10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q 

(Mark One)

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

For the quarterly period ended March 31, 2022.

OR

☐ TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934

From the transition period ____________ to ___________.

Commission File Number 000-30371

DYNARESOURCE, INC.

(Exact name of small business issuer as specified in its charter)

Delaware	94-1589426
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

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

(Address of principal executive offices)

(972) 868-9066

(Issuer’s telephone number)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large Accelerated Filer	☐	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☒

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

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. Yes ☐     No ☒

As of March 31, 2022, there were 18,091,293 shares of Common Stock of the issuer outstanding.

TABLE OF CONTENTS

PART I.	FINANCIAL STATEMENTS
ITEM 1.	Unaudited Financial Statements
	Notes to Unaudited Financial Statements	7
ITEM 2.	Management’s Discussion and Analysis and Plan of Operation	25
ITEM 3.	Quantitative and Qualitative Disclosure About Market Risk	35
ITEM 4.	Controls and Procedures	35
PART II.	OTHER INFORMATION
ITEM 1.	Legal Proceedings	37
ITEM 2.	Unregistered Sales of Securities and Use of Proceeds	38
ITEM 3.	Default Upon Senior Securities	38
ITEM 4.	Mine Safety Disclosures	38
ITEM 5.	Other Information	38
ITEM 6.	Exhibits	39

CERTIFICATIONS

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

2

DYNARESOURCE, INC.

CONSOLIDATED BALANCE SHEETS

MARCH 31, 2022, and DECEMBER 31, 2021

(Unaudited)

	2022			2021
ASSETS
Current Assets
Cash and Cash Equivalents	$	15,541,509		$	15,719,238
Accounts Receivable		1,278,392			577,118
Inventories		2,617,556			2,110,203
Foreign Tax Receivable		5,224,670			4,742,180
Other Current Assets		1,003,751			667,742
Total Current Assets		25,665,878			23,816,481
Mining Equipment and Fixtures (Net of Accumulated
Depreciation of $117,237 and $116,425)		1,917			2,729
Operating Lease		624,864			648,381
Mining Concessions		4,132,678			4,132,678
Other Assets		93,919			162,174
TOTAL ASSETS	$	30,519,256		$	28,762,443
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Accounts Payable	$	1,270,094		$	1,275,679
Accrued Expenses		4,771,486			5,440,204
Customer Advances		7,875,000			9,250,000
Derivative Liabilities		2,960,208			3,898,914
Convertible Notes Payable – Series I & II		543,279			543,279
Installment Notes Payable		1,982,396			1,962,525
Current Portion of Operating Lease Payable		91,098			98,169
Total Current Liabilities		19,493,561			22,468,770
Operating Lease Payable, Less Current Portion		558,914			587,782
TOTAL LIABILITIES		20,052,475			23,056,552
TEMPORARY EQUITY
Series C Senior Convertible Preferred Stock, $0.0001 par value, 1,734,992 shares authorized, issued and outstanding		4,337,480			4,337,480
Series D Senior 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)
Preferred Stock, Series A, $0.0001 par value, 1,000 shares authorized, issued and outstanding		1			1
Common Stock, $0.01 par value, 40,000,000 shares authorized 18,091,293 issued and outstanding		180,913			180,913
Preferred Rights		40,000			40,000
Additional Paid In Capital		50,632,400			50,632,400
Treasury Stock, 12,180 shares		(34,773	)		(34,773	)
Accumulated Other Comprehensive income		(549,577	)		(247,665	)
Accumulated Deficit		(45,659,663	)		(50,722,465	)
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)		4,609,301			(151,589	)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	30,519,256		$	28,762,443

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

3

DYNARESOURCE, INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2022, AND 2021

(Unaudited)

	2022			2021
REVENUE	$	10,492,503		$	4,912,712
COSTS AND EXPENSES OF MINING OPERATION
Production Cost Applicable to Sales		765,495			381,266
Mine Production Costs		1,227,884			806,470
Mine Exploration Costs		878,188			1,012,748
Facilities Expansion Costs		608,603			-
Exploration Drilling		487,615			-
Camp, Warehouse and Facilities		825,203			535,195
Transportation		390,640			238,564
Property Holding Costs		35,967			42,747
General and Administrative		1,026,355			514,977
Depreciation and Amortization		812			812
Total Operating Expenses		6,246,762			3,532,779
NET OPERATING INCOME		4,245,741			1,379,933
OTHER INCOME (EXPENSE)
Foreign Currency Gains (Losses)		(2,402	)		(333,735	)
Interest Expense		(119,769	)		(361,222	)
Derivatives Mark-to-Market Gain		938,706			(395,267	)
Other Income (Expense)		526			-
TOTAL OTHER INCOME (EXPENSES)		817,061			(1,090,224	)
NET INCOME BEFORE TAXES		5,062,802			289,709
PROVISION FOR INCOME TAXES		-			-
NET INCOME	$	5,062,802		$	289,709
DEEMED DIVIDEND FOR SERIES C & D PREFERRED		(58,575	)		(43,375	)
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	5,004,227		$	246,334
EARNINGS PER SHARE ATTRIBUTABLE TO THE
EQUITY HOLDERS OF DYNARESOURCE, INC.
Basic Income Per Common Share	$	0.28		$	0.01
Weighted Average Shares Outstanding - Basic		18,091,293			17,722,825
Diluted Income Per Common Share	$	0.27		$	0.01
Weighted Average Shares Outstanding - Diluted		18,983,458			17,722,825
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign Currency Translation Gain (Loss)		(301,912	)		292,371
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)		(301,912	)		292,371
TOTAL COMPREHENSIVE INCOME	$	4,760,890		$	582,080

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

4

 DYNARESOURCE, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THREE ENDED MARCH 31, 2022, AND 2021

(Unaudited)

	Preferred A				Common				Preferred		Preferred		Paid In		Treasury		Treasury			Other Comp		Accumulated
	Shares		Amount		Shares		Amount		Rights		Amount		Capital		Shares		Amount			Income		Deficit			Totals
THREE MONTHS ENDED MARCH 31, 2021
Balance January 1, 2021		1,000	$	1		17,722,825	$	177,228		1	$	40,000	$	50,407,333		516,480	$	(1,474,486	)	$	438,092	$	(59,256,828	)	$	(9,668,660
Other Comprehensive Income																					292,371					292,371
Net Income																							289,709			289,709
Balance, March 31, 2021		1,000	$	1		17,722,825	$	177,228		1	$	40,000	$	50,407,333		516,480	$	(1,474,486	)	$	730,463	$	(58,967,119	)	$	(9,086,580

THREE MONTHS ENDED MARCH 31, 2022
Balance January 1, 2022	1,000	$	1	18,091,293	$	180,913	1	$	40,000	$	50,632,400	12,180	$	(34,773	)	$	(247,665	)	$	(50,722,465	)	$	(151,589	)
Other Comprehensive Income (Loss)																	(301,912	)					(301,912	)
Net Income																				5,062,802			5,062,802
Balance, March 31, 2022	1,000	$	1	18,091,293	$	180,913	1	$	40,000	$	50,632,400	12,180	$	(34,773	)	$	(549,577	)	$	(45,659,663	)	$	4,609,301

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

5

DYNARESOURCE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2022, AND 2021

(Unaudited)

	2022			2021
CASH FLOWS FROM OPERATING ACTIVITES:
Net income	$	5,062,802		$	289,709
Adjustments to reconcile net income to cash used in operating activities
Change in Derivatives		(938,706	)		395,267
Depreciation and Amortization		812			812
Amortization of Loan Discount		-			137,312
Change in Operating Assets and Liabilities
Accounts Receivable		(701,274	)		(477,044	)
Inventories		(507,353	)		(655,877	)
Foreign Tax Receivable		(482,490	)		(372,404	)
Operating Lease Assets		23,517			20,904
Other Assets		(267,754	)		(84,845	)
Accounts Payable		(5,585	)		(332,949	)
Accrued Expenses		(668,718	)		362,485
Customer Advances		(1,375,000	)		3,750,000
Lease Liabilities		(35,939	)		(29,045	)
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES		104,312			3,004,325
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of Notes Payable		(36,165	)		(17,291	)
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES		(36,165	)		(17,291	)
Effects of Foreign Exchange		(245,876	)		238,203
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(177,729	)		3,225,460
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		15,719,238			1,504,016
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	15,541,509			4,729,253
SUPPLEMENTAL DISCLOSURES
Cash Paid for Interest	$	25,162		$	140,799
Cash Paid for Income Taxes	$	-		$	-

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

6

DYNARESOURCE, INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 MARCH 31, 2022 AND 2021

NOTE 1 – NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Activities, History and Organization

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

In 2000, the Company formed a wholly owned subsidiary, DynaResource de México S.A. de C.V., chartered in México (“DynaMéxico”). This Company was formed to acquire, invest in and develop resource properties in México. DynaMéxico owns a portfolio of mining concessions that currently includes its interests in the San José de Gracía Project (“SJG”) in northern Sinaloa State, México. The SJG District covers 9,920 hectares (24,513 acres) on the west side of the Sierra Madre mountain range. The Company currently owns 100% of the outstanding capital of DynaMéxico. A 20% minority interest in Dyna México was held by Goldgroup Resources Inc., a wholly owned subsidiary of Goldgroup Mining Inc. Vancouver BC (“Goldgroup”) until February 24, 2020.

In 2005, the Company formed DynaResource Operaciones de San Jose De Gracía S.A. de C.V. (“DynaOperaciones”), and acquired control of Mineras de DynaResource, S.A. de C.V. (formerly Minera Finesterre S.A. de C.V., “DynaMineras”). The Company owns 100% of Dyna Mineras.

The Company elected to become a voluntary reporting issuer in Canada in order to avail itself of Canadian regulations regarding reporting for mining properties and, more specifically, National Instrument 43-101 (“NI 43-101”). This regulation sets forth standards for reporting resources in a mineral property and is a standard recognized in the mining industry.

Significant Accounting Policies

The 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 financial statements.

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

Basis of Presentation

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

Principles of Consolidation

The unaudited consolidated financial statements include the accounts of DynaResource, Inc., as well as DynaResource de México, S.A. de C.V. (100% ownership), DynaResource Operaciones S.A. de C.V. (100% ownership) and Mineras de DynaResource S.A. de C.V. (100% ownership). All significant inter-company transactions have been eliminated. All amounts are presented in U.S. Dollars unless otherwise stated.

7

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 March 31, 2022, the Company had $14,140,366 of deposits in U.S. Banks in excess of the FDIC limit. Management does not believe that the Company is at risk of loss on cash.

Accounts Receivable and Allowances for Doubtful Accounts

The allowance for accounts receivable is recorded when receivables are considered to be doubtful of collection. As of March 31, 2022, and December 31, 2021, respectively, no allowance has been deemed necessary.

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 remitted. The total amounts of the IVA receivable as of March 31, 2022, and December 31, 2021 are $5,224,670 and $4,742,180, respectively.

Inventory

Inventories are carried at the lower of cost or net realizable value and consist of mined tonnage, and gravity and flotation concentrates, and gravity tailings or flotation feed material. The inventories are $2,617,556 and $2,110,203 as of March 31, 2022, and December 31, 2021, respectively.

Proven and Probable Reserves (No Known Reserves)

The definition of proven and probable reserves is set forth in SEC Industry Guide 7 (“Industry Guide 7”). Proven reserves for which (1) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes, grade and/or quality are computed from the results of detailed sampling and (2) the sites for inspection, sampling and measurement are spaced so closely and the geological character is so well defined that size, shape, depth and mineral content of the reserves are well-established. Probable reserves are reserves for which quantity and grade and/or quality are computed from information similar to that used for proven (measured) reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven (measured) reserves, is high enough to assume continuity between points of observations.

As of March 31, 2022, the Company’s properties do not contain resources that satisfy the definition of proven and probable reserves. Therefore the Company classifies the development of its properties, including the San Jose de Gracía Property, as exploration stage projects since no proven or probable reserves have been established under Industry Guide 7.

Property

Substantially all mine development costs, including design, engineering, mine construction, and installation of equipment are expensed as incurred as the Company has not established proven and probable reserves on any of its properties. Only certain types of mining equipment which has alternative uses or significant salvage value, may be capitalized without proven and probable reserves. Depreciation is computed using the straight-line method. Office furniture and equipment are being depreciated on a straight-line method over estimated economic lives ranging from 3 to 5 years. Leasehold improvements, which relate to the Company’s corporate office, are being amortized over the term of the lease of 10 years.

8

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

When proven and probable reserves as defined by Industry Guide 7 exist, development costs are capitalized, and the property is a commercially minable property. Mine development costs incurred either to develop new ore deposits, expand the capacity of operating mines, or to develop mine areas substantially in advance of current production would be capitalized. Costs of start-up activities and costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations as incurred. Costs of abandoned projects are charged to operations upon abandonment. All capitalized costs would be amortized using the units of production method over the estimated life of the ore body based on recoverable ounces to be mined from proven and probable reserves.

Certain costs to design and construct mining and processing facilities may be incurred prior to establishing proven and probable reserves. As no proven and probable reserves have been established on any of the Company’s properties, design, construction and development costs are not capitalized at any of the Company’s properties, and accordingly, substantially all costs are expensed as incurred, resulting in the Company reporting larger losses than if such expenditures had been capitalized. Additionally, the Company does not have a corresponding depreciation or amortization of these costs going forward since these expenditures were expensed as incurred as opposed to being capitalized. As a result of these and other differences, the Company’s financial statements may not be comparable to the financial statements of mining companies that have established reserves.

Mineral Properties Interests

Mineral property interests include acquired interests in development and exploration stage properties, which are considered tangible assets. The amount capitalized relating to a mineral property interest represents its fair value at the time of acquisition. When a property does not contain mineralized material that satisfies the definition of proven and probable reserves, such as with the San Jose de Gracía Property, capitalized costs and mineral property interests are amortized using the straight-line method once production begins. As of March 31, 2022, the mining interests have been in the pilot production stage and therefore, no amortization has been expensed. Mining properties consist of 33 mining concessions covering approximately 9,920 hectares at the San Jose de Gracía property (“SJG”), the basis of which are amortized on the unit of production method based on estimated recoverable resources. If it is determined that the deferred costs related to a property are not recoverable over its productive life, those costs will be written down to fair value as a charge to operations in the period in which the determination is made. The amounts at which mineral properties and the related costs are recorded do not necessarily reflect present or future values.

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

For operating mines, recoverability is measured by comparing the undiscounted future net cash flows to the net book value. When the net book value exceeds future net undiscounted cash flows, an impairment loss is measured and recorded based on the excess of the net book value over fair value. Fair value for operating mines is determined using a combined approach, which uses a discounted cash flow model for the existing operations and a market approach for the fair value assessment of exploration land claims. Future cash flows are estimated based on quantities of recoverable mineralized material, expected gold and silver prices (considering current and historical prices, trends and related factors), production levels, operating costs, capital requirements and reclamation costs, all based on life-of-mine plans. The term “recoverable mineralized material” refers to the estimated amount of gold or other commodities that will be obtained after considering losses during processing and treatment of mineralized material. In estimating future cash flows, assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of future cash flows from other asset groups. The Company’s estimates of future cash flows are based on numerous assumptions and it is possible that actual future cash flows will be significantly different than the estimates, as actual future quantities of recoverable minerals, gold, silver and other commodity prices, production levels and costs and capital are each subject to significant risks and uncertainties.

9

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, and at least annually. As of the date of this filing, no events have occurred that would require write- down of any assets. As of March 31, 2022 and December 31, 2021, no indications of impairment existed.

Asset Retirement Obligation

As the Company is not obligated to remediate the mining properties, no Asset Retirement Obligation (“ARO”) has been established. Changes in regulations or laws, any instances of non-compliance with laws or regulations that result in fines, or any unforeseen environmental contamination could result in a material impact to the amounts charged to operations for reclamation and remediation. Significant judgments and estimates are made when estimating the fair value of AROs. Expected cash flows relating to AROs could occur over long periods of time and the assessment of the extent of environmental remediation work is highly subjective. Considering all of these factors that go into the determination of an ARO, the fair value of the AROs can materially change over time.

Property Holding Costs

Holding costs to maintain a property on a care and maintenance basis are expensed in the period they are incurred. These costs include security and maintenance expenses, lease and claim fees and payments, and environmental monitoring and reporting costs.

Exploration Costs

Exploration costs are charged to operations and expenses as incurred. Exploration, development, direct field costs and administrative costs are expensed in the period incurred.

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) yearend exchange rates for balance sheet accounts, and (ii) the weighted average exchange rate of the reporting period for all income statement accounts. Foreign currency translation gains and losses are reported as a separate component of stockholders’ equity and comprehensive income (loss).

The 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 March 31, 2022, and December 31, 2021 (Mexican Pesos per one U.S. dollar):

	Mar 31, 2022		Dec 31, 2021
Exchange Rate at Period End Pesos		19.91		20.48

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 March 31, 2022, and March 31, 2021 (Mexican Pesos per one U.S. dollar):

	Mar. 31, 2022		Mar. 31, 2021
Weighted Average Exchange Rate for the three Months Ended Pesos		20.50		20.45

10

The Company recorded currency transaction gains (losses) of $(2,402) and $(333,735) for the three months ended March 31, 2022 and 2021, 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 at applicable Mexican tax law.

Use of Estimates

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

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 financial statements. The Company’s comprehensive income consists of net income and other comprehensive income (loss), consisting of unrealized net gains and losses on the translation of the assets and liabilities of its foreign operations.

Revenue Recognition

The Company follows ASC 606 “Revenue from contracts with customers”. The Company generates revenue by selling gold and silver 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 to direct the use of and obtain substantially all the remaining benefits from the material and the customer has the risk of loss.

The amount of revenue recognized is initially recorded on a provisional basis based on the contract price and the estimated metal quantities based on assay data. The revenue is adjusted upon final settlement of the sale. The chief risk associated with the recognition of sales on a provisional basis is the fluctuations between the estimated quantities of precious metals base on the initial assay and the actual recovery from treatment and processing.

As of March 31, 2022, there are $7,875,000 in customer deposit liabilities for payments received in advance expected to be settled in 2022.

During the quarter ended March 31, 2022, and the year ended December 31, 2021, there was $9,250,000 and $1,500,000 of revenue recognized during the period from customer deposit liabilities (deferred contract revenue) from prior periods, and $0 of customer deposits refunded to the customer due to order cancellation.

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

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash, receivables, payables and long-term debt. The carrying amount of cash, receivable and payables approximates fair value because of the short-term nature of these items. The carrying amount of long-term debt approximates fair value due to the relationship between the interest rate on long-term debt and the Company’s incremental risk adjusted borrowing rate.

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Per Share Amounts

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

The Company had 3,060,998 warrants outstanding at March 31, 2022 which upon exercise, would result in the issuance of 3,060,998 shares of common stock. Of these warrants 2,168,833 were exercisable at $2.04 per share and 892,165 were exercisable at $.01 per share. The Company also had convertible debt instruments as of March 31, 2022 which, upon conversion at valuations of $2.50 per share, would result in the issuance of 217,312 shares of stock.

The Company had 3,060,998 warrants outstanding at December 31, 2021 which upon exercise, would result in the issuance of 3,060,998 shares of common stock. Of these warrants 2,168,833 were exercisable at $2.04 per share and 892,615 were exercisable at $.01 per share. The Company also had convertible debt instruments as of December 31, 2021 which, upon conversion at valuations of $2.50 per share, would result in the issuance of 217,312 shares of stock.

	Three Months Ended March 31, 2022		Three Months Ended March 31, 2021
Net income (loss) attributable to common shareholders	$	5,004,227	$	246,334
Weighted average number of common shares outstanding, Basic		18,091,293		17,722,825
Diluted weighted average number of common shares outstanding,		18,983,458		17,722,825
Basic earnings (loss) per share	$	0.28	$	0.01
Diluted earnings (loss) per share	$	0.27	$	0.01

At March 31, 2022, 2,168,833 shares of potentially dilutive common stock related to outstanding stock warrants and 217,312 shares of potentially dilutive common stock related to convertible debt were excluded from the diluted earnings per share calculation because the exercise and conversion prices exceeded the average stock price and therefore their effect would be anti-dilutive.

At March 31, 2021, 2,168,833 shares of potentially dilutive common stock related to outstanding stock warrants and 2,227,312 shares of potentially dilutive common stock related to convertible debt were excluded from the diluted earnings per share calculation because the exercise and conversion prices exceeded the average stock price and therefore their effect would be anti-dilutive. In addition, at March 31, 2021, 1,260,633 of potentially dilutive common stock related to outstanding stock warrants were excluded from the diluted earnings per share calculation because the ratio of expenses related to the shares to issuable shares exceeded the basic earnings per share and therefore their effect 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 is also a related party.

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NOTE 2 – INVENTORIES

Inventories are carried at the lower of cost or fair value and consist of mined tonnage, gravity-flotation concentrates, and gravity tailings (or, flotation feed material). Inventory balances of March 31, 2022, and December 31, 2021, respectively, were as follows:

	2022		2021
Mined Tonnage	$	2,520,239	$	2,042,633
Gold-Silver Concentrates		97,317		67,570
Total Inventories	$	2,617,556	$	2,110,203

NOTE 3 – PROPERTY

Property consists of the following at March 31, 2022 and December 31, 2021:

	2022			2021
Leasehold improvements	$	9,340		$	9,340
Office equipment		31,012			31,012
Office furniture and fixtures		78,802			78,802
Sub-total		119,154			119,154
Less: Accumulated depreciation		(117,237	)		(116,425	)
Total Property	$	1,917		$	2,729

Depreciation and amortization has been provided over each asset’s estimated useful life. Depreciation and amortization expense was $812 and $812 for the three months ended March 31, 2022 and 2021 respectively.

NOTE 4 – MINING CONCESSIONS

Mining properties consist of the San Jose de Gracía (“SJG”) concessions. Mining Concessions were $4,132,678 and $4,132,678 at March 31, 2022 and December 31, 2021, respectively. There was no depletion expense during the three months ended March 31, 2022 and 2021.

NOTE 5 – CONVERTIBLE PROMISSORY NOTES

Notes Payable – Series I

In April and May 2013, the Company entered into note agreements with shareholders in the principal amount of $1,495,000, of which $340,000 was then converted to preferred shares within the same year, netting proceeds of $1,155,000 (the “Series I Notes”). The Series I Notes bear simple interest at twelve and a half percent (12.5%), accrued for twelve months, and with the accrued interest to be added to the principal, and then interest will be paid by the Company, quarterly in arrears.

The Notes originally matured on December 31, 2015. As of December 31, 2018, seven of the Series I Notes totaling $646,875 had subsequently been extended to December 30, 2019. On December 31, 2019, the Company entered into agreements to extend seven outstanding notes totaling $646,875 plus accrued interest totaling $34,277 for new total notes of $681,152 until December 31, 2020.

