|UNITED
      STATES                     
|----------------------------------------
|SECURITIES
      AND EXCHANGE COMMISSION
|Washington,
      D.C. 20549            
|FORM 10-KSB                             
|(Mark One)                              
|[X]                                     
|                                        
|                                        
|OR                                      
|[
      ]                               
|                                        

Commission file number
000-50931AURELIO RESOURCE
CORPORATION(Name of small business issuer
in its charter)

|Nevada                                                               | 33-1086828                             
|-------------------------------------------------------------------- | ---------------------------------------
|(State or other
      jurisdiction of incorporation or organization) | (IRS Employer Identification
      No.)

Suite 200, 5554 South Prince
StreetLittleton, Colorado,
80120(Address of principal executive
offices)303.795.3030(Issuers telephone
number)

Check whether the issuer (1) filed all
reports required to be filed by Section 13 or 15(d) of the 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 [ ]

Check if there is no disclosure of
delinquent filers in response to Item 405 of Regulation S-B is not 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.
[ ]

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

State issuers revenues for its most
recent fiscal year: Nil

State the aggregate market value of the
voting and non-voting common equity held by non-affiliates computed by reference
to the price at which the common equity was sold, or the average bid and asked
prices of such common equity, as of a specified date within 60 days. (See
definition of affiliate in Rule 12b-2 of the Exchange Act.): 18,401,500 shares
of common stock at $0.06(1)per share = $1,104,090(1)Bid
price on August 1, 2006.

State the number of shares outstanding of
each of the issuers classes of equity stock, as of the latest practicable date:
28,436,500 shares of common stock issued and outstanding as of August 28, 2006.

Transitional Small Business Disclosure
Format (Check one): Yes [ ] No [X]

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2

PART I

Item 1.Description of Business.This annual report contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. These statements relate
to future events or our future financial performance. In some cases, you can
identify forward-looking statements by terminology such as may, should,
expects, plans, anticipates, believes, estimates, predicts,
potential or continue or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors, including the risks in the section
entitled Risk Factors, that may cause our or our industrys actual results,
levels of activity, performance or achievements to be materially different from
any future results, levels of activity, performance or achievements expressed or
implied by these forward-looking statements.

Although we believe that the expectations
reflected in the forward-looking statements are reasonable, we cannot guarantee
future results, levels of activity, performance or achievements. Except as
required by applicable law, including the securities laws of the United States,
we do not intend to update any of the forward-looking statements to conform
these statements to actual results.

Our financial statements are stated in
United States dollars and are prepared in accordance with United States
Generally Accepted Accounting Principles.

As used in this annual report, the terms
we, us and our mean Aurelio Resource Corporation, our wholly owned
subsidiary, Aurelio Resources Inc. and our 98% owned subsidiary, Minera Milenium
S.A. de C.V., unless otherwise indicated.

Corporate History

We were incorporated on February 19, 2004,
under the laws of the state of Nevada. Effective June 16, 2006 we changed our
name to Aurelio Resource Corporation and effected a six and one-half (6.5) for
one (1) forward stock split of our authorized, issued and outstanding common
stock. As a result, our authorized capital has increased from 75,000,000 shares
of common stock with a par value of $0.001 to 487,500,000 shares of common stock
with a par value of $0.001. Except as otherwise stated, all references to shares
and prices per share have been adjusted to give retroactive effect to the stock
split.

On August 17, 2006 we completed our
acquisition of all of the issued and outstanding common stock of Aurelio
Resources Inc., a privately-owned Colorado corporation engaged in mineral
exploration, pursuant to an agreement we entered into with Aurelio Resources
Inc. and its shareholders dated April 27, 2006, as amended on June 9, 2006 and
further amended on July 13, 2006 and on July 21, 2006.

Current Business

As a result of our acquisition of Aurelio
Resources Inc., we have indirectly acquired all of its assets. In particular, we
have acquired properties in Arizona, and a 98% interest in Minera Milenium S.A.
de C.V., a company incorporated in Mexico which holds an option to acquire a
100% interest in a property in Mexico. The assets held by Aurelio Resources Inc.
are described below under Description of Our Properties.

Aurelio Resources Inc. did not have a
business relationship with our company. Our new directors were all directors of
Aurelio Resources Inc. Dr. Frederik Warnaars, our President, Chief Executive
Officer, Chief Financial Officer, Treasurer and a director, and Stephen Doppler,
our Vice-President of Exploration and a director, were responsible for acquiring
the Hill Copper Property for Aurelio Resources Inc. Dr. Frederik Warnaars,
Stephen Doppler and David C. Jonson will remain directors and officers of
Aurelio Resources Inc. for the foreseeable future. We anticipate that our
subsidiary will eventually be merged with our company.

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3

We are an exploration stage company engaged in the exploration of mineral properties and we may also, from time to time, acquire additional mineral properties to explore.  Prior to the completion of the acquisition of
Aurelio Resources Inc., we had a 100% interest in twenty-five mineral claims, subject to a 3% net proceeds interest to the State of Alaska (the Alaska Property). Upon our the completion of our acquisition of Aurelio Resources Inc., we
now have, in addition to the Alaska Property, 100% rights to mineral exploration and development in 13 mining claims in Arizona, and an option to earn a 100% interest in the mineral exploration and development of 3 mining claims/concessions covering
approximately 1,000 hectares, in Durango, Mexico.  We intend to explore these properties with a view to exploiting any mineral deposits we discover or selling or otherwise assigning the rights to do so.

Since we are an exploration stage company, there is no assurance that a commercially viable mineral deposit exists on any of our properties, and a great deal of further exploration will be required before a final evaluation
as to the economic and legal feasibility for our future exploration is determined. We have no known reserves of any type of mineral. To date, we have not discovered an economically viable mineral deposit on the mineral property, and there is no
assurance that we will discover one.

Mineral property exploration is typically conducted in phases. Before it is carried out, each subsequent phase of exploration work is recommended by a geologist based on the results from the most recent phase of
exploration. We have only recently commenced the initial phase of exploration on our Alaska Property and have not yet begun exploration of the properties held by Aurelio Resources Inc. and Minera Milenium S.A. de C.V. Once we complete a phase of
exploration, we will make a decision as to whether or not we proceed with each successive phase based upon the analysis of the results of that program.  Our directors will make these decisions based upon the recommendations of the independent
geologist who oversees the program and records the results.

Our plan of operation is to conduct exploration work on each of our properties in order to ascertain whether any possess commercially exploitable quantities of minerals. There can be no assurance that such mineral deposits
exist on any of our properties.

Even if we complete our proposed exploration programs on our properties and we are successful in identifying a mineral deposit, we will have to spend substantial funds on further drilling and engineering studies before we
will know whether we have a commercially viable mineral deposit.

We are interested in exploring for minerals such as copper, gold, silver and zink on our properties but we are not restricting our exploration to any one type or select types of minerals. We may also seek to acquire other
properties for mineral exploration in the United States, Mexico, Latin America or elsewhere.

Our objective is to pursue deposits of any type of mineral and to develop, sell or otherwise assign the rights to develop the properties if and when any commercially viable deposits of minerals are found on our
properties.

DESCRIPTION OF OUR MINERAL PROPERTIESGlossary of Geologic and Mining Terms

airborne geophysical surveys are the search for mineral deposits by measuring the physical property of near-surface rocks through the use of an airplane or helicopter in order to detect unusual responses caused
by the presence of mineralization. Electrical, magnetic, gravitational, seismic and radioactive properties are the ones most commonly measured;

andesite is a type of dark coloured, fine-grained volcanic rock;

anomalous means either a geophysical response or a rock, stream silt, or soil sample assay value that is greater than the average background value;

breccia means a coarse-grained rock, composed of rounded to angular rock fragments held together by a finer-grained matrix;

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4

dacite is a type of fine-grained extrusive rock;

drilling involves extracting a long cylinder of rock from the ground to determine amounts of metals at different depths. Pieces of the rock obtained, known as drill core, are analysed for mineral
content;

electromagnetic surveys involve measuring whether or not rocks on the surface and subsurface of the property conduct electricity. Copper and gold are excellent conductors of electricity. Areas of high
conductivity are targets for follow-up exploration;

felsic describes an igneous rock having abundant light colored minerals; geophysics is the study of physical properties of rock and minerals; geochemistry is the study of chemical
properties of rocks;

igneous rock means a rock formed by the cooling of molten rock either underground or at the surface of the earth;

induced polarization (IP) survey is an electrical survey method that measures the resistivity and chargeability of rock which may be a result of sulphide content of the rock;

intrusive rock means an igneous rock formed by the cooling of igneous rock, that when in the molten or partially molten stage, penetrated into or between other rocks, but cooled beneath the surface;

magnetic surveys involve searching for changes in the magnetic field over property areas. Magnetic anomalies may be a result of accumulations of certain magnetic rocks such as pyrrhotite, hematite and
magnetite: These rock types are often found alongside base metals such as copper, zinc and nickel, or precious metals such as gold and silver.

metasediment refers to metamorphosed sedimentary rock;

ore is a mixture of minerals from which at least one metal can be extracted at a profit;

orebody means a continuous well-defined mass of material containing enough ore to make extraction economically feasible;

porphyry means an igneous rock of any composition that contains conspicuously large mineral crystals set in a finer-grained ground mass;

pyrite is an iron sulfide;

pyritization means a rock impregnated with pyrite; and

vein means a mineral filling of a fault or fracture in the host rock, typically in tabular or sheet-like form.

Hill Copper Property, Arizona

Our wholly-owned Colorado subsidiary, Aurelio Resources Inc., is the registered owner of a 100% interest in 13 mining claims on a mineral property located in southeastern Arizona (the Hill Copper Property). In
acquiring the Hill Copper Property, we acquired thirteen unpatented lode-mining claims (covering approximately 260 acres), staked on federal lands administered by the United States Bureau of Land Management. The unpatented mining claims are
identified as MAN 1 through MAN 6, which are contiguous, and MAN 7 through MAN 13, which were staked on two occasions and which are all contiguous with one another.

The following description of the Hill Copper Property is excerpted from a report on the Hill Copper Property, Arizona, dated June 15, 2006 and prepared by David Jonson and Dr. Frederik Warnaars for Aurelio Resources
Inc.

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5

General Overview of our Arizona Mining
Claims at Hill Copper Property

The Hill Copper Property consists of
thirteen unpatented lode-mining claims (covering approximately 260 acres),
staked on federal lands administered by the United States Bureau of Land
Management. The mining claims are in good standing with all regulatory
authorities, and the mining claims are properly registered at Cochise County in
Bisbee and the United States Bureau of Land Management in Phoenix, Arizona. The
current annual maintenance fees are $125 per mining claim due on or before
August 31st of each year.

The MAN 1-6 mining claims are six
contiguous unpatented mining claims (MAN 1, MAN 2, MAN 3, MAN 4, MAN 5 and MAN
6), each measuring 600 feet by 1,500 feet, staked in Section 28, Township 19
South, Range 25 East, Turquoise Mountain Quadrangle, Courtland-Gleeson Mining
District, Cochise County, Arizona.

The MAN 7-13 mining claims are seven
contiguous unpatented mining claims (MAN 7, MAN 8, MAN 9, MAN 10, MAN 11, MAN 12
and MAN 13), each measuring 600 feet by 1,500 feet, staked in Section 28,
Township 19 South, Range 25 East, Turquoise Mountain Quadrangle,
Courtland-Gleeson Mining District, Cochise County, Arizona.

Our subsidiary, Aurelio Resources Inc.,
has also entered into a purchase and sale agreement, dated for reference May 15,
2006, with Hope Mining and Milling Company, an Arizona corporation, concerning
the acquisition by Aurelio Resources Inc. of 30 patented mining claims known as
Courtland Mines and located in Turqoise Mining District, Cochise County,
Arizona. The acquisition of Courtland Mines is pending and expected to be
completed in September 2006.

Recording of the Mineral
Claims

The mineral claims comprising the Hill
Copper Property have the following legal description:

|Table
      3: Hill Property Claims
|-----------------------------------
|Claim
      Name                   
|MAN 1                              
|MAN 2                              
|MAN 3                              
|MAN 4                              
|MAN 5                              
|MAN 6                              
|MAN 7                              
|MAN 8                              
|MAN 9                              
|MAN 10                             
|MAN 11                             
|MAN 12                             
|MAN 13                             

Location, Access and Property
Overview

The Hill Copper Property is located on the
eastern flank of the southern Dragoon Mountains, approximately 80 miles
southeast of Tucson, Arizona. Access to the Hill Copper Property from Tucson is
via the Dragoon turnoff on I-10 freeway, 12 miles east of Benson, then east to
Arizona Highway 191, then south through Sunsites Village and the nearby ghost
town of Pearce.

Aurelio Resources, Inc. is not aware of
any particular environmental, political or regulatory problems that would
adversely affect mineral exploration of the property.

The topography in the project area varies
from flat to rolling hills with an average elevation of 4,600 feet above sea
level. Vegetation in the area is sparse and is typical of a desert
climate.

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6

Mining and Exploration
History

Our Hill Copper Property mining claims are
located within the Turquoise Mining District covering about 15 square miles that
has a long history of mining production. Modern mining for copper and turquoise
commenced in the northern end of the Turquoise Mining District in
1877.

Exploration and development by the
Calumet, Phelps Dodge and Great Western companies started a boom in the area in
1907, and copper production peaked in 1912. The larger mines closed by 1920,
although small operators continued production until about 1932. There are at
least 52 old mine workings in the Turquoise Mining District.

Mineral Exploration Company (a division of
Union Oil Company) drilled its first hole at the Hill Copper deposit in 1957 and
have subsequently drilled 28 more holes on a rough grid. Mineral Exploration
Company later abandoned the property in 1958.

During the subsequent 27 years, eight
other companies drilled a total of 247 additional holes in the Turquoise Mining
District, with 53 of these on the Hill Copper Property. Only relatively small
copper-zinc skarns or replacements were identified and Hill Copper was the
largest of these. Near-surface oxide copper and chalcocite blankets were drilled
through but generally ignored.

