UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

Washington,
D.C. 20549



FORM
10-K/A

(Amendment
No. 2)





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



For
the fiscal year ended: December 31, 2018



OR



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



From
the transition period ___________ to ____________.



Commission
File Number: 000-30371



DYNARESOURCE,
INC.

(Exact
name of registrant as specified in its charter)



Delaware
94-1589426

(State
or other jurisdiction of incorporation or organization (IRS Employer Identification No.)



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

(Address
of principal executive offices)



Registrant’s
telephone number, including area code: (972) 868-9066



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]



Indicate
by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the 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 (p. 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
[X] No [ ]



Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (p. 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]





1











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



|Large accelerated filer | ☐                                                   | Accelerated filer         | ☐
|----------------------- | --------------------------------------------------- | ------------------------- | -
|Non-accelerated filer   | ☐ (Do not check if a smaller reporting
    company) | Smaller reporting company | ☒
|                        |                                                     | Emerging growth company   | ☐



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



Yes
[ ] No [X]



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



Yes
[ ] No [X]



The
aggregate market value of the voting and non-voting common equity, par value $0.01 per share, held by non-affiliates computed
by reference to the price at which the common equity was last sold, as of the last business day of the registrant’s most
recently completed fiscal year end, December 31, 2018, was $14,751,511 based on the closing price of $1.20 per share as reported
on the OTCQB.  For purposes of this computation, all officers, directors, subsidiaries, 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.



There
were 17,722,825 shares outstanding of each of the registrant’s classes of common stock (only 1 class) as of the latest practicable
date (August 31, 2019).



DOCUMENTS
INCORPORATED BY REFERENCE



Listed
below are documents incorporated herein by reference.



None.







2







Explanatory
Note



This
Amendment No. 2  to Form 10-K is being filed to update certain information in our audited financial statements for the years
ended December 31, 2018 and 2017 and related management’s discussion and analysis for the same period, as previously
reported in our Form 10-K for the year ended December 31, 2018 as filed with the SEC on April 8, 2019. As discussed in Note 1
to the Financial Statements, on July 31, 2019, Dyna Resources Inc. (the “Company”) and its Board of Directors,
after consultation with the Company’s independent registered public accounting firm, concluded that the Company would
amend its Annual Report on Form 10-K for the year ended December 31, 2018 and restate its financial statements and financial
information for the years ended December 31, 2018 and December 31, 2017.



The
restatement adjusts mining equipment and fixtures, accumulated deficit, non-controlling interest, mine expansion costs
and depreciation expense. The errors were caused by the Company capitalizing certain expenditures as mining equipment
and fixtures which should have been expensed as mine expansion costs. The errors have been corrected. As a result, for the
year ended December 31, 2018 mine expansion cost has increased by $1,039,391, depreciation expense decreased by $270,959 and
gain on sale of assets increased by $13,223. As of December 31, 2018, mine equipment and fixtures net of accumulated
depreciation decreased by $2,436,872, accumulated deficit increased by $2,430,473 and non-controlling interest increased by
$6,399. For the year ended December 31, 2017 mine expansion cost has increased by $1,260,873 and depreciation expense
decreased by $148,232. As of December 31, 2017, mine equipment and fixtures net of accumulated depreciation decreased by
$1,681,663, accumulated deficit increased by $1,672,805 and the deficit attributed to non-controlling interest increased by
$8,858. As of January 1, 2017, accumulated deficit increased by $556,847 and the deficit attributed non-controlling interest
increased by $12,175. For the years ended December 31, 2018 and 2017, the restatement reclassified cash flows used in
investing activities of ($1,039,394) and ($1,260,873) to cash flows used in operating activities. There was no effect on the
net change in cash in either period.



For
the convenience of the reader, this Form 10-K/A sets forth the original Form 10-K, as amended hereby, in its entirety.
However, this Form 10-K/A amends and restates only Items 2, 7, 8, 9A, and 15 of the original Form 10-K, in each case solely
as a result of and to reflect the adjustments discussed above and more fully in Note 1 of the accompanying financial
statements, and no other information in the original Form 10-K is amended hereby. As a result of this restatement, the
Company has also updated Item 9A. controls and procedures.



As
required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended, new certifications by DynaResource, Inc.’s
principal executive officer and principal financial officer are being filed with this Form 10-K/A as Exhibits 31.1, 31.2 and 32.1.
In addition, Item 8 has been amended to contain a currently-dated consent of independent registered public accounting firms.







3













TABLE
OF CONTENTS



|PART
    I       
|-----------------
|                 
|ITEM 1.          
|ITEM 1A.         
|ITEM 1B.         
|ITEM 2.          
|ITEM 3.          
|ITEM 4.          
|                 
|                 
|                 
|ITEM 5.          
|ITEM 6.          
|ITEM 7.          
|ITEM 7A.         
|ITEM 8.          
|ITEM 9.          
|ITEM 9A.         
|ITEM 9B.         
|PART
    III     
|                 
|ITEM 10.         
|ITEM 11.         
|ITEM 12.         
|ITEM 13.         
|ITEM 14.         
|                 
|PART
    IV      
|                 
|                 
|ITEM 15.         
|ITEM 16.         
|                 
|EXHIBIT
    INDEX
|                 
|Exhibit 31.1     
|Exhibit 31.2     
|Exhibit 32.1     









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



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



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



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







5













PART
I



|ITEM
    1. | BUSINESS
|----------- | --------



History
and Organization



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



We
currently own 80% of the outstanding shares of DynaMéxico, and DynaMéxico currently holds a lien on 20% of the outstanding
shares of DynaMéxico. DynaMéxico owns 100% of the mining concessions, equipment, camp and related facilities which
comprise the San Jose de Gracia Property, in northern Sinaloa State, México. We also own 100% of Mineras de DynaResource
S.A. de C.V. (“DynaMineras”), the exclusive operator of the San José de Gracia Project, under contract with
DynaMéxico. DynaMineras currently conducts test mining and pilot milling operations, and other exploration activities in
México.



In
2000, the Company formed DynaMéxico for the purpose of acquiring and holding mineral properties and mining concessions
in México. DynaMéxico owns a portfolio of mining concessions which comprise the San José de Gracia Project
(“SJG”). The mining concessions which comprise the SJG District cover 69,121 hectares (170,802 acres) on the west
side of the Sierra Madre mountain range. At the incorporation of DynaMéxico, 100 shares of Fixed Capital Series “A”
shares were issued, with DynaUSA receiving 99 shares and its CEO receiving 1 share.



In
2005, the Company formed DynaMineras. DynaMineras entered into an operating agreement with DynaMéxico on April 15, 2005.
Because of that agreement and subsequent amendments to that agreement, DynaMineras is the exclusive operating entity for the SJG
Project.



Also
in 2005, the Company formed another wholly owned subsidiary, DynaResource Operaciones, S.A. de C.V. (“DynaOperaciones”).
DynaOperaciones entered into a personnel management agreement with DynaMineras and, because of that agreement, is the exclusive
management company for personnel and consultants involved at the SJG Project.



From
January 2008 through March 2011, DynaMéxico issued 100 Variable Capital Series “B” Shares to Goldgroup Resources
Inc., a wholly owned subsidiary of Goldgroup Mining Inc., in Vancouver, BC. (“Goldgroup”), in exchange for Goldgroup’s
total capital contributions of $18,000,000 to DynaMéxico. At the time of the issuance of the 100 Series B Shares to Goldgroup,
Goldgroup owned 50% of the outstanding capital shares of DynaMéxico.



On
May 17, 2013, DynaUSA agreed to acquire a stock certificate for 300 Series “B” Variable Capital Shares of DynaMéxico,
in exchange for the settlement of accounts receivable from DynaMéxico in the amount of $31,090,710 Mexican Pesos (approximately
$2.4 million USD). After giving effect to the issuance of the 300 Series B Shares on June 21, 2013, DynaUSA owns 80% of the total
outstanding Capital of DynaMéxico. (See table representation of the outstanding Capital of DynaMéxico below). The
exchange of shares by DynaMéxico for amounts payable to DynaUSA was unanimously approved by shareholders at a meeting of
the shareholders of DynaMéxico, held on the second call for shareholder's meeting on May 17, 2013 in Mazatlán, Sinaloa,
México. The date of issuance of the 300 Series B Share Certificate was June 21, 2013. As a result of the issuance to DynaUSA
of the 300 Variable Capital shares for amounts owed to DynaUSA, the accounts payable amount owed by DynaMéxico to DynaUSA
was retired in full.



After
giving effect to the issuance to DynaUSA of the 300 Series B Variable Capital shares of DynaMéxico as described above,
the current outstanding Capital of DynaMéxico is set forth in the table below:



|DynaMéxico
        Shareholder |  | Fixed
    Capital Series "A" Shares |     |  | Variable
    Capital Series "B" Shares |  |     | Total
    Capital Shares(Series A and B) | 
|------------------------------ |  | ----------------------------------- | --- |  | -------------------------------------- |  | --- | ---------------------------------------- | 
|DynaResource,
    Inc.         |  |                                     | 099 |  |                                        |  | 300 |                                          | 
|Koy W. (“K.D.”)
    Diepholz   |  |                                     | 001 |  |                                        |  | -   |                                          | 
|Goldgroup Resources Inc.       |  |                                     | -   |  |                                        |  | 100 |                                          | 
|                               |  |                                     |     |  |                                        |  |     |                                          | 
|Total
    Capital Issued       |  |                                     | 100 |  |                                        |  | 400 |                                          | 





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





6









Company
Ownership and Description of Subsidiaries



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



DynaResource
de México, S.A. de C.V.:

80%
Owned by DynaResource, Inc.



|● | 100%
    owner of the San Jose de Gracia Property;
|- | --------------------------------------------------



Mineras
de DynaResource, S.A. de C.V.:

100%
Owned by DynaResource, Inc.



|● | Exclusive
    Operator of the San Jose de Gracia Project;
|- | ---------------------------------------------------------



|● | Entered
    into Exploitation Agreement (“EAA”) with DynaMéxico (See below);
|- | ----------------------------------------------------------------------------



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



DynaResource
Operaciones de San Jose de Gracia, S.A. de C.V.:

100%
Owned by DynaResource, Inc.



|● | Personnel
    Management Company at San Jose de Gracia;
|- | -------------------------------------------------------



Exploitation
Amendment Agreement (“EAA”)



On
May 15, 2013, DynaMineras entered into an Exploitation Amendment Agreement (“EAA”) with DynaMéxico. The EAA
grants to DynaMineras the right to finance, explore, develop and exploit the SJG Property, in exchange for the following:



(A)
Reimbursement of all costs associated with financing, maintenance, exploration, development and exploitation of the SJG Property,
which costs are to be charged and billed by DynaMineras to DynaMéxico; and



(B)
After Item (A) above, 75% of gross receipts received by DynaMéxico from the sale of all minerals produced from SJG, to
the point that DynaMineras has received 200% of its advanced funds; a 2.5% Net Smelter Royalty on all minerals sold from SJG over
the term of the EAA. The total advances made by DynaMineras to DynaMéxico as of December 31, 2017 are $6,125,000.



(C)
After items (A) and (B) above, 50% of all gross receipts received by DynaMéxico from the sale of all minerals produced
from SJG, and throughout the term of the EAA.



The
EAA is the third and latest Amendment to the original Contract Mining Services and Mineral Production Agreement (the “Operating
Agreement”), which was previously entered into by DynaMineras and DynaMéxico in April 2005, and in which DynaMineras
was named the Exclusive Operating Entity at SJG. The Operating Agreement was first amended in September 2006 (the “First
Amendment”), and amended again at July 15, 2011 (the “Second Amendment”). The Term of the Second Amendment is
20 years, and the EAA (Third Amendment) provides for the continuation of the 20 Year Term from the date of the Second Amendment
(July 15, 2011).



Our
objective is to increase the value of our shares through the exploration, development and extraction of gold, silver and other
valuable minerals. We generally conduct our exploration activities as sole operator and our current flagship property is San Jose
de Gracia.



Our
principal executive office is located at 222 W. Las Colinas Blvd., Suite 1910 North Tower, Irving, Texas 75039. We can be reached
by phone at (972) 868-9066 and by fax at (972) 868-9067. The Company’s website is www.dynaresource.com.



In
this report, “DynaResource, Inc.”, the “Company”, “DynaUSA”, “our” and “we”
refer to DynaResource, Inc. DynaResource de México SA de CV, the 100% owner of the mining concessions, camp, equipment,
and related interests to San Jose de Gracia Property, is referred to a “DynaMéxico”. DynaUSA owns 80% of DynaMéxico.
Mineras de DynaResource SA de CV, the named exclusive operator at San Jose de Gracia Property under agreement with DynaMéxico,
is referred to as “DynaMineras”. DynaUSA owns 100% of DynaMineras. DynaResource Operaciones de San Jose de Gracia
SA de CV, and the named manager of personnel and consultants who are actively involved at San Jose de Gracia under agreement with
DynaMineras and DynaMéxico, is referred to as “DynaOperaciones”. DynaUSA owns 100% of DynaOperaciones. The
San Jose de Gracia Property is referred to as “SJG”, or the “SJG Property”, or the “SJG Project”,
or the “SJG District”. DynaMéxico owns 100% of the SJG District. Further in this report, “Au” represents
gold; “Ag” represents silver; “oz.” represents ounces; “gpt” represents grams per metric tonne;
“ft” represents feet; “m” represents meter, “km” represents kilometer; and “sq”
represents square.



Segment
Information



Our
only current operating segment is México.





7









Products



The
end use product produced at our test mining and pilot milling operations at SJG is either in the form of primarily gold-silver
Dore, or primarily gold-silver concentrates. The end use product from current activities generally consists of approximately 100%
concentrate and 0% Dore. Dore is an alloy consisting primarily of gold and silver but also containing other metals. Dore is sent
to refiners to produce bullion that meets the required market standard of 99.95% gold and 99.9% silver. Gold-silver concentrates,
or simply concentrate, is raw precious metals materials that has been crushed and ground finely to a sand-like product where gangue
(waste) and non-precious metals are removed or reduced, thus concentrating the precious metals component. Concentrates processed
and produced from San Jose de Gracia are shipped to third-party smelters, refineries or third parties for further processing or
re-sale.



During
2018, we reported the delivery and sale of 13,418 net Oz gold contained in concentrates. All gold-silver concentrate originated
from the San Jose de Gracia Property in México.



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



Gold
and Silver Pilot Processing Methods



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



Gold
and Silver Reserves / No Known Reserves



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



General
Government Regulations



| | México | 
| | ------ | 



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



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



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



Mining
Royalties.    In October 2013, the Mexican lower house passed a bill levying a tax-deductible mining royalty
of 7.5% on earnings before the deduction of interest, taxes, depreciation and amortization, along with an additional 0.5% surcharge
on precious metals revenue for mining companies. The effective date of the law was January 1, 2014. Although there are a
few uncertainties surrounding the scope, calculation and enforcement of the royalty, based on the Company's current interpretation
of the bill, the royalty or surcharge was not material for 2016.



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





8









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



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



Customers



The
Company sells its concentrates to the buyer who offers the best terms based upon price, treatment costs, refining costs, and other
terms of payment. During the year ended December 31, 2018, the Company sold gold-silver concentrates to the following purchasers:



|Dore:                     | None.                                        
|------------------------- | ---------------------------------------------
|Gold-Silver Concentrates: | Mercuria Commodities
    Trading S.A. de C.V.

Employees



As
of December 31, 2018, we had 210 employees, including 205 employees based in México, and 5 in the United States. Consultants
are retained from time to time. Employees based in México and the United States include laborers, engineers, geologists,
information technologists, office administrators, managers and executives. None of our employees in México are covered
by union contracts and the Company believes we have good relations with our employees.



|ITEM
        1A. | RISK FACTORS
|---------------- | ------------







This
report, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking
statements that may be affected by several risk factors. The following information summarizes all material risks known to us at
the date of filing this report.



Risks
Relating to Our Company



Nature
of Mineral Exploration and Mining



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 discoveries
of commercial mineralized bodies.



