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Item 8. Financial Statements and Supplementary Data

2022-08-23 compared with 2019-09-24 · 753 added, 1254 removed, 100 unchanged (95% of the section changed)

FINANCIAL STATEMENTS

AND SUPPLEMENTARY DATA

into and forming an integral part of this Form 10-K are the audited financial statements for the Company for the years ended December

31, 2018 and 2017.

The financial statements as of December 31, 2018 and 2017 of the Company included in this Form 10-K have been

audited by Whitley Penn LLP, an independent registered public accounting firm, as set forth in their report.

Statements included in the Form 10-K:

of Independent Registered Public Accounting Firm

Balance Sheets as of December 31, 2018 and 2017

Statements of Operations for the Years Ended December 31, 2018 and 2017

Statement of Changes in Stockholders’

Equity (Deficit) for the Years Ended December 31, 2018 and 2017

Statements of Cash Flows for the Years Ended December 31, 2018 and 2017

to the Consolidated Financial Statements for the Years Ended December 31, 2018 and 2017

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Board of Directors and Stockholders of

DynaResource,

on the Financial Statements

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

and subsidiaries (the “Company”) as

of December 31, 2018 and 2017, and the related consolidated statements of income and comprehensive income, changes in stockholders’

equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the “financial

statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position

of the Company as of December 31, 2018 and 2017, and the results of their operations and their cash flows for the years then ended,

in conformity with accounting principles generally accepted in the United States of America.

discussed in Notes 1, 3, 7, 12 and 17 to the financial statements, the Company restated certain amounts previously reported as

of and for the years ended December 31, 2018 and 2017.

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

Our responsibility is to express an opinion on

the Company’s 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.

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

Those standards require that we plan and perform the audit

to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error

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

As part of our audits we are required to obtain an understanding of internal control over financial reporting, but

not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Incorporated into and forming an integral part of this Form 10-K are the audited consolidated financial statements for the Company for the years ended December 31, 2021 and 2020.

The consolidated financial statements as of December 31, 2021 and 2020 of the Company included in this Form 10-K have been audited by Armanino LLP, an 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:

Consolidated Balance Sheets

Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)

Consolidated Statement of Changes in Stockholders’ (Deficit)

Consolidated Statements of Cash Flows for the Years

Notes to the Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

DynaResource, Inc.

Irving, Texas

Opinion on the Consolidated Financial Statements

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

(the "Company") and subsidiaries as of December 31, 2021 and 2020, the related consolidated statements of operations, changes in stockholders' equity, and cash flows for the years then ended, and the related notes (collectively referred to as the "consolidated financial statements").

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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

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

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 audit 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 audit 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.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to

error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

have served as the Company’s auditor since 2018.

Whitley Penn LLP

8, 2019 (September 23, 2019 as to Notes 1, 3, 7, 12 and 17 and the effects of the restatement )

DYNARESOURCE,

CONSOLIDATED BALANCE

DECEMBER 31, 2018

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

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

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

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

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved especially challenging, subjective, or complex judgments.

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

Derivative Liabilities

As described in Note 10 to the consolidated financial statements, the derivative liabilities represent the embedded conversion features of the Series C Preferred Stock, Preferred Series C Warrants, and Series D Notes Kicker Warrants.

The Company has classified the derivative liabilities as Level 3 liabilities and the fair value of the liabilities are evaluated each reporting period.

As of December 31, 2021, the derivative liabilities were $3,898,914.

The derivative liabilities include both quantitative and qualitative components.

The calculation of the fair value of the derivative liabilities used a Black-Scholes pricing model.

Key components of the fair value calculation included:

the annual volatility rate, the risk-free rate, the remaining term, and the fair value of the underlying common stock.

The principal considerations for our determination that performing procedures relating to the fair value of the derivative liabilities is a critical audit matter are:

there was significant judgment and estimation used by management in determining the fair value of the derivative liabilities, which led to an increased level of auditor judgment, subjectivity and effort in performing procedures and in evaluating audit evidence obtained relating to the derivative liabilities, including the qualitative component.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included documenting the control environment in which judgements were made.

These procedures also included, testing the reasonableness of the assumptions management used in the Black-Scholes pricing model, recalculating the change in fair value, and performing a stress-test on the assumptions.

Armanino LLP Dallas, Texas

We have served as the Company's auditor since 2020.

March 24, 2022 except for Note 16, as to which the date is August 23, 2022

DYNARESOURCE, INC.

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2021 and 2020

Current assets

Cash and Cash

Cash and cash equivalents

Accounts receivable

Foreign tax receivable

Current Assets

Other current assets

Total current assets

Mining Equipment and Fixtures

(Net of Accumulated

Property and equipment (net of accumulated

depreciation of $ 116,425 and $ 113,176 )

Right-of-use assets

Mining concessions

Investment in Affiliate

LIBILITIES AND STOCKHOLDERS’

EQUITY (DEFICIT)

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities:

2 unchanged sentences

Customer advances

Due to Non-Controlling Interest

Derivative liabilities

Convertible Notes Payable

Portion of Long-Term Debt

Current portion of convertible notes payable

Current portion of operating lease payable

Current portion of long-term debt

Total current liabilities

Convertible notes payable - Series D (net of amortized discount of $ 0 and $ 755,214 )

Convertible notes payable - Series I & II, less current portion

Operating lease payable, less current portion

Long term debt, less current portion

TOTAL LIABILITES

Preferred Stock, Series C,

$0.0001 per value, 1,733,221 shares Authorized, issued and outstanding

TEMPORARY EQUITY

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

Series D Senior Convertible Preferred Stock, $ 0.0001 par value, 3,000,000 shares authorized, 760,000 and 0 shares issued and outstanding

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS'

EQUITY (DEFICIT)

Preferred Stock, Series A, $0.0001 par value,

issued and outstanding

Common Stock, $0.01 par value, 25,000,000 shares

17,722,825 and 17,722,825

issued and outstanding

STOCKHOLDERS' EQUITY (DEFICIT)

Preferred Stock, Series A, $ 0.0001 par value, 1,000 shares

authorized, issued and outstanding

Common Stock, $ 0.01 par value, 40,000,000 and 40,000,000 shares authorized

18,091,293 and 17,722,825 issued and outstanding

Preferred rights

Additional paid-in-capital

Treasury Stock, 778,980 and

778,980 shares

Accumulated Other Comprehensive

Treasury stock, 12,180 and 516,480 shares

( 1,474,486 )

Total DynaResource Inc.

Stockholders'

Non-Controlling

TOTAL EQUITY (DEFICIT)

TOTAL LIABILITIES AND

STOCKHOLDERS' EQUITY (DEFICIT)

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

D YNARESOURCE,

STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

THE YEARS ENDED DECEMBER 31, 2018 AND 2017

Accumulated other comprehensive income

Accumulated deficit

( 50,722,465 )

( 59,256,828 )

TOTAL STOCKHOLDERS’ DEFICIT

( 9,668,660 )

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

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

DYNARESOURCE, INC.

CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

COSTS AND EXPENSES OF MINING OPERATION

Production Cost Applicable

Production cost applicable to sales

Mine production costs

1 unchanged sentence

Mine expansion costs

Camp, Warehouse and

Camp, warehouse and facilities

Transportation

1 unchanged sentence

General and administrative

and Amortization

Operating Expenses

NET OPERATING (LOSS)

Depreciation and amortization

TOTAL OPERATING EXPENSES

NET OPERATING INCOME (LOSS)

( 2,679,945 )

OTHER INCOME (EXPENSE)

Foreign Currency Gains

Gain on Sale of Assets

Foreign currency gains (loss)

Interest expense

Derivatives Mark-to-Market

Income (Expense)

Total Other Income

( 1,573,125 )

( 1,133,360 )

Derivatives mark-to-market gain (loss)

( 2,186,912 )

( 1,186,964 )

Arbitration award expense

( 1,111,111 )

Other income (expense)

TOTAL OTHER INCOME (EXPENSE)

( 4,622,364 )

( 2,685,878 )

NET INCOME (LOSS) BEFORE TAXES

( 5,365,823 )

PROVISION FOR INCOME TAXES

NET INCOME (LOSS)

DEEMED DIVIDEND FOR SERIES C PREFERRED

LOSS ATTRIBUTABLE TO NON-CONTROLLING

NET INCOME(LOSS) ATTRIBUTABLE

TO COMMON STOCKHOLDERS

$ ( 5,365,823 )

DEEMED DIVIDEND FOR SERIES C & D PREFERRED

LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS

$ ( 5,477,733 )

EARNINGS PER SHARE ATTRIBUTABLE TO THE

EQUITY HOLDERS OF DYNARESOURCE,

Basic Earnings (Loss)

Per Common Share

Weighted Average

Shares Outstanding - Basic

Diluted Earnings (Loss)

Per Common Share

Weighted Average

Shares Outstanding - Diluted

EQUITY HOLDERS OF DYNARESOURCE, INC.

Basic and Diluted Income (loss) per common share

Weighted average shares outstanding – Basic and Diluted

OTHER COMPREHENSIVE INCOME (LOSS)

Currency Translation Gain (Loss)

TOTAL OTHER COMPREHENSIVE

INCOME (LOSS)

TOTAL COMPREHENSIVE INCOME

Foreign currency translation gain (loss)

TOTAL OTHER COMPREHENSIVE INCOME (LOSS)

TOTAL COMPREHENSIVE INCOME (LOSS)

$ ( 5,265,241 )

ATTRIBUTABLE TO:

HOLDERS OF DYNARESOURCE, INC.

NON-CONTROLLING

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

DYNARESOURCE,

STATEMENTS OF CHANGES IN STOCKHOLDERS’

EQUITY (DEFICIT)

ENDED DECEMBER 31, 2018 AND 2017 (RESTATED)

EQUITY HOLDERS OF DYNARESOURCE, INC.

$ ( 5,191,983 )

NON-CONTROLLING INTEREST

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

DYNARESOURCE, INC.

Consolidated Statement of Changes

in Stockholders' Equity

For the Years Ended December

31, 2018 and 2017

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

YEARS ENDED DECEMBER 31, 2021 AND 2020

Non Controlling

Balance, December 31, 2016

Sale of Common Shares for Cash

Issuance of Treasury Shares for Services

Balance January 1, 2020

$ ( 2,223,891 )

$ ( 53,952,594 )

$ ( 5,723,663 )

$ ( 4,734,919 )

Treasury Stock Issued for Services

Other Comprehensive Income

Net Income (Loss)

( 5,304,234 )

( 5,365,823 )

Elimination of Non-Controlling Interest

( 5,565,421 )

Balance, December 31, 2020

$ ( 1,474,486 )

$ ( 59,256,828 )

$ ( 9,668,660 )

Treasury Stock Issued for Services

Stock Warrants Exercised

Other Comprehensive Income

1 unchanged sentence

Balance, December 31, 2021

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

DYNARESOURCE,

STATEMENTS OF CASH FLOWS

THE YEARS ENDED DECEMBER 31, 2018 AND 2017

$ ( 247,665 )

$ ( 50,722,465 )

$ ( 151,589 )

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

DYNARESOURCE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

CASH FLOWS FROM OPERATING ACTIVITES:

Net Income (Loss)

Adjustments to reconcile net income (loss) to

cash provided by (used in) operating activities

$ ( 5,365,823 )

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

Change in derivatives

Depreciation and amortization

Gain on Sale of Asset

Amortization of loan discount

Stock issued for services

Non-dilution stock issuance

Change in operating assets and liabilities

Accounts receivable

( 1,506,236 )

Foreign tax receivable

Customer Advances

( 2,562,266 )

( 1,111,111 )

Right-of-use assets

Accounts payable

Accrued expenses

Customer advances

Operating lease liabilities

CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of Equipment

Disposal of Equipment

CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES

CASH FLOW FROM FINANCING ACTIVITIES:

Proceeds from Sale of

Payments of Promissory

Notes - Related Parties

of Long-Term Debt

CASH FLOW PROVIDED BY (USED IN) FINANCING ACTIVITIES

of Foreign Exchange

NET INCREASE (DECREASE) IN CASH

CASH AT BEGINNING OF PERIOD

CASH AT END OF PERIOD

( 2,421,108 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from exercise of stock warrants

Proceeds from borrowing

Payments of convertible notes

( 2,500,000 )

Payments of long-term debt

CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES

( 2,557,721 )

Effects of foreign currency exchange

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVILANTS

CASH AND CASH EQUIVILANTS AT BEGINNING OF PERIOD

CASH AND CASH EQUIVILANTS AT END OF PERIOD

SUPPLEMENTAL DISCLOSURES

Paid for Interest

Paid for Income Taxes

Cash paid for interest

Cash paid for income taxes

NON-CASH TRANSACTION

Issuance of Treasury

of Accounts Payable to Long-Term Debt

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

DYNARESOURCE,

TO THE CONSOLIDATED FINANCIAL STATEMENTS

31, 2018 and 2017

NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES

of Activities, History and Organization

DynaResource,

(The “Company”, “DynaResource”, or “DynaUSA”) was organized September 28, 1937, as a

California corporation under the name of West Coast Mines, Inc.

