UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

WASHINGTON,
D.C. 20549



FORM
   10-K/A

Amendment
No. 1



| | [X] | ANNUAL
                                                                                                                           REPORT
                                                                                                                           PURSUANT
                                                                                                                           TO
                                                                                                                           SECTION
                                                                                                                           13
                                                                                                                           OR
                                                                                                                           15(d)
                                                                                                                           OF
                                                                                                                           THE
                                                                                                                           SECURITIES
                                                                                                                           EXCHANGE
                                                                                                                           ACT
                                                                                                                           OF
                                                                                                                           1934
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



For
the fiscal year ended December 31, 2011



| | [ ] | TRANSITION REPORT
                                                                                                                         PURSUANT
                                                                                                                         TO SECTION
                                                                                                                         13 OR
                                                                                                                         15(d)
                                                                                                                         OF THE
                                                                                                                         SECURITIES
                                                                                                                         EXCHANGE
                                                                                                                         ACT OF
                                                                                                                         1934
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





For
the transition period from _________________________ to _________________________



Commission
File Number: _______000-30371_____________________



DYNARESOURCE,
INC.



(Exact
name of Registrant as specified in its charter)



|                         |  |                                  
|------------------------ |  | ---------------------------------
|Delaware                 |  | 94-1589426                       
|(State of Incorporation) |  | (Employer Identification
    No.)



|                                                                 |  |           
|---------------------------------------------------------------- |  | ----------
|222
    W. Las Colinas Blvd., Suite 744 East Tower Irving, Texas |  | 75039     
|(Address of principal
    executive offices)                     |  | (Zip Code)



Registrant’s
telephone number:   Phone:  (972) 868-9066; Fax:  (972) 868-9067





Securities
registered pursuant to Section 12(b) of the Act:

None



Securities
registered pursuant to Section 12(g) of the Act:



Common
Stock; $0.01 Par Value

(Title
of Class)



Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes
[ ]		No [X]



Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.



Yes
[ ]		No [X]





1











Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.



Yes
[X]		No [ ]



Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).



Yes
[ ]		No [ ]



Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]





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



Large
accredited filer 	[ ]		Accredited filer		[ ]



Non-accredited
filer	[ ]		Smaller reporting company	[X]



Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).



Yes
[ ]	No [X]



The
aggregate market value of common stock, par value $0.01 per share, held by non-affiliates of the registrant, based on the average
bid and asked prices of the common stock on June 30, 2011 (the last business day of the registrant’s most recently completed
second fiscal quarter) was approximately $35.2 million.  For purposes of this computation, all officers, directors and 10%
beneficial owners of the registrant are deemed to be affiliates.  Such determination should not be deemed an admission that
such officers, directors or 10% beneficial owners are, in fact, affiliates of the registrant.



Number
of common shares outstanding at March 30, 2012	 10,602,868





2







EXPLANATORY NOTE



We are filing this Amendment No. 1 on Form
10-K/A (this “Amendment”) to amend our annual report on Form 10-K for the fiscal year ended December 31, 2011, filed
with the Securities and Exchange Commission (“SEC”) on April 2, 2012 (the “Original Form 10-K”). 
This Report is being filed for the sole purpose of responding to comments of the staff of the SEC.



As required by Rule 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), new certifications of our principal executive
officer and principal financial officer are being filed as exhibits to this Report.





DOCUMENTS INCORPORATED BY REFERENCE





Listed below are documents incorporated herein by reference and
the part of this Report into which each such document is incorporated:



None



3









DYNARESOURCE, INC.


FORM 10-K


TABLE OF CONTENTS




PART IITEM 1.
Business


5ITEM 1A.
Risk Factors


11ITEM 1B.
Unresolved Staff Comments


15ITEM 2.
Properties


15ITEM 3.
Legal Proceedings


18ITEM 4.
Mine Safety Disclosures


18PART IIITEM 5.
Market for Registrant’s Common Equity, Related Stockholders Matters and Issuer Purchases of Equity Securities


19ITEM 6.
Selected Financial Data


19ITEM 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operation


20ITEM 7A.
Quantitative and Qualitative Disclosures About Market Risk


31ITEM 8.
Financial Statements and Supplementary Data


32ITEM 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure


50ITEM 9A.
Controls and Procedures


50ITEM 9B.
Other Information


51PART IIIITEM 10.
Directors, Executive Officers and Corporate Governance


51ITEM 11.
Executive Compensation


53ITEM 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters


54ITEM 13.
Certain Relationships and Related Transactions, and Director Independence


55ITEM 14.
Principal Accounting Fees and Services


56PART IVITEM 15.
Exhibits and Financial Statement Schedules


57EXHIBIT INDEXExhibit 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 2002Exhibit 31.2
Certification of Chief Financial Officer, pursuant to Rule 13a-14(a) of
the Exchange Ace, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002Exhibit 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












4









FORWARD-LOOKING STATEMENTS

This annual report on Form 10-K 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 headings “Risk Factors” and “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 required to prepare reports under the Canadian Securities Administrators’ National Instrument 43-101 “Standards
of Disclosure for Mineral Projects” (“NI 43-101”), under the Canadian securities laws because we are subject
to Canadian securities laws. These standards are materially different from the standards generally permitted in reports filed with
the United States Securities and Exchange Commission (“SEC”).

The
terms “mineral reserve”, “proven mineral reserve” and “probable mineral reserve” used in this
report are Canadian mining terms defined in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”)
in the CIM Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council. These definitions differ from the definitions
of those terms in Industry Guide 7 (“Guide 7”) promulgated by the SEC. 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. Under Guide 7 standards, a “Final” or
“Bankable” feasibility study is required to report reserves, the three-year historical average precious metals prices
are used in any reserve or cash flow analysis to designate reserves, and the primary environmental analysis or report must be filed
with the appropriate government authority. One consequence of these differences is that “reserves” calculated in accordance
with Canadian standards may not be “reserves” under Guide 7 standards. U.S. investors should be aware that the Company’s
properties located in Mexico do not have “reserves” as defined by Guide 7 and are cautioned not to assume that any
part or all of the disclosed mineralized material will be confirmed or converted into Guide 7 compliant “reserves”.

Under NI 43-101, we report measured, indicated
and inferred resources, which are measurements that are generally not permitted in filings made with the SEC. The estimation of
measured resources and indicated resources involve greater uncertainty as to their existence and economic feasibility than the
estimation of proven and probable reserves. U.S. investors are cautioned not to assume that any part of measured or indicated resources
will ever be converted into economically mineable reserves. The estimation of inferred resources involves far greater uncertainty
as to their existence and economic viability than the estimation of other categories of resources. It cannot be assumed that all
or any part of inferred resources will ever be upgraded to a higher category. Therefore, U.S. investors are also cautioned not
to assume that all or any part of inferred resources exist, or that they can be mined legally or economically.







5







PART I



Item 1. Business

Company.

DynaResource, Inc., the Company described
herein, is a Delaware corporation, with offices located at 222 W. Las Colinas Blvd., Suite 744 East Tower, Irving, Texas 75039.
It can be reached by phone at (972) 868-9066 and by fax at (972) 868-9067.



History.

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.

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

Through its 50% owned Mexican subsidiary,
DynaResource de México, S.A. de C.V. (“DynaMéxico”), the Company owns a portfolio of mining concessions
that currently includes its interests in the San José de Gracia (SJG) Project in Sinaloa State, in northern Mexico. The
SJG District covers 69,121 hectares (170,802 acres) on the west side of the Sierra Madre Mountains.

DynaResource owns a 50% common stock
interest in DynaMéxico, and the remaining 50% common stock interest is held by Goldgroup Mining Inc.

A wholly owned subsidiary of the Company, Mineras
de DynaResource S.A. de C.V. (“MinerasDyna”), entered into an operating agreement with DynaMéxico on April 15,
2005 and, as a consequence of that agreement, is the named exclusive operating entity for the SJG Project.



In 2005, the Company formed another wholly
owned subsidiary, DynaResource Operaciones, SA de C.V. (“DynaOperaciones”). DynaOperaciones entered into a personnel
management agreement with MinerasDyna and, as a consequence of that agreement, is the exclusive manager of personnel for the SJG
Project.



Licenses and Concessions

The SJG District is comprised of 33
mining concessions covering 69,121 hectares (171,802 acres) and is located within the Sierra Madre gold-silver belt, where the
majority of hydrothermal deposits in Mexico are located. The Company’s concessions, all of which are formally held by DynaMéxico,
are granted by the Mexican government, or acquired from previous owners. The Company’s concessions are comprised of a combination
of exploration concessions and development concessions, are filed in the Public Registry of Mining, and are scheduled to expire
from 2028 through 2058. The concessions can be renewed prior to the expiry dates. The table below contains a listing of the mineral
concessions currently held by DynaMéxico.

DynaMexico plans to apply for certain
operating licenses and additional permits as part of its pre-production activities for the San Jose de Gracia property. The licenses
and permits would be issued by the host government, whether state or federal.

Current Mining Concessions - San
José de Gracia

|Claim Name          | ClaimNumber | 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   | 06/11/2050 | 2037.9479 | 63.22             
|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             









6









|Claim Name             | ClaimNumber | Staking date | Expiry     | Hectares    | Taxes / ha (pesos)
|---------------------- | ----------- | ------------ | ---------- | ----------- | ------------------
|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             | 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 | 62481.3815  | 5.08              
|TOTAL                  |             |              |            | 69,121.4010 |                   



The San Jose de Gracia mining
property surrounds the area of San Jose de Gracia, Sinaloa State, Mexico. San Jose de Gracia is located on the west side of the
Sierra Madre Mountains in the Sierra Madre Gold-Silver Belt, approximately 100 kilometers inland from Los Mochis, Sinaloa Mexico
and approximately 200 kilometers north of Mazatlan, Sinaloa. (See Map below). The SJG property is described in more detail in this
Form 10-K, under Item 2, Properties.





7









Sierra Madre Gold-Silver Belt
in Mexico









Historical Production

SJG reports 1,000,000 Oz. gold historical production
from a series of underground workings. 471,000 Oz. Au is reported produced at the La Purisima area of SJG, at an average grade
of 66.7 g/t; and 215,000 Oz. Au is reported produced from the La Prieta area, at an average grade of 27.6 g/t. Mineralization at
SJG has been traced on surface and underground over a 15 square kilometer area.



1997-1998 Drilling – Exploration
Programs

A drill program was conducted at SJG
in 1997 - 1998 by a prior majority owner.  Approximately 6,172 meters drilling was completed in 63 core drill holes. Significant
intercepts, including bonanza grades, outlined the down dip potential of the Northeast section (150 Meter NE to SW extent of the
Drilling) of the Los Hilos to Tres Amigos Trend of SJG.  Surface and underground sampling in 1999 - 2000 confirmed high grades
in historic workings and surface exposures throughout the project area.  These high grades outline the presence of mineralization
shoots developed within the veins.  The mineralization shoots appear to be controlled by dilational jogs and/or vein intersections.
A total of 544 samples were collected in 1999-2000, and assayed an average 6.51 grams/ton gold.

Pilot Production Activities

DynaMexico, conducting activities
through its operating sister companies MinerasDyna and DynaOperaciones, mined high-grade veins at the San Pablo area of SJG from
mid 2003 to June 2006. 18,250 Oz. gold was produced and sold from mill feed tonnage of 42,000 tons, at an average grade of approximately
15-20 g/t. Production costs were reported at approx. < $ 175. / Oz. Au in this small scale, pilot production operation.



|Mined Tonnage                      | 42,500 tons
|---------------------------------- | -----------
|Production (Oz Au)                 | 18,250 Oz  
|Average Grade                      | 15-20 g/t  
|Recovery Efficiency (Plant)        | 85%        
|Recovery in Concentrate (Sales)    | 90%        
|Production Cost (Average, 4 Years) | $175 / Oz  





8









The small scale mining and production
activities at SJG consisted of improvements to an existing mill, including the installation of a gravity / flotation processing
circuit, and initial test runs with tailings were completed in 2002.  Actual mining at the higher grade San Pablo area of
the property commenced in March 2003.



Suspension of Production Activities

The Company initiated the test production
activity in 2003 at the time gold prices were depressed, and when exploration funding opportunities, while available, were deemed
to be too dilutive by Company management. While the test production was considered successful (see results in the table above),
a small scale production activity was not expected to provide the necessary capital in order to explore a project the size of SJG.



The earlier, limited-scope production
activity has provided significant benefits in terms of confirming production grades, metallurgy and process, efficiency of recoveries,
and production costs – all of which is valuable for larger scale production plans.

Earn
In / Option Agreement – Financing of Drilling – Exploration Programs

As gold prices continued to appreciate
into 2006, exploration financing opportunities increased and the Company negotiated and entered into an Earn In / Option Agreement
with Goldgroup Mining Inc., dated September 1, 2006. The terms of the Earn In / Option Agreement provided for Goldgroup to furnish
$18,000,000 USD financing to DynaMexico for exploration expenditures at SJG, in exchange for a 50% share interest in DynaMexico.



National Instrument 43-101 (“NI 43-101”) Mineral
Resource Estimate

The Company received from DynaMexico on February
14, 2012 a National Instrument 43-101 (“NI 43-101”) Mineral Resource Estimate for San Jose de Gracia. The NI 43-101
Mineral 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 Mineral Resource Estimate
concentrates on four separate vein systems at SJG: Tres Amigos, San Pablo, La Union, and La Purisima.



No Known Reserves

Currently, the Company’s
drilling programs (through DynaMexico) are exploratory in nature.

The SJG Property is without known
reserves.Under U.S. standards, 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.



Future Drilling – Exploration
Programs

Further drilling programs at SJG are contemplated,
in view of the 2012 DynaMexico-CAM SJG Mineral Resource Estimate and the recently-released formal National Instrument 43-101(“NI
43-101”) Technical Report for San Jose de Gracia (the “2012 DynaMexico Luna-CAM SJG Technical Report”).



The Company expects DynaMéxico will
expand the size and scope of the resource at SJG through continued drilling and development programs at San Pablo, Tres Amigos,
La Cecena, Palos Chinos, La Union, La Purisima, and La Prieta. The Company expects extensions to mineralization in all directions
and down dip from the main target areas.



National Instrument 43-101 Technical
Report for San Jose de Gracia

The Company received from DynaMexico
on March 28, 2012 a National Instrument 43-101 (“NI 43-101”) compliant Technical Report for the San Jose de Gracia
Project (the “2012 DynaMexico Luna-CAM SJG Technical Report”, the “Technical Report”), and approved by
DynaResource de Mexico, SA de CV. (“DynaMexico”), the 100% owner of SJG.





9







The 2012 DynaMexico Luna-CAM SJG Technical
Report was prepared by Mr. Ramon Luna, BS, P.Geo., of Servicios y Proyectos
Mineros, Hermosillo, Mexico, anda Qualified Person as defined under NI 43-101; and by Mr. Robert Sandefur, BS, MSc, P.E.,
a senior reserve analyst for Chlumsky, Armbrust & Meyer LLC, Lakewood, CO., and a Qualified Person as defined under NI 43-101.
The 2012 DynaMexico Luna-CAM SJG Technical Report includes as Section Fourteen (14) a Mineral Resource Estimate for SJG as prepared
by Mr. Sandefur (the “2012 DynaMexico-CAM SJG 43-101 Mineral Resource Estimate”, the “Resource Estimate”).



The Company filed the Technical Report on SEDAR
(www.sedar.com) on March 28, 2012.



Preliminary Economic Assessment Report

The Company anticipates that DynaMexico will
commission at least one Preliminary Economic Assessment Report for the SJG Project in the second quarter, 2013.



Company Transition from Exploration
to Mining – Production

The Company expects to transition its business
from that of a purely exploration company, to an exploration and production company. With the foundational resource for SJG as
reported in the 2012 DynaMexico-CAM SJG Mineral Resource Estimate, the Company expects DynaMexico to confirm a positive economic
assessment for SJG in the Preliminary Economic Assessment Report expected to be commissioned by DynaMexico.



Capital Requirements

The mining industry in general requires significant
capital in order to take a property from the exploration, to development to production. These costs remain a significant barrier
to entry for the average company but once in production, there is a ready market for the final products, In the case of SJG, the
final product would be mainly gold, the price of which is determined by global markets, so there is not a dependence on a customer
base.



Gold

Gold Uses.    
Gold generally is used for fabrication or investment. Fabricated gold has a variety of end uses, including jewelry, electronics,
dentistry, industrial and decorative uses, medals, medallions and official coins. Gold investors buy gold bullion, official coins
and jewelry.

Gold Supply.    A
combination of current mine production, recycling and draw-down of existing gold stocks held by governments, financial institutions,
industrial organizations and private individuals make up the annual gold supply. Based on public information available for the
years 2008 through 2011, on average, current mine production has accounted for approximately 64% of the annual gold supply.

Gold Price.    The
following table presents the annual high, low and average daily afternoon fixing prices for gold over the past ten years on the
London Bullion Market ($/ounce):



|                              |  |      |       |  |     |   |       |         |  |   |       | 
|----------------------------- |  | ---- | ----- |  | --- | - | ----- | ------- |  | - | ----- | 
|Year                          |  | High |       |  | Low |   |       | Average | 
|2002                          |  | $    | 349   |  |     | $ | 278   |         |  | $ | 310   | 
|2003                          |  | $    | 416   |  |     | $ | 320   |         |  | $ | 363   | 
|2004                          |  | $    | 454   |  |     | $ | 375   |         |  | $ | 410   | 
|2005                          |  | $    | 536   |  |     | $ | 411   |         |  | $ | 444   | 
|2006                          |  | $    | 725   |  |     | $ | 525   |         |  | $ | 604   | 
|2007                          |  | $    | 841   |  |     | $ | 608   |         |  | $ | 695   | 
|2008                          |  | $    | 1,011 |  |     | $ | 713   |         |  | $ | 872   | 
|2009                          |  | $    | 1,213 |  |     | $ | 810   |         |  | $ | 972   | 
|2010                          |  | $    | 1,421 |  |     | $ | 1,058 |         |  | $ | 1,225 | 
|2011                          |  | $    | 1,895 |  |     | $ | 1,319 |         |  | $ | 1,572 | 
|2012 (through March 16, 2012) |  | $    | 1,751 |  |     | $ | 1,598 |         |  | $ | 1,683 | 




Source: Kitco, Reuters and the London Bullion Market Association



On March 28, 2012, the afternoon
fixing gold price on the London Bullion Market was $1,665 per ounce and the spot market gold price on the New York Commodity Exchange
was $1,658 per ounce.



10







Condition of Physical Assets
and Insurance

Our business is capital intensive and
requires ongoing capital investment for the replacement, modernization or expansion of equipment and facilities. We, and our subsidiaries,
maintain insurance policies against property loss. Such insurance, however, contains exclusions and limitations on coverage, particularly
with respect to environmental liability and political risk. There can be no assurance that claims would be paid under such insurance
policies in connection with a particular event.

