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Item 7. Management’s Discussion and Analysis

2025-04-07 compared with 2024-04-16 · 454 added, 365 removed, 648 unchanged (56% of the section changed)

MANAGEMENT’S DISCUSSION AND A NALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, which we refer to in this annual report as the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, which we refer to in this annual report as the Exchange Act.

Forward-looking statements are not statements of historical fact but rather reflect our current expectations, estimates and predictions about future results and events.

These statements may use words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “predict,” “project” and similar expressions as they relate to us or our management.

When we make forward-looking statements, we are basing them on our management’s beliefs and assumptions, using information currently available to us.

These forward-looking statements are subject to risks, uncertainties and assumptions, including but not limited to, risks, uncertainties and assumptions discussed in this annual report.

Factors that can cause or contribute to these differences include those described under the heading “Management Discussion and Analysis and Plan of Operation.”

If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we projected.

Any forward-looking statement you read in this annual report reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity.

All subsequent written and oral forward-looking statements attributable to us or individuals acting on our behalf are expressly qualified in their entirety by this paragraph.

You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this annual report.

The Company expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking statements to reflect any change in its views or expectations.

The Company can give no assurances that such forward-looking statements will prove to be correct.

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 a specific focus on the prolific San Jose de Gracia high-grade gold project in México.

We currently conduct activities in México through our operating subsidiary DynaResource de México SA de CV.

(“DynaMéxico”).

We currently own 100% of the outstanding shares of DynaMéxico, and DynaMéxico owns 100% of mining concessions, equipment, camp and related facilities which comprise the San José de Gracia Property (“SJG”), in northern Sinaloa State, México.

In addition to investing in the increase and expansion of its test mining and milling activities at SJG in 2023, the Company has focused on corporate governance, with the intention of meeting the listing requirements for other exchanges in the US and/or Canada.

Project Improvements, Expansion and Increased Output (2017 to 2023)

Since 2017, the Company has conducted test mining and pilot milling activities at SJG, and to improve, increase and expand test mining and pilot milling operations to increase production of gold ounces, and since 2022 to continue exploration activities at SJG with the target to increase primarily gold resources.

Since the startup of the test mining and milling activities at SJG in January 2015, the Company has increased daily output from an initial average of 100 tons per 24-hour operating day, to an average of approximately 550 tons per 24-hour operating day in 2023.

In 2023, the volume processed increased over 44% from an average of 377 tons per 24-hour day to an average of 550 tons per 24-hour day in 2023.

During the first half of 2024, the Company expects to begin to achieve capacity from test mining and milling activities of approximately an average of 800 tons per 24-hour operating day and build processing capacity to an average of 900 to 1,000 tons per day in the second half of 2024.

Since January 2017, the Company has expended approximately $28.3 million USD in non-recurring costs, generally classified as project improvements and expansion costs which have been expensed in the Company’s financial statements.

The funds for these expenditures have been provided primarily from cash flows from operations and from the sale of the Company’s equity.

Of the approximately $28.3 million in non-recurring costs, the Company has spent the following on facilities expansion:

Mill Expansion

Tailings Pond Expansion

Machinery and Equipment

Mining Camp Expansion

The Company has spent the following amounts on mine development:

Mine Development - San Pablo

Mine Expansion - San Pablo East

Mine Expansion - Tres Amigos

Exploration Drilling

SJG Mining Concessions

Surface Rights and Permitting

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”) requirements.

The result of expensing all costs is that the Company has accumulated a net loss carry forward from México operations of approximately $22 million USD which is available to offset future taxable earnings.

The Company is a minerals investment, management, and exploration company, and currently advancing its high-grade San Jose de Gracia gold project in México through an operating subsidiary.

Activities are focused on exploration, technical evaluation, and project development in support of expanding the mineral resource base.

We currently conduct activities in México through our operating subsidiary DynaMéxico.

We currently own 100% of the outstanding shares of DynaMéxico, and DynaMéxico owns 100% of mining concessions, equipment, camp and related facilities which comprise the SJG.

In addition to investing in the continued advancement and development of its San Juan de Gracia Project, the Company has also focused on strengthening corporate governance practices, with the objective of meeting the listing requirements of additional exchanges in the US and/or Canada.

Project Improvements, Expansion and Increased Output

Since 2015, the Company has carried out limited site-scale processing and operational activities at SJG in support of its exploration and evaluation programs.

These activities have been aimed at enhancing technical understanding of the deposit, optimizing on-site infrastructure, and supporting project advancement.

In 2022, the company expanded its focus on exploration efforts at SJG with the objective of increasing the project’s mineral resource base, primarily targeting gold.

From initial small-scale operations averaging of 100 tons per 24-hour operating day in 2015, throughput has steadily increased, reaching an average of approximately 700 tons per day in 2024.

In 2023 alone, daily processing volumes rose by 30%, from 550 to 700 tons.

For 2025, the Company expects to increase in daily throughput to an average of 800 tons, with installed capacity now in place to support up to 1,000 tons per day.

The Company remains classified as an exploration stage issuer under Regulation S-K 1300 and does not currently meet the criteria for designation as an operating stage issuer .

The Company is currently reporting all costs of mine operations, improvements, and expansion as expenses in accordance with United States Generally Accepted Accounting Principles (“GAAP”) The result of expensing all costs is that the Company has accumulated a net loss carry forward from México operations of approximately $18 million USD which is available to offset future taxable earnings.

Results for the Years Ended December 31, 2024 and 2023

Summary of Test Mining and Pilot Mill Operations for 2018 to 2023:

Estimated Total Tonnes

Estimated Reported Mill

Estimated Reported

Estimated Gross Gold

Estimated Net Gold

Test pilot operations in 2023 yielded 198,618 Tons mined and processed from underground test mining activity and pilot milling activities and the production of approximately 27,252 gross Oz Au, and net of dry weight adjustments at the buyer’s facilities, the production of approximately 24,829 Oz Au.

Test pilot operations in 2022 yielded 137,740 Tons mined and processed from underground test mining activity and pilot milling activities and the production of approximately 31,905 gross Oz Au, and net of dry weight adjustments at the buyer’s facilities, the production of approximately 25,554 Oz Au.

The decrease in the estimated recovery percentage from 88.05% to 76.50% was a result of processing different types of ore on a larger scale, testing activities, and adjustments to the operating inputs of the new ball mills.

We believe the test mill operations will achieve increased efficiencies as we gain experience with larger volumes of material processed.

However, the Company believes the reported recovery percentage may continue to be a reduced percentage from prior periods, as we process larger volumes of material and our milling processes are refined.

The drop in the feed grade at the pilot plant facility is a result of dilution experienced in the test mining activities, and partially due to the increase in test mining tonnage.

To increase the tonnage of higher-grade test mining material available for test mill processing, the Company has opened another test mining area of SJG in the fourth quarter of 2023.

The Company expects to achieve the access to an additional test mining area at SJG during 2024.

Revenue decreased approximately 10.5% to $35,573,194 for the year ended December 31, 2023 from $39,767,460 for the year ended December 31, 2022.

As discussed above, the Company’s yield decreased in 2023, which attributed to a 2.8% decrease in delivered ounces for the year.

Additionally, revenue in the first half of 2023 was offset by adjustments in final settlements of $2,593,583 based on provisional settlements recorded on 2022 shipments.

Consistent with ongoing practice, the final settlement assays are recorded in the period received, of which the process may generally include a delay of three to six months due to Buyer’s receipt of final assay from the independent assay firm prior to July 2023.

The Company has worked with the buyer and the independent assay firm to develop processes to shorten the period of waiting on the final settlement assays, and during the last quarter of 2023, the final settlement adjustments were being processed and received in approximately 4-6 weeks.

The Company believes it has addressed the issues contributing to the differences in the assays that occurred since the installation of the new milling equipment in late 2022.

PRODUCTION COSTS RELATED TO SALES :

Production costs related to sales for the years ended December 31, 2023 and 2022 were $8,256,062 and $4,413,649, respectively.

These are expenses directly related to the milling, packaging and shipping of primarily gold and other precious metals product.

This represents an increase in the milling cost per ounce delivered (according to the preliminary settlements) from $173 per ounce to $333 per ounce.

The increase in the cost per ounce is primarily related to the decrease in feed grade from 8.18 g/t Au in 2022 to 5.58 g/t in 2023, resulting in an increase in tonnage processed from 137,740 in 2022 to 198,518 in 2023.

The Company expanded its pilot milling capacity late in 2022, which allows the Company to process more tonnage and process ore with a lower grade.

Summary of Site Based Processing and Operational Activity, 2018 to 2024:

Reported Mill

In 2024, on-site operational activities at San Jose de Gracia resulted in the processing of 257,676 Tons and the production of approximately 25,677 gross Oz Au.

After dry weight adjustments at settlement terms with the buyer, approximately 22,003 Oz Au were sold.

Quarterly Results for the Three and Twelve Months Ended December 31, 2024 and 2023:

Three Months Ended

Key Operating Information

December 31, 2024

December 31, 2023

December 31, 2024

December 31, 2023

Operating Data

Mill Throughput

Gold Ounces Produced

Gold Ounces Sold

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

Mill feed grades and recovery rates are based on internal estimates derived from assay data and estimated weights of material processed.

The drop in the feed grade at the pilot plant facility is a result of the planned reduction of certain high-grade zones in accordance with the mine plan, as well as higher dilution experienced in the processed material.

The increase in processed tonnage within SJG also contributed to lower grades ore being treated.

To support throughput, the Company opened a new development area at San Pablo during the fourth quarter of 2023, and an additional target zone, La Mochomera, in May 2024, which is expected to yield higher-grade material at depth.

2024 HIGHLIGHTS

Operational Performance

Throughout the second half of 2024 (H2 2024), the Company has remained focused on developing and implementing the optimization program at the San Jose de Gracia mine aimed at increasing process plant throughput and recoveries, and improving maintenance and equipment usage with the goal of improving efficiencies and profit margins at the SJG Project level.

