Item 7. Management’s Discussion and Analysis
ITEM 7. MANAGEMENT’S DISCUSSION AND A NALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company
The Company is a minerals investment, production, and exploration company, currently advancing its high-grade SJG mine in Mexico through its operating subsidiary, DynaMéxico. Activities are focused on exploration, technical evaluation, and project development aimed at expanding the mineral resource base.
The Company conducts operations in Mexico through its wholly-owned subsidiary, DynaMéxico. As of the date of this Annual Report on Form 10-K, the Company owns 100% of the outstanding shares of DynaMéxico, which in turn claims an ownership interest in the mining concessions, equipment, camp, and related facilities which comprise the SJG mine.
In addition to advancing the SJG mine, the Company has also focused on strengthening its corporate governance practices, with the objective of meeting the listing requirements of additional stock exchanges in the United States and/or Canada.
Project Improvements, Expansion and Increased Output
Since 2015, the Company has carried out limited site-scale processing and operational activities at the SJG mine to support its exploration and evaluation programs. These activities have been directed toward enhancing the technical understanding of the deposit, optimizing on-site infrastructure, and advancing project development. In 2022, the Company expanded its exploration efforts at the SJG mine with the objective of increasing its mineral resource base, primarily targeting gold mineralization.
From initial small-scale operations averaging 100 tons per 24-hour operating day in 2015, throughput has steadily increased, reaching an average of approximately 700 tons per day in 2025. In 2023 alone, daily processing volumes rose by 30%, from 550 tons to 700 tons per day.
In 2026, the Company expects to operate at an average daily throughput of approximately 800 tons per day, representing management’s target operating rate assuming approximately 90% availability. The processing facility has a maximum instantaneous throughput capacity of approximately 900 tons per day.
SJG Mine TRS
As discussed above, on May 20, 2025, the Company filed with the SEC the TRS for the SJG mine in Sinaloa, Mexico. The TRS includes the Company’s initial Mineral Reserve Estimate, which outlines a high-grade Proven and Probable Mineral Reserve of 250,000 gold ozs for the SJG mine. This initial Mineral Reserve Estimate and TRS was prepared by the independent firm P&E Mining Consultants Inc (“P&E”), and process plant review and operations aspects by D.E.N.M. Engineering Ltd.
Highlights Include:
• Proven & Probable Mineral Reserves of 1,607 k tonnes at 4.91 g/t gold, totaling 253,000 gold ounces (see Table 1).
• Indicated Mineral Resource of 286 k tonnes at 6.74 g/t gold and Inferred Mineral Resource of 97 k tonnes at 4.37 g/t gold. (see Table 2).
• Life of Mine of 7-years based on current Mineral Reserves with excellent potential to extend along strike and adjacent to the existing underground mine infrastructure and in the wider SJG mine property.
• After-tax net present value (“NPV”) of the SJG mine is estimated at $84.4 million ($110.0 million pre-tax) under baseline scenarios of 5% discount rate and $2,500/oz Au. At a $3,000/oz gold price the after-tax NPV is estimated at $133.3 million ($183.6 million pre-tax).
• An Operating Cash Cost of $1,327 (US$/oz Au Eq) and an All-in Sustaining Cost of $1,720 (US$/oz Au Eq).
• Significant Upside - Gold price sensitivity with conservative pricing assumption ($2,500 oz Au ~25% below current spot gold price) used in the TRS.
• Growth Potential – Mineral Reserves / Mineral Resources defined for only three of the mineralized structures in the SJG mine property, which historically hosted mining on a total of 20 discrete mineralized structures.
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Mineral Reserves
The Mineral Reserves and Mineral Resource for the SJG mine are as follows;
Table 1: Mineral Reserves
Mineral Reserve Estimate (1-9)
Reserve Class
Tonnes (k)
Grade (g/t Au)
Contained Metal (koz Au)
Proven
1,114
5.23
187.2
Probable
493
4.18
66.3
Proven & Probable 9
1,607
4.91
253.5
Notes:
1. Mineral Reserves are based on Measured and Indicated Mineral Resource Classifications only.
2. Mineral Reserves are reported using the 2014 CIM Definition Standards and 2019 Best Practices Guidelines and have an effective date of March 24, 2025.
3. Mineral Reserves are defined within mine plans and incorporate mining dilution and ore losses.
4. Underground Mineral Reserves are based on metal price of US$2,500/oz Au and are constrained within a mine design, and use process plant recoveries varying between 76-80% for Au
5. An Underground economic cut-off value of US$140/t is estimated to differentiate ore from waste and is based on cost assumptions of US$99/t for mining US$23/t processing, and US$18/t site general and administrative. Mineralized material above a cut-off of $90/t that is planned to be mined adjacent to economic material is identified as Marginal ore, as the revenue it generates exceeds the additional costs associated with haulage, processing and backfilling the material versus leaving it in the stope as backfill.
6. Smelter terms result in an average value paid per ounce of gold of 90.53% of the value of the gold in concentrate, after accounting for all contract terms.
7. The provided LOM block models do not track deleterious elements noted in the smelter terms, which could reduce the payable value of the concentrate. However, DynaResource asserts that no penalties of this nature have historically been assessed on any payment invoice from the existing concentrate buyer.
8. Totals may not sum due to rounding.
9. Mineral Reserves derived from marginal material total 312 kt at 2.03 g/t Au for a total contained metal content of 20.3 koz.
Mineral Resources
Table 2: Mineral Resources
Mineral Resource Estimate at 2.0 g/t Au Cut-off (1-6)
Zone
Classification
Tonnes
(k)
Au
(g/t)
Au
(koz)
Metallurgical
Recovery
San Pablo/La Mochomera
Indicated
286
6.74
62
80 %
Inferred
51
4.29
7
Tres Amigos
Inferred
46
4.45
7
Total
Indicated
286
6.74
62
Inferred
97
4.37
14
Notes:
1. The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.
2. The Inferred Mineral Resource in this estimate has a lower level of confidence than that applied to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It can be reasonably expected that the majority of the Inferred Mineral Resource could be upgraded to an Indicated Mineral Resource with continued exploration.
3. The Mineral Resource is estimated using S-K 1300.
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4. Mined areas as of December 31, 2024, were depleted from the block models.
5. Mineral Resources are exclusive of Mineral Reserves.
6. All numbers are rounded.
Economic Analysis
For the current 7 year mine life exploiting the Tres Amigos, San Pablo and La Mochomera ore bodies the following were the key economic results from the study.
Table 3: Key Economic Parameters
KEY ECONOMIC PARAMETERS
Parameter
Amount
Production mine life (years)
7
Production rate (tpd)
630
Production rate (ktpa)
230
Total production (kt)
1,607
Gold grade (g/t)
4.91
Gold process recovery (%)
79.9
Gold smelting/refining (%)
94
Gold payable (koz)
190
Gold Equivalent payable (koz)
190
Net Revenue ($M)
463.6
Sustaining Capital Costs ($M)
81.6
Operating Cost ($/t processed)
155.85
Operating Cost ($M)
250.4
Operating Cash Cost (US$/oz AuEq)
1,327
All-in Sustaining Cost (US$/oz AuEq)
1,720
Pre-Tax Cash Flow ($M)
131.6
Pre-Tax NPV (5% discount) ($M)
110.0
Income Taxes ($M)
32.1
After-Tax Cash Flow ($M)
99.5
After-Tax NPV (5% discount) ($M)
84.4
Sensitivity Analysis
The after-tax NPV sensitivities to ±20% changes in gold metal price, gold head grade, gold metallurgical recoveries, operaing expenses (“OPEX”) and capital expenses (“CAPEX”) are presented in Figure 1 and Table 4 below. The after-tax base case NPV is most sensitive to the gold metal price, followed by gold metallurgical recoveries and gold head grades, followed by OPEX, and then CAPEX.
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Figure 1: After-Tax NPV @ 5% Sensitivity Parameter Values
Table 4: After-Tax NPV @5% Sensitivity Graph
EXTENDED GOLD PRICE AFTER-TAX NPV SENSITIVITY ANALYSIS
Gold Price (US$/oz)
2,000
(80%)
2,250
(90%)
2,500
(100%)
2,750
(110%)
3,000
(120%)
After-Tax Project NPV @5% (in millions)
27.5
58.3
84.4
110.4
133.3
The SJG mine exhibits strong leverage to gold prices, especially with long-term gold price expectations exceeding the base case assumptions made in this Annual Report on Form 10-K. At current spot prices above $3,200 per gold ounce, after tax NPV would be expected to materially exceed $133.3 million.
Results for the Years Ended December 31, 2025 and 2024
Summary of Site Based Processing and Operational Activity, 2018 to 2025:
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
2025
260,694
3.46
73.69
%
21,393
20,848
In 2025, on-site operational activities at SJG mine resulted in the processing of 260,694 tons of material and the production of approximately 21,393 gross Oz Au. After dry weight adjustments at settlement terms with the buyer, approximately 20,848 Oz Au were sold.
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Quarterly Results for the Three and Twelve Months Ended December 31, 2025 and 2024:
Three Months Ended
Year Ended
Key Operating Information
Unit
December 31, 2025
December 31, 2024
December 31, 2025
December 31, 2024
Operating Data
Ore mined
t
74,984
59,490
287,878
233,782
Mining rate
tpd
815
647
789
639
Ore Milled
t
65,275
67,670
262,224
257,676
Mill Throughput
tpd
710
736
718
704
Grade
g/t
3.20
4.12
3.46
4.07
Recovery Au
%
75.68
%
75.58
%
73.69
%
76.24
%
Gold Ounces Produced
oz
5,080
6,775
21,393
25,677
Gold Ounces Sold
oz
4,767
6,897
20,848
22,003
(1) Gold concentrate sold during the period is not equal to gold concentrate produced 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 processing facility is a result of the planned reduction of certain high-grade zones in accordance with the SJG mine plan, as well as higher dilution experienced in the processed material. The increase in processed tonnage at the SJG mine 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.
2025 HIGHLIGHTS
Operational Performance Overview
During Q4 2025, the Company continued to advance the optimization program at the SJG mine. This program is focused on increasing process plant throughput and recoveries, improving maintenance and equipment utilization, and ultimately enhancing operational efficiencies and profit margins at the SJG mine.
Operational results for Q4 2025 showed improved performance across several critical operational metrics (particularly in costs) due to the ongoing optimization program. The average underground development was 1,057 meters per month in Q4 2025 (1,267 in Q3 2025), compared to 383 meters per month in Q4 2024. This increase allowed the SJG mine to access over 20 production stopes. Expanded development work also led to the discovery of two new mineralized veins – one at the Tres Amigos mine (named Victoria) and one at La Mochomera (named 532) which are currently being mined as additional high-grade ore sources. Process plant reliability also improved. Electrical refurbishment and preventative maintenance programs resulted in ball mill availability averaging 96% for Q4 2025 compared to 94% Q3 2025.
A construction work program to establish a primary gravity gold circuit with the installation of three new Falcon gravity concentrators (the “Falcon” units) was completed in Q3 2025 with commissioning completed in early Q4 2025. These Falcon units were installed after the ball mills to recover the significant portion of free gold available in the San Pablo, San Pablo Sur and La Mochomera deposits. In addition, the process plant at the SJG mine has another Falcon unit already installed on the tailings circuit. The aim of the installation of these Falcon units is to boost gold recoveries improving operational efficiency and SJG mine’s economics, especially in the current higher priced gold environment.
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Milled ore for Q4 2025 was 65,275 tons (approximately 710 tons per day), a 4% increase from the Q3 2025 production average of 682 tons per day. With the current high ball mill availability, the Company is evaluating cost-effective strategies to utilize additional processing capacity of approximately 100 tons per day. Gold metal recoveries for the quarter averaged 75.69%, an increase from the 73% gold recovery achieved in Q3 2025, primarily due to the installation and commissioning of the Falcon units.
