Pan American Goldfields (MXOM) 10-Q 2010 Q3 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington D. C. 20549

FORM 10-Q

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

For the quarterly period ended November 30, 2009

Commission file number 000-23561

MEXORO MINERALS LTD.

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

Colorado (State or other jurisdiction of incorporation)	84-1431797 (IRS Employer Identification Number)
Mountain View Center 12303 Airport Way, Suite 200
Broomfield, CO. (Address of principal executive offices)	80021 (Zip Code)

Registrant’s telephone number, including area code: (303) 327 1587

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yeso Noo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filero Accelerated filero Non-accelerated filero Smaller reporting companyþ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yeso Noþ

As of January 12, 2010, the registrant had 42,378,827 shares of common stock issued and outstanding.

TABLE OF CONTENTS

	ITEM 1. FINANCIAL STATEMENTS
		Consolidated Balance Sheets
		Consolidated Statements of Operations and Deficit
		Consolidated Statements of Cash Flows
		Notes to Consolidated Financial Statements
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	Item 3. Quantitative and Qualitative Disclosure about Market Risk
	Item 4. Controls and Procedures
PART II — OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
	Item 6. Exhibits
SIGNATURES
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

ITEM 1. FINANCIAL STATEMENTS

MEXORO MINERALS LTD.
(A Development Stage Company)

CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Expressed in U.S. Dollars)

November 30, 2009

2

MEXORO MINERALS LTD.
(A Development Stage Company)

Consolidated Balance Sheets
(Expressed in U.S. Dollars)

	November 30, 2009			February 28, 2009
	(Unaudited)			(Audited)
Assets
Current
Cash and cash equivalents	$	299,861		$	38,704
Accounts receivable		338,004			248,589
Prepaid expenses		516,289			34,048
		1,154,154			321,341
Equipment (note 4)		255,309			275,900
Total assets	$	1,409,463		$	597,241
Liabilities
Current
Accounts payable and accrued liabilities	$	2,189,188		$	2,679,512
Current portion of loans payable (note 9)		699,408			63,232
Promissory notes (note 7)		775,299			968,543
Current portion of convertible debentures (note 8)		—			1,267,314
		3,663,895			4,978,601
Loans payable (note 9)		—			7,608
Convertible debentures (note 8)		—			673,887
Total liabilities		3,663,895			5,660,096
Stockholders’ deficiency
Capital stock
Preferred stock
Authorized: 20,000,000 shares without par value (note 10)
Issued: nil		—			—
Common stock
Authorized: 200,000,000 shares without par value
Issued: 42,378,827 (2009 — 31,019,302) (note 11)		28,275,401			25,556,901
Additional paid-in capital		12,838,523			12,676,908
Stock subscriptions		1,816,000			121,258
Accumulated deficit from prior operations		(2,003,427	)		(2,003,427	)
Accumulated deficit during the development stage		(43,338,026	)		(41,864,219	)
Other comprehensive income (loss)		157,097			449,724
Total stockholders’ deficiency		(2,254,432	)		(5,062,855	)
Total liabilities and stockholders’ deficiency	$	1,409,463		$	597,241

Going-concern (note 3)
Commitments (notes 6, 13 and 16)
Subsequent events (note 17)

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

3

MEXORO MINERALS LTD.
(A Development Stage Company)

Consolidated Statements of Operations and Deficit
(Unaudited) (Expressed in U.S. Dollars)

													Period from
													Inception of
													Development
													Stage
	Three Months Ended						Nine Months Ended						(March 1, 2004)
	November 30,			November 30,			November 30,			November 30,			To November 30,
	2009			2008			2009			2008			2009
Net sales	$	130,202		$	—		$	522,286		$	—		$	522,286
Cost of goods sold		99,103			—			264,836			—			264,836
Gross margin		31,099			—			257,450			—			257,450
Expenses
General and administrative		870,171			824,492			2,279,498			2,095,415			15,013,717
Mineral exploration (note 6)		96,798			1,200,176			420,750			3,955,061			8,322,976
Impairment of mineral property costs		167,081			—			270,237			—			16,654,952
Operating loss		(1,102,951	)		(2,024,668	)		(2,713,035	)		(6,050,476	)		(39,734,195	)
Other income (expenses)
Foreign exchange		(45,634	)		(163,972	)		(1,061	)		(134,857	)		(193,811	)
Interest expense		(269,618	)		(104,518	)		(521,111	)		(341,496	)		(5,310,284	)
Other income		162,700			229			172,791			—			172,791
Gain (loss) on sale of assets		1,500,000			—			1,498,830			(4,179	)		1,497,250
Gain on settlement of debt		264,565			—			89,779			—			230,223
Net income (loss)		509,062			(2,292,929	)		(1,473,807	)		(6,531,008	)		(43,338,026	)
Accumulated deficit, beginning		(43,847,088	)		(38,066,090	)		(41,864,219	)		(33,828,011	)		—
Accumulated deficit, ending	$	(43,338,026	)	$	(40,359,019	)	$	(43,338,026	)	$	(40,359,019	)	$	(43,338,026	)
Other comprehensive income
Foreign exchange gain (loss) on translation		(46,452	)		422,960			(292,627	)		398,940			157,097
Total comprehensive loss	$	462,610		$	(1,869,969	)	$	(1,766,434	)	$	(6,132,068	)	$	(43,180,929	)
Total income (loss) per share — basic	$	0.01		$	(0.08	)	$	(0.04	)	$	(0.30	)	$	—
Total income (loss) per share — diluted	$	0.01		$	(0.08	)	$	(0.04	)	$	(0.30	)	$	—
Weighted average number of shares of common stock — basic		39,604,559			29,203,010			36,711,212			22,484,877			—
Weighted average number of shares of common stock — diluted		42,601,225			29,203,010			36,711,212			22,484,877			—

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

4

MEXORO MINERALS LTD.
(A Development Stage Company)

Consolidated Statements of Cash Flows
(Unaudited) (Expressed in U.S. Dollars)

							Period from
							Inception of
							Development
							Stage
	Nine Months Ended						(March 1, 2004)
	November 30,			November 30,			to November 30,
	2009			2008			2009
Cash flows from operating activities
Net loss	$	(1,473,807	)	$	(6,531,008	)	$	(43,338,026	)
Adjustments to reconcile net (loss) to net cash flows:
Write off of note receivable		—			—			57,500
Impairment of mineral property costs		—			—			13,645,000
Issuance of shares for consulting services		13,500			—			365,590
Issuance of shares for interest costs		82,500			—			82,500
Discount on convertible debenture		86,191			64,133			569,549
Gain on sale of assets		(1,500,000	)		—			(1,500,000	)
Gain on settlement of debt		(89,779	)		—			(272,038	)
Beneficial conversion feature		51,192			198,860			4,081,091
Stock-based compensation		873,678			563,144			8,843,535
Depreciation		56,339			62,881			239,263
Net change in operating assets and liabilities:
Prepaid expense		(461,214	)		4,273			(497,660	)
Accounts receivable		(48,337	)		(107,638	)		(374,284	)
Customer deposits		—			—			(44,809	)
Notes payable		—			—			109,337
Accounts payable and accrued liabilities		231			2,800,900			4,079,286
Cash used in operating activities		(2,409,506	)		(2,944,455	)		(13,954,166	)
Investing activities
Sale of equipment		29,437			—			33,316
Purchase of property and equipment		(23,258	)		(12,810	)		(588,247	)
Cash used in investing activity		6,179			(12,810	)		(554, 931	)
Financing activities
Proceeds from loans payable		33,750			13,119			259,567
Proceeds from notes payable		507,514			2,406,180			3,571,179
Proceeds from convertible debentures		1,573,510			1,370,000			7,362,500
Proceeds from exercise of options		—			—			78,000
Proceeds from exercise of warrants		—			—			3,144,377
Repayment of loans payable		(58,524	)		(61,135	)		(202,564	)
Repayment of notes payable		—			(900,281	)		(383,270	)
Repayment of convertible debentures		(1,300,000	)		—			(1,830,000	)
Stock subscriptions		1,816,000			15,000			2,107,258
Issuance of common stock		75,000			179,885			731,994
Cash provided by financing activities		2,647,250			3,022,768			14,839,041
Net change in cash		243,923			65,503			329,944
Effect of foreign currency translation on cash		17,234			(73,630	)		(52,160	)
Cash and cash equivalents, beginning		38,704			12,947			22,077
Cash and cash equivalents, ending	$	299,861		$	4,820		$	299,861

Supplemental cash flow information (note 15)

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

5

MEXORO MINERALS LTD.
(A Development Stage Company)

Notes to Consolidated Financial Statements
Nine Months Ended November 30, 2009
(Unaudited) (Expressed in U.S. Dollars)

1.	Basis of presentation
	Mexoro Minerals Ltd. (formerly Sunburst Acquisitions IV, Inc.) (“Mexoro” or the “Company”) was incorporated in the state of Colorado on August 27, 1997 and on February 15, 2006 its name was changed to Mexoro Minerals Ltd. The Company was formed to seek out and acquire business opportunities. Between 1997 and 2003, the Company 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. Effective March 1, 2004, the Company changed its operations to mineral exploration and the extraction of mineralized material in Mexico.
	On February 12, 2009, the Company entered into a joint venture through a definitive agreement for development of Cieneguita project with Minera Rio Tinto, S.A. de C.V. (“MRT”), a company duly incorporated pursuant to the laws of Mexico, which is controlled by a former officer and director of the Company. The purpose of the joint venture is to put the Cieneguita property into production. As per the agreement, MRT is to provide the necessary working capital to begin and maintain mining operations estimated to be $3,000,000. MRT will spend 100% of the funds in exchange for a 75% interest in the net cash flow from production. Accordingly, as of February 12, 2009 the Company is considered to be a development stage company.
	On May 25, 2004, the Company completed a “Share Exchange Agreement” with Sierra Minerals and Mining, Inc. (“Sierra Minerals”), a Nevada corporation, which caused Sierra Minerals to become a wholly-owned subsidiary. Sierra Minerals held certain rights to properties in Mexico that the Company now owns or has an option to acquire. Through Sierra Minerals, the Company entered into a joint venture agreement with MRT. In August 2005, the Company cancelled the joint venture agreement in order to directly pursue mineral exploration opportunities through a wholly-owned Mexican subsidiary, Sunburst Mining de Mexico S.A. de C.V. (“Sunburst de Mexico”). On August 25, 2005, Sunburst de Mexico, Mexoro and MRT entered into agreements providing Sunburst de Mexico the right to explore and exploit certain properties in Mexico. In December 2005, the Company and Sunburst de Mexico entered into a new agreement with MRT (the “New Agreement”) (note 6). On January 20, 2006, Sierra Minerals was dissolved.
	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-Q and Article 8 of Regulation S-X. 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 nine months ended November 30, 2009 are not necessarily indicative of the results that may be expected for the year ending February 28, 2010. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended February 28, 2009.