On March 31, 2020, the Company entered into agreements to extend the seven outstanding notes totaling $691,152 plus accrued interest totaling $21,286 for a new total of $702,438 until June 30, 2022. At December 31, 2020 one note for $246,533 was paid off leaving six Series I Notes remaining outstanding with a total balance of $455,905.

As of March 31, 2022 and December 31, 2021, six Series I Notes remained outstanding with a total balance of $455,905. The Company has the right to prepay the Series I Notes with a ten percent (10%) penalty.

The Series I Note holder retains the option, at any time prior to maturity or prepayment, to convert any unpaid principal and accrued interest into Common Stock at $2.50 per share. If the Series I Note is converted into Common Stock, at the time of conversion, the holder would also receive warrants, in the same number as the number of common shares received upon conversion, to purchase additional common shares of the Company for $7.50 per share, with such warrants expiring one year from their conversion date.

Notes Payable – Series II

In 2013 and 2014, the Company entered into additional note agreements of $199,808 and $250,000, respectively (the “Series II Notes”) with similar terms as the Series I Notes. The Series II Notes bear simple interest at twelve and a half percent (12.5%), accrued for twelve months, and with the accrued interest to be added to the principal, and then interest will be paid by the Company, quarterly in arrears

The Notes originally matured on December 31, 2015. On December 31, 2019 the Company entered into agreements to extend the two notes totaling $78,750 plus accrued interest of $5,977 for total new notes of $84,757 to December 31, 2020. One note for $112,500 was not extended and was past due as of December 31, 2019. At December 31, 2019 three Series II notes remained outstanding for $197,226.

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On March 31, 2020, the Company entered into agreements to extend the two notes totaling $84,726 plus accrued interest of $2,648 for total new notes of $87,374 to June 30, 2022. One note for $112,500 was not extended and was paid off in May 2020. At December 31, 2020, two Series II notes remained outstanding for $87,374.

As of March 31, 2022 and December 31, 2021, two Series II notes remained outstanding with a balance of $87,374. The Company has the right to prepay the Series II Notes with a ten percent (10%) penalty.

The Note holder may, at any time prior to maturity or prepayment, convert any unpaid principal and accrued interest into common stock of the Company at $2.50 per share. At the time of conversion, the holder would receive a warrant to purchase additional common shares of the Company for $7.50 per share, such warrant expiring one year from their conversion date.

NOTE 6 – INCOME TAXES

The Company has adopted ASC 740-10, “ Income Taxes”, which requires the use of the liability method in the computation of income tax expense and the current and deferred income taxes payable (deferred tax liability) or benefit (deferred tax asset). Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

The Company’s effective tax rate for the period ended March 31, 2022 and for the period ended March 31, 2021 varies from the statutory rate of 21% due to valuation allowance which creates a near zero effective tax rate. The Company intends to continue maintaining a full valuation allowance on our deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of the valuation allowance. However, given our current earnings and anticipated future earnings, it is reasonably possible that in the near future sufficient positive evidence may become available to support the conclusion that no valuation allowance is necessary.

NOTE 7– STOCKHOLDERS’ EQUITY

Authorized Capital. The total number of shares of all classes of capital stock which the corporation shall have the authority to issue is 60,001,000 shares, consisting of (i) twenty million and one thousand (20,001,000) shares of Preferred Stock, par value $0.0001 per share (“Preferred Stock”), of which 1,000 shares shall be designated as Series A Preferred Stock, 1,734,992 are designated as Series C Preferred Stock, and 3,000,000 shares are designated as Series D Preferred Stock and (ii) forty million (40,000,000) shares of Common Stock, par value $0.01 per share (“Common Stock”). As of March 31, 2022, 15,265,008 shares of Preferred Stock remain undesignated.

Series A Preferred Stock

The Company has designated 1,000 shares of its Preferred Stock as Series A, having a par value of $0.0001 per share. Holders of the Series A Preferred Stock have the right to elect a majority of the Board of Directors of the Company. The Company issued 1,000 shares of Series A Preferred Stock to its CEO. At March 31, 2022 and December 31, 2021, there were 1,000 shares of Series A Preferred Stock outstanding.

Series C Senior Convertible Preferred Stock

At March 31, 2022 and December 31, 2021 there were 1,734,992 and 1,734,992 Series C Preferred shares outstanding. These Series C Preferred Shares are convertible to common shares at $2.04 per share, through June 30, 2022 and include anti-dilution protection. The Series C Preferred Shares may receive a 4% per annum dividend, payable if available, and in arrears. The Dividend is calculated at 4.0% of $4,337,480 payable annually on June 30. At March 31, 2022 dividends for the years 2016 to 2021 totaling $880,278 were in arrears.

Due to the nature of this transaction as mandatorily redeemable, the Series C preferred shares are classified as “temporary equity” on the balance sheet.

Series D Senior Convertible Preferred Stock

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

On May 14, 2020, the Company closed an additional financing agreement with Golden Post, and with certain individual shareholders of DynaUSA (“DynaUSA Shareholders”), and related agreements. A summary of the transactions and related agreements are set forth below:

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

· Golden Post acquired the following securities:

(a)

A convertible promissory note (the “Golden Post Note”) payable to Golden Post in the principal amount of $2,500,000, bearing interest at 10%, and maturing two years from the date of execution. One half of the principal amount of the Golden Post Note, or $1,250,000, has been fully funded in accordance with an agreed-upon draw summary and budget. The balance of the principal amount will also be funded in accordance with agreed-upon draw summaries and the budget. The Golden Post Note is convertible, at the option of Golden Post, into shares of Series D Senior Convertible Preferred Stock (the “Series D Preferred”) at a conversion price of $2.00 per share; and

(b)

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

· The Remaining Purchasers acquired the following securities:

(a)	Convertible promissory notes (the “Remaining Notes”) in the aggregate principal amount of $1,400,000, bearing interest at 10%, and maturing two years from the date of issuance. The Remaining Notes have been fully funded. The Remaining Notes are convertible, at the option of each individual Remaining Purchaser, into shares of Series D Preferred at a conversion price of $2.00 per share; and
(b)	Common stock purchase warrants (the “Remaining Purchasers Warrants”) for the purchase of an aggregate of 439,026 shares of the Company’s common stock, at an exercise price of $0.01 per share, and maturing on the 10-year anniversary of the date of issuance. The Remaining Purchasers Warrants contain anti-dilution provisions.

2. Also pursuant to the NPA, the Company and the Lead Purchaser have agreed to amend the common stock purchase warrant dated June 30, 2015 (the “2015 Warrant”), issued to the Lead Purchaser in connection with that certain Securities Purchase Agreement dated as of May 6, 2015. The 2015 Warrant contemplates the purchase, upon exercise, of 2,166,527 shares (subject to adjustment) of the Company’s common stock and matured June 30, 2020 (the “Termination Date”). The amendment to the 2015 Warrant provides that, following the expiration of the 2015 Warrant pursuant to its terms, the Company will issue to the Lead Purchaser a new warrant (the “New Warrant”), substantially in the same form of the 2015 Warrant, for the number of shares of the Company’s common stock that went unexercised on the Termination Date, if any. The New Warrant has a maturity date of June 30, 2022.

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3.	As part of the transaction contemplated by the NPA, the Company executed an Amended and Restated Registration Rights Agreement pursuant to which Golden Post may require the Company to register the shares of common stock which may be issued upon (i) the conversion of the Series C Senior Convertible Preferred Stock (“Series C Preferred”), (ii) the conversion of the Series D Preferred, and (iii) the shares of common stock issuable upon the exercise of the 2015 Warrant, the 2020 Warrant, and a compensatory warrant issued to the Lead Purchaser on May 13, 2020 (described below under the heading “Compensatory Issuances”), including any additional shares of common stock issuable pursuant to anti-dilution provisions of such securities.
4.	Pursuant to the transaction contemplated by the NPA, the Company agreed to call a special meeting of Company stockholders, to be held not later than July 14, 2020, to solicit stockholder approval of (a) an amendment of the Company’s certificate of incorporation to increase the number of authorized shares of common stock from 25,000,000 shares to 40,000,000 shares, and (b) an amendment of the Certificate of Designations of the Series C Preferred, in order to (a) extend the maturity date of the Series C Preferred by an additional two (2) years, (ii) add an equity cap in respect of the conversion of Series C Preferred into common stock of the Company, and (iii) add certain restrictions on the ability of the Company to issue Series C Preferred. The special meeting was properly called and held on July 13, 2020, whereby Company stockholders confirmed approval for each item referenced in item 4 above
5.	Compensatory Issuances. On May 13, 2020, one business day prior to the NPA, the Company issued to the Lead Purchaser the following: (i) a common stock purchase warrant for 2,306 shares, at an exercise price of $0.01 per share, and maturing on the 7-year anniversary of the date of issuance (the “Compensatory Warrant”); and (ii) 1,771 shares of Series C Preferred Shares. These issuances were occasioned by the Company’s obligations under the Securities Purchase Agreement dated as of May 6, 2015.
6.	In order to accommodate the issuance of the additional 1,771 shares of Series C Preferred, on May 13, 2020 the Company filed with the Secretary of State of Delaware a Certificate of Increase of Series C Senior Convertible Preferred Stock, to increase the number of shares of preferred stock designated as Series C Preferred from 1,733,221 shares to 1,734,992 shares (“Certificate of Increase”).

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

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

Retirement of Series D Convertible Debt

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

The remaining ten noteholders of notes convertible into Series D Preferred Stock elected to convert their notes totaling $1,520,000 into Series D Preferred stock at $2.00 per share. On October 18, 2021 the Company issued 760,000 shares of Series D Preferred Stock for these notes.

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

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

At March 31, 2022 and December 31, 2021, there were 760,000 and 760,000 Series D Preferred shares outstanding, respectively. These Series D Preferred Shares are convertible to common shares at $2.00 per share, through October 18, 2026. The Series D Preferred Shares may receive a 4% per annum dividend, payable if available, and in arrears. The Dividend is calculated at 4.0% of $1,520,000 payable annually on October 18. At March 31, 2022, no dividends were in arrears.

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

The sale of the Golden Post Note, the Remaining Notes, the 2020 Warrant, the Remaining Purchasers Warrants, the Compensatory Warrant, and the Series C Preferred was made pursuant to a privately negotiated transaction that did not involve a public offering of securities and, accordingly, the Company believes that the transaction was exempt from the registration requirements of the Securities Act pursuant to Section 4(a)(2) thereof. Each investor represented that it (A) is an “accredited investor” and (B) has such knowledge and experience in financial and business matters that the investor is capable of evaluating the merits and risks of acquiring the securities acquired by such investor. All of the foregoing securities are deemed restricted securities for purposes of the Securities Act.

Due to underlying anti-dilutive provisions contained in the Series C Preferred Shares and the Golden Post Warrant, the Company incurred derivative liabilities. On May 14, 2020 in connection with the Series D Convertible Note financing, the expiration date for the Series C Preferred Shares and the Golden Post warrants were extended to June 30, 2022. In addition, a new derivative liability was incurred due to the issuance of warrants for kicker shares. At March 31, 2022, the total derivative liability was $2,960,208 which included $554,695 for the Series C Preferred Shares, and $714,706 in connection with the Golden Post Warrants and $1,690,807 in connection with the Series D Convertible Note Kicker Warrants. At December 31, 2021 the total derivative liability was $3,898,914 which included $1,019,431 for the Series C Preferred Shares, and $1,320,380 in connection with the Golden Post Warrants and $1,559,103 in connection with the Series D Convertible Note Kicker Warrants. The deemed dividend for the quarters ending March 31, 2022, and March 31, 2021 were $58,575 and $43,375, respectively. As the Company has not declared these dividends, it is required only as an item “below” the net income (loss) amount on the accompanying consolidated statements of income (loss).

Preferred Stock (Undesignated)

In addition to the 1,000 shares designated as Series A Preferred Stock and the 1,734,992 shares designated as Series C Preferred Shares and the 3,000,000 shares designated as Series D Preferred Stock, the Company is authorized to issue an additional 15,265,008 shares of Preferred Stock, having a par value of $0.0001 per share. The Board of Directors of the Company has authority to issue the Preferred Stock from time to time in one or more series, and with respect to each series of the Preferred Stock, to fix and state by the resolution the terms attached to the Preferred Stock. At March 31, 2022 and December 31, 2021, there were no other shares of Preferred Stock outstanding.

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Separate Series; Increase or Decrease in Authorized Shares. The shares of each series of Preferred Stock may vary from the shares of any other series thereof in any or all of the foregoing respects and in any other manner. The Board of Directors may increase the number of shares of Preferred Stock designated for any existing series by a resolution adding to such series authorized and unissued shares of Preferred Stock not designated for any other series. Unless otherwise provided in the Preferred Stock Designation, the Board of Directors may decrease the number of shares of Preferred Stock designated for any existing series by a resolution subtracting from such series authorized and unissued shares of Preferred Stock designated for such existing series, and the shares so subtracted shall become authorized, unissued and undesignated shares of Preferred Stock.

Common Stock

The Company is authorized to issue 40,000,000 common shares at a par value of $0.01 per share. These shares have full voting rights. At March 31, 2022 and December 31, 2021, there were 18,091,293 and 18,091,293 shares outstanding, respectively. No dividends were paid for the periods ended March 31, 2022 and 2021, respectively.

Preferred Rights

The Company issued “Preferred Rights” for the rights to percentages of revenues generated from the San Jose de Gracía Pilot Production Plant and received $784,500 for these rights. This has been reflected as “Preferred Rights” in stockholders’ equity. As of March 31, 2022, $744,500 had been repaid, leaving a current balance of $40,000 and $40,000 as of March 31, 2022 and December 31, 2021, respectively

Stock Issuances

There were no issuances of common stock during the period ended March 31, 2022.

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

Treasury Stock 

During the three months ended March 31, 2022 no treasury stock was issued.

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

Outstanding treasury shares total 12,180 and 12,180 at March 31, 2022 and December 31, 2021, respectively.

Warrants

2022 activity

The Company had 3,060,998 warrants outstanding at March 31, 2022. There were no warrants issued or exercised and no warrants expired during the three months ended March 31, 200

2021 activity

The Company had 3,060,998 warrants outstanding at December 31, 2021. On October 18, 2021, five warrant holders exercised a total of 368,468 warrant to purchase 368,468 shares of common stock for $0.01 a share.

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

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Intrinsic Value
Balance at December 31, 2021		3,429,466	$	1.30		4.40
Granted		-	$	-
Exercised		368,468	$	0.01
Forfeited		-	$	-
Balance at December 31, 2021		3,060,998	$	1.46		2.79
Granted		-	$	-				-
Exercised		-	$	-
Forfeited		-	$	-				-
Balance at March 31, 2022		3,060,998	$	1.46		2.55
Exercisable at March 31, 2022		3,060,998	$	1.46		2.55		-

NOTE 8 – RELATED PARTY TRANSACTIONS

Dynacap Group Ltd.

The Company paid $43,750 and $33,750 to Dynacap Group, Ltd. (“Dynacap”, an entity controlled by the CEO of the Company) for consulting and other fees during the periods ended March 31, 2022, and 2021, respectively.

NOTE 9 – COMMITMENTS AND CONTINGENCIES

Concession Taxes

The Company is required to pay taxes in México in order to maintain mining concessions owned by DynaMéxico. Additionally, the Company is required to incur a minimum amount of expenditures each year for all concessions held. The minimum expenditures are calculated based upon the land area, as well as the age of the concessions. Amounts spent in excess of the minimum may be carried forward indefinitely over the life of the concessions and are adjusted annually for inflation. Based on Management’s recent business activities and current and forward plans and considering expenditures on mining concessions since 2002-2017 and continuing expenditures in current and forward activities, the Company does not anticipate that DynaMéxico will have any difficulties meeting the minimum annual expenditures for the concessions ($388 – $2,400 Mexican Pesos per hectare). DynaMéxico retains sufficient carry- forward amounts to cover over 10 years of the minimum expenditure (as calculated at the 2017 minimum, adjusted for annual inflation of 4%).

Leases

In addition to the surface rights held by DynaMéxico pursuant to the Mining Act of México and its Regulations (Ley Minera y su Reglamento), DynaMineras maintains access and surface rights to the SJG Project pursuant to the 20-year Land Lease Agreement. The 20 Year Land Lease Agreement with the Santa Maria Ejido Community surrounding San Jose de Gracía was dated January 6, 2014 and continues through January 2033. It covers an area of 4,399 hectares surrounding the main mineral resource areas of SJG . It covers an area of 4,399 hectares surrounding the main mineral resource areas of SJG and provides for annual lease payments on January 1^st each year by DynaMineras of $1,359,443 pesos adjusted for inflation based on the Mexico minimum wage increase commencing in 2014. Rent was $3,015,112 Pesos (approx. $149,000 USD) for the year ended December 31, 2021. The Land Lease Agreement provides DynaMineras with surface access to the core resource areas of SJG (4,399 hectares), and allows for all permitted mining and exploration activities from the owners of the surface rights (Santa Maria Ejido community).

The Company leases office space for its corporate headquarters in Irving, Texas. In September 2017, the Company entered into a sixty-six-month extension of the lease through January 2023. As part of the agreement the Company received six months free rent as a finish out allowance. The Company capitalized the leasehold improvement costs and amortized them over the rent abatement period as rent expense. The Company makes tiered lease payments on the 1st of each month.

Effective January 1, 2019, the Company adopted ASC 842, which requires recognition of a right-of-use asset and lease liability for all leases at the commencement date based on the present value of lease payments over the lease term. Additional qualitative and quantitative disclosures regarding the Company’s leasing arrangements are also required. The Company adopted ASC 842 prospectively and elected the package of transition practical expedients that does not require reassessment of (1) whether any existing or expired contracts are or contain leases, (2) lease classification and (3) initial direct costs. In addition, the Company has elected other available practical expedients to not separate lease and non-lease components, which consist principally of common area maintenance charges, for all classes of underlying assets and to exclude leases with an initial term of 12 months or less.

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The Company determines if a contract is or contains a lease at inception. As of March 31, 2022, the Company has two operating leases - a six and one-half year lease for office space with a remaining term of eighteen months and a twenty-year ground lease in association with its México mining operations with a remaining term of thirteen years. Variable lease costs consist primarily of variable common area maintenance, storage parking and utilities. The Company’s leases do not have any residual value guarantees or restrictive covenants.

As the implicit rate is not readily determinable for most of the Company’s lease agreements, the Company uses an estimated incremental borrowing rate to determine the initial present value of lease payments. These discount rates for leases are calculated using the Company’s interest rate of promissory notes.

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

	Period Ended
	March 31, 2022
Operating Lease – Office Lease	$	21,823
Operating Lease – Ground Lease		22,834
Short Term Lease Costs		4,381
Variable Lease Costs		-
TOTAL	$	49,038
Weighted average remaining lease term and weighted average discount rate are as follows:
Weighted Average Remaining Lease Term (Years) – Operating Leases		10.12
Weighted Average Discount Rate – Operating Leases		12.50	%
Estimated future minimum lease obligations are as follow for the years ending March 31:
YEAR
2022	$	164,979
2023		94,074
2024		96,896
2025		99,803
2026		102,797
Thereafter		684,885
Total	$	1,243,434
Less Imputed Interest		(593,422	)
OPERATING LEASE PAYABLE	$	650,012

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NOTE 10 – DERIVATIVE LIABILITIES

Preferred Series C Stock

As discussed in Note 7, the Company analyzed the embedded conversion features of the Series C Preferred Stock and determined that the stock qualified as a derivative liability and is required to be bifurcated and accounted for as such since the host and the embedded instrument are not clearly and closely related. The Company performed a valuation of the conversion feature. In performing the valuation, the Company applied the guidance in ASC 820, “Fair Value Measurements”, to nonfinancial assets and liabilities that are recognized or disclosed at fair value on a nonrecurring basis. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). To measure fair value, the Company incorporates assumptions that market participants would use in pricing the asset or liability and utilizes market data to the maximum extent possible.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

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

	2022			2021
Annual volatility rate		102	%		147	%
Risk free rate		2.28	%		0.73	%
Remaining Term	0.25 years			0.50 years
Fair Value of common stock	$	1.90		$	1.75

For the three and twelve months ended March 31, 2022 and December 31, 2021, an active market for the Company’s common stock did not exist. Accordingly, the fair value of the Company’s common stock was estimated using a valuation model with level 3 inputs.

The below table represents the change in the fair value of the derivative liability during the three and twelve months ended March 31, 2022 and December 31, 2021.

Period Ended	2022			2021
Fair value of derivative (stock), beginning of period	$	1,019,431		$	601,313
Change in fair value of derivative		(464,736	)		418,118
Fair value of derivative on the date of issuance		-			-
Fair value of derivative (stock), end of period	$	554,695		$	1,019,431

Preferred Series C Warrants

As discussed in Note 7, the Company analyzed the embedded conversion features of the Series C Preferred Stock and determined that the Warrants qualified as a derivative liability and are required to be bifurcated and accounted for as such since the host and the embedded instrument are not clearly and closely related. The Company performed a valuation of the conversion feature. In performing the valuation, the Company applied the guidance in ASC 820, “Fair Value Measurements”, to nonfinancial assets and liabilities that are recognized or disclosed at fair value on a nonrecurring basis. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). To measure fair value, the Company incorporates assumptions that market participants would use in pricing the asset or liability and utilizes market data to the maximum extent possible.

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.

20

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 based on the assumptions below:

	2022			2021
Annual volatility rate		102	%		147	%
Risk free rate		2.28	%		0.73	%
Remaining Term	0.25 years			0.50 years
Fair Value of common stock	$	1.90		$	1.75

For the three and twelve months ended March 31, 2022, and December 31, 2021, an active market for the Company’s common stock did not exist. Accordingly, the fair value of the Company’s common stock was estimated using a valuation model with level 3 inputs.

The below table represents the change in the fair value of the derivative liability during the periods ended March 31, 2022, and December 31, 2021.