During Q4 2025, metal production totaled 1,633 ounces of gold in October, 1,615 ounces in November, and 1,832 ounces in December. Total metal production for Q4 2025 was 5,080 ounces of gold, above Q3 2025 production of 4,830 ounces. The average gold feed grade was 3.20 g/t for Q4 2025, and for the full year 2025, the average gold feed grade was 3.46 g/t.
Mine development for Q4 2025 was on budget with 3,172 meters of development completed, compared to 3,013 meters in Q3 2025. The completion of new development drifts enabled the Company to maintain more than 20 stopes in production by the end of the quarter and the end of the year. This additional mining flexibility is expected to positively impact ore tonnage and grades in the coming months in 2026. The Company has also completed a capital works program to enhance mine ventilation across all three mines which included connecting the La Mochomera and San Pablo Sur mines which has had an immediate impact on the working environment. Improved ventilation time has resulted in an improvement in working conditions and faster re-entry times following blasting activities. Planning for a central Raise Bore ventilation shaft was cancelled due to unfavorable geotechnical conditions and this planned ventilation location was moved to Palos Chinos. This capital works program will involve approximately 100 meters of decline development which, in addition to helping ventilation will bring mine development closer to the Purisima historical works. Numerous exploration targets have been identified in this southern area of the mineral field. This ventilation development will also be a platform for underground exploration.
Detailed activities from the four main deposits include:
Tres Amigos
Original mine planning at Tres Amigos anticipated closure by the end of Q1 2025. However, geological reinterpretations and targeted short exploration drifts identified two additional mineralized structures – the Victoria and Alexa veins – located within 40 meters of existing underground infrastructure.
To date approximately 40,000 tons of high-grade ore have been extracted from this high-grade structure. In addition, a new ore drive was completed on the upper levels of the Tres Amigos North Zone which is an area well known for free gold occurrences, providing access to a new high-grade ore face. Mining from this area in Tres Amigos totaled 17,000 tons contributing to Q4 2025 production and is expected to continue throughout 2026. This new access will also enable future diamond drilling to test the north and south extensions of the deposit, with the goal of increasing inventory.
San Pablo Viejo and San Pablo Sur
Throughout Q4 2025, the Company continued mining multiple faces at the San Pablo deposit while advancing development toward the deeper southern extensions.
San Pablo Viejo and San Pablo Sur are expected to remain the primary sources of gold production through 2026 and 2027, with additional upside potential beyond that horizon. Particularly promising is the South Extension at the 500 level, which could yield high-grade (“Bonanza”-style) gold mineralization in the short to mid-term. Ongoing development efforts are positioning the mine for continued growth, including expansion deeper into the La Mochomera vein system.
La Mochomera
The La Mochomera vein is expected to be a significant source of gold production in 2026 and 2027, with especially promising high-grade potential at depth. During Q1 2025, development activities intersected a previously unrecognized high-grade mineralized structure, now designated as the “532 Vein”. The significance and potential of this new discovery are currently being evaluated with approximately 3,000 tons of high-grade material extracted from this vein.
Palos Chinos
Palos Chinos is an ore body which the Company exposed in January 2025 from the La Mochomera underground infrastructure with the first ore being extracted in January 2025. By the end of Q4 2025, the Company had completed 4 development levels on this vein and mined 3,500 tons of ore. In 2026, this ore body will be an important source of high-grade ore.
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Results for the Years Ended December 31, 2025 and 2024
REVENUE: Revenue increased approximately 26% to $58,467,565 for the year ended December 31, 2025 from $46,503,016 for the year ended December 31, 2024. This was primarily due to an increase in net revenue per ounce from $2,113 to $2,804, partially offset by a decrease in gold ounces sold.
OPERATING COSTS: Operating costs for the year ended December 31, 2025 and 2024 were $40,223,275 and $47,898,208, respectively. The cost decrease for year ended December 31, 2025 reflected $9.0 million in capitalized mine development costs, and $2.6 million in property, plant and equipment incurred beginning January 2025 following the issuance of the Company’s Maiden Mineral Reserve Estimate under Reg. S-K 1300 and the resulting change to the Company’s capitalization policies. These costs were expensed as operating costs during 2024.
DEPRECIATION AND DEPLETION: Depreciation and depletion expense for the year ended December 31, 2025 and 2024 were $964,295 and $Nil, respectively. With the Company’s transition from Exploration Stage to Production Stage under S-K 1300, the Company began capitalizing mine development costs and commenced depreciation and depletion charges on a units-of- production basis.
GENERAL AND ADMINISTRATIVE EXPENSES : General and administrative expenses for the years ended December 31, 2025 and 2024 were $6,192,509 and $4,157,425 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, accounting, and legal expenses. Increases to general and administrative expenses in 2025 primarily relate to an increase in consulting and professional fees related to the Company’s legal matters, together with increased bonus expense.
STOCK-BASED COMPENSATION EXPENSE: Stock-based compensation expense was $1,249,459 and $1,219,062 for the years ended December 31, 2025 and 2024, respectively and was related to the vesting of restricted stock awards issued in 2024 combined with shares awarded in 2025.
ACCRETION EXPENSE: Accretion expense for the year ended December 31, 2025 and 2024 was $42,004 and $18,260, respectively. The Company began accreting its asset retirement obligation (“ARO”) on January 1, 2024, related to estimated costs to decommission the milling plant and tailings pond at the estimated life of the mines in operation at the establishment of the ARO in 2023 as a result of the expansion of the milling operation.
OTHER EXPENSE: Other income (expense) for the years ended December 31, 2025 and 2024 was $471,590 and $1,247,352 respectively. Included in 2025 was interest expense of $1,613,836, mark-to-market loss on the derivative liability of $356,863, currency translation gain of $5,139,258, and other expense of $3,640,149. 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.
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, 2025 and 2024 consisted of unrealized foreign currency translation gains (losses) of $(8,531,837) and $(2,486,399), respectively.
Liquidity and Capital Resources
As of December 31, 2025, the Company had negative working capital of $31,735,708, a decrease of $13,383,323 from the working capital maintained by the Company of negative $18,352,385, as of December 31, 2024. The primary reasons for the decrease is related to a decrease in cash related to the Company’s net loss, reclassification of a portion of the Company’s foreign tax receivable to long term and an increase in short term trade liabilities.
Cash from operations for the year ended December 31, 2025 was $5,757,148 compared to net cash used of $8,014,004 during the year ended December 31, 2024. The improvement in the cash flow from operations was primarily attributable to the Company’s income generated in 2025, driven by increased revenue and lower mine operating costs.
Cash used in investing activities for the year ended December 31, 2025 totaled $11,526,369 compared to $6,755 during the year ended December 31, 2024. The increase reflected $9.03 million in capitalized mine development costs incurred beginning January
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2025 following the issuance of the Company’s Initial Mineral Reserve Estimate under S-K 1300 and the resulting change to the Company’s capitalization policies.
Cash provided by financing activities for the year ended December 31, 2025 and 2024 was $5,059,294 and $8,495,282, respectively. The net cash provided by financing activities during the year ended December 31, 2025 came from $17,650,000 of advances from the company’s Revolving Credit Line ("RCL”) offset by $12,500,000 in payments on the RCL and $90,706 in operating lease payments.
Through December 31, 2025, 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, 2025, there were many expenses which were made that were not expended for the production of revenue, such as exploration drilling and mine expansion costs. 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, 2025, 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.
Capital Expenditures
Primary capital expenditures in 2025 have been directed toward increasing underground infrastructure development and enhancing processing capacity at the SJG mine. Average underground capitalized development in Q4 2025 was 1,267 meters per month, compared to 380 meters per month in 2024. Processing systems have been upgraded through the installation of new Falcon units and the repurposing of the original grinding mill. Additional equipment acquisitions and infrastructure improvements have also enhanced site access and operational capacity. Effective January 1, 2025, capital expenditures are capitalized in accordance with S-K 1300. See Note 3 of the consolidated financial statements. Total capital expenditures in 2025 were $11.5 million.
Exploration Activity
The Company continues to invest in exploration spending on near-mine extensions as well as geological studies and reinterpretations. The Company completed a Mineral Resource Estimate under S-K 1300 in the second quarter of 2025 covering San Pablo Sur, San Pablo, La Mochomera and the Tres Amigos ore bodies which includes development proposals for additional exploration of ore veins in the short and mid-term.
The Company expects to start underground mine extension drilling at the start of Q2 2026 and expand exploration to surrounding areas by year-end. Part of this activity will be a re-analysis of the previous surface geophysical surveys. Exploration will focus on growing the known resources and increasing the reserve inventory at the SJG mine.
The Company intends to prioritize exploration of high-grade underground targets that can be readily incorporated into the SJG mine plan, as well continue the regional program to better understand the broader potential of the land package associated with the SJG mine. Additionally, planning for deeper and lateral drilling between the San Pablo and Tres Amigos veins has highlighted the potential to extend high-grade underground resources at the SJG mine, especially in areas previously considered discontinuous due to faulting. The Company has identified opportunities to develop San Pablo, San Pablo Sur, La Mochomera, and Tres Amigos exploration potential. At the La Mochomera deposit, the Company plans to explore southward toward the historic Palos Chinos and Purisima mines, which operated over 100 years ago as high-grade producers. Of note is the Palos Chinos exploration target, located within 40 meters of the existing La Mochomera mine infrastructure.
In June 2025, the Company provided an update on exploration activities at the SJG mine. This update included the preliminary identification of two potential high-grade mineralized zones situated adjacent to existing mine infrastructure. These zones are currently under evaluation for future exploration and development potential.
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Note: Assay results referenced in this Annual Report on Form 10-K are based on internal laboratory analyses conducted at the SJG mine plant. They have not been verified by an independent third-party laboratory and do not conform to disclosure standards such as S-K 1300 or NI 43-101.
Over the past year, the Company has been compiling and interpreting geological, geochemical, geophysical, and historical mining data to support an exploration diamond drilling program planned for Q2/2026. This review has led to the identification of the Victoria zone, a previously undocumented mineralized structure located approximately 40 meters from the upper-level development at the Tres Amigos mine (see Figures 1 and 2). Similarly, analysis of historical workings mining activity has highlighted the potential of the Palos Chinos zone, situated near active workings at La Mochomera (see Figure 3). Both zones are undergoing early-stage evaluation through exploration drifting, geological mapping, channel sampling, and internal bulk sampling. Material is being processed at the SJG mine plant to assess mineralization, metallurgy, and gold recovery characteristics.
Victoria Target (Tres Amigos Mine Area)
Geological and structural analysis at the Tres Amigos working face has led to the identification of an exploration target in the previously underexplored hanging wall of the Tres Amigos vein system. Subsequent development drifting toward this target has resulted in the discovery of a previously undocumented mineralized vein approximately 1.5 meters in width (see Figure 3). To date, a total of 110 meters of drifting has been completed on two sublevels (550 and 540 levels, spaced 10 meters apart), alongside the collection and analysis of 1,069 channel samples. In addition, the Company has mined and processed a bulk sample of approximately 10,000 tonnes, with internal assay results indicating an estimated average grade of 8 grams per tonne gold. Based on the current exploration work, the Victoria zone is considered to have a conceptual exploration target of approximately 100,000 tonnes grading between 7 and 8 grams per tonne gold, representing a potential of ~25,000 ounces of contained gold.
Note: The potential quantity and grade of the Victoria target are conceptual in nature. There has been insufficient exploration to define a mineral resource, and it is uncertain if further work will result in the delineation of a mineral resource.
Figure 1 : Plan view of the existing underground infrastructure at Tres Amigos, highlighting the location of the newly identified Victoria vein in the hanging wall zone.
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Figure 2: Photograph of the Victoria vein, highlighting a vein width of 1.5 meters and abundant sulphide mineralization, including chalcopyrite, pyrite, galena, and sphalerite, characteristic of this high-grade gold-bearing structure.
