SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~September 30, 2022~~March 31, 2023.

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

From the transition period ____________ to ___________.

Commission File Number 000-30371

DYNARESOURCE, INC.

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

Delaware

94-1589426

(State or other jurisdiction

of incorporation or organization)

(IRS Employer

Identification No.)

222 W. Las Colinas Blvd., Suite 1910 North Tower, Irving, Texas 75039

(Address of principal executive offices)

(972) 868-9066

(Issuer’s telephone number)

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

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

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 every Interactive Data File required to be submitted 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 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:

Large Accelerated Filer	☐	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☒

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 registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~September 30, 2022,~~May 12, 2023, there were ~~20,746,654~~22,246,654 shares of Common Stock of the registrant outstanding.

TABLE OF CONTENTS

CERTIFICATIONS

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

Table of Contents

DYNARESOURCE, INC.

CONSOLIDATED BALANCE SHEETS

~~SEPTEMBER 30, 2022,~~MARCH 31, 2023 AND DECEMBER 31, ~~2021~~

~~(Unaudited)~~2022

2022

2021

ASSETS

Current Assets

Cash and Cash Equivalents

$ 16,488,686

$ 15,719,238

Accounts Receivable

942,734

577,118

Inventories

2,943,112

2,110,203

Foreign Tax Receivable

8,244,016

4,742,180

Other Current Assets

1,009,020

667,742

Total Current Assets

29,627,568

23,816,481

Mining Equipment and Fixtures (Net of Accumulated

Depreciation of $118,862 and $116,425)

292

2,729

Operating Lease

575,985

648,381

Mining Concessions

4,132,678

4,132,678

Other Assets

163,298

162,174

TOTAL ASSETS

$ 34,499,821

$ 28,762,443

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current Liabilities:

Accounts Payable

$ 2,261,299

$ 1,275,679

Accrued Expenses

5,481,107

5,440,204

Customer Advances

7,375,000

9,250,000

Derivative Liabilities

1,905,078

3,898,914

Convertible Notes Payable - Series I & II

-

543,279

Installment Notes Payable

1,914,086

1,962,525

Current Portion of Operating Lease Payable

50,461

98,169

Total Current Liabilities

18,987,031

22,468,770

Operating Lease Payable, Less Current Portion

558,914

587,782

TOTAL LIABILITIES

19,545,945

23,056,552

TEMPORARY EQUITY

Series C Senior Convertible Preferred Stock, $0.0001 par     value, 1,734,992 shares designated, issued and outstanding

4,337,480

4,337,480

Series D Senior Preferred Stock, $0.0001 par value, 3,000,000 shares designated, 760,000 shares issued and outstanding

1,520,000

1,520,000

COMMITMENTS AND CONTINGENCIES

-

-

STOCKHOLDERS’ EQUITY (DEFICIT)

Preferred Stock, Series A, $0.0001 par value, 1,000 shares designated, issued and outstanding

1

1

Common Stock, $0.01 par value, 40,000,000 shares authorized, 20,746,654 and 18,091,293 issued and outstanding

207,467

180,913

Preferred Rights

40,000

40,000

Additional Paid In Capital

56,022,782

50,632,400

Treasury Stock, 12,180 shares

(34,773 )

(34,773 )
Accumulated Other Comprehensive Income

(421,708 )

(247,665 )
Accumulated Deficit

(46,717,373 )

(50,722,465 )
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)

9,096,396

(151,589 )

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

$ 34,499,821

$ 28,762,443

2023
(Unaudited)

2022
(Audited)

ASSETS

Current assets

Cash and cash equivalents

$ 19,104,208

$ 19,177,138

Accounts receivable

1,885,597

724,642

Inventories

2,348,881

2,720,811

Foreign tax receivable

10,900,843

9,355,863

Other current assets

1,401,709

1,145,501

Total current assets

35,641,238

33,123,955

Right-of-use assets, net

531,115

550,473

Mining concessions

4,132,678

4,132,678

Deferred tax asset

3,047,433

2,970,410

Other assets

170,959

165,396

TOTAL ASSETS

$ 43,523,423

$ 40,942,912

LIABILITIES. TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$ 2,169,896

$ 2,057,880

Accrued expenses

8,291,867

5,756,961

Customer advances

9,200,000

9,350,000

Derivative liabilities

2,002,983

2,172,417

Current portion of operating lease payable

27,032

28,868

Installment notes payable

2,127,196

1,968,251

Total current liabilities

23,818,974

21,334,377

Operating lease payable, less current portion

531,882

558,914

TOTAL LIABILITIES

24,350,856

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, issued and outstanding

1

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

56,889,031

56,889,031

Treasury stock, 12,180 shares each period, at cost

(34,773 )

(34,773 )
Accumulated other comprehensive income

203,319

112,078

Accumulated deficit

(44,004,958 )

(44,036,663 )
TOTAL STOCKHOLDERS’ EQUITY

13,315,087

13,192,141

TOTAL LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY

$ 43,523,423

$ 40,942,912

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

3
Table of Contents

DYNARESOURCE, INC.
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME
FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER 30,~~MARCH 31, 2023 AND 2022 ~~AND 2021~~
(Unaudited)

Three Months
Sept. 30, 2022

Three Months
Sept. 30, 2021

Nine Months
Sept. 30, 2022

Nine Months
Sept. 30, 2021

REVENUES

$ 8,032,557

$ 10,467,058

$ 28,623,070

$ 25,906,083

COSTS AND EXPENSES OF MINING OPERATIONS

Production Costs Applicable to Sales

964,172

756,898

2,876,902

1,917,049

Mine Production Costs

1,946,981

1,135,938

4,786,236

3,385,340

Mine Exploration Costs

1,335,437

1,151,020

3,792,405

3,437,009

Facilities Expansion Costs

1,773,385

579,432

4,744,792

579,432

Exploration Drilling

770,892

-

1,993,082

-

Camp, Warehouse and Facilities

911,284

697,446

3,147,312

1,956,168

Transportation

572,772

374,974

1,682,986

968,672

Property Holding Costs

39,312

36,866

112,093

116,516

General and Administrative

1,033,820

1,085,187

3,177,917

2,252,156

Depreciation and Amortization

812

812

2,437

2,437

Total Operating Expenses

9,348,867

5,818,573

26,316,162

14,614,779

NET OPERATING INCOME (LOSS)

(1,316,310 )

4,648,485

2,306,908

11,291,304

OTHER INCOME (EXPENSE)

Foreign Currency Gains (Losses)

9,919

(258,006 )

47,709

(121,725 )
Interest Expense

(103,544 )

(372,336 )

(345,049 )

(1,102,755 )
Derivatives Mark-to-Market Gain (Loss)

(169,445 )

(3,743,797 )

1,993,836

(3,928,913 )
Arbitration Award Expense

-

-

-

(1,111,111 )
Other Income

649

581

1,688

581

Total Other Income (Expense)

(262,421 )

(4,373,558 )

1,698,184

(6,263,923 )

NET INCOME (LOSS) BEFORE TAXES

(1,578,731 )

274,927

4,005,092

5,027,381

INCOME TAXES

-

-

-

-

NET INCOME (LOSS)

$ (1,578,731 )

$ 274,927

$ 4,005,092

$ 5,027,381

DEEMED DIVIDEND FOR SERIES C AND SERIES D PREFERRED

$ (58,574 )

(43,374 )

(175,724 )

(130,124 )
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

$ (1,637,305 )

$ 231,553

$ 3,829,368

$ 4,897,257

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

Basic Earnings (Loss) per Common Share

$ (0.08 )

$ 0.01

$ 0.20

$ 0.28

Diluted Earnings (Loss) per Common Share

$ (0.08 )

$ 0.01

$ 0.20

$ 0.28

Weighted Average Shares Outstanding, Basic

20,746,654

17,722,825

19,005,593

17,722,825

Weighted Average Shares Outstanding, Diluted

20,746,654

17,722,825

19,005,593

17,722,825

OTHER COMPREHENSIVE INCOME (LOSS)

Foreign Currency Exchange Gains (Losses)

(185,059 )

69,421

(174,043 )

(301,986 )
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)

(185,059 )

69,421

(174,043 )

(301,986 )
TOTAL COMPREHENSIVE INCOME (LOSS)

$ (1,763,790 )

$ 344,348

$ 3,831,049

$ 4,725,395

2023

2022

REVENUE

$ 11,953,079

$ 10,492,503

COSTS AND EXPENSES OF MINING OPERATION

Production Cost Applicable to Sales

1,711,262

765,495

Mine Production Costs

2,529,437

1,227,884

Mine Exploration Costs

2,216,949

878,188

Facilities Expansion Costs

285,078

608,603

Exploration Drilling

497,400

487,615

Camp, Warehouse and Facilities

1,082,179

825,203

Transportation

746,063

390,640

Property Holding Costs

39,521

35,967

General and Administrative

2,965,593

1,026,355

Depreciation and Amortization

-

812

Total Operating Expenses

12,073,482

6,246,762

NET OPERATING INCOME (LOSS)

(120,403 )

4,245,741

OTHER INCOME (EXPENSE)

Foreign Currency Gains (Losses)

18,254

(2,402 )
Interest Expense

(116,308 )

(119,769 )
Derivatives Mark-to-Market Gain

169,434

938,706

Other Income

3,705

526

TOTAL OTHER INCOME

75,085

817,061

NET INCOME (LOSS) BEFORE TAXES

(45,318 )

5,062,802

INCOME TAX BENEFIT

77,023

-

NET INCOME

$ 31,705

$ 5,062,802

DEEMED DIVIDEND FOR SERIES C & D PREFERRED

(58,575 )

(58,575 )

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS

$ (26,870 )

$ 5,004,227

EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO THE

EQUITY HOLDERS OF DYNARESOURCE, INC.

Basic Earnings (Loss) Per Common Share

$ 0.00

$ 0.28

Weighted Average Shares Outstanding - Basic

22,246,654

18,091,293

Diluted earnings (Loss) Per Common Share

$ 0.00

$ 0.27

Weighted Average Shares Outstanding - Diluted

22,246,654

18,983,458

OTHER COMPREHENSIVE INCOME (LOSS)

Foreign Currency Translation Gain (Loss)

91,241

(301,912 )
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)

91,241

(301,912 )

TOTAL COMPREHENSIVE INCOME

$ 122,946

$ 4,760,890

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

4
Table of Contents

DYNARESOURCE, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY ~~(DEFICIT)~~
FOR THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER 30,~~MARCH 31, 2023 AND 2022 ~~AND 2021~~
(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 SEPTEMBER 30, 2021

Balance, June 30, 2021

1,000

$ 1

17,722,825

$ 177,228

1

$ 40,000

$ 50,407,333

516,480

$ (1,474,486 )

$ 66,685

$ (54,504,374 )

$ (5,287,613 )

Treasury Stock Issued for Services

(11,634 )

(20,967 )

59,858

48,224

Other Comprehensive Income

69,421

69,421

Net Income (Loss)

274,927

274,927

Balance, September 30, 2021

1,000

$ 1

17,722,825

$ 177,228

1

$ 40,000

$ 50,395,699

495,513

$ (1,414,628 )

$ 136,106

$ (54,229,447 )

$ (4,895,041 )

THREE MONTHS ENDED SEPTEMBER 30, 2022
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

Other Comprehensive Income

(185,059 )

(185,059 )

Net Income (Loss)

(1,578,731 )

(1,578,731 )

Balance, September 30, 2022

1,000

$ 1

20,746,654

$ 207,467

1

$ 40,000

$ 56,022,782

12,180

$ (34,773 )

$ (421,708 )

$ (46,717,373 )

$ 9,096,396

NINE MONTHS ENDED SEPTEMBER 30, 2021
Balance January 1, 2021

1,000

$ 1

17,722,825

$ 177,228

1

$ 40,000

$ 50,407,333

516,480

$ (1,474,486 )

$ 438,092

$ (59,256,828 )

$ (9,668,660 )

Treasury Stock Issued for Services

(11,634 )

(20,967 )

59,858

48,224

Other Comprehensive Income

(301,986 )

(301,986 )

Net Income (Loss)

5,027,381

5,027,381

Balance, September 30, 2021

1,000

$ 1

17,722,825

$ 177,228

1

$ 40,000

$ 50,395,699

495,513

$ (1,414,628 )

$ 136,106

$ (54,229,447 )

$ (4,895,041 )

NINE MONTHS ENDED SEPTEMBER 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

(174,043 )

(174,043 )

Net Income (Loss)

4,005,092

4,005,092

Balance, September 30, 2022

1,000

$ 1

20,746,654

$ 207,467

1

$ 40,000

$ 56,022,782

12,180

$ (34,773 )

$ (421,708 )

$ (46,717,373 )

$ 9,096,396

                      THREE MONTHS ENDED MARCH 31, 2022

Other

Preferred A

Common

Preferred

Preferred

Paid In

Treasury

Treasury

Comp

Accumulated

Shares

Amount

Shares

Amount

Rights

Amount

Capital

Shares

Amount

Income

Deficit

Totals

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 )
Other Comprehensive (Loss)

(301,912 )

(301,912 )

Net Income

5,062,802

5,062,802

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

THREE MONTHS ENDED MARCH 31, 2023

Other

Preferred A

Common

Preferred

Preferred

Paid In

Treasury

Treasury

Comp

Accumulated

Shares

Amount

Shares

Amount

Rights

Amount

Capital

Shares

Amount

Income

Deficit

Totals

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

Other Comprehensive Income

91,241

91,241

Net Income

31,705

31,705

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

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

5
Table of Contents

DYNARESOURCE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE ~~NINE~~THREE MONTHS ENDED ~~SEPTEMBER 30,~~MARCH 31, 2023 AND 2022 ~~AND 2021~~
(Unaudited)