Environmental Matters

Our activities are largely outside the United
States and subject to governmental regulations for the protection of the environment. We conduct our operations so as to protect
public health and the environment and believe our operations are in compliance with applicable laws and regulations in all material
respects. DynaMexico is involved with reclamation matters with the oversight of Semarnat, the federal environmental agency of Mexico.



Item 1A.	Risk Factors.

Business Risk

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

The exploration and development of mineral
deposits involve significant risks which a combination of careful evaluation, experience and knowledge may not eliminate. There
is no assurance that the Company’s exploration programs will result in further discoveries of commercial mineralization bodies.



Nature of Mineral Exploration
and Mining

The Company’s future is
dependent upon its exploration programs. The exploration and development of mineral deposits involve significant risks over significant
periods of time. It is impossible to ensure that the current or proposed exploration programs on the Company’s property will
result in a profitable mining operation.

Whether a mineralized deposit will be
commercially viable depends on many factors, such as size and grade of the deposit, proximity to infrastructure, financing costs,
regulations, environmental protection, commodities prices, taxes, political risks. The impact of these factors cannot be accurately
predicted, but the combination of factors may result in the Company’s failure to provide a return on investment.



Competitive Business Conditions

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

The
Company competes with many companies in the mining business, including large, established mining companies with substantial capabilities,
personnel, and financial resources. There is a limited supply of desirable mineral lands available for claim-staking, lease, or
acquisition in Mexico where the Company’s activities are focused. The Company may be at a competitive disadvantage in acquiring
mineral properties, since it competes with companies which have greater financial resources and larger technical staffs. From
time to time, specific properties or areas which would otherwise be attractive for acquisition or exploration are unavailable
due to their previous acquisition by competitors or due to the Company’s lack of financial resources.

Competition
in the industry extends to the technical expertise to find, advance, and operate mineral properties; the labor to operate the
properties; and the capital for the purpose of funding exploration and development activities on such properties. Many competitors
explore for and mine precious metals, and conduct refining and marketing operations on a world-wide basis. Such competition may
make it more difficult for the Company to recruit or retain qualified employees, to obtain equipment and personnel to assist in
its exploration and production activities, or to acquire the capital necessary to fund operations.



Government Regulations

The Company conducts its resource
exploration and development activities in Mexico, subject to rules and regulations for owning and maintaining mining concessions
and surface rights, environmental, water rights, hazardous wastes, explosives, reclamation, and others. There can be no certainty
that the Company maintains full compliance with all government regulations.



11







Mexico.Exploration and development of minerals in Mexico may be carried out through Mexican companies incorporated under Mexican
law by means of obtaining exploration and development (exploitation) concessions. The Company’s concessions are granted
by the Mexican government, or acquired from previous owners, are filed in the Public Registry of Mining, and are scheduled to
expire from 2028 through 2058. Holders of exploration concessions may, prior to the expiration of such concessions, apply for
one or more development concessions covering all or part of the area covered by an exploration concession.

Environmental
law in Mexico provides for general environmental policies, with specific requirements set forth under regulations of the Ministry
of Environment, Natural Resources and Fishing, which regulate all environmental matters with the assistance of the National Institute
of Ecology and the Procuraduria Federal de Proteccion al Ambiente.

The
primary laws and regulations governing environmental protection for mining in Mexico are found in the General Law, the Ecological
Technical Standards, and also in the air, water and hazardous waste regulations, among others. In order to comply with the environmental
regulations, a concessionaire must obtain a series of permits during the exploration stage. Generally, these permits are issued
on a timely basis after the completion of an application by a concession holder. The Company believes it is currently in full
compliance with the General Law and its regulations in relation to its mineral property interests in Mexico.



Commodities Prices

Any potential economic success
of the Company’s properties will depend to a large extent to the market price of commodities; the future price of which is
impossible to predict.

The current value and potential value
for properties obtained by the Company is directly related to the market price for gold. The market price of gold may also have
a significant influence on the market price of the Company’s common stock. If the Company obtains positive drill results
and a property progresses to a point where a commercial production decision can be made, the decision to put a mine in production
and to commit funds necessary for that purpose would be made long before any revenue from production would be received. A decrease
in the market price of gold at any time during future exploration or development may prevent a property from being economically
mined or result in the write-off of assets whose value is impaired as a result of lower gold prices.

The price of gold is affected by numerous
factors beyond the Company’s control, including inflation, fluctuation of the United States dollar and foreign currencies,
global and regional demand, the purchase or sale of gold by central banks, and the political and economic conditions of major gold
producing countries throughout the world. During the last five years, the market price of gold has fluctuated between approximately
$608 and $1,895 per ounce. The volatility of gold prices represents a substantial risk which is impossible to fully eliminate.
In the event gold prices decline and remain low for prolonged periods of time, the Company might be unable to explore, develop,
or produce revenue from its properties.

No Revenue

The Company suspended its production
activity in June 2006, and currently receives no significant revenue. There is a risk that the Company would expend available cash
and funding in exploration and administration costs, and would not be able to obtain further funding to continue its work.

In June 2006, production activities at
SJG were suspended, in order to focus on the exploration of the vast SJG district. Funds received by DynaMexico pursuant to the
Earn In Agreement were utilized for exploration and related activities. In addition, the Company maintains overhead in the US and
other costs which are not reimbursed. The Company and its subsidiaries have $2,670,933 in cash on hand, at December 31, 2011. The
Company could incur exploration expenses and corporate expenses greater than the amount of available cash on hand. The Company
may need to raise additional funds in order to support its activities. If the Company needs to raise additional capital, its common
stock would be diluted. Further, if the Company is unable to raise funds to meet its obligations, the value of its common stock
may decline.



Substantial Control of Chairman
/ Preferred Shares

The Company’s Chairman and CEO
owns 100% of the Series A preferred stock, which give him the right to elect the majority of the board of directors.



12







K.W. (“K.D.”)  Diepholz,
the Company’s Chairman and CEO, owns 100% of the outstanding shares of Series A preferred stock, which hold special voting
rights. As a result, Mr. Diepholz has the ability to elect the majority of the Company’s Board of Directors. Such ownership
and the resultant concentration of control may have the effect of delaying, deferring or preventing a change in control of the
Company, even if the transaction would be beneficial to Company stockholders as a whole.



Capital Needs

The Company may need to raise additional
capital, which may not be available or may be too costly, and which, if not obtained, could cause the Company to cease operations.

The Company’s capital requirements
could be greater than its operating income. The Company believes it has adequate cash on hand for the foreseeable future, but it
does not have sufficient cash to indefinitely sustain operating losses. The Company’s liquidity depends on its ability to
raise capital through the sale of common stock or through debt or equity offerings. Additional financing may not be available,
or, if available, may be on terms unacceptable or unfavorable. If additional capital is required and not obtained, or if the Company
is not able to produce revenue from operations, or otherwise operate at a profit, the value of investment in the Company could
decline or be lost entirely.



Illiquid Market

The Company has a limited public market
trading on the pink sheets, and an active trading market may never materialize, and an investor may not be able to sell stock.

There is currently only a limited public market
for the Company’s Common Stock and there can be no assurance that a more robust trading market will develop further or be
maintained in the future. An active trading market may not develop and if not the market value could decline to a value below the
amount investors paid for stock. Additionally, if the market is not active or illiquid, investors may not be able to sell the securities
of the Company.



Penny Stock Classification

If a public trading market for the
Company’s common stock materializes, it may be classified as a ‘penny stock’ which would result in additional
requirements for trading the stock. These additional requirements could affect the liquidity of the stock.

The SEC has adopted regulations which
generally define a “penny stock” to be an equity security that has a market price of less than $5.00 per share, subject
to specific exemptions. The market price of the Company’s Common Stock may trade at less than $5.00 per share and accordingly
may be a “penny stock.” Brokers and dealers effecting transactions in “penny stock” must disclose certain
information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably
suitable to purchase the securities. These rules may restrict the ability of brokers or dealers to sell the Common Stock and may
affect an investor’s ability to sell such shares.



Title Matters

No Guarantee of Title

The Company has investigated
title to all mineral claims, and, to the best of its knowledge, title to all properties is in good standing. The Company has received
legal opinions from legal counsel, the most recent of which is dated August 4, 2011, which confirm the title and good standing
of DynaMexico and mineral claims comprising the SJG District. However, there can be no assurance of complete title, nor guarantee
of title.  The properties may be affected by undetected defects in title, such as the reduction in size of the mineral claims
and other third party claims affecting the Company's priority rights.

Dependence upon Key Personnel

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

The loss of any member of the
management team could have a material adverse effect upon the business and prospects of the Company. In the event of such loss,
the Company will seek suitable competent replacements, but there is no assurance that the Company will be able to retain such
replacements. The Company has obtained a Key Man Life Insurance program for its Chairman and CEO, which would pay the proceeds
of such policy to the Company in the event of his death.

13







Uncertainty of Resource Estimate

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

The current formal resource estimate
in respect of the SJG Property (the NI 43-101 Mineral Resource Estimate) is based on limited information, such as historical data,
drilling programs, the production activity conducted by the Company in 2003 – 2006, and various reports, manual calculations
and opinions. No assurance can be given that the anticipated tonnages and grades will be achieved or that the estimated or indicated
level of recovery will realized. The grade of mineralization actually recovered or produced could differ significantly from the
resource estimates.

No Known Reserves

Currently, the Company’s
drilling programs (through DynaMexico) are exploratory in nature.

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.

Environmental and Regulatory
Concerns

The Company operates in an industry
where there are significant environmental and regulatory requirements. The inability of the Company to satisfy these requirements
could cause the value of its common stock to decline.

The current or future operations
of the Company, including acquisition, leasing, and sales activities, involve mineral properties which require permits from various
federal, state and local governmental authorities. Such future operations are and will be governed by laws and regulations governing
prospecting, development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, toxic substances,
land use, environmental protection, mine safety and other matters.  Companies engaged in the development and operation of
mines and related facilities generally experience increased costs, and delays in production and other schedules as a result of
the need to comply with applicable laws, regulations and permits. Additional permits and studies, which may include environmental
impact studies conducted before permits can be obtained, are necessary prior to operation of properties in which the Company has
interests.  Required permits could adversely affect the Company's ability to negotiate agreeable acquisition, lease, or sales
terms and therefore adversely affect the price of the Company’s common stock.

Competitive conditions affecting
the Company could negatively impact our business.

The potential value of the Company’s
mining property is directly related to the market price for gold. The price of gold may also have a significant influence on the
market price of its common stock. If the Company obtains positive drill results and its property progresses to a point where a
commercial production decision can be made, the decision to put a mine in production and to commit funds necessary for that purpose
must be made long before any revenue is from production would be received. A decrease in the market price of gold at any time during
future exploration and development may prevent the Company’s property from being economically mined or could result in the
write-off of assets whose value is impaired as a result of lower gold prices. The price of gold is affected by numerous factors
beyond our control, including inflation, fluctuation of the United States dollar and foreign currencies, global and regional demand,
the purchase or sale of gold by central banks, and the political and economic conditions of major gold producing countries throughout
the world. During the last five years, the market price of gold has fluctuated between approximately $608 and $1,895 per ounce.
The volatility of gold prices represents a substantial risk which no amount of planning or technical expertise can fully eliminate.
In the event gold prices decline and remain low for prolonged periods of time, we might be unable to develop our property and produce
revenue.

Joint Ownership of DynaMéxico

DynaResource owns a 50% share interest in DynaMéxico
– the 100 % owner of the SJG Project -- and the remaining 50% share interest is held by Goldgroup. As a consequence of this
shared ownership, any benefits to be derived from the ownership of DynaMéxico are shared between the Company and Goldgroup.



Each of DynaResource and Goldgroup currently
appoints two of the four members of the DynaMéxico board of directors; accordingly, the inherent structure of ownership
and governance has the potential for deadlock that could affect operations of San José de Gracia. By way of example, the
directors appointed by the Company and the directors appointed by Goldgroup may have different short or long-term objectives or
goals for DynaMéxico, which could cause delays in decision making or decisions that are not necessarily in the best interest
of our stockholders.





14









This risk is mitigated by the operational structure
for the SJG Project, as a wholly owned subsidiary of DynaResource -- Mineras de DynaResource S.A. de C.V. -- maintains an exclusive
operating agreement with DynaMéxico. Additionally, another wholly owned subsidiary of DynaResource -- DynaResource Operaciones
de San Jose De Gracia S.A. de C.V. maintains an exclusive agreement to manage the personnel in Mexico.



This risk is also mitigated by the fact that
K.W. (“K.D.”)  Diepholz, the Company’s Chairman and CEO, as well as President and a member of the Board
of Directors of DynaMéxico, holds a broad power of attorney granted by the shareholders of DynaMéxico. The power
of attorney gives Mr. Diepholz authority superior to that of any other person or group within DynaMéxico (including the
Board of Directors). The power of attorney held by Mr. Diepholz is consistent with the laws in Mexico, whose laws are based on
a civil code.



Historical production of Gold at the
San Jose de Gracia Property May Not be Indicative of Future Production or Revenue.

The SJG Property is a high-grade mineralized
system with reported historical production of over 1 M. Oz. Gold. The production occurred in the early 1900’s, prior to the
Mexican Revolution. Since the time, the property has seen small scale mining operations, from small scale local owners, to the
Company’s production in 2003–2006. Due to the uncertainties associated with exploration, including variations in geology
and structure, there is no assurance that the Company’s efforts will be successful in identifying mineralization in sufficient
quantities to define proven or probable reserves, and further there is no assurance that any such reserves could be developed into
a commercial operation. Investors in the Company’s securities should not rely on historical operations as an indication that
the SJG property will be developed into a commercial production in the future. The Company expects to incur losses unless and until
such time as one or more of its properties enters into commercial production and generates sufficient revenue to fund continuing
operations.



Item 1B.	Unresolved Staff Comments.



Not applicable.



Item 2.     Properties.



Executive Offices

The Company maintains its executive offices
of approximately 2,100 sq. ft., at 222 W. Las Colinas Blvd., Suite 744 East Tower, Irving, Texas 75039, at $3,840 per month, plus
utility services. The Company renewed a prior 3 year lease for an additional 1 year term commencing September, 2011.



San Jose de Gracia Mineral Property

DynaMexico owns 100% of the mineral
concessions at the San Jose de Gracia Property, located in Sinaloa State, Mexico, which is the only property in which DynaMexico
retains an interest. The Company owns 50% of the outstanding shares of DynaMexico. DynaMexico holds title to 33 concessions covering
approximately 69,121 hectares (170,802 acres), with no outstanding royalty or other interests.

The property is located in and around
San Jose de Gracia, Sinaloa State, Mexico which is approximately 100 km northeast of Guamuchil, near the west coast of Mexico.
A small airstrip is located near San Jose de Gracia, and can be accessed by a small airplane or alternatively, by dirt mountain
road. Several roads on the property are accessible throughout the year, with the possible exception of July - September when the
rainy season sometimes causes flooding and runoff to make the roads difficult to navigate.



Currently, the Company’s
drilling programs (through DynaMexico) are exploratory in nature.

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.





15









SJG History

SJG reports 1,000,000 Oz. Gold historical
production from a series of underground workings. 471,000 Oz. is reported produced at the La Purisima area of SJG, at an average
grade of 66.7 g/t.; and 215,000 Oz. is reported produced from the La Prieta area, at an average grade of 27.6 g/t. Mineralization
at SJG has been traced on surface and underground over a 15 square kilometer area.

Drilling programs at SJG were conducted
by a prior partner in 1997 – 1998, primarily at the Tres Amigos area, which outlined some of the down dip potential in this
area. Approximately 6,172 meters drilling was completed in 63 drill holes.

DynaMexico was formed in March 2000,
for the purpose of acquiring the concessions comprising the SJG District, and to consolidate all ownership of SJG under DynaMexico.
DynaMexico focused on acquisition and consolidation work through 2003, and reports a clear title and ownership to the district.

DynaMexico mined high-grade veins at the
San Pablo area of SJG from mid 2003 to June 2006, in a Pilot Production operation. 18,250 Oz Gold was produced and sold, from mill
feed tonnage of 42,500 tons, at an average grade of 15-20 g/t. Average production costs during the production period were reported
as $175 / Oz.



Financing/Sale of Stock of Subsidiary
(Earn In / Option Agreement)

On September 1, 2006 the Company signed
a “Stock Purchase and Earn In Agreement” (“Earn In”) between DynaResource, Inc. and DynaMexico, (“Seller”)
and Goldgroup Mining, Inc. (formerly Goldgroup Resources, Inc.), of Vancouver, British Columbia.

The Earn In provided for Goldgroup to
contribute $18,000,000 on or before March 15, 2011 in exchange for fifty per cent (50%) of the total outstanding shares of DynaMexico,
the 100 % owner of the San Jose de Gracia District (“SJG”). Goldgroup now holds 50% of the outstanding shares of DynaMexico.

Drilling programs conducted pursuant to
the Earn In/ Option Agreement completed a total of 298 drill holes covering 68,741 meters of drilling from 2007 through March 2011.
Results of the drilling activity, including the results of previous drilling in 1997-1998, appear in an “SJG Drill Intercepts
Summary File through 11-298”, as Exhibit 99.1 to our Form 10-Q for the period ended June 30, 2011 filed with the SEC on August
22, 2011, and available on EDGAR at:



http://sec.gov/Archives/edgar/data/1111741/000112178111000241/ex99one.htm.



Additionally, the updated Drill Summary
File is posted on the Company’s web site at www.dynaresource.com.



National Instrument 43-101 (“NI
43-101”) Mineral Resource Estimate for the San Jose de Gracia Property

The Company received from DynaMexico on February
14, 2012, a National Instrument 43-101 Mineral Resource Estimate for San Jose de Gracia. The NI 43-101 Resource Estimate (the “2012
DynaMexico-CAM SJG Mineral Resource Estimate”, the “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. The Resource Estimate concentrates on four separate main vein systems at SJG: Tres Amigos, San Pablo, La Union, and
La Purisima.





National Instrument 43-101 Technical Report on the
San Jose de Gracia Property

The Company received from DynaMexico
on March 28, 2012 a National Instrument 43-101 (“NI 43-101”) compliant Technical Report for the San Jose de Gracia
Project (the “2012 DynaMexico Luna-CAM SJG Technical Report”, the “Technical Report”), and approved by
DynaResource de Mexico, SA de CV. (“DynaMexico”), the 100% owner of SJG.