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





9









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, and 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 México, where the Company’s activities are focused. The Company may be at a competitive disadvantage
in acquiring mineral properties, since it competes with companies which have greater financial resources and larger technical
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 México, subject to rules and regulations for owning
and maintaining mining concessions and surface rights, environmental protection, water rights, hazardous wastes, explosives, reclamation,
and others. There can be no certainty that the Company maintains full compliance with all government regulations.



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



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



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



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 $1,057 and $1,895 per ounce. The volatility of gold prices represents a substantial
risk which is impossible to fully eliminate. In the event gold prices decline and remain low for prolonged periods of time, the
Company might be unable to explore, develop, or produce revenue from its properties.





10









The
volatility of mineral prices represents a substantial risk which no amount of planning or technical expertise can fully eliminate.
In the event mineral prices decline and remain low for prolonged periods of time, we might be unable to develop our properties,
which may adversely affect our results of operations, financial performance and cash flows. Our results of operations have been
and could continue to be materially and adversely affected by the impairment of assets. An asset impairment charge may result
from the occurrence of unexpected adverse events that impact our estimates of expected cash flows generated from our producing
properties or the market value of our non-producing properties.



The
volatility in gold, silver and copper prices is illustrated by the following table, which sets forth, for the periods indicated,
the average market prices in U.S. dollars per ounce of gold and silver, based on the average daily London P.M. fix, and per
pound of copper based on the London Metal Exchange Grade A copper settlement price.



|Metal  |  | 2012 |          |  | 2013 |   |          | 2014 |  |   | 2015     |  |  | 2016 |          |  | 2017 |   |          | 2018 | 
|------ |  | ---- | -------- |  | ---- | - | -------- | ---- |  | - | -------- |  |  | ---- | -------- |  | ---- | - | -------- | ---- | 
|Gold   |  | $    | 1,669.00 |  |      | $ | 1,411.00 |      |  | $ | 1,266.00 |  |  | $    | 1,175.00 |  |      | $ | 1,236.00 |      | 
|Silver |  |      | 31.15    |  |      |   | 23.79    |      |  |   | 19.08    |  |  |      | 13.90    |  |      |   | 17.14    |      | 
|Copper |  |      | 3.61     |  |      |   | 3.32     |      |  |   | 3.11     |  |  |      | 2.09     |  |      |   | 2.54     |      | 



As
of March 31, 2019, the price of gold was $1,295 per ounce. Should a downward trend in prices occur, there is a possibility that
we may record impairment charges in 2018, or in future years.



Revenue



The
Company suspended its test pilot production activity in June 2006 in order to focus on exploration activities. The Company re-commenced
test mining and pilot production work in 2014. There is a risk that the Company would expend available cash and funding in test
mining and milling activities, and administration costs, and would not be able to obtain further funding to continue its work.



In
2007, the Company focused on the exploration of the vast SJG district. Funds received by DynaMéxico pursuant to the Earn
In/Option Agreement (See Earn In / Option Agreement – Financing of Drilling – Exploration Programs (2006 – 2011),
were utilized for exploration and related activities.



In
2015, the Company commenced test mining and pilot milling operations. And during 2018, the Company improved and expanded its operations
in order to increase outputs from the test mining and pilot milling activities.



The
Company and its subsidiaries have $2,685,576 cash on hand at December 31, 2018. The Company could incur test pilot production
expenses and corporate expenses greater than the amount of available cash on hand. The Company may need to raise additional funds
in order to support its activities. If the Company needs to raise additional capital, its common stock could be diluted. 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 / CEO owns 100% of the outstanding shares of Series A preferred stock. The Series A preferred shares
retain the right to elect a majority of the members of the Company’s Board of Directors. Such ownership and concentration
of control may have the effect of delaying, deferring or preventing a change in control of the Company, even if the transaction
could be determined to be beneficial to Company’s stockholders.



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 sufficient 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 Over the Counter Market (“OTC”), and an active trading market
may never materialize, and an investor may not be able to sell stock.





11









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 properties, and, to the best of its knowledge, title to all mineral claims
and properties comprising the SJG District is in good standing. However, there can be no assurance of complete title, nor guarantee
of title.  The mineral claims and properties may be affected by undetected defects in title, such as the reduction in size
of the mineral claims and other third-party claims affecting the Company's rights.



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



We
will need to obtain additional financing, either in the form of debt or equity financing, to fund development of additional mining
operations at the San Jose de Gracia project and to continue our administrative activities. Our ability to obtain necessary funding,
in turn, depends upon a few factors, including the state of the economy and applicable commodity prices. We may not be successful
in obtaining the required financing for San Jose de Gracia or other purposes, on terms that are favorable to us or at all, in
which case, our ability to continue operating would be adversely affected. Failure to obtain such additional financing could result
in delay or indefinite postponement of further exploration or potential development and the possible partial or total loss of
our interest in certain properties.



The
feasibility of mining at our San Jose de Gracia property has not been established in accordance with SEC Industry Guide 7, and
any funds spent on exploration and development could be lost.



A
"reserve," as defined by Industry Guide 7 of the SEC, is that part of a mineral deposit which could be economically
and legally extracted or produced at the time of the reserve determination. A reserve requires a SEC-compliant feasibility study
or other report demonstrating with reasonable certainty that the deposit can be economically extracted and produced. Since we
have not received a SEC-compliant report on any of our properties, we currently have no reserves as defined by SEC Industry Guide
7, and there are no assurances that we will be able to prove that there are reserves on our properties.



The
mineralized material identified on our properties, including the San Pablo mine where we are currently conducting test mining
activities does not and may never demonstrate economic viability. Substantial expenditures are required to establish reserves
through drilling and additional study and there is no assurance that reserves will be established. The feasibility of mining at
San Jose de Gracia, or any other property has not been, and may never be, established. Whether a mineral deposit can be commercially
viable depends upon a few factors, including the particular attributes of the deposit, including size, grade, metallurgical recoveries
and proximity to infrastructure; metal prices, which can be highly variable; and government regulations, including environmental
and reclamation obligations. If we are unable to establish some or all of our mineralized material as proven or probable reserves
in sufficient quantities to justify commercial operations, our investment in that property may be lost, and the market value of
our securities may suffer.



There
are significant risks and uncertainty associated with construction, commencing or expanding test mining and pilot production activities
or changing operational plans without a current feasibility, pre-feasibility or scoping study. As such, the San Jose de Gracia
property may ultimately be determined to lack one or more geological, engineering, legal, operating, economic, social, environmental,
and other relevant factors reasonably required to serve as the basis for a final decision to successfully complete all or part
of these projects.





12









The
figures for our estimated mineralized material are based on interpretation and assumptions and may yield less mineral production
under actual conditions than is currently estimated.



Unless
otherwise indicated, mineralization figures presented in our filings with Canadian securities regulatory authorities (on SEDAR),
news releases and other public statements that may be made from time to time are based upon estimates made by independent geologists
and our internal geologists. When making determinations about whether to advance any of our projects to development, we must rely
upon such estimated calculations as to the mineralized material and grades of mineralization on our properties. Until mineralized
material is actually mined and processed, mineralized material and grades of mineralization must be considered as estimates only.



These
estimates are imprecise and depend upon geological interpretation and statistical inferences drawn from drilling and sampling
analysis, which may prove to be unreliable. We cannot ensure that:



these
estimates will be accurate;



mineralization
estimates will be accurate; or



this
mineralization can be mined or processed profitably.







Any
material changes in mineral estimates and grades of mineralization may affect the economic viability of placing a property into
production and such property's return on capital. There can be no assurance that minerals recovered in small scale tests will
be recovered in large-scale tests under on-site conditions or in production scale. The estimates contained in our public filings
in Canada (on SEDAR) have been determined and valued based on assumed future prices, cut-off grades and operating costs that may
prove to be inaccurate. Extended declines in market prices for gold and/or silver may render portions of our mineralization estimates
uneconomic and result in reduced reported mineralization or adversely affect the commercial viability of one or more of our properties.
Any material reductions in estimates of mineralization, or of our ability to extract this mineralization, could have a material
adverse effect on our results of operations or financial condition.



Legislation
has been enacted that affects the mining industry



In
México, in October 2013, the Mexican lower house passed a bill proposing a tax-deductible mining royalty of 7.5% on earnings
before the deduction of interest, taxes, depreciation and amortization, along with an additional 0.5% on precious metals revenue
for precious metals mining companies. In addition, the long-term corporate tax rate is expected to remain at 30% rather than being
reduced to 28% as originally planned. The Mexican Senate approved the provisions of the Tax Reform on October 31, 2013. The
effective date of the law was January 1, 2014.



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.



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





13









No
Known Reserves



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 1,000,000 Oz. Gold. The production
occurred in the early 1900’s, prior to the Mexican Revolution. Since that time, the property has seen small scale mining
operations, from small scale local owners, to the Company’s pilot production activities in 2003–2006 and 2014 to present.
Due to the uncertainties associated with exploration, including variations in geology and structure, there is no assurance that
the Company’s efforts will be successful in identifying mineralization in sufficient quantities to define proven or probable
reserves, and further there is no assurance that any such reserves could be developed into a commercial operation. 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.



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.



Our
business is subject to U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws, a breach or violation of which
could lead to civil and criminal fines and penalties, loss of licenses or permits and reputational harm.



We
operate in certain jurisdictions that have experienced governmental and private sector corruption to some degree, and, in certain
circumstances, strict compliance with anti-bribery laws may conflict with certain local customs and practices. For example, the
U.S. Foreign Corrupt Practices Act and anti-bribery laws in other jurisdictions, generally prohibit companies and their intermediaries
from making improper payments for the purpose of obtaining or retaining business or other commercial advantage, and often carry
substantial penalties. There can be no assurance that our internal control policies and procedures always will protect it from
recklessness, fraudulent behavior, dishonesty or other inappropriate acts committed by the Company's affiliates, employees or
agents. As such, our corporate policies and processes may not prevent all potential breaches of law or other governance practices.
Violations of these laws, or allegations of such violations, could lead to civil and criminal fines and penalties, litigation,
and loss of operating licenses or permits, and may damage the Company's reputation, which could have a material adverse effect
on our business, financial position and results of operations or cause the market value of our common shares to decline.



We
are subject to foreign currency risk.



While
we transact most of our business in U.S. dollars, expenses, such as labor, operating supplies, and property and equipment, are
denominated in Mexican pesos. As a result, currency exchange fluctuations may impact our operating costs. The appreciation of
non-U.S. dollar currencies against the U.S. dollar increases costs and the cost of purchasing property and equipment in U.S. dollar
terms in México, which can adversely impact our operating results and cash flows. Conversely, a depreciation of non-U.S.
dollar currencies usually decreases operating costs and property and equipment purchases in U.S. dollar terms in foreign countries.



The
value of cash and cash equivalents denominated in foreign currencies also fluctuates with changes in currency exchange rates.
Appreciation of non-U.S. dollar currencies results in a foreign currency gain on such investments and a depreciation in non-U.S.
dollar currencies results in a loss. We have not utilized market risk sensitive instruments to manage our exposure to foreign
currency exchange rates but may in the future actively manage our exposure to foreign currency exchange rate risk. We also hold
portions of our cash reserves in Mexican currency.





14









Increased
operating and capital costs could affect our profitability.



Costs
at any particular mining location are subject to variation due to a few factors, such as variable ore grade, changing metallurgy
and revisions to mine plans in response to the physical shape and location of the mineralized bodies, as well as the age and utilization
rates for the mining and processing-related facilities and equipment. In addition, costs are affected by the price and availability
of input commodities, such as fuel, electricity, labor, chemical reagents, explosives, steel and concrete and mining and processing-related
equipment and facilities. Reported costs may also be affected by changes in accounting standards. A material increase in costs
at any significant location could have a significant effect on our profitability and operating cash flow.



We
could have significant increases in capital and operating costs over the next several years in connection with the development
of new projects and in the sustaining and/or expansion of test mining and pilot processing operations. Costs associated with capital
expenditures have escalated on an industry-wide basis over the last several years, as a result of factors beyond our control,
including the prices of oil, steel and other commodities and labor, as well as the demand for certain mining and processing equipment.
Increased capital expenditures may have an adverse effect on the profitability of and cash flow generated from existing operations,
as well as the economic returns anticipated from new projects.



Majority
Ownership of DynaMéxico



DynaUSA
owns 80% of the outstanding share capital of DynaMéxico – the 100% owner of the SJG Project. Because of this shared
ownership (80%/20%), any current benefits to be derived from the ownership of DynaMéxico could be distributed on an 80%/20%
basis.



A
wholly owned subsidiary of DynaResource, Inc. -- Mineras de DynaResource S.A. de C.V. (“DynaMineras”) -- maintains
an exclusive operating agreement with DynaMéxico. Additionally, another wholly owned subsidiary of DynaResource, Inc. --
DynaResource Operaciones de San Jose De Gracia S.A. de C.V. (“DynaOperaciones”) maintains an exclusive agreement to
manage the personnel registered as employees in México.



The
Company’s Chairman and CEO is also President of DynaMéxico and President of DynaMineras, and the CEO holds a broad
power of attorney granted by the shareholders of DynaMéxico. The power of attorney gives the CEO broad authority to act
for DynaMéxico. The power of attorney held by the CEO is consistent with the laws in México, whose laws are based
on a civil code.



The
nature of mineral exploration and production activities involves a high degree of risk and the possibility of uninsured losses
that could materially and adversely affect our operations.



Exploration
for and production of minerals is highly speculative and involves greater risk than many other businesses. Many exploration programs
do not result in the discovery of mineralization, and any mineralization discovered may not be of sufficient quantity or quality
to be profitably mined. Few properties that are explored are ultimately advanced to production. Our current exploration efforts
are, and future development and mining operations we conduct will be, subject to all of the operating hazards and risks normally
incident to exploring for and developing mineral properties, such as, but not limited to:



|● | economically insufficient
    mineralized material;
|- | ---------------------------------------------------



|● | fluctuations in
    production costs that may make mining uneconomical;
|- | -----------------------------------------------------------------------



|● | availability of
    labor, contractors, engineers, power, transportation and infrastructure;
|- | --------------------------------------------------------------------------------------------



|● | labor disputes;
|- | ---------------



|● | potential delays
    related to social, public health, and community issues;
|- | ----------------------------------------------------------------------------



|● | unanticipated variations
    in grade and other geologic problems;
|- | ------------------------------------------------------------------



|● | environmental hazards;
|- | ----------------------



|● | difficult surface
    or underground conditions;
|- | ------------------------------------------------



|● | water conditions;
|- | -----------------



|● | industrial accidents;
|- | ---------------------



|● | metallurgical and
    other processing problems;
|- | ------------------------------------------------



|● | mechanical and equipment
    performance problems;
|- | --------------------------------------------------



|● | failure of pit walls
    or dams;
|- | ---------------------------------



|● | unusual or unexpected
    rock formations;
|- | ------------------------------------------



|● | personal injury,
    fire, flooding, cave-ins and landslides; and
|- | -----------------------------------------------------------------



|● | decrease in reserves
    or mineralized material due to a lower gold, silver, or copper price.
|- | ----------------------------------------------------------------------------------------------







15







Any
of these risks can materially and adversely affect, among other things, the development of properties, production quantities and
rates, costs and expenditures, potential revenues and production dates. We currently have no insurance to guard against any of
these risks, except in very limited circumstances. If we determine that capitalized costs associated with any of our mineral interests
are not likely to be recovered, we would incur a write-down of our investment in these interests. All these factors may result
in losses in relation to amounts spent which are not recoverable.



We
do not insure against all risks to which we may be subject in our operations.



While
we currently maintain insurance to insure against general commercial liability claims and physical assets at our properties in
México, we do not maintain insurance to cover all of the potential risks associated with our operations. We may also be
unable to obtain insurance to cover other risks at economically feasible premiums or at all. Insurance coverage may not continue
to be available or may not be adequate to cover liabilities. We might also become subject to liability for environmental, pollution
or other hazards associated with mineral exploration and production which may not be insured against, which may exceed the limits
of our insurance coverage, or which we may elect not to insure against because of premium costs or other reasons. Losses from
these events may cause us to incur significant costs that could materially adversely affect our financial condition and our ability
to fund activities on our property. A significant loss could force us to reduce or terminate our operations.



Shortages
of critical parts and equipment may adversely affect our operations and development projects.



