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Item 1. Business

2022-08-23 compared with 2019-09-24 · 65 added, 746 removed, 7 unchanged (99% of the section changed)

and Organization

Company is a minerals investment, management, and exploration company, and currently conducting test mining and pilot milling

operations through an operating subsidiary in México, with specific focus on precious and base metals in México.

History and Organization

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

The Company was originally incorporated in the State of California on September 28, 1937, under the name West Coast Mines, Inc.

In November 1998, the Company re-domiciled from California to Delaware and changed its name to DynaResource, Inc.

(“DynaUSA”).

currently own 80% of the outstanding shares of DynaMéxico, and DynaMéxico currently holds a lien on 20% of the outstanding

shares of DynaMéxico.

DynaMéxico owns 100% of the mining concessions, equipment, camp and related facilities which

comprise the San Jose de Gracia Property, in northern Sinaloa State, México.

We also own 100% of Mineras de DynaResource

(“DynaMineras”), the exclusive operator of the San José

de Gracia Project, under contract with

DynaMéxico.

DynaMineras currently conducts test mining and pilot milling operations, and other exploration activities in

México.

2000, the Company formed DynaMéxico for the purpose of acquiring and holding mineral properties and mining concessions

in México.

DynaMéxico owns a portfolio of mining concessions which comprise the San José

de Gracia Project

(“SJG”).

The mining concessions which comprise the SJG District cover 69,121 hectares (170,802 acres) on the west

side of the Sierra Madre mountain range.

At the incorporation of DynaMéxico, 100 shares of Fixed Capital Series “A”

shares were issued, with DynaUSA receiving 99 shares and its CEO receiving 1 share.

2005, the Company formed DynaMineras.

DynaMineras entered into an operating agreement with DynaMéxico on April 15, 2005.

Because of that agreement and subsequent amendments to that agreement, DynaMineras is the exclusive operating entity for the SJG

in 2005, the Company formed another wholly owned subsidiary, DynaResource Operaciones, S.A.

(“DynaOperaciones”).

DynaOperaciones entered into a personnel management agreement with DynaMineras and, because of that agreement, is the exclusive

management company for personnel and consultants involved at the SJG Project.

January 2008 through March 2011, DynaMéxico issued 100 Variable Capital Series “B”

Shares to Goldgroup Resources

Inc., a wholly owned subsidiary of Goldgroup Mining Inc., in Vancouver, BC.

(“Goldgroup”), in exchange for Goldgroup’s

total capital contributions of $18,000,000 to DynaMéxico.

At the time of the issuance of the 100 Series B Shares to Goldgroup,

Goldgroup owned 50% of the outstanding capital shares of DynaMéxico.

May 17, 2013, DynaUSA agreed to acquire a stock certificate for 300 Series “B”

Variable Capital Shares of DynaMéxico,

in exchange for the settlement of accounts receivable from DynaMéxico in the amount of $31,090,710 Mexican Pesos (approximately

$2.4 million USD).

After giving effect to the issuance of the 300 Series B Shares on June 21, 2013, DynaUSA owns 80% of the total

outstanding Capital of DynaMéxico.

(See table representation of the outstanding Capital of DynaMéxico below).

exchange of shares by DynaMéxico for amounts payable to DynaUSA was unanimously approved by shareholders at a meeting of

the shareholders of DynaMéxico, held on the second call for shareholder's meeting on May 17, 2013 in Mazatlán, Sinaloa,

México.

The date of issuance of the 300 Series B Share Certificate was June 21, 2013.

As a result of the issuance to DynaUSA

of the 300 Variable Capital shares for amounts owed to DynaUSA, the accounts payable amount owed by DynaMéxico to DynaUSA

was retired in full.

giving effect to the issuance to DynaUSA of the 300 Series B Variable Capital shares of DynaMéxico as described above,

the current outstanding Capital of DynaMéxico is set forth in the table below:

DynaMéxico

Capital Series "A"

Capital Series "B"

Capital Shares(Series A and B)

DynaResource,

(“K.D.”)

Goldgroup Resources Inc.

Capital Issued

currently owns 80% of the outstanding capital shares of DynaMéxico.

Ownership and Description of Subsidiaries

description of the subsidiaries owned by the Company and its ownership in each is summarized below:

de México, S.A.

Owned by DynaResource, Inc.

owner of the San Jose de Gracia Property;

de DynaResource, S.A.

Owned by DynaResource, Inc.

Operator of the San Jose de Gracia Project;

into Exploitation Agreement (“EAA”) with DynaMéxico (See below);

into 20-year surface Rights agreement with the Santa Maria Ejido;

Operaciones de San Jose de Gracia, S.A.

Owned by DynaResource, Inc.

Management Company at San Jose de Gracia;

Amendment Agreement (“EAA”)

May 15, 2013, DynaMineras entered into an Exploitation Amendment Agreement (“EAA”) with DynaMéxico.

grants to DynaMineras the right to finance, explore, develop and exploit the SJG Property, in exchange for the following:

Reimbursement of all costs associated with financing, maintenance, exploration, development and exploitation of the SJG Property,

which costs are to be charged and billed by DynaMineras to DynaMéxico;

After Item (A) above, 75% of gross receipts received by DynaMéxico from the sale of all minerals produced from SJG, to

the point that DynaMineras has received 200% of its advanced funds;

a 2.5% Net Smelter Royalty on all minerals sold from SJG over

the term of the EAA.

