**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**Form
      10** - **QSB**








X QUARTERLY REPORT
      UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


**For
      the
      quarter ended August 31, 2007**





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


For
      the transition
      period from ____ to _____








**MEXORO
      MINERALS LTD.**


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


(Exact
      name of
      small business issuer as specified in its charter)





Colorado
            0-23561
            84-1431797(State
                or
                other jurisdiction of incorporation)
            Commission
                file number
            (IRS
                Employer
                Identification No.)





C.
                General
                Retana #706
              Col.
                San
                Felipe,
              Chihuahua,
                Chih., Mexico
            C.P.
                31203(Address
                of
                principal executive offices)
            (Zip
                Code)





Issuer’s
      telephone
      number: (800) 661-7830





Check
      whether the
      issuer (1) filed all reports required to be filed by Section 13 or 15(d) of
      the
      Securities Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days.


Yes X No
      ____





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





**Applicable
      only to issuers involved in bankruptcy proceedings during the preceding five
      years:**





Check
      whether the
      issuer has filed all documents and reports required to be filed by Section
      12,
      13 or 15(d) of the Exchange Act after the distribution of securities under
      a
      plan confirmed by a court.


Yes
      ___ No
      ___





**Applicable
      only to corporate issuers:**





State
      the number of
      shares outstanding of each of the issuer's classes of common equity, as of
      the
      latest practicable date: 23,071,101 at Oct
      9,
      2007 .





Transitional
      Small
      Business Disclosure Format (Check one):


Yes
      __
      No X




-1-


























**MEXORO
      MINERALS LTD.**


**(An
      Exploration Stage Company)**








**CONSOLIDATED
      FINANCIAL STATEMENTS**


**(Unaudited)**


**(Expressed
      in U.S. Dollars)**





**AUGUST
      31,
      2007**
















-2-




**MEXORO
      MINERALS LTD** **.**


**(An
      Exploration Stage Company)**


**Consolidated
      Balance Sheets**


**(Unaudited)
      (Expressed in U.S. Dollars)**


**August
                  31,**
              **2007**
              **(Unaudited)**
            **February
                  28,**
              **2007**
              **(Audited)****Assets****Current**Cash
                and cash
                equivalents
            
            
            $
            46,354
            
            
            $
            13,148Accounts
                receivable
            
            
            
            187,085
            
            
            
            165,897Prepaid
                expenses
            
            
            
            105,639
            
            
            
            173,857339,078
            
            
            
            352,902**Equipment
                (note 4)**
            
            
            
            366,448
            
            
            
            351,335**Total
                assets**
            
            
            $
            705,526
            
            
            $
            704,237**Liabilities****Current**Accounts
                payable and accrued liabilities
            
            
            $
            993,672
            
            
            $
            263,145Current
                portion of loans payable (note 7)
            
            
            
            44,799
            
            
            
            25,400Promissory
                notes (note 6)
            
            
            
            577,099
            
            
            
            109,3371,615,570
            
            
            
            397,882**Loans
                payable (note 7)**
            
            
            
            67,344
            
            
            
            36,863**Total
                liabilities**
            
            
            
            1,682,914
            
            
            
            434,745**Stockholders’
                Deficiency****Capital
                stock**Preferred
                stockAuthorized:
                20,000,000 shares without par value (note 8)Issued:
                nil
            
            
            
            -
            
            
            
            -Common
                stockAuthorized:
                200,000,000 shares without par valueIssued:
                22,901,101 (2007 - 21,036,102) (note 9)
            
            
            
            20,569,253
            
            
            
            19,304,277Additional
                paid-in capital
            
            
            
            10,375,474
            
            
            
            8,702,096Accumulated
                deficit from prior operations
            
            
            
            (2,003,427
            )
            
            
            (2,003,427
            )Accumulated
                deficit during the exploration stage
            
            
            
            (29,929,733
            )
            
            
            (25,731,407
            )Other
                comprehensive income (loss)
            
            
            
            11,045
            
            
            
            (2,047
            )**Total
                stockholders’ equity (deficiency)**
            
            
            
            (977,388
            )
            
            
            269,492**Total
                liabilities and stockholders’ equity (deficiency)**
            
            
            $
            705,526
            
            
            $
            704,237





**Going
      concern (note 3)**


**Commitments
      (notes 5, 10, 11 and 13)**


**Subsequent
      events (note 14)**





**The
      accompanying notes are an integral part of these consolidated financial
      statements.**




-3-


**MEXORO
      MINERALS LTD.**


**(An
      Exploration Stage Company)**


**Consolidated
      Statements of Operations and Deficit**


**(Unaudited)
      (Expressed in U.S. Dollars)**


**Three
                Months Ended**
            **Six
                Months Ended**
            
            **Period
                from Inception of  Exploration Stage**
              **(March
                1, 2004)****August
                  31,****2007**
            
            
            **August
                  31,****2006**
            
            
            **August
                  31,****2007**
            
            
            **August
                  31,****2006**
            
            ****
            **To
                  August
                  31,****2007**ExpensesGeneral
                and
                administrative
            $
            356,858
            
            $
            227,472
            
            $
            1,292,123
            
            $
            797,760
            
            $
            3,301,761Stock-based
                compensation (note 10)
            
            735,670
            
            
            735,250
            
            
            1,673,378
            
            
            1,222,500
            
            
            4,940,584Mineral
                exploration (note 5)
            
            564,358
            
            
            352,237
            
            
            1,232,634
            
            
            604,498
            
            
            16,798,056Impairment
                of
                mineral property costs
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            1,089,498**Operating
                loss**
            
            (1,656,886
            )
            
            (1,314,959
            )
            
            (4,198,135
            )
            
            (2,624,758
            )
            
            (26,129,899
            )**Other
                income (expenses)**Foreign
                exchange
            
            2,938
            
            
            -
            
            
            2,938
            
            
            -
            
            
            2,938Interest
                expense
            
            -
            
            
            (15,532
            )
            
            -
            
            
            (2,320,973
            )
            
            (3,940,087
            )Interest
                income
            
            3,228
            
            
            18,063
            
            
            (3,129
            )
            
            24,118
            
            
            (3,129
            )Gain
                on
                settlement of debt
            
            -
            
            
            -
            
            
            -
            
            
            7,259
            
            
            140,444**Net
                loss**
            
            (1,650,720
            )
            
            (1,312,428
            )
            
            (4,198,326
            )
            
            (4,914,354
            )
            
            (29,929,733
            )**Accumulated
                deficit, beginning**
            
            (28,279,013
            )
            
            (21,940,299
            )
            
            (25,731,407
            )
            
            (18,338,373
            )
            
            -**Accumulated
                deficit, ending**
            $
            (29,929,733
            )
            $
            (23,252,727
            )
            $
            (29,929,733
            )
            $
            (23,252,727
            )
            $
            (29,929,733
            )**Other
                comprehensive income**Foreign
                exchange gain (loss) on translation
            
            (2,834
            )
            
            1,707
            
            
            13,093
            
            
            (30,905
            )
            
            11,045**Total
                comprehensive loss**
            $
            (1,653,554
            )
            $
            (1,310,721
            )
            $
            (4,185,233
            )
            $
            (4,945,259
            )
            $
            (29,918,688
            )**Total
                loss per share**- basic and
                diluted
            $
            (0.07
            )
            $
            (0.07
            )
            $
            (0.19
            )
            $
            (0.30
            )
            $
            -**Weighted
                average number of shares of common stock - basic and
                diluted**
            
            22,372,008
            
            
            18,882,406
            
            
            21,767,370
            
            
            16,521,139
            
            
            -











**The
      accompanying notes are an integral part of these consolidated financial
      statements.**




-4-


**MEXORO
      MINERALS LTD.**


**(An
      Exploration Stage Company)**


**Consolidated
      Statements of Cash Flows**


**(Unaudited)
      (Expressed in U.S. Dollars)**


**Six
                Months Ended**
            
            **Period
              from
              Inception of****August
                  31,**2007
            
            
            **August
                  31,**2006
            
            
            **Exploration
                to August 31, 2007****Cash
                flows from operating activities**Net
                loss
            $
            (4,198,326
            )
            $
            (4,914,354
            )
            $
            (29,929,733
            )Adjustments
                to reconcile net income (loss) to net cash flowsWrite
                off of
                note receivable
            
            -
            
            
            -
            
            
            57,500Acquisition
                of resource properties for stock
            
            -
            
            
            -
            
            
            13,065,000Issuance
                of
                shares for consulting services
            
            -
            
            
            -
            
            
            90,000Depreciation
            
            31,575
            
            
            3,049
            
            
            56,504Discount
                on
                convertible debenture
            
            -
            
            
            -
            
            
            175,000Non-cash
                component of gain on settlement of debt
            
            -
            
            
            -
            
            
            (182,259
            )Stock-based
                compensation
            
            1,673,378
            
            
            1,222,500
            
            
            6,463,583Beneficial
                conversion feature
            
            -
            
            
            2,265,500
            
            
            3,717,500Prepaid
                expense
            
            71,917
            
            
            48,269
            
            
            (95,461
            )Accounts
                receivable
            
            (15,692
            )
            
            (87,884
            )
            
            (173,383
            )Customer
                deposits
            
            -
            
            
            -
            
            
            (44,809
            )Notes
                payable
            
            -
            
            
            -
            
            
            109,337Accounts
                payable and accrued liabilities
            
            724,243
            
            
            102,509
            
            
            972,454**Cash
                used in operating activities**
            
            (1,712,905
            )
            
            (1,360,411
            )
            
            (5,718,767
            )**Investing
                activity**Purchase
                of
                property and equipment
            
            (35,394
            )
            
            (90,308
            )
            
            (411,658
            )**Cash
                used in investing activity**
            
            (35,394
            )
            
            (90,308
            )
            
            (411,658
            )**Financing
                activities**Proceeds
                from
                loans payable
            
            47,685
            
            
            -
            
            
            123,033Proceeds
                from
                notes payable
            
            465,088
            
            
            -
            
            
            1,027,888Proceeds
                from
                convertible debentures
            
            -
            
            
            2,240,500
            
            
            3,692,500Proceeds
                from
                exercise of options
            
            -
            
            
            -
            
            
            78,000Proceeds
                from
                exercise of warrants
            
            1,264,976
            
            
            50,000
            
            
            1,314,976Repayment
                of
                loans payable
            
            -
            
            
            -
            
            
            (13,085
            )Repayment
                of
                notes payable
            
            -
            
            
            -
            
            
            (178,500
            )Repayment
                of
                convertible debentures
            
            -
            
            
            -
            
            
            (530,000
            )Stock
                subscriptions
            
            -
            
            
            (170,000
            )
            
            170,000Issuance
                of
                common stock
            
            -
            
            
            375,000
            
            
            477,109**Cash
                provided by financing activities**
            
            1,777,749
            
            
            2,495,500
            
            
            6,161,921**Net
                change in cash**
            
            29,450
            
            
            1,044,781
            
            
            31,496**Effect
                of foreign currency translation on cash**
            
            3,756
            
            
            9,802
            
            
            (7,219
            )**Cash
                and cash equivalents, beginning**
            
            13,148
            
            
            479,530
            
            
            22,077**Cash
                and cash equivalents, ending**
            $
            46,354
            
            $
            1,534,113
            
            $
            46,354**Supplemental
                cash flow information**Interest
                paid
            $
            -
            
            $
            55,473
            
            $
            162,157Common
                stock
                issued on conversion of debt
            
            -
            
            
            2,917,500
            
            
            3,217,500Common
                stock
                issued on settlement of notes payable
            
            -
            
            
            412,800
            
            
            412,800Shares
                issued
                for services
            
            -
            
            
            -
            
            
            90,000





**The
      accompanying notes are an integral part of these consolidated financial
      statements.**




-5-


**MEXORO
      MINERALS LTD.**


**(An
      Exploration Stage Company)**


**Notes
      to
      Consolidated Financial Statements**


**Six
      Months
      Ended August 31, 2007**


**(Unaudited)
      (Expressed in U.S. Dollars)**




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




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




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




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




The
      accompanying
      unaudited consolidated financial statements have been prepared in accordance
      with United States generally accepted accounting principles (“US GAAP”) for
      interim financial information and with the instructions to Form 10-QSB and
      Item
      310 of Regulation S-B. Accordingly, they do not include all of the information
      and footnotes required by generally accepted accounting principles for complete
      consolidated financial statements. In the opinion of management, all adjustments
      (consisting of normal recurring accruals) considered necessary for a fair
      presentation have been included. Operating results for the three and six months
      ended August 31, 2007 are not necessarily indicative of the results that may
      be
      expected for the year ending February 29, 2008. For further information, refer
      to the consolidated financial statements and footnotes thereto included in
      the
      Company’s annual report on Form 10-KSB for the year ended February 28,
      2007.




-6-


**MEXORO
      MINERALS LTD.**


**(An
      Exploration Stage Company)**


**Notes
      to
      Consolidated Financial Statements**


**Six
      Months
      Ended August 31, 2007**


**(Unaudited)
      (Expressed in U.S. Dollars)**




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




(a)
            Recent
                accounting pronouncements




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




(ii)
            In
                September
                2006, the United States Securities and Exchange Commission (“SEC”)
                released SAB No. 108, “Considering the Effects of Prior Year Misstatements
                when Quantifying Misstatements in Current Year Financial Statements” (“SAB
                108”). SAB 108 provides interpretive guidance on the SEC’s views on how
                the effects of the carryover or reversal of prior year misstatements
                should be considered in quantifying a current year misstatement.
                The
                Company adopted SAB 108 during the fourth quarter of 2006. The adoption
                did not have a material impact on the Company’s financial position, cash
                flows or results of operations.




(iii)
            In
                September
                2006, FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”).
                SFAS 157 provides guidance for using fair value to measure assets
                and
                liabilities. It clarifies that for items that are not actively traded,
                such as certain kinds of derivatives, fair value should reflect the
                price
                in a transaction with a market participant, including adjustment
                for risk,
                not just the company’s mark-to-model value. SFAS 157 also requires
                expanded disclosure of the effect on earnings for items measured
                using
                unobservable data. Fair value refers to the price that would be received
                to sell an asset or paid to transfer a liability in an orderly transaction
                between market participants in the market in which the reporting
                entity
                transacts. SFAS 157 is effective for financial statements issued
                for
                fiscal years beginning after November 15,
                2007.




-7-




**MEXORO
      MINERALS LTD.**


**(An
      Exploration Stage Company)**


**Notes
      to
      Consolidated Financial Statements**


**Six
      Months
      Ended August 31, 2007**


**(Unaudited)
      (Expressed in U.S. Dollars)**




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




(a)  Recent
      accounting
      pronouncements (continued)




(iv)
            In
                July 2006,
                FASB issued Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty
                in Income Taxes - An Interpretation of FASB Statement No. 109. FIN
                48
                clarifies the accounting for uncertainty in income taxes recognized
                in an
                enterprise’s financial statements in accordance with FASB Statement No.
                109, and also prescribes a recognition threshold and measurement
                attribute
                for the financial statement recognition and measurement of a tax
                position
                taken or expected to be taken in a tax return. FIN 48 is effective
                for
                financial statements issued for fiscal years beginning after December
                15,
                2006. The adoption of this standard did not have a significant impact
                on
                the Company’s consolidated financial statements.