The
mining industry has been impacted, from time to time, by increased demand for critical resources such as input commodities, drilling
equipment, trucks, shovels and tires. These shortages have, at times, impacted the efficiency of our operations, and resulted
in cost increases and delays in rehabilitation and refurbishing of projects, thereby impacting operating costs, capital expenditures,
and production and construction schedules.



Our
operations are subject to permitting requirements which could require us to delay, suspend or terminate our operations on our
mining properties.



Our
test mining and pilot milling operations, and including future exploration and drilling programs, require permits from the state
and federal governments, including permits for the use of water and for drilling wells for water. We may be unable to obtain these
permits in a timely manner, on reasonable terms or on terms that provide us sufficient resources to develop our properties, or
at all. Even if we are able to obtain such permits, the time required by the permitting process can be significant. If we cannot
obtain or maintain the necessary permits, or if there is a delay in receiving these permits, our timetable and business plan for
exploration of our properties will be adversely affected, which may in turn adversely affect our results of operations, financial
condition, cash flows and market price of our securities.





Title
to mineral properties can be uncertain, and we are at risk of loss of ownership of one or more of our properties.



Our
ability to explore and operate our properties depends on the validity of our title to that property. Our concessions in México
are subject to continuing government regulation and failure to adhere to such regulations could result in termination of the concessions.



We
cannot ensure that we will have an adequate supply of water to complete desired exploration or development of our mining properties.



Our
test mining and pilot milling operations require significant quantities of water for mining, ore processing and related support
facilities. Our operations in México are in areas where water is scarce and competition among users for continuing access
to water is significant. Continuous operations at our mines is dependent on our ability to maintain our water rights. Although
each of our operations currently has sufficient water rights and claims to cover our operational demands, we cannot predict the
future circumstances relating to our water rights, claims and uses. Water shortages may also result from weather or environmental
and climate impacts out of the Company's control.



We
are subject to litigation risks.



All
industries, including the mining industry, are subject to legal claims, with and without merit. Defense and settlement costs can
be substantial, even with respect to claims that have no merit. Due to the inherent uncertainty of the litigation process, the
resolution of any legal proceeding, including regulatory proceedings, could have a material adverse effect on our financial position
and results of operations.





16









Risks
Relating to Our Common Stock



A
small number of existing shareholders own a significant portion of DynaResource, Inc. common stock, which could limit your ability
to influence the outcome of any shareholder vote.



The
Chairman/CEO currently owns approximately 10.5% of total outstanding common shares and the management and members of the Board
of Directors as a group own approximately 30.64% of common shares outstanding. These blocks of ownership could limit another stockholders’
ability to influence the outcome of any shareholder vote.



Our
stock price may be volatile, and as a result you could lose all or part of your investment.



In
addition to other risk factors identified herein and to volatility associated with equity securities in general, the value of
your investment could decline due to the impact of any of the following factors upon the market price of our common stock:



|● | Changes in the worldwide
    price for gold, silver and/or copper;
|- | ------------------------------------------------------------------



|● | Volatility in the
    equities markets;
|- | ---------------------------------------



|● | Disappointing results
    from our exploration or test mining and pilot milling and production efforts;
|- | -------------------------------------------------------------------------------------------------------



|● | Test pilot production
    rates lower than those targeted;
|- | ----------------------------------------------------------



|● | Political and regulatory
    risks;
|- | -----------------------------------



|● | Weather conditions,
    including unusually heavy rains;
|- | --------------------------------------------------------



|● | Failure to meet
    our revenue or profit goals or operating budget;
|- | --------------------------------------------------------------------



|● | Decline in demand
    for our common stock;
|- | -------------------------------------------



|● | Downward revisions
    in securities analysts' estimates or changes in general market conditions;
|- | -------------------------------------------------------------------------------------------------



|● | Technological innovations
    by competitors or in competing technologies;
|- | --------------------------------------------------------------------------



|● | Investor perception
    of our industry or our prospects;
|- | ---------------------------------------------------------



|● | Actions by government
    central banks; and
|- | --------------------------------------------



|● | General economic
    trends.
|- | ----------------------------



During
the 2018 calendar year the price of our stock has ranged from a low of $.78 to a high of $1.25. In addition, stock markets in
general have experienced extreme price and volume fluctuations and the market prices of securities have been highly volatile.
These fluctuations are often unrelated to operating performance and may adversely affect the market price of our common stock.
As a result, you may be unable to resell your shares at a desired price.



|ITEM
    1B. | UNRESOLVED STAFF
    COMMENTS
|------------ | -----------------------------



Not
Applicable



|ITEM
    2. | PROPERTIES
|----------- | ----------



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



San
Jose de Gracia Mineral Property



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



DynaMéxico
owns 100% of the mineral concessions at the SJG Property, and all mineral concessions are contiguous. The SJG Property is currently
the only property in which DynaMéxico retains an interest. The Company owns 80% of the outstanding capital shares of DynaMéxico.
DynaMéxico holds title to 33 concessions covering approximately 69,121 hectares (170,802 acres).





17









Property
Location



The
property is located in and around San Jose de Gracia, Sinaloa State, México which is approximately 100 km northeast of
Guamuchil, near the west coast of México. It is located on the west side of the Sierra Madre mountain range in the Sierra
Madre Gold-Silver Belt. The topography is generally rugged with elevations varying from 400 meters in the valley bottoms to over
1,600 meters in the higher Sierra. Several roads on the property are accessible throughout the year, with the possible exception
of July through September when the rainy season sometimes causes flooding and runoff to make the roads difficult to navigate.



Access



The
San José de Gracia Project can be accessed by road, via a sealed highway from Culiacan, the capital city of the State of
Sinaloa (located to the south of the San José de Gracia Project) or the city of Guamuchil (located to the southwest of
SJG), to the small town of Sinaloa de Leyva, then by gravel mountainous road to the village of San José de Gracia.



The
San José de Gracia Project can also be accessed by air. A gravel airstrip is located adjacent to the village of San José
de Gracia which is located at the southwestern portion of the property at the SJG Project, and the airstrip is suitable for light
aircraft.



Climate
and Operating Season



The
climate is semi-tropical with a rainy season dominating from late June through September. Operations at the San José de
Gracia Project are, in part, dependent on the weather and some activities may be suspended during the rainy season.



Infrastructure
and Local Resources



Power



A
power line to the San José de Gracia Project has been installed by the Comisión Federal de Electricidad, the only
authorized power producer in México. The power line was installed in March 2012 from the municipality of Sinaloa de Leyva
(La Estancia area), a distance of approximately 75 kilometers.



The
power line is currently 220 volts maximum capacity, which supports domestic use only, including the office and camp facilities
at SJG, such as water pump, air conditioning, refrigeration, lights, internet, and fans, as well as local residential use. Currently,
the SJG Project produces its own diesel-generated power for industrial use.



Water



The
water source for the SJG camp is from a well located close to the river which runs just west of the village of San José
de Gracia. DynaMéxico has obtained the water concession rights for this water source, which provide for usage of 1,000,000
cubic meters per year. DynaMéxico estimates its current consumption of water to be approximately 10,000 liters per week.



Accommodations



The
mine site area camp maintains facilities which can accommodate 50 persons. The village of San José de Gracia maintains
few stores, which offer only minimal goods.



Offices
– Camp Facilities



DynaMéxico
maintains an administrative and logistics office in Guamuchil, located 100 kilometers southwest of the SJG property. The SJG Project
sources many of its supplies from Guamuchil, and from Los Mochis and Culiacan. A satellite dish installed at the SJG Property
provides communications from the SJG Property to Guamuchil.



Lab



A
field laboratory is maintained within the camp facility. The Company utilized the lab for assaying services during its production
activities in 2003-2006. In the second half of 2016, the laboratory has been refurbished by DynaMineras and is currently utilized
by on site personnel to provide assays for mined material, feed material, gravity and flotation concentrates, and tailings. DynaMineras
anticipates utilizing the lab facility in the future for providing internal assays to support the exploration, test mining, and
pilot milling activities.





18









Regional
Geology & Mineral Deposits



San
José de Gracia lies within the Sierra Madre Occidental (“SMO”) Gold-Silver Belt, in a second-order graben directly
east of the regional-scale Grete Graben.  The SMO is recognized as a highly prospective mineral belt for gold, silver and
poly-metallic deposits. 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 volcanoclastic 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”).



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 co-temporal 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.  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.



Property
Mineralization



High
grade gold mineralization at San José de Gracia is found in vein structures hosted within andesite and rhyodacite of the
Lower Volcanic Series (“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 hanging wall 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 have 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.



The
characterization of the mineralization at San Jose de Gracia can be described as low sulphidation polymetallic epithermal gold
type. 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 San Pablo East);
|-- | ---------------------------------------------------------------



|4. | San
    Pablo trend;
|-- | --------------------



|5. | La
    Prieta trend, and
|-- | ------------------------



|6. | Los
    Hilos to Tres Amigos trend.
|-- | -----------------------------------



Licenses
and Concessions



The
SJG District is comprised of 33 mining concessions covering 9,920 hectares (24,513 acres) and is located within the Sierra Madre
gold-silver belt, where the majority of hydrothermal deposits in México are located. The Company’s mining 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.





19









Under
amendments to the Mining Act of México that came into effect on December 2006, the classifications of Mining Exploration
Concessions and Mining Exploitation Concessions were replaced by a single classification of Mining Concessions valid for a renewable
term of 50 years, commencing from the initial issuance date. To be converted into Mining Concessions at the time these amendments
came into force, former exploration and exploitation concessions had to be in good standing at the time of conversion. All of
the SJG concessions were converted to 50-year Mining Concessions at the time the amendments to the Mining Act came into effect.
To renew the 50-year term, Mining Concessions must be in good standing at the time application is filed. An application for renewal
must be filed within 5 years prior to expiration of the term.



To
maintain Mining Concessions in good standing, the registered owner must (a) pay bi-annual mining duties (“assessment taxes”)
in advance, by January 31 and July 31 each year, (b) file assessment work reports by May 30 each year, for the preceding year
(some exception rules apply), and (c) file by January 31 each year, statistical reports on exploration / exploitation work conducted
for the preceding year.



The
Notice of Commencement of Production Activities and Annual Production Reports must be filed annually by January 31 each year for
those concessions where mineral ore extraction is taking place. As a general provision, registered owners of Mining Concessions
must follow environmental and labor laws and regulations in order to maintain their Mining Concessions in good standing.



As
of the date of this Form 10-K, the 33 mining concessions comprising the SJG Property are in good standing with respect to the
payment of taxes and the filing of assessment work obligations imposed by the Mining Act of México and its Regulations.
Included among the 33 mining concessions are 32 currently registered in the sole name of DynaMéxico. DynaMéxico
holds one mining concession (San Miguel t.183504) that in order to produce legal effects requires the consent or relinquishment
of first rights of refusal from registered owners to the 50% undivided title. See the note following the table of mining concessions
below, describing the steps needed to be taken by DynaMéxico to obtain title to the San Miguel mining concession.



In
July 2018 in connection with settlement of prior years’ concessions, DynaMéxico’s reduced its Francisco Arturo
concession from 62,481 hectares to 3,274 hectors. This reduced the total concessions holdings from 69,121 hectares (170,802 acres)
to 9,920 hectares (24,513 acres)



Current
Mining Concessions - San José de Gracia



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







20













|TRES
    AMIGOS 2    | 212142 | 31/08/2000 | 30/08/2050 | 54.4672   | 63.22
|-------------------- | ------ | ---------- | ---------- | --------- | -----
|FINISTERRE
    4     | 231166 | 18/01/2008 | 17/01/2058 | 2142.1302 | 5.08 
|FRANCISCO
    ARTURO | 230494 | 06/09/2007 | 27/03/2057 | 3.279.56  |      
|TOTAL                |        |            |            | 9,919.58  |      





(1)
According to the records of the Mines Registry Office, the registered owners to 100% undivided title to the San Miguel (t.183504)
mining concession are: Maria Trinidad Acosta Salazar (25%), Miguel López Medina (25%), Josefa González Castro (25%)
and Otilia Tracy Vizcarra (25%). On October 17, 2000 and March 8, 2001, DynaMéxico signed with each of Miguel Lopez Medina
and Josefa Gonzalez Castro, respectively, agreements for the transfer to DynaMéxico of 50% undivided title to the San Miguel
(t.183504) mining concession (the “San Miguel Transfer Agreements”).



In
respect to the San Miguel Transfer Agreements, DynaMéxico has been advised that in order for the San Miguel Transfer Agreements
to produce legal effects and be eligible for registration before the Mines Registry Office, DynaMéxico is required to first
obtain the legal consent to such transfers, or the written relinquishment of first rights of refusal, from Maria Trinidad Acosta
Salazar and Otilia Tracy Vizcarra (or court-appointed estate executor). In addition to the San Miguel Transfer Agreements,
DynaMéxico has entered into the following Promise to Sell and Purchase Agreements (the “San Miguel Promise to Sell
and Purchase Agreements”):



(a)
Promise to Sell and Purchase Agreement signed on March 8, 2001 among DynaMéxico and Maria Trinidad Acosta Salazar, the
registered owner to 25% undivided title to the San Miguel (t.183504) mining concession, and



(b)
Promise to Sell and Purchase Agreement signed on December 15, 2000 among DynaMéxico and Margarita Tracy Vizcarra, the sister
of the deceased Otilia Tracy Vizcarra.



In
respect to the San Miguel Promise to Sell and Purchase Agreements, DynaMéxico has been advised that:



(a)
with respect to the Promise to Sell and Purchase Agreement signed on March 8, 2001 among DynaMéxico and Maria Trinidad
Acosta Salazar, to contact Ms. Maria Trinidad Acosta Salazar to demand compliance with such agreement by executing the definitive
transfer to DynaMéxico of the 25% undivided title to the San Miguel (t.183504) mining concession registered in her name,
and



(b)
with respect to the Promise to Sell and Purchase Agreement signed on December 15, 2000 among DynaMéxico and Margarita Tracy
Vizcarra, the sister of the deceased Otilia Tracy Vizcarra,the estate of Otilia Tracy Vizcarra requires the appointment
of a court-appointed executor that would be capable under Mexican law to formally grant the estate ́s consent for the execution
of the San Miguel Transfer Agreements, to relinquish the estate ́s first rights of refusal or to request court approval for
the transfer to DynaMéxico of the 25% undivided interest in the San Miguel (t.183504) mining concession registered in the
name of the deceased Otilia Tracy Vizcarra.



Surface
Lease Rights



In
addition to the surface rights held by DynaMéxico pursuant to the Mining Act of México and its Regulations
(Ley Minera y su Reglamento), DynaMineras maintains access and surface rights to the SJG Project pursuant to the 20-year
Land Lease Agreement (above). The 20 Year Land Lease Agreement with the Santa Maria Ejido
Community surrounding San Jose de Gracia is dated January 6, 2014 and continues through 2033. It covers an area of 4,399 hectares
surrounding the main mineral resource areas of SJG and provides for annual lease payments by DynaMineras of $1,359,443 Pesos (approx.
$74,000 USD as of April 10, 2018), commencing in 2014. Additionally, under the description of the 20 Year Land Lease, DynaMineras
constructed a Medical Facility at SJG in year 2017.



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



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





21









Mineral
Reserves / No Known Reserves



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



Sierra
Madre Gold-Silver Belt in México







San
Jose de Gracia - History



Historical
production records from San Jose de Gracia (“SJG”) reported 1,000,000 Oz gold production from a series of underground
workings. The major areas report 471,000 Oz. produced at the La Purisima area of SJG, at an average grade of 66.7 g/t.; and 215,000
Oz. 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 15 sq. km.



DynaMéxico
was formed in March 2000, for the purpose of acquiring the concessions comprising the SJG District, and to consolidate all ownership
of SJG under DynaMéxico.



Lack
of Historical Surface Disturbance or Contamination



Historical
production at San Jose de Gracia occurred prior to the Mexican Revolution (pre-1910). The Company is not aware of any surface
disturbance or contamination issues found on the surface or in the groundwater due to historical mining activities.