The total advances made by DynaMineras to DynaMéxico as of December 31, 2017 are $6,125,000.

After items (A) and (B) above, 50% of all gross receipts received by DynaMéxico from the sale of all minerals produced

from SJG, and throughout the term of the EAA.

EAA is the third and latest Amendment to the original Contract Mining Services and Mineral Production Agreement (the “Operating

Agreement”), which was previously entered into by DynaMineras and DynaMéxico in April 2005, and in which DynaMineras

was named the Exclusive Operating Entity at SJG.

The Operating Agreement was first amended in September 2006 (the “First

Amendment”), and amended again at July 15, 2011 (the “Second Amendment”).

The Term of the Second Amendment is

20 years, and the EAA (Third Amendment) provides for the continuation of the 20 Year Term from the date of the Second Amendment

(July 15, 2011).

objective is to increase the value of our shares through the exploration, development and extraction of gold, silver and other

valuable minerals.

We generally conduct our exploration activities as sole operator and our current flagship property is San Jose

principal executive office is located at 222 W.

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

We can be reached

by phone at (972) 868-9066 and by fax at (972) 868-9067.

The Company’s website is www.dynaresource.com .

this report, “DynaResource, Inc.”, the “Company”, “DynaUSA”, “our”

and “we”

refer to DynaResource, Inc.

DynaResource de México SA de CV, the 100% owner of the mining concessions, camp, equipment,

and related interests to San Jose de Gracia Property, is referred to a “DynaMéxico”.

DynaUSA owns 80% of DynaMéxico.

Mineras de DynaResource SA de CV, the named exclusive operator at San Jose de Gracia Property under agreement with DynaMéxico,

is referred to as “DynaMineras”.

DynaUSA owns 100% of DynaMineras.

DynaResource Operaciones de San Jose de Gracia

SA de CV, and the named manager of personnel and consultants who are actively involved at San Jose de Gracia under agreement with

DynaMineras and DynaMéxico, is referred to as “DynaOperaciones”.

DynaUSA owns 100% of DynaOperaciones.

San Jose de Gracia Property is referred to as “SJG”, or the “SJG Property”, or the “SJG Project”,

or the “SJG District”.

DynaMéxico owns 100% of the SJG District.

Further in this report, “Au”

“Ag”

represents silver;

“oz.”

represents ounces;

“gpt”

represents grams per metric tonne;

“ft”

represents feet;

“m”

represents meter, “km”

represents kilometer;

and “sq”

represents square.

only current operating segment is México.

end use product produced at our test mining and pilot milling operations at SJG is either in the form of primarily gold-silver

Dore, or primarily gold-silver concentrates.

The end use product from current activities generally consists of approximately 100%

concentrate and 0% Dore.

Dore is an alloy consisting primarily of gold and silver but also containing other metals.

to refiners to produce bullion that meets the required market standard of 99.95% gold and 99.9% silver.

Gold-silver concentrates,

or simply concentrate, is raw precious metals materials that has been crushed and ground finely to a sand-like product where gangue

(waste) and non-precious metals are removed or reduced, thus concentrating the precious metals component.

Concentrates processed

and produced from San Jose de Gracia are shipped to third-party smelters, refineries or third parties for further processing or

2018, we reported the delivery and sale of 13,418 net Oz gold contained in concentrates.

All gold-silver concentrate originated

from the San Jose de Gracia Property in México.

concentrates are sold at a small discount to the prevailing spot market price, based on the price per ounce of gold and silver

quoted at the London PM fix, with the actual net precious metals prices received depending on the sales contract.

are priced by individual concentrate lots of 36 to 72 tons, or as a series of lots under contract, whereby the final selling price

and gold-silver quantities are subject to final adjustments at the time of final purchase settlement.

and Silver Pilot Processing Methods

and silver are extracted from mined mineralized material, by crushing, grinding, milling, and further by simple gravity and flotation

DynaUSA currently owns 80% of the outstanding shares of DynaMéxico, and DynaMéxico currently holds 20% of the outstanding shares of DynaMéxico as treasury stock.

DynaMéxico owns 100% of the mining concessions, equipment, camp and related facilities which comprise the San Jose de Gracía Property (“SJG”), in northern Sinaloa State, México.

We also own 100% of Mineras de DynaResource S.A.

(“DynaMineras”).

The Company also has another wholly owned subsidiary, DynaResource Operaciones, S.A.

(“DynaOperaciones”).

The Company currently conducts test mining and pilot milling operations, and other exploration activities in México.

Segment Information

Our only current operating segment is gold mining and milling operation.

The end use product produced at our test mining and pilot milling operations at SJG is in the form of gold-silver concentrates.

Gold-silver concentrates, or simply concentrate, is raw precious metals materials that has been crushed and ground finely to a sand-like product where gangue (waste) and non-precious metals are removed or reduced, thus concentrating the precious metals component.

Concentrates processed and produced from San Jose de Gracía are shipped to third-party smelters, refineries or third parties for further processing or re-sale.

During 2021, we reported the delivery and sale of 22,566 (subject to final settlements) net Oz gold contained in concentrates.

All gold-silver concentrate originated from the San Jose de Gracía Property in México.

Gold-silver concentrates are sold at a small discount to the prevailing spot market price, based on the price per ounce of gold and silver quoted at the London PM fix, with the actual net precious metals prices received depending on the sales contract.