2022

2021

2023

2022

CASH FLOWS FROM OPERATING ACTIVITES:

Net income

$ 4,005,092

$ 5,027,381

Adjustments to reconcile net income to cash provided by (used in) operating activities

Change in Derivatives

(1,993,836 )

3,928,913

Net Income

$ 31,705

$ 5,062,802

Adjustments to reconcile net income to cash used in operating activities

Change in Fair Value of Derivatives

(169,434 )

(938,706 )
Depreciation and Amortization

2,437

2,437

-

812

Amortization of Loan Discount

-

411,935

Stock Issued for Services

-

48,224

Deferred Taxes

(77,023 )

-

Change in Operating Assets and Liabilities

Accounts Receivable

(365,616 )

(125,252 )

(1,160,955 )

(701,274 )
Inventories

(832,909 )

(1,428,944 )

371,930

(507,353 )
Foreign Tax Receivable

(3,501,836 )

(1,670,554 )

(1,544,980 )

(482,490 )
Operating Lease Assets

19,358

23,517

Other Assets

(342,402 )

(270,129 )

(261,771 )

(267,754 )
Operating Lease Assets

72,396

64,301

Appeal Bond

-

1,111,111

Accounts Payable

985,620

(419,323 )

112,016

(5,585 )
Accrued Expenses

40,903

1,381,360

2,534,906

(668,718 )
Customer Advances

(1,875,000 )

6,750,000

(150,000 )

(1,375,000 )
Operating Lease Liabilities

(76,576 )

(64,077 )
Lease Liabilities

(28,868 )

(35,939 )
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES

(3,881,727 )

14,747,383

(323,116 )

104,312

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from Exercise of Stock Warrants

5,416,936

-

Payments of Convertible Notes Payable

(543,279 )

-

CASH FLOWS FROM FINANCING ACTIVITIES

Payments of Notes Payable

(83,258 )

(47,936 )

-

(36,165 )
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES

4,790,399

(47,936 )
CASH FLOWS USED IN FINANCING ACTIVITIES

-

(36,165 )

Effects of Foreign Currency Exchange

(139,224 )

(371,173 )
Effects of Foreign Currency

250,186

(245,876 )

NET INCREASE IN CASH AND CASH EQUIVALENTS

769,448

14,328,274

NET DECREASE IN CASH AND CASH EQUIVALENTS

(72,930 )

(177,729 )
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

15,719,238

1,504,016

19,177,138

15,719,238

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$ 16,488,686

15,832,290

$ 19,104,208

15,541,509

SUPPLEMENTAL DISCLOSURES

Cash Paid for Interest

$ 62,729

$ 391,436

$ -

$ 25,162

Cash Paid for Income Taxes

$ -

$ -

$ -

$ -

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

6
Table of Contents

DYNARESOURCE, INC.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
~~SEPTEMBER 30, 2022 AND 2021~~MARCH 31, 2023

NOTE 1 - NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Activities, History and Organization

DynaResource, Inc. (the “Company” or “DynaResource”) 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 the production of precious metals.

In 2000, the Company 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 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 Sierra Madre ~~mountain~~Mountain range. The Company currently owns 100% of the outstanding capital of DynaMéxico. ~~A 20% minority interest in DynaMéxico was held by Goldgroup Resources Inc., a wholly owned subsidiary of Goldgroup Mining Inc. Vancouver BC (“Goldgroup”) until February 24, 2020.~~

In 2005, the Company formed DynaResource Operaciones de San José De Gracia S.A. de C.V. (“DynaOperaciones”) and acquired control of Mineras de DynaResource, S.A. de C.V. (formerly Minera Finesterre S.A. de C.V., “DynaMineras”). 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, more specifically, National Instrument 43-101 (“NI 43-101”). This regulation sets forth standards for reporting resources in a mineral property and is a reporting standard widely recognized in the mining industry.

Significant Accounting Policies

The Company’s management selects accounting principles generally accepted in the United States of America 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 consistently applied in the preparation of these financial statements.

The financial statements and notes are representations 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)(1) recorded transactions are valid; 2)(2) valid transactions are recorded; and 3)(3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods presented.

Basis of Presentation

The Company prepares its unaudited consolidated financial statements on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States.

Correction of an Error
The derivative liability in the Company’s December 31, 2022 balance sheet presented herein has been corrected to $2,172,417 from $2,334,377 from the Company’s Form 10-K which was filed with the Securities and Exchange Commission on April 17, 2023. The error was a typographical error made in 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.
7
Table of Contents
Use of Estimates
In order to prepare unaudited consolidated financial statements in conformity with accounting principles generally accepted in the United States, management must make estimates, judgments and assumptions that affect the 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.
Principles of Consolidation

The unaudited consolidated financial statements include the accounts of 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 Mineras de DynaResource S.A. de C.V. (100% ownership). All significant inter-company transactions have been eliminated. All amounts are presented in U.S. Dollars unless otherwise stated.

7
~~Table of Contents~~
Cash and Cash Equivalents

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 Federal Deposit Insurance Corporation (“FDIC”) insurance limits. As of ~~September 30, 2022,~~March 31, 2023, the Company ~~had $15,595,559 of~~has $18,113,393 in deposits in U.S. ~~Banks~~banks in excess of the FDIC limit. ~~Management does not believe~~The Company reduces this risk by maintaining such deposits at high quality financial institutions that ~~the Company is at risk of loss on cash.~~management believes are creditworthy.

Accounts Receivable and Allowances for Doubtful Accounts

The Company maintains an allowance for doubtful accounts ~~receivable is recorded when receivables are considered to be doubtful of collection.~~based upon its customers’ financial condition and payment history, and its historical collection experience and expected collectability. As of ~~September 30, 2022,~~March 31, 2023 and December 31, ~~2021, respectively,~~2022, no allowance has been deemed necessary.

Foreign Tax Receivable

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. ~~The total amounts of the IVA receivable as of September 30, 2022, and December 31, 2021 are $8,244,016 and $4,742,180, respectively.~~

Inventory

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 inventories are $2,943,112 and $2,110,203 as of September 30, 2022, and December 31, 2021, respectively.~~

Exploration Stage Issuer (No Reserves Disclosed)

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.

8
Table of Contents
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 ~~September 30, 2022,~~March 31, 2023, the Company ~~fits~~meets the definition of an exploration stage issuer which is defined as an issuer that has no material property with established proven and probable mineral reserves ~~disclosed.~~as defined by Regulation S-K, Item 1300.
8
~~Table of Contents~~

Property, Plant & Equipment

Substantially all ~~mine development costs,~~property, plant and equipment at the Company’s mines, including design, engineering, mine construction, and installation of equipment are expensed as incurred, as the Company has not established proven and probable reserves on any of its properties. Only certain types of mining equipment which ~~has~~have alternative uses or significant salvage value, may be capitalized without proven and probable reserves. ~~Depreciation is computed using the straight-line method.~~
Office furniture and equipment are ~~being~~ 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 March 31, 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, and the property is a commercially minable property.~~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 the estimated life of 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

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. When a property does not contain mineralized material that satisfies the definition of proven and probable reserves, such as with the San José de Gracia Property, capitalized costs and mineral property interests are amortized using the straight-line method once production begins. As of September 30, 2022, the mining interests have been in the pilot production stage and therefore, no amortization has been expensed. Mining properties consist of 33 mining concessions covering approximately 9,920 hectares at the San José de Gracia ~~property, the basis of which are amortized on the unit of production method based on estimated recoverable resources.~~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.
9
Table of Contents

Impairment of Assets: The Company reviews and evaluates its long-lived assets for 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.
9
~~Table of Contents~~

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:

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

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, and at least annually.~~needed. As of the date of this filing, no events have occurred that would require the write-down of any assets. As of ~~September 30, 2022,~~March 31, 2023 and December 31, ~~2021,~~2022, no indications of impairment existed.

Asset Retirement Obligation

As the Company is not obligated to remediate the mining properties, no Asset Retirement Obligation (“ARO”) has been established. Changes in regulations or laws, any instances of non-compliance with laws or regulations that 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 made when estimating the fair value of AROs. Expected cash flows relating to AROs could occur over long periods of time and the assessment of the 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.

Property Holding Costs

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.

10
Table of Contents
Exploration Costs

Exploration costs, ~~are charged to operations and expensed as incurred. Exploration,~~including exploration, development, direct field costs and related administrative costs are expensed in the period incurred.
Leases
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.

Transactions in and Translations of Foreign Currency

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).

10
~~Table of Contents~~
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 ended ~~September 30, 2022,~~March 31, 2023, and December 31, ~~2021~~2022 (Mexican Pesos per one U.S. dollar):

~~Sept. 30,~~
~~2022~~
~~Dec.~~
~~31,~~
~~2021~~
~~Exchange Rate at Period End Pesos~~
~~20.12~~
~~20.48~~

March 31,
2023

December
31, 2022

Current Exchange Rate

18.03

19.48

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 ~~September 30,~~March 31, 2023 and 2022 ~~and September 30, 2021~~ (Mexican Pesos per one U.S. dollar):

~~Sept. 30,~~
~~2022~~
~~Sept. 30,~~
~~2021~~
~~Weighted Average Exchange Rate for the Nine Months Ended Pesos~~
~~20.25~~
~~20.13~~

March 31,
2023

March 31,
2022

Weighted Average Exchange Rate for the Three Months Ended

18.66

20.50

The Company recorded currency transaction gains (losses) of ~~$47,709~~$18,254 and ~~$(121,725)~~$(2,402) for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively.

Income Taxes

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 that some portion or all of the deferred income tax asset will not be realized.

11
Table of Contents
Income from the Company’s subsidiaries in México is taxed isin accordance with applicable Mexican tax law ~~rates.~~
~~Use of Estimates~~
~~In order to prepare unaudited consolidated financial statements in conformity with accounting principles generally accepted in the United States, management must make estimates, judgments~~ and assumptions that affect the 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.enacted rates.

Comprehensive Income (Loss)

ASC 220 “Comprehensive Income” establishes standards for reporting and display of comprehensive income and its components in a full set of general-purpose financial statements. The 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.

Revenue Recognition

The Company follows ASC 606 “Revenue from ~~contracts~~Contracts with ~~customers~~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.

11
~~Table of Contents~~
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 ~~September 30, 2022,~~March 31, 2023, there are ~~$7,375,000~~$9,200,000 in customer deposit liabilities for payments received in advance, all of which are expected to be settled, by the delivery of product, in ~~2022.~~the second quarter of 2023.

During the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, and the year ended December 31, ~~2021,~~2022, there was $9,350,000 and $9,250,000, ~~and $1,500,000~~respectively of revenue recognized during the period from customer deposit liabilities (deferred contract revenue) from prior periods, and ~~$0 of~~no customer deposits were refunded to the customer due to order cancellation.

~~We have elected to account for shipping~~Shipping and handling costs asare considered fulfillment costs after the customer obtains control of the goods.

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash, receivables, payables and long-term debt. ~~The carrying amount of cash,~~Cash, receivables and payables ~~approximates~~approximate fair value because of the short-term nature of these items.   ~~The carrying amount~~As of March 31, 2023 and December 31, 2022, there were no long-term ~~debt approximates~~assets or liabilities, measured at their estimated fair ~~value due to the relationship between the interest rate on long-term debt and the Company’s incremental risk adjusted borrowing rate.~~value.

Earnings (Loss) Per Share ~~Amounts~~

Earnings (loss) per share, attributable to the common equity holders of DynaResource, are calculated in accordance with ASC 260 “Earnings per Share”. The weighted average number of common shares outstanding during each period is used to compute basic earnings (loss) per share. Diluted earnings (loss) per share ~~are~~is computed using the weighted average number of shares and potentially dilutive common shares outstanding. Potentially dilutive common shares are additional common shares assumed to be exercised. Potentially dilutive common shares consist of stock warrants and convertible preferred shares and ~~convertible notes and~~ are excluded from ~~the~~ diluted earnings (loss) per share computation in periods 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.
~~The~~   For the three months ended March 31, 2023, the Company had ~~warrants outstanding at September 30, 2022 which upon exercise, would result in the issuance of 892,165 shares of common stock. The warrants are exercisable at $.01 per share.~~
The Company had warrants outstanding at December 31, 2021 which upon exercise, would result in the issuance of 3,060,998 shares of common stock. Of these warrants, 2,168,833 were exercisable at $2.04 per share and 892,615 were exercisable at $.01 per share. The Company also had convertible debt instruments as of December 31, 2021 which, upon conversion at valuations of $2.50 per share, would result in the issuance of 217,312 shares of common stock.

Nine Months
Ended
Sept. 30,
2022

Nine Months
Ended
Sept. 30,
2021

Net income (loss) attributable to common shareholders

$ 3,829,368

$ 4,897,257

Weighted average number of common shares outstanding, Basic

19,005,593

17,722,825

Diluted weighted average number of common shares outstanding

19,005,593

17,722,825

Basic earnings per share

$ 0.20

$ 0.28

Diluted earnings per share

$ 0.20

$ 0.28

~~As of September 30, 2022, 892,165 shares~~3,433,482 of potentially dilutive common ~~stock related to outstanding stock warrants were~~shares that have been excluded from ~~the~~ diluted earnings per share, ~~calculation because the ratio of expenses related to the shares to issuable shares exceeded the basic earnings per share and therefore~~as their effect would be ~~anti-dilutive.~~considered anti-dilutive due to the net loss for the quarter attributable to the common equity holders.