The 2012 DynaMexico Luna-CAM SJG Technical
Report was prepared by Mr. Ramon Luna, BS, P.Geo., of Servicios y Proyectos
Mineros, Hermosillo, Mexico, anda Qualified Person as defined under NI 43-101; and by Mr. Robert Sandefur, BS, MSc, P.E.,
a senior reserve analyst for Chlumsky, Armbrust & Meyer LLC, Lakewood, CO., and a Qualified Person as defined under NI 43-101.
The 2012 DynaMexico Luna-CAM SJG Technical Report includes as Section Fourteen (14) a Mineral Resource Estimate for SJG as prepared
by Mr. Sandefur (the “2012 DynaMexico-CAM SJG 43-101 Mineral Resource Estimate”, the “Resource Estimate”).

The Company filed the Technical Report
on SEDAR (www.sedar.com) on March 28, 2012.

Regional Geology & Mineral Deposits

San José de Gracia lies within
the Sierra Madre Occidental Gold-Silver Belt, in a second-order graben directly east of the regional-scale Grete Graben.  The
basement to the Sierra Madre Occidental consists of deformed Paleozoic sedimentary strata, which are non-conformably overlain by
Tertiary mafic to felsic volcanic and volcaniclastic strata known as the Lower Volcanic Series (“LVS”).  Strata
of the LVS are recognized as being spatially related to gold and silver mineralization in the region.  Volcanic and sedimentary
strata are capped by a thick sequence of non-deformed Late Tertiary ignimbrites, known as the Upper Volcanic Series (“UVS”).



16









Property Geology

The oldest rocks exposed at San José
de Gracia are deformed Paleozoic shale, sandstone, conglomerate and minor limestone, which are non-conformably overlain by andesite
and rhyodacite flows and tuffs of the LVS.  Volcanic and sedimentary strata are cut by quartz-feldspar porphyry, porphyritic
diorite bodies and fine-grained mafic dykes, which may be cotemporal with the LVS.  Ignimbrites of the UVS are exposed at
higher elevations on the property and are thought to act as a post mineralization cap rock, thereby indicating an Early to Mid
Tertiary (Paleocene to Eocene) age for gold mineralization at San José de Gracia.



Geologic Structure

Detailed mapping within the project area
has defined several stages of deformation, beginning with compression during the Laramide Orogeny which affected the Paleozoic
basement and formed flat-lying reverse faults, which have been reactivated as conduits for gold-bearing fluids in the La Prieta
trend (Table 2).  Extension in Tertiary time led to the development of second order structures, trending south, southwest
and southeast; which formed the major structural orientations for mineralization at San José de Gracia.  The latest
phase of deformation is characterized by late-stage extension and southwest tilting.



Mineralization & Alteration

High grade gold mineralization at San
José de Gracia is hosted within andesite and rhyodacite of the LVS and underlying Paleozoic sediments as fault breccia veins
and crackle breccias that exhibit multiple stages of reactivation and fluid flow, as evidenced by crustiform/colloform textures
and cross cutting veins.  Locally, veins exhibit sharp, clay gouge hangingwall and footwall contacts with slickensides, indicating
reactivation of structurally-hosted veins subsequent to mineralization.  Gold grades can also be carried within the mineralized
halo adjacent to the principal veins as quartz-chlorite stockwork.  In addition to vein-hosted mineralization, broad zones
of un-mineralized clay alteration, developed southwest of the main mineralized trends, may overlie lower-grade, disseminated gold
mineralization at depth.



Alteration at San José de
Gracia is laterally and vertically zoned from discrete zones of silicification to broad zones of illite to clay alteration with
increasing elevation and/or distance from the main feeder structures.  Faulting and tilting of the mineralization system has
affected the surface distribution of alteration and in general has exposed deeper portions of the system in the northeast and exposed
shallower, more distal portions of the hydrothermal system in the southwest part of the property.

Six principal mineralized trends have been identified at San
José de Gracia, from south to north. These consist of the:



1.La Purisima Ridge trend;

2.Palos Chinos trend;

3.La Parilla to Veta Tierra trend (Including La Union);

4.San Pablo trend;

5.La Prieta trend, and

6.Los Hilos to Tres Amigos trend.



Lab

A field laboratory is maintained within
the camp facility. The Company utilized the lab for Assaying services during its production activities. Assays were performed by
Company personnel for mined mineralization, feed mineralization, gravity and flotation concentrates, and tailings. The current
status of the lab and equipment is care and maintenance. The Company anticipates utilizing the lab facility in the future for providing
quick check assays to support the exploration works.





17









Item 3. Legal Proceedings

The Company is not involved in any legal proceedings.



Item 4. Mine Safety Disclosures

None.











18







PART II



Item 5. Market for Registrant’s
Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities



The Company’s common stock is traded
on the “OTCBB” under the symbol "DYNR".  The following table sets forth, for the periods indicated,
the high and low bid quotations which set forth reflect inter-dealer prices, without retail mark-up or mark-down and without commissions;
and may not reflect actual transactions.



|Calendar Quarter Ending | Low  | High
|----------------------- | ---- | ----
|March 31, 2010          | 2.85 | 3.25
|June 30, 2010           | 2.75 | 3.35
|September 30, 2010      | 2.65 | 3.60
|December 31, 2010       | 3.00 | 3.95
|March 31, 2011          | 3.92 | 4.95
|June 30, 2011           | 4.10 | 4.80
|September 30, 2011      | 3.90 | 4.45
|December 31, 2011       | 3.75 | 4.20



No cash dividends on the Company common stock have been declared
or paid since the Company's inception. The Company had approximately 595 shareholders at December 31, 2011. This does not include
shareholders that hold their shares in street name or with a broker.

During the fiscal year ended December 31, 2011, except as
included in our Quarterly Reports on Form 10-Q or in our Current Reports on Form  8-K, we have not sold any equity securities
not registered under the Securities Act.

During the fiscal year ended December 31, 2011,
no securities of the Company were authorized for issuance under equity compensation plans.



Item 6. Selected Financial Data

Not applicable.



Item 7.	 Management’s Discussion
and Analysis of Financial Condition and Results of Operations

General

The Company currently holds 50%
of the outstanding shares of DynaResource de México, S.A. de C.V. (“DynaMéxico”), which owns 100% of
the mineral concessions and related interest to the San José de Gracia mining District (“SJG”). SJG is currently
comprised of 33 mining concessions covering approximately 69,121 hectares located in and around San José de Gracia, Sinaloa
State, México (“SJG”). SJG is located on the west side of the Sierra Madre Mountains, approximately 250 kilometers
inland from the port city of Los Mochis, Sinaloa; and approximately 500 kilometers north of Mazatlan, Sinaloa.

The SJG is a High-Grade Mineralized System
which reports historical production of over 1 M. Oz. AU, from a series of underground workings. DynaMéxico is focused on
the exploration and future exploitation of this vein-hosted, near surface, and over 400 hundred M. down – dip gold potential,
that occurs within fault breccia veins; and has been traced on surface and underground over a 15 Sq. Km. area.



Prior Drilling and Exploration Activity / SJG (1997 / 1998)

A drill program was conducted at
SJG in 1997 - 1998 by Golden Hemlock Explorations, Ltd., a prior partner at SJG. Approximately 6,172 meters drilling was completed
in 63 core drill holes. Significant intercepts, including bonanza grades, outlined down dip potential of the Northeast section
(150 Meter NE to SW extent of the Drilling) of the Los Hilos to La Cecena to Tres Amigos Trend.  And, Drill Hole 97-63 confirmed
down dip and extension at the Palos Chinos Area of SJG.

Surface and underground sampling in 1999 -
2000 conducted by the Company confirmed high grades in historic workings and surface exposures throughout the SJG district and
project area.  These high grades outlined the presence of mineralization shoots developed within the veins.  The mineralized
shoots appear to be controlled by dilational jogs and/or vein intersections. A total of 544 samples were collected in 1999-2000,
and assayed an average 6.51 grams/ton (g/t) gold.





19









Recent Pilot Production Activity

During the period 2003 through 2006, DynaMéxico
conducted underground mining and pilot production activities at SJG. The small scale production activities at SJG consisted of
improvements to an existing mill, including the installation of a gravity / flotation processing circuit. Initial test runs with
tailings from historical production were completed in 2002.  Actual mining at the high grade San Pablo area of the SJG property
commenced in March 2003. DynaMéxico produced 18,250 Oz. gold from Mid 2003 to June 2006; from mill feed tonnage of 42,500
tons, at an average grade of approximately 15-20 g/t. Production costs were reported at approx. $175. /Oz.



Recent Financing Activity

As gold prices continued to appreciate
into 2006, exploration financing opportunities increased and the Company and DynaMéxico negotiated and entered into the
“Earn In / Option” agreement with Goldgroup Resources, Inc. (subsequently Goldgroup Mining Inc.), Vancouver, BC, dated
September 1, 2006. The Terms of the Earn In / Option provided for $ 18 M. USD financing from Goldgroup to DynaMéxico, over
four Phases (last drilling at March 2011), and including exploration related expenditures at SJG, in exchange for Goldgroup’s
earning of 50% of the outstanding shares of DynaMéxico. (See Material Agreements; Earn In / Option Agreement.)

Magnetic and IP Surveys

Magnetic and IP surveys were conducted
throughout the SJG district in 2009, covering an area of approximately 15 Sq. Km.

IP is the primary geophysical target at SJG,
and is expected to identify pyrite-based mineralization hosting gold. Initial Survey Grid lines were located approximately perpendicular
to inferred geologic strike. The data response from these grid lines indicate one or more IP sources that dip northwest. Additional
grid lines were crossed with the initial lines, and appear to identify two separate IP sources.



Grid lines to the South appear to indicate
an IP source at > 250 Meters.



Correlation between ground magnetic
and IP:

In general the correlation between the Magnetic
and IP response and data was excellent.



Correlation with recent Drilling Programs
and known Mineralization:

The data response of the surveys correlated
to the recent drilling programs and to the areas of known mineralization at SJG was excellent. Considering this excellent correlation
to known mineralization, additional areas of SJG showing similar data response could be indicative of additional target areas.



Identification of Additional Resource
Target Areas:

Significant survey responses were reported
for the following areas; and are projected for follow up drilling:



San Pablo; Up Dip;

San Pablo; Displacement
Zone;

Tres Amigos; Down Dip and
Northwest;

Tres Amigos; Extension
Northeast;

Orange Tree; Down Dip;

La Cecena, Los Hilos, and
Tepehauje;

Palos Chinos;

La Prieta;

La Purisima; Down dip at
Southeast end;

Argyllic Zone; + 250 M.
Down;



Activity for the Year Ended December
31, 2011

In 2011, the Company's 50% owned subsidiary,
DynaMexico continued drilling under the Earn In/Option Agreement with Goldgroup whereby an additional 59 holes were completed by
March 2011.

An SJG Drill Summary File through
drill holes 11-298, describing the mineralized intercepts of all core drill holes, including the drilling results of 1997, and
including the recent drilling of 2007 - March 31, 2011, was filed as an Exhibit to our Form 10-Q for the period ended June 30,
2011, and is available on the SEC website at:

http://sec.gov/Archives/edgar/data/1111741/000112178111000241/ex99one.htm





20









In the fourth quarter 2011, DynaMéxico
commissioned a National Instrument 43-101 (“43-101”) compliant Technical Report in order to define the results of recent
drilling at SJG, which are explained below.



DynaMéxico Summary of Drilling
Results

The drilling results obtained from San Jose
de Gracia through March 31, 2011 (through DDH SJG 11-298) confirm the extensions of mineralization, down dip of historical workings,
with confirmation of high grade gold (over 10 g/t), and including bonanza grades shoots which are consistent with historical and
recent production grades. Specifically, San Pablo, Tres Amigos, La Purisima, and La Union areas have reported significant results.



National Instrument 43-101 Mineral
Resource Estimate (NI 43-101) for San Jose de Gracia

The Company received from DynaMexico
on February 14, 2012 a National Instrument 43-101 (“NI 43-101”) Mineral Resource Estimate for the SJG property, with
an Effective Date of February 6, 2012.

The NI 43-101 Mineral 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 Mineral Resource Estimate concentrates on four separate
vein systems at SJG: Tres Amigos, San Pablo, La Union, and La Purisima.



2012 DynaMexico-CAM SJG Selected Drill
Results by Target Area



Tres Amigos





Selected drill hole results for Tres Amigos
follow:



|Drill hole | Area        | From m | To m   | length (m) | Au g/t | Ag g/t | Cu%  | Pb%  | Zn% 
|---------- | ----------- | ------ | ------ | ---------- | ------ | ------ | ---- | ---- | ----
|97-002     | Tres Amigos | 42.70  | 58.20  | 15.50      | 3.99   | 15.10  | 0.38 | 0.00 | 0.00
|97-006     | Tres Amigos | 27.80  | 29.65  | 1.85       | 6.46   | 45.50  | 1.10 | 0.03 | 0.32
|97-007     | Tres Amigos | 57.00  | 67.00  | 10.00      | 3.41   | 12.20  | 0.09 | 0.00 | 0.00
|97-009     | Tres Amigos | 100.00 | 102.00 | 2.00       | 13.53  | 3.10   | 0.02 | 0.01 | 0.50
|97-012     | Tres Amigos | 24.50  | 26.20  | 1.70       | 8.57   | 34.90  | 0.39 | 1.00 | 4.30
|97-013     | Tres Amigos | 95.00  | 107.50 | 12.50      | 20.80  | 21.80  | 0.43 | 0.06 | 0.15
|97-035     | Tres Amigos | 126.00 | 132.00 | 6.00       | 8.84   | 14.20  | 0.28 | 0.00 | 0.13
|97-037     | Tres Amigos | 35.90  | 37.20  | 1.30       | 11.97  | 15.00  | 0.19 | 0.22 | 3.60
|97-039     | Tres Amigos | 40.20  | 43.20  | 3.00       | 29.50  | 44.60  | 0.58 | 0.95 | 7.45
|97-040     | Tres Amigos | 78.00  | 80.00  | 2.00       | 14.88  | 10.90  | 0.19 | 0.17 | 0.10
|97-040     | Tres Amigos | 92.00  | 94.00  | 2.00       | 10.81  | 16.30  | 0.38 | 0.01 | 0.78
|97-040     | Tres Amigos | 104.00 | 108.00 | 4.00       | 7.21   | 4.80   | 0.04 | 0.00 | 0.25
|97-045     | Tres Amigos | 100.00 | 106.00 | 6.00       | 11.46  | 3.40   | 0.03 | 0.02 | 0.17
|97-047     | Tres Amigos | 124.94 | 132.00 | 7.06       | 7.51   | 15.40  | 0.09 | 0.27 | 3.42
|97-050     | Tres Amigos | 78.00  | 80.00  | 2.00       | 8.53   | 10.80  | 0.05 | 0.78 | 2.00
|08-102     | Tres Amigos | 158.66 | 162.47 | 3.81       | 5.10   | 6.60   | 0.14 | 0.01 | 0.19
|08-104     | Tres Amigos | 67.45  | 68.80  | 1.35       | 26.20  | 327.90 | 1.60 | 0.23 | 0.01
|08-113     | Tres Amigos | 25.10  | 26.70  | 1.60       | 13.40  | 3.20   | 0.00 | 0.01 | 0.90
|08-115     | Tres Amigos | 153.30 | 159.00 | 5.70       | 8.31   | 8.30   | 0.17 | 0.00 | 0.07
|08-116     | Tres Amigos | 134.80 | 138.10 | 3.30       | 21.74  | 9.90   | 0.06 | 0.04 | 0.15
|08-118     | Tres Amigos | 27.84  | 31.88  | 4.04       | 5.18   | 30.50  | 0.38 | 0.80 | 5.68







21









|Drill hole | Area | From m | To m | length (m) | Au g/t | Ag g/t | Cu% | Pb% | Zn%
|---------- | ---- | ------ | ---- | ---------- | ------ | ------ | --- | --- | ---

|08-118 | Tres Amigos | 52.65  | 53.73  | 1.08  | 13.70  | 13.90  | 0.06 | 0.98 | 4.53
|------ | ----------- | ------ | ------ | ----- | ------ | ------ | ---- | ---- | ----
|10-150 | Tres Amigos | 285.61 | 288.49 | 2.88  | 10.93  | 14.24  | 0.32 | 0.01 | 0.03
|10-150 | Tres Amigos | 312.80 | 321.81 | 9.01  | 3.97   | 2.35   | 0.09 | 0.00 | 0.03
|10-151 | Tres Amigos | 208.38 | 216.20 | 7.82  | 22.19  | 14.70  | 0.36 | 0.01 | 0.06
|10-152 | Tres Amigos | 174.42 | 175.55 | 1.13  | 9.85   | 16.68  | 0.18 | 0.05 | 0.15
|10-153 | Tres Amigos | 207.47 | 211.10 | 3.63  | 5.36   | 12.92  | 0.33 | 0.05 | 0.23
|10-154 | Tres Amigos | 73.00  | 74.75  | 1.75  | 21.89  | 9.30   | 0.00 | 0.00 | 0.02
|10-175 | Tres Amigos | 135.93 | 140.00 | 4.07  | 3.41   | 8.34   | 0.15 | 0.28 | 0.56
|10-175 | Tres Amigos | 241.59 | 245.40 | 3.81  | 6.37   | 3.41   | 0.02 | 0.00 | 0.03
|10-176 | Tres Amigos | 221.04 | 228.91 | 7.87  | 2.00   | 7.02   | 0.18 | 0.09 | 1.02
|10-177 | Tres Amigos | 228.63 | 245.00 | 16.37 | 10.58  | 9.75   | 0.25 | 0.02 | 0.09
|10-178 | Tres Amigos | 222.55 | 233.45 | 10.90 | 4.22   | 8.11   | 0.31 | 0.01 | 0.13
|10-179 | Tres Amigos | 75.3   | 77.02  | 1.72  | 105.51 | 49.60  | 0.03 | 0.01 | 0.06
|10-179 | Tres Amigos | 174.85 | 179.52 | 4.67  | 5.70   | 15.89  | 0.11 | 0.00 | 0.16
|10-226 | Tres Amigos | 205.05 | 213.09 | 8.04  | 18.47  | 19.77  | 0.42 | 0.13 | 0.22
|10-227 | Tres Amigos | 176.95 | 186.75 | 9.80  | 8.42   | 11.92  | 0.41 | 0.04 | 0.33
|10-228 | Tres Amigos | 164.31 | 167.29 | 2.98  | 3.73   | 26.21  | 0.58 | 0.09 | 0.35
|10-230 | Tres Amigos | 244.91 | 249.45 | 4.54  | 18.09  | 15.48  | 0.53 | 0.02 | 0.03
|10-231 | Tres Amigos | 266.70 | 269.45 | 2.75  | 8.99   | 35.18  | 0.84 | 0.00 | 0.03
|10-233 | Tres Amigos | 177.00 | 179.40 | 2.40  | 5.42   | 2.87   | 0.03 | 0.04 | 0.41
|10-234 | Tres Amigos | 214.61 | 217.97 | 3.36  | 15.05  | 13.45  | 0.23 | 0.01 | 0.01
|10-235 | Tres Amigos | 147.65 | 151.15 | 3.50  | 2.95   | 0.55   | 0.01 | 0.00 | 0.01
|10-237 | Tres Amigos | 92.44  | 92.84  | 0.40  | 883.91 | 195.00 | 0.24 | 0.77 | 5.35
|11-246 | Tres Amigos | 107.30 | 108.20 | 0.90  | 63.85  | 10.10  | 0.03 | 0.01 | 0.01
|11-257 | Tres Amigos | 60.84  | 63.33  | 2.49  | 5.37   | 9.28   | 0.25 | 0.01 | 0.40
|11-257 | Tres Amigos | 92.00  | 94.66  | 2.66  | 5.00   | 6.74   | 0.25 | 0.02 | 1.16
|11-260 | Tres Amigos | 63.40  | 71.15  | 7.75  | 7.84   | 10.68  | 0.16 | 0.12 | 2.28
|11-265 | Tres Amigos | 47.95  | 52.17  | 4.22  | 3.07   | 2.14   | 0.07 | 0.00 | 0.08
|11-271 | Tres Amigos | 115.40 | 120.15 | 4.75  | 13.93  | 18.56  | 0.54 | 0.02 | 0.14
|11-278 | Tres Amigos | 66.75  | 67.40  | 0.65  | 16.34  | 2.80   | 0.02 | 0.02 | 0.08
|11-280 | Tres Amigos | 3.05   | 4.57   | 1.52  | 10.67  | 0.50   | 0.01 | 0.00 | 0.01