Mineralization

The primary and secondary mineralization
are both important for the economics of a mineral deposit. The secondary
mineralization is closer to the surface whereby the operating, mining and
extraction costs, and initial investment are lower than the primary
mineralization. Metallurgical testing is urgent, early in the development,
because industry-wide copper recovery varies between 60% and 93%. The deeper
primary mineralization has the best size potential whereby the economics of
scale becomes essential as well as the metallurgy. There are two types of
mineralization requiring different metallurgical processes:

Primary Protore (milling required, not
amenable to heap leaching)

Massive pyrite-chalcopyrite(Cu)-sphalerite
(Zn)-magnetic (iron oxide) deposits, with by-products of gold and silver, occur
in skarn or as replacement deposits in the highly favourable Abrigo limestone.
These were the focus of historic mining operations. Lower grade, disseminated
mineralization is more confined to intrusive porphyries, but is often present as
well as in the Bolsa quartzite and the Abrigo limestone.

Hydrothermal alteration in the wall rock
typically consists of intense stockwork and pervasive silicification, along with
strong sericitization and argillization to the extent that rocks in the
drillcore are often unidentifiable.

Secondary enrichment (amenable to heap
leaching and SX/EW recovery)

Near-surface protore was later oxidized,
leached and heavily iron-stained. Some limestone areas contain oxide cooper
minerals (malachite, azurite or turquoise) or oxide zinc minerals, like
smithsonite, ZnCO3.  Underlying theoxide zone is an extensive supergene blanket, containing
chalcocite (Cu2S a mineral with 79%
copper) and is mainly developed in porphyry rock.

This enrichment blanket, along with the
underlying protore, was later offset by numerous steep, closely spaced faults
making lateral projection difficult.

The oxide deposits are the most
economically attractive in the Hill Copper area because they are very close to
the surface above the chalcocite blanket and could be easily mined with a very
low stripping ratio. In addition, the copper values are usually higher than in
the underlying blanket.

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7

Exploration Program  Hill Copper
Property

The phased exploration program for our
Hill Copper Property will evaluate the mineral potential from historic mining
operations, together with surface and near surface mineralization, as well as
deep mineralization.

Phase I. Our objective for Phase I of the
Hill Copper program, which has begun, consists of extending and consolidating
our land position by staking additional claims, negotiating with private
landowners and acquiring state leases. We budgeted this part of Phase I at
$300,000.

In addition, we will review our extensive
database of information in detail. We estimate this phase will take 90 days to
complete, with a projected remaining budget cost of $110,000.

Phase II. Our board of directors will make
a determination whether to proceed with Phase II of the exploration program upon
completion of Phase I of the exploration program by the geologist and the review
of the results of Phase I. In completing this determination, we will make an
assessment as to whether the results of phase one are sufficiently positive to
enable us to achieve any financing that may be necessary for us to proceed with
phase two of the exploration program. This assessment will include an assessment
of the market for financing of junior mineral exploration projects at the time
of our assessment. Phase II will likely include, together with necessary
permitting, one or more of: (a) systematic sampling and evaluation of existing
data; (b) drilling of surface and/or deep underground targets to confirm the
resources previously identified by other exploration companies and to test the
exploration targets identified in Phase I. Budgetary requirements are uncertain
until such time as a suitably detailed scope of work for the project is
established from Phase I, however are likely to be in the range of $500,000,
over a seven to eight month period.

Table 4: Budget Summary of Hill Copper
Property

|Phase I                                         | Estimated
    Cost
|----------------------------------------------- | ------------------
|Extending and Consolidating Land
      Position | $300,000          
|Legal and Technical                             | $64,000           
|Transportation                                  | $6,150            
|Lodging and Food                                | $4,000            
|Professional Fees and
    Engineering           | $27,500           
|Contingency                                     | $8,350            
|Phase I
    Total                               | $410,000          
|Phase II                                        | Estimated Cost    
|Technical, mainly drilling                      | $400,000          
|Transportation                                  | $9,600            
|Lodging and Food                                | $6,000            
|Professional Fees and
    Engineering           | $42,500           
|Additional Land Acquisition                     | $25,000           
|Contingency                                     | $16,900           
|Phase II
    Total                              | $500,000          

We also own 98% of the issued and
outstanding common shares of Minera Milenium S.A. de C.V., a company
incorporated under the laws of Mexico. Minera Milenium S.A. de C.V. holds an
option to earn a 100% undivided interest in certain mining claims/concessions
situated in the Tamazula District, Durango, Mexico (the Gavilanes
Property).

The Gavilanes Property consists initially
of mining claims/concessions covering approximately a 100 hectares identified as
title number 185397, expediente 321.1/24569 and granted by the Direcion General
de Minas and inscribed with number 577, on page 145 of Volume number 251 of the
General book of Mining Concessions of the

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8

Public Mines register in Mexico City, D.F.
Subsequently, 900 hectares exploration concessions were staked around the
initial Gavilanes property.

Option Terms

Pursuant to the terms of the option
agreement, dated for reference August 18, 2005, between Aurelio Resources Inc.
and Minera Holmex S.A. de C.V., a company incorporated under the laws of the
State of Sinaloa, Republic of Mexico, and wholly-owned by Dr. Frederik Warnaars,
Aurelio Resources Inc. acquired the right to earn up to a 100% interest in the
mineral exploration and development in 3 mining claims/concessions, covering
approximately 1,000 hectares, in Durango, Mexico, free and clear of all charges,
encumbrances and claims. Aurelio Resources Inc. assigned all of its interest in
this option to its 98% owned subsidiary, Minera Milenium S.A. de C.V.

In consideration for granting the option
to Aurelio Resources Inc., Aurelio Resources Inc. paid Minera Holmex an amount
equal to the taxes in arrears for the years 2001 and 2002 and the aggregate sum
of P$63,536 Mexican Pesos plus late payment penalties (approximately US$6,100).
Aurelio Resources Inc. also paid the sum of US$5,000 to Minera Holmex S.A. de
C.V. as of February 1, 2006 in accordance with the options
provisions.

To maintain the option in good standing,
we will need to make the following payments to Minera Holmex S.A. de C.V. no
later than the dates provided below:

|Payment Due
      Date | Cash (US$)
|---------------------- | ----------
|August 15,  2006       | $10,000   
|February 15, 2007      | $15,000   
|August 15,  2007       | $15,000   
|February 15, 2008      | $20,000   
|August 15,  2008       | $20,000   
|February 15, 2009      | $25,000   
|August 15,  2009       | $25,000   
|February 15, 2010      | $30,000   
|August 15,  2010       | $30,000   
|February 15, 2011      | $305,000  
|Total
      Payments   | $500,000  

The Gavilanes Property is subject to a 3%
net smelter royalty in favour of Mr. Modesto Rivas Beltran of Culiacan, Sinaloa,
Mexico. There are no provisions in the option whereby we can purchase all or a
portion of the smelter royalty from Mr. Modesto Rivas Beltran.

The smelter royalty is payable only from
the actual proceeds received by our company from any mint, smelter, refinery or
other purchaser from the sale of our ore, metals (including bullion) or
concentrates produced from the Gavilanes Property and sold, or proceeds received
from an insurer in respect of our mineral products, after deducting certain
expenses related to certain costs to our company of the extraction, preparation
and sale of our mineral products. The smeter royalty shall be paid to Mr.
Modesto Rivas Beltran on a quarterly basis within 45 days of the end of each
fiscal quarter.

The following description of the Gavilanes
Property is reproduced from a report on the Gavilanes Property entitled
Geology, Mineralization and Proposed Drill Tests At Gavilanes, Durango,
Mexico, revised March 16, 2006 and prepared by Dr. Frederik Warnaars, Victor
Hugo Mendoza D, Mario Llano Z, and Othon Colin for Aurelio Resources Inc.

Location and Access

The Gavilanes Property is located
approximately 70 km east of Culiacan, near the hamlet of Chiqueritos (see the
illustration below) and can be reached by small fixed wing aircraft or a 5 hour
drive from Culiacan via Tarmazula.

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9

Road building to possible drill platforms was carried out from in the spring of 2005.  This road building has provided access to many rock exposures on both the northern and southern flanks of the Gavilanes ridge. To date,
we have completed approximately 4,400 meters of roadway.

Gavilanes Property Overview

The Gavilanes Property consists of mining claims/concessions covering approximately a 100 hectares identified as title number 185397, expediente 321.1/24569 and granted by the Direcion General de Minas and inscribed with
number 577, on page 145 of Volume number 251 of the General book of Mining Concessions of the Public Mines register in Mexico City, D.F. In the Map set out below, the area subject to our Option is identified as Los Gavilanes, an area directly south
of Chiqueritos village.

Reconnaissance mapping and sampling was completed over an area of about 5 square kilometers from the area near the airport, about 2.5 kilometres north-west of Chiqueitos, to the San Andres area in the south.

Geology

The area near the Gavilanes Property is underlain by a metasedimentary sequence of possible early Mesozoic age rocks consisting of schists, shales, phyllites, quartzites and meta-arkoses that reach low-grade greenschist
metamorphism.

The sequence is intruded by fine grained dacite porphyries with variable amounts of biotite and/or hornblende and/or magnetite with different porphyrite textures.  Various porphyry intrusions may be present or possibly one
intrusive with many local variations.  Hydrothermal alterations and surface weathering are often intense and pervasive, so it is difficult at this stage to separate and map the various intrusions or different phases.  At one location in the San
Andres area, an unaltered porphyry was found. A hornblende concentrate separated from this porphyry was dated by K/Ar method and gave an age of 62.5 million years (early Paleocene). Porphyry intrusions are exposed over an area of two km in a
north-south direction and about one km in an east-west direction. To the east and south they are covered by post-mineral volcanics. A weakly mineralized and weakly altered hydrothermal system was dated as a whole rock specimen and gave
an age of 42.3 million years (mid-Eocene).

An unbrecciated contact of dacite porphyry with various types of metasediments is exposed in the creek west of Chiqueritos village.  This contact is diffuse and consists of a hybrid zone with assimilated sediments and
contaminated intrusives suggesting a slow process of emplacement.

Strike and dip metasediments to the northeast, north, west and in upper reaches of Arroyo del Oso in the south suggest a doming effect caused by the dacite porphyry complex.

An equigranular medium grained granodiroite is exposed along the road between the airport and Chiqueritos. This is probably part of a batholith exposed further west. It is unmineralized and intrudes the metasediments. A
K/Ar age determination of hornblends separated from a granodiorite resulted in an age of 81.2 million years (upper Cretaceous).

Many post mineral felsic and mafic dikes cut the area. Their widths vary between 30 cm to 9 meters and are mostly steeply dipping. At various places, they can be followed over a distance of more than 1,000 meters.

The youngest rocks are Miocene volcanics covering the area to the east and south. They are flat lying and cover the mountains above the 1,200 to 1,300 meter elevation. Part of the prospect may have oxidized prior to the
deposition of the volcanic sequence. Oxidized and mineralized porphyries are therefore anticipated to exist below the volcanics to the east.  Gavilanes ridge is undergoing at present a second stage of oxidation superimposed on an earlier oxidation
stage.

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Exploration Program  Gavilanes Property

The exploration program for our Gavilanes Property will evaluate the mineral potential of mine waste from historic mining operations, together with surface and near surface mineralization, as well as deep mineralization.

Phase I: We conducted a due diligence phase evaluating all the pertinent data in Culiacan, followed by a field visit. This Phase took about six days to complete and improveed our existing information regarding the geology,
alteration and gold/silver/molybdenum distribution at the Gavilanes Property. Phase I helped to identify and mark various drill hole locations and plan the initial drilling phase. The total budget for Phase I was $20,000

Phase II.  Phase II will be dependent upon the results of Phase I.  The Phase II initial drilling program (to 750 meters), together with necessary permitting, aims to test three of the best targets for an economic bulk
mineable, open-pittable deposit. Phase II is expected to take up to one month to complete and is budgeted to cost $100,000. The estimated time frame is dependent upon obtaining permitting for access road construction and drill platform
construction, experience of the drilling team, rock quality and weather conditions.

Phase III. Phase III will be dependent upon the results of Phase II, and will likely include, together with necessary permitting, a second drilling program of 7 holes to a total depth of 1,750 meters. The estimated cost to
complete is $270,000 and should take three to four months to complete.

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11

Table 5: Budget of Gavilanes
Property

|Phase II                     | Estimated Cost
|---------------------------- | --------------
|Technical Exploration        | $80,500       
|Transportation               | $5,000        
|Lodging and Food             | $1,700        
|Professional Fees and Labour | $10,000       
|Contingency                  | $2,800        
|Property Payment             | $10,000       
|Phase II Total               | $110,000      
|Phase III                    | Estimated Cost
|Technical Exploration        | $192,150      
|Transportation               | $10,000       
|Lodging and Food             | $4,500        
|Professional Fees and Labour | $18,300       
|Contingency                  | $20,050       
|Property Payment             | $15,000       
|Phase III
      Total        | $260,000      

Lake Iliamna Property, Alaska

By mineral staking in March 2004, we have
acquired 100% interest in twenty-five mineral claims, subject to a 3% net
smelter royalty to the State of Alaska on production on state lands. The staking
was originally executed by Alaska Earth Resources, Inc., an Alaska geological
company, acting as our agent. Shortly thereafter, we filed our certificate of
authority to do business in the state of Alaska and the ownership of the claims
was transferred from Alaska Earth Resources, Inc. to us. The mineral claims are
located approximately 7.5 miles northwest of Lake Iliamna which is 215 miles
south-west of Anchorage, Alaska. Each mineral claim entitles us to one quarter
section of property reserved for mineral exploration that consists of 160 acres.
The total area of the twenty-five mineral claims is approximately 4,000 acres or
6.25 square miles. The mineral claims are in good standing with the State of
Alaska through to September 1, 2006.

Phase one of our mineral exploration work
program was completed in May 2005, and consisted of an induced polarization and
ground magnetic survey. The program took approximately ten days to complete and
was estimated to cost approximately $30,000. Due to higher than expected costs
for mobilization, demobilization and labor, we revised our estimated costs of
phase one to approximately $34,000. Our consulting geophysics firm has
recommended that the we repeat certain portions of the induced polarization
survey conducted in phase one to gather better data before making a decision to
move to phase two. However, our ability to continue exploration of the mineral
claims will be subject to us obtaining additional financing as these
expenditures will exceed our cash reserves.