Operational results for the quarter demonstrated significantly improved efficiencies as a result of the ongoing optimization program with a steady improvement as the quarter proceeded with metal production of 2,626 ounces of gold in October, 2,182 ounces in November and 1,968 ounces in December.

In Q4 2024 total metal production of 6,776 ounces of gold was a 19% increase from 5,676 ounces the previous quarter and a 25% increase from 5,405 ounces in Q4 2023.

Production for the full year 2024 totaled 25,677 ounces of gold, which fell within the Company’s revised guidance.

Milled throughput for Q4 2024 was 67,670 tons, representing a 9% increase compared to 61,900 tones in Q3 2024 and a 50% improvement over 45,151 tones in Q4 2023.

Milled throughput for the full year 2024 was 256,676 tons representing a 30% increase over 2023 annual milled throughput of 198,518 tons.

The increase in ounces produced during the quarter was a result of the increase in feed grade from 3.78 g/t in Q3 2024 to 4.12 g/t in Q4 2024, compared to 4.71 g/t in Q4 2023.

The average head grade for the full year 2024 was 4.07 g/t.

Through significant capital investment made in Q2 and Q3 2024, the Company has made several upgrades to the plant, increase in capital underground development and increased access to working faces and improved the utilization and productivity of current infrastructure, which benefited Q4 2024 production

A new vibrating screen was installed in the crushing circuit in August 2024 which has resulted in a more consistent and overall improved mill performance which is demonstrated by September’s performance of an average of 770 tons per day produced.

Throughout October, production averaged 825 tons per day with further improvements expected.

Improvements to the flotation circuit have led to improvements in grades with steady month-over-month increases in the metallurgical results achieved.

At the plant level, metallurgical test work with new reagents also resulted in an optimized flow sheet and demonstrated the ability to deliver up to a 79% recovery, under certain conditions.

The Company is working to improve the consistency of plant recoveries.

The near completion of a new drift into a new working mining face that is expected to come into production in the La Mochomera deposit and the improved access to working faces through the completion of an access road to reach the San Pablo deposit have and should continue to contribute to improved throughput rates.

This will also have a positive impact on grades as better access to high-grade zones is gained.

Detailed activities from the three main deposits include:

At the Tres Amigos vein north zone a new ore drive was completed in the upper levels enabling further access to this high-grade vein via a new mining face.

Mining from this face was incorporated into Q3 2024 production and will continue throughout 2025 as mining this is currently one of the main sources of high-grade ore to the mill.

This newly gained access will also enable diamond drilling deeper with a lateral extension toward this untested north and south extension with the goal of increasing inventory.

San Pablo Viejo and San Pablo Sur

Throughout the 3rd quarter of 2024 the Company continued active mining from multiple faces at the San Pablo deposit while continuing development work on the access to the San Pablo deposit.

San Pablo Viejo and San Pablo Sur are expected to remain the primary sources of gold production through 2025 and 2026, with continued potential beyond.

Additionally, the South Extension at the 500 level presents an exciting high-grade opportunity, potentially yielding “Bonanza” style gold grades in the short to mid-term.

The mine is well-positioned for the future, with a focus on developing new reserves and expanding deeper into the La Mochomera vein.

The La Mochomera vein is also expected to be an important source of gold production during 2025 and 2026 and with particularly interesting high-grade opportunities at depth which is also open.

OUTLOOK (SJG)

With a successful Q4 2024 demonstrating more normalized operations, the Company believes that San Jose de Gracia is well positioned for 2025.

The steady increased rate of production resulted in 2024 full year production meeting the Company’s updated guidance.

While the Company made significant headway in the last half of 2024, the continued effort to optimize operations will remain focused on improving ore to the mill, throughput rates, and recoveries.

San Pablo Sur, San Pablo, La Mochomera and the Tres Amigos ore bodies will continue to be the main contributors to production in the year ahead.

Development in these areas will also be a key focus for the Company to access high-grade zones and new mining faces.

As a result of the capital investments made to the mine and mill, exploration expenditure in Q4 2024 remained minimal, limiting available high-grade resources ready for short term mining.

In the near term, exploration will drill targets that are expected to continue to grow the existing high-grade ore resources and increase mineable inventory.

The Company has continued to invest exploration spending in both near-mine extensions and geological studies and interpretation.

The Company plans to complete an SK-1300 Mineral Resource Estimate Update in Q2 2025 at San Jose de Gracia to San Pablo Sur, San Pablo, La Mochomera and the Tres Amigos ore bodies which will include development proposals for additional exploration for ore veins in the short and mid-term.

The Company expects to start near-mine extension drilling on the property in July 2025 (Q3 2025) and expand to surrounding areas by year end.

Exploration will focus on growing the known resources at San Jose de Gracia.

The Company will prioritize drilling high grade underground targets that can readily be brought into the mine plan as well as the continued regional program to better understand the potential of the significant land package at San Jose de Gracia.

Additionally, planning for deeper and lateral drilling in between the San Pablo and Tres Amigos veins has highlighted the potential for extending the high-grade underground resource at San Jose de Gracia, especially in zones that were previously thought to be discontinuous such as near faulting, and has identified the opportunity to develop San Pablo, San Pablo Sur, La Mochomera and Tres Amigos exploration potential.

At the La Mochomera deposit, the Company seeks to explore high grade potential toward south to Palos Chinos and Purisima historical mines which operated over 100 years ago as high-grade mines.

A new tailings dam was completed during Q3 2024 with a total estimated storage capacity of 670,751 cubic meters distributed in two stages to hold additional future tailings for approximately 3.0 years.

The use of the third stage storage facility is underway and planning for the fourth stage is in process.

Results for the Years Ended December 31, 2024 and 2023

Revenue increased approximately 31% to $46,503.016 for the year ended December 31, 2024 from $35,573,194 for the year ended December 31, 2023.

This was primarily due to an increase in net revenue per ounce from $1,433 to $2,113.

MINE PRODUCTION COSTS :

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These costs were directly related to the extraction of mine tonnage to be processed at the mill.

The increase is primarily due to an increase in tonnage mined as well as an increase in cost per ton from $47.98 per ton in 2022 to $54.77 per ton in 2023.

The increase in the cost per ton is primarily related to higher labor, equipment and fuel costs due to inflation in Mexico of over 5% in 2023.

MINE EXPLORATION COSTS :

Mine exploration costs for the years ended December 31, 2023 and 2022 were $8,311,027 and $5,707,832, respectively.

These were the costs of extracting waste material to reach the materials to be extracted for processing.

The increase is primarily due to a 30% increase in mined tonnage.

MINE DEVELOPMENT AND STRIPPING COSTS :

Mine development and stripping costs for the years ended December 31, 2024 and 2023 were $11,809,670 and $8,311,027, respectively.

These include the costs of extracting waste material to reach the materials to be extracted for processing.

The increase was a result of the increase in volume.

However, the percentage of waste tonnage dropped from 49.2% of total tonnage mined in 2022 to 46% in 2023.

PRODUCTION COSTS RELATED TO SALES :

Production costs related to sales for the years ended December 31, 2024 and 2023 were $6,046,714 and $6,669,568, respectively.

These are expenses directly related to the milling, packaging and shipping of primarily gold and other precious metals product.

CAMP, WAREHOUSE AND FACILITIES :

Camp, warehouse and facility cost for the years ended December 31, 2024 and 2023 were $5,527,949 and $5,453,778, respectively.

These were the support costs of the mining facilities including housing, food, security and warehouse operations.

The increase was a result of the increase in personnel from the increase in operations.

TRANSPORTATION:

Transportation costs for the years ended December 31, 2024 and 2023 were $4,971,128 and $4,484,766, respectively.

These were the costs of transporting material between the mine and the mill, and delivery of the concentrate to the customer for treatment and sale.

The increase was a result of the overall increase in volume transported and the general increase in fuel and trucking costs.

FACILITIES EXPANSION COSTS :

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These were the costs associated with the expansion of the mining facilities.

Primary expenditures in 2024 was related to the opening of new mine access and continued upgrades to the ball mills.

Primary expenditures in 2023 were additional costs related to the new ball mills, including a new crusher, and concentrators on the front and the backs of the mill to aid in free gold recovery.

Primary costs in 2022 were the purchase and installation of the two new ball mills and the construction of a new tailings pond.

These are cost which would normally have been treated as capital expenditures under U.S.

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Exploration drilling expenses for the years ended December 31, 2024 and 2023 were $1,736,880 and $2,514,544, respectively.

The Company began a new drilling program in 2022 to update its Canadian National Instrument 43-101 resource estimate.

The Company began a new drilling program in 2022 to update its mineral resource estimate under Regulation SK 1300.

The Company drilled 29 drill holes totaling 6,644 meters during 2024 and 48 drill holes totaling 14,009 meters in 2023.

CAMP, WAREHOUSE AND FACILITIES :

Camp, warehouse and facility cost for the years ended December 31, 2023 and 2022 were $5,453,778 and $4,403,660, respectively.

These were the support costs of the mining facilities including housing, food, security and warehouse operations.

The increase was a result of the increase in personnel from the increase in operations.

TRANSPORTATION:

Transportation costs for the years ended December 31, 2023 and 2022 were $2,898,272 and $2,261,681, respectively.

These were the costs of transporting material between the mine and the mill, and delivery of the concentrate to the customer for treatment and sale.

The increase was a result of the overall increase in volume transported and the general increase in fuel and trucking costs.

PROPERTY HOLDING COSTS :

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General and administrative expenses for the years ended December 31, 2024 and 2023 were $4,157,425 and $8,529,349 respectively.

These general and administrative expenses were the costs of operating the Company not directly associated with the test mining and pilot mill operations including management, accounting, and legal expenses.

The increase in costs in 2023 was primarily an increase in legal fees as discussed in the legal summary, including a non-recurring legal expense of $3,000,000 tied to the successful outcome of litigation and due to an overall increase in administrative costs supporting the Company’s increase in activity.

STOCK COMPENSATION EXPENSE:

Stock compensation expense was $881,250 for the years ended December 31, 2023 and 2022 related to the vesting of restricted stock awards issued in 2022.