San Pablo





Selected drill hole results for San
Pablo follow:



22









|Drill hole | Area      | From m | To m   | length (m) | Au g/t  | Ag g/t  | Cu%  | Pb%  | Zn% 
|---------- | --------- | ------ | ------ | ---------- | ------- | ------- | ---- | ---- | ----
|07-007     | San Pablo | 85.50  | 87.50  | 2.00       | 24.55   | 45.00   | 0.49 | 0.03 | 0.07
|07-008     | San Pablo | 115.80 | 118.10 | 2.30       | 7.60    | 18.90   | 0.02 | 0.01 | 0.00
|07-009     | San Pablo | 167.40 | 170.55 | 3.15       | 8.24    | 2.00    | 0.00 | 0.00 | 0.01
|07-012     | San Pablo | 19.70  | 23.90  | 4.20       | 10.45   | 10.00   | 0.15 | 0.00 | 0.01
|07-023     | San Pablo | 69.10  | 70.50  | 1.40       | 9.16    | 24.50   | 0.63 | 0.03 | 0.04
|07-026     | San Pablo | 65.90  | 67.80  | 1.90       | 34.00   | 18.70   | 0.21 | 0.01 | 0.05
|07-027     | San Pablo | 142.80 | 148.85 | 6.05       | 13.72   | 28.60   | 1.06 | 0.02 | 0.04
|07-029     | San Pablo | 130.60 | 132.30 | 1.70       | 23.86   | 43.00   | 0.94 | 0.00 | 0.01
|07-031     | San Pablo | 94.25  | 98.05  | 3.80       | 31.32   | 69.60   | 1.01 | 0.23 | 0.74
|08-048     | San Pablo | 219.46 | 228.66 | 9.20       | 4.39    | 7.50    | 0.28 | 0.00 | 0.01
|08-051     | San Pablo | 183.55 | 192.60 | 9.05       | 22.95   | 13.60   | 0.40 | 0.00 | 0.03
|08-060     | San Pablo | 235.70 | 238.60 | 2.90       | 13.88   | 12.50   | 0.58 | 0.00 | 0.01
|08-089     | San Pablo | 173.80 | 175.10 | 1.30       | 4.11    | 35.60   | 1.00 | 0.01 | 0.01
|08-090     | San Pablo | 190.70 | 191.90 | 1.20       | 11.55   | 48.50   | 1.00 | 0.02 | 0.02
|08-092     | San Pablo | 124.80 | 125.80 | 1.00       | 23.31   | 0.50    | 0.00 | 0.01 | 0.00
|08-097     | San Pablo | 227.69 | 229.75 | 2.06       | 17.04   | 20.00   | 0.56 | 0.03 | 0.04
|09-131     | San Pablo | 95.55  | 96.65  | 1.10       | 28.25   | 20.30   | 0.26 | 0.17 | 0.18
|09-133     | San Pablo | 126.80 | 129.80 | 3.00       | 13.10   | 10.25   | 0.32 | 0.00 | 0.02
|09-134     | San Pablo | 79.09  | 81.57  | 2.48       | 4.33    | 9.46    | 0.36 | 0.00 | 0.02
|09-135     | San Pablo | 75.70  | 79.10  | 3.40       | 4.60    | 24.29   | 1.22 | 0.01 | 0.02
|09-137     | San Pablo | 135.90 | 140.87 | 4.97       | 5.35    | 12.46   | 0.31 | 0.00 | 0.01
|09-137     | San Pablo | 157.25 | 158.93 | 1.68       | 12.50   | 16.90   | 0.39 | 0.00 | 0.01
|09-138     | San Pablo | 150.62 | 153.59 | 2.97       | 8.80    | 10.46   | 0.28 | 0.00 | 0.02
|09-139     | San Pablo | 132.18 | 137.68 | 5.50       | 20.51   | 25.82   | 0.70 | 0.00 | 0.01
|09-140     | San Pablo | 99.92  | 102.20 | 2.28       | 4.59    | 67.30   | 1.77 | 0.00 | 0.01
|10-195     | San Pablo | 170.67 | 173.61 | 2.94       | 3.26    | 10.47   | 0.32 | 0.00 | 0.00
|10-197     | San Pablo | 48.15  | 51.82  | 3.67       | 7.96    | 13.18   | 0.49 | 0.00 | 0.03
|10-197     | San Pablo | 102.00 | 105.30 | 3.30       | 28.38   | 14.00   | 0.00 | 0.01 | 0.09
|10-199     | San Pablo | 4.68   | 6.24   | 1.56       | 9.14    | 4.10    | 0.02 | 0.00 | 0.00
|10-201     | San Pablo | 23.40  | 25.50  | 2.10       | 15.78   | 17.35   | 0.19 | 0.01 | 0.02
|10-203     | San Pablo | 70.65  | 76.15  | 5.50       | 332.86* | 143.90* | 0.02 | 0.00 | 0.01
|10-207     | San Pablo | 80.15  | 83.20  | 3.05       | 16.74   | 24.17   | 0.54 | 0.01 | 0.02
|10-212     | San Pablo | 46.80  | 51.60  | 4.80       | 5.90    | 6.97    | 0.38 | 0.01 | 0.22
|10-213     | San Pablo | 171.75 | 173.56 | 1.81       | 5.78    | 10.60   | 0.18 | 0.00 | 0.01
|10-215     | San Pablo | 186.80 | 190.27 | 3.47       | 15.82   | 14.68   | 0.41 | 0.03 | 0.02
|10-217     | San Pablo | 182.64 | 184.06 | 1.42       | 89.95   | 38.70   | 0.74 | 0.00 | 0.01
|10-219     | San Pablo | 155.84 | 157.25 | 1.41       | 10.82   | 11.84   | 0.39 | 0.00 | 0.01
|10-221     | San Pablo | 69.98  | 71.98  | 2.00       | 13.14   | 23.93   | 0.62 | 0.00 | 0.01





23











|Drill hole | Area | From m | To m | length (m) | Au g/t | Ag g/t | Cu% | Pb% | Zn%
|---------- | ---- | ------ | ---- | ---------- | ------ | ------ | --- | --- | ---

|10-224 | San Pablo | 122.82 | 125.05 | 2.23 | 5.29  | 18.70 | 0.69 | 0.02 | 0.04
|------ | --------- | ------ | ------ | ---- | ----- | ----- | ---- | ---- | ----
|10-224 | San Pablo | 148.60 | 154.95 | 6.35 | 7.04  | 13.31 | 0.57 | 0.00 | 0.01
|10-236 | San Pablo | 112.96 | 117.03 | 4.07 | 11.38 | 22.92 | 0.68 | 0.00 | 0.01
|11-247 | San Pablo | 63.60  | 65.45  | 1.85 | 10.49 | 5.92  | 0.01 | 0.00 | 0.02
|11-247 | San Pablo | 80.00  | 83.47  | 3.47 | 5.00  | 36.71 | 0.53 | 0.01 | 0.02
|11-249 | San Pablo | 108.20 | 109.93 | 1.73 | 8.21  | 30.29 | 0.80 | 0.00 | 0.02
|11-250 | San Pablo | 101.72 | 104.81 | 3.09 | 20.15 | 53.44 | 0.88 | 0.24 | 0.54
|11-263 | San Pablo | 119.88 | 121.13 | 1.25 | 9.47  | 21.70 | 0.65 | 0.01 | 0.04
|11-264 | San Pablo | 145.21 | 146.45 | 1.24 | 21.24 | 78.80 | 0.72 | 0.04 | 0.01
|11-268 | San Pablo | 92.65  | 94.25  | 1.60 | 11.74 | 21.13 | 0.37 | 0.01 | 0.04



La Union



Selected drill results for La Union follow:



|Drill hole | Area     | From m | To m   | length (m) | Au g/t | Ag g/t | Cu%  | Pb%  | Zn% 
|---------- | -------- | ------ | ------ | ---------- | ------ | ------ | ---- | ---- | ----
|92-001     | La Union | 46.00  | 60.96  | 14.96      | 2.58   |        |      |      |     
|97-027     | La Union | 20.30  | 21.30  | 1.00       | 6.14   | 12.50  | 0.05 | 0.24 | 0.04
|97-029     | La Union | 38.10  | 41.20  | 3.10       | 3.63   | 8.60   | 0.11 | 0.02 | 0.06
|97-030     | La Union | 75.00  | 78.10  | 3.10       | 4.62   | 9.10   | 0.50 | 0.00 | 0.01
|97-031     | La Union | 87.00  | 91.00  | 4.00       | 2.84   | 6.70   | 0.34 | 0.00 | 0.01
|97-034     | La Union | 45.70  | 47.70  | 2.00       | 8.87   | 4.10   | 0.14 | 0.00 | 0.01
|08-061     | La Union | 27.80  | 31.30  | 3.50       | 2.01   | 24.80  | 0.45 | 0.22 | 0.15
|08-076     | La Union | 32.75  | 34.85  | 2.10       | 36.09  | 47.80  | 0.43 | 0.80 | 1.06
|08-080     | La Union | 125.30 | 128.40 | 3.10       | 4.82   | 4.40   | 0.11 | 0.00 | 0.01
|09-143     | La Union | 55.36  | 56.76  | 1.40       | 12.08  | 8.80   | 0.13 | 0.01 | 0.01
|10-208     | La Union | 150.61 | 152.67 | 2.06       | 6.60   | 10.30  | 0.40 | 0.00 | 0.01
|10-216     | La Union | 39.24  | 42.20  | 2.96       | 12.36  | 3.45   | 0.06 | 0.00 | 0.01
|10-218     | La Union | 140.01 | 141.30 | 1.29       | 8.42   | 6.41   | 0.08 | 0.00 | 0.01
|10-223     | La Union | 29.52  | 31.14  | 1.62       | 9.90   | 6.60   | 0.02 | 0.00 | 0.02
|10-223     | La Union | 63.90  | 67.42  | 3.52       | 10.24  | 10.69  | 0.62 | 0.00 | 0.01
|11-244     | La Union | 73.82  | 74.86  | 1.04       | 9.79   | 65.20  | 1.42 | 0.03 | 0.37
|11-252     | La Union | 55.25  | 59.70  | 4.45       | 4.26   | 12.05  | 0.37 | 0.01 | 0.04
|11-256     | La Union | 51.61  | 52.85  | 1.24       | 144.08 | 138.60 | 1.06 | 1.61 | 1.78
|11-256     | La Union | 99.93  | 101.29 | 1.36       | 9.04   | 3.30   | 0.01 | 0.00 | 0.01
|11-298     | La Union | 49.15  | 49.85  | 0.7        | 49.39  | 20.80  | 0.20 | 0.01 | 0.03





24







La Purisima



Selected drill hole results for La Purisima
follow:



|Drill hole | Area        | From m | To m   | length (m) | Au g/t | Ag g/t | Cu%  | Pb%  | Zn% 
|---------- | ----------- | ------ | ------ | ---------- | ------ | ------ | ---- | ---- | ----
|97-055     | La Purisima | 24.40  | 27.40  | 3.00       | 5.24   | 28.50  | 0.63 | 0.35 | 1.83
|97-063     | La Purisima | 54.50  | 61.50  | 7.00       | 3.13   | 4.00   | 0.07 | 0.02 | 0.00
|97-063     | La Purisima | 67.30  | 70.00  | 2.70       | 8.45   | 11.10  | 0.68 | 0.00 | 0.00
|07-016     | La Purisima | 32.45  | 34.60  | 2.15       | 5.20   | 4.20   | 0.22 | 0.00 | 0.01
|07-021     | La Purisima | 158.70 | 160.80 | 2.10       | 75.90  | 76.00  | 1.61 | 0.07 | 0.00
|07-036     | La Purisima | 91.40  | 92.82  | 1.42       | 4.47   | 2.60   | 0.01 | 0.01 | 0.06
|07-037     | La Purisima | 251.30 | 253.50 | 2.20       | 4.88   | 23.00  | 0.01 | 0.01 | 0.00
|07-039     | La Purisima | 197.55 | 200.80 | 3.25       | 10.93  | 4.60   | 0.04 | 0.00 | 0.01
|07-042     | La Purisima | 16.10  | 18.30  | 2.20       | 3.02   | 2.00   | 0.01 | 0.01 | 0.05
|08-068     | La Purisima | 135.40 | 137.00 | 1.60       | 18.16  | 8.30   | 0.04 | 0.03 | 0.22
|08-070     | La Purisima | 120.50 | 121.60 | 1.10       | 9.50   | 2.70   | 0.01 | 0.00 | 0.06
|08-082     | La Purisima | 151.60 | 153.30 | 1.70       | 18.16  | 0.10   | 0.00 | 0.00 | 0.04
|10-161     | La Purisima | 87.70  | 99.67  | 11.97      | 3.12   | 4.86   | 0.36 | 0.00 | 0.01
|10-186     | La Purisima | 92.10  | 93.45  | 1.35       | 14.73  | 11.17  | 0.47 | 0.00 | 0.00
|10-193     | La Purisima | 41.15  | 46.75  | 5.60       | 3.96   | 32.31  | 0.01 | 0.10 | 0.14
|10-198     | La Purisima | 35.05  | 36.58  | 1.53       | 13.64  | 6.10   | 0.14 | 0.00 | 0.00
|10-204     | La Purisima | 128.02 | 131.86 | 3.84       | 4.06   | 3.15   | 0.09 | 0.00 | 0.00
|10-204     | La Purisima | 173.15 | 174.58 | 1.43       | 7.21   | 5.57   | 0.08 | 0.00 | 0.01
|10-206     | La Purisima | 121.73 | 124.04 | 2.31       | 14.63  | 3.45   | 0.02 | 0.00 | 0.00
|11-282     | La Purisima | 27.43  | 30.48  | 3.05       | 6.21   | 3.44   | 0.01 | 0.02 | 0.03
|11-282     | La Purisima | 74.45  | 75.36  | 0.91       | 18.87  | 10.10  | 0.03 | 0.00 | 0.00
|11-282     | La Purisima | 152.40 | 153.92 | 1.52       | 7.79   | 1.40   | 0.04 | 0.00 | 0.00
|11-285     | La Purisima | 85.06  | 87.92  | 2.86       | 3.93   | 0.80   | 0.03 | 0.00 | 0.00
|11-285     | La Purisima | 98.50  | 102.15 | 3.65       | 6.70   | 3.87   | 0.20 | 0.00 | 0.01
|11-289     | La Purisima | 109.73 | 112.78 | 3.05       | 9.50   | 7.05   | 0.11 | 0.02 | 0.00
|11-293     | La Purisima | 38.11  | 39.27  | 1.16       | 10.06  | 0.50   | 0.01 | 0.00 | 0.00
|11-293     | La Purisima | 158.75 | 160.55 | 1.80       | 12.65  | 2.84   | 0.10 | 0.00 | 0.01



Block Model in Surpac

While the Company has compiled its manual calculation
and internal interpretation of the mineralization at SJG defined by drilling and production to date; the Company also is in process
of building the block model of mineralization at SJG using Surpac, (Gemcom) software. The current block model at SJG confirms mineralization
at San Pablo, Tres Amigos, La Union, Palos Chinos, and La Purisima; with portions of the mineralization in a high grade category,
and including mineralization at San Pablo and Tres Amigos, and is consistent with the CAM SJG Mineral Resource Estimate. The Company
will continue this Surpac modeling work as additional drill programs are planned and completed.



National Instrument 43-101 Technical Report
for San Jose de Gracia



The Company received from DynaMexico
on March 28, 2012 a National Instrument 43-101 (“NI 43-101”) compliant Technical Report for the San Jose de Gracia
Project (the “2012 DynaMexico Luna-CAM SJG Technical Report”, the “Technical Report”), and approved by
DynaResource de Mexico, SA de CV. (“DynaMexico”), the 100% owner of SJG.



25







The 2012 DynaMexico Luna-CAM SJG Technical
Report was prepared by Mr. Ramon Luna, BS, P.Geo., of Servicios y Proyectos
Mineros, Hermosillo, Mexico, anda Qualified Person as defined under NI 43-101; and by Mr. Robert Sandefur, BS, MSc, P.E.,
a senior reserve analyst for Chlumsky, Armbrust & Meyer LLC, Lakewood, CO., and a Qualified Person as defined under NI 43-101.
The 2012 DynaMexico Luna-CAM SJG Technical Report includes as Section Fourteen (14) a Mineral Resource Estimate for SJG as prepared
by Mr. Sandefur (the “2012 DynaMexico-CAM SJG 43-101 Mineral Resource Estimate”, the “Resource Estimate”).



The Company filed the Technical Report
on SEDAR (www.sedar.com) on March 28, 2012.

Preliminary Economic Assessment Report

DynaMexico approved and released the National
Instrument 43-101 (“NI 43-101”) Technical Report for SJG on March 28, 2012, and the Company now expects DynaMexico
to commission a Preliminary Economic Assessment Report (“PEA”) in the second quarter, 2013. The Company expects the
PEA to be commissioned to and compiled by a reputable firm and pursuant to National Instrument 43-101.



