DYNARESOURCE, INC. 10-K/A

ITEM 7. MANAGEMENT’S DISCUSSION AND A NALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company 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 Site Based Processing and Operational Activity, 2018 to 2024: Year Total Tonnes Processed Reported Mill Feed Grade (g/t Au) Reported Recovery % Gross Gold Concentrates Produced (Au oz.) Net Gold (1) Concentrates Sold (Au oz.) 2018 52,038 9.82 86.11 % 14,147 13,418 2019 66,031 5.81 86.86 % 10,646 9,713 2020 44,218 5.65 87.31 % 7,001 5,828 2021 97,088 9.67 88.79 % 26,728 22,566 2022 137,740 8.18 88.05 % 31,905 25,554 2023 198,518 5.58 76.50 % 27,252 24,829 2024 257,676 4.07 76.24 % 25,677 22,003 20 Table of Contents 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 Year Ended Key Operating Information Unit December 31, 2024 December 31, 2023 December 31, 2024 December 31, 2023 Operating Data Ore mined t 59,490 45,755 233,782 172,062 Mining rate tpd 647 497 639 471 Ore Milled t 67,670 45,151 257,676 198,518 Mill Throughput tpd 736 491 704 544 Grade g/t 4.12 4.71 4.07 5.58 Recovery Au % 75.58 % 79.05 % 76.24 % 76.50 % Gold Ounces Produced oz 6,775 5,405 25,677 27,252 Gold Ounces Sold oz 6,897 4,552 22,003 24,829 (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. 21 Table of Contents 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: Tres Amigos 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. La Mochomera 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. 22 Table of Contents 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: 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 : Mine production costs for the years ended December 31, 2024 and 2023 were $15,090,417 and $11,156,677 respectively. These costs were directly related to the extraction of mine tonnage to be processed at the mill. 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. 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 : Facilities expansion costs for the years ended December 31, 2024 and 2023 were $2,548,899 and $2,554,505 respectively. 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. These are cost which would normally have been treated as capital expenditures under U.S. GAAP but the Company is required to expense because of the lack of proven and probable reserves. EXPLORATION DRILLING : 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 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. PROPERTY HOLDING COSTS : Property holding costs for the years ended December 31, 2024 and 2023 were $166,551 and $172,663, respectively. These costs were concessions taxes, leases on land and other direct costs of maintaining the property. GENERAL AND ADMINISTRATIVE EXPENSES : 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 represent costs incurred in operating the Company that are not directly related to site-based processing or exploration activities, and include management, 23 Table of Contents 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 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, 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, 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. 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 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. The revenue from operations was supplemented by proceeds from the sale of common stock and customer advances as well as the cash flow from operations. Although the Company has incurred net losses and net cash outflows from operating activities and investing activities for the year ended December 31, 2024, there were many expenses which were made that were not expended for the production of revenue, such as exploration drilling and mine expansion and non-recurring legal success fees paid. If these expenses had not been made, the Company’s net loss would have been minimized. 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. To the extent that existing capital and revenue growth are not sufficient to fund future activities, the Company may need to raise capital through additional equity or debt financing. Additional funds may not be available on terms favorable to the Company or at all. Failure to raise additional capital, if needed, could have a material adverse effect on the Company’s financial position, results of operations and cash flows. Off-Balance Sheet Arrangements As of December 31, 2024, we did not have any off-balance sheet arrangements, which have or are reasonably likely to have a material adverse effect on our financial condition, results of operations or liquidity. Plan of Operation The Plan of operation for the next twelve months includes continued enhancement of site infrastructure and processing capabilities, along with expanded exploration drilling at SJG. 24 Table of Contents 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 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 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 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 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. ITEM 7A. QUANTITATIVE AND QUALIT ATIVE DISCLOSURE ABOUT MARKET RISK Not applicable. 25 Table of Contents ITEM 8. FINANCIAL STATEMENT S AND SUPPLEMENTARY DATA 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: Report of Independent Registered Public Accounting Firm PCAOB ID: 32 Report of Independent Registered Public Accounting Firm PCAOB ID: 731 Consolidated Balance Sheets Consolidated Statements of Operations and Comprehensive Income (Loss) 32 Consolidated Statement of Changes in Stockholders’ Equity/(Deficit) 33 Consolidated Statements of Cash Flows for the Years 34 Notes to the Consolidated Financial Statements 35 26 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and Directors of DynaResource, Inc. Opinion on the Consolidated Financial Statements 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 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. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. 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 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. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, we express no such opinion. 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. 27 Table of Contents 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 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 The Company has recognized significant deferred tax assets in respect of unused tax losses. The recovery of the deferred tax assets depends on achieving sufficient taxable profits in the future. Future taxable profits to be used for utilization of tax losses accumulated by the Company mainly represent income from mining operations to be earned by the Company’s main operating subsidiary. The assessment of the potential to utilize the tax losses is dependent on the forecast profitability of the subsidiary. This requires management’s judgment and estimation on key inputs such as expected production, sales volumes, commodity prices, grade and tonnage estimates and operating costs. There is inherent uncertainty involved in forecasting timing and quantum of future taxable profits, which support the extent to which tax assets are recognized. Therefore, this is the key judgmental area our audit is concentrated on. Our audit procedures included the following: • 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 Vancouver, Canada Chartered Professional Accountants April 4, 2025 28 Table of Contents 29 Table of Contents DYNARESOURCE, INC. CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2024 AND 2023 2024 2023 ASSETS Current assets Cash $ 4,781,352 $ 5,603,713 Accounts receivable 1,208,346 880,473 Inventories (Note 2) 1,576,392 2,089,194 Foreign tax receivable 2,690,309 4,434,958 Other current assets (Note 5) 1,914,303 1,137,162 Total current assets 12,170,702 14,145,500 Property and equipment (net of accumulated depreciation and amortization of $ 42,738 and $ 12,239 ) (Notes 3) 79,290 103,034 Right-of-use assets, net 734,229 848,822 Mining concessions (Note 4) 4,132,678 4,132,678 Deferred tax asset (Note 13) 4,025,957 4,264,115 Foreign tax receivable 16,613,129 11,768,613 Other assets 160,407 175,588 TOTAL ASSETS $ 37,916,392 $ 35,438,350 LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable $ 4,889,022 $ 2,768,634 Accrued liabilities (Note 6) 9,857,317 7,727,621 Derivative liability (Note 7) 892,167 1,797,341 Notes payable (Note 8) 9,850,000 9,750,000 Current portion of