2. SIGNIFICANT ACCOUNTING POLICIES

(a) Recent accounting pronouncements

(i) In September 2009, the FASB issued Update No. 2009-13, “Multiple-Deliverable Revenue Arrangements—a consensus of the FASB Emerging Issues Task Force” (ASU 2009-13). It updates the existing multiple-element revenue arrangements guidance currently included under ASC 605-25, which originated primarily from the guidance in EITF Issue No. 00-21, “Revenue Arrangements with Multiple Deliverables” (EITF 00-21). The revised guidance primarily provides two significant changes: 1) eliminates the need for objective and reliable evidence of the fair value for the undelivered element in order for a delivered item to be treated as a separate unit of accounting, and 2) eliminates the residual method to allocate the arrangement consideration. In addition, the guidance also expands the disclosure requirements for revenue recognition. ASU 2009-13 will be effective for the first annual reporting period beginning on or after June 15, 2010, with early adoption permitted provided that the revised guidance is retroactively applied to the beginning of the year of adoption. The Company is currently assessing the future impact of this new accounting update to its financial statements.

6

MEXORO MINERALS LTD.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Nine Months Ended November 30, 2009
(Unaudited) (Expressed in U.S. Dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(a) Recent accounting pronouncements (continued)

(ii)	In September 2009, the FASB issued ASC 105, formerly FASB Statement No. 168, the FASB Accounting Standards Codification (“Codification”) and the Hierarchy of Generally Accepted Accounting Principles (“GAAP”), a replacement of FASB Statement No. 162 (“SFAS 168”). SFAS 168 establishes the Codification as the single source of authoritative GAAP in the United States, other than rules and interpretive releases issued by the SEC. The Codification is a reorganization of current GAAP into a topical format that eliminates the current GAAP hierarchy and establishes instead two levels of guidance — authoritative and non-authoritative. All non-grandfathered, non-SEC accounting literature that is not included in the Codification will become non-authoritative. The FASB’s primary goal in developing the Codification is to simplify user access to all authoritative GAAP by providing all the authoritative literature related to a particular accounting topic in one place. The Codification will be effective for interim and annual periods ending after September 15, 2009. As the Codification was not intended to change or alter existing GAAP, it did not have a material impact on the Company’s financial statements.
(iii)	Effective July 1, 2009, the Company adopted FASB ASU No. 2009-05, Fair Value Measurements and Disclosures (Topic 820) (“ASU 2009-05”). ASU 2009-05 provided amendments to ASC 820-10, Fair Value Measurements and Disclosures – Overall, for the fair value measurement of liabilities. ASU 2009-05 provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using certain techniques. ASU 2009-05 also clarifies that when estimating the fair value of a liability, a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of a liability. ASU 2009-05 also clarifies that both a quoted price in an active market for the identical liability at the measurement date and the quoted price for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required are Level 1 fair value measurements. Adoption of ASU 2009-05 did not have a material impact on the Company’s results of operations or financial condition.
(iv)	Effective June 30, 2009, the Company adopted three accounting standard updates which were intended to provide additional application guidance and enhanced disclosures regarding fair value measurements and impairments of securities. They also provide additional guidelines for estimating fair value in accordance with fair value accounting. The first update, as codified in ASC 820-10-65, provides additional guidelines for estimating fair value in accordance with fair value accounting. The second accounting update, as codified in ASC 320-10-65, changes accounting requirements for other-than-temporary-impairment (OTTI) for debt securities by replacing the current requirement that a holder have the positive intent and ability to hold an impaired security to recovery in order to conclude an impairment was temporary with a requirement that an entity conclude it does not intend to sell an impaired security and it will not be required to sell the security before the recovery of its amortized cost basis. The third accounting update, as codified in ASC 825-10-65, increases the frequency of fair value disclosures. These updates were effective for fiscal years and interim periods ended after June 15, 2009. The adoption of these accounting updates did not have a material impact on the Company’s financial statements.

7

MEXORO MINERALS LTD.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Nine Months Ended November 30, 2009
(Unaudited) (Expressed in U.S. Dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(a) Recent accounting pronouncements (continued)

(v)	Effective June 30, 2009, the Company adopted a new accounting standard for subsequent events, as codified in ASC 855-10. The update modifies the names of the two types of subsequent events either as recognized subsequent events (previously referred to in practice as Type I subsequent events) or non-recognized subsequent events (previously referred to in practice as Type II subsequent events). In addition, the standard modifies the definition of subsequent events to refer to events or transactions that occur after the balance sheet date, but before the financial statements are issued (for public entities) or available to be issued (for nonpublic entities). It also requires the disclosure of the date through which subsequent events have been evaluated. The update did not result in significant changes in the practice of subsequent event disclosures, and therefore the adoption did not have a material impact on the Company’s financial statements.
(vi)	Effective January 1, 2009, the Company adopted an accounting standard update regarding the determination of the useful life of intangible assets. As codified in ASC 350-30-35, this update amends the factors considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under intangibles accounting. It also requires a consistent approach between the useful life of a recognized intangible asset under prior business combination accounting and the period of expected cash flows used to measure the fair value of an asset under the new business combinations accounting (as currently codified under ASC 850). The update also requires enhanced disclosures when an intangible asset’s expected future cash flows are affected by an entity’s intent and/or ability to renew or extend the arrangement. The adoption did not have a material impact on the Company’s financial statements.
(vii)	Effective January 1, 2009, the Company adopted a new accounting standard update regarding business combinations. As codified under ASC 805, this update requires an entity to recognize the assets acquired, liabilities assumed, contractual contingencies, and contingent consideration at their fair value on the acquisition date. It further requires that acquisition-related costs be recognized separately from the acquisition and expensed as incurred; that restructuring costs generally be expensed in periods subsequent to the acquisition date; and that changes in accounting for deferred tax asset valuation allowances and acquired income tax uncertainties after the measurement period be recognized as a component of provision for taxes. The adoption did not have a material impact on the Company’s financial statements.

(b) Accounting Estimates

The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and contingencies at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the year. Actual results may differ form those estimates.

8

MEXORO MINERALS LTD.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Nine Months Ended November 30, 2009
(Unaudited) (Expressed in U.S. Dollars)

3.	GOING CONCERN
	The accompanying financial statements have been prepared on a going concern basis. The Company has a history of operating losses and will need to raise additional capital to fund its planned operations. As at November 30, 2009, the Company had a working capital deficiency of $2,509,741 (February 28, 2009 — $4,657,260) and a cumulative loss during the development period of $43,338,026 (February 28, 2009 — $41,864,219). These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
	The Company intends to reduce its cumulative loss through the attainment of profitable operations from its investment in a Mexican mining venture (note 6). In addition, the Company has conducted private placements of convertible debt and common stock (note 11), which have generated a portion of the initial cash requirements of its planned Mexican mining ventures (note 6).
	In February 2009, the Company signed a definitive agreement with MRT to provide funding of up to $9,000,000 to the Company to initiate production at its Cieneguita property, complete a feasibility study as well as to continue the exploration of its properties.
	In July 2009, the Company signed a definitive agreement to sell its Guazapares project located in South western Chihuahua, Mexico to Paramount Gold de Mexico, SA de C.V., the Mexican subsidiary of Paramount Gold and Silver Corp. (“Paramount”) for a total consideration of up to $5.3 million. The sale is subject to satisfaction of various conditions precedent prior to closing. Payment for the properties is expected once the title of the claims has been re-registered in Paramount’s name with the Mining Bureau in Mexico.
	In September 2009, the Company entered into private placement subscription agreements for private placement of up to a total of 9,000,000 unregistered shares of the Company’s common stock with 100% warrant coverage at a purchase price of $0.20 per unit. In November 2009, the Company entered into an amendment to each of the private placement agreements to increase the maximum units to be sold to 12,500,000 unregistered shares of the Company’s common stock and increase the aggregate purchase price of the units to $2,500,000.

4. EQUIPMENT

	November 30,						February 28,
	2009						2009
			Accumulated		Net Book		Net Book
	Cost		Depreciation		Value		Value
Software	$	23,673	$	17,304	$	6,369	$	5,730
Machinery		278,066		74,852		203,214		193,097
Vehicles		102,156		73,073		29,083		56,456
Computers		27,752		22,497		5,255		9,751
Office equipment		16,296		4,908		11,388		10,866
	$	447,943	$	192,634	$	255,309	$	275,900

9

MEXORO MINERALS LTD.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Nine Months Ended November 30, 2009
(Unaudited) (Expressed in U.S. Dollars)

5. JOINT VENTURE WITH MRT

On February 12, 2009, the Company entered into a joint venture through a definitive agreement for development of Cieneguita project with MRT. The purpose of the joint venture is to put Cieneguita property into production. As per the agreement, MRT is to provide the necessary working capital to begin and maintain mining operations estimated to be $3,000,000. MRT will spend 100% of the funds in exchange for a 75% interest in the net cash flow from production. The agreement limits the mining of the mineralized material that is available from the surface to a depth of 15 meters or approximately 10% of the mineralized material found as of the date of the definitive agreement. The Company incurs no obligations to the joint venture’s creditors as the operations and working capital requirements are controlled by MRT. Accordingly, the Company’s share of income and expenses are reflected in these financial statements under the proportionate consolidation method.

6. MINERAL PROPERTIES

The Company incurred exploration expenses as follows in the nine months ended November, 2009:

							Encino		New
	Sahuayacan		Guazapares		Cieneguita		Gordo		Projects		Total
Drilling and sampling	$	152	$	—	$	78,369	$	—	$	—	$	78,521
Geological, geochemical, geophysics		4,099		44,730		46,630		—		1,015		96,474
Land use permits		3,778		4,849		6,913		2,826		—		18,366
Automotive		—		446		—		—		—		446
Travel		7,160		217		14,382		—		—		21,759
Consulting		25,976		8,199		111,019		—		—		145,194
Equipment		2,426		—		2,893		—		—		5,319
General		11,461		20,141		22,917		152		—		54,671
	$	55,052	$	78,582	$	283,123	$	2,978	$	1,015	$	420,750

The Company incurred exploration expenses as follows in the nine months ended November 30, 2008:

	Cieneguita								Encino			New
	Operations		Sahuayacan		Guazapares		Cieneguita		Gordo			Projects		Total
Drilling and sampling	$	—	$	—	$	370,660	$	2,008,668	$	—		$	—	$	2,379,328
Geological, geochemical, geophysics		—		—		127,881		368,613		—			46,720		543,214
Land use permits		50		110,437		45,550		117,785		(1,561	)		—		272,261
Automotive		246		—		3,247		8,143		—			—		11,636
Travel		658		304		33,663		30,687		202			—		65,514
Consulting		12,314		—		149,471		153,793		—			—		315,578
Equipment		104		—		22,413		22,378		—			—		44,895
General		8,308		6,685		85,740		221,395		507			—		322,635
	$	21,680	$	117,426	$	838,625	$	2,931,462	$	(852	)	$	46,720	$	3,955,061

10

MEXORO MINERALS LTD.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Nine Months Ended November 30, 2009
(Unaudited) (Expressed in U.S. Dollars)

6. MINERAL PROPERTIES (CONTINUED)

Since May 2004, the Company has held interests in gold 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 in the name of Sunburst de Mexico. On August 25, 2005, the Company entered into property agreements with MRT, which provided Sunburst de Mexico options to purchase the mineral concessions of the Cieneguita and Guazapares properties and the right of refusal on three Encino Gordo properties. The Company also entered into an exploration and sale agreement, in October 2006, with Minera Emilio for the mineral concessions of the Sahuayacan 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 operator’s agreement and share option agreement were subsequently cancelled when the Company and Sunburst de Mexico entered into a new contract with MRT as described below under Encino Gordo property.