Since
acquisition and consolidation of the project under DynaResourcede Mexico SA de CV. (“DynaMéxico”),
all activities conducted at San Jose de Gracia have been permitted in accordance with Mexico regulations, the specifics of which
are described below:



On
June 17, 2013, DynaResource de Mexico received from the Secretaria de Medio Ambiente Y Recursos Naturales (“Semarnat”),
the federal environmental authority in Mexico, the approval and permission which allows for the rehabilitation and operation of
the pilot mill facility at San Jose de Gracia (the “Semarnat Permit”). Under the terms of the Semarnat Permit, DynaMéxico
is responsible for maintaining the San Jose de Gracia pilot mill facility, as well as the adjacent tailings pond area, in compliance
with Semarnat regulations.



On
September 30, 2013 DynaResource de Mexico also received from Semarnat, the approval and permission which allows for the exploitation
and mining activities at the San Pablo Area of San Jose de Gracia (the “Semarnat Exploitation Permit”). Under the
terms of the Semarnat Exploitation Permit, DynaMéxico’s exploitation and mining activities are restricted to the
San Pablo Area of San Jose de Gracia.



Drilling
– Exploration Programs (1997 – 2000)



A
drill program was conducted at SJG in 1997 to 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 to 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 mineralized shoots appear to be controlled by dilational
jogs and/or vein intersections. A total of 544 samples were collected in 1999 to 2000 and assayed an average 6.51 g/t gold.



Pilot
Production Activities (2003 – 2006)



DynaMéxico,
conducting activities through its operating sister companies DynaMineras 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 tonnes, at
an average grade of approximately 15-20 g/t. Production costs were reported at approximately $175/Oz. gold in this small scale,
pilot production operation. 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 high-grade San Pablo area of the property commenced in March 2003.



|Mined
    and Milled Tonnage           | 42,000
    tonnes
|-------------------------------------- | -----------------
|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    







22







Suspension
of Pilot Operations (2006)



The
Company initiated the test mining and pilot mill operations in 2003 and, at that time, gold prices were depressed. Exploration
funding opportunities, while available, were deemed to be too dilutive by Company management. Subsequently, in 2006, commodities
prices were rising, and the Company was able to negotiate acceptable financing in order to fund exploration activities. Therefore,
the Company suspended its test mining and pilot mill operations in 2006 in order to focus on the exploration of the vast SJG District.
While the test mining and pilot milling operations were considered successful (see results in the table above), small scale operations
were not expected to provide the necessary capital in order to fund exploration of a project the size of SJG.



The
earlier, limited-scope pilot operations provided significant benefits in terms of confirming production test mining and milling
grades, metallurgy and process, efficiency of recoveries, and operational costs – all of which is valuable for larger scale
production plans.





Earn
In / Option Agreement – Financing of Drilling – Exploration Programs (2006 – 2011)



The
Company entered into an Earn In / Option Agreement with Goldgroup Resources Inc., a subsidiary of Goldgroup Mining Inc., Vancouver,
BC. (“Goldgroup”), dated September 1, 2006 (the “Goldgroup Earn In”). The terms of the Goldgroup Earn
In provided for Goldgroup to contribute $18,000,000financing to DynaMéxico, in stages
over the 5-year period, for exploration expenditures at SJG, in exchange for 50% of the outstanding share capital of DynaMéxico.
The Goldgroup Earn In was completed March 15, 2011, and Goldgroup held 50% of outstanding capital of DynaMéxico at that
date.



On
June 21, 2013, DynaResource acquired a Certificate for 300 Series “B” Variable Capital Shares of DynaMéxico,
in exchange for the settlement of accounts receivable from DynaMéxico in the amount of $31,090,710 Mexican Pesos (approximately
$2.4 M USD). After the issuance and receipt of the 300 Series B Shares, DynaUSA holds 80% of the total outstanding share capital
of DynaMéxico.



Drilling
programs (2007 – 2011)



Drilling
programs completed by the Company’s subsidiaries produced 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.



Magnetic
and IP Surveys (2009)



Magnetic
and IP (“Induced Polarization”) surveys were conducted throughout the SJG district in 2009, covering an area of approximately
15 Sq. kilometers. 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 Prieta

La
Ceceña, Los Hilos, and Tepehauje;

Palos
Chinos;

La
Purisima; Down dip at Southeast end;

Argillic
Zone; + 250 M. down dip;







23







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



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



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



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



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



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



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



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



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





24









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



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



Selected
Drill Hole Intercepts by Target Area (Excerpt from The Updated 2012 DynaMéxico Luna-CAM SJG Technical Report)



Tres
Amigos



|Drill
    hole | Area            | From
    m | To
    m | length
    (m) | Au
    g/t | Ag
    g/t | Cu%  | Pb%  | Zn% 
|-------------- | --------------- | ---------- | -------- | -------------- | ---------- | ---------- | ---- | ---- | ----
|97-013         | Tres
    Amigos | 95.00      | 107.50   | 12.50          | 20.80      | 21.80      | 0.43 | 0.06 | 0.15
|97-039         | Tres
    Amigos | 40.20      | 43.20    | 3.00           | 29.50      | 44.60      | 0.58 | 0.95 | 7.45
|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
|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
|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
|10-154         | Tres
    Amigos | 73.00      | 74.75    | 1.75           | 21.89      | 9.30       | 0.00 | 0.00 | 0.02
|10-175         | Tres
    Amigos | 241.59     | 245.40   | 3.81           | 6.37       | 3.41       | 0.02 | 0.00 | 0.03
|10-177         | Tres
    Amigos | 228.63     | 245.00   | 16.37          | 10.58      | 9.75       | 0.25 | 0.02 | 0.09
|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
|10-230         | Tres
    Amigos | 244.91     | 249.45   | 4.54           | 18.09      | 15.48      | 0.53 | 0.02 | 0.03
|10-234         | Tres
    Amigos | 214.61     | 217.97   | 3.36           | 15.05      | 13.45      | 0.23 | 0.01 | 0.01
|10-237         | Tres
    Amigos | 92.44      | 92.84    | 0.40           | 883.91     | 195.00     | 0.24 | 0.77 | 5.35
|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
|11-271         | Tres
    Amigos | 115.40     | 120.15   | 4.75           | 13.93      | 18.56      | 0.54 | 0.02 | 0.14







San
Pablo



|Drill
    hole | Area          | From
    m | To
    m | length
    (m) | Au
    g/t | Ag
    g/t | Cu%  | Pb%  | Zn% 
|-------------- | ------------- | ---------- | -------- | -------------- | ---------- | ---------- | ---- | ---- | ----
|07-012         | San
    Pablo | 19.70      | 23.90    | 4.20           | 10.45      | 10.00      | 0.15 | 0.00 | 0.01
|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
|07-031         | San
    Pablo | 94.25      | 98.05    | 3.80           | 31.32      | 69.60      | 1.01 | 0.23 | 0.74
|08-051         | San
    Pablo | 183.55     | 192.60   | 9.05           | 22.95      | 13.60      | 0.40 | 0.00 | 0.03
|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
|09-133         | San
    Pablo | 126.80     | 129.80   | 3.00           | 13.10      | 10.25      | 0.32 | 0.00 | 0.02
|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
|10-197         | San
    Pablo | 48.15      | 51.82    | 3.67           | 7.96       | 13.18      | 0.49 | 0.00 | 0.03









25







|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
|10-215 | San
    Pablo | 186.80 | 190.27 | 3.47 | 15.82  | 14.68  | 0.41 | 0.03 | 0.02
|10-221 | San
    Pablo | 69.98  | 71.98  | 2.00 | 13.14  | 23.93  | 0.62 | 0.00 | 0.01
|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
|11-249 | 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
|11-268 | San
    Pablo | 92.65  | 94.25  | 1.60 | 11.74  | 21.13  | 0.37 | 0.01 | 0.04



San
Pablo East



|Drill
    hole | Area            | From
    m | To
    m | length
    (m) | Au
    g/t | Ag
    g/t | Cu%  | Pb%  | Zn% 
|-------------- | --------------- | ---------- | -------- | -------------- | ---------- | ---------- | ---- | ---- | ----
|08-076         | San
    Pablo E | 32.75      | 34.85    | 2.10           | 36.09      | 47.80      | 0.43 | 0.80 | 1.06
|10-208         | San
    Pablo E | 150.61     | 152.67   | 2.06           | 6.60       | 10.30      | 0.40 | 0.00 | 0.01
|11-252         | San
    Pablo E | 55.25      | 59.70    | 4.45           | 4.26       | 12.05      | 0.37 | 0.01 | 0.04
|11-256         | San
    Pablo E | 51.61      | 52.85    | 1.24           | 144.08     | 138.60     | 1.06 | 1.61 | 1.78
|11-256         | San
    Pablo E | 99.93      | 101.29   | 1.36           | 9.04       | 3.30       | 0.01 | 0.00 | 0.01
|11-298         | San
    Pablo E | 49.15      | 49.85    | 0.7            | 49.39      | 20.80      | 0.20 | 0.01 | 0.03





La
Purisima



|Drill
    hole | Area            | From
    m | To
    m | length
    (m) | Au
    g/t | Ag
    g/t | Cu%  | Pb%  | Zn% 
|-------------- | --------------- | ---------- | -------- | -------------- | ---------- | ---------- | ---- | ---- | ----
|07-021         | La
    Purisima | 158.70     | 160.80   | 2.10           | 75.90      | 76.00      | 1.61 | 0.07 | 0.00
|07-039         | La
    Purisima | 197.55     | 200.80   | 3.25           | 10.93      | 4.60       | 0.04 | 0.00 | 0.01
|10-161         | La
    Purisima | 87.70      | 99.67    | 11.97          | 3.12       | 4.86       | 0.36 | 0.00 | 0.01
|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 | 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 Calculation in Surpac Software--The Company has compiled its manual calculation and internal interpretation of the mineralization
at SJG defined by drilling and production to date. The Company has also built 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 described above. The Company will continue this Surpac modeling
work as additional drill programs are planned and completed.



Exploration
and Mining Permit Requirements (México)



In
respect of permit requirements for mineral exploration and mining in México, the most relevant applicable laws, regulations
and official technical norms are the following: The Federal Mining Act, and its Regulations, the Federal Environmental
Protection and Ecological Equilibrium Act, and its Regulations, the Federal Sustainable Forestry Development Act and
its Regulations, the Federal Explosives and Firearms Act, the National Waters Act and the Mexican Official Norm
120.



To
carry out mineral exploration activities, holders of mining concessions in México are required to file at the offices of
the Secretaria de Medio Ambiente Y Recursos Naturales, the Federal Environmental Authority in México (“SEMARNAT”)
a “Notice of Commencement of Exploration Activities” under the guidelines of the Mexican Official Norm 120
(“Norm 120”). SEMARNAT is the office of the Federal Government of México responsible for the review and issuance
of a Change of Soil Use Permit (“CSUP”), the review of a Technical Justification Study (referenced below) and the
filing of Norm 120. Norm 120 is a notice to SEMARNAT only and has no processing time.





26









If
contemplated mineral exploration activities fall outside of the parameters defined under Norm 120, a CSUP Application is required
to be filed at the SEMARNAT under the guidelines of the Federal Sustainable Forestry Development Act and its Regulations.
To meet the requirements for issuance of a CSUP, the applicant must also file a Technical Study (“Technical Justification
Study”) to justify the change of soil use from forestry to mining, to demonstrate that biodiversity will not be compromised,
and to demonstrate that there will be no soil erosion or water quality deterioration on completion of the mineral exploration
activities.



As
a pre-requisite for issuance of a CSUP, Article 118 of the Federal Sustainable Forestry Development Act provides for the
posting of a bond to the Mexican Forestry Fund for remediation, restoration and reforestation of the areas impacted by the mineral
exploration activities.



To
carry out mining activities in México, holders of mining concessions are also required to file an “Environmental
Impact Assessment Study” (“Environmental Impact Study”) under the guidelines of the Federal Environmental
Protection and Ecological Equilibrium Act and its Regulations, in order to evaluate the environmental impact of the contemplated
mining activities.



As
a pre-requisite for approval of an Environmental Impact Study, the Federal Environmental Protection and Ecological Equilibrium
Act and its Regulations require the posting of a bond to guarantee remediation and rehabilitation of the areas impacted by
the mining activities.



If
the use of explosives materials is required for execution of mineral exploration or mining activities, an Application for General
Permit for Use, Consumption and Storage of Explosive (“Explosives Permit”) is required to be filed at the offices
of the Secretariat of National Defense (“SEDENA”) under the guidelines of the Federal Explosives and Firearms Act.





Under
the Federal Mining Act, holders of mining concessions in México have the right to the use of the water coming from
the mining works. However, certification of water rights and/or issuance of water rights concessions are required from the National
Water Commission (“CONAGUA”) under the guidelines of the National Waters Act.



DynaMéxico
Permit Filings / Permits History (2003 – 2018)



|● | On
    February 10, 2003, SEDENA granted DynaMéxico an Explosives Permit for use and storage of explosives materials in SJG.
|- | ----------------------------------------------------------------------------------------------------------------------------



|● | In
    June 2006, DynaMéxico ceased use of explosives materials in its mining activities at SJG and requested suspension of
    the Explosives Permit. The Explosives Permit has been temporarily suspended by SEDENA and DynaMéxico will be required
    to file a re-activation application to re-activate the Explosives Permit.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|● | On
    June 28, 2010, DynaMéxico filed a Preventive Exploration Notice at the office of SEMARNAT in connection with contemplated
    mineral exploration activities at the La Prieta, San Pablo, La Purisima, La Unión, Tres
    Amigos and La Ceceña areas of the San José de Gracia Project.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|● | On
    July 21, 2010, SEMARNAT authorized DynaMéxico to conduct the mineral exploration activities referenced in the Preventive
    Exploration Notice, for a term of 36 months, as SEMARNAT determined that such activities fall within the framework of Norm
    120. SEMARNAT’s approval was subject to the following conditions: (a) DynaMéxico’s filing of a CSUP Application
    (referenced below) and approval thereof by SEMARNAT, and (b) posting of a bond in the amount of $134,487 Mexican Pesos to
    guarantee remediation and rehabilitation measures following the conclusion of the mineral exploration activities referenced
    in the Preventive Exploration Notice. The bond was timely posted by DynaMéxico.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|● | On
    August 9, 2010, DynaMéxico filed a CSUP Application and a Technical Justification Study at the offices of SEMARNAT
    to carry out certain mineral exploration activities at the La Prieta, San Pablo, La Purisima, La Unión, Tres Amigos
    and La Ceceña areas of the San José de Gracia Project.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|● | On
    December 20, 2010, SEMARNAT approved the CSUP Application and Technical Justification Study filed by DynaMéxico with
    respect to the San José de Gracia Project and authorized DynaMéxico to conduct mineral exploration activities
    on 5.463 hectares of the San José de Gracia Project for a term of 36 months.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|● | On
    March 8, 2012, the Director of Water Administration of CONAGUA certified in writing the rights of DynaMéxico to use
    exploit and extract 1,000,000 cubic meters of water per year from the extraction infrastructure located in San José
    de Gracia. CONAGUA determined that DynaMéxico’s water rights are not subject to any water rights concession or
    any other water extraction restriction. Water extracted by DynaMéxico will be subject to applicable levies imposed
    by the Mexican tax authorities under applicable tax laws.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------







27







|● | On
    June 17, 2013, DynaMéxico received from SEMARNAT, the approval and permission which allows for the rehabilitation and
    operation of the pilot mill facility at SJG ("the SEMARNAT-SJG Mill Permit," and, the "SEMARNAT Permit").
    Under the terms of the SEMARNAT-SJG Mill Permit, DynaMéxico will be responsible to maintain the SJG pilot mill facility,
    and including the adjacent tailings pond area, in compliance with the regulations described in la Norma Oficial Mexicana ("NOM-141-SEMARNAT-2003).
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|● | On
    July 31, 2013, SEMARNAT authorized DynaMéxico to conduct the mineral exploration activities referenced in the Preventive
    Exploration Notice, for a term of an additional 18 months, extending the initial term of 36 months as SEMARNAT had determined
    on July 10, 2010. SEMARNAT determined that such activities fall within the framework of Norm 120.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|● | On
    December 31, 2013, DynaMéxico received from SEMARNAT the approval and permission which allows for mining activities
    and the exploitation of the San Pablo area of San Jose de Gracia.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|● | On
    January 6, 2014, DynaMineras entered into a 20 Year Land Lease Agreement with the Santa
    Maria Ejido Community surrounding San Jose de Gracia. The 20 Year Land Lease Agreement is dated January 6, 2014 and continues
    through 2033. It covers an area of 4,399 hectares surrounding the main mineral resource areas of SJG and provides for annual
    lease payments by DynaMineras of $1,359,443 Pesos (approx. $74,000 USD as of April 10, 2018), commencing in 2014. Additionally,
    under the description of the Land Lease Agreement, DynaMineras constructed a Medical Facility at SJG during 2017. The
    land lease agreement provides DynaMineras with surface access to the core resource areas of SJG (4,399 hectares), and allows
    for all permitted test mining, pilot production and exploration activities from the owners of the surface rights (Santa Maria
    Ejido community).
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



DynaMéxico
Bonding Requirements (2010)



|● | Under
    the Exploration Permit issued to DynaMéxico on July 21, 2010, SEMARNAT imposed upon DynaMéxico a bonding obligation
    in the amount of $134,487 Mexican Pesos to guarantee remediation and rehabilitation measures following the conclusion of the
    mineral exploration activities referenced in the Preventive Exploration Notice. The bond was timely posted by DynaMéxico.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





|● | Under
    the CSUP issued to DynaMéxico on December 20, 2010, SEMARNAT imposed upon DynaMéxico a bonding obligation of
    $116,911 Mexican Pesos for reforestation and remediation measures with respect to the San José de Gracia Project. The
    bond was timely posted by DynaMéxico.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Water
Concession



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



Test
Underground Mining and Pilot Mill Operations

Capital
Investment Program (2015 and 2016)

In
July 2015, the Company commenced a capital investment program designed to increase tonnage from the test mining operations and,
to increase volume and output through the pilot mill facility. Through DynaMineras, the Company was engaged in the implementation
of this capital investment program from July through December 2015. And, in 2016, the Company was carrying out operations utilizing
the improvements and increased outputs from test mining and pilot milling activities.