Period Ended	2022			2021
Fair value of derivative (warrants), beginning of period	$	1,320,380		$	817,613
Change in fair value of derivative		(605,674	)		502,767
Fair value of derivative on the date of issuance		-			-
Fair value of derivative(warrants), end of period	$	714,706		$	1,320,380

Series D Notes Kicker Warrants

As discussed in Note 7, the Company analyzed the conversion features of the Series D Notes and determined that the Warrants qualified as a derivative liability. The fair value was required to be allocated among the notes, conversion features, and the warrants, and then remeasured at each reporting date. The Company performed a valuation of the conversion feature. In performing the valuation, the Company applied the guidance in ASC 820, “Fair Value Measurements”, to nonfinancial assets and liabilities that are recognized or disclosed at fair value on a nonrecurring basis. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). To measure fair value, the Company incorporates assumptions that market participants would use in pricing the asset or liability and utilizes market data to the maximum extent possible.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

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

	2022			2021
Annual volatility rate		118	%		147	%
Risk free rate		2.28	%		0.73	%
Remaining Term	8.13 years			8.37 years
Fair Value of common stock	$	1.90		$	1.75

For the three and twelve months ended March 31, 2022 and December 31, 2021, an active market for the Company’s common stock did not exist. Accordingly, the fair value of the Company’s common stock was estimated using a valuation model with level 3 inputs.

The below table represents the change in the fair value of the derivative liability during the three and twelve months ended March 31, 2022 and December 31, 2021.

Period Ended	2022		2021
Fair value of derivative (warrants), beginning of period	$	1,559,103	$	952,634
Fair value of derivative on the date of issuance		-		-
Exercise of warrants		-		(659,558	)
Change in fair value of derivative		131,704		1,266,027
Fair value of derivative(warrants), end of period	$	1,690,807	$	1,559,103

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NOTE 11 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The ASC guidance for fair value measurements and disclosure establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1 Inputs – Quoted prices for identical instruments in active markets.

Level 2 Inputs – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 Inputs – Instruments with primarily unobservable value drivers.

As of March 31, 2022, and December 31, 2021, the Company’s financial assets 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 10.

			Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Fair Value Measurement at March 31, 2022 Using:
Liabilities:
Derivative Liabilities	$	2,960,208	$	-	$	-	$	2,960,208
Totals	$	2,960,208	$	-	$	-	$	2,960,208
Fair Value Measurement at December 31, 2021
Liabilities:
Derivative Liabilities	$	3,898,914	$	-	$	-	$	3,898,914
Totals	$	3,898,914	$	-	$	-	$	3,898,914

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NOTE 12 – REVENUE CONCENTRATION

The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable, as follows:

For each of the three months ended March 31, 2022, and 2021, one and three customers accounted for 100% of revenue, respectively.

At March 31, 2022 and December 31, 2021, one and one customer accounted for 100% of accounts receivable, respectively.

NOTE 13 – 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 21.84%

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%.

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 on the reduced Francisco Arturo mining concession.

As of June 2019, the Company ceased making monthly payments on the above noted Francisco Arturo concession notes and has petitioned the Hacienda for a reduction in the liability equal to the reduction in the Francisco Arturo concession above. For financial reporting purposes the Company continues to carry all notes at unpaid principal amount and accrues interest on a monthly basis. At March 31, 2022 $1,189,560 of accrued interest on the notes was included in accrued liabilities on the 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%.

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The following is a summary of the transaction during the three and twelve months ended March 31, 2022 and December 31, 2021:
Balance December 31, 2020	$	2,081,435
Exchange Rate Adjustment		(57,504	)
2021 Principal Payments		(61,406	)
Balance December 31, 2021		1,962,525
Exchange Rate Adjustment		56,036
2022 Principal Payments		(36,165	)
Balance March 31, 2022	$	1,982,396

NOTE 14 – REVOLVING CREDIT LINE FACILITY

On February 4, 2021 Mineras de DynaResource SA de CV (“Seller”) entered into a Revolving Credit Line Facility and Commercial Offtake Agreement (the “RCL”), with a commercial buyer. Under the terms of the RCL:

· The Company will deliver 100% of its produced concentrates to the buyer and provider of the RCL, through December 31, 2022; unless extended by the Company;

· An initial RCL was established by buyer in the amount of $3.75M USD;

· On May 1, 2021, the RCL increased to an amount equal to 80% of prior 3 month’s revenue;

· Each successive month, the RCL shall be adjusted according to the Company’s prior 3 month’s revenue;

· The RCL shall never be less than $3.75M USD;

· The RCL will be interest free for 45 days;

· The RCL is to be repaid through deliveries of concentrates or cash within 120 days;

The RCL is included under Customer Advances on the unaudited consolidated balance sheet.

Deposits under Revolving Credit Line Facility

Under the terms of the RCL, Mineras de DynaResource received the following advances from the buyer:

(1)	$2.5M advance on February 4, 2021. Settled on March 26, 2021.
(2)	$3.75M advance on March 30, 2021. Settled on May 12, 2021
(3)	$3.75M advance on May 12, 2021. Settled on June 16, 2021.
(4)	$6.75M advance on June 18, 2021. Settled on August 5, 2021.
(5)	$8.25M advance on August 9, 2021. Settled on September 27, 2021.
(6)	$8.25M advance on September 29, 2021. Settled on November 17, 2021
(7)	$8.25M advance on November 19, 2021. Settled on December 20, 2021
(8)	$9.25M advance on December 30, 2021. Settled on February 25, 2022
(9)	$8.175M advance on February 25, 2022. Settled on March 30, 2022
(10)	$7.875M advance on March 30, 2022.

NOTE 16 – SUBSEQUENT EVENTS

The Company has evaluated events from March 31, 2022, through the date whereupon the financial statements were issued, and has determined there were no items requiring disclosure.

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

FORWARD-LOOKING STATEMENTS

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 annual report as the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, which we refer to in this annual 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. These statements may use words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “predict,” “project” and similar expressions as they relate to us or our management. When we make forward-looking statements, we are basing them on our management’s beliefs and assumptions, using information currently available to us. These forward-looking statements are subject to risks, uncertainties and assumptions, including but not limited to, risks, uncertainties and assumptions discussed in this annual report. Factors that can cause or contribute to these differences include those described under the heading “Management Discussion and Analysis and Plan of Operation.”

If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we projected. Any forward-looking statement you read in this annual report reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. All subsequent written and oral forward-looking statements attributable to us or individuals acting on our behalf are expressly qualified in their entirety by this paragraph. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this annual report. The Company expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking statements to reflect any change in its views or expectations. The Company can give no assurances that such forward-looking statements will prove to be correct.

CAUTIONARY NOTE TO UNITED STATES INVESTORS—INFORMATION CONCERNING PREPARATION OF RESOURCE AND RESERVE ESTIMATES

The Company is an “OTC Reporting Issuer” as that term is defined in BC Multilateral Instrument 51-105, Issuers Quoted in the U.S. Over-the-Counter Markets, promulgated by the British Columbia Securities Commission.

In Canada, an issuer is required to provide technical information with respect to mineralization, including reserves and resources, if any, on its mineral exploration properties in accordance with Canadian requirements, which differ significantly from the requirements of the United States Securities and Exchange Commission (the “SEC”) applicable to registration statements and reports filed by United States companies pursuant to the Securities Act or the Exchange Act. As such, certain disclosures of mineralization under Canadian standards may not be comparable to similar information made public by United States companies subject to the reporting and disclosure requirements of the SEC and not subject to Canadian securities legislation.

While these terms are recognized and required by Canadian securities legislation (under National Instrument 43-101 (“NI 43-101”), entitled Standards of Disclosure for Mineral Projects), the SEC does not recognize these terms. Investors in the United States are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted to reserves. In addition, inferred mineral resources have a great amount of uncertainty as to their existence and economic and legal feasibility. It cannot be assumed that all or any part of a measured mineral resource, indicated mineral resource or inferred mineral resource will ever be upgraded to a higher category. Under Canadian securities legislation, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, although they may form, in certain circumstances, the basis of a “preliminary economic assessment” as that term is defined in NI 43-101. U.S. investors are cautioned not to assume that any part or all of any reported measured, indicated, or inferred mineral resource estimates referred to in the DynaMéxico NI 43-101 Technical Report and DynaMéxico 43-101 Mineral Resource Estimate (compiled for DynaResource de Mexico SA de CV) are economically or legally mineable.

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Under U.S. standards, as set forth in SEC Industry Guide 7, mineralization may not be classified as a “reserve” unless a determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. The SJG Property as described in this Annual Report on Form 10-K is without known reserves. Mineral resources which are not classified as mineral reserves do not have “demonstrated economic viability.” The quantity of resources and the quality (grade) of resources reported as “Indicated” and “Inferred” mineral resources in the DynaMéxico 43-101 Mineral Resource Estimate compiled for DynaResource de Mexico SA de CV, under Canadian National Instrument 43-101 and filed by the Company with SEDAR, are not disclosed in this Form 10-Q. There has been insufficient exploration to define any mineral reserves on the SJG Property, and it is not certain if further exploration will result in the definition of mineral reserves.

The Company

The Company is a minerals investment, management, and exploration company, and currently conducting test mining and pilot milling operations through an operating subsidiary in México, with specific focus on precious and base metals in México. The Company was originally incorporated in the State of California on September 28, 1937, under the name West Coast Mines, Inc. In November 1998, the Company re-domiciled from California to Delaware and changed its name to DynaResource, Inc. (“DynaUSA”).

We currently own 80% of the outstanding shares of DynaMéxico, and DynaMéxico currently holds 20% of the outstanding shares of DynaMéxico. DynaMéxico owns 100% of the mining concessions, equipment, camp and related facilities which comprise the San Jose de Gracía Property (“SJG”), in northern Sinaloa State, México. We also own 100% of Mineras de DynaResource S.A. de C.V. (“DynaMineras”), the exclusive operator of the San José de Gracía Project, under contract with DynaMéxico. DynaMineras currently conducts test mining and pilot milling operations, and other exploration activities in México. The Company also has another wholly owned subsidiary, DynaResource Operaciones, S.A. de C.V. (“DynaOperaciones”). DynaOperaciones entered into a personnel management agreement with DynaMineras and, under the terms of that agreement, DynaOperaciones is the exclusive management company for registered employees.

Segment Information

Not required for small reporting Companies

Products

The end use product produced at our test mining and pilot milling operations at SJG is in the form of gold-silver concentrates. Gold-silver concentrates, or simply concentrate, is raw precious metals materials that has been crushed and ground finely to a sand-like product where gangue (waste) and non-precious metals are removed or reduced, thus concentrating the precious metals component. Concentrates processed and produced from San Jose de Gracía are shipped to third-party smelters, refineries or third parties for further processing or re-sale.

During the first three months of 2022, we reported the delivery and sale of 6,000 net Oz gold contained in concentrates. All gold-silver concentrate originated from the San Jose de Gracía Property in México.

Gold-silver concentrates are sold at a discount to the prevailing spot market price, based on the price per ounce of gold and silver quoted at the London PM fix, with the actual net precious metals prices received depending on the sales contract. Concentrates are priced by individual concentrate lots of 36 to 72 tons, or as a series of lots under contract, whereby the final selling price and gold-silver quantities are subject to final adjustments at the time of final purchase settlement.

Gold and Silver Pilot Processing Methods

Gold and silver are extracted from mined mineralized material, by crushing, grinding, milling, and further by simple gravity and flotation recoveries. The mineralized material is extracted by underground mining methods. The processing plant at the San José de Gracía mine is composed of conventional crushing and grinding circuits, and with gravity and flotation recovery methods. The gravity and flotation concentrates are dewatered and shipped to purchasers in semi-truck trailers.

Gold and Silver Reserves / No Known Reserves

The Company currently has no mineral “reserves” as defined by SEC Industry Guide 7 promulgated by the SEC.

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General Government Regulations

México

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

Mineral Concession Rights. Exploration and exploitation of minerals in México may be carried out through Mexican companies incorporated under Mexican law by means of obtaining mining concessions. Mining concessions are granted by the Mexican government for a period of fifty years from the date of their recording in the Public Registry of Mining and are renewable for a further period of fifty years upon application within five years prior to the expiration of such concession in accordance with the Mining Law and its regulations. Mining concessions are subject to annual work requirements and payment of annual surface taxes which are assessed and levied on a semi-annual basis. Such concessions may be transferred or assigned by their holders, but such transfers or assignments must be registered with the Public Registry of Mining in order to be valid against third parties. The holder of a concession must pay semi-annual duties in January and July of each year on a per hectare basis and in accordance with the amounts provided by the Federal Fees Law. During the month of May of each year, the concessionaire must file with the General Bureau of Mines, the work assessment reports made on each concession or group of concessions for the preceding calendar year. The regulations of the Mining Law provide tables containing the minimum investment amounts that must be made on a concession. This amount is updated annually in accordance with the changes in the Consumer Price Index.

Surface Rights. In México, while mineral rights are administered by the federal government through federally issued mining concessions, Ejidos (communal owners of land recognized by the federal laws in México) control surface access rights to the land. An Ejido may sell or lease lands directly to a private entity. While the Company has agreements or is in the process of negotiating agreements with the Ejido that impact all of its projects in México, some of these agreements may be subject to renegotiations.

Environmental Law. The Environmental Law in México, called the “General Law of Ecological Balance and Protection to the Environment” (“General Law”), provides for general environmental policies, with specific requirements for certain activities such as exploration set forth in regulations called “Mexican official norms”. Responsibility for enforcement of the General Law, the regulations and the Mexican official norms is with the Ministry of Environment and Natural Resources, which regulate all environmental matters with the assistance of Procuraduria Federal de Protección al Ambiente (known as “PROFEPA”).

2020 Forestry Law. The 2020 Forestry Law provides for general policies for the use and protection of the surface, and for plants, soil and trees. The regulation of the Forestry Law is with the Ministry of Environment and Natural Resources, with the assistance of PROFEPA.

Residues Law. The Residues Law, also known as Norm 141, provides for general policies for the deposit and storage of residue and waste. The regulation of the Residues Law is with the Ministry Of Environment and Natural Resources, with the assistance of PROFEPA.

The primary laws and regulations used by the State of Sinaloa, where our San Jose de Gracía property is located, in order to govern environmental protection for mining and exploration are: The General Law, the 2020 Forestry Law, Residues Law, as well as their specific regulations on air, water and residues, and the Mexican official norms (known as “NOM-120”). In order to comply with the environmental regulations, a concessionaire must obtain a series of permits during the exploitation and exploration stage. The time required to obtain the required permits is dependent on a few factors including the type of vegetation and trees impacted by proposed activities.

Mining Permits. The Secretariat of Environmental and Natural Resources, the Mexican Government environmental authority (“SEMARNAT”), is responsible for issuing environmental permits associated with mining. Three main permits required before construction can begin are: Environmental Impact Statement (known in México as Manifesto Impacto Ambiental) (“MIA”), Land Use Change (known in México as Estudio Justificativo Para Cambio Uso Sueldo) (“ETJ”), and Risk Analysis (known in México as Analisis de Riesgo) (“RA”). A construction permit is required from the local municipality and an archaeological release letter must be obtained from the National Institute of Anthropology and History (known as “INAH”). An explosives permit is required from the ministry of defense before construction can begin. The Environmental Impact Statement is required to be prepared by a third-party contractor and submitted to SEMARNAT and must include a detailed analysis of climate, air quality, water, soil, vegetation, wildlife, cultural resources and socio-economic impacts. The Risk Analysis study (which is included into the Environmental Impact Statement and submitted as one complete document) identifies potential environmental releases of hazardous substances and evaluates the risks in order to establish methods to prevent, respond to, and control environmental emergencies. The Land Use Change requires that an evaluation be made of the existing conditions of the land, including a plant and wildlife study, an evaluation of the current and proposed use of the land, impacts to naturally occurring resources, and an evaluation of reclamation/re-vegetation plans.

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Customers

The Company sells its concentrates to the buyer who offers the best terms based upon price, treatment costs, refining costs, and other terms of payment. During the three months ended March 31, 2022, the Company sold gold-silver concentrates to one purchasers.

Employees

As of March 31, 2022, we had 197 employees, including 192 employees based in México, and 5 in the United States. Consultants are retained from time to time. Employees based in México and the United States include laborers, engineers, geologists, information technologists, office administrators, managers and executives. None of our employees in México are covered by union contracts and the Company believes we have good relations with our employees.

The San Jose de Gracia Mineral Property

We classify our mineral property as an “Exploration Property”. We do not suggest that we have proven or probable reserves at our property as defined by the SEC. Under U.S. standards, as set forth in SEC Industry Guide 7, mineralization may not be classified as a “reserve” unless a determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. The SJG Property as described in this Annual Report on Form 10-K is without known reserves. Mineral resources which are not classified as mineral reserves do not have “demonstrated economic viability.” The quantity of resources and the quality (grade) of resources reported as “Indicated” and “Inferred” mineral resources in the mineral resource estimate compiled for DynaMéxico, under and filed by the Company on SEDAR, are not disclosed in this Form 10K. There has been insufficient exploration to define any mineral reserves on the SJG Property, and it is not certain if further exploration will result in the definition of mineral reserves.

San Jose de Gracia Mineral Property

San Jose de Gracía Property (“SJG”) is a high-grade mineralized system which reports historical production of 1,000,000 Oz. gold (“Au”), from a series of underground workings and is located in the state of Sinaloa, México. The Company is focused on the exploration and future exploitation of this vein-hosted, near surface, and over 400 meters down dip gold potential, that occurs within fault breccia veins; and has been traced on surface and underground over a 15 Sq. kilometer area.

DynaMéxico owns 100% of the mineral concessions at the SJG Property, and all mineral concessions are contiguous. The SJG Property is comprised of 33 concessions covering approximately 9,920 hectares (24,513 acres).

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Current Mining Concessions - San José de Gracía

Claim Name	Claim Number	Staking date	Expiry	Hectares	Taxes / ha (pesos)
AMPL. SAN NICOLAS	183815	22/11/1988	21/11/2038	17.4234	111.27
AMPL. SANTA ROSA	163592	30/10/1978	29/10/2028	25.0000	111.27
BUENA VISTA	211087	31/03/2000	30/03/2050	17.9829	63.22
EL CASTILLO	214519	02/10/2001	01/10/2051	100.0000	31.62
EL REAL	212571	07/11/2000	07/11/2052	2038.0000	31.62
EL REAL 2	216301	30/04/2002	29/04/2052	280.1555	31.62
FINISTERRE FRACC. A	219001	28/01/2003	27/01/2053	18.7856	31.62
FINISTERRE FRACC. B	219002	28/01/2003	27/01/2053	174.2004	31.62
GUADALUPE	189470	05/12/1990	04/12/2040	7.0000	111.27
LA GRACIA I	215958	02/04/2002	01/04/2052	300.0000	31.62
LA GRACIA II	215959	02/04/2002	01/04/2052	230.0000	31.62
LA LIBERTAD	172433	15/12/1983	14/12/2033	97.0000	111.27
LA NUEVA AURORA	215119	08/02/2002	07/02/2052	89.3021	31.62
LA NUEVA ESPERANZA	226289	06/12/2005	05/12/2055	40.0000	7.6
LA UNION	176214	26/08/1985	25/08/2035	4.1098	111.27
LOS TRES AMIGOS	172216	27/10/1983	26/10/2033	23.0000	111.27
MINA GRANDE	163578	10/10/1978	09/10/2028	6.6588	111.27
NUEVO ROSARIO	184999	13/12/1989	12/12/2039	32.8781	111.27
PIEDRAS DE LUMBRE 2	215556	05/03/2002	04/03/2052	34.8493	31.62
PIEDRAS DE LUMBRE 3	218992	28/01/2003	27/01/2053	4.3098	31.62
PIEDRAS DE LUMBRE No.4	212349	29/09/2000	28/09/2050	0.2034	63.22
PIEDRAS DE LUMBRE UNO	215555	05/03/2002	04/03/2052	40.2754	31.62
SAN ANDRES	212143	31/08/2000	30/08/2050	385.0990	63.22
SAN JOSÉ	208537	24/11/1998	23/11/2048	27.0000	111.27
SAN MIGUEL (1)	183504	26/10/1988	25/10/2038	7.0000	111.27
SAN NICOLAS	163913	14/12/1978	13/12/2028	55.5490	111.27
SAN SEBASTIAN	184473	08/11/1989	07/11/2039	40.0000	111.27
SANTA MARIA	218769	17/01/2003	16/01/2053	4.2030	31.62
SANTA ROSA	170557	13/05/1982	12/05/2032	31.4887	111.27
SANTO TOMAS	187348	13/08/1986	12/08/2036	312.0000	111.27
TRES AMIGOS 2	212142	31/08/2000	30/08/2050	54.4672	63.22
FINISTERRE 4	231166	18/01/2008	17/01/2058	2142.1302	5.08
FRANCISCO ARTURO	230494	06/09/2007	27/03/2057	3,279.56
TOTAL				9,920.00

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Surface Lease Rights

In addition to the surface rights held by DynaMéxico pursuant to the Mining Act of México and its Regulations (Ley Minera y su Reglamento), DynaMineras maintains access and surface rights to the SJG Project pursuant to the 20-year Land Lease Agreement (above). The 20 Year Land Lease Agreement with the Santa Maria Ejido Community surrounding San Jose de Gracía is dated January 6, 2014 and continues through 2033. It covers an area of 4,399 hectares surrounding the main mineral resource areas of SJG and provides for annual lease payments by DynaMineras of $1,359,443 Pesos adjusted for inflation based on the Mexico minimum wage, commencing in 2014. The 2021 payment was $3,015,112 pesos (approx. $149,000 USD). Additionally, under the description of the 20 Year Land Lease, DynaMineras constructed a Medical Facility at SJG in year 2017.

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, pilot production and exploration activities from the owners of the surface rights (Santa Maria Ejido community).

The Company expects DynaMineras will be successful in expanding the size and scope of the resources at SJG through continued drilling and development programs at San Pablo, Tres Amigos, La Ceceña, Palos Chinos, San Pablo East, La Purisima, and La Prieta. The Company expects extensions to mineralization in all directions and down dip from the main target areas.

Mineral Reserves / No Known Reserves

Under U.S. standards, as set forth in SEC Industry Guide 7, mineralization may not be classified as a “reserve” unless a determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. The SJG property is without known reserves. Mineral resources which are not classified as mineral reserves do not have “demonstrated economic viability.” The quantity of resources and the quality (grade) of resources reported as “Indicated” and “Inferred” mineral resources in the mineral resource estimate compiled for DynaMéxico is not disclosed in this Form 10-Q. There has been insufficient exploration to define any mineral reserves on the property, and it is not certain if further exploration will result in the definition of mineral reserves.

Technical Report and Resource Estimate According to Canadian National Instrument 43-101 (2012)

In 2012, DynaMéxico commissioned Servicios y Proyectos Mineros (“SPM”) for the production of Technical Report 43-101 (“43-101”) at San Jose de Gracía. Additionally, DynaMéxico commissioned Mr. Robert Sandefur, a senior reserve analyst for Chlumsky, Armbrust & Meyer LLC, Lakewood, CO (“CAM”) to produce a mineral resource estimate for the 4 main vein systems at the property.