Palos Chinos
Exploration drifting toward the historical Palos Chinos vein system has advanced to approximately 70 meters from current mine workings. Observations from this development, combined with historical mapping from 1999-2000, suggest a second near-infrastructure exploration target. Preliminary evaluation indicates a conceptual exploration target of approximately 90,000 tonnes grading 5 to 6 g/t per tonne gold, representing a potential of ~15,000 ounces of contained gold.
Cautionary Statement: The potential quantity and grade of the Palos Chinos target are conceptual in nature. There has been insufficient exploration to define a mineral resource, and it is uncertain if further exploration will result in the delineation of a mineral resource.
The ongoing exploration drifts have encountered minor disseminated mineralized structures within the footwall of the Palos Chinos structure, supporting the potential for additional mineralization along the trend (see Figure 3).
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Figure 3 : Image showing existing underground infrastructure at the La Mochomera vein system, showing the special relationship to the newly identified Victoria vein and its proximity to the Palos Chinos exploration drift.
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Figure 4 : Photograph of a mineralized vein exposed in the drift development advancing toward the main Palo Chinos vein.
Detailed mapping and sampling conducted in 1999 and 2000 across multiple levels of the historical Palos Chinos workings confirmed that the mined-out section of the Palos Chinos vein generally averages between 1.0 and 1.5 meters in thickness, with a steep westerly dip ranging from 60° to 80°. Along strike, several mineralized shoots were identified, displaying key structural and mineralogical characteristics, including:
A shift in strike orientation from south to southeast;
A localized shallowing of dip angles between 35° to 40°;
Vein thickening to between 2 and 4 meters;
Increased development of chlorite-rich stockwork adjacent to the vein;
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Elevated gold grades, including individual samples grading up to 92.5 g/t Au over 0.7 meters; and
A mineralized shoot transect averaging 7.6 g/t Au over 7.6 meters, including 13.4 g/t Au over 3.4 meters within the main Palos Chinos vein (see Table 1).
In total, 180 samples were collected along the Palos Chinos trend from both surface exposures and underground workings. Of these, 74 samples were taken directly from the Palos Chinos vein and adjacent mineralized hanging wall and footwall zones. Based on this dataset, the Palos Chinos vein returned an average grade of 11.4 g/t Au over an average width of 1.2 meters. Additionally, mining above the Palos Chinos level exposed a parallel, laterally continuous hanging wall vein located approximately 4 to 5 meters above the main structure. Three samples collected from this vein returned gold grades ranging from 11.3 to 18.5 g/t Au and also contained notable concentrates of copper, with localized lead and zinc values over narrow widths. A summary of significant historical assay results from the Palos Chinos vein is provided in Table 1.
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Table 1: Summary of significant historical assay results samples from the Palos Chinos vein.
The reported average vein thickness of 1.2 meters is derived from the mean of all individual sample interval widths and does not reflect the full extent of the historically mined zone between the Palos Chinos and Saramiento levels. To determine the broader mineralized envelope, a representative channel potential sample transect spanning the interval between the Palos Chinos vein and a parallel hanging wall structure returned an average of 7.4 g/t Au over 7.6 meters (see Table 1). These results indicate that portions of the Palos Chinos trend may exhibit sufficient thickness, grade continuity, and structural geometry to be amenable to mechanized mining, subject to further drilling, geotechnical evaluation, and mine planning studies.
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Figure 5: Assay results from a representative channel sample transect extending from the footwall contact, across the Palos Chinos vein and associated chlorite stockwork zone, to the hanging wall vein. The composite interval averages 7.4 g/t Au over 7.6 meters (true width), with notable enrichment in gold, silver, and copper across discrete intervals
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.
OUTLOOK (SJG MINE)
With the development progress achieved in Q4 2025 and the increase in mining faces now available to the Company, management remains confident in the ongoing progress and long-term performance of the SJG mine. The Company’s focus for 2026 is to improve production and grade through the implementation of additional and ongoing operational enhancements and development work.
While the Company made significant headway in 2025, optimization efforts will continue to focus on improving gold ore grades to the mill, throughput rates, and recoveries. San Pablo Sur, San Pablo, La Mochomera, Palos Chinos and the Tres Amigos ore bodies are expected to remain the main contributors to production in the year ahead. Further development in these areas will also be a key focus to access additional high-grade zones and additional mining faces.
The capital works program to add a primary gravity gold circuit to the processing plant involved the installation of three new Falcon units installed downstream of the ball mills to recover the significant portion of the free gold present in the San Pablo, San Pablo Sur, Tres Amigos and La Mochomera deposits. The three new Falcon units are performing as designed recovering approximately 30% of the gold in a specific gravity gold concentrate (average ~300 g/t Au) which achieves a higher payability factor. The target for 2026 is for the process plant to achieve a processing rate between 750 to 800 tpd.
A new tailings dam was completed during Q3 2024, with an estimated storage capacity of 670,751 cubic meters, distributed over four stages to accommodate up to three years of additional tailings. The third-stage facility is currently in use, and planning for construction of the fourth stage is underway. The Company has also begun evaluating a potential location for a third tailings storage facility at the SJG mine. These studies include environmental and geotechnical surveys to identify a preferred site.
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Plan of Operation
The plan of operation for 2026 includes the continued enhancement of site infrastructure and processing capabilities, along with expanded exploration drilling at the SJG mine. During 2025, the Company processed an average of approximately 700 tons of material per day. For the first two months of 2026 an average of 755 tons of material was milled and the Company anticipates increasing daily processing throughput towards an average of 750 to 800 tons per day. The Company has installed processing capacity of up to 900 tons per day (with three ball mills), with a target rate of achieving an average of 800 tons per day taking into consideration planned maintenance downtime. The Company has continued underground development as part of its exploration activities on additional target areas (Vein 532, Victoria and Palos Chinos structures) which are anticipated to yield higher-grade material for processing. The Company anticipates that a combination of higher-grade feed material, increased processing throughput, and higher gold prices will have the potential to significantly increase revenue in 2026, as part of its ongoing exploration and project optimization efforts.
The Company plans to commence its exploration drilling program from underground in Q2 2026 having already obtained firm quotes from contractors to undertake the work. Ongoing decisions regarding the scope and direction of the program will be guided by drilling results, corporate strategy, market conditions, as well as surface mapping, sampling, and target generation.
ITEM 7A. QUANTITATIVE AND QUALIT ATIVE DISCLOSURE ABOUT MARKET RISK
Not applicable to smaller reporting companies.
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ITEM 8. FINANCIAL STATEMENT S AND SUPPLEMENTARY DATA
The Company’s consolidated financial statements as of and for the year December 31, 2025 and 2024 included in this Annual Report on 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: 731
51
Consolidated Balance Sheets
54
Consolidated Statements of Operations and Comprehensive Income (Loss)
56
Consolidated Statements of Changes in Stockholders’ Equity/(Deficit)
57
Consolidated Statements of Cash Flows for the Years
58
Notes to the Consolidated Financial Statements
59
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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, 2025 and 2024, and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity (deficiency), and cash flows for the years ended December 31, 2025 and 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of DynaResource, Inc. as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years ended December 31, 2025 and 2024 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, 2025, the Company had negative working capital of $31,735,708, an accumulated deficit of $65,353,966, and for the year ended December 31, 2025, had a net income of $3,817,103. 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 Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatements of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (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 these critical audit matters do not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
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Stage of Production of the San José de Gracia Mine
As described in Note 3 and Note 5 to the financial statements, the Company filed with the SEC a Technical Report Summary (“TRS”), for the San José de Gracia mine prepared in accordance with the requirements of S-K 1300. The TRS includes the Company’s declaration of mineral reserves and supports the transition from an Exploration Stage issuer to a Production Stage issuer. As a result of the declaration of proven and probable mineral reserves, the Company has revised certain accounting estimates prospectively, including the capitalization of certain development costs, and the commencement of systemic depletion of applicable assets
Our audit procedures included the following:
• Evaluating the appropriateness of management’s estimates, including the reasonability of additions made to the mineral property and the depletion recorded.
• Using an auditor expert to evaluate the Technical Report Summary, including the proven and probable reserves at the San José de Gracia mine to support the transition of the mining cycle stage.
Deferred Tax Asset
As described in Note 14 to the financial statements, 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. This in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures to evaluate audit evidence relating to the judgments made by management in their taxable profits forecast model.
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, and 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 1, 2026
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DYNARESOURCE, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2025 AND 2024
2025
2024
(Restated - Note 2)
ASSETS
Current assets
Cash
$
4,171,891
$
4,781,352
Accounts receivable
—
1,208,346
Concentrate and ore inventories (Note 4)
1,595,363
1,576,392
Foreign tax receivable
1,424,244
2,690,309
Supplies inventory
2,313,917
1,258,064
Other current assets (Note 6)
694,939
656,239
Total current assets
10,200,354
12,170,702
Mineral property interests, plant and equipment
(net of accumulated depreciation and depletion of $ 1,094,835 and $ 42,738 ) (Note 5)
17,308,323
4,211,968
Right-of-use assets, net
500,392
734,229
Deferred tax asset (Note 14)
2,349,186
4,633,513
Foreign tax receivable
27,238,331
16,613,129
Other assets
—
160,406
TOTAL ASSETS
$
57,596,586
$
38,523,947
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued liabilities (Note 7)
$
17,305,927
$
7,352,435
Accrued mining taxes and other liabilities (Note 7)
9,786,005
8,246,290
Derivative liability (Note 8)
1,249,030
892,167
Credit line (Note 9)
8,333,333
9,850,000
Current portion of operating lease payable (Note 15)
87,689
122,630
Concession duties payable (Note 10)
5,174,078
4,059,565
Total current liabilities
41,936,062
30,523,087
Credit line (Note 9)
6,666,667
—
Operating lease payable, less current portion (Note 15)
511,317
702,531
Deferred tax liability (Note 14)
622,030
307,777
Asset retirement obligation (Note 11)
2,831,430
223,520
Other liabilities
266,550
—
TOTAL LIABILITIES
52,834,056
31,756,915
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 (DEFICIENCY) (Note 12)
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
293,157
Series E Senior Convertible Preferred Stock, $ 0.0001 par value, 1,552,795 and 0 shares authorized, issued and outstanding
2,500,000
2,500,000
Preferred rights
40,000
40,000
Additional paid-in-capital
70,168,395
69,131,186
Treasury stock, 37,180 and 37,180 shares at cost
( 95,023
)
( 95,023
)
Accumulated other comprehensive income (loss)
( 8,647,513
)
( 1,788,699
)
Accumulated deficit
( 65,353,966
)
( 69,171,069
)
TOTAL STOCKHOLDERS’ EQUITY (DEFICIENCY)
( 1,094,950
)
909,552
TOTAL LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY (DEFICIENCY)
57,596,586
38,523,947
The accompanying notes are an integral part of these consolidated financial statements.
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DYNARESOURCE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
2025
2024
(Restated - Note 2)
REVENUE
$
58,467,565
$
46,503,016
Operating costs
( 40,223,275
)
( 47,898,208
)
Depreciation and depletion
( 964,295
)
—
GROSS PROFIT
17,279,995
( 1,395,192
)
OTHER OPERATING EXPENSES:
General and administrative expenses
6,192,509
4,157,425
Stock-based compensation (Note 13)
1,249,459
1,219,062
Accretion expense (Note 11)
42,004
18,260
Right of use asset amortization
98,388
114,593
Depreciation and amortization
31,625
30,499
7,613,985
5,539,839
OPERATING INCOME (LOSS)
9,666,010
( 6,935,031
)
OTHER (INCOME) EXPENSE:
Foreign currency losses
( 5,139,258
)
506,439
Interest expense
1,613,836
1,696,258
Derivative mark-to-market loss (gain) (Note 8)
356,863
( 905,174
)
Other expenses (income)
3,640,149
( 50,171
)
TOTAL OTHER (INCOME) EXPENSE
471,590
1,247,352
NET INCOME (LOSS) BEFORE TAXES
9,194,420
( 8,182,383
)
Mining tax expense (Note 14)
1,790,760
890,459
Income tax expense (Note 14)
3,586,557
( 551,399
)
TOTAL TAX EXPENSE
5,377,317
339,060
NET INCOME (LOSS)
3,817,103
( 8,521,443
)
DEEMED DIVIDEND FOR SERIES C & D PREFERRED
( 234,299
)
( 234,299
)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS
3,582,804
( 8,755,742
)
INCOME (LOSS) PER SHARE ATTRIBUTABLE TO THE EQUITY HOLDERS OF DYNARESOURCE, INC.