The
capital investment program consisted of a net total of $3,565,000 USD as generally described below:



| | Contract
Mining: | $713,000; including $250,000 Deposit (advance for services), and $513,000 in direct
    mining costs, explosives, and payments to contractor;
| | ---------------- | ---------------------------------------------------------------------------------------------------------------------------------------------



| | Mine related Costs: | $290,000; including mine plan development, permits, assays, consulting, mine supplies,
    and equipment items;
| | ------------------- | ---------------------------------------------------------------------------------------------------------------



28









| | Mill and Camp: | $613,000; Improvements to the Mill and Camp, including pre-operation expenses;
| | -------------- | ------------------------------------------------------------------------------



| | Personnel Costs: | $673,000; including payroll and consulting expenses;
| | ---------------- | ----------------------------------------------------



| | Equipment: | $636,000;long term equipment purchases including transportation, mine loading and hauling,
                                         generators, compressors and pumps;
| | ---------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Overhead: | $285,000; including legal expenses, consulting, and administration;
| | --------- | -------------------------------------------------------------------



| | IVA Taxes: | $272,000; Value added taxes paid, and refundable;
| | ---------- | -------------------------------------------------



| | Land Use and Rental: | $83,000;
| | -------------------- | --------



| | Total: | $3,565,000
| | ------ | ----------





Project
Improvements, Expansion and Increased Output (2017 AND 2018)

The
Company continues its business plan of operations at San Jose de Gracia, which is to improve, increase and expand test mining
and pilot milling operations and generally, to increase production output. Since 2015 startup of the test mining and milling activities,
the Company has increased daily output from an initial 75 tons per day, to a current 200 tons per day, and during fiscal year
2019 the Company expects to achieve production output of 250 tons per day. (Note the Summary of Test Mining and Pilot Mill Operations
for 2015, 2016, 2017, and 2018 below).

Since
January 2017, the Company has expended over $7.9 million USD in non-operating costs, generally classified as project improvements
and expansion costs which have been expensed in the company’s financial statements. These funds have been provided primarily
by cash flows from operations. An itemized list of these non-operating costs is described below:



| | Mill
    Expansion:                 |  | $1,520,000 | 
| | ----------------------------------- |  | ---------- | 
| | Tailings
    Pond Expansion         |  | 265,000    | 
| | Machinery and Equipment             |  | 467,000    | 
| | Mining Camp Expansion               |  | 146,000    | 
| | Medical Facility                    |  | 123,000    | 
| | Mine Development -
    San Pablo    |  | 2,509,000  | 
| | Mine Expansion - San
    Pablo East |  | 680,000    | 
| | SJG Mining Concessions              |  | 1,024,000  | 
| | Surface Rights and
    Permitting   |  | 125,000    | 
| | Deb Retirement                      |  | 125,000    | 
| | Legal Fees                          |  | 896,000    | 
| | Total                               |  | $7,880,000 | 





The
Company is currently reporting all costs of mine operations, improvements, and expansion as expenses in accordance with United
States General Accepted Accounting Principal (GAAP) requirements. The results of expensing all costs is that the Company has accumulated
a net loss carry forward from Mexico operations of $28 million USD which is available to offset future taxable earnings.

Summary
of Test Mining and Pilot Mill Operations for 2015, 2016, 2017 and 2018:



|Year | Total
                                         Tonnes
        Mined
        & Processed | Reported
                                         Mill Feed Grade
        (g/t Au) | Reported
                                         Recovery
        % | Gross
                                         Gold Concentrates Produced
        (Au
        oz.) | Net
                                         Gold Concentrates Sold
        (Au
        oz.)
|---- | --------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------- | -------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------
|2015 | 7,180                                                                                   | 8.30                                                                               | 78.0%                                                                | 1,495                                                                                              | 1,308                                                                                       
|2016 | 33,172                                                                                  | 12.70                                                                              | 79.7
    %                                                           | 10,836                                                                                             | 8,668                                                                                       
|2017 | 35,170                                                                                  | 12.95                                                                              | 85.00
    %                                                          | 12,636                                                                                             | 10,740                                                                                      
|2018 | 52,038                                                                                  | 9.82                                                                               | 86.11%                                                               | 14,147                                                                                             | 13,418                                                                                      



DynaMineras
expects to continue to increase its test underground mining activity and pilot milling operations in 2019; and projects the increased
output to 250 tons/day from the mine(s) and mill during 2019.









Additional
Test Mining and Mill Operations Disclosure



The
flow sheet for obtaining and processing mineralized material is described below:



Contract
Mining: Mineralize material is mined from San Pablo mine by the contract miner, and according to the formal mine plan developed
by the Company.



Mining
Patio: Freshly mined mineralized material is transported by the contract miner outside the San Pablo Mine to the mine patio;



Pilot
Mill Facility – General Description and Flow Sheet;



Mill
Patio: Mineralized material is transported by Company dump trucks and articulated dump truck to the mill patio.



Crushing
Circuit: Freshly mined mineralized material is loaded from the mill patio into the crushing circuit, comprised of a jaw crusher
and cone crusher; and 1/2” crushed material is fed by conveyor belt to the fine mineralized material bin. The mineralized
material is then sent by conveyor belt to the primary ball mill, which is a Hardinge conical mill.



Hardinge
Mill: The mineralized material is then ground to -100 mesh particle size; and then fed to a holding tank;



Holding
Tank: The mineralized material is pumped from the holding tank to the cyclone;



Cyclone:The course material plus (-100 Mesh) is fed to the Ball Mill #2, the Denver Mill; and fine material less (-100 Mesh) is fed
to another holding tank.



Fine
Screening System (Sweco Screen): The fine mineralized material is fed from the holding tank to the Sweco Screen; the fine
mineralized material less (-200 Mesh) is fed to the spirals; the oversized material is fed to Ball Mill# 2.



Denver
Mill: All mineralized material reground in the Denver Mill, is then fed to the holding tank prior to the Cyclone.



Spiral
Gravity Concentration: Approximately 25% of the mineralized material is fed from the spirals to the Wifley table. Approximately
75% of the mineralized material is fed from the spiral concentration to the flotation conditioning tank.



Wifley
Shaking Table: The concentrate from the spirals feed the Wifley shaking table, producing a high-grade gravity concentrate.
The high-grade gravity concentrate is bagged and shipped for sale. (There are no chemicals present in the gravity concentrate.)
It is estimated that the gravity concentrate produced is approx. 40% of the total recovered gold; and estimated that a 300-400
g/t Au would be the final gravity concentrate grade.



Flotation
Conditioning Tank: The tailings from spirals and from the Wifley table are fed to the flotation conditioning tank. A low calculation
of chemicals is added, with metered feeder, directly to the flotation feed tank. Sodium sulfide, a granular solid, is added also
to the agitated flotation feed tank.



Flotation
Chemicals: The following chemicals are added to the flotation feed tank: Na2S (Sodium Sulfide), 400 g/mt (solid); Aero 343
Xanthate Collector 40-80 g/mt (liquid); Cytec 7249 conditioner 50 g/mt (liquid); Cytec 4037 Conditioner 20–40 g/mt (liquid);
and Aerofroth 70 or 73 Frother 30 g/mt (liquid).



Rougher
Flotation: The Rougher flotation consists of a bank of 8 flotation cells (or Hybrid float cell), which is fed by the conditioning
tank. The rougher concentrate recovered from the rougher float cells or the first hybrid cell is bagged for shipment and sale.
A very low percentage of chemicals remains in the rougher concentrate.



Scavenger
and Cleaner Concentrate: The tailings of the rougher concentrate could be fed to the scavenger and cleaner float cells (or,
a second hybrid cell). The cleaner concentrate would then be bagged and shipped for sale. A very low percentage of chemicals remains
in the cleaner concentrate.



Circuit
Tailings: The tailings from the flotation area are fed to the tailings impoundment area. Less than 10% of chemicals added
at the conditioning tank remain in the tailings slurry. Chemicals do not appear in the water of the tailings; as confirmed by
analysis.



Power:A 45 KW efficient diesel generator will supply power to the camp, mill lights and to the laboratory. Two 50 KW back-up diesel
generators (Selmec, Kamag) are also available for camp use.



The
mill primary generator is a 310 KW Cat Diesel and there is a 455 KW Cat Diesel mill back-up generator.



Diesel
fuel is stored in a 10,000-liter storage tank that feeds the two large generators by gravity flow to a common 500-liter head tank.
The fuel storage tank is contained within a secondary cement impoundment with controlled and oil-trapped drainage.



Electrical:The Company is in process of connecting electrical power sufficient to supply electrical power for the camp and mill.







29









ITEM
3. Legal Proceedings

Arbitration
filed by Goldgroup / DynaMéxico Complaint against Goldgroup



On
March 14, 2014, Goldgroup filed for arbitration in the United States with the American Arbitration Association ("AAA"),
citing the Earn In Agreement dated September 1, 2006 as the basis for the arbitration filing. The Company filed an answer on April
10, 2014, disputing that any issues exist which provide for arbitration.

On
December 9, 2014, DynaMéxico filed an Ordinary commercial lawsuit (Civil Claims) against Goldgroup Mining Inc., its parent
company Goldgroup Resources Inc., and the AAA, in the Thirty Sixth Civil Court in the Federal District of México, under
file 1120 number / 2014 ("the DynaMéxico Trial"). The DynaMéxico Trial seeks to terminate the U.S.-based
arbitration proceedings, as DynaMéxico believes there is no legal basis for arbitration, and to nullify the arbitration
proceedings since Goldgroup previously sought recourse in the Mexican courts. In the DynaMéxico Trial, DynaMéxico
also requests that substantial damages (in the amount of US $50 million) be awarded to DynaMéxico against Goldgroup for:

|a) | wrongfully
    using and disseminating confidential information and data belonging to DynaMéxico;                                                                                                                                              
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|b) | asserting
    that Goldgroup owns any interest in the San Jose de Gracia Project in northern Sinaloa, México, rather than accurately
    disclosing that Goldgroup owns a common shares equity interest (shareholder’s interest) in DynaMéxico;
|c) | improperly
    disclosing the percentage of common shares equity interest (shareholder’s interest) owned by Goldgroup in DynaMéxico;                                                                                                           
|d) | improperly
    disclosing or implying that Goldgroup is the operator of the San Jose de Gracia Project;                                                                                                                                        
|e) | attempting
    to delay, stop, or otherwise impair the financing of, and further development of, the SJG Project;                                                                                                                              
|f) | making
    numerous threats against DynaMéxico management and officers;                                                                                                                                                                        
|g) | failing
    to properly disclose that broad powers of attorney for acting on behalf of DynaMéxico are held by an individual not
    affiliated with Goldgroup.                                                                                 
|   |                                                                                                                                                                                                                                                

On
October 5, 2016, in an appellate ruling, the Thirty Sixth Civil Court of the Superior Court of Justice of the Federal District
of México (Tribunal Superior de Justicia del Distrito Federal), file number 1120/2014 declared, among other resolutions,
that:

|(a) | The
    AAA must “cease and desist” from the arbitration proceeding;                                                                                                                                                    
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | The
    AAA does not have jurisdiction to hear any conflict and/or interpretation arising from the Earn In/Option Agreement, dated
    September 1, 2006; and                                                           
|(c) | The
    AAA does not have jurisdiction to hear disputes arising between shareholders of DynaMéxico, which disputes do not arise
    directly and immediately from the Earn In/Option Agreement, dated September 1, 2006.



$48M
Damages Award to DynaMéxico

Also
on October 5, 2015, in an appellate ruling, DynaMéxico was awarded in excess of US $48 million in damages from Goldgroup
Resources, Inc. by virtue of a Sentencia Definitiva (the “Definitive Sentence”) issued by the Thirty Sixth Civil Court
of the Superior Court of Justice of the Federal District of México (Tribunal Superior de Justicia del Distrito Federal),
File number 1120/2014. The Definitive Sentence included the considerations and resolutions by the Court, and additional Resolutions
were also ordered in favor of DynaMéxico (together the damages award and the additional Resolutions are referred to as,
the “Oct. 5, 2015 Resolution”).

A
concise translation to English of the Oct. 5, 2015 Resolution (the resolution portion of the Definitive Sentence) is set forth
below:

|FIRST:  | The
    action and litigation based on commercial law filed by DynaMéxico is valid and enforceable, and where Goldgroup and
    the American Arbitration Association were found to be in default, was proper.                                                                                                                                                                                               
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|SECOND: | Goldgroup
    is declared in breach of its corporate duties, for failure to refrain from claiming direct ownership of 50% of the San José
    de Gracia Mining Project.                                                                                                                                                                                                                                     
|THIRD:  | Goldgroup
    is condemned and ordered to pay to DynaMéxico the amount of USD $20,000,000 (Twenty Million Dollars) in damages caused
    by Goldgroup to DynaMéxico, deriving from its breach of obligations in refraining from claiming direct ownership of
    50% of the San Jose de Gracia Mining Project; which amount should be paid within five days upon execution of this order and
    resolution.
|        |                                                                                                                                                                                                                                                                                                                                                                                                             





30







|FOURTH:     | Goldgroup
    is condemned and ordered to pay to DynaMéxico the amount of USD $28,280,808.34 (Twenty Eight Million Two Hundred and
    Eighty Thousand Eight Hundred and Eight and 34/100 Dollars), for breach of its corporate duty and covenants with regards to
    the San Jose de Gracia mining project, as a result of depriving profits from DynaMéxico which DynaMéxico could
    have earned for the sale of gold produced and extracted during the years 2013 and 2014; amounts that should be paid within
    five days upon execution of this order and resolution.                                                                                                                                                     | 
|----------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|FIFTH:      | Goldgroup
    is condemned and ordered to pay losses and damages to DynaMéxico, which Goldgroup continues to cause, until full payment
    of the above-mentioned amounts has been made, which damages, and losses shall be calculated by an expert opinion in a corresponding
    legal procedure related to this litigation.                                                                                                                                                                                                                                                                                                                                                                                                      | 
|SIXTH:      | Pursuant
    to Article 1424 of the Commercial Code of México, the arbitration provision established under clause 8.16 of the Earn
    In/Option Agreement, dated as of September 1, 2006, is ineffective and impossible to execute.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 
|SEVENTH:    | This
                                         court declares that any controversy arising from the Ear In/Option Agreement must be
                                                                                brought
                                         and resolved under Mexican Law and by competent Mexican Courts with proper jurisdiction,
                                         in recognition of the waiver and exclusion of the arbitration clause (contained in the
                                         Earn In/Option Agreement) by both parties.                                                                                                                                                    | 
|EIGHT:      | This
    Court declares that the American Arbitration Association must abstain from hearing arbitration procedure number 50 501 T 00226
    14, or any other ongoing and/or future arbitration proceeding already filed or that may be filed by the co-defendant Goldgroup
    against DynaResource.                                                                                                                                                                                                                                                                                                                                                                                                                                | 
|NINTH:      | This
    Court declares that the American Arbitration Association does not have jurisdiction to hear any conflict and/or interpretation
    arising from the Earn In/Option Agreement, dated September 1, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 
|TENTH:      | This
    Court declares, that the American Arbitration Association does not have jurisdiction to hear disputes arising between shareholders
    of DynaMéxico, which disputes do not arise directly and immediately from the Earn In/Option Agreement, dated September
    1, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 
|ELEVENTH:   | This
                                         Court declares, that the American Arbitration Association does not have jurisdiction
                                         to hear any matters where Koy Wilber Diepholz, who is the President of the Board of Directors
                                         of DynaMéxico, and has been personally sued in relation to the arbitration clause
                                         established under clause 8.16 of the Earn In/Option Agreement, dated September 1, 2006,
                                         since he signed the mentioned instrument in representation of the Company and not in
                                         his personal capacity. | 
|TWELFTH:    | The
    expenses and costs associated with these proceedings are hereby waived.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 
|THIRTEENTH: | LET
    IT SO BE PUBLISHED. A Copy of this order and Sentence shall be found in the corresponding records.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 

ORDERED,
adjudged and decreed by the Thirty Sixth Civil Judge of the Superior Court of the Federal District, Mr. JULIO GABRIEL IGLESIAS
GOMEZ.