12
At September 30, 2021, 2,168,833 shares of potentially dilutive common stock related to outstanding stock warrants and 224,103 shares of potentially dilutive common stock related to convertible debt were excluded from the diluted earnings per share calculation because the exercise and conversion prices exceeded the average stock price and therefore their effect would be anti-dilutive. In addition, at September 30, 2021, 1,260,634 of potentially dilutive common stock related to outstanding warrants and 2,089,098 shares of potentially dilutive common stock related to convertible debt were excluded from the diluted earnings per share calculation because the ratio of expenses related to the shares to issuable shares exceeded the basic earnings per share and therefore their effect would be anti-dilutive.
Table of Contents

Related Party Transactions

~~FASB~~ ASC 850, ~~“Related~~“Related Party ~~Disclosures”~~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.

NOTE 2 - INVENTORIES

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 30, 2022,~~March 31, 2023 and December 31, ~~2021, respectively,~~2022 were as follows:

2022

2021

2023

2022

Mined Tonnage

$ 2,866,094

$ 2,042,633

$ 2,238,791

$ 2,610,116

Gold-Silver Concentrates

77,018

67,570

110,090

110,695

Total Inventories

$ 2,943,112

$ 2,110,203

$ 2,348,881

$ 2,720,811

NOTE 3 -– PROPERTY, PLANT & EQUIPMENT

~~Property consists~~As of ~~the following at September 30, 2022~~March 31, 2023 and December 31, ~~2021:~~

2022

2021

Leasehold improvements

$ 9,340

$ 9,340

Office equipment

31,012

31,012

Office furniture and fixtures

78,802

78,802

Sub-total

119,154

119,154

Less: Accumulated depreciation

(118,862 )

(116,425 )
Total Property

$ 292

$ 2,729

~~Depreciation~~2022, all the Company’s property, plant and ~~amortization has~~equipment have been ~~provided over each asset’s estimated useful life. Depreciation~~fully depreciated, amortized or expensed, as discussed in “Property, Plant and ~~amortization expense was $2,437 and $2,437 for the nine months ended September 30, 2022 and 2021, respectively.~~Equipment” in Note 1 above.
12
~~Table of Contents~~

NOTE 4 - MINING CONCESSIONS

Mining properties consist of the San José de Gracia concessions. Mining Concessions were $4,132,678 ~~and $4,132,678 at September 30, 2022~~as of March 31, 2023 and December 31, ~~2021, respectively.~~2022. There was no depletion expense during the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021.~~as the Company is an exploration stage issuer (See Note 1).

NOTE ~~5 - CONVERTIBLE PROMISSORY NOTES~~
~~Notes Payable - Series I~~
In April and May 2013, the Company entered into note agreements with shareholders in the principal amount of $1,495,000 (the “Series I Notes”). The Series I Notes bear simple interest at twelve and a half percent (12.5%), paid quarterly in arrears. The Notes originally matured on December 31, 2015 but were subsequently extended.
Each Series I Note holder retained the option, at any time prior to maturity or prepayment, to convert any unpaid principal and accrued interest into Common Stock at $2.50 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 one year from their conversion date.
~~As of December 31, 2021, six Series I Notes remained outstanding with a total balance of $455,905. The Series I Notes were paid off in July 2022.~~
~~Notes Payable - Series II~~
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%) paid by the Company, quarterly in arrears. The Series II Notes originally matured on December 31, 2015, but were subsequently extended.
Each Series II 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 $2.50 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 one year from the conversion date.
~~As of December 31, 2021, two Series II Notes remained outstanding with a balance of $87,374. The Series II Notes were paid off in July 2022.~~
~~NOTE 6 -~~5- INCOME TAXES

The Company has adopted ASC 740-10, “Income Taxes”, which requires the use of the liability method in the 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.
~~The Company’s~~Our income tax expense and effective income tax rate ~~for~~are significantly impacted by the ~~period ended September 30, 2022~~mix of our domestic and ~~for~~foreign earnings before income taxes. The Mexican applicable statutory rate is 30% which is higher than the ~~period ended September 30, 2021 varies from the~~U.S. federal and state combined statutory rate of approximately 21%. For the quarter, the increase in the effective benefit rate is primarily due to ~~a valuation allowance which creates a near zero effective tax rate. The Company intends~~the beneficial impact of mark to continue maintaining a full valuation allowance on our deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of the valuation allowance. However, given our current earnings and anticipated future earnings, it is reasonably possible thatmarket discrete items booked in the ~~near future sufficient positive evidence may become available~~quarter when compared to ~~support~~ the ~~conclusion that some~~net loss before income taxes of ~~all of the valuation allowance is necessary.~~$45,318.
13
~~Table of Contents~~

NOTE 7-6 - STOCKHOLDERS’ EQUITY

The total number of shares of all classes of capital stock which the corporation has the authority to issue is 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”), of which 1,000 shares 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) ~~forty million (40,000,000)~~40,000,000 shares of Common Stock, par value $0.01 per share (“Common Stock”). As of ~~September 30, 2022,~~March 31, 2023, 15,265,008 shares of Preferred Stock remain undesignated.
13
Table of Contents

Series A Preferred Stock

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. ~~The Company issued 1,000 shares~~As of ~~Series A Preferred Stock to its CEO. At, September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, there were 1,000 shares of Series A Preferred Stock outstanding. On April 19, 2023, the Company repurchased the Series A Preferred Stock, as discussed in Note 14 – “Subsequent Events”.

Series C Senior Convertible Preferred Stock

~~At September 30, 2022~~As of March 31, 2023 and December 31, ~~2021~~2022 there were ~~1,734,992 and~~ 1,734,992 Series C Preferred shares outstanding. As of ~~September 30, 2022,~~March 31, 2023, these Series C Preferred Shares are convertible to common shares at $2.04 per share 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. The dividend is calculated at 4.0% of $4,337,480 payable annually on June ~~30. At September 30, 2022,~~30th. As of March 31, 2023, dividends for the years 2016 to 2022 totaling $1,053,777 were in arrears.

Due to the nature of the Series C Preferred Shares as mandatorily redeemable, the Series C Preferred Shares are classified as “temporary equity” on the balance sheet.

Series D Senior Convertible Preferred Stock

~~Financing Agreement with Golden Post Rail, LLC, a Texas Limited Liability Company, (“Golden Post”) and with Shareholders of DynaResource, Inc.~~
On May 14, 2020, the Company closed an additional financing ~~agreement with Golden Post, and with certain individual shareholders, and related agreements. A summary of the transactions~~ and related agreements ~~is set forth below:~~
1.
Pursuant to the May 14, 2020 Note Purchase Agreement (the “NPA”) among the Company, Golden Post Rail, LLC (the “Lead Purchaser”), and the other parties listed on Exhibit A of the NPA thereto (the “Remaining Purchasers”):
·
~~Golden Post acquired the following securities~~:
~~(a)~~
A convertible promissory note (the “Golden Post Note”) payable to Golden Post in the principal amount of $2,500,000, bearing interest at 10%, and maturing two years from the date of execution. The Golden Post Note is convertible, at the option of Golden Post, into shares of Series D Senior Convertible Preferred Stock (the “Series D Preferred”) at a conversion price of $2.00 per share; and
~~(b)~~
A common stock purchase warrant (the “2020 Warrant”) for the purchase of 783,976 shares of the Company’s common stock, at an exercise price of $0.01 per share, and maturing on the 10-year anniversary of the date of issuance. The 2020 Warrant contains anti-dilution provisions.
14
~~Table of Contents~~
·
~~The Remaining Purchasers acquired the following securities~~:
~~(a)~~
Convertible promissory notes (the “Remaining Notes”) in the aggregate principal amount of $1,400,000, bearing interest at 10%, and maturing two years from the date of issuance. The Remaining Notes are convertible, at the option of each individual Remaining Purchaser, into shares of Series D Preferred at a conversion price of $2.00 per share; and
~~(b)~~
Common stock purchase warrants (the “Remaining Purchasers Warrants”) for the purchase of an aggregate of 439,026 shares of the Company’s common stock, at an exercise price of $0.01 per share, and maturing on the 10-year anniversary of the date of issuance. The Remaining Purchasers Warrants contain anti-dilution provisions.
2.
Also pursuant to the NPA, the Company and the Lead Purchaser agreed to amend the common stock purchase warrant dated September 30, 2015 (the “2015 Warrant”), issued to the Lead Purchaser in connection with that certain Securities Purchase Agreement dated as of May 6, 2015. The 2015 Warrant contemplates the purchase, upon exercise, of 2,166,527 shares (subject to adjustment) of the Company’s common stock and matured September 30, 2020 (the “Termination Date”). The amendment to the 2015 Warrant provides that, following the expiration of the 2015 Warrant, the Company will issue to the Lead Purchaser a new warrant (the “New Warrant”), substantially in the same form of the 2015 Warrant, representing the right to purchase the number of shares of the Company’s common stock that were still subject to purchase upon exercise of the 2015 Warrant, if any. The New Warrant has a maturity date of September 30, 2022.
3.
As part of the transaction contemplated by the NPA, the Company executed an Amended and Restated Registration Rights Agreement pursuant to which Golden Post may require the Company to register the shares of common stock which may be issued upon (i) the conversion of the Series C Preferred, (ii) the conversion of the Series D Preferred, and (iii) the shares of common stock issuable upon the exercise of the 2015 Warrant, the 2020 Warrant, and a compensatory warrant issued to the Lead Purchaser on May 13, 2020 (described below under the heading “Compensatory Issuances”), including any additional shares of common stock issuable pursuant to anti-dilution provisions of such securities.
4.
Pursuant to the transaction contemplated by the NPA, the Company held a special meeting of Company stockholders, to solicit stockholder approval of (a) an amendment of the Company’s certificate of incorporation to increase the number of authorized shares of common stock from 25,000,000 shares to 40,000,000 shares, and (b) an amendment of the Certificate of Designations of the Series C Preferred, in order to (a) extend the maturity date of the Series C Preferred by an additional two (2) years, (ii) add an equity cap in respect of the conversion of Series C Preferred into common stock of the Company, and (iii) add certain restrictions on the ability of the Company to issue Series C Preferred. The special meeting was held on July 13, 2020, and Company stockholders approved each item referenced above.
5.
On May 13, 2020, one business day prior to the NPA, the Company issued to the Lead Purchaser the following: (i) a common stock purchase warrant for 2,306 shares, at an exercise price of $0.01 per share, and maturing on the 7-year anniversary of the date of issuance (the “Compensatory Warrant”); and (ii) 1,771 shares of Series C Preferred. These issuances were occasioned by the Company’s obligations under the Securities Purchase Agreement dated as of May 6, 2015.
6.
In order to accommodate the issuance of the additional 1,771 shares of Series C Preferred, on May 13, 2020 the Company filed with the Secretary of State of Delaware a Certificate of Increase of Series C Senior Convertible Preferred Stock, to increase the number of shares of preferred stock designated as Series C Preferred from 1,733,221 shares to 1,734,992 shares.
7.
Also on May 13, 2020, the Company filed with the Secretary of State of Delaware a Certificate of Designations of the Powers, Preferences and Relative, Participating, Optional and Other Special Rights of Preferred Stock and Qualifications, Limitations and Restrictions thereof of Series D Senior Convertible Preferred Stock, contemplating the authorization of 3,000,000 shares of Series D Preferred.
15
~~Table of Contents~~
~~On October 11, 2021. the Company filed an amended designation of Series D Preferred~~ with ~~the State of Delaware.~~
~~Retirement of Convertible Debt~~
certain shareholders. On October 7, 2021, the Company paid $2,500,000 to repurchase one ~~note that was convertible into Series D Preferred.~~note.

The remaining ten noteholders of 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 Company issued 760,000 shares of Series D Preferred Stock for these notes. The 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 $1,520,000 payable annually on October 18^th. As of March 31, 2023 dividends for the 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 ~~stock holder~~stockholder at any time following maturity, the Series D Preferred ~~shares are~~Stock is classified as “temporary equity” on the balance sheet.

Due to the anti-dilutive provisions contained in the May 6, 2015, Securities Purchase Agreement, the Series C Preferred and the 2015 Warrant, the Company incurred derivative liabilities upon issuance of these securities. On May 14, 2020, in connection with the Series D Convertible Note financing, the expiration dates for the Series C Preferred and the 2015 Warrant were extended to September 30, 2022. In addition, a new derivative liability was incurred due to the issuance of additional warrants. At December 31, 2021, the total derivative liability was $3,898,914, which included $1,019,431 for the Series C Preferred, $1,320,380 in connection with the 2015 Warrant, and $1,559,103 in connection with the additional warrants. As of September 30, 2022, only the additional warrants derivative liability remained, for a total derivative liability of $1,905,078.   The 2015 Warrant was exercised on September 28, 2022 at an above market price, resulting in no derivative liability. The Series C Preferred shares are convertible at an above market price or redeemable by the holder on demand. The deemed dividends on the Series C and D Preferred Stock for the ~~nine~~three months ~~ending September 30,~~ended March 31, 2023 and 2022, were $58,575 and ~~September 30, 2021, were $130,124 and $130,124 respectively. The deemed dividends for the Series D Preferred for the nine months ending September 30, 2022 and 2021 were $45,600 and $0,~~$58,575, respectively. As the Company has not declared these dividends, it is required ~~only~~ as an item “below” the net income ~~(loss)~~ amount on the accompanying consolidated statements of ~~income (loss).~~income.