Basic income (loss) per common share
0.12
( 0.35
)
Weighted average shares outstanding – Basic
29,315,726
24,680,167
Diluted income (loss) per common share
0.13
( 0.35
)
Weighted average shares outstanding – Diluted
37,864,832
24,680,167
OTHER COMPREHENSIVE LOSS
Unrealized foreign currency translation loss
( 6,858,814
)
( 2,486,399
)
TOTAL OTHER COMPREHENSIVE LOSS
( 6,858,814
)
( 2,486,399
)
TOTAL COMPREHENSIVE LOSS
( 3,041,711
)
( 11,007,842
)
The accompanying notes are an integral part of these consolidated financial statements.
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DYNARESOURCE, INC.
CONSOLIDATED STATEMENT S OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
YEARS ENDED DECEMBER 31, 2025 AND 2024
Preferred E
Common
Preferred
Preferred
Paid In
Treasury
Treasury
Other Comp
Accumulated
Shares
Amount
Shares
Amount
Rights
Amount
Capital
Shares
Amount
Income
Deficit
Totals
Balance January 1, 2024 (restated)
—
$
—
23,371,708
$
233,717
1
$
40,000
$
61,509,032
37,180
$
( 95,023
)
$
697,700
$
( 60,649,626
)
$
1,735,800
Issuance of Common Stock
—
—
5,769,231
$
57,692
—
—
5,942,308
—
—
—
—
6,000,000
Sales of Series E Convertible Preferred Stock
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
—
—
—
—
—
—
—
—
—
—
( 8,521,443
)
( 8,521,443
)
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
)
( 69,171,069
)
909,552
Balance January 1, 2025 (restated)
1,552,795
$
2,500,000
29,315,726
$
293,157
1
$
40,000
$
69,131,186
37,180
$
( 95,023
)
$
( 1,788,699
)
$
( 69,171,069
)
$
909,552
Stock Issued for Services
—
—
—
—
—
—
—
—
—
—
—
—
Stock-based compensation - Vesting
—
—
—
—
—
—
1,037,209
—
—
—
—
1,037,209
Other Comprehensive Income
—
—
—
—
—
—
—
—
—
( 6,858,814
)
—
( 6,858,814
)
Net Income
—
—
—
—
—
—
—
—
—
—
3,817,103
3,817,103
Balance, December 31, 2025
1,552,795
2,500,000
29,315,726
293,157
1
40,000
70,168,395
37,180
( 95,023
)
( 8,647,513
)
( 65,353,966
)
( 1,094,950
)
The accompanying notes are an integral part of these consolidated financial statements.
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DYNARESOURCE, INC.
CONSOLIDATED STATE MENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
2025
2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
$
3,817,103
$
( 8,134,852
)
Adjustments to reconcile net income to cash used in operating activities
Derivatives mark-to-market gain
356,863
( 905,174
)
Accretion expense
42,004
18,260
Depreciation and depletion (Note 5)
995,920
30,499
Right-of-use asset amortization
98,388
114,593
Other expense
1,182,621
—
Stock-based compensation
1,249,459
1,219,062
Deferred tax
2,598,580
211,698
Foreign exchange
( 6,706,735
)
—
Operating cash flows before change in non-cash working capital items
3,634,203
( 7,445,914
)
Change in operating assets and liabilities
Accounts receivable
1,208,346
( 327,873
)
Inventories
( 1,232,298
)
233,211
Foreign tax receivable
( 6,480,799
)
( 6,962,321
)
Other assets
180,673
( 1,091,821
)
Accounts payable and accrued expenses
8,180,473
7,580,714
Other liabilities
266,550
—
Change in non-cash working capital items
2,122,945
( 568,090
)
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES
5,757,148
( 8,014,004
)
CASH FLOWS FROM INVESTING ACTIVITIES
Mine development
( 8,911,872
)
—
Purchase of equipment
( 2,614,497
)
( 6,755
)
CASH FLOWS USED IN INVESTING ACTIVITIES
( 11,526,369
)
( 6,755
)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from credit line (Note 9)
17,650,000
12,000,000
Proceeds from sale of common stock
—
6,000,000
Proceeds from sale of Series E Convertible Preferred Stock (Note 12)
—
2,500,000
Payments of credit line (Note 9)
( 12,500,000
)
( 11,900,000
)
Operating lease payments
( 90,706
)
( 104,718
)
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
5,059,294
8,495,282
Effects of foreign currency in cash
100,466
( 1,296,884
)
NET INCREASE (DECREASE) IN CASH
( 609,461
)
( 822,361
)
CASH AT BEGINNING OF YEAR
4,781,352
5,603,713
CASH AT END OF YEAR
4,171,891
4,781,352
SUPPLEMENTAL DISCLOSURES
Cash paid for interest
$
1,721,045
$
955,272
Cash paid for income taxes
$
—
Conversion of accrued expenses into common stock
$
—
$
462,532
The accompanying notes are an integral part of these consolidated financial statements.
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DYNARESOURCE, INC .
NOTES TO THE CONSOLIDA TED FINANCIAL STATEMENTS
December 31, 2025 and 2024
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, including its subsidiaries, is in the business of acquiring, investing in, and developing precious metal properties, and the production of precious metals.
As of December 31, 2025 the Company had one wholly owned subsidiary in the United States, DynaMéxico US Holding, LLC (“US Holding”) and four wholly owned subsidiaries in México, DynaResource de México, S.A. de C.V. (“DynaMéxico”), Mineras de DynaResource S.A. de C.V. (“DynaMineras”), DynaResource Operaciones de San Jose De Gracia S.A. de C.V. (“DynaOperaciones”), and Minera de Alica S.A. de C.V., (“DynaAlica”).
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 interest in the San José de Gracia mine (“SJG mine”) in northern Sinaloa State, México.
Principles of Consolidation
The consolidated financial statements include the accounts of DynaResource, as well as its 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 (“GAAP”) 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 GAAP 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 controls and preventing and detecting fraud. The Company’s system of internal accounting controls 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 GAAP.
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, 2025, the Company had negative working capital of $ 31,735,708 , an accumulated deficit of $ 65,353,966 , and for the year ended December 31, 2025, had a net income of $ 3,817,103 . 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 required. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
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Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the amounts reported in the financial statements and disclosures of contingent assets and liabilities. Actual results could differ materially from those estimates.
Production Stage Issuer
The definitions of Measured mineral resource, Mineral reserve and Mineral resource are set forth in Regulation S-K, Item 1300 ("S-K 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.
In accordance with S-K 1300, the SJG mine was classified as an Exploration Stage Property prior to January 1, 2025. This classification was based on the fact that the SJG mine had no Mineral Reserves as defined under S-K 1300. Although the SJG mine engaged in the mining of Mineral Resources and production of gold-silver concentrate, such activities were not sufficient to alter its classification as an Exploration Stage Property.
Effective January 1, 2025, following the completion of a Mineral Reserve estimate in accordance with S-K 1300, the Company transitioned from an Exploration Stage issuer to a Production Stage issuer. In connection with this transition, the Company updated its accounting estimates related to the capitalization of development costs and its depreciation and depletion methodologies. This change is treated as a change in accounting estimate under Accounting Standards Codification ("ASC”) 250, and has been applied prospectively from January 1, 2025.
Segment Information
The Company operates as one reportable segment, focused on the exploration, development, production and sale of gold and silver in Mexico.
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.
Cash balances may, at times, exceed the Federal Deposit Insurance Corporation ("FDIC”) insurance limits. As of December 31, 2025 , the Company had $ 3,164,645 of deposits in United States banks, and $ 1,007,246 in Mexico banks. In addition, the Company does no t have any cash equivalents as of December 31, 2025 and 2024 . 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
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uncollectible. As of December 31, 2025 and 2024, no allowance has been made. As of December 31, 2025 management believes all accounts receivable are fully collectable.
Mined Tonnage Inventory
Mined tonnage inventory represents ore mined and stockpiled for further processing. Stockpile quantities are estimated based on tonnes added and removed, contained metals (based on assays), and estimated metallurgical recovery rates. Costs are allocated to stockpiles based on relative values and mining costs. Stockpiles are carried at the lower of average cost or net realizable value, based on estimated future sales prices, less estimated costs to complete production and sale.
Concentrate Inventory
Concentrate inventory, consisting of metal concentrates located at the Company facilities or in transit to customers is carried at the lower of production cost or net realizable value, based on current metals prices.
Foreign Tax Receivable
Foreign tax receivable is comprised of recoverable value-added taxes ("IVA”) paid to the Mexican government on goods and services. Under certain circumstances, IVA is recoverable by filing a tax return. Amounts paid are tracked and recognized as receivables until collected.
Proven and Probable Reserves
The definitions of proven and probable mineral reserves are set forth in S-K 1300.
A proven mineral reserve is the economically mineable part of a measured mineral resource. The qualified person reflects a high degree of confidence in the results obtained from the application of modifying factors, as well as in the estimates of tonnage and grade or quality. A proven mineral reserve can only result from the conversion of a measured mineral resource.
A probable mineral reserve is the economically mineable part of an indicated mineral resource and in some cases, a measured mineral resource. The qualified person’s confidence in the modifying factors and in the estimates of tonnage and grade or quality is lower for a probable reserve than for a proven mineral reserve, but still sufficient to demonstrate that extraction is economically viable at the time of recording, based on reasonable investment and market assumptions.
The lower level of confidence associated with a probable reserve arises either from geologic uncertainty when converting an indicated mineral resource or from greater risks related to the modifying factors when converting a measured mineral resource. A qualified person must classify a measured mineral resource as a probable mineral reserve if confidence in the application of the modifying factors is insufficient to support classification as a proven mineral reserve. See Note 3.
Mineral Property Interests, Plant and Equipment and Mine Development Costs
Mineral property interests:
Mineral property interests consist of capitalized expenditures related to the development of mineral properties and mining concessions arising from acquisitions. The amount capitalized represents the fair value of the mineral property and associated mining concessions at the time of acquisition.
Development costs include engineering and metallurgical studies, drilling, and related costs to delineate an ore body, and the construction of access paths and other infrastructure to gain access to the ore body at underground mines. Development costs are expensed as Development and Stripping Costs when incurred until an economically viable deposit has been delineated, at which point such costs are capitalized. Where multiple open pits exist at a mine, pre-stripping costs are capitalized separately for each pit. Production commences when saleable minerals, beyond a de minimis amount, are produced.
During the production phase of a mine, costs incurred to provide access to reserves and resources that will be produced in future periods and that would not have otherwise been accessible are capitalized and included in the carrying value of the related mineral property interest.
When proven and probable mineral reserves exist, development costs are capitalized. Drilling and related costs are capitalized for an ore body where an economically viable deposit exists and the activities are directed at obtaining additional information, providing
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greater definition of the ore body, or converting non-reserve mineralization to proven and/or probable reserves if the benefit is expected to be realized over a period beyond one year. All other drilling and related costs are expensed as incurred as Exploration or Development and Stripping Costs. Exploration costs include costs incurred to identify new mineral resources, evaluate potential resources, and convert mineral resources into proven and probable mineral reserves. Drilling costs incurred for the purpose of operational ore control during the production stage, rather than for obtaining additional information about the ore body, are allocated to inventory costs and then expensed as a component of production costs applicable to sales once revenue from the sale of inventory is realized.