Recording of the Mineral
Claims

The mineral claims consist of twenty-five
mineral claims located in the Iliamna Lake area of Alaska. The mineral claims
have the following legal description:

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12

Table 1: Lake Iliamna Property, Alaska
Claims

|Name of            |                  |          |                  
|------------------ | ---------------- | -------- | -----------------
|Mining
      Claim | ADL
      Number | Meridian | Expiry
      Date
|Fur 1              | 644524           | Seward   | September 1, 2006
|Fur 2              | 644525           | Seward   | September 1, 2006
|Fur 3              | 644526           | Seward   | September 1, 2006
|Fur 4              | 644527           | Seward   | September 1, 2006
|Fur 5              | 644528           | Seward   | September 1, 2006
|Fur 6              | 644529           | Seward   | September 1, 2006
|Fur 7              | 644530           | Seward   | September 1, 2006
|Fur 8              | 644531           | Seward   | September 1, 2006
|Fur 9              | 644532           | Seward   | September 1, 2006
|Fur 10             | 644533           | Seward   | September 1, 2006
|Fur 11             | 644534           | Seward   | September 1, 2006
|Fur 12             | 644535           | Seward   | September 1, 2006
|Fur 13             | 644536           | Seward   | September 1, 2006
|Fur 16             | 644539           | Seward   | September 1, 2006
|Fur 17             | 644540           | Seward   | September 1, 2006
|Fur 18             | 644541           | Seward   | September 1, 2006
|Fur 19             | 644542           | Seward   | September 1, 2006
|Fur 20             | 644543           | Seward   | September 1, 2006
|Fur 21             | 644544           | Seward   | September 1, 2006
|Fur 22             | 644545           | Seward   | September 1, 2006
|Fur 23             | 644546           | Seward   | September 1, 2006
|Fur 24             | 644547           | Seward   | September 1, 2006
|Fur 25             | 644548           | Seward   | September 1, 2006
|Fur 35             | 644558           | Seward   | September 1, 2006
|Fur 36             | 644559           | Seward   | September 1, 2006

In order to maintain our mineral claims in
good standing, we must make payment to the State of Alaska of an annual rental
fee of $100 per quarter section, or $2,500 in total for our twenty-five mineral
claims, to keep our claims in good standing. This payment is for claims owned as
of the 1st of every September and is payable within ninety days or the 30th of
every November. We must make a payment of $2,500 to the State of Alaska by
November 30, 2006, or we will lose our mineral claims.

In addition, we must complete annual
labour or exploration expenditures on the mineral claims and file confirmation
of work with the applicable mining recording office of the State of Alaska.
Currently, exploration work with a minimum value of $400 per quarter section (or
mineral claim) is required before the 1st of every September with the exception
of the year the mineral claims are staked. Our claims encompass twenty-five
quarter sections so our commitment for exploration expenditures with the State
of Alaska for the current year is $10,000. During the year ended May 31, 2006,
we believe we met the $10,000 work commitment as required by the State of Alaska
to keep the claims in good standing by virtue of the work performed in the
previous year.

If we fail to make and file the work
expenditures or make the appropriate payments to the State of Alaska, we will
lose all interest in the mineral claims.

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13

Location and Access

Our Alaska property is located 7.5 miles north-west of Lake Iliamna which is 215 miles southwest of Anchorage, Alaska. This property is thirty-two miles west of the town of Iliamna which has a paved commercial airport,
general store, and lodge facilities. There are several float plane carriers in the area that may be used for an exploration fly camp support. Float planes can land on lakes in or near our property. There are no roads in the area outside the
immediate vicinity of Ilamna. Our Alaska property can be accessed by snow machine in the winter and by all terrain vehicles in the summer.  To date, we have not discovered an economically viable mineral deposit at the Lake Iliamna Property, and
there is no assurance that we will discover one.



Physiography and Climate

Our claims occupy a relatively flat plateau at an elevation of 600-750 feet above sea level that is underlain by glacial outwash. There are no trees and vegetation is sparse consisting of grasses, moss, lichen, and some
alder.

Technical Information Regarding the Property

The mineral property is the subject of a geological report prepared by William T. Ellis, B.Sc., Certified Professional Geologist, dated May 15, 2004. The following description of the mineral property is summarized from Mr.
Elliss report. There is no relationship between Mr. Ellis and us, our officers, our directors or our affiliates. In addition, the mineral property is subject of a geophysical report prepared by Shawn Rastad, B. Sc., and Syd Visser, B.Sc., P.
Geo., dated June 2005.  The geophysical report is a summary of the induced polarization survey and ground magnetic survey performed in May 2005.  There is no relationship between Mr. Rastad, Mr. Visser and us, our officers, our directors or our
affiliates.

History and Previous Work

Very little surface mapping or sampling has been completed on our mineral claims. An airborne magnetic survey was flown over the claim area in 2000 by a third party and a brief follow-up geologic reconnaissance was
completed by them. That magnetic survey data was published as an open file report by the United States Geological Survey in January 2004 allowing the public to view the data. There is no regional geochemistry in the area except for very wide-spaced
National Uranium Resource Evaluation data of which only one stream sample was taken within the claim group.

Conclusions and Recommendations of the Geological Report

Mr. Elliss geological report recommended a phase one exploration work program on the property that included a four line reconnaissance ground magnetic survey to define targets for further work. The proposed
north-west

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14

trending lines were to be approximately
1.5 to 2 miles long and spaced approximately three quarters of a mile apart. A
budget of $30,000 was estimated for phase one and it was expected to take
approximately two weeks to complete.

Recent Exploration Activities on the
Alaska Property

In late May 2005, we conducted the phase
one exploration work on the mineral claims consisting of an induced polarization
survey and a ground magnetic survey as recommended in Mr. Elliss report. The
cost of the program was approximately $34,000, which exceeded our initial
estimate by $4,000. The increase was a result of higher than expected costs for
mobilization, demobilization and labor. The work program commenced in mid May
2005 and lasted approximately ten days.

We commissioned a report on the results of
phase one from a consulting geophysics firm. The report stated the induced
polarization survey encountered various ground conditions resulting in varying
degrees of quality data. There were features of interest on several of the IP
lines surveyed but no conclusive evidence can be obtained from the acquired
chargeability readings. The combined affects of poor weather conditions, a
possible frost layer and the existence of a highly resistive overburden resulted
in very low voltage potential.

Our consulting geophysics firm has
recommended that the we repeat certain portions of the induced polarization
survey conducted in phase one to gather better data before making a decision to
move to phase two. We are considering this recommendation and we may decide to
repeat certain portions of the induced polarization survey during 2006 or 2007.
The cost to repeat Phase I is budgeted at $35,000.

Future Exploration Activities on the
Alaska Property

Our board of directors will make a
determination whether to proceed with phase two of the exploration program upon
completion of phase one of the exploration program by the geologist and the
review of the results of phase one. In completing this determination, we will
make an assessment as to whether the results of phase one are sufficiently
positive to enable us to achieve any financing that may be necessary for us to
proceed with phase two of the exploration program. This assessment will include
an assessment of the market for financing of junior mineral exploration projects
at the time of our assessment.

Phase two will consist of detailed
follow-up geological mapping and prospecting of the claim area, with grid
controlled geochemical and geophysical surveys as required to cover areas of
specific interest as identified in phase one. Phase two is intended to identify
the geological environment underlying the mineral claims and a detailed
mineralization map to scale should be produced. A geologist and a camp
consisting of four crew members will conduct a field program. Under the
supervision of the geologist, the crew will collect sediment samples for
geochemical analysis on the areas of interest identified in phase one. This
field work is expected to take place over a two week period and the analysis of
the sediment samples is expected to take an additional three to four weeks. This
level of surveying and sampling will provide a higher level of reconnaissance
information for the mineral claims. Phase two will also include an updated
geological report with an independent analysis and recommendation on the mineral
claims. Phase two is expected to take approximately six weeks to complete and it
is planned for the summer of 2007. A budget of $23,000 is estimated for phase
two and the components are as follows:

Table 2: Budget of Lake Iliamna
Property, Alaska

|Phase II                                                    | Estimated Cost
|----------------------------------------------------------- | --------------
|Geological mapping and report                               | $10,000       
|Reconnaissance stream, grid rock and 200 samples            | $10,000       
|Camp cost and logistical support  14 days with 4
      men | $3,000        
|Phase II Total                                              | $23,000       

Again, our board of directors will make a
determination whether to proceed with the next phase of the exploration program
upon completion of phase two. In completing this determination, we will make an
assessment as to whether the results are sufficiently positive to enable us to
achieve the financing that would be necessary for us to proceed. The next phase
of the exploration program would likely be comprised of a small drill program
and a

---

15

geological interpretation of the results of the drilling program. The drilling program would require access to the site of the mineral claims with drilling equipment, the issuance of a work permit and the posting of a bond.
 The estimated cost of completion of this phase of the exploration program is approximately $250,000. This phase is expected to take approximately eight to ten weeks to complete and it is planned for the summer of 2008. Positive drilling results
at this phase could indicate zones of mineralization but will not indicate, in any way, mineral reserves.

Employees

As of the date of this annual report, we do not have any employees other than our officers. We intend to retain independent geologists and consultants on a contract basis to conduct the work programs on the mineral
property.

Subsidiaries

On August 17, 2006 we completed our acquisition of all of the issued and outstanding common stock of Aurelio Resources Inc., a privately-owned Colorado corporation engaged in mineral exploration, pursuant to an agreement we
entered into with Aurelio Resources Inc. and its shareholders dated April 27, 2006, as amended on June 9, 2006 and further amended July 13, 2006 and on July 21, 2006. As a result of the share purchase transaction, Aurelio Resources Inc. is now a
wholly-owned subsidiary of our company. Aurelio Resources Inc. owns a 100% interest in 13 mining claims on a property located in southeastern Arizona. We also own 98% of the issued and outstanding common shares of Minera Milenium SA de CV., a
Mexican incorporated company which holds an option to earn a 100% interest in 3 mining claims/concessions in Durango, Mexico, known as the Gavilanes Property.

Risk Factors

Shares of our common stock are speculative, especially since we are in the exploration-stage of our new business. We operate in a volatile sector of business that involves numerous risks and uncertainties.  The risks and
uncertainties described below are not the only ones we face. Other risks and uncertainties, including those that we do not currently consider material, may impair our business. If any of the risks discussed below actually occur, our business,
financial condition, operating results or cash flows could be materially adversely affected.  This could cause the trading price of our securities to decline, and you may lose all or part of your investment. Prospective investors should consider
carefully the risk factors set out below.

Risks Related To Our Business

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

Potential investors should be aware of the difficulties normally encountered by new mineral exploration companies and the high rate of failure of such enterprises.  The likelihood of success must be considered in light of
the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems
relating to exploration, and additional costs and expenses that may exceed current estimates.  The expenditures to be made by us in the exploration of the mineral claim may not result in the discovery of mineral deposits.  Problems such as unusual
or unexpected formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. If the results of our exploration do not reveal viable commercial mineralization, we may decide to abandon our
claims. If this happens, our business will likely fail.

2. Because of the speculative nature of exploration of mineral properties, there is no assurance that our exploration activities will result in the discovery of new commercially exploitable quantities of
minerals.

We plan to conduct mineral exploration on our mineral properties. The search for valuable minerals as a business is extremely risky.  We can provide investors with no assurance that additional exploration on our properties
will establish that commercially exploitable reserves of minerals exist on our property. Additional potential problems that may prevent us from discovering any reserves of minerals on our property include, but are not limited to,

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16

unanticipated problems relating to exploration and additional costs and expenses that may exceed current estimates. If we are unable to establish the presence of commercially exploitable reserves of minerals on our property
our ability to fund future exploration activities will be impeded, we will not be able to operate profitably and investors may lose all of their investment in our company.

3. Because our mineral properties are without known mineral reserves and because we have never made a profit from our operations, our securities are highly speculative and investors may lose all of their investment in
our company.

Our securities must be considered highly speculative, generally because of the nature of our business and our early stage of exploration. Our mineral properties are in the exploration stage only and are without known
deposits of minerals. Accordingly, we have not generated revenues nor have we realized a profit from our operations to date and there is little likelihood that we will generate any revenues or realize any profits in the short term.  Any
profitability in the future from our business will be dependent upon locating and exploiting mineral reserves or selling the rights to exploit those mineral reserves. The likelihood of any of our mineral properties containing valuable and
commercially exploitable minerals is extremely remote. In all probability, our mineral properties do not contain any reserves and any funds that we spend on exploration will be lost. We may never discover mineral resources in our mineral properties
or any other area, or we may do so and still not be commercially successful if we are unable to exploit those resources profitably or earn revenues from selling the rights to exploit any mineral resources we discover. We may not be able to operate
profitably and may have to cease operations, the price of our securities may decline and investors may lose all of their investment in our company.

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

The search for valuable minerals involves numerous hazards. As a result, we may become subject to liability for such hazards, including pollution, cave-ins and other hazards against which we cannot insure or against which
we may elect not to insure. At the present time we have no coverage to insure against these hazards. The payment of such liabilities may have a material adverse effect on our financial position.

5. The potential profitability of mineral ventures depends in part upon factors beyond the control of our company and even if we discover and exploit mineral deposits, we may never become commercially viable and we
may be forced to cease operations.

The commercial feasibility of mineral properties is dependent upon many factors beyond our control, including the existence and size of mineral deposits in the properties we explore, the proximity and capacity of processing
equipment, market fluctuations of prices, taxes, royalties, land tenure, allowable production and environmental regulation. These factors cannot be accurately predicted and any one or a combination of these factors may result in our company not
receiving an adequate return on invested capital. These factors may have material and negative effects on our financial performance and our ability to continue operations.

6. Exploration and exploitation activities are subject to comprehensive regulation which may cause substantial delays or require capital outlays in excess of those anticipated causing an adverse effect on our
company.

Exploration and exploitation activities are subject to federal, provincial, and local laws, regulations and policies, including laws regulating the removal of natural resources from the ground and the discharge of materials
into the environment.  Exploration and exploitation activities are also subject to federal, provincial, and local laws and regulations which seek to maintain health and safety standards by regulating the design and use of drilling methods and
equipment.

Various permits from government bodies are required for drilling operations to be conducted, and no assurance can be given that such permits will be received. Environmental and other legal standards imposed by federal,
provincial, or local authorities may be changed and any such changes may prevent us from conducting planned activities or increase our costs of doing so, which would have material adverse effects on our business. Moreover, compliance

---

17

with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus causing an adverse effect on us.  Additionally, we may be subject to liability for pollution or other environmental
damages which we may not be able to or elect not to insure against due to prohibitive premium costs and other reasons. Any laws, regulations or policies of any government body or regulatory agency may be changed, applied or interpreted in a manner
which will alter and negatively affect our ability to carry on our business.