Concentrates are priced by individual concentrate lots of 36 to 72 tons, or as a series of lots under contract, whereby the final selling price and gold-silver quantities are subject to final adjustments at the time of final purchase settlement.

Gold and Silver Pilot Processing Methods

Gold and silver are extracted from mined mineralized material, by crushing, grinding, milling, and further by simple gravity and flotation recoveries.

The mineralized material is extracted by underground mining methods.

The processing plant at the San José

Gracia mine is composed of conventional crushing and grinding circuits, and with gravity and flotation recovery methods.

and flotation concentrates are dewatered or dried, and shipped to purchasers in semi-trailers.

and Silver Reserves / No Known Reserves

Company currently has no mineral “reserves”

as defined by SEC Industry Guide 7 promulgated by the SEC.

Government Regulations

México

in México is subject to numerous federal, state and local laws, regulations and ordinances governing mineral rights, operations

and environmental protection.

Concession Rights.

Exploration and exploitation of minerals in México may be carried out through

Mexican companies incorporated under Mexican law by means of obtaining mining concessions.

Mining concessions are granted by the

Mexican government for a period of fifty years from the date of their recording in the Public Registry of Mining and are renewable

for a further period of fifty years upon application within five years prior to the expiration of such concession in accordance

with the Mining Law and its regulations.

Mining concessions are subject to annual work requirements and payment of annual

surface taxes which are assessed and levied on a semi-annual basis.

Such concessions may be transferred or assigned by their holders,

but such transfers or assignments must be registered with the Public Registry of Mining in order to be valid against third parties.

The holder of a concession must pay semi-annual duties in January and July of each year on a per hectare basis and in accordance

with the amounts provided by the Federal Fees Law.

During the month of May of each year, the concessionaire must file with the

General Bureau of Mines, the work assessment reports made on each concession or group of concessions for the preceding calendar

The processing plant at the San José de Gracía mine is composed of conventional crushing and grinding circuits, and with gravity and flotation recovery methods.

The gravity and flotation concentrates are dewatered and shipped to purchasers in semi-truck trailers.

Exploration Stage

The Company is an exploration stage company as defined in Section 1300 of Regulation S-K.

General Government Regulations

Mining in México is subject to numerous federal, state and local laws, regulations and ordinances governing mineral rights, operations and environmental protection.

Mineral Concession Rights.

Exploration and exploitation of minerals in México may be carried out through Mexican companies incorporated under Mexican law by means of obtaining mining concessions.

Mining concessions are granted by the Mexican government for a period of fifty years from the date of their recording in the Public Registry of Mining and are renewable for a further period of fifty years upon application within five years prior to the expiration of such concession in accordance with the Mining Law and its regulations.

Mining concessions are subject to annual work requirements and payment of annual surface taxes which are assessed and levied on a semi-annual basis.

Such concessions may be transferred or assigned by their holders, but such transfers or assignments must be registered with the Public Registry of Mining in order to be valid against third parties.

The holder of a concession must pay semi-annual duties in January and July of each year on a per hectare basis and in accordance with the amounts provided by the Federal Fees Law.

During the month of May of each year, the concessionaire must file with the General Bureau of Mines, the work assessment reports made on each concession or group of concessions for the preceding calendar year.

The regulations of the Mining Law provide tables containing the minimum investment amounts that must be made on a concession.

This amount is updated annually in accordance with the changes in the Consumer Price Index.

In México, while mineral rights are administered by the federal government through federally issued mining

concessions, Ejidos (communal owners of land recognized by the federal laws in México) control surface access rights

Surface Rights.

In México, while mineral rights are administered by the federal government through federally issued mining concessions, Ejidos (communal owners of land recognized by the federal laws in México) control surface access rights to the land.

An Ejido may sell or lease lands directly to a private entity.

While the Company has agreements or is in the

process of negotiating agreements with the Ejido that impact all of its projects in México, some of these agreements

may be subject to renegotiations.

In October 2013, the Mexican lower house passed a bill levying a tax-deductible mining royalty

of 7.5% on earnings before the deduction of interest, taxes, depreciation and amortization, along with an additional 0.5% surcharge

on precious metals revenue for mining companies.

The effective date of the law was January 1, 2014.

Although there are a

few uncertainties surrounding the scope, calculation and enforcement of the royalty, based on the Company's current interpretation

of the bill, the royalty or surcharge was not material for 2016.

Environmental

The Environmental Law in México, called the "General Law of Ecological Balance and

Protection to the Environment"

("General Law"), provides for general environmental policies, with specific requirements

for certain activities such as exploration set forth in regulations called "Mexican official norms".

Responsibility

for enforcement of the General Law, the regulations and the Mexican official norms is with the Ministry of Environment and Natural

Resources, which regulate all environmental matters with the assistance of Procuraduria Federal de Protección al Ambiente

(known as "PROFEPA").

primary laws and regulations used by the State of Sinaloa, where our San Jose de Gracia property is located, in order to govern

environmental protection for mining and exploration are:

The General Law, Forestry Law, Residues Law, as well as their specific

regulations on air, water and residues, and the Mexican official norms (known as "NOM-120").

In order to comply with

the environmental regulations, a concessionaire must obtain a series of permits during the exploitation and exploration stage.