In 1998, the Company re-domiciled to Delaware and changed

its name to DynaResource, Inc.

The Company is in the business of acquiring, investing in, and developing precious metal

properties, and the production of precious metals.

2000, the Company formed a wholly owned subsidiary, DynaResource de México S.A.

de C.V., chartered in México (“DynaMéxico”).

Company was formed to acquire, invest in and develop resource properties in México.

DynaMéxico owns a portfolio

of mining concessions that currently includes its interests in the San José

de Gracia Project (“SJG”) in northern

Sinaloa State, México.

The SJG District covers 69,121 hectares (170,802 acres) on the west side of the Sierra Madre mountain

The Company currently owns 80% of the outstanding capital of DynaMéxico.

2005, the Company formed DynaResource Operaciones de San Jose De Gracia S.A.

(“DynaOperaciones”), and acquired

effective control of Mineras de DynaResource, S.A.

Accrued interest rolled into notes payable

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

DYNARESOURCE, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021 and 2020

NOTE 1 – NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Activities, History and Organization

DynaResource, Inc.

(The “Company”, “DynaResource”, or “DynaUSA”) was organized September 28, 1937, as a California corporation under the name of West Coast Mines, Inc.

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

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

In 2000, the Company formed a wholly owned subsidiary, DynaResource de México S.A.

de C.V., chartered in México (“DynaMéxico”).

This Company was formed to acquire, invest in and develop resource properties in México.

DynaMéxico owns a portfolio of mining concessions that currently includes its interests in the San José de Gracía Project (“SJG”) in northern Sinaloa State, México.

The SJG District covers 9,920 hectares (24,513 acres) on the west side of the Sierra Madre mountain range.

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

DynaMéxico currently holds 20% of the Shares of DynaMéxico as treasury shares, after complete foreclosure and recovery of those shares on February 20, 2020 from Goldgroup Resources Inc., a wholly owned subsidiary of Goldgroup Mining Inc.

Vancouver, BC (“Goldgroup”).

In 2005, the Company formed DynaResource Operaciones de San Jose De Gracía S.A.

(“DynaOperaciones”) as an operating subsidiary to manage registered employees, and acquired effective control of Mineras de DynaResource, S.A.

(formerly Minera Finesterre S.A.

de C.V., “DynaMineras”).

The Company owned 25% of DynaMineras and acquired effective control of DynaMineras by acquiring the option to purchase the remaining

75% of the Shares of DynaMineras.

The Company finalized the option and acquisition of DynaMineras in January 2010, and now owns

100% of DynaMineras.

The results of these subsidiaries are consolidated with those of the Company.

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.

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

contribution of $18,000,000 to DynaMéxico.

At March 14, 2011, Goldgroup owned 50% of the outstanding capital shares of

DynaMéxico.

June 21, 2013, DynaResource acquired a 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 the issuance and receipt of the 300 Series B Shares, DynaUSA holds 80% of the total outstanding Capital

of DynaMéxico.

Company elected to become a voluntary reporting issuer in Canada in order to avail itself of Canadian regulations regarding reporting

for mining properties and, more specifically, National Instrument 43-101 (“NI 43-101”).

This regulation sets forth

standards for reporting resources in a mineral property and is a standard recognized in the mining industry.

Reclassifications

and Adjustments

financial statement reclassifications have been made to prior period balances to reflect the current period’s presentation

such reclassifications had no impact on the Company’s consolidated statements of income or consolidated statements

of cash flows and had no material impact on the Company’s consolidated balance sheets.

Accounting Policies

Company’s management selects accounting principles generally accepted in the United States of America and adopts methods

for their application.

The application of accounting principles requires the estimating, matching and timing of revenue

The accounting policies used conform to generally accepted accounting principles which have been consistently applied

in the preparation of these financial statements.

financial statements and notes are representations of the Company’s management which is responsible for their integrity

and objectivity.

Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing

and maintaining a system of internal accounting control and preventing and detecting fraud.

The Company's system of

internal accounting control is designed to assure, among other items that:

de C.V., “DynaMineras”).

The Company owns 100% of DynaMineras and 100% of DynaOperaciones.

The Company elected to become a voluntary reporting issuer in Canada in order to avail itself of Canadian regulations regarding reporting for mining properties and, more specifically, National Instrument 43-101 (“NI 43-101”).

This regulation sets forth standards for reporting resources in a mineral property and is a standard recognized in the mining industry.

Significant Accounting Policies

The consolidated financial statements and notes are representations of the Company’s management which is responsible for their integrity and objectivity.

Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud.

The Company's system of internal accounting control is designed to assure, among other items that:

1) recorded transactions are valid;

2) valid transactions are recorded;

and 3) transactions are recorded in the proper period in a

timely manner to produce financial statements which present fairly the financial condition, results of operations and

cash flows of the Company for the respective periods presented.

of Presentation

Company prepares its financial statements on the accrual basis of accounting in conformity with accounting principles generally

accepted in the United States.

Company is filing this Amendment No.2 to its Annual Report on Form 10-K for the year ended December 31, 2018, which was originally

filed with the Securities and Exchange Commission on April 8, 2019.

The Company has restated its consolidated financial statements

for the years ended December 31, 2018 and December 31, 2017 to correct the manner in which the Company recorded certain expenditures.

The expenditures which were capitalized as Mining Equipment and Fixtures should have been expensed as mine expansion costs under

Generally Accepted Accounting Principles (GAAP) in the United States.

The Company made the appropriate adjustment to the opening

January 1, 2017 equity balance to reflect the cumulative effect of prior periods to remove certain

expenditures for mining site improvements and equipment that were previously capitalized as fixed assets.

errors which were included in the December 31, 2018 Form 10-K Annual Report were incurred throughout the 2018 and 2017 fiscal

years and prior periods and were subsequently identified in the third quarter of the 2019 fiscal year.

The Company will also be

filing an amended 10-Q for the quarter ended March 31, 2019.

refer to Note 17 –

Restatements for a complete summary of the restatement adjustments and an “As Reported”

“As Restated”

comparison of the affected balances within the financial statements.

As required by Rule 12b-15 under

the Securities Exchange Act of 1934, as amended, new certifications by DynaResouce Inc.’s principal executive officer and

principal financial officer are being filed with this Form 10-K/A as Exhibits 31.1, 31.2, 32.1 and 32.2.

In addition, Item 8 has

been amended to contain a currently-dated opinion of the Company’s independent registered public accounting firm.

of Consolidation

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

(80% ownership),

DynaResource Operaciones S.A.

and 3) transactions are recorded in the proper period in a timely manner to produce consolidated financial statements which present fairly the consolidated financial condition, results of operations and cash flows of the Company for the respective periods presented.

Basis of Presentation

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

Use of Estimates

In order to prepare consolidated financial statements in conformity with accounting principles generally accepted in the United States, management must make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and determines whether contingent assets and liabilities, if any, are disclosed in the consolidated financial statements.

The ultimate resolution of issues requiring these estimates and assumptions could differ significantly from the resolution currently anticipated by management and on which the consolidated financial statements are based.

Principles of Consolidation

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

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

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

(100% ownership).

significant inter-company transactions have been eliminated.

All significant inter-company transactions have been eliminated.

All amounts are presented in U.S.

Dollars unless otherwise

Non-Controlling

Company’s subsidiary, DynaResource de México S.A.

de C.V, is 20% owned by Goldgroup Mining, Inc.

On May 17, 2013,

the ownership changed from 50% to 20%.

The Company accounts for this outside interest as “non-controlling interest”.

in Affiliates

Company owns a 19.95% interest in DynaResource Nevada, Inc., a Nevada Corporation (“DynaNevada”), with one operating

subsidiary in México, DynaNevada de México, S.A.

(“DynaNevada de México”), together “DynaNevada”.

The Company accounts for this investment using the cost basis.

The Company has significant influence over DynaNevada, but not

control, due to the lack of a majority voting interest in the entity.

DynaNevada has been dormant for several years.

no plan or intention of future funding with DynaNevada nor are any other transactions with DynaNevada contemplated at this time.

The Company therefore accounts for this investment using the cost basis.

The investment was $70,000 and $70,000 at December 31,

2018 and 2017, respectively.

and Cash Equivalents

Company considers all highly liquid debt instruments with an original maturity of three months or less to be cash equivalents.

times, cash balances may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limits.

Receivable and Allowances for Doubtful Accounts

allowance for accounts receivable is recorded when receivables are considered to be doubtful of collection.

As of December 31,

2018, and 2017, respectively, no allowance has been made.

Tax Receivable

Tax Receivable is comprised of recoverable value-added taxes (“IVA”) charged by the Mexican government on goods and

services rendered.

Under certain circumstances, these taxes are recoverable by filing a tax return.

paid for IVA are tracked and held as receivables until the funds are remitted.

The total amounts of the IVA receivable

as of December 31, 2018 and December 31, 2017 are $845,564 and $732,341, respectively.

are carried at the lower of cost or net realizable value and consist of mined tonnage, and gravity and flotation concentrates,

and gravity tailings or flotation feed material.

The inventories are $1,588,778 and $907,982 as of December 31, 2018 and December

31, 2017, respectively.

and Probable Reserves (No Known Reserves)

definition of proven and probable reserves is set forth in SEC Industry Guide 7 (“Industry Guide 7”).

Proven reserves

for which (1) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes, grade and/or quality

are computed from the results of detailed sampling and (2) the sites for inspection, sampling and measurement are spaced

so closely and the geological character is so well defined that size, shape, depth and mineral content of the reserves are well-established.

Probable reserves are reserves for which quantity and grade and/or quality are computed from information similar to that used

for proven (measured) reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less

adequately spaced.

The degree of assurance, although lower than that for proven (measured) reserves, is high enough to assume

continuity between points of observations.

of December 31, 2018, none of the Company's properties contain resources that satisfy the definition of proven and probable

The Company classifies the development of its properties, including the San Jose de Gracia Property, as exploration

stage projects since no proven or probable reserves have been established under Industry Guide 7.

Substantially

all mine development costs, including design, engineering, mine construction, and installation of equipment are expensed as incurred

as the Company has not established proven and probable reserves on any of its properties.

Only certain types of mining equipment

which has alternative uses or significant salvage value, may be capitalized without proven and probable reserves.

is computed using the straight-line method.

Office furniture, equipment and light vehicles are being depreciated on a straight-line

method over estimated economic lives ranging from 3 to 5 years.