In November 2008, the Company signed a letter of intent and on February 12, 2009, a definitive agreement with MRT to initiate production at its Cieneguita property, complete a feasibility study and to continue the exploration of its properties. Under the agreement, MRT and Mexoro’s wholly owned subsidiary Sunburst Mining de Mexico will form a new Mexican joint venture company for the purpose of putting Cieneguita property into production.

The material provisions of the property agreements are as follows:

Cieneguita

MRT assigned to Sunburst de Mexico, with the permission of the owner of the Cieneguita property, 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 and the contract was extended.

The Company has the obligation to pay a further $120,000 per year for 13 years and the balance of the payments in the 14th year, until the total amount of $2,000,000 is paid. The Company renegotiated the payment due May 6, 2007, to $60,000 payable on November 6, 2007, which was paid, and the balance of $60,000 was paid on December 20, 2007. The Company paid $60,000 on May 12, 2008 of the $120,000 due on May 6, 2008, and the balance was paid in June 2008. The Company made the 2009 payments in 4 equal payments; $30,000 in May, $30,000 in June, $30,000 in September and $30,000 in November. The Company is not in default in its payments.

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.

11

MEXORO MINERALS LTD.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Nine Months Ended November 30, 2009
(Unaudited) (Expressed in U.S. Dollars)

6. MINERAL PROPERTIES (CONTINUED)

On February 12, 2009 the Company entered into a definitive agreement for development of Cieneguita project with Minera Rio Tinto (“MRT”), a private Mexican corporation whose president was a former president of our Company. The definitive agreement covers project financing of up to $9,000,000. The major points of the agreement are as follows:

(i) MRT and/or its investors will subscribe for up to $1 million of a secured convertible debenture at 8% interest (payable in stock or cash). The debenture is convertible into units at $0.60 per unit. Each unit comprises 2 common shares and 1 warrant. Each warrant is exercisable at $0.50 per share for a period of 3 years. The funds from the placement will be used for continued exploration of the Company’s properties and general working capital.

(ii) MRT is to provide the necessary working capital to begin and maintain mining operations estimated to be $3,000,000 used for the purpose of putting the Cieneguita property into production. MRT will spend 100% of the funds in exchange for a 75% interest in the net cash flow from production. The agreement will limit the mining to the mineralized material that is available from surface to a depth of 15 meters or approximately 10% of the mineralized material found to date.

(iii) MRT will spend up to $5 million to take the Cieneguita property through the feasibility stage. In doing so, MRT will earn a 60% interest in Mexoro’s rights to the property. After the expenditure of the $5 million all costs will be shared on a ratio of 60% to MRT and 40% to Mexoro. If the Company elects not to pay its portion of costs after the $5 million has been spent, the Company’s position shall revert to a 25% carried interest on the 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 eight of the Guazapares property concessions upon payment of $910,000. The total payments for the Company to acquire and retain 100% ownership of all eight concessions are as follows: November 30, 2005 — $100,000 (this payment date was extended – see below), October 31, 2006 — $60,000 (this payment date was extended to February 28, 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.

On September 19, 2007, Sunburst de Mexico, Mexoro and MRT entered into an agreement to defer any and all property payments regarding Guazapares that were due by December 31, 2007 owing to MRT, 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.

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

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

In June 2009, the Company signed a definitive agreement to sell its Guazapares project located in south western Chihuahua, Mexico to Paramount Gold de Mexico, SA de C.V., the Mexican subsidiary of Paramount. The sale is subject to satisfaction of various conditions precedent prior to closing. Payment for the properties is expected once the title of the claims have been re-registered in Paramount’s name with the Mining Bureau in Mexico. Paramount has deposited $3,700,000 in an escrow fund to buy the properties.

12

MEXORO MINERALS LTD.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Nine Months Ended November 30, 2009
(Unaudited) (Expressed in U.S. Dollars)

6.	MINERAL PROPERTIES (CONTINUED)
	San Francisco (Guazapares)
	As per the agreement, the due dates for all payments for the ownership of Guazapares have been deferred with the property owners for a period of 37 months from the closing date. Sunburst is required to make monthly payment of $6,000 plus $900 in taxes for 36 months commencing on July 20, 2009 and ending on June 10, 2012 for deferment from the escrow fund. 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. The payments are: $20,000 on June 25, 2006 (paid); $30,000 on June 25, 2007 (paid); and $40,000 on June 25, 2008 (paid).
	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.
	In June 2009, Paramount made the $250,000 payment to Minera Rachasa and acquired the San Francisco concessions as part of the definitive agreement to acquire the Guazapares project.
	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 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: $50,000 on January 15, 2008 (this payment was deferred to January 31, 2008 and paid) and $50,000 on January 15, 2009 (overdue).
	In June 2009, Mexoro assigned the option to acquire San Antonio concessions to Paramount as part of the definitive agreement to acquire the Guazapares project.
	Encino Gordo
	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 the 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.

13

MEXORO MINERALS LTD.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Nine Months Ended November 30, 2009
(Unaudited) (Expressed in U.S. Dollars)

6. MINERAL PROPERTIES (CONTINUED)

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. 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%;

(c) 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;

(d) 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

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

Sunburst de Mexico purchased two of the Encino Gordo concessions from MRT for a price of 1,000 pesos (approximately US$100), and MRT assigned to Sunburst de Mexico a first right of refusal to acquire three additional Encino Gordo concessions. 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 ($20,000 of this payment was made on January 3, 2008 and the balance was paid on February 29, 2008), $75,000 on December 31, 2008 (the Company was in default). In August 2009, the Company decided to surrender the Encino Gordo 2 mining concession and absolved itself of any further obligations relating to this concession.

Sahuayacan

On June 21, 2006, Sunburst de Mexico entered into an exploration and sale option agreement of mining concessions with Minera Emilio, S.A. de C.V. (“Minera Emilio”) for mineral concessions of the Sahuayacan Property. Minera Emilio granted the Company the exclusive right to conduct exploration on the Sahuayacan 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 July 21, 2008 for a total of $42,000 (paid); and $5,000 per month effective August 21, 2008 to July 21, 2011 (all payments until October 2009 have been made) for a total of $180,000 until the balance of the total $282,000 is paid (36 months).

Segundo Santo Nino (Sahuayacan)

On May 15, 2006, Sunburst de Mexico entered into an exploration contract with Jose Maria Rascon and Sabino Amador Rascon Polanco and, on November 20, 2007, Sunburst de Mexico entered into an exploration contract with Rene Muro Lugo (all three representatives constitute the “Concessionaires”) for the Segundo Santo Nino concession on the Sahuayacan property. Each concession representative owns 33.3% of the total Segundo Santo Nino title. The Company must pay the Concessionaires a total of $255,000 for this concession. As of August 31, 2009, the Company paid $135,000 of the payments required until November 13, 2009. The remaining payment is due on May 15, 2010 ($120,000).

14

MEXORO MINERALS LTD.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Nine Months Ended November 30, 2009
(Unaudited) (Expressed in U.S. Dollars)

6. MINERAL PROPERTIES (CONTINUED)

La Maravilla (Sahuayacan)

On January 25, 2008, Sunburst de Mexico entered into an exploration and option agreement with Maria Luisa Wong Madrigal for mineral concessions under the “La Maravilla” project on the Sahuayacan property. The Company must pay Maria Luisa Wong Madrigal $600,000 to acquire 100% of this concession as follows: $33,000 – January 25, 2008 (paid); $33,000 – July 25, 2008 (paid); $34,000 – January 25, 2009 (this payment was made in September 2009); $33,000 – December 11, 2009; $34,000 – June 11, 2010, $33,000 – December 11, 2010 and; $400,000 – June 11, 2011.

7. PROMISSORY NOTES

As at November 30, 2009, the Company had $775,299 (November 30, 2008 — $1,180,172) of promissory notes outstanding, comprising the following:

(a) During the twelve months ended February 29, 2008, the Company converted accounts payable of $465,994 (Swiss Franc (“CHF”) 565,000) into promissory notes. The Company had an implied obligation to pay the accounts payable in Swiss Francs as the funds to pay the expense came from Swiss investors in CHF. Accordingly, the promissory notes were issued in CHF. The notes consist of one warrant for each CHF 5.00 of notes issued, exercisable at $1.00 each. The principal and interest on the notes became due and payable on April 30, 2008. The Company has not repaid the promissory notes as of November 30, 2009 and is in default. The principal and interest on the notes due and payable as of November 30, 2009 was $704,050. The interest rate payable during the default period is 12%.

(b) $71,249 of promissory notes is due to related parties and their associates that bear no interest and have no terms of repayment (14).

8. CONVERTIBLE DEBENTURES

On May 5, 2008, the Company signed a LOI to enter into a strategic alliance with Paramount Gold and Silver Corp. (“Paramount”). The agreement called for Paramount to invest a minimum of $4 million and maximum of $6 million into the Company, fixed at a price of $0.50 per unit by June 23, 2008. The investment timeline was extended until July 21, 2008, and then to August 5, 2008. On August 6, 2008 Mexoro terminated the LOI with Paramount as Paramount did not meet the terms of the agreement.

The Company issued secured convertible debentures to Paramount as follows:

On May 9, 2008, the Company issued $500,000 in convertible debentures to Paramount, with a maturity date of one year, accruing interest at 8% per year payable in arrears and convertible at the option of the holder.

On June 10, 2008, the Company issued $70,000 in convertible debentures to Paramount, with a maturity date of one year, accruing interest at 8% per year payable in arrears and convertible at the option of the holder.

On June 25, 2008, the Company issued $300,000 in convertible debentures to Paramount, with a maturity date of one year, accruing interest at 8% per year payable in arrears and convertible at the option of the holder.

On July 11, 2008, the Company issued $500,000 in convertible debentures to Paramount, with a maturity date of one year, accruing interest at 8% per year payable in arrears and convertible at the option of the holder.