Structure of Company / Operations

Activities in México are conducted by
DynaMéxico, through operating agreement to the operating subsidiary of DynaResource, Inc., Mineras de DynaResource SA de
CV. (“MinerasDyna”); with the management of personnel being contracted by MinerasDyna through to the personnel management
subsidiary, DynaResource Operaciones, SA de CV (“DynaOperaciones”). DynaResource, Inc. management and consultants continue
to manage the 3 subsidiaries in México; while Chairman / CEO K.D. Diepholz is the President of each of the 3 companies.
Management and administrative fees are charged by MinerasDyna and DynaOperaciones, which are eliminated in consolidation.



Competitive Advantage

The Company, through its subsidiaries, has
been conducting business in México since March 2000. During this period the Company believes it has structured its subsidiaries
properly and strategically, and during which time the Company has retained key personnel and developed key relationships and support.
The Company believes its experience and accomplishments in México gives it a competitive advantage, even though many competitors
may be larger and have more capital resources.



Drilling Programs

Further drilling programs at SJG are projected
for the latter half of 2013, but those plans will take into consideration the recent NI 43-101 2012 DynaMexico-CAM SJG Mineral
Resource Estimate and the recommendations made in the 2012 DynaMexico Luna-CAM SJG 43-101 Technical Report. Further drilling may
be based upon recommendations made in the anticipated PEA report. The Company expects continued drilling at SJG at San Pablo, Tres
Amigos, La Cecena, Palos Chinos, La Union, La Purisima, and La Prieta. And, the Company expects to confirm extensions to mineralization
in all directions and down dip from the main target areas.



Capital contributions and Expenditures
to Earn In

In 2011, Goldgroup contributed $3,999,717 USD
to DynaMéxico, in the year ending December 31, 2011. The total capital contributed by Goldgroup to DynaMéxico at
December 31, 2011 was $18,000,000 USD which completed Goldgroup's capital contribution obligations under the Earn In/Option Agreement.



Note Receivable – Affiliate

In the year ending December 31, 2011, the Company
did not loan any additional funds to DynaResource Nevada, Inc., a Nevada Corporation (“DynaNevada”), with one operating
subsidiary in México, DynaNevada de México, SA de CV (“DynaNevada de Mexico”). The total amount loaned
by the Company to DynaNevada at December 31, 2010 was $750,000 USD. The terms of the Note Receivable provide for a “Convertible
Loan”, repayable at 5% interest over a 3 year period, and convertible at the Company’s option into Common Stock of
DynaNevada at $0.25 / Share.  DynaNevada is a related entity, and through its subsidiary in México (DynaNevada
de México), (“DynaNevada de Mexico”), has entered into an Option agreement with Grupo México (“IMMSA”)
in México, for the exploration and development of approximately 3,000 hectares in the State of San Luis Potosi (“the
Santa Gertrudis Property”). In March, 2010, DynaNevada de Mexico completed the Option with IMMSA so that it now owns 100%
of Santa Gertrudis. In June, 2010, DynaNevada de Mexico acquired an additional 6,000 Hectares in the State of Sinaloa (“the
San Juan Property”).





26









On December 31, 2010, the Company exercised
its option to convert the receivable from DynaNevada into shares of common stock at a rate of $.25 per share. The Company received
3,223,040 shares, which represents approximately 19.95% shares of outstanding shares of DynaNevada. At the time of the exchange,
DynaNevada’s net book value was approximately $695,000, consisting of $30,000 cash and the remainder unproven mining properties.
DynaNevada has a contingent liability arising from the purchase of one of the mining properties, which Management believes has
no merit. Based upon the above, Management estimated the value of the Company’s DynaNevada shares as of December 31, 2011
and 2010 to be $70,000. Management believes the impairment is temporary, and therefore an unrealized loss of $735,760 has been
recorded in comprehensive income.



Competition

DynaMéxico retains 100% of the
rights to concessions over the area of the San José de Gracia property and currently sees no competition for mining on the
lands covered by those concessions. If DynaMéxico were to re-start production activities, the sale of gold and any bi-products
would be subject to global market prices, which prices fluctuate daily. The Company was successful in selling gold concentrates
produced from SJG in prior years, and the Company expects willing buyers for its produced concentrates and/or other mineral products
in the future. Actual prices received by DynaMéxico would depend upon these global market prices, less processing charges
and any deductions.

The Company conducted a mining and
milling operation from March 2003 through June, 2006. This activity was suspended in order to focus efforts on the exploration
of the vast SJG District. The Company reported no revenue in 2008 and 2007. The Company does not expect any revenues from mining
and production in 2011-2012. The Company earned minimal revenue during 2011 and 2010 of $0 and $305,652 respectively for exploration
services performed for a related party.

The Company’s production and
exploration costs were $2,654,227 and $3,620,617 for the years ended December 31, 2011 and 2010 respectively. The exploration costs
in 2011 were less than in 2010 due to less drilling.

The Company's operating expenses
included two categories, a) depreciation and amortization, and b) general and administrative expenses. Operating expenses were
$2,933,794 for the year ended December 31, 2011 compared to $2,285,397 for the year ended December 31, 2010. Included in these
amounts was depreciation and amortization of $132,022 and $142,951 in 2011 and 2010 respectively and common stock issued for services
of $1,161,189 and $901,437 in 2011 and 2010 respectively.

Other income and expenses included interest
income for the year ended December 31, 2011 of $1,123 compared with $2,655 for the year ended December 31, 2010. Additionally,
we had other income of $0 in 2011 compared to $883 in 2010.



Noncontrolling Interest

Under the terms of the Earn In Agreement, Goldgroup
Mining Inc. (Goldgroup), throughout 2010, had earned and owned a 25% interest in DynaResource de Mexico, S.A. de C.V. (DynaMexico)
and since March 2011, Goldgroup's ownership percentage was 50%. The applicable portion of the earnings or loss attributable to
Goldgroup is offset in this section. In the year ended December 31, 2011 and 2010 the portion of the net loss attributable to Goldgroup
was $1,624,783 and $804,511 respectively. The increase in the amount attributable to the non-controlling interest is due to an
increase in expenses in DynaMexico and therefore an increase in the loss of which the non-controlling interest would be allocated
a larger amount.



Currency Translation Income / Loss

The currency translation loss was
$(307,004) for the year ended December 31, 2011 and a gain of $419,840 for the year ended December 31, 2010. These gains are caused
by the fluctuation of the exchange rate between the United States dollar and the Mexican peso.

The Company’s comprehensive loss
before the noncontrolling interest for the years ended December 31, 2011 and 2010 was ($4,365,309) and ($5,443,107) respectively.
The decrease in the loss is attributed to less exploration activities and related costs in 2011.



Plan of Operation

The Plan of operation for the next
twelve months includes DynaMexico continuing drilling, exploration and pre-production activities at San Jose de Gracia. The amount
allocated to each of these will depend on the recommendations that DynaMexico receives in the Preliminary Economic Assessment that
DynaMexico expects to commission in the second quarter, 2013. The Company is required to fund its general and administrative expenses
in the US. The Company does not currently generate revenue. The Company believes that cash on hand is adequate to fund our ongoing
general and administrative expenses through 2011. The Company plans to seek additional capital funding during the next 12 months
depending on market conditions, results of drilling activities, plans for production or continuing exploration activities, and
other circumstances.



27







Capital Expenditures

The Company’s primary activities
relate to the exploration of SJG property through its 50% owned subsidiary DynaMexico. Drilling and other services at SJG are contracted
through MinerasDyna, the operating entity, to contractors. The Company does not foresee significant capital purchases in 2012 which
would have to be funded out of its current cash reserves.

Liquidity and Capital Resources

As of December 31, 2011, the Company
maintained working capital of $2,625,365, comprised of current assets of $2,705,660 and current liabilities of $125,295. This represents
an increase of $1,077,335 from the working capital maintained by the Company of $1,548,030 at December 31, 2010, approximately
$500,000 due to additional funds contributed by Goldgroup under the Earn In / Option Agreement which were still on hand at December
31, 2011 and capital raised by the Company.

Net cash used in operations for
the year ended December 31, 2011 increased to $4,268,132 from $4,255,418 for the year ended December 31, 2010.

Cash used for purchase of fixed
assets was $692,203 and $115,299 for the years ended December 31, 2011 and 2010 respectively.

Cash provided by financing activities
for the year ended December 31, 2011 was $6,354,303 compared to $3,567,250 for the year ended December 31, 2010. The main changes
include an increase in common stock sold by the Company of approximately $1.8 million over the year ended December 31, 2010.

Sampling Process

The geological data contained in this report
was verified by an appropriate quality control person using industry standard quality controls and quality assurance protocols
utilized in exploration activities. Standard reference samples and various duplicates are inserted in each batch of assays. Drill
core samples are cut by saw on site and samples splits are prepared for shipment, sealed and then shipped for assaying. Samples
are sent to a certified assayer (Inspectorate Exploration & Mining Services Ltd., Vancouver, BC.) and analyzed for gold by
fire assay and for silver and 34 other trace and major elements in accordance with standard industry practices.



2011 Drilling Programs

In the period September 2006 through December
31, 2011, DynaMexico completed approximately 68,741 meters drilling at San Jose de Gracia, resulting in a defined NI 43-101 Mineral
Resource Estimate as described in the 2012 DynaMexico-CAM SJG Mineral Resource Estimate. The Company expects continued and subsequent
drilling programs in 2013 at San Pablo, Tres Amigos, La Cecena, Palos Chinos, La Union, La Purisima, and La Prieta / Rosario /
Rudolpho. The Company expects extensions to mineralization in all directions and down dip from the main target areas.



Mineralization at San José de Gracia

The Company was informed by DynaMéxico
that it had outlined significant mineralization from drilling activity at San Pablo, Tres Amigos, La Union, and La Purisima areas
of SJG as described in the recent NI 43-101 2012 DynaMexico-CAM SJG Mineral Resource Estimate. Further drilling is expected to
outline additional mineralization at these 4 major target areas at SJG, while additional mineralization are also expected to be
defined at La Prieta and the area Northeast of Tres Amigos. Other areas at SJG indicate clear potential to develop additional mineralization
as well.



No Known Reserves

Currently, the Company’s drilling
programs (through DynaMexico) are exploratory in nature.



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.





28









Preliminary Economic Assessment Report
(“PEA”)

The Company expects DynaMéxico to commission
and complete a Preliminary Economic Assessment Report (“PEA”) in the second quarter, 2013.



Item 7A. Quantitative and Qualitative Disclosures
about Market Risk

Not applicable.



Item 8. Financial Statements and Supplementary Data

Incorporated into and forming
an integral part of this Form 10-K are the audited financial statements for the Company for the years ended December 31, 2011 and
2010. The financial statements as of December 31, 2011 and 2010, of the Company included in this Form 10-K have been audited by
The Hall Group, CPAs, independent registered public accountants, as set forth in their report. The financial statements have been
included in reliance upon the authority of them as experts in accounting and auditing.



Financial Statements:

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2011 and
2010

Consolidated Statements of Operations
for the Years Ended December 31, 2011 and 2010 and Cumulative Since Reentering the Exploration Stage (January 1, 2007) through
December 31, 2011

Consolidated Statement of Changes
in Stockholders’ Equity for the Years Ended December 31, 2011 and 2010

Consolidated Statements of Cash
Flows for the Years Ended December 31, 2011 and 2010 and Cumulative Since Reentering the Exploration Stage (January 1, 2007) through
December 31, 2011

Notes to the Consolidated Financial Statements
for the Years Ended December 31, 2011 and 2010





29







REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM







To
the Board of Directors and Management of

DynaResource,
Inc.

Irving,
Texas



We
have audited the accompanying consolidated balance sheets of DynaResource, Inc. and subsidiaries as of December 31, 2011 and 2010
and the related consolidated statements of operations, stockholders’ equity and cash flows for the years ended December
31, 2011 and 2010 and for the period since reentering the Exploration Stage (January 1, 2007) through
December 31, 2011.These consolidated financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on our audits.



We
conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.



We
were not engaged to examine management’s assertion about the effectiveness of DynaResource, Inc.’s internal control
over financial reporting as of December 31, 2011 and 2010 and, accordingly, we do not express an opinion thereon.



In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position
of DynaResource, Inc. and subsidiaries as of December 31, 2011 and 2010 and the results of its operations and its cash flows for
the years ended December 31, 2011 and 2010 and for the period since reentering the Exploration Stage
(January 1, 2007) through December 31, 2011in conformity with accounting principles generally accepted in the United States
of America.









The
Hall Group, CPAs

Dallas,
Texas



March
22, 2012

30





DYNARESOURCE, INC.

(An Exploration Stage Company)

Consolidated Balance Sheets

December 31, 2011 and 2010

|                                                                                              |  |   | 2011        |   |  |   | 2010        |  
|--------------------------------------------------------------------------------------------- |  | - | ----------- | - |  | - | ----------- | -
|                                                                                              |  |   |             |   |  |   |             |  
|ASSETS                                                                                        |  |   |             |   |  |   |             |  
|Current Assets:                                                                               |  |   |             |   |  |   |             |  
|Cash and Cash Equivalents                                                                     |  | $ | 2,670,933   |   |  | $ | 1,277,065   |  
|Foreign Tax Receivable                                                                        |  |   | 34,593      |   |  |   | 255,384     |  
|Other Current Assets                                                                          |  |   | 45,134      |   |  |   | 112,578     |  
|Total Current Assets                                                                          |  |   | 2,750,660   |   |  |   | 1,645,027   |  
|                                                                                              |  |   |             |   |  |   |             |  
|Fixed Assets:                                                                                 |  |   |             |   |  |   |             |  
|Mining Camp Equipment and Fixtures (Net of Accumulated Depreciation of $705,511 and $617,645) |  |   | 967,319     |   |  |   | 362,882     |  
|Mining Properties (Net of Accumulated Amortization of $484,842 and $440,686)                  |  |   | 4,218,525   |   |  |   | 4,262,681   |  
|Total Fixed Assets                                                                            |  |   | 5,185,844   |   |  |   | 4,625,563   |  
|                                                                                              |  |   |             |   |  |   |             |  
|Other Assets:                                                                                 |  |   |             |   |  |   |             |  
|Investment in Affiliate                                                                       |  |   | 70,000      |   |  |   | 70,000      |  
|Other Assets                                                                                  |  |   | 178,178     |   |  |   | 162,728     |  
|Total Other Assets                                                                            |  |   | 248,178     |   |  |   | 232,728     |  
|TOTAL ASSETS                                                                                  |  | $ | 8,184,682   |   |  | $ | 6,503,318   |  
|                                                                                              |  |   |             |   |  |   |             |  
|LIABILITIES AND EQUITY                                                                        |  |   |             |   |  |   |             |  
|Current Liabilities:                                                                          |  |   |             |   |  |   |             |  
|Accounts Payable                                                                              |  | $ | 73,266      |   |  | $ | 32,225      |  
|Accrued Expenses                                                                              |  |   | 52,029      |   |  |   | 64,772      |  
|Total Current Liabilities 	 Long-Term Liabilities                                             |  |   | 125,295  0  |   |  |   | 96,997  0   |  
|                                                                                              |  |   |             |   |  |   |             |  
|TOTAL LIABILITIES                                                                             |  | $ | 125,295     |   |  | $ | 96,997      |  
|                                                                                              |  |   |             |   |  |   |             |  
|Equity: Preferred Stock, $1.00 par value, 10,000 shares authorized                            |  |   |             |   |  |   |             |  
|1,000 and 1,000 shares issued and outstanding                                                 |  | $ | 1,000       |   |  | $ | 1,000       |  
|Common Stock, $0.01 par value, 25,000,000 and 12,500,000 shares authorized                    |  |   |             |   |  |   |             |  
|10,602,868 and 9,763,220 shares issued and outstanding                                        |  |   | 106,029     |   |  |   | 97,632      |  
|Preferred Rights                                                                              |  |   | 40,000      |   |  |   | 40,000      |  
|Additional Paid In Capital                                                                    |  |   | 38,421,114  |   |  |   | 31,011,472  |  
|Other Comprehensive Income                                                                    |  |   | 575,600     |   |  |   | 405,948     |  
|Accumulated Deficit                                                                           |  |   | (6,002,516  | ) |  |   | (6,002,516  | )
|Accumulated Deficit Since Reentering the Development Stage                                    |  |   | (21,493,034 | ) |  |   | (17,223,915 | )
|Total DynaResource, Inc. Stockholders’ Equity                                                 |  |   | 11,648,193  |   |  |   | 8,329,621   |  
|Noncontrolling Interest                                                                       |  |   | (3,588,806  | ) |  |   | (1,923,300  | )
|TOTAL EQUITY                                                                                  |  |   | 8,059,387   |   |  |   | 6,406,321   |  
|TOTAL LIABILITIES AND EQUITY                                                                  |  | $ | 8,184,682   |   |  | $ | 6,503,318   |  





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



31







DYNARESOURCE, INC.