operating lease payable (Note 14) 122,630 104,117 Mining concession duties payable (Note 9) 1,838,346 2,259,432 Total current liabilities 27,449,482 24,407,145 Deferred tax liability (Note 13) 307,777 334,236 Operating lease payable, less current portion (Note 14) 702,531 825,762 Asset retirement obligation (Note 10) 223,520 198,468 TOTAL LIABILITIES 28,683,310 25,765,611 TEMPORARY EQUITY Series C Senior Convertible Preferred Stock, $ 0.0001 par value, 1,734,992 shares authorized, issued and outstanding 4,337,480 4,337,480 Series D Senior Convertible Preferred Stock, $ 0.0001 par value, 3,000,000 shares authorized, 760,000 shares issued and outstanding 1,520,000 1,520,000 COMMITMENTS AND CONTINGENCIES — — STOCKHOLDERS’ EQUITY (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 293,157 233,717 Series E Senior Convertible Preferred Stock, $ 0.0001 par value, 1,552,795 and 0 shares authorized, issued and outstanding 2,500,000 — Preferred rights 40,000 40,000 Additional paid-in-capital 69,131,186 61,509,032 Treasury stock, 37,180 and 37,180 shares at cost ( 95,023 ) ( 95,023 ) Accumulated other comprehensive income (loss) ( 1,788,699 ) 697,700 30 Table of Contents Accumulated deficit ( 66,705,019 ) ( 58,570,167 ) TOTAL STOCKHOLDERS’ EQUITY 3,375,602 3,815,259 TOTAL LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY $ 37,916,392 $ 35,438,350 The accompanying notes are an integral part of these consolidated financial statements. 31 Table of Contents DYNARESOURCE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 2024 2023 REVENUE $ 46,503,016 $ 35,573,194 OPERATING EXPENSES Mine production costs 15,090,417 11,156,677 Mine development and stripping costs 11,809,670 8,311,027 Mill production cost applicable to sales 6,046,714 6,669,568 Camp, warehouse and facilities 5,527,949 5,453,778 Transportation 4,971,128 4,484,766 Property holding costs 166,551 172,663 Facilities expansion costs 2,548,899 2,554,505 Exploration drilling 1,736,880 2,514,544 Stock based compensation (Note 12) 1,219,062 881,250 General and administrative 4,157,425 8,529,349 Accretion Expense (Note 10) 18,260 — Right-of-use asset amortization 114,593 63,396 Depreciation and amortization (Note 3) 30,499 12,239 TOTAL OPERATING EXPENSES 53,438,047 50,803,762 NET OPERATING LOSS ( 6,935,031 ) ( 15,230,568 ) OTHER INCOME (EXPENSE) Foreign currency loss ( 506,439 ) ( 45,177 ) Interest expense (Notes 8 & 9) ( 1,696,258 ) ( 567,792 ) Derivatives mark-to-market gain (Note 7) 905,174 375,076 Other income 50,171 2,218 TOTAL OTHER EXPENSE ( 1,247,352 ) ( 235,675 ) NET LOSS BEFORE TAXES ( 8,182,383 ) ( 15,466,243 ) Mining tax expense (Note 13) 406,579 — Income tax benefit (Note 13) ( 454,110 ) ( 932,739 ) TOTAL TAX BENEFIT ( 47,531 ) ( 932,739 ) NET LOSS $ ( 8,134,852 ) $ ( 14,533,504 ) DEEMED DIVIDEND FOR SERIES C & D PREFERRED ( 234,299 ) ( 234,299 ) NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS $ ( 8,369,151 ) $ ( 14,767,803 ) LOSS PER SHARE ATTRIBUTABLE TO THE EQUITY HOLDERS OF DYNARESOURCE, INC. Basic loss per common share $ ( 0.34 ) $ ( 0.65 ) Weighted average shares outstanding – Basic 24,680,167 22,705,923 Diluted earnings loss per common share $ ( 0.34 ) $ ( 0.65 ) Weighted average shares outstanding – Diluted 24,680,167 22,705,923 OTHER COMPREHENSIVE INCOME (LOSS) Unrealized foreign currency translation gain (loss) ( 2,486,399 ) 585,622 TOTAL OTHER COMPREHENSIVE INCOME (LOSS) ( 2,486,399 ) 585,622 TOTAL COMPREHENSIVE LOSS $ ( 10,621,251 ) $ ( 13,947,882 ) The accompanying notes are an integral part of these consolidated financial statements. 32 Table of Contents DYNARESOURCE, INC. CONSOLIDATED STATEMENT S OF STOCKHOLDERS' EQUITY YEARS ENDED DECEMBER 31, 2024 AND 2023 Preferred A Preferred E Common Preferred Preferred Paid In Treasury Treasury Other Comp Accumulated Shares Amount Shares Amount Shares Amount Rights Amount Capital Shares Amount Income Deficit Totals YEAR ENDED DECEMBER 31, 2023 Balance January 1, 2023 1,000 $ 1 — $ — 22,246,654 $ 222,467 1 $ 40,000 $ 56,889,031 12,180 $ ( 34,773 ) $ 112,078 $ ( 44,036,663 ) $ 13,192,141 Issuance of Common Stock 1,000,000 10,000 4,990,000 5,000,000 Issuance of Non-Dilution Shares 125,054 1,250 ( 1,250 ) Stock Compensation - Vesting 881,250 881,250 Purchase of Series A Preferred Stock 1,000 ( 1,250,000 ) ( 1,250,000 ) Cancellation of Series A Preferred Stock ( 1,000 ) ( 1 ) ( 1,249,999 ) ( 1,000 ) 1,250,000 — Acquisition of Treasury Stock 25,000 ( 60,250 ) ( 60,250 ) Other Comprehensive Income 585,622 585,622 Net Loss ( 14,533,504 ) ( 14,533,504 ) Balance, December 31, 2023 — $ — — $ — 23,371,708 $ 233,717 1 $ 40,000 $ 61,509,032 37,180 $ ( 95,023 ) $ 697,700 $ ( 58,570,167 ) $ 3,815,259 YEAR ENDED DECEMBER 31, 2024 Balance January 1, 2024 — $ — — $ — 23,371,708 $ 233,717 1 $ 40,000 $ 61,509,032 37,180 $ ( 95,023 ) $ 697,700 $ ( 58,570,167 ) $ 3,815,259 Issuance of Common Stock 5,769,231 $ 57,692 $ 5,942,308 6,000,000 Sales of Series E Preferred Shares 1,552,795 2,500,000 2,500,000 Stock Issued for Services 287,287 2,873 459,659 462,532 Stock Compensation - Vesting 1,219,062 1,219,062 Cancellation of Shares ( 112,500 ) $ ( 1,125 ) 1,125 — Other Comprehensive Income ( 2,486,399 ) ( 2,486,399 ) Net Loss ( 8,134,852 ) ( 8,134,852 ) Balance, December 31, 2024 — $ — 1,552,795 $ 2,500,000 29,315,726 $ 293,157 1 $ 40,000 $ 69,131,186 37,180 $ ( 95,023 ) $ ( 1,788,699 ) $ ( 66,705,019 ) $ 3,375,602 The accompanying notes are an integral part of these consolidated financial statements. 33 Table of Contents DYNARESOURCE, INC. CONSOLIDATED STATE MENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 8,134,852 ) $ ( 14,533,504 ) Adjustments to reconcile net income to cash used in operating activities Derivatives mark-to-market gain ( 905,174 ) ( 375,076 ) Deferred tax asset 211,698 ( 614,073 ) Depreciation and amortization 30,499 12,239 Accretion 18,260 — Right-of-use asset amortization 114,593 63,396 Stock based compensation 1,219,062 881,250 Operating cash flows before changes in operating assets and liabilities ( 7,445,914 ) ( 14,565,768 ) Change in operating assets and liabilities Accounts receivable ( 327,873 ) ( 155,831 ) Inventories 233,211 631,617 Foreign tax receivable ( 6,962,321 ) ( 6,847,708 ) Other assets ( 1,091,821 ) ( 1,853 ) Accounts payable 2,926,750 710,754 Accrued liabilities 4,653,964 2,169,128 Customer advances — 400,000 CASH FLOWS USED IN OPERATING ACTIVITIES ( 8,014,004 ) ( 17,659,661 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment ( 6,755 ) ( 115,273 ) CASH FLOWS USED IN INVESTING ACTIVITIES ( 6,755 ) ( 115,273 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from borrowing (Note 8) 12,000,000 — Proceeds from sale of common stock (Note 11) 6,000,000 5,000,000 Proceeds from sale of series E preferred stock (Note 11) 2,500,000 — Purchase of series A preferred stock (Note 11) — ( 1,250,000 ) Acquisition of treasury stock (Note 11) — ( 60,250 ) Payments of notes payable (Note 8) ( 11,900,000 ) — Lease Payments ( 104,718 ) ( 19,648 ) CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 8,495,282 3,670,102 Effects of foreign currency exchange ( 1,296,884 ) 531,407 NET DECREASE IN CASH ( 822,361 ) ( 13,573,425 ) CASH AT BEGINNING OF YEAR 5,603,713 19,177,138 CASH AT END OF YEAR $ 4,781,352 $ 5,603,713 $ — SUPPLEMENTAL DISCLOSURES Cash paid for interest $ 1,175,508 $ — Cash paid for income taxes $ — $ 200,000 NON-CASH TRANSACTIONS Conversion of accrued expenses into common stock $ 462,532 $ — Conversion of customer advance into note payable $ — $ 9,750,000 The accompanying notes are an integral part of these consolidated financial statements. 34 Table of Contents DYNARESOURCE, INC . NOTES TO THE CONSOLIDA TED FINANCIAL STATEMENTS December 31, 2024 and 2023 NOTE 1 – NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES Nature of Activities, History and Organization DynaResource, Inc. (the “Company” or “DynaResource”) was organized September 28, 1937, as a California corporation under the name of West Coast Mines, Inc. In 1998, the Company re-domiciled to Delaware and changed its name to DynaResource, Inc. The Company is in the business of acquiring, investing in, and developing precious metal properties, and the production of precious metals. 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. de C.V. (“DynaMéxico”), Mineras de DynaResource S.A. de C.V. (“DynaMineras”), and DynaResource Operaciones de San Jose De Gracia S.A. de C.V. (“DynaOperaciones”). 