(v)
            On
                February
                15, 2007, the FASB issued SFAS Statement No. 159, “The Fair Value Option
                for Financial Assets and Financial Liabilities” (“SFAS 159”). This
                Statement permits companies and not-for-profit organizations to make
                a
                one-time election to carry eligible types of financial assets and
                liabilities at fair value, even if fair value measurement is not
                required
                under US GAAP. SFAS 159 is effective for fiscal years beginning after
                November 15, 2007. The Company is currently evaluating the effect
                of the
                adoption of SFAS 159.






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




The
      accompanying
      consolidated financial statements have been prepared on a going-concern basis.
      The Company has a history of operating losses and will need to raise additional
      capital to fund its planned operations. As at August 31, 2007, the Company
      had
      working capital deficiency of $1,276,492 (February 28, 2007 - working capital
      deficiency of $44,980) and a cumulative loss during the exploration period
      of
      $29,929,733 (February 28, 2007 - $25,731,407). These conditions raise
      substantial doubt about the Company’s ability to continue as a going concern.
      The Company intends to reduce its cumulative loss through the attainment of
      profitable operations, from its investment in planned Mexican mining ventures
      (note 5). In addition, the Company has conducted private placements of
      convertible debt and common stock (note 9), which have generated a portion
      of
      the initial cash requirements of its planned Mexican mining ventures (note
      5).




-8-




**MEXORO
      MINERALS LTD.**


**(An
      Exploration Stage Company)**


**Notes
      to
      Consolidated Financial Statements**


**Six
      Months
      Ended August 31, 2007**


**(Unaudited)
      (Expressed in U.S. Dollars)**




**4.**
            **EQUIPMENT**




August
                  31,
                  2007
            
            February
                28,
              2007Cost
            
            
            Accumulated
                Depreciation
            
            
            Net
                Book Value
            
            
            Net
                Book ValueSoftware
            $
            15,764
            
            $
            4,051
            
            $
            11,713
            
            $
            15,521Machinery
            
            196,075
            
            
            9,145
            
            
            186,930
            
            
            213,219Vehicles
            
            152,989
            
            
            23,907
            
            
            129,082
            
            
            87,747Computers
            
            29,426
            
            
            6,041
            
            
            23,385
            
            
            19,202Office
                equipment
            
            16,876
            
            
            1,538
            
            
            15,338
            
            
            15,646$
            411,130
            
            $
            44,682
            
            $
            366,448
            
            $
            351,335




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




The
      Company incurred exploration
      expenses as follows in the six months ended August 31, 2007:





Cieneguita
            
            
            Sahuayacan
            
            
            Guazapares
            
            
            San
                Antonio
            
            
            San
                Francisco
            
            
            Encino
                Gordo
            
            
            TotalDrilling
                and
                sampling
            $
            -
            
            $
            324,834
            
            $
            116,691
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            441,525Geological,
                geochemical, geophysics
            
            16,500
            
            
            83,169
            
            
            17,223
            
            
            -
            
            
            -
            
            
            42,739
            
            
            159,631Land
                use
                permits
            
            17,810
            
            
            51,374
            
            
            7,680
            
            
            400
            
            
            30,530
            
            
            1,886
            
            
            109,680Automotive
            
            3,523
            
            
            47
            
            
            718
            
            
            -
            
            
            -
            
            
            -
            
            
            4,288Travel
            
            18,082
            
            
            15,201
            
            
            18,040
            
            
            -
            
            
            -
            
            
            3,411
            
            
            54,734Consulting
            
            143,020
            
            
            30,026
            
            
            71,517
            
            
            -
            
            
            -
            
            
            5,124
            
            
            249,687Equipment
            
            68,901
            
            
            -
            
            
            11,201
            
            
            -
            
            
            -
            
            
            786
            
            
            80,888General
            
            107,488
            
            
            -
            
            
            25,942
            
            
            -
            
            
            -
            
            
            (1,229
            )
            
            132,201$
            375,324
            
            $
            504,651
            
            $
            269,012
            
            $
            400
            
            $
            30,530
            
            $
            52,717
            
            $
            1,232,634




-9-


**MEXORO
      MINERALS LTD.**


**(An
      Exploration Stage Company)**


**Notes
      to
      Consolidated Financial Statements**


**Six
      Months
      Ended August 31, 2007**


**(Unaudited)
      (Expressed in U.S. Dollars)**




**5.**  **MINERAL
      PROPERTIES (continued)**




The
      Company
      incurred exploration expenses as follows in the six months ended August 31,
      2006:





Cieneguita
            
            
            Sahuayacan
            
            
            Guazapares
            
            
            San
                Francisco
            
            
            Encino
                Gordo
            
            
            TotalGeological,
                geochemical, geophysics
            $
            45,875
            
            $
            -
            
            $
            353
            
            $
            -
            
            $
            -
            
            $
            46,228Land
                use
                permits
            
            88,327
            
            
            33,639
            
            
            10,010
            
            
            20,685
            
            
            24,743
            
            
            177,404Automotive
            
            34,768
            
            
            3,011
            
            
            2,515
            
            
            -
            
            
            -
            
            
            40,294Travel
            
            9,599
            
            
            3,626
            
            
            5,302
            
            
            -
            
            
            -
            
            
            18,527Consulting
            
            110,556
            
            
            23,603
            
            
            13,434
            
            
            -
            
            
            -
            
            
            147,593Equipment
            
            7,933
            
            
            7,263
            
            
            1,613
            
            
            -
            
            
            -
            
            
            16,809General
            
            133,029
            
            
            21,244
            
            
            3,370
            
            
            -
            
            
            -
            
            
            157,643$
            430,087
            
            $
            92,386
            
            $
            36,597
            
            $
            20,685
            
            $
            24,743
            
            $
            604,498




Since
      May 2004, the
      Company has held interests in exploration properties in Mexico.




In
      August 2005, the
      Company formed its wholly-owned subsidiary, Sunburst de Mexico, which allowed
      the Company to take title to the properties into the name of Sunburst Mexico.
      On
      August 25, 2005 the Company entered into property agreements with MRT, which
      provided Sunburst Mexico options to purchase the mineral concessions of the
      Cieneguita and Guazapares properties and the right of refusal on two Encino
      Gordo properties. The Company also entered into an exploration and sale
      agreement, in October 2006, with Minera Emilio S.A. de C.V. (“Minera Emilio”)
      for mineral concessions of the Sahauyacan Property.




In
      August 2005 the
      parties also entered into an operator’s agreement, that gave MRT the sole and
      exclusive right and authority to manage the Cieneguita Property, and a share
      option agreement which granted MRT the exclusive option to acquire up to 100%
      of
      all outstanding shares of Sunburst de Mexico if the Company did not comply
      with
      the terms of the property agreements. The operating agreement and share option
      agreement were subsequently cancelled.




-10-


**MEXORO
      MINERALS LTD.**


**(An
      Exploration Stage Company)**


**Notes
      to
      Consolidated Financial Statements**


**Six
      Months
      Ended August 31, 2007**


**(Unaudited)
      (Expressed in U.S. Dollars)**




**5.**  **MINERAL
      PROPERTIES (continued)**




The
      material
      provisions of the property agreements are as follows:




**Cieneguita**




MRT
      assigned to
      Sunburst de Mexico, with the permission of the Cieneguita owner, Corporativo
      Minero, S.A. de C.V. (“Corporativo Minero”), all of MRT’s rights and obligations
      acquired under a previous agreement, the Cieneguita option agreement, including
      the exclusive option to acquire the Cieneguita Property for a price of
      $2,000,000. As the Cieneguita Property was not in production by May 6, 2006,
      Sunburst de Mexico was required to pay $120,000 to Corporativo Minero to extend
      the contract. Corporativo Minero agreed to reduce the obligation to $60,000,
      of
      which $10,000 was paid in April 2006 and the balance paid on May 6, 2006. The
      Company made this payment to Corporativo Minero so the contract has been
      extended.




The
      Company has the
      obligation to pay a further $120,000 per year for the next 13 years and the
      balance of the payments in the 14 th year, until the
      total of $2,000,000 is paid. The Company did not make the required payment
      due
      May 6, 2007, as required by the written agreement. This payment is currently
      in
      default. The Company is re-negotiating the terms of the agreement.




In
      the alternative,
      if the Cieneguita Property is put into production, of which there is no
      guarantee, the Company must pay the Cieneguita owners $20 per ounce of gold
      produced, if any, from the Cieneguita Property to the total $2,000,000 due.
      In
      the event that the price of gold is above $400 per ounce, the property payments
      payable to the Cieneguita owners from production will be increased by $0.10
      for
      each dollar increment over $400 per ounce. The total payment of $2,000,000
      does
      not change with fluctuations in the price of gold. Non-payment of any portion
      of
      the $2,000,000 total payment will constitute a default. In such case, the
      Cieneguita owners will retain ownership of the concessions, but the Company
      will
      not incur any additional default penalty. MRT retained no interest in the
      Cieneguita Property.






**Guazapares**




MRT
      assigned to
      Sunburst de Mexico, with the consent of the Guazapares Property owner Compañía
      Minera, S.A. de C.V. (“Compañía Minera”), MRT’s rights and obligations
      concerning the Guazapares Property, including the exclusive option, for a term
      of four years, to purchase seven of the Guazapares Property concessions upon
      payment of $810,000. The total payments for the Company to acquire and retain
      100% ownership of all eight concessions are as follows: October 31, 2006 -
      $60,000 (this payment date was extended to February 28, 2007, then to May 31,
      2007 and then to August 31, 2007- see below), August 2, 2007 - $140,000 (see
      below), August 2, 2008 - $110,000 and August 2, 2009 - $500,000.




Subsequent
      to
      August 31, 2007, the Company reached an agreement with MRT to defer any and
      all
      Guazapares payments owing to MRT (see note 15(b)).




In
      return, Sunburst
      de Mexico granted MRT a 2.5% net smelter rate (“NSR”) and the right to extract
      from the Guazapares Property up to 5,000 tons per month of rock material; this
      right will terminate on exercise of the option to purchase the Guazapares
      Property concessions. Otherwise, MRT retained no interest in the Guazapares
      Property.




-11-


**MEXORO
      MINERALS LTD.**


**(An
      Exploration Stage Company)**


**Notes
      to
      Consolidated Financial Statements**


**Six
      Months
      Ended August 31, 2007**


**(Unaudited)
      (Expressed in U.S. Dollars)**




**5.**  **MINERAL
      PROPERTIES (continued)**




**San
      Francisco (Guazapares)**




MRT
      assigned to
      Sunburst de Mexico, for a term of 60 months, commencing from June 25, 2004
      (the
“Option Period”), with the consent of the San Francisco concessions owner Minera
      Rachasa, S.A. de C.V. (“Minera Rachasa”), MRT’s rights and obligations acquired
      under the San Francisco option agreement, including the option to purchase
      the
      San Francisco concessions for a price of $250,000 on June 25, 2009.




To
      maintain the
      option, Sunburst de Mexico assumed the obligation to pay to the San Francisco
      owner cumulative annual payments totaling $90,000. The payments are: $20,000
      on
      June 25, 2006 (paid); $30,000 on June 25, 2007 (paid); and $40,000 on June
      25,
      2008.




If
      the option is
      exercised prior to the expiration of the Option Period by payment of the
      purchase price of $250,000; the obligation to pay the annual payments will
      be
      terminated. MRT and the San Francisco owner reserved a combined 2.5% NSR. MRT
      reserved no other rights on the San Francisco concessions.






**San
      Antonio
      (Guazapares)**




MRT
      assigned to
      Sunburst de Mexico, with the consent of the San Antonio concessions owner
      (Rafael Fernando Astorga Hernández), MRT’s rights and obligations acquired under
      the San Antonio option agreement, including the option to purchase the San
      Antonio concessions for a total price of $500,000, commencing on January 15,
      2004, the signing date of the San Antonio option agreement, and due on January
      15, 2010.




To
      maintain the
      option, Sunburst de Mexico assumed the obligation to pay to the San Antonio
      owner cumulative annual payments. The remaining payments are: $30,000 on January
      15, 2007 (paid), $50,000 on January 15, 2008 and $50,000 on January 15,
      2009.




If
      the option is
      exercised prior to the expiration of the option period by payment of the
      purchase price; the obligation to pay the annual payments will be terminated.
      The San Antonio owner reserved the right to extract from the San Antonio
      concessions up to 50 tonnes per day of rock material; this right will terminate
      on the date of the exercise of the option. MRT and the San Antonio owner
      reserved a combined 2.5% NSR to be paid to them. MRT reserved no other rights
      on
      the San Antonio concessions.






**Encino
      Gordo**




Sunburst
      de Mexico
      purchased two of the Encino Gordo concessions from MRT for a price of 1,000
      pesos (approximately U.S. $100), and MRT assigned to Sunburst de Mexico a first
      right of refusal to acquire three additional Encino Gordo concessions. The
      total
      payments to acquire 100% of these three additional concessions are as follows:
      $10,000 on June 30, 2006 (paid); $25,000 on December 31, 2006 (paid), $50,000
      on
      December 31, 2007, $75,000 on December 31, 2008 and $100,000 on December 31,
      2009.




-12-




**MEXORO
      MINERALS LTD.** ****


**(An
      Exploration Stage Company)**


**Notes
      to
      Consolidated Financial Statements**


**Six
      Months
      Ended August 31, 2007**


**(Unaudited)
      (Expressed in U.S. Dollars)**




**5.**  **MINERAL
      PROPERTIES (continued)**






**Sahauyacan**




On
      October 24,
      2006, Sunburst de Mexico entered into an exploration and sale option agreement
      of mining concessions with Minera Emilio for mineral concessions of the
      Sahauyacan Property. Minera Emilio granted the Company the exclusive right
      to
      conduct exploration on the Sahauyacan Property and the Company must pay $282,000
      in the following manner: $20,000 on date of signing agreement (paid); $10,000
      due December 1, 2006 (paid); $2,500 per month effective from August 21, 2006
      to
      July 21, 2007, for a total of $30,000 (paid); $3,500 per month effective from
      August 21, 2007 to August 21, 2008 for a total of $45,500; $5,000 per month
      effective September 21, 2008 to July 21, 2011 for a total of $175,000 and $1,500
      on August 21, 2011.




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




The
      following are
      additional material terms of the New Agreement:




(a)
            The
                share
                option agreement with MRT was
                cancelled;





(b)
            The
                Company
                granted MRT the option to buy all of the outstanding shares of Sunburst
                de
                Mexico for $100 if the Company failed to transfer $1,500,000 to Sunburst
                de Mexico by April 30, 2006. On April 6, 2006, MRT agreed to waive
                its
                option to purchase the shares of Sunburst de Mexico and also waived
                the
                Company’s obligation to transfer $1,500,000 to Sunburst de
                Mexico;





(c)
            The
                property
                agreements were modified to change the NSR to a maximum of 2.5% for
                all
                properties covered by the agreements. The property agreements contained
                NSRs ranging from 0.5% to 7%;





(d)
            The
                Company
                agreed to issue 2,000,000 shares of the Company’s common stock to MRT
                within four months of the date of the signing of the New Agreement.
                These
                shares were issued to MRT and its assignee at the market value of
                $1.05
                per share on February 23, 2006 and $2,100,000 was charged to operations
                for the year ended February 28, 2006. This issuance fulfilled the
                Company’s payment obligations under the previous property agreements;





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





(f)
            The
                operator’s agreement with MRT was
                cancelled.