Leasehold improvements, which relate to the Company's corporate

office, are being amortized over the term of the lease of 10 years.

Trailers, heavy vehicles and other site equipment are

being depreciated on a straight-line method over estimated economic lives from 5 to 15 years.

Buildings are being depreciated

on straight line method over an estimated economic life of 20 years.

Construction, and Development Costs:

Mine development costs include engineering and metallurgical studies,

drilling and other related costs to delineate an ore body, the removal of overburden to initially expose an ore body at open pit

surface mines and the building of access ways, shafts, lateral access, drifts, ramps and other infrastructure at underground mines.

proven and probable reserves as defined by Industry Guide 7 exist, development costs are capitalized, and the property is a commercially

minable property.

Mine development costs incurred either to develop new ore deposits, expand the capacity of operating mines,

or to develop mine areas substantially in advance of current production would be capitalized.

Costs of start-up activities and

costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations as incurred.

Costs of abandoned projects are charged to operations upon abandonment.

All capitalized costs would be amortized using the units

of production method over the estimated life of the ore body based on recoverable ounces to be mined from proven and probable

costs to design and construct mining and processing facilities may be incurred prior to establishing proven and probable reserves.

As no proven and probable reserves have been established on any of the Company's properties, design, construction and development

costs are not capitalized at any of the Company's properties, and accordingly, substantially all costs are expensed as incurred,

resulting in the Company reporting larger losses than if such expenditures had been capitalized.

Additionally, the Company does

not have a corresponding depreciation or amortization of these costs going forward since these expenditures were expensed as incurred

as opposed to being capitalized.

As a result of these and other differences, the Company's financial statements may not be comparable

to the financial statements of mining companies that have established reserves.

Properties Interests

property interests include acquired interests in development and exploration stage properties, which are considered tangible assets.

Dollars unless otherwise stated.

Non-Controlling Interest

The Company’s subsidiary, DynaResource de México S.A.

de C.V, was 20 % owned by Goldgroup Resources, Inc.

until February 20, 2020 when the Company recovered the shares as partial satisfaction of a legal judgement.

See Note 11 for further details.

The Company accounted for this outside interest as a “non-controlling interest” through February 2020.

A 20% share of operating income (loss) and comprehensive income (loss) was allocated to the non-controlling interest through the date of the recovery of the shares.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments with an original maturity of three months or less to be cash equivalents.

At times, cash balances may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limits.

As of December 31, 2021, the Company had $ 15,266,823 of deposits in U.S.

Banks in excess of the FDIC limit.

The Company does not believe it is at a risk of loss.

Accounts Receivable and Allowances for Doubtful Accounts

The allowance for accounts receivable is recorded when receivables are considered to be doubtful of collection.

As of December 31, 2021, and 2020, respectively, no allowance has been made.

During the year the Company recorded a $381,871 bad debt write off of receivables from a former customer of the Company.

At, December 31, 2021 management believes all current receivables are fully collectable.

Inventories are carried at the lower of cost or net realizable value and consist of mined tonnage, gravity and flotation concentrates, and gravity tailings or flotation feed material.

The inventories were $ 2,110,203 and $ 603,967 as of December 31, 2021 and December 31, 2020, respectively.

Foreign Tax Receivable

Foreign Tax Receivable is comprised of recoverable value-added taxes (“IVA”) charged by the Mexican government on goods and services rendered to the company in Mexico and paid by the company.

Under certain circumstances, these taxes are recoverable by filing a tax return and application for reimbursement.

IVA amounts charged to and paid by the company are recorded and carried as receivables until the funds are collected by the company.

The total amounts of the IVA receivable as of December 31, 2021 and December 31, 2020 were $ 4,742,180 and $ 2,179,914 , respectively.

Exploration Stage

According to Section 1300 of Regulation S-K, the Registrant is an exploration stage company with an exploration stage property since it does not have an opinion from a qualified person that the project can be economically viable.

Property and Equipment

Substantially all mine development costs, including design, engineering, mine construction, and installation of equipment are expensed as incurred as the Company has not established proven and probable reserves on any of its properties.

Only certain types of mining equipment which has alternative uses or significant salvage value, may be capitalized without proven and probable reserves.

Depreciation is computed using the straight-line method.

Office furniture and equipment are being depreciated on a straight-line method over estimated economic lives ranging from 3 to 5 years.

Leasehold improvements, which relate to the Company's corporate office, are being amortized over the term of the lease of 10 years.

Design, Construction, and Development Costs:

Mine development costs include engineering and metallurgical studies, drilling and other related costs to delineate an ore body, the removal of overburden to initially expose an ore body at open pit surface mines and the building of access ways, shafts, lateral access, drifts, ramps and other infrastructure at underground mines.

Mineral Properties Interests

Mineral property interests include acquired interests in development and exploration stage properties, which are considered tangible assets.

The amount capitalized relating to a mineral property interest represents its fair value at the time of acquisition.

When a property

does not contain mineralized material that satisfies the definition of proven and probable reserves, such as with the San Jose

de Gracia Property, capitalized costs and mineral property interests are amortized using the straight-line method once production

As of December 31, 2018, the mining interests have been in the pilot production stage and therefore, no amortization has

been expensed.

Mining properties consist of 33 mining concessions covering approximately 9,919 hectares at the San Jose de Gracia

property (“SJG”), the basis of which are amortized on the unit of production method based on estimated recoverable

If it is determined that the deferred costs related to a property are not recoverable over its productive life,

those costs will be written down to fair value as a charge to operations in the period in which the determination is made.

amounts at which mineral properties and the related costs are recorded do not necessarily reflect present or future values.

The Company reviews and evaluates its long-lived assets for impairment when events or changes

in circumstances indicate that the related carrying amounts may not be recoverable.

Mineral properties are monitored for impairment

based on factors such as mineral prices, government regulation and taxation, the Company's continued right to explore the area,

exploration reports, assays, technical reports, drill results and its continued plans to fund exploration programs on the property.

operating mines, recoverability is measured by comparing the undiscounted future net cash flows to the net book value.

net book value exceeds future net undiscounted cash flows, an impairment loss is measured and recorded based on the excess of

the net book value over fair value.

Fair value for operating mines is determined using a combined approach, which uses a discounted

cash flow model for the existing operations and a market approach for the fair value assessment of exploration land claims.

cash flows are estimated based on quantities of recoverable mineralized material, expected gold and silver prices (considering

current and historical prices, trends and related factors), production levels, operating costs, capital requirements and reclamation

costs, all based on life-of-mine plans.

The term "recoverable mineralized material"

refers to the estimated amount of

gold or other commodities that will be obtained after taking into account losses during processing and treatment of mineralized

In estimating future cash flows, assets are grouped at the lowest level for which there are identifiable cash flows

that are largely independent of future cash flows from other asset groups.

The Company's estimates of future cash flows are based

on numerous assumptions and it is possible that actual future cash flows will be significantly different than the estimates, as

actual future quantities of recoverable minerals, gold, silver and other commodity prices, production levels and costs and capital

are each subject to significant risks and uncertainties.

recoverability of the book value of each property will be assessed annually for indicators of impairment such as adverse changes

to any of the following:

recoverable ounces of gold, silver or other precious minerals;

future commodity prices;

expected future operating costs, capital expenditures and reclamation expenditures.

write-down to fair value will be recorded when the expected future cash flow is less than the net book value of the property or

when events or changes in the property indicate that carrying amounts are not recoverable.

This analysis will be completed

as needed, and at least annually.

As of the date of this filing, no events have occurred that would require write-down of any

When a property does not contain mineralized material that satisfies the definition of proven and probable reserves, such as with the San Jose de Gracía Property, capitalized costs and mineral property interests are amortized using the straight-line method once production begins.

As of December 31, 2021, the mining interests have been in the pilot production stage and therefore, no amortization has been expensed.

Mining properties consist of 33 mining concessions covering approximately 9,920 hectares at the San Jose de Gracía property (“SJG”), the basis of which are amortized on the unit of production method based on estimated recoverable resources.

If it is determined that the deferred costs related to a property are not recoverable over its productive life, those costs will be written down to fair value as a charge to operations in the period in which the determination is made.

The amounts at which mineral properties and the related costs are recorded do not necessarily reflect present or future values.

Impairment of Assets:

The Company reviews and evaluates its long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable.

Mineral properties are monitored for impairment based on factors such as mineral prices, government regulation and taxation, the Company's continued right to explore the area, exploration reports, assays, technical reports, drill results and its continued plans to fund exploration programs on the property.

For operating mines, recoverability is measured by comparing the undiscounted future net cash flows to the net book value.

When the net book value exceeds future net undiscounted cash flows, an impairment loss is measured and recorded based on the excess of the net book value over fair value.

Fair value for operating mines is determined using a combined approach, which uses a discounted cash flow model for the existing operations and a market approach for the fair value assessment of exploration land claims.

Future cash flows are estimated based on quantities of recoverable mineralized material, expected gold and silver prices (considering current and historical prices, trends and related factors), production levels, operating costs, capital requirements and reclamation costs, all based on life-of-mine plans.

The term "recoverable mineralized material" refers to the estimated amount of gold or other commodities that will be obtained after considering losses during processing and treatment of mineralized material.

In estimating future cash flows, assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of future cash flows from other asset groups.

The Company's estimates of future cash flows are based on numerous assumptions and it is possible that actual future cash flows will be significantly different than the estimates, as actual future quantities of recoverable minerals, gold, silver and other commodity prices, production levels and costs and capital are each subject to significant risks and uncertainties.

The recoverability of the book value of each property is assessed annually for indicators of impairment such as adverse changes to any of the following:

estimated recoverable ounces of gold, silver or other precious minerals;

estimated future commodity prices;

estimated expected future operating costs, capital expenditures and reclamation expenditures.

A write-down to fair value will be recorded when the expected future cash flow is less than the net book value of the property or when events or changes in the property indicate that carrying amounts are not recoverable.

This analysis is completed as needed, and at least annually.

As of the date of this filing, no events have occurred that would require write-down of any assets.

As of December 31, 2021, and 2020, no indications of impairment existed.

Retirement Obligation:

As the Company is not obligated to remediate the mining properties, no Asset

Retirement Obligation (“ARO”) has been established.

Changes in regulations or laws, any instances of non-compliance

with laws or regulations that result in fines, or any unforeseen environmental contamination could result in a material impact

to the amounts charged to operations for reclamation and remediation.

Significant judgments and estimates are made when estimating

the fair value of AROs.

Expected cash flows relating to AROs could occur over long periods of time and the assessment of the extent

of environmental remediation work is highly subjective.

Considering all of these factors that go into the determination of an

ARO, the fair value of the AROs can materially change over time.

Production Costs

2016, the Company has conducted rehabilitation activity at the San Pablo mine and has refurbished the Pilot Mill Facility at San

Jose de Gracia and, in general prepared for test mining and pilot milling (“Pilot Production”) Operations.

associated with the rehabilitation, preparation, clean up and facilitation of this process are expensed as pre-pilot production

Holding Costs

costs to maintain a property on a care and maintenance basis are expensed in the period they are incurred.

These costs include

security and maintenance expenses, lease and claim fees and payments, and environmental monitoring and reporting costs.

costs are charged to operations and expenses as incurred.

Exploration, development, direct field costs and administrative costs

are expensed in the period incurred.

Currency Translation

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).

financial statements of the subsidiaries should not be construed as representations that Mexican Pesos have been, could have been

or may in the future be converted into U.S.

Asset Retirement Obligation

As the Company is not obligated to remediate the mining properties, no Asset Retirement Obligation (“ARO”) has been established.