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 the Company’s wholly owned subsidiaries DynaMéxico, DynaMineras, DynaOperaciones and DynaAlica. All significant intercompany transactions have been eliminated. All amounts are presented in U.S. Dollars unless otherwise stated. Significant Accounting Policies 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. The accounting policies used conform to generally accepted accounting principles which have been consistently applied in the preparation of these consolidated financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. Management acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal accounting control is designed to assure, among other items, that: (1) recorded transactions are valid; (2) valid transactions are recorded; and (3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods presented. Basis of Presentation The Company prepares its 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. 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 35 Table of Contents required. 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) The definitions of Measured Mineral Resource, Mineral Reserve and Mineral Resource are set forth in SEC Regulation S-K, Item 1300 (“Reg. S-K, Item 1300”). Measured mineral resource is that part of a mineral resource for which quantity and grade or quality are estimated on the basis of conclusive geological evidence and sampling. The level of geological certainty associated with a measured mineral resource is sufficient to allow a qualified person to apply modifying factors in sufficient detail to support detailed mine planning and final evaluation of the economic viability of the deposit. Because a measured mineral resource has a higher level of confidence than the level of confidence of either an indicated mineral resource or an inferred mineral resource, a measured mineral resource may be converted to a proven mineral reserve or to a probable mineral reserve. Mineral reserve is an estimate of tonnage and grade or quality of indicated and measured mineral resources that, in the opinion of the qualified person, can be the basis of an economically viable project. More specifically, it is the economically mineable part of a measured or indicated mineral resource, which includes diluting materials and allowances for losses that may occur when the material is mined or extracted. Mineral resource is a concentration or occurrence of material of economic interest in or on the Earth’s crust in such form, grade or quality, and quantity that there are reasonable prospects for economic extraction. A mineral resource is a reasonable estimate of mineralization, taking into account relevant factors such as cut-off grade, likely mining dimensions, location or continuity, that, with the assumed and justifiable technical and economic conditions, is likely to, in whole or in part, become economically extractable. It is not merely an inventory of all mineralization drilled or sampled. As of December 31, 2024 , the Company continues to meets the definition of an exploration stage issuer which is defined as an issuer that has no material property with established proven and probable mineral reserves as defined by Regulation S-K, Item 1300. Segment Information 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 The Company considers all highly liquid debt instruments with an original maturity of three months or less to be cash equivalents. At times, cash balances may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. As of December 31, 2024 , the Company had $ 4,206,843 of deposits in United States banks in excess of the FDIC limit. In addition, the Company does no t have any cash equivalents as of December 31, 2024 and 2023 . The Company reduces this risk by maintaining such deposits at high quality financial institutions that management believes are creditworthy. Accounts Receivable and Allowances for Doubtful Accounts Accounts receivable consists of trade receivables which are recorded net of allowance for doubtful accounts for the sale of metal concentrate, as well as net of an embedded derivative based on mark-to-market adjustments for outstanding provisional invoices based on forward metal prices. The allowance for accounts receivable is recorded when receivables are considered to be uncollectible. As of December 31, 2024 and 2023, no allowance has been made. As of December 31, 2024 management believes all accounts receivable are fully collectable. Mined Tonnage Inventory Mined tonnage inventory represents ore that has been mined and is available for further processing. The stockpiles of mined tonnage are measured by estimating the number of tonnes added and removed from the stockpile, an estimate of the contained metals (based on assay data) and the estimated metallurgical recovery rates. 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 36 Table of Contents stockpile’s average cost per tonne. Stockpiles are carried at the lower of average cost of net realizable value. Net realizable value represents the estimated future sales price of the product based on current and long-term metal prices, less the estimated cost to complete production and bring the product the sale. Concentrate Inventory Concentrate inventory include metal concentrates located either at the Company’s facilities or in transit to its customer’s port. Concentrate inventories are carried at the lower of cost of production or net realizable value based on current metals prices. Foreign Tax Receivable Foreign tax receivable is comprised of recoverable value-added taxes (“IVA”) charged by the Mexican government on goods and services rendered. Under certain circumstances, these taxes are recoverable by filing a tax return. Amounts paid for IVA are tracked and held as receivables until the funds are received by the Company. Property and Equipment Substantially all property and equipment at the Company’s mines, including design, engineering, mine construction, and installation of equipment are expensed as incurred, as the Company has not established proven and probable reserves on any of its properties. Only certain types of mining equipment which have alternative uses or significant salvage value, may be capitalized without proven and probable reserves. Office furniture and equipment are depreciated on a straight-line method over estimated economic lives ranging from 3 to 5 years. Leasehold improvements, which relate to the Company’s corporate office, are being amortized over the term of the lease which is 52 months. Mine Development Costs Mine development costs are expensed as incurred and include engineering and metallurgical studies, drilling and other related costs to delineate an ore body, the removal of overburden to initially expose an ore body at open pit surface mines, and the building of access ways, shafts, lateral access, drifts, ramps and other infrastructure at underground mines. When proven and probable reserves (as defined by Reg. S-K, Item 1300) exist, development costs are capitalized. Mine development costs incurred either to develop new ore deposits, expand the capacity of operating mines, or to develop mine areas substantially in advance of current production would also be capitalized. Costs of start-up activities and costs incurred to maintain current production or to maintain assets are charged to operations as incurred. All capitalized costs would be amortized using the units of production method over the estimated life of the ore body based on recoverable ounces to be mined from proven and probable reserves. Certain costs to design and construct mining and processing facilities may be incurred prior to establishing proven and probable reserves. As no proven and probable reserves have been established on any of the Company’s properties, the design, construction and development costs are not capitalized at any of the Company’s properties. Mining Concessions The Company’s mining concessions include acquired interests in development and exploration stage properties and are considered tangible assets. The amount capitalized relating to the Company’s mining concessions represents its fair value at the time of acquisition. If it is determined that the deferred costs related to a property are not recoverable over its productive life, those costs will be written down to fair value as a charge to operations in the period in which the determination is made. The amounts at which mining concessions and the related costs are recorded do not necessarily reflect present or future values. The Company reviews and evaluates its long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Mineral properties are monitored for impairment based on factors such as mineral prices, government regulation and taxation, the Company’s continued right to explore the area, exploration reports, assays, technical reports, drill results and its continued plans to fund exploration programs on the property. 