15

MEXORO MINERALS LTD.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Nine Months Ended November 30, 2009
(Unaudited) (Expressed in U.S. Dollars)

8. CONVERTIBLE DEBENTURES (CONTINUED)

Paramount had the option to convert all or a portion of the principal amount of the debenture into units consisting of one share of our common stock and half a warrant to purchase one share of our common stock. Subject to certain adjustments upon the occurrence of various capital reorganizations and other events, the units were convertible at $0.50 per unit for a total of up to 2,740,000 shares of common stock and up to 1,370,000 warrants at $0.75 to purchase shares of common stock (the “Warrants”). The Warrants would have had a term of four years if Paramount had converted the debenture or the portion of the debenture covering those warrants.

The value assigned to the beneficial conversion feature of the convertible debentures issued to Paramount was $416,200. The fair value of the Warrants attached to the convertible debentures as discussed above was estimated to be $423,000. The fair value of the Warrants was estimated at the date of grant using the Black-Scholes option pricing model using the following weighted average assumptions:

	2008
Expected volatility		71.48-110.72	%
Weighted-average volatility		71.48-110.72	%
Expected dividend rate		—
Expected life of warrants in years		4
Risk-free rate		2.30-3.41	%

The weighted average fair value of the warrants was $0.30 per warrant, while the weighted average stock price on the dates granted was $0.50. Stock-based compensation for these warrants of $423,000 was being amortized over the one year term of the convertible debentures starting on May 9, 2008.

On March 19, 2009, the Company entered into an agreement with Paramount restructuring its payment terms on the three outstanding secured convertible debentures held by Paramount. Under the terms of the agreement, the Company paid Paramount $1,000,000 to cancel two debentures held by them, one issued on May 9, 2008 for $500,000 and another issued on July 11, 2008 for $500,000.

The Company also amended a debenture issued to them on June 18, 2008 in the face amount of $370,000. The amount of that debenture was increased to $521,047, which, among other things, includes interest accrued on all three debentures to March 31, 2009. The Company was obligated to make a payment on March 31, 2009 on this debenture in the amount of $393,547 and the balance of $127,500 was to be re-paid on April 30, 2009. This remaining amount of $127,500 was interest free as long as the debenture remained in good standing. On March 31, 2009, the Company paid back $300,000. As per the agreement, the remaining amount of $221,047 accrued interest at 8% per year payable monthly, in arrears on the 10^th day of each month. On July 8, 2009, the Company entered into a definitive agreement with Paramount to sell the Guazapares project. As part of the agreement, Paramount waived off the interest charges due on the convertible debenture (see note 17).

As part of a restructuring fee, the Company issued to Paramount 150,000 shares of common stock. As part of the agreement, Paramount has released its security interest on the Company’s Cieneguita properties. The Company also repaid the amended debenture of $221,047 on October 8, 2009, from the escrow funds for the payment of Guazapares properties (note 6). The Company recognized a loss of $196,045 on the liquidation of the debentures with Paramount. Upon receipt of this payment from the Company, Paramount is obligated to release its security interests in the Company’s assets, including its security interests in the Company’s Sahuayacan, Guazapares and Encino Gordo properties.

16

MEXORO MINERALS LTD.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Nine Months Ended November 30, 2009
(Unaudited) (Expressed in U.S. Dollars)

8. CONVERTIBLE DEBENTURES (CONTINUED)

The value assigned to the beneficial conversion feature of the convertible debentures issued to Paramount ($221,047) was $nil. The fair value of the Warrants attached to the convertible debentures as discussed above was estimated to be $48,500. The fair value of the warrants was estimated at the date of grant using the Black-Scholes option pricing model using the following weighted average assumptions:

	2009
Expected volatility		110.36	%
Weighted-average volatility		110.36	%
Expected dividend rate		—
Expected life of warrants in years		3-4
Risk-free rate		1.21-1.45	%

The weighted average fair value of the warrants was $0.75 per warrant, while the weighted average stock price on the dates granted was $0.35. Stock-based compensation for these warrants of $48,500 was being amortized over the one year term of the convertible debentures starting on March 19, 2009.

In March of 2009, the Company approved the issuance of $1,500,000 of Convertible Debenture to four investors, of which $1,300,000 was received in cash and used to liquidate the debentures issued to Paramount (former debenture holders) during the period of May 2008 to July 2008. Additionally, the Company converted $100,000 of accounts payable into the convertible debenture and received $100,000 in cash for the remaining debenture in October, 2009. The debenture was due in one year from the date of issuance and accrued interest at 15% per annum, to be paid quarterly in either cash or stock of the Company valued at a 20% discount of the 20 day trading average prior to the date of payment. The holders had several options to convert the debentures. On July 24, 2009, all of the holders of the Convertible Debentures agreed to irrevocably convert the debentures into a 10% ownership interest in the Company’s Cieneguita mining project. The Company has valued the Cieneguita project at approximately $15,000,000. The 10% ownership interest in the Cieneguita project thus approximates the value of the debentures to be converted.

As consideration for the debentures, the Company granted a security interest in its Cieneguita properties to these debenture holders.

On October 12, 2009, the debentures were converted into 10% ownership interest in Cieneguita. The Company recognized a gain on sale of assets in the amount of $1,500,000 for the nine months ended November 30, 2009.

During the nine months ended November 30, 2009, the Company issued $273,510 in convertible debenture to MRT as part of the $1,000,000 subscription of secured convertible debenture as per the definitive agreement for development of Cieneguita project (note 6). Under the convertible debenture agreement, the Company also issued one warrant for each $0.60 of convertible debentures issued (note 6). The warrants can be exercised at any time at a price of $0.50 for 3 years.

The value assigned to the beneficial conversion feature of the convertible debentures issued to MRT was $71,866. The fair value of the Warrants attached to the convertible debentures as discussed above was estimated to be $51,800. The fair value was estimated at the date of the grants using the Black-Scholes option pricing model with the following weighted average assumptions:

	2009
Expected volatility		108.54-110.36	%
Weighted-average volatility		108.54-110.36	%
Expected dividend rate		—
Weighted-average expected life of warrants in years		3
Risk-free rate		1.36-1.45	%

17

MEXORO MINERALS LTD.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Nine Months Ended November 30, 2009
(Unaudited) (Expressed in U.S. Dollars)

8. CONVERTIBLE DEBENTURES (CONTINUED)

The weighted average fair value of the warrants was $0.19 per warrant, while the weighted average stock price on the dates granted was $0.32. Stock-based compensation for these warrants of $51,800 is being amortized till December 31, 2010.

In November 2009, MRT converted $1,000,000 debenture into units of $0.60 each. The Company recognized a gain on extinguishment of debenture of $285,825.

9. LOANS PAYABLE

As at November 30, 2009, there were loans payable in the amount of $699,408, which are due in the next 12 months, of which, $11,054 have no repayment terms. $649,637 of loans relates to deferred expense disbursements from the money deposited in the escrow fund by Paramount for the sale of Guazapares properties.

The remainder of the loans is repayable in monthly instalments of $5,692, including interest ranging from 5.3% to 15.6% per annum, and is partially secured by specified automotive equipment.

10. 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.

11. COMMON STOCK

In November 2009, the Company received subscription proceeds of $65,000 and issued 325,000 shares of common stock in a private placement. The subscribers to the subscription proceeds have agreed to purchase one unit for each $0.20 of subscription proceeds. Each unit consists of one share of Company’s common stock and one warrant each exercisable at $0.30, which expire in four years.

In November 2009, MRT converted the $1,000,000 debentures into units of $0.60 each. Each unit comprises 2 common shares and 1 warrant. Each warrant is exercisable at $0.50 per share for a period of 3 years. The Company issued 3,333,333 shares and 1,666,667 warrants to a designee of MRT.

In October 2009, the Company received subscription proceeds of $20,000 and issued 100,000 shares of common stock in a private placement. The subscribers to the subscription proceeds have agreed to purchase one unit for each $0.20 of subscription proceeds. Each unit consists of one share of Company’s common stock and one warrant each exercisable at $0.30, which expire in four years.

In September 2009, the Company received subscription proceeds of $40,000 and issued 200,000 shares of common stock in a private placement. The subscribers to the subscription proceeds have agreed to purchase one unit for each $0.20 of subscription proceeds. Each unit consists of one share of Company’s common stock and one warrant each exercisable at $0.30, which expire in four years.

18

MEXORO MINERALS LTD.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Nine Months Ended November 30, 2009
(Unaudited) (Expressed in U.S. Dollars)

11. COMMON STOCK (CONTINUED)

In July 2009, the Company received subscription proceeds of $100,000 and issued 500,000 shares of common stock in a private placement. The subscribers to the subscription proceeds have agreed to purchase one unit for each $0.20 of subscription proceeds. Each unit consists of one share of Company’s common stock and one warrant each exercisable at $0.30, which expire in four years.

In June 2009, the Company converted $622,500 of debt into subscription proceeds and issued 2,075,000 common shares. The subscribers to the subscription proceeds have agreed to purchase one unit for each $0.60 of debt. Each unit consists of two shares of Company’s common stock and one warrant each exercisable at $0.50, which expires on December 31, 2010.

In June 2009, the Company issued 1,000,000 shares of common stock to an officer of the Company as bonus.

In May 2009, the Company converted $250,000 of debt into subscription proceeds and issued 833,334 common shares. The subscribers to the subscription proceeds have agreed to purchase one unit for each $0.60 of debt. Each unit consists of two shares of Company’s common stock and one warrant each exercisable at $0.50, which expires on December 31, 2010.

In May 2009, the Company issued 42,837 shares for $13,500 of investors’ relations services as per the agreement.

In April 2009, the Company issued 2,250,000 shares under an escrow agreement as security against convertible debentures issued.

In March and April 2009, the Company issued 700,000 shares pursuant to amended convertible debenture agreement and financing arrangements.

In February 2009, the Company issued 400,000 shares of common stock to an officer of the Company as bonus for the 500,000 ounce gold discovery.

In November 2008, the Company issued 50,000 shares of common stock to an officer of the Company as bonus for the 500,000 ounce gold discovery.

In November 2008, the Company issued 500,000 shares of common stock to the president of the Company as a signing bonus.

In October, 2008, the Company converted subscription proceeds of $4,943 into 9,886 shares of common stock. The subscribers to the subscription proceeds have agreed to purchase one unit for each $1.00 of subscription proceeds. Each unit consists of two shares of Company’s common stock and one warrant each exercisable at $0.75, which expire in four years.

In October 2008, the Company issued 100,000 shares of common stock to an officer of the Company as bonus for the 500,000 ounce gold discovery.

In October 2008, the Company converted $151,866 of debt into 415,000 shares of common stock.

In September 2008, the Company converted $835,514 of debt into subscription proceeds and issued 1,671,028 common shares. The subscribers to the subscription proceeds have agreed to purchase one unit for each $1.00 of debt. Each unit consists of two shares of Company’s common stock and one warrant each exercisable at $0.75, which expire in four years.

19

MEXORO MINERALS LTD.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Nine Months Ended November 30, 2009
(Unaudited) (Expressed in U.S. Dollars)

11. COMMON STOCK (CONTINUED)

In September, 2008, the Company received subscription proceeds of $170,000 and issued 425,000 shares of common stock in a private placement. The subscribers to the subscription proceeds have agreed to purchase one unit for each $1.00 of subscription proceeds. Each unit consists of two shares of Company’s common stock and one warrant each exercisable at $0.75, which expire in four years.