(An Exploration Stage Company)

Consolidated Statements of Operations

For the Years Ended December 31, 2011 and
2010

And Cumulative Since Re-entering the Development
Stage (January 1, 2007)

through December 31, 2011



|                                                                                         |  | 2011 |                   | 2010 |  | Cumulative Since Reentering the Exploration Stage (January 1, 2007 through December 31, 2011)
|---------------------------------------------------------------------------------------- |  | ---- | ----------------- | ---- |  | ---------------------------------------------------------------------------------------------
|                                                                                         |  |      |                   |      |  |                                                                                              
|REVENUES                                                                                 |  | $    | 0                 |      |  | $                                                                                            
|                                                                                         |  |      |                   |      |  |                                                                                              
|EXPLORATION EXPENSES (exclusive of depreciation and amortization shown separately below) |  |      | 2,654,227         |      |  |                                                                                              
|GROSS PROFIT (DEFICIT)                                                                   |  |      | (2,654,227        | )    |  |                                                                                              
|                                                                                         |  |      |                   |      |  |                                                                                              
|OPERATING EXPENSES                                                                       |  |      |                   |      |  |                                                                                              
|Depreciation and Amortization Stock Issued for Services                                  |  |      | 132,022 1,161,189 |      |  |                                                                                              
|General and Administrative                                                               |  |      | 1,640,583         |      |  |                                                                                              
|TOTAL OPERATING EXPENSES                                                                 |  |      | 2,933,794         |      |  |                                                                                              
|                                                                                         |  |      |                   |      |  |                                                                                              
|NET OPERATING INCOME (LOSS)                                                              |  |      | (5,588,021        | )    |  |                                                                                              
|                                                                                         |  |      |                   |      |  |                                                                                              
|OTHER INCOME (EXPENSE)                                                                   |  |      |                   |      |  |                                                                                              
|Portfolio Income                                                                         |  |      | 1,123             |      |  |                                                                                              
|Currency Translation Gain (Loss)                                                         |  |      | (307,004          | )    |  |                                                                                              
|Other Income                                                                             |  |      | 0                 |      |  |                                                                                              
|TOTAL OTHER INCOME (EXPENSE)                                                             |  |      | (305,881          | )    |  |                                                                                              
|                                                                                         |  |      |                   |      |  |                                                                                              
|NET INCOME (LOSS) BEFORE INCOME TAXES                                                    |  |      | (5,893,902        | )    |  |                                                                                              
|                                                                                         |  |      |                   |      |  |                                                                                              
|Provision for Income Taxes (Expense) Benefit                                             |  |      | 0                 |      |  |                                                                                              
|NET INCOME (LOSS)                                                                        |  | $    | (5,893,902        | )    |  | $                                                                                            
|Net Loss Attributable to Non-Controlling Interest                                        |  |      | 1,624,783         |      |  |                                                                                              
|NET LOSS ATTRIBUTABLE TO DYNARESOURCE, INC. COMMON SHAREHOLDERS                          |  |      | (4,269,119        | )    |  |                                                                                              
|                                                                                         |  |      |                   |      |  |                                                                                              
|Unrealized Loss on Securities Held for Sale                                              |  |      | 0                 |      |  |                                                                                              
|Unrealized Currency Translation Gain (Loss)                                              |  |      | (96,190           | )    |  |                                                                                              
|                                                                                         |  |      |                   |      |  |                                                                                              
|TOTAL COMPREHENSIVE INCOME (LOSS)                                                        |  |      | (4,365,309        | )    |  |                                                                                              
|Comprehensive (Income) Loss Attributable To Non-Controlling Interest                     |  |      | 40,723            |      |  |                                                                                              
|                                                                                         |  |      |                   |      |  |                                                                                              
|COMPREHENSIVE LOSS ATTRIBUTABLE TO                                                       |  |      |                   |      |  |                                                                                              
|DYNARESOURCE, INC. COMMON SHAREHOLDERS                                                   |  | $    | (4,324,586        | )    |  | $                                                                                            
|                                                                                         |  |      |                   |      |  |                                                                                              
|EARNINGS PER SHARE, Basic and Diluted                                                    |  |      |                   |      |  |                                                                                              
|Weighted Average Shares Outstanding Basic and Diluted                                    |  |      | 10,052,749        |      |  |                                                                                              
|Income (Loss) per Common Share, Basic and Diluted                                        |  | $    | (0.4247           | )    |  | $                                                                                            





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

32





DYNARESOURCE, INC.

(An Exploration Stage Company)

Consolidated Statement of Changes in Stockholders’
Equity

For the Years Ended December 31, 2011 and
2010







|                                        |  | Preferred |        |  | Common |   |        | Preferred |  |  |            | Additional Paid In |  |   |         | Treasury |  |   |        | Other Comprehensive |  |   |            | Accumulated |  |   |          | Deficit Since Reentering the Exploration |  |   |           |   | 
|--------------------------------------- |  | --------- | ------ |  | ------ | - | ------ | --------- |  |  | ---------- | ------------------ |  | - | ------- | -------- |  | - | ------ | ------------------- |  | - | ---------- | ----------- |  | - | -------- | ---------------------------------------- |  | - | --------- | - | 
|                                        |  |           | Shares |  |        |   | Amount |           |  |  | Shares     |                    |  |   | Amount  |          |  |   | Rights |                     |  |   | Capital    |             |  |   | Stock    |                                          |  |   | Income    |   | 
|Stockholders’ Equity, January 1, 2010   |  |           | 1,000  |  |        | $ | 1,000  |           |  |  | 9,374,303  |                    |  | $ | 93,743  |          |  | $ | 40,000 |                     |  | $ | 25,475,425 |             |  | $ | (2,385   | )                                        |  | $ | 1,405,537 |   | 
|                                        |  |           |        |  |        |   |        |           |  |  |            |                    |  |   |         |          |  |   |        |                     |  |   |            |             |  |   |          |                                          |  |   |           |   | 
|Sale of Common Shares                   |  |           |        |  |        |   |        |           |  |  | 124,244    |                    |  |   | 1,242   |          |  |   |        |                     |  |   | 433,460    |             |  |   |          |                                          |  |   |           |   | 
|Issuance of Common Shares for Services  |  |           |        |  |        |   |        |           |  |  | 264,673    |                    |  |   | 2,647   |          |  |   |        |                     |  |   | 898,790    |             |  |   |          |                                          |  |   |           |   | 
|Treasury Stock Purchased                |  |           |        |  |        |   |        |           |  |  |            |                    |  |   |         |          |  |   |        |                     |  |   |            |             |  |   | (141,689 | )                                        |  |   |           |   | 
|Treasury Stock Sold                     |  |           |        |  |        |   |        |           |  |  |            |                    |  |   |         |          |  |   |        |                     |  |   | 71,787     |             |  |   | 144,074  |                                          |  |   |           |   | 
|Other Comprehensive Income              |  |           |        |  |        |   |        |           |  |  |            |                    |  |   |         |          |  |   |        |                     |  |   |            |             |  |   |          |                                          |  |   | (999,589  | ) | 
|DynaMexico Earn In                      |  |           |        |  |        |   |        |           |  |  |            |                    |  |   |         |          |  |   |        |                     |  |   | 4,132,010  |             |  |   |          |                                          |  |   |           |   | 
|Net Income (Loss)                       |  |           |        |  |        |   |        |           |  |  |            |                    |  |   |         |          |  |   |        |                     |  |   |            |             |  |   |          |                                          |  |   |           |   | 
|Stockholders’ Equity, December 31, 2010 |  |           | 1,000  |  |        | $ | 1,000  |           |  |  | 9,763,220  |                    |  | $ | 97,632  |          |  | $ | 40,000 |                     |  | $ | 31,011,472 |             |  | $ | 0        |                                          |  | $ | 405,948   |   | 
|                                        |  |           |        |  |        |   |        |           |  |  |            |                    |  |   |         |          |  |   |        |                     |  |   |            |             |  |   |          |                                          |  |   |           |   | 
|Sale of Common Shares                   |  |           |        |  |        |   |        |           |  |  | 565,148    |                    |  |   | 5,652   |          |  |   |        |                     |  |   | 2,220,005  |             |  |   |          |                                          |  |   |           |   | 
|Issuance of Common Shares for Services  |  |           |        |  |        |   |        |           |  |  | 274,500    |                    |  |   | 2,745   |          |  |   |        |                     |  |   | 1,158,444  |             |  |   |          |                                          |  |   |           |   | 
|Common Stock Options Issued             |  |           |        |  |        |   |        |           |  |  |            |                    |  |   |         |          |  |   |        |                     |  |   | 31,476     |             |  |   |          |                                          |  |   |           |   | 
|Other Comprehensive Income              |  |           |        |  |        |   |        |           |  |  |            |                    |  |   |         |          |  |   |        |                     |  |   |            |             |  |   |          |                                          |  |   | 169,652   |   | 
|DynaMexico Earn In                      |  |           |        |  |        |   |        |           |  |  |            |                    |  |   |         |          |  |   |        |                     |  |   | 3,999,717  |             |  |   |          |                                          |  |   |           |   | 
|Net Income (Loss)                       |  |           |        |  |        |   |        |           |  |  |            |                    |  |   |         |          |  |   |        |                     |  |   |            |             |  |   |          |                                          |  |   |           |   | 
|Stockholders’ Equity, December 31, 2011 |  |           | 1,000  |  |        | $ | 1,000  |           |  |  | 10,602,868 |                    |  | $ | 106,029 |          |  | $ | 40,000 |                     |  | $ | 38,421,114 |             |  | $ | 0        |                                          |  | $ | 575,600   |   | 



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

33





DYNARESOURCE, INC.

(An Exploration Stage Company)

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2011 and
2010

And Cumulative Since Re-entering the Development
Stage (January 1, 2007)

through December 31, 2011



|                                                                        |  | 2011 |            | 2010 |  | Cumulative Since Reentering the Development Stage (January 1, 2007) through December 31, 2011
|----------------------------------------------------------------------- |  | ---- | ---------- | ---- |  | ---------------------------------------------------------------------------------------------
|CASH FLOWS FROM OPERATING ACTIVITIES                                    |  |      |            |      |  |                                                                                              
|Net Income (Loss)                                                       |  | $    | (5,893,902 | )    |  | $                                                                                            
|Adjustments to reconcile net loss to cash used by operating activities: |  |      |            |      |  |                                                                                              
|Issuance of Common Stock for Services                                   |  |      | 1,161,189  |      |  |                                                                                              
|Issuance of Common Stock Options                                        |  |      | 31,476     |      |  |                                                                                              
|Issuance of Preferred Stock for Services                                |  |      | 0          |      |  |                                                                                              
|Depreciation and Amortization                                           |  |      | 132,022    |      |  |                                                                                              
|Loss on Disposition of Assets                                           |  |      | 0          |      |  |                                                                                              
|Change in Operating Assets and Liabilities:                             |  |      |            |      |  |                                                                                              
|Decrease in Accounts Receivable                                         |  |      | 0          |      |  |                                                                                              
|(Increase) Decrease in Foreign Tax Receivable                           |  |      | 220,791    |      |  |                                                                                              
|(Increase) Decrease in Accounts Receivable – Related Party              |  |      | 0          |      |  |                                                                                              
|(Increase) in Other Current Assets                                      |  |      | 67,443     |      |  |                                                                                              
|(Increase) Decrease in Other Assets                                     |  |      | (15,443    | )    |  |                                                                                              
|(Decrease) in Accounts Payable                                          |  |      | 41,041     |      |  |                                                                                              
|Increase (Decrease) Increase in Accrued Expenses                        |  |      | (12,743    | )    |  |                                                                                              
|(Decrease) in Deferred Tax Liability                                    |  |      | 0          |      |  |                                                                                              
|CASH FLOWS (USED IN) OPERATING ACTIVITIES                               |  |      | (4,268,132 | )    |  |                                                                                              
|                                                                        |  |      |            |      |  |                                                                                              
|CASH FLOWS FROM INVESTING ACTIVITIES                                    |  |      |            |      |  |                                                                                              
|Purchase of Fixed Assets                                                |  |      | (692,303   | )    |  |                                                                                              
|Retirement of Fixed Assets                                              |  |      | 0          |      |  |                                                                                              
|Conversion of Note Receivable to Equity                                 |  |      | 0          |      |  |                                                                                              
|Investment in Affiliate                                                 |  |      | 0          |      |  |                                                                                              
|Note Receivable to Affiliate                                            |  |      | 0          |      |  |                                                                                              
|CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES                   |  |      | (692,303   | )    |  |                                                                                              
|                                                                        |  |      |            |      |  |                                                                                              
|CASH FLOWS FROM FINANCING ACTIVITIES                                    |  |      |            |      |  |                                                                                              
|Proceeds from DynaMexico Earn In                                        |  |      | 3,999,717  |      |  |                                                                                              
|Proceeds from Sale of Common Stock                                      |  |      | 2,225,657  |      |  |                                                                                              
|Repurchase of Common Stock Options                                      |  |      | 0          |      |  |                                                                                              
|Other Comprehensive Income (Loss)                                       |  |      | 128,929    |      |  |                                                                                              
|Purchase of Treasury Stock                                              |  |      | 0          |      |  |                                                                                              
|Sale of Treasury Stock                                                  |  |      | 0          |      |  |                                                                                              
|CASH FLOWS PROVIDED BY FINANCING ACTIVITIES                             |  |      | 6,354,303  |      |  |                                                                                              
|NET INCREASE (DECREASE) IN CASH                                         |  |      | 1,393,868  |      |  |                                                                                              
|                                                                        |  |      |            |      |  |                                                                                              
|CASH AT BEGINNING OF PERIOD                                             |  |      | 1,277,065  |      |  |                                                                                              
|CASH AT END OF PERIOD                                                   |  | $    | 2,670,933  |      |  | $                                                                                            
|                                                                        |  |      |            |      |  |                                                                                              
|SUPPLEMENTAL DISCLOSURES                                                |  |      |            |      |  |                                                                                              
|Non-Cash Issuance of Common Shares for Services                         |  | $    | 1,161,189  |      |  | $                                                                                            
|Non-Cash Issuance of Preferred Shares for Services                      |  | $    | 0          |      |  | $                                                                                            
|Non-Cash Conversion of Note Receivable to Equity                        |  | $    | 0          |      |  | $                                                                                            
|Cash Paid During the Year for Interest Expense                          |  | $    | 0          |      |  | $                                                                                            
|Non-Cash Dividend of Property                                           |  | $    | 0          |      |  | $                                                                                            



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



34





DYNARESOURCE, INC.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2011 and 2010





NOTE 1 – NATURE OF ACTIVITIES
AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Activities, History and
Organization:

DynaResource, Inc. (The “Company”
or “DynaResource”) was organized September 28, 1937, as a California corporation under the name of West Coast Mines,
Inc.  In 1998, the Company re-domiciled to Delaware and changed its name to DynaResource, Inc.  The Company
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 Mexico S.A. de C.V. chartered in Mexico (“DynaMexico”).  This Company was
formed to acquire, invest in and develop resource properties in Mexico.  In 2005, the Company formed DynaResource Operaciones
de San Jose De Gracia S.A. de C.V. (“DynaOperaciones”), and acquired effective control of Mineras de DynaResource,
S.A de C.V. (formerly Minera Finesterre S.A. De C.V.), (“MinerasDyna”). The Company owned 25% of MinerasDyna and acquired
effective control of MinerasDyna by acquiring the option to purchase the remaining 75% of the Shares of MinerasDyna. The Company
finalized the option and acquisition of MinerasDyna in January 2010, and now owns 100% of MinerasDyna.   The results
of MinerasDyna are consolidated with those of the Company.

In January 2008, the Company transferred
15% of the ownership of DynaMexico to Goldgroup Resources Inc. (“Goldgroup”), in exchange for $3,000,000 USD cash contribution
for exploration expenditures at the San Jose de Gracia property (“SJG”), and in August 2008, the Company transferred
an additional 10% of the ownership of DynaMexico to Goldgroup in exchange for an additional $3,000,000 USD cash for exploration
expenditures, and in March 2011, the Company transferred an additional 25% of the ownership of DynaMexico to Goldgroup in exchange
for an additional $12,000,000 USD cash for exploration expenditures (See Note 6 below).  Through December 31, 2011, Goldgroup
has contributed $18,000,000 USD to DynaMexico, and it currently owns 50% of DynaMexico.

The Company produced approximately
$7,637,150 in revenues from production activities conducted during the years ended December 31, 2003 through 2006, and suspended
this activity voluntarily to concentrate its efforts on exploration and development.  In accordance with that decision,
as of January 1, 2007, the Company reentered the Exploration Stage and has presented its cumulative results since reentering the
Exploration Stage, in accordance with Accounting Standards Codification (“ASC”) 915 “Development Stage Entities”
(formerly Statement of Financial Accounting Standard (“SFAS”) No. 7, “Accounting and Reporting by Development
Stage Enterprises” (“SFAS No. 7”)), and will continue this presentation until it again has revenues from
operations.

The Company chose to become a voluntary reporting
issuer in Canada in order to avail itself of Canadian regulations regarding reporting for mining properties, 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 revenue and expense. 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  being presented.





35









Basis of Presentation:

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



Principles of Consolidation:

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



Foreign Currency Translation:

The functional currency for the subsidiaries
of the Company is the Mexican peso.  As a result, the financial statements of the subsidiary have been re-measured from
Mexican pesos into U.S. dollars using (i) current exchange rates for monetary asset and liability accounts, (ii) historical exchange
rates for nonmonetary asset and liability accounts, (iii) historical exchange rates for revenues and expenses associated with nonmonetary
assets and liabilities and (iv) the weighted average exchange rate of the reporting period for all other revenues and expenses.  In
addition, foreign currency transaction gains and losses resulting from U.S. dollar denominated transactions are eliminated.  The
resulting re-measured gain or loss is reported as a separate component of stockholders’ equity (comprehensive income (loss)).



The financial statements of the subsidiary
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 financial statements for the subsidiary are as follows for the years ended December 31, 2011 and 2010 (Mexican pesos per
one U.S. dollar):

| |  | 
| |  | 



|                                                   | December 31, 2011
|-------------------------------------------------- | -----------------
|Current exchange rate:                             | Pesos            
|                                                   |                  
|Weighted average exchange rate for the year ended: | Pesos            



|                                                   |                   |      
|-------------------------------------------------- | ----------------- | -----
|                                                   | December 31, 2010
|Current exchange rate:                             | Pesos             | 12.39
|                                                   |                   |      
|Weighted average exchange rate for the year ended: | Pesos             | 12.65



Cash and Cash Equivalents:

The Company considers all highly liquid
debt instruments with a 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.   At December 31, 2011, the Company
had a balance of $216,446 that was in excess of the FDIC insurance limit and $1,042,286 which is currently insured in full under
the FDIC’s temporary unlimited coverage on non-interest bearing transactions accounts, which expires on December 31, 2012.
The carrying amount approximates fair market value.



36







Accounts Receivable and Allowances
for Doubtful Accounts:

The allowance for accounts receivable is recorded
when receivables are considered to be doubtful of collection. No allowance has been established as all receivables were deemed
to be fully collectable.



Foreign Tax Receivable:

Foreign Tax Receivable (IVA) is comprised of
recoverable value-added taxes 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 amount of the IVA receivable as of December 31, 2011 and 2010 are $34,593 and $255,384,
respectively.



Inventory:

As the Company ceased mining production in
2006, there is no inventory as of December 31, 2011 and 2010.



Fixed Assets:

Fixed assets are carried at cost.  Depreciation
is provided over each asset’s estimated useful life.  Upon retirement and disposal, the asset cost and related
accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the determination of the net
income.  Expenditures for geological and engineering studies, maintenance and claim renewals are charged to expense when
incurred.  Additions and significant improvements are capitalized and depreciated.



Mining Properties:

The Company is an ‘Exploration Stage’
company as defined in “SEC Industry Guide 7”.  Mining properties consist of 33 mining concessions
covering approximately 69,121 hectares, at the San Jose de Gracia property, the basis of which are deferred until the properties
are brought into production, at which time they will be amortized on the unit of production method based on estimated recoverable
reserves.  The Company has elected to expense a minimal amount of amortization due to the effects of exploration activities
on the recoverable reserves.  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 deferred costs are recorded do not necessarily reflect
present or future values.



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 December 31,
2011, no indications of impairment existed.



Exploration Costs:

Exploration costs not directly associated
with proven reserves on the mining concessions are charged to operations as incurred. Exploration, development, direct field costs
and administrative costs are expensed in the period incurred.



The carrying amounts of the mining concessions
are reviewed at each calendar year end to determine whether there is any indication of impairment.

As of December 31, 2011, no indications of impairment existed.



Advertising Costs:

The Company incurred no advertising costs for
the years ended December 31, 2011 and 2010.