The
October 5, 2015 Resolution constitutes a public record which may be reviewed through the Courts in México City.

México
City Court Approves Lien on Shares of DynaMéxico owned by Minority Interest Holder

On
October 5, 2016, the Thirty-Sixth Civil Court of the Superior Court of Justice of the Federal District of México (Tribunal
Superior de Justicia del Distrito Federal) approved a Lien (referred to by the court as an “Embargo”), in favor of
DynaMéxico, upon Stock Certificates in the name of Goldgroup Resources Inc. (“Goldgroup”). The Stock Certificates
subject to the Lien (“Embargo”) constitute Shares of DynaMéxico (“the Goldgroup DynaMéxico Shares”).

The
Goldgroup DynaMéxico Shares were seized as a partial recovery of assets by DynaMéxico after DynaMéxico was
awarded more than $48M USD (Forty-Eight Million Dollars) in damages against Goldgroup (the “Damages against Goldgroup”)
on October 05, 2015, as described in a Sentencia Definitiva (the “Definitive Sentence”) issued by the same court,
the Thirty Sixth Civil Court of the Superior Court of Justice of the Federal District of México, File number 1120/2014.
Excerpts from the Definitive Sentence appear below. In addition to the Damages against Goldgroup, the Definitive Sentence also
included additional Resolutions ordered in favor of DynaMéxico (the Damages against Goldgroup and the additional Resolutions
are together referred to as the “Oct. 5, 2015 Resolution”).





31







Denial
of Amparo Appeal

On
August 24, 2017 a Federal Amparo Judge (“Juzgado de Distrito”) in the State of Vera Cruz, México, dismissed
Goldgroup Resources Inc’s Amparo Trial Challenge to the $48 M USD damages award previously granted in favor of DynaMéxico.
Pursuant to the dismissal ruling, the $48M USD damages award, previously granted to DynaMéxico by the Thirty-Sixth Civil
Court of the Superior Court of Justice of the Federal District of México on October 5, 2015, was effectively confirmed.

México
Circuit Court of Appeals – Notice of Intent for Final Ruling in Favor of DynaResource de México

On
May 27, 2019, The Eleventh Collegiate Court in Civil Matters of the First Circuit (“México Circuit Court”,
and the Court of Final Appeal for Goldgroup Resources Inc.) issued a written notice confirming it was ruling against the Amparo
Appeal filed by Goldgroup Resources Inc. and in Favor of DynaResource de México, S.A. de C.V.In an effort to stay
the issuance of the Ruling by the México Circuit Court, Goldgroup Resources Inc. filed a request to The Supreme Court of
México to review the Amparo Appeal decision.

Rejection
of Goldgroup Resources Inc. request to the Supreme Court of México

On
July 3, 2019 an Official Ruling from The Supreme Court of México was issued to Reject the Request of Goldgroup Resources
Inc. (the “México Supreme Court Rejection to Goldgroup”).The Justices of the First Chamber of the Supreme
Court of Justice of México issued a Rejection Notice to Goldgroup Resources Inc., “due to the lack of legitimacy
presented by Goldgroup”; and in issuing the Rejection Notice to Goldgroup, the Supreme court thereby reverted the Amparo
Appeal back to the México Circuit Court where the Official and Final Ruling from the México Circuit Court is expected
to be issued.

Arbitration
Ruling

In
direct contradiction to the October 5, 2015 Definitive Sentence issued by court in México, on August 25, 2016 the American
Arbitration Association - International Centre for Dispute Resolution, Denver office (the “AAA”) issued an Arbitration
Ruling (the “Arbitration Ruling”) in favor of Goldgroup Resources Inc. against DynaMéxico and DynaResource,
Inc. The Arbitration Ruling was the result of a proceeding in which neither DynaMéxico nor DynaResource participated, since
the Definitive Sentence issued by the court in México effectively prohibited their participation in the Arbitration proceeding
and should have prohibited Goldgroup Resources Inc. participation as well.

The
Arbitration Ruling provides the following: (i) the Earn In/Option Agreement is still in force, and consequently Goldgroup may
appoint two directors to the DynaMéxico board, and may participate in the appointment of a fifth director; (ii) the DynaMéxico
Management Committee is reinstated, and must approve all budgets and expenditures; (iii) amounts expended by DynaMéxico
that were not approved by the Management Committee are subject to repayment by DynaResource; (iv) the issuance of additional shares
by DynaMéxico (and consequent dilution of Goldgroup’s equity interest) was in violation of the Earn In/Option Agreement;
and (v) DynaResource and DynaMéxico are responsible for Goldgroup’s costs and professional fees associated with the
Arbitration Ruling.

Unlike
most arbitration proceedings in the U.S., the Arbitration Ruling is not final. Since the Arbitration Ruling is subject to international
rules, the ruling may be vacated by U.S. courts, or simply not recognized by U.S. courts, on several grounds. Accordingly, both
DynaMéxico and DynaResource have timely requested relief from the United States Federal District Court in Colorado, via
the filing of a Petition for Nonrecognition of Foreign Arbitral Award and/or Motion to Vacate Arbitration Award (the “Petition
for Nonrecognition”), and a supporting brief. The Petition for Nonrecognition relies heavily upon the Mexican court’s
Definitive Sentence, key excerpts of which appear immediately below.

The
Mexican court has already ruled that “any controversy arising from the Earn In/Option Agreement must be brought and resolved
under Mexican Law and by competent Mexican Courts with proper jurisdiction.” Consequently, the monetary awards against DynaResource
– which are based upon a finding that the Earn In/Option Agreement is still in force – will not be enforceable if
the Mexican court rules that the Earn In/Option Agreement is terminated. The Company believes that the potential for the assessment
of a material monetary judgment against DynaResource is remote.

|SIXTH:   | Pursuant
    to Article 1424 of the Commercial Code of México, the arbitration provision established under clause 8.16 of the Earn
    In/Option Agreement, dated as of September 1, 2006, is ineffective and impossible to execute.                                                                                                     
|-------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|SEVENTH: | This
    Court declares that any controversy arising from the Earn In/Option Agreement must be brought and resolved under Mexican Law
    and by competent Mexican Courts with proper jurisdiction, in recognition of the waiver and exclusion of the arbitration clause
    (contained in the Earn In/Option Agreement) by both parties.
|EIGHT:   | This
    Court declares that the American Arbitration Association must abstain from hearing arbitration procedure number 50 501 T 00226
    14, or any other ongoing and/or future ongoing arbitration already filed or to be filed by the defendant Goldgroup, based
    on the Earn In/Option Agreement dated September 1, 2006.       
|NINTH:   | This
    Court declares that the American Arbitration Association does not have jurisdiction to hear any conflict and/or interpretation
    arising from the Earn In/Option Agreement, dated September 1, 2006.                                                                                                                          
|         |                                                                                                                                                                                                                                                                                                                                          





32











|TENTH:    | This
    Court declares, that the American Arbitration Association does not have jurisdiction to hear disputes arising between shareholders
    of DynaMéxico, which disputes do not arise directly and immediately from the Earn In/Option Agreement, dated September
    1, 2006.                                                                                                                                                                                                                                                 
|--------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ELEVENTH: | This
    Court declares, that the American Arbitration Association does not have jurisdiction to hear any matters where Koy Wilber
    Diepholz, who is the President of the Board of Directors of DynaMéxico, and has been personally sued in relation to
    the arbitration clause established under clause 8.16 of the Earn In/Option Agreement, dated September 1, 2006, since he signed
    the mentioned instrument in representation of the Company and not in represention of the Company and not in his personal capacity.
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     





| | (a) | The
                                         Arbitration Ruling contains an acknowledgement by the AAA that the AAA was named as a
                                         defendant in the legal demand filed by DynaMéxico in the Thirty Sixth Civil Court
                                         of the Superior Court of Justice of the Federal District of México (the “DynaMéxico
                                         Legal Demand”). The Arbitration Ruling also contains a statement that the AAA was
                                         not properly served notice of the DynaMéxico Legal Demand;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(b)
DynaMéxico obeyed the October 5, 2015 Court Order and did not attend the Arbitration hearing;

| | (c) | DynaMéxico
                                         will pursue all legal remedies in order to obtain a full dismissal of the Arbitration
                                         Ruling;                                                                                                                                                                                                                                                                                                   
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (d) | The October 5, 2015 Court Order and the $48 million USD award of
                           damages against Goldgroup Resources Inc. remains in full force and effect as issued. DynaMéxico
                           is currently pursuing all available remedies in order to collect $48 million USD in damages from Goldgroup
                           Resources Inc. (See Court Approves Lien on Shares of DynaMéxico owned by Goldgroup Resources,
                           above).



DynaUSA
and DynaMéxico filed Motion to Vacate Arbitration Ruling

On
November 17, 2016, DynaUSA and DynaMéxico filed a Motion to Vacate the Arbitration Ruling in United States District Court,
District of Colorado.

Recommendation
to Vacate Arbitration Ruling issued by United States Magistrate Judge

On
February 13, 2018 a Recommendation to Vacate the Arbitration Ruling was issued by a United States Magistrate Judge of the United
States District Court, District of Colorado.

Arbitration
Award against DynaResource, Inc. and DynaResource de México, S.A. de C.V.

On
May 9, 2019, the United States district court for the district of Colorado confirmed the August 2016 Arbitration award against
DynaResource, Inc. and DynaResource de México, S.A. de C.V.  The district court’s decision overruled the
recommendation previously issued by the magistrate judge to sustain the DynaResource entities’ motion to vacate the arbitration
award. Each of DynaResource, Inc. and DynaResource de México, S.A. de C.V. intends to exercise all its rights, as appropriate,
including an appeal.

Complaint
filed by Goldgroup against the May 17, 2013 Shareholders’ Meeting of DynaMéxico

On
February 2nd, 2014, Goldgroup Resources Inc. filed a petition with the Judge of the Tenth District Mazatlán, according
to record 08/2014, in the ordinary commercial action, against DynaResource Inc., and DynaResource de México, S.A. de CV.
(“DynaMéxico”). In the Petition, Goldgroup complains against the results of the shareholders meeting of DynaMéxico
of May 17, 2013, and petitions for the nullification of the meeting itself and for the nullification of the additional shares
of the outstanding capital of DynaMéxico issued to DynaResource, Inc. in satisfaction of debts owed to DynaResource.

DynaResource
and DynaMéxico filed a response on January 9, 2016, and the matter was. DynaMéxico will vigorously defend against
all such complaints by Goldgroup, as there exists no legal basis for the complaint by Goldgroup against the May 17, 2013 shareholders
meeting of DynaMéxico.

On
October 31, 2018, the Judge of the Tenth District declared the Expiration of the Trial, due to inactivity of Goldgroup in the
process, and the Judge decreed the Trial as a concluded and filed trial. As a result, the shareholders' meeting of May 17, 2013
remains valid.

On
November 16, 2018, Goldgroup appealed the declaration of Expiration of the Trial.

On
February 12, 2019, the Court of Appeals (Segundo Tribunal Unitario de Circuito in Mazatlán) confirmed the resolution issued
October 31, 2018 by the Judge of Tenth District and declared and confirmed the Expiration of the Trial, due to the inactivity
of Goldgroup to the process, and therefore the Court of Appeals decreed the matter as a concluded and filed trial. As a result,
the shareholders' meeting of May 17, 2013 remains valid.

Goldgroup
has filed a writ of amparo against the resolution of the Court of Appeals that confirmed the declaration of expiration of the
trial. This Amparo Trial is pending resolution.





33







Litigation(s)
in México – Company as Plaintiff

The
Company, and DynaMéxico have filed several legal actions in México against Goldgroup Mining Inc. and Goldgroup Resources
Inc., and certain individuals retained as agents of Goldgroup Mining Inc., or Goldgroup Resources.
The Company and DynaMéxico are plaintiffs in the actions filed in México and the outcomes are pending.

The
Company believes that no material adverse change will occur as a result of the actions taken, and the Company further believes
that there is little to no potential for the assessment of a material monetary judgment against the Company for legal actions
it has filed in México. For purposes of confidentiality, the Company does not provide more specific disclosure in this
Form 10-K.





|ITEM
    4. | MINE SAFETY DISCLOSURES
|----------- | -----------------------



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





34







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 OTC Markets under the symbol "DYNR".  The following table sets forth,
for the periods indicated, the high and low bid quotations which reflect inter-dealer prices, without retail mark-up or mark-down
and without commissions; and may not reflect actual transactions. All amounts are denominated in U.S. dollars.



|Year ended December 31, 2018 |  | Low |      |  | High | 
|---------------------------- |  | --- | ---- |  | ---- | 
|First Quarter                |  |     | 1.05 |  |      | 
|Second Quarter               |  |     | 1.14 |  |      | 
|Third Quarter                |  |     | 1.14 |  |      | 
|Fourth Quarter               |  |     | 0.78 |  |      | 
|                             |  |     |      |  |      | 



|Year ended December 31, 2017 |  | Low |      |  | High | 
|---------------------------- |  | --- | ---- |  | ---- | 
|First Quarter                |  |     | 1.00 |  |      | 
|Second Quarter               |  |     | 1.01 |  |      | 
|Third Quarter                |  |     | 0.90 |  |      | 
|Fourth Quarter               |  |     | 0.90 |  |      | 



As
of March 31, 2019, there were outstanding 17,722,825 shares of our common stock, which were held by approximately 569 shareholders
of record. This figure does not include shareholders that hold their shares in street name or with a broker.



Dividend
Policy



No
cash dividends on the Company common stock have been declared or paid since the Company's inception. Payment of future dividends,
if any, will be at the discretion of our Board of Directors after taking into account various factors, including the terms of
any credit arrangements, our financial condition, operating results, current and anticipated cash needs and plans for growth.
Our initial earnings, if any, will likely be retained to finance our growth. At the present time, we are not party to any agreement
that would limit our ability to pay dividends.



During
the fiscal year ended December 31, 2018, except as included in our Quarterly Reports on Form 10-Q or in our Current Reports on
Form 10-K, we have not sold any equity securities not registered under the Securities Act.



During
the fiscal years ended December 31, 2018 and 2017, 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
|----------- | -----------------------------------------------------------------------------------------



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 heading “Management Discussion and Analysis and Plan of Operation.”