-13-


**MEXORO
        MINERALS LTD.** ****
 **(An
        Exploration Stage Company)**
 **Notes
        to
        Consolidated Financial Statements**
 **Six
        Months
        Ended August 31, 2007**
 **(Unaudited)
        (Expressed in U.S. Dollars)**


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




As
      at August 31,
      2007, the Company had $106,050 (February 28, 2007 - $109,337) promissory notes
      outstanding to related parties that bear no interest with no due date and no
      terms of repayment (see note 12).






**7.**
            **LOANS
                PAYABLE**




As
      at August 31,
      2007 there were loans payable in the amount of $112,143 of which $44,799 is
      a
      current liability and $67,344 is a long-term liability. The loans are repayable
      in monthly instalments of $4,811 including interest ranging from 10.24% to
      15.6%
      per annum and are secured by specified automotive equipment.






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




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






**9.**
            **COMMON
                STOCK**




In
      the six months
      ended August 31, 2007, the Company issued 1,000,000 shares of common stock
      on
      the exercise of 1,000,000 warrants where each warrant was exercisable into
      shares of common stock at the price of $0.50 per share. The warrants were to
      expire on June 30, 2007.




In
      the six months
      ended August 31, 2007, the Company issued 399,999 shares of common stock on
      the
      exercise of 399,999 warrants where each warrant was exercisable into shares
      of
      common stock at the price of $0.75 per share. The warrants were to expire on
      December 31, 2007.




In
      the six months
      ended August 31, 2007, the Company issued 465,000 shares of common stock on
      the
      exercise of 465,000 warrants where each warrant was exercisable into shares
      of
      common stock at the price of $1.00 per share. The warrants were to expire on
      April 30, 2008.




On
      August 15, 2006,
      the Company returned to treasury 50,000 shares of common stock that were issued
      but not delivered pending payment with respect to the convertible debt converted
      into shares of common stock on July 5, 2006.




On
      August 10, 2006,
      the Company issued 50,000 shares of common stock on the exercise of 50,000
      warrants where each warrant was exercisable into shares of common stock at
      a
      price of $1.00 per share.




On
      July 5, 2006,
      the Company issued 5,835,000 shares of common stock on the exercise of
      $2,917,500 of convertible debt at a price of $0.50 per share.




-14-


**MEXORO
        MINERALS LTD.** ****
 **(An
        Exploration Stage Company)**
 **Notes
        to
        Consolidated Financial Statements**
 **Six
        Months
        Ended August 31, 2007**
 **(Unaudited)
        (Expressed in U.S. Dollars)**
  **9** **.**  **COMMON
      STOCK (continued)**




On
      April 3, 2006
      and May 31, 2006 the Company issued 550,000 and 200,000 shares of common stock,
      respectively, pursuant to a private placement unit offering. Units consisted
      of
      one share of common stock and one-half of one warrant. Each full warrant
      entitles the investor to purchase an additional share of the Company’s common
      stock at a price of $1.00 per share and is exercisable until April 30,
      2008.




On
      March 4, 2006,
      the Company agreed to issue 1,651,200 shares of common stock at a price of
      $0.25
      per share to settle $412,800 in promissory notes payable. On April 6, 2006,
      these shares were issued.






**10.**
            **STOCK
                COMPENSATION PROGRAM**




On
      February 26,
      2007 the board of directors approved the granting of stock options according
      to
      a Nonqualified Stock Option Plan (“NQSO Plan”). This stock option plan has the
      purpose (a) to ensure the retention of the services of existing executive
      personnel, key employees and directors of the Company or its affiliates; (b)
      to
      attract and retain competent new executive personnel, key employees, consultants
      and directors; (c) to provide incentive to all such personnel, employees,
      consultants and directors to devote their utmost effort and skill to the
      advancement and betterment of the Company, by permitting them to participate
      in
      the ownership of the Company and thereby in the success and increased value
      of
      the Company; and (d) allowing vendors, service providers, consultants, business
      associates, strategic partners, and others, with or that the board of directors
      anticipates will have an important business relationship with the Company or
      its
      affiliates, the opportunity to participate in the ownership of the Company
      and
      thereby to have an interest in the success and increased value of the Company.




This
      plan
      constitutes a single “omnibus” plan, but is composed of two parts. The first
      part is the NQSO Plan, which provides grants of nonqualified stock options.
      The
      second part is the Restricted Shares Plan (“Restricted Shares Plan”) which
      provides grants of restricted shares of Company common stock (“Restricted
      Shares”). The maximum number of shares of common stock that may be purchased
      under the plan is 6,000,000.




Pursuant
      to a
      consulting agreement between the Company and GM Capital Partners Inc. (“GM
      Capital”), signed January 31, 2006, the Company granted 5,000,000 warrants
      (Series A to E, see note 11). The consulting agreement provides for the
      provisions of financial public relations services from December 1, 2005 to
      November 30, 2007. The fair value of the 5,000,000 warrants totalled $3,898,000
      and was determined using the Black-Scholes option pricing model using weighted
      averages: 2.38 year expected life of the warrants, a volatility factor of 152%,
      a risk-free rate of 5% and an assumed dividend rate of 0% The weighted average
      fair value of the warrant was $0.78 per warrant, while the weighted average
      stock price on the dates granted was $1.00. The fair value will be amortized
      over the 24-month term of the contract and the Company will record $487,250
      as a
      stock-based compensation expense and an offsetting credit to additional paid-in
      capital every quarter until November 30, 2007.




-15-


**MEXORO
        MINERALS LTD.** ****
 **(An
        Exploration Stage Company)**
 **Notes
        to
        Consolidated Financial Statements**
 **Six
        Months
        Ended August 31, 2007**
 **(Unaudited)
        (Expressed in U.S. Dollars)**
  **1** **0.**  **STOCK
      COMPENSATION PROGRAM (continued)**




In
      the six months
      ended August 31, 2007, the Company awarded 1,635,000 options to purchase common
      shares (2006 - nil) and recorded stock-based compensation expense of $698,878
      (2006 - $248,000). The weighted average fair value of each option granted for
      the six months ended August 31, 2007 was $0.33. The following weighted average
      assumptions were used for the Black-Scholes option-pricing model used to value
      stock options granted in 2007 and 2006:




2007
            
            2006Expected
                volatility
            
            
            
            
            69%
                -
                73%
            
            152%Weighted-average
                volatility
            
            
            
            
            72%
            
            152%Expected
                dividend rate
            
            
            
            
            -
            
            -Expected
                life
                of options in years
            
            
            
            3
                -
                10
            
            10Risk-free
                rate
            
            
            
            
            4.61%
            
            5.00%




There
      were no
      capitalized stock-based compensation costs at August 31, 2007 or August 31,
      2006.




The
      summary of
      option activity under the stock option plan as of August 31, 2007, and changes
      during the period then ended is presented below:




**Options**
            
            **Weighted-Average
                Exercise Price**
            
            
            **Number
                of
                Shares**
            
            
            **Weighted-Average
                Remaining Contractual Term**
            
            
            **Aggregate
                Intrinsic Value**Balance
                at
                February 28, 2007
            $
            0.54
            
            
            930,000Options
                granted
            
            1.09
            
            
            1,635,000Options
                exercised
            
            -
            
            
            -Options
                expired
            $
            1.50
            
            
            (20,000
            )Balance
                at
                August 31, 2007
            $
            0.89
            
            
            2,545,000
            
            
            8.73
            
            $
            518,600Exercisable
                at August 31, 2007
            $
            0.65
            
            
            1,182,500
            
            
            8.11
            
            $
            494,350





The
      weighted-average grant-date fair value of options granted during the six months
      ended August 31, 2007 and August 31, 2006 was $0.80 and $nil,
      respectively.


-16-


**MEXORO
        MINERALS LTD.** ****
 **(An
        Exploration Stage Company)**
 **Notes
        to
        Consolidated Financial Statements**
 **Six
        Months
        Ended August 31, 2007**
 **(Unaudited)
        (Expressed in U.S. Dollars)**
  **1** **0.**  **STOCK
      COMPENSATION PROGRAM (continued)**




A
      summary of the
      status of the Company’s nonvested options as of August 31, 2007, and changes
      during the six month period ended August 31, 2007, is presented
      below:




**Non-vested
                options**
            
            **Shares**
            
            
            **Weighted-average
                grant-date fair value**Nonvested
                at
                February 28, 2007
            
            200,000
            
            $
            1.24Granted
            
            1,635,000
            
            
            0.80Vested
            
            (472,500
            )
            
            1.48Nonvested
                at
                August 31, 2007
            
            1,362,500
            
            $
            0.89




As
      of August 31,
      2007, there was an estimated $1,037,992 of total unrecognized compensation
      cost
      related to nonvested share-based compensation arrangements granted under the
      NQSO Plan. That cost is expected to be recognized over a weighted-average period
      of approximately 2.1 years. The actual amount of future stock-based compensation
      will be dependent on the Company stock price at future vesting dates.






**11.**
            **WARRANTS**




As
      at August 31,
      2007, the Company had a total of 6,352,501 (February 28, 2007 - 8,217,500)
      warrants outstanding to purchase common stock. Each warrant entitles the holder
      to purchase one share of the Company’s common stock. The Company has reserved
      6,532,501 shares of common stock in the event that these warrants are
      exercised.




During
      the six
      months ended August 31, 2007, there were 1,864,999 warrants exercised for gross
      proceeds of $1,264,976.




The
      warrants
      include 1,000,000 Series A Warrants exercisable at $0.50 per share, 1,000,000
      Series B Warrants exercisable at $0.75 per share, 1,000,000 Series C Warrants
      exercisable at $1.00 per share, 1,000,000 Series D Warrants exercisable at
      $1.25
      per share and 1,000,000 Series E Warrants exercisable at $1.50 per share; of
      which all are exercisable at the option of the holder, have no redemption
      features, and are settled on a physical basis. The Series A Warrants were fully
      vested upon issuance. They are exercisable at any time following their issuance
      but will expire on June 30, 2007 to the extent they are not exercised. The
      remaining series of Warrants will become exercisable only at the time that
      the
      immediately preceding series has been fully exercised.




Unless
      terminated
      earlier as a result of failure to vest, the Series B and Series C Warrants
      will
      each expire on December 31, 2007, and the Series D and Series E Warrants will
      each expire on December 31, 2008. The fair value of the 5,000,000 warrants
      totalled $3,898,000 and was determined using the Black-Scholes option pricing
      model using weighted averages: 2.38 year expected life of the warrants, a
      volatility factor of 152%, a risk-free rate of 5% and an assumed dividend rate
      of 0% The weighted average fair value of the warrant was $0.78 per warrant,
      while the weighted average stock price on the dates granted was $1.00. The
      fair
      value will be amortized over the 24-month term of the contract and the Company
      will record $487,250 as a stock-based compensation expense and an offsetting
      credit to additional paid-in capital every quarter until November 30, 2007.




-17-




**MEXORO
        MINERALS LTD.** ****
 **(An
        Exploration Stage Company)**
 **Notes
        to
        Consolidated Financial Statements**
 **Six
        Months
        Ended August 31, 2007**
 **(Unaudited)
        (Expressed in U.S. Dollars)**


**1** **1.
      WARRANTS
      (continued)**




The
      Company has
      also issued 2,917,500 warrants exercisable at $1.00 each pursuant to the
      issuance of convertible debentures. These warrants expire on April 30, 2008,
      are
      redeemable by the Company, at $0.01 per share, in the event the Company’s common
      stock closes with a bid price, on average, over $3.00 per share for a
      consecutive 20 day period and are settled on a physical basis. On August 10,
      2006, 50,000 warrants were exercised into 50,000 shares of common stock at
      a
      price of $1.00 per share. On August 15, 2006, 25,000 warrants were cancelled
      due
      to non-payment of funds with respect to a convertible debt subscription in
      the
      amount of $25,000.




The
      Company has
      also issued 375,000 warrants exercisable at $1.00 each pursuant to the issuance
      of a private placement unit offering (note 9). These warrants expire on April
      30, 2008, are redeemable by the Company, at $0.10 per share, in the event the
      Company’s common stock closes with a bid price, on average, over $3.00 per share
      for a consecutive 20 day period and are settled on a physical
      basis.




The
      following table
      summarizes the continuity of the Company’s share purchase warrants:




Number
                of
              warrants
            
            Weighted
                average exercise price
              ($)Balance,
                February 28, 2006
            5,652,000
            
            
            1.00Issued
            2,640,500
            
            
            1.00Cancelled
            (25,000
            )
            
            1.00Exercised
            (50,000
            )
            
            1.00Balance,
                February 28, 2007
            8,217,500
            
            
            1.00Issued
            -
            
            
            -Cancelled
            -
            
            
            -Exercised
            (1,864,999
            )
            
            (0.68Balance
                August 31, 2007
            6,352,501
            
            
            1.09




As
      at August 31,
      2007, the following share purchase warrants were outstanding:




Number
                of
                Warrants
            Exercise
                Price
            
            Expiry
                Date600,001
            $
                0.75
            
            December
                31,
                20071,000,000
            $
                1.00
            
            December
                31,
                20072,752,500
            $
                1.00
            
            April
                30,
                20081,000,000
            $
                1.25
            
            December
                31,
                20081,000,000
            $
                1.50
            
            December
                31,
                20086,352,501




-18-


**MEXORO
        MINERALS LTD.** ****
 **(An
        Exploration Stage Company)**
 **Notes
        to
        Consolidated Financial Statements**
 **Six
        Months
        Ended August 31, 2007**
 **(Unaudited)
        (Expressed in U.S. Dollars)**


**12.**
            **RELATED
                PARTY TRANSACTIONS**




For
      the six months
      ended August 31, 2007, the Company paid or accrued management fees of $298,597
      (August 31, 2006 - $116,000) to certain officers and directors and to companies
      controlled by directors. The Company also paid or accrued $47,929 (August 31,
      2006 - $23,776) to certain officers and directors and to companies controlled
      by
      directors for travel, office and other related expenses.




As
      at August 31,
      2007, accounts payable of $36,876 (August 31, 2006 - $4,121) were owing to
      certain officers and directors of the Company and $91,771 (August 31, 2006
      -
      $nil) was owing to companies controlled by directors. In addition, promissory
      notes of $106,050 (August 31, 2006 - $nil) were owing to a director and
      companies controlled by directors (note 6).




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






**13.**
            **COMMITMENTS**




During
      the year
      ended February 28, 2007 the Company entered into an agreement for the lease
      of
      new office premises for a two-year period, commencing on September 15, 2006
      and
      ending on September 14, 2008. The Company is committed to spend approximately
      $22,800 under this arrangement.