Preferred Stock (Undesignated)

In addition to the 1,000 shares designated as Series A Preferred Stock, and the 1,734,992 shares designated as Series C Preferred ~~Shares~~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. ~~At September 30, 2022~~As of March 31, 2023 and December 31, ~~2021,~~2022, there were no other shares of Preferred Stock outstanding.
14
Table of Contents

The shares of each series of Preferred Stock may vary from the shares of any other series thereof in any or all of 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.

Common Stock

The Company is authorized to issue 40,000,000 common shares at a par value of $0.01 per share. These shares have full voting rights. ~~At September 30, 2022~~As of March 31, 2023, and December 31, ~~2021,~~2022, there were ~~20,746,654 and 18,091,293~~22,246,654 shares ~~outstanding, respectively.~~outstanding. No dividends were declared or paid ~~for~~during the ~~periods~~three months ended ~~September 30, 2022~~March 31, 2023 and ~~2021, respectively.~~2022.
16
~~Table of Contents~~

Preferred Rights

The Company issued “Preferred Rights” for the rights to percentages of revenues generated from the San José de Gracia Pilot Production Plant and received $784,500 for these rights. The “Preferred Rights” are reflected in stockholders’ equity. As of ~~September 30, 2022,~~March 31, 2023, $744,500 had been repaid, leaving a current balance of $40,000 and $40,000 as of ~~September 30, 2022~~March 31, 2023, and December 31, ~~2021,~~2022, respectively.

Stock Issuances

~~On June 28, 2022,~~There were no issuances of stock during the ~~Company issued 2,655,361 shares of common stock upon the exercise of warrants to purchase 2,655,361 shares, by one warrant holder for $2.04 a share.~~
~~On October 18, 2021, the Company issued 368,468 shares of common stock upon the exercise of warrants to purchase 368,468 shares, by five warrant holders for $.01 a share.~~three months ended March 31, 2023.

Treasury Stock

During the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 no shares of ~~common~~treasury stock ~~held in treasury (treasury stock)~~ were ~~issued.~~purchased.

~~During the year ending December~~There were 12,180 shares of Treasury Stock outstanding as of March 31, ~~2021, 504,300 treasury shares were issued, in consideration of services provided to the Company.~~
~~Outstanding treasury shares total 12,180 and 12,180 at September 30, 2022~~2023 and December 31, ~~2021, respectively.~~2022.

Warrants

~~2022~~2023 activity

~~At September 30, 2022,~~As of March 31, 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. On June 28, 2022 one warrant holder exercised a warrant to purchase a total of 2,655,361 shares of common stock for $2.04 a share.~~stock:

~~2021 activity~~
At December 31, 2021, the Company had outstanding warrants to purchase 3,060,998 shares of common stock. On October 18, 2021, five warrant holders exercised warrants to purchase 368,468 shares of common stock for $0.01 a share.

Number
of Shares

Weighted
Average
Exercise
Price

Weighted
Average
Remaining
Contractual
Life (Years)

Intrinsic
Value

Number
of Shares

Weighted
Average
Exercise
Price

Weighted
Average
Remaining
Contractual
Life (Years)

Intrinsic
Value

Balance at December 31, 2020

3,429,466

$ 1.30

4.40

-

Balance as of December 31, 2022

892,165

$ 0.01

7.37

-

Granted

-

$ -

-

-

-

-

-

-

Exercised

368,468

$ 0.01

-

-

-

-

-

-

Forfeited

-

$ -

-

-

-

-

-

-

Balance at December 31, 2021

3,060,998

$ 1.46

2.79

-

Granted

-

$ -

-

-

Exercised

2,166,775

$ 2.04

-

-

Forfeited

2,058

$ 2.04

-

-

Balance at September 30, 2022

892,165

$ 0.01

7.62

-

Exercisable at September 30, 2022

892,165

$ 0.01

7.62

-

Balance as of March 31, 2023

892,165

0.01

7.13

-

Exercisable as of March 31, 2023

892,165

$ 0.01

7.13

-

1715
Table of Contents

~~NOTE 8 - RELATED PARTY TRANSACTIONS~~
~~Dynacap Group Ltd.~~
~~The Company paid $143,750 and $128,500 to Dynacap Group, Ltd. (an entity controlled by~~A derivative liability was incurred at the ~~CEO~~issuance of the ~~Company) for consulting and other fees during~~Series D warrants in 2022. As of March 31, 2023, the ~~periods ended September 30, 2022, and 2021, respectively.~~
derivative liability totaled $2,002,983. See Note 8 below.

NOTE 97 - COMMITMENTS AND CONTINGENCIES

Concession Taxes

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 ~~since 2002-2017~~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%).

Leases

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 hectares 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 $1,359,443 ~~pesos~~Pesos (approximately $73,000 USD) adjusted for inflation based on the Mexico minimum wage increase. Rent was ~~$3,678,437~~$4,414,124 Pesos ~~(approx. $182,000~~(approximately $236,000 USD) for the year ended December 31, ~~2022.~~2023, which was paid during the first quarter of 2023. The Land Lease Agreement provides DynaMineras with surface access to the core resource areas of SJG (4,399 hectares), and allows for all permitted mining and exploration activities.
The Company leases office space for its corporate headquarters in Irving, Texas. In September 2017, the Company entered into a sixty-six-month extension of the lease through January 2023. As part of the agreement the Company received six months free rent as a finish out allowance. The Company capitalized the leasehold improvement costs and amortized them over the rent abatement period as rent expense. The Company makes tiered lease payments on the 1st of each month.
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 Company determines if a contract is or contains a lease at inception. As of ~~September 30, 2022,~~March 31, 2023, the Company has two operating leases: ~~a six and one-half year lease for~~corporate office space ~~with a remaining term of four months,~~ and a twenty-year ground lease in association with its México mining ~~operations with~~operations. An agreement for the lease of expanded office space was signed in the first quarter of 2023 and will commence when the build-out of the space is complete, which is anticipated to be during the second 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 ~~thirteen~~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.
18
~~Table of Contents~~

As the implicit rate is not readily determinable for most of the Company’s lease agreements, the Company uses an estimated incremental borrowing rate to determine the initial present value of lease payments. These discount rates for leases are calculated using the Company’s interest rate of promissory ~~notes.~~notes
~~The Company’s components of lease cost are as follows:~~

Period Ended

Sept. 30, 2022

Operating Lease - Office Lease

$ 65,769

Operating Lease - Ground Lease

68,501

Short Term Lease Costs

12,037

Variable Lease Costs

-

TOTAL

$ 146,307

Weighted average remaining lease term and weighted average discount rate are as follows:

Weighted Average Remaining Lease Term (Years) - Operating Leases

10.12

Weighted Average Discount Rate - Operating Leases

12.50 %

Estimated future minimum lease obligations are as follow for the years ending September 30:

YEAR

2022

$ 121,033

2023

94,074

2024

96,896

2025

99,803

2026

102,797

Thereafter

684,885

Total

$ 1,199,488

Less Imputed Interest

(590,113 )
OPERATING LEASE PAYABLE

$ 609,375

NOTE 108 - DERIVATIVE ~~LIABILITIES~~LIABILITY
~~Series C Preferred Stock~~
As discussed in Note 7, the Company analyzed the embedded conversion features of the Series C Preferred Stock and determined that the stock 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.
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.
19
~~Table of Contents~~
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:

2022

2021

Annual volatility rate

0 %

147 %
Risk free rate

4.22 %

0.73 %
Remaining Term

0.00 years

0.50 years

Fair Value of common stock

$ 2.14

$ 1.75

For the nine and twelve months ended September 30, 2022 and December 31, 2021, 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 during the nine and twelve months ended September 30, 2022 and December 31, 2021.~~
Period Ended

2022

2021

Fair value of derivative (stock), beginning of period

$ 1,019,431

$ 601,313

Change in fair value of derivative

(1,019,431 )

418,118

Fair value of derivative on the date of issuance

-

-

Fair value of derivative (stock), end of period

$ -

$ 1,019,431

~~2015 Warrant~~
As discussed in Note 7, the Company analyzed the embedded conversion features of the Series C Preferred Stock and determined that the 2015 Warrant (acquired at the same time as the Series C Preferred Stock) 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.
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 2015 Warrant based on the assumptions below:

2022

2021

Annual volatility rate

0 %

147 %
Risk free rate

4.22 %

0.73 %
Remaining Term

0.00 years

0.50 years

Fair Value of common stock

$ 2.14

$ 1.75

20
~~Table of Contents~~
For the nine and twelve months ended September 30, 2022, and December 31, 2021, 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 during the periods ended September 30, 2022, and December 31, 2021.~~
Period Ended

2022

2021

Fair value of derivative (warrant), beginning of period

$ 1,320,380

$ 817,613

Change in fair value of derivative

(1,320,380 )

502,767

Fair value of derivative on the date of issuance

-

-

Fair value of derivative (warrant), end of period

$ -

$ 1,320,380

Warrants ~~issued with~~Issued With the Notes ~~convertible into~~Convertible Into Series D Preferred

As discussed in Note 7,6, the Company analyzed the conversion features of the promissory notes convertible into Series D Preferred and determined that the Warrants issued with such notes qualified as a derivative liability. The fair value was required to be allocated among the notes, the notes’ conversion features, and the warrants, and 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.

16
Table of Contents
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 Warrants issued with the notes convertible into Series D Preferred based on the assumptions below:

2022

2021

March 31,

Period Ended

2023

2022

Annual volatility rate

119 %

147 %

122 %

116 %
Risk free rate

4.22 %

0.73 %

4.06 %

4.41 %
Remaining Term

7.62 years

8.37 years

7.13 years

7.37 years

Fair Value of common stock

$ 2.14

$ 1.75

$ 2.25

$ 2.44

For the ~~nine~~three and twelve months ended ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~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 during the ~~nine~~three and twelve months ended ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022.

Period Ended

2022

2021

Fair value of derivative (warrants), beginning of period

$ 1,559,103

$ 952,634

Fair value of derivative on the date of issuance

-

-

Exercise of warrants

-

(659,558 )
Change in fair value of derivative

345,975

1,266,027

Fair value of derivative (warrants), end of period

$ 1,905,078

$ 1,559,103

21
~~Table of Contents~~
Period Ended

2023

2022

Fair value of derivative (warrants), beginning of period

$ 2,172,417

$ 1,559,103

Exercise of warrants

-

-

Change in fair value of derivative

(169,434 )

613,314

Fair value of derivative (warrants), end of period

$ 2,002,983

$ 2,172,417

NOTE 119 - FAIR VALUE OF FINANCIAL INSTRUMENTS

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; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3 Inputs - Instruments with primarily unobservable value drivers.

17
Table of Contents
As of ~~September 30, 2022,~~March 31, 2023 and December 31, ~~2021,~~2022, the Company’s financial assets and liabilities were measured at fair value using Level 3 inputs, 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 ~~10.~~8.

Quoted
Prices
in Active
Markets
For
Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

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 at September 30, 2022 Using:

Fair Value Measurement as of March 31, 2023:

Liabilities:

Derivative Liabilities

$ 1,905,078

$ -

$ -

$ 1,905,078

$ 2,002,983

$ -

$ -

$ 2,002,983

Totals

$ 1,905,078

$ -

$ -

$ 1,905,078

$ 2,002,983

$ -

$ -

$ 2,002,983

Fair Value Measurement at December 31, 2021

Fair Value Measurement as of December 31, 2022

Liabilities:

Derivative Liabilities

$ 3,898,914

$ -

$ -

$ 3,898,914

$ 2,172,417

$ -

$ -

$ 2,172,417

Totals

$ 3,898,914

$ -

$ -

$ 3,898,914

$ 2,172,417

$ -

$ -

$ 2,172,417

NOTE 1210 - ~~REVENUE~~CUSTOMER CONCENTRATION

The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable, as follows:

For each of the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ one ~~and three customers~~customer accounted for 100% of ~~revenue, respectively.~~revenue.

~~At September 30, 2022~~As of March 31, 2023 and December 31, ~~2021,~~2022, one ~~and one customers~~customer accounted for 100% of accounts ~~receivable, respectively.~~receivable.

22
~~Table of Contents~~

NOTE 1311 - NOTES PAYABLE

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 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 above.~~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. ~~At September 30, 2022, $1,381,398~~As of March 31, 2023, $1,777,164 of accrued interest on the notes was    included in accrued liabilities on the unaudited consolidated balance sheet.
18
Table of Contents

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 ~~transaction~~activity during the ~~nine and twelve~~three months ended ~~September 30, 2022 and December~~March 31, ~~2021:~~2023:

Balance December 31, 2020

$ 2,081,435

Exchange Rate Adjustment

(57,504 )
2021 Principal Payments

(61,406 )
Balance December 31, 2021

1,962,525

Exchange Rate Adjustment

34,819

2022 Principal Payments

(83,258 )
Balance September 30, 2022

$ 1,914,086

Balance December 31, 2022

$ 1,968,251

Exchange Rate Adjustment

158,945

2023 Principal Payments

-

Balance March 31, 2023

$ 2,127,196

NOTE 1412 - REVOLVING CREDIT LINE FACILITY

On February 4, 2021, the Company (through DynaMineras) entered into a Revolving Credit Line Facility and Commercial Offtake Agreement (the “RCL”), with a commercial buyer. The RCL was extended in December 2022 through December 2023. Under the terms of the RCL:

·
The Company will deliver 100% of its produced concentrates to the buyer and provider of the RCL, through December 31, ~~2022;~~2023; unless extended by the Company;

·
An initial RCL was established by 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;

23
~~Table of Contents~~
The RCL is included under Customer Advances on the unaudited consolidated balance sheet.