In September 2008, the Company converted $42,800 of debt into 107,000 shares of common.

In August 2008, the Company converted $142,508 (MXN 1,449,989) of promissory notes into subscription proceeds and issued 280,000 common shares. The subscribers to the subscription proceeds have agreed to purchase one unit for each $1.00 of debt. Each unit consists of two shares of the Company’s common stock and one warrant each exercisable at $0.75, which expire in four years.

In July 2008, the Company converted $67,424 of debt into 150,000 shares of common.

In June 2008, the Company converted $60,000 of debt into subscription proceeds and issued 120,000 common shares. The subscribers to the subscription proceeds have agreed to purchase one unit for each $1.00 of debt. Each unit consists of two shares of Company’s common stock and one warrant each exercisable at $0.75, which expire in four years.

In June, 2008, the Company issued 9,885 shares of common stock in a private placement.

In May 2008, the Company converted $535,500 of debt into subscription proceeds and issued 1,071,000 common shares. The subscribers to the subscription proceeds have agreed to purchase one unit for each $1.00 of debt.

On April 25, 2008, stock subscriptions of $330,000 were converted into 330,000 shares of common stock.

In the year ended February 29, 2008, the Company issued 1,174,000 shares of common stock on the exercise of 1,174,400 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.

In the second and third quarters of the year ended February 29, 2008, 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 $0.75 per share. The warrants were to expire on December 31, 2007.

In the first two quarters of the year ended February 29, 2008, 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.

On April 25, 2008, stock subscriptions of $330,000 were converted into 330,000 shares of common stock.

In fiscal 2008, the Company issued 1,174,000 shares of common stock on the exercise of 1,174,400 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.

In the second and third quarter of fiscal 2008, 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 $0.75 per share. The warrants were to expire on December 31, 2007.

In the first two quarters of fiscal 2008, 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.

20

MEXORO MINERALS LTD.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Nine Months Ended November 30, 2009
(Unaudited) (Expressed in U.S. Dollars)

12. STOCK COMPENSATION PROGRAM

On March 18, 2009, the board of directors approved the granting of stock options according to the 2009 Nonqualified Stock Option Plan (“2009 Option Plan”) whereby the board is authorized to grant to employees and other related persons stock options to purchase an aggregate of up to 6,000,000 shares of the Company’s common stock. Subject to the adoption of the 2009 Option Plan, the options were granted and vest, pursuant to the terms of the 2009 Option Plan, in three equal instalments, with the first instalment vesting at the date of grant, the second instalment vesting September 18, 2009 and the last instalment vesting March 18, 2010.

In the nine months ended November 30, 2009, the Company awarded 1,150,000 options to purchase common shares (2008 – 1,400,000) and recorded stock-based compensation expense for the vesting options of $800,178 (2008 — $472,420). The following weighted average assumptions were used for the Black-Scholes option-pricing model to value stock options granted in 2009 & 2008:

	2009			2008
Expected volatility		107.27%-109.46	%		62%-72	%
Weighted-average volatility		107.56	%		72.15	%
Expected dividend rate		—			—
Expected life of options in years		10			2-10
Risk-free rate		3.42	%		2.82%-3.86	%

There were no capitalized stock-based compensation costs at November 30, 2009 or November 30, 2008.

The summary of option activity under the 2009 Option Plan as of November 30, 2009, and changes during the period then ended, is presented below:

						Weighted-
	Weighted					Average
	Average					Remaining		Aggregate
	Exercise		Number of			Contractual		Intrinsic
Options	Price		Shares			Term		Value
Balance at March 1, 2009	$	0.56		4,835,000
Options granted		0.33		1,150,000
Options exercised		—		—
Options cancelled/forfeited	$	0.65		(285,000	)
Balance at November 30, 2009	$	0.51		5,700,000			8.26	$	613,075
Exercisable at November 30, 2009	$	0.64		3,486,668			7.59	$	232,046

The weighted-average grant-date fair value of options granted during the nine months ended November 30, 2009 and November 30, 2008 was $0.33 and $0.29, respectively.

A summary of the status of the Company’s nonvested options as of November 30, 2009, and changes during the nine months ended November 30, 2009, is presented below:

21

MEXORO MINERALS LTD.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Nine Months Ended November 30, 2009
(Unaudited) (Expressed in U.S. Dollars)

12. STOCK COMPENSATION PROGRAM (CONTINUED)

				Weighted-
				average
				Grant-Date
Non-vested options	Shares			Fair Value
Nonvested at February 28, 2009		2,502,499		$	0.28
Granted		1,150,000			0.33
Vested		(1,334,167	)		0.55
Cancelled/forfeited		(105,000	)		0.40
Nonvested at November 30, 2009		2,213,332		$	0.29

As of November 30, 2009, there was an estimated $536,477 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the 2007, 2008 and 2009 nonqualified stock option plans. That cost is expected to be recognized over a weighted-average period of approximately 1.57 years.

13. WARRANTS

As at November 30, 2009, the Company had a total of 15,518,900 (February 28, 2009 – 7,102,890) 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 15,518,900 shares of common stock in the event that these warrants are exercised.

During the nine months ended November 30, 2009, the Company received $nil from warrants exercised.

The outstanding warrants include 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. All the warrants were fully vested upon issuance. The Series E Warrants will become exercisable only when the Series D Warrants have been fully exercised. Unless terminated earlier as a result of failure to vest, the Series D and Series E Warrants will each expire on December 31, 2009.

The Company had issued 2,917,500 warrants exercisable at $1.00 each pursuant to the issuance of convertible debentures. These warrants expired on April 30, 2008.

The Company had issued 375,000 warrants exercisable at $1.00 each pursuant to the issuance of a private placement unit offering. These warrants expired on April 30, 2008.

22

MEXORO MINERALS LTD.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Nine Months Ended November 30, 2009
(Unaudited) (Expressed in U.S. Dollars)

13. WARRANTS (CONTINUED)

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

				Weighted
	Number of			Average
	Warrants			Exercise Price
Balance, February 29, 2008		4,486,100		$	1.17
Issued		4,989,890			0.73
Cancelled		(2,043,100	)		1.00
Exercised		(330,000	)		1.00
Balance, February 28, 2009		7,102,890		$	1.03
Issued		10,912,500			0.46
Cancelled		(2,496,490	)		0.91
Exercised		—			—
November 30, 2009		15,518,900		$	0.65

As at November 30, 2009, the following share purchase warrants were outstanding:

Number of
Warrants		Exercise Price		Expiry Date
	166,666	$	0.30	May 8, 2012
	1,125,000	$	0.30	July 23, 2011 to November 5, 2011
	1,300,000	$	0.36	July 23, 2011
	200,000	$	0.40	March 24, 2012
	100,000	$	0.43	September 8, 2010
	1,454,167	$	0.50	December 31, 2010
	5,000,000	$	0.50	December 24, 2012
	1,666,667	$	0.50	November 5, 2012
	200,000	$	0.65	June 30, 2012
	1,793,400	$	0.75	April 2012 to August, 2013
	113,000	$	1.00	January 31, 2010
	1,000,000	$	1.25	December 31, 2009
	200,000	$	1.30	June 30, 2012
	1,000,000	$	1.50	December 31, 2009
	200,000	$	2.00	June 30, 2012
	15,518,900

23

MEXORO MINERALS LTD.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Nine Months Ended November 30, 2009
(Unaudited) (Expressed in U.S. Dollars)

14. RELATED PARTY TRANSACTIONS

For the nine months ended November 30, 2009, the Company paid or accrued management fees of $179,080 (November 30, 2008 — $103,842) to certain officers and directors. The Company also paid or accrued $14,223 (November 30, 2008 — $8,299) to certain officers and directors for travel, office and other related expenses.

As at November 30, 2009, accounts payable of $340,578 (November 30, 2008 — $7,000) was owing to directors and officers of the Company and $16,832 (November 30, 2008 — $59,935) was owing to a company controlled by a director. In addition, promissory notes of $9,960 (November 30, 2008 — $nil) were owed to a company controlled by a director (note 7).

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

15. SUPPLEMENTAL CASH FLOW INFORMATION

	Nine		Nine		Period From
	Months		Months		Inception of
	Ended		Ended		Development Stage
	November		November		(March 1, 2004) to
	30, 2009		30, 2008		November 30, 2009
Interest paid	$	—	$	36,034	$	280,053
Common stock issued on conversion of debt		872,500		878,000		4,193,000
Common stock issued on settlement of notes payable		1,250,000		2,936,028		3,133,322
Common stock issued for interest costs		82,500		—		82,500
Common stock issued for financing costs		145,000		—		145,000
Common stock issued for mineral property costs		—		—		580,000
Common stock issued for bonuses		280,000		650,000		512,750
Shares issued for services	$	13,500	$	67,424	$	365,590

16. COMMITMENTS

On July 1, 2008, the Company entered into an investor relations agreement with Vastani Company (“Vastani”), whereby Vastani will act as an investor relationship advisor to the Company. The Company has agreed to pay a monthly retainer of €20,000 and 1,000,000 warrants to purchase shares of the Company’s common stock. This includes 250,000 warrants at a price of $0.65 per share vesting on signing, 250,000 warrants at an execution price of $1.30 per share vesting after 90 days, 250,000 warrants at a price of $2.00 per share vesting after 120 days and 250,000 warrants at a price of $2.75 per share vesting after 180 days. The warrants expire on June 30, 2012.

On February 10, 2009, the Company entered into a consultancy agreement with Consulting for Strategic Growth 1, Ltd. for investor relation services. The Company will pay $3,000 per month in cash and $4,500 in shares of the Company’s common stock for the consultant’s services. The term of the agreement ends on August 10, 2009.

On March 3, 2009, the Company entered into a consulting agreement with Dusford Overseas Investments, Ltd., a British Virgin Islands company (“Dusford”). One of the Company’s former non-executive directors, Steven Sanders, is a principal of Dusford. Under the agreement, Dusford will provide the Company with a variety of services including financial public relations, strategic planning, acquisition consulting and assistance in securing equity or debt financing. The agreement has an initial term of 12 months beginning on the effective date of March 3, 2009, but the Company has the right to terminate the Agreement early with 30 days’ notice.

24

MEXORO MINERALS LTD.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Nine Months Ended November 30, 2009
(Unaudited) (Expressed in U.S. Dollars)

16. COMMITMENTS (CONTINUED)

Under the terms of the Agreement, the Company paid Dusford a signing fee of 200,000 restricted shares and is paying a monthly fee of $10,000 (payable in shares or cash). The Company will issue Dusford a warrant which entitles Dusford to purchase one million shares of the Company’s common stock at $0.40 per share for three years. The warrant vests and becomes issuable at the close of any financings introduced by Dusford in increments of 100,000 shares for every $100,000 raised.