37









Income Taxes:

Income from the corporation is taxed at regular
corporate rates per the Internal Revenue Code.  Although the Company has tax loss carry-forwards (see Note 5), there is uncertainty
as to utilization prior to their expiration.  Accordingly, the future income tax asset amounts have been fully offset by a
valuation allowance.



Use of Estimates:

In order to prepare financial statement in
conformity with accounting principles generally accepted in the United States, management must make estimates, judgments and assumptions
that affect the amounts reported in the financial statements and determines whether contingent assets and liabilities, if any,
are disclosed in the financial statements. The ultimate resolution of issues requiring these estimates and assumptions could differ
significantly from resolution currently anticipated by management and on which the financial statements are based.



Comprehensive Income:

ASC 220 “Comprehensive Income”,
(formerly SFAS No. 130 “Reporting 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.  For the years ended December 31, 2011 and 2010,
the Company’s components of comprehensive income were foreign currency translation adjustments and unrealized losses on securities
held for sale.



Revenue Recognition:

The Company recognizes revenue in accordance
with ASC 605-10, "Revenue Recognition in Financial Statements", (formerly Staff Accounting Bulletin No. 104 (“SAB
104”).   Revenue is recognized when persuasive evidence of an arrangement exists, delivery or service has
occurred, the sale price is fixed or determinable and receipt of payment is probable.



Revenues earned from the sale of precious metal
concentrates are recognized as the title to the material is passed to the buyer upon delivery.



Earnings per Common Share:

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



There were no potentially dilutive common stock
equivalents as of December 31, 2011, therefore basic earnings per share equals diluted earnings per share for the year ended December
31, 2011.  The Company had 25,000 options outstanding at December 31, 2011. As the Company incurred a net loss during the
year ended December 31, 2011, the basic and diluted loss per common share is the same amount, as any common stock equivalents would
be considered anti-dilutive.



As the Company incurred a net loss during the
year ended December 31, 2010, the basic and diluted loss per common share is the same amount.   As of December 31, 2010, the
Company had zero stock options outstanding that could potentially have a dilutive effect on basic earnings per share in the future.



Recently Issued Accounting Pronouncements:

The Company  does not expect  the  adoption  of  recently  issued  accounting
pronouncements  to have a significant  impact on the Company’s  results of  operations,
financial position or cash flow.  See Note 12 for a discussion of new accounting pronouncements.





38









Reclassifications

Certain prior year balances have been
reclassified to conform to current year presentation.

NOTE 2 – FIXED ASSETS



Fixed assets consist of the following at December
31, 2011 and 2010:



|                                   |  | 2011 |           | 2010
|---------------------------------- |  | ---- | --------- | ----
|                                   |  |      |           |     
|Mining camp equipment and fixtures |  | $    | 1,224,540 |     
|Transportation equipment           |  |      | 268,253   |     
|Lab equipment                      |  |      | 14,306    |     
|Machinery and equipment            |  |      | 43,187    |     
|Office furniture and fixtures      |  |      | 76,895    |     
|Office equipment                   |  |      | 11,673    |     
|Computer equipment                 |  |      | 33,976    |     
|Sub-total                          |  |      | 1,672,830 |     
|Less: Accumulated depreciation     |  |      | (705,511  | )   
|Total                              |  | $    | 967,319   |     
|                                   |  |      |           |     

Depreciation has been provided over
each asset’s estimated useful life.  Depreciation expense was $87,866 and $93,218 for the years ended December
31, 2011 and 2010, respectively. The Company acquired a tractor during 2011 that was not in service as of December 31, 2011, and
therefore, has not yet been depreciated.

NOTE 3 – MINING PROPERTIES

Mining properties consist of the following
at December 31, 2011 and 2010:



|                               |  | 2011 |           | 2010
|------------------------------ |  | ---- | --------- | ----
|San Jose de Gracia (“SJG”):    |  |      |           |     
|Mining Concessions             |  | $    | 4,703,367 |     
|Less: Accumulated Amortization |  |      | (484,842  | )   
|                               |  |      |           |     
|Total Mining Properties        |  | $    | 4,218,525 |     



Amortization expense was $44,156 and
$49,733 for the years ended December 31, 2011 and 2010, respectively.

NOTE 4 – INVESTMENT IN AFFILIATE

Through December 31, 2011 the Company loaned
a total of $805,760 USD to DynaResource Nevada, Inc. (“DynaNevada”), a Nevada Corporation, with one operating subsidiary
in Mexico, DynaNevada de Mexico, SA de CV., (“DynaNevada de Mexico”).  The terms of the Note Receivable provided
for a “Convertible Loan”, repayable at 5% interest over a 3 year period, and convertible at the Company’s option
into common stock of DynaNevada at $.25 / Share.  DynaNevada is a related entity (affiliate), and through its subsidiary
DynaNevada de Mexico, has entered into an Option agreement with Grupo Mexico (IMMSA) in Mexico, for the exploration and development
of approximately 3,000 hectares in the State of San Luis Potosi (“The Santa Gertrudis Property”). DynaNevada de Mexico
completed the Option with IMMSA in March 2010, so that DynaNevada de Mexico now owns 100% of the Santa Gertrudis Property. In June,
2010, DynaNevada de Mexico acquired an additional 6,000 hectares in the State of Sinaloa (the “San Juan Property”).





39









On December 31, 2010, the Company exercised
its option to convert the note receivable and other receivable from DynaNevada into shares of common stock at a rate of $.25 per
share. The Company received 3,223,040 shares, which represents approximately 19.95% of the outstanding shares of DynaNevada. At
the time of the exchange, DynaNevada’s net book value was approximately $695,000, consisting of $30,000 cash and the remainder
unproven mining properties. DynaNevada has a contingent liability arising from the purchase of one of the mining properties, which
Management believes has no merit. Based upon the above, Management estimated the value of the Company’s DynaNevada shares
as of December 31, 2011 and 2010 to be $70,000. Management believes the impairment is temporary, and therefore an unrealized loss
of $735,760 has been recorded in other comprehensive income.

NOTE 5 – 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 cumulative tax effect at the expected tax
rate of 34% (blended for U.S. and Mexico) of significant items comprising the Company’s net deferred tax amounts as of December
31, 2011 and 2010 are as follows:



Deferred Tax Asset Related to:

|                             |  | 2011 |            | 2010
|---------------------------- |  | ---- | ---------- | ----
|Prior Year                   |  | $    | 5,004,276  |     
|Tax Benefit for Current Year |  |      | 2,003,927  |     
|Total Deferred Tax Asset     |  |      | 7,008,203  |     
|Less: Valuation Allowance    |  |      | (7,008,203 | )   
|Net Deferred Tax Asset       |  | $    | 0          |     



The net deferred tax asset and benefit for
the current year is generated primarily from the cumulative net operating loss carry-forward which is approximately $28,000,000
at December 31, 2011, and will expire in the years 2025 through 2030.



The realization of deferred tax benefits
is contingent upon future earnings and is fully reserved at December 31, 2011.

NOTE 6 – MATERIAL AGREEMENTS

Financing/Sale of Stock of Subsidiary:

On September 1, 2006 the Company signed
a “Stock Purchase and Earn In Agreement” (“Earn In”) between  DynaResource and DynaMexico, (“Seller”)
and Goldgroup Mining, Inc. (formerly Goldgroup Resources, Inc.), of Vancouver, British Columbia (“Goldgroup”), (“Buyer”),
and Together, (“the Parties”).

The Earn In provided for Goldgroup to
contribute $18,000,000 on or before March 15, 2011 in exchange for fifty per cent (50%) of the total outstanding shares of DynaMexico,
the owner of the San Jose de Gracia District in northern Sinaloa Mexico (“SJG”). The remaining balance of the $18,000,000
to be contributed was completed on March 14, 2011 and Goldgroup now owns 50% of the outstanding shares of DynaMexico.

NOTE 7 – RELATED PARTY TRANSACTIONS

The Company paid $107,500 and $57,203 to Dynacap
Group, Ltd. (an entity controlled by officers of the Company) for consulting and other fees in 2011 and 2010, respectively.





40









In addition, the Company has issued its stock
to the following directors and consultants for the years ended December 31, 2011 and 2010, respectively:



| |             | 2011 |  | 2010
| | ----------- | ---- |  | ----
| |             |      |  |     
| | Directors   |      |  | $   
| |             |      |  |     
| | Consultants |      |  | $   
| |             |      |  |     
| | Totals      |      |  | $   





The above stock transactions were expensed
as compensation in the financial statements.

During the year ended December 31, 2010,
the Company’s revenue was earned from exploration services performed for a related party.

On December 31, 2010, the Company converted
the Note Receivable from DynaNevada, into shares of common stock, as discussed in Note 4.

NOTE 8 – STOCKHOLDERS’
EQUITY

Preferred Stock:

The Company is authorized to issue 10,000 shares
of its Series A Preferred Stock, having a par value of $1.00 per share.  Holders of the Series A Preferred Stock have the
right to elect a majority of the Board of Directors of the Company.  In October 2007, the Company issued 1,000 shares of Series
A Preferred Stock to its CEO. An aggregate of 1,000 shares of Series A Preferred Stock were outstanding at December 31, 2011 and
2010, respectively.



Common Stock:

The Company is authorized to issue 25,000,000
common shares at a par value of $0.01 per share.  These shares have full voting rights.  At December 31, 2011 and 2010,
there were 10,602,868 and 9,763,220 shares outstanding, respectively.  No dividends were paid in 2011 or 2010.



Preferred Rights:

The Company issued “Preferred
Rights” and received $158,500 in 2003 and $626,000 in 2002, for the rights to percentages of revenues generated from the
San Jose de Gracia Pilot Production Plant.  This has been reflected as “Preferred Rights” in stockholders’
equity.  As of December 31, 2004, $558,312 was repaid and as of December 31, 2005, an additional $186,188 has been repaid,
leaving a current balance of $40,000 and $40,000 as of December 31, 2011 and 2010, respectively.

Stock Issuances:

During 2011, the Company issued 565,148
common shares for cash for $3.75 to $5.00 per share.

During 2011, the Company also issued
274,500 shares for $1,161,189 of consulting services. Included in this amount was 20,000 shares issued to directors for $85,500
in services.

During 2010, the Company issued 124,244
common shares for cash for $3.50 per share.

During 2010, the Company also issued
252,173 shares for $854,562 of consulting services. The Company also issued 12,500 shares to directors for $46,875 in services.

Treasury Stock:

During 2010, the Company repurchased
60,085 shares for $141,689 and resold 60,085 shares for $215,861.

Treasury stock is accounted for by the cost
method.



Options and Warrants:

The Company had 25,000 options or warrants
outstanding at December 31, 2011.



41







During 2011, 25,000 options were issued,
none were exercised and none expired. The Company recorded expense related to the issuance of these options in accordance with
the Black Scholes option pricing model.

During 2010, the Company had no options
or warrants outstanding.

NOTE 9 – EMPLOYEE BENEFIT
PLANS

During the years ended December 31,
2011 and 2010, there were no qualified or non-qualified employee pension, profit sharing, stock option, or other plans authorized
for any class of employees.

NOTE 10 – COMMITMENTS AND
CONTINGENGIES

The Company is required to pay taxes
in order to maintain their concessions.  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 business plans, they do
not anticipate any issues in meeting the minimum annual expenditures for the concessions, and the Company retains sufficient carry
forward amounts to cover over 20 years of the minimum expenditure (as calculated at the 2010 minimum, adjusted for annual inflation
of 4%).

In September 2008, the Company entered
into a 37 month lease agreement for its corporate office.  In August, 2011 the Company entered into a one year extension
of the lease through August 31, 2011. In The Company paid rent expense of $52,395 and $46,230 related to this lease for the years
ended December 31, 2011 and 2010.

The following is a schedule of minimum lease
payments required under the existing lease as of December 31, 2011:



|Year Ended December 31: | Amount         
|----------------------- | ---------------
|                        |                
|                        | 2012           
|                        | 2013 and beyond
|                        |                



NOTE 11 – NON-CONTROLLING
INTEREST

The Company’s Non-controlling Interest
recorded in the consolidated financial statements relates to a 50% interest in DynaResource de México, S.A. de C.V. Changes
in Non-controlling Interest for the year ended December 31, 2011 and 2010 were as follows:



|                                  |  | For the Year Ended December 31,
|--------------------------------- |  | -------------------------------
|                                  |  | 2011                           
|Beginning balance                 |  | $                              
|Operating income (loss)           |  |                                
|Other comprehensive income (loss) |  |                                
|Ending balance                    |  | $                              



The Company began allocating a portion
of other comprehensive income (loss) to the non-controlling interest with the adoption of FASB 160 as of January 1, 2009.



42







NOTE 12 – RECENT ACCOUNTING
PRONOUCEMENTS

In June 2011, the FASB issued Accounting
Standards Update (“ASU”) No. 2011-05, “Comprehensive Income – Presentation of Comprehensive Income.”
ASU No. 2011-05 eliminated the option to present the components of other comprehensive income as part of the statement of stockholders’
equity. It requires an entity to present the total of comprehensive income, the components of net income, and the components of
other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements.
In December, 2011, the FASB issued ASU 2011-12, “Comprehensive Income – Deferral of the Effective Date for Amendments
to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in ASU 2011-05” to defer
the effective date of the specific requirement to present items that are reclassified out of accumulated other comprehensive income
to net income alongside their respective components of net income and other comprehensive income. All other provisions of this
update, which are to be applied retrospectively, are effective for fiscal years, and interim periods within those years, beginning
December 15, 2011, The Company is currently evaluating the impact that the adoption will have on their consolidated financial statements.

In December 2011, the FASB issued ASU
No. 2011-11, “Balance Sheet – Disclosures about Offsetting Assets and Liabilities.” ASU 2011-11 requires entities
to disclose information about offsetting and related arrangements of financial instruments and derivative instruments and will
be applied retrospectively for all comparative periods presented. ASU 2011-11 is effective for annual reporting periods beginning
on or after January 1, 2013, and interim periods within those annual periods. The Company is currently evaluating the impact that
the adoption will have on their consolidated financial statements.

|NOTE 13 – FAIR VALUE OF FINANCIAL INSTRUMENTS
|---------------------------------------------

In September 2006, the guidance for fair
value measurements and disclosure was updated to define fair value, establish a framework for measuring fair value, and expand
disclosures about fair value measurements.  This guidance does not require any new fair value measurements but rather
eliminates inconsistencies in guidance found in various prior accounting pronouncements.  The provisions of the updated
guidance were adopted January 1, 2008.  In February 2008, the FASB staff issued an update to the guidance which delayed
the effective date for nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial
statements on a nonrecurring basis. The Company adopted the updated guidance for the Company’s nonfinancial assets and liabilities
measured at fair value on a nonrecurring basis on January 1, 2009.   The adoption of updated guidance did not have
a material impact on the Company’s financial position, results of operations or cash flows.

In October 2008, the guidance was further
updated to provide guidance on how the fair value of a financial asset is to be determined when the market for that financial asset
is inactive.  The guidance states that determining fair value in an inactive market depends on the facts and circumstances,
requires the use of significant judgment and, in some cases, observable inputs may require significant adjustment based on unobservable
data. Regardless of the valuation technique used, an entity must include appropriate risk adjustments that market participants
would make for nonperformance and liquidity risks when determining fair value of an asset in an inactive market.  The
guidance was effective upon issuance.  The Company has incorporated the principles of updated guidance in determining
the fair value of financial assets when the market for those assets is not active.

In April 2009, the guidance was further
updated to provide additional guidance on determining fair value when the volume and level of activity for the asset or liability
have significantly decreased and identifying circumstances that indicate when a transaction is not orderly.  The provisions
of this updated guidance were adopted April 1, 2009.  The adoption of the guidance did not have an impact on the Company’s
fair value measurements.

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



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

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

Level 3 Inputs – Instruments
with primarily unobservable value drivers.



As of December 31, 2011 and 2010, the Company’s
financial assets are measured at fair value using Level 3 inputs, with the exception of cash, which was valued using Level 1 inputs.
There were no financial liabilities as of December 31, 2011 and 2010.





43












Fair Value Measurement at December 31, 2011 Using:December 31, 2011


Quoted Prices In

Active Markets

For Identical Assets

(Level 1)


Significant Other

Observable

Inputs

(Level 2)


Significant

Unobservable

Inputs

(Level 3)Assets:Cash and Cash Equivalents

$
2,670,933


$
2,670,933


$
-


$
-Investment in Affiliate


70,000



-



-



70,000$
2,740,933


$
2,670,933


$
-


$
70,000











Fair Value Measurement at December 31, 2010 Using:December 31, 2010


Quoted Prices In Active Markets

For Identical Assets

(Level 1)


Significant Other

Observable

Inputs

(Level 2)


Significant

Unobservable

Inputs

(Level 3)Assets:Cash and Cash Equivalents

$
1,277,065


$
1,277,065


$
-


$
-Investment in Affiliate


70,000


$
-


$
-


$
70,000$
1,347,065


$
1,277,065


$
-


$
70,000






NOTE 14 – SUBSEQUENT EVENTS



On December 27, 2011, the Company's shareholders
voted to increase the authorized common stock of the Company from 12,500,000 to 25,000,000 and the filing was made with the Secretary
of State of Delaware in February 2012 to effect this change. The authorized preferred stock remained unchanged. The financial statements
reflect this change as if it had been effectuated prior to December 31, 2011.



On March 28, 2012 DynaResource de Mexico approved
and released to the Company a National Instrument 43-101 (“NI 43-101”) Technical Report for the San Jose de Gracia
Property (the “2012 DynaMexico Luna-CAM SJG Technical Report”). The 2012 DynaMexico Luna-CAM SJG Technical Report was
prepared by Mr. Ramon Luna, BS, P.Geo., of Servicios y Proyectos Mineros,
Hermosillo, Mexico, anda Qualified Person as defined under NI 43-101; and by Mr. Robert Sandefur, BS, MSc, P.E., a senior
reserve analyst for Chlumsky, Armbrust & Meyer LLC, Lakewood, CO., and a Qualified Person as defined under NI 43-101. The 2012
DynaMexico Luna-CAM SJG Technical Report includes as Section Fourteen (14) a Mineral Resource Estimate for SJG as prepared by Mr.
Sandefur (the “2012 DynaMexico-CAM SJG 43-101 Mineral Resource Estimate”). The Effective Date of the 2012 DynaMexico
Luna-CAM SJG Technical Report is February 6, 2012.



The Technical Report was filed by the
Company on SEDAR (www.sedar.com) on March 28, 2012, and is available for review on SEDAR under the Company profile.

No other reportable subsequent events were
noted.



44







Item 9. Changes in and Disagreements
with Accountants on Accounting and Financial Disclosure

None.



Item 9A. Controls and Procedures

Evaluation of Disclosure on 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 December 31, 2011. This evaluation was accomplished under the supervision and with the participation of our chief executive
officer / principal executive officer, and chief financial officer / principal financial officer who concluded that our disclosure
controls and procedures are 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.