Deposits under Revolving Credit Line Facility

Under the terms of the RCL, DynaMineras received the following advances from the ~~buyer:~~buyer (in millions):

(1)
$~~2.5M~~9.35 advance on ~~February 4, 2021.~~December 28, 2022. Settled on ~~March 26, 2021~~February 16, 2023
(2)
$~~3.75M~~9.60 advance on February 21, 2023. Settled on March 31, 2023
(3)
$9.20 advance on March ~~30, 2021. Settled on May 12, 2021~~
~~(3)~~
~~$3.75M advance on May 12, 2021. Settled on June 16, 2021~~
~~(4)~~
~~$6.75M advance on June 18, 2021. Settled on August 5, 2021~~
~~(5)~~
~~$8.25M advance on August 9, 2021. Settled on September 27, 2021~~
~~(6)~~
~~$8.25M advance on September 29, 2021. Settled on November 17, 2021~~
~~(7)~~
~~$8.25M advance on November 19, 2021. Settled on December 20, 2021~~
~~(8)~~
~~$9.25M advance on December 30, 2021. Settled on February 25, 2022~~
~~(9)~~
~~$8.175M advance on February 25, 2022. Settled on March 30, 2022~~
~~(10)~~
~~$7.875M advance on March 30, 2022. Settled on May 13, 2022~~
~~(11)~~
~~$8.875M advance on May 19, 2022. Settled on June 27, 2022~~
~~(12)~~
~~$8.75M advance on June 28, 2022. Settled on August 15, 2022~~
~~(13)~~
~~$7.80M advance on August 19, 2022. Settled on September 28, 2022~~
~~(14)~~
~~$7.375M advance on September 29, 2022.~~ 31, 2023.

NOTE ~~16 - SUBSEQUENT EVENTS~~13 – RELATED PARTY TRANSACTIONS
Dynacap Group Ltd.

The Company ~~has evaluated events commencing September 30, 2022~~paid $43,750 to Dynacap Group, Ltd. (“Dynacap”, an entity formerly controlled by the CEO of the Company) for consulting and ~~through~~other fees during the ~~date~~periods ended March 31, 2022. There were no fees paid to Dynacap or any other related party for the ~~financial statements were issued, and determined~~quarter ended March 31, 2023.
There are no ~~items required~~other related party transactions that require disclosure.

2419
Table of Contents
NOTE 14 - SUBSEQUENT EVENTS
On April 19, 2023, the Company entered into a Multi-Party Agreement (the “Agreement”) with Golden Post Rail, LLC (“Golden Post”), MKR 2022 Grantor Retained Annuity Trust, and Koy W. (“K.D.”) Diepholz (“Diepholz”). Golden Post is a holder of more than 5% of the outstanding shares of the Company’s Common Stock and of all the Company’s outstanding Series C Preferred Stock (the “Series C Stock”). Diepholz is the Company’s CEO and Chairman of the Company’s Board of Directors.
The principal terms of the Agreement are as follows:
·
Diepholz agreed to sell to the Company, and the Company agreed to redeem and purchase from Diepholz, all of the 1,000 outstanding shares (the “A Shares”) of Series A Preferred Stock (the “Series A Stock”) held by Diepholz for a price of $1,250,000.
·
The A Shares constitute all of the outstanding shares of Series A Stock of the Company. The Series A Stock carried the right to elect a majority of the Company’s Board of Directors. Upon the redemption of the A Shares, the Company agreed to retire the A Shares, not to issue or sell any Series A Stock in the future, and not to create or issue any other class or series of Preferred Stock having the right to elect a majority of the Board of Directors without approval of the Board of Directors (including the director appointed by the holders of the Series C Stock (the “Series C Director”).
·
Within 90 days after closing of the Agreement, the Company will seek stockholder approval to amend its Certificate of Incorporation to eliminate the Series A Stock.
·
The Company will enter into executive employment agreements (the “Employment Agreements”) with its key executives – Diepholz, Rene Mladosich, Jose Vargas, and Lic. Santos.
·
Prior to the redemption of the A Shares, Diepholz agreed to vote the A Shares to elect Ronald Vail as a fourth independent member of the Company’s Board of Directors, resulting in the Company’s having a majority-independent Board of Directors.
·
The Company will create an Audit Committee, consisting of three or more independent members of its Board of Directors, one of which must be the Series C Director as long as Golden Post has the right to appoint the Series C Director.
·
The Company will create a Nominating Committee, consisting of (a) all of the independent members of the Board of Directors, including the Series C Director as long as Golden Post has the right to appoint the Series C Director; and (b) the CEO, as long Diepholz holds that position and is serving as a director.
The foregoing description of the Agreement is qualified in its entirety by reference to the full text of the Agreement, a copy of which is available as filed on Form 8-K, filed with the SEC on April 26, 2023 and incorporated herein in its entirety by reference.
20
Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This 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 report as the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, which we refer to in this 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 report.
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 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 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 exp

Company

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 in México.

We currently conduct operations in México through our operating subsidiaries. We currently own 80% of the outstanding shares of DynaResource de México, S.A. de C.V. (“DynaMéxico”), and DynaMéxico currently holds 20% of its outstanding shares recovered from Goldgroup Resources Inc. DynaMéxico owns 100% of mining concessions, equipment, camp and related facilities which comprise the San José de Gracia Property, 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. DynaOperaciones is the exclusive management company for registered employees.

21
Table of Contents
Project Improvements, Expansion and Increased Output (2017 To Present)

The Company continues its business plan of operations at San José de Gracia, which is to improve, increase and expand test mining and pilot milling operations and generally, to increase production of gold ounces. Since January 2015 startup of the test mining and milling activities, the Company has increased daily output from an initial 75average of 100 tons per 24-hour operating day, to a current ~~400~~average of approximately 500 tons per 24-hour operating ~~day, and during~~day. During the second ~~quarter 2022~~half of 2023, the Company expects to achieve production output of ~~600~~an average of approximately 700 tons per 24-hour operating day. (Note the Summary of Test Mining and Pilot Mill Operations ~~for 2018 to 2022~~ below).

Since January 2017, the Company has expended over 27$32.6 million USD in non-operating costs, generally classified as project improvements and expansion costs which have been expensed in the company’s financial statements. These funds have been provided primarily from cash flows from operations. An itemized list of these non-operating costs is described below:

Mill Expansion:

$ 5,893,000

Mill Expansion

$ 7,093,000

Tailings Pond Expansion

1,464,000

1,464,000

Machinery and Equipment

2,143,000

2,600,000

Mining Camp Expansion

146,000

146,000

Medical Facility

126,000

126,000

Mine Development - San Pablo

2,748,000

2,748,000

Mine Expansion - San Pablo East

915,000

915,000

Mine Expansion - Tres Amigos

1,599,000

1,599,000

Exploration Drilling

2,028,000

2,981,000

SIG Mining Concessions

2,014,000

2,014,000

Surface Rights and Permitting

792,000

1,030,000

Debt Retirement

3,528,000

3,528,000

Legal Fees

4,043,000

6,385,000

Total

$ 27,439,000

$ 32,629,000

The Company is currently reporting all costs of mine operations, improvements, and expansion as expenses in accordance with United States General Accepted Accounting Principal ~~(GAAP)~~(“GAAP”) requirements. The result of expensing all costs is that the Company has accumulated a net loss carry forward from México operations of ~~$18.5~~$8 million USD which is available to offset future taxable earnings.
Summary of Test Mining and Pilot Mill Operations
Annual Results from 2018 to 2022:

Total Tons
Mined &

Reported Mill Feed Grade (g/t

Reported
Recovery

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

88.05 %

31,905

25,554

2522
Table of Contents

~~Summary of Test Mining and Pilot Mill Operations for 2018 to 2022:~~
~~Year~~
~~Total Tonnes~~
~~Mined &~~
~~Processed~~
~~Reported Mill~~
~~Feed Grade (g/t~~
~~Au)~~
~~Reported~~
~~Recovery~~
%
~~Gross Gold Concentrates Recovered~~
~~(Au oz.)~~
~~Net Gold~~
~~Concentrates~~
~~Sold~~
~~(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~~
Test pilot operations in ~~2021~~2022 yielded ~~97,088 Tons~~137,740 tons of material, mined and processed from underground test mining activity and pilot milling ~~operations; and the production~~operations. These test pilot operations also yielded approximately 31,905 gross ounces of ~~approximately 26,728 gross Oz Au,~~gold, and net of dry weight adjustments at the buyer’s facilities, the ~~production~~approximately 25,554 ounces of ~~approximately 22,566 Oz Au. The Company reports net revenue of $35,886,046 net of buyer’s price discount and refining and treatment costs.~~gold.

~~Summary of Test Mining and Pilot Mill Operations~~Quarterly Results for the ~~nine months ended September 30, 2022~~Three Months Ended March 31, 2023 and ~~2021:~~2022:

~~Total~~
~~Tonnes~~
~~Mined &~~
~~Processed~~
~~Reported~~
~~Mill Feed~~
~~Grade (g/t Au)~~
~~Reported~~
~~Recovery~~
%
~~Gross Gold Concentrates Recovered~~
~~(Au oz.)~~
~~Net Gold (1) Concentrates~~
~~Sold (Au oz.)~~
~~Nine Months Ended Sept. 30, 2022~~
~~100,206~~
~~8.67~~
~~79.86~~ %
~~22,314~~
~~17,823~~
~~Nine Months Ended Sept. 30, 2021~~
~~66,695~~
~~9.48~~
~~89.45~~ %
~~18,141~~
~~16,036~~

Total
Tons
Mined &
Processed

Reported
Mill Feed
Grade (g/t Au)

Reported
Recovery
%

Gross Gold Concentrates Recovered
(Au oz.)

Net Gold (1) Concentrates
Sold (Au oz.)

Three Months Ended March 31, 2023

53,258

6.91

69.39 %

8,204

6,810

Three Months Ended March 31, 2022

27,511

10.12

79.40 %

7,110

6,000

(1)
Gold concentrate sold during the quarter is not equal to gold concentrate recovered during the quarter due to timing of shipments & buyers discount.

Test pilot operations in Q1 2023 yielded 53,258 tons mined and processed through mill operations (average of 592 tons per day) and the recovery of 8,204 gross Oz Au resulting in sales of 6,810 gross 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 Q1 2022 yielded 27,511 tons mined and processed through mill operations ~~(306~~(average of 306 tons per day) ; and the recovery of 7,110 gross Oz Au resulting in sales of 6,000 gross Au Oz contained in gold-silver concentrates, and ~~the receipt~~ of $10,492,503 ~~in revenues~~of revenue, net of buyer’s price discount, refining and treatment costs.

~~Test pilot operations~~Reported recovery in Q2Q1 2023 is less than Q1 2022 ~~yielded 33,655 tons mined~~as a result of the expansion of the Company’s mill operations. In the same quarter prior year, the Company was limited in capacity, and has since added two ball mills to the facility, which is providing additional capacity. With this new capacity, we had an increase in ore tonnage processed ~~through mill operations (370~~from 27,511 (average of 306 tons per day) ~~; and the recovery~~to 53,258 (average of 7,834 gross Oz Au resulting in sales of 6,004 gross Au Oz contained in gold-silver concentrates, and the receipt of $10,492,511 in revenues net of buyer’s price discount, refining and treatment costs. The Company record a negative adjustment to revenue of $337,969 from final settlements of prior periods deliveries providing a net revenue of $10,098,010 for the quarter.
~~Test pilot operations in Q3 2022 yielded 39,040 tons mined and processed through mill operations (424~~592 tons per day) ; and decrease in grade from 10.12 to 6.91 g/t. The decrease in recovery percentage from 79.40% to 69.39% was a result of processing inefficiencies as a result of the installation, testing and adjustments to the operating inputs of the new, largest ball mill installed to date. We believe these inefficiencies will be temporary, however, the reported recovery percentage may be less going forward as we process larger amounts of 9,551 gross Oz Au resulting in sales of 7,370 gross Au Oz contained in gold-silver concentrates, and the receipt of $9,235,141 in revenues net of buyer’s price discount, refining and treatment costs. The Company record a negative adjustment to revenue of $1,202,584 from final settlements of prior periods deliveries providing a net revenue of $8,032,557 for the quarter.material.