In June 2009, the Company cancelled its consulting agreements with Vastani Company, Consulting for Strategic Growth 1, Ltd. and Dusford Overseas Investments, Ltd.

17. SUBSEQUENT EVENTS

Entry into a Material Definitive Agreement

On December 23, 2009, the Company entered into an Acknowledgement and Agreement with Minera Rio Tinto, S.A. de C.V. (“MRT”), Mario Ayub, one of the Company’s directors and a principal of MRT, and Marje Minerals SA, an entity formed by certain of the participants in the Company’s March 2009 debenture financing. The participants in the Company’s March 2009 debenture financing irrevocably converted their $1.5 million in outstanding debentures into a 10% ownership interest in the Company’s Cieneguita property, along with a 10% interest in the net cash flows from the mining production that is available from the surface of the Cieneguita property to a depth of fifteen meters (the “First Phase Production”). The Acknowledgement and Agreement confirms the prior ownership of the debentures, the irrevocable conversion of the debentures and the ownership interest in the Cieneguita property held by the debenture financing participants.

Under the Acknowledgement and Agreement, MRT and Mr. Ayub agreed to sell the Company an aggregate 4% ownership interest in the Cieneguita property and a 4% ownership interest in the net cash flows from the First Phase Production for $550,000. In a transaction unrelated to the Company, the participants in the debenture financing formed a new entity, Marje Minerals SA, and contributed their remaining 6% ownership interest in the Cieneguita property and their remaining 6% ownership interest in the net cash flows from the First Phase Production to this entity.

In addition, on December 23, 2009, Mexoro entered into Amendment No. 1 to the Development Agreement with MRT (the “Amendment”). The Company previously entered into a development agreement with MRT in February 2009 (the “Development Agreement”), in which MRT agreed to invest up to $9 million to complete a feasibility study for and to commence First Phase Production at the Cieneguita property for a 60% ownership interest in the Cieneguita property and a 75% ownership interest in the net cash flows from the First Phase Production. In the Amendment, we agreed to reduce MRT’s total investment commitment by $1 million. In exchange, MRT transferred to the Company a 6% ownership interest in the Cieneguita property and a 1% ownership interest in the net cash flows from the First Phase Production.

As a result of the Acknowledgement and Agreement and the Amendment, the ownership interest in the Cieneguita Project and the net cash flows from the First Phase Production are held by Mexoro, MRT and Marje Minerals as follows:

				Net Cash Flow			Net Cash Flow
				Interest			Interest
				From First Phase			Following First Phase
Holder	Ownership Percentage			Production			Production
MRT		54	%		74	%		54	%
Marje Minerals		6	%		6	%		6	%
Mexoro		40	%		20	%		40	%

25

MEXORO MINERALS LTD.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Nine Months Ended November 30, 2009
(Unaudited) (Expressed in U.S. Dollars)

17. SUBSEQUENT EVENTS (CONTINUED)

Any additional costs for the First Phase Production and the feasibility study for the Cieneguita property, after MRT completes its required investment, will be shared by the Company, MRT and Marje Minerals on a pro-rata basis based on their respective ownership percentages. If any party does not pay its portion of the costs, then their ownership position in the Cieneguita property will be reduced by 1% for every $100,000 invested by the other owners. Mexoro’s ownership interest in the Cieneguita property, however, cannot be reduced below 25%. In addition, Mexoro has the right to cover Marje Minerals’ pro rata portion of costs if they fail to pay their portion of the costs. In return, the Company will receive 1% of Marje Minerals’ ownership position in the Cieneguita Project for every $100,000 the Company invests on their behalf.

26

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in thisForm 10-Q constitute “forward-looking statements”. These statements, which may be 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 such forward-looking statements. Such risks and uncertainties include those set forth under this Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in thisForm 10-Q and in ourForm 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”). These forward-looking statements represent beliefs and assumptions only as of the date of this report. We undertake no obligation 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 SEC, particularly our annual reports onForm 10-K, our quarterly reports onForm 10-Q and our current reports onForm 8-K.

Overview

We are a development stage company focused on mineral exploration and development activities in Mexico. Through our wholly owned Mexican subsidiary, Sunburst Mining de Mexico, S.A. de C.V., or Sunburst de Mexico, we are currently engaged in the exploration and development of three gold and silver projects, each made up of several mining concessions, located in the Sierra Madre region of the State of Chihuahua, Mexico. These projects are referred to as the Cieneguita Project, the Encino Gordo Project and the Sahuayacan Project. We previously had a fourth Project, known as the Guazapares Project, which we have agreed to sell pursuant to the terms of a definitive agreement, dated July 8, 2009, to Paramount Gold de Mexico, SA de C.V., the Mexican subsidiary of Paramount Gold and Silver Corp. (“Paramount”), for up to $5.3 million. As of the date of this report, we have engaged in the search for and extraction of mineral deposits but have not engaged in the exploitation of mineral deposits.

On September 21, 2009, we entered into private placement subscription agreements, as thereafter amended, with certain U.S. accredited investors and certain non-U.S. investors for the private placement of 12,500,000 unregistered shares of the common stock with 100% warrant coverage at a purchase price of $0.20 per unit (the “Private Placement”). The warrants have an exercise price of $0.30 per share, a two-year term and will not be exercisable until twelve months after their date of issuance. As of December 24, 2009, the Company has completed the sale of all of the unregistered shares, and the Company had received aggregate gross proceeds, prior to any expenses, from the Private Placement of $2,500,000.

In August 2009, we dropped one of our properties in the Encino Gordo concessions, Encino Gordo 2. Management determined that the property payments due to the concession holder were too expensive and we did not make the option payment at this time. There is currently no plan to try and negotiate the payments for this property.

In February 2009, we entered into a development agreement with MRT, which we amended in December 2009. Pursuant to the terms of the development agreement, as amended, MRT has agreed to invest up to $8 million to initiate the first phase of production and to complete a feasibility study. The first phase of production is limited to the mining of the mineralized material that is available from the surface to a depth of 15 meters (“First Phase Production”). In exchange, we assigned MRT an interest to 74% of the net cash flows from First Phase Production and a 54% ownership interest in the Cieneguita Project.

To fund our continued operations, we issued $1.5 million of convertible debentures in March 2009, of which an aggregate of $880,000 was issued to Mario Ayub, a director of Mexoro, and to his affiliated entity, MRT. Pursuant to the terms of the convertible debentures, the holders irrevocably converted the debentures into a 10% ownership interest in the Cieneguita Project and a 10% interest in the net cash flow from First Phase Production. In December 2009, Mario Ayub and MRT agreed to resell an aggregate 4% ownership interest in the Cieneguita Project back to us, along with 4% of the net cash flow from First Phase Production, in return for $550,000. In a private transaction not involving the Company, the other holders contributed their remaining 6% ownership interest in the Cieneguita Project to a newly formed entity, Marje Minerals SA.

27

As a result of our amended development agreement and our agreements with the debenture holders, the ownership interest in the Cieneguita Project and the net cash flows from the First Phase Production are held by the Company, MRT and Marje Minerals as follows:

				Net Cash Flow Interest			Net Cash Flow Interest
				From First Phase			Following First Phase
Holder	Ownership Percentage			Production (First 15 Meters)			Production (Beyond 15 Meters)
MRT		54	%		74	%		54	%
Marje Minerals		6	%		6	%		6	%
Mexoro		40	%		20	%		40	%

Any additional costs for the First Phase Production and the feasibility study for the Cieneguita Project, after MRT invests $8 million, will be shared by the Company, MRT and Marje Minerals on a pro-rata basis based on their respective ownership percentages in the Cieneguita Project.

The major terms of the development agreement with MRT and Marje Minerals are as follows:

• MRT purchased $1 million of secured convertible debentures at 8% interest (payable in stock or cash). The proceeds from this investment were used for continued exploration and development of the Cieneguita Project and general working capital. On November 5, 2009, MRT exercised its conversion rights on the debenture and a designee of MRT was issued 3,333,333 common shares and a warrant to purchase 1,666,667 shares of common stock at an exercise price of $0.50 per share.

• MRT agreed to provide the necessary working capital to begin and maintain mining operations, estimated to be $3 million, to put the first phase of the Cieneguita Project into production. In exchange for these funds, we assigned MRT an interest to 74% of the net cash flow from First Phase Production. The agreement limits the mining during First Phase Production to the mineralized material that is available from the surface to a depth of 15 meters.

• MRT committed to spend up to $4 million to take the Cieneguita Project through the feasibility stage. In doing so, we assigned MRT a 54% interest in our rights to the Cieneguita Project. After the expenditure of the $4 million, all costs will be shared on a pro rata ownership basis (i.e. 54% to MRT, 40% to the Company and 6% to Marje Minerals). If any party cannot pay its portion of the costs after the $4 million has been spent, then their ownership position in the Cieneguita Project will be reduced by 1% for every $100,000 invested by the other owners. Our ownership interest in the Cienguita Project, however, cannot be reduced below 25%. In addition, we have the right to cover Marje Minerals’ pro rata portion of costs if they cannot pay their portion of the costs. In return, we will receive 1% of Marje Minerals’ ownership position in the Cieneguita Project for every $100,000 we invest on their behalf.

• The MRT agreement was contingent on our repaying a debenture to Paramount Gold and Silver Corp. In March 2009, we repaid $1 million, or approximately two thirds of the debt, and Paramount released a security interest it had on the Cieneguita Project. In October 2009, we repaid the remaining amount of the debt, and Paramount released its security interests on the Sahuayacan, Guazapares and Encino Gordo properties.

Strategy

We are currently focused on mineral exploration and development activities in the Sierra Madre region of Chihuahua, Mexico. We have mineral concession rights at three projects in this region: Cieneguita, Encino Gordo and Sahuayacan, all of which are located near pre-existing operations of large mining corporations and have available mining and transportation infrastructures. Our strategy is to advance each of these projects to the drilling stage as aggressively as prudent financing will allow to determine the presence of gold, silver or other precious mineral reserves. If we are successful in doing so, we believe we can attract the attention of the existing mining companies already operating in the area or new mining companies to either enter into development agreements with us or to acquire the projects from us outright.

Our goal is to establish a pipeline of two new drill-stage or near-to-drill stage projects per year. Our proposed exploration and development program consists of four main components:

• Create a pipeline of quality properties providing a steady stream of new prospects and/or projects to explore, contract-out and/or enter into development agreements with another mining company.

• Identify and acquire at low cost (whenever possible) early to mid-stage properties in selected locations along the main gold-silver belts in Mexico.

• Focus on small to medium-sized gold and/or silver deposits (minimum deposits containing 500,000 ounces gold-equivalent).

• Target initially the Sierra Madre Occidental and Central Mexico regions, and potentially extend further south into Mexico and other countries if conditions and the project’s potential warrant such development.

28

The proposed exploration and development program is being undertaken by our exploration and development team using in-house knowledge along with the support and guidance of consultants with expertise in the region. We believe our existing management team and key advisors have the necessary exploration and mining expertise to locate, evaluate and bring mining properties to production.