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 37 Table of Contents of the net book value over fair value. Fair value for operating mines is determined using a combined approach, which uses a discounted cash flow model for the existing operations and a market approach for the fair value assessment of exploration land claims. Future cash flows are estimated based on quantities of recoverable mineralized material, expected gold and silver prices (considering current and historical prices, trends and related factors), production levels, operating costs, capital requirements and reclamation costs, all based on life-of-mine plans. The term “recoverable mineralized material” refers to the estimated amount of gold or other commodities that will be obtained after considering losses during processing and treatment of mineralized material. In estimating future cash flows, assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of future cash flows from other asset groups. The Company’s estimates of future cash flows are based on numerous assumptions, and it is possible that actual future cash flows will be significantly different than the estimates, as actual future quantities of recoverable minerals, gold, and silver, commodity prices, production levels and costs and capital are each subject to significant risks and uncertainties. The recoverability of the book value of each property will be assessed annually for indicators of impairment such as adverse changes to any of the following: • estimated recoverable ounces of gold, silver or other precious minerals • estimated future commodity prices • estimated expected future operating costs, capital expenditures and reclamation expenditures A write-down to fair value would be recorded if the expected future cash flow is less than the net book value of the property, or when events or changes in the property indicate that carrying amounts are not recoverable. This analysis will be completed as needed. As of the date of this filing, no events have occurred that would require the write-down of any assets. As of December 31, 2024 and 2023 , no indications of impairment existed. Asset Retirement Obligation (“ARO”) The Company records a liability based on the best estimate of costs for site closure and reclamation activities that the Company is legally or contractually required to remediate. The provision for closure and reclamation liabilities is estimated using expected cash flows based on engineering and environmental reports and accreted to full value over time through periodic charges to income. 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 costs to decommission the plant and tailings pond at the end of the estimated live of the mines in operation as of December 31, 2023. As the Company is an exploration stage property that does not qualify for asset capitalization, the costs associated with the obligation are charged to operations. Changes in regulations or laws, any instances of non-compliance with laws or regulations that result in fines, or any unforeseen environmental contamination could result in a material impact to the amounts charged to operations for reclamation and remediation. Significant judgments and estimates are made when estimating the fair value of AROs. Expected cash flows relating to AROs could occur over long periods of time and the assessment of the extent of environmental remediation work is highly subjective. Considering all the factors that go into the determination of an ARO, the fair value of the AROs can materially change over time. Property Holding Costs Holding costs to maintain the property are expensed in the period they are incurred. These costs include security and maintenance expenses, lease and claim fees and payments, and environmental monitoring and reporting costs. Exploration Costs Exploration costs, including exploration, development, direct field costs and related administrative costs are expensed in the period incurred. Leases The Company adopted ASC 842, which requires recognition of a right-of-use asset and lease liability for all leases at the commencement date based on the present value of lease payments over the lease term. Additional qualitative and quantitative disclosures regarding the Company’s leasing arrangements are also required. The Company adopted ASC 842 prospectively and 38 Table of Contents elected the package of transition practical expedients that does not require reassessment of (1) whether any existing or expired contracts are or contain leases, (2) lease classification and (3) initial direct costs. In addition, the Company has elected other available practical expedients to not separate lease and non-lease components, which consist principally of common area maintenance charges, for all classes of underlying assets and to exclude leases with an initial term of 12 months or less. Transactions In and Translations Of Foreign Currency The functional currency for the subsidiaries of the Company is the Mexican Peso. As a result, the financial statements of the subsidiaries have been translated from Mexican Pesos into U.S. dollars using (i) year-end exchange rates for balance sheet accounts, and (ii) the weighted average exchange rate of the reporting period for all income statement accounts. Foreign currency translation gains and losses are reported as a separate component of stockholders’ equity and comprehensive income (loss). Foreign currency transactions are translated into the functional currency of the respective currency of the entity or division, using the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and losses resulting from the settlement of such transactions and from the remeasurement of monetary items denominated in foreign currency at period-end exchange rates are recognized in profit or loss. Non-monetary items that are not re-translated at period end are measured at historical cost (translated using the exchange rates at the transaction date), except for non-monetary items measured at fair value, which are translated using the exchange rates as at the date when fair value was determined. Gains and losses are recorded in the statement of operations and comprehensive income (loss). 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. dollar): December 31, 2024 December 31, 2023 Current exchange rate Pesos 20.86 16.97 Weighted average exchange rate for the year ended Pesos 18.33 17.23 The Company recorded currency transaction gains (losses) of $( 506,439 ) and $( 45,177 ) for the years ended December 31, 2024 and 2023 , respectively. Income Taxes 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. Uncertain Tax Position The Company is subject to income taxes in the U.S. and other foreign jurisdictions, with respect to which some of the outcome is uncertain. The evaluation of the Company’s uncertain tax positions involves significant judgment in the interpretation and application of GAAP and complex domestic and international tax laws. We establish reserves to remove some or all of the tax benefit of any of our tax positions at the time we determine that it becomes uncertain based upon one of the following conditions: (1) the tax position is not "more likely than not" to be sustained, (2) the tax position is "more likely than not" to be sustained, but for a lesser amount, or (3) the tax position is "more likely than not" to be sustained, but not in the financial period in which the tax position was originally taken. For purposes of evaluating whether or not a tax position is uncertain, (1) we presume the tax position will be examined by the relevant taxing authority that has full knowledge of all relevant information; (2) the technical merits of a tax position are derived from authorities such as legislation and statutes, legislative intent, regulations, rulings and case law and their applicability to the facts and circumstances of the tax position; and (3) each tax position is evaluated without consideration of the possibility of offset or aggregation with other tax positions taken. 