~~[ X ]~~~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~[ ]~~~~TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934~~

☐	TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934

From the transition period ~~___________~~____________ to ~~____________.~~___________.

222 WW. Las Colinas Blvd., Suite ~~744 East~~1910 North Tower, Irving, Texas 75039

~~(Former name, former address and former fiscal year, if changed since last report)~~

Indicate by check mark whether the registrant (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: Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate website, 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). Yes ☒ No ☐

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:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act. Yes ☐ No ☒

Indicate by a check mark whether the ~~company~~registrant is a shell company (as defined byin Rule 12b-2 of the Exchange Act):

As of ~~November 13, 2017,~~July 31, 2023 there were ~~17,722,825~~22,246,654 shares of Common Stock of the ~~issuer~~registrant outstanding.

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

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


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CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)

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

Table of Contents

DYNARESOURCE, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THREE AND SIX MONTHS ENDED JUNE 30, 2023 AND 2022

(Unaudited)

	Preferred A						Common				Preferred		Preferred		Paid In			Treasury			Treasury			Other Comp			Accumulated
	Shares			Amount			Shares		Amount		Rights		Amount		Capital			Shares			Amount			Income			Deficit			Totals

THREE MONTHS ENDED JUNE 30, 2022

Balance, March 31, 2022		1,000		$	1			18,091,293	$	180,913		1	$	40,000	$	50,632,400			12,180		$	(34,773	)	$	(549,577	)	$	(45,659,663	)	$	4,609,301

Stock Warrant Exercised								2,655,361		26,554						5,390,382															5,416,936

Other Comprehensive Income																									312,928						312,928

Net Income (Loss)																												521,021			521,021

Balance, June 30, 2022		1,000		$	1			20,746,654	$	207,467		1	$	40,000	$	56,022,782			12,180		$	(34,773	)	$	(236,649	)	$	(45,138,642	)	$	10,860,186

THREE MONTHS ENDED JUNE 30, 2023

Balance, March 31, 2023		1,000		$	1			22,246,654	$	222,467		1	$	40,000	$	56,889,031			12,180		$	(34,773	)	$	203,319		$	(44,004,958	)	$	13,315,087

Purchase of Series A Stock																			1,000			(1,250,000	)								(1,250,000	)

Cancellation of Series A Stock		(1,000	)		(1	)										(1,249,999	)		(1,000	)		1,250,000									0

Acquisition of Treasury Stock																			25,000			(60,250	)								(60,250	)

Other Comprehensive Income																									259,976						259,976

Net Income (Loss)																												(592,441	)		(592,441	)

Balance, June 30, 2023		-		$	-			22,246,654	$	222,467		1	$	40,000	$	55,639,032			37,180		$	(95,023	)	$	463,295		$	(44,597,399	)	$	11,672,372

SIX MONTHS ENDED JUNE 30, 2022

Balance January 1, 2022		1,000		$	1			18,091,293	$	180,913		1	$	40,000	$	50,632,400			12,180		$	(34,773	)	$	(247,665	)	$	(50,722,465	)	$	(151,589	)

Stock Warrant Exercised								2,655,361		26,554						5,390,382															5,416,936

Other Comprehensive Income																									11,016						11,016

Net Income (Loss)																												5,583,823			5,583,823

Balance, June 30, 2022		1,000		$	1			20,746,654	$	207,467		1	$	40,000	$	56,022,782			12,180		$	(34,773	)	$	(236,649	)	$	(45,138,642	)	$	10,860,186

SIX MONTHS ENDED JUNE 30, 2023

Balance January 1, 2023		1,000		$	1			22,246,654	$	222,467		1	$	40,000	$	56,889,031			12,180		$	(34,773	)	$	112,078		$	(44,036,663	)	$	13,192,141

Purchase of Series A Stock																			1,000			(1,250,000	)								(1,250,000	)

Cancellation of Series A Stock		(1,000	)		(1	)										(1,249,999	)		(1,000	)		1,250,000									0

Acquisition of Treasury Stock																			25,000			(60,250	)								(60,250	)

Other Comprehensive Income																									351,217						351,217

Net Income (Loss)																												(560,736	)		(560,736	)

Balance, June 30, 2023		-		$	0			22,246,654	$	222,467		1	$	40,000	$	55,639,032			37,180		$	(95,023	)	$	463,295		$	(44,597,399	)	$	11,672,372

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

Table of Contents

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

DynaResource, Inc. ~~(The~~(the “Company”, or “DynaResource”~~, or “DynaUSA”~~) was organized September 28, 1937, as a California corporation under the name of West Coast Mines, Inc. In 1998, the Company re-domiciled to Delaware and changed its name to DynaResource, Inc. The Company is in the business of acquiring, investing in, and developing precious metal properties, and in the ~~test mining and pilot milling~~ production of precious metals.

~~The interim consolidated financial statements included herein have been prepared by~~

In 2000, the Company ~~without audit, pursuant~~formed a wholly owned subsidiary, DynaResource de México S.A. de C.V., chartered in México (“DynaMéxico”). This Company was formed to acquire, invest in and develop resource properties in México. DynaMéxico owns a portfolio of mining concessions that currently includes its interests in the ~~rules and regulations~~San José de Gracia Project (“SJG”) in northern Sinaloa State, México. The SJG District covers 9,920 hectares (24,513 acres) on the west side of the ~~Securities~~Sierra Madre Mountain range. The Company currently owns 100% of the outstanding capital of DynaMéxico.

In 2005, the Company formed DynaResource Operaciones de San José De Gracia S.A. de C.V. (“DynaOperaciones”) and ~~Exchange Commission (“SEC”~~acquired control of Mineras de DynaResource, S.A. de C.V. (formerly Minera Finesterre S.A. de C.V., “DynaMineras”). ~~Certain information~~The Company owns 100% of DynaMineras.

The Company elected to become a voluntary reporting issuer in Canada in order to avail itself of Canadian regulations regarding reporting for mining properties and, ~~note disclosures normally included~~more specifically, National Instrument 43-101 (“NI 43-101”). This regulation sets forth standards for reporting resources in ~~financial statements prepared~~a mineral property and is a reporting standard widely recognized in ~~accordance with~~the mining industry.

The Company’s management selects accounting principles generally accepted in the United States of America ~~(“U.S. GAAP”) has~~and adopts methods for their application. The application of accounting principles requires the estimating, matching and timing of revenues and expenses. The accounting policies used conform to generally accepted accounting principles which have been ~~condensed or omitted pursuant to such rules~~consistently applied in the preparation of these financial statements.

The financial statements and ~~regulations, although the Company believes that the disclosures included~~notes are ~~adequate to make the information presented not misleading.~~

In management’s opinion, the unaudited Consolidated Statements of Operations and Comprehensive Income for the nine months ended September 30, 2017 and 2016, the Consolidated Balance Sheets as at September 30, 2017 (unaudited) and December 31, 2016, and the unaudited Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016, contained herein, reflect all adjustments, consisting solely of normal recurring items, which are necessary for the fair presentationrepresentations of the Company’s management, which is responsible for their integrity and objectivity. Management acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal accounting control is designed to assure, among other items, that: (1) recorded transactions are valid; (2) valid transactions are recorded; and (3) transactions are recorded in the proper period in a timely manner to produce financial ~~position,~~statements which present fairly the financial condition, results of operations and cash flows ~~on a basis consistent with that~~ of the ~~Company’s prior audited annual~~Company for the respective periods presented.

The Company prepares its unaudited consolidated financial ~~statements. However,~~statements on the ~~results~~accrual basis of ~~operations for~~accounting in conformity with accounting principles generally accepted in the ~~interim periods may not be indicative~~United States.

The derivative liability in the Company’s December 31, 2022 balance sheet presented herein has been corrected to be expected for the full fiscal year. Therefore, these financial statements should be read in conjunction with the audited financial statements and notes thereto and summary of significant accounting policies included in$2,172,417 from $2,334,377 from the Company’s Form 10-K ~~for~~which was filed with the ~~year ended December 31, 2016. Except as noted below, there have been no material changes~~Securities and Exchange Commission on April 17, 2023. The error was a typographical error made in ~~the footnotes from those accompanying the audited~~that single line item and it did not impact any other financial statement balances including total liabilities, net income, earnings per share, or management compensation.

In order to prepare unaudited consolidated financial statements ~~contained~~in conformity with accounting principles generally accepted in the ~~Company’s Form 10-K for~~United States, management must make estimates, judgments and assumptions that affect the ~~year ended December 31, 2016.~~amounts reported in the unaudited consolidated financial statements and determines whether contingent assets and liabilities, if any, are disclosed in the unaudited consolidated financial statements. The ultimate resolution of issues requiring these estimates and assumptions could differ significantly from resolution currently anticipated by management and on which the financial statements are based.

The unaudited consolidated financial statements include the accounts of ~~the Company~~DynaResource, Inc., as well as DynaResource de México, S.A. de C.V. (100% ownership), DynaResource Operaciones S.A. de C.V. (100% ownership) and ~~its wholly-owned subsidiaries.~~Mineras de DynaResource S.A. de C.V. (100% ownership). All significant inter-company ~~accounts and~~ transactions have been eliminated. All amounts are presented in U.S. Dollars unless otherwise stated.

The Company considers all highly liquid debt instruments with an original maturity of three months or less to be cash equivalents. At times, cash balances may be in excess of the ~~second quarter 2017, we identified~~Federal Deposit Insurance Corporation (“FDIC”) insurance limits. As of June 30, 2023, the Company has $14,388,760 in deposits in U.S. banks in excess of the FDIC limit. The Company reduces this risk by maintaining such deposits at high quality financial institutions that management believes are creditworthy.

The Company maintains an allowance for doubtful accounts based upon its customers’ financial condition and payment history, and its historical collection experience and expected collectability. As of June 30, 2023 and December 31, 2022, no allowance has been deemed necessary.

Foreign Tax Receivable is comprised of recoverable value-added taxes (“IVA”) charged by the Mexican government on goods and services rendered. Under certain circumstances, these taxes are recoverable by filing a tax return. Amounts paid for IVA are tracked and held as receivables until the funds are remitted.

Inventories are carried at the lower of cost or net realizable value and consist of mined tonnage, gravity and flotation concentrates, and gravity tailings or flotation feed material.

The definitions of Measured Mineral Resource, Mineral Reserve and Mineral Resource are set forth in SEC Regulation S-K, Item 1300 (“Reg. S-K, Item 1300”).

Measured mineral resource is that part of a mineral resource for which quantity and grade or quality are estimated on the basis of conclusive geological evidence and sampling. The level of geological certainty associated with a measured mineral resource is sufficient to allow a qualified person to apply modifying factors in sufficient detail to support detailed mine planning and final evaluation of the economic viability of the deposit. Because a measured mineral resource has a higher level of confidence than the level of confidence of either an indicated mineral resource or an inferred mineral resource, a measured mineral resource may be converted to a proven mineral reserve or to a probable mineral reserve.

Mineral reserve is an estimate of tonnage and grade or quality of indicated and measured mineral resources that, in the opinion of the qualified person, can be the basis of an economically viable project. More specifically, it is the economically mineable part of a measured or indicated mineral resource, which includes diluting materials and allowances for losses that may occur when the material is mined or extracted.

Mineral resource is a concentration or occurrence of material of economic interest in or on the Earth’s crust in such form, grade or quality, and quantity that there are reasonable prospects for economic extraction. A mineral resource is a reasonable estimate of mineralization, taking into account relevant factors such as cut-off grade, likely mining dimensions, location or continuity, that, with the assumed and justifiable technical and economic conditions, is likely to, in whole or in part, become economically extractable. It is not merely an inventory of all mineralization drilled or sampled.

As of June 30, 2023, the Company meets the definition of an exploration stage issuer which is defined as an issuer that has no material property ~~taxes amounting to $541,245 from 2014, 2015,~~with established proven and ~~$169,232 for 2016, which were not~~probable mineral reserves as defined by Regulation S-K, Item 1300.

Substantially all property, plant and equipment at the Company’s mines, including design, engineering, mine construction, and installation of equipment are expensed as ~~required~~incurred, as the Company has not established proven and probable reserves on any of its properties. Only certain types of mining equipment which have alternative uses or significant salvage value, may be capitalized without proven and probable reserves.

Office furniture and equipment are depreciated on a straight-line method over estimated economic lives ranging from 3 to 5 years. Leasehold improvements, which relate to the Company’s corporate office, are being amortized over the term of the lease of 10 years. As of June 30, 2023, all property, plant and equipment are fully depreciated or amortized.

Design, Construction, and Development Costs: Mine development costs include engineering and metallurgical studies, drilling and other related costs to delineate an ore body, the removal of overburden to initially expose an ore body at open pit surface mines, and the building of access ways, shafts, lateral access, drifts, ramps and other infrastructure at underground mines.

When proven and probable reserves (as defined by Reg. S-K, Item 1300) exist, development costs are capitalized. Mine development costs incurred either to develop new ore deposits, expand the capacity of operating mines, or to develop mine areas substantially in advance of current production would also be capitalized. Costs of start-up activities and costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations as incurred. Costs of abandoned projects are charged to operations upon abandonment. All capitalized costs would be amortized using the units of production method over ~~accrual~~the estimated life of ~~$150,000~~the ore body based on recoverable ounces to be mined from proven and probable reserves.

Certain costs to design and construct mining and processing facilities may be incurred prior to establishing proven and probable reserves. As no proven and probable reserves have been established on any of the Company’s properties, the design, construction and development costs are not capitalized at any of the Company’s properties, and accordingly, substantially all such costs are expensed as incurred, resulting in the Company reporting higher operating costs than if such expenditures had been capitalized. Additionally, the Company does not have a corresponding depreciation or amortization of these costs going forward since such costs were expensed as incurred as opposed to being capitalized. As a result of these and other differences, the Company’s financial statements may not be comparable to the financial statements of mining companies that have established reserves.

Mineral property interests include acquired interests in development and exploration stage properties and are considered tangible assets. The amount capitalized relating to a mineral property interest represents its fair value at the time of acquisition. Mining properties consist of 33 mining concessions covering approximately 9,920 hectares at the San José de Gracia property. If it is determined that the deferred costs related to a property are not recoverable over its productive life, those costs will be written down to fair value as a charge to operations in the period in which the determination is made. The amounts at which mineral properties and the related costs are recorded do not necessarily reflect present or future values.

Impairment of Assets: The Company reviews and evaluates its long-lived assets for ~~legal expenses~~impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Mineral properties are monitored for impairment based on factors such as mineral prices, government regulation and taxation, the Company’s continued right to explore the area, exploration reports, assays, technical reports, drill results and its continued plans to fund exploration programs on the property.

For operating mines, recoverability is measured by comparing the undiscounted future net cash flows to the net book value. When the net book value exceeds future net undiscounted cash flows, an impairment loss is measured and recorded based on the excess of the net book value over fair value. Fair value for operating mines is determined using a combined approach, which uses a discounted cash flow model for the existing operations and a market approach for the fair value assessment of exploration land claims. Future cash flows are estimated based on quantities of recoverable mineralized material, expected gold and silver prices (considering current and historical prices, trends and related factors), production levels, operating costs, capital requirements and reclamation costs, all based on life-of-mine plans. The term “recoverable mineralized material” refers to the estimated amount of gold or other commodities that will be obtained after considering losses during processing and treatment of mineralized material. In estimating future cash flows, assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of future cash flows from other asset groups. The Company’s estimates of future cash flows are based on numerous assumptions, and it is possible that actual future cash flows will be significantly different than the estimates, as actual future quantities of recoverable minerals, gold, and silver, commodity prices, production levels and costs and capital are each subject to significant risks and uncertainties.

The recoverability of the book value of each property will be assessed annually for indicators of impairment such as adverse changes to any of the following:

A write-down to fair value will be recorded when the expected future cash flow is less than the net book value of the property, or when events or changes in the property indicate that carrying amounts are not recoverable. This analysis will be completed as needed. As of the date of this filing, no events have occurred that would require the write-down of any assets. As of June 30, 2023 and December 31, ~~2016. Based on Staff Accounting Bulletin No. 108~~2022, no indications of impairment existed.

As the Company is not obligated to remediate the mining properties, no Asset Retirement Obligation (“~~SAB 108”~~ARO”)~~, we have determined~~ has been established. Changes in regulations or laws, any instances of non-compliance with laws or regulations that ~~these~~result in fines, or any unforeseen environmental contamination could result in a material impact to the amounts charged to operations for reclamation and remediation. Significant judgments and estimates are ~~immaterial~~made when estimating the fair value of AROs. Expected cash flows relating to ~~each~~AROs could occur over long periods of time and the assessment of the ~~time~~extent of environmental remediation work is highly subjective. Considering all of these factors that go into the determination of an ARO, the fair value of the AROs can materially change over time.

Holding costs to maintain a property on a care and maintenance basis are expensed in the period they are incurred. These costs include security and maintenance expenses, lease and claim fees and payments, and environmental monitoring and reporting costs.

Exploration costs, including exploration, development, direct field costs and related administrative costs are expensed in the period incurred.

Effective January 1, 2019, the Company adopted ASC 842, which requires recognition of a right-of-use asset and lease liability for all leases at the commencement date based on the present value of lease payments over the lease term. Additional qualitative and quantitative disclosures regarding the Company’s leasing arrangements are also required. The Company adopted ASC 842 prospectively and elected the package of transition practical expedients that does not require reassessment of (1) whether any existing or expired contracts are or contain leases, (2) lease classification and (3) initial direct costs. In addition, the Company has elected other available practical expedients to not separate lease and non-lease components, which consist principally of common area maintenance charges, for all classes of underlying assets and to exclude leases with an initial term of 12 months or less.

The functional currency for the subsidiaries of the Company is the Mexican Peso. As a result, the financial statements of the subsidiaries have been translated from Mexican Pesos into U.S. dollars using (i) year-end exchange rates for balance sheet accounts, and (ii) the weighted average exchange rate of the reporting period for all income statement accounts. Foreign currency translation gains and losses are reported as a separate component of stockholders’ equity and comprehensive income (loss).