The time required to obtain the required permits is dependent on a few factors including the type of vegetation and trees impacted

by proposed activities.

The Secretariat of Environmental and Natural Resources, the Mexican Government environmental authority

("SEMARNAT"), is responsible for issuing environmental permits associated with mining.

Three main permits required before

construction can begin are:

Environmental Impact Statement (known in México as Manifesto Impacto Ambiental ) ("MIA"),

Land Use Change (known in México as Estudio Justificativo Para Cambio Uso Sueldo ) ("ETJ"), and Risk Analysis

(known in México as Analisis de Riesgo ) ("RA").

A construction permit is required from the local municipality

and an archaeological release letter must be obtained from the National Institute of Anthropology and History (known as "INAH").

While the Company has agreements or is in the process of negotiating agreements with the Ejido that impact all of its projects in México, some of these agreements may be subject to renegotiations.

Environmental Law.

The Environmental Law in México, called the "General Law of Ecological Balance and Protection to the Environment" ("General Law"), provides for general environmental policies, with specific requirements for certain activities such as exploration set forth in regulations called "Mexican official norms".

Responsibility for enforcement of the General Law, the regulations and the Mexican official norms is with the Ministry of Environment and Natural Resources, which regulate all environmental matters with the assistance of Procuraduria Federal de Protección al Ambiente (known as "PROFEPA").

2020 Forestry Law.

The 2020 Forestry Law provides for general policies for the use and protection of the surface, and for plants, soil and trees.

The regulation of the Forestry Law is with the Ministry of Environment and Natural Resources, with the assistance of PROFEPA.

Residues Law.

The Residues Law, also known as Norm 141, provides for general policies for the deposit and storage of residue and waste.

The regulation of the Residues Law is with the Ministry Of Environment and Natural Resources, with the assistance of PROFEPA.

The primary laws and regulations used by the State of Sinaloa, where our San Jose de Gracía property is located, in order to govern environmental protection for mining and exploration are:

The General Law, the 2020 Forestry Law, Residues Law, as well as their specific regulations on air, water and residues, and the Mexican official norms (known as "NOM-120").

In order to comply with the environmental regulations, a concessionaire must obtain a series of permits during the exploitation and exploration stage.

The time required to obtain the required permits is dependent on a few factors including the type of vegetation and trees impacted by proposed activities.

Mining Permits.

The Secretariat of Environmental and Natural Resources, the Mexican Government environmental authority ("SEMARNAT"), is responsible for issuing environmental permits associated with mining.

Three main permits required before construction can begin are:

Environmental Impact Statement (known in México as Manifesto Impacto Ambiental ) ("MIA"), Land Use Change (known in México as Estudio Justificativo Para Cambio Uso Sueldo ) ("ETJ"), and Risk Analysis (known in México as Analisis de Riesgo ) ("RA").

A construction permit is required from the local municipality and an archaeological release letter must be obtained from the National Institute of Anthropology and History (known as "INAH").

An explosives permit is required from the ministry of defense before construction can begin.

The Environmental Impact Statement

is required to be prepared by a third-party contractor and submitted to SEMARNAT and must include a detailed analysis of climate,

air quality, water, soil, vegetation, wildlife, cultural resources and socio-economic impacts.

The Risk Analysis study (which

is included into the Environmental Impact Statement and submitted as one complete document) identifies potential environmental

releases of hazardous substances and evaluates the risks in order to establish methods to prevent, respond to, and control environmental

The Land Use Change requires that an evaluation be made of the existing conditions of the land, including a plant

and wildlife study, an evaluation of the current and proposed use of the land, impacts to naturally occurring resources, and an

evaluation of reclamation/re-vegetation plans.

Company sells its concentrates to the buyer who offers the best terms based upon price, treatment costs, refining costs, and other

terms of payment.

During the year ended December 31, 2018, the Company sold gold-silver concentrates to the following purchasers:

Gold-Silver Concentrates:

Mercuria Commodities

of December 31, 2018, we had 210 employees, including 205 employees based in México, and 5 in the United States.

are retained from time to time.

Employees based in México and the United States include laborers, engineers, geologists,

information technologists, office administrators, managers and executives.

None of our employees in México are covered

by union contracts and the Company believes we have good relations with our employees.

report, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking

statements that may be affected by several risk factors.

The following information summarizes all material risks known to us at

the date of filing this report.

Relating to Our Company

of Mineral Exploration and Mining

Company is involved in the business of exploration and development of resource properties, which carries the inherent risk of

exploration and development of mineral deposits involve significant risks which a combination of careful evaluation, experience

and knowledge may not eliminate.

There is no assurance that the Company’s exploration programs will result in discoveries

of commercial mineralized bodies.

Company’s future is dependent upon the success of its exploration programs, and the success of its test mining and pilot

milling programs.

The exploration and development of mineral deposits involve significant risks over significant periods of time.

It is impossible to ensure that the current or proposed exploration programs on the Company’s property will result in a

profitable mining operation.

a mineralized deposit will be commercially viable depends on many factors, such as size and grade of the deposit, proximity to

infrastructure, financing costs, regulations, environmental protection, commodities prices, taxes, and political risks.

of these factors cannot be accurately predicted, but the combination of factors may result in the Company’s failure to provide

a return on investment.

Business Conditions

Company competes with many larger, well capitalized companies, which places the Company at a competitive disadvantage.