These general and administrative expenses represent costs incurred in operating the Company that are not directly related to site-based processing or exploration activities, and include management,

accounting, and legal expenses.

The decrease in costs in 2024 was primarily a decrease in legal fees as discussed in the legal summary, including a non-recurring legal expense of $3,000,000 tied to the successful outcome of litigation paid in 2023.

STOCK BASED COMPENSATION EXPENSE:

Stock compensation expense was $1,219,062 and $881,250 for the years ended December 31, 2024 and 2023 respectively and was related to the vesting of restricted stock awards issued in 2022.

OTHER INCOME (EXPENSE):

Other income (expense) for the years ended December 31, 2024 and 2023 was $(1,247,352) and $(235,675) respectively.

Included in 2022 was interest expense of $450,324, mark-to-market gain on the derivative liability of $1,726,497, currency translation gain of $58,426, and other income of $2,242.

Included in 2024 was interest expense of $1,696,258, mark-to-market gain on the derivative liability of $905,174, currency translation loss of $506,439, and other income of $50,171.

Included in 2023 was interest expense of $567,792, mark-to-market gain on the derivative liability of $375,076, currency translation loss of $45,177 and other income of $2,218.

The primary reason for the increase in interest expense was the Company entering into a revolving credit line facility.

OTHER COMPREHENSIVE INCOME (LOSS):

Comprehensive income (loss) includes the Company’s net income (loss) plus the unrealized foreign currency translation gain for the period.

The Company’s other comprehensive loss for the years ended December 31, 2023 and 2022 consisted of unrealized foreign currency translation gains of $585,622 and $359,743, respectively, of which $383,604 of the 2023 gain related to a cumulative translation adjustment resulting from the unrealized gains on the Company’s deferred tax asset arising from the Mexico net operating loss.

The Company’s other comprehensive loss for the years ended December 31, 2024 and 2023 consisted of unrealized foreign currency translation gains (losses) of $(2,486,399) and $585,622, respectively, of which $(715,913) of the 2024 loss and $383,604 of the 2023 gain related to a cumulative translation adjustment resulting from the unrealized gains (losses) on the Company’s deferred tax asset arising from the Mexico net operating loss.

Liquidity and Capital Resources

As of December 31, 2023, the Company had negative working capital of $10,261,645, a decrease from the working capital maintained by the Company of $11,789,578, as of December 31, 2022.

The primary reasons for the decrease is related to a decrease in cash related to the Company’s net loss, which included over $29.5 million of non-recurring expenditures as discussed herein, an decrease in the Company’s current foreign tax receivable as delays in refunds of the IVA tax warranted classification as long-term in 2023, and an increase in accounts payable and accrued expenses.

As of December 31, 2024, the Company had negative working capital of $15,278,780, a decrease of $5,017,135 from the working capital maintained by the Company of negative $10,261,645, as of December 31, 2023 .

The primary reasons for the decrease is related to a decrease in cash related to the Company’s net loss, reclassification a portion of the Company’s foreign tax receivable to long term and an increase in short term trade liabilities.

Net cash used in operations for the year ended December 31, 2024 was $8,014,004 compared to $17,659,661 during the year ended December 31, 2023.

The increase in cash used is largely due the net loss in 2023 and the increase in exploration activities and decrease in working capital.

Net cash used in investing activities for the year ended December 31, 2023 was $115,273 for the purchase of computer equipment and leasehold improvements to expand the Corporate office.

This was primarily due to a decrease in the Company’s operating loss.

Net cash used in investing activities for the year ended December 31, 2024 was $6,755 for the purchase of computer equipment.

In 2024 and 2023, expenditures related to facilities expansion costs of $2,548,899 and $2,554,505 respectively, were expensed under subpart 1300 of Regulation S-K and not included in investing activities.

Net cash provided by financing activities for the year ended December 31, 2024, was $8,495,282 compared to $3,670,102 for the year ended December 31, 2023.

In 2023, the Company received proceeds of $5,000,000 from the sale of a 1,000,000 shares of common stock offset by the purchase of the Company’s Series A Preferred stock for $1,250,000 and repurchase of shares that were returned to treasury stock for $60,250.

In 2024 the Company raised $2,500,000 from the sales of Series E Preferred Stock and $6,000,000 from a private placement of the Company’s common stock.

In 2023, the Company received proceeds of $5,000,000 from the sale of 1,000,000 shares of common stock offset by the purchase of the Company’s Series A Preferred Stock for $1,250,000 and repurchase of shares that were returned to treasury stock for $60,250.

Through December 31, 2024, the Company’s available liquidity and operations have been financed primarily through its operations and the revenue generated from the sale of product.

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If these expenses had not been made, the Company’s net loss would have been minimized.

The Company believes it’s cash and cash receipts from its revenue arrangements, will be sufficient to meet its working capital and capital expenditure needs for at least the next 12 months from the date these financial statements were available for issuance.

Additionally, the Company believes its revenue will be greater due to material being mined from the additional mine opened and improvements made to the productivity of the milling activities.

The Company believes its revenue will be greater due to material being mined from the additional mine opened and improvements made to the productivity of the milling activities.

Future capital requirements will depend on many factors, including the Company’s rate of mining, milling and exploration activities and growth.

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Plan of Operation

The Plan of operation for the next twelve months includes the Company continuing the improvement and expansion of the test mining and pilot milling activities and exploration drilling at SJG.

During the first six months of 2024, the Company plans to mine and mill an average of approximately 800 tons of material a day, with that rate increasing to an average of approximately 1,000 tons a day during the second half of 2024.

The Company has opened a second mine late in 2023 and is consistently test mining additional material during the first quarter of 2024.

The Company plans to open a third mine during the second quarter of 2024 in an area anticipated to provide high feed grade material.

The Plan of operation for the next twelve months includes continued enhancement of site infrastructure and processing capabilities, along with expanded exploration drilling at SJG.

During 2024, the Company processed an average of approximately 700 tons of material per day.

For 2025, the Company anticipates increasing daily processing throughput to an average of 800 tons per 24-hour operating day, in.

support of its ongoing exploration and project evaluation activities at the SJG Project.

The Company now has processing capacity of up to a maximum of 850 tons a day.

The Company initiated development in additional target zones within the project area, which are anticipated to yield higher-grade material for processing as part of its ongoing exploration activities.

The Company expects that a combination of higher-grade feed material, increased processing throughput, and higher gold prices may produce a significant increase in revenue in 2025, as part of its ongoing exploration and project advancement efforts.

The Company plans to continue its exploration drilling program with two to three rigs on site.

Management and geologists will make decisions based on the drill results, corporate strategies and market conditions, surface mapping, sampling and target generation.

The Company has contracted with a "Qualified Person" within the meaning of subpart 1300 of Regulation S-K and Canadian Standard NI 43-101 to interpret the data collected in order to compile a formal Mineral Resource Estimate update in 2024.

The Company has contracted with a "Qualified Person" within the meaning of subpart 1300 of Regulation S-K to interpret the data collected in order to compile a formal Mineral Resource Estimate update in the second quarter of 2025.

Capital Expenditures

The Company’s primary capital expenditures relate to the test mining and pilot milling activities of the SJG Project.

The Company expanded its pilot milling plant in 2022 with the addition and installation of two ball mills and expanded the tailings pond with water being recycled to the plant.

The Company has continued to refine the milling process throughout 2023 with the addition of front and back end concentrators and utilization of the original mill for grinding.

All capital expenditures are expensed as we are an exploration stage issuer under subpart 1300 of Regulation S-K.

The Company’s primary capital expenditures at the SJG Project have supported ongoing site development and processing enhancements.

In 2024 the Company continued to refine its processing systems through the installation of front and back end concentrators and the repurposing of the original mill for grinding.

Additional equipment was acquired, and infrastructure was expanded to improve site access and increase operational capacity.

All capital expenditures are expensed, consistent with the Company’s classification as an exploration stage issuer under subpart 1300 of Regulation S-K.

Exploration Stage

The Company is currently an exploration stage issuer and is reporting all costs of mine operations, improvements, and expansion as expenses in accordance with Section 1300 of Regulation S-K and US GAAP requirements, and therefore the above costs are not reflected as capitalized assets on the Company’s balance sheet.

The Company has started test mining, milling and extraction activities prior to determining mineral reserves.

The Company is currently classified as an exploration stage issuer under Subpart 1300 of Regulation S-K.

In accordance with SEC rules and US GAAP, all costs related to site operations, development activities, and infrastructure improvements are expensed as incurred.

As a result, such costs are not capitalized as assets on the Company’s balance sheet.

The Company has undertaken limited site-scale operational activities to support its exploration and evaluation efforts;

however, it has not yet determined mineral reserves, and no commercial production decision has been made.

DynaMéxico General Powers of Attorney

The Chairman of the Board of Directors and Chief Executive Officer of DynaUSA also serves as the President of DynaMéxico and as the President of DynaMineras.

The President of DynaMéxico holds broad powers of attorney granted by the shareholders of DynaMéxico which gives the current President significant and broad authority within DynaMéxico.

The Chief Executive Officer of DynaUSA also serves as the President of DynaMéxico and DynaMineras.

The President of DynaMéxico holds powers of attorney granted by the shareholders of DynaMéxico which give the current President significant and broad authority within DynaMéxico.

QUANTITATIVE AND QUALIT ATIVE DISCLOSURE ABOUT MARKET RISK

Not required for smaller reporting companies.

Not applicable.

FINANCIAL STATEMENT S AND SUPPLEMENTARY DATA

The Company’s consolidated financial statements as of and for the year December 31, 2023 and 2022 included in this Form 10-K have been audited by Davidson & Company LLP and Armanino LLP, independent registered public accounting firms, for the years ended December 31, 2023 and 2022, respectively, as set forth in their report.

The Company’s consolidated financial statements as of and for the year December 31, 2024 and 2023 included in this Form 10-K have been audited by Davidson & Company LLP, independent registered public accounting firm, as set forth in their report.