For purposes of this section, the term
disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information
required to be disclosed by the issuer in the reports that it files or submits under the 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.

Based upon an evaluation conducted for the
period ended December 31, 2011, our Chief Executive and Chief Financial Officer as of December 31, 2011 and as of the date of this
Report, has concluded that as of the end of the periods covered by this report, we have identified no material weakness in our
internal control.



Management’s Annual Report on
Internal Control Over Financial Reporting

Ourmanagement
is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in
Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control system was designed 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 in the United States of America. Our internal control over financial reporting includes
those policies and procedures that (i) pertain to the maintenance records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United
States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management
of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use,
or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of inherent limitations, a system
of internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate due to change in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.

Our management conducted an evaluation
of the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework at December 31, 2011. Based
on its evaluation, our management concluded that, as of December 31, 2011, our internal control over financial reporting was effective
and contained no material weaknesses. A material weakness is a deficiency, or a combination of control deficiencies, in internal
control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s
annual or interim financial statements will not be prevented or detected on a timely basis.

This annual report does not include an attestation
report of the Company’s registered public accounting firm regarding internal control over financial reporting.  Management’s
report was not subject to the attestation by the Company’s registered public accounting firm pursuant to rules of the SEC
that permit the Company to provide only management’s report in this annual report.





45









Changes in Internal Controls over
Financial Reporting

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



Item 9B. Other Information

None.



PART III

Item 10.     Directors, Executive
Officers and Corporate Governance

The following table lists the names and
ages of the executive officers, directors and key consultants of the Company.  The directors will continue to serve until
the next annual shareholders meeting, or until their successors are elected and qualified. Mr. Diepholz, Mr. Smith, and Mr. Tidwell
have been elected to serve through 2012. All officers serve at the discretion of the President, Chairman of the Board of Directors,
and members of the Board of Directors.



|Name                                                                            |  | Age |  | Position                                        |  | Held Since               
|------------------------------------------------------------------------------- |  | --- |  | ----------------------------------------------- |  | -------------------------
|K. W. (K.D.) Diepholz
        1303 Regency Court
        Southlake, Texas 76092 |  | 55  |  | Chairman of The Board,
        CEO, Treasurer   |  | May 1995
        May 1997
|                                                                                |  |     |  |                                                 |  |                          
|Charles Smith
        709-B West Rusk #580
        Rockwall, Texas 75087        |  | 55  |  | Chief Financial Officer, Secretary and Director |  | May 2005                 
|                                                                                |  |     |  |                                                 |  |                          
|Melvin E. Tidwell
        4804 Piccadilly Place
        Tyler, Texas 75703      |  | 65  |  | Director                                        |  | May 1994                 
|                                                                                |  |     |  |                                                 |  |                          
|Bradford J. Saulter
        7618 Straits Lane
        Rowlett, Texas 75088      |  | 51  |  | Vice President – Investor Relations             |  | May 1998                 









K.W. Diepholz - Graduated Lake
Land College; Communications and Business Emphasis; Regional Director - Fidelity Union Insurance and Investment, Dallas, Texas
(1980 -1983); President - KWD Properties Corporation, Mattoon, Illinois (1983 - 1989); a privately-held Oil & Gas Exploration
and Development Company involved in all phases of The Oil & Gas Business, and Various Types of Partnerships; Vice President
- American Investment Retirement Corporation, Phoenix, Arizona (1990 - 1991), Involved in Program Structuring for Pension Accounts;
 Vice President - Ideal Securities, Inc., Dallas, Texas (1992);  Program Structuring and Marketing Management;  President
- DP Phoenix, a Real Estate Investment Company, Phoenix, Arizona (1991 -1992);  Investment Program Structuring, Real Estate
Acquisitions, General Management;   Director:  Farm Partners, Inc., Dallas, Texas (1992 - Present);  General
Management of this General Partner to Precious Metals Limited Partnership; DP Group Ltd., Dallas, Texas (1993 - Present);  President
of this independent Marketing firm; Dynacap Group Ltd., Dallas, Texas (1992 - Present);  President of this Consulting and
Management firm, directing the management of certain Limited Liability Investment Companies; DynaResource, Inc. (f/k/a: West Coast
Mines, Inc.), Dallas, Texas (1994 - Present);  Chairman, President, Treasurer, and Director. Special skills in the areas of
Business Development, Project Planning, Corporate Financing, Acquisition Analysis, Investment Program Interpretation and Structuring.
 Mr. Diepholz has been instrumental in the negotiations of: the acquisition of 24.9 % Net Profits Interest in the San José
de Gracia in 1995; the acquisition of an additional 25 % interest in San José de Gracia in 1998; the acquisition and consolidation
of 100 % of the rights to the San José de Gracia from prior owners, culminating at March, 2000; the acquisition and consolidation
of several outstanding Concessions at the San José de Gracia from previous Mexican owners during 2000-3; the Direction and
Management of the production operation at SJG; and the negotiation of the Stock Purchase / Earn In Agreement with Goldgroup Mining,
Inc. in 2006. Mr. Diepholz is the current Chairman / Ceo of the Company; and he holds the same position with DynaResource Nevada,
Inc., an affiliated Company. Mr. Diepholz is also the current President of the following subsidiaries of the Company in Mexico;
DynaResource de Mexico (“DynaMexico), and holding all the Powers of Attorney for the Company, Mineras de DynaResource (“Mineras
Dyna”), and DynaResource Operaciones (“DynaOperaciones”); And, Mr. Diepholz is also the President of DynaNevada
de Mexico, the wholly owned subsidiary of DynaResource Nevada Inc.





46









Charles
Smith.     Mr. Smith graduated from Boston University, Boston, Massachusetts in 1979 and since that time
has been a Certified Public Accountant involved in all phases of business including audit and tax matters. He is a consultant
to various companies.  Some of Mr. Smith’s business affiliations the past five years include:  Chief Financial
Officer of DynaResource, Inc. – May 2005 to present. Chairman of Dynacap Group, Ltd. - a consulting and management firm
- 1992 to the present. Sole proprietor as a Certified Public Accountant - 1983 to the present. Sole officer and Director - MC
Cambridge, Inc. - a financial consulting firm - 1997 to present.

Melvin
E. Tidwell, P.E. - Professional Engineer, registered in California in 1977; Control Systems Engineer; Instrument Engineer
on over 80 Projects Worldwide; Instrument Startup Engineer on over 50 Projects Worldwide; Affiliated / Associated with following
Companies over the past 25 years: Weyerhaeuser Company, Howe-Baker Engineers, LaGloria Oil & Gas Co., IWATANI Electronics
(Japan), EQM (Mexico), Kyodo Oxygen Co., Ltd. (Japan), Chin Yang Fine Chemical Co. (South Korea), Hankuk Glass Mfg. Co. (South
Korea), Hunt Oil Co., Liquid Carbonics Co., Celanese Mexicana (Mexico), Grain Power Tucumcari Ltd., Jetco Chemical Inc., Claiborne
Gasoline Co., Conoco, Chevron, Metano Gas (now Exxon), Union Oil, Texaco Angola, Petrofac, Alfurat (Syrian Oil Co.), Arco, Chevron
/ Placer Cego, Tidwell & Associates;  with  Engineering / Management Experience in the following Project Areas:
 Startup & Engineering - $ 160 Million Linerboard Paper Mill; Chief Instrument Engineer - chemical division;  DEA
Gas Treating & Sulfur Recovery Plant;  One Part / million H2 Plant;  Startup Hydrogen Plants;  H2 / CO Cosorb
Plant;  Startup H2 / CO synthesis Gas Plant & Cold Box; Startup Ethanol Plant;  Specialties Chemicals Expansion
- Foxboro 200 instruments;  Startup & Calibration 75,000 BPD Crude Distillation Facility;  Instrument Engineer -
1st Oxygen Enrichment Cope Unit;  Instrument Engineer, Startup & checkout - 30 TPD Selectox SRU;  Instrument Engineer
- Offshore Oil & Gas Production Facility;  Lead Instrument Engineer - 60,000 BPD Oil Production Facility;  Instrument
Checkout, Calibration, and Inspection prior to startup - Selectox Sulfur Units (Honeywell TDC 3000 DCS) (Foxboro 760 Electronics
Controllers);  Startup Amine Plant and Sulfur Plant, and System Engineering (Foxboro and Westinghouse PLC); Instrument Engineer,
Field Startup and Checkout - CCR, HDS, MTBE, Hydrogen and Cryogenic Plants. Founder, President - Tidwell & Associates, a private
engineering consulting Firm (1993 to Present); Director – DynaResource, Inc. (f/k/a: West Coast Mines, Inc.), Dallas, (1994
to present).

Bradford
J. Saulter - Attended University of Texas, Austin, Texas; Marketing Department of Metagram, Inc., a Dallas National Marketing
Company; Regional Manager for Lugar, Lynch, & Associates, A Dallas Financial Services Company, Involved in Sales & Marketing
of Various Investment Products; Independent Marketing Consultant; Series 22 & 63 Securities License; Vice President / Marketing
- Dynacap Group Ltd. (1992 - Present); Director: Farm Partners, Inc. (1992 - Present), Vice President – Investor Relations
- DynaResource, Inc., Dallas, Texas (1995 to present).

To the knowledge of the Company,
no present or former director, executive officer, or person nominated to become a director or executive of the Company, or consultants
to the Company, has ever:

1.)	Filed a bankruptcy
petition by or against any business of which such person was a general partner or executive officer whether at the time of the
bankruptcy or with two years prior to that time;

2.)	Had any conviction
in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

3.)	Been subject to any
order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking
activities; and,

4.)	Been found by a court
of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal
or state securities or commodities law, and the judgment has not been reversed suspended or vacated.



47









Item 11. Executive Compensation

The following officers received
the following compensation for the years ended December 31, 2011 and 2010. These officers do not have employment contracts with
the Company.

|Name and principal position                         | Year              | Salary                    | Bonus             | Stock Awards            | Option Awards     | Nonequity incentive plan compensation | Nonqualified deferred compensation | All other compensation
        *
|--------------------------------------------------- | ----------------- | ------------------------- | ----------------- | ----------------------- | ----------------- | ------------------------------------- | ---------------------------------- | --------------------------------
|                                                    |                   |                           |                   |                         |                   |                                       |                                    |                                 
|K.W. Diepholz
        CEO, President                | 2011
        2010 | $225,000
        $225,000 | None
        None | None
        None       | None
        None | None
        None                     | None
        None                  | $ 25,455
        $ 53,600       
|                                                    |                   |                           |                   |                         |                   |                                       |                                    |                                 
|Charles Smith
        CFO, Secretary                | 2011
        2010 | None
        $30,000      | None
        None | $85,500
        $46,875 | None
        None | None
        None                     | None
        None                  | $ None
        $ None           
|                                                    |                   |                           |                   |                         |                   |                                       |                                    |                                 
|Bradford J. Saulter
        VP – Investor Relations | 2011
        2010 | $72,000
        $72,000   | None
        None | None
        $43,751    | None
        None | None
        None                     | None
        None                  | $28,545
        $ 9,103         
|                                                    |                   |                           |                   |                         |                   |                                       |                                    |                                 
|Melvin E. Tidwell, Director                         | 2011
        2010 | None
        None         | None
        None | $21,874
        $21,874 | None
        None | None
        None                     | None
        None                  | $ None
        $ None           
|                                                    |                   |                           |                   |                         |                   |                                       |                                    |                                 



* As disclosed in the financial statements,
the Company paid consulting fees to Dynacap Group, Ltd. This remuneration was paid from the funds received by Dynacap.





48









|                                                    |                                                                     |                                                                       |                              |                       |                        |                                            
|--------------------------------------------------- | ------------------------------------------------------------------- | --------------------------------------------------------------------- | ---------------------------- | --------------------- | ---------------------- | -------------------------------------------
|                                                    |                                                                     |                                                                       |                              |                       |                        |                                            
|                                                    | Option Awards                                                       | Stock Awards                                                         
|Name and principal position                         | Number of Securities Underlying Unexercised options (#) exercisable | Number of Securities Underlying Unexercised options (#) unexercisable | Equity incentive plan awards | Option exercise price | Option expiration date | Number of share awards that have not vested
|                                                    |                                                                     |                                                                       |                              |                       |                        |                                            
|K.W. Diepholz
        CEO, President                | None                                                                | None                                                                  | None                         | N/A                   | N/A                    | None                                       
|                                                    |                                                                     |                                                                       |                              |                       |                        |                                            
|Charles Smith
        CFO, Secretary                | None                                                                | None                                                                  | None                         | N/A                   | N/A                    | None                                       
|                                                    |                                                                     |                                                                       |                              |                       |                        |                                            
|Melvin Tidwell
        Director                     | None                                                                | None                                                                  | None                         | N/A                   | N/A                    | None                                       
|                                                    |                                                                     |                                                                       |                              |                       |                        |                                            
|Bradford J. Saulter
        VP – Investor Relations | None                                                                | None                                                                  | None                         | N/A                   | N/A                    | None                                       
|                                                    |                                                                     |                                                                       |                              |                       |                        |                                            

Name of

Item 12. Security Ownership of
Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth the amount
and nature of beneficial ownership of each of the executive officers and directors of the Company and each person known to be a
beneficial owner of more than five percent of the issued and outstanding shares of the Company as of December 31, 2011.  The
following table sets forth the information based on 10,602,868 common shares issued and outstanding as of December 31, 2011.



|COMMON STOCK | Beneficial Owner                                                                                    | Address                                            | Common Shares | Percent
        Ownership
|------------ | --------------------------------------------------------------------------------------------------- | -------------------------------------------------- | ------------- | -------------------------
|             |                                                                                                     |                                                    |               |                          
|Common Stock | K.W. (“K.D.”) Diepholz
        Chairman / CEO                                                       | 1303 Regency Court
        Southlake, Texas 76092  | 1,439,915     | 13.58%                   
|             |                                                                                                     |                                                    |               |                          
|Common Stock | Charles Smith
        CFO; Secretary;
        Director                                              | 709-B West Rusk #580
        Rockwall, Texas 75087 | 164,150       | 1.55%                    
|             |                                                                                                     |                                                    |               |                          
|Common Stock | Children of
        Charles Smith, through
        Smith First Family LP.;
        Andrew Smith, GP | 4247 Clairmont
        Birmingham, AL 35222        | 331,250       | 2.12%                    
|             |                                                                                                     |                                                    |               |                          
|Common Stock | Melvin E. Tidwell
        Director;                                                                 | 4804 Picadilly Place
        Tyler, Texas 75703    | 75,845        | 0.72%                    
|             |                                                                                                     |                                                    |               |                          
|Common Stock | Bradford J. Saulter
        VP., Investor Relations                                                 | 7618 Straits Lane
        Rowlett, Texas 75088     | 112,531       | 1.06%                    
|             |                                                                                                     |                                                    |               |                          
|             | All Officers, Directors And Beneficial
        owners
        as a Group (5 Persons)                |                                                    | 2,123,691     | 20.03%                   





None of the Shares described above are
subject to options which are either (a) vested, or, (b) will vest within 60 days.

The officers and directors and those 5% beneficial owners
held the following options as of December 31, 2011:

None



49









|                  |  |                  |  |                                                 |  |                  |  |                  
|----------------- |  | ---------------- |  | ----------------------------------------------- |  | ---------------- |  | -----------------
|PREFERRED

SHARES |  |                  |  |                                                 |  |                  |  |                  
|                  |  |                  |  |                                                 |  |                  |  |                  
|                  |  | Beneficial Owner |  | Address                                         |  | Preferred Shares |  | Percent Ownership
|                  |  |                  |  |                                                 |  |                  |  |                  
|Preferred         |  | K.W. Diepholz    |  | 1303 Regency Court
        Southlake, TX. 76092 |  | 1,000            |  | 10.0%            







Item 13.     Certain Relationships
and Related Transactions, and Director Independence

The Company has paid cash remuneration
for services to Dynacap Group Ltd., a private consulting firm.   Mr. K.W. Diepholz - Chairman and CEO of the Company
and Mr. Charles Smith, Chief Financial Officer, are the Managers of Dynacap Group, Ltd.



The Company has paid cash compensation
as follows, to related parties or officers during the years ended December 31, 2011 and 2010:

In 2011, the Company paid $107,500 to Dynacap Group,
Ltd. for consulting and other fees;

In 2010, the Company paid $57,203 to Dynacap Group,
Ltd. for consulting and other fees.



The Company is not aware of any other
material relationships or related transactions between the Company and any officers, directors or holders of more than five percent
of any class of outstanding securities of the issuer.



Item 14. Principal Accounting Fees and Services

(1) Audit Fees

The aggregate fees billed for professional
services rendered by our auditors, for the audit of the registrant's annual financial statements and review of the financial statements
included in the registrant's Form 10-K or services that are normally provided by the accountant in connection with statutory and
regulatory filings or engagements for fiscal years 2011 and 2010 was $63,536 and $59,245, respectively.



(2) Audit Related Fees

None



(3) Tax Fees

None



(4) All Other Fees

None



(5) Audit Committee Policies and Procedures

The Company does not have an audit committee.



(6) If greater than 50 percent, disclose the
percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent
employees.

Not applicable.



50







PART IV

Item 15. Exhibits and Financial Statement Schedules



|No.     | Description                                                                                                                                                                                         
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.1 *  | Certification of the Company’s Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                
|31.2 *  | Certification of the Company’s Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                
|32.1 ** | Certification of the Company’s Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|99.1 ** | SJG Drill Summary File through 11-298                                                                                                                                                               



_____________________

* Filed herewith.

** Previously filed with
the Original Form 10-K filed with the SEC on April 2, 2012.



51







SIGNATURES



Pursuant to the requirements of Section
13 or 15(d) 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.



By:  /s/  K.W. (“K.D.”) Diepholz

K.W. Diepholz, President

(Principal Executive Officer)



By:  /s/  Charles Smith

Charles Smith, Chief Financial Officer

(Principal Financial Officer)





Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.

|                          |  |                                              |  |                 
|------------------------- |  | -------------------------------------------- |  | ----------------
|Signature                 |  | Title                                        |  | Date            
|                          |  |                                              |  |                 
|/s/ K.W. (“K.D.” Diepholz |  | President, Chief Executive Officer,          |  | February 8, 2013
|K.W. (“K.D.”) Diepholz    |  | Chairman, Director                           |  |                 
|                          |  | (principal executive officer)                |  |                 
|                          |  |                                              |  |                 
|                          |  |                                              |  |                 
|                          |  |                                              |  |                 
|/s/  Charles Smith        |  | Chief Financial Officer, Director            |  | February 8, 2013
|Charles Smith             |  | (principal financial and accounting officer) |  |                 
|                          |  |                                              |  |                 





52