Mineral property interests are amortized upon commencement of production on a unit-of-production basis over proven and probable mineral reserves. When a property does not contain mineralized material that satisfies the definition of proven and probable reserves, the amortization of the capitalized costs is charged to expense based on the most appropriate method, which includes the straight-line method and the units-of-production method over the total estimated production over the life of the mine, as determined by internal mine plans.
Plant and equipment:
For properties where the Company has established economically viable deposits, expenditures for plant and equipment are capitalized and recorded at cost. The cost capitalized for plant and equipment includes borrowing costs that attributable to qualifying assets. Plant and equipment are depreciated using the straight-line method over the estimated productive lives of the assets.
Construction-in-progress costs:
Assets under construction are capitalized as construction-in-progress until the asset is available for its intended use, at which point costs are transferred to the appropriate category of plant and equipment or mineral property interest and amortized. Construction-in-progress costs comprise the purchase price of the asset and any directly attributable costs incurred to bring the asset into working condition for its intended use.
Office furniture and equipment are depreciated using the straight-line method over estimated useful lives ranging from three to five years . Leasehold improvements related to the Company’s corporate office are amortized over the term of the lease, which is 52 months.
For properties where the Company has not established economically viable deposits, substantially all costs, including design, engineering, construction, and installation of equipment, are expensed as incurred unless the equipment has alternative uses, significant salvage value, or probable future benefit, in which case the equipment is capitalized at cost.
Impairment of Long-Lived Assets:
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Mineral properties are monitored for indicators of impairment based on factors such as changes in mineral prices, government regulations and taxation, the Company’s continued right to explore the area, results from exploration activities (including assays, technical reports, and drill results), and the Company’s ongoing plans and ability to fund exploration programs on the property.
For operating mines, recoverability is assessed by comparing the undiscounted future net cash flows expected to be generated by the asset to its net book value. If the net book value exceeds future net undiscounted future net cash flows, an impairment loss is recognized and measured as the excess of the asset’s net book value over its estimated fair value. Fair value for operating mines is determined using a combined approach, which includes a discounted cash flow model for the existing operations and a market approach for the valuation 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 relevant market factors), production levels, operating costs, capital requirements and reclamation obligations, all based on current life-of-mine plans. The term "recoverable mineralized material” refers to the estimated quantity of gold or other commodities recoverable after accounting for processing and treatment losses.
In estimating future cash flows, assets are grouped at the lowest level for which there are separately identifiable cash flows that are largely independent of the cash flows of other asset groups. The Company’s estimates of future cash flows involve significant judgments and assumptions. Actual future results, including quantities of recoverable minerals, commodity prices, production levels, operating and capital costs, may differ materially due the inherent risks and uncertainties involved.
The recoverability of the book value of each property will be assessed annually for indicators of impairment such as adverse changes
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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, 2025 and 2024 , no indications of impairment existed.
Asset Retirement Obligation (“ARO”)
The Company recognizes asset retirement obligations (“AROs”) for the estimated future costs associated with the closure, dismantling, remediation, and post‑closure monitoring of its mining operations. These obligations include, among other activities, the decommissioning and removal of infrastructure, stabilization and closure of tailings storage facilities, sealing of underground mine workings, management and disposal of residual materials, remediation of disturbed areas, and required post‑closure environmental monitoring.
AROs are recognized in the period in which a legal or constructive obligation associated with the retirement of a long‑lived asset is incurred and the obligation can be reasonably estimated. Asset retirement costs are capitalized as part of the carrying amount of the related long‑lived asset when proven or probable mineral reserves exist or when the costs relate to an acquired mineral property interest. Otherwise, such costs are expensed as incurred. ARO liabilities are subsequently accreted over time, with accretion recognized as an operating expense.
Prior to January 1, 2025, the Company was classified as an Exploration Stage issuer and had not demonstrated proven or probable mineral reserves. Accordingly, asset retirement costs did not qualify for capitalization and were expensed as incurred.
The fair value of the Company’s ARO is measured using an expected present value technique in accordance with ASC 410‑20. Expected future cash flows are based on a comprehensive closure plan and reflect management’s best estimate of costs that a market participant would incur to perform the required closure and remediation activities. These cash flows are discounted using a credit‑adjusted risk‑free rate that reflects the Company’s credit standing.
The Company records the fair value of a liability for an ARO in the period that it is incurred if a reasonable estimate of fair value can be made. The Company prepares estimates of the timing and amounts of expected cash flows when an ARO is incurred, which are updated to reflect changes in facts and circumstances. Estimation of the fair value of AROs requires significant judgment, including amount of cash flows, timing of reclamation, inflation rate and credit risk. Accrued reclamation and closure costs can represent a significant and variable liability on our balance sheet. The Company has estimated its liabilities under appropriate accounting guidance and reviews its liabilities on at least an annual basis. However, the ranges of liability could exceed the liabilities recognized. If substantial damages were awarded, claims were settled, or remediation costs were incurred in excess of our accruals, our financial results or condition could be materially adversely affected.
Property Holding Costs
Holding costs to maintain the SJG mine 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, 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 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
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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, 2025 and 2024 (Mexican Pesos per one U.S. dollar):
December 31,
2025
December 31,
2024
Current exchange rate
Pesos
17.95
20.86
Weighted average exchange rate for the year ended
Pesos
19.21
18.33
The Company recorded currency transaction gains (losses) of $ 5,192,079 and $( 506,439 ) for the years ended December 31, 2025 and 2024 , 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
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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, 2025 and 2024 , 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 include cash, accounts receivable, accounts payable, credit line, installment notes payable and derivative liabilities. The carrying values of cash, accounts receivable, accounts payable, and credit line approximate fair value due to their short-term nature. Installment credit line also approximates fair value based on the relationship between stated interest rates and the Company’s risk-adjusted borrowing rate. Derivative liabilities are measured using 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 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.
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Potentially dilutive common shares consist of stock warrants and convertible preferred shares and are excluded from the diluted earnings per share computation in periods where the Company has incurred a net loss, as their effect would be considered anti-dilutive.
The Company’s Series C Preferred Stock and related outstanding dividends were convertible into 2,942,695 and 2,853,721 shares of common stock at December 31, 2025 and 2024 , respectively. The Company’s Series D Preferred Stock and related outstanding dividends were convertible into 851,200 and 820,800 shares of common stock at December 31, 2025 and 2024, respectively. During the years ended December 31, 2025 and 2024, the Company had warrants outstanding to purchase 892,165 shares of common stock. During the years ended December 31, 2025 and 2024 the Company has options outstanding to purchase 1,150,000 and 1,150,000 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, 2025 and 2024, as including them would be anti-dilutive.
Years ended December 31,
2025
2024
Net income (loss) attributable to common shareholders
$
3,582,804
$
( 8,755,742
)
Shares:
Weighted average number of common shares outstanding, Basic
29,315,726
24,680,167
Weighted average number of common shares outstanding, Diluted
37,864,832
24,680,167
Basic income (loss) per share
$
0.12
$
( 0.35
)
Diluted income (loss) per share
$
0.13
$
( 0.35
)
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 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:
• 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;
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• 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, which requires the selection of appropriate valuation models and significant judgment in determining input assumptions.
Reclassification
Certain prior period amounts in the Consolidated Balance Sheets have been reclassified to conform with current period presentation. All amounts previously presented under "Mining Concessions” as of December 31, 2024, have been reclassified to "Mineral Property Interests, Plant and Equipment”. See Note 3. Amounts relating to accrued interest on the Francisco Arturo mining concession duties payable (Note 11) that were previously included under "Accrued Liabilities” as of December 31, 2024 have been reclassified to "Mining concession duties payable”. In addition, certain non-trade obligations previously included under accounts payable and accrued liabilities as of December 31, 2024 have been reclassified to "Accrued mining taxes and other liabilities”. These reclassifications better reflect the nature of the liabilities and had no effect on current liabilities, net income or cash flows in any period reported.
Amounts in the Consolidated Statements of Operations and Comprehensive Income (Loss) related to mine development and stripping costs for the year ended December 31, 2025 have been included as part of mine production costs to conform to the current year presentation. See Note 3. This reclassification better reflects the nature of the costs and had no effect on net income or cash flows in any period presented. In addition, effective for the year ended December 31, 2025, the Company reclassified and consolidated previously reported cost categories—including Mine Production Costs, Mill Production Costs Applicable to Sales, Camp, Warehouse and Facilities, Transportation Costs, Property Holding Costs, Facilities Expansion Costs, and Exploration Drilling—into a single line item titled ‘Operating Costs.’ This reclassification has been applied retrospectively, and all prior period amounts previously disclosed under these categories have been adjusted to conform to the current period presentation.
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 adoption of this guidance did not have a material impact on the Company’s consolidated financial position, results of operations, or cash flows, as the amendments primarily affect disclosure requirements.
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . The guidance enhances the transparency and decision usefulness of income tax disclosures by requiring, among other things, expanded disclosures related to the effective tax rate reconciliation and income taxes paid.
Adoption of ASU 2023-09 requires public entities to:
• Present a tabular reconciliation of the statutory federal income tax rate to the effective income tax rate using specified categories, including a requirement to disaggregate reconciling items that exceed a quantitative threshold;
• Disclose income (loss) before income taxes disaggregated between domestic and foreign operations; and
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• Disclose in the supplemental disclosures within the statement of cash flows, income taxes paid, net of refunds received, disaggregated by federal, state, and foreign jurisdictions, including further disaggregation for individual jurisidictions that are significant
The Company adopted ASU 2023-09 effective January 1, 2025 on a prospective basis. The adoption of this guidance did not have a material impact on the Company’s consolidated financial position, results of operations, or cash flows, as the amendments primarily affect disclosure requirements.
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 - RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
In August 2025, management determined that the Company had accounted for Special and Extraordinary Mining Duties in Mexico inaccurately in certain prior periods, and that, mining tax expense and mining tax liabilities were not recognized in connection with consolidated financial statements prepared for the fiscal years ended December 31, 2021, 2022, and 2023 contained in its Annual Reports on Form 10-K for those years. As a result of these misstatements, the Company is restating certain financial information for the periods noted. All restated financial information is included in this Annual Report on Form 10-K for the year ended December 31, 2025 (the “Form 10-K”), and the Company has not filed, and does not intend to file, amendments to any of our filings that the Company have previously filed with the SEC.
Restatement Background
In March 2025, the Mexican Tax Authority (Servicio de Administracion, “SAT”) issued a re-assessment for the 2021 tax year of DynaMexico. Following receipt of such reassessment, the Company identified previously unrecognized liabilities related to Special and Extraordinary Mining Duties applicable to its mining operations in Mexico. These duties, which are statutory and recurring in nature, were not fully recognized in the fiscal year ended December 31, 2021. The Company undertook a thorough internal review of its tax filings from prior years to ensure compliance and completeness of any other potential liabilities. As a result of the internal review, management identified unrecognized mining duties and corresponding liabilities from DynaMexico and DynaMineras, two of the Company’s subsidiaries that operated the SJG mine during the years reviewed. The previously unrecognized liabilities total approximately $ 1.1 million, $ 0.9 million, $ 0.6 million, and $ 0.5 million for the fiscal years ended December 31, 2021, 2022, 2023 and 2024, respectively, inclusive of inflation adjustments, and penalties.
The internal review determined that restatement changes were necessary due to:
• an understatement of mining tax expense in each period of the consolidated statement of operations; and
• an understatement of mining tax liabilities in each period of the consolidated balance sheets
Items Included in this Filing
This Form 10-K includes restated consolidated financial statements and related disclosures as of and for the years ended December 31, 2021, 2022, 2023 and 2024.
The impact of the correction of the misstatements on the consolidated financial statements related to the mining duties for the years ended December 31, 2021, 2022, 2023 and 2024, which have now been corrected, is summarized below. The applicable accompanying notes to the consolidated financial statements have also been updated, as applicable. The following amounts reflect the impact of the correction attributable to each individual reporting period; the cumulative effect of the prior‑period misstatement is reflected in the revised comparative financial statements and is disclosed below for the most recently comparable prior period.