Plan of Operation

Summary

Our business plan is to proceed with the exploration and development of our Mexican mineral properties to determine whether they contain commercially exploitable reserves of gold, silver or other metals. On February 12, 2009 we entered into a development agreement with MRT to provide us with immediate funding to initiate production at our Cieneguita property, to complete a feasibility study and to continue the exploration of its properties. The development agreement was amended in December 2009 and calls for project funding of up to $8,000,000 to be spent on First Phase Production and to complete a feasibility study. To date MRT has contributed $1,000,000 in working capital and has spent additional funds on initiating production plans for the Cieneguita project through the building of a floatation and gravity circuit mill. MRT has shipped an approximately 5,000 ton bulk sample to its mill in Sinaloa Mexico for processing to verify the metallurgical process need to process the mineralized material from the Cieneguita property.

Our original strategy was to put the Cieneguita property into production as a heap leach operation, and as such we purchased approximately $250,000 worth of new and used mining equipment to be used for heap leach production. We contemplated putting the Cieneguita property into production during 2008 but the positive exploration results from our drilling programs changed those plans. The mineralized material that has been defined by the drilling appears to suggest that the mineralized material is far larger than originally contemplated and of a different material that is not suitable for heap leaching. As such, we entered into the joint venture agreement with MRT to put the Cieneguita into production using a simple crushing and floatation circuit process and not a heap leach operation as originally planned.

With the joint venture with MRT, we intend to put the Cieneguita project into First Phase Production in January 2010. We are using a simple crushing and floatation circuit process in stead of the heap leach process as originally contemplated. We still plan to use the equipment as part of the new mining process designed in the joint venture agreement. When all mineral extraction has been completed, then it is managements’ plan to try and sell the equipment that we have purchased. At this time, we have no estimates on what the equipment will be worth in the secondary market. If we are unable to sell it, we may lose all of our capital investment. No assurances can be given that we will be able to sell the equipment at a price to recover our original investment, or at all.

Management is pleased to report excellent progress at the Cieneguita project. Start-up operations have progressed as planned. All essential systems and construction for plant operations are substantially complete and are in operation currently for one 12 hour shift per day. Management expects to increase operations to two shifts, at a processing rate of 1000 tons per day, within the next month.

The gravity concentration system and the flotation circuit are fully operational, each producing concentrate that is of expected quality, with overall gold recovery of 82 percent. Processing of 3.2 gram per ton gold equivalent material produces a rough concentrate that will be shipped to the MRT Choix mill for further processing into a final concentrate.

In the event that we do discover a mineral deposit on one of our properties, of which there is no guarantee, we would need to expend substantial amounts of capital to put any of our properties into production, if so warranted. The amount of such expenditures is indeterminable at this time as our exploration and development program has not advanced far enough to provide us with results to determine this information.

Such expenditures depend upon the size of the mineralized body, the grade of the mineralized body and the type of mining that is 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 therefore would have to raise the 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.

On September 21, 2009, we hired George Young as our chief operating officer, Salil Dhaumya as our chief financial officer and Manuel Flores as our operations manager. On November 16, 2009, Mr. Young was appointed president upon the resignation of Francisco Quiroz. We expect to hire an additional 8 geologists in addition to the drilling contractors to conduct exploration or development over the 12 month period from December 1, 2009 through November 30, 2010. Other than these employees and our 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.

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In the event that we should find a mineable reserve, it is management’s intention to contract the mining and milling of any mineralized reserves out to third parties. We do not have any known reserves at this time.

Exploration Projects — Current Status

To date the Sierra Madre gold exploration program has been focused on advancing current exploration projects to the next exploration stage. During most of 2008, exploration activities were concentrated in four projects: Sahuayacan, Encino Gordo, Guazapares and Cieneguita. However, exploration activities during the nine months ended November 30, 2009 were focused exclusively on the Cieneguita project. As well, we sold our Guazapares concessions to Paramount Gold and Silver Corp. To date most of the data gathered during our field campaigns and drilling programs is completely compiled and is being evaluated. The next exploration stages for all three remaining projects have been already planned.

Over the next twelve months, we intend to explore our three projects to determine whether there are economically attractive concentrations of gold and gold-silver mineralization. We intend to hire 8 additional employees but do not plan to make any purchase of equipment over the next twelve months. At this time, though, the exploration program is only planned for the 12 month period from December 1, 2009 through November 30, 2010, which we will undertake when the necessary capital has been raised to complete these programs. We do not have any sources of capital indentified at this time and no assurance can be given that we will be able to complete the proposed exploration program.

Results of Operations

Three and nine months ended November 30, 2009 compared to the three and nine months ended November 30, 2008.

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

Revenues

The Company earned its 25% proportionate revenue from the joint venture with MRT from the commercial pilot test during the nine months ended November 30, 2009. Other than the commercial pilot test, which generated $103,000 in net cash flows, we did not have commercial production of any of our properties in 2009. 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 development 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.

Operating Costs

We did not incur any operating costs during the three and nine months ended November 30, 2009 or 2008 due to the fact that we did not achieve production from exploration activities during either year.

Expenses

Our expenses decreased to $1,103,000 and $2,713,000 for the three and nine months ended November 30, 2009, compared to $2,025,000 and $6,050,000 for the three and nine months ended November 30, 2008, respectively. The decrease is primarily attributable to lower exploration costs which was due to lack of funding, and curtailment of exploration on Cieneguita because of the joint venture agreement with MRT, where MRT has agreed to spend up to $4,000,000 to take Cieneguita to a feasibility stage.

General and administrative expenses increased slightly to $870,000 and $2,279,000 in the three and nine months ended November 30, 2009 compared to $824,000 and $2,095,000 in the three and nine months ended November 30, 2008, respectively. The increase during the current three and nine month period is attributable to higher legal fees offset by lower travel costs. Included in the general and administrative expenses, is the non-cash stock-based compensation expense of $546,000 and $874,000 in 2009 compared to $236,000 and $576,000 in 2008 for the three and nine months, respectively. The amount for the nine month period in 2009 had $800,000 of stock-based compensation expense relating to options granted to officers, directors and consultants and $74,000 of stock-based compensation relating to warrants. The amount for the corresponding period in 2008 relates to stock options granted to management and key personnel and compensation relating to warrants for $472,000 and $103,000, respectively.

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Accounting and legal fees increased to $338,000 in the nine months ended November 30, 2009 compared to $318,000 in the nine months ended November 30, 2008. The increase was primarily attributable to higher legal costs relating to issuance, payment and restructuring of convertible debentures.

Mineral exploration in the three and nine months ended November 30, 2009 decreased to $97,000 and $421,000 compared to $1,200,000 and $3,955,000 for the three and nine months ended November 30, 2008, respectively as the Company reduced its exploration activity as described above.

Loss

Our net loss decreased to $1,474,000 for the nine months ended November 30, 2009 compared to $6,531,000 for the nine months ended November 30, 2008. For the nine months ended in 2009, we recognized a gain on sale of assets of $1,500,000 as the equivalent amount of debentures was converted into 10% direct interest in the Cieneguita project.

Other than the lower operating loss as described above, this change in our loss was attributable to higher interest expense recognized in 2009 relating to beneficial conversion feature offset by gain on settlement of repayment of convertible debentures.

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

We are a development stage company and have generated only limited revenues from our Cieneguita project and have not yet generated or realized any revenue from our other two exploration projects. As of November 30, 2009, we had total assets of $1,409,000, total liabilities of $3,664,000, and a deficit of $43,338,000 accumulated during the exploration/development stage, which includes the losses incurred in the two unsuccessful business combinations we attempted prior to beginning our current business focus on mineral exploration and development activities in Mexico.

Cash and Working Capital

We had cash and cash equivalents of $300,000 as of November 30, 2009, compared to cash of $39,000 at February 28, 2009 and $5,000 at November 30, 2008. We had working capital deficiency of $2,510,000 as of November 30, 2009, compared to a working capital deficiency of $4,657,000 as of February 28, 2009 and $4,633,000 as of November 30, 2008.

During the first nine months of 2009, we reduced the activities for our exploration program considerably but have continued to incur corporate administrative expenses. We raised approximately $1,891,000 from the private placement as of November 30, 2009, which went towards reducing our accounts payable and accrued liabilities. Our accounts payable and accrued liabilities decreased from $2,680,000 from the fiscal year ended February 28, 2009 to $2,189,000 in the first nine months of 2009. Of the $2,189,000 accounts payable and accrued liabilities as of November 30, 2009, $729,000 relates to exploration expenses.

Cash Used in Operating Activities

Cash used in operating activities decreased to $2,410,000 for the nine months ended November 30, 2009 compared to $2,944,000 for the nine months ended November 30, 2008. The cash used in operating activities was primarily for exploration costs and general and administrative expenses.

Cash Used in Investing Activities

The Company used cash of $23,000 for purchase of equipment for the nine months ended November 30, 2009 compared to cash used of $13,000 for purchase of equipment for the nine months ended November 30, 2008. There are no additional capital expenditures for the current fiscal year anticipated at this time.

Financing Activities

Cash provided by financing activities decreased to $2,647,000 for the nine months ended November 30, 2009 compared to $3,023,000 for the nine months ended November 30, 2008. Most of the cash provided by financing activities was from issuing of convertible debentures, notes payables and subscription proceeds. Cash provided by financing activities was used to fund our operating and investing activities.

During the nine months ended November 30, 2009, the Company issued a total of $1,895,000 convertible debentures to Paramount, MRT and other investors.

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The Company repaid the amended debenture of $221,047 to Paramount on October 8, 2009, from the escrow funds for the payment of Guazapares.

The convertible debentures of $237,510 issued in 2009 and $726,490 in 2008 to MRT were converted into units of $0.60 on November 5, 2009. Each unit comprised of two common share plus one common share purchase warrant. One full warrant is exercisable immediately at a price of $0.50 for three years.

The convertible debentures of $1,500,000 to MRT and other investors with principal and accrued interest at 15% per year were converted into 10% direct interest in the Company’s Cieneguita project on October 12, 2009.

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 depends 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 November 30, 2009, the Company had working capital deficiency of $2,510,000 (November 30, 2008 — working capital deficiency of $4,633,000) and an accumulated deficit during the exploration stage of $43,338,000 (November 30, 2008 — $40,359,000). 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 extraction of its mineralized material and exploration ventures. 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.

Subsequent to the quarter ended November 30, 2009, the Company completed a private placement of 12,500,000 unregistered shares of the common stock with 100% warrant coverage at a purchase price of $0.20 per unit resulting in aggregate gross proceeds to the Company, prior to any expenses, from the Private Placement of $2,500,000. Substantially all of the proceeds from the private placement have been used to fund the Company’s working capital expenses and reduce the Company’s payables.