7. As we face intense competition in the mineral exploration industry, we will have to compete with our competitors for financing and for qualified managerial and technical employees.

Our mineral properties are in Alaska, Arizona and Mexico and our competition there includes large, established mining companies with substantial capabilities and with greater financial and technical resources than we have.
As a result of this competition, we may have to compete for financing and be unable to acquire financing on terms we consider acceptable.  We may also have to compete with the other mining companies in the recruitment and retention of qualified
managerial and technical employees. If we are unable to successfully compete for financing or qualified employees, our exploration programs may be slowed down or suspended, which may cause us to cease operations as a company.

Risks Associated With Our Company

8. We have a history of losses and have a deficit, which raises substantial doubt about our ability to continue as a going concern.

We have not generated any revenues since our incorporation and we will continue to incur operating expenses without revenues until we are in commercial deployment. Our net loss from inception February 19, 2004 to May 31,
2006 was $112,055. We had cash in the amount of $2,521 as of May 31, 2006. We currently do not have any operations and we have no income.  We estimate our average monthly operating expenses to be approximately $190,000 each month. We
cannot provide assurances that we will be able to successfully explore and develop our business. These circumstances raise substantial doubt about our ability to continue as a going concern as described in an explanatory paragraph to our independent
auditors report on our audited financial statements, dated August 21, 2006. If we are unable to continue as a going concern, investors will likely lose all of their investments in our company.

9. Our future is dependent upon our ability to obtain financing. If we do not obtain such financing, we may have to cease our exploration activities and investors could lose their entire investment.

There is no assurance that we will operate profitably or will generate positive cash flow in the future.  We will require additional financing in order to proceed beyond the first few months of our exploration program. We
will also require additional financing for the fees we must pay to maintain our status in relation to the rights to our properties and to pay the fees and expenses necessary to become and operate as a public company. We will also need more funds if
the costs of the exploration of our mineral claims are greater than we have anticipated. We will also require additional financing to sustain our business operations if we are not successful in earning revenues. We currently do not have any
arrangements for further financing and we may not be able to obtain financing on commercially reasonable terms or terms that are acceptable to us when it is required. Our future is dependent upon our ability to obtain financing. If we do not obtain
such financing, our business could fail and investors could lose their entire investment.

10. Because we may never earn revenues from our operations, our business may fail and then investors may lose all of their investment in our company.

We have no history of revenues from operations. We have never had significant operations and have no significant assets. We have yet to generate positive earnings and there can be no assurance that we will ever operate
profitably. Our company has a limited operating history and is in the exploration stage.  The success of our company is significantly dependent on the uncertain events of the discovery and exploitation of mineral reserves on our properties or
selling the rights to exploit those mineral reserves. If our business plan is not successful and we are not

---

18

able to operate profitably, then our stock
may become worthless and investors may lose all of their investment in our
company.

Prior to completion of our exploration
stage, we anticipate that we will incur increased operating expenses without
realizing any revenues. We therefore expect to incur significant losses into the
foreseeable future. We recognize that if we are unable to generate significant
revenues from the exploration of our mineral claims in the future, we will not
be able to earn profits or continue operations. There is no history upon which
to base any assumption as to the likelihood that we will prove successful, and
we can provide no assurance that we will generate any revenues or ever achieve
profitability. If we are unsuccessful in addressing these risks, our business
will fail and investors may lose all of their investment in our
company.

Risks Associated With Our Common
Stock

11. We do not intend to pay
dividends on any investment in the shares of stock of our
company.

We have never paid any cash dividends and
currently do not intend to pay any dividends for the foreseeable future. To the
extent that we require additional funding currently not provided for in our
financing plan, our funding sources may prohibit the payment of a dividend.
Because we do not intend to declare dividends, any gain on an investment in our
company will need to come through an increase in the stocks price. This may
never happen and investors may lose all of their investment in our
company.

12. Our stock is a penny stock.
Trading of our stock may be restricted by the SEC's penny stock regulations
which may limit a stockholder's ability to buy and sell our
stock.

Our stock is a penny stock. The Securities
and Exchange Commission has adopted Rule 15g-9 which generally defines penny
stock to be any equity security that has a market price (as defined) less than
$5.00 per share or an exercise price of less than $5.00 per share, subject to
certain exceptions. Our securities are covered by the penny stock rules, which
impose additional sales practice requirements on broker-dealers who sell to
persons other than established customers and accredited investors. The term
accredited investor refers generally to institutions with assets in excess of
$5,000,000 or individuals with a net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock
rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standard risk disclosure document
in a form prepared by the SEC which provides information about penny stocks and
the nature and level of risks in the penny stock market. The broker-dealer also
must provide the customer with current bid and offer quotations for the penny
stock, the compensation of the broker-dealer and its salesperson in the
transaction and monthly account statements showing the market value of each
penny stock held in the customer's account. The bid and offer quotations, and
the broker-dealer and salesperson compensation information, must be given to the
customer orally or in writing prior to effecting the transaction and must be
given to the customer in writing before or with the customer's confirmation. In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from these rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written agreement to the transaction.
These disclosure requirements may have the effect of reducing the level of
trading activity in the secondary market for the stock that is subject to these
penny stock rules. Consequently, these penny stock rules may affect the ability
of broker-dealers to trade our securities. We believe that the penny stock rules
discourage investor interest in and limit the marketability of our common
stock.

Item 2.Description of Property.We have discontinued the use of our executive offices located at
Suite 1802, 888 Pacific Street, Vancouver, British Columbia. We now maintain an
executive office in Littleton, Colorado and a field office in Culiacan, Mexico.
We believe these spaces are adequate for our current needs and that suitable
space will be available to accommodate our future needs.

We also own three mineral exploration
properties in Alaska, Arizona and Mexico. For details on these properties,
please see the section entitled Description of Our Mineral Properties
above.

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19

Item 3.Legal Proceedings.We are not currently a party to any legal proceedings that have been
or are currently being undertaken for or against us nor are we aware of any
contemplated.

Item 4. Submission of Matters to a Vote
of Security Holders.

We did not submit any matters to our
security holders to be voted upon during our fiscal year ended May 31,
2006.

PART II

Item 5. Market for Common Equity and
Related Stockholder Matters.

Market Information

Our shares are currently trading on the
OTC Bulletin Board under the symbol AULO. Our shares commenced trading on the
OTC Bulletin Board on November 16, 2004 under the symbol FURR. On June 16, 2006,
we changed our name to Aurelio Resource Corporation and effected a six and
one-half (6.5) for one (1) forward stock split resulting in a new
symbol.

The high and the low bid prices for our
common shares for each quarter are not available from the OTC Bulletin Board. In
order for the OTC Bulletin Board to report the high and low bid prices for a
particular security, there must be three market makers for that security. During
the period from the date our common shares were first traded on the OTC Bulletin
Board to the end of our May 31, 2006 fiscal year, there was only one or two
market makers for our common stock. As such, the OTC Bulletin Board has not
reported the high or low bid prices for our common shares during the periods. As
our common shares did not trade on the OTC Bulletin Board prior to November 16,
2004, no information is available for periods prior to that date.

Holders of our Common
Stock

As of August 28, 2006, there were 21
registered shareholders of our common stock.

Dividends

Since our inception, we have not declared
nor paid any cash dividends on our capital stock and we do not anticipate paying
any cash dividends in the foreseeable future. Our current policy is to retain
any earnings in order to finance the expansion of our operations. Our board of
directors will determine future declarations and payments of dividends, if any,
in light of the then-current conditions they deem relevant and in accordance
with applicable corporate law.

There are no restrictions in our articles
of incorporation or bylaws that prevent us from declaring dividends. The Nevada
Revised Statutes, however, do prohibit us from declaring dividends where, after
giving effect to the distribution of the dividend:

|1. | We would not be able to pay our
      debts as they become due in the usual course of business; or                                                                                                                                          
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. | Our total assets would be less
      than the sum of our total liabilities plus the amount that would be needed
      to satisfy the rights of shareholders who have preferential rights
      superior to those receiving the distribution.

Recent Sales of Unregistered
Securities

We did not sell any securities without
registration under the Securities Act of 1933 during our fiscal year ended May
31, 2006.

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20

Subsequent to our fiscal year ended May
31, 2006, on August 17, 2006, we issued 10,000,000 shares of our common stock
without registration to the shareholders of Aurelio Resources Inc. pursuant to
an exemption from registration as set out under Rule 506 of Regulation D to both
accredited and non-accredited investors and pursuant to an exemption from
registration as set out under Section 4(2) of the Securities Act of 1933, as
amended. No advertising or general solicitation was employed in offering these
securities. The following table sets out the purchasers of these 10,000,000
shares of common stock of our company:

|Name                                                                                         | Number of Shares of Our  Common Stock Acquired
|-------------------------------------------------------------------------------------------- | ----------------------------------------------
|
|Fred Warnaars  6373 S. Yates Court 
      Littleton, CO 80123                                | 6,000,000                                     
|
|
|International American Resources, Inc.  6373 S. Yates
      Court  Littleton, CO 80123       | 800,000                                       
|
|
|Stephen Doppler  1696 Ajax Lane  Evergreen, CO
      80439                                   | 500,000                                       
|
|
|David C. Jonson  3082 S. Wheeling Way
      #410  Aurora, CO 80014                           | 700,000                                       
|
|
|Jonson Management Inc.  3082 S.
      Wheeling Way #410  Aurora, CO 80014                    | 800,000                                       
|
|
|David S. Johnson  740 Gilpin
      St.  Denver, CO 80218                                     | 250,000                                       
|
|
|Hernandez Family Trust  P.O. Box
      61  Pearce, AZ 85625                                  | 200,000                                       
|
|
|Steve Stine  17055 East Dorado Circle 
      Cenennial, CO 80015                             | 250,000                                       
|
|
|Briner Group Holdings Inc.  Suite 510, 999
      West Hastings Street  Vancouver, BC V6C 2W2 | 500,000                                       
|
|
|Total                                                                                        | 10,000,000                                    

Item 6. Managements Discussion and
Analysis or Plan of Operation.

You should read the following discussion
of our financial condition and results of operations together with our audited
financial statements and the related notes for the years ended May 31, 2006 and
2005 which appear elsewhere in this annual report. The following discussion
contains forward-looking statements that reflect our plans, estimates and
beliefs. Our actual results could differ materially from those discussed in the
forward looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed below and elsewhere
in this annual report, particularly in Item 1  Description of Business  Risk
Factors of this annual report.

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21

Overview

We were incorporated in the State of Nevada on February 19, 2004 under the name Furio Resources Inc. We are an exploration stage company engaged in the exploration of mineral properties and we may also, from time to time,
acquire additional mineral properties to explore. We have focused our efforts since incorporation acquiring mineral properties and carrying out exploration activities on those mineral properties.

We changed our name to Aurelio Resource Corp. effective June 16, 2006 and effected a six and one-half (6.5) for one (1) forward stock split of our authorized, issued and outstanding common stock. As a result, our authorized
capital has increased from 75,000,000 shares of common stock with a par value of $0.001 to 487,500,000 shares of common stock with a par value of $0.001.

We continue to focus our efforts on the acquisition and exploration of mineral properties. To date, we have not discovered an economically viable mineral deposit on the mineral claims, and there is no assurance that we will
discover one. A great deal of further exploration will be required before a final evaluation as to the economic and legal feasibility for our future development is determined.

We have no revenues, have experienced losses since inception, have no operations, have been issued a going concern opinion by our auditors and rely upon the sale of our securities to fund operations.

Plan of Operations

Our plan of operations for the next twelve months involves implementation of phased exploration programs for our Alaska property, our Hill Copper Property and our Gavilanes Property.

We wish to complete the following objectives within the time periods specified, subject to our obtaining the funding necessary for the continued exploration of our mineral properties:

Hill Copper Property, Arizona:

We plan to acquire additional land through negotiations with private landholders and through staking free land. We anticipate that the Phase I work program will cost $110,000. We will need to raise
additional funds in order to conduct these land acquisitions.

We also plan to conduct a small drill program of approximately 20 to 30 diamond drill holes on our current landholdings to confirm the previously identified resources and to test additional exploration targets with the goal
of increasing the resource estimates. We anticipate that this drill program will cost $400,000 and take about seven to eight months to complete. We have budgeted $500,000 for Phase II of the recommended work program. We will need to raise
additional funds in order to conduct this work program at our Hill Copper Property.

Gavilanes Property:

We plan to make the option payments due August 15, 2006 and February 15, 2007 in order to keep the Gavilanes Option in good standing. These two payments will total US$25,000. We will need to raise additional funds in
order to make these option payments.

We plan to implement Phase I work for the Gavilanes Property. We will review and evaluate all the pertinent data available in Culiacan. We will follow-up with a field examination at the Gavilanes Property. Anticipated costs
for this Phase I review are $20,000. We will need to raise additional funds in order to perform this review.

We plan to conduct a drilling program to test three of the best ten targets identified at the Gavilanes Property. Our goal is to identify an economic, bulk mineable, open pittable deposit with a total of 750 meters. We
anticipate that this drill program will take one month to complete and is estimated to cost $100,000.  We will need to raise additional funds in order to conduct this drill program.

---

22

If warranted by the results of Phase I and the initial drilling program, we will conduct a Phase II drill program consisting of seven holes for a total of 1,750 meters. We estimate the cost of Phase II to be $270,000
and take three to four months to complete. We will need to raise additional funds in order to conduct the Phase II work program.

Lake Iliamna Property, Alaska:

We plan to repeat certain portions of the induced polarization survey conducted in Phase I in order to gather data before making a decision to move to phase two. The cost to repeat Phase I is budgeted at $35,000 and
additional funds will have to be raised in order to conduct this work program planned for the summer of 2006 or summer of 2007.

If warranted by the results of Phase I, we intend to proceed with Phase II of our recommended exploration program. Phase II will consist of detailed follow-up geological mapping and prospecting of the claim area, with grid
controlled geochemical and geophysical surveys as required to cover areas of specific interest as identified in phase one. Phase II is intended to identify the geological environment underlying the mineral claims and a detailed mineralization map to
scale should be produced. Phase II is estimated to cost $23,000.  We will have to raise additional funding in order to conduct the phase two program. If we obtain the necessary financing, we anticipate that phase two would be conducted during
the summer of 2007 and would take approximately six weeks to complete.