The unaudited financial statements of the subsidiaries should not be construed as representations that Mexican Pesos have been, could have been or may in the future be converted into U.S. dollars at such rates or any other rates.

Relevant exchange rates used in the preparation of the unaudited financial statements for the subsidiaries are as follows for the periods ~~affected~~ended June 30, 2023, and ~~therefore, we~~December 31, 2022 (Mexican Pesos per one U.S. dollar):

Relevant exchange rates used in the preparation of the income statement portion of unaudited financial statements for the subsidiaries are as follows for the periods ended June 30, 2023 and 2022 (Mexican Pesos per one U.S. dollar):

The Company recorded currency transaction gains of $34,227 and $37,790 for the six months ended June 30, 2023 and 2022, respectively.

The Company accounts for income taxes under ASC 740 “Income Taxes” using the liability method, recognizing certain temporary differences between the financial reporting basis of liabilities and assets and the related income tax basis for such liabilities and assets. This method generates either a net deferred income tax liability or asset for the Company, as measured by the statutory tax rates in effect. The Company derives the deferred income tax charge or benefit by recording the change in either the net deferred income tax liability or asset balance for the year. The Company records a valuation allowance against any portion of those deferred income tax assets when it believes, based on the weight of available evidence, it is more likely than not ~~required to amend our previously filed reports. However, if these adjustments were recorded~~that some portion or all of the deferred income tax asset will not be realized.

Income from the Company’s subsidiaries in ~~2017, we believe the impact could be material to this year. Therefore, we plan to adjust our previously reported results~~México is taxed in accordance with applicable Mexican tax law and enacted rates.

ASC 220 “Comprehensive Income” establishes standards for ~~2014, 2015,~~reporting and ~~2016 for these immaterial amounts as required by SAB 108. Such previous periods will be restated upon the next filing~~display of ~~our quarterly~~comprehensive income and ~~annual consolidated~~its components in a full set of general-purpose financial statements. The ~~balance sheet~~Company’s comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss), consisting of unrealized net gains and losses on the translation of the assets and liabilities of its foreign operations.

The Company follows ASC 606 “Revenue from Contracts with Customers”. The Company generates revenue by selling gold and silver concentrate material produced from its mining operations. The Company recognizes revenue for gold and silver concentrate production, net of treatment and refining costs, when it satisfies the performance obligation of transferring control of the concentrate to the customer. This is generally when the material is delivered to the customer facility for treatment and processing, as the customer has the ability (upon such delivery) to direct the use of and obtain substantially all the remaining benefits from the material and the customer has the risk of loss.

The amount of revenue recognized is initially recorded on a provisional basis based on the contract price and the estimated metal quantities based on assay data. The revenue is adjusted upon final settlement of the sale. The chief risk associated with the recognition of sales on a provisional basis is the fluctuation (if any) between the estimated quantities of precious metals base on the initial assay and the actual recovery from treatment and processing.

As of June 30, 2023, there are $10,000,000 in customer deposit liabilities for payments received in advance, all of which are expected to be settled, by the delivery of product, in the third quarter of 2023.

During the six months ended June 30, 2023, and the year ended December 31, ~~2016 has been adjusted~~2022, there was $9,350,000 and $9,250,000, respectively of revenue recognized during the period from customer deposit liabilities (deferred contract revenue) from prior periods, and no customer deposits were refunded to ~~reflect~~ the ~~cumulative impact~~customer due to order cancellation.

Shipping and handling costs are considered fulfillment costs after the customer obtains control of such errors. As a result, Accounts payable has been increased by $541,245, accrued expenses increased by $169,232 and retained earnings decreased by $710,477. For additional information, see Footnote 14.the goods.

The Company’s financial statement reclassifications have been made to prior period balances to reflect the current period’s presentation format; such reclassifications had no impact on the Company’s consolidated statements of operations or consolidated statementsinstruments consist of cash, ~~flows~~receivables, payables and ~~had~~long-term debt. Cash, receivables and payables approximate fair value because of the short-term nature of these items. As of June 30, 2023 and December 31, 2022, there were no ~~material impact on the Company’s consolidated balance sheets.~~long-term assets or liabilities, measured at their estimated fair value.

Earnings (loss) per share, ~~is computed by dividing~~attributable to the ~~period Income (Loss) available to~~ common ~~shareholders by the weighted average number~~equity holders of ~~common shares outstanding. Diluted Profit (Loss)~~DynaResource, are calculated in accordance with ASC 260 “Earnings per ~~share is computed by dividing the Income (Loss) available to common shareholders by the~~Share”. The weighted average number of common shares outstanding ~~plus~~during each period is used to compute basic earnings (loss) per share. Diluted earnings (loss) per share is computed using the weighted average number of shares and potentially dilutive common shares outstanding. Potentially dilutive common shares are additional common shares ~~that would have been outstanding if~~assumed to be exercised. Potentially dilutive ~~potential~~ common shares ~~had been issued. For purposes~~consist of ~~this calculation,~~stock warrants and convertible preferred ~~stock, common stock dividends, warrants and options to acquire common stock, are all considered common stock equivalents in periods in which they have a dilutive effect~~shares and are excluded from ~~this calculation~~diluted earnings (loss) per share computation in periods ~~in which these are~~where the Company has incurred a net loss attributable to the common equity holders or where the average stock price was below the exercise price of the respective potentially dilutive common share, as their effect would be considered anti-dilutive. For the six months ended June 30, 2023, the Company had 3,518,540 of potentially dilutive common shares that have been excluded from diluted earnings per share, as their effect would be considered anti-dilutive ordue to the net ~~loss. The securities~~loss for the ~~three-month period ending September 30, 2017 and September 30, 2016 were deemed antidilutive.~~quarter attributable to the common equity holders.


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~~The following table illustrates the computation of Profit (loss), for the three months and nine months ended September 30, 2016 and 2017:~~Related Party Transactions

ASC 850, “Related Party Disclosures” requires companies to include in their financial statements, disclosures of material related party transactions. The Company discloses all material related party transactions. A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party is also a related party if it can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

~~The Company commenced underground test mining and pilot milling activities (“pilot production”) in the 2~~nd quarter of 2014. Rehabilitation of the San Pablo Mine and refurbishing of the Pilot Mill Facility and construction of the adjacent tailings pond continued through 2016, and expansion of these activities commenced in second quarter 2017.

Inventories are carried at the lower of cost or fair value and consist of mined tonnage, gravity-flotation concentrates, and gravity tailings (or flotation feed material). Inventory balances of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016, respectively,~~2022 were as follows:

As of ~~the following at September~~June 30, ~~2017~~2023 and December 31, ~~2016:~~2022, all the Company’s property, plant and equipment have been fully depreciated, amortized or expensed, as discussed in “Property, Plant and Equipment” in Note 1 above.

Mining properties consist of the San José de Gracia concessions. Mining Concessions were $4,132,678 as of June 30, 2023 and December 31, 2022. There was no depletion expense during the six months ended June 30, 2023 and 2022, as the Company is an exploration stage issuer (See Note 1).

The Company ~~purchased equipment~~has adopted ASC 740-10, “Income Taxes”, which requires the use of ~~$327,786 and $127,997~~the liability method in the ~~nine~~computation of income tax expense and the current and deferred income taxes payable (deferred tax liability) or benefit (deferred tax asset). Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

Our income tax expense and effective income tax rate are significantly impacted by the mix of our domestic and foreign earnings before income taxes. The Mexican applicable statutory rate is 30% which is higher than the U.S. federal and state combined statutory rate of approximately 21%. For the six months ended ~~September~~June 30, ~~2017 and September 30, 2016, respectively.~~

~~Depreciation has been provided over each asset’s estimated useful life. Depreciation expense was $129,248 and $77,626 for~~2023, the ~~nine months ended September 30, 2017 and 2016, respectively.~~increase in the effective benefit rate is primarily due to the beneficial impact of mark to market discrete items booked in the quarter when compared to the net loss before income taxes of $1,771,951.

~~Depletion expense was $nil and $nil for the nine months ended September 30, 2017 and 2016 respectively, respectively.~~

~~NOTE 5 – INVESTMENT IN AFFILIATE/RECEIVABLES FROM AFFILIATE/OTHER ASSETS~~

Through December 31, 2016, the Company loaned a total of $805,760 to DynaResource Nevada, Inc. (“DynaNevada”), a Nevada Corporation, which owns 100% of one operating subsidiary in México, DynaNevada de México, S.A. de C.V. (“DynaNevada de México”). The terms of the Note Receivable provided for a “Convertible Loan”, repayable at 5% interest over a 3-year period, and convertible at the Company’s option into common stock of DynaNevada at $.25 / Share. DynaNevada is a related entity (affiliate), and through its subsidiary, DynaNevada de México has entered into an Option agreement with Grupo México (IMMSA) in México, for the exploration and development of approximately 3,000 hectares in the State of San Luis Potosi (“The Santa Gertrudis Property”). DynaNevada de México exercised the Option with IMMSA in March 2010, so that DynaNevada de México now owns 100% of the Santa Gertrudis Property. In June 2010, DynaNevada de México acquired an additional 6,000 hectares in the State of Sinaloa (the “San Juan Property”). As of September 30, 2017, and December 31, 2016 the investment was $70,000.

In April and May 2013, the Company entered into note agreements with shareholders in the principal amount of $1,495,000, of which $340,000 was then converted to preferred shares within the same year, netting to proceeds of $1,155,000 (the “Series I Notes”). The Series I Notes bear simple interest at twelve and a half percent (12.5%), accrued for twelve months, and with the accrued interest to be added to the principal, and then interest will be paid by the Company, quarterly in arrears. The holders of the Series I Notes (in aggregate) are also entitled to receive ten percent (10%) of the net profits received by the Company, on the first fifty thousand tons processed through the mill facilities at San Jose de Gracia. Such net profits (if any) are to be calculated after deducting “all expenses related to the production”, and after a prior deduction of thirty-three percent (33%) from the net profits, to be deposited into a sinking fund cash reserve. To date, the Company has not produced any net profits as calculated in accordance with the Series I Notes.

The Notes originally matured on December 31, 2015. In April 2015, the Company received note extensions (allonges) from all Series I note holders to ensure that all Series I Notes were in good standing and also extended the maturity date of the Series I Notes to December 31, 2016. At December 31, 2016, one of the Series I Notes remained outstanding for a total of $5,801 and was paid in 2017, one of the Series I Notes was further extended to September 30, 2017, and the remaining Series I Notes were further extended to December 31, 2017. The balance of the Notes at September 30, 2017 was $950,625.

~~The Company has the right to prepay the Series I Notes with a ten percent (10%) penalty.~~

The Series I Note holder retains the option, at any time prior to maturity or prepayment, to convert any unpaid principal and accrued interest into Common Stock at $5.00 per share. If the Series I Note is converted into Common Stock, at the time of conversion, the holder would also receive warrants, in the same number as the number of common shares received upon conversion, to purchase additional common shares of the Company for $7.50 per share, with such warrants expiring on December 31, 2018.

In 2013 and 2014, the Company entered into additional note agreements of $199,808 and $250,000, respectively (the “Series II Notes”) with similar terms as the Series I Notes. The Series II Notes bear simple interest at twelve and a half percent (12.5%), accrued for twelve months, and with the accrued interest to be added to the principal, and then interest will be paid by the Company, quarterly in arrears. The holders of the Series II Notes (in aggregate) are also entitled to receive ten percent (10%) of the net profits received by the Company, on the second fifty thousand tons processed through the mill facilities at San Jose de Gracia. Such net profits (if any) are to be calculated after deducting “all expenses related to the production” l, and after a prior deduction of thirty-three percent (33%) from the net profits, to be deposited into a sinking fund cash reserve. To date, the Company has not produced any net profits as calculated in accordance with the Series II Notes.

The Notes originally matured on December 31, 2015. In April 2015, the Company received allonges (note extensions) from all noteholders to ensure that all notes were in good standing and also confirmed the maturity of the Series II notes to be December 31, 2016. At December 31, 2016, the remaining Series II Notes were further extended to December 31, 2017.

~~The Company has the right to prepay the Series II Notes with a ten percent (10%) penalty.~~

The Note holder may, at any time prior to maturity or prepayment, convert any unpaid principal and accrued interest into common stock of the Company at $5.00 per share. At the time of conversion, the holder would receive a warrant to purchase additional common shares of the Company for $7.50 per share, such warrant expiring on December 31, 2018.

On June 30, 2015, the Company entered into conversion agreements with six (6) note holders. Principal and interest in the amount of $809,784 plus $33,120 of accrued interest (total of $842,903) was contracted to convert into 337,162 common shares. In addition, 337,162 warrants were issued which provide the option to purchase common shares at $2.50, with all warrants expiring December 31, 2017. The Company recorded $826,347 inducement expense related to these conversion transactions. On August 17, 2015, these common shares and warrants were issued.

At September 30, 2017, the principal and capitalized interest balance on the remaining Series I Notes was $759,375, and the principal and capitalized interest on the Series II Notes was $191,250, for a total Note balance of $950,625. The accrued interest for these notes was $29,965 and $29,883 as of September 30, 2017 and 2016, respectively.

In June 2017, the Company entered into financing agreements in the amount of $541,245 in order to retain the rights to, and maintain exploratory mineral concessions. The Company paid twenty percent as an initial payment, $108,249, and financed the balance, payable over thirty-six months. In accordance with the Company’s policy of treatment of exploratory mineral concessions or properties, the Company capitalized all costs associated with the financing of the exploratory mineral concessions, including annual taxes or fees, and the Company expects to prepare an annual impairment analysis.

~~The following is a summary of the Notes Payable at September 30, 2017 and December 31, 2016:~~

In June 2017, the Company entered into financing agreements for unpaid mining concession taxes for the period July 1, 2014 through December 31, 2015 in the amount of $541,245. The Company paid 20% as an initial payment, $108,249, and financed the balance over thirty-six months.

~~The following is a summary of the transactions during the second and third quarters:~~

~~The only change in our stockholders’ equity in the three and nine months ended September 30, 2017 was the exercise of 1,000,000 warrants for cash at $2.50 per share.~~

~~Authorized Capital~~. The total number of shares of all classes of capital stock which the corporation ~~shall have~~has the authority to issue is ~~45,001,000~~60,001,000 shares, consisting of (i) ~~twenty million and one thousand (20,001,000)~~20,001,000 shares of Preferred Stock, par value $0.0001 per share (“Preferred ~~Stock~~”Stock”), of which ~~one thousand (1,000)~~1,000 shares ~~shall be~~are designated as Series A Preferred Stock, 1,734,992 are designated as Series C Preferred Stock, and 3,000,000 shares are designated as Series D Preferred Stock and (ii) ~~twenty-five million (25,000,000)~~40,000,000 shares of Common Stock, par value ~~$.01~~$0.01 per share (“Common ~~Stock~~”Stock”). As of June 30, 2023, 15,265,008 shares of Preferred Stock remain undesignated.

The Company has designated 1,000 shares of its Preferred Stock as Series A, having a par value of $0.0001 per share. Holders of the Series A Preferred Stock have the right to elect a majority of the Board of Directors of the Company. ~~In October 2007, the Company issued~~As of December 31, 2022, there were 1,000 shares of Series A Preferred Stock ~~to its CEO. At September~~outstanding. On April 19, 2023, the Company repurchased the Series A Preferred Stock from the CEO (see Note 13 – Related Party Transactions). The Series A Preferred shares were subsequently cancelled. As of June 30, ~~2017 and December 31, 2016,~~2023, there were ~~1,000 shares and 1,000~~no shares of Series A Preferred Stock ~~outstanding, respectively.~~outstanding.

As of June 30, 2015, the Company issued 1,600,000 Series C Senior Convertible Preferred Shares (the “Series C Preferred Shares”) at $2.50 per share for gross proceeds of $ 4,000,000, as well as issuing 133,221 additional2023 and December 31, 2022 there were 1,734,992 Series C Preferred ~~Shares due to anti-dilution provisions (with no cash remuneration). Legal fees~~shares outstanding. As of ~~$45,000 were deducted from the proceeds of this transaction at closing. These~~June 30, 2023, these Series C Preferred Shares are convertible to common shares at ~~$2.50~~$2.04 per share ~~through February 20, 2020.~~or redeemable in cash at the shareholder’s option and include anti-dilution protection. The Series C Preferred Shares may receive a 4% per annum dividend, payable if available, and in arrears. ~~A description~~The dividend is calculated at 4.0% of $4,337,480 payable annually on June 30th. As of June 30, 2023, dividends for the ~~transaction which included~~years 2016 to 2023 totaling $1,227,276 were in arrears.

Due to the ~~issuance~~nature of the Series C Preferred Shares ~~is included below. During 2016,~~as mandatorily redeemable, the ~~company~~Series C Preferred Shares are classified as “temporary equity” on the balance sheet.

On May 14, 2020, the Company closed an additional financing and related agreements with certain shareholders. On October 7, 2021, the Company paid ~~Dividends~~$2,500,000 to repurchase one note.

The remaining ten noteholders of ~~$160,000~~notes convertible into Series D Preferred Stock elected to convert their notes totaling $1,520,000 into Series D Preferred Stock at $2.00 per share. On October 18, 2021, the ~~holder~~Company issued 760,000 shares of Series ~~C Convertible~~D Preferred ~~Stock.~~Stock for these notes. The ~~Dividend~~Series D Preferred Stock may receive a 4% per annum dividend, payable if available, and in arrears. The dividend is calculated at 4.0% of ~~$4,000,000~~$1,520,000 payable annually on October 18^th. As of June ~~30. The accumulated~~30, 2023 dividends ~~were $128,211 and $120,000~~ for the ~~nine~~year 2022 totaling $60,800 were in arrears.

Due to the nature of the Series D Preferred as mandatorily redeemable by the Company at the election of the Series D Preferred stockholder at any time following maturity, the Series D Preferred Stock is classified as “temporary equity” on the balance sheet.