**14.**
            **SUBSEQUENT
                EVENTS**




a)
            Warrants





Subsequent
      to
      August 31, 2007, the Company received proceeds of $170,000 on exercise of
      170,000 warrants.




b)
            Guazapares
                property payments





On
      September 19,
      2007, Sunburst de Mexico, Mexoro and MRT entered into an agreement to defer
      any
      and all property payments regarding Guazapares, currently owing to MRT and
      which
      would otherwise become due by December 31, 2007, until such time as Sunburst
      de
      Mexico and Mexoro have sufficient funds to make the payments, in the opinion
      of
      the disinterested directors of Mexoro and;





Mexoro
      agreed to
      issue 250,000 shares to MRT and/or assignees, in consideration for the deferral
      of any and all Guazapares property payments currently outstanding and those
      arising on or before December 31, 2007.




c)
            Options
                granted




On
      September 1,
      2007, the
      Company granted
      105,000 stock options to employees of the Company. These options have an
      exercise price of $1.05 and a term of three years from the date of
      grant.




-19-




**ITEM
      2.**


**MANAGEMENT'S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS**





**CAUTIONARY
      STATEMENT REGARDING FORWARD-LOOKING STATEMENTS**





Certain
      statements
      contained in this Form 10-QSB constitute "forward-looking statements". These
      statements, identified by words such as “plan”, "anticipate", "believe",
      "estimate", "should", "expect" and similar expressions include our expectations
      and objectives regarding our future financial position, operating results and
      business strategy. These statements reflect the current views of management
      with
      respect to future events and are subject to risks, uncertainties and other
      factors that may cause our actual results, performance or achievements, or
      industry results, to be materially different from those described in the
      forward-looking statements. Such risks and uncertainties include those set
      forth
      under this Item 2, "Management's Discussion and Analysis or Plan of Operations"
      and elsewhere in this Form 10-QSB. We do not intend to update the
      forward-looking information to reflect actual results or changes in the factors
      affecting such forward-looking information. We advise you to carefully review
      the reports and documents we file from time to time with the United States
      Securities and Exchange Commission (the “SEC”), particularly our annual reports
      on Form 10-KSB, our quarterly reports on Form 10-QSB and our current reports
      on
      Form 8-K.





**Overview**




We
      are a start-up
      exploration stage company and have not yet generated or realized any revenues
      from our exploration projects, which commenced in May 2004. As of August
      31 ,
      2007 we had $46,354 in our bank account and do not have sufficient cash to
      maintain our operations after October 2007. Currently, officers of the Company
      are providing the necessary working capital to maintain our current operations.
      The funds coming from the officers are interest free loans with no terms of
      repayment and unsecured. The officers are committed to providing the necessary
      working capital for the Company to keep its operations going until October
      2007,
      but they are not contractually obligated to do so. It is unlikely that the
      officers of our Company can contribute additional working capital after October
      2007. If no additional capital is raised prior to the end of October 2007,
      we
      will most likely have to cease operations. Furthermore, if our exploration
      is
      successful, we will need to raise additional funds to meet our needs for
      additional exploration and/or production.





Our
      continued
      existence and plans for future growth depend on our ability to obtain the
      additional capital necessary to operate either through the generation of revenue
      or the issuance of additional debt or equity. While we believe that we have
      raised sufficient funds in our private placement offering and loans from our
      officers to allow us to continue in business until October 2007, we may not
      be
      able to continue in business beyond that date unless we obtain additional
      capital. We have not generated any revenues, and no revenues are anticipated
      unless and until mineralized material is discovered on the properties in which
      we have an interest. We do not have any arrangements in place at this time
      to
      raise additional capital for the Company other than non-binding commitments
      from
      the officers of our company to provide working capital as needed.





For
      the 12 month
      period from September 2007 to August 2008, we will need to raise additional
      capital to maintain operations. We will need to raise a minimum of $540,000
      for
      taxes and property payments and an additional $460,000 for general and
      administrative costs. This does not include any capital to execute our
      exploration programs as detailed below. The following table shows our
      contractual property payments that are due until August 2008:





Name
            Date
            Payment
                Type
            USD**Cieneguita
                Property**
            May
                2007
            Property
                payment
            $120,000*
                this
                payment is in default**Guazapares
                Property**
            August
                31,
                2007
            Property
                payment
            $60,000*
                extension
                agreement1All
                Guazapares property payments due by December 31, 2007 have been deferred
                until, in the opinion of the disinterested directors of Mexoro, Sunburst
                de Mexico and Mexoro have sufficient funds to make the
                payments.
            August
                2,
                2007
            Property
                payment
            $140,000January
                15,
                2008
            Property
                payment
            $50,000**Encino
                Gordo Property**
            December
                31,
                2007
            Property
                payment
            $50,000**Sahauyacan
                Property**
            August
                21,
                2007 -
            Property
                payments
            $3,500
                per
                monthAugust
                21,
                2008





-20-





Additionally,
      if
      our exploration during the twelve month period from September 2007 to August
      2008 is successful, we will need to raise additional capital to fund those
      exploration programs. At this time, we cannot assess with any accuracy our
      total
      capital needs to fund an expanded exploration program beyond our basic program.
      We also anticipate that we will need to raise an additional $2,200,000 for
      the
      purchase of additional milling equipment and to build the plant site for our
      Cieneguita Property. We would anticipate raising the additional capital to
      maintain operations and to put the Cieneguita Property into production through
      the sale of our common stock or through debt financing. We do not have any
      sources of additional capital to fund our operations beyond October 2007. We
      also believe that we will not generate any revenues that would allow us to
      continue operations. If we are unable to raise additional capital through debt
      or equity beyond October 2007, it is most likely that we will have to cease
      operations and forfeit our properties as we would be unable to make the
      necessary property payments.





We
      plan to buy a
      plant or significant equipment within the next six months. To date, we have
      spent approximately $530,000
      of our
      $2,200,000 budget for equipment and building a plant to put the Cieneguita
      Property into production. Our ability to buy the remaining equipment is
      dependent upon our cash position at that time and our ability to raise
      additional capital. We currently do not have sufficient working capital to
      purchase all of the needed equipment. If we should fail to raise additional
      capital through the sale of equity or debt, we will not be able to purchase
      the
      desired equipment and we will not be able to construct a production facility
      to
      process the ore. Currently we do not have any sources for such capital to
      purchase the mining equipment. Furthermore, the Cieneguita Property has no
      known
      ore reserves.






**Plan
      of
      Operation**




*Summary*





Our
      business plan
      is to proceed with the exploration of our Mexican mineral properties to
      determine whether they contain commercially exploitable reserves of gold, silver
      or other metals. We do not have sufficient capital to fund our current
      exploration plans or to meet our monthly general and administrative costs.
      Our
      officers have committed to lend additional capital to the Company pursuant
      to
      non-interest bearing unsecured loans with no terms of repayment. The officers
      are under no contractual obligation to provide these funds. The funds should
      be
      sufficient to enable the Company to operate until
      the end of
      October 2007. After that time, we will neither have sufficient funds to continue
      our exploration plans nor funds for general administrative expenses. As a
      minimum, we will need to raise additional working capital to maintain basic
      operations. We would plan to raise those funds through the sale of equity or
      debt. At this time we do not have any sources to raise additional capital for
      the company and no assurance can be given that we will be able to find sources
      to raise additional capital. Failure to raise any additional capital would
      most
      likely require us to cease operations and abandon all of our exploration
      ventures.





In
      the event that
      our exploration program finds targets that warrant additional exploration work
      including exploration by drilling, we will not have enough cash available to
      fund an expanded exploration program. If we decide to expand our exploration
      program, we would need to raise additional capital to meet these needs. We
      currently do not have any sources of additional capital available to us and
      we
      may not have any in the future. The failure to raise additional capital would
      severely curtail our ability to conduct any additional exploration work that
      might be warranted following the results of our current exploration program.





We
      are not involved
      in any research and development on our exploration properties. We have no known
      reserves on the Cieneguita property, but in anticipation of favourable results,
      we plan to put the property into production, subject to the availability of
      funding. As there is a high demand for mining and milling equipment, we have
      paid a deposit towards the purchase of milling equipment and anticipate building
      a processing plant at our Cieneguita Property over the next six months, assuming
      we can raise the necessary capital to proceed. In the event we purchase milling
      equipment and do not find sufficient ore reserves on the Cieneguita Property,
      we
      may lose all of our capital investment. In that event, we would try to re-sell
      the equipment we purchase, but no assurances can be given that we would be
      able
      to sell the equipment at a price to recover close to our original investment,
      or
      at all.





In
      the event that
      we discover a mineral deposit on any of our properties other than the Cieneguita
      Property, of which there is no guarantee, we would need to expend substantial
      amounts of capital to put such properties




-21-




into
      production, if
      so warranted. The amount of such expenditures is indeterminable at this time
      as
      our exploration programs have not advanced far enough to provide us with results
      to establish this information.





Such
      expenditures
      are dependent upon the size of the ore body, the grade of the ore and the type
      of mining required to extract any minerals that may be found. Regardless, we
      do
      not have enough capital available to us to make any such expenditure that would
      be required to put any mineral property into production, and we would have
      to
      raise additional capital or, if possible, enter into a joint venture for the
      production phase. If we were to form a joint venture, we cannot assess what
      our
      final position in the project would be. We do not have any sources of capital
      available to us at this time to fund such a project if one should be
      discovered.





We
      hired our
      current VP of Exploration on March 1, 2007. We also hired an office
      administrator for our office in Chihuahua. We hired one geologist at the end
      of
      August 2006, another geologist in January 2007 and two more geologists in August
      2007 to work on our exploration programs. We do not expect any significant
      change in additional contractors to conduct exploration over the next 12 months.
      Other than the VP of Exploration and our three geologists, all of the employees
      we hire are contracted from third parties specializing in providing employees
      for Mexican companies. In using third party contractors, we minimize our
      exposure to Mexican employment law, and all liabilities are undertaken by the
      third party contractors providing the services. We pay a flat rate to the third
      parties for their services.





In
      the event that
      we should find a mineable reserve, it is management’s intention to contract the
      mining and milling of ore reserves out to third parties. As we plan to put
      the
      Cieneguita Property into production in the next three months, we anticipate
      hiring one mine manager to oversee the work done by the third party contractors.
      We do not have any known reserves at this time.







***Cieneguita
      Property***




Based
      on the data
      obtained from the previous exploration programs and mining records from Glamis
      Gold Ltd. (“Glamis Gold”), our exploration program, planned until the end of
      December 2007, on the Cieneguita Property will focus mainly on identifying
      mineralized zones of economic grade to allow for the property to be put into
      production as an open pit heap leach mine. The following steps summarize the
      exploration we have done to date on the Cieneguita Property, as well as our
      plans.





1.  Phase
      1
      Exploration.





Budget:   We
      expected the
      phase 1 exploration program to cost approximately $200,000. From January 2006
      to
      February 2007 we spent approximately $400,000, double the budgeted amount,
      on
      the phase 1 exploration of this project. Of this, $300,000 was spent on the
      trenching, sampling and assaying on the property. We also spent approximately
      $50,000 on column testing to determine the leachability of the ore. The balance
      of the funds was spent in wages, camp costs and general administrative costs.
      The funds that were expended came from our general working capital. We have
      recently completed additional column testing to determine the leachablity of
      the
      ore. The cost for these additional tests was approximately $25,000. The funds
      required for these additional tests came from general working
      capital.





Milestones:  The
      milestones for
      the phase 1 exploration program included the review of available data to create
      a structural mineralization framework, detailed soil and rock sampling,
      resampling existing trenches, the extension of existing trenches and the
      creation of new trenches. We also conducted cyanide testing on the rock to
      determine the best method of leaching the precious metals from the rock. We
      have
      completed phase 1 of our exploration program.





In
      April 2006, we
      completed a sampling of the property that included more than 500 meters of
      deep
      trenches from which we took comprehensive channel sampling. The trenches
      comprised eight trenches approximately 200 meters long and two to 10 meters
      deep
      spaced equally along the 1,000 meter strike length of the property. From the
      walls of these trenches, we took approximately 550 rock samples. One half of
      these samples were sent to ALS Chemex’s laboratory in Chihuahua for assaying.
      The sampling protocol followed the best mining practices. The purpose of the
      sampling was to further define the ore grade and potential of the property.
      We
      also completed detailed soil sampling and rock sampling outside of the
      trenches.





By
      December 2006,
      we completed a detailed mapping of the property using existing information
      and
      drill results from previous operators, as well as incorporating our own data.
      To
      this end, we have created a structural mineralization framework for the
      property. We do not have any proven reserves on this property.





-22-




The
      other half of
      the sample was used to complete column tests to determine the leachability
      of
      the precious metals from the rock. In this test, the ore was placed in PVC
      tubes
      and different mixtures of a cyanide solution were dripped over the top of the
      columns at different flow rates. The results from these tests will help
      determine the most effective solution to be used on the heap leach pads on
      the
      property. These tests were done by qualified geologists employed by MRT as
      part
      of our former office rental package costs. The tests were scientifically
      conducted and monitored for quality control and efficacy. These tests were
      done
      to ensure that the metallurgy of the minerals allows for economic recovery
      of
      the precious metals using a cyanide heap leach process. The results of the
      column test indicate that up to 98% of the gold contained in the ore samples
      we
      took could be recovered from the ore, if the ore is leached for a long enough
      period. Under actual mining production conditions in the field, though, we
      would
      anticipate that the economic recovery levels of the ore would be approximately
      70% to 75% recovery of gold from the ore. The cost of the cyanide needed to
      produce the additional gold above the 85% level outweighs the value of the
      gold
      recovered. We cannot guarantee that we would be able to achieve this level
      of
      recovery. This is not an estimate of reserves on the property. Additional tests
      will be needed to determine the most effective crush size of the ore, the most
      cost effective flow rates of the cyanide and most economical leaching time
      to be
      undertaken if we should ever put the property into production. We hope that
      these tests will help us optimize the potential for extracting precious metals
      from the ore for the mining operation.





We
      have received
      the results of the sampling programs and after review of the material, including
      the results of our column tests, management has determined that it is warranted
      to continue exploration on the property in phase 2 to delineate ore grade
      material for a heap leach open pit mining operation. We do not intend to
      implement a feasibility study for the property.






2.  Phase
      2
      Exploration





Budget:  Under
      the direction
      of our VP of Exploration, we commenced phase 2 of our exploration program in
      April 2007, which was completed in July 2007. We budgeted $585,000 for the
      phase
      2 exploration; including $50,000 for an additional geochemical sampling program
      and $50,000 for general administrative expenses. We have spent a total of
      $450,000 as of July 2007 on this phase of exploration.





Milestones:  The
      phase 2
      exploration was designed to identify new veins and/or mineralized zones. The
      geological mapping and sampling activities carried out within phase 2 of the
      exploration program at Cieneguita has resulted in the discovery of high grade
      gold zones in three different locations along Cieneguita’s mineralized body. The
      three new high grade gold locations have been identified just on the outlined
      limit of the known mineralized body opening the potential to the southeast
      in
      the Pit 1 South area, to the north in the Central area and to the north in
      the
      Pit 2 area, respectively.