General Operating Expenses

We anticipate spending approximately $5,000 in ongoing general and administrative expenses per month for the next twelve months, for a total anticipated expenditure of $60,000 over the next twelve months. The
general and administrative expenses for the year will consist primarily of professional fees for the audit and legal work relating to our regulatory filings throughout the year, as well as transfer agent fees, annual mineral claim fees of $2,500
to the State of Alaska, maintaining an office in Littleton, Colorado and maintaining a field office in Culiacan, Mexico, and general office expenses.

The following discussion should be read in conjunction with the pro form financial statements accompanying this Form 10-KSB. At May 31, 2006, we had cash on hand of $2,521 and a working capital deficit of $15,855.
Our cash and working capital will not be sufficient to enable us to pay for the costs of our general and administrative expenses or even allow us to undertake any of the recommended work programs. We will have to raise additional capital in order to
pay our anticipated general and administrative expenses. Our ability to complete the next phases of our recommended work programs will be subject to us obtaining additional financing as these expenditures will exceed our cash reserves.

During the next twelve-month period, we anticipate that we will not generate any revenue. Accordingly, we will be required to obtain additional financing in order to continue our plan of operations. We believe that debt
financing will not be an alternative for funding additional phases of exploration as we do not have tangible assets to secure any debt financing. We anticipate that additional funding will be in the form of equity financing from the sale of our
common stock.  However, we do not have any financing arranged and we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund the next phase of our exploration program. In
the absence of such financing, we will not be able to continue exploration of our mineral claims and our business plan will fail. Even if we are successful in obtaining equity financing to fund the next phase of our exploration program, there is no
assurance that we will obtain the funding necessary to pursue any advanced exploration of our mineral claims following the completion of the work program. If we do not continue to obtain additional financing, we will be forced to abandon our mineral
claims and our plan of operations

We may consider entering into a joint venture arrangement to provide the required funding to develop the mineral claims. We have not undertaken any efforts to locate a joint venture partner for the mineral claims. Even if
we determined to pursue a joint venture partner, there is no assurance that any third party would enter into a joint venture agreement with us in order to fund exploration of our mineral claims. If we entered into a joint venture arrangement, we
would likely have to assign a percentage of our interest in our mineral claims to the joint venture partner.

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23

Cash Requirements

For the next 12 months we plan to continue to explore for base and precious metals on our Alaska Property, our Hill Copper Property in Arizona, and our Gavilanes Property in Mexico. The budget for exploration and
development of these properties is $1,303,000.

We will require additional funds to implement our exploration and development programs. These funds may be raised through equity financing, debt financing, or other sources, which may result in further dilution in the
equity ownership of our shares. There is still no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on his investment in our common stock.  Further, we may continue to be unprofitable. We
need to raise additional funds in the immediate future in order to proceed with our exploration program.

In order to proceed with our plans, we plan to raise additional funds by way of private placements of equity securities in our company.

Results of Operations

We have had no operating revenues since our inception on February 19, 2004, through to May 31, 2006.

For the year ended May 31, 2006, we incurred operating costs of $36,750. These operating costs included $29,026 in professional fees for the ongoing legal and accounting costs of the quarterly and annual filings. We
also incurred mineral property expenditures during the year ended May 31, 2006, of $6,430, which included a $2,500 annual rental fee to the State of Alaska to extend the mineral claims to September 1, 2006. The mineral property expenditures
also included the final costs of the phase one work program conducted in the summer of 2005.

During the comparative period in 2005, we incurred operating costs of $60,698, including professional fees of $23,576 related to the preparation of our Form SB-2 and $35,629 in mineral property expenditures
primarily dealing with the first phase of exploration on our Alaskan mineral claims.

We anticipate our operating expenses will increase as we undertake our plan of operations. The increase will be attributable to our continuing geological exploration program and continued professional fees that we
anticipate incurring as we are now a reporting company with the Securities and Exchange Commission under the Securities Exchange Act of 1934.

Liquidity and Capital Resources

At May 31, 2006, we had cash on hand of $2,521 and a working capital deficit of $15,855.

We anticipate that our cash and working capital will only be sufficient to enable us to pay for the costs of our general and administrative expenses for the current month. Accordingly, our ability to complete the our
ongoing exploration activities and our next phases of the recommended work programs will be subject to us obtaining additional financing as these expenditures will exceed our cash reserves.

During the next twelve-month period, we anticipate that we will not generate any revenue.  Therefore, we must obtain additional financing in order to continue our plan of operations. We believe that debt financing will not
be an alternative for funding additional phases of exploration as we do not have tangible assets to secure any debt financing.  We anticipate that additional funding will be in the form of equity financing from the sale of our common stock.
However, we do not have any financing arranged and we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund the next phase of our exploration program. In the absence of
such financing, we will not be able to continue exploration of our mineral claims and our business plan will fail. Even if we are successful in obtaining equity financing to fund the next phases of our exploration programs, there is no assurance
that we will obtain the funding necessary to pursue any advanced exploration of our mineral claims following the completion of the work program.  If we do not continue to obtain additional financing, we will be forced to abandon our mineral claims
and our plan of operations.

---

24

We may consider entering into a joint venture arrangement to provide the required funding to develop the mineral claims. We have not undertaken any efforts to locate a joint venture partner for the mineral claims. Even if
we determined to pursue a joint venture partner, there is no assurance that any third party would enter into a joint venture agreement with us in order to fund exploration of our mineral claims. If we entered into a joint venture arrangement, we
would likely have to assign a percentage of our interest in our mineral claims to the joint venture partner. Our requirements for additional financing are discussed in further detail above under the heading Plan of Operation.

Cash used in operating activities was $48,816 for the year ended May 31, 2006, which reflects the costs of our operations for the period, as compared with cash used in operating activities of $35,437 during the year
ended May 31, 2005.

We have funded our business to date from sales of our common stock. Gross proceeds from the sale of our common shares during the period from inception, on February 19, 2004, through to May 31, 2006, totaled $96,200 all
of which was receipted by the year ended May 31, 2004.

We anticipate continuing to rely on equity sales of our common shares in order to continue to fund our business operations. Issuance of additional shares will result in dilution to our existing shareholders. There are no
assurances that we will be able to achieve further sales of our common stock or any other form of additional financing. If we are unable to achieve the financing necessary to continue our plan of operations, then we will not be able to continue our
exploration of the mineral claims and our venture will fail.

Off-Balance Sheet Arrangements

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

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with United States generally accepted accounting principles requires our management to make estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  Our management
routinely makes judgments and estimates about the effects of matters that are inherently uncertain.

Our significant accounting policies are disclosed in Note 3 to the audited financial statements included in this Annual Report on Form 10-KSB.

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25

Item 7. Financial
Statements.

Our audited financial statements for the
year ended May 31, 2006, are described below:

|(a) | Report of Independent Registered
      Public Accounting Firm                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) | Balance Sheet as at May 31,
      2006                                                                                                          
|   
|(c) | Statements of Operations for the
      years ended May 31, 2006 and 2005 and the period from inception (February
      19, 2004) to May 31, 2006
|   
|(d) | Statement of Stockholders' Equity
      (Deficit) for the period from inception (February 19, 2004) to May 31,
      2006                       
|   
|(e) | Statements of Cash Flows for the
      years ended May 31, 2006 and 2005 and the period from inception (February
      19, 2004) to May 31, 2006
|   
|(f) | Notes to Financial
      Statements                                                                                                             
|   

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26

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

Aurelio Resources Corporation (formerly Furio Resources, Inc.) (An Exploration Stage Company)

We have audited the accompanying balance sheet of Aurelio Resources Corporation as of May 31, 2006, and the related statements of operations, stockholders equity and cash flows from inception (February 19, 2004) to
May 31, 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 audit. The financial statements of Aurelio Resources Corporation
as of May 31, 2005 were audited by other auditors whose report dated July 19, 2005 on those statements included an explanatory paragraph describing conditions that raised substantial doubt about the Company's ability to continue as a going
concern.

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

In our opinion, the financial statements referred to above present fairly in all material respects, the financial position of Aurelio Resources Corporation as of May 31, 2006 and the results of operations and cash flows
from inception (February 19, 2004) to May 31, 2006 in conformity with U.S. generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the financial statements, the Company incurred losses of $36,750 for the year ended May
31, 2006, and has an accumulated deficit of $112,055 at May 31, 2006. At May 31, 2006, total liabilities exceeded total assets by $15,855. These factors, and others discussed in Note 2, raise substantial doubt about the Company's ability to
continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the
Company cannot continue in existence.

/s/ Mason Russell West, LLCLittleton, COAugust 21, 2006

---

27

Aurelio Resources
Corporation(formerly Furio Resources
Inc.) (An Exploration Stage Company) Balance Sheet

|May 31, 2006                                                                                          |   |          
|----------------------------------------------------------------------------------------------------- | - | ---------
|ASSETS                                                                                                |   |          
|Current Assets                                                                                        |   |          
|Cash and cash
      equivalents                                                                       | $ | 2,521    
|Deferred tax
      asset, less valuation allowance of $39,219                                         |   | -        
|Total Assets                                                                                          | $ | 2,521    
|LIABILITIES AND STOCKHOLDERS DEFICIT                                                                 |   |          
|Current Liabilities                                                                                   |   |          
|Accounts
      payable and accrued liabilities                                                        | $ | 18,376   
|Total Current
      Liabilities                                                                       |   | 18,376   
|Commitments and Contingencies (Notes 2 and 4)                                                         |   |          
|Stockholders Deficit                                                                                 |   |          
|Common stock, $0.001 par
      value; 487,500,000 shares authorized, 31,401,500issued and outstanding |   | 31,402   
|Additional
      paid-in capital                                                                      |   | 64,798   
|Deficit accumulated during the exploration
      stage                                                |   | (112,055)
|Total Stockholders Deficit                                                                           |   | (15,855) 
|Total
      Liabilities and Stockholders Deficit                                                     | $ | 2,521    
|The accompanying notes are an integral part
      of these financial statements.                     

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28

Aurelio Resources
Corporation(formerly Furio Resources
Inc.) (An Exploration Stage Company) Statements of
Operations

|                                                                                 | Cumulative  amounts from 
        inception  (February 19,    2004) to 
      May 31,
      2006 | Year ended   
      May 31, 
        2006 | Year ended 
        May
      31,    2005
|-------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------ | ----------------------------------------- | -----------------------------------------
|
|
|
|
|
|EXPENSES                                                                         |                                                                                                  |                                           |                                          
|Bank charges                                                                     | $                                                                                                | 401                                       | $                                        
|Mineral property
      expenditures                                              |                                                                                                  | 50,124                                    |                                          
|Office
      expenses                                                            |                                                                                                  | 1,364                                     |                                          
|Professional and filing
      fees                                               |                                                                                                  | 58,806                                    |                                          
|Transfer agent                                                                   |                                                                                                  | 1,675                                     |                                          
|Loss before interest income                                                      |                                                                                                  | (112,370)                                 |                                          
|Interest income                                                                  |                                                                                                  | 315                                       |                                          
|Loss before income taxes                                                         |                                                                                                  | (112,055)                                 |                                          
|Provision for income taxes                                                       |                                                                                                  | -                                         |                                          
|Net
      loss                                                                   | **$**                                                                                            | (112,055)                                 | $                                        
|Basic and diluted net loss per share                                             |                                                                                                  |                                           | $                                        
|**Weighted average
      number of shares of****common stock
      outstanding** |                                                                                                  |                                           |                                          
|The accompanying notes are
      an integral part of these financial statements.

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29

Aurelio Resources
Corporation(formerly Furio Resources
Inc.) (An Exploration Stage Company)Statement of Stockholders Equity (Deficit)

|                                                                                 | Common Stock | Additional    Paid-in 
      Capital   | DeficitAccumulatedDuringExplorationStage | Total 
      Stockholders    Equity 
        (Deficit)
|-------------------------------------------------------------------------------- | ------------ | -------------------------------------- | ---------------------------------------- | -------------------------------------------------------
|
|Shares                                                                           | Amount      
|
|
|                                                                                 |              |                                        |                                          |                                                        
|**Balance,**February 19, 2004 (date ofinception)                                 |             | $            
                
       | $               
                       | $                        
                            
|                                                                                 |              |                                        |                                          |                                                        
|Common stock issued for cash at $0.002per share, March 2004                      | 13,000,000   | 13,000                                 | 7,000                                    |                                                       
|                                                                                 |              |                                        |                                          |                                                        
|Common stock issued for cash at $0.004per share, April 2004                      | 18,200,000   | 18,200                                 | 51,800                                   |                                                       
|                                                                                 |              |                                        |                                          |                                                        
|Common stock issued for cash at $0.03per share, May 2004                         | 201,500      | 202                                    | 5,998                                    |                                                       
|Net loss                                                                         |             |                                       |                                         | (14,607)                                               
|Balance, May 31, 2004                                                            | 31,401,500   | $               
      31,402          | $               
      64,798            | $               (14,607)                               
|Net loss                                                                         |             |                                       |                                         | (60,698)                                               
|Balance, May 31, 2005                                                            | 31,401,500   | $               
      31,402          | $               
      64,798            | $              
      (75,305)                         
|Net loss                                                                         |             |                                       |                                         | $          
          (36,750)                         
|Balance, May 31, 2006                                                            | 31,401,500   | $               
      31,402          | $               
      64,798            | $            
      (112,055)                          
|The accompanying notes are an integral part of these
      financial statements.

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30

Aurelio Resources
Corporation(formerly Furio Resources
Inc.) (An Exploration Stage Company) Statements of Cash
Flows

|                                                                                 | Cumulative  amounts from   
      inception  (February 19,    2004) to 
      May 31,
      2006 | Year ended  May 31,2006    | Year ended  May 31, 
      2005
|-------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------ | -------------------------- | -------------------------------
|
|
|
|
|
|Cash flows
      from operating activities                                       |                                                                                                  |                            |                                
|Net
      loss                                                                   | $  
      (112,055)                                                                              | $   
      (36,750)        | $  
       (60,698)            
|Change
      in liabilities:                                                     |                                                                                                  |                            |                                
|Increase in accounts payable and accrued
      liabilities                       | 18,376                                                                                           | (12,066)                   | 25,261                         
|Net cash used
      in operating activities                                      | (93,679)                                                                                         | (48,816)                   | (35,437)                       
|Cash flows from investing activities                                             |                                                                                                  |                            |                                
|Redemption of redeemable short-term investment
      (uninsured)                 | -                                                                                                | -                          | 65,000                         
|Net cash
      provided by investing activities                                  | -                                                                                                | -                          | 65,000                         
|Cash flows from financing activities                                             |                                                                                                  |                            |                                
|Proceeds from issuing common stock                                               | 96,200                                                                                           | -                          | -                              
|Net cash
      provided by financing activities                                  | 96,200                                                                                           | -                          | -                              
|Change in cash and cash equivalents for the period                               | 2,521                                                                                            | (48,816)                   | 29,563                         
|Cash and cash equivalents,beginning
      of period                              |                                                                                                 | 51,337                     | 21,774                         
|Cash and cash
      equivalents,end of period                                    | $    
      2,521                                                                                | $          **2,521**       | $          **51,337**          
|Cash paid during the period for interest                                         | $ 
                
                                                                            | $         
               | $           
                 
|Cash paid
      during the period for income taxes                               | $    
                                                                                          | $                         | $             
               
|The accompanying notes are
      an integral part of these financial statements.