Changes in regulations or laws, any instances of non-compliance with laws or regulations that result in fines, or any unforeseen environmental contamination could result in a material impact to the amounts charged to operations for reclamation and remediation.

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).

The financial statements of the subsidiaries should not be construed as representations that Mexican Pesos have been, could have been or may in the future be converted into U.S.

dollars at such rates or any other rates.

exchange rates used in the preparation of the financial statements for the subsidiaries are as follows for the years ended December

31, 2018 and 2017 (Mexican Pesos per one U.S.

Relevant exchange rates used in the preparation of the financial statements for the subsidiaries are as follows for the years ended December 31, 2021 and 2020 (Mexican Pesos per one U.S.

Current exchange rate

Weighted average exchange rate for the period

Company recorded currency transaction gains of $51,325 for the year ended December 31, 2018 and $1,388,573 in 2017.

Company accounts for income taxes under ASC 740 “Income Taxes”

using the liability method, recognizing

certain temporary differences between the financial reporting basis of liabilities and assets and the related income tax basis

for such liabilities and assets.

This method generates either a net deferred income tax liability or asset for the Company, as

measured by the statutory tax rates in effect.

The Company derives the deferred income tax charge or benefit by recording the

change in either the net deferred income tax liability or asset balance for the year.

The Company records a valuation allowance

against any portion of those deferred income tax assets when it believes, based on the weight of available evidence, it is more

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

from the Company’s subsidiaries in México are taxed at applicable Mexican tax law.

December 22, 2017, the 2017 Tax Cuts and Jobs Act (the “Act”) was signed into law.

Among other provisions, the Act

reduced the highest corporate tax rate from 35% to 21%.

With the passage of the Act, the Company‘s deferred tax assets and

liabilities were restated as of the effective date of the law to reflect the new applicable rate.

The reduction to the net deferred

tax asset was charged to tax expense in the period of the change and offset by a valuation allowance stemming from historical

net operating loss carryforwards.

order to prepare financial statements in conformity with accounting principles generally accepted in the United States, management

must make estimates, judgments and assumptions that affect the amounts reported in the financial statements and determines whether

contingent assets and liabilities, if any, are disclosed in the financial statements.

The ultimate resolution of issues requiring

these estimates and assumptions could differ significantly from resolution currently anticipated by management and on which the

financial statements are based.

Comprehensive

Income (Loss)

220 “Comprehensive Income”

establishes standards for reporting and display of comprehensive income and its

components in a full set of general-purpose financial statements.

The Company’s comprehensive income

consists of net income and other comprehensive income (loss), consisting of unrealized net gains and losses on the translation

of the assets and liabilities of its foreign operations.

Company adopted ASC 606 “

Revenue from contracts with customers ”

on January 1, 2018 using the modified retrospective

Weighted average exchange rate for the period ended

The Company recorded currency transaction gains (losses) of $247,712 for the year ended December 31, 2021 and $(361,127) for the year ended December 31, 2020.

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

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

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

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

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

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 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 accounts for revenue recognition under ASC 606 “ Revenue from contracts with customers ”.

The Company generates revenue by selling gold and silver produce 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 to direct the use of and obtain substantially all the remaining benefits

from the material and the customer has the risk of loss.

amount of revenue recognized is initially recorded on a provisional basis based on the contract price and the estimated metal

quantities based on assay data.

The 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 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.

The revenue is adjusted upon final settlement of the sale.

The chief risk associated with the

recognition of sales on a provisional basis is the fluctuations between the estimated quantities of precious metals base on the

initial assay and the actual recovery from treatment and processing.

the year ended December 31, 2018 there was $0 of revenue recognized during the period from customer deposit liabilities (deferred

contract revenue), and $0 of customer deposits refunded to the customer on order cancellation.

of December 31, 2018, there are $1,750,000 in customer deposit liabilities for payments received during the period for contracts

expected to ship in 2019.

Under terms of the Company’s sales contract this amount is to be applied as payment on the customer

account at a rate of $250,000 per month throughout the year.

of and for the year ended December 31, 2018, there are $0 significant contract deferred costs such as sales commissions or costs

have elected to account for shipping and handling costs as fulfillment costs after the customer obtains control of the goods.

to the adoption of this standard the Company recognized revenue in accordance with ASC 605-10, "

Revenue Recognition in

Financial Statements ".

Revenue was recognized when persuasive evidence of an arrangement exists, delivery

or service has occurred, the sale price is fixed or determinable and receipt of payment is probable.

Revenues earned from the

sale of precious metal concentrates are recognized when both the buyer and seller agree on the % of gold as determined by sample

assays and when it is delivered to the Buyer.

Subsequently, a “final settlement”

was calculated an adjustment was

recorded when any remaining balance was paid.

change in accounting principle from ASC 605 to ASC 606 did not impact the amount of revenue recognized in the Company’s

financial statements.

Company accounts for stock options at fair value as prescribed in ASC 718.

The Company estimates the fair value of each stock

option at the grant date by using the Black-Scholes option-pricing model and provides for expense recognition over the service

period, if any, of the stock option.

Company accounts for stock options issued and vesting to non-employees in accordance with ASC Topic 505-50 “

Equity -Based

Payment to Non-Employees”

and accordingly the value of the stock compensation to non-employees is based upon the measurement

date as determined at either (a) the date at which a performance commitment is reached, or (b) at the date at which

the necessary performance to earn the equity instruments is complete.

Accordingly, the fair value of these options is being “marked

to market”

quarterly until the measurement date is determined.

Value of Financial Instruments

Company’s financial instruments consist of cash, receivables, payables and long-term debt.

The carrying amount of cash,

receivable and payables approximates fair value because of the short-term nature of these items.

The carrying amount of long-term

debt approximates fair value due to the relationship between the interest rate on long-term debt and the Company’s incremental

risk adjusted borrowing rate.

Share Amounts

per share 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.

dilutive common shares are additional common shares assumed to be exercised.

Potentially dilutive common shares consist

of stock options and convertible preferred shares and convertible notes 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.

Company had 2,523,689 warrants outstanding at December 31, 2018 exercisable at $2.50 per share, which upon exercise, would result

in the issuance of 2,523,689 shares of common stock.

The Company also had convertible debt instruments as of December 31, 2018

which, upon conversion at a valuation of $2.50 per share, would result in the issuance of 335,250 shares of stock.

Company had 2,523,689 warrants outstanding at December 31, 2017 exercisable at $2.50 per share, which upon exercise, would result

in the issuance of 2,523,689 shares of common stock.

The Company also had convertible debt instruments as of December 31, 2017

which, upon conversion at a valuation of $2.50 per share, would result in the issuance of 380,250 shares of stock.

ended December 31

(loss) attributable to common shareholders

Weighted average number of common shares outstanding,

Basic earnings (loss) per share

Diluted earnings (loss) per share

Party Transactions

ASC 850, "Related Party Disclosures"

requires companies to include in their financial statements disclosures of material

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

As of December 31, 2021, there are $ 9,250,000 in customer advances for payments received during the period for contracts expected to be settled in 2022.

During the years ended December 31, 2021, and December 31, 2020, there was $ 1,500,000 and $0 of revenue recognized during the period from customer deposit liabilities (deferred contract revenue) from prior periods, and $0 of customer deposits refunded to the customer due to order cancellation.

As of and for the year ended December 31, 2021, and December 31, 2020, there are no deferred contract costs or commissions.

We have elected to account for shipping and handling costs as fulfillment costs after the customer obtains control of the concentrate.

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash, receivables, payables and long-term debt.

The carrying amount of cash, receivable and payables approximates fair value because of the short-term nature of these items.

The carrying amount of long-term debt approximates fair value due to the relationship between the interest rate on long-term debt and the Company’s incremental risk adjusted borrowing rate.

Earnings Per Share

Earnings per share 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.

Potentially dilutive common shares consist of stock warrants, convertible preferred shares and convertible notes 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 had 3,060,998 warrants outstanding at December 31, 2021 which upon exercise, would result in the issuance of 3,060,998 shares of common stock.

Of these warrants 2,168,833 were exercisable at $2.05 per share and 892,165 were exercisable at $.01 per share.

The Company also had convertible debt instruments as of December 31, 2021 which, upon conversion at $2.50 per share, would result in the issuance of 217,312 shares of common stock.

The Company had 3,429,466 warrants outstanding at December 31, 2020 which upon exercise, would result in the issuance of 3,429,466 shares of common stock.

Of these warrants 2,168,833 were exercisable at $ 2.05 per share and 1,260,633 were exercisable at $.01 per share.

The Company also had convertible debt instruments as of December 31, 2020 which, upon conversion at valuations from $2.00 to $2.50 per share, would result in the issuance of 2,227,312 shares of common stock.

Years ended December 31

Net income (loss) attributable to common shareholders

$ ( 5,477,733 )

Weighted average number of common shares outstanding, Basic

Weighted average number of common shares outstanding, Diluted

Basic income (loss) per share

Diluted income (loss) per share

At December 31, 2021, 2,168,833 shares of potentially dilutive common stock related to outstanding stock warrants and 217,312 shares of potentially dilutive common stock related to convertible debt were excluded from the diluted earnings per share calculation, using the treasury stock method, because the exercise and conversion prices exceeded the average stock price and therefore their effect would be anti-dilutive.

In addition, at December 31, 2021, 892,165 of potentially dilutive common stock related to outstanding stock were excluded from the diluted earnings per share calculation as the net income impact of the converted shares would cause earnings per share to increase, therefore their effect would be antidilutive.

At December 31, 2020, potentially dilutive common shares related to stock warrants and convertible debt were excluded from the diluted earnings per share computation because the Company incurred a net loss and therefore their effect would be anti-dilutive.

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.”

Issued Accounting Pronouncements

May 2017, the FASB issued ASU 2017-09, Compensation –

Stock Compensation (Topic 718):

Scope of Modification Accounting (“ASU

ASU 2017-09 provides clarity and reduce both (1) diversity in practice and (2) cost and complexity when applying the

guidance in Topic 718, Compensation—Stock Compensation, to a change to the terms or conditions of a share-based payment

The amendments in this update provide guidance about which changes to the terms or conditions of a share-based payment

award require an entity to apply modification accounting in Topic 718.

The amendments in this update are effective for all entities

for annual periods, and interim periods within those annual periods, beginning after December 15, 2017.

Early adoption is permitted.

As such, The Company adopted these provisions as of the fiscal year beginning on January 1, 2018.

The amendments in this update

should be applied prospectively to an award modified on or after the adoption date.

February 2016, FASB issued ASU 2016-02—

Leases (Topic 842).

The update is intended to increase transparency and comparability

among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about

leasing arrangements.

The amendments in this update are effective for fiscal years beginning after December 15, 2018, including

interim periods within those fiscal years.

Early application of the amendments in this update is permitted.

As such, The Company

is required to adopt these provisions as of the fiscal year beginning on January 1, 2019.

The Company is currently evaluating

the impact of FASB ASU 2016-02 and expects the adoption thereof will have a material effect on The Company’s presentation

of balance sheet assets and liabilities based on the present value of future lease payments but does not expect a material effect

on the presentation of expenses and cash flows.

Company commenced underground test mining and pilot milling activities (“pilot production”) in the 2nd quarter of

Rehabilitation of the San Pablo Mine and refurbishing of the Pilot Mill Facility and construction of the adjacent tailings

pond continued through 2016.

Inventories are carried at the lower of cost or fair value and consist of mined tonnage, gravity-flotation

concentrates, and gravity tailings (or, flotation feed material).

Inventory balances of December 31, 2018 and December 31, 2017,

respectively, were as follows:

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.

NOTE 2 – INVENTORIES

Inventories are carried at the lower of cost or fair value and consist of mined tonnage, gravity-flotation concentrates, and gravity tailings (or, flotation feed material).