Additional Test Mining and Mill Operations Disclosure

~~DynaMineras~~The Company expects to continue its test underground mining activity and pilot milling operations in ~~the third quarter 2022,~~2023, and projects an increased output to an average of ~~500~~approximately 700 tons per 24-hour operating day from the mine and mill during the ~~quarter.~~second half of 2023.
26
~~Table of Contents~~

Results for the ~~three~~Three Months ended March 31, 2023 and ~~nine months ended September 30,~~ 2022 ~~and 2021~~

REVENUE. The Company processed 100,206 tons (367 per day) during the first nine months of 2022 compared to 66,695 tons (244 per day) in 2021. As a result of the increased volume the grade of ore processed dropped from 9.48 g/t Au per ton in the prior year to 8.67 g/t Au per ton for the current year. In addition the percentage of ore recovered has dropped from 89% to 80%. The net result is an increase of ounces recovered from 18,141 in 2021 to 22,314 in the first nine months of 2022. This resulted in an increase in gross ounces sold from 16,036 in 2021 to 17,823 in 2022, increasing revenues from $25,906,083 to $28,623,070 for the nine months ended September 30, 2021 and 2022, respectively.
~~Revenues~~Revenue for the quarter ended ~~September 30,~~March 31, 2023 and 2022 was $11,953,079 and ~~September 30, 2021 were $8,032,557 and $10,467,058,~~10,492,503. The ~~decrease~~increase was ~~the~~a result of an increase in tonnage mined and processed during the quarter from 27,511 tons in 2022 to 53,258 in 2023. The increase in tonnage was offset by a ~~decrease~~drop in the grade of the ore processed ore from ~~10.13~~10.12 g/t Auau to in 2022 to 6.91 g/t au per ton in ~~2021~~2023. In addition, the Company’s recovery rate dropped from 79.4% to ~~7.61 per g/t Au per ton in 2022 and~~69.4% due primarily to the ~~recovery percentage from 83% to 79%. The Company’s net revenue for the quarter reflected an negative adjustment~~implementation of ~~$1,202,584 for final settlement of provisional invoices reported in prior quarters.~~two new ball mills.

PRODUCTION COSTS RELATED TO SALES. Production costs related to sales for the ~~nine months ended September 30, 2022 and September 30, 2021 were $2,876,902 and $1,917,049, respectively.   Production cost for the~~ three months ended ~~September 30,~~March 31, 2023 and 2022 were $1,711,262 and ~~2021 were $964,172 and $756,898, respectively.~~$765,495. These are expenses directly related to the milling, packaging and shipping of gold and other precious metals ~~product.~~products. The increase is ~~consistent with the increase~~a result of increasing production from an average of 306 tons per day in ~~tonnage process.~~2022 to an average of 592 tons per day in 2023.
23
Table of Contents

MINE PRODUCTION COSTS. Mine production costs for the ~~nine months ended September 30, 2022, and 2021 were $4,786,236 and $3,385,340 respectively and $1,946,981 and $1,135,938 for the~~ three months ended ~~September 30,~~March 31, 2023 and 2022 were $2,529,437 and ~~2021, respectively.~~$1,227,884. The Company allocates total mining costs between production and waste based on tonnage mined monthly. These costs were directly related to the extraction of mine tonnage to be processed at the mill. ~~The increase is consistent with~~For the ~~increase in tonnage mined. Cost per ton~~quarter ended March 31, 2023, the Company mined 45,499 tons of ore ~~mined increase from $42 per ton in 2021~~compared to ~~$45 per ton~~31,696 tons in the ~~current year.~~prior year first quarter.

MINE EXPLORATION COSTS. Mine exploration costs for the ~~nine months ended September 30, 2022, and 2021 were $3,792,405 and 3,437,009 respectively and $1,335,437 and $1,151,020 for the~~ three months ended ~~September 30,~~March 31, 2023 and 2022 were $2,216,949 and ~~2021, respectively.~~$878,188. These were the costs of extracting waste material to reach the materials to be extracted for processing. ~~The~~For the quarter ended March 31, 2023 the Company ~~allocates total mining costs between production and~~mined 40,677 tons of waste ~~based on tonnage on a monthly basis. Mine exploration cost remained at approximately 13% of revenue from year~~compared to ~~year. The increase cost of mining was offset by a drop~~22,314 in ~~waste tonnage as a percentage of total tonnage mined.~~the prior year.

FACILITIES EXPANSION COSTS: Facilities expansion costs for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 were $285,078 and ~~2021 were $4,744,792 and 579,432, respectively.~~$608,603. The major expense in the first quarter of 2022 was the ~~installation~~refurbishment of ~~two new Ball Mill which upon completion will increase processing capacity to 700 tons a day.~~the Company’s existing mills. The ~~Company expects~~Company’s first phase of the expansion ~~to be complete by October These are cost which would normally be capitalized under U.S Gaap but are expensed under Reg. S-K, Item 1300 because~~was completed in May 2022 and the second phase of the ~~Company is an exploration stage issuer lacking proven and probable reserves.~~expansion was completed in the first quarter of 2023. The majority of the second phase expansion costs were incurred during 2022.

EXPLORATION DRILLING. During the 1^stfirst quarter of 2022 the Company ~~begin~~began an exploration drilling program for the purposes of updating the Company’s 43-101 Mineral Resource Estimate. ~~Total cost of the exploratory drilling program in the first nine months of 2022 was $1,993,082 including $770,892 in the 3rd quarter.~~
~~TRANSPORTATION. Transportation costs for the nine months ended September 30, 2022, and 2021 were $1,682,986 and $968,672, respectively. Transportation cost~~Exploration expenditures for the three months ended ~~September 30,~~March 31, 2023 and 2022 were $497,400 and 2021 were $572,772 and $374,974, respectively. These were the costs of transporting the product to the customer for treatment and sale. The increase in reflective of the increase in fuel and transportation costs.$487,615.

CAMP, WAREHOUSE AND SUPPORT FACILITIES. Camp, warehouse and support facility ~~cost for the nine months September 30, 2022 and 2021 were $3,147,312 and $1,956,168 respectively and 911,284 and $697,446~~costs for the three months ended ~~September 30,~~March 31, 2023 and 2022 were $1,082,179 and ~~2021, respectively.~~$825,203. These ~~were~~represent the ~~support~~ costs of supporting the mining facilities including housing, food, security and warehouse operations. The ~~increases were the~~increase was a result of the ~~Company’s~~ increase in mining ~~operations~~activity as a result of the facilities expansion and mine exploration.
TRANSPORTATION. Transportation costs for the three months ended March 31, 2023 and 2022 were $746,063 and $390,640. These costs relate to the transporting the product to the customer for treatment and sales. The increase in costs between quarters 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~~three months ended ~~September 30,~~March 31, 2023 and 2022 were $39,521 and ~~2021 were $112,093 and $116,516, respectively.~~$35,967. These costs were concessions taxes, leases on land and other direct costs of maintaining the property. These ~~cost~~costs are relatively consistent from year to year regardless of the level of mining activity.

27
~~Table of Contents~~
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses for the ~~nine months ended September 30, 2022, and 2021 were $3,177,917 and $2,252,156, respectively. General and administrative costs for the~~ three months ended ~~September~~March 31, 2023 and 2022 were $2,965,593 and ~~2021 were 1,033,820 and 1,085,187 respectively.~~$1,026,355. These were the costs of operating the Company not directly associated with the mine operations including management, accounting, and legal expenses. The increase was an increase legal fees associated ongoing legal discussed in the legal summary, including a non-recurring legal expense tied to the outcome of litigation that was accrued in the first quarter of 2023 and an overall increase in administrative costs supporting the ~~Companies~~Company’s increase in activity.

OTHER INCOME (EXPENSE). Other income (expense) for the ~~nine~~three months ended ~~September 30,~~March 31, 2023, and 2022 was $75,085 and ~~2021 was 1,698,184 and $(6,263,923),~~$817,061, respectively. Included in this category in ~~2022~~2023 was interest expense of ~~$(345,049)~~$(116,308), change in derivative of ~~$1,993,836~~$169,434 and currency transaction gain (loss) of ~~$47,709~~$18,254 and miscellaneous income of 1,688. Included in this category in 2021 was interest expense of $(1,102,755), change in derivative of $(3,928,913), currency transaction gain (loss) of $(121,725) and a one-time arbitration award expense of $1,111,111.$3,705. The decrease in the derivative liability was primarily due to ~~maturity of two~~the decreased remaining life of the underlying securities and the Company’s common stock value remaining under the conversion ~~terms. The decrease~~term. Included in this category in 2022 was interest expense ~~was the result~~ of ~~a reduction~~$(119,769), change in ~~the Company’s debt. For a more detailed explanation~~derivative of ~~the 2021 arbitration award see Legal Proceedings.~~$938,706 and currency transaction gain (loss) of $(2,402) and miscellaneous income of $526.

OTHER COMPREHENSIVE ~~INCOME (LOSS).~~INCOME. Other comprehensive income (loss) includes the Company’s net income (loss) plus the unrealized currency translation gain (loss) for the period. The Company’s other comprehensive loss for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ consisted of unrealized currency gains (losses) of ~~$(174,043)~~$91,241 and ~~$(301,986)~~$(301,912), respectively. The change is due to the variances in the peso exchange rates throughout the two periods.

24
Table of Contents
Liquidity and Capital Resources

As of ~~September 30, 2022,~~March 31, 2023, the Company had working capital of ~~$10,640,537,~~$11,822,264, comprised of current assets of ~~$29,627,568~~$35,641,238 and current liabilities of ~~$18,987,031.~~$23,818,974. This represented an increase of ~~$9,292,826~~$32,686 from the working capital ~~of $1,347,711~~ maintained by the Company of $11,789,578 as of December 31, ~~2021.~~2022. The primary ~~reasons~~reason for the increase ~~were funds generated~~was due to timing of the Company’s sales, timing of the payment of accounts receivable and advances from the company’s customer, partially offset by a decrease in the Company’s ~~operating profit and proceeds from the exercise of stock warrants.~~derivative liability, which is a current liability.

Net cash ~~provided by (used in)~~used in operations for the ~~nine~~three months ended ~~September 30, 2022 and 2021~~March 31, 2023 was ~~$(3,881,727) and $14,747,383, respectively.~~$(323,116) compared to a source of funds of $104,312 during the three months ended March 31, 2022. The decrease in the ~~funds provided~~cash flow from operations was ~~a result the~~primarily due to an increase in accounts receivable and customer advances and decrease in ~~operating income~~inventory due to the timing of the Company’s sales, and ~~the~~an increase in ~~receivables and inventory required by increase operations.~~accrued liabilities related to a non-recurring legal expense tied to the outcome of litigation.

~~Net cash provided by (used in)~~There were no investing activities for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023, and ~~2021 was $0 and $0, respectively.~~2022. Expenditures necessary for the expansion of mining ~~operations~~facilities totaled $$285,078 and ~~$0 in~~$608,603 during the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively, ~~$4,744,792 which~~ would normally have been included in this category were expenses due to the company’s ~~being an exploration stage issuer~~lack of proven and probable reserves, which therefore, requires the expenses related to expansion of mining operation activities to be expensed as ~~defined in SEC Reg. S-K, Item 1300.~~incurred.

Net cash ~~provided by (used in)~~used in financing activities for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 was $0 and ~~2021 was $4,790,399 and $(47,936)~~$(36,165), ~~respectively. The 2021 usage represented~~respectively, the amount in 2022 representing principal payments ~~on long-term debt. The 2022 source~~ of ~~funds was proceeds from~~ the ~~exercise of stock warrants, offset by payments to reduce debt.~~Company’s installment notes payable.

Off-Balance Sheet Arrangements

As of ~~September 30, 2022,~~March 31, 2023, we did not have any off-balance sheet arrangements, which have or are ~~reasonably~~ likely to have a material adverse effect on our financial condition, results of operations or liquidity.

Plan of Operation

The ~~Plan~~Company’s plan of operation for the next twelve months includes ~~DynaMineras~~ continuing the improvement and expansion of the test mining and pilot milling operations at SJG. The Company commenced its testing activities in fall 2015 at the rate of an average of approximately 100 tons per 24-hour operating day from the mine and approximately the same output from the processing plant. Over the past five years, the Company has gradually increased its output to an average of approximately ~~300~~500 tons per 24-hour operating day from the mines and processing plant. In ~~2022~~2023 the Company ~~anticipates completion~~completed the current planned expansion of ~~expansion to reach~~the plant with the addition of a ~~capacity of 700 tons per 24-hour operating days from the processing plant.~~fifth ball mill. The Company expects to operate at an average of approximately 600 tons per day in the ~~fourth quarter~~first half of ~~2022.~~2023 and an average of approximately 700 tons per day in the second half of 2023.
28
~~Table of Contents~~

The Company funds its general and administrative expenses in the US from the Company’s operating subsidiaries ~~DynaMineras and DynaOperaciones. These amounts are eliminated~~ in ~~consolidation.~~Mexico. The Company believes that cash on hand and ~~including~~the cash flow to be generated from its current operations, is adequate to fund its ongoing general and administrative expenses through the subsequent twelve months.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.
25
Table of Contents

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of ~~September 30, 2022.~~March 31, 2023. This evaluation was accomplished under the supervision and with the participation of our chief executive officer / principal executive officer and our financial consultant, who concluded that our disclosure controls and procedures are not effective as of the end of the period covered by this Form 10-Q. For purposes of this section, the term disclosure controls and procedures 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 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 in our reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

We recognize the importance of having effective controls in place to manage risks and ensure the integrity of our financial reporting. We are committed to continuously improving our control environment through ongoing monitoring, testing, and 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.
Changes in Internal Control over Financial Reporting

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

2926
Table of Contents

PART II

ITEM 1. LEGAL PROCEEDINGS

2014 Arbitration Proceeding filed by Goldgroup Resources Inc.

On March 14, 2014, Goldgroup Resources, Inc. (“Goldgroup”) filed for arbitration in the United States with the American Arbitration Association (“~~AAA~~”AAA”), seeking monetary and nonmonetary relief, and citing the Earn In/Option Agreement as the basis for its filing. On August 25, 2016, the AAA issued a ruling in favor of Goldgroup against the Company and DynaMéxico (the “~~Arbitration Award~~”“Arbitration Award”). On May 9, 2019, the United States District Court for the District of Colorado (the “~~Colorado~~“Colorado U.S. District ~~Court~~”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 $4,054 in interest, in full satisfaction of the monetary portion of the Arbitration Award. Since that time, the Company has fully performed the non-monetary portion of the Arbitration Award, which included the election of a Goldgroup designee to the board of DynaMé~~xico, yet Goldgroup continues to challenge the Company’s actions before the Colorado U.S. District Court.~~xico.