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 39 Table of Contents or when a tax assessment is raised. The number of years subject to tax assessments varies depending on the tax jurisdiction. Any tax benefit that is or has been reserved because of a failure to meet the "more likely than not" recognition threshold would be recognized in income tax expense in the first interim period when the uncertainty disappears under any one of the following conditions: (1) the tax position is "more likely than not" to be sustained, (2) the tax position, amount, and/or timing is ultimately settled through negotiation or litigation, or (3) the statute of limitations for the tax position has expired. Comprehensive Income (Loss) ASC 220 “Comprehensive Income” establishes standards for reporting and display of comprehensive income and its components in a full set of general-purpose consolidated financial statements. The Company’s comprehensive income consists of net income (loss) and other comprehensive income (loss), consisting of unrealized net gains and losses on the translation of the assets and liabilities of its foreign operations. Revenue Recognition The Company follows ASC 606 “ Revenue from Contracts with Customers ”. The Company generates revenue by selling gold and silver concentrate material produced from its mining operations. The Company recognizes revenue for gold and silver concentrate production, net of treatment and refining costs, when it satisfies the performance obligation of transferring control of the concentrate to the customer. This is generally when the material is delivered to the customer facility for treatment and processing, as the customer has the ability (upon such delivery) to direct the use of and obtain substantially all the remaining benefits from the material and the customer has the risk of loss. The amount of revenue recognized is initially recorded on a provisional basis based on the contract price and the estimated metal quantities based on assay data. Adjustments to the provisional sales prices are made to take into account the mark-to-market changes based on the forward prices of metals until final settlement occurs. The changes in price between the provisional sales price and final sales price are considered an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable from the sale of the concentrate at the quoted metal prices at the time of delivery. The embedded derivative, which does not qualify for hedge accounting, is adjusted to market through revenue at final settlement. Market changes in the prices of metals between the delivery and final settlement dates will result in adjustments to revenues related to previously recorded sales of concentrate. 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, 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. Derivative Financial Instruments Certain warrants are treated as derivative financial liabilities. The estimated fair value, based on the Black-Scholes model, is adjusted on a quarterly basis with gains or losses recognized in the statements of operations and comprehensive income (loss). The Black-Scholes model is based on significant assumptions such as volatility, dividend yield, and expected term. Fair Value of Financial Instruments The Company’s financial instruments consist of cash, accounts receivable, accounts payable, note payable and installment notes payable and derivative liabilities. The carrying amount of cash, accounts receivable, accounts payable and note payable approximates fair value because of the short-term nature of these items. The carrying amount of installment notes payable debt approximates fair value due to the relationship between the interest rate on installment notes payable debt and the Company’s incremental risk adjusted borrowing rate. The fair value of derivative liabilities is based on the Black-Scholes model. Earnings (Loss) Per Share 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 40 Table of Contents earnings (loss) per share. Diluted earnings per share are computed using the weighted average number of shares and potentially dilutive common shares outstanding. Potentially dilutive common shares are additional common shares assumed to be exercised. Potentially dilutive common shares consist of stock warrants and convertible preferred shares and 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 2,942,695 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. 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, 2024 2023 Net loss attributable to common shareholders $ ( 8,369,151 ) $ ( 14,767,803 ) Shares: Weighted average number of common shares outstanding, Basic 24,680,167 22,705,923 Weighted average number of common shares outstanding, Diluted 24,680,167 22,705,923 Basic loss per share $ ( 0.34 ) $ ( 0.65 ) Diluted loss per share $ ( 0.34 ) $ ( 0.65 ) Related Party Transactions FASB ASC 850 "Related Party Disclosures" requires companies to include in their consolidated financial statements disclosures of material related party transactions. The Company discloses all material related party transactions. A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party. Significant Judgments, Estimates and Assumptions 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. These judgments, estimates and assumptions are regularly evaluated and are based on management’s experience and knowledge of the relevant facts and circumstances. While management believes the estimates to be reasonable, actual results could differ from those estimates and could impact future results of operations and cash flows. The areas which require significant judgment and estimates that management has made at the financial reporting date, that could result in a material change to the carrying amounts of assets and liabilities, in the event actual results differ from the assumptions made, relate to, but are not limited to the following: Significant judgments: 41 Table of Contents • the determination of income tax is inherently complex and requires making certain estimates and assumptions about future events; • quantitative and qualitative factors used in the assessment of impairment of the Company’s mineral property; • the analysis of resource calculations, drill results, etc. which can impact the Company’s assessment of impairment, and provisions, if any, for environmental rehabilitation and restoration; and • 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 In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” , which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. 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 Inventories are carried at the lower of cost or fair value and consist of mined tonnage, gravity-flotation concentrates, and gravity tailings (or, flotation feed material). Inventory balances as of December 31, 2024 and 2023, respectively, were as follows: 2024 2023 Mined Tonnage $ 1,406,448 $ 2,061,149 Gold-Silver Concentrates 169,944 28,045 Total Inventories $ 1,576,392 $ 2,089,194 42 Table of Contents NOTE 3 – PROPERTY AND EQUIPMENT Property and equipment consists of the following as of December 31, 2024 and 2023: 2024 2023 Leasehold improvements $ 21,274 $ 21,274 Office equipment 49,238 42,483 Office furniture and fixtures 24,453 24,453 Other 27,063 27,063 Sub-total 122,028 115,273 Less: Accumulated depreciation and amortization ( 42,738 ) ( 12,239 ) Total Property and Equipment $ 79,290 $ 103,034 Depreciation and amortization has been provided over each asset’s estimated useful life. Depreciation and amortization expense was $ 30,499 and $ 12,239 for the years ended December 31, 2024, and 2023 respectively. NOTE 4 – MINING 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 As of December 31, 2024 and 2023, the Company had the following accrued liabilities: December 31, December 31, 2024 2023 Accrued interest $ 2,221,219 $ 2,352,869 Accrued mining expenses 3,515,893 2,104,938 Accrued taxes 1,241,111 993,978 Other accrued liabilities 2,879,094 2,275,836 Total accrued liabilities $ 9,857,317 $ 7,727,621 NOTE 7 - DERIVATIVE LIABILITIES Warrants Issued With the Notes Convertible into Series D Preferred Stock In fiscal 2020, the Company closed a financing agreement with Golden Post Rail, LLC (“Golden Post”) and certain shareholders whereby the Company issued convertible promissory notes that bore interest at 10 % and were convertible into shares of Series D Senior Convertible Preferred Stock and common stock purchase warrants (“2020 warrants”) at an exercise price of $ 0.01 per share, with an expiry of ten years . These 2020 warrants contain anti-dilution provisions. See Note 11. 