Inventory balances at December 31, 2021 and 2020, respectively, were as follows:

Mined Tonnage

Gold-Silver Concentrates, and/or Gravity Tailings (Flotation Feed Material)

Gold-Silver Concentrates

Total Inventories

consists of the following at December 31, 2018 and December 31, 2017:

NOTE 3 – PROPERTY

Property consists of the following at December 31, 2021 and 2020:

Leasehold improvements

Office equipment

Office furniture and

Office furniture and fixtures

Accumulated depreciation

Company purchased equipment of $3,931 and $12,316 in the years ended December 31, 2018 and 2017, respectively.

has been provided over each asset’s estimated useful life.

Depreciation expense was $7,856 and $5,630 for the

years ended December 31, 2018 and 2017, respectively.

MINING CONCESSIONS

properties consist of the following at December 31, 2018 and December 31, 2017:

San Jose de Gracia (“SJG”):

Total Mining Concessions

expense was $0 and $0 for the years ended December 31, 2018 and 2017, respectively.

INVESTMENT IN AFFILIATE/RECEIVABLES FROM AFFILIATE/OTHER ASSETS

December 31, 2018, the Company loaned a total of $805,760 to DynaResource Nevada, Inc.

(“DynaNevada”), a Nevada Corporation,

which owns 100% of one operating subsidiary in México, DynaNevada de México, S.A.

(“DynaNevada

de México”).

The terms of the Note Receivable provided for a “Convertible Loan”, repayable at 5% interest

over a 3-year period, and convertible at the Company’s option into common stock of DynaNevada at $.25 / Share.

DynaNevada is a related entity (affiliate), and through its subsidiary, DynaNevada de México has entered into an Option

agreement with Grupo México (IMMSA) in México, for the exploration and development of approximately 3,000 hectares

in the State of San Luis Potosi (“The Santa Gertrudis Property”).

DynaNevada de México exercised the Option

with IMMSA in March 2010, so that DynaNevada de México now owns 100% of the Santa Gertrudis Property.

In June 2010, DynaNevada

de México acquired an additional 6,000 hectares in the State of Sinaloa (the “San Juan Property”).

December 31, 2010, the Company exercised its option to convert the note receivable and other receivable from DynaNevada into shares

of common stock at a rate of $.25 / Share.

The Company received 3,223,040 shares, which represents approximately 19.95% of the

outstanding shares of DynaNevada.

At the time of the exchange, DynaNevada’s net book value was approximately $695,000, consisting

of $30,000 cash and the remainder unproven mining properties.

Based upon the above, Management estimated the value of the Company’s

DynaNevada shares as of December 31, 2018 and December 31, 2017 to be $70,000 and $70,000, respectively.

The loss was taken to

“other income (loss) on the income statement in previous years.

2016 the Company deemed $159,143 of receivable for funds, previously advanced to DynaNevada in order for DynaNevada to meets its

basis filing and reporting obligations with the Mexican authorities relating to tax returns and paying taxes on its mining concessions,

to be uncollectable and wrote them off.

As of December 31, 2018, and December 31, 2017 the Company had no remaining receivable

from DynaNevada.

December 31, 2018 and December 31, 2017, the Company had a receivable from DynaNevada de Mexico of $68,376 and $0, respectively.

CONVERTIBLE PROMISSORY NOTES

Payable –

April and May 2013, the Company entered into note agreements with shareholders in the principal amount of $1,495,000, of which

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

The Series I Notes bear simple interest at twelve and a half percent (12.5%), accrued for twelve months, and with the accrued

interest to be added to the principal, and then interest will be paid by the Company, quarterly in arrears.

of the Series I Notes (in aggregate) are also entitled to receive ten percent (10%) of the net profits received by the Company,

on the first fifty thousand tons processed through the mill facilities at San Jose de Gracia.

Such net profits (if any) are to be

calculated after deducting “all expenses related to the production”, and after a prior deduction of thirty-three

percent (33%) from the net profits, to be deposited into a sinking fund cash reserve.

To date, the Company has not produced any

net profits as calculated in accordance with the Series I Notes.

Notes originally matured on December 31, 2015.

In April 2015, the Company received note extensions (allonges) from all Series

I note holders to ensure that all Series I Notes were in good standing and extended the maturity date of the Series I Notes to

December 31, 2016.

The Company paid $5,625 to one Series I debt holder during 2017.

The remaining eight of the Series I noteholders totaling $759,375 have subsequently been extended to December 30, 2019.

Company has the right to prepay the Series I Notes with a ten percent (10%) penalty.

Series I Note holder retains the option, at any time prior to maturity or prepayment, to convert any unpaid principal and accrued

interest into Common Stock at $5.00 per share.

If the Series I Note is converted into Common Stock, at the time of conversion,

the holder would also receive warrants, in the same number as the number of common shares received upon conversion, to purchase

additional common shares of the Company for $7.50 per share, with such warrants expiring on December 31, 2020.

Payable –

2013 and 2014, the Company entered into additional note agreements of $199,808 and $250,000, respectively (the “Series II

Notes”) with similar terms as the Series I Notes.

The Series II Notes bear simple interest at twelve and a half percent

(12.5%), accrued for twelve months, and with the accrued interest to be added to the principal, and then interest will

be paid by the Company, quarterly in arrears.

The holders of the Series II Notes (in aggregate) are also entitled to receive

ten percent (10%) of the net profits received by the Company, on the second fifty thousand tons processed through the mill facilities

at San Jose de Gracia.

Such net profits (if any) are to be calculated after deducting “all expenses related to the

production”

and after a prior deduction of thirty-three percent (33%) from the net profits, to be deposited into

a sinking fund cash reserve.

To date, the Company has not produced any net profits as calculated in accordance with the Series

Notes originally matured on December 31, 2015.

In 2018 The Company paid off one note for $112,500.

The remaining two Series II

Notes totaling $78,750 have been extended to December 30, 2019.

Company has the right to prepay the Series II Notes with a ten percent (10%) penalty.

Note holder may, at any time prior to maturity or prepayment, convert any unpaid principal and accrued interest into common stock

of the Company at $5.00 per share.

At the time of conversion, the holder would receive a warrant to purchase additional common

shares of the Company for $7.50 per share, such warrant expiring on December 31, 2020.

June 30, 2015, the Company entered into conversion agreements with six (6) note holders.

Principal and interest in the amount

of $809,784 plus $33,120 of accrued interest (total of $842,903) was contracted to convert into 337,162 common shares.

337,162 warrants were issued which provide the option to purchase common shares at $2.50, with all warrants expiring December

The Company recorded $826,347 inducement expense related to these conversion transactions.

On August 17, 2015, these

common shares and warrants were issued.

December 31, 2018, the principal and capitalized interest balance on the remaining Series I Notes was $759,375, and the principal

and capitalized interest on the Series II Notes was $78,750, for a total Note balance of $838,125.

At December 31, 2017, the principal

and capitalized interest balance on the remaining Series I Notes was $759,375, and the principal and capitalized interest on the

Series II Notes was $191,250, for a total Note balance of $950,625.

The accrued interest for these notes was $25,150 and $30,141

as of December 31, 2018 and 2017, respectively.

Company has adopted ASC 740-10, “

Income Taxes”

, which requires the use of the liability method in the computation

of income tax expense and the current and deferred income taxes payable (deferred tax liability) or benefit (deferred tax asset).

Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

The cumulative

tax effect at the expected tax rate of 21% and 34%, respectively (blended for U.S.

and México) of significant items comprising

the Company’s net deferred tax amounts as of December 31, 2018 and December 31, 2017 are as follows:

Deferred Tax Asset Related to:

Tax (Expense) Benefit for Current Year

Peranent Difference

Due to Rate Change

Total Deferred Tax Asset

Total Property

Depreciation and amortization has been provided over each asset’s estimated useful life.

Depreciation and amortization expense was $ 3,249 and $ 3,249 for the years ended December 31, 2021 and 2020 respectively.

NOTE 4 – MINING CONCESSIONS

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

Mining Concessions were $ 4,132,678 and $ 4,132,678 at December 31, 2021 and December 31, 2020, respectively.

There was no depletion expense for the years ended December 31, 2021 and 2020.

NOTE 5 – CONVERTIBLE PROMISSORY NOTES

Notes Payable – Series I

In April and May 2013, the Company entered into note agreements with shareholders in the principal amount of $ 1,495,000 , of which $ 340,000 was then converted to preferred shares within the same year, netting proceeds of $ 1,155,000 (the “Series I Notes”).

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

The Notes originally matured on December 31, 2015 .

As of December 31, 2018, seven of the Series I Notes totaling $ 646,875 had subsequently been extended to December 30, 2019.

On December 31, 2019, the Company entered into agreements to extend seven outstanding notes totaling $646,875 plus accrued interest totaling $ 34,277 for new total notes of $ 681,152 until December 31, 2020.

On March 31, 2020, the Company entered into agreements to extend the seven outstanding notes totaling $ 681,152 plus accrued interest totaling $ 21,286 for a new total of $ 702,438 until June 30, 2022.

At December 31, 2020 one note for $ 246,533 was paid off leaving six Series I Notes remaining outstanding with a total balance of $ 455,905 .

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

The Company has the right to prepay the Series I Notes with a ten percent (10%) penalty.

The Series I Note holders retain the option, at any time prior to maturity or prepayment, to convert any unpaid principal and accrued interest into Common Stock at $2.50 per share.

If the Series I Note is converted into Common Stock, at the time of conversion, the holder would also receive warrants, in the same number as the number of common shares received upon conversion, to purchase additional common shares of the Company for $ 7.50 per share, with such warrants expiring one year from their conversion date.

Notes Payable – Series II

In 2013 and 2014, the Company entered into additional note agreements of $ 199,808 and $ 250,000 , respectively (the “Series II Notes”) with similar terms as the Series I Notes.

The Series II Notes bear simple interest at twelve and a half percent ( 12.5 %), accrued for twelve months, and with the accrued interest to be added to the principal, and then interest will be paid by the Company, quarterly in arrears

The Notes originally matured on December 31, 2015 .

On December 31, 2019 the Company entered into agreements to extend the two notes totaling $ 78,750 plus accrued interest of $ 5,977 for total new notes of $ 84,726 to December 31, 2020.

One note for $112,500 was not extended and was past due as of December 31, 2019.

At December 31, 2019 three Series II notes remained outstanding for $ 197,226 .

On March 31, 2020, the Company entered into agreements to extend the two notes totaling $84,726 plus accrued interest of $ 2,648 for total new notes of $87,374 to June 30, 2022.

One note for $ 112,500 was not extended and was paid off in May 2020.

At December 31, 2020, two Series II notes remained outstanding for $ 87,374 .

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

The Company has the right to prepay the Series II Notes with a ten percent (10%) penalty.

The Note holder may, at any time prior to maturity or prepayment, convert any unpaid principal and accrued interest into common stock of the Company at $2.50 per share.

At the time of conversion, the holder would receive a warrant to purchase additional common shares of the Company for $ 7.50 per share, such warrant expiring one year from their conversion date.

NOTE 6 – 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 our 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.

We 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 main factors that we consider include:

Cumulative profits/losses in recent years, adjusted for certain nonrecurring items;

Income/losses expected in future years;

Unsettled circumstances that, if unfavorably resolved, would adversely affect future operations and profit levels;

The availability, or lack thereof, of taxable income in prior carryback periods that would limit realization of tax benefits;

The carryforward period associated with the deferred tax assets and liabilities.

We consider 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.