~~2014 Court filing by DynaMéxico, in~~DynaResource de Mexico SA de CV Legal Update & Disclosure:

On ~~December 9, 2014, DynaMéxico~~March 3, 2023, Goldgroup Resources Inc. (“Goldgroup”) filed a ~~commercial lawsuit~~formal notice with the México Federal Legal Authorities, which confirmed Goldgroup’s complete withdrawal of all legal claims in Mexico and under Mexican law against ~~Goldgroup, its parent company Goldgroup Mining Inc.,~~DynaResource de México SA de CV.
Goldgroup’s complete legal withdrawal is the result and culmination of 7 years of legal actions undertaken in Mexico by DynaMéxico. Accordingly, all matters before the ~~AAA,~~courts in ~~the Thirty Sixth Civil Court in the Federal District of~~ México ~~(the “~~~~Trial Court~~~~”), under file 1120 number / 2014 (the “~~~~DynaMéxico Trial~~~~”). In the DynaMéxico Trial, DynaMéxico sought to terminate the U.S.-based arbitration proceedings, and requested that substantial damages (in the amount of US $50 million) be awarded~~with respect to DynaMéxico ~~against Goldgroup. On October 5, 2015, the Trial Court awarded DynaMéxico damages in excess of US $48 million.~~and Goldgroup Resources Inc. are fully resolved and are no longer subject to appeal.

Consequence of the México legal ruling and the Goldgroup legal withdrawal:
1.
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.
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 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 3- month LIBOR rate, from February 2020 forward. In August 2022, the panel also assessed costs of the arbitration proceeding against Mineras, in the aggregate amount of £ 376,232.75. DynaResource has ~~appealed~~accrued $1,000,000 for the ~~$48 million damages~~arbitration award ~~on multiple occasions, yet the award stands~~ and ~~has been affirmed by~~related costs.
As Mineras is a ~~variety~~company of Mexican courts, including the highest court in the land. Even in the face of multiple rejections of its arguments before Mexican courts, Goldgroup continues to raise baseless and unfounded objections to the award.
On October 5, 2016, the Trial Court (the same court which made the $48 million damages award) approved a grant to DynaMéxico of a lien (referred to by the court as an “Embargo”) upon the shares of DynaMéxico held by Goldgroup in certificate form. ~~On February 20, 2020~~, a México City court issued a final judgment, effectively foreclosing on all shares of DynaMéxico formerly held by Goldgroup, and awarding those shares to DynaMéxico. Those shares are now legally owned, and physically held, by DynaMéxico. Consequently, Goldgroup currently owns no shares of DynaMéxiconationality, under Mexican law ~~which requires physical possession~~Mineras has the right to legally oppose the recognition and enforcement of ~~shares to evidence ownership.~~
~~The~~the award to ~~DynaMéxico~~Mercuria, the assessment of ~~the shares formerly owned by Goldgroup, does not satisfy the $48 million damages award in favor of DynaMéxico.~~
~~2020 Petition for Recognition of the $48M Damages Award~~
~~On December 5, 2020, the Company~~any costs, and ~~DynaMéxico filed an Original Petition for Recognition of the $48 million damages award in favor of DynaMéxico, in US. District Court in Dallas County, Texas (the “~~~~Texas U.S. District Court~~”), under principles of international comity. On May 12, 2021, The Texas U.S. District Court issued a ruling stating the Court was not obligated to recognize the $48 million damages award in the United States. On May 14, 2021, the Company and DynaMéxico filed a Notice of Appeal of that ruling.any supplemental award.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On June 28, 2022, Golden Post Rail, LLC exercised its warrant to acquire 2,655,361 shares of the Company’s common stock at a price of $2.04 per share, for a total exercise price of $5,416,936. The warrant was granted on May 6, 2015 with an original maturity date of September 30, 2020, and the period of exercise was extended for two years in 2020.None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

3027
Table of Contents

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit Number;

Name of Exhibit
31.1

Certification of Chief Executive Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Chief Financial Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certification of Chief Executive Officer and Chief Financial Officer, pursuant to 18 United States Code Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002.

3128
Table of Contents

SIGNATURES

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.

DynaResource, Inc.

Date: ~~November 1, 2022~~May 12, 2023
By:
/s/ K.W. (“K.D.”) Diepholz

K.W. (“~~KD”~~K.D.”) Diepholz,

Chairman / ~~CEO~~
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrants have duly caused this report to be signed on their behalf by the undersigned, thereunto duly authorized. The signature for each undersigned Registrant shall be deemed to relate only to matters having reference to such Registrant and any subsidiaries thereof.
Chief Executive Officer /~~s/ K.D. Diepholz~~
~~/s/ Rene LF Mladosich~~
~~K. D. Diepholz, Chairman~~
~~Rene LF Mladosich~~
~~/s/ Dr. Jose Vargas Lugo~~
~~/s/ Dale G. Petrini~~
~~Dr. Jose Vargas Lugo~~
~~Dale G. Petrini~~
~~/s/ John C. Wasserman~~
~~/s/ Phillip Rose~~
~~John C. Wasserman~~
~~Phillip Rose~~
~~November 1, 2022~~
~~Dated~~
Acting Chief Financial Officer

3229

PART I.	FINANCIAL 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	2521

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	2925

ITEM 4.	Controls and Procedures	2926

PART II.	OTHER INFORMATION

ITEM 1.	Legal Proceedings	3027

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3027

ITEM 3.	Defaults Upon Senior Securities	3027

ITEM 4.	Mine Safety Disclosures	3128

ITEM 5.	Other Information	3128

ITEM 6.	Exhibits	3128

	2022			2021
ASSETS
Current Assets
Cash and Cash Equivalents	$	16,488,686		$	15,719,238
Accounts Receivable		942,734			577,118
Inventories		2,943,112			2,110,203
Foreign Tax Receivable		8,244,016			4,742,180
Other Current Assets		1,009,020			667,742
Total Current Assets		29,627,568			23,816,481

Mining Equipment and Fixtures (Net of Accumulated
Depreciation of $118,862 and $116,425)		292			2,729
Operating Lease		575,985			648,381
Mining Concessions		4,132,678			4,132,678
Other Assets		163,298			162,174

TOTAL ASSETS	$	34,499,821		$	28,762,443

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Accounts Payable	$	2,261,299		$	1,275,679
Accrued Expenses		5,481,107			5,440,204
Customer Advances		7,375,000			9,250,000
Derivative Liabilities		1,905,078			3,898,914
Convertible Notes Payable - Series I & II		-			543,279
Installment Notes Payable		1,914,086			1,962,525
Current Portion of Operating Lease Payable		50,461			98,169
Total Current Liabilities		18,987,031			22,468,770

Operating Lease Payable, Less Current Portion		558,914			587,782

TOTAL LIABILITIES		19,545,945			23,056,552
TEMPORARY EQUITY
Series C Senior Convertible Preferred Stock, $0.0001 par value, 1,734,992 shares designated, issued and outstanding		4,337,480			4,337,480
Series D Senior Preferred Stock, $0.0001 par value, 3,000,000 shares designated, 760,000 shares issued and outstanding		1,520,000			1,520,000

COMMITMENTS AND CONTINGENCIES		-			-
STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred Stock, Series A, $0.0001 par value, 1,000 shares designated, issued and outstanding		1			1
Common Stock, $0.01 par value, 40,000,000 shares authorized, 20,746,654 and 18,091,293 issued and outstanding		207,467			180,913
Preferred Rights		40,000			40,000
Additional Paid In Capital		56,022,782			50,632,400
Treasury Stock, 12,180 shares		(34,773	)		(34,773	)
Accumulated Other Comprehensive Income		(421,708	)		(247,665	)
Accumulated Deficit		(46,717,373	)		(50,722,465	)
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)		9,096,396			(151,589	)

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	34,499,821		$	28,762,443

	2023 (Unaudited)			2022 (Audited)
ASSETS
Current assets
Cash and cash equivalents	$	19,104,208		$	19,177,138
Accounts receivable		1,885,597			724,642
Inventories		2,348,881			2,720,811
Foreign tax receivable		10,900,843			9,355,863
Other current assets		1,401,709			1,145,501
Total current assets		35,641,238			33,123,955

Right-of-use assets, net		531,115			550,473
Mining concessions		4,132,678			4,132,678
Deferred tax asset		3,047,433			2,970,410
Other assets		170,959			165,396

TOTAL ASSETS	$	43,523,423		$	40,942,912

LIABILITIES. TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	2,169,896		$	2,057,880
Accrued expenses		8,291,867			5,756,961
Customer advances		9,200,000			9,350,000
Derivative liabilities		2,002,983			2,172,417
Current portion of operating lease payable		27,032			28,868
Installment notes payable		2,127,196			1,968,251
Total current liabilities		23,818,974			21,334,377

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

TOTAL LIABILITIES		24,350,856			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, issued and outstanding		1			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		56,889,031			56,889,031
Treasury stock, 12,180 shares each period, at cost		(34,773	)		(34,773	)
Accumulated other comprehensive income		203,319			112,078
Accumulated deficit		(44,004,958	)		(44,036,663	)
TOTAL STOCKHOLDERS’ EQUITY		13,315,087			13,192,141

TOTAL LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY	$	43,523,423		$	40,942,912

	2023			2022
REVENUE	$	11,953,079		$	10,492,503
COSTS AND EXPENSES OF MINING OPERATION
Production Cost Applicable to Sales		1,711,262			765,495
Mine Production Costs		2,529,437			1,227,884
Mine Exploration Costs		2,216,949			878,188
Facilities Expansion Costs		285,078			608,603
Exploration Drilling		497,400			487,615
Camp, Warehouse and Facilities		1,082,179			825,203
Transportation		746,063			390,640
Property Holding Costs		39,521			35,967
General and Administrative		2,965,593			1,026,355
Depreciation and Amortization		-			812
Total Operating Expenses		12,073,482			6,246,762
NET OPERATING INCOME (LOSS)		(120,403	)		4,245,741

OTHER INCOME (EXPENSE)
Foreign Currency Gains (Losses)		18,254			(2,402	)
Interest Expense		(116,308	)		(119,769	)
Derivatives Mark-to-Market Gain		169,434			938,706
Other Income		3,705			526
TOTAL OTHER INCOME		75,085			817,061

NET INCOME (LOSS) BEFORE TAXES		(45,318	)		5,062,802
INCOME TAX BENEFIT		77,023			-

NET INCOME	$	31,705		$	5,062,802

DEEMED DIVIDEND FOR SERIES C & D PREFERRED		(58,575	)		(58,575	)

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(26,870	)	$	5,004,227

EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO THE
EQUITY HOLDERS OF DYNARESOURCE, INC.

Basic Earnings (Loss) Per Common Share	$	0.00		$	0.28
Weighted Average Shares Outstanding - Basic		22,246,654			18,091,293

Diluted earnings (Loss) Per Common Share	$	0.00		$	0.27
Weighted Average Shares Outstanding - Diluted		22,246,654			18,983,458

OTHER COMPREHENSIVE INCOME (LOSS)
Foreign Currency Translation Gain (Loss)		91,241			(301,912	)
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)		91,241			(301,912	)

TOTAL COMPREHENSIVE INCOME	$	122,946		$	4,760,890


	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 SEPTEMBER 30, 2021
Balance, June 30, 2021		1,000	$	1		17,722,825	$	177,228		1	$	40,000	$	50,407,333			516,480		$	(1,474,486	)	$	66,685		$	(54,504,374	)	$	(5,287,613	)

Treasury Stock Issued for Services														(11,634	)		(20,967	)		59,858									48,224

Other Comprehensive Income																							69,421						69,421

Net Income (Loss)																										274,927			274,927

Balance, September 30, 2021		1,000	$	1		17,722,825	$	177,228		1	$	40,000	$	50,395,699			495,513		$	(1,414,628	)	$	136,106		$	(54,229,447	)	$	(4,895,041	)

THREE MONTHS ENDED SEPTEMBER 30, 2022
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

Other Comprehensive Income																							(185,059	)					(185,059	)

Net Income (Loss)																										(1,578,731	)		(1,578,731	)

Balance, September 30, 2022		1,000	$	1		20,746,654	$	207,467		1	$	40,000	$	56,022,782			12,180		$	(34,773	)	$	(421,708	)	$	(46,717,373	)	$	9,096,396

NINE MONTHS ENDED SEPTEMBER 30, 2021
Balance January 1, 2021		1,000	$	1		17,722,825	$	177,228		1	$	40,000	$	50,407,333			516,480		$	(1,474,486	)	$	438,092		$	(59,256,828	)	$	(9,668,660	)

Treasury Stock Issued for Services														(11,634	)		(20,967	)		59,858									48,224

Other Comprehensive Income																							(301,986	)					(301,986	)

Net Income (Loss)																										5,027,381			5,027,381

Balance, September 30, 2021		1,000	$	1		17,722,825	$	177,228		1	$	40,000	$	50,395,699			495,513		$	(1,414,628	)	$	136,106		$	(54,229,447	)	$	(4,895,041	)

NINE MONTHS ENDED SEPTEMBER 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																							(174,043	)					(174,043	)

Net Income (Loss)																										4,005,092			4,005,092

Balance, September 30, 2022		1,000	$	1		20,746,654	$	207,467		1	$	40,000	$	56,022,782			12,180		$	(34,773	)	$	(421,708	)	$	(46,717,373	)	$	9,096,396

																				Other
	Preferred A				Common				Preferred		Preferred		Paid In		Treasury		Treasury			Comp			Accumulated
	Shares		Amount		Shares		Amount		Rights		Amount		Capital		Shares		Amount			Income			Deficit			Totals
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	)
Other Comprehensive (Loss)																					(301,912	)					(301,912	)

Net Income																								5,062,802			5,062,802

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

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

	Nine Months Ended Sept. 30, 2022		Nine Months Ended Sept. 30, 2021
Net income (loss) attributable to common shareholders	$	3,829,368	$	4,897,257

Weighted average number of common shares outstanding, Basic		19,005,593		17,722,825

Diluted weighted average number of common shares outstanding		19,005,593		17,722,825

Basic earnings per share	$	0.20	$	0.28

Diluted earnings per share	$	0.20	$	0.28

	2022			2021
Leasehold improvements	$	9,340		$	9,340
Office equipment		31,012			31,012
Office furniture and fixtures		78,802			78,802
Sub-total		119,154			119,154
Less: Accumulated depreciation		(118,862	)		(116,425	)
Total Property	$	292		$	2,729

		~~(a)~~	A convertible promissory note (the “Golden Post Note”) payable to Golden Post in the principal amount of $2,500,000, bearing interest at 10%, and maturing two years from the date of execution. The Golden Post Note is convertible, at the option of Golden Post, into shares of Series D Senior Convertible Preferred Stock (the “Series D Preferred”) at a conversion price of $2.00 per share; and

		~~(b)~~	A common stock purchase warrant (the “2020 Warrant”) for the purchase of 783,976 shares of the Company’s common stock, at an exercise price of $0.01 per share, and maturing on the 10-year anniversary of the date of issuance. The 2020 Warrant contains anti-dilution provisions.