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31

Aurelio Resources
Corporation(formerly Furio Resources
Inc.)(An Exploration Stage
Company)Notes to Financial
StatementsMay 31,
2006

1. HISTORY AND ORGANIZATION OF THE
COMPANY

The Company was incorporated on February
19, 2004, under the Laws of the State of Nevada and is in the business of
exploring mineral properties. The Company has not yet determined whether its
properties contain mineral resources that may be economically recoverable.
Therefore, the Company has not reached the development stage and is considered
to be an exploration stage company.

On April 27, 2006, and amended on June 9,
2006, July 13, 2006 and July 21, 2006, the Company entered into an agreement to
acquire all of the shares of Aurelio Resources Inc. (Aurelio Inc.), a
privately-owned Colorado corporation engaged in mineral exploration. Aurelio
Inc. has interest and rights to various mineral exploration properties in
Arizona and Mexico.

On June 16, 2006, and subsequent to the
year ended May 31, 2006, the Company changed its name to Aurelio Resources
Corporation and effected a six and one-half (6.5) for one (1) forward stock
split of its authorized, issued and outstanding common stock. Except as
otherwise stated, all references to shares and prices per share have been
adjusted to give retroactive effect to the stock split.

The recoverability of mineral property
costs is dependent upon the existence of economically recoverable reserves,
confirmation of the Companys interest in the underlying mineral claims, the
ability of the Company to obtain necessary financing to complete the exploration
and upon future profitable production.

2. GOING CONCERN

These financial statements have been
prepared with the on-going assumption that the Company will be able to realize
its assets and discharge its liabilities in the normal course of business.
However, certain conditions noted below currently exist which raise substantial
doubt about the Companys ability to continue as a going concern. These
financial statements do not include any adjustments to the amounts and
classifications of assets and liabilities that might be necessary should the
Company be unable to continue as a going concern.

The operations of the Company have
primarily been funded by the sale of common stock. Continued operations of the
Company are dependent on the Companys ability to complete additional equity
financings or generate profitable operations in the future. Managements plan in
this regard is to secure additional funds through future equity financings. Such
financings may not be available or may not be available on reasonable
terms.

|                                                       | May 31, 2006
|------------------------------------------------------ | ------------
|Deficit accumulated during
      the exploration stage | $    112,055
|Working capital deficit                                | 15,855      
|                                                       |             

The financial statements are stated in US
dollars. Significant accounting policies adopted by the Company are as
follows:

Cash and cash
equivalents

The Company considers cash held at banks
and all highly liquid investments with original maturities of three months or
less to be cash and cash equivalents.

---

32

Aurelio Resources Corporation(formerly Furio Resources Inc.)(An Exploration Stage Company)Notes to Financial StatementsMay 31, 2006

3. SIGNIFICANT ACCOUNTING POLICIES(continued)

Use of estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Mineral properties

Costs of acquisition, exploration, carrying, and retaining unproven properties are expensed as incurred.

Investments

Investments are considered to be held to maturity and are carried at cost. Investments are continually reviewed to determine whether any events or changes in circumstances indicate that the carrying amount of the investment
may not be recoverable. The Company bases its evaluation on such impairment indicators as the nature of the investments, the future economic benefit of the investments, any historical or future profitability measurements as well as other external
market values, conditions or factors that may be present.If it is determined that the value of the investment is permanently impaired, it is written down to its estimated net
realizable value.

Environmental requirements

At the report date, environmental requirements related to mineral claims acquired are unknown and therefore an estimate of any future cost cannot be made.

Income taxes

A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carryforwards. Deferred tax expenses (benefit) result from the net change during the
period of deferred tax assets and liabilities.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Net loss per share

Basic net loss per share is computed by dividing the net loss for the period by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share takes into consideration shares
of common stock outstanding (computed under basic net loss per share) and potentially dilutive shares of common stock. Diluted net loss per share is not presented separately from net loss per share since there are no potentially dilutive shares of
common stock outstanding.

---

33

Aurelio Resources
Corporation(formerly Furio Resources
Inc.)(An Exploration Stage
Company)Notes to Financial
StatementsMay 31,
2006

Recent Accounting
Pronouncements

In December 2004, FASB issued Statement of
Financial Accounting Standards No. 153, Exchanges of Nonmonetary Assets  an
amendment of APB Opinion No. 29 (SFAS 153) which amends Accounting Principles
Board Opinion No. 29, Accounting for Nonmonetary Transactions to eliminate the
exception for nonmonetary exchanges of similar productive assets and replaces it
with a general exception for exchanges of nonmonetary assets that do not have
commercial substance. A nonmonetary exchange has commercial substance if the
future cash flows of the entity are expected to change significantly as a result
of the exchange. SFAS 153 is effective for nonmonetary asset exchanges occurring
in fiscal periods beginning after June 15, 2005.

In December 2004, FASB issued Statement of
Financial Accounting Standards No. 123R, Share Based Payment (SFAS 123R).
SFAS 123R supersedes Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" and its related implementation guidance by requiring
entities to recognize the cost of employee services received in exchange for
awards of equity instruments based on the grant-date fair value of those awards
(with limited exceptions) and revises Statement of Financial Accounting
Standards No. 123 Accounting for Stock-Based Compensation (SFAS 123) as
follows:

|i)   | Public entities are required to
      measure liabilities incurred to employees in share-based payment
      transactions at fair value and nonpublic entities may elect to measure
      their liabilities to employees incurred in share-based payment
      transactions at their intrinsic value whereas under SFAS 123, all
      share-based payment liabilities were measured at their intrinsic
      value.                                                                                                                                                                                                                         
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|ii)  | Nonpublic entities are required
      to calculate fair value using an appropriate industry sector index for the
      expected volatility of its share price if it is not practicable to
      estimate the expected volatility of the entitys share price.                                                                                                                                                                                                                                                                                                                                                                                
|    
|iii) | Entities are required to estimate
      the number of instruments for which the requisite service is expected to
      be rendered as opposed to accounting for forfeitures as they occur.                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    
|iv)  | Incremental compensation cost for
      a modification of the terms or conditions of an award is measured by
      comparing the fair value of the modified award with the fair value of the
      award immediately before the modification whereas SFAS 123 required that
      the effects of a modification be measured as the difference between the
      fair value of the modified award at the date it is granted and the awards
      value immediately before the modification determined based on the shorter
      of (1) its remaining initially estimated expected life or (2) the expected
      life of the modified award.

SFAS 123R also clarifies and expands
guidance in several areas, including measuring fair value, classifying an award
as equity or as a liability and attributing compensation cost to reporting
periods. SFAS 123R does not change the accounting guidance for share-based
payment transactions with parties other than employees provided in SFAS 123 as
originally issued and EITF 96-18. SFAS 123R also does not address the accounting
for employee share ownership plans which are subject to Statement of Position
93-6, Employers Accounting for Employee Stock Ownership Plans. Public
entities (other than those filing as small business issuers) will be required to
apply SFAS 123R as of the first annual reporting period that begins after June
15, 2005. Public entities that file as small business issuers will be required
to apply SFAS 123R in the first annual reporting period that begins after
December 15, 2005. For nonpublic entities, SFAS 123R must be applied as of the
beginning of the first annual reporting period beginning after December 15,
2005.

The adoption of these new pronouncements
are not expected to have a material effect on the Companys financial position
or results of operations.

---

34

Aurelio Resources
Corporation(formerly Furio Resources
Inc.)(An Exploration Stage
Company)Notes to Financial
StatementsMay 31,
2006

4. MINERAL PROPERTY

During the period from inception (February
19, 2004) to May 31, 2004, the Company staked, through its agent Alaska Earth
Resources, Inc., mining claims located in the Iliamna Recording District of
Southwestern Alaska. As the claims do not contain any known reserves, the
acquisition costs were expensed during the respective periods. By September 1,
2006, the Company must complete $10,000 in annual labor or exploration
expenditures on the mineral claims and file confirmation of work with the
applicable mining recording office of the State of Alaska or make payment in
lieu. In addition, by September 1, 2006, the Company must make payment to the
State of Alaska of an annual rental fee of $2,500 for the mineral claims, to
keep the claims in good standing.

5. RELATED PARTY
TRANSACTIONS

During the period from inception (February
19, 2004) to May 31, 2004, the Company issued 13,000,000 shares of its common
stock for proceeds of $20,000 to officers and directors of the
Company.

This transaction was in the normal course
of operations and was measured at the exchange value which represented the
amount of consideration established and agreed to by related parties.

6. INCOME TAXES

|A
      reconciliation of income taxes at statutory rates with the reported taxes
      is as follows:
|------------------------------------------------------------------------------------------------------
|                                                                                                      
|Net loss                                                                                              
|Expected income tax
      recovery                                                                    
|Unrecognized current
      benefit of operating losses                                                
|Total
      income taxes                                                                              
|The Companys
      total future income tax asset is as follows:                                      
|                                                                                                      
|Tax benefit of net
      operating loss carryforward                                                  
|Valuation
    allowance                                                                               
|                                                                                                      

The Company has net operating loss
carryforwards of approximately $112,055 available for deduction against future
years taxable income. The valuation allowance increased to $39,219 during the
period ended May 31, 2006, since the realization of the net operating loss
carryforwards are doubtful. It is reasonably possible that the Company's
estimate of the valuation allowance will change. The operating loss
carryforwards will expire in 2026.

7. FINANCIAL INSTRUMENTSThe
Companys financial instruments consist of cash and cash equivalents and
accounts payable and accrued liabilities. Unless otherwise noted, it is
managements opinion that the Company is not exposed to significant interest,
currency or credit risks arising from these financial instruments. The fair
value of these financial instruments approximate their carrying values, unless
otherwise noted.

---

35

Aurelio Resources Corporation(formerly Furio Resources Inc.)(An Exploration Stage Company)Notes to Financial StatementsMay 31, 2006

8. SEGMENT INFORMATION

The Company operates in three reportable segments, being the exploration of mineral properties in Alaska, Arizona and Mexico.

9. SUBSEQUENT EVENTS

Subsequent to the year ended May 31, 2006, the Company changed its name to Aurelio Resources Corporation and effected a six and one-half (6.5) for one (1) forward stock split its authorized, issued and outstanding common
stock. Except as otherwise stated, all references to shares and prices per share have been adjusted to give retroactive effect to the stock split.

On August 17, 2006, and subsequent to the year ended May 31, 2006, the Company closed the share purchase agreement with Aurelio Resources Inc. (Aurelio Inc.), a privately-owned Colorado corporation engaged in
mineral exploration. Aurelio Inc. has interest and rights to various mineral exploration properties in Arizona and Mexico. In consideration, the Company issued 10,000,000 common shares to the former shareholders of Aurelio Inc. As part of the
transaction, two former officers and directors of the Company returned 12,965,000 common shares held by them to the Company for cancellation. After giving effect to the issuance of 10,000,000 common shares to the former shareholders of Aurelio Inc.
and the cancellation of the 12,965,000 common shares, the Company now has 28,436,500 common shares issued and outstanding.

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36

Item 8. Changes In and Disagreements
With Accountants on Accounting and Financial Disclosure.

We engaged Mason Russell West, LLC,
Certified Public Accountants, of Littleton, Colorado, as our principal
independent auditors effective August 9, 2006. Our former principal independent
auditors were Dohan and Company, Certified Public Accountants. Concurrent with
the appointment of Mason Russell West, LLC Certified Public Accountants, Dohan
and Company, Certified Public Accountants resigned as our principal independent
auditors effective August 9, 2006. The decision to change principal independent
auditors has been approved by our board of directors.

The report of Dohan and Company, Certified
Public Accountants dated July 19, 2005 on our balance sheet for the year ended
May 31, 2005, the related statement of stockholders equity for the period from
February 19, 2004 (inception) to May 31, 2005 and the related statements of
operations and cash flows for each of the years ended May 31, 2005 and 2004 and
for the period from February 19, 2004 (inception) to May 31, 2005 did not
contain an adverse opinion or disclaimer of opinion, nor was it modified as to
uncertainty, audit scope, or accounting principles, other than to state that
there is substantial doubt as to our ability to continue as a going
concern.

In connection with the audit of the year
ended May 31, 2005 and the period from February 19, 2004 (inception) to May 31,
2005 and during the subsequent interim period through to the date of their
resignation, there were no disagreements with Dohan and Company, Certified
Public Accountants on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedures, which
disagreements if not resolved to the satisfaction of Dohan and Company,
Certified Public Accountants would have caused them to make reference thereto in
their reports on our audited financial statements.

Item 8A.Controls and Procedures.

Disclosure Controls and
Procedures

We maintain disclosure controls and
procedures designed to ensure that we are able to collect the information we are
required to disclose in the reports we file with the Securities and Exchange
Commission (SEC), and to process, summarize and disclose this information within
the time periods specified in the rules of the SEC. As required by Rule 13a-15
under the Securities Exchange Act of 1934 (the Exchange Act), we carried out
an evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures as of May 31, 2006, being the date of our most recently
completed fiscal year. Based on his evaluation of our disclosure controls and
procedures, our Chief Executive Officer and Chief Financial Officer believes
that these controls and procedures are effective to ensure that we are able to
collect, process and disclose the information we are required to disclose in the
reports we file with the SEC within the required time periods.