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2021
As previously stated
Adjustments
As restated
Consolidated Statements of Financial Position
Accrued expenses
$
5,440,204
$
1,070,806
$
6,511,010
Accumulated deficit
$
( 50,722,465
)
$
( 1,070,806
)
$
( 51,793,271
)
Consolidated statements of loss and comprehensive loss
Other income/(expenses)
$
1,072
$
( 1,070,806
)
$
( 1,069,734
)
Comprehensive income for the year
$
8,534,363
$
( 1,070,806
)
$
7,463,557
Income per share, basic and diluted
$
0.47
$
0.41
Consolidated statements of changes in equity
Income for the year
$
8,534,363
$
( 1,070,806
)
$
7,463,557
Deficit – December 31, 2021
$
( 50,722,465
)
$
( 1,070,806
)
$
( 51,793,271
)
Total equity
$
( 151,589
)
$
( 1,070,806
)
$
( 1,222,395
)
2022
As previously stated
Adjustments
As restated
Consolidated Statements of Financial Position
Accrued expenses
$
5,756,961
$
891,894
$
6,648,855
Deferred tax asset
$
2,970,410
$
384,196
$
3,354,606
Accumulated deficit
$
( 44,036,663
)
$
( 507,698
)
$
( 44,544,361
)
Consolidated statements of loss and comprehensive loss
Other income/(expenses)
$
2,242
$
( 507,698
)
$
( 505,456
)
Comprehensive income for the year
$
6,685,802
$
( 507,698
)
$
6,178,104
Income per share, basic and diluted
$
0.33
$
0.29
Consolidated statements of changes in equity
Income for the year
$
6,685,802
$
( 507,698
)
$
6,178,104
Deficit – December 31, 2021
$
( 50,722,465
)
$
( 1,070,806
)
$
( 51,793,271
)
Deficit – December 31, 2022
$
( 44,036,663
)
$
( 1,578,504
)
$
( 45,615,167
)
Total equity
$
13,192,141
$
( 1,578,504
)
$
11,613,637
Consolidated statements of changes in assets
Deferred tax asset
$
2,970,410
$
384,196
$
3,354,606
Total Assets
$
40,942,912
$
384,196
$
41,327,108
Consolidated statements of changes in liabilities
Accrued expenses
$
5,756,961
$
1,962,700
$
7,719,661
Total liabilities
$
21,893,291
$
1,962,700
$
23,855,991
2023
As previously stated
Adjustments
As revised
Consolidated Statements of Financial Position
Accrued liabilities
$
7,727,621
$
627,025
$
8,354,646
Deferred tax asset
$
4,264,115
$
126,070
$
4,390,185
Accumulated deficit
$
( 58,570,167
)
$
( 500,955
)
$
( 59,071,122
)
Consolidated statements of loss and comprehensive loss
Other income/(expenses)
$
2,218
$
( 500,955
)
$
( 498,737
)
Comprehensive loss for the year
$
( 14,533,504
)
$
( 500,955
)
$
( 15,034,459
)
Loss per share, basic and diluted
$
( 0.65
)
$
( 0.68
)
Consolidated statements of changes in equity
Loss for the year
$
( 14,533,504
)
$
( 500,955
)
$
( 15,034,459
)
Deficit – December 31, 2021
$
( 50,722,465
)
$
( 1,070,806
)
$
( 51,793,271
)
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Deficit – December 31, 2022
$
( 44,036,663
)
$
( 507,698
)
$
( 44,544,361
)
Deficit – December 31, 2023
$
( 58,570,167
)
$
( 2,079,459
)
$
( 60,649,626
)
Total equity
$
3,815,259
$
( 2,079,459
)
$
1,735,800
Consolidated statements of changes in assets
Deferred tax asset
$
4,264,115
$
510,266
$
4,774,381
Total Assets
$
35,438,350
$
510,266
$
35,948,616
Consolidated statements of changes in liabilities
Accrued expenses
$
7,727,621
$
2,589,725
$
10,317,346
Total liabilities
$
25,765,611
$
2,589,725
$
28,355,336
2024
As previously stated
Adjustments
As revised
Consolidated Statements of Financial Position
Accrued mining taxes and other liabilities
$
5,172,685
$
483,880
$
5,656,565
Deferred tax asset
$
4,025,957
$
97,289
$
4,123,246
Accumulated deficit
$
( 66,705,019
)
$
( 386,591
)
$
( 67,091,610
)
Consolidated statements of loss and comprehensive loss
Other income/(expenses)
$
50,171
$
( 386,591
)
$
( 336,420
)
Comprehensive loss for the year
$
( 8,134,852
)
$
( 386,591
)
$
( 8,521,443
)
Loss per share, basic and diluted
$
( 0.34
)
$
( 0.36
)
Consolidated statements of changes in equity
Loss for the year
$
( 8,134,852
)
$
( 386,591
)
$
( 8,521,443
)
Deficit – December 31, 2021
$
( 50,722,465
)
$
( 1,070,806
)
$
( 51,793,271
)
Deficit – December 31, 2022
$
( 44,036,663
)
$
( 507,698
)
$
( 44,544,361
)
Deficit – December 31, 2023
$
( 58,570,167
)
$
( 500,955
)
$
( 59,071,122
)
Deficit – December 31, 2024
$
( 66,705,019
)
$
( 2,466,050
)
$
( 69,171,069
)
Total equity
$
3,375,602
$
( 2,466,050
)
$
909,552
Consolidated statements of changes in assets
Deferred tax asset
$
4,025,957
$
607,555
$
4,633,512
Total Assets
$
37,916,392
$
607,555
$
38,523,947
Consolidated statements of changes in liabilities
Accrued mining taxes and other liabilities
$
5,172,685
$
3,073,605
$
8,246,290
Total liabilities
$
28,683,310
$
3,073,605
$
31,756,915
The cumulative effect of the correction through December 31, 2024 is reflected as an adjustment to opening retained earnings and agrees to the revised consolidated financial statements.
NOTE 3 - CHANGE IN ACCOUNTING ESTIMATE DUE TO TRANSITION TO PRODUCTION STAGE
On May 20, 2025, the Company filed with the SEC a Technical Report Summary ("TRS”) for the SJG mine prepared in accordance with the requirements of S-K 1300. The TRS includes the Company’s first declaration of mineral reserves and supports the transition from an Exploration Stage issuer to a Production Stage issuer.
As a result of the declaration of proven and probable mineral reserves, the Company has revised certain accounting estimates prospectively, including the capitalization of certain development costs and the commencement of systematic depreciation of applicable assets. These changes have been applied prospectively in accordance with ASC 250, with no restatement of prior periods.
Impact on Accounting Estimates
In connection with this transition, the Company revised its accounting estimates as follows:
1. Capitalization of Development Costs
Prior to January 1, 2025, all underground mine development costs were expensed as incurred, as the SJG mine was classified as
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an exploration-stage property.
Effective January 1, 2025, mine development costs that are directly related to sustaining and production-related activities are capitalized as part of "Mineral Property Interests, Plant and Equipment.”
As a result capitalization of development costs during the year ended December 31, 2025 increased by approximately $ 8.9 million, compared to prior periods.
2. Depreciation and Depletion
Beginning in 2025, the Company commenced depletion of capitalized mine development costs and depreciation of mineral property interests (including mining concessions) using the Unit-of-Production ("UOP”) method, based on total proven and probable mineral reserves.
As a result depreciation and depletion expense during the year ended December 31, 2025 increased by approximately $ 1.4 million, compared to prior periods.
Financial Impact of the Change
The adoption of these revised estimates in 2025 had the following impact on the Company’s financial results:
Impact Area
Increase/(Decrease)
Capitalized Development Costs
$ 8.9 million
Depreciation and Depletion Expense
$ 1.4 million
This change in accounting estimate has been applied prospectively in accordance with ASC 250, Accounting Changes and Error Corrections , with no restatement of prior periods.
Forward-Looking Considerations
Management anticipates that these changes will result in increased capitalized costs and higher depreciation expense in future periods. The Company will continue to review and update its reserve estimates and related accounting assumptions on an ongoing basis, consistent with GAAP.
NOTE 4 – CONCENTRATE AND ORE 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, 2025 and 2024, respectively, were as follows:
2025
2024
Mined Tonnage
$
899,302
$
1,406,448
Gold-Silver Concentrates
696,061
169,944
Total Inventories
$
1,595,363
$
1,576,392
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NOTE 5 – MINERAL PROPERTY INTERESTS, PLANT AND EQUIPMENT
Mineral property interests, plant and equipment consists of the following as of December 31, 2025 and 2024:
December 31, 2025
December 31, 2024
Mineral property interests, cost
Mining concessions
$
4,132,678
$
4,132,678
Mine development
8,911,872
—
Subtotal
13,044,550
4,132,678
Less: accumulated depletion
( 964,295
)
—
Mineral property interests, carrying value
$
12,080,255
$
4,132,678
Plant and equipment, cost
Construction in progress
$
542,000
$
—
Plant and equipment
2,228,651
73,691
Other
2,587,966
48,337
Subtotal
5,358,617
122,028
Less: Accumulated depreciation and amortization
( 130,549
)
( 42,738
)
Plant and equipment, carrying value
$
5,228,068
$
79,290
Total Property and Equipment
$
17,308,323
$
4,211,968
Depreciation and amortization has been provided over each asset’s estimated useful life. Depreciation and amortization expense was $ 31,625 and $ 30,499 for the years ended December 31, 2025, and 2024 respectively. ARO is included in Other.
NOTE 6 - OTHER CURRENT ASSETS
Other current assets consist primarily of advances to suppliers and prepaid assets.
NOTE 7 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
As of December 31, 2025 and 2024, the Company had the following accrued liabilities:
December 31,
December 31,
2025
2024
(Restated)
Accounts payable
$
11,644,576
$
5,812,439
Accrued vendors
2,586,453
406,487
Accrued payroll and board fees
222,250
412,500
Accrued interest
135,920
-
Other accrued liabilities
2,716,728
721,009
Trade payables and accruals
$
17,305,927
$
7,352,435
Accrued mining taxes
7,533,493
6,395,721
Other liabilities
2,252,512
1,850,569
Accrued mining taxes and other liabilities
$
9,786,005
$
8,246,290
NOTE 8 - DERIVATIVE LIABILITIES
Warrants Issued With the Notes Convertible into Series D Preferred Stock
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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 12. 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.
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 classified the inputs in this valuation as Level 3 within the fair value hierarchy under ASC 820 and utilized an equity simulation model to determine the value of conversion feature associated with the 2020 Warrants issued in connection with the notes convertible into Series D Preferred Stock, based on the assumptions set forth below:
2025
2024
Annual volatility rate
115
%
128
%
Risk free rate
3.47
%
4.25
%
Remaining term
4.37 years
5.37 years
Fair value of common stock
$
1.40
$
1.00
For the years ended December 31, 2025 and 2024, 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, 2025 and 2024.
Year Ended
2025
2024
Fair value of derivative (warrants), beginning of year
$
892,167
$
1,797,341
Exercise of warrants
-
-
Change in fair value of derivative
356,863
( 905,174
)
Fair value of derivative (warrants), end of year
$
1,249,030
$
892,167
NOTE 9 – CREDIT LINE
(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:
• Beginning in September 2023, up to $ 10 million of the ACL advance may be converted into a one-year installment loan (the “RCL”) bearing interest at 3 month 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; and
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• The Amendment provides the buyer with a right of first refusal during the Offtake Agreement, to provide offtake financing and purchase other concentrates (zinc, silver, copper, etc) and doré from the Company’s open pit and underground operations.