		~~(a)~~	Convertible promissory notes (the “Remaining Notes”) in the aggregate principal amount of $1,400,000, bearing interest at 10%, and maturing two years from the date of issuance. The Remaining Notes are convertible, at the option of each individual Remaining Purchaser, into shares of Series D Preferred at a conversion price of $2.00 per share; and

		~~(b)~~	Common stock purchase warrants (the “Remaining Purchasers Warrants”) for the purchase of an aggregate of 439,026 shares of the Company’s common stock, at an exercise price of $0.01 per share, and maturing on the 10-year anniversary of the date of issuance. The Remaining Purchasers Warrants contain anti-dilution provisions.

	3.	As part of the transaction contemplated by the NPA, the Company executed an Amended and Restated Registration Rights Agreement pursuant to which Golden Post may require the Company to register the shares of common stock which may be issued upon (i) the conversion of the Series C Preferred, (ii) the conversion of the Series D Preferred, and (iii) the shares of common stock issuable upon the exercise of the 2015 Warrant, the 2020 Warrant, and a compensatory warrant issued to the Lead Purchaser on May 13, 2020 (described below under the heading “Compensatory Issuances”), including any additional shares of common stock issuable pursuant to anti-dilution provisions of such securities.

	4.	Pursuant to the transaction contemplated by the NPA, the Company held a special meeting of Company stockholders, to solicit stockholder approval of (a) an amendment of the Company’s certificate of incorporation to increase the number of authorized shares of common stock from 25,000,000 shares to 40,000,000 shares, and (b) an amendment of the Certificate of Designations of the Series C Preferred, in order to (a) extend the maturity date of the Series C Preferred by an additional two (2) years, (ii) add an equity cap in respect of the conversion of Series C Preferred into common stock of the Company, and (iii) add certain restrictions on the ability of the Company to issue Series C Preferred. The special meeting was held on July 13, 2020, and Company stockholders approved each item referenced above.

5.	On May 13, 2020, one business day prior to the NPA, the Company issued to the Lead Purchaser the following: (i) a common stock purchase warrant for 2,306 shares, at an exercise price of $0.01 per share, and maturing on the 7-year anniversary of the date of issuance (the “Compensatory Warrant”); and (ii) 1,771 shares of Series C Preferred. These issuances were occasioned by the Company’s obligations under the Securities Purchase Agreement dated as of May 6, 2015.

6.	In order to accommodate the issuance of the additional 1,771 shares of Series C Preferred, on May 13, 2020 the Company filed with the Secretary of State of Delaware a Certificate of Increase of Series C Senior Convertible Preferred Stock, to increase the number of shares of preferred stock designated as Series C Preferred from 1,733,221 shares to 1,734,992 shares.

7.		Also on May 13, 2020, the Company filed with the Secretary of State of Delaware a Certificate of Designations of the Powers, Preferences and Relative, Participating, Optional and Other Special Rights of Preferred Stock and Qualifications, Limitations and Restrictions thereof of Series D Senior Convertible Preferred Stock, contemplating the authorization of 3,000,000 shares of Series D Preferred.

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Intrinsic Value		Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Intrinsic Value
Balance at December 31, 2020		3,429,466	$	1.30		4.40		-
Balance as of December 31, 2022										892,165	$	0.01		7.37		-
Granted		-	$	-		-		-		-		-		-		-
Exercised		368,468	$	0.01		-		-		-		-		-		-
Forfeited		-	$	-		-		-		-		-		-		-
Balance at December 31, 2021		3,060,998	$	1.46		2.79		-
Granted		-	$	-		-		-
Exercised		2,166,775	$	2.04		-		-
Forfeited		2,058	$	2.04		-		-
Balance at September 30, 2022		892,165	$	0.01		7.62		-
Exercisable at September 30, 2022		892,165	$	0.01		7.62		-
Balance as of March 31, 2023										892,165		0.01		7.13		-
Exercisable as of March 31, 2023										892,165	$	0.01		7.13		-

	Period Ended
	Sept. 30, 2022
Operating Lease - Office Lease	$	65,769
Operating Lease - Ground Lease		68,501
Short Term Lease Costs		12,037
Variable Lease Costs		-
TOTAL	$	146,307

Weighted average remaining lease term and weighted average discount rate are as follows:

Weighted Average Remaining Lease Term (Years) - Operating Leases		10.12
Weighted Average Discount Rate - Operating Leases		12.50	%

Estimated future minimum lease obligations are as follow for the years ending September 30:

YEAR
2022	$	121,033
2023		94,074
2024		96,896
2025		99,803
2026		102,797
Thereafter		684,885
Total	$	1,199,488
Less Imputed Interest		(590,113	)
OPERATING LEASE PAYABLE	$	609,375

	2022			2021
Annual volatility rate		0	%		147	%
Risk free rate		4.22	%		0.73	%
Remaining Term	0.00 years			0.50 years
Fair Value of common stock	$	2.14		$	1.75

	2022			2021			March 31,
Period Ended							2023			2022
Annual volatility rate		119	%		147	%		122	%		116	%
Risk free rate		4.22	%		0.73	%		4.06	%		4.41	%
Remaining Term	7.62 years			8.37 years			7.13 years			7.37 years
Fair Value of common stock	$	2.14		$	1.75		$	2.25		$	2.44

			Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		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 at September 30, 2022 Using:
Fair Value Measurement as of March 31, 2023:
Liabilities:
Derivative Liabilities	$	1,905,078	$	-	$	-	$	1,905,078	$	2,002,983	$	-	$	-	$	2,002,983
Totals	$	1,905,078	$	-	$	-	$	1,905,078	$	2,002,983	$	-	$	-	$	2,002,983
Fair Value Measurement at December 31, 2021
Fair Value Measurement as of December 31, 2022
Liabilities:
Derivative Liabilities	$	3,898,914	$	-	$	-	$	3,898,914	$	2,172,417	$	-	$	-	$	2,172,417
Totals	$	3,898,914	$	-	$	-	$	3,898,914	$	2,172,417	$	-	$	-	$	2,172,417

Balance December 31, 2020	$	2,081,435
Exchange Rate Adjustment		(57,504	)
2021 Principal Payments		(61,406	)
Balance December 31, 2021		1,962,525
Exchange Rate Adjustment		34,819
2022 Principal Payments		(83,258	)
Balance September 30, 2022	$	1,914,086

Balance December 31, 2022	$	1,968,251
Exchange Rate Adjustment		158,945
2023 Principal Payments		-
Balance March 31, 2023	$	2,127,196

	·	The Company will deliver 100% of its produced concentrates to the buyer and provider of the RCL, through December 31, ~~2022;~~2023; unless extended by the Company;
	·	An initial RCL was established by 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)	$~~2.5M~~9.35 advance on ~~February 4, 2021.~~December 28, 2022. Settled on ~~March 26, 2021~~February 16, 2023
(2)	$~~3.75M~~9.60 advance on February 21, 2023. Settled on March 31, 2023
(3)	$9.20 advance on March ~~30, 2021. Settled on May 12, 2021~~
~~(3)~~	~~$3.75M advance on May 12, 2021. Settled on June 16, 2021~~
~~(4)~~	~~$6.75M advance on June 18, 2021. Settled on August 5, 2021~~
~~(5)~~	~~$8.25M advance on August 9, 2021. Settled on September 27, 2021~~
~~(6)~~	~~$8.25M advance on September 29, 2021. Settled on November 17, 2021~~
~~(7)~~	~~$8.25M advance on November 19, 2021. Settled on December 20, 2021~~
~~(8)~~	~~$9.25M advance on December 30, 2021. Settled on February 25, 2022~~
~~(9)~~	~~$8.175M advance on February 25, 2022. Settled on March 30, 2022~~
~~(10)~~	~~$7.875M advance on March 30, 2022. Settled on May 13, 2022~~
~~(11)~~		~~$8.875M advance on May 19, 2022. Settled on June 27, 2022~~
~~(12)~~		~~$8.75M advance on June 28, 2022. Settled on August 15, 2022~~
~~(13)~~			~~$7.80M advance on August 19, 2022. Settled on September 28, 2022~~
~~(14)~~			~~$7.375M advance on September 29, 2022.~~ 31, 2023.

	·	Diepholz agreed to sell to the Company, and the Company agreed to redeem and purchase from Diepholz, all of the 1,000 outstanding shares (the “A Shares”) of Series A Preferred Stock (the “Series A Stock”) held by Diepholz for a price of $1,250,000.
	·	The A Shares constitute all of the outstanding shares of Series A Stock of the Company. The Series A Stock carried the right to elect a majority of the Company’s Board of Directors. Upon the redemption of the A Shares, the Company agreed to retire the A Shares, not to issue or sell any Series A Stock in the future, and not to create or issue any other class or series of Preferred Stock having the right to elect a majority of the Board of Directors without approval of the Board of Directors (including the director appointed by the holders of the Series C Stock (the “Series C Director”).
	·	Within 90 days after closing of the Agreement, the Company will seek stockholder approval to amend its Certificate of Incorporation to eliminate the Series A Stock.
	·	The Company will enter into executive employment agreements (the “Employment Agreements”) with its key executives – Diepholz, Rene Mladosich, Jose Vargas, and Lic. Santos.
	·	Prior to the redemption of the A Shares, Diepholz agreed to vote the A Shares to elect Ronald Vail as a fourth independent member of the Company’s Board of Directors, resulting in the Company’s having a majority-independent Board of Directors.
	·	The Company will create an Audit Committee, consisting of three or more independent members of its Board of Directors, one of which must be the Series C Director as long as Golden Post has the right to appoint the Series C Director.
	·	The Company will create a Nominating Committee, consisting of (a) all of the independent members of the Board of Directors, including the Series C Director as long as Golden Post has the right to appoint the Series C Director; and (b) the CEO, as long Diepholz holds that position and is serving as a director.

Mill Expansion:	$	5,893,000
Mill Expansion			$	7,093,000
Tailings Pond Expansion		1,464,000		1,464,000
Machinery and Equipment		2,143,000		2,600,000
Mining Camp Expansion		146,000		146,000
Medical Facility		126,000		126,000
Mine Development - San Pablo		2,748,000		2,748,000
Mine Expansion - San Pablo East		915,000		915,000
Mine Expansion - Tres Amigos		1,599,000		1,599,000
Exploration Drilling		2,028,000		2,981,000
SIG Mining Concessions		2,014,000		2,014,000
Surface Rights and Permitting		792,000		1,030,000
Debt Retirement		3,528,000		3,528,000
Legal Fees		4,043,000		6,385,000
Total	$	27,439,000	$	32,629,000

	Total Tons Mined &		Reported Mill Feed Grade (g/t		Reported Recovery			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		88.05	%		31,905		25,554

1.	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.

Exhibit Number;		Name of Exhibit
31.1		Certification of Chief Executive Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer and Chief Financial Officer, pursuant to 18 United States Code Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002.

	DynaResource, Inc.

Date: ~~November 1, 2022~~May 12, 2023	By:	/s/ K.W. (“K.D.”) Diepholz
		K.W. (“~~KD”~~K.D.”) Diepholz,
		Chairman / ~~CEO~~

Chief Executive Officer /~~s/ K.D. Diepholz~~		~~/s/ Rene LF Mladosich~~
~~K. D. Diepholz, Chairman~~		~~Rene LF Mladosich~~

~~/s/ Dr. Jose Vargas Lugo~~		~~/s/ Dale G. Petrini~~
~~Dr. Jose Vargas Lugo~~		~~Dale G. Petrini~~

~~/s/ John C. Wasserman~~		~~/s/ Phillip Rose~~
~~John C. Wasserman~~		~~Phillip Rose~~

~~November 1, 2022~~
~~Dated~~		Acting Chief Financial Officer