Company competes with many companies in the mining business, including large, established mining companies with substantial capabilities,

personnel, and financial resources.

There is a limited supply of desirable mineral lands available for claim-staking, lease, or

acquisition in México, where the Company’s activities are focused.

The Company may be at a competitive disadvantage

in acquiring mineral properties, since it competes with companies which have greater financial resources and larger technical

From time to time, specific properties or areas which would otherwise be attractive for acquisition or exploration are

unavailable due to their previous acquisition by competitors or due to the Company’s lack of financial resources.

in the industry extends to the technical expertise to find, advance, and operate mineral properties;

the labor to operate the

and the capital for the purpose of funding exploration and development activities on such properties.

Many competitors

explore for and mine precious metals and conduct refining and marketing operations on a world-wide basis.

Such competition may

make it more difficult for the Company to recruit or retain qualified employees, to obtain equipment and personnel to assist in

its exploration and production activities, or to acquire the capital necessary to fund operations.

Company conducts its resource exploration and development activities in México, subject to rules and regulations for owning

and maintaining mining concessions and surface rights, environmental protection, water rights, hazardous wastes, explosives, reclamation,

There can be no certainty that the Company maintains full compliance with all government regulations.

México.

Exploration and development of minerals in México may be carried out through Mexican companies incorporated under Mexican

law by means of obtaining exploration and development (exploitation) concessions.

The Company’s concessions are granted

by the Mexican government, or acquired from previous owners, are filed in the Public Registry of Mining, and are scheduled to

expire from 2028 through 2058.

Holders of exploration concessions may, prior to the expiration of such concessions, apply for

one or more development concessions covering all or part of the area covered by an exploration concession.

Environmental

law in México provides for general environmental policies, with specific requirements set forth under regulations of the

Ministry of Environment, Natural Resources and Fishing, which regulate all environmental matters with the assistance of the National

Institute of Ecology and the Procuraduria Federal de Proteccion al Ambiente.

primary laws and regulations governing environmental protection for mining in México are found in the General Law, the

Ecological Technical Standards, and also in the air, water and hazardous waste regulations, among others.

In order to comply with

the environmental regulations, a concessionaire must obtain a series of permits during the exploration stage.

Generally, these

permits are issued on a timely basis after the completion of an application by a concession holder.

The Company believes it is

currently in full compliance with the General Law and its regulations in relation to its mineral property interests in México.

potential economic success of the Company’s properties will depend to a large extent to the market price of commodities,

the future price of which is impossible to predict.

current value and potential value for properties obtained by the Company is directly related to the market price for gold.

market price of gold may also have a significant influence on the market price of the Company’s common stock.

If the Company

obtains positive drill results and a property progresses to a point where a commercial production decision can be made, the decision

to put a mine in production and to commit funds necessary for that purpose would be made long before any revenue from production

would be received.

A decrease in the market price of gold at any time during future exploration or development may prevent a property

from being economically mined or result in the write-off of assets whose value is impaired as a result of lower gold prices.

price of gold is affected by numerous factors beyond the Company’s control, including inflation, fluctuation of the United

States dollar and foreign currencies, global and regional demand, the purchase or sale of gold by central banks, and the political

and economic conditions of major gold producing countries throughout the world.

During the last five years, the market price of

gold has fluctuated between approximately $1,057 and $1,895 per ounce.

The volatility of gold prices represents a substantial

risk which is impossible to fully eliminate.

In the event gold prices decline and remain low for prolonged periods of time, the

Company might be unable to explore, develop, or produce revenue from its properties.

volatility of mineral prices represents a substantial risk which no amount of planning or technical expertise can fully eliminate.

In the event mineral prices decline and remain low for prolonged periods of time, we might be unable to develop our properties,

which may adversely affect our results of operations, financial performance and cash flows.

Our results of operations have been

and could continue to be materially and adversely affected by the impairment of assets.

An asset impairment charge may result

from the occurrence of unexpected adverse events that impact our estimates of expected cash flows generated from our producing

properties or the market value of our non-producing properties.

volatility in gold, silver and copper prices is illustrated by the following table, which sets forth, for the periods indicated,

the average market prices in U.S.

dollars per ounce of gold and silver, based on the average daily London P.M.

pound of copper based on the London Metal Exchange Grade A copper settlement price.

of March 31, 2019, the price of gold was $1,295 per ounce.

Should a downward trend in prices occur, there is a possibility that

we may record impairment charges in 2018, or in future years.

Company suspended its test pilot production activity in June 2006 in order to focus on exploration activities.

The Company re-commenced

test mining and pilot production work in 2014.

There is a risk that the Company would expend available cash and funding in test

mining and milling activities, and administration costs, and would not be able to obtain further funding to continue its work.

2007, the Company focused on the exploration of the vast SJG district.

Funds received by DynaMéxico pursuant to the Earn

In/Option Agreement (See Earn In / Option Agreement –

Financing of Drilling –

Exploration Programs (2006 –

were utilized for exploration and related activities.

2015, the Company commenced test mining and pilot milling operations.

And during 2018, the Company improved and expanded its operations

in order to increase outputs from the test mining and pilot milling activities.

Company and its subsidiaries have $2,685,576 cash on hand at December 31, 2018.

The Company could incur test pilot production

expenses and corporate expenses greater than the amount of available cash on hand.