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 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 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). To measure fair value, the Company incorporates assumptions that market participants would use in pricing the asset or liability and utilizes market data to the maximum extent possible. 43 Table of Contents In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The Company considered the inputs in this valuation to be level 3 in the fair value hierarchy under ASC 820 and used the Black-Scholes model to determine the value of conversion feature of the Warrants issued with the notes convertible into Series D Preferred Stock based on the assumptions below: 2024 2023 Annual volatility rate 128 % 123 % Risk free rate 4.25 % 4.23 % Remaining term 5.37 years 6.37 years Fair value of common stock $ 1.00 $ 2.02 For the years ended December 31, 2024 and 2023, an active market for the Company’s common stock did not exist. Accordingly, the fair value of the Company’s common stock was estimated using a valuation model with level 3 inputs. The below table represents the change in the fair value of the derivative liability during the years ended December 31, 2024 and 2023. Year Ended 2024 2023 Fair value of derivative (warrants), beginning of year $ 1,797,341 $ 2,172,417 Exercise of warrants - - Change in fair value of derivative ( 905,174 ) ( 375,076 ) Fair value of derivative (warrants), end of year $ 892,167 $ 1,797,341 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”). Under the terms of the ACL and Amendment: • 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 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 $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; Month 2-11, 5% principal plus interest; and Month 12, final 50% principal plus interest. 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. 44 Table of Contents 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): (1) $ 9.35 advance on December 28, 2022. Settled on February 16, 2023 . (2) $ 9.60 advance on February 21, 2023. Settled on March 31, 2023 . (3) $ 9.20 advance on March 31, 2023. Settled on May 17, 2023 . (4) $ 9.85 advance on May 18, 2023. Settled on June 28, 2023 . (5) $ 10.0 advance on June 29, 2023. Settled on August 14, 2023 . (6) $ 10.75 advance on August 17, 2023. Settled on September 16, 2023 . (7) $ 9.75 advance on September 29, 2023. Converted to a one-year note payable on December 1, 2023. (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; Month 2-11, 5% principal plus interest; and Month 12, final 50% principal plus interest. 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: December 31, December 31, 2024 2023 Balance beginning of year $ 9,750,000 $ - Advances 12,000,000 — Conversion of ACL to Note Payable — 9,750,000 Principal Payments ( 11,900,000 ) — Balance end of year $ 9,850,000 $ 9,750,000 Interest expense for the year ended December 31, 2024 was $ 1,249,098 (2023- $ 108,098 ). 45 Table of Contents 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 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 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. As of June 2019, the Company ceased making monthly payments on the above noted Francisco Arturo concession notes and has petitioned the Hacienda for a reduction in the liability equal to the reduction in the Francisco Arturo concession above. For financial reporting purposes the Company continues to carry all notes at unpaid principal amount and accrues interest on a monthly basis. 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 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: Balance December 31, 2022 $ 1,968,251 Exchange Rate Adjustment 291,181 2023 Principal Payments — Balance December 31, 2023 2,259,432 Exchange Rate Adjustment ( 421,086 ) 2024 Principal Payments — Balance December 31, 2024 $ 1,838,346 NOTE 10 - ASSET RETIREMENT OBLIGATION 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: December 31, December 31, 2024 2023 Asset retirement obligation at beginning of year $ 198,468 $ - Additions to ARO liability 6,792 198,468 Accretion 18,260 — Asset retirement obligation at end of year $ 223,520 $ 198,468 NOTE 11– STOCKHOLDERS’ EQUITY 46 Table of Contents 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 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, 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. As of December 31, 2024 , dividends for the years ending December 31, 2017 through 2024 totaling $ 1,400,775 were in arrears. (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 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 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 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 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, 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 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. The 47 Table of Contents 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 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. Separate Series; Increase or Decrease in Authorized Shares . The shares of each series of Preferred Stock may vary from the shares of any other series thereof in any or all of the foregoing respects and in any other manner. The Board of Directors may increase the number of shares of Preferred Stock designated for any existing series by a resolution adding to such series authorized and unissued shares of Preferred Stock not designated for any other series. Unless otherwise provided in 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. Common Stock The Company is authorized to issue 40,000,000 common shares at a par value of $ 0.01 per share. These shares have full voting rights. At December 31, 2024 and December 31, 2023 , there were 29,315,726 and 23,371,708 common stock shares outstanding, respectively. No dividends were paid for the years ended December 31, 2024 and 2023, respectively. Preferred Rights In 2003, the Company issued “Preferred Rights” and received $ 784,500 for these rights. This has been reflected as “Preferred Rights” in stockholders’ equity in accompanying consolidated balance sheets. As of December 31, 2024 , $ 744,500 had been repaid, leaving a current balance of $ 40,000 and $ 40,000 as of December 31, 2024 and 2023, respectively. Stock Issuances 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 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. 48 Table of Contents At December 31, 2024 and 2023 , 37,180 and 37,180 treasury shares were held by the Company. Warrants 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: Weighted Weighted Average Average Exercise Remaining Number Price Contractual Intrinsic of Shares per share Life (Years) Value Balance at December 31, 2022 892,165 $ 0.01 7.37 Exercise of warrants — $ — Forfeiture of the warrants — $ — - Balance at December 31, 2023 892,165 $ 0.01 6.37 Exercise of warrants — $ — Forfeiture of the warrants — $ — - Balance at December 31, 2024 892,165 $ 0.01 5.37 Exercisable at December 31, 2024 892,165 $ 0.01 5.37 - 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. Options 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. Weighted Weighted Average Average Exercise Remaining Number Price Contractual Intrinsic of Shares per share Life (Years) Value Balance at December 31, 2022 — $ — — — Issuance of options — $ — — Exercise of options — $ — Forfeiture of the options — $ — Balance at December 31, 2023 — $ — — — Issuance of options 1,150,000 $ 2.88 — Exercise of options — $ — Forfeiture of the options — $ — Balance at December 31, 2024 1,150,000 $ 2.88 3.97 — 49 Table of Contents NOTE 12 – STOCK BASED COMPENSATION On December 28, 2022, the Company issued 1,500,000 shares of restricted Common Stock to certain key employees and consultants. The shares were 25 % vested at issuance and vest an additional 25 % on December 28, 2023, 2024, and 2025. 