The Company's pre-tax income (loss) by jurisdiction was as follows for the years ending December 31, 2021 and December 31, 2020:

Year ended December 31,

$ ( 10,064,644 )

$ ( 3,955,124 )

Net Deferred Tax Asset

The income tax provision for the Company

as of December 31, 2018 and 2017 differ from those computed using the statutory rates of 21% and 34% due to the following:

Tax Expense (Benefit) at Statutory

Peranent Difference Due to Rate Change

Other Permanent Differences

( 1,410,699 )

$ ( 5,365,823 )

The provision for income taxes for continuing operations for the year ended December 31, 2021 and 2020 consist of the following:

Current income taxes

Total current income taxes

Deferred income taxes

Total deferred income taxes

Total income tax expense (benefit)

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, 2021 includes state minimum taxes, permanent differences, and deferred tax assets for which a full valuation allowance has been placed.

A corresponding tax expense is included for the year ended December 31, 2021 to reflect the decrease in the valuation allowance.

Year ended December 31,

Tax Expense at statutory federal rate of 21%

$ ( 1,126,823 )

State income taxes, net of federal income tax benefit

Permanent Differences

Foreign Rate Differential

Change in Valuation Allowance

Provision for (Benefit

from) Income Taxes, Net

net deferred tax asset and benefit for the current year is generated primarily from the cumulative net operating loss carry-forward

which is approximately $51,100,000 at December 31, 2018 and will expire in the years 2027 through 2033.

realization of deferred tax benefits is contingent upon future earnings and is fully reserved at December 31, 2018.

December 11, 2013, the Mexican government enacted a tax reform that increased the effective tax rate applicable to the Company's

Mexican operations.

The law, effective January 1, 2014, increased the future corporate income tax rate to 30%, created a

10% withholding tax on dividends paid to non-resident shareholders and created a new Extraordinary Mining duty which is equal

to 0.5% of gross revenues from the sale of gold, silver and platinum.

Furthermore, the reform introduced a Special Mining Duty

The Special Mining Duty is deductible for income tax purposes.

The Special Mining Duty is generally applicable to earnings

before income tax, depreciation, depletion, amortization and interest.

There will be no deductions related to development type

costs, but exploration and prospecting costs are deductible when incurred.

Certain non-deducted exploration expenditures incurred

prior to January 1, 2014 are also deductible in the calculation of the Special Mining Duty.

For the years ended December 31,

2018 and 2017, the Company had no taxes payable under the 7.5% Special Mining Duty.

Company or its subsidiaries file income tax returns in the United States and México.

These tax returns are subject to examination

by local taxation authorities provided the tax years remain open to audit under the relevant statute of limitations.

The following

summarizes the open tax years by major jurisdiction:

México:

Company does not have any other material items of temporary or permanent differences, which give rise to deferred tax assets or

STOCKHOLDERS’

The total number of shares of all classes of capital stock which the corporation shall have the authority to

issue is 45,001,000 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 one thousand (1,000) shares shall be designated as Series A Preferred

Stock and (ii) twenty-five million (25,000,000) shares of Common Stock, par value $0.01 per share (“Common Stock”).

A Preferred Stock

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

Holders of the

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

In October 2007, the

Company issued 1,000 shares of Series A Preferred Stock to its CEO.

At December 31, 2018 and December 31, 2017, there were 1,000

and 1,000 shares of Series A Preferred Stock outstanding, respectively.

C Senior Convertible Preferred Shares

June 30, 2015, the Company issued 1,600,000 Series C Senior Convertible Preferred Shares (the “Series C Preferred Shares”)

at $2.50 per share for gross proceeds of $ 4,000,000, as well as issuing 133,221 additional Series C Preferred Shares due to anti-dilution

provisions (with no cash remuneration).

Legal fees of $45,000 were deducted from the proceeds of this transaction at closing.

These Series C Preferred Shares are convertible to common shares at $2.50 per share, through February 20, 2020.

The Series C Preferred

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

A description of the transaction which included

the issuance of the Series C Preferred Shares is included below.

The Dividend is calculated at 4.0% of $4,333,053 payable annually

At December 31, 2017 and 2018 dividends of $173,320 per year were in arrears.

Agreement with Golden Post Rail, LLC, a Texas Limited Liability Company

May 6, 2015, the Company, Golden Post Rail, LLC, a Texas limited liability company (“Golden Post”), and Mr.

(“K.D.”) Diepholz, Chairman-CEO of the Company entered into a Securities Purchase Agreement (the “SPA”).

Pursuant to the SPA, Golden Post acquired the following securities:

shares of Series C Senior Convertible Preferred Stock (the “Series C Preferred”) at a purchase price of $2.50

per share ($4M USD), plus an additional 133,221 shares of Series C Preferred pursuant to anti-dilution provisions.

C Preferred is entitled to receive dividends at the per share rate of four percent (4%) per annum, ranks senior (in priority)

to the Common Stock, the Series A Preferred Stock, and each other class or series of equity security of the Company.

C Preferred is convertible into Common Stock of the Company at the price of $2.41 per share and is entitled to anti-dilution

protection for (i) subsequent equity issuances by the Company and (ii) changes in the Company’s ownership of DynaResource

de México SA de CV (“DynaMéxico”).

The Series C Preferred is also entitled to preemptive rights,

and the holder has the right to designate one person to the Company’s Board of Directors as a Class III director.

Common Stock Purchase Warrant (the “Golden Post Warrant”) for the purchase of 2,166,527 shares of the Company’s

Common Stock, at an exercise price of $2.50 per share, and expiring June 30, 2020.

The anti-dilution protections contained

in the terms of the Series C Preferred are essentially replicated in the Golden Post Warrant.

to the SPA, the Company executed a Registration Rights Agreement pursuant to which Golden Post may require the Company to

register the shares of Common Stock which may be issued upon the conversion of the Series C Preferred and the shares of Common

Stock issuable upon the exercise of the Warrant, including any additional shares of Common Stock issuable pursuant to anti-dilution

2015, due to underlying anti-dilutive provisions contained in the Series C Preferred Shares and the Golden Post Warrant, the Company

incurred derivative liabilities of $1,531,789 in connection with the Series C Preferred Shares, and $2,963,378 in connection with

the Golden Post Warrant.

Additionally, the Company fully accreted the discount related to the Series C Preferred Shares and the

Golden Post Warrant in the amount of $4,637,179, which is reflected “below”

the net income (loss) amount.

2015, the Company reported $87,374 deemed dividend for Golden Post Rail related to its 4% dividend terms.

As the Company has not

declared these dividends, it is required only as an item “below”

the net income (loss) amount.

At December 31, 2018

the total Derivative Liability was $974,683 which included $402,909 for the Series C Preferred Shares, and $571,774 in connection

with the Golden Post Warrant.

The Deemed Dividend for 2018 and 2017 was $173,320, and $173,320 respectively.

to the nature of this transaction as mandatorily redeemable, the preferred shares are classified as “temporary equity”

on the balance sheet.

( 1,144,539 )

( 2,230,488 )

Income tax expense (benefit)

Deferred income taxes reflect the tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amount used for income tax purposes.

The following table discloses those significant components of our deferred tax assets and liabilities, including any valuation allowance:

Long-term deferred tax assets:

Federal Net Operating Loss Carryforwards

State Net Operating Loss Carryforwards

Total deferred tax assets before valuation allowance

Deferred tax liabilities:

Total deferred tax liabilities

Valuation Allowance

( 12,328,461 )

( 13,473,000 )

Net deferred tax assets and liabilities

During the year ended December 31, 2021, the valuation allowance decreased by $ 1.2 million.

The Company believes a full valuation allowance against the net deferred tax asset is appropriate based on the negative evidence against future taxable income.

The Company is currently in a three-year cumulative loss and does not believe there is evidence to suggest future taxable income to realize its deferred tax assets.

The Company will continue to evaluate the realiziability of its deferred tax assets in future years.

We account for uncertain tax positions in accordance with ASC 740-10-25, which prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns.

The following table summarized the total changes in unrecognized tax benefits in continuing operations during the years ended December 31, 2021 and 2020.

Such amounts include unrecognized tax benefits that have impacted deferred tax assets and liabilities as of December 31, 2021 and 2020.

Balance - beginning of year

Gross increases - tax positions in prior period

Gross decreases - tax positions in prior period

Gross increases - tax positions in current period

Lapse of Statute of limitations

Uncertain Tax Benefit - end of year

The total amount of unrecognized tax benefits as of December 31, 2021 was $ 0 , of which none, if recognized, would affect our effective tax rate and income tax benefit from continuing operations.

Our practice is to recognize interest and penalties related to income tax matters in income tax expense in our consolidated statements of operations.

We did not have any interest or penalties on unrecognized tax benefits accrued at December 31, 2021.

The Company is subject to income taxes in the US federal jurisdiction and various state jurisdictions and Mexico.

With few exceptions, the Company is no longer subject to US federal, state and local tax examinations by tax authorities for years prior to fiscal year 2017.

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

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

At December 31, 2021, our carryforwards available to offset future taxable income consisted of (1) federal net operating loss (“NOL”) carryforwards of approximately $ 19.1 million pre-tax, $ 16.4 million of which expires in 2029 to 2037 and $ 2.7 million of which has no expiration date, (2) foreign net operating losses of $ 12.5 million.

Our ability to utilize NOL carryforwards to reduce future taxable income may be limited under Section 382 of the Internal Revenue Code if certain ownership changes in our company occur during a rolling three-year period.

These ownership changes include purchases of common stock under share repurchase programs, the offering of stock by us, the purchase or sale of our stock by 5% shareholders, as defined in the Treasury regulations, or the issuance or exercise of rights to acquire our stock.

If such ownership changes by 5 % shareholders result in aggregate increases that exceed 50 percentage points during the three-year period, then Section 382 imposes an annual limitation on the amount of our taxable income that may be offset by the NOL carryforwards or tax credit carryforwards at the time of ownership change.

earnings (loss) from continuing operations

federal income tax expense (benefit)

State income tax expense (benefit)

Foreign income tax expense (benefit)

Total tax expense (benefit) from continuing operations

Federal Deferred Incoome Taxes

State Deferred Income Taxes

Foreign income tax expense (benefit)

Total Deferred Income taxes from continuing operations

Total Provision for income taxes

NOTE 7 – STOCKHOLDERS’ EQUITY

Authorized Capital .

The total number of shares of all classes of capital stock which the corporation shall have 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 one thousand (1,000) shares shall be designated as Series A Preferred Stock, 1,734,992 are designated as Series C Preferred Stock, and 3,000,000 shares are designated as Series D Preferred Stock and (ii) forty million (40,000,000) shares of Common Stock, par value $0.01 per share (“Common Stock”).

As of December 31, 2021, 15,265,008 of Preferred stock remain undesignated.

Series A Preferred Stock

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

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

The Company issued 1,000 shares of Series A Preferred Stock to its CEO.

At December 31, 2021 and December 31, 2020, there were 1,000 shares of Series A Preferred Stock outstanding.

Series C Senior Convertible Preferred Stock

At December 31, 2021 and December 31, 2020 there were 1,734,992 and 1,734,992 Series C Preferred shares outstanding, respectively.

These Series C Preferred Shares are convertible to common shares at $ 2.50 per share, through June 30, 2022 and include anti-dilution protection.

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

The Dividend is calculated at 4.0% of $ 4,337,480 payable annually on June 30.

At December 31, 2021 dividends for the years 2017 to 2021 totaling $ 866,940 were in arrears.