The Company may need to raise additional funds

in order to support its activities.

If the Company needs to raise additional capital, its common stock could be diluted.

if the Company is unable to raise funds to meet its obligations, the value of its common stock may decline.

Control of Chairman / Preferred Shares

Company’s Chairman / CEO owns 100% of the outstanding shares of Series A preferred stock.

The Series A preferred shares

retain the right to elect a majority of the members of the Company’s Board of Directors.

Such ownership and concentration

of control may have the effect of delaying, deferring or preventing a change in control of the Company, even if the transaction

could be determined to be beneficial to Company’s stockholders.

Company may need to raise additional capital, which may not be available or may be too costly, and which, if not obtained, could

cause the Company to cease operations.

Company’s capital requirements could be greater than its operating income.

The Company believes it has adequate cash on

hand for the foreseeable future, but it does not have sufficient cash to indefinitely sustain operating losses.

The Company’s

liquidity depends on its ability to raise capital through the sale of common stock or through debt or equity offerings.

financing may not be available, or, if available, may be on terms unacceptable or unfavorable.

If additional capital is required

and not obtained, or if the Company is not able to produce sufficient revenue from operations, or otherwise operate at a profit,

the value of investment in the Company could decline or be lost entirely.

Company has a limited public market trading on the Over the Counter Market (“OTC”) , and an active trading market

may never materialize, and an investor may not be able to sell stock.

is currently only a limited public market for the Company’s Common Stock and there can be no assurance that a more robust

trading market will develop further or be maintained in the future.

An active trading market may not develop and if not, the market

value could decline to a value below the amount investors paid for stock.

Additionally, if the market is not active or illiquid,

investors may not be able to sell the securities of the Company.

Stock Classification

a public trading market for the Company’s common stock materializes, it may be classified as a ‘penny stock’

which would result in additional requirements for trading the stock.

These additional requirements could affect the liquidity

of the stock.

SEC has adopted regulations which generally define a “penny stock”

to be an equity security that has a market price

of less than $5.00 per share, subject to specific exemptions.

The market price of the Company’s Common Stock may trade at

less than $5.00 per share and accordingly may be a “penny stock.”

Brokers and dealers effecting transactions in “penny

must disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine

that the purchaser is reasonably suitable to purchase the securities.

These rules may restrict the ability of brokers or dealers

to sell the Common Stock and may affect an investor’s ability to sell such shares.

Guarantee of Title

Company has investigated title to all mineral claims and properties, and, to the best of its knowledge, title to all mineral claims

and properties comprising the SJG District is in good standing.

However, there can be no assurance of complete title, nor guarantee

The mineral claims and properties may be affected by undetected defects in title, such as the reduction in size

of the mineral claims and other third-party claims affecting the Company's rights.

business requires substantial capital investment and we may be unable to raise additional funding on favorable terms to develop

additional mining operations.

will need to obtain additional financing, either in the form of debt or equity financing, to fund development of additional mining

operations at the San Jose de Gracia project and to continue our administrative activities.

Our ability to obtain necessary funding,

in turn, depends upon a few factors, including the state of the economy and applicable commodity prices.

We may not be successful

in obtaining the required financing for San Jose de Gracia or other purposes, on terms that are favorable to us or at all, in

which case, our ability to continue operating would be adversely affected.

Failure to obtain such additional financing could result

in delay or indefinite postponement of further exploration or potential development and the possible partial or total loss of

our interest in certain properties.

feasibility of mining at our San Jose de Gracia property has not been established in accordance with SEC Industry Guide 7, and

any funds spent on exploration and development could be lost.

"reserve,"

as defined by Industry Guide 7 of the SEC, is that part of a mineral deposit which could be economically

and legally extracted or produced at the time of the reserve determination.

A reserve requires a SEC-compliant feasibility study

or other report demonstrating with reasonable certainty that the deposit can be economically extracted and produced.

have not received a SEC-compliant report on any of our properties, we currently have no reserves as defined by SEC Industry Guide

7, and there are no assurances that we will be able to prove that there are reserves on our properties.

mineralized material identified on our properties, including the San Pablo mine where we are currently conducting test mining

activities does not and may never demonstrate economic viability.

Substantial expenditures are required to establish reserves

through drilling and additional study and there is no assurance that reserves will be established.

The feasibility of mining at

San Jose de Gracia, or any other property has not been, and may never be, established.

Whether a mineral deposit can be commercially

viable depends upon a few factors, including the particular attributes of the deposit, including size, grade, metallurgical recoveries

and proximity to infrastructure;

metal prices, which can be highly variable;

and government regulations, including environmental

and reclamation obligations.

If we are unable to establish some or all of our mineralized material as proven or probable reserves

in sufficient quantities to justify commercial operations, our investment in that property may be lost, and the market value of

our securities may suffer.

are significant risks and uncertainty associated with construction, commencing or expanding test mining and pilot production activities

or changing operational plans without a current feasibility, pre-feasibility or scoping study.

As such, the San Jose de Gracia

property may ultimately be determined to lack one or more geological, engineering, legal, operating, economic, social, environmental,

and other relevant factors reasonably required to serve as the basis for a final decision to successfully complete all or part

of these projects.

figures for our estimated mineralized material are based on interpretation and assumptions and may yield less mineral production

under actual conditions than is currently estimated.

otherwise indicated, mineralization figures presented in our filings with Canadian securities regulatory authorities (on SEDAR),

news releases and other public statements that may be made from time to time are based upon estimates made by independent geologists

and our internal geologists.