The deemed dividends on the Series C and D Preferred Stock for the six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022, were $117,150 and $117,150, respectively. As the Company has not declared these dividends, it is required as an item “below” the net income amount on the accompanying consolidated statements of income.

In addition to the 1,000 shares designated as Series A Preferred Stock, and the 1,734,992 shares designated as Series C Preferred Stock, and the 3,000,000 shares designated as Series D Preferred Stock, the Company is authorized to issue an additional 15,265,008 shares of Preferred Stock, having a par value of $0.0001 per share. The Board of Directors of the Company has authority to issue the Preferred Stock from time to time in one or more series, and with respect to each series of the Preferred Stock, to fix and state by the resolution the terms attached to the Preferred Stock. As of June 30, 2023 and December 31, 2022, there were no other shares of Preferred Stock outstanding.

The shares of each series of Preferred Stock may vary from the shares of any other series thereof in any or all the foregoing respects and in any other manner. The Board of Directors may increase the number of shares of Preferred Stock designated for any existing series by a resolution adding to such series authorized and unissued shares of Preferred Stock not designated for any other series. Unless otherwise provided in a particular Preferred Stock designation, the Board of Directors may decrease the number of shares of Preferred Stock designated for any existing series by a resolution subtracting from such series authorized and unissued shares of Preferred Stock designated for such existing series, and the shares so subtracted shall become authorized, unissued and undesignated shares of Preferred Stock.

The Company is authorized to issue ~~25,000,000~~40,000,000 common shares at a par value of $0.01 per share. These shares have full voting rights. ~~At September~~As of June 30, ~~2017~~2023, and December 31, ~~2016,~~2022, there were ~~17,722,825 and 16,722,825~~22,246,654 shares ~~outstanding, respectively.~~outstanding. No dividends were declared or paid ~~for~~during the ~~periods~~six months ended ~~September~~June 30, ~~2017.~~2023 and 2022.

The Company issued “Preferred Rights” for the rights to percentages of revenues generated from the San ~~Jose~~José de Gracia Pilot Production Plant and received ~~$158,500 in 2003 and $626,000 in 2002. This has been reflected as~~$784,500 for these rights. The “Preferred Rights” are reflected in stockholders’ equity. As of ~~December 31, 2004, $558,312 was repaid and as of December 31, 2005, an additional $186,188 was~~June 30, 2023, $744,500 had been repaid, leaving a current balance of $40,000 ~~and $40,000~~ as of ~~September~~June 30, ~~2017~~2023, and December 31, ~~2016, respectively.~~2022.

There were no issuances of ~~1,000,000 Common Share Options at $2.50 per Share – Total~~stock during the six months ended June 30, 2023.

~~On August 22, 2017,~~the Company’s common stock previously issued in return for services were returned to the Company ~~received proceeds~~as part of a settlement of fees.

There were 37,180 and 12,180 shares of Treasury Stock outstanding as of June 30, 2023 and December 31, 2022.

As of June 30, 2023, the Company had outstanding warrants, which were a part of the issuance of notes convertible into Series D Convertible Preferred Stock in 2020, to purchase 892,165 shares of common stock:

A derivative liability was incurred at the issuance of the Series D warrants in 2020. As of June 30, 2023, the derivative liability totaled $1,610,140. See Note 8 below.

The Company is required to pay taxes in México in order to maintain mining concessions owned by DynaMéxico. Additionally, the Company is required to incur a minimum amount of expenditures each year for all concessions held. The minimum expenditures are calculated based upon the land area, as well as the age of the concessions. Amounts spent in excess of the minimum may be carried forward indefinitely over the life of the concessions and are adjusted annually for inflation. Based on Management’s recent business activities and current and forward plans and considering expenditures on mining concessions from 2002 to 2017 and continuing expenditures in current and forward activities, the Company does not anticipate that DynaMéxico will have any difficulties meeting the minimum annual expenditures for the concessions ($388 - $2,400 Mexican Pesos per hectare). DynaMéxico retains sufficient carry- forward amounts to cover over 10 years of the minimum annual expenditure (as calculated at the 2017 minimum, adjusted for annual inflation of 4%).

In addition to the surface rights held by DynaMéxico pursuant to the Mining Act of México and its Regulations (Ley Minera y su Reglamento), DynaMineras maintains access and surface rights to the SJG Project pursuant to a 20-year Land Lease Agreement with the Santa Maria Ejido Community, the owners of the surface rights. The Land Lease Agreement was dated January 6, 2014 and continues through January 2033. It covers an area of 4,399 surrounding the main mineral resource areas of SJG and provides for annual lease payments on January 1^st each year by DynaMineras, in the amount of ~~$2.5 M USD following~~$1,359,443 Pesos (approximately $73,000 USD) adjusted for inflation based on the ~~exercise~~Mexico minimum wage increase. Rent was $4,414,124 Pesos (approximately $243,000 USD) for the year ended December 31, 2023, which was paid during the first quarter of ~~one million outstanding options at a price~~2023. The Land Lease Agreement provides DynaMineras with surface access to the core resource areas of ~~$2.50 per share. The option exercise was completed~~SJG (4,399 hectares) and ~~funded on August 22, 2017.~~

~~2017 Activity – On August 22, 2017, 1,000,0000 options to purchase common shares were exercised,~~allows for all permitted mining and ~~1,000,000 common shares were issued.~~

~~In the three months ended September 30, 2017, the Company did not repurchase any Notes.~~

~~In the nine months ended September 30, 2017, the Company repaid Notes with a principal balance of $5,625.~~

~~Shareholders of the Company exercised 1,000,000 warrants for cash at $2.50 per share.~~exploration activities.

The Company ~~follows FASB ASC subtopic 850-10, Related Party Disclosures,~~determines if a contract is or contains a lease at inception. As of June 30, 2023, the Company has two operating leases: corporate office space and a twenty-year ground lease in association with its México mining operations. An agreement for the ~~identification~~lease of ~~related parties~~expanded office space was signed in the first quarter of 2023 and ~~disclosure of related party transactions. Pursuant to ASC 850-10-20, related parties include: a) affiliates~~will commence when the build-out of the ~~Company; b) entities~~space is complete, which is anticipated to be during the third quarter of 2023. Until that time, the existing space is being leased on a month-to-month basis. The ground lease has a remaining term of approximately 10 years. Variable lease costs consist primarily of variable common area maintenance, storage parking and utilities. The Company’s leases do not have any residual value guarantees or restrictive covenants.

As the implicit rate is not readily determinable for ~~which investments in their equity securities would be required, absent the election~~most of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with whichCompany’s lease agreements, the Company ~~may deal if one party controls or can significantly influence~~uses an estimated incremental borrowing rate to determine the ~~management or operating policies~~initial present value of lease payments. These discount rates for leases are calculated using the ~~other to an extent that one~~Company’s interest rate of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

Material related party transactions are required to be disclosed in the consolidated financial statements, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which statements of operation are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which statements of operations are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

The Company paid $124,000 and $91,000 to Dynacap Group, Ltd. (“Dynacap”, an entity controlled by the CEO of the Company) for consulting and other fees during the nine months ended September 30, 2017 and 2016, respectively. Dynacap retains 2 individuals who are family members of the CEO, as well as 2 consultants, as independent contractors who provide administrative and executive support services to the Company. Dynacap has provided these services to the Company for recent years.

~~Company Chairman/CEO loaned $75,000 and a former Company CFO loaned $150,000 as advances to the Company in 2015.~~promissory notes.

In 2015, the Company converted $175,000 of advances from the CEO for the issuance of 70,000 shares of common (at $2.50 per share) as well as 70,000 warrants, exercisable at $2.50 per share, expiring December 31, 2017. These shares were issued in August 2015. The Company repaid the $150,000 advance to the former CFO in 2016.NOTE 8 - DERIVATIVE LIABILITY

~~NOTE 10 – DERIVATIVE LIABILITIES~~Warrants Issued With the Notes Convertible Into Series D Preferred

As discussed in Note 8,6, the Company analyzed the ~~embedded~~ conversion features of the promissory notes convertible into Series CD Preferred ~~Stock~~ and determined that the ~~stock~~Warrants issued with such notes qualified as a derivative ~~liability and is~~liability. The fair value was required to be ~~bifurcated and accounted for as such since~~allocated among the ~~host~~notes, the notes’ conversion features, and the ~~embedded instrument are not clearly~~warrants, and ~~closely related.~~then remeasured at each reporting date. The Company performed a valuation of the conversion feature. In performing the valuation, the Company applied the guidance in ASC 820,“Fair Value Measurements”,to nonfinancial assets and liabilities that are recognized or disclosed at fair value on a nonrecurring basis. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). To measure fair value, the Company incorporates assumptions that market participants would use in pricing the asset or liability and utilizes market data to the maximum extent possible.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

The Company considered the inputs in this valuation to be level 3 in the fair value hierarchy under ASC 820 and used an equity simulation model to determine the value of conversion feature of the Series C Preferred Stock based on the assumptions below for the nine months ended September 30, 2017 and year ended December 31, 2016:

~~The below table represents the change in the fair value of the derivative liability (Preferred Series C Stock) during the nine months ending September 30, 2017 and the year ending December 31, 2016:~~

As discussed in Note 8, the Company analyzed the embedded conversion features of the Series C Preferred Stock and determined that the Warrants qualified as a derivative liability and is required to be bifurcated and accounted for as such since the host and the embedded instrument are not clearly and closely related. The Company performed a valuation of the conversion feature. In performing the valuation, the Company applied the guidance in ASC 820,~~“Fair Value Measurements”,~~ to nonfinancial assets and liabilities that are recognized or disclosed at fair value on a nonrecurring basis. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). To measure fair value, the Company incorporates assumptions that market participants would use in pricing the asset or liability, and utilizes market data to the maximum extent possible.

The Company considered the inputs in this valuation to be level 3 in the fair value hierarchy under ASC 820 and used an equity simulation model to determine the value of conversion feature of the Warrants issued with the notes convertible into Series D Preferred based on the assumptions ~~below for~~below:

For the ~~periods~~six and twelve months ended ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016:~~2022, an active market for the Company’s common stock did not exist. Accordingly, the fair value of the Company’s common stock was estimated using a valuation model with level 3 inputs.

The below table represents the change in the fair value of the derivative liability ~~(Preferred Series C Warrants) for~~during the ~~period~~six and twelve months ended ~~September~~June 30, ~~2017 and the year ending December 31, 2016.~~

~~Total (Gain) Loss on Derivative Liability (Preferred Series C Stock and Warrants)~~

~~The below table represents the total (gain) or loss, of the derivative liability (Preferred Series C Stock and Warrants) for the period ended September 30, 2017 and the year ending December 31, 2016.~~

The Company’s Non-Controlling Interest recorded in the consolidated financial statements relates to an interest in DynaResource de México, S.A. de C.V. of 50% through May 13, 2013, and 20% thereafter. Changes in Non-Controlling Interest for the periods ended September 30, 20172023 and December 31, ~~2016, respectively were as follows:~~2022.

The Company began allocating a portion of other comprehensive income (loss) to the non-controlling interest with the adoption of SFAS 160 as of January 1, 2009. However, this amount is only reflected in the income statement.

The ASC 820 guidance for fair value measurements and disclosure establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1 Inputs – - Quoted prices for identical instruments in active markets.

Level 2 Inputs – - Quoted prices for similar instruments in active ~~markets;~~markets; quoted prices for identical or similar instruments in markets that are not ~~active;~~active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

As of ~~September~~June 30, ~~2017,~~2023 and December 31, ~~2016,~~2022, the Company’s financial assets and liabilities were measured at fair value using Level 3 inputs, ~~except for~~with the exception of cash, which was valued using Level 1 inputs. A description of the valuation of the Level 3 inputs is discussed in Note 8.


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Table of Contents

The Company ~~receives revenues from~~had certain customers ~~who~~whose revenue individually represented 10% or more of the Company’s total revenue, ~~and the Company’s~~or whose accounts receivable balances ~~are represented by customers who~~ individually represented 10% or more of the Company’s total accounts receivable, as ~~described below:~~follows:

For each of the ~~three~~six months ended ~~September~~June 30, ~~2017 one customer accounted for 100% of revenue~~2023 and ~~for the three months ended September 30, 2016,~~2022, one customer accounted for 100% of revenue.

As of June 30, ~~2017 two customers accounted for 100% of revenue~~2023 and ~~for the nine months ended September 30, 2016, two customers accounted for 100% of revenue.~~

~~At September 30, 2017, one customer accounted for 100% of accounts receivable. At~~ December 31, ~~2016,~~2022, one customer accounted for 100% of accounts receivable.

In September 2018, the Company entered into financing agreements for the unpaid mining concession taxes on the Francisco Arturo mining concession for the year ended December 31, 2017 and the period ending September 30, 2018 in the amount of $1,739,392. The Company paid an initial 20% payment of $347,826 and financed the balance over 36 months at an interest rate of 21.84% per annum.

In February 2019, the Company entered into a financing agreement for unpaid mining concession taxes on the Francisco Arturo mining concession for the year ended December 31, 2018 in the amount of $335,350. The Company paid an initial 20% payment of $67,070 and financed the balance over 36 months at an interest rate of 22% per annum.

In September 2018, the Company applied for a reduction of the Francisco Arturo mining concession, from 69,121 hectares to 3,280 hectares. On July 31, 2018, the application for reduction was approved and the Company paid an initial amount of 985,116 MNP (Pesos), for the second semester 2018 mining concessions taxes on the reduced Francisco Arturo mining concession. The Company continues to accrue an amount of $22,500 (USD) per semester (six months) on the reduced Francisco Arturo mining concession.

As of September 2019, the Company ceased making monthly payments on the above noted Francisco Arturo concession notes and has petitioned the Hacienda (Mexican federal tax authority) for a reduction in the liability which is pro-rata to the reduction in the Francisco Arturo concession. For financial reporting purposes the Company continues to carry all notes (to finance unpaid mining concession taxes) at their unpaid principal amount and accrues interest on a monthly basis. As of June 30, 2023, $1,981,947 of accrued interest on the notes was included in accrued liabilities on the unaudited consolidated balance sheet.

In October 2019, the Company entered into a financing agreement for unpaid mining concession taxes on the core mining concessions in the amount of $299,474. The Company paid an initial 20% payment of $59,895 and financed the balance over 36 months at an interest rate of 22%.

The following is a summary of the activity during the six months ended June 30, 2023:

On July 17, 2023, the ~~second quarter 2017, we identified certain property taxes amounting~~Company filed a Certificate of Amendment to ~~$541,245 from 2014~~its Amended and ~~2015,~~Restated Certificate of Incorporation (the “Amendment”). The Amendment was adopted by the Company’s stockholders at the annual meeting of stockholders held on July 14, 2023. Pursuant to the Amendment, the Company’s Series A Preferred Stock was removed as a series of Preferred Stock, and ~~$169,232 from 2016,~~the composition of the Company’s Board of Directors was revised by redesignating the incumbent Class II Directors as Class I Directors and the incumbent Class III Director as the Class II Director, and removing the position of Class III Director. The foregoing description of the Amendment is qualified in its entirety by reference to the full text of the Amendment, a copy of which ~~were not expensed~~Amendment is available as ~~required,~~Appendix I to the Company’s Proxy Statement on Schedule 14A filed with the SEC on June 12, 2023 and incorporated herein in its entirety by reference.

On August 2, 2023, the Company entered into (1) an Amendment Agreement (the “OP Amendment”) to the Gold Concentrate Purchase Agreement dated February 1, 2021, as amended (the “Offtake Agreement”) by and between the Company’s affiliate, DynaResource de Mexico, SA de CV (“Dyna Mex”), and an ~~over accrual~~affiliate of ~~$150,000~~Ocean Partners Holdings Limited (“Ocean Partners”), MK Metal Trading Mexico SA de CV (“Buyer”), and (2) a Stock Purchase Agreement (the “Stock Purchase Agreement”) by and between the Company and Ocean Partners. The Amendment and the Stock Purchase Agreement were entered into pursuant to the terms of the Memorandum of Understanding dated June 29, 2023 (the “MOU”) by and between the Company and Ocean Partners.

Pursuant to the Stock Purchase Agreement, the Company issued and sold to Ocean Partners 1,000,000 shares of the Company’s Common Stock for ~~legal expenses at December 31, 2016. The Company assessed the materiality~~a purchase price of this misstatement in the 2016 and 2015 periods financial statements in accordance with the SEC’s Staff Accounting Bulletin (SAB) No. 99, codified in ASC No. 250, Presentation of Financial Statements, and concluded that the misstatement was not material to any prior periods.$5,000,000. In ~~accordance with SAB 108,~~addition, the Company has ~~adjusted~~agreed to appoint Brent Omland, or another person nominated by Ocean Partners, as a director of the ~~three and nine months ended September 30, 2016~~Company subject to approval by the Company’s Board of Directors, consent to which approval shall not to be unreasonably withheld as consistent with the Board’s fiduciary duties, for a term running through the next annual meeting of the Company’s stockholders. Such nominee will be nominated, subject to approval by the Company’s Board of Directors, consent to which approval shall not to be unreasonably withheld as consistent with the Board’s fiduciary duties, for reelection by the shareholders at such annual meeting.

The foregoing descriptions of the Amendment and the ~~balance sheet~~Stock Purchase Agreement (“SPA”) are qualified in their entirety by reference to the full text of the Amendment and the Stock Purchase Agreement, copies of which are attached hereto as Exhibits 10.1 and 10.2, respectively, and incorporated herein by reference. The representations, warranties and covenants contained in the Amendment and the SPA were made only for purposes of such agreements and as of ~~December 31, 2016. The following presents these adjustments in detail:~~specific dates, were solely for the benefit of the parties to the agreements, and may be subject to limitations agreed upon by the contracting parties.

The Memorandum of Understanding of this transaction was disclosed in a Form 8-K filed with the Securities & Exchange Commission on July 6, 2023, and incorporated herein by reference.