Consolidated Financial Statements included in the Form 10-K:

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Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of DynaResource, Inc.

(the “Company”) as of December 31, 2023, and the related consolidated statements of operations and comprehensive income (loss), changes in stockholders’ equity, and cash flows for the year ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows in the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheets of DynaResource, Inc.

(the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity, and cash flows for the years ended December 31, 2024 and 2023, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows in the years ended December 31, 2024 and 2023, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the consolidated financial statements, as of December 31, 2024, the Company had negative working capital of $15,278,780, an accumulated deficit of $66,705,019, and for the year ended December 31, 2024, had a net loss of $8,134,852.

These matters raise substantial doubt about the Company’s ability to continue as a going concern.

Management's plans in regard to these matters are also described in Note 1.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these financial statements based on our audits.

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

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We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

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Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

The communication of this critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.

Deferred Tax Asset

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Our audit procedures included the following:

• Testing the accuracy of the taxable profits forecast model used to estimate the likelihood of the recovery of deferred tax assets.

• Evaluating the appropriateness of management’s key assumptions and estimates used by management to allocate profit between the Company’s entities, the likelihood of generating sufficient future taxable profits to support the recognition of deferred tax assets.

• Using our in-house tax specialists, to evaluate the appropriateness of the application of relevant tax legislation by the Company, in relation to the utilisation of tax losses.

• Evaluating the appropriateness of management’s key assumptions and estimates used by management to allocate profit

between the Company’s entities, the likelihood of generating sufficient future taxable profits to support the recognition

of deferred tax assets.

• Using our in-house tax specialists, to evaluate the appropriateness of the application of relevant tax legislation by the

Company, in relation to the utilisation of tax losses.

We have served as the Company’s auditor since 2023.

/s/ DAVIDSON & COMPANY LLP

Chartered Professional Accountants

Vancouver, Canada

April 15, 2024

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders

DynaResource, Inc.

Irving, Texas

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of DynaResource, Inc.

(the "Company") and subsidiaries as of December 31, 2022, the related consolidated statements of operations, changes in stockholders' equity, and cash flows for the year then ended, and the related notes (collectively referred to as the "consolidated financial statements").

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of their operations and their cash flows for the year then ended,in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audit.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Dallas, Texas

Vancouver, Canada Chartered Professional Accountants

April 4, 2025

We served as the Company’s auditor from 2020 to 2022.

In 2023, we became the predecessor auditor.

DYNARESOURCE, INC.

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Accounts receivable

Inventories (Note 2)

Foreign tax receivable

Other current assets

Other current assets (Note 5)

Total current assets

Property and equipment (net of accumulated depreciation and amortization of $ 12,239 and $ 119,154 )

Property and equipment (net of accumulated depreciation and amortization of $ 42,738 and $ 12,239 ) (Notes 3)

Right-of-use assets, net

Mining concessions

Deferred tax asset, net

Mining concessions (Note 4)

Deferred tax asset (Note 13)

Foreign tax receivable

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Accounts payable

Accrued expenses

Customer advances

Derivative liabilities

Current portion of operating lease payable

Installment notes payable

Accrued liabilities (Note 6)

Derivative liability (Note 7)

Notes payable (Note 8)

Current portion of operating lease payable (Note 14)

Mining concession duties payable (Note 9)

Total current liabilities

Operating lease payable, less current portion

Deferred tax liability

Asset retirement obligation

Deferred tax liability (Note 13)

Operating lease payable, less current portion (Note 14)

Asset retirement obligation (Note 10)

TOTAL LIABILITIES

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COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY

Preferred Stock, Series A, $ 0.0001 par value, 0 and 1,000 shares authorized, issued and outstanding

STOCKHOLDERS’ EQUITY (Note 11)

Common Stock, $ 0.01 par value, 40,000,000 and 40,000,000 shares authorized 29,315,726 and 23,371,708 issued and outstanding

Series E Senior Convertible Preferred Stock, $ 0.0001 par value, 1,552,795 and 0 shares authorized, issued and outstanding

Preferred rights

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Treasury stock, 37,180 and 37,180 shares at cost

Accumulated other comprehensive income

Accumulated other comprehensive income (loss)

Accumulated deficit

TOTAL STOCKHOLDERS’ EQUITY

TOTAL LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY

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DYNARESOURCE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023

COSTS AND EXPENSES OF MINING OPERATION

Production cost applicable to sales

OPERATING EXPENSES

Mine production costs

Mine exploration costs

Facilities expansion costs

Exploration drilling

Mine development and stripping costs

Mill production cost applicable to sales

Camp, warehouse and facilities

Transportation costs

Transportation

Property holding costs

Stock based compensation

Facilities expansion costs

Exploration drilling

Stock based compensation (Note 12)

General and administrative

Depreciation and amortization

Accretion Expense (Note 10)

Right-of-use asset amortization

Depreciation and amortization (Note 3)

TOTAL OPERATING EXPENSES

NET OPERATING INCOME (LOSS)

NET OPERATING LOSS

OTHER INCOME (EXPENSE)

Foreign currency gains (loss)

Interest expense

Derivatives mark-to-market gain

TOTAL OTHER INCOME (EXPENSE)

NET INCOME (LOSS) BEFORE TAXES

INCOME TAXES BENEFIT

NET INCOME (LOSS)

Foreign currency loss

Interest expense (Notes 8 & 9)

Derivatives mark-to-market gain (Note 7)

TOTAL OTHER EXPENSE

NET LOSS BEFORE TAXES

Mining tax expense (Note 13)

Income tax benefit (Note 13)

TOTAL TAX BENEFIT

DEEMED DIVIDEND FOR SERIES C & D PREFERRED

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS

EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO THE

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS

LOSS PER SHARE ATTRIBUTABLE TO THE

EQUITY HOLDERS OF DYNARESOURCE, INC.

Basic earnings (loss) per common share

Basic loss per common share

Weighted average shares outstanding – Basic

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Weighted average shares outstanding – Diluted

OTHER COMPREHENSIVE INCOME

Unrealized foreign currency translation gain

TOTAL OTHER COMPREHENSIVE INCOME

TOTAL COMPREHENSIVE INCOME (LOSS)

OTHER COMPREHENSIVE INCOME (LOSS)

Unrealized foreign currency translation gain (loss)

TOTAL OTHER COMPREHENSIVE INCOME (LOSS)

TOTAL COMPREHENSIVE LOSS

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

DYNARESOURCE, INC.

CONSOLIDATED STATEMENT S OF STOCKHOLDERS' EQUITY (DEFICIT)

CONSOLIDATED STATEMENT S OF STOCKHOLDERS' EQUITY

YEARS ENDED DECEMBER 31, 2024 AND 2023

Income (Loss)

YEAR ENDED DECEMBER 31, 2023

Balance January 1, 2023

Stock Based Compensation

Stock Warrants Exercised

Other Comprehensive Income

Balance, December 31, 2022

Sale of Common Stock

Issuance of Common Stock

Issuance of Non-Dilution Shares

Stock Based Compensation

Stock Compensation - Vesting

Purchase of Series A Preferred Stock

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Balance, December 31, 2023

YEAR ENDED DECEMBER 31, 2024

Balance January 1, 2024

Issuance of Common Stock

Sales of Series E Preferred Shares

Stock Issued for Services

Stock Compensation - Vesting

Cancellation of Shares

Other Comprehensive Income

Balance, December 31, 2024

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

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FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023

CASH FLOWS USED IN OPERATING ACTIVITES:

Net Income (loss)

CASH FLOWS FROM OPERATING ACTIVITIES:

Adjustments to reconcile net income to cash used in operating activities

Derivatives mark-to-market gain

Deferred tax asset

Depreciation and amortization

Right-of-use asset amortization

Stock based compensation

Deferred tax asset

Operating cash flows before changes in operating assets and liabilities

Change in operating assets and liabilities

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Foreign tax receivable

Leased assets

Accounts payable

Accrued expenses

Accrued liabilities

Customer advances

Operating lease liabilities

CASH FLOWS USED IN OPERATING ACTIVITIES

CASH FLOWS USED IN INVESTING ACTIVITIES

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property and equipment

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CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from sale of common stock

Proceeds from exercise of stock warrants

Purchase of series A preferred stock

Acquisition of treasury stock

Payments of convertible notes

Payments of installment notes

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from borrowing (Note 8)

Proceeds from sale of common stock (Note 11)

Proceeds from sale of series E preferred stock (Note 11)

Purchase of series A preferred stock (Note 11)

Acquisition of treasury stock (Note 11)

Payments of notes payable (Note 8)

Lease Payments

CASH FLOWS PROVIDED BY FINANCING ACTIVITIES

Effects of foreign currency exchange

NET INCREASE (DECREASE) IN CASH

NET DECREASE IN CASH

CASH AT BEGINNING OF YEAR

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NON-CASH TRANSACTIONS

Conversion of accrued expenses into common stock

Conversion of customer advance into note payable

Recognition of right of use asset and lease liability

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

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The Company is in the business of acquiring, investing in, and developing precious metal properties, and the production of precious metals.

The Company has one wholly owned subsidiary in the United States, DynaMéxico US Holding, LLC (“US Holding”) and three wholly owned subsidiaries in México, DynaResource de México, S.A.

As of December 31, 2023 the Company had one wholly owned subsidiary in the United States, DynaMéxico US Holding, LLC (“US Holding”) and three wholly owned subsidiaries in México, DynaResource de México, S.A.

(“DynaMéxico”), Mineras de DynaResource S.A.

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(“DynaOperaciones”).

Although the Company considers the three Mexican subsidiaries to be wholly owned, each has issued one qualifying share to a second shareholder as required under Mexican law, with such qualifying shares held by either US Holding or DynaResource’s Chief Executive Officer.

In April 2024, as part of the Company’s organizational, operating and tax strategy in Mexico, the Company acquired Minera de Alica S.A.

de C.V., (“DynaAlica”) a Mexican corporation with no assets, liabilities or activity.