35









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



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



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



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



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



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





Company



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



We
currently conduct operations in México through our operating subsidiaries. We currently own 80% of the outstanding shares
of DynaResource de México, S.A. de C.V. (“DynaMéxico”). DynaMéxico owns 100% of mining concessions,
equipment, camp and related facilities which comprise the San Jose de Gracia Property, in northern Sinaloa State, México.
We also own 100% of Mineras de DynaResource S.A. de C.V. (“DynaMineras”), the exclusive operator of the San José
de Gracia Project, under contract with DynaMéxico.



In
2000, the Company formed DynaResource de México S.A. de C.V. (“DynaMéxico”) for the purpose of acquiring
and holding mineral properties and mining concessions in México and, specifically for acquiring and consolidating the Mining
District of San Jose de Gracia. DynaMéxico completed the consolidation of the entire SJG District to DynaMéxico
in 2003 (approx. 15 sq. km. at that time), with the exception of the San Miguel Mining Concession (7 Hectares, for which DynaMéxico
is proceeding towards accomplishing the transfer of title, under previously signed sale and purchase agreements).





36









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



Also
in 2005, the Company formed another wholly owned subsidiary, DynaResource Operaciones, S.A. de C.V. (“DynaOperaciones”).
DynaOperaciones entered into a personnel management agreement with DynaMineras and, as a consequence of that agreement, is the
exclusive management company for personnel and consultants involved at the SJG Project.



DynaMéxico
currently owns a portfolio of mining concessions, equipment, camp and related facilities which comprise the San José de
Gracia Project (“SJG”). The mining concessions cover 69,121 hectares (170,802 acres) on the west side of the Sierra
Madre mountain range, in northern Sinaloa State.



The
Company currently owns 80% of the outstanding shares of DynaMéxico. We also own 100% of Mineras de DynaResource S.A. de
C.V. (“DynaMineras”), the exclusive operator of the San José de Gracia Project, under contract with DynaMéxico,
and we own 100% of DynaResource Operaciones de San Jose de Gracia, S.A. de C.V., (“DynaOperaciones”), a company which
manages the personnel registered to work at the San Jose de Gracia Project.



San
Jose de Gracia - History



Historical
production records from San Jose de Gracia (“SJG”) report 1,000,000 Oz gold production from a series of underground
workings. The major areas report 471,000 Oz. produced at the La Purisima area of SJG, at an average grade of 66.7 g/t.; and 215,000
Oz. 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 15 sq. km.



DynaMéxico
was formed in March 2000, for the purpose of acquiring the concessions comprising the SJG District, and to consolidate all ownership
of SJG under DynaMéxico. DynaMéxico focused on acquisition and consolidation work through 2003 and reported a virtually
clear title and consolidated ownership to the district at December 31, 2013.



Drilling
– Exploration Programs (1997 – 2000)



A
drill program was conducted at SJG in 1997 to 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 to 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 mineralized shoots appear to be controlled by dilational
jogs and/or vein intersections. A total of 544 samples were collected in 1999 to 2000 and assayed an average 6.51 g/t gold.



Structure
of Company / Operations



Activities
in México are currently conducted by DynaMineras; with the management of personnel being contracted by DynaMineras through
to DynaOperaciones. Executive Management of DynaResource, Inc. and consultants manage the operating companies in México;
while the Chairman/CEO of DynaUSA is the President of each of DynaMéxico, DynaMineras and DynaOperaciones. Fees for management
and administration are charged by DynaMineras and DynaOperaciones, which are eliminated in consolidation.



Exclusive
Operating Entity at San Jose de Gracia



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







DynaMéxico
General Powers of Attorney



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





37









Company
Ownership and Description of Subsidiaries



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



DynaResource
de México, S.A. de C.V.:

80%
Owned by DynaResource, Inc.



|● | 100%
    owner of the San Jose de Gracia Property;
|- | --------------------------------------------------



Mineras
de DynaResource, S.A. de C.V.:                                                                                                              
                           
                  100% Owned by DynaResource, Inc.



|● | Exclusive
    Operator of the San Jose de Gracia Project;
|- | ---------------------------------------------------------



|● | Entered
    into Exploitation Agreement (“EAA”) with DynaMéxico (See EAA below);
|- | --------------------------------------------------------------------------------



|● | Entered
    into a 20-year Surface Rights Agreement with the Santa Maria Ejido (See Surface Rights Agreement below);
|- | --------------------------------------------------------------------------------------------------------------------



DynaResource
Operaciones de San Jose de Gracia, S.A. de C.V.:                                                                                                                     100%
Owned by DynaResource, Inc.



|● | Personnel
    Management Company at San Jose de Gracia;
|- | -------------------------------------------------------



Pilot
Production Activities (2003 – 2006)



DynaMéxico,
conducting operations through DynaMineras, 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 tonnes, at an average grade of approximately 15-20 g/t. Production
costs were reported at approximately $175/Oz. gold in this small scale, pilot production operation (See results in table below).
The pilot operations at SJG consisted of the installation of a gravity/flotation processing circuit to an existing mill, and initial
test runs with tailings were completed in 2002. Actual test mining at the high-grade San Pablo area of the property commenced
in March 2003.



|Mined
    and Milled Tonnage           | 42,000
    tonnes
|-------------------------------------- | -----------------
|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    



Suspension
of Production Activities (2006)



The
Company initiated the test production activity in 2003 and, at that time, gold prices were depressed. Exploration funding opportunities,
while available, were deemed to be too dilutive by Company management. Subsequently, in 2006, commodities prices were improving,
and the Company was able to negotiate financing in order to fund exploration activities. Therefore, the Company suspended test
mining activities in 2006 in order to focus on the exploration of the vast SJG District. While the test mining and pilot milling
operations were considered successful (see results in the table above), a small-scale production operation was not expected to
provide the necessary capital in order to fund exploration of the vast SJG District. The limited-scope pilot production activity
provided significant benefits through confirmation of production grades, metallurgy and process, efficiency of recoveries, and
production costs.



Drilling
programs (2007 – 2011)



Drilling
programs completed by the Company’s subsidiaries produced 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://www.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.



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



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





38









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



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



DynaMéxico
NI 43-101 Mineral Resource Estimate - Construction of Wireframes--Mineral Resources were estimated by Mr. Sandefur within
wireframes constructed by technical personnel of Minop. Minop was contracted by DynaMineras.



DynaMéxico
NI 43-101 Mineral Resource Estimate - Explanation of Resource Estimation--Resource estimation was done in MineSight and MicroModel
computer systems with only those composites that were inside the wireframe used in the estimate. Estimation was done using kriging
with the omni-directional variogram derived from all the data in each area for gold using the relative variogram derived from
the log variogram. High grades were restricted by capping the assays at a breakpoint based on the cumulative frequency curves.
Estimation was done using search radii of 100 x 100 x 50 m “blocks” oriented subparallel to the general strike and
dip of the vein system in each area. A sector search, corresponding to the faces of the search box with a maximum of two points
per sector was used in estimation. A density of 2.68 based on within ‘vein density’ samples was used in the resource
estimate. Within each of the four areas there are approximately 20 to 40 veins in the vein swarm. Resources were estimated by
kriging using data from all veins in the swarm. In general, gold accounts for at least 80% of the value of contained metal at
the SJG Project, so the variograms for gold were used in estimation of the four other metals.



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



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



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



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



The
DynaMéxico NI 43-101 Mineral Resource Estimate prepared by Mr. Robert Sandefur for the DynaMéxico NI 43-101 Technical
Report included Indicated Resources at Tres Amigos and San Pablo. The “DynaMéxico NI 43-101 Mineral Resource Estimate
also included an Inferred Resource for the four vein systems. Table summaries of Indicated and Inferred Resources are contained
in the DynaMéxico NI 43-101 Mineral Resource Estimate. The DynaMéxico NI 43-101 Mineral Resource Estimate has been
filed, along with the DynaMéxico NI 43-101 Technical Report, on SEDAR; but is not disclosed in this Form 10-K/A.







39









Updated
Technical Report According to Canadian National Instrument 43-101 (2012)



The
Company received from DynaMéxico, an updated Technical Report according to Canadian National Instrument 43-101, which included
the DynaMéxico NI 43-101 Mineral Resource Estimate (the “Updated DynaMéxico NI 43-101 Technical Report”).
The Updated DynaMéxico NI 43-101 Technical Report was approved by DynaMéxico, and filed by the Company on SEDAR;
but is not disclosed in this Form 10-Q.



No
Known Reserves



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



Exploitation
Amendment Agreement (“EAA”)



On
May 15, 2013, DynaMineras entered into an Exploitation Amendment Agreement (“EAA”) with DynaMéxico. The EAA
grants to DynaMineras the right to finance, explore, develop and exploit the SJG Property, in exchange for:



(a)
Reimbursement of all costs associated with financing, maintenance, exploration, development and exploitation of the SJG Property,
which costs are to be charged and billed by DynaMineras to DynaMéxico; and,



(b)
After Item (A) above, the receipt by DynaMineras of 75% of gross receipts received by DynaMéxico from the sale of all minerals
produced from SJG, to the point that DynaMineras has received 200% of its advanced funds; and,



(c)
after items (A) and (B) above; the receipt by DynaMineras of 50% of all gross receipts received by DynaMéxico from the
sale of all minerals produced from SJG, and throughout the term of the EAA; and,



(d)
in addition to Items (A), (B), and (C) above, DynaMineras shall receive a 2.5% NSR (“Net Smelter Royalty”) on all
minerals sold from SJG over the term of the EAA.



The
total unpaid advances made by DynaMineras to DynaMéxico as of December 31, 2018 is $2,373,500. And, in addition, the total
balance owed by DynaMéxico to the Company as of December 31, 2018 is $4,000,000. The EAA is the third and latest Amendment
to the original Contract Mining Services and Mineral Production Agreement (the “Operating Agreement”), which was previously
entered into by DynaMineras with DynaMéxico in April 2005, wherein DynaMineras was named the Exclusive Operating Entity
at SJG. The Operating Agreement was previously amended in September 2006 (the “First Amendment”) and amended again
at July 15, 2011 (the “Second Amendment”). The Term of the Second Amendment is 20 years, and the EAA (Third Amendment)
provides for the continuation of the 20 Year Term from the date of the Second Amendment (July 15, 2011).



Surface
Rights Agreement



On
January 6, 2014 DynaMineras entered into a 20-year surface rights agreement with the Santa
Maria Ejido Community surrounding the San Jose de Gracia Property (the “20 Year SRA”). The 20 Year SRA covers an area
of 4,399 hectares surrounding the main mineral resource areas of SJG and provides for annual lease payments by DynaMineras of
$1,359,443 Pesos (approx. $74,000 USD), commencing in 2014. The 20-year SRA provides DynaMineras with surface access to
the core resource areas of SJG, and allows for all permitted mining, pilot production and exploration activities from the owners
of the surface rights (Santa Maria Ejido community).



Additionally,
DynaMineras expects to construct a Medical Facility and a Community Center within the SJG community in year 2015. DynaMineras
reports that land and building for which the medical facility and community center will be constructed have been approved for
re-zoning by the local community; and plans are being drawn for constructing the facilities.



Rehabilitation
and Start-up of Pilot Mill Facility at San Jose de Gracia



Under
the terms of the Exploitation Amendment Agreement (“EAA”), as described above, DynaMineras has rehabilitated the pilot
mill facility at SJG and it has rehabilitated the San Pablo mine. The SJG pilot mill facility (a gravimetric-flotation circuit)
is designed to process bulk samples mined from selected target areas of SJG, including San Pablo. Operations at SJG are managed
by DynaMineras and are projected to be similar to those conducted by DynaMéxico during 2003-2006.





40









Test
Underground Mining and Pilot Mill Operations

Capital
Investment Program (2015 and 2016)

In
July 2015, the Company commenced a capital investment program designed to increase tonnage from the test mining operations and,
to increase volume and output through the pilot mill facility. Through DynaMineras, the Company was engaged in the implementation
of this capital investment program from July through December 2015. And, in 2016, the Company was carrying out operations utilizing
the improvements and increased outputs from test mining and pilot milling activities.



The
capital investment program consisted of a net total of $3,565,000 USD as generally described below:



| | Contract
    mining;     |  | $713,000;
    including @250,000 Deposit (advance for services). And $513,000 in direct
    mining costs, explosives, and payments to contractor;
| | ------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------
| | Mine
    related Costs;  |  | $290,000;
    including mine plan development, permits, assays, consulting, mine supplies,
    and  equuipment items;                            
| | Mill
    and Camp;       |  | $613,000;
    Improvements to the Mill andCamp, including pre-operation expenses;                                                                
| | Personnel
    Costs;     |  | $673,000;
    including payroll and consulting expenses;                                                                                         
| | Equipment;               |  | $636,000
    long term equipment purchases including transportation, mine loading and
    hauling, generators, compressors and pumps;            
| | Overhead;                |  | $285,000;
    including legal expenses, consulting, and administration;                                                                          
| | IVA
    Taxes;           |  | $272,000;
    Value added taxes paid, and refundable;                                                                                            
| | Land
    Use and Rental; |  | $83,000;                                                                                                                                         
| | Total;                   |  | $3,565,000                                                                                                                                       





Project
Improvements, Expansion and Increased Output (2017 AND 2018)



The
Company continues its business plan of operations at San Jose de Gracia, which is to improve, increase and expand test mining
and pilot milling operations and generally, to increase production output. Since 2015 startup of the test mining and milling activities,
the Company has increased daily output from an initial 75 tons per day, to a current 200 tons per day, and during fiscal year
2019 the Company expects to achieve production output of 250 tons per day. (Note the Summary of Test Mining and Pilot Mill Operations
for 2015, 2016, 2017, and 2018 below).

Since
January 2017, the Company has expended over $7.9 million USD in non-operating costs, generally classified as project improvements
and expansion costs which have been expensed in the company’s financial statements. These funds have been provided primarily
from cash flows from operations. An itemized list of these non-operating costs is described below:



| | Mill
    Expansion;                 |         | $1,520,000 | 
| | ----------------------------------- | ------- | ---------- | 
| | Tailings
    Pond Expansion         |         | 265,000    | 
| | Machinery
    and Equipment         |         | 467,000    | 
| | Mining
    Camp Expansion           |         | 146,000    | 
| | Medical
    Facility                |         | 123,000    | 
| | Mine
    Development - San Pablo    |         | 2,509,000  | 
| | Mine
    Expansion - San Pablo East | 680,000 |           
| | SJG
    Mining Concessions          |         | 1,024,000  | 
| | Surface
    Roghts andPermitting    |         | 125,000    | 
| | Debt
    Retirment                  |         | 125,000    | 
| | Legal
    Fees                      |         | 896,000    | 
| | Total                               |         | $7,880,000 | 



The
Company is currently reporting all costs of mine operations, improvements, and expansion as expenses in accordance with United
States General Accepted Accounting Principal (GAAP) requirements. The results of expensing all costs is that the Company has accumulated
a net loss carry forward from Mexico operations of $28 million USD which is available to offset future taxable earnings.



41







Summary
of Test Mining and Pilot Mill Operations for 2015, 2016, 2017 and 2018:





|Year | Total
                                         Tonnes
        Mined
        & Processed | Reported
                                         Mill Feed Grade
        (g/t Au) | Reported
                                         Recovery
        % | Gross
                                         Gold Concentrates Produced
        (Au
        oz.) | Net
                                         Gold Concentrates Sold
        (Au
        oz.)
|---- | --------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------- | -------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------
|2015 | 7,180                                                                                   | 8.30                                                                               | 78.0%                                                                | 1,495                                                                                              | 1,308                                                                                       
|2016 | 33,172                                                                                  | 12.70                                                                              | 79.7
    %                                                           | 10,836                                                                                             | 8,668                                                                                       
|2017 | 35,170                                                                                  | 12.95                                                                              | 85.00
    %                                                          | 12,636                                                                                             | 10,740                                                                                      
|2018 | 52,038                                                                                  | 9.82                                                                               | 86.11%                                                               | 14,147                                                                                             | 13,418                                                                                      



DynaMineras
expects to continue to increase its test underground mining activity and pilot milling operations in 2019; and projects the increased
output to 250 tons/day from the mine(s) and mill during 2019.