According
      to our VP
      of Exploration, the results from the last mapping and sampling campaign provided
      evidence that the potential for the discovery of new areas with gold grades
      still remains open as shown by the discovery of the Pit 1 South, Central and
      Pit
      2 North areas. This exploration program consisting of detailed mapping and
      sampling on these three newly discovered zones was completed in August 2007.





Our
      lead geologist,
      in conjunction with management and our VP of Exploration, believes that the
      sampling results warrant putting the property into production even though we
      have not conducted any feasibility study on the property. Management believes
      that the cost of a feasibility study is too expensive to undertake relative
      to
      the estimated size of the mineralization. Furthermore, we have determined,
      based
      on the results of the sampling, that continued exploration on the property,
      is
      warranted to further delineate the mineralization to be used in the heap leach
      open pit mining operation. We will be concurrently conducting further
      exploration on the property and beginning the process of putting the mine into
      production. We have not determined if there are any known reserves on this
      property to date.





3.  Phase
      3
      Exploration





Budget:   We
      budgeted
      $570,000 for the cost of a 3,000 meter drilling program, including assaying
      and
      supervision. We do not have a definite date for the commencement of this drill
      program as drilling rigs are difficult to obtain for exploration. As soon as
      the
      company is able to secure a drill rig, we plan to implement our drilling
      program, subject to available funding.





Milestones:  The
      objectives for
      phase 3 of the exploration plan are to initiate a drill program and to continue
      the trenching program from phase 2 of the exploration plan in order to further
      delineate the oxide ore mineralization and define and plan where to mine the
      ore. We have completed phase 2 of the exploration plan.





-23-




Subject
      to the
      recommendation of our VP of Exploration, we may initiate a drill program
      consisting of 1,000 meters of reverse circulation drilling. At this time, there
      is a high demand for drill rigs and we cannot predict with any accuracy the
      timing to start the drilling program. Once we receive a rig, we anticipate
      the
      drilling program will take approximately one month, with assay results available
      one month later. The funds for this drilling program will come from general
      working capital on hand. At the moment, though, we do not have funds on hand
      to
      initiate this drilling program. If and when we start drilling, we hope that
      the
      results from this program will help us to better delineate the mineralization
      of
      the oxide zone and provide an ore reserve calculation. We do not intend to
      implement a feasibility study for the property in this phase of exploration.
      Six
      of the drill holes will be drilled to a depth of 200 meters to test the sulphide
      potential of the mineral system. The use of these deep holes will help us
      determine if there is an extension to the oxide mineralization in the underlying
      sulphides. Our on-site geologist will determine where the holes are to be
      drilled based on our earlier exploration and mapping of the property. We are
      currently negotiating with several contractors to secure the use of a drill
      to
      undertake our drill program. To date, we have not found a contractor able to
      supply drills to meet our time schedule. We cannot, with any certainty, predict
      when a drill rig may become available to us. The unavailability of such drill
      rigs could hamper our exploration plans, but management believes that we can
      generate sufficient information from the trenching program, to mine the oxide
      mineralization on the property. We have not determined any known reserves on
      this property to date.





Even
      though the
      rock is fractured, the objective of the drill program will be to provide us
      with
      accurate information to make an ore calculation of the grade of the ore and
      the
      size of the mineralized zones.





One
      of the main
      purposes of this phase of exploration is to delineate the mineralized ore body
      and map the grade of the mineralization, which will allow us to refine our
      plan
      to put the property into production. If the exploration program does not provide
      us with the results we deem necessary to continue exploration, then, on a
      recommendation from our senior geologist, or our VP of Exploration and
      managements’ concurrence on his findings, we will cease exploration on the
      property and any plans to put the property into production. If no further
      exploration is warranted, then we will discontinue any payments to the
      concession holders and allow our option to lapse. We will also then try to
      sell
      the mining equipment we recently purchased. If we allow the option to lapse,
      we
      will be obligated, by the Mexican Government, to complete some reclamation
      work
      on the property of approximately $50,000. These funds would come from the bond
      we have already paid to the government in the amount of $67,000. Any funds
      not
      expended on reclamation would be returned to us by the Government. All of the
      money that we had invested in the exploration of the Cieneguita Property could
      be lost.





We
      have three
      geologists working full time on the Cieneguita Property and they will continue
      to do so through December 2007, subject to availability of funding and subject
      to exploration results justifying the expenditure. If the results do not warrant
      further work, we plan to move the geologists to one of our other properties
      to
      continue exploration on those properties.








4.  Cieneguita
      Mine
      Design





Budget:   We
      budgeted $50,000
      from general working capital to create the mine design for the Cieneguita
      Property. The mine design has been completed and cost approximately $50,000.
      We
      paid for the work from our general working capital.





Milestones:  Concurrently,
      with
      phase 2 of the exploration plan, we implemented our plan to put the Cieneguita
      Property into production. The mine design will help determine where and how
      we
      will mine the Cieneguita Property. We plan to put the mine into production
      by
      the end of December 2007, if we find available funding.





Coinciding
      with
      phase 2 and 3 of our exploration plan, we have commissioned a mine design to
      determine how to put the Cieneguita Property into production. At this time,
      we
      do not plan to implement a feasibility study for this property but feel we
      have
      sufficient information to put the property into production. The mine design
      has
      been commissioned to a third party contractor with expertise in heap leach
      mining. This contractor, an engineering firm, is reviewing all of the data
      that
      we have accumulated from Glamis Gold Ltd.’s previous exploration and from the
      trenching and sampling we have completed on the property. All of this
      information will be put on a map laying out the structure of the mineralized
      zone on our property to assist in mining the ore. The key purpose of this map
      is
      to help enable our on-site geologist to monitor grade control during mining.
      Additionally, from the information accumulated so far on the Cieneguita
      Property, the mining engineer has designed a heap leach mining operation best
      suited to the tonnage, grade of the ore and availability of land to build
      leaching pads.





-24-




The
      mine design
      calls for the mining operation to be run by a third party contractor, who will
      charge the company a flat fee per tonne of rock that is moved. It is estimated
      by the engineer designing the mine that the cost per tonne of rock moved from
      the property to the mill site will be approximately $1.30 per tonne of rock.
      This fee is only an estimate, as no contractor at this time has been engaged
      to
      mine the mineralized ore nor provided us with a firm quote on the cost of
      mining. The actual cost of mining the ore may be much higher, and no assurance
      can be given as to the actual cost at this time. The engineering firm designing
      the mine has stated that one of the key objectives at this stage of the mining
      operation will be grade control. Because our sampling to date has shown that
      the
      gold mineralization is not consistent through out the ore, it will be imperative
      that our on-site geologist directs the contractors where to mine the ore. The
      geologist will need to work daily using the interpretation from the results
      of
      our drilling program and will need to take samples of the rock and assay them
      on-site to determine where the contractor should extract ore for the next day.
      The proper grade of ore shipped to the milling site is imperative to ensure
      a
      profitable operation. If the head grade is too low, we will not recover enough
      gold from the rock to maintain a profitable operation. Conversely, a head grade
      of ore that is too high will shorten the life of the mine. We are estimating
      that the total cost of mining and milling the ore will be approximately $15
      per
      tonne. If the price of gold fluctuates up or down we may have to adjust our
      cut
      off grade, which is currently 1.5 grams per tonne and this will affect the
      over
      all life of the mine.





The
      milling of the
      ore at the mine site will also be contracted out to a third party contractor.
      The following is a brief description of the mining process pursuant to our
      mine
      design. First, the ore is crushed by a crusher into a smaller size. Second,
      the
      rock is deposited on a conveyor belt and moved to the agglomorator. Third,
      the
      agglomorator mixes the rock with lime and the rock is then moved to a stacker.
      A
      stacker is a moveable conveyor belt that oscillates back and forth, distributing
      the rock equally onto a heap leach pad. At that point, the rock is sprinkled
      with a cyanide mixture for approximately 30 days. The fluid from the percolation
      through the rock is then pumped through carbon filters. Waste rock is dumped
      into a ravine, per our permits, while the carbon filters are shipped to a third
      party contractor for extraction of the precious metals. The waste rock is
      completely free of any harmful chemicals and is restored to the original ph
      it
      had prior to mining.





We
      have identified
      and negotiated the purchase of a second hand crusher suitable for our type
      of
      operation and for the size of rock we will be mining. We also have, onsite
      and
      ready for construction, the conveyor belts we will need for all phases of the
      milling operation. The conveyor belts were manufactured in Chihuahua and have
      been assembled at the Cieneguita mine site. We have identified and purchased
      a
      second hand agglomorator, a used stacker and used carbon columns and pumps
      suitable for the milling stage.





At
      this time, we do
      not know the cost associated with the process of having the precious metals
      extracted and minted into ore bars. If our head grade is not accurate or the
      heap leach process is not effective, we may not extract enough gold from the
      carbon filters to pay for this complete operation and we would lose money from
      the mining operation. If we lost money on the mining and milling operation,
      we
      may not be able to stay in business as we would expect the cash flow from
      operations to cover, at the minimum, the mining and milling operation.
      Furthermore, we do not have any proven reserves on our property and the
      inability to find enough ore could severely hinder our mining
      operations.





We
      engaged an
      independent third party consultant to review the work of the engineering firm
      to
      verify and agree with the results of the mine design. The independent third
      party consultants worked with the mining engineering firm to agree on a final
      design. The mine design has been completed and cost approximately $50,000.
      We
      paid for the work from our general working capital. The milling equipment and
      cost of building the plant will be approximately $2,200,000. We estimate that
      we
      will need approximately $1,100,000 for working capital during the first four
      months of mine operation. There can be no assurance given that if the property
      is put into production that, after four months of operation, we will have
      recovered any precious metals from the milling process. We will need to continue
      to fund working capital if the precious metals are not in the ore as predicted.
      We will need to raise additional capital to put the property into production
      and
      to fund at least four months of working capital. The funds would be raised
      through the sale of debt or equity. We have not identified any additional
      sources of capital at this time. Furthermore, once we have commenced production,
      we can give no assurance that we will be profitable or recover any
      gold.








***Guazapares
      Property***





1.  Phase
      1
      Exploration





Budget:   Concurrently
      with
      the exploration of the Cieneguita Property, we budgeted approximately $668,000,
      which includes $596,000 for a drilling program, of our general working capital
      for exploration on our




-25-




Guazapares
      Property, to December 2007. Of this amount, we spent approximately $100,000
      from
      March 2006 through to the end of December 2006 for phase 1 of the exploration
      plan. Approximately $351,000 was spent on this property from January 2007 to
      August 2007. These funds came from our general working capital.





Milestones:  The
      goals of phase
      1 of the exploration plan on the Guazapares Property were to collect rock
      samples and complete the mapping of the property. This phase has been completed.
      Management has determined that further exploration is warranted so we have
      begun
      phase 2 of the exploration plan, as described below.





We
      have one full
      time geologist working on the Guazapares Property collecting rock samples and
      mapping the property. The goal for this phase was the completion of mapping
      on
      the property at a scale of 1:5,000. Rock samples were taken from the property
      and were sent to ALS Chemex in Chihuahua for chemical analysis and assaying.
      The
      sampling protocol followed the best mining practices. The results from phase
      1
      of the exploration plan were to determine whether subsequent exploration was
      warranted and if a drill program should be commenced. Phase 1 of work included
      reviewing available data to create a structural mineralization framework. We
      also mapped the topography and sampled the entire underground workings along
      the
      main level of the San Antonio area. The distribution of the veins, lithology
      and
      alteration were also mapped. We have received the results from this phase 1
      of
      exploration. Management reviewed the results of this phase and determined,
      based
      on a recommendation from our lead geologist on the property, to continue with
      phase 2 of the exploration plan.





2.  Phase
      2
      Exploration





Budget:   We
      budgeted
      $100,000 from the total of $668,000 for phase 2 of the exploration plan. Of
      this, $50,000 was budgeted for specific sampling and trenching in the San
      Francisco concession area. These funds came from general working capital of
      the
      company.





Milestones:  The
      goals of phase
      2 of the exploration plan were to conduct more detailed geological mapping,
      rock
      sampling and sample trenches in order to define the structural framework of
      the
      mineralized zone to facilitate a drilling program, if warranted. This phase
      commenced in February 2007 and was completed at the end of June
      2007.





The
      information
      from phase 2 of the exploration plan
      has been
      reviewed by our senior geologist and VP of Exploration and they have made a
      recommendation to management that further exploration is warranted. Four
      drilling targets were identified as part of this mapping process: San Antonio,
      San Francisco, El Cantilito, and Montana de Oro. A 3,000 to 4,000 meter drilling
      program has been planned and implemented to test the three main areas: San
      Antonio, San Francisco and El Cantilito. We will continue to conduct phase
      3 of
      our exploration plan, subject to availability of funding.





3.  Phase
      3 Drill
      Program





Budget:   We
      estimate that
      the initial drill program expenditure will be $596,000 (the balance of the
      $668,000 budgeted for the property). We are in the process of raising additional
      capital through the sale of equity or debt to fund the drilling program, as
      only
      a small portion of the funds budgeted are left in our general working capital
      to
      initiate the program.





Milestones:  The
      goal of phase 3
      of the exploration drill program is to gather information to determine if we
      should put the property into production.





We
      are currently in
      the drilling phase of the exploration program. This phase commenced in July
      2007
      and we have drilled four holes to date of a 20 hole program. This phase is
      to
      last approximately three months and drilling is to advance 200 meters per week.
      Once the drill program is completed, the results will take approximately 30
      days
      to be assayed and interpreted. Once those results are known, we will consult
      our
      lead geologists and our VP of Exploration to determine whether to abandon the
      Guazapares Property or to continue with further drilling .





If
      management
      decides to continue with further drilling, we will need to raise additional
      funding through the sale of debt or equity because we do not have sufficient
      capital to continue such an exploration program. Additional drilling would
      cost
      a significant amount of money and there is no assurance that we would be able
      to
      raise such additional amounts of money. We have not identified any additional
      sources of funding to implement such a program. If we can not obtain additional
      financing, we could seek a joint venture partner if




-26-




the
      drilling
      results warranted it. We do not have any joint venture partners at this time
      and
      can give no assurance that we will be able to find one if the Guazapares
      Property warranted such a joint venture.





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








***Encino
      Gordo***





The
      Encino Gordo
      Property comprises five mining concessions that total 1,042 hectares
      (approximately 2,575 acres). We have limited information available to us about
      this property from previous exploration that was undertaken by other companies.
      The previous geochemical sampling that was carried out suggests a presence
      of
      mineralized structures. These structures are being investigated by geochemical
      sampling to determine if further exploration is warranted and to help refine
      the
      best exploration plan for the concessions.