Parameters Used to Estimate the Mineral Resource Estimate--The data base for the San Jose de Gracía Project consists of 372 drill holes of which 361 are diamond drill holes (“DDH”) and the remaining 11 were reverse circulation holes “(RC”), with a total drilling of 75,878 meters. The NI 43-101 Mineral Resource Estimate, prepared in 2012, concentrates on four main mineralized vein systems at SJG: Tres Amigos, San Pablo, La Union, and La Purisima. Of the 372 drill holes, 368 were drilled to test these four main vein systems and the remaining four holes tested the Argillic Zone. Technical personnel of Minop S.A. de C.V. (“Minop”), a subsidiary (or affiliate) of Goldgroup Mining Inc., built three dimensional solids to constrain estimation to the interpreted veins in each swarm. The 172 holes most recently drilled (2009-2011), were allocated as follows: Tres Amigos (64 holes), San Pablo (49 holes), La Union (24 holes), La Purisima (32 holes) and Argillic Zone (3 holes). The data base also includes rock and chip sampling, regional stream sediment sampling, and IP Surveys.

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Density--A total of 5,540 pieces of core were measured for specific gravity using the weight in air vs. weight in water method. This represents an additional 3,897 measurements taken in the 2009-11 drill seasons with density measurements taken from all mineral zones. Dried samples were coated with paraffin wax before being measured. The results tabulated have been sorted by lithology and mineralized veins. The average specific gravity of 5,051 wall rock samples was 2.59 while the average specific gravity for 489 samples of vein material is 2.68. CAM and Servicios y Proyectos Mineros have reviewed the procedures and results and opine that the results are suitable for use in mineral resource estimation.

Mineral Resource Estimate - Construction of Wireframes--Mineral Resources were estimated by Mr. Sandefur within wireframes constructed by technical personnel of Minop. Minop was contracted by Mineras de DynaResource S.A. de C.V. (“DynaMineras”).

Mineral Resource Estimate - Explanation of Resource Estimation--Resource estimation was done in MineSight and MicroModel computer systems with only those composites that were inside the wireframe used in the estimate. Estimation was done using kriging with the omni-directional variogram derived from all the data in each area for gold using the relative variogram derived from the log variogram. High grades were restricted by capping the assays at a breakpoint based on the cumulative frequency curves. Estimation was done using search radii of 100 x 100 x 50 m “blocks” oriented subparallel to the general strike and dip of the vein system in each area. A sector search, corresponding to the faces of the search box with a maximum of two points per sector was used in estimation. A density of 2.68 based on within ‘vein density’ samples was used in the resource estimate. Within each of the four areas there are approximately 20 to 40 veins in the vein swarm. Resources were estimated by kriging using data from all veins in the swarm. In general, gold accounts for at least 80% of the value of contained metal at the project, so the variograms for gold were used in estimation of the four other metals.

The veins at San Jose de Gracía have been historically mined for many years and historic mined volumes are not available. The one exception is the approximate 42,000 tonnes of ore processed by DynaMéxico during its pilot production activities in 2003-2006. The resource table is not adjusted for any historic mining. To validate that historic mining had not significantly reduced the resource, CAM reviewed the database for all assays greater than 1 gram per ton gold that were next to missing values at the bottom of drill holes. Only four assays satisfying this criterion were found, and on the basis of this review, Mr. Sandefur does not believe that significant mining has occurred within the volumes defined by the wireframes.

Servicios y Proyectos Mineros performed a database review and considers that a reasonable level of verification has been completed, and that no material issues have been left unidentified from the drilling programs undertaken.

Mineral Resource Estimate and 43-101 Technical Report - Data Verification-- Mr. Ramon Luna Espinoza (“Mr. Luna”) initially visited the San Jose de Gracía Project in November 2010 and conducted site inspections at SJG in November 2011 and January 2012. Mr. Sandefur conducted a site inspection of the SJG Project in January 2012. While at the Property in November 2011, Mr. Luna inspected the areas of Tres Amigos, La Prieta, Gossan Cap, San Pablo, La Union, and La Purisima, and historic mining sites. In January 2012, Mr. Sandefur and Mr. Luna inspected the areas of Tres Amigos, San Pablo, La Union, and La Purisima. Pictures of the areas were taken. Many of the drill pads for the drilling programs of 2007 to 2011 were clearly located and identified. Mr. Luna also inspected at San José de Gracía, the core logging and storage facilities, the geology offices, the meteorological station, the plant nursery, and the mill. Mr. Sandefur also inspected the core logging and storage facilities.

The Company received from DynaMéxico on February 14, 2012, a National Instrument 43-101 Mineral Resource Estimate for San Jose de Gracía. The NI 43-101 Resource Estimate was prepared by Mr. Robert Sandefur, BS, MSc, P.E., a Qualified Person as defined under NI 43-101, and a senior reserve analyst for Chlumsky, Armbrust & Meyer LLC, Lakewood, CO (“CAM”). The Resource Estimate concentrates on four separate main vein systems at SJG: Tres Amigos, San Pablo, La Union, and La Purisima.

The mineral resource estimates prepared by Mr. Robert Sandefur for this Technical Report included Indicated Resources at Tres Amigos and San Pablo. Table summaries of Indicated and Inferred Resources are contained in the 2012 DynaMéxico-CAM Mineral Resource Estimate. The Resource Estimate has been filed, along with the Technical Report on SEDAR; but is not disclosed in this Form 10-Q.

Water Concession

The Company has secured the Water Rights Concession for the area surrounding SJG. The Director of Water Administration of the National Water Commission of México (CONAGUA) formally certified in writing the rights of DynaResource de México, S.A. de C.V. to legally “use”, exploit and extract 1,000,000 cubic meters of water per year from the DynaMéxico extraction infrastructure located within the perimeter of the mining concessions comprising the San Jose de Gracía Mining Property in Sinaloa State, México. CONAGUA determined that the DynaMéxico water rights are not subject to any water rights concession or any other water extraction restriction. Water extracted by DynaMéxico will be subject to applicable levies imposed by the Mexican tax authorities in accordance with current Mexican tax laws.

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Company

The Company is a minerals investment, management, and exploration company, and currently conducting test mining and pilot milling operations through an operating subsidiary in México, with specific focus on precious and base metals in México. The Company was incorporated in the State of California on September 28, 1937, under the name West Coast Mines, Inc. In November 1998, the Company re-domiciled from California to Delaware and changed its name to DynaResource, Inc. (“DynaUSA”).

We currently conduct operations in México through our operating subsidiaries. We currently own 80% of the outstanding shares of DynaResource de México, S.A. de C.V. (“DynaMéxico”), and DynaMéxico currently holds 20% of its outstanding shares recovered from Goldgroup Resources Inc. DynaMéxico owns 100% of mining concessions, equipment, camp and related facilities which comprise the San Jose de Gracía Property, in northern Sinaloa State, México. We also own 100% of Mineras de DynaResource S.A. de C.V. (“DynaMineras”), the exclusive operator of the San José de Gracía Project, under contract with DynaMéxico. DynaOperaciones is the exclusive management company for registered employees.

Project Improvements, Expansion and Increased Output (2017 To 2021)

The Company continues its business plan of operations at San Jose de Gracía, which is to improve, increase and expand test mining and pilot milling operations and generally, to increase production of gold ounces. Since January 2015 startup of the test mining and milling activities, the Company has increased daily output from an initial 75 tons per 24-hour operating day, to a current 300 tons per 24-hour operating day, and during second quarter 2022 the Company expects to achieve production output of 500 tons per 24-hour operating day. (Note the Summary of Test Mining and Pilot Mill Operations for 2018 to 2022 below).

Since January 2017, the Company has expended over $20 million USD in non-operating costs, generally classified as project improvements and expansion costs which have been expensed in the company’s financial statements. These funds have been provided primarily from cash flows from operations. An itemized list of these non-operating costs is described below:

Mill Expansion:	$	3,542,000
Tailings Pond Expansion		265,000
Machinery and Equipment		1,556,000
Mining Camp Expansion		146,000
Medical Facility		126,000
Mine Development - San Pablo		2,748,000
Mine Expansion - San Pablo East		915,000
Mine Expansion – Tres Amigos		1,599,000
Exploration Drilling		522,000
SIG Mining Concessions		1,516,000
Surface Rights and Permitting		528,000
Debt Retirement		2,985,000
Legal Fees		3,738,000
Total	$	20,186,000

The Company is currently reporting all costs of mine operations, improvements, and expansion as expenses in accordance with United States General Accepted Accounting Principal (GAAP) requirements. The result of expensing all costs is that the Company has accumulated a net loss carry forward from México operations of $15 million USD which is available to offset future taxable earnings.

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Summary of Test Mining and Pilot Mill Operations for 2018 to 2022:

Year	Total Tonnes Mined & Processed		Reported Mill Feed Grade (g/t Au)		Reported Recovery %			Gross Gold Concentrates Recovered (Au oz.)		Net Gold 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

Test pilot operations in 2021 yielded 97,088 Tons mined and processed from underground test mining activity and pilot milling operations; and the production of approximately 26,728 gross Oz Au, and net of dry weight adjustments at the buyer’s facilities, the production of approximately 22,566 Oz Au. The Company reports net revenue of $35,886,046 net of buyer’s price discount and refining and treatment costs.

Summary of Test Mining and Pilot Mill Operations for the three months ended March 31, 2022 and 2021:

	Total Tonnes Mined & Processed		Reported Mill Feed Grade (g/t Au)		Reported  Recovery %			Gross Gold Concentrates Recovered (Au oz.)		Net Gold (1) Concentrates Sold (Au oz.)
Three Months Ended March 31, 2022		27,511		10.12		79.40	%		7,110		6,000
Three Months Ended March 31, 2021		17,342		7.66		83.45	%		3,571		3,024

(1) Gold concentrate sold during the quarter is not equal to gold concentrate recovered during the quarter due to timing of shipments & buyers discount.

Test pilot operations in Q1 2022 yielded 27,511 tons mined and processed through mill operations (306 tons per day) ; and the recovery of 7,110 gross Oz Au resulting in sales of 6,000 gross Au Oz contained in gold-silver concentrates, and the receipt of $10,492,503 in revenues net of buyer’s price discount, refining and treatment costs.

Additional Test Mining and Mill Operations Disclosure

DynaMineras expects to continue its test underground mining activity and pilot milling operations in the second quarter 2022, and projects an increased output of 500 tons per 24-hour operating day from the mine and mill during the quarter.

Results for the three months ended March 31, 2022 and 2021

REVENUE. The Company processed 27,511 tones (306 per day) during the current quarter compared to 17,342 tons (194 per day) in 2021. Additionally, the ore process was a higher grade of 10.12 Oz Au per ton compared to 7.66 Oz Au per ton in 2021 resulting in an increase of ounces recovered from 3,571 in 2021 to 7,110 in 2021. This resulted in an increase in gross ounces sold from 3,024 in 2021 to 6,000 in 2022 increasing revenues for the quarter from $4,912,712 to $10,492,503

PRODUCTION COSTS RELATED TO SALES. Production costs related to sales for the three months ended March 31, 2022, and 2021 were $765,495 and $381,266, respectively. These are expenses directly related to the milling, packaging and shipping of gold and other precious metals product. The increase is consistent with the increase in tonnage process and ounces recovered.

MINE PRODUCTION COSTS. Mine production costs for the three months ended March 31, 2022, and 2021 were $1,227,884 and $806,470 respectively. These costs were directly related to the extraction of mine tonnage to be processed at the mill. The increase is consistent with the increase in tonnage mined.

MINE EXPLORATION COSTS. Mine exploration costs for the three months ended March 31, 2022, and 2021 were $878,188 and $1,012,748, respectively. These were the costs of extracting waste material to reach the materials to be extracted for processing. The Company allocates total mining costs between production and waste based on tonnage on a monthly basis. The decrease in cost is a result of the decrease in waste tonnage as a percentage of total tonnage mined from 55.7% to 41.3%

FACILITIES EXPANSION COSTS: Facilities expansion costs for the three months ended March 31, 2022, and 2021 were $608,603 and 0, respectively. The major expense in the first quarter of 2022 was the installation of a new Ball Mill which upon completion will increase processing capacity to 500 tons a day. The Company expects the expansion to be complete by May.

EXPLORATION DRILLING. During the 1^st quarter of 2022 the Company begin an exploration drilling program for the purposes of updating the Company’s 43-101 Mineral Resource Estimate.

TRANSPORTATION. Transportation costs for the three months ended March 31, 2022, and 2021 were $390,640 and $238,564, respectively. These were the costs of transporting the product to the customer for treatment and sale. The increase in yield reduced overall transportation costs from approximately 4.86% to 3.72% of revenue.

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CAMP, WAREHOUSE AND SUPPORT FACILITIES. Camp, warehouse and support facility cost for the three months March 31, 2022 and 2021 were $825,203 and $535,195, respectively. These were the support costs of the mining facilities including housing, food, security and warehouse operations. The increase was a result of the increase mining activity dropping from 10.89% to 7.86% of revenue.

PROPERTY HOLDING COSTS. Property holding costs for the three months ended March 31, 2022, and 2021 were $35,967 and $42,747, respectively. These costs were concessions taxes, leases on land and other direct costs of maintaining the property. These cost are relatively consistent from year to year regardless of the level of mining activity.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses for the three months ended March 31, 2022, and 2021 were $1,026,355 and $514,977 respectively. These were the costs of operating the Company not directly associated with the mine operations including management, accounting, and legal expenses. The increase was an increase legal fees associated ongoing legal discussed in the legal summary and an overall increase in administrative costs supporting the Companies increase in activity.

OTHER INCOME (EXPENSE). Other income (expense) for the three months ended March 31, 2022, and 2021 was $817,061 and $(1,090,224) respectively. Included in this category in 2022 was interest expense of $(119,769), change in derivative of $938,706 and currency transaction gain (loss) of $(2,402) and miscellaneous income of $526. Included in this category in 2021 was interest expense of $(361,222), change in derivative of $(395,267) and currency transaction gain (loss) of $(333,735). The decrease in the derivative liability was primarily due decreased remaining life of the underlying securities and the Company’s common stock value remaining under the conversion term. The decrease in interest expense was a result of the reduction in the Company’s debt.

OTHER COMPREHENSIVE INCOME (LOSS). Other comprehensive income (loss) includes the Company’s net income (loss) plus the unrealized currency translation gain (loss) for the period. The Company’s other comprehensive loss for the three months ended March 31, 2022 and 2021 consisted of unrealized currency gains (losses) of $(301,912) and $292,371 respectively. The change is due to the variances in the peso exchange rates throughout the two periods.

Liquidity and Capital Resources

As of March 31, 2022, the Company had working capital of $6,172,317, comprised of current assets of $25,665,878 and current liabilities of $19,493,561. This represented an increase of $4,824,606 from the working capital maintained by the Company of $1,347,711 as of December 31, 2021. The primary reason for the increase was funds generate from the Company’s operating profit.

Net cash provided by (used in) operations for the three months ended March 31, 2022, and 2021 was $104,312 and $3,004,325, respectively. The decrease in the funds provided from operations was a result of the operating profits being applied to reduced payables increase working capital.

Net cash provided by (used) in investing activities for the three months ended March 31, 2022, and 2021 was $0 and $0, respectively. Expenditures necessary for the expansion of mining operations totaled $608,603 and $0 in the three months ended March 31, 2022, and 2021, respectively, would normally have been included in this category were expenses due to the company’s lack of proven and probable reserves.

Net cash provided by (used in) financing activities for the three months ended March 31, 2022 and 2021 was $(36,165) and $(17,291) respectively representing principal payments of long term debt.

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Off-Balance Sheet Arrangements

As of March 31, 2022, we did not have any off-balance sheet arrangements, which have or are reasonably likely to have a material adverse effect on our financial condition, results of operations or liquidity.

Plan of Operation

The Plan of operation for the next twelve months includes DynaMineras continuing the improvement and expansion of the test mining and pilot milling operations at SJG. The Company commenced its testing activities in fall 2015 at the rate of approximately 100 tons per 24-hour operating day from the mine and approximately the same output from the processing plant. Over the past five years, the Company has gradually increased its output to approximately 300 tons per 24-hour operating day from the mines and processing plant. In 2021, the Company completed its phases of expansion to reach the output of approximately 300 tons per 24-hour operating day from the mine and the processing plant. In 2022 the Company anticipates completion of expansion to reach 500 tons per 24-hour operating days from the mine and the processing plant.

The Company funds its general and administrative expenses in the US, from the Company’s operating subsidiaries, DynaMineras and DynaOperaciones. These amounts are eliminated in consolidation. The Company believes that cash on hand, and including cash flow generated from its current operations, is adequate to fund its ongoing general and administrative expenses through the subsequent twelve months.

Capital Expenditures

The Company’s primary activities relate to the test mining and pilot milling operations of the SJG property through its 100% owned operating subsidiary, DynaMineras. DynaMineras is conducting activities at SJG under the terms of the Exploitation Amendment Agreement (the “EAA”, or “operating agreement”) with DynaMéxico.

No Known Reserves

The SJG property is without known reserves. Under U.S. standards, mineralization may not be classified as a “reserve” unless a determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made.

Exploitation Amendment Agreement (“EAA”)

On May 15, 2013, DynaMineras entered into an Exploitation Amendment Agreement (“EAA”) with DynaMéxico. The EAA grants to DynaMineras the right to finance, explore, develop and exploit the SJG Property, in exchange for: (A) Reimbursement of all costs associated with financing, maintenance, exploration, development and exploitation of the SJG Property, which costs are to be charged and billed by DynaMineras to DynaMéxico; and, (B) After Item (A) above, the receipt by DynaMineras of 75% of gross receipts received by DynaMéxico from the sale of all minerals produced from SJG, to the point that DynaMineras has received 200% of its advanced funds; and, (C) after items (A) and (B) above; the receipt by DynaMineras of 50% of all gross receipts received by DynaMéxico from the sale of all minerals produced from SJG, and throughout the term of the EAA; and, (D) in addition to Items (A), (B), and (C) above, DynaMineras shall receive a 2.5% NSR (“Net Smelter Royalty”) on all minerals sold from SJG over the term of the EAA. The total Advances made by DynaMineras to DynaMéxico as of December 31, 2014 is $4,025,000. The EAA is the third and latest Amendment to the original Contract Mining Services and Mineral Production Agreement (the “Operating Agreement”), which was previously entered into by DynaMineras with DynaMéxico in April 2005, wherein DynaMineras was named the Exclusive Operating Entity at SJG. The Operating Agreement was previously amended in September 2006 (the “First Amendment”) and amended again at July 15, 2011 (the “Second Amendment”). The Term of the Second Amendment is 20 years, and the EAA (Third Amendment) provides for the continuation of the 20 Year Term from the date of the Second Amendment (July 15, 2011).

Exclusive Operating Entity at San Jose de Gracía

Under agreement with DynaMéxico, Mineras de DynaResource S.A. de C.V. (“DynaMineras”) has been named the exclusive operating entity at the San Jose de Gracía Project. DynaResource owns 100% of DynaMineras.

DynaMéxico General Powers of Attorney

The Chairman-CEO of DynaUSA also serves as the President of DynaMéxico and as the President of DynaMineras. The President of DynaMéxico holds broad powers of attorney granted by the shareholders of DynaMéxico which gives the current President significant and broad authority within DynaMéxico.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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 March 31, 2021. This evaluation was accomplished under the supervision and with the participation of our chief executive officer / principal executive officer and our financial consultant who concluded that our disclosure controls and procedures are not effective to ensure that all material information required to be filed in the annual report on Form 10-K has been made known to them. The evaluation did not include a 404A assessment. For purposes of this section, the term disclosure controls and procedures mean 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 Act (15 U.S.C. 78a et seg.) 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 Securities Exchange Act of 1934, as amended (the “Act”) is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Controls over Financial Reporting

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

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PART II

ITEM 1.  LEGAL PROCEEDINGS

2014 Arbitration Proceeding filed by Goldgroup Resources Inc.

On March 14, 2014, Goldgroup filed for arbitration in the United States with the American Arbitration Association (“AAA”), seeking monetary and nonmonetary relief, and citing the Earn In/Option Agreement as the basis for its filing. On August 25, 2016, the AAA issued a ruling in favor of Goldgroup against the Company and DynaMéxico (the “Arbitration Award”). On May 9, 2019, the United States District Court for the District of Colorado (the “Colorado U.S. District Court”) confirmed the Arbitration Award.

On May 20, 2021, the Company and DynaMéxico agreed to release the $1.111 million bond that had been posted, and paid an additional $4,054 in interest, in full satisfaction of the monetary portion of the Arbitration Award. Since that time, the Company has fully performed the non-monetary portion of the Arbitration Award, which included the election of a Goldgroup designee to the board of DynaMéxico, yet Goldgroup continues to challenge the Company’s actions before the Colorado U.S. District Court.

2014 Court filing by DynaMéxico, in Mexico

On December 9, 2014, DynaMéxico filed a commercial lawsuit against Goldgroup, its parent company Goldgroup Mining Inc., and the AAA, in the Thirty Sixth Civil Court in the Federal District of México (the “Trial Court”), under file 1120 number / 2014 (the “DynaMéxico Trial”). In the DynaMéxico Trial, DynaMéxico sought to terminate the U.S.-based arbitration proceedings, and requested that substantial damages (in the amount of US $50 million) be awarded to DynaMéxico against Goldgroup. On October 5, 2015, the Trial Court awarded DynaMéxico damages in excess of US $48 million.

Goldgroup has appealed the $48 million damages award on multiple occasions, yet the award stands and has been affirmed by a variety of Mexican courts, including the highest court in the land. Even in the face of multiple rejections of its arguments before Mexican courts, Goldgroup continues to raise baseless and unfounded objections to the award.

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On October 5, 2016, the Trial Court (the same court which made the $48 million damages award) approved a grant to DynaMéxico of a lien (referred to by the court as an “Embargo”) upon the shares of DynaMéxico held by Goldgroup in certificate form. On February 20, 2020, a México City court issued a final judgment, effectively foreclosing on all shares of DynaMéxico formerly held by Goldgroup, and awarding those shares to DynaMéxico. Those shares are now legally owned, and physically held, by DynaMéxico. Consequently, Goldgroup currently owns no shares of DynaMéxico under Mexican law, which requires physical possession of shares to evidence ownership.

The award to DynaMéxico of the shares formerly owned by Goldgroup, does not satisfy the $48 million damages award in favor of DynaMéxico.

2020 Petition for Recognition of the $48M Damages Award

On December 5, 2020, the Company and DynaMéxico filed an Original Petition for Recognition of the $48 million damages award in favor of DynaMéxico, in US. District Court in Dallas County, Texas (the “Texas U.S. District Court”), under principles of international comity. On May 12, 2021, The Texas U.S. District Court issued a ruling stating the Court was not obligated to recognize the $48 million damages award in the United States. On May 14, 2021, the Company and DynaMéxico filed a Notice of Appeal of that ruling.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULT UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

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.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

Exhibit Number;   Name of Exhibit

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.