During our most recently completed fiscal
year ended May 31, 2006, there were no changes in our internal control over
financial reporting that have materially affected, or are reasonably likely to
affect, our internal control over financial reporting. The term internal
control over financial reporting is defined as a process designed by, or under
the supervision of, our principal executive and principal financial officers, or
persons performing similar functions, and effected by our board of directors,
management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles and includes those policies and procedures that:

|(a) | Pertain to the maintenance of
      records that in reasonable detail accurately and fairly reflect our
      transactions and dispositions of the assets;                                                                                                                                                                                   
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) | Provide reasonable assurance that
      transactions are recorded as necessary to permit preparation of financial
      statements in accordance with generally accepted accounting principles,
      and that our receipts and expenditures are being made only in accordance
      with authorizations of our management and directors; and
|   
|(c) | Provide reasonable assurance
      regarding prevention or timely detection of unauthorized acquisition, use
      or disposition of our assets that could have a material effect on the
      financial statements.                                                                                                                         
|   

---

37

Item 8B. Other
Information.

None.

PART III

Item 9. Directors, Executive Officers,
Promoters and Control Persons; Compliance with Section 16(a) of the Exchange
Act.

As of August 28, 2006, our directors and
executive officers, their ages, positions held, and duration as such, are as
follows:

|Name                  | Position Held  with the Company                                                              | Age | Date First Elected  or Appointed
|--------------------- | -------------------------------------------------------------------------------------------- | --- | --------------------------------
|
|Dr. Frederik Warnaars | President, Chief Executive Officer, Chief 
      Financial Officer, Treasurer and a Director | 70  | August 17,2006                  
|
|David C. Jonson       | Vice-President
      of Exploration and a Director                                           | 76  | August 17,2006                  
|Stephen Doppler       | Chairman of
      the Board of Directors and a Director                                      | 49  | August
      17, 2006           

All directors of our company hold office
until the next annual meeting of the stockholders or until their successors have
been elected and qualified. Currently there are three seats on our board of
directors. Currently, our directors receive no compensation for their services.
The officers of our company are appointed by our board of directors and serve
until their successors are appointed by the board of directors or until their
death, resignation or removal from office.

Business Experience

The following is a brief account of the
education and business experience of each of our directors, executive officers
and key employees during at least the past five years, indicating each persons
principal occupation during the period, and the name and principal business of
the organization by which he or she was employed.

Dr. Frederik Warnaars, President, Chief
Executive Officer, Chief Financial Officer and a Director

Dr. Warnaars is the President, Chief
Executive Officer, Chief Financial Officer and a Director of our Company. Dr.
Warnaars has accumulated over thirty-one years of experience in geology and the
management of exploration and development teams. Since 1993, Dr. Warnaars
founded International American Resources Inc. and Minera Holmex S.A. de C.V.
through which Dr. Warnaars was able to acquire exploration properties, and to
provide services to various companies including MIM (Australia), Apex Silver
Mines Ltd., Queenstake and others. From 1988 to 1993, Dr. Warnaars acted as a
senior staff geologist for Cyrus Mineral Company, as well as manager of Cyprus
Minera de Honduras, for which he discovered or identified major precious metal
and base metal deposits. From 1986 to 1988, Dr. Warnaars was an Associate with
Behre Dolbear Riverside & Company where he discovered a new disseminated
gold deposit in Ecuador.

From 1976 to 1985, Dr. Warnaars was
engaged with Exxon Minerals Company in various roles: senior supervisory
geologist and acting general manager with Esso in Papua, New Guinea; senior
staff explorationist in New York; supervisory geologist and geology manager at
the Loas Bronces Expansion project in Chile; and staff geologist for Esso
Eastern inc. in Texas. From 1969 to 1976, Dr. Warnaars was engaged as a
geologist with Kennecott Copper Corporation. From 1965 to 1969, Dr. Warnaars was
an assistant professor of geochemistry and geophysics at the University of
Utrecht, Netherlands.

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38

Dr. Warnaars earned a Doctorate in Petrology from the University of Leyden, Netherlands, in 1967. In addition to being fluent in English, Dr. Warnaars is also fluent in several other languages including Spanish, French,
German and Dutch. Since 1966, Dr. Warnaars has also published many articles concerning economic geology.

David C. Jonson, Vice-President of Exploration and a Director

Mr. Jonson is the Vice-President and a director of our Company. Mr. Jonson has amassed over forty-four years of experience as a mining geologist, half of which were spent in management and the other half as a geological
consultant. Since 1977, Mr. Jonson has provided consulting services to various clients during which he has made field or office evaluations of over 600 prospects, mines and mining districts and has discovered or identified numerous large, attractive
precious and base metal prospects, prepared several bankable feasibility studies, and designing computerized mining models.

From 1974 to 1976, Mr. Jonson acted as Vice President and District Exploration Manager (covering six western states) for Freeport Exploration Co.  From 1969 to 1974, Mr. Jonson was engaged as an assistant manager and
subsequently as manager (North American operations) for Midwest Oil Corp. From 1956 to 1969, Mr. Jonson acted as a senior geologist and project manager for Climax Molybdenum Co.  From 1955 to 1956, Mr. Jonson was employed as a mine geologist for
Newmont Mining Corp.

After spending two years with the U.S. Army Corps of Engineers, Mr. Jonson earned a Master of Sciences in Geology from the Colorado School of Mines in 1955.  Mr. Jonson is a Fellow with the Society of Economic
Geologists.

Stephen Doppler, Chairman of the Board of Directors and a Director

Mr. Doppler is the Chairman and a director of our Company. Mr. Doppler has worked in the mining industry for nearly 20 years. Since 1999, Mr. Doppler has acted as the managing director of Doppler & Associates of
Colorado, a consulting firm specializing in reverse takeovers and other corporate transactions involving OTC-BB companies. From 1996 to 1999, Mr. Doppler acted as President, CEO and Chairman of Adamas Resources Corp., a junior resource company
listed on the TSX Venture Exchange, where he designed and successfully implemented a turn around strategy for the company. From 1994 to 1996, Mr. Doppler has provided advisory services in the area of mergers and acquisitions to international mining
companies. From 1979 to 1994, Mr. Doppler provided consulting services in the resource sector, including assessing the fair market value of a Venezuelan firms international subsidiaries, designing a long range strategic plan for the creation
of a leading zinc producer, and preparing fair market evaluations, appraisals and optimization studies for development stage and operating stage companies with copper, gold and silver projects.

Mr. Doppler earned a Master of Sciences in Mineral Economics from the Colorado School of Mines, and a Bachelor of Arts (Geology) and a Bachelor of Arts (Economics) from Bates College in Maine.

Committees of the Board of Directors

Our board of directors does not maintain a separately-designated standing audit committee. As a result, our entire board of directors acts as our audit committee. We believe that the cost related to appointing an
independent financial expert to our board of directors at this time is prohibitive.

Our board of directors presently do not have a compensation committee, nominating committee, an executive committee of our board of directors, stock plan committee or any other committees.

Terms of Office

Our directors are appointed for one-year terms to hold office until the next annual general meeting of the holders of our common stock or until removed from office in accordance with our by-laws. Our officers are appointed
by our board of directors and hold office until removed by our board of directors.

---

39

Audit Committee Financial
Expert

Our board of directors has determined that
it does not have a member of its audit committee that qualifies as an audit
committee financial expert as defined in Item 401(e) of Regulation S-B, and is
independent as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the
Securities Exchange Act of 1934, as amended.

We believe that the members of our board
of directors are collectively capable of analyzing and evaluating our financial
statements and understanding internal controls and procedures for financial
reporting. In addition, we believe that retaining an independent director who
would qualify as an audit committee financial expert would be overly costly
and burdensome and is not warranted in our circumstances given the early stages
of our development and the fact that we have not generated any revenues to
date.

Code of Ethics

We have adopted a Code of Ethics
applicable to our officers and directors which is a "code of ethics" as defined
by applicable rules of the SEC. Our Code of Ethics is attached as an exhibit to
this annual report. If we make any amendments to our Code of Ethics other than
technical, administrative, or other non-substantive amendments, or grant any
waivers, including implicit waivers, from a provision of our Code of Ethics to
our Chief Executive Officer, Chief Financial Officer, or certain other finance
executives, we will disclose the nature of the amendment or waiver, its
effective date and to whom it applies in a current report on Form 8-K filed with
the SEC.

Section 16(a) Beneficial Ownership
Compliance

Section 16(a) of the Securities Exchange
Act of 1934, as amended, requires our executive officers and directors and
persons who own more than 10% of a registered class of our equity securities to
file with the Securities and Exchange Commission initial statements of
beneficial ownership, reports of changes in ownership and annual reports
concerning their ownership of our shares of common stock and other equity
securities, on Forms 3, 4 and 5, respectively. Executive officers, directors and
greater than 10% shareholders are required by the Securities and Exchange
Commission regulations to furnish us with copies of all Section 16(a) reports
they file.

Based solely on our review of the copies
of such forms received by our company, or written representations from certain
reporting persons that no Form 5s were required for those persons, we believe
that, during the fiscal year ended May 31, 2006, all filing requirements
applicable to our officers, directors and greater than 10% beneficial owners as
well as our officers, directors and greater than 10% beneficial owners of our
subsidiary, Aurelio Resources Inc, were complied with, with the exception of the
following:

|Name              | Number of  Late
      Reports | Number of Transactions Not  Reported on a Timely Basis | Failure to File  Requested
      Forms
|----------------- | ----------------------------- | ------------------------------------------------------ | --------------------------------------
|
|Frederik Warnaars | 1(1)                          | 1                                                      | Nil                                   
|Stephen Doppler   | 1(1)                          | 1                                                      | Nil                                   
|David Jonson      | 1(1)                          | 1                                                      | Nil                                   

(1)The named officer, director or greater than 10% shareholder, as
applicable, filed a late Form 3 - Statement of Changes in Beneficial
Ownership.

Family Relationships

There are no family relationships among
our directors or officers.

---

40

Item 10.Executive Compensation.Summary Compensation TableThe table below summarizes all compensation awarded to, earned by, or
paid to our executive officers by any person for all services rendered in all
capacities to us for the period from our inception through May 31, 2006.

|Name                 | Title                                      | Year                        | Annual Compensation     | Long Term Compensation
|-------------------- | ------------------------------------------ | --------------------------- | ----------------------- | ----------------------
|Salary($)            | Bonus($)                                   | **OtherAnnualCompen**sation | Restricted StockAwarded | Options/*SARs(#)      
|
|Paul Fong(1)         | President, CEO, Treasurer and Director     | 2006                        | Nil                     | Nil                   
|2005                 | Nil                                        | Nil                         | Nil                     | Nil                   
|2004                 | Nil                                        | Nil                         | Nil                     | Nil                   
|Patrick McGrath(1)   | CFO, Secretary andDirector                 | 2006                        | Nil                     | Nil                   
|2005                 | Nil                                        | Nil                         | Nil                     | Nil                   
|2004                 | Nil                                        | Nil                         | Nil                     | Nil                   
|Frederik Warnaars(1) | President, CEO, CFO,Treasurer and Director | 2006                        | Nil                     | Nil                   
|2005                 | Nil                                        | Nil                         | Nil                     | Nil                   
|2004                 | Nil                                        | Nil                         | Nil                     | Nil                   
|Stephen Doppler(1)   | Corporate Secretary and
      Director     | 2006                        | Nil                     | Nil                   
|2005                 | Nil                                        | Nil                         | Nil                     | Nil                   
|2004                 | Nil                                        | Nil                         | Nil                     | Nil                   
|David C. Jonson(1)   | Vice President ofExploration andDirector   | 2006                        | Nil                     | Nil                   
|2005                 | Nil                                        | Nil                         | Nil                     | Nil                   
|2004                 | Nil                                        | Nil                         | Nil                     | Nil                   

(1)On August 17, 2006, Dr. Frederik Warnaars was appointed President, CEO,
CFO, Treasurer and a director, Mr. Stephen Doppler was appointed as our
Corporate Secretary and a director, Mr. David Jonson was appointed Vice
President of exploration and a director, and both Mr. Paul Fong and Mr. Patrick
McGrath resigned as officers and directors of our company.

Since our inception, no compensation has
been awarded to, earned by or paid to our executive officers or directors by us
or any other person, nor have we granted any stock options or stock appreciation
rights to our executive officers or directors.

We do not have any long-term incentive
plans, pension plans or similar compensatory plans for our officers or
directors.

Stock Option Grants

We did not grant any stock options to the
executive officers or directors from inception through May 31, 2006. We have
also not granted any stock options to the executive officers since May 31, 2006.
We intend to grant stock options to our executive officers in the future as
described below under Employment Contracts.

Employment Contracts

Effective August 17, 2006, we entered into
consulting agreements with each of our executive officers. The terms of these
consulting agreements are discussed below.

Effective August 17, 2006, we entered into
a consulting agreement with International American Resources Inc., a corporation
wholly-owned by Dr. Frederik Warnaars. Under the terms of this agreement,
International American Resources Inc. contracted to supply the services of Dr.
Warnaars as President and CEO of our company for a period of two years, subject
to annual renewal. For the provision of these consulting services, we will pay
International American Resources Inc. $5,000 monthly for the consulting services
provided. We will also grant 100,000 options to International American Resources
Inc.

---

41

Effective August 17, 2006, we entered into
a consulting agreement with Jonson Management Company, a corporation
wholly-owned by David Jonson. Under the terms of this agreement, Jonson
Management Company contracted to supply the services of Mr. Jonson as a
consultant to our company for a period of two years, subject to annual renewal.
Jonson Management Company will, through Mr. Jonson, provide assistance and
guidance to Aurelio Resource Corporation and its subsidiaries in acquiring,
developing and operating our mineral properties and projects, and to contact and
negotiate with the owners of suitable mineral properties for potential
acquisition by our company. For the provision of these consulting services, we
will pay Jonson Management Company $5,000 monthly for the consulting services
provided. We will also grant 100,000 options to Jonson Management
Company.

Effective August 17, 2006, we entered into
a consulting agreement with Salzburg Holdings LLC, a corporation wholly-owned by
Stephen Doppler. Under the terms of this agreement, Salzburg Holdings LLC agreed
to supply the services of Mr. Doppler, on a part-time basis, as a consultant to
our company for a period of two years, subject to annual renewal. Salzburg
Holdings LLC will, through Mr. Doppler, provide assistance and guidance to our
company, and to our subsidiaries, in acquiring, developing and operating our
mineral properties and projects, and contacting and negotiating with the owners
of suitable mineral properties for potential acquisition by our company. For the
provision of these consulting services, we will pay Salzburg Holdings LLC the
amount of US$43.75 per hour of consulting services provided. We will also grant
100,000 options to Salzburg Holdings Inc.