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, 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: Year Ended December 31, 2024 December 31, 2023 Annual volatility rate 127.93 % — Risk free rate 4.36 % — Expected life at issuance 5.0 — Fair Value of stock options $ 1.15 — 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: Year Ended December 31, 2024 December 31, 2023 Annual volatility rate 105.55 % — Risk free rate 4.42 % — Expected life at issuance 5.0 — Fair Value of stock options $ 1.38 — NOTE 13 – INCOME TAXES FASB ASC 740-10, Income Taxes, mandates the asset and liability approach to determine the income tax provision or benefit. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Income tax receivables and liabilities and deferred tax assets and liabilities are recognized based on the amounts that more likely than not will be sustained upon ultimate settlement with taxing authorities. 50 Table of Contents Developing the provision for income taxes and analysis of uncertain tax positions requires significant judgment and knowledge of federal and state income tax laws, regulations and strategies, including the determination of deferred tax assets and liabilities and, if necessary, any valuation allowances that may be required for deferred tax assets. The Company assess the realization of our deferred tax assets to determine whether an income tax valuation allowance is required. Based on all available evidence, both positive and negative, and the weight of that evidence to the extent such evidence can be objectively verified, we determine whether it is more likely than not that all or a portion of the deferred tax assets will be realized. The Company considers many factors when evaluating our uncertain tax positions, and such judgments are subject to periodic review. Tax benefits associated with uncertain tax positions are recognized in the period in which one of the following conditions is satisfied: (1) the more likely than not recognition threshold is satisfied; (2) the position is ultimately settled through negotiation or litigation; or (3) the statute of limitations for the taxing authority to examine and challenge the position has expired. Tax benefits associated with an uncertain tax position are derecognized in the period in which the more likely than not recognition threshold is no longer satisfied. December 31, December 31, 2024 2023 Deferred Tax Assets: Federal net operating loss carryforwards $ 1,824,870 $ 1,389,426 Foreign net operating loss carryforwards 5,377,469 6,288,045 Lease liability 173,284 195,275 Accrued bonus — 105,240 Other 174,426 185,867 Gross Deferred Tax Asset 7,550,049 8,163,853 Valuation allowance ( 3,215,387 ) ( 3,468,858 ) Total Deferred Tax Asset 4,334,662 4,694,995 Deferred Tax Liabilities: Right of use asset ( 154,188 ) ( 178,253 ) Other ( 462,294 ) ( 586,863 ) Total Deferred Tax Liabilities ( 616,482 ) ( 765,116 ) Net Deferred Tax Asset $ 3,718,180 $ 3,929,879 Balance Sheet Presentation: Deferred Tax Asset $ 4,025,957 $ 4,264,115 Deferred Tax Liability 307,777 334,236 Net Deferred Tax Asset $ 3,718,180 $ 3,929,879 The Company's pre-tax income (loss) by jurisdiction was as follows for the years ending December 31, 2024 and 2023 December 31, December 31, 2024 2023 Domestic $ ( 770,536 ) $ ( 3,925,863 ) Foreign ( 7,818,426 ) ( 11,540,380 ) Total $ ( 8,588,962 ) $ ( 15,466,243 ) The provision for income taxes for continuing operations for the year ended December 31, 2024 and 2023 consists of the following 51 Table of Contents December 31, December 31, 2024 2023 Current income taxes Federal $ — $ ( 148,666 ) State — — Foreign 456,683 ( 170,000 ) Total current income taxes $ 456,683 $ ( 318,666 ) Deferred income taxes Federal $ ( 348,996 ) $ ( 983,296 ) State — — Foreign ( 155,218 ) 369,223 Total deferred income taxes $ ( 504,214 ) $ ( 614,073 ) Total income tax benefit $ ( 47,531 ) $ ( 932,739 ) A reconciliation between the amount of reported income tax expense (benefit) and the amount computed by multiplying income from continuing operations before income taxes by the statutory federal income tax rate is shown below. Income tax expense for the year ended December 31, 2024 includes state minimum taxes, permanent differences, and deferred tax assets for which the valuation allowance has been released. A corresponding tax benefit is included for the year ended December 31, 2024 to reflect the release in the valuation allowance. December 31, December 31, 2024 2023 Tax Expense at statutory federal rate of 21% $ ( 1,803,682 ) $ ( 3,247,911 ) Permanent differences ( 198,295 ) ( 118,773 ) Foreign rate differential ( 703,658 ) ( 1,038,635 ) Return to provision 2,307,583 ( 274,501 ) NOL Expieration 199,427 — Mining Tax 406,579 — Change in valuation allowance ( 253,471 ) 3,468,858 Statutory to GAAP ( 2,791 ) 278,223 Other 777 — Income tax benefit $ ( 47,531 ) $ ( 932,739 ) The net deferred tax asset and benefit for the current year is generated primarily from cumulative net operating loss carryforward, which totals approximately $ 26.5 million at December 31, 2024. December 31, December 31, 2024 2023 United States Expiring 2029 to 2037 $ - $ - United States Indefinite Limited to 80% 8,689,855 6,578,856 Foreign NOLs 17,924,896 21,742,318 Total Net Operating Loss Carryforward $ 26,614,751 $ 28,321,174 At December 31, 2024, the carryforwards available to offset US federal future taxable income consisted of net operating loss (“NOL”) carryforwards of approximately $ 8.7 million pre-tax, all of which, have no expiration date. Future NOL utilization will be subject to the 80-percent of taxable income limitation, as all remaining NOLs have been generated after 2017 and the passage of the Tax Cuts and Jobs Act of 2017. The Company’s Mexico net operating losses of $ 17.9 million pre-tax are subject to a ten-year carryforward period and the Company anticipates utilizing its Mexico NOL in future years before expiration. During the year ended December 31, 2022, the valuation allowance was released. The Company believes a full valuation allowance against the net deferred tax asset is no longer warranted based on the positive evidence in recent years. Such positive evidence includes no longer being in a three-year cumulative losses, the rising prices in gold, utilization of current year tax attributes, and projected taxable income in the future. 52 Table of Contents 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 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. The Company is no longer subject to US federal, state and local tax examinations by tax authorities for years prior to fiscal year 2021. The Company began utilizing its NOL in 2021. The statute of limitations began when the Company filed its 2021 US Federal Tax Return. The Company is no longer subject to Mexican tax examinations for years prior to fiscal year 2017. The Company has not provided U.S. income taxes and foreign withholding taxes, on its cumulative earnings for certain non-U.S. subsidiaries, because such earnings are intended to be indefinitely reinvested. Determination of the amount of unrecognized deferred tax liability for temporary differences related to investments in these non-U.S. subsidiaries that are essentially permanent in duration is not practicable. NOTE 14 – COMMITMENTS AND CONTINGENCIES Legal Update 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. On March 14, 2014, Goldgroup Resources, Inc. ("Goldgroup") filed for arbitration in the United States with the American Arbitration Association (“AAA”), seeking monetary and nonmonetary relief under an Earn In/Option Agreement. On August 25, 2016, the AAA issued a ruling in favor of Goldgroup against the Company and DynaMéxico (the “Arbitration Award”). On May 9, 2019, the United States District Court for the District of Colorado (the “Colorado U.S. District Court”) confirmed the Arbitration Award. The Company fulfilled its obligations under the Arbitration Award prior to the beginning of 2023. On March 5, 2024, the Colorado U.S. District Court issued an Order denying requests for additional relief by both the Company and Goldgroup and stating that the case is closed. DynaResource de Mexico SA de CV Legal Update & Disclosure On March 3, 2023, Goldgroup Resources Inc. (“Goldgroup”) filed a formal notice with the México Federal Legal Authorities, which confirmed Goldgroup’s complete withdrawal of all legal claims in Mexico and under Mexican law against DynaResource de México SA de CV. Goldgroup’s complete legal withdrawal is the result and culmination of 7 years of legal actions undertaken in Mexico by DynaMéxico. Accordingly, all matters before the courts in México with respect to DynaMéxico and Goldgroup Resources Inc. are fully resolved and are no longer subject to appeal. Consequences of the México legal ruling and the Goldgroup legal withdrawal: 1. 