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SIGNATURES

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.

	DynaResource, Inc.
Date: May 6, 2022	By:	/s/ K.W. (“K.D.”) Diepholz
		K.W. (“KD”) Diepholz,
		Chairman / CEO

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EX-31.1

EXHIBIT 31.1

CHIEF EXECUTIVE OFFICER CERTIFICATION

I, K.W. (“K.D.”) DIEPHOLZ, certify that:

1.	I have reviewed this report on Form 10-Q of DYNARESOURCE, INC.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15(e) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusion about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and,

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: May 6 , 2022

/s/ K.W. (“K.D.”) Diepholz

K.W. (“KD”) Diepholz;

Chairman and Chief Executive Officer

EX-31.2

EXHIBIT 31.2   

CHIEF FINANCIAL OFFICER CERTIFICATION

I, K.W. (“K.D.”) DIEPHOLZ, certify that:

1.	I have reviewed this report on Form 10-Q of DYNARESOURCE, INC.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15(e) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusion about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

d) Disclosed in this report any change to the registrant’s internal controls over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controls over financial reporting; and,

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and,

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: May 6, 2022

/s/ K.W. (“K.D.”) Diepholz

K.W. (“KD”) Diepholz;

Chief Financial Officer

EX-31.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Report of DynaResource, Inc. on Form 10-Q for the period ended March 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company. 

/s/ K.W. (“K.D.”) Diepholz

K.W. (“K.D.”) Diepholz

Chairman of the Board of Directors

Dated: May 6, 2022

/s/ K.W. (“K.D.”) Diepholz

K.W. (“K.D.”) Diepholz

Chief Executive Officer

Dated: May 6, 2022

/s/ K.W. (“K.D.”) Diepholz

K.W. (“K.D.”) Diepholz;

Chief Financial Officer

Dated: May 6, 2022

/s/ K.W. (“K.D.”) Diepholz

K.W. (“K.D.”) Diepholz;

Principal Accounting Officer

Dated: May 6, 2022

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

XML

Cover	3 Months Ended
	Mar. 31, 2022 shares
Cover [Abstract]
Entity Registrant Name	DYNARESOURCE, INC.
Entity Central Index Key	0001111741
Document Type	10-Q
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Document Period End Date	Mar. 31, 2022
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2022
Entity Common Stock Shares Outstanding	18,091,293
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	000-30371
Entity Incorporation State Country Code	DE
Entity Tax Identification Number	94-1589426
Entity Address Address Line 1	222 W Las Colinas Blvd
Entity Address Address Line 2	Suite 1910 North Tower
Entity Address City Or Town	Irving
Entity Address State Or Province	TX
Entity Address Postal Zip Code	75039
City Area Code	972
Local Phone Number	868-9066
Entity Interactive Data Current	Yes

XML

CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Current Assets
Cash And Cash Equivalents	$ 15,541,509	$ 15,719,238
Accounts Receivable	1,278,392	577,118
Inventories	2,617,556	2,110,203
Foreign Tax Receivable	5,224,670	4,742,180
Other Current Assets	1,003,751	667,742
Total Current Assets	25,665,878	23,816,481
Mining Equipment And Fixtures (net Of Accumulated Depreciation Of $117,237 And $116,425)	1,917	2,729
Operating Lease	624,864	648,381
Mining Concessions	4,132,678	4,132,678
Other Assets	93,919	162,174
Total Assets	30,519,256	28,762,443
Current Liabilities:
Accounts Payable	1,270,094	1,275,679
Accrued Expenses	4,771,486	5,440,204
Customer Advances	7,875,000	9,250,000
Derivative Liabilities	2,960,208	3,898,914
Convertible Notes Payable - Series I & Ii	543,279	543,279
Installment Notes Payable	1,982,396	1,962,525
Current Portion Of Operating Lease Payable	91,098	98,169
Total Current Liabilities	19,493,561	22,468,770
Operating Lease Payable, Less Current Portion	558,914	587,782
Total Liabilities	20,052,475	23,056,552
Commitments And Contingencies	0	0
Stockholders' Equity (deficit)
Common Stock, $0.01 Par Value, 40,000,000 Shares Authorized 18,091,293 Issued And Outstanding	180,913	180,913
Preferred Rights	40,000	40,000
Additional Paid In Capital	50,632,400	50,632,400
Treasury Stock, 12,180 Shares	(34,773)	(34,773)
Accumulated Other Comprehensive Income	(549,577)	(247,665)
Accumulated Deficit	(45,659,663)	(50,722,465)
Total Stockholders' Equity (deficit)	4,609,301	(151,589)
Total Liabilities And Stockholders' Equity (deficit)	30,519,256	28,762,443
Series D Senior Preferred Stock
Stockholders' Equity (deficit)
Temporary Equity	1,520,000	1,520,000
Preferred Stock Series A
Stockholders' Equity (deficit)
Preferred Stock, Series A, $0.0001 Par Value, 1,000 Shares Authorized, Issued And Outstanding	1	1
Series C Senior Convertible Preferred Stock
Stockholders' Equity (deficit)
Temporary Equity	$ 4,337,480	$ 4,337,480

XML

CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Accumulated Depreciation, Mining Equipment And Fixtures	$ 117,237	$ 116,425
Common Stock, Par Value	$ 0.01	$ 0.01
Common Stock, Shares Authorized	40,000,000	40,000,000
Common Stock, Shares Issued	18,091,293	18,091,293
Common Stock, Shares Outstanding	18,091,293	18,091,293
Treasury Stock	12,180	12,180
Preferred Stock, Par Value	$ 0.0001
Series D Senior Preferred Stock
Preferred Stock, Par Value	$ 0.0001	$ 0.0001
Preferred Stock, Shares Authorized	3,000,000	3,000,000
Preferred Stock, Shares Issued	760,000	760,000
Preferred Stock, Shares Outstanding	760,000	760,000
Preferred Stock Series A
Preferred Stock, Par Value	$ 0.0001	$ 0.0001
Preferred Stock, Shares Authorized	1,000	1,000
Preferred Stock, Shares Issued	1,000	1,000
Preferred Stock, Shares Outstanding	1,000	1,000
Series C Senior Convertible Preferred Stock
Preferred Stock, Par Value	$ 0.0001	$ 0.0001
Preferred Stock, Shares Authorized	1,734,992	1,734,992
Preferred Stock, Shares Issued	1,734,992	1,734,992
Preferred Stock, Shares Outstanding	1,734,992	1,734,992

XML

CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) (Unaudited)
Revenue	$ 10,492,503	$ 4,912,712
Costs And Expenses Of Mining Operation
Production Cost Applicable To Sales	765,495	381,266
Mine Production Costs	1,227,884	806,470
Mine Exploration Costs	878,188	1,012,748
Facilities Expansion Costs	608,603	0
Exploration Drilling	487,615	0
Camp, Warehouse And Facilities	825,203	535,195
Transportation	390,640	238,564
Property Holding Costs	35,967	42,747
General And Administrative	1,026,355	514,977
Depreciation And Amortization	812	812
Total Operating Expenses	6,246,762	3,532,779
Net Operating Income	4,245,741	1,379,933
Other Income (expense)
Foreign Currency Gains (losses)	(2,402)	(333,735)
Interest Expense	(119,769)	(361,222)
Derivatives Mark-to-market Gain	(938,706)	395,267
Other Income (expense)	(526)	0
Total Other Income (expenses)	817,061	(1,090,224)
Net Income Before Taxes	5,062,802	289,709
Provision For Income Taxes	0	0
Net Income	5,062,802	289,709
Deemed Dividend For Series C & D Preferred	(58,575)	(43,375)
Net Income Attributable To Common Stockholders	$ 5,004,227	$ 246,334
Earnings Per Share Attributable To The Equity Holders Of Dynaresource, Inc.
Basic Income Per Common Share	$ 0.28	$ 0.01
Weighted Average Shares Outstanding - Basic	18,091,293	17,722,825
Diluted Income Per Common Share	$ 0.27	$ 0.01
Weighted Average Shares Outstanding - Diluted	18,983,458	17,722,825
Other Comprehensive Income (loss)
Foreign Currency Translation Gain (loss)	$ (301,912)	$ 292,371
Total Other Comprehensive Income (loss)	(301,912)	292,371
Total Comprehensive Income	$ 4,760,890	$ 582,080

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (DEFICIT) (Unaudited) - USD ($)	Total	Series A Preferred Stocks	Common Stock	Preferred Stock	Treasury Stock	Paid In Capital	Other Comp Income	Accumulated Deficit
Balance, Shares at Dec. 31, 2020		1,000	17,722,825	1	516,480
Balance, Amount at Dec. 31, 2020	$ (9,668,660)	$ 1	$ 177,228	$ 40,000	$ (1,474,486)	$ 50,407,333	$ 438,092	$ (59,256,828)
Other Comprehensive Income (loss)	292,371						292,371
Net Income	289,709							289,709
Balance, Shares at Mar. 31, 2021		1,000	17,722,825	1	516,480
Balance, Amount at Mar. 31, 2021	$ (9,086,580)	$ 1	$ 177,228	$ 40,000	$ (1,474,486)	50,407,333	730,463	(58,967,119)
Balance, Shares at Dec. 31, 2021	3,060,998	1,000	18,091,293	1	12,180
Balance, Amount at Dec. 31, 2021	$ (151,589)	$ 1	$ 180,913	$ 40,000	$ (34,773)	50,632,400	(247,665)	(50,722,465)
Other Comprehensive Income (loss)	(301,912)						(301,912)
Net Income	$ 5,062,802							5,062,802
Balance, Shares at Mar. 31, 2022	3,060,998	1,000	18,091,293	1	12,180
Balance, Amount at Mar. 31, 2022	$ 4,609,301	$ 1	$ 180,913	$ 40,000	$ (34,773)	$ 50,632,400	$ (549,577)	$ (45,659,663)

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Cash Flows From Operating Activites:
Net Income	$ 5,062,802	$ 289,709
Adjustments To Reconcile Net Income To Cash Used In Operating Activities
Change In Derivatives	(938,706)	395,267
Depreciation And Amortization	812	812
Amortization Of Loan Discount	0	137,312
Change In Operating Assets And Liabilities
Accounts Receivable	(701,274)	(477,044)
Inventories	(507,353)	(655,877)
Foreign Tax Receivable	(482,490)	(372,404)
Operating Lease Assets	23,517	20,904
Other Assets	(267,754)	(84,845)
Accounts Payable	(5,585)	(332,949)
Accrued Expenses	(668,718)	362,485
Customer Advances	(1,375,000)	3,750,000
Lease Liabilities	(35,939)	(29,045)
Cash Flows Provided By (used In) Operating Activities	104,312	3,004,325
Cash Flows From Financing Activities:
Payments Of Notes Payable	(36,165)	(17,291)
Cash Flows Provided By (used In) Financing Activities	(36,165)	(17,291)
Effects Of Foreign Exchange	(245,876)	238,203
Net Increase (decrease) In Cash And Cash Equivalents	(177,729)	3,225,460
Cash And Cash Equivalents At Beginning Of Period	15,719,238	1,504,016
Cash And Cash Equivalents At End Of Period	15,541,509	4,729,253
Supplemental Disclosures
Cash Paid For Interest	25,162	140,799
Cash Paid For Income Taxes	$ 0	$ 0

XML

NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2022

NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES

Nature Of Activities And Significant Accounting Policies

NOTE 1 – NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Activities, History and Organization

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

In 2000, the Company formed a wholly owned subsidiary, DynaResource de México S.A. de C.V., chartered in México (“DynaMéxico”). This Company was formed to acquire, invest in and develop resource properties in México. DynaMéxico owns a portfolio of mining concessions that currently includes its interests in the San José de Gracía Project (“SJG”) in northern Sinaloa State, México. The SJG District covers 9,920 hectares (24,513 acres) on the west side of the Sierra Madre mountain range. The Company currently owns 100% of the outstanding capital of DynaMéxico. A 20% minority interest in Dyna México was held by Goldgroup Resources Inc., a wholly owned subsidiary of Goldgroup Mining Inc. Vancouver BC (“Goldgroup”) until February 24, 2020.

In 2005, the Company formed DynaResource Operaciones de San Jose De Gracía S.A. de C.V. (“DynaOperaciones”), and acquired control of Mineras de DynaResource, S.A. de C.V. (formerly Minera Finesterre S.A. de C.V., “DynaMineras”). The Company owns 100% of Dyna Mineras.

The Company elected to become a voluntary reporting issuer in Canada in order to avail itself of Canadian regulations regarding reporting for mining properties and, more specifically, National Instrument 43-101 (“NI 43-101”). This regulation sets forth standards for reporting resources in a mineral property and is a standard recognized in the mining industry.

Significant Accounting Policies

The 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 financial statements.

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

Basis of Presentation

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

Principles of Consolidation

The unaudited consolidated financial statements include the accounts of DynaResource, Inc., as well as DynaResource de México, S.A. de C.V. (100% ownership), DynaResource Operaciones S.A. de C.V. (100% ownership) and Mineras de DynaResource S.A. de C.V. (100% ownership). All significant inter-company transactions have been eliminated. All amounts are presented in U.S. Dollars unless otherwise stated.

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 March 31, 2022, the Company had $14,140,366 of deposits in U.S. Banks in excess of the FDIC limit. Management does not believe that the Company is at risk of loss on cash.

Accounts Receivable and Allowances for Doubtful Accounts

The allowance for accounts receivable is recorded when receivables are considered to be doubtful of collection. As of March 31, 2022, and December 31, 2021, respectively, no allowance has been deemed necessary.

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 remitted. The total amounts of the IVA receivable as of March 31, 2022, and December 31, 2021 are $5,224,670 and $4,742,180, respectively.

Inventory

Inventories are carried at the lower of cost or net realizable value and consist of mined tonnage, and gravity and flotation concentrates, and gravity tailings or flotation feed material. The inventories are $2,617,556 and $2,110,203 as of March 31, 2022, and December 31, 2021, respectively.

Proven and Probable Reserves (No Known Reserves)

The definition of proven and probable reserves is set forth in SEC Industry Guide 7 (“Industry Guide 7”). Proven reserves for which (1) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes, grade and/or quality are computed from the results of detailed sampling and (2) the sites for inspection, sampling and measurement are spaced so closely and the geological character is so well defined that size, shape, depth and mineral content of the reserves are well-established. Probable reserves are reserves for which quantity and grade and/or quality are computed from information similar to that used for proven (measured) reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven (measured) reserves, is high enough to assume continuity between points of observations.

As of March 31, 2022, the Company’s properties do not contain resources that satisfy the definition of proven and probable reserves. Therefore the Company classifies the development of its properties, including the San Jose de Gracía Property, as exploration stage projects since no proven or probable reserves have been established under Industry Guide 7.

Property

Substantially all mine development costs, including design, engineering, mine construction, and installation of equipment are expensed as incurred as the Company has not established proven and probable reserves on any of its properties. Only certain types of mining equipment which has alternative uses or significant salvage value, may be capitalized without proven and probable reserves. Depreciation is computed using the straight-line method. Office furniture and equipment are being depreciated on a straight-line method over estimated economic lives ranging from 3 to 5 years. Leasehold improvements, which relate to the Company’s corporate office, are being amortized over the term of the lease of 10 years.

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

When proven and probable reserves as defined by Industry Guide 7 exist, development costs are capitalized, and the property is a commercially minable property. Mine development costs incurred either to develop new ore deposits, expand the capacity of operating mines, or to develop mine areas substantially in advance of current production would be capitalized. Costs of start-up activities and costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations as incurred. Costs of abandoned projects are charged to operations upon abandonment. All capitalized costs would be amortized using the units of production method over the estimated life of the ore body based on recoverable ounces to be mined from proven and probable reserves.

Certain costs to design and construct mining and processing facilities may be incurred prior to establishing proven and probable reserves. As no proven and probable reserves have been established on any of the Company’s properties, design, construction and development costs are not capitalized at any of the Company’s properties, and accordingly, substantially all costs are expensed as incurred, resulting in the Company reporting larger losses than if such expenditures had been capitalized. Additionally, the Company does not have a corresponding depreciation or amortization of these costs going forward since these expenditures were expensed as incurred as opposed to being capitalized. As a result of these and other differences, the Company’s financial statements may not be comparable to the financial statements of mining companies that have established reserves.

Mineral Properties Interests

Mineral property interests include acquired interests in development and exploration stage properties, which are considered tangible assets. The amount capitalized relating to a mineral property interest represents its fair value at the time of acquisition. When a property does not contain mineralized material that satisfies the definition of proven and probable reserves, such as with the San Jose de Gracía Property, capitalized costs and mineral property interests are amortized using the straight-line method once production begins. As of March 31, 2022, the mining interests have been in the pilot production stage and therefore, no amortization has been expensed. Mining properties consist of 33 mining concessions covering approximately 9,920 hectares at the San Jose de Gracía property (“SJG”), the basis of which are amortized on the unit of production method based on estimated recoverable resources. If it is determined that the deferred costs related to a property are not recoverable over its productive life, those costs will be written down to fair value as a charge to operations in the period in which the determination is made. The amounts at which mineral properties and the related costs are recorded do not necessarily reflect present or future values.

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

For operating mines, recoverability is measured by comparing the undiscounted future net cash flows to the net book value. When the net book value exceeds future net undiscounted cash flows, an impairment loss is measured and recorded based on the excess of the net book value over fair value. Fair value for operating mines is determined using a combined approach, which uses a discounted cash flow model for the existing operations and a market approach for the fair value assessment of exploration land claims. Future cash flows are estimated based on quantities of recoverable mineralized material, expected gold and silver prices (considering current and historical prices, trends and related factors), production levels, operating costs, capital requirements and reclamation costs, all based on life-of-mine plans. The term “recoverable mineralized material” refers to the estimated amount of gold or other commodities that will be obtained after considering losses during processing and treatment of mineralized material. In estimating future cash flows, assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of future cash flows from other asset groups. The Company’s estimates of future cash flows are based on numerous assumptions and it is possible that actual future cash flows will be significantly different than the estimates, as actual future quantities of recoverable minerals, gold, silver and other commodity prices, production levels and costs and capital are each subject to significant risks and uncertainties.

The recoverability of the book value of each property 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, and at least annually. As of the date of this filing, no events have occurred that would require write- down of any assets. As of March 31, 2022 and December 31, 2021, no indications of impairment existed.

Asset Retirement Obligation

As the Company is not obligated to remediate the mining properties, no Asset Retirement Obligation (“ARO”) has been established. Changes in regulations or laws, any instances of non-compliance with laws or regulations that result in fines, or any unforeseen environmental contamination could result in a material impact to the amounts charged to operations for reclamation and remediation. Significant judgments and estimates are made when estimating the fair value of AROs. Expected cash flows relating to AROs could occur over long periods of time and the assessment of the extent of environmental remediation work is highly subjective. Considering all of these factors that go into the determination of an ARO, the fair value of the AROs can materially change over time.

Property Holding Costs

Holding costs to maintain a property on a care and maintenance basis are expensed in the period they are incurred. These costs include security and maintenance expenses, lease and claim fees and payments, and environmental monitoring and reporting costs.

Exploration Costs

Exploration costs are charged to operations and expenses as incurred. Exploration, development, direct field costs and administrative costs are expensed in the period incurred.

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) yearend exchange rates for balance sheet accounts, and (ii) the weighted average exchange rate of the reporting period for all income statement accounts. Foreign currency translation gains and losses are reported as a separate component of stockholders’ equity and comprehensive income (loss).

The 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 March 31, 2022, and December 31, 2021 (Mexican Pesos per one U.S. dollar):

	Mar 31, 2022		Dec 31, 2021
Exchange Rate at Period End Pesos		19.91		20.48

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 March 31, 2022, and March 31, 2021 (Mexican Pesos per one U.S. dollar):

	Mar. 31, 2022		Mar. 31, 2021
Weighted Average Exchange Rate for the three Months Ended Pesos		20.50		20.45

The Company recorded currency transaction gains (losses) of $(2,402) and $(333,735) for the three months ended March 31, 2022 and 2021, 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 at applicable Mexican tax law.

Use of Estimates

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

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 financial statements. The Company’s comprehensive income consists of net income and other comprehensive income (loss), consisting of unrealized net gains and losses on the translation of the assets and liabilities of its foreign operations.

Revenue Recognition

The Company follows ASC 606 “Revenue from contracts with customers”. The Company generates revenue by selling gold and silver 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 to direct the use of and obtain substantially all the remaining benefits from the material and the customer has the risk of loss.

The amount of revenue recognized is initially recorded on a provisional basis based on the contract price and the estimated metal quantities based on assay data. The revenue is adjusted upon final settlement of the sale. The chief risk associated with the recognition of sales on a provisional basis is the fluctuations between the estimated quantities of precious metals base on the initial assay and the actual recovery from treatment and processing.

As of March 31, 2022, there are $7,875,000 in customer deposit liabilities for payments received in advance expected to be settled in 2022.

During the quarter ended March 31, 2022, and the year ended December 31, 2021, there was $9,250,000 and $1,500,000 of revenue recognized during the period from customer deposit liabilities (deferred contract revenue) from prior periods, and $0 of customer deposits refunded to the customer due to order cancellation.

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

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash, receivables, payables and long-term debt. The carrying amount of cash, receivable and payables approximates fair value because of the short-term nature of these items. The carrying amount of long-term debt approximates fair value due to the relationship between the interest rate on long-term debt and the Company’s incremental risk adjusted borrowing rate.

Per Share Amounts

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

The Company had 3,060,998 warrants outstanding at March 31, 2022 which upon exercise, would result in the issuance of 3,060,998 shares of common stock. Of these warrants 2,168,833 were exercisable at $2.04 per share and 892,165 were exercisable at $.01 per share. The Company also had convertible debt instruments as of March 31, 2022 which, upon conversion at valuations of $2.50 per share, would result in the issuance of 217,312 shares of stock.

The Company had 3,060,998 warrants outstanding at December 31, 2021 which upon exercise, would result in the issuance of 3,060,998 shares of common stock. Of these warrants 2,168,833 were exercisable at $2.04 per share and 892,615 were exercisable at $.01 per share. The Company also had convertible debt instruments as of December 31, 2021 which, upon conversion at valuations of $2.50 per share, would result in the issuance of 217,312 shares of stock.