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

Carrying Value, December 31, 2019

Issuances at Fair Value, Net of Issuance

Issuances at Fair Value, Net of Issuance Costs

Bifurcation of Derivative Liability

Relative Fair Value of Warrants –

Stock Discount

Accretion of Preferred Stock to Redemption

Relative Fair Value of Warrants – Preferred Stock Discount

Accretion of Preferred Stock to Redemption Value

Carrying Value, December 31, 2020

Issuances at Fair Value, Net of Issuance

Bifurcation of Derivative Liability

Relative Fair Value of Warrants –

Stock Discount

Accretion of Preferred

Stock to Redemption Value

Issuances at Fair Value, Net of Issuance Costs

Relative Fair Value of Warrants – Preferred Stock Discount

Accretion of Preferred Stock to Redemption Value

Carrying Value, December 31, 2021

Stock (Undesignated)

addition to the 1,000 shares designated as Series A Preferred Stock and the 1,733,221 shares designated as Series C Preferred

Shares, the Company is authorized to issue an additional 16,266,779 shares of Preferred Stock, having a par value of $0.0001 per

The Board of Directors of the Company has authority to issue the Preferred Stock from time to time in one or more series,

and with respect to each series of the Preferred Stock, to fix and state by the resolution the terms attached to the Preferred

Series D Senior Convertible Preferred Stock

Financing Agreement with Golden Post Rail, LLC, a Texas Limited Liability Company, and with Shareholders of DynaResource, Inc.

On May 14, 2020, the Company closed an additional financing agreement with Golden Post, and with certain individual shareholders of DynaUSA (“DynaUSA Shareholders”), and related agreements.

A summary of the transactions and related agreements are set forth below:

Pursuant to the May 14, 2020 Note Purchase Agreement (the “NPA”) among the Company, Golden Post Rail, LLC (the “Lead Purchaser”), and the other parties listed on Exhibit A of the NFP (the “Remaining Purchasers”):

Golden Post acquired the following securities :

A convertible promissory note (the “Golden Post Note”) payable to Golden Post in the principal amount of $ 2,500,000 , bearing interest at 10%, and maturing two years from the date of execution.

One half of the principal amount of the Golden Post Note, or $ 1,250,000 , has been fully funded in accordance with an agreed-upon draw summary and budget.

The balance of the principal amount will also be funded in accordance with agreed-upon draw summaries and the budget.

The Golden Post Note is convertible, at the option of Golden Post, into shares of Series D Senior Convertible Preferred Stock (the “Series D Preferred”) at a conversion price of $ 2.00 per share; and

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

The 2020 Warrant contains anti-dilution provisions; and

The Remaining Purchasers acquired the following securities :

Convertible promissory notes (the “Remaining Notes”) in the aggregate principal amount of $ 1,400,000 , bearing interest at 10%, and maturing two years from the date of issuance.

The Remaining Notes have been fully funded.

The Remaining Notes are convertible, at the option of each individual Remaining Purchaser, into shares of Series D Preferred at a conversion price of $ 2.00 per share; and

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

The Remaining Purchasers Warrants contain anti-dilution provisions.

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

Pursuant to the transaction contemplated by the NPA, the Company agreed to call a special meeting of Company stockholders, to be held not later than July 14, 2020, to solicit stockholder approval of (a) an amendment of the Company’s certificate of incorporation to increase the number of authorized shares of common stock from 25,000,000 shares to 40,000,000 shares , and (b) an amendment of the Certificate of Designations of the Series C Preferred, in order to (a) extend the maturity date of the Series C Preferred by an additional two (2) years, (ii) add an equity cap in respect of the conversion of Series C Preferred into common stock of the Company, and (iii) add certain restrictions on the ability of the Company to issue Series C Preferred.

The special meeting was properly called and held on July 13, 2020, whereby Company stockholders confirmed approval for each item referenced in item 4 above.

Compensatory Issuances .

On May 13, 2020, one business day prior to the NPA, the Company issued to the Lead Purchaser the following:

(i) a common stock purchase warrant for 2,306 shares, at an exercise price of $0.01 per share, and maturing on the 7-year anniversary of the date of issuance (the “Compensatory Warrant”); and (ii) 1,771 shares of Series C Preferred Shares.

These issuances were occasioned by the Company’s obligations under the Securities Purchase Agreement dated as of May 6, 2015 .

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

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

On October 11, 2021 the Company filed an amended designation of Series D Preferred Stock with the State of Delaware which removed the anti-dilution provisions of the original designation.

Retirement of Series D Convertible Debt

On October 7, 2021, the Company paid $ 2,500,000 to repurchase one note that was convertible into Series D Preferred Stock.

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

On October 18, 2021 the Company issued 760,000 shares of Series D Preferred Stock for these notes.

In addition the redemption of the Series D notes trigged an acceleration of the amortization of the original loan discount booked at the issuance of the Series D notes (see discussion below) and being amortized over the 24 month life of the notes of $ 287,508 in October 2021.

As part of the transaction all Series D noteholders agreed to waive the non-dilution rights contained in the original note and an amendment of the Series D Preferred Stock designation was filed with the State of Delaware.

At December 31, 2021 and December 31, 2020, there were 760,000 and 0 Series D Preferred shares outstanding, respectively.

These Series D Preferred Shares are convertible to common shares at $2.00 per share, through October 18, 2026.

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

The Dividend is calculated at 4.0% of $1,520,000 payable annually on October 18.

At December 31, 2021 , no dividends were in arrears.

Due to the nature of this transaction as mandatorily redeemable by the Company at the election of the Series D preferred stock holder at maturity, the Series D preferred shares are classified as “temporary equity” on the balance sheet.

Due to underlying anti-dilutive provisions contained in the Series C Preferred Stock and the Golden Post Warrant, the Company incurred derivative liabilities.

On May 14, 2020 in connection with the Series D Convertible Note financing, the expiration date for the Series C Preferred Stock and the Golden Post warrants were extended to June 30, 2022.

In addition, a new derivative liability was incurred due to the issuance of warrants for kicker shares.

At December 31, 2021, the total derivative liability was $ 3,898,914 which included $ 1,019,431 for the Series C Preferred Stock, and $ 1,320,380 in connection with the Golden Post Warrants and $ 1,559,103 in connection with the Series D Convertible Note Kicker Warrants.

At December 31, 2020, the total derivative liability was $ 2,371,560 which included $ 601,313 for the Series C Preferred Stock, and $ 817,613 in connection with the Golden Post Warrants and $ 952,634 in connection with the Series D Convertible Note Kicker Warrants.

The deemed dividend for the years ending December 31, 2021, and December 31, 2020 were $ 188,699 and $ 173,490 , respectively.

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

A discount of $ 1,098,492 was recorded on the Series D financing as a result of the valuation the total liabilities including the derivatives .

The discount was amortized over the two year life of the loan on a straight line basis.

Preferred Stock (Undesignated)

In addition to the 1,000 shares designated as Series A Preferred Stock, the 1,734,992 shares designated as Series C Preferred Shares and 3,000,000 shares designated as Series D Preferred Stock, the Company is authorized to issue an additional 15,265,008 shares of Preferred Stock, having a par value of $0.0001 per share.

The Board of Directors of the Company has authority to issue the Preferred Stock from time to time in one or more series, and with respect to each series of the Preferred Stock, to fix and state by the resolution the terms attached to the Preferred Stock.

At December 31, 2021 and December 31, 2020, there were no other shares of Preferred Stock outstanding.

Separate Series;

Increase or Decrease in Authorized Shares .

The shares of each series of Preferred Stock may vary from the shares of

any other series thereof in any or all of the foregoing respects and in any other manner.

The Board of Directors may increase

the number of shares of Preferred Stock designated for any existing series by a resolution adding to such series authorized and

unissued shares of Preferred Stock not designated for any other series.

Unless otherwise provided in the Preferred Stock Designation,

the Board of Directors may decrease the number of shares of Preferred Stock designated for any existing series by a resolution

subtracting from such series authorized and unissued shares of Preferred Stock designated for such existing series, and the shares

so subtracted shall become authorized, unissued and undesignated shares of Preferred Stock.

Company is authorized to issue 25,000,000 common shares at a par value of $0.01 per share.

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

The Board of Directors may increase the number of shares of Preferred Stock designated for any existing series by a resolution adding to such series authorized and unissued shares of Preferred Stock not designated for any other series.

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

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

These shares have full voting rights.

At December 31, 2021 and December 31, 2020, there were 18,091,293 and 17,722,825 shares outstanding, respectively.

were paid for the years ended December 31, 2018 and 2017, respectively.

Company issued “Preferred Rights”

for the rights to percentages of revenues generated from the San Jose de Gracia

Pilot Production Plant and received $158,500 in 2003 and $626,000 in 2002.

This has been reflected as “Preferred Rights”

in stockholders’

As of December 31, 2004, $558,312 was repaid and as of December 31, 2005, an additional $186,188

was repaid, leaving a current balance of $40,000 and $40,000 as of December 31, 2018 and December 31, 2017, respectively.

the year ended December 31, 2017, the Company issued 1,000,000 common shares for the exercise of stock warrants at $2.50 a share

for total proceeds of $2,500,000.

In addition, the Company issued 333,333 shares of treasury stock as additional compensation

for exercise of the warrants at above market price.

the year ended December 31, 2017 the Company issued 333,333 treasury shares as additional compensation for the exercise of stock

warrants at an above market price as discussed above.

No treasury stock was issued during the year ended December 31, 2018.

December 31, 2018 and 2017, 778,980 and 778,790 treasury shares were outstanding.

Company had 2,523,689 warrants outstanding at December 31, 2018.

There were no warrants issued or exercised in 2018 and no warrants

expired in 2018.

Company had 2,523,689 warrants outstanding at December 31, 2018.

1,000,000 warrants were exercised at $2.50 a share during the

year and 70,000 warrants expired.

Company recorded no expense related to the issuance of these warrants since these warrants were issued in common stock for cash

sales and note conversions.

Average Exercise Price

Average Remaining Contractual Life (Years)

at December 31, 2016

at December 31, 2017

at December 31, 2018

No dividends were paid for the years ended December 31, 2021 and 2020, respectively.

Preferred Rights

The Company issued “Preferred Rights” for the rights to percentages of revenues generated from the San Jose de Gracía Pilot Production Plant and received $ 784,500 for these rights.

This has been reflected as “Preferred Rights” in stockholders’ equity.

As of December 31, 2021, $ 744,500 had been repaid, leaving a current balance of $ 40,000 and $ 40,000 as of December 31, 2021 and 2020, respectively

Stock Issuances

On October 18, 2021, the Company issued 368,468 shares of common stock upon the exercise of 368,468 warrants by five warrant holders for $.01 a share.

There were no issuances of common stock during the year ending December 31, 2020.

Treasury Stock

During the year ending December 31, 2021, 504,300 treasury shares were transferred for services provided to the Company.

At December 31, 2021, 12,180 treasury shares remained outstanding.

During the year ending December 31, 2020, 262,500 treasury shares were transferred for services provided to the Company.

At December 31, 2020, 516,480 treasury shares remained outstanding.

2021 Activity

On October 18, 2021, five warrant holders exercised a total of 368,468 warrant to purchase 368,468 shares of common stock for $ 0.01 a share.

At December 2021, the Company had a total of 3,060,998 warrants outstanding.

2020 Activity

On May 13, 2020 the Company issued 2,306 warrants to purchase shares of common stock with an exercise price of $ 2.05 per share related to anti-dilution provisions of the Series C preferred stock.

These warrants expire on June 30, 2022.

On May 14, 2020, the Company issued 1,260,633 warrants to purchase shares of common stock with an exercise price of $ 0.01 per share as kicker shares as part of the Series D note agreements.

These warrants expire on May 14, 2030.

On June 30, 2020, as part of the Series D note agreement the Company issued 2,166,527 warrants to purchase shares of common stock with an exercise price of $ 2.05 per share to replace the 2,166,527 warrants previously outstanding which expired on that date.

These warrants expire on June 30, 2022.

At December 2020, the Company had a total of 3,429,466 warrants outstanding.

The Company recorded no expense related to the issuance of these warrants since these warrants were issued in common stock for cash sales and note conversions.

Balance at December 31, 2019

Balance at December 31, 2020

Balance at December 31, 2021

Exercisable at December 31, 2021

NOTE 8 – RELATED PARTY TRANSACTIONS

Related Party Transactions

Party Transactions

Company follows FASB ASC subtopic 850-10, Related Party Disclosures, for the identification of related parties and disclosure

of related party transactions.

Pursuant to ASC 850-10-20, related parties include:

a) affiliates of the Company;

b) entities for

which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value

Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity;

for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management;

d) principal owners of the Company;

e) management of the Company;

f) 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;

and g) other parties that can significantly influence

the management or operating policies of the transacting parties or that have 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.

related party transactions are required to be disclosed in the consolidated financial statements, other than compensation arrangements,

expense allowances, and other similar items in the ordinary course of business.

However, disclosure of transactions that are eliminated

in the preparation of consolidated or combined financial statements is not required in those statements.

The disclosures shall

a) the nature of the relationship(s) involved;

b) a description of the transactions, including transactions to which

no amounts or nominal amounts were ascribed, for each of the periods for which statements of operation are presented, and such

other information deemed necessary to an understanding of the effects of the transactions on the financial statements;

dollar amounts of transactions for each of the periods for which statements of operations are presented and the effects of any

change in the method of establishing the terms from that used in the preceding period;

and d) amounts due from or to related parties

as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

Company paid $113,750 and $165,250 to Dynacap Group, Ltd.

(“Dynacap”, an entity controlled by the CEO of the Company)

for consulting and other fees during the years ended December 31, 2018 and 2017, respectively.

from Goldgroup Mining Inc.

(“Goldgroup”) to Dyna México

2014, Goldgroup advanced $111,500 to DynaMéxico and in 2013 Goldgroup advanced $120,000 USD to DynaMéxico.

total $231,500 is being carried by DynaMéxico as a Due to Non-Controlling Interest.

COMMITMENTS AND CONTINGENCIES

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.

on Management’s recent business activities and current and forward plans and considering expenditures on mining concessions

since 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

DynaMéxico retains sufficient carry-forward amounts to cover over 10 years of the minimum expenditure (as calculated

at the 2017 minimum, adjusted for annual inflation of 4%).

addition to the surface rights held by DynaMéxico pursuant to the Mining Act of México and its Regulations

( Ley Minera y su Reglamento ), DynaMineras maintains access and surface rights to the SJG Project pursuant to the 20-year

Land Lease Agreement.

The 20 Year Land Lease Agreement with the Santa Maria Ejido Community

surrounding San Jose de Gracia was dated January 6, 2014 and continues through 2033.

It covers an area of 4,399 hectares surrounding

the main mineral resource areas of SJG and provides for annual lease payments by DynaMineras of $1,359,443 Pesos (approx.

USD), commencing in 2014.

The Land Lease Agreement provides DynaMineras with surface access to the core resource areas

of SJG (4,399 hectares) and allows for all permitted mining and exploration activities from the owners of the surface rights (Santa

Maria Ejido community).

Company leases office space for its corporate headquarters in Irving, Texas.

In September 2017, the Company entered into a sixty-six-month

extension of the lease through 2023.

Dynacap Group Ltd.

The Company paid $ 285,999 and $ 114,250 to Dynacap Group, Ltd.

(“Dynacap”, an entity controlled by the CEO of the Company) for consulting and other services during the years ended December 31, 2021 and 2020, respectively.

NOTE 9 – COMMITMENTS AND CONTINGENCIES

Concession Taxes

The Company is required to pay taxes in México in order to maintain mining concessions owned by DynaMéxico.

Additionally, the Company is required to incur a minimum amount of expenditures each year for all concessions held.

The minimum expenditures are calculated based upon the land area, as well as the age of the concessions.

Amounts spent in excess of the minimum may be carried forward indefinitely over the life of the concessions and are adjusted annually for inflation.

Based on Management’s recent business activities and current and forward plans and considering expenditures on mining concessions 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 carry-forward amounts to cover over 10 years of the minimum expenditure (as calculated at the 2017 minimum, adjusted for annual inflation of 4%) .

In addition to the surface rights held by DynaMéxico pursuant to the Mining Act of México and its Regulations ( Ley Minera y su Reglamento ), DynaMineras maintains access and surface rights to the SJG Project pursuant to the 20 -year Land Lease Agreement.

The 20 Year Land Lease Agreement with the Santa Maria Ejido Community surrounding San Jose de Gracía was dated January 6, 2014 and continues through January 2033.

It covers an area of 4,399 hectares surrounding the main mineral resource areas of SJG and provides for annual lease payments on January 1 st each year by DynaMineras of $ 1,359,443 pesos adjusted for inflation based on the Mexico minimum wage increase commencing in 2014.

Rent was $ 3,015,112 Pesos (approx.

$ 149,000 USD) for the year ended December 31, 2021.

The Land Lease Agreement provides DynaMineras with surface access to the core resource areas of SJG (4,399 hectares), and allows for all permitted mining and exploration activities from the owners of the surface rights (Santa Maria Ejido community).

The Company leases office space for its corporate headquarters in Irving, Texas.

In September 2017, the Company entered into a sixty-six-month extension of the lease through January 2023.

As part of the agreement the Company received six months free rent as a finish out allowance.

The Company capitalized the leasehold improvement costs and amortized them over the rent abatement period as rent expense The

Company incurred rent expense of $86,011 and $71,399 for the office lease in the years ended December 31, 2018 and 2017, respectively.

minimum lease obligations are as follow for the years ending December 31:

Contingencies

Company's mining and exploration activities are subject to various laws and regulations governing the protection of the environment.

These laws and regulations are continually changing and generally becoming more restrictive.

The Company conducts its operations

so as to protect public health and the environment, and believes its operations are materially in compliance with all applicable

laws and regulations.

The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations.

Awarded to DynaMéxico in México Litigation

October 5, 2015, DynaResource de México SA de C.V.

(“DynaMéxico”), was awarded in excess of $48 M USD

(Forty-Eight Million Dollars) in damages from Goldgroup Resources, Inc.

(the “Goldgroup Damages”) by virtue of a Sentencia

Definitiva (the “Definitive Sentence”) issued by the Thirty Sixth Civil Court of the Superior Court of Justice of

the Federal District of México (Tribunal Superior de Justicia del Distrito Federal), File number 1120/2014.

The Definitive

Sentence included the considerations and resolutions by the Court, and additional Resolutions were also ordered in favor of DynaMéxico

(together the Goldgroup Damages and the additional Resolutions are referred to as, the “Oct.

5, 2015 Resolution”).

The October 5, 2015 Resolution is described in Part II, Item 1.

Legal Proceedings.

As of December 31, 2018, the decision remains

under appeal.

Company believes that no material adverse change will occur as a result of the legal actions taken, and the Company further believes

that there is little to no potential for the assessment of a material monetary judgment against the Company for legal actions

it has filed in México.

Further, the Company believes there is no legal basis for which to conduct arbitration proceedings.

Legal Proceedings.

And, see Item 7.

Management’s Discussion and Analysis of Financial Conditions and Results

of Operations).

DERIVATIVE LIABILITIES

Series C Stock

discussed in Note 8, the Company analyzed the embedded conversion features of the Series C Preferred Stock and determined that

the stock qualified as a derivative liability and is required to be bifurcated and accounted for as such since the host and the

embedded instrument are not clearly and closely related.

The Company capitalized the leasehold improvement costs and amortized them over the rent abatement period as rent expense.

The Company makes tiered lease payments on the 1 st of each month.

Effective January 1, 2019, the Company adopted ASC 842, which requires recognition of a right-of-use asset and lease liability for all leases at the commencement date based on the present value of lease payments over the lease term.

Additional qualitative and quantitative disclosures regarding the Company's leasing arrangements are also required.

The Company adopted ASC 842 prospectively and elected the package of transition practical expedients that does not require reassessment of (1) whether any existing or expired contracts are or contain leases, (2) lease classification and (3) initial direct costs.

In addition, the Company has elected other available practical expedients to not separate lease and non-lease components, which consist principally of common area maintenance charges, for all classes of underlying assets and to exclude leases with an initial term of 12 months or less.

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

As of December 31, 2021, the Company has two operating leases - a six- and one-half year lease for office space with a remaining term of twenty-four months and a twenty-year ground lease in association with its México mining operations with a remaining term of thirteen years.

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

The Company’s leases do not have any residual value guarantees or restrictive covenants.

As the implicit rate is not readily determinable for most of the Company’s lease agreements, the Company uses an estimated incremental borrowing rate to determine the initial present value of lease payments.

These discount rates for leases are calculated using the Company's interest rate of promissory notes.

The Company’s components of lease cost are as follows:

December 31, 2021

Operating Lease – Office Lease

Operating Lease – Ground Lease

Short Term Lease Costs

Variable Lease Costs

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

Weighted Average Remaining Lease Term (Years) – Operating Leases

Weighted Average Discount Rate – Operating Leases

Estimated future minimum lease obligations are as follow for the years ending December 31:

Less Imputed Interest

OPERATING LEASE LIABILITY

NOTE 10 – DERIVATIVE LIABILITIES

Preferred Series C Stock

As discussed in Note 7, the Company analyzed the embedded conversion features of the Series C Preferred Stock and determined that the stock qualified as a derivative liability and is required to be bifurcated and accounted for as such since the host and the embedded instrument are not clearly and closely related.

The Company performed a valuation of the conversion feature.

In performing

the valuation, the Company applied the guidance in ASC 820, “Fair Value Measurements”, to nonfinancial assets

and liabilities that are recognized or disclosed at fair value on a nonrecurring basis.

ASC 820 defines fair value as the price

that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants

at the measurement date (exit price).

To measure fair value, the Company incorporates assumptions that market participants would

use in pricing the asset or liability and utilizes market data to the maximum extent possible.

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.

Company considered the inputs in this valuation to be level 3 in the fair value hierarchy under ASC 820 and used an equity simulation

model to determine the value of conversion feature of the Series C Preferred Stock based on the assumptions below:

Annual volatility

Value of common stock

the year ended December 31, 2018, 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.

below table represents the change in the fair value of the derivative liability during the years ended December 31, 2018 and 2017:

value of derivative (stock), beginning of year

Change in fair value

of derivative

Fair value of derivative

on the date of issuance

Fair value of derivative(stock),

Series C Warrants

discussed in Note 8, the Company analyzed the embedded conversion features of the Series C Preferred Stock and determined that

the Warrants qualified as a derivative liability and is required to be bifurcated and accounted for as such since the host and

the embedded instrument are not clearly and closely related.

In performing the valuation, the Company applied the guidance in ASC 820, “Fair Value Measurements”, to nonfinancial assets and liabilities that are recognized or disclosed at fair value on a nonrecurring basis.

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price).

To measure fair value, the Company incorporates assumptions that market participants would use in pricing the asset or liability and utilizes market data to the maximum extent possible.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

The Company considered the inputs in this valuation to be level 3 in the fair value hierarchy under ASC 820 and used an equity simulation model to determine the value of conversion feature of the Series C Preferred Stock based on the assumptions below:

Annual volatility rate

Risk free rate

Remaining Term

Fair Value of common stock

For the years ended December 31, 2021, and December 31, 2020, 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 table below represents the change in the fair value of the derivative liability during the years ended December 31, 2021, and December 31, 2020.

Fair value of derivative (stock), beginning of period

Change in fair value of derivative

Fair value of derivative on the date of issuance

Fair value of derivative (stock), end of period

Preferred Series C Warrants

As discussed in Note 7, the Company analyzed the embedded conversion features of the Series C Preferred Stock and determined that the Warrants qualified as a derivative liability and is required to be bifurcated and accounted for as such since the host and the embedded instrument are not clearly and closely related.