Although the Company considers the four Mexican subsidiaries to be wholly owned, each has issued one qualifying share to a second shareholder as required under Mexican law, with such qualifying shares held by US Holding.

DynaMéxico owns a portfolio of mining concessions that currently comprises its 100 % interest in the San José de Gracia Project (“SJG”) in northern Sinaloa State, México.

Principles of Consolidation

The consolidated financial statements include the accounts of DynaResource, Inc., as well as DynaResource de México, S.A.

( 100 % ownership), DynaResource Operaciones S.A.

( 100 % ownership) and Mineras de DynaResource S.A.

( 100 % ownership).

The consolidated financial statements include the accounts of DynaResource, Inc., as well as the Company’s wholly owned subsidiaries DynaMéxico, DynaMineras, DynaOperaciones and DynaAlica.

All significant intercompany transactions have been eliminated.

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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 Company’s management selects accounting principles generally accepted in the United States and adopts methods for their application.

The application of accounting principles requires the estimating, matching and timing of revenues and expenses.

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

Going concern

These consolidated financial statements have been prepared on a going concern basis that contemplates the realization of assets and discharge of liabilities at their carrying value in the normal course of business for the foreseeable future.

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 .

The change in accrued liabilities in the Company’s statement of cash flows presented herein has been corrected to $ 316,757 from $ 96,757 and the net income for the year ended December 31, 2022, attributable to common shareholders in Note 2 presented herein has been corrected from $ 6,744,654 to $ 6,451,503 from the Company’s Form 10-K which was filed with the Securities and Exchange Commission on April 17, 2023.

The errors were typographical errors and it did not impact any other financial statement balances including total liabilities, net income, earnings per share, or management compensation .

As of December 31, 2024, the Company had negative working capital of $ 15,278,780 , an accumulated deficit of $ 66,705,019 , and for the year ended December 31, 2024, had a net loss of $ 8,134,852 .

These matters raise substantial doubt about the Company’s ability to continue as a going concern.

The ability of the Company to continue as a going concern is dependent on the Company’s ability to further implement its business plan, raise additional capital as needed from the sales of stock, additional debt financing or debt refinancing as may be

The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Exploration Stage Issuer (No Reserves Disclosed)

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Segment Information

The Company operates as one segment:

test mining and milling gold-silver concentrate for sale from its location in Mexico.

The Company operates as one reportable segment, focused on the exploration and evaluation of its gold-silver project in Mexico.

Limited site-scale processing activities are conducted in support of ongoing exploration efforts, consistent with the Company’s classification as an Exploration Stage issuer under Regulation S-K 1300.

Cash and Cash Equivalents

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Costs are allocated to stockpiles based on the relative values of material stockpiled and processed using current mining costs incurred, including applicable overhead.

Material is removed at each stockpile’s average cost per tonne.

Material is removed at each

stockpile’s average cost per tonne.

Stockpiles are carried at the lower of average cost of net realizable value.

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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.

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.

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.

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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.

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.

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Relevant exchange rates used in the preparation of the financial statements for the subsidiaries are as follows for the years ended December 31, 2024 and 2023 (Mexican Pesos per one U.S.

December 31, 2023

December 31, 2022

Current exchange rate

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The Company recorded currency transaction gains (losses) of $( 506,439 ) and $( 45,177 ) for the years ended December 31, 2024 and 2023 , respectively.

The Company accounts for income taxes under ASC 740 “Income Taxes” using the liability method, recognizing certain temporary differences between the financial reporting basis of liabilities and assets and the related income tax basis for such liabilities and assets.

This method generates either a net deferred income tax liability or asset for the Company, as measured by the statutory tax rates in effect.

The Company derives the deferred income tax charge or benefit by recording the change in either the net deferred income tax liability or asset balance for the year.

The Company records a valuation allowance against any portion of those deferred income tax assets when it believes, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred income tax asset will not be realized.

The Company accounts for income and mining 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 and mining tax liability or asset for the Company, as measured by the statutory tax rates in effect.

The Company derives the deferred income and mining tax charge or benefit by recording the change in either the net deferred income and mining tax liability or asset balance for the year.

The Company records a valuation allowance against any portion of those deferred income and mining 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 and mining tax asset will not be realized.

Income from the Company’s subsidiaries in México are taxed in accordance with applicable Mexican tax law.

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Although management believes the Company’s reserves are reasonable, no assurance can be given that the final outcome of these uncertainties will not be different from that which is reflected in the Company’s reserves.

A number of years may elapse before a particular uncertain tax position is audited and finally resolved or when a tax assessment is raised.

A number of years may elapse before a particular uncertain tax position is audited and finally resolved

or when a tax assessment is raised.

The number of years subject to tax assessments varies depending on the tax jurisdiction.

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The chief risk associated with the recognition of sales on a provisional basis is the fluctuation (if any) between the estimated quantities of the precious metals based on the initial assay and the actual recovery from treatment and processing.

During the years ended December 31, 2023 and 2022, there were $ 9,350,000 and $ 9,250,000 , respectively of revenue recognized during the year from customer deposit liabilities (deferred contract revenue) from prior periods, and no customer deposits were refunded to the customer due to order cancellation.

During the years ended December 31, 2024 and 2023 , there were $ Nil and $ 9,350,000 , respectively of revenue recognized during the year from customer deposit liabilities (deferred contract revenue) from prior periods, and no customer deposits were refunded to the customer due to order cancellation.

Shipping and handling costs are considered fulfillment costs after the customer obtains control of the goods.

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Earnings (loss) per share attributable to the common equity holders of the Company 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.

The weighted average number of common shares outstanding during each period is used to compute basic

earnings (loss) per share.

Diluted earnings per share are computed using the weighted average number of shares and potentially dilutive common shares outstanding.

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Potentially dilutive common shares consist of stock warrants and convertible preferred shares and are excluded from the diluted earnings per share computation in periods where the Company has incurred a net loss, as their effect would be considered anti-dilutive.

The Company’s Series C Preferred Stock and related outstanding dividends are convertible into 2,853,721 shares of Common Stock at December 31, 2023.

The Company’s Series D Preferred Stock and related outstanding dividends are convertible into 820,800 shares of common stock at December 31, 2023.

The Company’s Series C Preferred Stock and related outstanding dividends are convertible into 2,942,695 and 2,853,721 shares of Common Stock at December 31, 2024 and 2023 .

The Company’s Series D Preferred Stock and related outstanding dividends are convertible into 851,200 and 820,800 shares of common stock at December 31, 2024 and 2023.

During the years ended December 31, 2024 and 2023, the Company had warrants outstanding to purchase 892,165 shares of common stock.

These shares related to these potentially dilutive common shares are included in the weighted average diluted shares outstanding for the year ended December 31, 2022 and are excluded for the year ended December 31, 2023, as including them would be anti-dilutive.

During the years ended December 31, 2024 and 2023 the Company has options outstanding to purchase 1,150,000 and nil shares of common stock.

These shares related to these potentially dilutive common shares are excluded from the weighted average diluted shares outstanding for the year ended December 31, 2024 and 2023, as including them would be anti-dilutive.

Years ended December 31,

Net income (loss) attributable to common shareholders

Net loss attributable to common shareholders

Weighted average number of common shares outstanding, Basic

Weighted average number of common shares outstanding, Diluted

Basic earnings (loss) per share

Diluted earnings (loss) per share

Diluted Earnings Per Share is calculated as follows:

Net income attributable to common shareholders

Deemed Dividends of Series C Preferred Stock

Deemed Dividends of Series D Preferred Stock

Adjusted Diluted Earnings

Weighted average number of share outstanding - Basic

Series C Preferred Stock Common Stock Equivalent

Series D Preferred Stock Common Stock Equivalent

Weighted average number of share outstanding - Diluted

Diluted Earnings Per Share

Basic loss per share

Diluted loss per share

Related Party Transactions

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The preparation of financial statements in accordance with U.S.

GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of

the financial statements, and the reported amounts of revenues and expenses during the period.

GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the period.

These judgments, estimates and assumptions are regularly evaluated and are based on management’s experience and knowledge of the relevant facts and circumstances.

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• The valuation of derivatives liabilities requires management to determine the most appropriate valuation model and inputs to the valuation model.

Recently Adopted Accounting Pronouncements

In the fourth quarter of 2024 , the Company adopted ASU 2023-07 , Segment Reporting (Topic 280):

Improvements to Reportable

Segment Disclosures (“ASU 2023-07”).

ASU 2023-07 enhances reportable segment disclosures by requiring disclosures such as

significant segment expenses, information on the CODM and disclosures for entities with a single reportable segment.

Additionally, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, and contain other disclosure requirements.

The adoption of ASU 2023-07 did not have an impact on the consolidated results of operations, financial condition or statement of cash flows.

Recently Issued Accounting Standards

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The Company is currently evaluating the potential impact of the adoption of this new guidance on our Consolidated Financial Statements and related disclosures.

Accounting Standards Update 2024-03 – Income Statement – Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40).

ASU 2024-03 requires all public entities to disclose disaggregated information about purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depletion for each income statement line item that contains those expenses.

The amendments in ASU 2024-03 are effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027.

ASU 2024-03 allows for early adoption and requires either prospective adoption to financial statements issued for reporting periods after the effective date of ASU 2024-03 or retrospective adoption for any and all prior periods presented in the financial statements.

The Company is currently assessing the impact of adopting ASU 2024-03 on the consolidated financial statements and related disclosures.

NOTE 2 – INVENTORIES

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NOTE 4 – MINING CONCESSIONS

Mining properties consist of the San Jose de Gracía (“SJG”) concessions.

Mining properties consist of the SJG concessions.

Mining Concessions were $ 4,132,678 and $ 4,132,678 at December 31, 2024 and December 31, 2023 , respectively.

As the Company is an exploration stage company, there was no depletion expense for the years ended December 31, 2024 and 2023 .

NOTE 5 - OTHER CURRENT ASSETS

Other current assets consist primarily of warehouse supplies, advances to suppliers and prepaid assets.