	Three Months Ended March 31, 2022		Three Months Ended March 31, 2021
Net income (loss) attributable to common shareholders	$	5,004,227	$	246,334
Weighted average number of common shares outstanding, Basic		18,091,293		17,722,825
Diluted weighted average number of common shares outstanding,		18,983,458		17,722,825
Basic earnings (loss) per share	$	0.28	$	0.01
Diluted earnings (loss) per share	$	0.27	$	0.01

At March 31, 2022, 2,168,833 shares of potentially dilutive common stock related to outstanding stock warrants and 217,312 shares of potentially dilutive common stock related to convertible debt were excluded from the diluted earnings per share calculation because the exercise and conversion prices exceeded the average stock price and therefore their effect would be anti-dilutive.

At March 31, 2021, 2,168,833 shares of potentially dilutive common stock related to outstanding stock warrants and 2,227,312 shares of potentially dilutive common stock related to convertible debt were excluded from the diluted earnings per share calculation because the exercise and conversion prices exceeded the average stock price and therefore their effect would be anti-dilutive. In addition, at March 31, 2021, 1,260,633 of potentially dilutive common stock related to outstanding stock warrants were excluded from the diluted earnings per share calculation because the ratio of expenses related to the shares to issuable shares exceeded the basic earnings per share and therefore their effect 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 is also a related party.

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INVENTORIES

3 Months Ended

Mar. 31, 2022

INVENTORIES

Inventories

NOTE 2 – INVENTORIES

Inventories are carried at the lower of cost or fair value and consist of mined tonnage, gravity-flotation concentrates, and gravity tailings (or, flotation feed material). Inventory balances of March 31, 2022, and December 31, 2021, respectively, were as follows:

	2022		2021
Mined Tonnage	$	2,520,239	$	2,042,633
Gold-Silver Concentrates		97,317		67,570
Total Inventories	$	2,617,556	$	2,110,203

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PROPERTY

3 Months Ended

Mar. 31, 2022

PROPERTY

Property

NOTE 3 – PROPERTY

Property consists of the following at March 31, 2022 and December 31, 2021:

	2022			2021
Leasehold improvements	$	9,340		$	9,340
Office equipment		31,012			31,012
Office furniture and fixtures		78,802			78,802
Sub-total		119,154			119,154
Less: Accumulated depreciation		(117,237	)		(116,425	)
Total Property	$	1,917		$	2,729

Depreciation and amortization has been provided over each asset’s estimated useful life. Depreciation and amortization expense was $812 and $812 for the three months ended March 31, 2022 and 2021 respectively.

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MINING CONCESSIONS

3 Months Ended

Mar. 31, 2022

MINING CONCESSIONS

Mining Concessions

NOTE 4 – MINING CONCESSIONS

Mining properties consist of the San Jose de Gracía (“SJG”) concessions. Mining Concessions were $4,132,678 and $4,132,678 at March 31, 2022 and December 31, 2021, respectively. There was no depletion expense during the three months ended March 31, 2022 and 2021.

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CONVERTIBLE PROMISSORY NOTES

3 Months Ended

Mar. 31, 2022

CONVERTIBLE PROMISSORY NOTES

Convertible Promissory Notes

NOTE 5 – CONVERTIBLE PROMISSORY NOTES

Notes Payable – Series I

In April and May 2013, the Company entered into note agreements with shareholders in the principal amount of $1,495,000, of which $340,000 was then converted to preferred shares within the same year, netting proceeds of $1,155,000 (the “Series I Notes”). The Series I Notes bear simple interest at twelve and a half percent (12.5%), accrued for twelve months, and with the accrued interest to be added to the principal, and then interest will be paid by the Company, quarterly in arrears.

The Notes originally matured on December 31, 2015. As of December 31, 2018, seven of the Series I Notes totaling $646,875 had subsequently been extended to December 30, 2019. On December 31, 2019, the Company entered into agreements to extend seven outstanding notes totaling $646,875 plus accrued interest totaling $34,277 for new total notes of $681,152 until December 31, 2020.

On March 31, 2020, the Company entered into agreements to extend the seven outstanding notes totaling $691,152 plus accrued interest totaling $21,286 for a new total of $702,438 until June 30, 2022. At December 31, 2020 one note for $246,533 was paid off leaving six Series I Notes remaining outstanding with a total balance of $455,905.

As of March 31, 2022 and December 31, 2021, six Series I Notes remained outstanding with a total balance of $455,905. The Company has the right to prepay the Series I Notes with a ten percent (10%) penalty.

The Series I Note holder retains the option, at any time prior to maturity or prepayment, to convert any unpaid principal and accrued interest into Common Stock at $2.50 per share. If the Series I Note is converted into Common Stock, at the time of conversion, the holder would also receive warrants, in the same number as the number of common shares received upon conversion, to purchase additional common shares of the Company for $7.50 per share, with such warrants expiring one year from their conversion date.

Notes Payable – Series II

In 2013 and 2014, the Company entered into additional note agreements of $199,808 and $250,000, respectively (the “Series II Notes”) with similar terms as the Series I Notes. The Series II Notes bear simple interest at twelve and a half percent (12.5%), accrued for twelve months, and with the accrued interest to be added to the principal, and then interest will be paid by the Company, quarterly in arrears

The Notes originally matured on December 31, 2015. On December 31, 2019 the Company entered into agreements to extend the two notes totaling $78,750 plus accrued interest of $5,977 for total new notes of $84,757 to December 31, 2020. One note for $112,500 was not extended and was past due as of December 31, 2019. At December 31, 2019 three Series II notes remained outstanding for $197,226.

On March 31, 2020, the Company entered into agreements to extend the two notes totaling $84,726 plus accrued interest of $2,648 for total new notes of $87,374 to June 30, 2022. One note for $112,500 was not extended and was paid off in May 2020. At December 31, 2020, two Series II notes remained outstanding for $87,374.

As of March 31, 2022 and December 31, 2021, two Series II notes remained outstanding with a balance of $87,374. The Company has the right to prepay the Series II Notes with a ten percent (10%) penalty.

The Note holder may, at any time prior to maturity or prepayment, convert any unpaid principal and accrued interest into common stock of the Company at $2.50 per share. At the time of conversion, the holder would receive a warrant to purchase additional common shares of the Company for $7.50 per share, such warrant expiring one year from their conversion date.

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INCOME TAXES

3 Months Ended

Mar. 31, 2022

INCOME TAXES

Income Taxes

NOTE 6 – INCOME TAXES

The Company has adopted ASC 740-10, “ Income Taxes”, which requires the use of the liability method in the computation of income tax expense and the current and deferred income taxes payable (deferred tax liability) or benefit (deferred tax asset). Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

The Company’s effective tax rate for the period ended March 31, 2022 and for the period ended March 31, 2021 varies from the statutory rate of 21% due to valuation allowance which creates a near zero effective tax rate. The Company intends to continue maintaining a full valuation allowance on our deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of the valuation allowance. However, given our current earnings and anticipated future earnings, it is reasonably possible that in the near future sufficient positive evidence may become available to support the conclusion that no valuation allowance is necessary.

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STOCKHOLDERS EQUITY

3 Months Ended

Mar. 31, 2022

STOCKHOLDERS EQUITY

Stockholders Equity

NOTE 7– STOCKHOLDERS’ EQUITY

Authorized Capital. The total number of shares of all classes of capital stock which the corporation shall have the authority to issue is 60,001,000 shares, consisting of (i) twenty million and one thousand (20,001,000) shares of Preferred Stock, par value $0.0001 per share (“Preferred Stock”), of which 1,000 shares shall be designated as Series A Preferred Stock, 1,734,992 are designated as Series C Preferred Stock, and 3,000,000 shares are designated as Series D Preferred Stock and (ii) forty million (40,000,000) shares of Common Stock, par value $0.01 per share (“Common Stock”). As of March 31, 2022, 15,265,008 shares of Preferred Stock remain undesignated.

Series A Preferred Stock

The Company has designated 1,000 shares of its Preferred Stock as Series A, having a par value of $0.0001 per share. Holders of the Series A Preferred Stock have the right to elect a majority of the Board of Directors of the Company. The Company issued 1,000 shares of Series A Preferred Stock to its CEO. At March 31, 2022 and December 31, 2021, there were 1,000 shares of Series A Preferred Stock outstanding.

Series C Senior Convertible Preferred Stock

At March 31, 2022 and December 31, 2021 there were 1,734,992 and 1,734,992 Series C Preferred shares outstanding. These Series C Preferred Shares are convertible to common shares at $2.04 per share, through June 30, 2022 and include anti-dilution protection. The Series C Preferred Shares may receive a 4% per annum dividend, payable if available, and in arrears. The Dividend is calculated at 4.0% of $4,337,480 payable annually on June 30. At March 31, 2022 dividends for the years 2016 to 2021 totaling $880,278 were in arrears.

Due to the nature of this transaction as mandatorily redeemable, the Series C preferred shares are classified as “temporary equity” on the balance sheet.

Series D Senior Convertible Preferred Stock

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

On May 14, 2020, the Company closed an additional financing agreement with Golden Post, and with certain individual shareholders of DynaUSA (“DynaUSA Shareholders”), and related agreements. A summary of the transactions and related agreements are set forth below:

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

· Golden Post acquired the following securities:

(a)

A convertible promissory note (the “Golden Post Note”) payable to Golden Post in the principal amount of $2,500,000, bearing interest at 10%, and maturing two years from the date of execution. One half of the principal amount of the Golden Post Note, or $1,250,000, has been fully funded in accordance with an agreed-upon draw summary and budget. The balance of the principal amount will also be funded in accordance with agreed-upon draw summaries and the budget. The Golden Post Note is convertible, at the option of Golden Post, into shares of Series D Senior Convertible Preferred Stock (the “Series D Preferred”) at a conversion price of $2.00 per share; and

(b)

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

· The Remaining Purchasers acquired the following securities:

(a)	Convertible promissory notes (the “Remaining Notes”) in the aggregate principal amount of $1,400,000, bearing interest at 10%, and maturing two years from the date of issuance. The Remaining Notes have been fully funded. The Remaining Notes are convertible, at the option of each individual Remaining Purchaser, into shares of Series D Preferred at a conversion price of $2.00 per share; and
(b)	Common stock purchase warrants (the “Remaining Purchasers Warrants”) for the purchase of an aggregate of 439,026 shares of the Company’s common stock, at an exercise price of $0.01 per share, and maturing on the 10-year anniversary of the date of issuance. The Remaining Purchasers Warrants contain anti-dilution provisions.

2. Also pursuant to the NPA, the Company and the Lead Purchaser have agreed to amend the common stock purchase warrant dated June 30, 2015 (the “2015 Warrant”), issued to the Lead Purchaser in connection with that certain Securities Purchase Agreement dated as of May 6, 2015. The 2015 Warrant contemplates the purchase, upon exercise, of 2,166,527 shares (subject to adjustment) of the Company’s common stock and matured June 30, 2020 (the “Termination Date”). The amendment to the 2015 Warrant provides that, following the expiration of the 2015 Warrant pursuant to its terms, the Company will issue to the Lead Purchaser a new warrant (the “New Warrant”), substantially in the same form of the 2015 Warrant, for the number of shares of the Company’s common stock that went unexercised on the Termination Date, if any. The New Warrant has a maturity date of June 30, 2022.

3.	As part of the transaction contemplated by the NPA, the Company executed an Amended and Restated Registration Rights Agreement pursuant to which Golden Post may require the Company to register the shares of common stock which may be issued upon (i) the conversion of the Series C Senior Convertible Preferred Stock (“Series C Preferred”), (ii) the conversion of the Series D Preferred, and (iii) the shares of common stock issuable upon the exercise of the 2015 Warrant, the 2020 Warrant, and a compensatory warrant issued to the Lead Purchaser on May 13, 2020 (described below under the heading “Compensatory Issuances”), including any additional shares of common stock issuable pursuant to anti-dilution provisions of such securities.
4.	Pursuant to the transaction contemplated by the NPA, the Company agreed to call a special meeting of Company stockholders, to be held not later than July 14, 2020, to solicit stockholder approval of (a) an amendment of the Company’s certificate of incorporation to increase the number of authorized shares of common stock from 25,000,000 shares to 40,000,000 shares, and (b) an amendment of the Certificate of Designations of the Series C Preferred, in order to (a) extend the maturity date of the Series C Preferred by an additional two (2) years, (ii) add an equity cap in respect of the conversion of Series C Preferred into common stock of the Company, and (iii) add certain restrictions on the ability of the Company to issue Series C Preferred. The special meeting was properly called and held on July 13, 2020, whereby Company stockholders confirmed approval for each item referenced in item 4 above
5.	Compensatory Issuances. On May 13, 2020, one business day prior to the NPA, the Company issued to the Lead Purchaser the following: (i) a common stock purchase warrant for 2,306 shares, at an exercise price of $0.01 per share, and maturing on the 7-year anniversary of the date of issuance (the “Compensatory Warrant”); and (ii) 1,771 shares of Series C Preferred Shares. These issuances were occasioned by the Company’s obligations under the Securities Purchase Agreement dated as of May 6, 2015.
6.	In order to accommodate the issuance of the additional 1,771 shares of Series C Preferred, on May 13, 2020 the Company filed with the Secretary of State of Delaware a Certificate of Increase of Series C Senior Convertible Preferred Stock, to increase the number of shares of preferred stock designated as Series C Preferred from 1,733,221 shares to 1,734,992 shares (“Certificate of Increase”).

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

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

Retirement of Series D Convertible Debt

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

The remaining ten noteholders of notes convertible into Series D Preferred Stock elected to convert their notes totaling $1,520,000 into Series D Preferred stock at $2.00 per share. On October 18, 2021 the Company issued 760,000 shares of Series D Preferred Stock for these notes.

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

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

At March 31, 2022 and December 31, 2021, there were 760,000 and 760,000 Series D Preferred shares outstanding, respectively. These Series D Preferred Shares are convertible to common shares at $2.00 per share, through October 18, 2026. The Series D Preferred Shares may receive a 4% per annum dividend, payable if available, and in arrears. The Dividend is calculated at 4.0% of $1,520,000 payable annually on October 18. At March 31, 2022, no dividends were in arrears.

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

The sale of the Golden Post Note, the Remaining Notes, the 2020 Warrant, the Remaining Purchasers Warrants, the Compensatory Warrant, and the Series C Preferred was made pursuant to a privately negotiated transaction that did not involve a public offering of securities and, accordingly, the Company believes that the transaction was exempt from the registration requirements of the Securities Act pursuant to Section 4(a)(2) thereof. Each investor represented that it (A) is an “accredited investor” and (B) has such knowledge and experience in financial and business matters that the investor is capable of evaluating the merits and risks of acquiring the securities acquired by such investor. All of the foregoing securities are deemed restricted securities for purposes of the Securities Act.

Due to underlying anti-dilutive provisions contained in the Series C Preferred Shares and the Golden Post Warrant, the Company incurred derivative liabilities. On May 14, 2020 in connection with the Series D Convertible Note financing, the expiration date for the Series C Preferred Shares and the Golden Post warrants were extended to June 30, 2022. In addition, a new derivative liability was incurred due to the issuance of warrants for kicker shares. At March 31, 2022, the total derivative liability was $2,960,208 which included $554,695 for the Series C Preferred Shares, and $714,706 in connection with the Golden Post Warrants and $1,690,807 in connection with the Series D Convertible Note Kicker Warrants. At December 31, 2021 the total derivative liability was $3,898,914 which included $1,019,431 for the Series C Preferred Shares, and $1,320,380 in connection with the Golden Post Warrants and $1,559,103 in connection with the Series D Convertible Note Kicker Warrants. The deemed dividend for the quarters ending March 31, 2022, and March 31, 2021 were $58,575 and $43,375, respectively. As the Company has not declared these dividends, it is required only as an item “below” the net income (loss) amount on the accompanying consolidated statements of income (loss).

Preferred Stock (Undesignated)

In addition to the 1,000 shares designated as Series A Preferred Stock and the 1,734,992 shares designated as Series C Preferred Shares and the 3,000,000 shares designated as Series D Preferred Stock, the Company is authorized to issue an additional 15,265,008 shares of Preferred Stock, having a par value of $0.0001 per share. The Board of Directors of the Company has authority to issue the Preferred Stock from time to time in one or more series, and with respect to each series of the Preferred Stock, to fix and state by the resolution the terms attached to the Preferred Stock. At March 31, 2022 and December 31, 2021, there were no other shares of Preferred Stock outstanding.

Separate Series; Increase or Decrease in Authorized Shares. The shares of each series of Preferred Stock may vary from the shares of any other series thereof in any or all of the foregoing respects and in any other manner. The Board of Directors may increase the number of shares of Preferred Stock designated for any existing series by a resolution adding to such series authorized and unissued shares of Preferred Stock not designated for any other series. Unless otherwise provided in the Preferred Stock Designation, the Board of Directors may decrease the number of shares of Preferred Stock designated for any existing series by a resolution subtracting from such series authorized and unissued shares of Preferred Stock designated for such existing series, and the shares so subtracted shall become authorized, unissued and undesignated shares of Preferred Stock.

Common Stock

The Company is authorized to issue 40,000,000 common shares at a par value of $0.01 per share. These shares have full voting rights. At March 31, 2022 and December 31, 2021, there were 18,091,293 and 18,091,293 shares outstanding, respectively. No dividends were paid for the periods ended March 31, 2022 and 2021, respectively.

Preferred Rights

The Company issued “Preferred Rights” for the rights to percentages of revenues generated from the San Jose de Gracía Pilot Production Plant and received $784,500 for these rights. This has been reflected as “Preferred Rights” in stockholders’ equity. As of March 31, 2022, $744,500 had been repaid, leaving a current balance of $40,000 and $40,000 as of March 31, 2022 and December 31, 2021, respectively

Stock Issuances

There were no issuances of common stock during the period ended March 31, 2022.

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

Treasury Stock 

During the three months ended March 31, 2022 no treasury stock was issued.

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

Outstanding treasury shares total 12,180 and 12,180 at March 31, 2022 and December 31, 2021, respectively.

Warrants

2022 activity

The Company had 3,060,998 warrants outstanding at March 31, 2022. There were no warrants issued or exercised and no warrants expired during the three months ended March 31, 200

2021 activity

The Company had 3,060,998 warrants outstanding at December 31, 2021. On October 18, 2021, five warrant holders exercised a total of 368,468 warrant to purchase 368,468 shares of common stock for $0.01 a share.

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

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Intrinsic Value
Balance at December 31, 2021		3,429,466	$	1.30		4.40
Granted		-	$	-
Exercised		368,468	$	0.01
Forfeited		-	$	-
Balance at December 31, 2021		3,060,998	$	1.46		2.79
Granted		-	$	-				-
Exercised		-	$	-
Forfeited		-	$	-				-
Balance at March 31, 2022		3,060,998	$	1.46		2.55
Exercisable at March 31, 2022		3,060,998	$	1.46		2.55		-

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RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2022

RELATED PARTY TRANSACTIONS

Related Party Transactions

NOTE 8 – RELATED PARTY TRANSACTIONS

Dynacap Group Ltd.

The Company paid $43,750 and $33,750 to Dynacap Group, Ltd. (“Dynacap”, an entity controlled by the CEO of the Company) for consulting and other fees during the periods ended March 31, 2022, and 2021, respectively.

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2022

COMMITMENTS AND CONTINGENCIES

Commitments And Contingencies

NOTE 9 – COMMITMENTS AND CONTINGENCIES

Concession Taxes

The Company is required to pay taxes in México in order to maintain mining concessions owned by DynaMéxico. Additionally, the Company is required to incur a minimum amount of expenditures each year for all concessions held. The minimum expenditures are calculated based upon the land area, as well as the age of the concessions. Amounts spent in excess of the minimum may be carried forward indefinitely over the life of the concessions and are adjusted annually for inflation. Based on Management’s recent business activities and current and forward plans and considering expenditures on mining concessions since 2002-2017 and continuing expenditures in current and forward activities, the Company does not anticipate that DynaMéxico will have any difficulties meeting the minimum annual expenditures for the concessions ($388 – $2,400 Mexican Pesos per hectare). DynaMéxico retains sufficient carry- forward amounts to cover over 10 years of the minimum expenditure (as calculated at the 2017 minimum, adjusted for annual inflation of 4%).

Leases

In addition to the surface rights held by DynaMéxico pursuant to the Mining Act of México and its Regulations (Ley Minera y su Reglamento), DynaMineras maintains access and surface rights to the SJG Project pursuant to the 20-year Land Lease Agreement. The 20 Year Land Lease Agreement with the Santa Maria Ejido Community surrounding San Jose de Gracía was dated January 6, 2014 and continues through January 2033. It covers an area of 4,399 hectares surrounding the main mineral resource areas of SJG . It covers an area of 4,399 hectares surrounding the main mineral resource areas of SJG and provides for annual lease payments on January 1^st each year by DynaMineras of $1,359,443 pesos adjusted for inflation based on the Mexico minimum wage increase commencing in 2014. Rent was $3,015,112 Pesos (approx. $149,000 USD) for the year ended December 31, 2021. The Land Lease Agreement provides DynaMineras with surface access to the core resource areas of SJG (4,399 hectares), and allows for all permitted mining and exploration activities from the owners of the surface rights (Santa Maria Ejido community).

The Company leases office space for its corporate headquarters in Irving, Texas. In September 2017, the Company entered into a sixty-six-month extension of the lease through January 2023. As part of the agreement the Company received six months free rent as a finish out allowance. The Company capitalized the leasehold improvement costs and amortized them over the rent abatement period as rent expense. The Company makes tiered lease payments on the 1st of each month.

Effective January 1, 2019, the Company adopted ASC 842, which requires recognition of a right-of-use asset and lease liability for all leases at the commencement date based on the present value of lease payments over the lease term. Additional qualitative and quantitative disclosures regarding the Company’s leasing arrangements are also required. The Company adopted ASC 842 prospectively and elected the package of transition practical expedients that does not require reassessment of (1) whether any existing or expired contracts are or contain leases, (2) lease classification and (3) initial direct costs. In addition, the Company has elected other available practical expedients to not separate lease and non-lease components, which consist principally of common area maintenance charges, for all classes of underlying assets and to exclude leases with an initial term of 12 months or less.

The Company determines if a contract is or contains a lease at inception. As of March 31, 2022, the Company has two operating leases - a six and one-half year lease for office space with a remaining term of eighteen months and a twenty-year ground lease in association with its México mining operations with a remaining term of thirteen years. Variable lease costs consist primarily of variable common area maintenance, storage parking and utilities. The Company’s leases do not have any residual value guarantees or restrictive covenants.

As the implicit rate is not readily determinable for most of the Company’s lease agreements, the Company uses an estimated incremental borrowing rate to determine the initial present value of lease payments. These discount rates for leases are calculated using the Company’s interest rate of promissory notes.