1.  Phase
      1
      Exploration





Budget:  We
      have planned for
      an exploration program, with a total budget of approximately $705,000 from
      general working capital, through March 2008, on our Encino Gordo Property.
      We
      budgeted $50,000 for mapping and sampling, which was completed in February
      2007.
      We spent $50,000, as budgeted, through the end of February 2007. Our VP of
      Exploration has reviewed all of the initial material on the property and the
      results of exploration completed in February 2007 and a second phase of mapping
      and sampling has been planned. The proposed exploration will consist of mapping
      the Encino Gordo and Vinorama concessions at a scale of 1:5,000 initially and
      then 1:1,000 on pre-determined sections. The focus will be on lithology,
      structure, alteration and veining to determine the potential of the
      near-mesothermal (porphyry-type) system present at Encino Gordo and the
      epithermal vein deposits on the Vinorama concession.





The
      balance of the
      budgeted funds will be spent as directed by our VP of Exploration once he has
      reviewed all of the initial material on the property and the results of the
      exploration completed in February 2007. From January to July 2007 we spent
      $12,540 on exploration. At this time we do not have the necessary working
      capital to proceed. The funds for this additional exploration, if warranted,
      will come from general working capital if and when available. We can give no
      assurances that we will be able to raise sufficient capital to continue
      exploration on this property.


Milestones:  The
      goals of phase
      one of exploration were to complete mapping of the property and to take
      geochemical samples from the property. We currently have one geologist taking
      geochemical sampling and mapping this property. The purpose of this initial
      program was to get a better understanding of the geology of the property. We
      completed this phase of the exploration program at the end of February
      2007.





We
      mapped the
      property at a scale of 1:5,000 with individual veins being mapped at a scale
      of
      1:1,000. We met part of our mapping goal during the month of October, when
      mapping was completed along the extension of the structures hosting the Elyca
      vein located along the eastern edge of the Encino Gordo claims, with the balance
      of the mapping completed at the end of February 2007.





A
      total of 43
      stream sediment samples were collected from the various arroyos cutting the
      property. Samples of greater than one kilogram were collected with material
      crushed to less than one millimetre in size. Samples of this rock will be
      analyzed by ALS Chemex for gold content plus 27 other mineral elements
      associated with the rock. The sampling protocol followed the best mining
      practices. The purpose of the sampling was to further define the ore grade
      and
      potential of the property. To date, three samples have returned anomalous
      results of gold which require follow-up to verify source areas.





In
      October 2006, we
      prepared a list of preliminary drill hole locations to accompany the SEMARNAT
      work permit application. We are currently preparing the documents for SEMARNAT
      work permits on the Encino Gordo Property and it is expected to be approved
      in
      November 2007. Our goal is to drill the targets as recommended by our VP of
      Exploration. Much additional exploration work must be completed and a definitive
      exploration plan needs to be prepared by our VP of Exploration before management
      can determine whether or not to continue to the next phase of exploration.
      The
      actual drill hole locations are likely to change from those submitted with
      the
      working plan permit, as the drill targets are reviewed. This change of targets
      will not affect the working permit; as such a movement of locations is
      anticipated in the issuing of the permits.





Our
      goal was to
      have this further exploration completed by the end of August 2007 and a
      geological report on the Encino Gordo Property, prepared by our senior
      geologist. However, due to lack of working capital we have not implemented
      this
      strategy yet. When further exploration is complete, and depending on the results
      of the




-27-




report,
      as
      determined by management, we intend to either abandon the Encino Gordo Property,
      in which case no further payments would be made or would be due under our
      agreements to acquire these concessions, or make additional expenditures to
      determine potential drill targets.





2.  Phase
      2 Drill
      Program





Budget:   If
      management
      decides to continue exploration by initiating a drill program, a budget will
      be
      prepared at that time, and the amount and source of capital needed for
      additional expenditures will be determined. If a drill program of any size
      is
      recommended, we do not have sufficient capital on hand to complete such a
      program because it would most likely require the expenditure of significant
      amounts of money. We would need to raise additional capital through the sale
      of
      debt or equity. We can give no assurance that we would be able to raise such
      capital, as we have not identified any source of capital for such a program
      at
      this time. If we could not raise additional funds, we would consider seeking
      a
      joint venture partner if the results warranted it. We do not have any joint
      venture partners at this time and can give no assurance that we would be able
      to
      find one if the Encino Gordo Property warranted such a joint
      venture.





Milestones:  Phase
      2 of the
      exploration plan would be to initiate drill program to gather more information.
      Such information would be used to determine if we should put the property into
      production. We do not know when this phase of exploration could be completed,
      as
      discussed above. We estimate that the program would take approximately 60 days
      to complete, with results from the program being returned about 90 days after
      completion. These are estimates, as the number of drill targets will determine
      the length of the drill program. Once the results from the drill program are
      known, we would consult with our lead exploration geologist and our VP of
      Exploration to determine whether to abandon the Encino Gordo Property or
      continue with further drilling exploration.





Management
      and our
      VP of Exploration will review the information provided by phase 1 of the
      exploration plan and determine whether a drill program is recommended. If a
      drill program is recommended, and we have received our permits that have been
      applied for in advance, we do not have sufficient information at this time
      to
      estimate what the drill program would entail. We need extensive information
      to
      determine the number of drill holes to drill, where they would be located and
      to
      what depth they would be drilled. This information will be provided by phase
      1
      of the exploration plan.





The
      Encino Gordo
      Property is without known reserves. Our proposed programs are exploratory in
      nature.





***Sahauyacan***





The
      Sahauyacan
      Property is located near the Chihuahua-Sonora state border approximately 275
      kilometers east-southeast of the city of Chihuahua and 50 kilometers
      south-southwest of the town of Mycoba in the state of Chihuahua, Mexico. The
      Sahauyacan Property comprises 14 mineral concessions that total 649 hectares
      (approximately 2,575 acres). We have limited information available to us about
      this property from previous exploration.





The
      main vein in
      the area, the “Santo Nino Vein”, was the focus of a small scale underground gold
      mining operation in the late 1800’s and early 1900’s, with at least three main
      underground mine access drifts supplying feed to a centrally located mill,
      which
      is still present. The mine was closed at the time of the Mexican revolution
      and
      the Santo Nino Vein system has never been evaluated using modern techniques
      and
      has not been explored by drilling. This area is the main focus of our
      exploration program.





1.  Phase
      1
      Exploration





Budget:  We
      have spent
      approximately $607,000 from general working capital, through August 2007, on
      exploration of this property. Of
      that, we spent
      approximately $90,000 conducting initial due diligence and gathering initial
      information before considering the acquisition of the property. The funds spent
      to date have come from general working capital. The estimated expenditures
      for
      future work will need to be raised through the sale of debt or equity. We can
      give no assurance that we would be able to raise such capital, as we have not
      identified any source of capital for such a program at this time. If we could
      not raise additional funds, we would consider seeking a joint venture partner
      if
      the results warranted it. We do not have any joint venture partners at this
      time
      and can give no assurance that we would be able to find one if the Sahauyacan
      Property warranted such a joint venture.





-28-




Milestones:  We
      completed our
      initial mapping of the property, including the underground workings.





As
      part of our due
      diligence on acquiring the properties, we had a surface geological mapping
      and
      sampling crew evaluate the property from September 2006 through December 2006.
      Mapping on the property was completed at a scale of 1:5,000 with individual
      veins being mapped at a scale of 1:1,000. To date, a total of 300 samples have
      been taken from the property including 101 rock chip and channel samples, 41
      stream sediment samples and 158 soil samples. We received the results back
      from
      our sampling. The underground workings were evaluated for safe entry and the
      mine has been deemed unsafe to open. A limited part of the mine was opened
      and
      bulk samples were taken.





We
      met one of our
      milestones in phase 1 of the exploration plan, which was determining drill
      hole
      locations. Our VP of Exploration determined from our phase 1 work that a 13
      hole
      drill program was warranted.





2.  Phase
      2 Drill
      Program





Budget:  We
      budgeted
      $365,000 to complete a 13 hole drill program. The contractor doing the drilling
      has completed the drilling.





Milestones:  Our
      VP of Exploration recommended
      a 13 hole drill program on this property. Reconnaissance and detailed mapping
      programs from phase 1 on the Sahauyacan Property have identified four
      significant drilling targets: Santo Niño, La Cumbre, Cerro Cacho and Santa
      Teresa. The goal of this phase of exploration was to determine if we should
      continue exploration with a further drill program. We filed the application
      for
      the work permit in February 2007 and it was approved by SEMARNAT. We completed
      the drilling in May 2007.





Current
      Drilling
      program:  To
      date a total of
      approximately 2,000 meters have been drilled in 13 diamond drillholes. Eight
      holes were drilled in the Santo Niño vein-structure (SDH-1, through SDH-4 and
      SDH-7 through SDH-10), two diamond drillholes (SDH-5 and SDH-6) were drilled
      in
      La Cumbre mineralized area and two holes (SDH-11 and SDH-12) on the Santa
      Theresa vein.





SDH-1
      through
      SDH-4, and SDH-7 through SDH-10, were collared along the Santo Niño mineralized
      vein. Drillhole SDH-1 intersected two zones of gold mineralization over the
      165.05 meters drilled in this hole, including 7.50 meters with 2.56 g/t Au
      and
      11.00 meters with 2.24 g/t Au including 8.00 meters with 2.98 g/t Au.





The
      two mineralized
      zones intersected by SDH-1 are hosted by volcaniclastic rocks interbedded with
      several andesitic tuffs and breccias. The mineralized zone, intersected from
      65.0 to 72.5 meters, is characterized by multiple stages of hydrothermal
      activity exhibiting quartz veinlets and quartz stockwork mineralization with
      moderate to weak argillic alteration (illite-kaolin) and propylitic alteration
      characterized by epidote, chlorite, and calcite. The second mineralized zone
      intersected from 96.4 to 107.5 meters in SDH-1 is mainly characterized by a
      weak
      to moderate silicification exhibiting quartz and calcite veinlets. Areas show
      dissemination of pyrite as fine crystals are common in the mineralized
      zones.





In
      addition, the
      low values of silver may suggest that we are still high in the mineralized
      system and our VP of Exploration believes that the silver and other base metal
      content may increase with depth and consequently the Ag:Au ratio will
      change.





A
      summary of the
      assay results of the two mineralized zones intersected by the SDH-1 is provided
      in the table below.





Drillhole
            From
                (meters)
            To
                (meters)
            Interval
                (meters)
            Au
                (g/t)
            Ag
                (g/t)
            Au
                Eq.
                (g/t)SDH-1
            65.00
            66.50
            1.50
            2.02
            0.866.50
            68.00
            1.50
            8.09
            2.868.00
            69.50
            1.50
            0.26
            1.269.50
            71.00
            1.50
            0.233
            1.371.00
            72.50
            1.50
            2.23
            2.196.50
            98.00
            1.50
            6.13
            49.498.00
            98.50
            0.50
            9.24
            21.198.50
            99.50
            1.00
            0.529
            0.799.50
            100.50
            1.00
            1.695
            1.2100.50
            101.50
            1.00
            1.415
            9.2




-29-




101.50
            102.50
            1.00
            3.81
            10.5102.50
            103.50
            1.00
            0.038
            0.09103.50
            104.50
            1.00
            1.00
            5.9104.50
            105.50
            1.00
            0.363
            7.3105.50
            106.50
            1.00
            0.341
            9.6106.50
            107.50
            1.00
            0.111
            10.5





The
      remaining holes
      did not return encouraging assay results. The results from drillholes SDH-3
      and
      SDH-4 show gold anomalies varying from 0.01 to 0.02 g/t. Geological and
      structural mapping surveys along the Santo Niño vein have identified a NE
      structure that is displacing the mineralized zone. Current field investigations
      are aimed to define in more detail the structural setting on this part of the
      mineralized vein-structure.





Drillholes
      SDH-5
      and SDH-6 were collared in the Le Cumbre zone. The two holes intersected
      mineralization from surface to 175 metres. Only the SDH-5 intersected several
      two-meter-wide intercepts with gold mineralization ranging from 1.03 to 1.905
      g/t. Other gold values ran between 0.2 to 0.5 grams/tonne. Our VP of Exploration
      believes that the gold in these zones is free gold and is contained in the
      fractures in the oxides. As the drilling consumes massive quantities of water,
      we believe the free gold has been washed away from the core. As a result, we
      plan to re-drill the Le Cumbre zone using reverse circulation drilling to ensure
      all the particles are captured while drilling. No assurance, though, may be
      given that any gold values will be found when it is redrilled using reverse
      circulation drilling. A detailed evaluation of these gold values and their
      correspondent geological conditions is in progress.





The
      final area
      tested at Sahauyacan was the Santa Theresa target, where two drillholes (SDH-11
      and SDH-12) were completed. SDH-12 has intersected a high grade mineralized
      zone, consisting of 7.5 meters with 56.01 g/t Au and 283.22 g/t Ag. The
      following are the assay intercepts from the Santa Theresa
      structure.




Drillhole
            From
                (meters)
            To
                (meters)
            Interval
                (meters)
            Au
                (g/t)
            Ag
                (g/t)SDH-12
            74.50
            76.00
            1.50
            6.21
            14876.00
            77.50
            1.50
            0.716
            8.577.50
            79.00
            1.50
            268.75
            121579.00
            80.50
            1.50
            2.46
            39.880.50
            82.00
            1.50
            1.93
            4.8





Additional
      check
      assays of the core from 77.50 to 79.00 returned values of 431 g/t Au and 1.490
      g/t Ag over 1.5 meters. These results have not been qualified or confirmed
      by
      the Company.





Surface
      mapping and
      drilling results suggest that high gold values tend to cluster at certain areas
      along the Santo Nino and the Santa Theresa vein structures. SDH-11 returned
      anomalous gold zones in the structure. SDH-12 shows potential for a significant
      increase in the Santa Theresa mineralization area.





Drillholes
      SDH-11
      returned only anomalous gold zones in the structure. SDH-12 shows that the
      potential for a significant increase in the Santa Theresa mineralization area.
      The mineralization is controlled by NWN structures running from the Santa
      Theresa target to the north to the La Cumbre target. The Company’s VP of
      Exploration will evaluate these results and further evaluation the Sahauyacan
      Property by reverse circulation drilling at La Cumbre and diamond drilling
      at
      Santa Theresa and Santo Nino to test the veins. This program will help to define
      the potential volume and grade of a large portion of the mineralized vein
      systems at Sahauyacan.








Despite
      these
      results, the Sahauyacan Property has no known or estimated resources or
      reserves.





3.  Phase
      3
      Exploration.





Management
      including our VP of Exploration will review the information provided by the
      second phase of exploration and determine whether further exploration is
      recommended. If further exploration is recommended, we do not have sufficient
      information at this time to estimate what that program would entail. This
      information will be provided by the second phase of exploration.





The
      Sahauyacan
      Property is without known reserves. Our proposed programs are exploratory in
      nature.





-30-




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





We
      have made a
      business decision to place a higher priority on the Cieneguita Property
      exploration program to define mineralized ore. However, we intend to proceed
      with exploration on all four properties simultaneously .
      If our
      exploration programs warrant drilling programs on the properties, we anticipate
      contracting two geologists, one junior geologist and four assistants for
      supervising the drilling work and taking splits for the drilling
      samples.