(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 balance of $ 9,750,000 into an RCL. The RCL is repayable as follows: Month 1, interest only ; Months 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 amendment, the Company could receive up to an additional $ 4,000,000 under a temporary advance credit line (the "TACL”) at the same interest rate, with the TACL maturing on November 30, 2024 . As part of the amendment, the Company also received a put option (the "Put Option”) allowing it to convert up to $ 9,000,000 of the RCL into common stock at $ 1.61 per share, exercisable from November 1, 2024 until the November 30, 2024. If both the RCL and the TACL were repaid in full on or before November 30, 2024, the maximum principal amount of the RCL would increase to $ 12,500,000 . However, if the Put Option was exercised for an amount greater than $ 4,000,000 , the maximum principal amount of the RCL would be reduced on a dollar-for-dollar basis by the excess.
As part of the June 20, 2024 amendment, the Company granted a security interest in its Mexican IVA tax claims to the holder of the RCL and TACL notes.
In November 2024, the Company repaid the TACL in full and renewed the RCL for an additional one-year term. Under the renewal, the TACL was discontinued, and the Put Option was removed. The maximum principal amount of $ 12,500,000 , the interest rate, and repayment terms remained unchanged.
(C) Amendment to Offtake Agreement and Credit Facility
On August 22, 2025, DynaMexico entered into an amendment (the "Amendment”) to the Gold Concentrate Purchase Agreement originally dated February 1, 2021 (as amended, the "Offtake Agreement”), with MK Metal Trading Mexico S.A. de C.V. ("Buyer”) and Ocean Partners UK Limited ("Ocean Partners UK”).
The Amendment:
Extends the term of the Offtake Agreement through December 31, 2030, with automatic annual renewals unless terminated by either party with 365 days’ notice;
Adds Ocean Partners UK as a joint buyer under the Offtake Agreement, with full rights and obligations;
Establishes a new $ 15 million Concentrate Credit Facility (the "Credit Facility”), replacing the prior $ 12.5 million facility, with principal repayable in equal monthly installments over months 7 through 24 , bearing interest at 3-month SOFR plus 6.75 %;
Introduces a $ 3 million termination fee payable by DynaMexico to Buyer under certain conditions; and
Provides security for the Credit Facility, including a parent company guarantee from the Company, a general security agreement, and a pledge of DynaMexico shares.
The Credit Facility is structured as a 24 -month loan. For the first six months of the loan tenor, DynaMexico is required to make interest-only payments. Beginning in month 7 and continuing through month 24 , the loan is repayable in 18 equal monthly principal installments, plus interest.
Concurrent with the Amendment, DynaMexico and Ocean Partners UK entered into the Credit Facility, and the Company executed a Parent Company Guarantee in favor of Ocean Partners UK, guaranteeing DynaMexico’s obligations under the Credit Facility.
The following is a summary of the activity during the years ended December 31, 2025 and 2024:
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December 31,
December 31,
2025
2024
Balance beginning of period
$
9,850,000
$
9,750,000
Advances
17,650,000
12,000,000
Principal Payments
( 12,500,000
)
( 11,900,000
)
Balance end of period
$
15,000,000
$
9,850,000
Current liability
$
8,333,333
$
9,850,000
Non-current liability
$
6,666,667
$
-
Future payments (Principal and Interest):
2026
$
9,610,921
$
-
2027
$
6,934,039
$
-
Interest expense for the years ended December 31, 2025 and 2024 was $ 1,291,275 and $ 1,249,098 , respectively.
NOTE 10 – 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, 2025, $ 2,642,464 (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 SJG mine 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, 2025 was $ 421,245 (2024 - $ 449,161 ).
The following is a summary of the transaction during the years ended December 31, 2025, and December 31, 2024:
Balance December 31, 2024
$
4,059,565
Exchange rate adjustment
693,267
2025 Interest
421,246
2025 principal payments
—
Balance December 31, 2025
$
5,174,078
NOTE 11 - ASSET RETIREMENT OBLIGATION
The Company is responsible for the reclamation of certain past and future disturbances at its properties. During 2023, a significant upgrade was made to the milling facility and therefore, an ARO was established as of December 31, 2023.
During the year ended December 31, 2025, the Company recorded a change in estimate related to its ARO as a result of completing an updated, comprehensive closure plan. The increase in the ARO was recorded as an increase to mineral property, plant and equipment, with a corresponding increase to the ARO liability. The Company measures AROs using an expected present value
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technique in accordance with ASC 410‑20 and discounts expected future cash flows using a credit‑adjusted, risk‑free rate. As of December 31, 2025, the discount rate used was 4.92 %. The ARO represents estimated undiscounted future cash outflows of approximately $ 4.7 million, expected to be incurred over the closure and post‑closure periods.
A reconciliation of the Company’s reclamation and remediation liabilities for the years ended December 31, 2025 and 2024, is as follows:
December 31,
December 31,
2025
2024
Asset retirement obligation at beginning of year
$
223,520
$
198,468
Change in estimate
2,565,906
6,792
Accretion
42,004
18,260
Asset retirement obligation at end of year
$
2,831,430
$
223,520
NOTE 12 – STOCKHOLDERS’ EQUITY
The total number of shares of all classes of capital stock which the Company has the authority to issue is 60,001,000 shares, consisting of (i) twenty million and one thousand ( 20,001,000 ) shares of Preferred Stock, par value $ 0.0001 per share (“Preferred Stock”), of which 1,734,992 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. As of December 31, 2025 , 13,713,213 of Preferred Stock remain undesignated.
Series C Senior Convertible Preferred Stock
As of December 31, 2025 and 2024, there were 1,734,992 shares of Series C Preferred Stock outstanding. As of December 31, 2025, the Series C Preferred Stock is convertible to common stock at $ 1.95 per share or redeemable in cash at the shareholder’s option and include anti-dilution protection. The Series C Preferred Stock may receive a 4 % per annum dividend, payable if available, and in arrears, calculated at 4 % of $ 4,337,480 payable annually on June 30. As of December 31, 2025 , dividends for the years ending December 31, 2017 through 2025 totaling $ 1,574,274 were in arrears (2024 - $ 1,400,784 ).
Because the Series C Preferred Stock is mandatorily redeemable by the Company at the election of the holder upon maturity, it is classified as "temporary equity” on the consolidated 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
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 8, for the purchase of an aggregate of 1,260,633 shares of the Company’s common stock at an exercise price of $ 0.01 a share.
On October 7, 2021, the Company paid $ 2,500,000 to repurchase one note. The remaining ten noteholders elected to convert their notes totaling $ 1,520,000 into Series D Preferred Stock at $ 2.00 per share. 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. On October 18, 2021, the Company issued 760,000 shares of Series D Preferred Stock. The Series D Preferred Stock may receive a 4 % per annum dividend, payable if available, and in arrears, calculated at 4.0 % of $ 1,520,000 payable annually on October 18 . As of December 31, 2025 dividends for the years 2022 through 2025 totaling $ 243,200 were in arrears.
Because the Series D Preferred Stock is mandatorily redeemable by the Company at the election of the holder upon maturity, it is classified as "temporary equity” on the consolidated balance sheet.
Deemed dividends on the Series C and D Preferred Stock for the years ended December 31, 2025 and 2024 , were $ 234,299 and $ 234,299 , respectively. As these dividends have not been declared by the Company, they are required to be presented as an adjustment "below” the net income (loss) line on the accompanying unaudited condensed interim consolidated statements of income.
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Series E Convertible Preferred Stock
As of December 31, 2025 and 2024 there were 1,552,795 and nil shares of Series E Preferred Stock outstanding. The Series E Preferred Stocks is convertible on a one -for-one basis into shares of common stock, subject to equitable adjustment. They are eligible to receive the equivalent of any common stock dividend declared but carry no preferred dividend rights and are not redeemable for cash.
Preferred Stock (Undesignated)
In addition to the 1,734,992 shares designated as Series C Preferred Stock, the 3,000,000 shares designated as Series D Preferred Stock, and 1,552,795 such shares designated as Series E Preferred Stock, the Company is authorized to issue an additional 13,713,213 shares of Preferred Stock, each having a par value of $ 0.0001 per share. The Company’s Board of Director (the “Board”) has authority to issue Preferred Stock from time to time in one or more series and, with respect to each series, to fix and determine by resolution the designations, powers, preferences, rights, qualifications, limitations, and restrictions of such series. At December 31, 2025 and December 31, 2024 , there were no other shares of Preferred Stock outstanding.
The shares of each series of Preferred Stock may vary from the shares of any other series thereof in any or all these rights and terms. The Board may increase the number of shares designated for any existing series by resolution, adding authorized but unissued and undesignated shares to that series. Unless otherwise provided in a particular Preferred Stock designation, the Board may also decrease the number of shares designated for any existing series by resolution, returning such shares to the pool of authorized, unissued and undesignated 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 carry full voting rights. At December 31, 2025 and December 31, 2024 , there were 29,315,726 and 29,315,726 common stock shares outstanding, respectively. No dividends were declared or paid during the years ended December 31, 2025 and 2024, respectively.
Preferred Rights
The Company issued "Preferred Rights” and received proceeds of $ 784,500 for these rights. This amount is reflected as "Preferred Rights” within stockholders’ equity in the accompanying consolidated balance sheets. As of December 31, 2025 , $ 744,500 had been repaid, leaving a current balance of $ 40,000 and $ 40,000 as of December 31, 2025 and 2024, respectively.
Stock Issuances
• 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
There were no treasury stock transactions during the year ended December 31, 2025, or during the year ended December 31, 2024.
There were 37,180 shares of treasury stock outstanding as of December 31, 2025 and 2024.
Warrants
As of December 31, 2025, t he Company had outstanding warrants to purchase 892,165 shares of common stock. These warrants were issued as part of the 2020 financing transaction involving notes convertible into Series D Preferred Stock.
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Weighted
Weighted
Average
Average
Exercise
Remaining
Number
Price
Contractual
Intrinsic
of Warrants
per share
Life (Years)
Value
Balance at December 31, 2023
892,165
0.01
6.37
—
Exercise of warrants
—
—
—
—
Forfeiture of the warrants
—
—
—
—
Exercisable at December 31, 2024
892,165
0.01
5.37
—
Exercise of warrants
—
—
—
—
Forfeiture of the warrants
—
—
—
—
Balance at December 31, 2025
892,165
0.01
4.37
—
Exercisable at December 31, 2025
892,165
0.01
4.37
—
A derivative liability was recognized upon the issuance of the 2020 Warrants. As of December 31, 2025 , the derivative liability totaled $ 1,249,030 . See Note 8 above.
Options
As of December 31, 2025, the Company had outstanding options to purchase an aggregate of 1,150,000 shares of common stock, issued to directors and executive officers as compensation:
On February 16, 2024, in conjunction with joining the Board, 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. The options vest in 25 % increments on each of the first four anniversaries of the grant date and expiring five years after the grant date.
On June 3, 2024, in conjunction with accepting the position of Chief Executive Officer, Mr. Rohan Hazelton was awarded options to purchase up to 750,000 shares of common stock at an exercise price of $ 1.75 per share. The options vest and become exercisable in one-third increments on each of the first three anniversaries of the grant date and expire five years after the grant date.
Weighted
Weighted
Average
Average
Exercise
Remaining
Number
Price
Contractual
Intrinsic
of Options
per share
Life (Years)
Value
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
—
Issuance of options
—
—
—
Exercise of options
—
—
Forfeiture of the options
—
—
Balance at December 31, 2025
1,150,000
2.88
2.97
—
As of December 31, 2025, the Company had 350,000 stock options outstanding that were vested and exercisable but not exercised. The weighted‑average exercise price of these options was $ 2.68 , and the weighted‑average remaining contractual term was 2.97 years.