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

	Period Ended
	March 31, 2022
Operating Lease – Office Lease	$	21,823
Operating Lease – Ground Lease		22,834
Short Term Lease Costs		4,381
Variable Lease Costs		-
TOTAL	$	49,038
Weighted average remaining lease term and weighted average discount rate are as follows:
Weighted Average Remaining Lease Term (Years) – Operating Leases		10.12
Weighted Average Discount Rate – Operating Leases		12.50	%
Estimated future minimum lease obligations are as follow for the years ending March 31:
YEAR
2022	$	164,979
2023		94,074
2024		96,896
2025		99,803
2026		102,797
Thereafter		684,885
Total	$	1,243,434
Less Imputed Interest		(593,422	)
OPERATING LEASE PAYABLE	$	650,012

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DERIVATIVE LIABILITIES

3 Months Ended

Mar. 31, 2022

DERIVATIVE LIABILITIES

Derivative Liabilities

NOTE 10 – DERIVATIVE LIABILITIES

Preferred Series C Stock

As discussed in Note 7, the Company analyzed the embedded conversion features of the Series C Preferred Stock and determined that the stock qualified as a derivative liability and is required to be bifurcated and accounted for as such since the host and the embedded instrument are not clearly and closely related. The Company performed a valuation of the conversion feature. In performing the valuation, the Company applied the guidance in ASC 820, “Fair Value Measurements”, to nonfinancial assets and liabilities that are recognized or disclosed at fair value on a nonrecurring basis. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). To measure fair value, the Company incorporates assumptions that market participants would use in pricing the asset or liability and utilizes market data to the maximum extent possible.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

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

	2022			2021
Annual volatility rate		102	%		147	%
Risk free rate		2.28	%		0.73	%
Remaining Term	0.25 years			0.50 years
Fair Value of common stock	$	1.90		$	1.75

For the three and twelve months ended March 31, 2022 and December 31, 2021, an active market for the Company’s common stock did not exist. Accordingly, the fair value of the Company’s common stock was estimated using a valuation model with level 3 inputs.

The below table represents the change in the fair value of the derivative liability during the three and twelve months ended March 31, 2022 and December 31, 2021.

Period Ended	2022			2021
Fair value of derivative (stock), beginning of period	$	1,019,431		$	601,313
Change in fair value of derivative		(464,736	)		418,118
Fair value of derivative on the date of issuance		-			-
Fair value of derivative (stock), end of period	$	554,695		$	1,019,431

Preferred Series C Warrants

As discussed in Note 7, the Company analyzed the embedded conversion features of the Series C Preferred Stock and determined that the Warrants qualified as a derivative liability and are required to be bifurcated and accounted for as such since the host and the embedded instrument are not clearly and closely related. The Company performed a valuation of the conversion feature. In performing the valuation, the Company applied the guidance in ASC 820, “Fair Value Measurements”, to nonfinancial assets and liabilities that are recognized or disclosed at fair value on a nonrecurring basis. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). To measure fair value, the Company incorporates assumptions that market participants would use in pricing the asset or liability and utilizes market data to the maximum extent possible.

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 based on the assumptions below:

	2022			2021
Annual volatility rate		102	%		147	%
Risk free rate		2.28	%		0.73	%
Remaining Term	0.25 years			0.50 years
Fair Value of common stock	$	1.90		$	1.75

For the three and twelve months ended March 31, 2022, and December 31, 2021, an active market for the Company’s common stock did not exist. Accordingly, the fair value of the Company’s common stock was estimated using a valuation model with level 3 inputs.

The below table represents the change in the fair value of the derivative liability during the periods ended March 31, 2022, and December 31, 2021.

Period Ended	2022			2021
Fair value of derivative (warrants), beginning of period	$	1,320,380		$	817,613
Change in fair value of derivative		(605,674	)		502,767
Fair value of derivative on the date of issuance		-			-
Fair value of derivative(warrants), end of period	$	714,706		$	1,320,380

Series D Notes Kicker Warrants

As discussed in Note 7, the Company analyzed the conversion features of the Series D Notes and determined that the Warrants qualified as a derivative liability. The fair value was required to be allocated among the notes, conversion features, and the warrants, and then remeasured at each reporting date. The Company performed a valuation of the conversion feature. In performing the valuation, the Company applied the guidance in ASC 820, “Fair Value Measurements”, to nonfinancial assets and liabilities that are recognized or disclosed at fair value on a nonrecurring basis. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). To measure fair value, the Company incorporates assumptions that market participants would use in pricing the asset or liability and utilizes market data to the maximum extent possible.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

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

	2022			2021
Annual volatility rate		118	%		147	%
Risk free rate		2.28	%		0.73	%
Remaining Term	8.13 years			8.37 years
Fair Value of common stock	$	1.90		$	1.75

For the three and twelve months ended March 31, 2022 and December 31, 2021, an active market for the Company’s common stock did not exist. Accordingly, the fair value of the Company’s common stock was estimated using a valuation model with level 3 inputs.

The below table represents the change in the fair value of the derivative liability during the three and twelve months ended March 31, 2022 and December 31, 2021.

Period Ended	2022		2021
Fair value of derivative (warrants), beginning of period	$	1,559,103	$	952,634
Fair value of derivative on the date of issuance		-		-
Exercise of warrants		-		(659,558	)
Change in fair value of derivative		131,704		1,266,027
Fair value of derivative(warrants), end of period	$	1,690,807	$	1,559,103

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FAIR VALUE OF FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2022

FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair Value Of Financial Instruments

NOTE 11 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The ASC guidance for fair value measurements and disclosure establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1 Inputs – Quoted prices for identical instruments in active markets.

Level 2 Inputs – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 Inputs – Instruments with primarily unobservable value drivers.

As of March 31, 2022, and December 31, 2021, the Company’s financial assets 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 10.

			Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Fair Value Measurement at March 31, 2022 Using:
Liabilities:
Derivative Liabilities	$	2,960,208	$	-	$	-	$	2,960,208
Totals	$	2,960,208	$	-	$	-	$	2,960,208
Fair Value Measurement at December 31, 2021
Liabilities:
Derivative Liabilities	$	3,898,914	$	-	$	-	$	3,898,914
Totals	$	3,898,914	$	-	$	-	$	3,898,914

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REVENUE CONCENTRATION

3 Months Ended

Mar. 31, 2022

REVENUE CONCENTRATION

Revenue Concentration

NOTE 12 – REVENUE CONCENTRATION

The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable, as follows:

For each of the three months ended March 31, 2022, and 2021, one and three customers accounted for 100% of revenue, respectively.

At March 31, 2022 and December 31, 2021, one and one customer accounted for 100% of accounts receivable, respectively.

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NOTES PAYABLE

3 Months Ended

Mar. 31, 2022

NOTES PAYABLE

Notes Payable

NOTE 13 – 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 21.84%

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%.

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 on the reduced Francisco Arturo mining concession.

As of June 2019, the Company ceased making monthly payments on the above noted Francisco Arturo concession notes and has petitioned the Hacienda for a reduction in the liability equal to the reduction in the Francisco Arturo concession above. For financial reporting purposes the Company continues to carry all notes at unpaid principal amount and accrues interest on a monthly basis. At March 31, 2022 $1,189,560 of accrued interest on the notes was included in accrued liabilities on the 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 transaction during the three and twelve months ended March 31, 2022 and December 31, 2021:
Balance December 31, 2020	$	2,081,435
Exchange Rate Adjustment		(57,504	)
2021 Principal Payments		(61,406	)
Balance December 31, 2021		1,962,525
Exchange Rate Adjustment		56,036
2022 Principal Payments		(36,165	)
Balance March 31, 2022	$	1,982,396

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REVOLVING CREDIT LINE FACILITY

3 Months Ended

Mar. 31, 2022

CONVERTIBLE PROMISSORY NOTES

Revolving Credit Line Facility

NOTE 14 – REVOLVING CREDIT LINE FACILITY

On February 4, 2021 Mineras de DynaResource SA de CV (“Seller”) entered into a Revolving Credit Line Facility and Commercial Offtake Agreement (the “RCL”), with a commercial buyer. Under the terms of the RCL:

· The Company will deliver 100% of its produced concentrates to the buyer and provider of the RCL, through December 31, 2022; unless extended by the Company;

· An initial RCL was established by buyer in the amount of $3.75M USD;

· On May 1, 2021, the RCL increased to an amount equal to 80% of prior 3 month’s revenue;

· Each successive month, the RCL shall be adjusted according to the Company’s prior 3 month’s revenue;

· The RCL shall never be less than $3.75M USD;

· The RCL will be interest free for 45 days;

· The RCL is to be repaid through deliveries of concentrates or cash within 120 days;

The RCL is included under Customer Advances on the unaudited consolidated balance sheet.

Deposits under Revolving Credit Line Facility

Under the terms of the RCL, Mineras de DynaResource received the following advances from the buyer:

(1)	$2.5M advance on February 4, 2021. Settled on March 26, 2021.
(2)	$3.75M advance on March 30, 2021. Settled on May 12, 2021
(3)	$3.75M advance on May 12, 2021. Settled on June 16, 2021.
(4)	$6.75M advance on June 18, 2021. Settled on August 5, 2021.
(5)	$8.25M advance on August 9, 2021. Settled on September 27, 2021.
(6)	$8.25M advance on September 29, 2021. Settled on November 17, 2021
(7)	$8.25M advance on November 19, 2021. Settled on December 20, 2021
(8)	$9.25M advance on December 30, 2021. Settled on February 25, 2022
(9)	$8.175M advance on February 25, 2022. Settled on March 30, 2022
(10)	$7.875M advance on March 30, 2022.

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SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2022

SUBSEQUENT EVENTS

Subsequent Events

NOTE 16 – SUBSEQUENT EVENTS

The Company has evaluated events from March 31, 2022, through the date whereupon the financial statements were issued, and has determined there were no items requiring disclosure.

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NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2022

NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES

Nature Of Activities, History And Organization

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

In 2000, the Company formed a wholly owned subsidiary, DynaResource de México S.A. de C.V., chartered in México (“DynaMéxico”). This Company was formed to acquire, invest in and develop resource properties in México. DynaMéxico owns a portfolio of mining concessions that currently includes its interests in the San José de Gracía Project (“SJG”) in northern Sinaloa State, México. The SJG District covers 9,920 hectares (24,513 acres) on the west side of the Sierra Madre mountain range. The Company currently owns 100% of the outstanding capital of DynaMéxico. A 20% minority interest in Dyna México was held by Goldgroup Resources Inc., a wholly owned subsidiary of Goldgroup Mining Inc. Vancouver BC (“Goldgroup”) until February 24, 2020.

In 2005, the Company formed DynaResource Operaciones de San Jose De Gracía S.A. de C.V. (“DynaOperaciones”), and acquired control of Mineras de DynaResource, S.A. de C.V. (formerly Minera Finesterre S.A. de C.V., “DynaMineras”). The Company owns 100% of Dyna Mineras.

The Company elected to become a voluntary reporting issuer in Canada in order to avail itself of Canadian regulations regarding reporting for mining properties and, more specifically, National Instrument 43-101 (“NI 43-101”). This regulation sets forth standards for reporting resources in a mineral property and is a standard recognized in the mining industry.

Significant Accounting Policies

The 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 financial statements.

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

Basis Of Presentation

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

Principles Of Consolidation

The unaudited consolidated financial statements include the accounts of DynaResource, Inc., as well as DynaResource de México, S.A. de C.V. (100% ownership), DynaResource Operaciones S.A. de C.V. (100% ownership) and Mineras de DynaResource S.A. de C.V. (100% ownership). All significant inter-company transactions have been eliminated. All amounts are presented in U.S. Dollars unless otherwise stated.

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 March 31, 2022, the Company had $14,140,366 of deposits in U.S. Banks in excess of the FDIC limit. Management does not believe that the Company is at risk of loss on cash.

Accounts Receivable And Allowances For Doubtful Accounts

The allowance for accounts receivable is recorded when receivables are considered to be doubtful of collection. As of March 31, 2022, and December 31, 2021, respectively, no allowance has been deemed necessary.

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 remitted. The total amounts of the IVA receivable as of March 31, 2022, and December 31, 2021 are $5,224,670 and $4,742,180, respectively.

Inventory

Inventories are carried at the lower of cost or net realizable value and consist of mined tonnage, and gravity and flotation concentrates, and gravity tailings or flotation feed material. The inventories are $2,617,556 and $2,110,203 as of March 31, 2022, and December 31, 2021, respectively.

Proven And Probable Reserves (no Known Reserves)

The definition of proven and probable reserves is set forth in SEC Industry Guide 7 (“Industry Guide 7”). Proven reserves for which (1) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes, grade and/or quality are computed from the results of detailed sampling and (2) the sites for inspection, sampling and measurement are spaced so closely and the geological character is so well defined that size, shape, depth and mineral content of the reserves are well-established. Probable reserves are reserves for which quantity and grade and/or quality are computed from information similar to that used for proven (measured) reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven (measured) reserves, is high enough to assume continuity between points of observations.

As of March 31, 2022, the Company’s properties do not contain resources that satisfy the definition of proven and probable reserves. Therefore the Company classifies the development of its properties, including the San Jose de Gracía Property, as exploration stage projects since no proven or probable reserves have been established under Industry Guide 7.

Property

Substantially all mine development costs, including design, engineering, mine construction, and installation of equipment are expensed as incurred as the Company has not established proven and probable reserves on any of its properties. Only certain types of mining equipment which has alternative uses or significant salvage value, may be capitalized without proven and probable reserves. Depreciation is computed using the straight-line method. Office furniture and equipment are being depreciated on a straight-line method over estimated economic lives ranging from 3 to 5 years. Leasehold improvements, which relate to the Company’s corporate office, are being amortized over the term of the lease of 10 years.

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

When proven and probable reserves as defined by Industry Guide 7 exist, development costs are capitalized, and the property is a commercially minable property. Mine development costs incurred either to develop new ore deposits, expand the capacity of operating mines, or to develop mine areas substantially in advance of current production would be capitalized. Costs of start-up activities and costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations as incurred. Costs of abandoned projects are charged to operations upon abandonment. All capitalized costs would be amortized using the units of production method over the estimated life of the ore body based on recoverable ounces to be mined from proven and probable reserves.

Certain costs to design and construct mining and processing facilities may be incurred prior to establishing proven and probable reserves. As no proven and probable reserves have been established on any of the Company’s properties, design, construction and development costs are not capitalized at any of the Company’s properties, and accordingly, substantially all costs are expensed as incurred, resulting in the Company reporting larger losses than if such expenditures had been capitalized. Additionally, the Company does not have a corresponding depreciation or amortization of these costs going forward since these expenditures were expensed as incurred as opposed to being capitalized. As a result of these and other differences, the Company’s financial statements may not be comparable to the financial statements of mining companies that have established reserves.

Mineral Properties Interests

Mineral property interests include acquired interests in development and exploration stage properties, which are considered tangible assets. The amount capitalized relating to a mineral property interest represents its fair value at the time of acquisition. When a property does not contain mineralized material that satisfies the definition of proven and probable reserves, such as with the San Jose de Gracía Property, capitalized costs and mineral property interests are amortized using the straight-line method once production begins. As of March 31, 2022, the mining interests have been in the pilot production stage and therefore, no amortization has been expensed. Mining properties consist of 33 mining concessions covering approximately 9,920 hectares at the San Jose de Gracía property (“SJG”), the basis of which are amortized on the unit of production method based on estimated recoverable resources. If it is determined that the deferred costs related to a property are not recoverable over its productive life, those costs will be written down to fair value as a charge to operations in the period in which the determination is made. The amounts at which mineral properties and the related costs are recorded do not necessarily reflect present or future values.

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

For operating mines, recoverability is measured by comparing the undiscounted future net cash flows to the net book value. When the net book value exceeds future net undiscounted cash flows, an impairment loss is measured and recorded based on the excess of the net book value over fair value. Fair value for operating mines is determined using a combined approach, which uses a discounted cash flow model for the existing operations and a market approach for the fair value assessment of exploration land claims. Future cash flows are estimated based on quantities of recoverable mineralized material, expected gold and silver prices (considering current and historical prices, trends and related factors), production levels, operating costs, capital requirements and reclamation costs, all based on life-of-mine plans. The term “recoverable mineralized material” refers to the estimated amount of gold or other commodities that will be obtained after considering losses during processing and treatment of mineralized material. In estimating future cash flows, assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of future cash flows from other asset groups. The Company’s estimates of future cash flows are based on numerous assumptions and it is possible that actual future cash flows will be significantly different than the estimates, as actual future quantities of recoverable minerals, gold, silver and other commodity prices, production levels and costs and capital are each subject to significant risks and uncertainties.

The recoverability of the book value of each property 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, and at least annually. As of the date of this filing, no events have occurred that would require write- down of any assets. As of March 31, 2022 and December 31, 2021, no indications of impairment existed.

Asset Retirement Obligation

As the Company is not obligated to remediate the mining properties, no Asset Retirement Obligation (“ARO”) has been established. Changes in regulations or laws, any instances of non-compliance with laws or regulations that result in fines, or any unforeseen environmental contamination could result in a material impact to the amounts charged to operations for reclamation and remediation. Significant judgments and estimates are made when estimating the fair value of AROs. Expected cash flows relating to AROs could occur over long periods of time and the assessment of the extent of environmental remediation work is highly subjective. Considering all of these factors that go into the determination of an ARO, the fair value of the AROs can materially change over time.

Property Holding Costs

Holding costs to maintain a property on a care and maintenance basis are expensed in the period they are incurred. These costs include security and maintenance expenses, lease and claim fees and payments, and environmental monitoring and reporting costs.

Exploration Costs

Exploration costs are charged to operations and expenses as incurred. Exploration, development, direct field costs and administrative costs are expensed in the period incurred.

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) yearend exchange rates for balance sheet accounts, and (ii) the weighted average exchange rate of the reporting period for all income statement accounts. Foreign currency translation gains and losses are reported as a separate component of stockholders’ equity and comprehensive income (loss).

The 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 March 31, 2022, and December 31, 2021 (Mexican Pesos per one U.S. dollar):

	Mar 31, 2022		Dec 31, 2021
Exchange Rate at Period End Pesos		19.91		20.48

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 March 31, 2022, and March 31, 2021 (Mexican Pesos per one U.S. dollar):

	Mar. 31, 2022		Mar. 31, 2021
Weighted Average Exchange Rate for the three Months Ended Pesos		20.50		20.45

The Company recorded currency transaction gains (losses) of $(2,402) and $(333,735) for the three months ended March 31, 2022 and 2021, 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 at applicable Mexican tax law.

Use Of Estimates

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

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 financial statements. The Company’s comprehensive income consists of net income and other comprehensive income (loss), consisting of unrealized net gains and losses on the translation of the assets and liabilities of its foreign operations.

Revenue Recognition

The Company follows ASC 606 “Revenue from contracts with customers”. The Company generates revenue by selling gold and silver 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 to direct the use of and obtain substantially all the remaining benefits from the material and the customer has the risk of loss.

The amount of revenue recognized is initially recorded on a provisional basis based on the contract price and the estimated metal quantities based on assay data. The revenue is adjusted upon final settlement of the sale. The chief risk associated with the recognition of sales on a provisional basis is the fluctuations between the estimated quantities of precious metals base on the initial assay and the actual recovery from treatment and processing.

As of March 31, 2022, there are $7,875,000 in customer deposit liabilities for payments received in advance expected to be settled in 2022.

During the quarter ended March 31, 2022, and the year ended December 31, 2021, there was $9,250,000 and $1,500,000 of revenue recognized during the period from customer deposit liabilities (deferred contract revenue) from prior periods, and $0 of customer deposits refunded to the customer due to order cancellation.

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

Fair Value Of Financial Instruments

The Company’s financial instruments consist of cash, receivables, payables and long-term debt. The carrying amount of cash, receivable and payables approximates fair value because of the short-term nature of these items. The carrying amount of long-term debt approximates fair value due to the relationship between the interest rate on long-term debt and the Company’s incremental risk adjusted borrowing rate.

Per Share Amounts

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

The Company had 3,060,998 warrants outstanding at March 31, 2022 which upon exercise, would result in the issuance of 3,060,998 shares of common stock. Of these warrants 2,168,833 were exercisable at $2.04 per share and 892,165 were exercisable at $.01 per share. The Company also had convertible debt instruments as of March 31, 2022 which, upon conversion at valuations of $2.50 per share, would result in the issuance of 217,312 shares of stock.

The Company had 3,060,998 warrants outstanding at December 31, 2021 which upon exercise, would result in the issuance of 3,060,998 shares of common stock. Of these warrants 2,168,833 were exercisable at $2.04 per share and 892,615 were exercisable at $.01 per share. The Company also had convertible debt instruments as of December 31, 2021 which, upon conversion at valuations of $2.50 per share, would result in the issuance of 217,312 shares of stock.

	Three Months Ended March 31, 2022		Three Months Ended March 31, 2021
Net income (loss) attributable to common shareholders	$	5,004,227	$	246,334
Weighted average number of common shares outstanding, Basic		18,091,293		17,722,825
Diluted weighted average number of common shares outstanding,		18,983,458		17,722,825
Basic earnings (loss) per share	$	0.28	$	0.01
Diluted earnings (loss) per share	$	0.27	$	0.01

At March 31, 2022, 2,168,833 shares of potentially dilutive common stock related to outstanding stock warrants and 217,312 shares of potentially dilutive common stock related to convertible debt were excluded from the diluted earnings per share calculation because the exercise and conversion prices exceeded the average stock price and therefore their effect would be anti-dilutive.

At March 31, 2021, 2,168,833 shares of potentially dilutive common stock related to outstanding stock warrants and 2,227,312 shares of potentially dilutive common stock related to convertible debt were excluded from the diluted earnings per share calculation because the exercise and conversion prices exceeded the average stock price and therefore their effect would be anti-dilutive. In addition, at March 31, 2021, 1,260,633 of potentially dilutive common stock related to outstanding stock warrants were excluded from the diluted earnings per share calculation because the ratio of expenses related to the shares to issuable shares exceeded the basic earnings per share and therefore their effect 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 is also a related party.