Once
      we receive
      results from these exploration programs, management will assess whether to
      proceed to any further exploration phases. In making this determination, we
      will
      make an assessment as to whether the results are sufficient enough to obtain
      the
      financing necessary to proceed. The decision will be based mainly on the
      recommendations of our senior geologist and VP of Exploration. Other factors
      that will influence the production decision will be the current price of gold
      bullion, availability of mining equipment and a mining feasibility
      study.






**Results
      of
      Operations**




***Six
      months ended August 31, 2007 compared to the six months ended August 31,
      2006.***





In
      this discussion
      of Mexoro’s
      results of
      operations and financial condition, amounts, other than per-share amounts,
      have
      been rounded to the nearest thousand dollars.





Revenues





We
      did not earn
      revenues during the three or six months
      ended August 31, 2007 or 2006 because we did not have commercial production
      of
      any of our properties. We do not anticipate earning revenues until such time
      as
      we have entered into commercial production of our mineral properties, if ever.
      We are presently in the exploration stage of our business. We can provide no
      assurance that we will discover commercially exploitable levels of mineral
      resources on our properties or, if such resources are discovered, that we will
      enter into commercial production of our mineral properties. Interest income
      is
      recorded under “Other Income in the Statement of Operations” in the financial
      statements.





Operating
      Costs





We
      did not incur
      any operating costs during the three
      and six
      months ended August 31, 2007 or 2006 due to the fact that we did not achieve
      production from exploration activities during either year.





Expenses





Our
      expenses
      increased to $1,657,000
      and
      $4,198,000 for the three and six months ended August 31, 2007 compared to
      $1,315,000 and $2,625,000 for the three and six months ended August 31, 2006,
      respectively. The increase is primarily attributable to higher administrative
      costs, stock-based compensation to officers, directors and consultants and
      developing the exploration program.





General
      and
      administrative cash expenses increased to $357,000 and $1,292,000 in the three
      and six months ended August 31, 2007 respectively, compared to $227,000 and
      $798,000 in the three and six months ended August 31, 2006.





Management
      fees
      increased to $126,000 and $299,000 in the three and six months ended August
      31,
      2007 respectively, from $83,000 and $146,000 in the three and six months ended
      August 31, 2006. The increase was attributable to a new management team
      appointed in the prior fiscal year. Finders’ fees decreased to $nil in the six
      months ended August 31, 2007 from $285,000 in the six months ended August 31,
      2006. Accounting and legal fees increased to $35,000 and $117,000 in the three
      and six months ended August 31, 2007 respectively, from $44,000 and $78,000
      in
      the three and six months ended August 31, 2006. The increase in fees was
      primarily attributable to higher auditing costs and the cost of regulatory
      filings.





Stock-based
      compensation expense increased to $736,000 and $1,673,000 in the three and
      six
      months ended August 31, 2007 respectively, from $735,000 and $1,223,000 in
      the
      three and six months ended August




-31-




31,
      2006. The 2007
      amount relates to warrants issued and stock options granted to management and
      key personnel for $975,000 and $698,000, respectively.





Mineral
      exploration
      in the three and six months ended August 31, 2007 increased to $564,000 and
      $1,233,000 respectively, compared to $352,000 and $605,000 for the three and
      six
      months ended August 31, 2006. We anticipate that exploration expenditures will
      increase in fiscal 2008 as a result of exploration activities on our Mexican
      mineral properties.





Loss





Our
      net loss
      increased to $1,651,000 and decreased to $4,198,000 respectively, for the three
      and six months ended August 31, 2007 compared to $1,312,000 and $4,914,000
      for
      the three and six months ended August 31, 2006.





This
      change in our
      loss was primarily attributable to a decrease in interest expense offset by
      higher general and administrative, stock-based compensation and exploration
      expense in 2007. The net losses in both 2007 and 2006 were comprised of items
      not requiring an outlay of cash. In 2007, the non-cash component of stock-based
      compensation was $1,673,000. In 2006, the non-cash component is attributable
      to
      $487,000 of stock-based compensation and to a beneficial conversion feature
      of
      $2,266,000 on convertible debentures issued in the three months ended May 31,
      2006; which was recorded as interest expense. We anticipate that we will
      continue to incur a loss until such time as we can commence the development
      stage of our operations and achieve significant revenues from sales of gold
      recovered from our Mexican mineral properties, if ever. There is no assurance
      that we will commence the development stage of our operations at any of our
      Mexican mineral properties or achieve revenues.








**Liquidity
      and Capital Resources**





Since
      inception, we
      have undergone two unsuccessful business combinations, which have caused us
      to
      incur significant liabilities and have resulted in the accumulation of a
      substantial deficit during the exploration stage. As of August
      31, 2007, we
      have total assets of $706,000 total liabilities of $1,683,000 and a deficit
      of
      $29,930,000 accumulated during the exploration stage.





Cash
      and Working
      Capital





We
      had cash and
      cash equivalents of $46,354 as of August 31, 2007, compared to cash of $940,000
      as of May 31, 2007 and $1,534,000 as of August 31, 2006. We had working capital
      deficiency of $1,276,000 as of August 31, 2007, compared to a working capital
      of
      $1,235,000 as of May 31, 2007 and a working
      capital deficiency of $1,450,000 as of August 31, 2006.





We
      will require
      additional financing during the current fiscal year according to our planned
      exploration activities. We plan to spend approximately $1,000,000 from August
      2007 to October 2008 to carry out exploration and administration activities
      on
      our Mexican mineral properties and in the event that our exploration is
      successful on our Cieneguita Property, we anticipate spending a further
      $2,200,000 on milling equipment and building a plant to put that property into
      production. We anticipate spending approximately $480,000 during the next 12
      months on general and administrative costs. We presently do not have sufficient
      financing to enable us to complete these plans and will require additional
      financing to perform future exploration work on our Mexican mineral properties.
      Our actual expenditures on these activities will depend on the amount of funds
      we have available as a result of our financing efforts. There is no assurance
      that we will be able to raise the necessary financing.





The
      amount of
      working capital could be adversely affected further in the event claims are
      made
      against us alleging that certain shares we previously issued pursuant to Form
      S-8 registration statements constituted an illegal public offering because
      the
      company was a “shell company” at the time and, as a result, was not eligible to
      use Form S-8 for registration of shares under the Securities Act of 1933. In
      August and October of 2005, the Company issued shares of common stock to an
      officer of the Company, as compensation for consulting services. The two share
      issuances were for a combined total of 30,000 shares and each of the share
      issuances was made pursuant to a registration statement on Form S-8 under the
      Securities Act of 1933. Although the Company believes these shares were properly
      issued, a claim could be made that issuance of the shares constituted an illegal
      public offering because the Company was a “shell company” at the time. Shell
      companies [i.e. companies which have no or nominal operations and either (i)
      no
      or nominal assets; (ii) assets consisting
      solely
      of cash and cash equivalents; or (iii) assets consisting of any amount of cash
      and




-32-




cash
      equivalents
      and nominal other assets] are not eligible to use Form S-8 for registration
      under the Securities Act of 1933. If either of these transactions did violate
      federal securities laws, subsequent purchasers of the shares may have claims
      against us for damages or for rescission of their purchase transaction and
      recovery of the full subscription price paid, together with interest. As of
      the
      date of this annual report, no one has made or threatened any claim against
      us
      alleging violation of the federal securities laws. In the event such claims
      were
      successfully asserted there is no assurance that we would have sufficient funds
      available to pay and it is likely that we would be required to use funds
      currently designated as working capital for that purpose. That would
      substantially reduce the amount of working capital available for other purposes
      and, in that event, we could be forced to cease or discontinue certain
      operations and to liquidate certain assets to pay our liabilities, including,
      but not limited to, rescission claims.





Cash
      Used in
      Operating Activities





Cash
      used in
      operating activities increased to $1,713,000
      for the
      six months ended August 31, 2007 compared to $1,360,000 for the six months
      ended
      August 31, 2006. The cash used in operating activities was primarily for general
      and administrative expenses and exploration costs.





Cash
      Used in
      Investing Activities





The
      Company used
      cash of $35,000 for
      purchase of
      equipment for the six months ended August 31, 2007 compared to cash used of
      $90,000 for the three months ended August 31, 2006.





Financing
      Activities





Cash
      provided by
      financing activities amounted
      to
      $1,778,000 for the six months ended August 31, 2007 compared to $2,496,000
      for
      the six months ended August 31, 2006. Almost all of the cash provided by
      financing activities was from exercise of warrants and notes payables. Cash
      provided by financing activities was used to fund our operating and investing
      activities.





We
      anticipate
      continuing to rely on equity sales of our common stock or issuance of debt
      in
      order to continue to fund our business operations. Issuances of additional
      shares will result in dilution to our existing shareholders.





On
      March 4, 2006,
      the Company agreed to issue 1,651,000 common shares at a price of $0.25 per
      share to settle $413,000 in promissory notes payable. As a condition, the
      promissory note holders waived all accrued interest payable on the notes. On
      April 6, 2006, these shares were issued and the Company recorded a $7,000 gain
      on settlement of debt.





On
      April 3, 2006
      and May 31, 2006, the Company issued 550,000 common shares and 200,000 common
      shares, respectively and closed a private placement for total proceeds of
      $375,000. As at February 28, 2006, the Company had received $170,000 of
      subscriptions for this unit offering. Units consisted of one share of common
      stock and one-half of one warrant. Each full warrant entitles the investor
      to
      purchase an additional share of the Company’s common stock at a price of $1.00
      per share and is exercisable until April 30, 2008. The units were priced at
      $0.50 each.





During
      the quarter
      ended May 31, 2006, the Company issued a total of $2,265,500 convertible
      debentures. The convertible debentures, with principal and accrued interest
      at
      7% per year were convertible into $25,000 units at the option of the holder.
      Each unit consisted of a warrant to purchase 25,000 of the Company’s shares of
      common stock at $1.00 and $25,000 of debt, which may be converted to shares
      of
      common stock at $0.50 per share and is exercisable until April 30, 2008. In
      addition, the warrants are redeemable by the Company, at $0.01 per share, in
      the
      event the Company’s common stock closes with a bid price, on average, over $3.00
      per share for a consecutive 20-day period. Further, under the terms of the
      debenture, until May 2007, the Company is prohibited from effecting or entering
      into an agreement to affect any subsequent financing involving a “Variable Rate
      Transaction” The term Variable Rate Transaction means a transaction in which the
      Company issues or sells any debt or equity securities that are convertible
      into,
      exchangeable or exercisable for, or include the right to receive additional
      shares of common stock at a conversion, exercise or exchange rate or other
      price
      that is based upon and/or varies with the trading prices of or quotations for
      the shares of common stock at any time after the initial issuance of such debt
      or equity securities.





The
      holders of the
      debentures converted all of the debentures to shares of common stock at $0.50
      per share in June 2006. The Company issued 5,835,000 shares and 2,917,500
      warrants to debenture holders upon the




-33-




conversion.
      We have
      paid to the convertible debenture holders a total of $58,308, which is their
      accumulated interest on the debentures. During August 2006, the Company
      cancelled 50,000 shares of common stock with respect to the conversion and
      25,000 warrants with respect to this conversion due to non-payment of
      subscription funds.





Subsequent
      to
      August 31, 2007, the Company received proceeds of $145,000 on exercise of
      145,000 warrants.








Going
      Concern


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





The
      Company has a
      history of operating losses and will need to raise additional capital to fund
      its planned operations. As at August 31, 2007, the Company had working capital
      deficiency of $1,276,000 (August 31, 2006 - $1,450,000 working capital) and
      an
      accumulated deficit during the exploration stage of $29,930,000 (August 31,
      2006
      - $23,253,000). These conditions raise substantial doubt about the Company’s
      ability to continue as a going concern.





There
      is no
      assurance that our operations will be profitable. The Company has conducted
      private placements of convertible debt and common stock, which have generated
      funds to satisfy all of the initial cash requirements of its planned Mexican
      mining ventures.





**Off-Balance
      Sheet Arrangements**




We
      currently do not
      have any off-balance sheet arrangements which 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 our investors.





**ITEM
      3.**  **CONTROLS
      AND PROCEDURES**





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





Our
      independent
      registered public accounting firm reported to our board of directors certain
      conditions involving internal controls which they believe represent material
      weaknesses in our internal control environment. These matters are with regard
      to
      insufficient personnel resources within the accounting function, based on the
      size and complexity of the organization, to affect timely financial close
      process and to effectively evaluate and resolve certain routine and non-routine
      and/or complex accounting transactions. A material weakness is a significant
      deficiency, or combination of significant deficiencies, that results in more
      than a remote likelihood that a material misstatement of the annual or interim
      financial statements will not be prevented or detected. Significant deficiencies
      are control issues that could have a significant adverse effect on the ability
      to record, process, summarize and report financial data in the financial
      statements.





Our
      management and
      the board of directors agreed with our independent registered public accounting
      firm on the matter raised in their report and agreed to address the material
      weakness.





-34-




To
      remediate our
      internal control weaknesses, management intends to implement the following
      measures: the Company will add sufficient accounting personnel to properly
      segregate duties and to effect a timely, accurate preparation of the financial
      statements. The Company plans to have this implemented by the end of the fiscal
      year 2008.





Changes
      in internal
      controls: There were no changes in internal controls over financial reporting,
      known to the president or chief financial officer that occurred during the
      period covered by this report that has materially affected, or is likely to
      materially effect, the Company’s internal control over financial
      reporting.





**PART
      II -
      OTHER INFORMATION**





**ITEM
      4.**  **UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**





None.