On May 17, 2009, we entered into a letter of agreement to sell our Guazapares project located in south western Chihuahua, Mexico to Paramount Gold de Mexico, SA de C.V., the Mexican subsidiary of Paramount for a total consideration of up to $5,300,000. A definitive agreement was signed on July 8, 2009. The payment of the funds from escrow is subject to the satisfaction of various conditions. The material conditions of the agreement have been met and the payment for the sale of the properties is expected to occur in January 2010 as the agreements governing the concessions have been officially re-registered in the name of Paramount Gold de Mexico, SA de C.V. with the Mexican mining authorities. A 5.7% commission was paid on the closing of the sale. Mexoro’s Guazapares project comprises 12 claims close to Paramount’s San Miguel discovery. The purchase price is to be paid in two stages. The first payment of $3,700,000 was deposited into escrow at closing, and will be released from escrow to Mexoro when the transfer of the 12 claims to Paramount is finalized. An additional payment of $1.6 million is due to Mexoro if, within 36 months following execution of the letter of agreement (July 8, 2009), either (i) Paramount Gold de Mexico SA de C.V. is sold by Paramount, either through a stock sale or a sale of substantially all of its assets, or (ii) Paramount’s San Miguel project is put into commercial production.

As of November 30, 2009, the joint venture with MRT had generated net cash flows of approximately $411,000 of which $103,000 is attributable to us under the joint venture agreement. We are expecting additional ongoing cash flows from the commencement of operations at the Cieneguita property, starting in February 2010. The amount of net cash flows to be received on Mexoro’s 20% share from operations cannot be determined at this time.

We will need a minimum of $252,000 for property payments and an additional $1,853,000 for general and administrative costs. This does not include any capital needed to pay our accounts payables and to execute our exploration programs as detailed below. As of November 30, 2009, the following table shows our contractual property payments that are due until November 2010:

Name	Date	Payment Type	USD
Sahuayacan Property	December 2009 to November 2010	Property payments	$	65,000
Segundo Santo Nino (Sahuayacan)	May 2010	Property payments	$	120,000
La Estrella y la Sultana Menor	December 2009 and June 2010	Property payments	$	67,000

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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 funds to be received from the Guazapares sale and our expected net cash flows from the joint venture will allow us to continue in business until December 2010, there is no assurance that we will receive the Guazapares funds in a timely fashion, or at all, or that we will receive any net cash flows from our joint venture arrangement. Additionally, if our exploration programs are successful, we will need to raise additional capital to fund those programs.

We may be required to pursue sources of additional capital to fund our operations through various means, including equity or debt financing, funding from a corporate partnership or licensing arrangement or any similar financing. Future financings through equity investments are likely to be dilutive to existing stockholders. Also, the terms of securities we may issue in future capital transactions may be more favorable for our new investors. Newly issued securities may include preferences, superior voting rights and the issuance of warrants or other derivative securities, which may have additional dilutive effects. In addition, if we raise additional funds through joint venture or partnering arrangements, we may be required to relinquish potentially valuable ownership interests in our mining projects. Further, we may incur substantial costs in pursuing future capital and/or financing, including investment banking fees, legal fees, accounting fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expenses in connection with certain securities we may issue, such as convertible notes and warrants, which will adversely impact our financial results.

The significant downturn in the overall economy and the ongoing disruption in the capital markets has reduced investor confidence and negatively affected investments. As a result, there can be no assurance that additional funds will be available when needed from any source or, if available, will be available on terms that are acceptable to us. If we are unable to raise funds to satisfy our capital needs on a timely basis, we may be required to curtail or cease our operations.

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. Quantitative and Qualitative Disclosure about Market Risk

As we did not have to disclose quantitative and qualitative information about our market risk as of and for our last fiscal year, this item is not applicable to us at this time.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Securities and Exchange Commission defines the term “disclosure controls and procedures” to mean a company’s controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuer’s management, including its chief executive and chief financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC’s rules and forms and that information required to be disclosed is accumulated and communicated to chief executive and chief financial officers to allow timely decisions regarding disclosure.

For the second quarter ended August 31, 2009, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were not designed and were not effective in providing reasonable assurance of achieving the objectives of timely alerting them to material information required to be included in our periodic SEC reports and of ensuring that such information is recorded, processed, summarized and reported within the time periods specified by the SEC because the Company did not have sufficient personnel resources within the accounting function to affect a timely financial close. To help remediate our disclosure controls and procedures weaknesses, we hired Mr. Salil Dhaumya on September 21, 2009 to serve as our chief financial officer.

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For the third quarter ended November 30, 2009, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were not effective because the Company needed to hire additional personnel resources within the accounting function to have a proper segregation of duties. As a result, the Company intends to hire additional accounting personnel to properly segregate duties. The additional hiring is contingent upon the Company having sufficient funds to support its business activities and corporate expenses.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting that occurred during the last fiscal quarter, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our principal executive officer and our principal financial officer, do not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

PART II — OTHER INFORMATION

Other than disclosed herein, all other sections in Part II are inapplicable to the Company.

Item 1. Legal Proceedings

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

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities

			# of
			Warrants		# of Options				Price per
Name	# of Shares		Issued **		Issued **		Dated		Share		Amount USD$		Notes
John Martin		100,000		100,000		—		09/09/2009	$	0.20	$	20,000		(1) (11)
Woodstone Capital Inc.		100,000		100,000		—		09/25/2009	$	0.20	$	20,000		(2) (11)
Woodstone Capital Inc.		100,000		100,000		—		10/16/2009	$	0.20	$	20,000		(3) (11)
Medig Placements		150,000		150,000		—		11/04/2009	$	0.20	$	30,000		(4) (11)
Christopher Anderson		125,000		125,000		—		11/04/2009	$	0.20	$	25,000		(5) (11)
Joachim Brunner		50,000		50,000		—		11/06/2009	$	0.20	$	10,000		(6) (11)
MRT*		3,333,333		1,666,667		—		11/06/2009	$	0.30	$	50,000		(7) (11)
George Young*		—		—		1,000,000		09/21/2009		—		—		(8) (11)
Decerto Group*		—		1,000,000		—		09/21/2009		—		—		(9) (11)
MRT*		—		300,000		—		09/21/2009		—		—		(10) (11)

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*	Affiliate of the Company.
**	Each warrant and option entitles the holder to purchase one share of common stock.
(1)	On September 9, 2009, the Company issued 100,000 shares and 100,000 warrants to John Martin for subscription proceeds of $20,000. Each warrant is exercisable at $0.30 per common share within two years.
(2)	On September 25, 2009, the Company issued 100,000 shares and 100,000 warrants to Woodstone Capital Inc. for subscription proceeds of $20,000. Each warrant is exercisable at $0.30 per common share within two years.
(3)	On October 16, 2009, the Company issued 100,000 shares and 100,000 warrants to Woodstone Capital Inc. for subscription proceeds of $20,000. Each warrant is exercisable at $0.30 per common share within two years.
(4)	On November 4, 2009, the Company issued 150,000 shares and 150,000 warrants to Medig Placements for subscription proceeds of $30,000. Each warrant is exercisable at $0.30 per common share within two years.
(5)	On November 4, 2009, the Company issued 125,000 shares and 125,000 warrants to Christopher Anderson for subscription proceeds of $25,000. Each warrant is exercisable at $0.30 per common share within two years.
(6)	On November 6, 2009, the Company issued 50,000 shares and 50,000 warrants to Joachim Brunner for subscription proceeds of $10,000. Each warrant is exercisable at $0.30 per common share within two years.
(7)	On November 6, 2009, the Company issued 3,333,333 shares and 1,666,667 warrants to a designee of MRT from conversion of debentures. Each warrant is exercisable at $0.50 per common share within three years.
(8)	On September 21, 2009, the Company issued options to George Young, our president, to purchase 1,000,000 shares of our common stock pursuant to our 2009 Nonqualified Stock Option Plan. The options vest in four equal installments, with the first installment vesting on the six month anniversary of the grant date and the remaining installments vesting every six months thereafter. The options have an exercise price of $0.36 per share.
(9)	On September 21, 2009, the Company granted a warrant to the Decerto Group to purchase 1,000,000 shares of our Company’s common stock, with an exercise price equal to $0.36 per share. The warrant shares vest in four equal installments, with the first installment vesting on the six month anniversary the grant date, and the and the second installment vesting on the one year anniversary of the date of the consulting agreement, contingent upon the Decerto Group continuing to provide consulting services to the Company on such dates. John Clair, our director, is a manager of the Decerto Group.
(10)	On September 21, 2009, the Company granted a warrant to MRT to purchase 300,000 shares of our Company’s common stock, with an exercise price equal to $0.36 per share. The warrant shares vest in four equal installments, with the first installment vesting on the six month anniversary the grant date, and the remaining installments vesting every six months thereafter, contingent upon MRT continuing to provide consulting services to the Company on such dates. Mario Ayub, our director, is a manager of the MRT.

The offers, sales and issuances of these securities were deemed to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act, and/or Regulation D or Regulation S and the other rules and regulations promulgated thereunder, or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions not involving a public offering or transactions under compensatory benefit plans and contracts relating to compensation as provided under such Rule 701. The recipient of securities in each this transaction represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof or that they were not a US person, as defined in Regulation S, and were not acquiring the securities for the account or benefit of a US person, and appropriate legends were affixed to the share certificates and options issued in such transactions.

No advertising or general solicitation was employed in offering the securities. The offerings and sales were made to a limited number of persons, all of whom were accredited investors, business associates of our company or executive officers of our company, and transfer was restricted by our company in accordance with the requirements of the Securities Act of 1933. In addition to representations by the above-referenced persons, we have made independent determinations that all of the above-referenced persons were accredited or sophisticated investors, and that they were capable of analyzing the merits and risks of their investment, and that they understood the speculative nature of their investment. Furthermore, all of the above-referenced persons were provided with access to our Securities and Exchange Commission filings.

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Except as expressly set forth above, the individuals and entities to whom we issued securities as indicated in this Item 2 are unaffiliated with us.

We filed a registration statement on Form S-1 (Registration No. 333-164029) to register up to 12,500,000 shares of our common stock, no par value per share, for resale by the selling stockholders who purchased these shares in our private placement in the fall of 2009. The registration statement was declared effective by the Securities and Exchange Commission on January 12, 2010. We will not receive any proceeds from the sale of our common stock by the selling stockholders under the registration statement. The offering commenced on January 12, 2010 and has not terminated.

Item 6. Exhibits

The following exhibits are filed in reference:

Exhibit
Number		Description
	31.1	Certification of Principal Executive Officer of Mexoro Minerals Ltd. pursuant to Rule 13a-14(a)/15d-14(a).*
	31.2	Certification of Chief Financial Officer of Mexoro Minerals Ltd. pursuant to Rule 13a-14(a)/15d-14(a).*
	32.1	Certification of Principal Executive Officer of Mexoro Minerals Ltd. pursuant to 18 U.S.C. Section 1350.*
	32.2	Certification of 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.
/S/ George Young
Name:	George Young
Title:	President
Date:	January 14, 2009

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