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NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Mar. 31, 2022

NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES

Exchange Rates

	Mar 31, 2022		Dec 31, 2021
Exchange Rate at Period End Pesos		19.91		20.48

	Mar. 31, 2022		Mar. 31, 2021
Weighted Average Exchange Rate for the three Months Ended Pesos		20.50		20.45

Schedule Of Earning Per Share Amounts

	Three Months Ended March 31, 2022		Three Months Ended March 31, 2021
Net income (loss) attributable to common shareholders	$	5,004,227	$	246,334
Weighted average number of common shares outstanding, Basic		18,091,293		17,722,825
Diluted weighted average number of common shares outstanding,		18,983,458		17,722,825
Basic earnings (loss) per share	$	0.28	$	0.01
Diluted earnings (loss) per share	$	0.27	$	0.01

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INVENTORIES (Tables)

3 Months Ended

Mar. 31, 2022

INVENTORIES

Inventories

	2022		2021
Mined Tonnage	$	2,520,239	$	2,042,633
Gold-Silver Concentrates		97,317		67,570
Total Inventories	$	2,617,556	$	2,110,203

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PROPERTY (Tables)

3 Months Ended

Mar. 31, 2022

PROPERTY

Property

	2022			2021
Leasehold improvements	$	9,340		$	9,340
Office equipment		31,012			31,012
Office furniture and fixtures		78,802			78,802
Sub-total		119,154			119,154
Less: Accumulated depreciation		(117,237	)		(116,425	)
Total Property	$	1,917		$	2,729

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STOCKHOLDERS EQUITY (Tables)

3 Months Ended

Mar. 31, 2022

STOCKHOLDERS EQUITY

Warrant Activity

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Intrinsic Value
Balance at December 31, 2021		3,429,466	$	1.30		4.40
Granted		-	$	-
Exercised		368,468	$	0.01
Forfeited		-	$	-
Balance at December 31, 2021		3,060,998	$	1.46		2.79
Granted		-	$	-				-
Exercised		-	$	-
Forfeited		-	$	-				-
Balance at March 31, 2022		3,060,998	$	1.46		2.55
Exercisable at March 31, 2022		3,060,998	$	1.46		2.55		-

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COMMITMENTS AND CONTINGENCIES (Tables)

3 Months Ended

Mar. 31, 2022

COMMITMENTS AND CONTINGENCIES

Lease Cost

	Period Ended
	March 31, 2022
Operating Lease – Office Lease	$	21,823
Operating Lease – Ground Lease		22,834
Short Term Lease Costs		4,381
Variable Lease Costs		-
TOTAL	$	49,038
Weighted average remaining lease term and weighted average discount rate are as follows:
Weighted Average Remaining Lease Term (Years) – Operating Leases		10.12
Weighted Average Discount Rate – Operating Leases		12.50	%
Estimated future minimum lease obligations are as follow for the years ending March 31:
YEAR
2022	$	164,979
2023		94,074
2024		96,896
2025		99,803
2026		102,797
Thereafter		684,885
Total	$	1,243,434
Less Imputed Interest		(593,422	)
OPERATING LEASE PAYABLE	$	650,012

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DERIVATIVE LIABILITIES (Tables)

3 Months Ended

Mar. 31, 2022

DERIVATIVE LIABILITIES

Change In The Fair Value Of The Derivative Liability

	2022			2021
Annual volatility rate		102	%		147	%
Risk free rate		2.28	%		0.73	%
Remaining Term	0.25 years			0.50 years
Fair Value of common stock	$	1.90		$	1.75

Period Ended	2022			2021
Fair value of derivative (stock), beginning of period	$	1,019,431		$	601,313
Change in fair value of derivative		(464,736	)		418,118
Fair value of derivative on the date of issuance		-			-
Fair value of derivative (stock), end of period	$	554,695		$	1,019,431

	2022			2021
Annual volatility rate		102	%		147	%
Risk free rate		2.28	%		0.73	%
Remaining Term	0.25 years			0.50 years
Fair Value of common stock	$	1.90		$	1.75

Period Ended	2022			2021
Fair value of derivative (warrants), beginning of period	$	1,320,380		$	817,613
Change in fair value of derivative		(605,674	)		502,767
Fair value of derivative on the date of issuance		-			-
Fair value of derivative(warrants), end of period	$	714,706		$	1,320,380

	2022			2021
Annual volatility rate		118	%		147	%
Risk free rate		2.28	%		0.73	%
Remaining Term	8.13 years			8.37 years
Fair Value of common stock	$	1.90		$	1.75

Period Ended	2022		2021
Fair value of derivative (warrants), beginning of period	$	1,559,103	$	952,634
Fair value of derivative on the date of issuance		-		-
Exercise of warrants		-		(659,558	)
Change in fair value of derivative		131,704		1,266,027
Fair value of derivative(warrants), end of period	$	1,690,807	$	1,559,103

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2022

FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair Value Measurement

			Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Fair Value Measurement at March 31, 2022 Using:
Liabilities:
Derivative Liabilities	$	2,960,208	$	-	$	-	$	2,960,208
Totals	$	2,960,208	$	-	$	-	$	2,960,208
Fair Value Measurement at December 31, 2021
Liabilities:
Derivative Liabilities	$	3,898,914	$	-	$	-	$	3,898,914
Totals	$	3,898,914	$	-	$	-	$	3,898,914

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NOTES PAYABLE (Tables)

3 Months Ended

Mar. 31, 2022

NOTES PAYABLE

Notes Payable

The following is a summary of the transaction during the three and twelve months ended March 31, 2022 and December 31, 2021:
Balance December 31, 2020	$	2,081,435
Exchange Rate Adjustment		(57,504	)
2021 Principal Payments		(61,406	)
Balance December 31, 2021		1,962,525
Exchange Rate Adjustment		56,036
2022 Principal Payments		(36,165	)
Balance March 31, 2022	$	1,982,396

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NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES (Details)	Mar. 31, 2022	Dec. 31, 2021	Mar. 31, 2021
NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES
Current Exchange Rate	19.91	20.48
Weighted Average Exhange Rate For The Period	20.50		20.45

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NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES
Net Income (loss) Attributable To Common Shareholders	$ 5,004,227	$ 246,334
Shares:
Weighted Average Number Of Common Shares Outstanding, Basic	18,091,293	17,722,825
Diluted Weighted Average Number Of Common Shares Outstanding,	18,983,458	17,722,825
Basic Earnings (loss) Per Share	$ 0.28	$ 0.01
Diluted Earnings (loss) Per Share	$ 0.27	$ 0.01

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NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Amortized Of Lease Term	10 years
Bank Deposite Excess Of Fdic Limit	$ 14,140,366
Ownership Percentage	100.00%
Iva Receivable	$ 5,224,670		$ 4,742,180
Inventories	2,617,556		$ 2,110,203
Currency Transaction Gains (losses)	(2,402)	$ (333,735)
Customer Deposit Liabilities For Payment Received In Advance	$ 7,875,000
Warrants Outstanding	3,060,998		3,060,998
Deferred Contract Revenue	$ 9,250,000		$ 1,500,000
Exercisable	$ 2.0		$ 2.04
Common Stock Issued	3,060,998		3,060,998
Warrant Exercisable	2,168,833		2,168,833
Potentially Dilutive Common Stock	2,168,833
Goldgroup Resources [Member]
Minority Interest	20.00%
Minimum | Leasehold improvements [Member]
Property Estimate Useful Life	3 years
Maximum
Conversion At Valuations	$ 2.50		$ 2.50
Maximum | Leasehold improvements [Member]
Property Estimate Useful Life	5 years
Warrants
Warrants Outstanding	217,312		2,227,312
Common Stock Issued	217,312		217,312
Warrant Exercisable	1,260,633		2,168,833

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INVENTORIES (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Total Inventories	$ 2,617,556	$ 2,110,203
Mined Tonnage [Member]
Total Inventories	97,317	2,042,633
Gold-Silver Concentrates [Member]
Total Inventories	$ 2,520,239	$ 67,570

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PROPERTY (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
PROPERTY
Leasehold Improvements	$ 9,340	$ 9,340
Office Equipment	31,012	31,012
Office Furniture And Fixtures	78,802	78,802
Sub-total	119,154	119,154
Less: Accumulated Depreciation	(117,237)	(116,425)
Total Property	$ 1,917	$ 2,729

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PROPERTY (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
PROPERTY
Depreciation Expense	$ 812	$ 812

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MINING CONCESSIONS (Details Narrative) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
MINING CONCESSIONS
Total Mining Concessions	$ 4,132,678	$ 4,132,678

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CONVERTIBLE PROMISSORY NOTES (Details Narrative) - USD ($)	1 Months Ended				3 Months Ended	12 Months Ended
	Mar. 31, 2020	Oct. 31, 2019	Feb. 28, 2019	Jun. 30, 2018	Mar. 31, 2022	Dec. 31, 2020	Dec. 30, 2019	Dec. 31, 2021	Dec. 31, 2019
Principal Amount		$ 59,895	$ 67,070	$ 347,826
April and May 2013 [Member] | Notes Payable - Series II [Member]
Notes Payable	$ 702,438					$ 681,152	$ 646,875
Simple Interest Rate					12.50%
Maturity Date					Dec. 31, 2015
Accrued Interest	21,286					34,277
Notes Payable Outstanding Amount	691,152				$ 455,905	455,905		$ 455,905
One Note Paid Off Amount						246,533
Common Shares Received Upon Conversion, To Purchase Additional Common Shares					$ 7.50
Preferred Shares Converted Amount					$ 340,000
Proceed From Debt Instrument					1,155,000
Principal Amount					1,495,000
2013 and 2014 [Member] | Notes Payable - Series II [Member] | Additional Note Agreements [Member]
Notes Payable	84,726				$ 199,808	$ 250,000
Simple Interest Rate					12.50%	12.50%
Maturity Date					Dec. 31, 2015
Accrued Interest	2,648						$ 5,977
Notes Payable Outstanding Amount					$ 87,374	$ 87,374		$ 87,374	$ 197,226
One Note Paid Off Amount									112,500
Common Shares Received Upon Conversion, To Purchase Additional Common Shares					$ 7.50
Two Notes Totalling	$ 84,757								$ 78,750

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INCOME TAXES (Details Narrative)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
INCOME TAXES
Effective Income Tax Rate Reconciliation, At Federal Statutory Income Tax Rate, Percent	21.00%	21.00%

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STOCKHOLDERS EQUITY (Details) - Warrants - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Beginning Balance	3,060,998	3,429,466
Granted	0	0
Exercised	0	368,468
Forfeited	0	0
Ending Balance	3,060,998	3,060,998
Exercisable	3,060,998
Weighted Average Exercise Price, Beginning Balance	$ 1.46	$ 1.30
Weighted Average Exercise Price, Granted	0	0
Weighted Average Exercise Price, Exercised	0	0.01
Weighted Average Exercise Price, Forfeited	0	0
Weighted Average Exercise Price, Ending Balance	1.46	$ 1.46
Weighted Average Exercise Price, Exercisable	$ 1.46
Weighted Average Remaining Contractual Life (years), Beginning Balance	2 years 9 months 15 days	4 years 4 months 24 days
Weighted Average Remaining Contractual Life (years), Ending Balance	2 years 6 months 18 days	2 years 9 months 14 days
Weighted Average Remaining Contractual Life (years), Exercisable	2 years 6 months 18 days
Intrinsic Value, Beginning Balance	$ 0
Intrinsic Value, Granted	0
Intrinsic Value, Forfeited	0
Intrinsic Value, Ending Balance	0	$ 0
Intrinsic Value, Exercisable	$ 0

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STOCKHOLDERS EQUITY (Details Narrative) - USD ($)						1 Months Ended				3 Months Ended		12 Months Ended
	Oct. 07, 2021	Jul. 14, 2020	May 14, 2020	May 13, 2020	May 06, 2015	Oct. 31, 2021	Oct. 31, 2019	Feb. 28, 2019	Jun. 30, 2018	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Dec. 31, 2020	Oct. 18, 2021
Capital Stock Authorized Issue										60,001,000
Additional Preferred Stock Shares Issued										15,265,008
Preferred Stock Par Value										$ 0.0001
Derivative Liabilities										$ 2,960,208		$ 3,898,914
Deemed Dividend										58,575	$ 43,375
Amount Recieved From Preferred Right										784,500
Current Balance, Preferred Right										40,000		$ 40,000
Repaid Amount Under Preferred Right										$ 744,500
Exercise Of Warrants														368,468
Common Stock, Shares Issued										18,091,293		18,091,293		368,468
Treasury Shares For Services												504,300
Outstanding Treasury Shares										12,180		12,180
Warrants Outstanding										3,060,998		3,060,998
Common Stock, Par Value										$ 0.01		$ 0.01
Common Stock, Shares Authorized										40,000,000		40,000,000
Common Stock, Shares Outstanding										18,091,293		18,091,293
Principal Amount							$ 59,895	$ 67,070	$ 347,826
Securities Purchase Agreement [Member]
Warrant Contemplates The Purchase, Upon Exercise					2,166,527
Maturity Date					Jun. 30, 2022
Common Stock, Description		the Company’s certificate of incorporation to increase the number of authorized shares of common stock from 25,000,000 shares to 40,000,000 shares
DynaResource, Inc [Member] | Additional Financing Agreement [Member] | Golden Post Rail, LLC, Texas Limited Company [Member]
Common Stock Purchase										439,026			783,976
Principal Amount			$ 2,500,000							$ 1,400,000
Fully Funded Amount			$ 1,250,000
Conversion Price			$ 2.00							$ 2.00
Compensatory Issuances, Description				a common stock purchase warrant for 2,306 shares, at an exercise price of $0.01 per share, and maturing on the 7-year anniversary of the date of issuance (the “Compensatory Warrant”); and (ii) 1,771 shares of Series C Preferred Shares. These issuances were occasioned by the Company’s obligations under the Securities Purchase Agreement dated as of May 6, 2015.						These Series D Preferred Shares are convertible to common shares at $2.00 per share, through October 18, 2026. The Series D Preferred Shares may receive a 4% per annum dividend, payable if available, and in arrears. The Dividend is calculated at 4.0% of $1,520,000 payable annually on October 18. At March 31, 2022
Issuance Accommodate, Description				contemplating the authorization of 3,000,000 shares
Golden Post Warrants
Derivative Liabilities										$ 714,706		$ 1,320,380
Preferred Stock Series A
Preferred Stock Par Value										$ 0.0001		$ 0.0001
Preferred Stock, Shares Designated										1,000
Preferred Stock Shares Outstanding										1,000		1,000
Preferred Stock, Shares Issued										1,000		1,000
Additional Preferred Stock, Shares Designated										1,000
Preferred Stock Series A | CEO
Preferred Stock, Shares Issued										1,000		1,000
Series D Preferred Stock [Member]
Derivative Liabilities										$ 1,690,807		$ 1,559,103
Preferred Stock, Shares Designated										3,000,000
Preferred Stock Shares Outstanding										760,000		760,000
Preferred Stock, Shares Issued														760,000
Convertible Note Repurchase Amount	$ 2,500,000
Fair Value Of Derivative On The Date Of Issuance Notes						$ 287,508
Series D Preferred Stock [Member] | Ten Noteholders [Member]
Convertible Note Into Preferred Stock	$ 1,520,000
Convertible Note Into Preferred Stock Price Per Share	$ 2.00
Preferred Stock Series C
Derivative Liabilities										$ 554,695		$ 1,019,431
Preferred Stock, Shares Designated				1,734,992						1,734,992
Preferred Stock Shares Outstanding										1,734,992		1,734,992
Fair Value Of Derivative On The Date Of Issuance Notes										$ 0		$ 0
Conversion Price Per Shares										$ 2.04
Shares Dividend Receive Per Annum										4.00%
Dividend Payable										$ 4,337,480
Additional Shares				1,771
Total Arrears On Dividend										$ 880,278
Common Stock [Member]
Common Stock, Par Value										$ 0.01
Common Stock, Shares Authorized										40,000,000
Common Stock, Shares Outstanding										18,091,293		18,091,293
2022 Activity [Member]
Warrants Outstanding										3,060,998
2021 Activity [Member]
Capital Stock Authorized Issue														368,468
Warrants Outstanding												3,060,998		368,468
Exercise Price														$ 0.01

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RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
RELATED PARTY TRANSACTIONS
Related Party Consulting And Other Fees	$ 43,750	$ 33,750

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COMMITMENTS AND CONTINGENCIES (Details)	3 Months Ended
	Mar. 31, 2022 USD ($)
Short Term Lease Costs	$ 4,381
Variable Lease Costs	0
Total	49,038
Office Lease
Operating Lease	21,823
Ground Lease
Operating Lease	$ 22,834

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COMMITMENTS AND CONTINGENCIES (Details 1)	3 Months Ended
	Mar. 31, 2022
COMMITMENTS AND CONTINGENCIES
Weighted Average Discount Rate - Operating Leases	12.50%
Weighted Average Remaining Lease Term (years) - Operating Leases	10 years 1 month 13 days

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COMMITMENTS AND CONTINGENCIES (Details 2)	Mar. 31, 2022 USD ($)
COMMITMENTS AND CONTINGENCIES
2022	$ 164,979
2023	94,074
2024	96,896
2025	99,803
2026	102,797
Thereafter	684,885
Total	1,243,434
Less Imputed Interest	(593,422)
Operating Lease Payable	$ 650,012

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COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)		3 Months Ended
	Jan. 06, 2014	Mar. 31, 2022	Dec. 31, 2021
Concession Expenditure		$ 388	$ 2,400
Concession Taxes, Description		the Company does not anticipate that DynaMéxico will have any difficulties meeting the minimum annual expenditures for the concessions ($388 – $2,400 Mexican Pesos per hectare). DynaMéxico retains sufficient carry- forward amounts to cover over 10 years of the minimum expenditure (as calculated at the 2017 minimum, adjusted for annual inflation of 4%
DynaMineras [Member]
Lease Payment Anually		$ 1,359,443
Rent Expense		3,015,112
Land Lease Agreement [Member]
Land Area	4,399 hectares
Lease Agreement Term	20 years
Lease Payment Anually		$ 149,000

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DERIVATIVE LIABILITIES (Details) - $ / shares	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Preferred Stock Series C
Annual Volatility Rate	102.00%	147.00%
Risk Free Rate	2.28%	0.73%
Remaining Term	3 months	6 months
Fair Value Of Common Stock	$ 1.90	$ 1.75
Preferred Series C Warrant
Annual Volatility Rate	102.00%	147.00%
Risk Free Rate	2.28%	0.73%
Remaining Term	3 months	6 months
Fair Value Of Common Stock	$ 1.90	$ 1.75
Preferred Series D Warrant
Annual Volatility Rate	118.00%	147.00%
Risk Free Rate	2.28%	0.73%
Remaining Term	8 years 1 month 17 days	8 years 4 months 13 days
Fair Value Of Common Stock	$ 1.90	$ 1.75

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DERIVATIVE LIABILITIES (Details 1) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Preferred Stock Series C
Fair Value Of Derivative, Beginning Balance	$ 1,019,431	$ 601,313
Change In Fair Value Of Derivative	(464,736)	418,118
Fair Value Of Derivative On The Date Of Issuance	0	0
Fair Value Of Derivative, Ending Balance	554,695	1,019,431
Preferred Series C Warrant
Fair Value Of Derivative, Beginning Balance	1,320,380	817,613
Change In Fair Value Of Derivative	(605,674)	502,767
Fair Value Of Derivative On The Date Of Issuance	0	0
Fair Value Of Derivative, Ending Balance	714,706	1,320,380
Preferred Series D Warrant
Fair Value Of Derivative, Beginning Balance	1,559,103	952,634
Change In Fair Value Of Derivative	131,704	1,266,027
Fair Value Of Derivative On The Date Of Issuance	0	0
Fair Value Of Derivative, Ending Balance	1,690,807	1,559,103
Exercise Of Warrants	$ 0	$ 659,558

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Liabilities:
Derivative Liabilities	$ 2,960,208	$ 3,898,914
Total Liabilities	2,960,208	3,898,914
Level 1
Liabilities:
Derivative Liabilities	0	0
Total Liabilities	0	0
Level 2
Liabilities:
Derivative Liabilities	0	0
Total Liabilities	0	0
Level 3
Liabilities:
Derivative Liabilities	2,960,208	3,898,914
Total Liabilities	$ 2,960,208	$ 3,898,914

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REVENUE CONCENTRATION (Details Narrative)	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Revenue Individually	10.00%
Receivable Balances Individually	10.00%
Three and Three Customers [Member]
Concentration Of Risk	100.00%	100.00%
One and four Customer [Member]
Concentration Of Risk	100.00%	100.00%

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NOTES PAYABLE (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
NOTES PAYABLE
Property Holding Taxes, Beginning Balance	$ 1,962,525	$ 2,081,435
Exchange Rate Adjustment	56,036	(57,504)
Principal Payments	(36,165)	(61,406)
Property Holding Taxes, Beginning Balance	$ 1,982,396	$ 1,962,525

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NOTES PAYABLE (Details Narrative) - USD ($)	1 Months Ended
	Oct. 31, 2019	Feb. 28, 2019	Jul. 31, 2018	Jun. 30, 2018	Mar. 31, 2022
NOTES PAYABLE
Unpaid Mining Concession Taxes On The Francisco Arturo Mining Concession	$ 299,474	$ 335,350		$ 1,739,392
Initial Payment Amount	$ 59,895	$ 67,070		$ 347,826
Initial Payment Percentage Rate	20.00%	20.00%		20.00%
Remaining Finance Balance Term Over The Period	36 years	36 years		36 years
Remaining Finance Balance Term Over The Period Percentage Rate	22.00%	22.00%		21.84%
Accrued Interest Included In Accrued Liabilities					$ 1,189,560
Reduction In The Volume Of Mining Concession			In June 2018, the Company applied for a reduction of the Francisco Arturo mining concession, from 69,121 hectares to 3,280 hectares
Reduction In The Value Of Initial Payment Amount			$ 22,500
Reduction In The Value Of Initial Payment Amount In Pesos			$ 985,116

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REVOLVING CREDIT LINE FACILITY (Details Narrative) - USD ($) $ in Thousands				1 Months Ended						3 Months Ended
	Aug. 09, 2021	May 12, 2021	Feb. 04, 2021	Feb. 25, 2022	Dec. 30, 2021	Nov. 19, 2021	Sep. 29, 2021	Jun. 18, 2021	Mar. 30, 2021	Mar. 31, 2022	Mar. 30, 2022	May 01, 2021
CONVERTIBLE PROMISSORY NOTES
Revolving Credit Line Facility Amount			$ 3,750
Revolving Credit Line Facility Maximum Amount			$ 3,750
Concentrates On Delivery Percentage Rate			100.00%
Revolving Credit Line Facility Interest Free Term										45 years
Revolving Credit Line Facility Deliveries Of Concentrates Or Cash Free Term										120 years
Revolving Credit Line Facility Increased Percentage Rate												80.00%
Proceeds Advances From Buyers	$ 8,250	$ 3,750	$ 2,500	$ 8,175	$ 9,250	$ 8,250	$ 8,250	$ 6,750	$ 3,750		$ 7,875
Advances Settlement Date From Buyers	Sep. 27, 2021	Jun. 16, 2021	Mar. 26, 2021	Mar. 30, 2022	Feb. 25, 2022	Dec. 20, 2021	Nov. 17, 2021	Aug. 05, 2021	May 12, 2021