NOTE 6 - ACCRUED LIABILITIES

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Accrued mining expenses

Accrued payroll taxes

Accrued taxes

Other accrued liabilities

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The Company analyzed the conversion features of the promissory notes convertible into Series D Preferred Stock and determined that the 2020 warrants and remaining purchaser 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 2020 warrants and remaining purchaser warrants, and then remeasured at each reporting date.

The fair value was required to be allocated among the notes, the notes’ conversion features, and the 2020 warrants and remaining purchaser warrants, and then re-measured at each reporting date.

The Company performed a valuation of the conversion feature of the 2020 warrants and remaining purchaser warrants.

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.

In performing the valuation, the Company applied the guidance in ASC 820, “Fair Value Measurements”, to non-financial 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).

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Fair value of derivative (warrants), end of year

NOTE 7 – ADVANCE CREDIT LINE FACILITY/CUSTOMER ADVANCES

On February 4, 2021, the Company entered into a Advance Credit Line Facility and Purchase Agreement (the “ACL”), with a commercial buyer.

NOTE 8 – NOTES PAYABLE

(A) ADVANCE CREDIT LINE FACILITY/CUSTOMER ADVANCES

On February 4, 2021, the Company entered into an Advance Credit Line Facility and Purchase Agreement (the “ACL”), with a commercial buyer.

On August 2, 2023, the ACL was extended through December 2026 in an Amendment Agreement (the “Amendment”).

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• The Company will deliver 100 % of its produced concentrates to the buyer and provider of the ACL, through December 31, 2026, with evergreen annual extensions thereafter until either party terminates with at least 365 days’ notice;

• An initial ACL was established by the buyer in the amount of $ 3.75 million USD.

• On May 1, 2021, the ACL increased to an amount equal to 80 % of the prior three months’ revenue.

• Each successive month, the ACL shall be adjusted according to the Company’s prior three months’ revenue to a maximum advance line of $ 17.5 million as specified in the Amendment.

• An initial ACL was established by the buyer in the amount of $ 3.75 M USD.

• On May 1, 2021, the ACL increased to an amount equal to 80 % of the prior 3 months’ revenue.

• Each successive month, the ACL shall be adjusted according to the Company’s prior 3 months’ revenue to a maximum advance line of $ 17.5 million as specified in the Amendment.

• The ACL shall never be less than $ 3.75 M USD.

• The ACL will be interest free for 45 days.

• The ACL is to be repaid through deliveries of concentrates or cash within 120 days.

• Beginning in September 2023, up to $10 million of the ACL advance may be converted into a one-year installment loan bearing interest at 3M SOFR + 7.5% and amortized as follows:

• Beginning in September 2023, up to $10M of the ACL advance may be converted into a one-year installment loan (the “RCL”) bearing interest at 3M SOFR + 7.5% and amortized as follows:

Month 1, interest only;

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and Month 12, final 50% principal plus interest.

Converting the advance amount into an installment loan will reduce the available advance on a pro rata percentage basis;

• If the ACL is converted into an installment loan subsequent deliveries during the term of the loan will be paid in cash within ten days of delivery;

• The Amendment provides the buyer with a right of first refusal during the Purchase Agreement, to provide offtake financing and purchase other concentrates (zinc, silver, copper, etc) and dore from the Company’s open pit and underground operations.

The ACL is included under Customer Advances on the consolidated balance sheet as of December 31 2022.

Deposits under Advance Credit Line Facility

Converting the advance amount into an installment loan will reduce the available on a pro rata percentage basis;

• If the ACL is converted into the RCL subsequent deliveries during the term of the loan will be paid in cash within ten days of delivery;

• The Amendment provides the buyer with a right of first refusal during the Commercial Offtake Agreement, to provide offtake financing and purchase other concentrates (zinc, silver, copper, etc) and doré from the Company’s open pit and underground operations.

The ACL was included under Customer Advances on the consolidated balance sheet, prior to December 1, 2023.

Deposits under the Advance Credit Line Facility

Under the terms of the ACL, the Company received the following advances from the buyer (in millions):

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Converted to a one-year note payable on December 1, 2023.

NOTE 8 – NOTE PAYABLE

On December 1, 2023, the Company exercised its option under the Advance Credit Line Facility and Purchase Agreement (the “ACL”) to convert the outstanding ACL balance of $ 9,750,000 into a one year note payable bearing interest at 3M SOFR + 7.5%.

The notes is repayable as follows:

(B) REVOLVING CREDIT LINE (RCL) & TEMPORARY ADVANCE CREDIT LINE (TACL)

On December 1, 2023, the Company exercised its option under the ACL to convert the outstanding ACL balance of $ 9,750,000 into a one-year note payable (the “RCL”) bearing interest at 3M SOFR + 7.5%.

The RCL is repayable as follows:

Month 1, interest only;

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and Month 12, final 50% principal plus interest.

NOTE 9 – INSTALLMENT NOTES PAYABLE

In June 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 June 30, 2018 in the amount of $ 1,739,392 .

On June 20, 2024 the Company amended the terms of the RCL.

Under the amended agreement the Company may receive up to an additional $ 4,000,000 (the (“TACL”) at the same interest rate due on November 30, 2024 .

The Company also received a put option (the “Put Option”) to convert up to $ 9,000,000 of the RCL into common stock at $ 1.61 a share exercisable from November 1, 2024 until the November 30, 2024 maturity date.

If the TACL and the RCL are repaid in full on or prior to the maturity date, the maximum principal amount of the RCL will be increased to $ 12,500,000 .

If the Put Option is exercised for more than $ 4,000,000 , however, the maximum principal amount of the RCL will be reduced on a dollar-for-dollar basis by such excess.

As part of the June 20, 2024 amendment, the Company granted a security interest in the Company’s Mexican IVA tax claims to the holder of the RCL and TACL notes.

In November 2024 the Company paid off the TACL and renewed the RCL for one year.

Under terms of the renewal the TACL was discontinued and the put options was removed.

The $ 12,500,000 maximum principal amount, interest rate and payment terms remained the same.

The following is a summary of the activity during the years ended December 31, 2024 and 2023:

Balance beginning of year

Conversion of ACL to Note Payable

Principal Payments

Balance end of year

Interest expense for the year ended December 31, 2024 was $ 1,249,098 (2023- $ 108,098 ).

NOTE 9 – CONCESSION DUTIES PAYABLE

In June 2018, the Company entered into financing agreements for the unpaid mining concession duties on the Francisco Arturo mining concession for the year ended December 31, 2017 and the period ending June 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 22 %.

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 .

In February 2019, the Company entered into a financing agreement for unpaid mining concession duties 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 %.

In June 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.

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 duties 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.

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At December 31, 2024, $ 2,221,219 of accrued interest on the notes was included in accrued liabilities on the accompanying consolidated balance sheet.

In October 2019, the Company entered into a financing agreement for unpaid mining concession taxes on the San Jose de Gracia core mining concessions in the amount of $ 299,474 .

In October 2019, the Company entered into a financing agreement for unpaid mining concession duties on the San Jose de Gracia 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 %.

Interest expense for the year ended December 31, 2024 was $ 449,161 (2023 - $ 464,308 ).

The following is a summary of the transaction during the years ended December 31, 2024, and December 31, 2023:

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NOTE 10 - ASSET RETIREMENT OBLIGATION

live of the mines in operation as of December 31, 2023, discounted using credit-adjusted, risk-free interest rate of 9.2 %.

As this is an exploration stage property that does not qualify for asset capitalization, the costs associated with the obligation are charged to operations.

During 2023, a significant upgrade was made to the milling facility and therefore, an ARO has been established as of December 31, 2023 at the estimated undiscounted costs totaling $ 316,800 to decommission the plant and tailings pond at the end of the estimated live of the mines in operation as of December 31, 2023, discounted using credit-adjusted, risk-free interest rate of 9.2 %.

As this is an exploration stage property that does not qualify for asset capitalization, the costs associated with the obligation were charged to operations.

Asset retirement obligation consists of the following as of December 31, 2024 and 2023:

Asset retirement obligation at beginning of year

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Asset retirement obligation at end of year

NOTE 11 - 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 , of which $ 340,000 was converted to preferred shares within the same year, netting proceeds of $ 1,155,000 (the “Series I Notes”).

The Series I Notes bear simple interest a 12.5 % accrued for twelve months, and with the accrued interest to be added to the principal, and then interest will be paid by the Company, quarterly in arrears.

The Series I Note holders 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.

The Notes originally matured on December 31, 2015 .

The notes were extended multiple times including some interest payments being rolled into the principal.

At December 31, 2021, six Series I Notes remained outstanding with a total balance of $ 455,905 .

On July 1, 2022 the remaining Series I Notes were repaid in full in cash.

None of the notes were converted into common stock and no stock warrants were issued.

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 12.5 %, accrued for twelve months, and with the accrued interest to be added to the principal, and then interest will be paid by the Company, quarterly in arrears.

The Note holder retained the option to 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 their conversion date.

The Notes originally matured on December 31, 2015 .

The notes were extended multiple times including some interest payments being rolled into principal.

At December 31, 2021, two Series II notes remained outstanding with a balance of $ 87,374 .

On July 1, 2022 the remaining Series II Notes were paid off in full in cash.

None of the notes were converted into common stock and no stock warrants were issued.

NOTE 11– STOCKHOLDERS’ EQUITY

The total number of shares of all classes of capital stock which the Company has the authority to issue is 60,001,000 shares, consisting of (i) twenty million and one thousand ( 20,001,000 ) shares of Preferred Stock, par value $ 0.0001 per share (“Preferred Stock”), of which 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 ) shares of Common Stock, par value $ 0.01 per share (“Common Stock”).

The total number of shares of all classes of capital stock which the Company has the authority to issue is 60,001,000 shares, consisting of (i) twenty million and one thousand ( 20,001,000 ) shares of Preferred Stock, par value $ 0.0001 per share (“Preferred Stock”), of which 1,734,992 shares are designated as Series C Preferred Stock, 3,000,000 shares are designated as Series D Preferred Stock, and 1,552,795 shares are designated as Series E Preferred Stock, and (ii) forty million ( 40,000,000 ) shares of Common Stock, par value $ 0.01 per share (“Common Stock”).