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

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

This ~~quarterly report~~Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, which we refer to in this ~~annual~~ report as the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, which we refer to in this ~~annual~~ report as the Exchange Act. Forward-looking statements are not statements of historical fact but rather reflect our current expectations, estimates and predictions about future results and events. These statements may use words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “predict,” “project” and similar expressions as they relate to us or our management. When we make forward-looking statements, we are basing them on our management’s beliefs and assumptions, using information currently available to us. These forward-looking statements are subject to risks, uncertainties and assumptions, including but not limited to, (i) risks inherent in the mining business (including risks related to the development of large-scale mining projects, environmental hazards, industrial accidents, weather or geologically related conditions), (ii) changes in the market prices of precious metals and in the cost of mining and refining ores, (iii) the uncertainties inherent in the Company’s production, exploratory and developmental activities, including risks relating to permitting and regulatory delays (including the impact of government shutdowns), ground conditions and grade and recovery variability, (iv) any future labor disputes or work stoppages (involving the Company and its subsidiaries or third parties), (v) the uncertainties inherent in the estimation of mineral reserves and resources, (vi) changes that could result from the Company’s future acquisition of new mining properties or businesses, (vii) the Company’s reliance on a single purchaser to whom the Company markets its production, (viii) the effects of environmental and other governmental regulations in the United States and Mexico, (ix) the effects of changes in the general economic environment, including inflationary pressures, bank depositary risks, and the threat of recession, (x) the risks inherent in the ownership or operation of or investment in mining properties or businesses in foreign countries, and (xi) the Company’s ability to raise additional financing necessary to conduct its business. Readers are cautioned not to put undue reliance on forward-looking statements risks, uncertainties and assumptions discussed in this ~~annual~~ report. ~~Factors that can cause or contribute to these differences include those described under the heading “Management Discussion and Analysis and Plan of Operation.”~~

If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we projected. Any forward-looking statement you read in this ~~annual~~ report reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. All subsequent written and oral forward-looking statements attributable to us or individuals acting on our behalf are expressly qualified in their entirety by this paragraph. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this ~~annual~~ report. The Company expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking statements to reflect any change in its views or expectations. The Company can give no ~~assurances~~assurance that ~~such forward-looking~~forward looking statements will prove to be correct.

~~CAUTIONARY NOTE TO UNITED STATES INVESTORS—INFORMATION CONCERNING PREPARATION OF RESOURCE AND RESERVE ESTIMATES~~

~~The~~ Company ~~is an “OTC Reporting Issuer” as that term is defined in BC Multilateral Instrument 51-105,~~~~Issuers Quoted in the U.S. Over-the-Counter Markets~~~~, promulgated by the British Columbia Securities Commission.~~

In Canada, an issuer is required to provide technical information with respect to mineralization, including reserves and resources, if any, on its mineral exploration properties in accordance with Canadian requirements, which differ significantly from the requirements of the United States Securities and Exchange Commission (the “SEC”) applicable to registration statements and reports filed by United States companies pursuant to the Securities Act or the Exchange Act. As such, certain disclosures of mineralization under Canadian standards may not be comparable to similar information made public by United States companies subject to the reporting and disclosure requirements of the SEC and not subject to Canadian securities legislation.

~~While these terms are recognized and required by Canadian securities legislation (under National Instrument 43-101 (“NI 43-101”), entitled~~~~Standards of Disclosure for Mineral Projects~~), the SEC does not recognize these terms. Investors in the United States are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted to reserves. In addition, inferred mineral resources have a great amount of uncertainty as to their existence and economic and legal feasibility. It cannot be assumed that all or any part of a measured mineral resource, indicated mineral resource or inferred mineral resource will ever be upgraded to a higher category. Under Canadian securities legislation, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, although they may form, in certain circumstances, the basis of a “preliminary economic assessment” as that term is defined in NI 43-101. U.S. investors are cautioned not to assume that any part or all of any reported measured, indicated, or inferred mineral resource estimates referred to in the DynaMéxico NI 43-101 Technical Report and DynaMéxico 43-101 Mineral Resource Estimate (compiled for DynaResource de Mexico SA de CV) are economically or legally mineable.

Under U.S. standards, as set forth in SEC Industry Guide 7, mineralization may not be classified as a “reserve” unless a determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. The SJG Property as described in this Annual Report on Form 10-K is without known reserves. Mineral resources which are not classified as mineral reserves do not have “demonstrated economic viability.” The quantity of resources and the quality (grade) of resources reported as “Indicated” and “Inferred” mineral resources in the DynaMéxico 43-101 Mineral Resource Estimate compiled for DynaResource de Mexico SA de CV, under Canadian National Instrument 43-101 and filed by the Company with SEDAR, are~~not disclosed in this Form 10-Q. There has been insufficient exploration to define any mineral reserves on the SJG Property, and it is not certain if further exploration will result in the definition of mineral reserves.~~

The Company is a minerals investment, management, and exploration company, and currently conducting test mining and pilot milling operations through an operating subsidiary in México, with specific focus on ~~precious and base metals~~the prolific

San Jose de Gracia high grade gold project in México. The Company was incorporated in the State of California on September 28, 1937, under the name West Coast Mines, Inc. In November 1998, the Company re-domiciled from California to Delaware and changed its name to DynaResource, Inc. (“DynaUSA”).

We currently conduct ~~operations~~activities in México through our operating ~~subsidiaries.~~subsidiary DynaResource de Mexico SA de CV. (“DynaMexico”). We currently own ~~80%~~100% of the outstanding shares of ~~DynaResource de Mé~~DynaMéxico, ~~S.A. de C.V. (“DynaMéxico”).~~and DynaMéxico owns 100% of mining concessions, equipment, camp and related facilities which comprise the San ~~Jose~~José de Gracia Property (“SJG”), in northern Sinaloa State, México. ~~We also own 100% of Mineras de DynaResource S.A. de C.V. (“DynaMineras”), the exclusive operator of the San José de Gracia~~

Project ~~under contract with DynaMéxico.~~Improvements, Expansion and Increased Output (2017 To Present)

In 2000, the Company formed DynaResource de México S.A. de C.V. (“DynaMéxico”) for the purpose of acquiring and holding mineral properties and mining concessions in México and, specifically for acquiring and consolidating the Mining District of San Jose de Gracia. DynaMéxico completed the consolidation of the entire SJG District to DynaMéxico in 2003 (approx. 15 sq. km. at that time), with the exception of the San Miguel Mining Concession (7 Hectares, for which DynaMéxico is proceeding towards accomplishing the transfer of title, under previously signed sale and purchase agreements).

In 2005, the Company formed Mineras de DynaResource S.A. de C.V. (“DynaMineras”), a wholly owned subsidiary. DynaMineras entered into an operating agreement with DynaMéxico on April 15, 2005. As a consequence of that agreement and subsequent amendments to that agreement, DynaMineras is the exclusive operating entity for the SJG Project.

Also in 2005, the Company formed another wholly owned subsidiary, DynaResource Operaciones, S.A. de C.V. (“DynaOperaciones”). DynaOperaciones entered into a personnel management agreement with DynaMineras and, as a consequence of that agreement, is the exclusive management company for personnel and consultants involved at the SJG Project.

DynaMéxico currently owns a portfolio of mining concessions, equipment, camp and related facilities which comprise the San José de Gracia Project (“SJG”). The mining concessions cover 69,121 hectares (170,802 acres) on the west side of the Sierra Madre mountain range, in northern Sinaloa State.

The Company ~~currently owns 80%~~continues its business plan of the outstanding shares of DynaMéxico. We also own 100% of Mineras de DynaResource S.A. de C.V. (“DynaMineras”), the exclusive operator of the San José de Gracia Project, under contract with DynaMéxico, and we own 100% of DynaResource Operaciones de San Jose de Gracia, S.A. de C.V., (“DynaOperaciones”), a company which manages the personnel registered to work at the San Jose de Gracia Project.

Historical production records from San Jose de Gracia (“SJG”) report 1,000,000 Oz gold production from a series of underground workings. The major areas report 471,000 Oz. produced at the La Purisima area of SJG, at an average grade of 66.7 g/t.; and 215,000 Oz. produced from the La Prieta area, at an average grade of 27.6 g/t. Mineralization at SJG has been traced on surface and underground over 15 sq. km.

DynaMéxico was formed in March 2000, for the purpose of acquiring the concessions comprising the SJG District, and to consolidate all ownership of SJG under DynaMéxico. DynaMéxico focused on acquisition and consolidation work through 2003, and reported a virtually clear title and consolidated ownership to the district at December 31, 2013.

The SJG property is without known reserves. Under U.S. standards, mineralization may not be classified as a “reserve” unless a determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made.

On May 15, 2013, DynaMineras entered into an Exploitation Amendment Agreement (“EAA”) with DynaMéxico. The EAA grants to DynaMineras the right to finance, explore, develop and exploit the SJG Property, in exchange for:

(a) Reimbursement of all costs associated with financing, maintenance, exploration, development and exploitation of the SJG Property, which costs are to be charged and billed by DynaMineras to DynaMéxico; and,

(b) After Item (A) above, the receipt by DynaMineras of 75% of gross receipts received by DynaMéxico from the sale of all minerals produced from SJG, to the point that DynaMineras has received 200% of its advanced funds; and,

(c) after items (A) and (B) above; the receipt by DynaMineras of 50% of all gross receipts received by DynaMéxico from the sale of all minerals produced from SJG, and throughout the term of the EAA; and,

~~(d) in addition to Items (a), (b), and (c) above, DynaMineras shall receive a 2.5% NSR (“Net Smelter Royalty”) on all minerals sold from SJG over the term of the EAA.~~

The total unpaid advances made by DynaMineras to DynaMéxico as of September 30, 2017 is $2,125,000. The EAA is the third and latest Amendment to the original Contract Mining Services and Mineral Production Agreement (the “Operating Agreement”), which was previously entered into by DynaMineras with DynaMéxico in April 2005, wherein DynaMineras was named the Exclusive Operating Entity at SJG. The Operating Agreement was previously amended in September 2006 (the “First Amendment”), and amended again at July 15, 2011 (the “Second Amendment”). The Term of the Second Amendment is 20 years, and the EAA (Third Amendment) provides for the continuation of the 20 Year Term from the date of the Second Amendment (July 15, 2011).

~~On January 6, 2014 DynaMineras entered into a 20-year surface rights agreement with~~the Santa Maria Ejido Community surrounding the San Jose de Gracia Property (the “20 Year SRA”). The 20 Year SRA covers an area of 4,399 hectares surrounding the main mineral resource areas of SJG, and provides for annual lease payments by DynaMineras of $1,359,443 Pesos (approx. $85,000 USD), commencing in 2014. The 20-year SRA provides DynaMineras with surface access to the core resource areas of SJG, and allows for all permitted mining, pilot production and exploration activities from the owners of the surface rights (Santa Maria Ejido community).

Additionally, DynaMineras expects to construct a Medical Facility and a Community Center within the SJG community in year 2015. DynaMineras reports that land and building for which the medical facility and community center will be constructed have been approved for re-zoning by the local community; and plans are being drawn for constructing the facilities.

Activities in México are conducted by Mineras de DynaResource S.A. de C.V. (“DynaMineras”); with the management of personnel being contracted by DynaMineras through to the personnel management subsidiary, DynaResource Operaciones, S.A. de C.V. (“DynaOperaciones”). Management of DynaResource, Inc. and consultants continue to manage the operating companies in México; while the Chairman/CEO of DynaUSA is the President of each of the operating companies in México. Fees for Management and administration are charged by DynaMineras and DynaOperaciones, which are eliminated in consolidation.

In 2013, DynaMineras, in accordance with the terms of the Exploitation Amendment Agreement, commenced the rehabilitation of the San Pablo Mine and the refurbishment of the pilot production facility at SJG. DynaMéxico received permits as discussed above for the rehabilitation and operation of the pilot mill facility and the exploitation and mining of the San Pablo area of SJG. The basis for the mining activity and the operation of the pilot mill facility are the NI 43-101 Mineral Resource Estimate, the Technical Report, the block models prepared as a result of the recent drilling activity, and the recent production history of 2003-2006.

The mining industry in general requires significant capital in order to take a property from the exploration, to development to production. These costs remain a significant barrier to entry for the average company but once in production, there is a ready market for the final products, In the case of SJG, the final product would be mainly gold, the price of which is determined by global markets, so there is not a dependence on a customer base.

~~Gold Uses.~~ Gold generally is used for fabrication or investment. Fabricated gold has a variety of end uses, including jewelry, electronics, dentistry, industrial and decorative uses, medals, medallions and official coins. Gold investors buy gold bullion, official coins and jewelry.

~~Gold Supply.~~ A combination of current mine production, recycling and draw-down of existing gold stocks held by governments, financial institutions, industrial organizations and private individuals make up the annual gold supply. Based on public information available for the years 2008 through 2014, on average, current mine production has accounted for approximately 64% of the annual gold supply.

~~Gold Price.~~ ~~The following table presents the annual high, low and average daily afternoon fixing prices for gold over the past ten years on the London Bullion Market ($/ounce):~~

~~On October 16, 2017, the afternoon fixing gold price on the London Bullion Market was $1,303.30 per ounce and the spot market gold price on the New York Commodity Exchange was $1,294 per ounce.~~

Our business is capital intensive and requires ongoing capital investment for the replacement, modernization or expansion of equipment and facilities. We and our subsidiaries maintain insurance policies against property loss. Such insurance, however, contains exclusions and limitations on coverage, particularly with respect to environmental liability and political risk. There can be no assurance that claims would be paid under such insurance policies in connection with a particular event.

Our activities are largely outside the United States and subject to governmental regulations for the protection of the environment. We conduct our operations so as to protect public health and the environment and believe our operations are in compliance with applicable laws and regulations in all material respects. DynaMéxico is involved with maintaining tailings ponds and test mining and pilot milling operations at SJG, and to improve, increase and expand test mining and pilot milling operations and generally, to increase production of gold ounces, and since 2022 to continue exploration activities ~~(through DynaMineras)~~at SJG with the ~~oversight~~target to increase primarily gold resources. Since the January 2015 startup of ~~SEMARNAT,~~ the ~~federal environmental agency~~test mining and milling activities at SJG, the Company has increased daily output from an initial average of ~~México.~~

100 tons per 24-hour operating day, to a current average of approximately 550 tons per 24-hour operating day. During the second half of 2023, the Company expects to achieve production output from test mining and milling activities, to an average of approximately 700 tons per 24-hour operating day. (Note the Summary of Test Mining and Pilot Mill Operations below).

Since January 2017, the Company has expended over $36.6 million USD in non-recurring costs, generally classified as project improvements and expansion costs which have been expensed in the company’s financial statements and other uses of cash which are non-recurring such as debt repayment, purchase of the Series A preferred stock and legal fees. These funds have been provided primarily from cash flows from operations. An itemized list of these non-operating costs is described below:

The Company is currently reporting all costs of test mining operations, project improvements, and project expansion as expenses in accordance with the United States Securities & Exchange Commission requirements for an exploration stage company. The result of expensing all costs is that the ~~nine months ended September 30, 2017~~Company has accumulated a net loss carry-forward from México operations of $8 million USD which is available to offset future taxable earnings.

Test mining and pilot milling operations ~~during 2017~~in 2022 yielded 137,740 tons of material, test mined from underground access and ~~2016:~~

~~Test~~processed through pilot milling plant operations. These test pilot operations in ~~the nine months ended September 30, 2017~~2022 yielded ~~22,808 tonnes mined~~approximately 28,988 gross ounces of gold recovered, and ~~processed from underground mining activity and pilot mill operations; and the production of approximately 7,859 gross Oz Au (and~~ net of dry ~~weights,~~weight and provisional assay at the buyer’s ~~price discount and refining and treatment costs,~~facilities of approximately ~~6,307 Oz. Au) contained in gold-silver concentrates, and the receipt~~25,554 ounces of ~~$7,233,329 in revenues from the sale of gold-silver concentrates.~~gold sold.

1823

Table of Contents

Quarterly Results for the Six Months Ended June 30, 2023 and 2022:

Total

Tons

Mined &

Processed

Reported

Mill Feed

Grade (g/t Au)

Reported

Recovery

Estimated Gross Gold Concentrates Recovered

(Au oz.)

Net Gold (1) Concentrates

Sold (Au oz.)

Six Months Ended June 30, 2023

104,667

6.19

73.87

15,378

14,248

Six Months Ended June 30, 2022

58,315

9.39

80.00

14,090

12,004

(1)

Gold concentrate sold during the quarter is not equal to gold concentrate recovered during the quarter due to timing of shipments to buyer, and due to buyer’s discount for the purchase of gold concentrate, and due to any adjustment from dry weight and assay in provisional settlements with buyer.

Mill tonnage processed, feed grade and recovery rates are estimates based on internal reports of assays and estimated weights of tonnage mined and shipped to the plant. 2022 estimated tonnage has been adjusted down from those included in the table presented in the June 30, 2022 Form 10-Q to reflect management’s updated estimates of tonnage processed and of gold recovered and delivered for sale.

Test pilot operations in ~~the nine~~three months ended ~~September 30, 2016~~March 31, 2023 yielded ~~30,603 tonnes~~53,258 tons mined and processed ~~from underground mining activity and pilot~~through mill ~~operations;~~facility (an average of 592 tons per day) and the ~~production~~recovery of ~~approximately 9,990~~8,204 gross Au Oz resulting in sales of 6,810 gross Au ~~(and net of dry weights, buyer’s price discount and refining and treatment costs, approximately 7,385 Oz. Au)~~Oz contained in gold-silver concentrates, and $11,953,079 of revenue, net of buyer’s price discount, refining and treatment costs.

Test pilot operations in three months ended June 30, 2023 yielded 51,409 tons mined and processed through mill facility (average of 565 tons per day) and the recovery of 7,173 gross Au Oz resulting in sales of 7,438 gross Au Oz contained in gold-silver concentrates, and $13,505,752 of revenue, net of buyer’s price discount, refining and treatment costs. The revenue from three months ended June 30, 2023 was offset by adjustments in final settlements of $(2,593,583) on provisional settlements recorded on prior period shipments. Consistent with ongoing practice, the final settlement assays can lag up to a period of six months due to Buyer’s receipt of ~~$7,185,900 in revenues~~final assay from the ~~sale~~independent assay firm.