-35-





**ITEM
      5.**  **EXHIBITS**





The
      following
      exhibits are filed in reference:


Exhibit
              Number
            Description3.1
            Articles
                of
                Incorporation, as amended on December 10, 2001 and February 13, 2006
                (Herein incorporated by reference from the Registration Statement
                on Form
                SB-2 filed with the Securities and Exchange Commission on April 7,
                2006).3.2
            Bylaws
                of the
                Corporation (Herein incorporated by reference from the Registration
                Statement on Form SB-2/A filed with the Securities and Exchange Commission
                on September 25, 2006.)4.1
            Registration
                Agreement dated April 20, 2004, by and among Sunburst Acquisitions
                IV,
                Inc., and each of the purchasers in a private placement of shares
                of
                Sunburst (Herein incorporated by reference from the Registration
                Statement
                on Form SB-2/A filed with the Securities and Exchange Commission
                on
                September 25, 2006.)4.2
            Promissory
                Note between Sunburst Acquisitions IV, Inc. and Minera Rio Tinto
                S.A. de
                C.V. in the amount of $ 57,500 dated January 9, 2004 (incorporated
                by
                reference from Current Report on Form 8-K filed with the Securities
                and
                Exchange Commission on June 3, 2004).4.3
            Promissory
                Note between Sierra Minerals and Mining, Inc. and Minera Rio Tinto
                S.A. de
                C.V. in the amount of $ 167,500, dated May 3, 2004 (incorporated
                by
                reference from Current Report on Form 8-K filed with the Securities
                and
                Exchange Commission on June 3, 2004).4.4
            Securities
                Purchase Agreement with exhibits entered in connection with the $1,350,000
                original issued discount secured convertible debenture financing
                dated
                August 25, 2004 (Herein incorporated by reference from the Registration
                Statement on Form SB-2/A filed with the Securities and Exchange Commission
                on September 25, 2006.)4.5
            Secured
                Convertible Debenture by and between Bristol Capital, LLC and Sunburst
                Acquisitions IV, Inc. dated January 15, 2004 (Herein incorporated
                by
                reference from the Registration Statement on Form SB-2/A filed with
                the
                Securities and Exchange Commission on July 10, 2006).4.6
            Transaction
                Fee Agreement dated April 22, 2004 between Sunburst Acquisitions
                IV Inc.
                and T.R. Winston & Company LLC (Herein incorporated by reference from
                the Registration Statement on Form SB-2 filed with the Securities
                and
                Exchange Commission on April 7, 2006).4.7
            Finder’s
                Fee
                Agreement dated 2004 between Sunburst Acquisitions IV, Inc. and Liberty
                Management, LLC (Herein incorporated by reference from the Registration
                Statement on Form SB-2/A filed with the Securities and Exchange Commission
                on September 25, 2006.)4.8
            Convertible
                Debenture template used to sell debentures and units of Mexoro Minerals
                Ltd. for the offering that occurred in January through May of 2006
                (Herein
                incorporated by reference from the Registration Statement on Form
                SB-2
                filed with the Securities and Exchange Commission on April 7,
                2006).4.9
            Stock
                option
                plan approved by the shareholders of Mexoro Minerals, Ltd. on February
                13,
                2006. (Herein incorporated by reference from the Registration Statement
                on
                Form SB-2 filed with the Securities and Exchange Commission on April
                7,
                2006).4.10
            Subscription
                Agreement template used to sell units of Mexoro Minerals Ltd. for
                the
                offering that occurred in February and March of 2006 and was offered
                to
                accredited investors under Regulation D (Herein incorporated by reference
                from the Registration Statement on Form SB-2/A filed with the Securities
                and Exchange Commission on September 25,
                2006.)




-36-




4.11
            Convertible
                Debentures issued December 8, 2005 to Daimler Capital, James Longshore,
                and Spectrum International in the amount of $300,000 (Herein incorporated
                by reference from the Registration Statement on Form SB-2/A filed
                with the
                Securities and Exchange Commission on September 25,
                2006.)10.1
            Share
                Exchange Agreement, dated May 3, 2004, by and among Sunburst Acquisitions
                IV, Inc., a Colorado corporation, Sierra Minerals and Mining, Inc.,
                a
                Nevada corporation, and the shareholders of Sierra Minerals & Mining,
                Inc. (Herein incorporated by reference from the Registration Statement
                on
                Form SB-2/A filed with the Securities and Exchange Commission on
                September
                25, 2006.)10.2
            Joint
                Venture
                Agreement, dated April 26, 2004 and amended on June 1, 2004, by and
                between Sierra Mining and Minerals, Inc., a Nevada corporation, and
                Minera
                Rio Tinto S.A. de C.V., a Mexican company (Herein incorporated by
                reference from the Registration Statement on Form SB-2/A filed with
                the
                Securities and Exchange Commission on September 25,
                2006.)10.3
            Amendment
                to
                Joint Venture Agreement dated June 1, 2004. (Herein incorporated
                by
                reference from the Registration Statement on Form SB-2/A filed with
                the
                Securities and Exchange Commission on September 25,
                2006.)10.4
            SHARE
                OPTION
                AGREEMENT among Minera Rio Tinto, S.A. de C.V. a corporation duly
                incorporated and validly existing pursuant to the laws of the United
                Mexican States and having an office at Pascual Orozco No. 2117 -
                A
                Chihuahua, State of Chihuahua, Mexico 31310 and Sunburst Acquisitions
                IV,
                Inc., a corporation duly incorporated and validly existing pursuant
                to the
                laws of the State of Colorado, USA and having an office at Suite
                206, 595
                Howe St., Vancouver, B.C. Canada V6C 2T5 (Herein incorporated by
                reference
                from the Registration Statement on Form SB-2/A filed with the Securities
                and Exchange Commission on September 25, 2006.)10.5
            AGREEMENT
                made and entered in the City of Chihuahua, State of Chihuahua as
                of the
                18th day of August, 2005 among COMPAÑÍA MINERA DE NAMIQUIPA, S. A. DE C.
                V. a company duly incorporated and validly existing pursuant to the
                laws
                of the United Mexican States, and MINERA RIO TINTO, S. A. DE C. V.
                a
                company duly incorporated and validly existing pursuant to the laws
                of the
                United Mexican States, and MARIO HUMBERTO AYUB TOUCHE having a domicile
                at
                San Antonio No. 2036 Chihuahua, Chihuahua and SUNBURST MINING DE
                MÉXICO,
                S. A. DE C. V., a company duly incorporated and validly existing
                pursuant
                to the laws of the United Mexican States (herein incorporated by
                reference
                from the Company’s report on Form 8-K for report date August 22, 2005 and
                filed with the Securities and Exchange Commission on August 25,
                2005).10.6
            AGREEMENT
                made and entered at the City of Chihuahua, State of Chihuahua on
                this the
                18th day of August of the year 2005, among MINERA RIO TINTO, S. A.
                DE C.
                V. a company duly incorporated and validly existing pursuant to the
                laws
                of the United Mexican States, and SUNBURST MINING DE MÉXICO, S. A. DE C.
                V. a company duly incorporated and validly existing pursuant to the
                laws
                of the United Mexican States (Encino Gordo) (Herein incorporated
                by
                reference from the Registration Statement on Form SB-2/A filed with
                the
                Securities and Exchange Commission on September 25,
                2006.)10.7
            OPERATOR’S
                AGREEMENT dated effective as of the 18th day of August, 2005, among
                Minera
                Rio Tinto, S.A. de C.V. a corporation duly incorporated and validly
                existing pursuant to the laws of the United Mexican States and having
                an
                office at Pascual Orozco No. 2117 - A Chihuahua, State of Chihuahua,
                Mexico 31310, and Sunburst de Mexico, S.A. de C.V. a corporation
                duly
                incorporated and validly existing pursuant to the laws of the United
                Mexican States and having an office at Suite 5, Avenida del Mar No.1022
                Zona Costera, Mazatlan, State of Sinaloa, Mexico (Herein incorporated
                by
                reference from the Registration Statement on Form SB-2/A filed with
                the
                Securities and Exchange Commission on September 25,
                2006.)




-37-




10.8
            ASSIGNMENT
                OF
                CONTRACT AGREEMENT made and entered in the City of Chihuahua, State
                of
                Chihuahua as of this the 18th day of August, 2005 among MINERA RIO
                TINTO,
                S. A. DE C. V. a company duly incorporated and validly existing pursuant
                to the laws of the United Mexican States, and CORPORATIVO MINERO,
                S.A. DE
                C.V. a company duly incorporated and validly existing pursuant to
                the laws
                of the United Mexican States, and SUNBURST MINING DE MÉXICO, S. A. DE C.
                V. a company duly incorporated and validly existing pursuant to the
                laws
                of the United Mexican States (herein incorporated by reference from
                the
                Company’s report on Form 8-K for report date August 22, 2005 and filed
                with the Securities and Exchange Commission on August 25,
                2005).10.9
            ASSIGNMENT
                OF
                CONTRACT AGREEMENT made and entered in the City of Chihuahua, State
                of
                Chihuahua as of this the 18th day of August, 2005, among MINERA RIO
                TINTO,
                S. A. DE C. V. a company duly incorporated and validly existing pursuant
                to the laws of the United Mexican States, and RAFAEL FERNANDO ASTORGA
                HERNÁNDEZ, having a domicile at Calle República de Uruguay No. 706 of the
                City of Chihuahua, Chih, and SUNBURST MINING DE MÉXICO, S. A. DE C. V. a
                company duly incorporated and validly existing pursuant to the laws
                of the
                United Mexican States (San Antonio) (herein incorporated by reference
                from
                the Company’s report on Form 8-K for report date August 22, 2005 and filed
                with the Securities and Exchange Commission on August 25,
                2005).10.10
            ASSIGNMENT
                OF
                CONTRACT AGREEMENT made and entered in the City of Chihuahua, State
                of
                Chihuahua as of this the 18th day of August, 2005 among MINERA RIO
                TINTO,
                S. A. DE C. V. a company duly incorporated and validly existing pursuant
                to the laws of the United Mexican States, having an office at Av.
                Pascual
                Orozco Number 2117- Altos, La Cima, C. P. 31310, Chihuahua, Chihuahua,
                and
                MINERA RACHASA, S.A. DE C.V., a company duly incorporated and validly
                existing pursuant to the laws of the United Mexican States, and having
                an
                office at Niños Héroes No. 410 Colonia Centro, Chihuahua, Chihuahua (RFC
                BMM-900120-8B6), and SUNBURST MINING DE MÉXICO, S. A. DE C. V. a company
                duly incorporated and validly existing pursuant to the laws of the
                United
                Mexican States (San Francisco) (herein incorporated by reference
                from the
                Company’s report on Form 8-K for report date August 22, 2005 and filed
                with the Securities and Exchange Commission on August 25,
                2005).10.11
            THE
                NEW
                AGREEMENT entered into on December 8, 2005 among the Company, Sunburst
                de
                Mexico, and MRT (herein incorporated by reference from the Company’s
                current report on Form 8-K for report date December 8, 2005 and filed
                with
                the Securities and Exchange Commission on December 14,
                2005).10.12
            Funds
                Escrow
                Agreement dated July 2005, among Sunburst Acquisitions IV, Inc.,
                Investment Fund, Ltd., Alpha Capital AG and Stonestreet LP, and Grushko
                & Mittman, P.C. (herein incorporated by reference from the Company’s
                current report on Form 8-K dated July 1, 2005 and filed with the
                Securities and Exchange Commission on August 17, 2005).10.13
            Repayment
                Agreement dated July 15, 2005 by and among Sunburst IV, Inc. and
                Investment Fund, Ltd., Alpha Capital AG and Stonestreet LP. (herein
                incorporated by reference from the Company’s current report on Form 8-K
                dated July 1, 2005 and filed with the Securities and Exchange Commission
                on August 17, 2005).10.14
            Consulting
                Agreement dated July 1, 2005 between Tracy A. Moore and Sunburst
                Acquisitions IV, Inc. (herein incorporated by reference from the
                Company’s
                current report on Form 8-K dated July 1, 2005 and filed with the
                Securities and Exchange Commission on August 17, 2005).10.15
            Consulting
                Agreement with G.M. Capital Partners, Ltd. dated January 30, 2006
                (incorporated by reference from Current Report on Form 8-K filed
                with the
                Securities and Exchange Commission on February 7,
                2006).10.17
            Amendment
                to
                the New Agreement, dated April 6, 2006 by and among Mexoro Minerals,
                Ltd.,
                Sunburst Mining de Mexico S.A. de C.V., and Minera Rio Tinto, S.A.
                de C.V.
                (Herein incorporated by reference from the Registration Statement
                on Form
                SB-2/A filed with the Securities and Exchange Commission on September
                25,
                2006.)




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10.18
            Addendum
                To
                Purchase Contract Of Mining Rights To Lump Sum Entered Into On May
                6, 2004
                by Corporativo Minero, S.A. De C.V. And Sunburst Mining De Mexico,
                S.A. De
                C.V., dated March 24, 2006 (Herein incorporated by reference from
                the
                Registration Statement on Form SB-2/A filed with the Securities and
                Exchange Commission on September 25, 2006.)10.19
            Agreement
                to
                Extend August Payment Due Date, entered into on July 18, 2006 by
                Minera
                Rio Tinto and Sunburst de Mexico (Herein incorporated by reference
                from
                the Registration Statement on Form SB-2/A filed with the Securities
                and
                Exchange Commission on September 25, 2006.10.20
            Amended
                Agreement with G.M. Capital Partners Ltd. dated August 31, 2006 (herein
                incorporated by reference to the Current Report on Form 8-K dated
                August
                31, 2006 and filed on September 21, 2006.10.21
            Letter
                Employment Agreement with Matthew Wunder, dated August 15, 2006 (herein
                incorporated by reference from the Registration Statement on Form
                SB-2/A
                filed with the Securities and Exchange Commission on September 25,
                2006.10.22
            Original
                Agreement between MRT and Corporativo Minero dated 2004 concerning
                the
                Cieneguita Property (herein incorporated by reference from the
                Registration Statement on Form SB-2/A filed with the Securities and
                Exchange Commission on December 18, 2006.)10.23
            Agreement
                between MRT and La Empresa Denominada Minera Rachasa dated 2004 concerning
                the San Francisco concessions (herein incorporated by reference from
                the
                Registration Statement on Form SB-2/A filed with the Securities and
                Exchange Commission on September 25, 2006.)10.24
            Agreement
                between MRT and Rafael Astorga Hernandez, dated July 20, 2006, concerning
                the San Antonio concessions (herein incorporated by reference from
                the
                Registration Statement on Form SB-2/A filed with the Securities and
                Exchange Commission on September 25, 2006.)10.25
            Consent
                of
                MRT to assign the Agreement between MRT and Rafael Astorga Hernandez
                to
                Sunburst de Mexico (herein incorporated by reference from the Registration
                Statement on Form SB-2/A filed with the Securities and Exchange Commission
                on December 18, 2006.)10.26
            Exploration
                and Sale Option Agreement of Mining Concessions Entered By and Between
                Minera Emilio, S.A. de C.V. and Sunburst Mining de Mexico, S.A. de
                C.V.
                (herein incorporated by reference from the Current Report on Form
                8-K
                filed with the Securities and Exchange Commission on October 30,
                2006.)10.27
            Agreement
                to
                Defer Guazapares Property Payments, entered into on September 19,
                2007 by
                Sunburst de Mexico S.A. de C.V., Mexoro and MRT (herein incorporated
                by
                reference to the Current Report on Form 8-K dated September 19, 2007
                and
                filed on October 9, 2007.14.1
            Code
                of
                Ethics (herein incorporated by reference from the Registration Statement
                on Form SB-2 filed with the Securities and Exchange Commission on
                April 7,
                2006.)16.1
            Responsive
                letter of Comiskey & Co. (herein incorporated by reference from
                Current Report on Form 8-K filed with the Securities and Exchange
                Commission on July 16, 2004.)21.1
            Subsidiaries
                of the Registrant (herein incorporated by reference from the Registration
                Statement on Form SB-2 filed with the Securities and Exchange Commission
                on April 7, 2006.)31.1
            Certification
                of Chief Executive Officer and Chief
                Financial Officer of Mexoro Minerals Ltd. pursuant to Rule
                13a-14(a)/15d-14(a).*32.1
            Certification
                of Chief Executive Officer and Chief
                Financial Officer of Mexoro Minerals Ltd. pursuant to 18 U.S.C. Section
                1350. *





*filed
      herewith




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**SIGNATURES**





In
      accordance with
      the requirements of the Exchange Act, the registrant caused this report to
      be
      signed on its behalf by the undersigned, thereunto duly authorized.





**MEXORO
      MINERALS LTD.**














By:
      /S/ Robert
      Knight


Robert
      Knight,
      President, Chief Financial Officer and Director


Date:
      October 15,
      2007




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