As of December 31, 2024 , 13,713,213 of Preferred Stock remain undesignated.

Series A Preferred Stock

The Company had 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 had he right to elect a majority of the Board of Directors of the Company.

In 2007, the Company issued 1,000 shares of Series A Preferred Stock to its current CEO.

At December 31, 2022 there were 1,000 shares of Series A Preferred Stock outstanding.

On April 19, 2023 the Company repurchased the Series A Preferred stock from the CEO for $ 1,250,000 .

The Company had designated 1,000 shares of its Preferred Stock as Series A Preferred Stock, having a par value of $ 0.0001 per share.

Holders of the Series A Preferred Stock had the right to elect a majority of the Board of Directors of the Company.

In 2007, the Company issued 1,000 shares of Series A Preferred Stock to its now former CEO.

On April 19, 2023 the Company repurchased the 1,000 shares of Series A Preferred Stock from the now former CEO for $ 1,250,000 .

On July 17, 2023 the Company amended its certificate of incorporation to cancel the Series A Preferred Stock.

Series C Senior Convertible Preferred Stock

As of December 31, 2023 and 2022, there were 1,734,992 and 1,734,992 Series C Preferred shares outstanding, respectively.

These Series C Preferred Shares are convertible to common shares at $ 1.95 per share, redeemable on demand and include anti-dilution protection on both the Preferred Series C and the 2,655,361 of Common Stock acquired through the exercise of the Series C stock warrants in June 2022.

The Series C Preferred Shares may receive a 4 % per annum dividend, payable if available, and in arrears.

As of December 31, 2024 and 2023 , there were 1,734,992 and 1,734,992 shares of Series C Preferred Stock outstanding, respectively.

These shares of Series C Preferred Stock are convertible to shares of Common Stock at $ 1.93 per share, redeemable on demand and include anti-dilution protection on both the shares of Series C Preferred Stock and the 2,655,361 of shares of Common Stock acquired through the exercise of the Series C stock warrants in June 2022.

The shares of Series C Preferred Stock 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.

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(2023 - $ 1,227,276 ).

Due to the nature of this transaction as mandatorily redeemable by the Company at the election of the Series C preferred stock shareholder at maturity, the Series C Senior Convertible Preferred Shares are classified as “temporary equity” on the balance sheet.

Attached to the Series C Preferred Stock issued in 2015 were 2,000,000 warrants (the “2015 Warrant”), which gave the holder the right to purchase common shares at $ 2.50 per share.

After anti-dilution protection, these warrants became 2,166,527 warrants to purchase common shares at $ 2.04 and on June 28, 2022, the 2015 Warrant was exercised and the common shares were issued.

Due to the nature of this transaction as mandatorily redeemable by the Company at the election of the Series C Preferred Stock shareholder at maturity, the shares of Series C Preferred Stock 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, and with Shareholders of DynaResource, Inc.

On May 14, 2020, the Company closed an additional financing and related agreements with certain shareholders totaling $ 4,020,000 which was convertible into Series D Senior Preferred Stock.

On May 14, 2020, the Company closed an additional financing and related agreements with certain shareholders totaling $ 4,020,000 which was convertible into shares of Series D Preferred Stock.

The noteholders also received the 2020 warrants, as outlined in Note 6, for the purchase of an aggregate of 1,260,633 shares of the Company’s common stock at an exercise price of $ 0.01 a share.

On October 7, 2021, the Company paid $ 2,500,000 to repurchase one note.

The remaining ten noteholders elected to convert their notes totaling $ 1,520,000 into Series D Preferred Stock at $ 2.00 per share.

The remaining ten noteholders elected to convert their notes totaling $ 1,520,000 into shares of 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 shares of 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 December 31, 2023 dividends for the years 2022 and 2023 totaling $ 121,600 were in arrears.

As of December 31, 2024 dividends for the years 2022 through 2024 totaling $ 182,400 were in arrears.

Concurrently with the note conversion the noteholders exercised 368,468 of the 2020 warrants to purchase 368,468 shares of the Company’s Common Stock at $ 0.01 per share.

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

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

The deemed dividends on the Series C and D Preferred Stock for the years ended December 31, 2024 and 2023 , were $ 234,299 and $ 234,299 , respectively.

As the Company has not declared these dividends, it is required as an item “below” the net income amount on the accompanying consolidated statements of income.

Series E Convertible Preferred Stock

As of December 31, 2024 and 2023 there were 1,552,795 and nil shares of Series E Preferred Stock outstanding.

The shares of Series E Preferred Stock are convertible on a one-for-one basis into shares of Common Stock, subject to equitable adjustment.

shares of Series E Stock are eligible to receive the conversion equivalent of any Common Stock dividend declared but carry no preferred dividend and are not redeemable in cash.

Preferred Stock (Undesignated)

In addition to the 1,734,992 authorized shares designated as Series C Preferred Shares and 3,000,000 authorized shares designated as Series D Preferred Stock, the Company is authorized to issue an additional 15,266,008 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.

In addition to the 1,734,992 authorized shares designated as Series C Preferred Stock, the 3,000,000 authorized shares designated as Series D Preferred Stock and the 1,552,795 authorized shares designated as Series E Preferred Stock the Company is authorized to issue an additional 13,713,213 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 resolution the terms attached to the Preferred Stock.

At December 31, 2024 and December 31, 2023 , there were no other shares of Preferred Stock outstanding.

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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 the 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.

Unless otherwise provided in the Preferred Stock Designation, the Board of Directors may decrease the number of shares of Preferred Stock designated for any existing series by a resolution subtracting from such series authorized and unissued shares of Preferred Stock designated for such existing series, and the shares so subtracted shall become authorized, unissued and undesignated shares of Preferred Stock.

The Company is authorized to issue 40,000,000 common shares at a par value of $ 0.01 per share.

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Stock Issuances

On August 4, 2023 the Company sold 1,000,000 common shares for $ 5.00 per share.

In connection with the sales the Company issued 125,054 shares to the Series C Preferred Stockholder under the Series C anti-dilution provision.

On June 28, 2022, the Company issued 2,655,361 shares of common stock upon the exercise of the 2,166,775 warrants by one warrant holder for $ 2.04 a share.

There shares carry the antidilution provision of the Series C Preferred stock.

On December 28, 2022, the Compensation Committee approved restricted common stock awards to employees, directors and consultants of the Company.

The stock awards approved vested 25% immediately with the remainder vesting 25% each year on December 28 for the next three years, subject to resignation or termination provisions.

The awards totaled 1,500,00 shares and the Company recorded stock compensation expense of $ 881,250 representing value of the 25% of shares that vested in 2022 and an additional $ 881,250 of stock compensation expense representing the value of the 25% of shares that vested in 2023.

On August 4, 2023 the Company issued 1,000,000 shares of Common Stock for $ 5,000,000 cash consideration.

In connection with the sales the Company issued 125,054 shares to the Series C Preferred stockholder under the Series C Preferred Stock anti-dilution provision.

On June 27, 2024 the Company issued 1,552,795 shares of Series E Preferred Stock for $ 2,500,000 cash consideration.

On June 28, 2024 the Company issued 287,287 shares of Common Stock with a value of $ 462,532 to senior executives as compensation.

On October 18, 2024 the Company issued 5,769,231 shares of Common Stock for $ 6,000,000 cash consideration.

Treasury Stock

During the year ended December 31, 2023, 25,000 shares of the Company’s common stock previously issued for services were returned to the Company as part of a settlement of fees.

During the year ending December 31, 2024, there were no treasury stock transactions.

During the year ended December 31, 2023, 25,000 shares of the Company’s Common Stock previously issued for services were returned to the Company as part of a settlement of fees.

At December 31, 2024 and 2023 , 37,180 and 37,180 treasury shares were held by the Company.

On June 28, 2022, one warrant holder exercised 2,166,775 warrants to purchase 2,655,361 shares of common stock for $ 2.04 a share.

These shares carry the antidilution provisions of the Series C preferred Stock.

As of December 31, 2023, the Company had a total of 892,165 warrants outstanding.

As of December 31, 2024 , 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:

Balance at December 31, 2022

Exercise of the 2015 warrant

Forfeiture of the 2015 warrant

Exercise of warrants

Forfeiture of the warrants

Balance at December 31, 2023

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Exercisable at December 31, 2024

A derivative liability was incurred at the issuance of the Series D warrants in 2020.

As of December 31, 2024 , the derivative liability totaled $ 892,167 .

See Note 7 above.

As of December 31, 2024 the Company had the following outstanding options, which were issued to Directors and Executive Officers as compensation to purchase 1,150,000 shares of Common Stock:

On February 16, 2024, in conjunction with joining the Board of Directors, Mr.

Quinton Hennigh was awarded options to purchase up to 400,000 shares of the Common Stock at an exercise price of $ 5.00 per share, with such options vesting in 25 % increments on each of the first four anniversaries of the date of the award.

On June 3, 2024, Mr.

Rohan Hazelton, in conjunction with accepting the position of Chief Executive Officer, was awarded options to purchase up to 750,000 shares of Common Stock at an exercise price of $ 1.75 per share, with such options vesting and becoming exercisable one-third per year on each of the first three anniversaries of the grant date and will be exercisable for a period of five years from the grant date.

Balance at December 31, 2022

Issuance of options

Exercise of options

Forfeiture of the options

Balance at December 31, 2023

Issuance of options

Exercise of options

Forfeiture of the options

Balance at December 31, 2024

NOTE 12 – STOCK BASED COMPENSATION

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The shares were valued at the closing stock price of $ 2.35 on the date of issuance and accounted for under ASC 718.

Stock compensation expense for the years ended December 31, 2023 and 2022 was $ 881,250 representing the 25 % vested portion of the total stock value.

As of December 31, 2023, deferred compensation totaling $ 1,762,500 will be expensed pro rata upon vesting.

Stock compensation expense for the years ended December 31, 2024 and 2023 was $ 1,219,062 and 881,250 representing the 25 % vested portion of the total stock value.