Reported recovery percentage in the six months ended June 30, 2023 is less than the recovery percentage reported in the six months ended June 30, 2022 as a result of ~~gold-silver concentrates.~~the expansion of the Company’s mill operations, and a resulting decrease in operating efficiency. The Company added two ball mills to the mill facility in fourth quarter 2022, which commenced test mill operations with increased capacity in 2023. With this additional capacity, the Company achieved an increase in tonnage processed from 58,315 in the six months ended June 30, 2022 (average of 322 tons per day) to 104,667 during the six months ended June 30, 2023 (average of 578 tons per day), and during the same periods the Company reported a decrease in feed grade from 9.39 g/t Au to 6.19 g/t Au. The decrease in recovery percentage from 80% to 73.87% was a result of processing inefficiencies due to the new ball mill installations, testing activities and other adjustments to the operating inputs of the new ball mills. We believe the test mill operations will achieve increased efficiencies as we gain experience with larger volumes of material processed. However, the Company believes the reported recovery percentage may continue to be a reduced percentage from prior periods, as we process larger volumes of material.

The drop in the feed grade at the pilot plant facility is a result of some dilution experienced in the test mining activities, and partially due to the increase in test mining tonnage. To increase the tonnage of higher-grade test mining material available for test mill processing, the Company has commenced the opening to another test mining area of SJG. The Company expects to achieve the access to an additional test mining area at SJG during the third quarter, 2023.

The Company expects to continue its test underground mining activity and pilot milling operations in ~~2017;~~2023, and projects ~~the~~an increased output to an average of ~~150 tons/day – 250 tons/day from the mine and mill in the fourth quarter 2017.~~

~~On the below listed dates, DynaMineras reported the delivery for sale of gold ounces contained in concentrates (exact weights in gold and silver Oz. to be determined at final settlement):~~

~~Cash Receipts Subsequent to September 30, 2017 from the Delivery and Sale of Gold Concentrates~~

~~On the below listed dates, DynaMineras received the following amounts of net proceeds from the sale of gold-silver concentrates:~~

~~In the first and second quarter 2017, the Company expended~~ approximately $230,000 USD on the following projects which are one-time expenses. These amounts are included in our financial statements under the heading Other Assets and booked as construction in progress. When the improvements are complete, the costs will be moved to fixed assets and depreciated. These activities reduced the number of pilot mill operating days in the first quarter, 2017 to approximately 60. In the second and third quarters 2017, the Company operated the mill with reduced output in order to re-tool one ball mill, and to build a new foundation for this ball mill. The Company projects the re-insertion of this ball mill into the milling operation in the fourth quarter, and the Company expects to install a third ball mill into the milling operations in the fourth quarter. As the pilot mill capacity is increased with the operation of three ball mills, the Company projects test mining and pilot mill processing volumes to reach 250700 tons per 24-hour operating day ~~in the fourth quarter, 2017.~~

~~A medical clinic at San Jose de Gracia is being constructed by the Company and will be donated to the San Jose de Gracia Community.~~

~~The Company has expanded the capacity of the tailings pond adjacent to the pilot mill facility. The Company completed the tailings pond expansion in the second quarter, 2017.~~

~~The Company is currently expanding the capacity of its camp facilities at San Jose de Gracia. The Company expects to complete the camp expansion work in the fourth quarter, 2017.~~

The Company is currently conducting activities within the Pilot Mill Facility which are intended to improve processing efficiencies and to expand capacities. The Company expects to complete these activities in the fourth quarter, 2017.

~~During~~during the third quarter 2017, the Company has developed an additional access to the mineralized vein at San Pablo. The Company projects obtaining additional tonnage from the additional access at San Pablo in the fourth quarter 2017.2023.

The Company, through its subsidiaries, has been conducting business in México since March 2000. During this period the Company believes it has structured its subsidiaries properly and strategically, and during which time the Company has retained key personnel and developed key relationships and support. The Company believes its experience and accomplishments and relationships in México give it a competitive advantage, even though many competitors may be larger and have more capital resources.

DynaMéxico retains 100% of the rights to concessions over the area of the San José de Gracia property and it currently sees no competition for mining on the lands covered by those concessions. The sale of gold and any bi-products would be subject to global market prices; which prices fluctuate daily. DynaMéxico was successful in selling gold concentrates produced from SJG in prior years, and the Company expects a competitive market for produced concentrates and/or other mineral products in the future. Actual prices received by DynaMineras in the sale of concentrates or other products produced from San Jose de Gracia would depend upon these global market prices, less deductions.

The Company’s operating subsidiaries, DynaMineras and DynaOperaciones, receive monthly fees for management of the SJG activities and personnel. These fee amounts are eliminated in consolidation. Other than those intercompany fees, the Company reported revenue of $7,233,329 and $8,192,230 for the nine months ended September 30, 2017 and September 30, 2016 respectively.

Results for the ~~Three~~three and ~~Nine Months Ended September 30, 2017 and 2016~~

~~In the nine~~six months ended ~~September~~June 30, ~~2017,~~2023 and 2022

REVENUE: Revenue for the ~~Company, through its wholly owned subsidiary DynaMineras, continued full test mining and pilot mill operations at San Jose de Gracia.~~

~~DynaMineras conducted test mining and milling operations in the third quarter of 2017 and 2016. During the three~~six months ended ~~September~~June 30, ~~2017, the test mining~~2023 and ~~pilot milling operations have yielded the underground mining~~2022 was $22,865,248 and mill processing of approx. 7,773 tonnes of mineralized material, the production of approximately 3,003 gross oz. Au (and net of weight and value adjustment) approximately 2,191 oz. Au) contained in gold-silver concentrates. DynaMineras realized the receipt of $2,674,015 in revenues from the delivery and sale of gold-silver concentrates in the three months ended September 30, 2017 and $7,233,329 in revenues for the nine months ended September 30, 2017.

~~REVENUE. Revenues~~$20,590,513. Revenue for the three months ended ~~September~~June 30, ~~2017~~2023 and ~~2016 were $2,674,015~~2022 was $10,912,169 and ~~$3,027,305, respectively. Revenues~~$10,098,010. The increase was a result of an increase in tonnage mined and processed during the six months ended June 30, 2023 from 58,315 tons in 2022 to 104,667 in 2023. The increase in tonnage during the six months ended June 30, 2023 was offset by a reduction in the feed grade of the material processed from 9.39 g/t au in the six months period ending June 30, 2022 to 6.19 g/t au per ton for the ~~nine~~six months ended ~~September~~June 30, ~~2017 and 2016 were $7,233,329 and $8,192,230, respectively. The~~2023. In addition, the Company’s recovery rates declined from 80.0% in the six months ended June 30, 2022 to 73.87% in the six months ended June 30, 2023, due primarily to the reduced efficiency while implementing two new ball mills into the pilot mill operations. In addition, during the three months ended June 30, 2023, the Company ~~has established consistent test mining and pilot milling operations since January 2016.~~recorded adjustments in final settlements related to provisional settlements from prior periods of $(2,593,583).

PRODUCTION COSTS RELATED TO ~~SALES.~~SALES: Production costs related to sales for the six months ended June 30, 2023 and 2022 were $3,766,775 and $1,912,730. Production costs for the three months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022 were ~~$928,663~~$2,055,513 and ~~$443,703, respectively. Production costs related to sales for the nine months ended September 30, 2017 and 2016 were $2,586,553 and $1,308,858, respectively.~~$1,147,235. These are expenses directly related to the test milling, packaging and shipping of primarily gold ~~and other precious metals product. These costs increased~~concentrates. The increase is a result of the increase in the ~~current versus the prior year due to the Company incurring additional costs as it prepares its~~volume of test mining and milling ~~operations to increase its capacity. The Company believes the results~~activities from an average of ~~these additional expenditures will be seen~~322 tons per day in the ~~fourth quarter~~six months ended June 30, 2022 to an average of ~~2017.~~578 tons per day in the six months ended June 30, 2023.

MINE ~~OPERATING COSTS.~~PRODUCTION COSTS: Costs associated with test mining activities (mine production costs) for the six months ended June 30, 2023 and 2022 were $5,468,959 and $2,839,255. Mine ~~operating~~production costs for the three months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022 were ~~$1,100,948~~$2,939,522 and ~~$1,061,073, respectively. Mine operating~~$1,611,371. The Company allocates total test mining costs ~~for the nine months ended September 30, 2017~~between production and ~~2016 were $2,659,093 and $3,036,423, respectively.~~waste based on tonnage mined. These costs ~~are~~were directly related to the extraction ~~and transportation~~ of mine tonnage to be processed at the pilot mill facility. For the six months ended June 30, 2023, the Company test mined 97,229 tons of material compared to 63,984 tons in the six months ended June 30, 2022.

MINE EXPLORATION COSTS: Mine exploration costs for the six months ended June 30, 2023 and ~~correlate closely with~~2022 were $4,463,973 and $2,456,968. Costs for the ~~amount~~three months ended June 30, 2023 and 2022 were $2,247,024 and $1,578,780. Mine exploration costs are the costs of ~~ore processed after adjusting~~extracting waste material in order to reach the tonnage of material to be extracted for ~~stock piled inventory.~~processing at the pilot mill facility. For the six months ended June 30, 2023 the Company mined 81,154 tons of waste compared to 54,030 in the six months ended June 30, 2022. The increase in mine exploration costs was largely due to the initiative to open an additional area at SJG for test mining activities commencing in the second quarter of 2023.

FACILITIES EXPANSION COSTS: Facilities expansion costs for the six months ended June 30, 2023 and 2022 were $824,671 and $2,971,407. Expansion costs for the three months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022 were ~~$135,681~~$539,593 and ~~$153,286, respectively.~~$2,362,804. The major expenses reported for the six months ended June 30, 2022 were the expansion of the tailings pond and the acquisition and preparation for the installation of two new ball mills. The major expenses reported in the six months ended June 30, 2023 have been additions to the ball mill installations and related improvements to the mill facility, and mining infrastructure for the access to an additional test mining area at SJG.

EXPLORATION DRILLING: During the first quarter of 2022, the Company began an exploration drilling program for the purposes of updating the Company’s CND NI 43-101 Mineral Resource Estimate. Exploration expenditures for the six months ended June 30, 2023 and 2022 were $1,125,275 and $1,222,190. Exploration Costs for the three months ended June 30, 2023 and 2022 were $627,875 and $734,575.

CAMP, WAREHOUSE AND FACILITIES: Camp, warehouse and support facility costs for the six months ended June 30, 2023 and 2022 were $2,508,459 and $2,236,028. Costs for the three months ended June 30, 2023 and 2022 were $1,426,280 and $1,410,825. These represent the costs of supporting the test mining facilities including housing, food, security and warehouse operations. The increase in costs recorded for the six months ended June 30, 2023 was a result of the increase in test mining activity as a result of the facilities expansion and the increase in exploration costs.

TRANSPORTATION: Transportation costs for the six months ended June 30, 2023 and 2022 were $1,540,549 and $1,110,214. Costs for the three months ended June 30, 2023 and 2022 were $794,486 and $719,574. These costs relate to the transporting of the primarily gold concentrates to the customer for treatment and sales. The increase in costs is primarily due to an increase in tonnage of ore hauled from mine to plant and an overall increase in fuel and transportation costs.

PROPERTY HOLDING COSTS: Property holding costs for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022 were ~~$398,751~~$81,191 and ~~$370,986, respectively.~~$72,781. Costs for the three months ended June 30, 2023 and 2022 were $41,670 and $36,814. These costs ~~are~~were primarily taxes on mining concessions, ~~taxes,~~ leases on land and other direct costs of maintaining the SJG property. These costs are relatively consistent from year to year regardless of the level of mining activity.

GENERAL AND ADMINISTRATIVE EXPENSE: General and administrative expenses for the six months ended June 30, 2023 and 2022 were $5,230,983 and $2,144,097. Costs for the three months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022 were ~~$2,819,109~~$2,265,390 and ~~$2,340,987, respectively. Operating~~$1,117,742. These general and administrative expenses were the costs of operating the Company not directly associated with the test mining and pilot mill operations including management, accounting, and legal expenses. The increase in costs in 2023 was primarily an increase in legal fees as discussed in the legal summary, including a non-recurring legal expense of $3,000,000 tied to the successful outcome of litigation that was previously accrued, and due to an overall increase in administrative costs supporting the Company’s increase in activity.

OTHER INCOME (EXPENSE): Other income (expense) for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023, and ~~2016 were $7,579,018~~2022 was $373,636 and ~~$6,459,922,~~$1,960,605, respectively. Included in other income in 2023 was interest expense of $(224,175), change in derivative of $562,277, currency exchange gain of $34,227 and miscellaneous income of $1,307. The ~~above expenses include depreciation~~increase in the derivative liability was primarily due to the decrease in remaining life of the underlying securities and ~~amortization amounts~~the Company’s common stock value remaining under the term of ~~$36,781~~conversion. There was a benefit in the 2^nd quarter of 2022 from the maturity of two of the underlying securities which eliminated those derivatives. Included in other income in 2022 was interest expense of $(241,505), change in derivative of $2,163,281, currency exchange gain (loss) of $37,790 and ~~$29,496~~miscellaneous income of $1,039. Other income (expense) for the three months ended ~~September~~June 30, ~~2017~~2023, and ~~2016, respectively,~~2022 was $298,551 and ~~$129,248~~$1,143,544, respectively. Included in other income in 2023 was interest expense of $(107,867), change in derivative of $392,843, currency exchange gain of $15,973 and ~~$77,626~~miscellaneous expense of $(2,398). The increase in the derivative liability was primarily due to the decrease in remaining life of the underlying securities and the Company’s common stock value remaining under the term of conversion. Included in other income in 2022 was interest expense of $(121,736), change in derivative of $1,224,575, currency exchange gain of $40,192 and miscellaneous income of $513.

OTHER COMPREHENSIVE INCOME: Other comprehensive income includes the Company’s net income plus the unrealized currency exchange gain for the ~~nine~~period. The Company’s other comprehensive income for the six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022 consisted of unrealized currency gains of $351,217 and $11,016, respectively.

~~OTHER INCOME (EXPENSE). Other~~ The change is due to the variances in the currency exchange rates between the US Dollar and Mexican Peso throughout the two periods. The Company’s other comprehensive income ~~exclusive of currency transaction gain or (loss)~~ for the three months ended ~~September~~June 30, ~~2017~~2023 and ~~2016 was $921,392~~2022 consisted of unrealized currency gains of $259,976 and $(694,862), respectively. Derivatives mark-to-market adjustments are the primary components of income in 2017 of $753,626 and foreign currency losses in 2016 of $(460,885) respectively. For the nine months ended September 30, 2017 and 2016, other income included Foreign Currency Transaction gain or (loss) of $890,491 and $(1,603,758), respectively: Derivatives mark-to-market adjustments of 2017 of $2,457,063 and $nil for 2016$312,928, respectively. The ~~reason for~~change is due to the ~~fluctuations in the derivative market to market adjustment is the changes in the stock price and the reason for the fluctuations~~variances in the currency ~~gains/losses is~~exchange rates between the ~~change in valuation of~~US Dollar and Mexican Peso throughout the ~~Mexican Peso.~~two periods.

NON-CONTROLLING INTEREST. The non-controlling interest portion of the net loss for the three months ended September 30, 2017 and 2016 was $(49,397) and $10,756, respectively. The non-controlling interest portion of the net loss for the nine months ended September 30, 2017 and 2016 was $153,038 and $175,536, respectively.

COMPREHENSIVE INCOME (LOSS). Comprehensive income (loss) includes the Company’s net income (loss) plus the unrealized currency translation gain (loss) for the period. For the three months ended September 30, 2017 and 2016, the Company recorded a gain (loss) of $2,571,845 and $(1,083,766), respectively, which were made up of unrealized losses on currency translation. For the nine months ended September 30, 2017 and 2016, the Company recorded a gain (loss) of $2,313,973 and $(1,813,703), respectively, which were made up of unrealized losses on currency translation.

As of ~~September~~June 30, ~~2017,~~2023, the Company had ~~a negative~~ working capital of ~~$(188,487),~~$9,006,071 comprised of current assets of ~~$6,306,758~~$34,220,164 and current liabilities of ~~$6,495,245.~~$25,214,093. This ~~represents~~represented a decrease of ~~$3,243,965~~$2,783,507 from the working capital ~~(deficit)~~ maintained by the Company of ~~$(3,432,452)~~$11,789,578 as of December 31, ~~2016,~~2022. The primary reason for the decrease was due ~~primarily~~ to a decrease in the ~~mark to market adjustment for our derivative liabilities.~~Company’s cash.

Net cash ~~provided by~~used in operations for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 was ~~$675,946~~$(2,564,453) compared ~~with $(1,021,244) for~~to a use of $(176,600) during the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2022. The decrease in the cash flow from operations was primarily due to the Company’s loss in 2023, primarily attributed to the ongoing expenses of expansion and increased output in the six months ended June 30, 2023.

The Company reported no investing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023, and ~~2016 was $(327,786)~~June 30, 2022. Expenditures reported for the expansion of mining facilities totaled $824,671 and ~~$(127,997), respectively.~~$2,971,407 during the six months ended June 30, 2023 and June 30, 2022, respectively, would normally have been included in this category but were expensed due to the company’s lack of proven and probable reserves at the SJG Project, which therefore, requires the Company to expense costs as incurred related to expansion of test mining and milling activities.

Net cash provided by (used in) financing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022 was ~~$2,338,519~~$(1,310,250) and ~~$(310,000),~~$5,357,921, respectively.

~~Under~~ The net cash used in financing activities in the terms of the Earn-In Agreement (September 1, 2006 to March 15, 2011), Goldgroup Mining Inc. and its wholly owned subsidiary Goldgroup Resources, Inc. (Goldgroup), through 2010, had contributed capital to DynaMéxico in order to acquire 25% of the outstanding shares (a shareholder interest) of DynaResource de México, S.A. de C.V. (DynaMéxico). In March 2011, Goldgroup had contributed a total of $18 M USD capital to DynaMéxico in order to acquire a total of 50% of the outstanding shares (a shareholder interest) of DynaMéxico. From March 2011 through May 2013, Goldgroup owned 50% of the outstanding shares of DynaMéxico, and since May 2013 to current date Goldgroup owns 20% of the outstanding shares of DynaMéxico. The applicable portion of the earnings or loss attributable to Goldgroup is offset in this section. In the ninesix months ended ~~September~~June 30, ~~2017~~2023 was used to purchase the ~~attributable portion to Goldgroup~~Series A preferred stock previously held by the Company’s Chairman / CEO. The net cash provided by financing activities in the six months ended June 30, 2022 was ~~$(527,760)~~derived from the exercise and ~~$(283,333) for the year ended December 31, 2016.~~purchase of common stock warrants.

As of ~~September~~June 30, ~~2017, the Company~~2023, we did not have any off-balance sheet arrangements, ~~(as the phrase is defined by SEC rules applicable to this report)~~ which have or are ~~reasonably~~ likely to have a material adverse effect on our financial condition, results of operations or liquidity.

~~In May 2013, the Company acquired additional shares in the outstanding equity in DynaMéxico in exchange~~

The Company’s plan of operation for the ~~retirement of accounts receivable of $2,393,803, which amount was due from DynaMéxico at December 31, 2012. As a result, as of May 17, 2013,~~next twelve months includes continuing the ~~Company owns 80%~~improvement and expansion of the ~~outstanding equity of DynaMéxico.~~

~~As of September 30, 2017, the~~test mining and pilot milling operations at SJG. The Company ~~had advanced $6,346,500 to DynaMineras~~commenced its test mining and ~~DynaMineras had advanced $6,266,750 to DynaMéxico. At December 31, 2014, the Company issued 1,333,333 shares of its common stock to DynaMineras~~pilot milling activities in exchange for $4,000,000 receivable it held from DynaMéxico. The remaining $2,125,000 is a receivable owed to DynaMineras from DynaMéxico as of September 30, 2017. The total receivable from DynaMineras to the Company is $6,346,500 as of September 30, 2017.

Beginning on December 31, 2012, the Company and DynaMineras agreed with DynaMéxico to accrue interest on the total amount receivable until repaid or otherwise retired. The interest rate to be accrued is agreed to be simple annual interestfall 2015, at the rate ~~quoted by~~of an average of approximately 100 tons per 24-hour operating day. Over the ~~Bank of México.~~

~~As of September 30, 2017,~~past seven years, the Company ~~had advanced $6,346,500 USD~~has gradually increased its output to ~~DynaMineras~~a current average of approximately 600 tons per 24-hour operating day from the test mining activity and ~~DynaMineras had advanced $6,266,750 USD to DynaMéxico. On September 5, 2014,~~test milling facility. In the six months ended June 30, 2023, the Company ~~issued 1,333,333 shares~~completed the current planned expansion of ~~its common stock~~the pilot mill facility with the installation and addition to ~~DynaMineras in exchange for the $4,000,000 receivable from DynaMéxico. As a result~~pilot plant operations of ~~these transactions:~~

~~The Company loaned DynaOperaciones $225,000 in 2012, which amount remains payable to the Company as of September 30, 2017.~~

The receivable from Mineras to the Company is $6,346,500 as of September 30, 2017, as described above. All receivables and payables among all subsidiary companies have been eliminated upon consolidation.

two new ball mills. The Company expects to ~~make~~increase efficiency of activities in second semester 2023, and to achieve an additional ~~advances~~increase in output to ~~DynaMineras~~an average of approximately 700 tons per 24-hour operating day.

The Company funds its general and ~~DynaMéxico. Future advances~~administrative expenses in the US from ~~DynaMineras to DynaMéxico will be made under~~ the ~~terms of~~cash flow from the ~~Exploitation Amendment Agreement. Other advances are agreed~~Company’s operating subsidiary in Mexico. The Company believes that cash on hand and the cash flow to be ~~accrued in~~generated from its current test mining and pilot mill operations, is adequate to fund its ongoing general and administrative expenses through the ~~same manner as previous receivables, until or unless otherwise agreed between DynaMéxico and the Company.~~subsequent twelve months.

ITEM 3. QUANTITATIVE AND QUALITATIVE ~~DISCLOSURE~~DISCLOSURES ABOUT MARKET RISK

We carried out an evaluation of the effectiveness of the design and operation of ~~its~~our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of ~~September~~June 30, ~~2017.~~2023. This evaluation was accomplished under the supervision and with the participation of our chief executive officer / principal executive officer and ~~chief~~our financial ~~officer / principal financial officer~~consultant, who concluded that ~~the company’s~~our disclosure controls and procedures are not effective ~~to ensure that all material information required to be filed in~~as of the ~~quarterly report on~~end of the period covered by this Form ~~10-Q has been made known to them.~~

10-Q. For purposes of this section, the term disclosure controls and procedures ~~means~~mean controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act ~~(15 U.S.C. 78a et seg.)~~ is recorded, processed, summarized and reported, within the time periods specified in the 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 in our reports filed under the ~~Securities~~ Exchange Act ~~of 1934, as amended (the "Act")~~ is accumulated and communicated to ~~the issuer's~~our management, including ~~its~~our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

We recognize the ~~period ended September 30, 2017,~~importance of having effective controls in place to manage risks and ensure the integrity of our ~~Chief Executive Officer~~financial reporting. We are committed to continuously improving our control environment through ongoing monitoring, testing, and ~~Chief~~remediation of control deficiencies. Our management team is actively involved in overseeing the effectiveness of our controls, and we have established a culture of accountability and transparency to ensure that all employees understand their roles and responsibilities in maintaining a strong control environment. We are also investing in technology to streamline our control processes and reduce the risk of errors and fraud. We believe that these efforts will enable us to develop a high level of control effectiveness.

During the second quarter of ~~September 30, 2017, and as of~~2023 the ~~date of this Report, have concluded that as of the end of the period covered by this report, our~~Company made changes in its internal control over financial reporting ~~was~~to begin to remediate the disclosure controls and procedures that were not ~~effective. We have identified two areas~~effective as of December 31, 2022. These changes include establishment of an Audit Committee, which ~~contain material weaknesses. First, the size~~is composed of four of the ~~Company~~Company’s independent directors, strategic planning on the Company’s information technology and ~~inherent limitations in companies with limited accounting staff prevent the desired multiple checks~~risk management processes and balances prior to processing daily operations. We need more compensating controls. Though adequate processes are in place and functioning, subsequent reviews are deemed necessary to identify unauthorized transactions. Secondly; the same inherent current limitation on company staffing requires specialized outside accounting assistance to implement additional procedures that are effective, and another review to the process, to ensure that all material information required to be filed in the quarterly report on Form 10-Q has been made known to them. The material weaknesses identified will be addressed with the implementation of ~~revised internal control procedures to be developed~~additional key controls and approved by the Board of Directors and the Companies external auditors. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis.approvals.

The Company has not made any changes in its internal controls over financial reporting that occurred during the period covered by this report on Form 10-Q that have materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.PART II

~~DynaResource de Mexico’s Favorable Ruling against~~2014 Arbitration Proceeding filed by Goldgroup Resources Inc.

On August 24, 2017, a Federal Amparo Judge (appellate court) in the State of Veracruz, Mexico dismissed Goldgroup Resources Inc.’s Amparo Trial challenge to the $48 million USD damages award previously granted in favor of DynaMéxico. Pursuant to the ruling issued by the Federal Amparo Judge, the $48 million damages award – previously granted to DynaMéxico by the Thirty-Sixth Civil Court of the Superior Court of Justice of the Federal District of Mexico on October 5, 2015 – was effectively confirmed.

~~In the Federal Amparo Court,~~March 14, 2014, Goldgroup Resources, Inc. (“Goldgroup”) claimed that it was unaware of the Superior Court legal action which ultimately resulted in the $48 million damages award to DynaMéxico. Goldgroup further claimed that this lack of knowledge was the reason for its having missed the deadline for filing an Amparo Trial challenge to the $48 million damages award.

The Federal Amparo Judge found that, contrary to Goldgroup’s claims, both Goldgroup and its legal counsel had full knowledge of the existence of the Superior Court legal action since at least January 2015. Accordingly, the Federal Amparo Judge dismissed Goldgroup’s Amparo Trial challenge.

~~$48M USD Damages Award and Definitive Sentence against Goldgroup (October 5, 2015):~~

DynaMéxico was awarded $48 million USD in damages against Goldgroup on October 05, 2015, as described in the Sentencia Definitiva (“Definitive Sentence”) issued by the Thirty-Sixth Civil Court of the Superior Court of Justice of the Federal District of México, File number 1120/2014.

~~Grant of Lien upon the Shares of DynaMéxico owned by Goldgroup (October 5, 2016):~~

On October 5, 2016, the one-year anniversary of the $48 M damages award, the Thirty-Sixth Civil Court of the Superior Court of Justice of the Federal District of México granted to DynaMéxico, a lien (referred to by the Superior Court as an “Embargo”) upon 100% of the shares of DynaMéxico previously issued to Goldgroup, which at the time constituted 20% of the outstanding shares of DynaMéxico.

The referenced 2015, 2016, and 2017 court rulings in Mexico, are all favorable for DynaMéxico. The cumulative effect of these rulings is as follows: (a) Goldgroup is responsible for the payment of $48 million USD in damages to DynaMéxico; (b) Goldgroup’s challenge to that award has once again been denied by an appellate court; and (c) Goldgroup’s 20% ownership of the share capital of DynaMéxico is subject to a lien in favor of DynaMéxico.

~~DynaMéxico and DynaResource filed Motion for Leave to Supplement the Record~~

On September 15, 2017, as a consequence of the favorable appellate court ruling by the Federal Amparo Judge, DynaMéxico and DynaResource filed a Motion for Leave to Supplement the Record (“Motion”), in the United States District Court for the District of Colorado. This U.S. District Court is set to rule on the Petition for Nonrecognition of Foreign Arbitral Award and/or Motion to Vacate Arbitration Award, earlier filed by DynaMéxico and DynaResource. The Motion was filed to supplement the record with the favorable ruling received by DynaMéxico, following Goldgroup’s unsuccessful Amparo Trial Challenge.

~~On March 14, 2014, Goldgroup~~ filed for arbitration in the United States with the American Arbitration Association ~~("AAA"~~(“AAA”), seeking monetary and nonmonetary relief, and citing the Earn InIn/Option Agreement ~~dated September 1, 2006~~ as the basis for ~~the arbitration~~its filing. ~~The Company filed an answer on April 10, 2014, disputing that any issues exist which provide for arbitration.~~

On ~~December 9, 2014, DynaMéxico filed an Ordinary commercial lawsuit (Civil Claims) against Goldgroup Mining Inc., its parent company Goldgroup Resources Inc., and~~August 25, 2016, the AAA in the Thirty Sixth Civil Court in the Federal District of México, under file 1120 number / 2014 ("the DynaMéxico Trial"). The DynaMéxico Trial seeks to terminate the U.S.-based arbitration proceedings, as DynaMéxico believes there is no legal basis for arbitration, and to nullify the arbitration proceedings since Goldgroup previously sought recourse in the Mexican courts. In the DynaMéxico Trial, DynaMéxico also requests that substantial damages (in the amount of US $50 million) be awarded to DynaMéxico against Goldgroup for:

~~On October 5, 2016, in an appellate~~ ruling the Thirty Sixth Civil Court of the Superior Court of Justice of the Federal District of México (Tribunal Superior de Justicia del Distrito Federal), file number 1120/2014 declared, among other resolutions, that:

Also on October 5, 2015, in an appellate ruling, DynaMéxico was awarded in excess of US $48 million in damages from Goldgroup Resources, Inc. by virtue of a Sentencia Definitiva (the “Definitive Sentence”) issued by the Thirty Sixth Civil Court of the Superior Court of Justice of the Federal District of México (Tribunal Superior de Justicia del Distrito Federal), File number 1120/2014. The Definitive Sentence included the considerations and resolutions by the Court, and additional Resolutions were also ordered in favor of Goldgroup against the Company and DynaMéxico ~~(together~~(the “Arbitration Award”). On May 9, 2019, the ~~damages award~~United States District Court for the District of Colorado (the “Colorado U.S. District Court”) confirmed the Arbitration Award.

On May 20, 2021, the Company and DynaMéxico agreed to release the $1.111 million bond that had been posted, and paid an additional ~~Resolutions are referred to as, the “Oct. 5, 2015 Resolution”).~~

~~A concise translation to English~~$4,054 in interest, in full satisfaction of the ~~Oct. 5, 2015 Resolution (the resolution~~monetary portion of the ~~Definitive Sentence) is set forth below:~~

~~FIRST: T~~~~he action and litigation based on commercial law filed by DynaMéxico is valid and enforceable, and where Goldgroup and~~Arbitration Award. Since that time, the ~~American Arbitration Association were found to be in default, was proper.~~

~~SECOND:Goldgroup is declared in breach of its corporate duties, for failure to refrain from claiming direct ownership of 50%~~Company has fully performed the non-monetary portion of the ~~San José de Gracia Mining Project.~~

~~THIRD:~~Arbitration Award, which included the election of a Goldgroup is condemned and ordered to pay to DynaMéxico the amount of USD $20,000,000 (Twenty Million Dollars) in damages caused by Goldgroup to DynaMéxico, deriving from its breach of obligations in refraining from claiming direct ownership of 50% of the San Jose de Gracia Mining Project; which amount should be paid within five days upon execution of this order and resolution.

~~FOURTH:~~Goldgroup is condemned and ordered to pay to DynaMéxico the amount of USD $28,280,808.34 (Twenty Eight Million Two Hundred and Eighty Thousand Eight Hundred and Eight and 34/100 Dollars), for breach of its corporate duty and covenants with regardsdesignee to the ~~San Jose de Gracia mining project, as a result~~board of ~~depriving profits from~~ DynaMéxico which DynaMéxico could have earned for the sale of gold produced and extracted during the years 2013 and 2014; amounts that should be paid within five days upon execution of this order and resolution.xico.

~~FIFTH:~~Goldgroup is condemned and ordered to pay losses and damages to DynaMéxico, which Goldgroup continues to cause, until full payment of the above-mentioned amounts has been made, which damages and losses shall be calculated by an expert opinion in a corresponding legal procedure related to this litigation.

~~SIXTH:~~ Pursuant to Article 1424 of the Commercial Code of México, the arbitration provision established under clause 8.16 of the Earn In/Option Agreement, dated as of September 1, 2006, is ineffective and impossible to execute.

~~SEVENTH:~~ This Court declares that any controversy arising from the Earn In/Option Agreement must be brought and resolved under Mexican Law and by competent Mexican Courts with proper jurisdiction, in recognition of the waiver and exclusion of the arbitration clause (contained in the Earn In/Option Agreement) by both parties.DynaResource de Mexico SA de CV Legal Update & Disclosure:

~~EIGHT:~~ This Court declares that the American Arbitration Association must abstain from hearing arbitration procedure number 50 501 T 00226 14, or any other ongoing and/or future arbitration proceeding already filed or that may be filed by the co-defendant Goldgroup against DynaResource.

~~NINTH:~~~~This Court declares that the American Arbitration Association does not have jurisdiction to hear any conflict and/or interpretation arising from the Earn In/Option Agreement, dated September 1, 2006.~~

~~TENTH:~~This Court declares, that the American Arbitration Association does not have jurisdiction to hear disputes arising between shareholders of DynaMéxico, which disputes do not arise directly and immediately from the Earn In/Option Agreement, dated September 1, 2006.

~~ELEVENTH:~~This Court declares, that the American Arbitration Association does not have jurisdiction to hear any matters where Koy Wilber Diepholz, who is the President of the Board of Directors of DynaMéxico, and has been personally sued in relation to the arbitration clause established under clause 8.16 of the Earn In/Option Agreement, dated September 1, 2006, since he signed the mentioned instrument in representation of the Company and not in his personal capacity.

~~TWELFTH:~~~~The expenses and costs associated with these proceedings are hereby waived.~~

~~THIRTEENTH:~~~~LET IT SO BE PUBLISHED. A Copy of this Order and Sentence shall be found in the corresponding record.~~

~~ORDERED, adjudged and decreed by the Thirty Sixth Civil Judge of the Superior Court of the Federal District, Mr. JULIO GABRIEL IGLESIAS GOMEZ.~~

~~The October 5, 2015 Resolution constitutes a public record which may be reviewed through the Courts in México City.~~

~~Mexico City Court Approves Lien on Shares of DynaMéxico owned by Minority Interest Holder~~

On October 5, 2016, the Thirty-Sixth Civil Court of the Superior Court of Justice of the Federal District of Mexico (Tribunal Superior de Justicia del Distrito Federal) approved a Lien (referred to by the court as an “Embargo”), in favor of DynaMéxico, upon Stock Certificates in the name ofMarch 3, 2023, Goldgroup Resources Inc. (“Goldgroup”)~~. The Stock Certificates subject to~~ filed a formal notice with the ~~Lien (“Embargo”) constitute Shares~~México Federal Legal Authorities, which confirmed Goldgroup’s complete withdrawal of ~~DynaMé~~all legal claims in Mexico and under Mexican law against DynaResource de México (“SA de CV.

Goldgroup’s complete legal withdrawal is the ~~Goldgroup DynaMéxico Shares”).~~

~~The Goldgroup DynaMéxico Shares were seized as a partial recovery~~result and culmination of ~~assets~~7 years of legal actions undertaken in Mexico by DynaMéxico after DynaMéxico was awarded more than $ 48 M USD (Forty-Eight Million Dollars) in damages against Goldgroup (the “Damages against Goldgroup”) on October 05, 2015, as described in a Sentencia Definitiva (the “Definitive Sentence”) issued byxico. Accordingly, all matters before the same court, the Thirty Sixth Civil Court of the Superior Court of Justice of the Federal District of México, File number 1120/2014. Excerpts from the Definitive Sentence appear below. In addition to the Damages against Goldgroup, the Definitive Sentence also included additional Resolutions ordered in favor of DynaMéxico (the Damages against Goldgroup and the additional Resolutions are together referred to as the “Oct. 5, 2015 Resolution”).