NOTE 13 – 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, 2025 and 2024 was $ 1,249,459 and $ 1,219,062 , respectively, 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
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accelerated vesting 112,500 shares under these awards were cancelled in December 2024. As of December 31, 2025, deferred compensation totaling $ nil 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 November 20, 2025, the Company and Mr. Sotomayor entered into a new employment arrangement pursuant to an Offer of Continued Employment with the Company, which replaced the prior employment agreement. In connection with this arrangement, the Company agreed to provide Mr. Sotomayor with a retention award (the “Retention Bonus”), subject to his continued active employment and compliance with applicable laws, including securities laws. The Retention Bonus is intended to be delivered in the form determined by the Board, in its discretion, of either (i) 225,000 restricted stock units (“RSUs”) or (ii) a number of RSUs having an aggregate value of C$ 470,000 , calculated at the time of issuance.
The RSUs were cancelled and are expected to be reissued at such time as issuance is permitted under applicable laws. Provided Mr. Sotomayor remains actively employed at the time of issuance, the RSUs will be issued promptly in compliance with applicable laws.
On February 16, 2024, in conjunction with joining the Board, 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 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,
2025
December 31,
2024
Annual volatility rate
—
127.93
%
Risk free rate
—
4.36
%
Expected life at issuance
—
5.00
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 expiring five years after the grant date.
The inputs utilized in calculating the fair value are as follows:
Year Ended
December 31,
2025
December 31,
2024
Annual volatility rate
—
105.55
%
Risk free rate
—
4.42
%
Expected life at issuance
—
5.0
Fair Value of stock options
—
138.00
%
Mr. Hazelton also received 500,000 DSUs payable upon achievement of performance targets and 500,000 RSUs vesting in one-third increments on each of first three anniversaries of the grant date, with the terms and performance metrics to be determined by the Compensation Committee.
On June 2, 2025, the Company granted a total of 30,000 RSUs to an employee of the Company, holding a total grant date fair value of $ 40,500 , measured at US$ 1.35 /share restricted stock units vesting one-third per year on each of the first three anniversaries of
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the grant date.
On August 12, 2025, the Company granted a total of 600,000 RSUs to executives of the Company, holding a total grant date fair value of $ 720,000 , measured at US$ 1.20 /share restricted stock units vesting one-third per year on each of the first three anniversaries of the grant date.
Management Bonuses
On March 28, 2025, the Compensation Committee approved bonus awards for the management team totaling $ 457,500 , consisting of $ 217,500 in cash and $ 240,000 in common stock. The stock portion represents 263,736 shares, calculated based on the closing price of $ 0.91 per share on March 28, 2025. Of these awards, $ 70,000 in cash and $ 125,000 in stock (equivalent to 137,363 shares) were allocated to directors and officers. The Board ratified these awards on April 2, 2025.
Independent Director Compensation
Also on March 28, 2025, the Compensation Committee approved annual compensation for independent directors, consisting of a base cash component of $ 25,000 and an additional $ 50,000 to be paid in shares of common stock. The equity portion of the compensation is subject to vesting as follows: one-third vests immediately, one-third vests one year from the grant date, and the remaining one-third vests two years from the grant date. This resulted in a total stock-based award of $ 250,000 for the five independent directors. The Board approved this compensation on April 2, 2025. This amount was classified as a liability as the Company has an obligation to settle the obligation by issuing a variable number of shares.
NOTE 14 – 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.
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.
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December 31,
December 31,
2025
2024
Deferred Tax Assets:
Federal net operating loss carryforwards
$
1,095,870
$
1,824,870
Foreign net operating loss carryforwards
3,566,535
5,377,469
Lease liability
125,791
173,284
NQO & RSA Stock Options
535,225
—
Accruals & Reserves
607,556
607,556
Fixed Assets
95,186
—
Other
302,818
174,425
Gross Deferred Tax Asset
6,328,981
8,157,604
Valuation allowance
( 2,601,414
)
( 3,215,387
)
Total Deferred Tax Asset
$
3,727,567
$
4,942,217
Deferred Tax Liabilities:
Right of use asset
( 105,082
)
( 154,188
)
Other
( 1,895,329
)
( 462,293
)
Total Deferred Tax Liabilities
( 2,000,411
)
( 616,481
)
Net Deferred Tax Asset
$
1,727,156
$
4,325,736
Balance Sheet Presentation:
Deferred Tax Asset
$
2,349,186
$
4,633,513
Deferred Tax Liability
( 622,030
)
( 307,777
)
Net Deferred Tax Asset
$
1,727,156
$
4,325,736
The Company's pre-tax income (loss) by jurisdiction was as follows for the years ending December 31, 2025 and 2024
December 31,
December 31,
2025
2024
Domestic
$
( 4,270,793
)
$
( 770,536
)
Foreign
13,465,211
( 7,818,426
)
Total
$
9,194,418
$
( 8,588,962
)
The provision for income taxes for continuing operations for the year ended December 31, 2025 and 2024 consists of the following
December 31,
December 31,
2025
2024
Current income taxes
Federal
$
59,270
$
—
State
—
—
Foreign
1,731,490
890,459
Total current income taxes
$
1,790,760
$
890,459
Deferred income taxes
Federal
$
114,598
$
( 348,997
)
State
—
—
Foreign
3,471,959
( 202,402
)
Total deferred income taxes
$
3,586,557
$
( 551,399
)
Total income tax benefit
$
5,377,317
$
339,060
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, 2025 includes state minimum taxes, permanent differences, and deferred tax assets for which the
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valuation allowance has been released. A corresponding tax benefit is included for the year ended December 31, 2025 to reflect the release in the valuation allowance.
December 31,
2024
Tax Expense at statutory federal rate of 21%
$
( 1,803,682
)
Permanent differences
( 198,295
)
Foreign rate differential
( 703,658
)
Return to provision
2,307,583
NOL Expiration
199,427
Mining Tax
406,579
Change in valuation allowance
( 253,471
)
Statutory to GAAP
( 2,791
)
Other Items
777
Income tax benefit
$
( 47,531
)
December 31, 2025
(amount $)
(Percent %)
Federal tax at statutory rate
$
1,930,828
21.00
%
Nontaxable or Nondeductible Items
Section 951a inclusion - net of 250 deduction
993,587
10.81
%
Other differences
77,147
0.84
%
Foreign Tax Effects
Mexico
Foreign Rate Differential
1,211,869
13.18
%
Special Mining Tax
1,790,760
19.48
%
Tax Inflation Effect
345,438
3.76
%
Statutory to GAAP
261,244
2.84
%
Special Mining Tax Deduction
( 537,228
)
( 5.84
%)
Other
( 65,521
)
( 0.71
%)
Tax Credits
Valuation Allowance
( 630,807
)
( 6.68
%)
$
5,377,317
58.68
%
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, 2025.
December 31,
December 31,
2025
2024
United States Expiring 2029 to 2037
$
-
$
-
United States Indefinite Limited to 80%
5,218,429
8,689,855
Foreign NOLs
10,884,415
17,924,896
Total Net Operating Loss Carryforward
$
16,102,844
$
26,614,751
At December 31, 2025, the carryforwards available to offset US federal future taxable income consisted of net operating loss (“NOL”) carryforwards of approximately $ 5.2 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 $ 10.9 million pre-tax are subject to a ten-year carryforward period and the Company anticipates utilizing its Mexico NOL in future years before expiration.
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The Company’s practice is to recognize interest and penalties related to income taxes in income tax expense in continuing operations, as incurred. There were no uncertain tax benefits or interest and penalties related to uncertain tax benefits as of December 31, 2025.
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 2022. The Company is no longer subject to Mexico tax examinations for years prior to fiscal year 2018.
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 15 – 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.
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 mine 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 the SJG mine 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 $ 5,932,583 Pesos (approx. $ 304,000 USD) for the year ended December 31, 2025 . The Land Lease Agreement provides DynaMineras with surface access to the core resource areas of the SJG mine ( 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, 2025, 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 eight years. Variable lease costs consist primarily of variable
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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,
2025
Year Ended
December 31,
2024
Operating Lease – Office Lease
$
121,623
$
112,749
Operating Lease – Ground Lease
99,803
94,046
TOTAL
$
221,426
$
206,795
Weighted average remaining lease term and weighted average discount rate are as follows:
Weighted Average Remaining Lease Term (Years) – Operating Leases
4.96
Weighted Average Discount Rate – Operating Leases
12.50
%
Estimated future minimum lease obligations are as follows for the years ending December 31:
YEAR
2026
227,109
2027
221,722
2028
109,058
2029
112,329
2030
115,699
Thereafter
241,916
Total
1,027,833
Less Imputed Interest
( 314,565
)
OPERATING LEASE LIABILITY
$
713,268
NOTE 16 – 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, 2025 and 2024, 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 8.
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Quoted Prices
in Active
Markets For
Identical
Assets
Significant
Other
Observable
Inputs
Significant
Unobservable
Inputs
Fair Value Measurement at December 31, 2025:
(Level 1)
(Level 2)
(Level 3)
Liabilities:
Derivative Liabilities
$
1,249,030
-
-
$
1,249,030
Totals
$
1,249,030
$
-
$
-
$
1,249,030
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
The fair values of other financial assets and liabilities were assumed to approximate their carrying values due to their short-term nature and historically negligible credit losses, and are classified within Level 1 of the fair value hierarchy.
NOTE 17 – CONCENTRATIONS
For the years ended December 31, 2025 and 2024 , one customer accounted for 100 % of revenue and accounts receivable.
NOTE 18 - SEGMENTED INFORMATION
The Company operates as one reportable segment focused on the development and operation 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, 2025 and 2024:
Mexico
United States
Total
December 31, 2025
Mineral property interests, plant and equipment, net
$
17,260,659
$
47,664
$
17,308,323
Current assets
9,919,495
280,859
10,200,354
Other assets
28,642,912
1,444,997
30,087,909
Total assets
$
55,823,066
$
1,773,520
$
57,596,586
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
20,002,992
2,138,285
22,141,277
Total assets
$
31,727,374
$
6,796,573
$
38,523,947
Year Ended
Year Ended
Year Ended
December 31, 2025
December 31, 2024
Total Revenue for the year - Mexico
$
58,467,565
$
46,503,016
Total Revenue for the year - United States
-
-
Total Revenue for the year
$
58,467,565
$
46,503,016
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Year Ended
Year Ended
Year Ended
December 31, 2025
December 31, 2024
Total comprehensive income (loss) for the year - Mexico
$
4,437,051
$
( 10,583,324
)
Total comprehensive income (loss) for the year - United States
( 7,478,762
)
( 424,518
)
Total comprehensive income (loss) for the year
$
( 3,041,711
)
$
( 11,007,842
)
NOTE 19 – RELATED PARTY TRANSACTIONS
Management Bonuses
On March 28, 2025, the Compensation Committee approved bonus awards to the management team in cash and common stock. The stock portion is based on the closing price of $ 0.91 per share on March 28, 2025. Of these awards $ 70,000 in cash and $ 125,000 in stock (equivalent to 137,363 shares) were allocated to directors and officers. The Board ratified these awards on April 2, 2025.
Independent Director Compensation
On March 28, 2025, the Compensation Committee approved annual compensation for independent directors, consisting of a base cash payment of $ 25,000 per director, plus additional cash compensation of $ 4,000 for each committee membership and $ 2,000 for each committee chairmanship held by the director. In addition, each independent director was awarded $ 50,000 in equity compensation, to be paid in shares of common stock. The equity awards are subject to a vesting schedule whereby one-third vests immediately, one-third vests one year from the grant date, and the remaining one-third vests two years from the grant date. The Board approved this compensation on April 2, 2025.
During the years ended December 31, 2025 and 2024 , the Company paid or accrued $ 234,500 and $ 312,500 in management fees to its directors. Included in accounts payable at December 31, 2025 is $ 278,600 (2024 - $ 412,500 ) due to related parties.
NOTE 20 – SUBSEQUENT EVENTS
The Company has evaluated events from December 31, 2025, through the date the consolidated financial statements were issued. No subsequent events were identified that required adjustment to or disclosure in the consolidated financial statements.
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ITEM 9. CHANGES IN AND DISA GREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.