In addition the 2024 expenses included accelerated vesting of $ 327,813 due to terminations.

In addition to the accelerated vesting 112,500 shares under these awards were cancelled in December 2024.

As of December 31, 2024, deferred compensation totaling $ 297,063 remained unvested.

On June 3, 2024, Mr.

Rohan Hazelton was appointed as the Company’s new Chief Executive Officer.

In connection with Mr.

Hazelton’s appointment, the Company entered into an Employment Agreement with Mr.

Hazelton that included a signing bonus of 750,000 stock options as detailed below, 500,000 Restricted Stock Units vesting one-third per year on each of the first three anniversaries of the grant date, the terms of which are to be determined by the Compensation Committee and 500,000 Deferred Stock Units, the terms and metrics of which are to be determined by the Compensation Committee.

On July 22, 2024, Mr.

Alonso Sotomayor was appointed as the Company’s new Chief Financial Officer.

In connection with Mr.

Sotomayor’s appointment, the Company entered into an Employment Agreement with Mr.

Sotomayor that included a signing bonus of 225,000 restricted stock units vesting one-third per year on each of the first three anniversaries of the grant date.

On February 16, 2024, in conjunction with joining the Board of Directors, Mr.

Quinton Hennigh was awarded options to purchase up to 400,000 shares of Common Stock of the Company at an exercise price of $ 5.00 per share, with such options vesting in 25 % increments on each of the first four anniversaries of the date of the award and will be exercisable for a period of four years from the date of the grant.

The inputs utilized in calculating the fair are as follows:

Annual volatility rate

Risk free rate

Expected life at issuance

Fair Value of stock options

On June 3, 2024, Mr.

Rohan Hazelton, in conjunction with accepting the position of Chief Executive Officer, was awarded options to purchase up to 750,000 shares of Common Stock of the Company at an exercise price of $ 1.75 per share, with such options vesting and becoming exercisable one-third per year on each of the first three anniversaries of the grant date and will be exercisable for a period of five years from the grant date.

The inputs utilized in calculating the fair value are as follows:

Annual volatility rate

Risk free rate

Expected life at issuance

Fair Value of stock options

NOTE 13 – INCOME TAXES

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Accrued bonus

Gross Deferred Tax Assets

Gross Deferred Tax Asset

Valuation allowance

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Net Deferred Tax Asset

Balance Sheet Presentation:

Deferred Tax Asset

Deferred Tax Liability

Net Deferred Tax Asset

The Company's pre-tax income (loss) by jurisdiction was as follows for the years ending December 31, 2024 and 2023

The provision for income taxes for continuing operations for the year ended December 31, 2023 and 2022 consist of the following

The provision for income taxes for continuing operations for the year ended December 31, 2024 and 2023 consists of the following

Current income taxes

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Return to provision

GILTI NOL impact

GILTI NOL adjustment – previously offset by valuation allowance

NOL Expieration

Change in valuation allowance

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The Company’s practice is to recognize interest and penalties related to income taxes in income tax expense in continuing operations, as incurred.

There were no any uncertain tax benefits or interest and penalties related to uncertain tax benefits as of December 31, 2023.

There were no uncertain tax benefits or interest and penalties related to uncertain tax benefits as of December 31, 2024.

The Company is subject to income taxes in the US federal jurisdiction as well as Mexico.

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The Company is no longer subject to Mexican tax examinations for years prior to fiscal year 2017.

The Company is currently not under audit by any tax authority.

The Company has not provided U.S.

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NOTE 14 – COMMITMENTS AND CONTINGENCIES

From time to time, the Company is involved in legal matters in the ordinary course of its business.

The Company intends to defend itself vigorously against any such claims.

It is the Company’s policy to accrue for amounts related to lawsuits brought against it if it is probable that a liability has been incurred and an amount can be reasonably estimated.

Although the outcome of such matters cannot be predicted with certainty and no assurances can be given with respect to such matters, the Company believes that the outcome of those ordinary course matters in which it is currently involved will not have a materially adverse effect on its results of operations, liquidity, or financial position.

2014 Arbitration Proceeding filed by Goldgroup Resources Inc.

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are fully resolved and are no longer subject to appeal.

Consequence of the México legal ruling and the Goldgroup legal withdrawal:

Consequences of the México legal ruling and the Goldgroup legal withdrawal:

The $ 48,280,808 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.

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(“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 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.

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The Company determines if a contract is or contains a lease at inception.

As of December 31, 2023, the Company has two operating leases - fifty-two month lease for office space with a remaining term of forty-seven months and a twenty-year ground lease in association with its México mining operations with a remaining term of ten years.

As of December 31, 2024, the Company has two operating leases - a fifty-two month lease for office space with a remaining term of thirty-five months and a twenty-year ground lease in association with its México mining operations with a remaining term of ten years.

Variable lease costs consist primarily of variable common area maintenance, storage parking and utilities.

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Level 3 Inputs – Instruments with primarily unobservable value drivers.

As of December 31, 2023 and 2022, the Company’s financial assets were carried at fair value and were measured at fair value using Level 3 inputs, with the exception of cash, which was valued using Level 1 inputs.

As of December 31, 2024 and 2023, the Company’s financial instruments were carried at fair value and were measured at fair value using Level 3 inputs, with the exception of cash, accounts receivable, foreign tax receivable, notes payable, mining concession duties payable, which are measured at amortized cost.

A description of the valuation of the Level 3 inputs is discussed in Note 7.

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Derivative Liabilities

The fair values of other financial assets and liabilities were assumed to approximate their carrying values due to their short-term nature and historically negligible credit losses, and are classified within Level 1 of the fair value hierarchy.

NOTE 16 – CONCENTRATIONS

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NOTE 17 - SEGMENTED INFORMATION

The Company operates as one segment:

test-mining and pilot milling gold-silver concentrate for sale from its location in Mexico, and had the following geographic concentrations as of December 31, 2023 and 2022:

The Company operates as one reportable segment focused on the exploration and evaluation of its gold-silver project in Mexico, The Company’s Chief Executive Officer (“CEO”) acts as the Chief Operating Decision Maker (“CODM”) and the CODM uses consolidated net income/loss as the measure of segment profit and loss to assess performance and allocate resources.

The measure of segment assets is reported on the consolidated balance sheet as total consolidated assets, with a majority of these assets located in Mexico and had the following geographic concentrations as of December 31, 2024 and 2023:

United States

December 31, 2024

Mineral property

Property and equipment

Mining concessions

Property and equipment, net

Current assets

December 31, 2023

Mineral property

Property and equipment

Mining concessions

Property and equipment, net

Current assets

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December 31, 2023

Total Revenue for the year - Mexico

Total Revenue for the year - United States

Total Revenue for the year

December 31, 2024

December 31, 2023

Total comprehensive income (loss) for the year - Mexico

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During the year ended December 31, 2022 the Compensation Committee approved stock awards to employees, directors and consultants of the Company.

The stock awards approved were issued to each of the individuals/entities and vested 25 % immediately and the remainder vest 25 % each year on December 31st for the next three years, subject to resignation or termination provisions.

The stock awards approved were issued to each of the individuals/entities and vested 25 % immediately and the remainder vest 25 % each year on December 31 for the next three years, subject to resignation or termination provisions.

The awards totaled 1,500,000 shares of which 1,175,000 were awarded to officers and/or directors.

Total stock-based compensation recognized on awards granted to related parties totalled $ 690,313 during each of the years ended December 31, 2023 and 2022.

Total stock-based compensation recognized on awards granted to related parties totaled $ 690,313 for the years ended December 31, 2023 and $ 969,375 for the year ended December 31, 2024.

Due to a termination, 112,500 shares under these awards were cancelled in December 2024.

On June 3, 2024, Mr.

Rohan Hazelton was appointed as the Company’s new Chief Executive Officer.

In connection with Mr.

Hazelton’s appointment, the Company entered into an Employment Agreement with Mr.

On July 22, 2024, Mr.

Alonso Sotomayor was appointed as the Company’s new Chief Financial Officer.

In connection with Mr.

Sotomayor’s appointment, the Company entered into an Employment Agreement with Mr.

Sotomayor that included a signing bonus of 225,000 restricted stock units vesting one-third per year on each of the first three anniversaries of the grant date, the terms of which are to be determined by the Compensation Committee.

Options Awarded

On February 16, 2024, in conjunction with joining the Board of Directors, Mr.

Quinton Hennigh was awarded options to purchase up to 400,000 shares of Common Stock at an exercise price of $ 5.00 per share, with such options vesting in 25 % increments on each of the first four anniversaries of the date of the award.

On June 3, 2024, Mr.

NOTE 19– SUBSEQUENT EVENTS

The Company has evaluated events from December 31, 2024, through the date whereupon the consolidated financial statements were issued, and has described below the events subsequent to the end of the period:

On February 19, 2024., the Board of Directors approved the DynaResource, Inc.

2024 Equity Incentive Plan (the “Plan”), which the Company intends to submit for stockholder approval at the 2024 annual meeting of stockholders.

Pursuant to the Plan, the Company may issue various types of equity incentives, including stock options, restricted stock, and stock appreciation rights, to employees, directors, and consultants.

The Plan has a term of 10 years and provides for the issuance of no more than an aggregate 2,700,000 shares of common stock over the life of the Plan.

The Plan is administered by the Compensation Committee of the Board of Directors.

On February 19, 2024, the Company issued 400,000 stock option awards to a new independent director, at an exercise price of $ 5.00 per share, with such options vesting in 25 % increments on each of the first four anniversaries of the date of the award.

In September 2024, the Company entered into a commodity pricing contract through its major purchaser.

The Company used a forward contract to lock in the price of recoverable gold from its deliveries of gold concentrates.

The contract was for 75 % of recoverable gold up to 9,000 ounces, at a price of $ 2,495 per ounce.

This means that if the price of gold decreases, the Company will still receive amounts based on the contract price.

In March 2025, the Company fulfilled its delivery obligations under the commodity pricing contract.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis