ThZeal - The Zeal

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 13, 2024, there were 29,428,226 shares of Common Stock of the registrant outstanding.

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

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

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

NOTE 1 - NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Activities, History and Organization

DynaResource, Inc. (the “Company” or “DynaResource”) was organized on September 28, 1937, as a California corporation under the name of West Coast Mines, Inc. In 1998, the Company re-domiciled to Delaware and changed its name to DynaResource, Inc. The Company is in the business of acquiring, investing in, and developing precious metal properties, and the production of precious metals.

As of December 31, 2023, the Company had one wholly owned subsidiary in the United States, DynaMéxico US Holding, LLC and three wholly owned subsidiaries in México, DynaResource de México, S.A. de C.V. (“DynaMéxico”), Mineras de DynaResources S.A. de C.V. (“DynaMineras”) and DynaResource Operaciones de San Jose De Gracia S.A. de C.V. (“DynaOperaciones”). In April 2024, as part of the Company’s organizational, operating and tax strategy in Mexico, the Company purchased Minera de Alica S.A. de C.V., (DynaAlica) a Mexican corporation with no assets, liabilities or activity for 95,000 pesos (approximately $5,600 USD).

Although the Company considers the four Mexican subsidiaries to be wholly owned, each has issued one qualifying share to a second shareholder as required under Mexican law, with such qualifying shares held by either US Holding. DynaMéxico owns a portfolio of mining concessions that currently comprises its 100% interest in the San José de Gracia Project (“SJG”) in northern Sinaloa State, México.

Principles of Consolidation

The unaudited condensed interim consolidated financial statements include the accounts of DynaResource, Inc., as well as the Company’s wholly owned subsidiaries DynaMéxico, DynaMineras, DynaOperaciones and DynaAlica. All significant intercompany transactions have been eliminated. All amounts are presented in U.S. Dollars unless otherwise stated.

Significant Accounting Policies

The Company’s management selects accounting principles generally accepted in the United States of America and adopts methods for their application. The application of accounting principles requires the estimating, matching and timing of revenues and expenses. The accounting policies used conform to generally accepted accounting principles which have been consistently applied in the preparation of these unaudited, condensed, interim consolidated financial statements.

The unaudited condensed interim consolidated financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. Management acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal accounting control is designed to assure, among other items, that: (1) recorded transactions are valid; (2) valid transactions are recorded; and (3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods presented.

Basis of Presentation

These unaudited condensed consolidated interim financial statements reflect the accounts of the Company and have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for all periods presented. Certain information and footnote disclosures normally included in the audited annual consolidated financial statements prepared in accordance with GAAP have been omitted or condensed. These unaudited condensed interim consolidated financial statements have been prepared on a going concern basis that contemplates the realization of assets and discharge of liabilities at their carrying value in the normal course of business for the foreseeable future. The information included in these unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes as of and for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. These unaudited interim condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments), which, in the opinion of management, are necessary for the fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year.

Use of Estimates

In order to prepare unaudited condensed interim 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 unaudited condensed interim consolidated financial statements and determines whether contingent assets and liabilities, if any, are disclosed in the unaudited condensed interim consolidated 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.

Exploration Stage Issuer (No Reserves Disclosed)

The definitions of Measured Mineral Resource, Mineral Reserve and Mineral Resource are set forth in SEC Regulation S-K, Item 1300 (“Reg. S-K, Item 1300”).

Measured mineral resource is that part of a mineral resource for which quantity and grade or quality are estimated on the basis of conclusive geological evidence and sampling. The level of geological certainty associated with a measured mineral resource is sufficient to allow a qualified person to apply modifying factors in sufficient detail to support detailed mine planning and final evaluation of the economic viability of the deposit. Because a measured mineral resource has a higher level of confidence than the level of confidence of either an indicated mineral resource or an inferred mineral resource, a measured mineral resource may be converted to a proven mineral reserve or to a probable mineral reserve.

Mineral reserve is an estimate of tonnage and grade or quality of indicated and measured mineral resources that, in the opinion of the qualified person, can be the basis of an economically viable project. More specifically, it is the economically mineable part of a measured or indicated mineral resource, which includes diluting materials and allowances for losses that may occur when the material is mined or extracted.

Mineral resource is a concentration or occurrence of material of economic interest in or on the Earth’s crust in such form, grade or quality, and quantity that there are reasonable prospects for economic extraction. A mineral resource is a reasonable estimate of mineralization, taking into account relevant factors such as cut-off grade, likely mining dimensions, location or continuity, that, with the assumed and justifiable technical and economic conditions, is likely to, in whole or in part, become economically extractable. It is not merely an inventory of all mineralization drilled or sampled.

As of September 30, 2024, the Company continues to meet the definition of an exploration stage issuer which is defined as an issuer that has no material property with established proven and probable mineral reserves as defined by Regulation S-K, Item 1300.

Segment Information

The Company operates as one segment: test mining and milling gold-silver concentrate for sale from its location in Mexico.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments with an original maturity of three months or less to be cash equivalents. At times, cash balances may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. As of September 30, 2024, the Company has $253,654 in deposits in U.S. banks in excess of the FDIC limit. The Company does not have any cash equivalents as of September 30, 2024 and December 31, 2023. The Company reduces this risk by maintaining such deposits at high quality financial institutions that management believes are creditworthy.

Accounts Receivable and Allowances for Doubtful Accounts

Accounts receivable consists of trade receivables which are recorded net of allowance for doubtful accounts for the sale of metal concentrate, as well as net of an embedded derivative based on mark-to-market adjustments for outstanding provisional invoices based on forward metal prices. The allowance for accounts receivable is recorded when receivables are considered to be uncollectible. As of September 30, 2024 and December 31, 2023 no allowance has been made, as management believes all accounts receivable are fully collectable.

Mined Tonnage Inventory

Mined tonnage inventory represents ore that has been mined and is available for further processing. The stockpiles of mined tonnage are measured by estimating the number of tonnes added and removed from the stockpile, an estimate of the contained metals (based on assay data) and the estimated metallurgical recovery rates. Costs are allocated to stockpiles based on the relative values of material stockpiled and processed using current mining costs incurred, including applicable overhead. Material is removed at each stockpile’s average cost per tonne. Stockpiles are carried at the lower of average cost of net realizable value. Net realizable value represents the

estimated future sales price of the product based on current and long-term metal prices, less the estimated cost to complete production and bring the product to sale.

Concentrate Inventory

Concentrate inventory includes metal concentrates located either at the Company’s facilities or in transit to its customer’s port. Concentrate inventories are carried at the lower of cost of production or net realizable value based on current metals prices.

Foreign Tax Receivable

Foreign tax receivable is comprised of recoverable value-added taxes (“IVA”) charged by the Mexican government on goods and services rendered. Under certain circumstances, these taxes are recoverable by filing a tax return. Amounts paid for IVA are tracked and held as receivables until the funds are received by the Company.

Property and Equipment

Substantially all property and equipment at the Company’s mines, including design, engineering, mine construction, and installation of equipment are expensed as incurred, as the Company has not established proven and probable reserves on any of its properties. Only certain types of mining equipment which have alternative uses or significant salvage value, may be capitalized without proven and probable reserves.

Office furniture and equipment are depreciated on a straight-line method over estimated economic lives ranging from 3 to 5 years. Leasehold improvements, which relate to the Company’s corporate office, are being amortized over the term of the lease which is 52 months.

Mine Development Costs

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

When proven and probable mineral reserves (as defined by Reg. S-K, Item 1300) exist, development costs are capitalized. Mine development costs incurred either to develop new ore deposits, expand the capacity of operating mines, or to develop mine areas substantially in advance of current production would also be capitalized. Costs of start-up activities and costs incurred to maintain current production or to maintain assets are charged to operations as incurred. 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 mineral reserves.

Certain costs to design and construct mining and processing facilities may be incurred prior to establishing proven and probable mineral reserves. As no proven and probable reserves mineral have been established on any of the Company’s properties, the design, construction and development costs are not capitalized at any of the Company’s properties.

Mining Concessions

The Company’s mining concessions include acquired interests in development and exploration stage properties and are considered tangible assets. The amount capitalized relating to the Company’s mining concessions represents its fair value at the time of acquisition. If it is determined that the deferred costs related to a property are not recoverable over its productive life, those costs will be written down to fair value as a charge to operations in the period in which the determination is made. The amounts at which mining concessions and the related costs are recorded do not necessarily reflect present or future values.

The Company reviews and evaluates its long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Mineral properties are monitored for impairment based on factors such as mineral prices, government regulation and taxation, the Company’s continued right to explore the area, exploration reports, assays, technical reports, drill results and its continued plans to fund exploration programs on the property.

For operating mines, recoverability is measured by comparing the undiscounted future net cash flows to the net book value. When the net book value exceeds future net undiscounted cash flows, an impairment loss is measured and recorded based on the excess of the net book value over fair value. Fair value for operating mines is determined using a combined approach, which uses a discounted cash flow model for the existing operations and a market approach for the fair value assessment of exploration land claims. Future cash flows are estimated based on quantities of recoverable mineralized material, expected gold and silver prices (considering current and historical

prices, trends and related factors), production levels, operating costs, capital requirements and reclamation costs, all based on life-of-mine plans. The term “recoverable mineralized material” refers to the estimated amount of gold or other commodities that will be obtained after considering losses during processing and treatment of mineralized material. In estimating future cash flows, assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of future cash flows from other asset groups. The Company’s estimates of future cash flows are based on numerous assumptions, and it is possible that actual future cash flows will be significantly different than the estimates, as actual future quantities of recoverable minerals, gold, and silver, commodity prices, production levels and costs and capital are each subject to significant risks and uncertainties.

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

•

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

•

estimated future commodity prices;

•

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

A write-down to fair value 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. As of the date of this filing, no events have occurred that would require the write-down of any assets. As of September 30, 2024 and December 31, 2023, no indications of impairment existed.

Asset Retirement Obligation (“ARO”)

The Company records a liability based on the best estimate of costs for site closure and reclamation activities that the Company is legally or contractually required to remediate. The provision for closure and reclamation liabilities is estimated using expected cash flows based on engineering and environmental reports and accreted to full value over time through periodic charges to income.

During 2023, a significant upgrade was made to the milling facility and therefore, an ARO was established as of December 31, 2023 at the estimated costs to decommission the plant and tailings pond at the end of the estimated live of the mines in operation as of December 31, 2023. As the Company is an exploration stage property that does not qualify for asset capitalization, the costs associated with the obligation are charged to operations.

Changes in regulations or laws, any instances of non-compliance with laws or regulations that result in fines, or any unforeseen environmental contamination could result in a material impact to the amounts charged to operations for reclamation and remediation. Significant judgments and estimates are made when estimating the fair value of AROs. Expected cash flows relating to AROs could occur over long periods of time and the assessment of the extent of environmental remediation work is highly subjective. Considering all the factors that go into the determination of an ARO, the fair value of the AROs can materially change over time.

Property Holding Costs

Holding costs to maintain the property 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.

Exploration Costs

Exploration costs, including exploration, development, direct field costs and related administrative costs are expensed in the period incurred.

Leases

The Company adopted ASC 842, which requires recognition of a right-of-use asset and lease liability for all leases at the commencement date based on the present value of lease payments over the lease term. Additional qualitative and quantitative disclosures regarding the Company’s leasing arrangements are also required. The Company adopted ASC 842 prospectively and elected the package of transition practical expedients that does not require reassessment of (1) whether any existing or expired contracts are or contain leases, (2) lease classification and (3) initial direct costs. In addition, the Company has elected other available practical expedients to not separate lease and non-lease components, which consist principally of common area maintenance charges, for all classes of underlying assets and to exclude leases with an initial term of 12 months or less.

Transactions In and Translations of Foreign Currency

The functional currency for the subsidiaries of the Company is the Mexican Peso. As a result, the financial statements of the subsidiaries have been translated from Mexican Pesos into U.S. dollars using (i) year-end exchange rates for balance sheet accounts, and (ii) the weighted average exchange rate of the reporting period for all income statement accounts. Foreign currency translation gains and losses are reported as a separate component of stockholders’ equity and comprehensive income (loss).

Foreign currency transactions are translated into the functional currency of the respective currency of the entity or division, using the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and losses resulting from the settlement of such transactions and from the remeasurement of monetary items denominated in foreign currency at period-end exchange rates are recognized in profit or loss. Non-monetary items that are not re-translated at period end are measured at historical cost (translated using the exchange rates at the transaction date), except for non-monetary items measured at fair value, which are translated using the exchange rates as at the date when fair value was determined. Gains and losses are recorded in the statement of operations and comprehensive income (loss).

The unaudited 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.

Relevant exchange rates used in the preparation of the unaudited financial statements for the subsidiaries are as follows for the periods ended September 30, 2024 and December 31, 2023 (Mexican Pesos per one U.S. dollar):


	September 30, 2024		December 31, 2023
Current Exchange Rate		19.62		16.97

Relevant exchange rates used in the preparation of the income statement portion of unaudited financial statements for the subsidiaries are as follows for the periods ended September 30, 2024 and 2023 (Mexican Pesos per one U.S. dollar):


	September 30, 2024		September 30, 2023
Weighted Average Exchange Rate for the Three Months Ended		17.74		17.79

The Company recorded currency transaction losses of $259,770 and $46,588 for the nine months ended September 30, 2024 and 2023, respectively.

Income Taxes

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.

Uncertain Tax Position

The Company is subject to income taxes in the U.S. and other foreign jurisdictions, with respect to which some of the outcome is uncertain. The evaluation of the Company’s uncertain tax positions involves significant judgment in the interpretation and application of GAAP and complex domestic and international tax laws. The Company establish reserves to remove some or all of the tax benefit of any of our tax positions at the time we determine that it becomes uncertain based upon one of the following conditions: (1) the tax position is not "more likely than not" to be sustained, (2) the tax position is "more likely than not" to be sustained, but for a lesser amount, or (3) the tax position is "more likely than not" to be sustained, but not in the financial period in which the tax position was originally taken. For purposes of evaluating whether or not a tax position is uncertain, (1) we presume the tax position will be examined by the relevant taxing authority that has full knowledge of all relevant information; (2) the technical merits of a tax position are derived from authorities such as legislation and statutes, legislative intent, regulations, rulings and case law and their applicability to the facts and circumstances of the tax position; and (3) each tax position is evaluated without consideration of the possibility of offset or aggregation with other tax positions taken. Although management believes the Company’s reserves are reasonable, no assurance can be given that the final outcome of these uncertainties will not be different from that which is reflected in the Company’s reserves. A number of years may elapse before a particular uncertain tax position is audited and finally resolved or when a tax assessment is raised. The

number of years subject to tax assessments varies depending on the tax jurisdiction. Any tax benefit that is or has been reserved because of a failure to meet the "more likely than not" recognition threshold would be recognized in income tax expense in the first interim period when the uncertainty disappears under any one of the following conditions: (1) the tax position is "more likely than not" to be sustained, (2) the tax position, amount, and/or timing is ultimately settled through negotiation or litigation, or (3) the statute of limitations for the tax position has expired.

Comprehensive Income (Loss)

ASC 220 “Comprehensive Income” establishes standards for reporting and display of comprehensive income and its components in a full set of general-purpose consolidated financial statements. The Company’s comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss), consisting of unrealized net gains and losses on the translation of the assets and liabilities of its foreign operations.

Revenue Recognition

The Company follows ASC 606 “Revenue from Contracts with Customers”. The Company generates revenue by selling gold and silver concentrate material produced from its mining operations. The Company recognizes revenue for gold and silver concentrate production, net of treatment and refining costs, when it satisfies the performance obligation of transferring control of the concentrate to the customer. This is generally when the material is delivered to the customer facility for treatment and processing, as the customer has the ability (upon such delivery) to direct the use of and obtain substantially all the remaining benefits from the material and the customer has the risk of loss.

The amount of revenue recognized is initially recorded on a provisional basis based on the contract price and the estimated metal quantities based on assay data. Adjustments to the provisional sales prices are made to take into account the mark-to-market changes based on the forward prices of metals until final settlement occurs. The changes in price between the provisional sales price and final sales price are considered an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable from the sale of the concentrate at the quoted metal prices at the time of delivery. The embedded derivative, which does not qualify for hedge accounting, is adjusted to market through revenue at final settlement. Market changes in the prices of metals between the delivery and final settlement dates will result in adjustments to revenues related to previously recorded sales of concentrate. The chief risk associated with the recognition of sales on a provisional basis is the fluctuation (if any) between the estimated quantities of the precious metals based on the initial assay and the actual recovery from treatment and processing.

During the nine months ended September 30, 2024 and 2023, there were $0 and $9,350,000 respectively of revenue recognized during the period from customer deposit liabilities (deferred contract revenue) from prior periods, and no customer deposits were refunded to the customer due to order cancellation.

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

Derivative Financial Instruments

Certain warrants are treated as derivative financial liabilities. The estimated fair value, based on the Black-Scholes model, is adjusted on a quarterly basis with gains or losses recognized in the statements of operations and comprehensive income (loss). The Black-Scholes model is based on significant assumptions such as volatility, dividend yield, and expected term.

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash, accounts receivable, accounts payable, note payable and installment notes payable and derivative liabilities. The carrying amount of cash, accounts receivable, accounts payable and note payable approximates fair value because of the short-term nature of these items. The carrying amount of installment notes payable debt approximates fair value due to the relationship between the interest rate on installment notes payable debt and the Company’s incremental risk adjusted borrowing rate. The fair value of derivative liabilities is based on the Black-Scholes model.

Earnings (Loss) Per Share

Earnings (loss) per share, attributable to the common equity holders of the Company, are calculated in accordance with ASC 260 “Earnings per Share”. The weighted average number of common shares outstanding during each period is used to compute basic earnings (loss) per share. Diluted earnings (loss) per share is computed using the weighted average number of shares and potentially dilutive common shares outstanding. Potentially dilutive common shares are additional common shares assumed to be exercised. Potentially dilutive common shares consist of stock warrants and convertible preferred shares and are excluded from diluted earnings (loss) per share computation in periods where the Company has incurred a net loss, as their effect would be considered anti-dilutive.

The Company’s Series C Preferred Stock and related outstanding dividends are convertible into 2,942,695 and 2,853,721 shares of Common Stock as of September 30, 2024 and 2023, respectively. The Company’s Series D Preferred Stock and related outstanding dividends are convertible into 820,800 and 790,400 shares of common stock as of September 30, 2024 and 2023, respectively. The Company’s Series E Preferred Stock are convertible into 1,552,794 shares of common stock as of September 30, 2024. During the periods ended September 30, 2024 and 2023, the Company had warrants outstanding to purchase 892,165 shares of common stock. These shares related to these potentially dilutive common shares are excluded in the weighted average diluted shares outstanding for the periods ended September 30, 2024 and 2023 as including them would be anti-dilutive.

Related Party Transactions

FASB ASC 850, “Related Party Disclosures” requires companies to include in their 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.

Significant Judgments, Estimates and Assumptions

The preparation of financial statements in accordance with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the period. These judgments, estimates and assumptions are regularly evaluated and are based on management’s experience and knowledge of the relevant facts and circumstances. While management believes the estimates to be reasonable, actual results could differ from those estimates and could impact future results of operations and cash flows.

The areas which require significant judgment and estimates that management has made at the financial reporting date, that could result in a material change to the carrying amounts of assets and liabilities, in the event actual results differ from the assumptions made, relate to, but are not limited to the following:

Significant judgments:

•

the determination of income tax is inherently complex and requires making certain estimates and assumptions about future events;

•

quantitative and qualitative factors used in the assessment of impairment of the Company’s mineral property;

•

the analysis of resource calculations, drill results, etc. which can impact the Company’s assessment of impairment, and provisions, if any, for environmental rehabilitation and restoration; and

•

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

Reclassification

Amounts in the Condensed Interim Consolidated Statement of Cash Flows related to right-of-use-assets and operating lease payments for the nine months ended September 30, 2023, have been reclassified to conform to the current year presentation.

Amounts in the Consolidated Statement of Income (Loss) and Comprehensive Income (Loss) related to production cost related to sales and transportation costs for the three and nine months ended September 30, 2023 has been relassified to conform to the current year presentation.

Commodity Pricing Contract

In September 2024, the Company entered into a commodity pricing contract through its major purchaser. The company used a forward contract to lock in the price of recoverable gold from its deliveries of gold concentrates. The Contract was for 75% of recoverable gold up to 9,000 ounces, at a price of $2,495 per ounce. The Company expects the contract to be complete in under six months since contract inception. This means that if the price of gold decreases, the company will still receive amounts based on the contract price. The effect

NOTE 2 - CONCENTRATE AND ORE INVENTORIES

Inventories are carried at the lower of cost or fair value and consist of mined ore and finished goods inventories comprising gold silver concentrates. Inventory balances as of September 30, 2024 and December 31, 2023 were as follows:


	September 30, 2024		December 31, 2023
Mined tonnage	$	1,497,833	$	2,061,149
Gold-Silver concentrates		358,150		28,045
Total inventories	$	1,855,983	$	2,089,194

NOTE 3 – PROPERTY AND EQUIPMENT

Property and equipment consists of the following as of September 30, 2024 and December 31, 2023:


	September 30, 2024			December 31, 2023
Leasehold improvements	$	21,274		$	21,274
Office equipment		49,238			42,483
Office furniture and fixtures		24,453			24,453
Other		27,063			27,063
Subtotal		122,028			115,273
Less: Accumulated depreciation and amortization		(34,832	)		(12,239	)
Total property and equipment, net	$	87,196		$	103,034

Depreciation and amortization have been provided over each asset’s estimated useful life. Depreciation and amortization expense was $22,593 and $4,896 for the nine months ended September 30, 2024 and 2023, respectively.


	September 30,		December 31,
	2024		2023
Accrued interest	$	2,373,447	$	2,352,869
Accrued mining expenses		3,737,448		2,104,938
Accrued payroll taxes		923,769		1,122,644
Other accrued liabilities		2,310,148		2,147,170
Total accrued liabilities	$	9,344,812	$	7,727,621

NOTE 7 - DERIVATIVE LIABILITY

Warrants Issued With the Notes Convertible Into Series D Preferred

In fiscal 2020, the Company closed a financing agreement with Golden Post Rail, LLC (“Golden Post”) and certain shareholders whereby the Company issued convertible promissory notes that bore interest at 10% and were convertible into shares of Series D Senior Convertible Preferred Stock and common stock purchase warrants (“2020 warrants”) at an exercise price of $0.01 per share, with an expiry of ten years. These 2020 warrants contain anti-dilution provisions. See Note 11. The Company analyzed the conversion features of the promissory notes convertible into Series D Preferred Stock and determined that the 2020 warrants and remaining purchaser warrants issued with such notes qualified as a derivative liability. The fair value was required to be allocated among the notes, the notes’ conversion features, and the 2020 warrants and remaining purchaser warrants, and then remeasured at each reporting date. The Company performed a valuation of the conversion feature of the 2020 warrants and remaining purchaser warrants. In performing the valuation, the Company applied the guidance in ASC 820, “Fair Value Measurements”, to nonfinancial assets and liabilities that are recognized or disclosed at fair value on a nonrecurring basis. 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 Warrants issued with the notes convertible into Series D Preferred based on the assumptions below:


Period Ended	September 30, 2024			December 31, 2023
Annual volatility rate		129	%		123	%
Risk free rate		3.66	%		4.23	%
Expected life (years)	5.62			6.37
Fair value of common stock	$	0.98		$	2.02

For the nine and twelve months ended September 30, 2024 and December 31, 2023, an active market for the Company’s common stock did not exist. Accordingly, the fair value of the Company’s common stock was estimated using a valuation model with level 3 inputs. See Note 15.

The below table represents the change in the fair value of the derivative liability during the nine and twelve months ended September 30, 2024 and December 31, 2023.


Period Ended	September 30, 2024			December 31, 2023
Fair value of derivative (warrants), beginning of period	$	1,797,341		$	2,172,417
Exercise of warrants		-			-
Change in fair value of derivative		(923,017	)		(375,076	)
Fair value of derivative (warrants), end of period	$	874,324		$	1,797,341

NOTE 8 - NOTES PAYABLE

(A) ADVANCE CREDIT LINE FACILITY/CUSTOMER ADVANCES

On February 4, 2021, the Company entered into an Advance Credit Line Facility and Purchase Agreement (the “ACL”), with a commercial buyer. On August 2, 2023, the ACL was extended through December 2026 in an Amendment Agreement (the “Amendment”). Under the terms of the ACL and Amendment:

•

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

•

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

•

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

•

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

•

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

•

The ACL will be interest free for 45 days.

•

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

•

Beginning in September 2023, up to $10M of the ACL advance may be converted into a one-year installment loan (the “RCL”) bearing interest at 3M SOFR + 7.5% and amortized as follows: Month 1, interest only; Month 2-11, 5% principal plus interest; and Month 12, final 50% principal plus interest. Converting the advance amount into an installment loan will reduce the available on a pro rata percentage basis;

•

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

•

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

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

Deposits under the Advance Credit Line Facility

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

(1)

$9.35 advance on December 28, 2022. Settled on February 16, 2023.

(2)

$9.60 advance on February 21, 2023. Settled on March 31, 2023.

(3)

$9.20 advance on March 31, 2023. Settled on May 17, 2023.

(4)

$9.85 advance on May 18, 2023. Settled on June 28, 2023.

(5)

$10.0 advance on June 29, 2023. Settled on August 14, 2023.

(6)

$10.75 advance on August 17, 2023. Settled on September 16, 2023.

(7)

$9.75 advance on September 29, 2023. Converted to a one-year note payable on December 1, 2023. (Note 8).

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

On December 1, 2023, the Company exercised its option under the ACL to convert the outstanding ACL balance of $9,750,000 into a one-year note payable (the “RCL”) bearing interest at 3M SOFR + 7.5%. The RCL is repayable as follows: Month 1, interest only; Month 2-11, 5% principal plus interest; and Month 12, final 50% principal plus interest.

On June 20, 2024 the Company amended the terms of the RCL. Under the amended agreement the Company may receive up to an additional $4,000,000 (the (“TACL”) at the same interest rate due on November 30, 2024. The Company also received a put option (the “Put Option”) to convert up to $9,000,000 of the RCL into common stock at $1.61 a share exercisable from November 1, 2024 until the November 30, 2024 maturity date. If the TACL and the RCL are repaid in full on or prior to the maturity date, the maximum

principal amount of the RCL will be increased to $12,500,000. If the Put Option is exercised for more than $4,000,000, however, the maximum principal amount of the RCL will be reduced on a dollar-for-dollar basis by such excess.

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

The following is a summary of the activity during the periods ended September 30, 2024 and December 31, 2023:


	September 30,			December 31,
	2024			2023
Balance beginning of year	$	9,750,000		$	-
Advances		4,000,000			—
Conversion of ACL to Note Payable		—			9,750,000
Principal Payments		(2,437,500	)		—
Balance end of year	$	11,312,500		$	9,750,000

NOTE 9 – INSTALLMENT NOTES PAYABLE

In June 2018, the Company entered into financing agreements for the unpaid mining concession taxes on the Francisco Arturo mining concession for the year ended December 31, 2017 and the period ending June 30, 2018 in the amount of $1,739,392. The Company paid an initial 20% payment of $347,826 and financed the balance over 36 months at an interest rate of 22% per annum.

In February 2019, the Company entered into a financing agreement for unpaid mining concession taxes on the Francisco Arturo mining concession for the year ended December 31, 2018 in the amount of $335,350. The Company paid an initial 20% payment of $67,070 and financed the balance over 36 months at an interest rate of 22% per annum.

In June 2018, the Company applied for a reduction of the Francisco Arturo mining concession, from 69,121 hectares to 3,280 hectares. On July 31, 2018, the application for reduction was approved and the Company paid an initial amount of 985,116 MNP (Pesos), for the second semester 2018 mining concessions taxes on the reduced Francisco Arturo mining concession. The Company continues to accrue an amount of $22,500 (USD) per semester (six months) on the reduced Francisco Arturo mining concession.

As of June 2019, the Company ceased making monthly payments on the above noted Francisco Arturo concession notes and has petitioned the Hacienda (Mexican federal tax authority) for a reduction in the liability which is pro-rata to the reduction in the Francisco Arturo concession. For financial reporting purposes the Company continues to carry all notes (to finance unpaid mining concession taxes) at their unpaid principal amount and accrues interest on a monthly basis. As of September 30, 2024, $2,255,452 of accrued interest on the notes was included in accrued liabilities on the unaudited consolidated balance sheet.

In October 2019, the Company entered into a financing agreement for unpaid mining concession taxes on the core mining concessions in the amount of $299,474. The Company paid an initial 20% payment of $59,895 and financed the balance over 36 months at an interest rate of 22%.

The following is a summary of the activity during the nine months ended September 30, 2024:


Balance December 31, 2023	$	2,259,432
Exchange rate adjustment		(305,453	)
2024 principal payments		—
Balance September 30, 2024	$	1,953,979


	September 30,		December 31,
	2024		2023
Asset retirement obligation at beginning of year	$	198,468	$	-
Additions to ARO liability		—		198,468
Accretion		13,695		—
Asset retirement obligation at end of year	$	212,163	$	198,468

NOTE 11 - STOCKHOLDERS’ EQUITY

The total number of shares of all classes of capital stock which the corporation has the authority to issue is 60,001,000 shares, consisting of (i) 20,001,000 shares of Preferred Stock, par value $0.0001 per share (“Preferred Stock”), of which 1,734,992 are designated as Series C Preferred Stock, 3,000,000 shares are designated as Series D Preferred Stock, 1,552,794 shares are designated as Series E Preferred Stock and (ii) 40,000,000 shares of Common Stock, par value $0.01 per share (“Common Stock”). As of September 30, 2024, 13,713,214 shares of Preferred Stock remain undesignated.

Series A Preferred Stock

As of September 30, 2024 and December 31, 2023 no shares of Preferred A stock were outstanding. On April 19, 2023, the Company repurchased the Series A Preferred Stock from its now former Chief Executive Officer (“CEO”). The Series A Preferred shares were subsequently cancelled. On July 17, 2023, the Company amended its certification of incorporation to cancel the Series A Preferred Stock.

Series C Senior Convertible Preferred Stock

As of September 30, 2024 and December 31, 2023 there were 1,734,992 Series C Preferred shares outstanding. As of September 30, 2024, these Series C Preferred Shares are convertible to common shares at $1.95 per share or redeemable in cash at the shareholder’s option 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% of $4,337,480 payable annually on June 30th. As of September 30, 2024, dividends for the years 2016 to 2024 totaling $1,400,775 were in arrears.

Due to the nature of the Series C Preferred Shares as mandatorily redeemable, the Series C Preferred Shares are classified as “temporary equity” on the balance sheet.

Series D Senior Convertible Preferred Stock

On May 14, 2020, the Company closed an additional financing and related agreements with certain shareholders totaling $4,020,000 which was convertible into Series D Senior Preferred Stock. The noteholders also received the 2020 warrants, as outlined in Note 6, for the purchase of an aggregate of 1,260,633 shares of the Company’s common stock at an exercise price of $.01 a share.

On October 7, 2021, the Company paid $2,500,000 to repurchase one note. The remaining ten noteholders elected to convert their notes totaling $1,520,000 into Series D Preferred Stock at $2.00 per share. Concurrently with the note conversion the noteholders exercised 368,468 of the 2020 warrants to purchase 368,468 shares of the Company’s common stock at $.01 per share. On October 18, 2021, the Company issued 760,000 shares of Series D Preferred Stock for these notes. The Series D Preferred Stock may receive a 4% per annum dividend, payable if available, and in arrears. The dividend is calculated at 4.0% of $1,520,000 payable annually on October 18th. As of September 30, 2024 dividends for the years 2022 and 2023 totaling $121,600 were in arrears.

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

The deemed dividends on the Series C and D Preferred Stock for the nine months ended September 30, 2024 and 2023, were $175,724 and $175,724, respectively. As the Company has not declared these dividends, it is required as an item “below” the net income (loss) amount on the accompanying unaudited condensed interim consolidated statements of income.

Series E Convertible Preferred Stock

As of September 30, 2024 and December 31, 2023 there were 1,552,794 and nil Series E Preferred shares outstanding. The Series E Preferred Shares are convertible on a one-for-one basis into shares of common stock, subject to equitable adjustment. The Series E shares are eligible to receive the conversion equivalent of any common stock dividend declared but carry no preferred dividend and are not redeemable in cash.

Preferred Stock (Undesignated)

In addition to the 1,734,992 shares designated as Series C Preferred Stock, the 3,000,000 shares designated as Series D Preferred Stock, and the 1,552,794 of Series E Preferred Stock the Company is authorized to issue an additional 13,713,214 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. As of September 30, 2024 and December 31, 2023, there were no other shares of Preferred Stock outstanding.

The shares of each series of Preferred Stock may vary from the shares of any other series thereof in any or all 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 a particular Preferred Stock designation, the Board of Directors may decrease the number of shares of Preferred Stock designated for any existing series by a resolution subtracting from such series authorized and unissued shares of Preferred Stock designated for such existing series, and the shares so subtracted shall become authorized, unissued and undesignated shares of Preferred Stock.

Common Stock

The Company is authorized to issue 40,000,000 common shares at a par value of $0.01 per share. These shares have full voting rights. As of September 30, 2024, and December 31, 2023, there were 23,658,995 and 23,371,708 shares of common stock outstanding. No dividends were declared or paid during the nine months ended September 30, 2024 and 2023.

Preferred Rights

The Company issued “Preferred Rights” and received $784,500 for these rights. This has been reflected as “Preferred Rights” in stockholders’ equity in the accompanying consolidated balance sheets. As of September 30, 2024, $744,500 had been repaid, leaving a current balance of $40,000 as of September 30, 2024 and December 31, 2023.

Stock Issuances

On June 27, 2024 the Company issued 1,552,794 shares of Series E Preferred Stock for $2,500,000 cash consideration.

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

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

Treasury Stock

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

There were 37,180 shares of treasury stock outstanding as of September 30, 2024 and December 31, 2023.

Warrants

As of September 30, 2024, the Company had outstanding warrants, which were a part of the issuance of notes convertible into Series D Convertible Preferred Stock in 2020, to purchase 892,165 shares of common stock:


	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Intrinsic Value
Balance as of December 31, 2023		892,165	$	0.01		6.37		-
Granted		-		-		-		-
Exercised		-		-		-		-
Forfeited		-		-		-		-
Balance as of September 30, 2024		892,165		0.01		5.62		-
Exercisable as of September 30, 2024		892,165	$	0.01		5.62		-

A derivative liability was incurred at the issuance of the Series D warrants in 2020. As of September 30, 2024, the derivative liability totaled $874,324. See Note 6 above.

Under ASC 718, the fair value of the options at the date of issuance was determined using the Black Scholes model and will not be adjusted for subsequent changes in fair value. Expense is recorded annually, upon vesting, on a pro rata basis over the vesting period. The Company recognizes forfeitures as they occur.

On February 19, 2024, pursuant to the newly adopted DynaResource, Inc. 2024 Equity Incentive Plan, the Company awarded a board member options to purchase up to 400,000 shares of Common Stock of the Company, par value $0.01 per share, for an exercise price of $5.00 per share, with such options vesting in 25% increments on each of the first four anniversaries of the date of the award. The options expire five years from the grant date

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


Period Ended	September 30, 2024			December 31, 2023
Annual volatility rate		127.93	%		—
Risk free rate		4.36	%		—
Expected life at issuance	5.0				—
Fair Value of stock options	$	1.15			—

On June 3, 2024 the 2024 Equity Incentive Plan was amended (subject to shareholder ratification) to increase the number of shares issuable under the plan from 2,700,000 to 4,000,000 and the Company awarded the CEO options to purchase up to 750,000 shares of Common Stock of the Company, par value $0.01 per share, for an exercise price of $1.75 per share, with such options vesting in one-third increments on each of the first three anniversaries of the date of the award. The options expire five years from the grant date.

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


Period Ended	September 30, 2024			December 31, 2023
Annual volatility rate		105.55	%		—
Risk free rate		4.42	%		—
Expected life at issuance	5.0				—
Fair Value of stock options	$	1.38			—

Mr. Hazelton also received 500,000 deferred stock units payable on achievement of performance targets and 500,000 restricted stock units vesting one third on each of first three anniversaries.

On July 22, 2024 the Company appointed Alonso Sotomayor as its new Chief Financial Officer. In connection with Mr. Sotomayor’s appointment, the Company entered into an Employment Agreement with Mr. Sotomayor that included a signing bonus of 225,000 restricted stock units vesting one-third per year on each of the first three anniversaries of the grant date.

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 to 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 annual expenditure (as calculated at the 2017 minimum, adjusted for annual inflation of 4%).

Leases

In addition to the surface rights held by DynaMéxico pursuant to the Mining Act of México and its Regulations (Ley Minera y su Reglamento), DynaMineras maintains access and surface rights to the SJG Project pursuant to a 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 January 2033. It covers an area of 4,399 hectares surrounding the main mineral resource areas of SJG and provides for annual lease payments on January 1st each year by DynaMineras, in the amount of $1,359,443 Pesos (approximately $76,000 USD) adjusted for inflation based on the Mexico minimum wage increase. Rent was $5,296,950 Pesos (approximately $300,000 USD) for the year ended December 31, 2024. The Land Lease Agreement provides DynaMineras with surface access to the core resource areas of SJG (4,399 hectares) and allows for all permitted mining and exploration activities.

The Company leases office space for its corporate headquarters in Irving, Texas. In February 2023, the Company entered into a 52- month extension of the lease with additional office space. As part of the agreement, the lease term commenced and the Company received four months free rent upon completion of the finish out of the new space. The expansion was completed and the Company moved into the office space effective August 1, 2023. The Company makes tiered lease payments on the first of each month.

The Company determines if a contract is or contains a lease at inception. As of September 30, 2024, the Company has two operating leases: 52 months lease for office space with a remaining term of 38 months and the twenty-year ground lease in association with its México mining operations with a remaining term of 9.25 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.

As of September 30, 2024 and December 31, 2023, the Company’s financial assets and liabilities were measured at fair value using Level 3 inputs, with the exception of cash, which was valued using Level 1 inputs. A description of the valuation of the Level 3 inputs is discussed in Note 6.


	Total		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Fair Value Measurement as of September 30, 2024:
Liabilities:
Derivative Liabilities	$	874,324	$	-	$	-	$	874,324
Totals	$	874,324	$	-	$	-	$	874,324
Fair Value Measurement as of December 31, 2023:
Liabilities:
Derivative Liabilities	$	1,797,341	$	-	$	-	$	1,797,341
Totals	$	1,797,341	$	-	$	-	$	1,797,341

NOTE 17 – GEOGRAPHICAL CONCENTRATIONS

The Company operates as one segment: test mining and pilot mining gold-silver concentrate for sale from its location in Mexico, and had the following geographic concentrations as of September 30, 2024 and December 31, 2023:



	Mexico		United States		Total
September 30, 2024
Mining concessions	$	4,132,678	$	—	$	4,132,678
Property and equipment, net		—		87,196		87,196
Current assets		10,963,899		210,845		11,174,744
Other assets		18,283,424		70,000		18,353,424
Total assets	$	33,380,001	$	368,041	$	33,748,042

December 31, 2023
Mining concessions	$	4,132,678	$	—	$	4,132,678
Property and equipment, net		—		103,034		103,034
Current assets		8,475,858		5,669,642		14,145,500
Other assets		15,271,752		1,785,386		17,057,138
Total assets	$	27,880,288	$	7,558,062	$	35,438,350

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, which we refer to in this report as the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, which we refer to in this report as the Exchange Act. Forward-looking statements are not statements of historical fact but rather reflect our current expectations, estimates and predictions about future results and events. relating to our mining business, including resource estimates, exploration efforts, results and expenditures, development initiatives at the San Jose de Gracia Project, estimated production and capacity, costs, capital expenditures, expenses, recoveries, gold prices, sufficiency of assets, ability to discharge liabilities, liquidity management, financing needs, environmental compliance expenditures, environmental, social and governance (“ESG”) and human capital management initiatives, risk management strategies, including capital resources and use, cash flow maximization, mine life and other strategic initiatives. Such forward-looking statements are identified by the use of words such as “believes,” “intends,” “expects,” “hopes,” “may,” “will”, “should,” “plan,” “projected,” “contemplates,” “anticipates” or similar words and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Forward-looking information in this report includes, but is not limited to, statements regarding the beliefs, plans, expectations or intentions of management, as of the date of this presentation, regarding: (i) DynaResource, Inc.’s (the “Company”) ability to develop its exploration assets via operational cash flow from gold concentrate production; and (ii) the Company’s plans and expectations regarding its proposed 2024 exploration program for its San Jose de Gracia Project. Although the Company believes that the expectations reflected in the forward-looking information are reasonable, there can be no assurance that these expectations and assumptions will prove to be correct. Such forward-looking statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements including, without limitation, risks related to: (1) fluctuations in commodity pricing, specifically gold and silver; (2) the Company’s ability to retain or engage qualified employees or contractors necessary to conduct mill operations at its San Jose de Gracia Facility; (3) a decreased demand for gold, silver and other minerals; (4) unexpected difficulties with the milling and the extraction of minerals from the Company’s projects; (5) unexpected interruptions and problems encountered in the operation of the San Jose de Gracia Facility; (6) factors that delay or cause difficulties in timing of shipments of concentrates by the Company; (7) potential negative financial impact from regulatory investigations, claims, lawsuits and other legal proceedings and challenges; (8) the possibility that the Company may not have sufficient capital to operate its San Jose de Gracia Facility or facilitate the further exploration of San Jose de Gracia; (9) inflationary pressures; (10) continued access to financing sources; (11) government orders that may require temporary suspension of operations or effects on our suppliers (12) the effects of environmental and other governmental regulations and government shut-downs; (13) the risks inherent in the ownership or operation of or investment in mining properties or businesses in foreign countries; (14) our ability to raise additional financing necessary to conduct our business, make payments or refinance our debt and (15) other factors beyond the Company’s control. These risk and uncertainties also include those risk factors described in the section “Risk Factors” included in Part 1, Item 1A of our Annual Report on Form 10K for the fiscal year ended December 31, 2023, filed with the SEC, as well as in out public filings with the SEC.

There is a significant risk that such forward-looking statements will not prove to be accurate. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them. Given the current state of the global financial markets, global commodity markets, especially the recent volatility in gold and silver prices and current economic conditions, any forward-looking statements or projections may be impacted significantly. Consequently, there is no representation by the Company that actual results achieved will be the same as those forecast. You are cautioned not to place undue reliance on these forward-looking statements. No forward-looking statement is a guarantee of future results. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

The Company is a minerals investment, management, and exploration sage company and currently conducting test mining and pilot milling operations, as defined by SEC Regulation S-K, Item 1300, through an operating subsidiary in México, with specific focus on the prolific San Jose de Gracia high grade gold project in México.

We conduct activities in México through our operating subsidiary DynaResource de México SA de CV (“DynaMéxico”). We own 100% of the outstanding shares of DynaMéxico, and DynaMéxico owns 100% of mining concessions, equipment, camp and related facilities which comprise the San José de Gracia Property (“SJG”), in northern Sinaloa State, México.

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

The Company continues its business plan of test mining and pilot milling operations at SJG, as defined by SEC Regulation S-K. Item 1300, and to improve, increase and expand test mining and pilot milling operations and generally, to increase production of gold ounces, and to continue exploration activities at SJG with the target to increase primary gold resources. Since the January 2015 startup of the test mining and milling activities at SJG, the Company has increased daily output from an initial average of 100 tons per 24-hour operating day, to an average of approximately 750 tons per 24-hour operating day during September 2024.

The Company is currently reporting all costs of test mining operations, project improvements, and project expansion as expenses in accordance with Section 1300 of the United States Securities & Exchange Commission requirements for an exploration stage company. The result of expensing all costs is that the Company has accumulated a net loss carry-forward from México operations of approximately $8 million USD which is available to offset future taxable earnings.

Test mining and pilot milling operations in 2023 yielded 198,518 tons of material, test mined from underground access and processed through pilot milling plant operations. These test pilot operations in 2023 yielded approximately 27,252 gross ounces of gold recovered, and net of dry weight and provisional assay at the buyer’s facilities of approximately 24,829 ounces of payable gold sold.

Quarterly Results for the Three and Nine Months Ended September 30, 2024 and 2023:

Mill tonnage processed, feed grade and recovery rates are estimates based on internal reports of assays and estimated weights of tonnage mined and shipped to the plant.

The drop in the feed grade at the pilot plant facility is a result reduction in high-grade or zones in accordance with the mine plan as well as dilution experienced in the test mining activities, and partially due to the increase in test mining tonnage within SJG. To increase the tonnage of test mining material available for test mill processing, the Company opened a test mining area at San Pablo during the fourth quarter of 2023. An additional ore deposit area was opened in May 2024, at La Mochomera, which is an area anticipated to provide higher feed grade material in particular at depth. As well in 2024 and particularly in Q3 2024 increased access to mining faces and currently mined veins will contribute to minning rates going forward.

Throughout Q3 2024, the Company has remained focused on developing and implementing the optimization program at the San Jose de Gracia mine aimed at increasing throughput, improving recoveries, and improving maintenance and equipment usage with the goal of improving efficiencies and profit margins at the mine level.

Operational results for the quarter demonstrated significantly improved efficiencies as a result of the ongoing optimization program with a steady improvement as the quarter proceeded with metal production of 1,946 ounces of gold in July, 1,601 ounces. in August and 2,092 ounces in September. August production was impacted by the installation of a new vibrating screen and ancillary construction which resulted in a mill shut down for 5 days. In Q3 2024 total metal production of 5,676 ounces of gold was a 9% decrease from 6,231 ounces the previous quarter and a 12% decrease from 6,469 ounces in Q3 2023.

Milled throughput for Q3 2024 was 61,900 tons, demonstrating a 7% decrease compared to 66,775 tons in Q2 2024 and a 27% improvement over 48,700 tons in Q3 2023.

The decrease in ounces produced was a result of the decrease in feed grade from 3.91 g/t in Q2 2024 to 3.78 g/t in Q3 2024 compared to 5.09 g/t in Q3 2023.

This steady increased rate of production makes management confident it will achieve its production target rate of 25,500 tons per month in the fourth quarter 2024.

Through significant capital investment made in Q2 and Q3 2024, the Company has made several upgrades to the plant, increased access to working faces and improved the utilization and productivity of current infrastructure.

A new vibrating screen was installed in the crushing circuit in August 2024 which has resulted in a more consistent and overall improved mill performance which is demonstrated by September’s performance of an average of 770 tons per day produced. Subsequent to quarter end, October production was averaging 825 tons per day with further improvements expected. Improvements to the floatation circuit have led to improvements in grades with steady month over month increases in the metallurgical results achieved.

At the plant level, metallurgical test works with new reagents also resulted in an optimized flow sheet and demonstrated the ability to deliver up to a 79% recovery, under certain conditions. The Company is working to improve the consistency of plant recoveries.

The near completion of a new drift into a new working mining face that is expected to come into production in the La Mochomera deposit and the improved access to working faces through the completion of an access road to reach the San Pablo deposit have and should continue to contribute to improved throughput rates. This will also have a positive impact on grades as better access to high-grade zones is gained.

At the Tres Amigos vein north zone a new ore drive was completed in the upper levels enabling further access to this high-grade vein via a new mining face. Mining from this face was incorporated into Q3 2024 production and will continue throughout 2024 and into

2025 as mining this is currently one of the main sources of high-grade ore to the mill. This newly gained access will also enable diamond drilling deeper with a lateral extension toward this untested north and south extension with the goal of increasing inventory.

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

San Pablo Viejo and San Pablo Sur is planned to be the primary source of gold production throughout 2025 and 2026 and beyond as other areas as south extension 500 level very interesting high grade open potential zone as possible “Gold Bonanza” in the short to mid-term, mine are prepared for future with the mine focusing on developing new reserves and the addition of La Mochomera vein deeper, the Company is targeting 2024 production in the range of 26,000 -27,000 gold ounces.

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

With a successful Q3 2024 demonstrating more normalized, San Jose de Gracia is well positioned for further operational improvements in Q4 2024 and into 2025. This steady increased rate of production throughput makes management confident it will achieve its production throughput target rate of 25,500 tons per month in the fourth quarter 2024.

While the Company made significant headway in Q3 2024, the continued effort to optimize operations will remain focused on improving ore to the mill, throughput rates, and recoveries. San Pablo Sur, San Pablo, Mochomera and the Tres Amigos ore bodies will continue to be the main contributors to production in the year ahead and into the near future. The third quarter results discussed demonstrate steady progress due to new investments and operational changes. As a result, the Company anticipates a significant improvement in Q4 2024.

As a result of the capital investments made to the mine and mill, exploration expenditure was minimal, limiting available high-grade resources ready for short term mining. In the near term, exploration will drill targets that are expected to continue to grow the existing high-grade ore resources and increase mineable inventory.

The Company has continued to invest exploration spending in both near-mine extensions and geological studies and interpretation. The Company plans to complete an NI 43-101 (and SK1300) Mineral Resource Estimate Update in Q4 2024 at San Jose de Gracia to San Pablo Sur, San Pablo, Mochomera and Tres Amigos ore bodies which will include development proposals for additional exploration for ore veins in the short and mid-term.

The Company expects to start near-mine extension drilling on the property in November 2024 and expand to surrounding areas by year end. Exploration will focus on growing the known resources at SJG.

The Company will prioritize drilling high grade underground targets that can readily be brought into the mine plan as well as the continued regional program to better understand the potential of the significant land package at SJG. Additionally, planning for deeper and lateral drilling in between the San Pablo and Tres Amigos veins has highlighted the potential for extending the high-grade underground resource at SJG, especially in zones that were previously thought to be discontinuous such as near faulting, and has identified the opportunity to develop San Pablo, San Pablo Sur, Mochomera and Tres Amigos exploration potential. At the Mochomera deposit, the Company seeks to explore high grade potential toward south to Palos Chinos and Purisima historical mines which operated over 100 years ago as high-grade mines.

A new tailings dam was completed during the quarter with a total estimated storage capacity of 670,751 cubic meters distributed in two stages to hold additional future tailings for approximately 4.5 years. Planning and estimating the third stage of the tailings expansion project is still in process.

REVENUE: Revenue for the nine months ended September 30, 2024 and 2023 was $31,715,963 and $28,980,618. Revenue for three months ended September 30, 2024 and 2023 was $11,203,505 and $6,115,370. The increase was a result of an increase in tonnage mined and processed, and higher gold prices.

MINE PRODUCTION COSTS: Costs associated with test mining activities (mine production costs) for the nine months ended September 30, 2024 and 2023 were $11,231,687 and $8,022,328. Mine production costs for the three months ended September 30, 2024 and 2023 were $3,714,777 and $2,553,369. The Company allocates total test mining costs between production and waste based on tonnage mined. These costs were directly related to the extraction of mine tonnage to be processed at the pilot mill facility. During the nine months ended September 30, 2024, the Company test mined 174,292 tons of material compared to 146,213 tons in the nine months ended September 30, 2023

MINE EXPLORATION COSTS: Mine exploration costs for the nine months ended September 30, 2024 and 2023 were $8,120,521 and $7,318,836. Mine exploration costs for the three months ended September 30, 2024 and 2023 were $2,870,904 and $2,854,863. Mine exploration costs are the costs of extracting waste material in order to reach the tonnage of material to be extracted for processing at the pilot mill facility. For the nine months ended September 30, 2024 the Company mined 137,538 tons of waste compared to 132,713 in the nine months ended September 30, 2023.

MILL PRODUCTION COSTS RELATED TO SALES: Mill production costs related to sales for the nine months ended September 30, 2024 and 2023 were $3,943,588 and $5,004,260. Mill production costs related to sales for the three months ended September 30, 2024 and 2023 were $1,233,183 and $1,800,787. These are expenses directly related to the test milling, packaging and shipping of gold-silver concentrates. The decrease is a result of an increase in the efficiency of processing the ore at the test milling facility.

CAMP, WAREHOUSE AND FACILITIES: These represent the costs of supporting the test mining facilities including housing, food, security and warehouse operations. Camp, warehouse and support facility costs for the nine months ended September 30, 2024 and 2023 were $4,129,115 and $3,888,241. Camp, warehouse and support facility costs for the three months ended September 30, 2024 and 2023 were $1,347,744 and $1,379,782. The increase in costs recorded for the nine months ended September 30, 2024 was a result of the increase in test mining activity as a result of the facilities expansion.

TRANSPORTATION: Transportation costs for the nine months ended September 30, 2024 and 2023 were $3,642,774 and $3,266,165. Transportation costs for the three months ended September 30, 2024 and 2023 were $1,068,043 and $1,162,314. These costs relate to the transporting of the primarily gold concentrates to the customer for treatment and sales. The increase in costs for the nine months ended September 30, 2024 compared to 2023 is primarily due to an increase in tonnage of ore hauled from mine to plant and concentrate shipped and an overall increase in fuel and transportation costs.

PROPERTY HOLDING COSTS: Property holding costs for the nine months ended September 30, 2024 and 2023 were $134,963 and $130,015. Property holding costs for the three months ended September 30, 2024 and 2023 were $47,581 and $48,824. These costs were primarily taxes on mining concessions, leases on land and other direct costs of maintaining the SJG property. These costs are relatively consistent from year to year regardless of the level of mining activity.

FACILITIES EXPANSION COSTS: Facilities expansion costs for the nine months ended September 30, 2024 and 2023 were $2,447,826 and $1,226,135. Facilities expansion costs for the three months ended September 30, 2024 and 2023 were $354,346 and $401,464. The major expenses reported for the nine months ended September 30, 2023 was the second phase of expansion of the milling facility. The major expenses reported in the nine months ended September 30, 2024 relate to additions to the mill facility and mining infrastructure for the access to an additional test mining area at SJG.

EXPLORATION DRILLING: The Company continues exploration drilling program for the purpose of updating the Company’s CND NI 43-101 Mineral Resource Estimate. Exploration expenditures for the nine months ended September 30, 2024 and 2023 were $1,542,316 and $1,694,536. Exploration expenditures for the three months ended September 30, 2024 and 2023 were $242,482 and $569,261.

GENERAL AND ADMINISTRATIVE EXPENSE: General and administrative expenses for the nine months ended September 30, 2024 and 2023 were $3,262,382 and $6,660,862. General and administrative expenses for the three months ended September 30, 2024 and 2023 were $935,117 and $1,429,379. These general and administrative expenses were the costs of operating the Company not directly associated with the test mining and pilot mill operations including management, accounting, and legal expenses. The decrease in costs in 2024 was primarily a decrease in legal fees.

ACCRETION EXPENSE. Accretion expense for the nine months ended September 30, 2024 and 2023 and 2023 was $13,695 and $nil. Accretion expense for the three months ended September 30, 2024 and 2023 was $4,565 and $nil. The Company began accreting its asset retirement obligation on January 1, 2024, related to estimated costs to decommission the pilot milling plant and tailings pond at the estimated life of the mines in operation at the establishment of the ARO in 2023 as a result of the expansion of the pilot milling operation.

OTHER INCOME (EXPENSE): Other income (expense) for the nine months ended September 30, 2024 and 2023 was $(608,300) and $(532,776), respectively. Other income (expense) for the three months ended September 30, 2024 and 2023 was $(247,009) and $(906,412), respectively. Included in other income in 2024 was interest expense of $(1,305,270), change in derivative of $923,017, currency exchange loss of $(244,356) and miscellaneous income of $18,309. The decrease in the derivative liability was primarily due to the decrease in the Company’s common stock value. The increase in interest expense was due to the conversion of the Company’s ACL to an installment note in December of 2023. Included in other income in 2023 was interest expense of $(345,254), change in derivative of $(142,802), currency exchange loss of $(46,588) and miscellaneous income of $1,848.

OTHER COMPREHENSIVE INCOME: Other comprehensive income includes the Company’s net income (loss) plus the unrealized currency exchange gain for the period. The Company’s other comprehensive income for the nine months ended September 30, 2024 and 2023 consisted of unrealized currency gains (loss) of $(1,243,875) and $141,167, respectively. The Company’s other comprehensive income for the three months ended September 30, 2024 and 2023 consisted of unrealized currency gains (loss) of $(746,323) and $(210,050), respectively. The change is due to the variances in the currency exchange rates between the US Dollar and Mexican Peso throughout the two periods.

As of September 30, 2024, the Company had negative working capital of $17,293,079 comprised of current assets of $11,174,744 and current liabilities of $28,467,823. This represented an increase of $7,031,434 from the negative working capital maintained by the Company of $10,261,645 as of December 31, 2023 as a result of an increase in cash used in operations during the first half of 2024 and an increase in the Company’s accounts payable and accrued liabilities as of September 30, 2024.

Net cash used in operations for the nine months ended September 30, 2024 was $9,013,473 compared to a use of $11,477,695 during the nine months ended September 30, 2023. The decrease in the cash flow from operations was primarily due to the Company’s loss in 2024 primarily attributed to the ongoing expenses of expansion and a decrease in revenue year to date.

The Company had investing activities during the nine months ended September 30, 2024 of $6,755 compared to $115,273 for the prior year. Expenditures reported for the expansion of mining facilities, which totaled $2,447,826 and $1,226,135 during the nine months ended September 30, 2024 and 2023, respectively, would normally have been included in this category but were expensed due to the Company’s lack of proven and probable reserves at the SJG Project, which therefore, requires the Company to expense costs as incurred related to expansion of test mining and milling activities.

Net cash provided by financing activities for the nine months ended September 30, 2024 and 2023 was $3,978,713 and $3,678,679, respectively. The net cash provided by financing activities for the nine months ended September 30, 2024 consisted of proceeds from sale of equity of $2,500,000, proceeds from borrowing of $4,000,000 net of payments on the RCL of $2,437,500 and operating lease payments. of $83,787. Cash provided by financing activities for the nine months ended September 30, 2023 consists of proceeds from the sale of stock of $5,000,000 less the repurchase of Series A Preferred stock for $1,250,000, acquisition of treasury stock for $60,250 and lease payments of $11,111.

Through September 30, 2024, the Company’s available liquidity and operations have been financed primarily through its operations and the revenue generated from the sale of product and from proceeds from the sales of equity and proceeds from borrowing.

Although the Company has incurred net losses and net cash outflows from operating activities and investing activities for the nine months ended September 30, 2024, there were many expenses which were made that were not expended for the production of revenue, such as exploration drilling and mine expansion costs. If these expenses had not been made, the Company’s net loss would have been minimized. The Company believes its cash and cash receipts from its revenue arrangement, proceeds from the sale of equity and proceeds from borrowing will be sufficient to meet its working capital and capital expenditure needs for at least the next 12 months from the date these financial statements were available for issuance. Additionally, the Company believes its revenue will be greater in the fourth quarter of 2024 due to the recent opening of additional mines and improvements made to the productivity of the milling activities. Future capital requirements will depend on many factors, including the Company’s rate of mining, milling and exploration activities and growth. To the extent that existing capital and revenue growth are not sufficient to fund future activities, the Company may need to raise capital through additional equity or debt financings. Additional funds may not be available on terms favorable to the Company or at all. Failure to raise additional capital, if needed, could have a material adverse effect on the Company’s financial position, results of operations and cash flows.

As of September 30, 2024, the Company did not have any off-balance sheet arrangements, which have or are likely to have a material adverse effect on our financial condition, results of operations or liquidity.

The Company’s plan of operation for the next twelve months is to continue the improvement and expansion of the test mining and pilot milling activities and exploration drilling at SJG.

During the fourth quarter of 2024, the Company plans to continue to increase mining and milling to in excess of 800 tons of material a day. The Company opened a second ore deposit in late 2023 and is consistently test mining additional material from this deposit. The Company opened a third ore deposit during May 2024, La Mochomera which is in an area anticipated to provide higher feed grade material at depth. The Company expects to increase efficiency of activities in the fourth quarter of 2024 and is anticipating the ability to extract higher grade ore.

The Company is currently designing plans to accelerate its exploration drilling program. Management and geologists will make decisions based on the drill results, corporate strategies and market conditions, surface mapping, sampling and target generation. The Company has contracted with a "Qualified Person" within the meaning of subpart 1300 of Regulation S-K and Canadian Standard NI 43-101 to interpret the data collected in order to compile a formal Mineral Resource Estimate update in Q4 2024.

The Company’s primary capital expenditures relate to the test mining and pilot milling activities of the SJG Project. The Company expanded its pilot milling plant in 2022 and early 2023 with the addition and installation of two ball mills and expanded the tailings pond operation with water being recycled to the plant. The Company has continued to refine the milling process throughout 2024 with the addition of front and back-end concentrators and utilization of the original mills for higher grinding capacity. All capital expenditures are expensed as the Company is an exploration stage issuer under subpart 1300 of Regulation S-K.

The Company is currently an exploration stage issuer and is reporting all costs of mine operations, improvements, and expansion as expenses in accordance with Section 1300 of Regulation S-K and US GAAP requirements, and therefore the above costs are not reflected as capitalized assets on the Company’s balance sheet. The Company has started test mining, milling and extraction activities prior to determining mineral reserves.

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, 2024. This evaluation was accomplished under the supervision and with the participation of our principal executive officer and principal financial officer who concluded that our disclosure controls and procedures are effective as of the end of the period covered by this Form 10-Q. For purposes of this section, the term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

We recognize the importance of having effective controls in place to manage risks and ensure the integrity of our financial reporting. We are committed to continuously improving our control environment through ongoing monitoring, testing, and remediation of control deficiencies. Our management team is actively involved in overseeing the effectiveness of our controls, and we have established a culture of accountability and transparency to ensure that all employees understand their roles and responsibilities in maintaining a strong control environment. We are also investing in technology to streamline our control processes and reduce the risk of errors and fraud. We believe that these efforts will enable us to develop a high level of control effectiveness.

The Company did not make any change in its internal control over financial reporting during the period covered by this report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

There were no material developments during the period covered by this report on Form 10-Q in the legal proceedings previously publicly disclosed by the Company.

From time to time, the Company is involved in legal matters in the ordinary course of its business. The Company intends to defend itself vigorously against any such claims. It is the Company’s policy to accrue for amounts related to lawsuits brought against it if it is probable that a liability has been incurred and an amount can be reasonably estimated. Although the outcome of such matters cannot be predicted with certainty and no assurances can be given with respect to such matters, the Company believes that the outcome of those ordinary-course matters in which it is currently involved will not have a materially adverse effect on its results of operations, liquidity, or financial position.

As the Company has no mines located in the United States or any of its territories, the disclosure required by this Item is not applicable.

During the fiscal quarter ended September 30, 2024, none of our directors or officers informed us of the adoption, modification or termination of a “Rule 10b-5 trading arrangement” or “non-Rule 10b-5 trading arrangement,” as those terms are defined in Regulation S-K, Item 408.

In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.


Delaware	94-1589426
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
222 W. Las Colinas Blvd., Suite 1910 North Tower Irving, TX	75039
(Address of principal executive offices)	(Zip Code)


PART I.	FINANCIAL STATEMENTS

ITEM 1.	Unaudited Condensed Interim Consolidated Financial Statements	3

	Notes to Unaudited Condensed Interim Consolidated Financial Statements	7

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	30

ITEM 4.	Controls and Procedures	30

PART II.	OTHER INFORMATION

ITEM 1.	Legal Proceedings	32

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32

ITEM 3.	Defaults Upon Senior Securities	32

ITEM 4.	Mine Safety Disclosures	32

ITEM 5.	Other Information	32

ITEM 6.	Exhibits	33


EXHIBIT 31.1		CHIEF EXECUTIVE OFFICER CERTIFICATION

EXHIBIT 31.2		CHIEF FINANCIAL OFFICER CERTIFICATION

EXHIBIT 32.1		CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350


	2024			2023
	(Unaudited)			(Audited)
ASSETS
Current assets
Cash	$	596,024		$	5,603,713
Accounts receivable		1,416,056			880,473
Concentrate and ore inventories (Note 2)		1,855,983			2,089,194
Foreign tax receivable		5,378,354			4,434,958
Other current assets (Note 5)		1,928,327			1,137,162
Total current assets		11,174,744			14,145,500
Property and equipment (net of accumulated
depreciation and amortization of $34,832 and $12,239) (Note 3)		87,196			103,034
Right-of-use assets, net		763,156			848,822
Mining concessions (Note 4)		4,132,678			4,132,678
Deferred tax asset, net (Note 13)		4,264,115			4,264,115
Foreign tax receivable		13,161,257			11,768,613
Other assets		164,896			175,588
TOTAL ASSETS	$	33,748,042		$	35,438,350

LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Accounts payable	$	4,862,337		$	2,768,634
Accrued liabilities (Note 6)		9,344,812			7,727,621
Derivative liability (Note 7)		874,324			1,797,341
Notes payable (Note 8)		11,312,500			9,750,000
Current portion of operating lease payable		119,871			104,117
Installment notes payable (Note 9)		1,953,979			2,259,432
Total current liabilities		28,467,823			24,407,145
Operating lease payable, less current portion		726,221			825,762
Deferred tax liability (Note 13)		334,236			334,236
Asset retirement obligation (Note 10)		212,163			198,468
TOTAL LIABILITIES		29,740,443			25,765,611
TEMPORARY EQUITY (Note 11)
Series C Senior Convertible Preferred Stock, $0.0001 par value, 1,734,992 shares authorized, issued and outstanding		4,337,480			4,337,480
Series D Senior Convertible Preferred Stock, $0.0001 par value, 3,000,000 shares authorized, 760,000 shares issued and outstanding		1,520,000			1,520,000
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY (DEFICIT) (Note 11)
Common Stock, $0.01 par value, 40,000,000 shares authorized 23,658,995 and 23,371,708 shares issued and outstanding		236,590			233,717
Series E Senior Convertible Preferred Stock, $0.0001 par value, 1,552,794 and 0 shares authorized, issued and outstanding		2,500,000			—
Preferred rights		40,000			40,000
Additional paid-in-capital		62,791,191			61,509,032
Treasury stock, 37,180 shares each period, at cost		(95,023	)		(95,023	)
Accumulated other comprehensive income		(546,175	)		697,700
Accumulated deficit		(66,776,464	)		(58,570,167	)
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)		(1,849,881	)		3,815,259
TOTAL LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	33,748,042		$	35,438,350


	Preferred A						Preferred E				Common				Preferred		Preferred		Paid In			Treasury			Treasury			Other Comp			Accumulated
	Shares			Amount			Shares		Amount		Shares		Amount		Rights		Amount		Capital			Shares			Amount			Income			Deficit			Totals

	THREE MONTHS ENDED SEPTEMBER 30, 2023

Balance, June 30, 2023		—		$	—			—	$	—		22,246,654	$	222,467		1	$	40,000	$	55,639,032			37,180		$	(95,023	)	$	463,295		$	(44,597,399	)	$	11,672,372

Issuance of Common Stock												1,000,000		10,000						4,990,000															5,000,000

Other Comprehensive Income																													(210,050	)					(210,050	)

Net Loss																																(5,951,126	)		(5,951,126	)

Balance, September 30, 2023		—		$	—			—	$	—		23,246,654	$	232,467		1	$	40,000	$	60,629,032			37,180		$	(95,023	)	$	253,245		$	(50,548,525	)	$	10,511,196

	NINE MONTHS ENDED SEPTEMBER 30, 2023

Balance January 1, 2023		1,000		$	1			—	$	—		22,246,654	$	222,467		1	$	40,000	$	56,889,031			12,180		$	(34,773	)	$	112,078		$	(44,036,663	)	$	13,192,141

Issuance of Common Stock												1,000,000		10,000						4,990,000															5,000,000

Purchase of Series A Preferred Stock																							1,000			(1,250,000	)								(1,250,000	)

Cancellation of Series A Preferred Stock		(1,000	)		(1	)														(1,249,999	)		(1,000	)		1,250,000									—

Acquisition of Treasury Stock																							25,000			(60,250	)								(60,250	)

Other Comprehensive Income																													141,167						141,167

Net Loss																																(6,511,862	)		(6,511,862	)

Balance, September 30, 2023		—		$	—			—	$	—		23,246,654	$	232,467		1	$	40,000	$	60,629,032			37,180		$	(95,023	)	$	253,245		$	(50,548,525	)	$	10,511,196

	THREE MONTHS ENDED SEPTEMBER 30, 2024

Balance, June 30, 2024		—		$	-			1,552,794	$	2,500,000		23,658,995	$	236,590		1	$	40,000	$	62,791,191			37,180		$	(95,023	)	$	200,148		$	(65,905,952	)	$	(233,046	)

Other Comprehensive Income																													(746,323	)					(746,323	)

Net Loss																																(870,512	)		(870,512	)

Balance, September 30, 2024		-		$	-			1,552,794	$	2,500,000		23,658,995	$	236,590		1	$	40,000	$	62,791,191			37,180		$	(95,023	)	$	(546,175	)	$	(66,776,464	)	$	(1,849,881	)

	NINE MONTHS ENDED SEPTEMBER 30, 2024

Balance January 1, 2024		—		$	-			—	$	—		23,371,708	$	233,717		1	$	40,000	$	61,509,032			37,180		$	(95,023	)	$	697,700		$	(58,570,167	)	$	3,815,259

Sales of Series E Preferred Shares								1,552,794		2,500,000																									2,500,000

Sales Issued for Services												287,287		2,873						459,659															462,532

Stock Compensation - Vesting																				822,500															822,500

Other Comprehensive Income																													(1,243,875	)					(1,243,875	)

Net Loss																																(8,206,297	)		(8,206,297	)

Balance, September 30, 2024		-		$	-			1,552,794	$	2,500,000		23,658,995	$	236,590		1	$	40,000	$	62,791,191			37,180		$	(95,023	)	$	(546,175	)	$	(66,776,464	)	$	(1,849,881	)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐


	Three Months			Three Months			Nine Months			Nine Months
	Sept 30,			Sept 30,			Sept 30,			Sept 30,
	2024			2023			2024			2023
REVENUE	$	11,203,505			6,115,370		$	31,715,963			28,980,618
COSTS AND EXPENSES OF MINING OPERATION
Mine production costs		3,714,777			2,553,369			11,231,687			8,022,328
Mine exploration costs		2,870,904			2,854,863			8,120,521			7,318,836
Mill production cost applicable to sales		1,233,183			1,800,787			3,943,588			5,004,260
Camp, warehouse and facilities		1,347,744			1,379,782			4,129,115			3,888,241
Transportation costs		1,068,403			1,162,314			3,642,774			3,266,165
Property holding costs		47,581			48,824			134,963			130,015
Facilities expansion costs		354,346			401,464			2,447,826			1,226,135
Exploration drilling and reserve studies		242,482			569,261			1,542,316			1,694,536
General and administrative		935,117			1,429,879			3,262,382			6,660,862
Stock Compensation Expense (Note 12)		—			—			822,500			—
Accretion expense		4,565			—			13,695			—
Depreciation and amortization		7,906			4,896			22,593			4,896
TOTAL OPERATING EXPENSES		11,827,008			12,205,439			39,313,960			37,216,274
NET OPERATING LOSS		(623,503	)		(6,090,069	)		(7,597,997	)		(8,235,656	)
OTHER INCOME (EXPENSE)
Foreign currency gains		(267,548	)		(80,815	)		(244,356	)		(46,588	)
Interest expense		(469,933	)		(121,079	)		(1,305,270	)		(345,254	)
Derivative mark-to-market gain		477,125			(705,079	)		923,017			(142,802	)
Other income		13,347			561			18,309			1,868
TOTAL OTHER INCOME (EXPENSE)		(247,009	)		(906,412	)		(608,300	)		(532,776	)

NET LOSS BEFORE TAXES		(870,512	)		(6,996,481	)		(8,206,297	)		(8,768,432	)
INCOME TAXES BENEFIT (Note 13)		—			1,045,355			—			2,256,570

NET LOSS	$	(870,512	)	$	(5,951,126	)	$	(8,206,297	)	$	(6,511,862	)
DEEMED DIVIDEND FOR SERIES C & D PREFERRED		(58,574	)		(58,574	)		(175,724	)		(175,724	)
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(929,086	)	$	(6,009,700	)	$	(8,382,021	)	$	(6,687,586	)

LOSS PER SHARE ATTRIBUTABLE TO THE EQUITY HOLDERS OF DYNARESOURCE, INC.
Basic loss per common share	$	(0.04	)	$	(0.27	)	$	(0.36	)	$	(0.30	)
Weighted average shares outstanding – Basic		23,658,995			22,558,129			23,470,266			22,455,445
Diluted loss per common share	$	(0.04	)	$	(0.27	)	$	(0.36	)	$	(0.30	)
Weighted average shares outstanding – Diluted		23,658,995			22,558,129			23,470,266			22,455,455

OTHER COMPREHENSIVE INCOME
Unrealized foreign currency translation gain (loss)		(746,323	)		(210,050	)		(1,243,875	)		141,167
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)		(746,323	)		(210,050	)		(1,243,875	)		141,167
TOTAL COMPREHENSIVE LOSS	$	(1,616,835	)	$	(6,161,176	)	$	(9,450,172	)	$	(6,370,695	)


	2024			2023
CASH FLOWS USED IN OPERATING ACTIVITIES:
Net (loss)	$	(8,206,297	)	$	(6,511,862	)
Adjustments to reconcile net income (loss) to cash used in operating activities
Derivatives mark-to-market gain		(923,017	)		142,802
Accretion expense		13,695			—
Depreciation and amortization		22,593			4,896
Right-of-use asset amortization		85,666			12,347
Stock based compensation		822,500			—
Deferred tax asset		—			(2,256,570	)
Operating cash flows before changes in operating assets and liabilities		(8,184,860	)		(8,608,387	)
Change in operating assets and liabilities
Accounts receivable		(535,583	)		(88,341	)
Inventories		233,211			911,732
Foreign tax receivable		(5,008,356	)		(4,937,939	)
Other assets		(1,007,697	)		(390,347	)
Accounts payable		2,680,834			98,698
Accrued expenses		2,808,978			1,136,889
Customer advances		—			400,000
CASH FLOWS USED IN OPERATING ACTIVITIES		(9,013,473	)		(11,477,695	)

CASH FLOWS USED IN INVESTING ACTIVITIES
Operating lease asset acquisition					(361,645	)
Purchase of equipment		(6,755	)		(115,273	)
CASH FLOWS USED IN INVESTING ACTIVITIES		(6,755	)		(476,918	)

CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
Proceeds from borrowing (Note 8)		4,000,000
Proceeds from sale of Common stock (Note 11)					5,000,000
Proceeds from sale of Series E preferred stock (Note 11)		2,500,000
Operating lease acquisition					361,645
Purchase of Series A preferred stock (Note 11)					(1,250,000	)
Acquisition of treasury stock (Note 11)					(60,250	)
Payments of note payable (Note 8)		(2,437,500	)		—
Operating lease payments		(83,787	)		(11,111	)
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES		3,978,713			4,040,284

Effects of foreign currency		33,826			374,276
NET DECREASE IN CASH		(5,007,689	)		(7,540,053	)
CASH AT BEGINNING OF PERIOD		5,603,713			19,177,138
CASH AT END OF PERIOD	$	596,024		$	11,637,085

SUPPLEMENTAL DISCLOSURES
Cash paid for interest	$	955,272		$	—
Cash paid for income taxes	$	—		$	200,000
Conversion of accrued expenses into common stock	$	462,532		$	—


Year	Total Tons Mined & Processed		Reported Mill Feed Grade (g/t Au)		Reported Recovery %			Gross Gold Concentrates Recovered (Au oz.)		Net Gold (1) Concentrates Sold (Au oz.)
2018		52,038		9.82		86.11	%		14,147		13,418
2019		66,031		5.81		86.86	%		10,646		9,713
2020		44,218		5.65		87.31	%		7,001		5,828
2021		97,088		9.67		88.79	%		26,728		22,566
2022		137,740		8.18		80.00	%		28,988		25,554
2023		198,518		5.58		76.50	%		27,252		24,829


Key Operating		Three Months Ended		Nine months ended
Information	Unit	September 30, 2024	September 30, 2023	September 30, 2024	September 30, 2023


Operating Data
Ore mined	ton	60,992	48,534	174,292	148,213
Mining rate	tpd	663	528	636	534

Ore Milled	ton	61,900	48,700	190,006	153,367
Mill Throughput	tpd	673	558	693	575

Grade	g/t	3.78	5.09	4.05	5.84
Recovery Au	%	75.39%	81.18%	76.48%	75.90%

Gold Ounces Produced	oz	5,676	6,469	18,902	21,847
Gold Ounces Sold	oz	5,026	6,017	15,106	20,277


Exhibit Number;		Name of Exhibit
3.1		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 E Convertible Preferred Stock, incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed on June 28, 2024.
10.1		Memorandum of Understanding with Ocean Partners Holdings Limited, incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed on June 7, 2024.
10.2		Employment Agreement dated as of June 3, 2024, by and between the Company and Rohan Hazelton, incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed on June 7, 2024.
10.3		Revised and Amended Agreement Concerning the Business Relationship Dated as of June 3, 2024, by and between the Company and K.D. Diepholz, incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K filed on June 7, 2024.
10.4		Amended and Restated DynaResource, Inc. 2024 Equity Incentive Plan, incorporated by reference to Exhibit 10.4 to the Company’s Form 8-K filed on June 7, 2024.
10.5		Stock Purchase Agreement dated as of June 26, 2024, by and between DynaResource, Inc. and Golden Post Rail, LLC, incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on June 28, 2024.
10.6		Employment Agreement dated as of July 22, 2024, by and between the Company and Alonso Sotomayor, incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on July 22, 2024.
10.7		Amendment #5 to its Gold Concentrate Purchase Agreement with MK Metal Trading SA de CV (“MK”) incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on October 25, 2024.
31.1		Certification of Chief Executive Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer and Chief Financial Officer, pursuant to 18 United States Code Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002.


	DynaResource, Inc.

Date: November 13, 2024	By:	/s/ Rohan Hazelton
		Rohan Hazelton,
		Director / Chief Executive Officer