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. Goldgroup Resources’ challenges to that award have been fully denied and the damages award is final. 2. Goldgroup’s challenges to DynaMéxico’s share ownership have also been fully denied and consequently, under Mexican law, Goldgroup owns no shares in DynaMéxico. Mercuria Energy Trading S.A vs Mineras de DynaResource S.A. de C.V. In 2020, Mercuria Energy Trading, S.A. (“Mercuria”) initiated an arbitration proceeding against Mineras de Dynaresource, S.A. de C.V. (“Mineras”), arising out of the earlier-terminated supply agreement between the parties. In January 2022, The arbitration panel awarded Mercuria the sum of US$1,822,674, plus interest at 2% over the quarterly compounded USD 3- month LIBOR rate, from 53 Table of Contents February 2020 forward. In August 2022, the panel also assessed costs of the arbitration proceeding against Mineras, in the aggregate amount of £ 376,232. DynaResource has accrued $1,000,000 for the arbitration award and related costs. The Company notes the following: since Mineras is a company of Mexican nationality, under Mexican law Mineras has the right to legally oppose the recognition and enforcement of the award to Mercuria, the assessment of any costs, and any supplemental award. Concession Taxes The Company is required to pay taxes in México in order to maintain mining concessions owned by DynaMéxico. Additionally, the Company is required to incur a minimum amount of expenditures each year for all concessions held. The minimum expenditures are calculated based upon the land area, as well as the age of the concessions. Amounts spent in excess of the minimum may be carried forward indefinitely over the life of the concessions and are adjusted annually for inflation. Based on Management’s recent business activities and current and forward plans and considering expenditures on mining concessions from 2002-2017 and continuing expenditures in current and forward activities, the Company does not anticipate that DynaMéxico will have any difficulties meeting the minimum annual expenditures for the concessions ($388 – $2,400 Mexican Pesos per hectare). DynaMéxico retains sufficient carryforward amounts to cover over 10 years of the minimum expenditure (as calculated at the 2017 minimum, adjusted for annual inflation of 4%). Leases In addition to the surface rights held by DynaMéxico pursuant to the Mining Act of México and its Regulations ( Ley Minera y su Reglamento ), DynaMineras maintains access and surface rights to the SJG Project pursuant to the 20 -year Land Lease Agreement. The 20 Year Land Lease Agreement with the Santa Maria Ejido Community surrounding San Jose de Gracía was dated January 6, 2014 and continues through January 2033. It covers an area of 4,399 hectares surrounding the main mineral resource areas of SJG and provides for annual lease payments on January 1st each year by DynaMineras of $ 1,359,443 pesos adjusted for inflation based on the Mexico minimum wage increase commencing in 2014. Rent was $ 5,296,950 Pesos (approx. $ 289,000 USD) for the year ended December 31, 2024 . The Land Lease Agreement provides DynaMineras with surface access to the core resource areas of SJG ( 4,399 hectares ), and allows for all permitted mining and exploration activities from the owners of the surface rights (Santa Maria Ejido community). The Company leases office space for its corporate headquarters in Irving, Texas. In February 2023, the Company entered into a fifty-two-month extension of the lease with additional office space. As part of the agreement the lease term commenced and the Company received four months free rent upon completion of the finish out of the new space. The expansion was completed and the Company moved into the office space affective August 1, 2023 The Company makes tiered lease payments on the 1st of each month. The Company determines if a contract is or contains a lease at inception. 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. The Company’s leases do not have any residual value guarantees or restrictive covenants. As the implicit rate is not readily determinable for most of the Company’s lease agreements, the Company uses an estimated incremental borrowing rate to determine the initial present value of lease payments. These discount rates for leases are calculated using the Company's interest rate of promissory notes. The Company’s components of lease expense are as follows: Year Ended December 31, 2024 Operating Lease – Office Lease $ 112,749 Operating Lease – Ground Lease 96,896 Short Term Lease Costs 14,967 Variable Lease Costs 192,016 TOTAL $ 416,628 54 Table of Contents Weighted average remaining lease term and weighted average discount rate are as follows: Weighted Average Remaining Lease Term (Years) – Operating Leases 5.96 Weighted Average Discount Rate – Operating Leases 12.50 % Estimated future minimum lease obligations are as follow for the years ending December 31: YEAR 2024 $ 221,426 2025 226,903 2026 221,722 2027 109,058 2028 112,329 Thereafter 357,616 Total 1,249,054 Less Imputed Interest ( 423,893 ) OPERATING LEASE LIABILITY $ 825,161 NOTE 15 – FAIR VALUE OF FINANCIAL INSTRUMENTS The ASC guidance for fair value measurements and disclosure establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below: Level 1 Inputs – Quoted prices for identical instruments in active markets. Level 2 Inputs – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3 Inputs – Instruments with primarily unobservable value drivers. 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. Quoted Prices in Active Markets For Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Fair Value Measurement at December 31, 2024: (Level 1) (Level 2) (Level 3) Liabilities: Derivative Liabilities $ 892,167 - - $ 892,167 Totals $ 892,167 $ - $ - $ 892,167 Fair Value Measurement at December 31, 2023: Liabilities: Derivative Liabilities $ 1,797,341 - - $ 1,797,341 Totals $ 1,797,341 $ - $ - $ 1,797,341 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. 55 Table of Contents NOTE 16 – CONCENTRATIONS For the years ended December 31, 2024 and 2023 , one customer accounted for 100 % of revenue and accounts receivable. NOTE 17 - SEGMENTED INFORMATION 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: Mexico United States Total December 31, 2024 Mining concessions $ 4,132,678 $ — $ 4,132,678 Property and equipment, net — 79,290 79,290 Current assets 7,591,704 4,578,998 12,170,702 Other assets 19,395,437 2,138,285 21,533,722 Total assets $ 31,119,819 $ 6,796,573 $ 37,916,392 December 31, 2023 Mining concessions $ 4,132,678 $ — $ 4,132,678 Property and equipment, net — 103,034 103,034 Current assets 8,475,858 5,669,642 14,145,500 Other assets 15,271,752 1,785,386 17,057,138 Total assets $ 27,880,288 $ 7,558,062 $ 35,438,350 Year Ended Year Ended Year Ended December 31, 2024 December 31, 2023 Total Revenue for the year - Mexico $ 46,503,016 $ 35,573,194 Total Revenue for the year - United States - - Total Revenue for the year $ 46,503,016 $ 35,573,194 Year Ended Year Ended Year Ended December 31, 2024 December 31, 2023 Total comprehensive income (loss) for the year - Mexico $ ( 10,196,733 ) $ ( 11,249,628 ) Total comprehensive income (loss) for the year - United States ( 424,518 ) ( 2,698,254 ) Total comprehensive income (loss) for the year $ ( 10,621,251 ) $ ( 13,947,882 ) NOTE 18 – RELATED PARTY TRANSACTIONS 56 Table of Contents During the years ended December 31, 2024 and 2023 , the Company paid or accrued $ 312,500 and $ 370,000 in management fees to its directors. Included in accounts payable at December 31, 2024 is $ 412,500 due to related parties. Restricted Stock Awards 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 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 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. 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, 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. 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. 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: 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. 57 Table of Contents ITEM 9. CHANGES IN AND DISA GREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None.