~~In direct contradiction to the October 5, 2015 Definitive Sentence issued by court~~courts in México on August 25, 2016 the American Arbitration Association - International Centre for Dispute Resolution, Denver office (the “AAA”) issued an Arbitration Ruling (the “Arbitration Ruling”) in favor ofwith respect to DynaMéxico and Goldgroup Resources Inc. ~~against DynaMéxico~~are fully resolved and DynaResource, Inc. The Arbitration Ruling was the result of a proceeding in which neither DynaMéxico nor DynaResource participated, since the Definitive Sentence issued by the court in México effectively prohibited their participation in the proceeding, and should have prohibited Goldgroup Resources Inc. participation as well.

(a) The Arbitration Ruling contains an acknowledgement by the AAA that the AAA was named as a defendant in the legal demand filed by DynaMéxico in the Thirty Sixth Civil Court of the Superior Court of Justice of the Federal District of México (the “DynaMéxico Legal Demand”). The Arbitration Ruling also contains a statement that the AAA was not properly served notice of the DynaMéxico Legal Demand.

~~(b) DynaMéxico obeyed the October 5, 2015 Court Order, and did not attend the Arbitration hearing.~~

~~(c) DynaMéxico will pursue all legal remedies in order~~are no longer subject to ~~obtain a full dismissal of the Arbitration Ruling.~~appeal.

1.	26 The $48,280,808.34 USD damages award (dated October 05, 2015) in favor of DynaMéxico and against Goldgroup Resources Inc., confirmed by Mexican courts in 2019, is final, conclusive, and enforceable under Mexican law. Goldgroup Resources’ challenges to that award have been fully denied and the damages award is final.

2.	Goldgroup’s challenges to DynaMéxico’s share ownership have also been fully denied and consequently, under Mexican law, Goldgroup owns no shares in DynaMéxico.

~~(d) The October 5, 2015 Court Order and~~Mercuria Energy Trading S.A vs Mineras de DynaResource S.A. de C.V.

In 2020, Mercuria Energy Trading, S.A. (“Mercuria”) initiated an arbitration proceeding against Mineras de Dynaresource, S.A. de C.V. (“Mineras”), arising out of the ~~$48 million~~earlier-terminated supply agreement between the parties. In January 2022, the arbitration panel awarded Mercuria the sum of US$1,822,674, plus interest at 2% over the quarterly compounded USD ~~award~~3- month LIBOR rate, from February 2020 forward. In August 2022, the panel also assessed costs of ~~damages~~the arbitration proceeding against Goldgroup Resources Inc. remains in full force and effect as issued. DynaMéxico is currently pursuing all available remedies in order to collect $48 million USD in damages from Goldgroup Resources Inc. (See Court Approves Lien on Shares of DynaMéxico owned by Goldgroup Resources, above).

~~The Arbitration Ruling provides the following: (i) the Earn In/Option Agreement is still in force, and consequently Goldgroup may appoint two directors to the DynaMéxico board, and may participate~~Mineras, in the ~~appointment~~aggregate amount of £ 376,232.75. DynaResource has accrued $1,000,000 for the arbitration award and related costs.

As Mineras is a ~~fifth director; (ii)~~company of Mexican nationality, under Mexican law Mineras has the ~~DynaMéxico Management Committee is reinstated,~~right to legally oppose the recognition and must approve all budgets and expenditures; (iii) amounts expended by DynaMéxico that were not approved by the Management Committee are subject to repayment by DynaResource; (iv) the issuance of additional shares by DynaMéxico (and consequent dilution of Goldgroup's equity interest) was in violationenforcement of the ~~Earn In/Option Agreement; and (v) DynaResource and DynaMéxico are responsible for Goldgroup's costs and professional fees associated with the Arbitration Ruling.~~

~~Unlike the majority of arbitration proceedings in the U.S., the Arbitration Ruling is not final. Since the Arbitration Ruling is subject~~award to international rules, the ruling may be vacated by U.S. courts, or simply not recognized by U.S. courts, on a number of grounds. Accordingly, both DynaMéxico and DynaResource have timely requested relief from the United States Federal District Court in Colorado, via the filing of a Petition for Nonrecognition of Foreign Arbitral Award and/or Motion to Vacate Arbitration Award (the “Petition for Nonrecognition”), and a supporting brief. The Petition for Nonrecognition relies heavily upon the Mexican court's Definitive Sentence, key excerpts of which appear below.

The Mexican court has already ruled that “any controversy arising from the Earn In/Option Agreement must be brought and resolved under Mexican Law and by competent Mexican Courts with proper jurisdiction.” Consequently, the monetary awards against DynaResource - which are based upon a finding that the Earn In/Option Agreement is still in force - will not be enforceable if the Mexican court rules that the Earn In/Option Agreement is terminated. The Company believes that the potential forMercuria, the assessment of any costs, and any supplemental award.

On or about July 27, 2023, but effective as of April 19, 2023, the Company entered into Employment Agreements (the “Employment Agreements”) with each of its named executive officers, as disclosed in the Company’s Form 10-K for the year ended December 31, 2022: K.W. (“K.D.”) Diepholz, CEO and CFO; Dr. Jose Vargas Lugo, Executive Vice President; and Rene L.F. Mladosich, General Manager of the Company’s San Jose de Gracía ~~material monetary judgment against~~Project. The Employment Agreements were entered into pursuant to the terms of the Multi-Party Agreement (the “MPA”) by and among the Company, Golden Post Rail, LLC (“Golden Post”), MKR 2022 Grantor Retained Annuity Trust, and Mr. Diepholz. The principal terms of the MPA and the Employment Agreements were described in the Company’s Current Report on Form 8-K filed with the SEC on April 26, 2023. Copies of the Employment Agreements are attached hereto as Exhibits 10.1, 10.2, and 10.3, respectively, and incorporated herein by reference.

On August 2, 2023, the Company entered into (1) an Amendment Agreement (the “OP Amendment”) to the Gold Concentrate Purchase Agreement dated February 1, 2021, as amended (the “Offtake Agreement”) by and between the Company’s affiliate, DynaResource ~~is remote.~~de Mexico, SA de CV (“Dyna Mex”), and an affiliate of Ocean Partners Holdings Limited (“Ocean Partners”), MK Metal Trading Mexico SA de CV (“Buyer”), and (2) a Stock Purchase Agreement (the “Stock Purchase Agreement”) by and between the Company and Ocean Partners. The Amendment and the Stock Purchase Agreement were entered into pursuant to the terms of the Memorandum of Understanding dated June 29, 2023 (the “MOU”) by and between the Company and Ocean Partners.

The principal terms of the ~~Definitive Sentence ($48 M Damages Award to DynaMéxico)~~OP Amendment are as follows:

Pursuant to ~~Article 1424~~the Stock Purchase Agreement, the Company issued and sold to Ocean Partners 1,000,000 shares of the ~~Commercial Code~~Company’s Common Stock for a purchase price of ~~México,~~$5,000,000. In addition, the ~~arbitration provision established under clause 8.16~~Company has agreed to appoint Brent Omland, or another person nominated by Ocean Partners, as a director of the ~~Earn In/Option Agreement, dated as of September 1, 2006, is ineffective and impossible~~Company subject to ~~execute.~~

~~SEVENTH~~: This Court declares that any controversy arising from the Earn In/Option Agreement must be brought and resolved under Mexican Law and by competent Mexican Courts with proper jurisdiction, in recognition of the waiver and exclusion of the arbitration clause (contained in the Earn In/Option Agreement) by both parties.

~~EIGHT:~~ This Court declares that the American Arbitration Association must abstain from hearing arbitration procedure number 50 501 T 00226 14, or any other ongoing and/or future ongoing arbitration already filed or to be filedapproval by the ~~defendant Goldgroup, based on the Earn In/Option Agreement dated September 1, 2006.~~

~~NINTH~~: This Court declares that the American Arbitration Association does not have jurisdiction to hear any conflict and/or interpretation arising from the Earn In/Option Agreement, dated September 1, 2006.

~~TENTH~~: This Court declares, that the American Arbitration Association does not have jurisdiction to hear disputes arising between shareholders of DynaMéxico, which disputes do not arise directly and immediately from the Earn In/Option Agreement, dated September 1, 2006.

~~ELEVENTH~~~~: This Court declares, that the American Arbitration Association does not have jurisdiction to hear any matters where Koy Wilber Diepholz, who is the President of the~~Company’s Board of Directors, consent to which approval shall not to be unreasonably withheld as consistent with the Board’s fiduciary duties, for a term running through the next annual meeting of ~~DynaMéxico,~~the Company’s stockholders. Such nominee will be nominated, subject to approval by the Company’s Board of Directors, consent to which approval shall not to be unreasonably withheld as consistent with the Board’s fiduciary duties, for reelection by the shareholders at such annual meeting.

The foregoing descriptions of the Amendment and ~~has been personally sued~~the Stock Purchase Agreement (“SPA”) are qualified in ~~relation~~their entirety by reference to the ~~arbitration clause established under clause 8.16~~full text of the ~~Earn In/Option~~Amendment and the Stock Purchase Agreement, ~~dated September 1, 2006, since he signed~~copies of which are attached hereto as Exhibits 10.1 and 10.2, respectively, and incorporated herein by reference. The representations, warranties and covenants contained in the ~~mentioned instrument in representation~~Amendment and the SPA were made only for purposes of such agreements and as of specific dates, were solely for the benefit of the ~~Company~~parties to the agreements, and ~~not~~may be subject to limitations agreed upon by the contracting parties.

The Memorandum of Understanding of this transaction was disclosed in ~~his personal capacity.~~

~~DynaUSA and DynaMéxico~~a Form 8-K filed ~~Motion to Vacate Arbitration Ruling~~

~~On November 17, 2016, DynaUSA and DynaMéxico filed a Motion to Vacate the Arbitration Ruling in United States District Court, District of Colorado.~~

~~Complaint filed by Goldgroup against the May 17, 2013 Shareholders’ Meeting of DynaMéxico~~

~~On February 2, 2014, Goldgroup Resources Inc. filed a petition~~ with the ~~judge, tenth district Mazatlán, according to record 08/2014, in the ordinary commercial action, against DynaResource Inc.,~~Securities & Exchange Commission on July 6, 2023, and DynaResource de México, S.A. de CV. Goldgroup complains against the results of the shareholders meeting of May 17, 2013, and petitions for the nullification of the meeting itself and for the nullification of the additional shares of the outstanding capital of DynaMéxico issued to DynaResource, Inc. in satisfaction of debts owed to DynaResource.incorporated herein by reference.

DynaResource and DynaMéxico filed a response on January 9, 2016, and the matter is pending. DynaMéxico will vigorously defend against all such complaints by Goldgroup, as there exists no legal basis for the complaint by Goldgroup against the May 17, 2013 shareholders meeting of DynaMéxico.

The Company, and DynaMéxico have filed several legal actions in México against Goldgroup Mining Inc, Goldgroup Resources Inc., certain individuals employed or previously employed by Minop, S.A. de C.V. (a Company operating in México and associated with Goldgroup Mining Inc.), and certain individuals retained as agents of Goldgroup Mining Inc. The Company and DynaMéxico are plaintiffs in the actions filed in México and the outcomes are pending.

The Company believes that no material adverse change will occur as a result of the actions taken, and the Company further believes that there is little to no potential for the assessment of a material monetary judgment against the Company for legal actions it has filed in México. For purposes of confidentiality, the Company does not provide more specific disclosure in this Form 10-K.

~~As the Company has no mines located in the United States or any of its territories, the disclosure required by this Item is not applicable.~~

In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock	DYNR	OTC

	Large Accelerated Filer ~~[ ]~~	☐	Accelerated Filer ~~[ ]~~	☐
Non-accelerated Filer	~~Non-Accelerated Filer [ ]~~ ☐	Smaller Reporting Company ~~[X]~~	☒

~~ITEM 1.~~	~~Unaudited Financial Statements~~	~~3-6~~
	~~Notes to Unaudited Financial Statements~~	~~6-15~~

~~ITEM 2.~~	~~Management's Discussion and Analysis and Plan of Operation~~	~~15-22~~
~~ITEM 3.~~	~~Quantitative and Qualitative Disclosure About Market Risk~~ PART I.	23FINANCIAL STATEMENTS

ITEM 1.	Unaudited Consolidated Financial Statements		3

	Notes to Unaudited Consolidated Financial Statements		7

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		22

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk		27

ITEM 4.	Controls and Procedures	23	27

PART II.	OTHER INFORMATION
~~PART II.~~	~~OTHER INFORMATION~~
ITEM 1.	Legal Proceedings		29
~~ITEM 1.~~	~~Legal Proceedings~~	24

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
	29
~~ITEM 3.~~	~~Default Upon Senior Securities~~	28

~~ITEM 4.~~	~~Mine Safety Disclosures~~	28

~~ITEM 5.~~	~~Other Information~~	28

~~ITEM 6.~~	~~Exhibits~~	28


~~CERTIFICATIONS~~
ITEM 3.	Defaults Upon Senior Securities		29

ITEM 4.	Mine Safety Disclosures		30

ITEM 5.	Other Information		30

ITEM 6.	Exhibits		30

EXHIBIT 31.1		CHIEF EXECUTIVE OFFICER CERTIFICATION

EXHIBIT 31.2		CHIEF FINANCIAL OFFICER CERTIFICATION

EXHIBIT 32.1		CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

		Sept 30, 2017			Dec 31, 2016
ASSETS
Current Assets:
Cash and Cash Equivalents	$	3,548,315		$	2,197,005
Accounts Receivable		435,473			454,140
Inventories		1,065,785			561,238
Foreign Tax Receivable		1,136,090			1,083,364
Other Current Assets		121,095			73,871
Total Current Assets		6,306,758			4,369,618

Mining Equipment and Fixtures (Net of Accumulated
Depreciation of $950,380 and $821,132		825,993			578,743
Mining Concessions (Net of Accumulated Amortization)		4,132,678			4,132,678
Investments in Affiliate		70,000			70,000
Other Assets		143,117			15,450

TOTAL ASSETS	$	11,478,546		$	9,166,489

LIABILITIES AND EQUITY
Current Liabilities:
Accounts Payable	$	1,665,721		$	851,197
Convertible Notes Payable		950,625			956,250
Due to Non-Controlling Interest		231,500			231,500
Accrued Expenses		998,372			1,367,510
Derivative Liabilities		2,649,027			5,106,090
Total Current Liabilities		6,495,245			8,512,547

Long-Term Liabilities:
Accrued Expenses		265,028			—
TOTAL LIABILITIES	$	6,760,273		$	8,512,547

Preferred Stock, Series C, $.0001 par value, 1,733,221 shares
Authorized, 1,733,221 outstanding as of 2017 and 2016	$	4,333,053		$	4,333,053
Stockholders’ Equity Deficit
Preferred Stock, Series A, $.0001 par value, 1,000 shares
Authorized, 1,000 and 1,000 issued and outstanding	$	1		$	1
Common Stock, $.01 par value, 25,000,000 shares authorized,
17,722,825 and 16,722,825 shares outstanding as of 2017 and 2016		177,228			167,228
Preferred Rights		40,000			40,000
Additional Paid In Capital		57,573,783			55,083,783
Treasury Stock, 1,112,313 outstanding as of 2017 and 2016		(3,175,515	)		(3,175,515	)
Accumulated Other Comprehensive Income		1,741,749			3,771,532
Accumulated Deficit		(50,515,213	)		(53,581,567	)
Total DynaResource, Inc. Stockholders’ Equity		5,842,033			2,305,462
Non-controlling Interest		(5,456,813	)		(5,984,573	)
TOTAL (DEFICIT)	$	385,220		$	(3,679,111	)

TOTAL LIABILITIES AND EQUITY (DEFICIT)	$	11,478,546		$	9,166,489

~~Delaware~~		~~94-1589426~~ DYNARESOURCE, INC.
(Exact name of small business issuer as specified in its charter)

	2023			2022
	(Unaudited)			(Audited)
ASSETS
Current assets:
Cash and cash equivalents	$	15,924,750		$	19,177,138
Accounts receivable		1,347,391			724,642
Inventories		2,141,323			2,720,811
Foreign tax receivable		13,009,662			9,355,863
Other current assets		1,797,038			1,145,501
Total current assets		34,220,164			33,123,955

Right-of-use assets, net		525,742			550,473
Mining concessions		4,132,678			4,132,678
Deferred tax asset		4,181,625			2,970,410
Other assets		215,618			165,396

TOTAL ASSETS	$	43,275,827		$	40,942,912

LIABILITIES. TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,912,478		$	2,057,880
Accrued expenses		9,425,094			5,756,961
Customer advances		10,000,000			9,350,000
Derivative liabilities		1,610,140			2,172,417
Current portion of operating lease payable		27,032			28,868
Installment notes payable		2,239,349			1,968,251
Total current liabilities		25,214,093			21,334,377

Operating lease payable, less current portion		531,882			558,914

TOTAL LIABILITIES		25,745,975			21,893,291
TEMPORARY EQUITY
Series C Senior Convertible Preferred Stock, $0.0001 par value, 1,734,992 shares authorized, issued and outstanding		4,337,480			4,337,480
Series D Senior Convertible Preferred Stock, $0.0001 par value, 3,000,000 shares authorized, 760,000 shares issued and outstanding		1,520,000			1,520,000

COMMITMENTS AND CONTINGENCIES		-			-
STOCKHOLDERS’ EQUITY
Preferred Stock, Series A, $0.0001 par value, 1,000 shares authorized, 0 and 1,000 issued and outstanding		-			1
Common Stock, $0.01 par value, 40,000,000 shares authorized 22,246,654 issued and outstanding		222,467			222,467
Preferred rights		40,000			40,000
Additional paid-in-capital		55,639,032			56,889,031
Treasury stock, 37,180 and 12,180 shares each period, at cost		(95,023	)		(34,773	)
Accumulated other comprehensive income		463,295			112,078
Accumulated deficit		(44,597,399	)		(44,036,663	)
TOTAL STOCKHOLDERS’ EQUITY		11,672,372			13,192,141

TOTAL LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY	$	43,275,827		$	40,942,912

	Three Months Sept 30, 2017			Three Months Sept 30, 2016			Nine Months Sept 30, 2017			Nine Months Sept 30, 2016

REVENUES	$	2,674,015		$	3,027,305		$	7,233,329		$	8,192,230
COSTS AND EXPENSES OF MINING
OPERATIONS
Production Costs Applicable to Sales		928,663			443,703			2,586,553			1,308,858
Mine Operating Costs		1,100,948			1,061,073			2,659,093			3,036,423
Property Holding Costs		135,681			153,286			398,751			370,986
General and Administrative		616,036			653,429			1,805,373			1,666,029
Depreciation and Amortization		36,781			29,496			129,248			77,626
Total Operating Expenses		2,818,109			2,340,987			7,579,018			6,459,922

NET OPERATING INCOME (LOSS)		(144,094	)		686,318			(345,689	)		1,732,308

OTHER INCOME (EXPENSE)
Foreign Currency Gains (Losses)		195,042			(460,885	)		890,491			(1,603,758	)
Interest Expense		(27,533	)		(29,883	)		(89,203	)		(89,649	)
Gain (Loss) on Derivatives		753,626			(204,279	)		2,457,063			—
Other Income		257			185			654			545
Total Other Income (Expense)		921,392			(694,862	)		3,259,005			(1,692,862	)

NET INCOME (LOSS) BEFORE TAXES		777,298			(8,544	)		2,913,316			39,446

TAXES		—			—			—			—

NET INCOME (LOSS)	$	777,298		$	(8,544	)	$	2,913,316		$	39,446
Cumulative Dividend for Series C Preferred		(42,737	)		(40,000	)		(128,211	)		(120,000	)
ATTRIBUTABLE TO NON-CONTROLLING INTERESTS	$	(49,397	)	$	10,756		$	153,038			175,536
ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	685,164		$	(37,788	)	$	2,938,143		$	94,982

EARNINGS PER SHARE DATA ATTRIBUTABLE TO THE EQUITY HOLDERS OF
DYNARESOURCE, INC:

Basic Loss per Common Share	$	.04		$	(.00	)	$	0.17		$	.01
Diluted Loss per Common Share	$	.00			(.00	)		0.03			.01

Weighted Average Shares Outstanding, Basic		17,124,999			16,722,825			16,858,356			16,722,825
Weighted Average Shares Outstanding, Diluted		18,725,897			16,722,825			18,977,097			16,722,825

OTHER COMPREHENSIVE INCOME (LOSS)
NET INCOME (LOSS) PER ABOVE	$	777,298		$	(8,544	)	$	2,913,316		$	39,446
Foreign Currency Exchange Gains (Losses)		2,571,845			(1,083,766	)		2,313,973			(1,813,703	)

TOTAL COMPREHENSIVE INCOME (LOSS)	$	3,349,143		$	(1,092,310	)	$	5,227,289		$	(1,774,257	)

ATTRIBUTABLE TO:
EQUITY HOLDERS OF DYNARESOURCE, INC.	$	907,344		$	92,685		$	3,878,304		$	(269,442	)
NON-CONTROLLING INTERESTS	$	2,441,799		$	(1,184,995	)	$	1,348,985		$	(1,504,815	)
TOTAL COMPREHENSIVE INCOME (LOSS)		3,349,143			(1,092,310	)		5,227,289			(1,774,257	)


	September 30, 2017			September 30, 2016
	(Unaudited)			(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)	$	2,913,316		$	39,446
Adjustments to reconcile net loss to cash
provided by (used in) Operating activities
Gain on Derivative Liabilities		(2,457,063	)		—
Depreciation and Amortization		129,248			77,626
Change in Operating Assets and Liabilities:
Accounts Receivable		77,451			(462,358	)
Inventory		(411,736	)		(500,133	)
Other Current Assets		(47,224	)		(189,863	)
Receivables from Affiliate		(26,917	)		(8,602	)
Foreign Tax Receivable		91,222			(464,472	)
Other Assets		(144,954	)		(1,689	)
Accounts Payable		1,157,521			22,669
Accrued Liabilities		(604,918	)		466,132
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES		675,946			(1,021,244	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Equipment		(327,786	)		(127,997	)
CASH FLOWS (USED IN) INVESTING ACTIVITIES		(327,786	)		(127,997	)

CASH FLOWS FROM FINANCING ACTIVITIES
Payment on Advances to Related Party		—			(150,000	)
Payment of Dividends		—			(160,000	)
Payment on Note Payable		(5,625	)		—
Payment on Accrued LT		(155,856	)		—
Proceeds on Sale of Common Stock		2,500,000			—
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES		2,338,519			(310,000	)

Effect of Foreign Exchange		(1,335,369	)		1,890,284

NET DECREASE IN CASH		1,351,310			431,043

CASH AT BEGINNING OF PERIOD		2,197,005			1,922,599

CASH AT END OF PERIOD	$	3,548,315		$	2,353,642

SUPPLEMENTAL DISCLOSURES
Cash Paid for Interest	$	89,203		$	89,648
Cash Paid for Income Taxes	$	—		$	—

NON CASH TRANSACTIONS
	$	—		$	—

	2023			2022
CASH FLOWS FROM OPERATING ACTIVITES:
Net Income (Loss)	$	(560,736	)	$	5,583,823
Adjustments to reconcile net income (loss) to cash used in operating activities
Change in Fair Value of Derivatives		(562,277	)		(2,163,281	)
Depreciation and Amortization		-			1,625
Operating Lease Assets		24,731			47,642
Deferred Taxes		(1,211,215	)		-
Change in Operating Assets and Liabilities
Accounts Receivable		(622,749	)		(935,454	)
Inventories		579,488			(743,734	)
Foreign Tax Receivable		(3,653,799	)		(2,297,014	)
Other Assets		(701,759	)		(314,064	)
Accounts Payable		(145,402	)		1,266,687
Accrued Expenses		3,668,133			(67,037	)
Customer Advances		650,000			(500,000	)
Lease Liabilities		(28,868	)		(55,793	)
CASH FLOWS USED IN OPERATING ACTIVITIES		(2,564,453	)		(176,600	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Exercise of Stock Warrants		-			5,416,936
Purchase of Series A Preferred Stock		(1,250,000	)		-
Acquisition of Treasury Stock		(60,250	)		-
Payments of Notes Payable		-			(59,015	)
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES		(1,310,250	)		5,357,921

Effects of Foreign Currency		622,315			50,659

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(3,252,388	)		5,231,980
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		19,177,138			15,719,238
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	15,924,750		$	20,951,218

SUPPLEMENTAL DISCLOSURES
Cash Paid for Interest	$	-		$	44,410
Cash Paid for Income Taxes	$	200,000		$	-

·	estimated recoverable ounces of gold, silver or other precious minerals;
·	estimated future commodity prices;
·	estimated expected future operating costs, capital expenditures and reclamation expenditures.

	09/30/17		12/31/16
Mined Tonnage Stockpiled	$	674,382	$	445,082
Mill Tonnage Stockpiled		308,964		116,156
Finished Material		82,439		—
Total Inventories	$	1,065,785	$	561,238

	2023		2022
Mined Tonnage	$	1,988,426	$	2,610,116
Gold-Silver Concentrates		152,897		110,695
Total Inventories	$	2,141,323	$	2,720,811

	09/30/17			12/31/16

Mining camp equipment	$	653,651		$	399,180
Transportation equipment		282,379			282,379
Machinery and equipment		587,280			470,741
Office furniture and fixtures		78,709			75,829
Office equipment		174,314			171,746
Sub-total		1,776,373			1,399,875
Less: Accumulated depreciation		(950,380	)		(821,132	)
Total Property	$	825,993		$	578,743

	2017			2016
Convertible Promissory Notes Current Portion	$	956,250		$	956,250
Purchase of Note		(5,625	)		—
Total Notes Payable	$	950,625			956,250


~~PART I.~~
~~FINANCIAL STATEMENTS~~

	Sept 30, 2017
Property Holding Taxes June 1, 2014 – December 31, 2015	$	541,245
Initial payment of 20%		(108,249	)
2017 principal payments		(47,607	)
Balance at September 30, 2017	$	385,389
Short-Term Portion	$	120,361
Long-Term Portion		265,028
Total	$	385,389

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Intrinsic Value
Balance as of December 31, 2022		892,165	$	0.01		7.37		-
Granted		-		-		-		-
Exercised		-		-		-		-
Forfeited		-		-		-		-
Balance as of June 30, 2023		892,165		0.01		6.88		-
Exercisable as of June 30, 2023		892,165	$	0.01		6.88		-

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Intrinsic Value
Balance at December 31, 2016		3,593,689		$	2.45		2.51	$	—
Granted		—			—			$	—
Exercised		(1,000,000	)	$	2.50			$	—
Forfeited		—			—			$	—
Balance at September 30, 2017		2,593,689		$	2.42		2.34	$	—
Exercisable at September, 2017		2,593,689		$	2.42		2.34	$	—

	09/30/17			12/31/16
Annual volatility rate		97	%		123	%
Risk free rate		1.50	%		1.93	%
Holding Period		5 years			5 years
Fair Value of common stock	$	1.50		$	1.75

Period Ended	09/30/17			12/31/16
Fair value of derivative (Preferred Series C Stock), beginning of year	$	2,592,452		$	2,419,359
Change in fair value of derivative (Preferred Series C Stock)		(1,518,891	)		173,093
Fair value of derivative (Preferred Series C Stock), end of period	$	1,073,561		$	2,592,452

Period Ended	June 30, 2023			Dec 31, 2022
Annual volatility rate		115	%		116	%
Risk free rate		4.87	%		4.41	%
Remaining Term	6.88 years			7.37 years
Fair Value of common stock	$	1.81		$	2.44

Period Ended	09/30/17	12/31/16
Fair value of derivative liability (Preferred C Stock and Warrants), beginning of year	$5,106,090	$5,382,737
Change in fair value of derivative liability (Stock and Warrants)	(2,457,063)	(276,647)
Fair value of derivative liability (Stock and Warrants), end of period	$2,649,027	5,106,090

	Nine Months Ended 09/30/17	Year Ended 12/31/16
Beginning balance	$(5,984,573)	$(6,498,190)
Operating income (loss)	(153,038)	(317,179)
Share of Other Comprehensive Income	680,798	830,796
Ending balance	$(5,456,813)	$(5,984,573)

	Total Fair Market Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
None	-		-		-		-
Totals	$-		$-		$-		$-

Liabilities:
Derivative Liabilities	$	2,649,027		—		—	$	2,649,027
Totals	$	2,649,027	$	—	$	—	$	2,649,027

Fair Value Measurement at December 31, 2016 Using:
Assets:
None		—		—		—		—
Totals	$	—	$	—	$	—	$	—


Liabilities:
Derivative Liabilities	$	5,106,090		—		—	$	5,106,090
Totals	$	5,106,090	$	—	$	—	$	5,106,090

	Total		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Fair Value Measurement as of June 30, 2023:
Liabilities:
Derivative Liabilities	$	1,610,140	$	-	$	-	$	1,610,140
Totals	$	1,610,140	$	-	$	-	$	1,610,140
Fair Value Measurement as of December 31, 2022:
Liabilities:
Derivative Liabilities	$	2,172,417	$	-	$	-	$	2,172,417
Totals	$	2,172,417	$	-	$	-	$	2,172,417

Balance December 31, 2022	$	1,968,251
Exchange Rate Adjustment		271,098
2023 Principal Payments		-
Balance June 30, 2023	$	2,239,349

	·	The Company will deliver 100% of its produced concentrates to the buyer and provider of the RCL, through December 31, 2023; unless extended by the Company;
	·	An initial RCL was established by the buyer in the amount of $3.75M USD;
	·	On May 1, 2021, the RCL increased to an amount equal to 80% of the prior 3 months’ revenue;
	·	Each successive month, the RCL shall be adjusted according to the Company’s prior 3 months’ revenue;
	·	The RCL shall never be less than $3.75M USD;
	·	The RCL will be interest free for 45 days;
	·	The RCL is to be repaid through deliveries of concentrates or cash within 120 days;

(1)	$9.35 advance on December 28, 2022. Settled on February 16, 2023..
(2)	$9.60 advance on February 21, 2023. Settled on March 31, 2023.
(3)	$9.20 advance on March 31, 2023. Settled on May 17, 2023.
(4)	$9.85 advance on May 18, 2023. Settled on June 28, 2023
(5)	$10.0 advance on June 29, 2023.

	·	To extend the term of the Offtake Agreement until December 31, 2026, with evergreen annual extensions thereafter until either party terminates the Offtake Agreement on at least 365 days’ notice.

	·	To provide for a $1 million termination fee payable by the Company to Ocean Partners in certain circumstances.

	·	To increase the maximum advance line of credit under the Offtake Agreement to $17.5 million.

	·	To give the Company the option to convert the advance credit line under the Offtake Agreement, to a maximum of $10.0M, into a revolving credit facility repayable over 12 months at 3M SOFR + 7.50% amortized as follows: Month 1, interest only; Month 2-11, 5% principal plus interest; and Month 12, 50% principal plus interest. Converting to a revolving credit facility would reduce the availability on the advance credit line on a pro rata percentage basis.

	·	To provide Ocean Partners a right of first refusal, during the term of the Offtake Agreement, to provide offtake financing and purchase other concentrates (zinc, silver, copper, etc.) and doré from the Company’s open pit and underground operations.

BALANCE SHEET		Previously Reported Dec 31, 2016			Adjustments			Adjusted Balance Dec 31, 2016

Accounts Payable	$	309,952		$	(541,245	)	$	851,197
Accrued Expenses		1,198,278			169,232			1,367,510
Total Liabilities		7,802,070			710,477			8,521,547	)

Accumulated Deficit		(53,013,185	)		(568,382	)		(53,581,567	)
Total Equity (Deficit)		2,873,844			(568,832	)		2,305,462
Non-Controlling Interest		(5,842,478	)		(142,095	)		(5,984,573	)
Total Equity (Deficit)		(2,968,634	)		(710,477	)		(3,679,111	)
Total Liabilities and Equity	$	9,166,489		$	—		$	9,166,489

INCOME STATEMENT
	Three Months Ended Sept 30, 2016									Nine Months Ended Sept 30, 2016
		Previously Reported			Adjustments			Adjusted			Previously Reported		Adjustments			Adjusted
COSTS AND EXPENSES OF MINING OPERATIONS
Property Holding Costs	$	110,978		$	42,308		$	153,286			244,062	$	126,924		$	370,986
Total Operating Expenses		2,298,678			42,308			2,340,986			6,332,998		126,924			6,459,922

NET OPERATING INCOME (LOSS)		728,627			(42,308	)		686,318			1,859,232		(126,924	)		1,732,308

NET INCOME (LOSS) BEFORE TAXES		33,765			(42,308	)		(8,544	)		166,370		(126,924	)		39,446

NET INCOME (LOSS)		33,765			(42,308	)		(8,544	)		166,370		(126,924	)		39,446

ATTRIBUTABLE TO NON-CONTROLLING INTERESST		2,294			8,462			10,756			150,151		25,385			175,536
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS		(3,941	)		(33,847	)		(37,788	)	$	196,521	$	(101,539	)	$	94,982


Basic Loss Per Common Share		(0.00	)	$	0.00			(0.00	)	$	0.01	$	0.00		$	0.01

Diluted Loss Per Common Share	$	(0.00	)	$	0.00		$	(0.00	)	$	0.01	$	0.00		$	0.01

STATEMENT of CASH FLOWS		Previously Reported Sept 30, 2016			Adjustments			Adjusted Balance Sept 30, 2016

Net Income (Loss)	$	166,370		$	(126,924	)	$	39,446
Accrued Liabilities		339,208			126,924			466,132
Cash Flows Used in Operating	$	(1,021,244	)	$	—		$	(1,021,244	)

Year	High	Low	Average
2005	$536	$411	$444
2006	$725	$525	$604
2007	$841	$608	$695
2008	$1,011	$713	$872
2009	$1,213	$810	$972
2010	$1,421	$1,058	$1,225
2011	$1,895	$1,319	$1,572
2012	$1,792	$1,540	$1,669
2013	$1,694	$1,192	$1,411
2014	$1,380	$1,140	$1,265
2015	$1,303	$1,057	$1,175
2016	$1,366	$1,077	$1,251
2017 (Through October 16, 2017)	$1,351	$1,151	$1,251

Mill Expansion	$	7,093,000
Tailings Pond Expansion		1,464,000
Machinery and Equipment		3,140,000
Mining Camp Expansion		146,000
Medical Facility		126,000
Mine Development - San Pablo		2,748,000
Mine Expansion - San Pablo East		915,000
Mine Expansion - Tres Amigos		1,599,000
Exploration Drilling		3,610,000
SIG Mining Concessions		2,014,000
Surface Rights and Permitting		1,036,000
Debt Retirement		3,528,000
Purchase of Series A Preferred Stock		1,250,000
Legal Fees		7,952,000
Total	$	36,621,000

	Total Tons Mined &		Reported Mill Feed Grade (g/t		Reported Recovery			Estimated Gross Gold Concentrates Recovered		Net Gold Concentrates Sold
Year	Processed		Au)		%			(Au oz.)		(Au oz.)
2018		52,038		9.82		86.11	%		14,147		13,418
2019		66,031		5.81		86.86	%		10,646		9,713
2020		44,218		5.65		87.31	%		7,001		5,828
2021		97,088		9.67		88.79	%		26,728		22,566
2022		137,740		8.18		80.00	%		28,988		25,554