When making determinations about whether to advance any of our projects to development, we must rely

upon such estimated calculations as to the mineralized material and grades of mineralization on our properties.

Until mineralized

material is actually mined and processed, mineralized material and grades of mineralization must be considered as estimates only.

estimates are imprecise and depend upon geological interpretation and statistical inferences drawn from drilling and sampling

analysis, which may prove to be unreliable.

We cannot ensure that:

estimates will be accurate;

mineralization

estimates will be accurate;

mineralization can be mined or processed profitably.

material changes in mineral estimates and grades of mineralization may affect the economic viability of placing a property into

production and such property's return on capital.

There can be no assurance that minerals recovered in small scale tests will

be recovered in large-scale tests under on-site conditions or in production scale.

The estimates contained in our public filings

in Canada (on SEDAR) have been determined and valued based on assumed future prices, cut-off grades and operating costs that may

prove to be inaccurate.

Extended declines in market prices for gold and/or silver may render portions of our mineralization estimates

uneconomic and result in reduced reported mineralization or adversely affect the commercial viability of one or more of our properties.

Any material reductions in estimates of mineralization, or of our ability to extract this mineralization, could have a material

adverse effect on our results of operations or financial condition.

has been enacted that affects the mining industry

México, in October 2013, the Mexican lower house passed a bill proposing a tax-deductible mining royalty of 7.5% on earnings

before the deduction of interest, taxes, depreciation and amortization, along with an additional 0.5% on precious metals revenue

for precious metals mining companies.

In addition, the long-term corporate tax rate is expected to remain at 30% rather than being

reduced to 28% as originally planned.

The Mexican Senate approved the provisions of the Tax Reform on October 31, 2013.

effective date of the law was January 1, 2014.

upon Key Personnel

Company is dependent upon the efforts and abilities of its management team.

loss of any member of the management team could have a material adverse effect upon the business and prospects of the Company.

In the event of such loss, the Company will seek suitable competent replacements, but there is no assurance that the Company will

be able to retain such replacements.

The Company has obtained a Key Man Life Insurance program for its Chairman and CEO, which

would pay the proceeds of such policy to the Company in the event of his death.

of Resource Estimate

can be no certainty that any resource estimate by the Company’s consultants would ever be realized in production.

current formal resource estimate in respect of the SJG Property (the “NI 43-101 Mineral Resource Estimate") is based

on limited information, such as historical data, drilling programs, the production activity conducted by the Company in 2003–2006,

and various reports, manual calculations and opinions.

No assurance can be given that the anticipated tonnages and grades will

be achieved or that the estimated or indicated level of recovery will be achieved.

The grade of mineralization actually recovered

or produced could differ significantly from the resource estimates.

In addition, under U.S.

standards, as set forth in SEC Industry

Guide 7, mineralization may not be classified as a “reserve”

unless a determination has been made that the mineralization

could be economically and legally produced or extracted at the time the reserve determination is made.

The SJG Property as described

in this Annual Report is without known reserves.

Mineral resources which are not classified as mineral reserves do not have “demonstrated

economic viability.”

The quantity of resources and the quality (grade) of resources reported as “Indicated”

and “Inferred”

mineral resources in the mineral resource estimate compiled for DynaMéxico, under the NI 43-101

Mineral Resource Estimate filed by the Company on SEDAR, are not disclosed in this Form 10-K .

There has been insufficient

exploration to define any mineral reserves on the SJG Property, and it is not certain if further exploration will result in definition

of mineral reserves.

Known Reserves

Production of Gold at the San Jose de Gracia Property May Not Be Indicative of Future Production or Revenue

SJG Property is a high-grade mineralized system with reported historical production of over 1,000,000 Oz.

The production

occurred in the early 1900’s, prior to the Mexican Revolution.

Since that time, the property has seen small scale mining

operations, from small scale local owners, to the Company’s pilot production activities in 2003–2006 and 2014 to present.

Due to the uncertainties associated with exploration, including variations in geology and structure, there is no assurance that

the Company’s efforts will be successful in identifying mineralization in sufficient quantities to define proven or probable

reserves, and further there is no assurance that any such reserves could be developed into a commercial operation.

the Company’s securities should not rely on historical operations as an indication that the SJG property will be developed

into a commercial production in the future.

The Company expects to incur losses unless and until such time as one or more of its

properties enters into commercial production and generates sufficient revenue to fund continuing operations.

Environmental

and Regulatory Concerns

Company operates in an industry where there are significant environmental and regulatory requirements.

The inability of the Company

to satisfy these requirements could cause the value of its common stock to decline.

current or future operations of the Company, including acquisition, leasing, and sales activities, involve mineral properties

which require permits from various federal, state and local governmental authorities.

Such future operations are and will be governed

by laws and regulations governing prospecting, development, mining, production, exports, taxes, labor standards, occupational

health, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters.

Companies engaged

in the development and operation of mines and related facilities generally experience increased costs, and delays in production

and other schedules as a result of the need to comply with applicable laws, regulations and permits.

Additional permits and studies,

which may include environmental impact studies conducted before permits can be obtained, are necessary prior to operation of properties

in which the Company has interests.