Item 11.  Security Ownership of
Certain Beneficial Owners and Management

The following table provides the names and
addresses of each person known to us to own more than 5% of our outstanding
common stock as of August 28, 2006, and by the officers and directors,
individually and as a group. All shares are owned directly.

|Name and Address of Beneficial Owner                                        | Amount and Nature of  Beneficial Ownership | Percentage  of Class(1)
|--------------------------------------------------------------------------- | ------------------------------------------ | -----------------------
|
|Dr. Frederik Warnaars(2)(3)  6373 S. Yates
      Court, Littleton, CO 80123 | 6,800,000(4)                               | 23.91%                 
|
|David C. Jonson(2)(5)  3082 S.
      Wheeling Way #410, Aurora, CO 80014    | 1,500,000(6)                               | 5.27%                  
|
|Stephen Doppler(2)(7)  1696 Ajax
      Lane, Evergreen, CO 80439            | 500,000                                    | 1.76%                  
|
|Directors and Executive Officers as a
      Group                           | 8,800,000                                  | 30.95%                 

|(1) | Based on 28,436,500 shares of
      common stock issued and outstanding as of August 28, 2006, after giving
      effect to the acquisition of Aurelio Resources Inc. Beneficial ownership
      is determined in accordance with the rules of the Securities and Exchange
      Commission and generally includes voting or investment power with respect
      to securities. Except as otherwise indicated, we believe that the
      beneficial owners of the common stock listed above, based on information
      furnished by such owners, have sole investment and voting power with
      respect to such shares, subject to community property laws where
      applicable.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | This individual is a director of
      our company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|(3) | Dr. Warnaars is also the
      President, Chief Executive Officer, Chief Financial Officer and Treasurer
      of our company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|(4) | 800,000 of these common shares
      are held by International American Resources, Inc., a wholly-owned
      corporation of Dr. Frederik Warnaars.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|(5) | Mr. David Jonson is the Vice
      President of Exploration of our company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(6) | 800,000 of these common shares
      are held by Jonson Management Co., a wholly-owned corporation of David
      Jonson.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(7) | Mr. Stephen Doppler is the
      Chairman of the Board of Directors of our company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

We believe that that all persons named
have full voting and investment power with respect to the shares indicated,
unless otherwise noted in the table. Under the rules of the Securities and
Exchange Commission, a person (or group of persons) is deemed to be a
beneficial owner of a security if he or she, directly or indirectly, has or
shares the power to vote or to direct the voting of such security, or the power
to dispose of or to direct the disposition of such security. Accordingly, more
than one person may be deemed to be a beneficial owner of the same security.
A

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42

person is also deemed to be a beneficial
owner of any security, which that person has the right to acquire within 60
days, such as options or warrants to purchase our common stock.

Securities Authorized for Issuance
Under Equity Compensation Plans

We have no equity compensation plans
(including individual compensation arrangements) under which our equity
securities are authorized for issuance.

Item 12. Certain Relationships and
Related Transactions.

Other than as disclosed below, there have
been no transactions, or proposed transactions, which have materially affected
or will materially affect us in which any director, executive officer or
beneficial holder of more than 10% of the outstanding shares of common stock, or
any of their respective relatives, spouses, associates or affiliates, has had or
will have any direct or material indirect interest.

On August 17, 2006 we completed the
acquisition of all of the issued and outstanding common stock of Aurelio
Resources Inc., a privately-owned Colorado corporation engaged in mineral
exploration. We issued 10,000,000 shares of our common stock to the former
shareholders of Aurelio Resources Inc. in exchange for 10,000,000 common shares
of Aurelio Resources Inc., being all of the issued and outstanding common stock
of Aurelio Resources Inc.

Aurelio Resources Inc. did not have a
business relationship with our company. Our new directors, Dr. Frederik
Warnaars, Stephen Doppler and David Jonson, were all directors of Aurelio
Resources Inc. Dr. Frederik Warnaars, our President, Chief Executive Officer,
Chief Financial Officer, Treasurer and a director, and Stephen Doppler, our
Vice-President of Exploration and a director, were responsible for acquiring the
Hill Copper Property for Aurelio Resources Inc. Dr. Frederik Warnaars, Stephen
Doppler and David C. Jonson will remain directors and officers of Aurelio
Resources Inc. for the foreseeable future.

On March 29, 2004, Paul Fong, our former
Chief Executive Officer, President, Treasurer and director, and Patrick McGrath,
our former Chief Financial Officer, Secretary and director, each acquired
6,500,000 shares of our common stock at a price of $0.002 per share. On August
17, 2006, Mr. Fong and Mr. McGrath returned an aggregate of 12,965,000 shares of
our common stock (post forward-split) to us for cancellation. After giving
effect to the cancellation of these 12,965,000 common shares and the issuance of
10,000,000 common shares to the former shareholders of Aurelio Resources Inc.,
we now have 28,436,500 common shares issued and outstanding, and our former
control group of Mr. Fong and Mr. McGrath now own 35,000 shares of our common
stock, constituting only 0.12% of our issued and outstanding common
stock.

During the period from inception of
Aurelio Resources Inc. to February 28, 2006, Aurelio Resources Inc accepted
subscriptions for 2,250,000 shares of its common stock in exchange for certain
mineral rights. The following table shows who subscribed for these shares on
February 28, 2006:

|Shareholder                            | Number of
      Shares | Property Vended
      In        
|-------------------------------------- | ---------------------- | --------------------------------
|Fred Warnaars                          | 350,000                | Gavilanes Property Option       
|International American Resources, Inc. | 400,000                | Gavilanes Property Option       
|David Jonson                           | 350,000                | MAN claims, Hill Copper Property
|Jonson Management                      | 400,000                | MAN claims, Hill Copper Property
|Stephen Doppler                        | 250,000                | Uranium Property, Nevada        
|Salzburg Holdings LLC                  | 500,000                | Uranium Property, Nevada        
|Total                                  | 2,250,000              |                                 

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43

On May 2, 2006, Aurelio Resources Inc.
accepted subscriptions for another 2,250,000 of its common stock in exchange for
certain mineral rights. The following table shows who subscribed for these
shares on May 2, 2006:

|Shareholder                            | Number of
      Shares | Property Vended
      In        
|-------------------------------------- | ---------------------- | --------------------------------
|Fred Warnaars                          | 350,000                | Gavilanes Property Option       
|International American Resources, Inc. | 400,000                | Gavilanes Property Option       
|David Jonson                           | 350,000                | MAN claims, Hill Copper Property
|Jonson Management                      | 400,000                | MAN claims, Hill Copper Property
|Stephen Doppler                        | 250,000                | Uranium Property, Nevada        
|Salzburg Holdings LLC                  | 500,000                | Uranium Property, Nevada        
|Total                                  | 2,250,000              |                                 

Of these subscriptions for shares of
common stock listed above, certain subscriptions for an aggregate of 1,500,000
shares of common stock was accepted in exchange for a quitclaim deed to uranium
mining property in Nevada. Because the related party did not have legal rights
to the deeds, he reduced his subscriptions to 500,000 shares of Aurelio
Resources Inc. common stock. On July 28, 2006, and as a result of an increase in
the authorized common stock, Aurelio Resources Inc. approved and ratified the
share subscriptions received since incorporation and issued 4,700,000 shares of
common stock to the various subscribers.

Aurelio Resources Inc. also mistakenly
reimbursed a related party $10,320 for filing fees related to the Nevada
property. This related party has repaid the $10,320 to Aurelio Resources Inc.

On August 26, 2005, Aurelio Resources Inc.
acquired from Minera Holmex S.A. de C.V. an option to acquire a 100% interest in
3 mining claims/concessions covering approximately 1,000 hectares in Durango,
Mexico. Minera Holmex S.A. de C.V. is a company wholly-owned by Dr. Frederik
Warnaars. In consideration for the option, Aurelio Resources Inc. paid Minera
Holmex an amount equal to the taxes in arrears for the years 2001 and 2002 and
the aggregate sum of P$63,536 Mexican Pesos plus late payment penalties
(approximately US$6,100). Aurelio Resources Inc. also paid the sum of US$5,000
to Minera Holmex S.A. de C.V. as of February 1, 2006 in accordance with the
options provisions. To maintain the option in good standing, we will need to
make the following payments to Minera Holmex S.A. de C.V. The payment schedule
can be found under the heading Description of Our Mineral Properties
above.

On July 28, 2006, Aurelio Resources Inc.
issued 5,300,000 shares of its common stock to Dr. Frederik Warnaars at the
price of $0.001 per share for an aggregate of $5,300 in cash and services
rendered.

We have no policy regarding entering into
transactions with affiliated parties.

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44

|Item
      13.  **Exhibits.** | 
|----------------------------- | 

**Number** **Description**

|3.1  | Articles of Incorporation
      (1)                                                                                                                     
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|3.2  | By-Laws (1)                                                                                                                                             
|    
|3.3  | Specimen Stock Certificate
      (2)                                                                                                                    
|    
|10.1 | Mining Quitclaim Deed
      (1)                                                                                                                         
|    
|10.2 | Mineral Exploration Management
      Service Agreement between Alaska Earth Sciences, Inc. and Furio Resources
      Inc. dated March 7, 2005 (3)       
|    
|10.3 | Geophysical Survey Agreement
      between SJ Geophysical Ltd. and Furio Resources Inc. dated May 5,
      2005 (4)                                     
|    
|10.4 | Agreement between Aurelio
      Resources Inc. and Furio Resources Inc. dated April 27, 2006
      (5)                                                  
|    
|10.5 | Amended Agreement between Aurelio
      Resources Inc. and Furio Resources Inc. dated June 9, 2006
      (6)                                            
|    
|10.6 | Amended Agreement between Aurelio
      Resources Inc. and Aurelio Resource Corporation dated July 13, 2006
      (7)                                   
|    
|10.7 | Consulting Agreement among
      Aurelio Resource Corp., International American Resources Inc. and Dr.
      Frederik Warnaars dated August 9, 2006. (8)
|    
|10.8 | Consulting Agreement among
      Aurelio Resource Corp., Jonson Management Company and David C. Jonson
      dated August 9, 2006. (8)                  
|    
|10.9 | Consulting Agreement among
      Aurelio Resource Corp., Salzburg Holdings Inc. and Stephen Doppler dated
      August 9, 2006. (8)                     
|    

|14.1* | Code of Ethics                                                                                                                                                                            
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                           
|16.1  | Letter dated August 10, 2006 from Dohan and Company,
      CPA, independent registered public accountants regarding our change in
      independent registered public accounting firms (9)
|     
|21    | Subsidiaries: Aurelio Resources Inc. and Minera Milenium
      S.A. de C.V.                                                                                                               
|     

|31.1* | Certification Statement of
      the Chief Executive Officer and Chief Financial Officer pursuant
      to Section 302 of the
      Sarbanes-Oxley Act of 2002.     
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                     
|32.1* | Certification Statement of
      the Chief Executive Officer and Principal Financial Officer pursuant
      to Section 906  of the
      Sarbanes-Oxley Act of 2002.

* Filed herewith

|(1) | Incorporated by reference to the
      Companys Form SB-2 filed with the Securities and Exchange Commission on
      July 9, 2004.     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | Incorporated by reference to the
      Companys Form 8-A filed with the Securities and Exchange Commission on
      September 10, 2004.
|   
|(3) | Incorporated by reference to the
      Companys Form 10-QSB filed with the Securities and Exchange Commission on
      April 5, 2005.  
|   
|(4) | Incorporated by reference to the
      Companys Form 10-KSB filed with the Securities and Exchange Commission on
      July 27, 2005.  
|   
|(5) | Incorporated by reference to the
      Companys Form 8-K filed with the Securities and Exchange Commission on
      May 2, 2006.       
|   
|(6) | Incorporated by reference to the
      Companys Form 8-K filed with the Securities and Exchange Commission on
      June 15, 2006.     
|   

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45

|(7) | Incorporated by reference to the
      Companys Form 8-K filed with the Securities and Exchange Commission on
      July 17, 2006.  
|--- | -------------------------------------------------------------------------------------------------------------------------------------
|   
|(8) | Incorporated by reference to the
      Companys Form 8-K filed with the Securities and Exchange Commission on
      August 23, 2006.
|   
|(9) | Incorporated by reference to the
      Companys Form 8-K filed with the Securities and Exchange Commission on
      August 11, 2006.
|   

Item 14. Principal Accountant Fees and
Services

The aggregate fees billed or accrued for
the two most recently completed fiscal years ended May 31, 2006 for professional
services rendered by the principal accountant for the audit of the Corporations
annual financial statements and review of the financial statements included our
Quarterly Reports on Form 10-QSB and services that are normally provided by the
accountant in connection with statutory and regulatory filings or engagements
for these fiscal periods were as follows:

|                   | Year Ended  May 31,
      2006 | Year Ended  May 31,
      2005
|------------------ | ------------------------------ | ------------------------------
|
|Audit Fees         | $15,900                        | $13,050                       
|Audit Related Fees | Nil                            | Nil                           
|Tax Fees           | Nil                            | Nil                           
|All Other Fees     | Nil                            | Nil                           
|Total              | $15,900                        | $13,050                       

---

46

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.

AURELIO RESOURCES
CORPORATION

By: /s/ Frederik
Warnaars

Frederik Warnaars, President, Chief
Executive Officer (Principal Executive Officer), Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer), Treasurer,
and Director

Date: August 28, 2006

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that
each person whose signature appears below constitutes and appoints Frederik
Warnaars as his true and lawful attorney-in-fact and agent, with full power of
substitution and re-substitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this annual report, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent or any of them, or of their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the
Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

|Signature             | Title                                                                          | Date            | 
|--------------------- | ------------------------------------------------------------------------------ | --------------- | 
|/s/ Frederik Warnaars |                                                                                |                 | 
|Frederik Warnaars     | President, Chief Executive Officer,
      Chief Financial Officer and Director | August 28, 2006 | 
|                      |                                                                                |                 | 
|/s/ Stephen Doppler   |                                                                                |                 | 
|Stephen Doppler       | Chairman and Director                                                          | August 28, 2006 | 
|                      |                                                                                |                 | 
|/s/ David Jonson      |                                                                                |                 | 
|David Jonson          | Director                                                                       | August 28, 2006 | 

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