at Niños Héroes No. 410 Colonia Centro, Chihuahua, Chihuahua (RFC
                  BMM-900120-8B6), and SUNBURST MINING DE MÉXICO, S. A. DE C. V. a company
                  duly incorporated and validly existing pursuant to the laws of
                  the United
                  Mexican States (San Francisco) (herein incorporated by reference
                  from the
                  Registration Statement on Form SB-2/A filed with the Securities
                  and
                  Exchange Commission on December 18, 2006.)10.11
              THE
                  NEW AGREEMENT entered into on December 8, 2005 among the Company,
                  Sunburst
                  de Mexico, and MRT (herein incorporated by reference from the Company’s
                  current report on Form 8-K for report date December 8, 2005 and
                  filed with
                  the Securities and Exchange Commission on December 14,
                  2005).10.12
              Funds
                  Escrow Agreement dated July 2005, among Sunburst Acquisitions IV,
                  Inc.,
                  Investment Fund, Ltd., Alpha Capital AG and Stonestreet LP, and
                  Grushko
                  & Mittman, P.C. (herein incorporated by reference from the Company’s
                  current report on Form 8-K dated July 1, 2005 and filed with the
                  Securities and Exchange Commission on August 17, 2005).10.13
              Repayment
                  Agreement dated July 15, 2005 by and among Sunburst IV, Inc. and
                  Investment Fund, Ltd., Alpha Capital AG and Stonestreet LP. (herein
                  incorporated by reference from the Company’s current report on Form 8-K
                  dated July 1, 2005 and filed with the Securities and Exchange Commission
                  on August 17, 2005).10.14
              Consulting
                  Agreement dated July 1, 2005 between Tracy A. Moore and Sunburst
                  Acquisitions IV, Inc. (herein incorporated by reference from the
                  Company’s
                  current report on Form 8-K dated July 1, 2005 and filed with the
                  Securities and Exchange Commission on August 17, 2005).10.15
              Consulting
                  Agreement with G.M. Capital Partners, Ltd. dated January 30, 2006
                  (incorporated by reference from Current Report on Form 8-K filed
                  with the
                  Securities and Exchange Commission on February 7,
                  2006).10.22
              Original
                  Agreement between MRT and Corportivo Minero dated 2004 concerning
                  the
                  Cieneguita property (herein incorporated by reference from the
                  Registration Statement on Form SB-2/A filed with the Securities
                  and
                  Exchange Commission on December 18, 2006.)10.23
              Agreement
                  between MRT and La Empresa Denominada Minera Rachasa dated 2004
                  concerning
                  the San Francisco concessions (Herein incorporated by reference
                  from the
                  Registration Statement on Form SB-2/A filed with the Securities
                  and
                  Exchange Commission on September 25, 2006.)14.1
              Code
                  of Ethics (Herein incorporated by reference from the Registration
                  Statement on Form SB-2 filed with the Securities and Exchange Commission
                  on April 7, 2006).16.1
              Responsive
                  letter of Comiskey & Co. (incorporated by reference from Current
                  Report on Form 8-K filed with the Securities and Exchange Commission
                  on
                  July 16, 2004).21.1
              Subsidiaries
                  of the Registrant (Herein incorporated by reference from the Registration
                  Statement on Form SB-2 filed with the Securities and Exchange Commission
                  on April 7, 2006).31.1
              Certification
                  of Chief Executive Officer of Mexoro Mineral Ltd. pursuant to Rule
                  13a-14(a)/15d-14(a). *31.2
              Certification
                  of Chief Financial Officer of Mexoro Minerals, Ltd. pursuant to
                  Rule
                  13a-14(a)/15d-14(a). *32.1
              Certification
                  of Chief Executive Officer of Mexoro Minerals Ltd. pursuant to
                  18 U.S.C.
                  Section 1350. *




*--79--*




32.2
              Certification
                  of Chief Financial Officer of Mexoro Minerals, Ltd. pursuant to
                  18 U.S.C.
                  Section 1350. *





*filed
      herewith





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





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, 2006 or February 28, 2005.





Tax
      Fees





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





All
      Other
      Fees





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





**SIGNATURES**





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








**MEXORO
      MINERALS LTD.**








By:
      /s/ ROBERT
      KNIGHT


Robert
      Knight, CEO and Director





*--80--*




Date: 
        March 16, 2007





By:
          /s/
          KURT BORDIAN
 Kurt
          Bordian, CFO


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








By:
      /s/ ROBERT
      KNIGHT


Robert
      Knight, CEO and Director








By:
      /s/ MARIO
      AYUB


Mario
      Ayub, COO and Director





By:
          /s/
          KURT BORDIAN
 Kurt
          Bordian, CFO


By:
      /s/ TRACY
      A.
      MOORE


Tracy
      A.
      Moore, Director








Date: 
        March 16, 2007





*--81--*