Required permits could adversely affect the Company's ability to negotiate agreeable

acquisition, lease, or sales terms and therefore adversely affect the price of the Company’s common stock.

business is subject to U.S.

Foreign Corrupt Practices Act and similar worldwide anti-bribery laws, a breach or violation of which

could lead to civil and criminal fines and penalties, loss of licenses or permits and reputational harm.

operate in certain jurisdictions that have experienced governmental and private sector corruption to some degree, and, in certain

circumstances, strict compliance with anti-bribery laws may conflict with certain local customs and practices.

For example, the

Foreign Corrupt Practices Act and anti-bribery laws in other jurisdictions, generally prohibit companies and their intermediaries

from making improper payments for the purpose of obtaining or retaining business or other commercial advantage, and often carry

substantial penalties.

There can be no assurance that our internal control policies and procedures always will protect it from

recklessness, fraudulent behavior, dishonesty or other inappropriate acts committed by the Company's affiliates, employees or

As such, our corporate policies and processes may not prevent all potential breaches of law or other governance practices.

Violations of these laws, or allegations of such violations, could lead to civil and criminal fines and penalties, litigation,

and loss of operating licenses or permits, and may damage the Company's reputation, which could have a material adverse effect

on our business, financial position and results of operations or cause the market value of our common shares to decline.

are subject to foreign currency risk.

we transact most of our business in U.S.

dollars, expenses, such as labor, operating supplies, and property and equipment, are

denominated in Mexican pesos.

As a result, currency exchange fluctuations may impact our operating costs.

The appreciation of

dollar currencies against the U.S.

dollar increases costs and the cost of purchasing property and equipment in U.S.

terms in México, which can adversely impact our operating results and cash flows.

Conversely, a depreciation of non-U.S.

dollar currencies usually decreases operating costs and property and equipment purchases in U.S.

dollar terms in foreign countries.

value of cash and cash equivalents denominated in foreign currencies also fluctuates with changes in currency exchange rates.

Appreciation of non-U.S.

dollar currencies results in a foreign currency gain on such investments and a depreciation in non-U.S.

dollar currencies results in a loss.

We have not utilized market risk sensitive instruments to manage our exposure to foreign

currency exchange rates but may in the future actively manage our exposure to foreign currency exchange rate risk.

portions of our cash reserves in Mexican currency.

operating and capital costs could affect our profitability.

at any particular mining location are subject to variation due to a few factors, such as variable ore grade, changing metallurgy

and revisions to mine plans in response to the physical shape and location of the mineralized bodies, as well as the age and utilization

rates for the mining and processing-related facilities and equipment.

In addition, costs are affected by the price and availability

of input commodities, such as fuel, electricity, labor, chemical reagents, explosives, steel and concrete and mining and processing-related

equipment and facilities.

Reported costs may also be affected by changes in accounting standards.

A material increase in costs

at any significant location could have a significant effect on our profitability and operating cash flow.

could have significant increases in capital and operating costs over the next several years in connection with the development

of new projects and in the sustaining and/or expansion of test mining and pilot processing operations.

Costs associated with capital

expenditures have escalated on an industry-wide basis over the last several years, as a result of factors beyond our control,

including the prices of oil, steel and other commodities and labor, as well as the demand for certain mining and processing equipment.

Increased capital expenditures may have an adverse effect on the profitability of and cash flow generated from existing operations,

as well as the economic returns anticipated from new projects.

Ownership of DynaMéxico

owns 80% of the outstanding share capital of DynaMéxico –

the 100% owner of the SJG Project.

Because of this shared

ownership (80%/20%), any current benefits to be derived from the ownership of DynaMéxico could be distributed on an 80%/20%

wholly owned subsidiary of DynaResource, Inc.

-- Mineras de DynaResource S.A.

(“DynaMineras”) -- maintains

an exclusive operating agreement with DynaMéxico.

Additionally, another wholly owned subsidiary of DynaResource, Inc.

DynaResource Operaciones de San Jose De Gracia S.A.

(“DynaOperaciones”) maintains an exclusive agreement to

manage the personnel registered as employees in México.

Company’s Chairman and CEO is also President of DynaMéxico and President of DynaMineras, and the CEO holds a broad

power of attorney granted by the shareholders of DynaMéxico.

The power of attorney gives the CEO broad authority to act

for DynaMéxico.

The power of attorney held by the CEO is consistent with the laws in México, whose laws are based

on a civil code.

nature of mineral exploration and production activities involves a high degree of risk and the possibility of uninsured losses

that could materially and adversely affect our operations.

for and production of minerals is highly speculative and involves greater risk than many other businesses.

Many exploration programs

do not result in the discovery of mineralization, and any mineralization discovered may not be of sufficient quantity or quality

to be profitably mined.

Few properties that are explored are ultimately advanced to production.

Our current exploration efforts

are, and future development and mining operations we conduct will be, subject to all of the operating hazards and risks normally

incident to exploring for and developing mineral properties, such as, but not limited to:

economically insufficient

mineralized material;

fluctuations in

production costs that may make mining uneconomical;

availability of

labor, contractors, engineers, power, transportation and infrastructure;

labor disputes;

potential delays

related to social, public health, and community issues;

unanticipated variations

in grade and other geologic problems;

environmental hazards;

difficult surface

or underground conditions;

water conditions;

industrial accidents;

metallurgical and

What changed 10-K/A

Item 1. Business