Structure
of Company / Operations



Activities
in México are conducted by Mineras de DynaResource S.A. de C.V. (“DynaMineras”); with the management of personnel
being contracted by DynaMineras through to the personnel management subsidiary, DynaResource Operaciones, S.A. de C.V. (“DynaOperaciones”).
Management of DynaResource, Inc. and consultants continue to manage the operating companies in México; while the Chairman/CEO
of DynaUSA is the President of each of the operating companies in México. Fees for Management and administration are charged
by DynaMineras and DynaOperaciones, which are eliminated in consolidation.



Exploitation
Amendment Agreement



In
2013, DynaMineras, in accordance with the terms of the Exploitation Amendment Agreement, commenced the rehabilitation of the San
Pablo Mine and the refurbishment of the pilot production facility at SJG. DynaMéxico received permits as discussed above
for the rehabilitation and operation of the pilot mill facility and the exploitation and mining of the San Pablo area of SJG.
The basis for the mining activity and the operation of the pilot mill facility are the NI 43-101 Mineral Resource Estimate, the
Technical Report, the block models prepared as a result of the recent drilling activity, and the recent production history of
2003-2006.





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 and relationships in México
give it a competitive advantage, even though many competitors may be larger and have more capital resources.



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



The
Company’s operating subsidiaries, DynaMineras and DynaOperaciones, receive monthly fees for management of the SJG activities
and personnel. These fee amounts are eliminated in consolidation. Other than those intercompany fees, the Company reported revenue
of $14,059,697 in 2018 and $10,850,091 in 2017.



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 2014, on average, current mine production has accounted for approximately
64% of the annual gold supply.





42









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 | 
|---- |  | ---- | ----- |  | --- | - | ----- | ------- | 
|2009 |  | $    | 1,213 |  |     | $ | 810   |         | 
|2010 |  | $    | 1,421 |  |     | $ | 1,058 |         | 
|2011 |  | $    | 1,895 |  |     | $ | 1,319 |         | 
|2012 |  | $    | 1,792 |  |     | $ | 1,540 |         | 
|2013 |  | $    | 1,694 |  |     | $ | 1,192 |         | 
|2014 |  | $    | 1,380 |  |     | $ | 1,140 |         | 
|2015 |  | $    | 1,303 |  |     | $ | 1,057 |         | 
|2016 |  | $    | 1,366 |  |     | $ | 1,151 |         | 
|2017 |  | $    | 1,379 |  |     | $ | 1,101 |         | 
|2018 |  | $    | 1,355 |  |     | $ | 1,178 |         | 







Source:
Kitco, Reuters and the London Bullion Market Association



On
March 19, 2019, the afternoon fixing gold price on the London Bullion Market was $1,295 per ounce.



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. DynaMéxico is involved with maintaining tailings ponds and test
mining and pilot production activities (through DynaMineras) with the oversight of SEMARNAT, the federal environmental agency
of México.

Results
for the Years Ended December 31, 2018 and 2017





Summary
of Test Mining and Pilot Mill Operations for 2017 and 2018:



|Year | Total
                                         Tons
        Mined
        & Processed | Reported
                                         Mill Feed Grade
        (g/t Au) | Reported
                                         Recovery
        % | Gross
                                         Gold Concentrates Produced
        (Au
        oz.) | Net
                                         Gold Concentrates Sold
        (Au
        oz.)
|---- | ------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------- | -------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------
|2017 | 35,170                                                                                | 12.95                                                                              | 85.00
    %                                                          | 12,636                                                                                             | 10,740                                                                                      
|2018 | 52,038                                                                                | 9.82                                                                               | 86.11
    %                                                          | 14,147                                                                                             | 13,418                                                                                      



DynaMineras
expects to continue to increase its test underground mining activity and pilot milling operations in 2018; and projects the increased
output from to 250 tons/day from the mine and mill during 2018.



Test
pilot operations in 2018 yielded 52,038 Tons mined and processed from underground test mining activity and pilot milling operations;
and the production of approximately 14,147 gross Oz Au, and net of dry weight adjustments at the buyer’s facilities, the
production of approximately 13,418 Oz Au. The Company reports net revenue of $14,059,697 net of buyer’s price discount and
refining and treatment costs.



Test
pilot operations in 2017 yielded 35,170 Tons mined and processed from underground test mining activity and pilot milling operations;
and the production of approximately 12,636 gross Oz Au, and net of dry weight adjustments at the buyer’s facilities, the
production of approximately 10,740 Oz Au. The Company reports net revenue of $10,850,091 net of buyer’s price discount and
refining and treatment costs.





43









DynaMineras
expects to continue its test underground mining activity and pilot milling operations in 2019; and projects the output of 300
tons/day from the mine and mill in 2019.



REVENUE.
Revenues for the years ended December 31, 2018 and 2017 were $14,059,697 and $10,850,091, respectively. The Company continued
the test mining and pilot mill processing at San Jose de Gracia, including the production and sale of precious metals concentrates.
The increase is reflective of the increase tonnage mined detailed above as a result of the opening of the San Jose Garcia East
mine as well as increase production activity from the expansion of operating in the second half of 2017.



PRODUCTION
COSTS RELATED TO SALES. Production costs related to sales for the years ended December 31, 2018 and 2017 were $1,716,721 and $1,558,084,
respectively. These are expenses directly related to the milling, packaging and shipping of gold and other precious metals product.
The increase is consistent with the increase production and revenue.



MINE
PRODUCTION COSTS. Mine production costs for the years ended December 31, 2018 and 2017 were $2,807,474 and $1,178,162 respectively.
These costs are directly related to the extraction of mine tonnage to be processed at the mill. The increase is consistent with
the increase tonnage mined.



MINE
EXPLORATION COSTS. Mine exploration costs for the years ended December 31, 2018 and 2017 were $3,639,791 and $3,218,831, respectively.
These are the cost of extracting waste material to reach the materials to be extracted for processing. The percentage increase
was less than the production increase as a result of more targeted mining.



MINE
EXPANSION COSTS: Mine expansion costs for the years ended December 31, 2018 and 2017 were $1,466,287 and $1,514,104, respectively.
These are the cost associated with the expansion of the mining facilities and the cost associated with preparing the San Jose
de Gracia East Mine for production.



TRANSPORTATION.
Transportation costs for the years ended December 31, 2018 and 2017 were $645,504 and $576,315, respectively. These are the costs
of transporting the product to the customer for treatment and sale. The increase was consistent with the increased revenue



CAMP,
WAREHOUSE AND SUPPORT FACILITIES. Camp, warehouse and support facility cost for the years ended December 31, 2018 and 2017 were
$2,796,279 and $1,226,897, respectively. These are the support cost of the mining facilities including housing, food, security
and warehouse operations. The camp capacity was doubled in the second half of 2017 resulting in a full year of expenses in 2018.



PROPERTY
HOLDING COSTS. Property holding costs for the years ended December 31, 2018 and 2017 were $1,310,220 and $702,599, respectively.
These costs are concessions taxes, leases on land and other direct costs of maintaining the property. The increase was a result
of increase concessions on the Francisco Arturo lease and settlement of prior year concessions for amount in excess of the accrual.



GENERAL
AND ADMINISTRATIVE EXPENSES. General and administrative expenses for the years ended December 31, 2018 and 2017 were $2,203,366
and $2,609,675 respectively. These are the cost of operating the Company not directly associated with the mine operations including
management, accounting and legal expenses.



OTHER
INCOME (EXPENSE). Other income for the years ended December 31, 2018 and 2017 was $1,567,074 and $3,155,274, respectively. Included
in this category in 2018 is interest expense of $(391,757), other expense of $(323,034), Change in Derivative Liability of $2,206,825,
gain on sale of assets of $23,715 and currency transaction gain (loss) of $51,325. Included in this category in 2017 is interest
expense of $(158,944), change in derivative of $1,924,582 and currency transaction gain or (loss) of $1,388,573.



NON-CONTROLLING
INTEREST. The non-controlling interest portion of the net loss for the years ended December 31, 2018 and 2017 was $383,630 and
$122,184, respectively. This represents the non-controlling interest share of DynaMéxico’s loss.



OTHER
COMPREHENSIVE INCOME (LOSS). Comprehensive income (loss) includes the Company’s net income (loss) plus the unrealized currency
translation gain (loss) for the period. The Company’s other comprehensive loss for the years ended December 31, 2018 and
2017 consisted of unrealized currency losses of $178,473 and $(1,781,773) respectively.



Liquidity
and Capital Resources



As
of December 31, 2018, the Company had working capital of $(1,783,693), comprised of current assets of $6,567,578 and current liabilities
of $8,351,271, of which $974,683 is a derivative liability. This represents an increase of $41,161 from the working capital maintained
by the Company of $(1,824,854) with a derivative liability of $3,181,508 as of December 31, 2017. The primary reason for this
deficit is recognition of financial statement derivatives incurred in the issuance of Preferred C shares in 2015. The Company
continued to ramp up the operations to the refurbishment of the pilot mill facility and the rehabilitation of the San Pablo mine
at San Jose de Gracia.





44









Net
cash provided (used) in operations for the year ended December 31, 2018 was $(531,142) compared to $797,713 in the year ended
December 31, 2017. The decrease is primarily the result of the decrease in net income from $1,415,068 for the year ended December
31, 2017 to a net (loss) of $(966,727) in the current year offset by an increase in payables and customer advances.



Net
cash provided by(used) in investing activities for the years ended December 31, 2018 and 2017 was $19,784 and $(12,316), respectively.
In 2017 and 2018 expenditures necessary for the expansion of mining operations totaling $1,260,873 and $1,039,000, respectively
which would normally have been included in this category were expenses due to the company’s lack of proven and probable
reserves.



Cash
provided (used) provided by financing activities for the year ended December 31, 2018 was $(512,136) compared to $2,328,106 for
the year ended December 31, 2017. The swing was a result of $2,500,000 in proceeds from the issuance of stock as a result of the
exercise of warrants in the year ended December 31, 2017. There were no funds raised from the issuance of stock in the current
year. In additions cash used for repayment of debt rose from $171,894 in the prior year to $512,136 this year.





Non-controlling
Interest



Under
the terms of the Earn In Agreement (September 1, 2006 to March 15, 2011), Goldgroup Mining Inc. and its wholly owned subsidiary
Goldgroup Resources, Inc. (Goldgroup), through 2010, had contributed capital to DynaMéxico in order to acquire 25% of the
outstanding shares (a shareholder interest) of DynaResource de México, S.A. de C.V. (DynaMéxico). In March 2011,
Goldgroup had contributed a total of $18 M USD capital to DynaMéxico in order to acquire a total of 50% of the outstanding
shares (a shareholder interest) of DynaMéxico. From March 2011 through May 2013, Goldgroup owned 50% of the outstanding
shares of DynaMéxico, and since May 2013 to current date Goldgroup owns 20% of the outstanding shares of DynaMéxico.
The applicable portion of the earnings or loss attributable to Goldgroup is offset in this section. In the years ended December
31, 2018 and 2017 the portion of the net loss attributable to Goldgroup was $(383,630) and $(122,184), respectively.



Off-Balance
Sheet Arrangements



As
of December 31, 2018, we did not have any off-balance sheet arrangements (as that phrase is defined by SEC rules applicable
to this report) which have or are reasonably likely to have a material adverse effect on our financial condition, results of operations
or liquidity.



Plan
of Operation



The
Plan of operation for the next twelve months includes DynaMineras continuing the improvement and expansion of the test mining
and pilot milling operations at SJG. The Company funds its general and administrative expenses in the US. The Company’s
operating subsidiaries, DynaMineras and DynaOperaciones, receive monthly fees for management of SJG activities and personnel.
These amounts are eliminated in consolidation. The Company believes that cash on hand, and including cash flow generated from
its current operations, is adequate to fund its ongoing general and administrative expenses through 2018. The Company may seek
additional debt funding during the next 24 months depending on results of its pilot operations, market conditions, and other factors.



Capital
Expenditures



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



Sampling
Process-Core Drill Holes



The
geological data reported from core drill holes 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 were 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.



Drilling
Programs



In
the period September 2006 through December 31, 2011, funding from Goldgroup provided for DynaMéxico’s completing
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 DynaMéxico-CAM SJG Mineral Resource Estimate. The Company expects DynaMineras to plan continued and subsequent
drilling programs at San Pablo, Tres Amigos, La Ceceña, Palos Chinos, La Union, La Purisima, and La Prieta / Rosario /
Rudolpho. The Company expects further drilling programs to confirm extensions to mineralization in all directions and down dip
from the main target areas.





45









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 DynaMéxico-CAM SJG Mineral
Resource Estimate. Further drilling is expected to outline additional mineralization at these 4 major target areas at SJG, while
additional mineralization is 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.



No
Known Reserves



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



Exploitation
Amendment Agreement (“EAA”)



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



Exclusive
Operating Entity at San Jose de Gracia



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



DynaMéxico
General Powers of Attorney



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



Rehabilitation
and Start-up of Pilot Mill Facility at San Jose de Gracia



Under
the terms of the Exploitation Amendment Agreement (“EAA”), as described above, DynaMineras has rehabilitated the pilot
mill facility at SJG. The SJG pilot mill facility (a gravimetric-flotation circuit) is now processing bulk samples mined from
selected target areas of SJG. Operations at SJG are managed by DynaMineras and are similar to those conducted by DynaMéxico
during 2003-2006.



Capital
Advances to Subsidiaries





46









DynaResource
de México (“DynaMéxico”)



In
May 2013, the Company acquired additional shares in the outstanding equity in DynaMéxico in exchange for the retirement
of accounts receivable of $2,393,803, which amount was due from DynaMéxico at December 31, 2012. As a result, as of May
17, 2013, the Company owns 80% of the outstanding equity of DynaMéxico.



At
December 31, 2014, the Company issued 1,333,333 shares of its common stock to DynaMineras in exchange for $4,000,000 receivable
it held from DynaMéxico.



As
of December 31, 2018, and December 31, 2017 DynaMineras owed the Company $6,392,705 and $6,346,500, respectively.



As
of December 31, 2018, and December 31, 2017 DynaMéxico owed the Company $4,000,000 and $4,000,000, respectively.



As
of December 31, 2018, and December 31, 2017 DynaOperaciones owed the Company $225,000 and $225,000, respectively.



As
of December 31, 2018, and December 31, 2017 DynaMéxico owed DynaMineras $2,373,500 and $2,539,639, respectively.



As
of December 31, 2018, and December 31, 2017 DynaOperaciones owed DynaMineras $7,134,808 and $6,077,325, respectively.



Beginning
on December 31, 2012, the Company and DynaMineras agreed with DynaMéxico to accrue interest on the total amount receivable
until repaid or otherwise retired. The interest rate to be accrued is agreed to be simple annual interest at the rate quoted by
the Bank of México.



Future
Advances to DynaMineras and DynaMéxico from the Company



The
Company expects to make additional advances to DynaMineras and DynaMéxico. Future advances from DynaMineras to DynaMéxico
will be made under the terms of the Exploitation Amendment Agreement. Other advances are agreed to be accrued in the same manner
as previous receivables, until or unless otherwise agreed between DynaMéxico and the Company.



Advances
from Goldgroup Mining Inc. (“Goldgroup”) to DynaMéxico



In
2014, Goldgroup advanced $111,500 to DynaMéxico and in 2013 Goldgroup advanced $120,000 USD to DynaMéxico. This
total $231,500 is being carried by DynaMéxico as a Due to Non-Controlling Interest at December 31, 2018 and 2017.



Note
Receivable and Investments in Affiliate



DynaResource
Nevada, Inc., a Nevada Corporation (“DynaNevada”), with one operating subsidiary in México, DynaNevada de México,
S.A. de C.V. (“DynaNevada de México”) have common officers, directors and shareholders. The total amount loaned
by the Company to DynaNevada at December 31, 2010 was $805,760. 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 $0.25 / Share.  On December 31, 2010, the Company converted its receivable from DynaNevada into 3,223,040
Shares of DynaNevada; and as a result, the Company owns 19.92% of the outstanding share capital of DynaNevada. DynaNevada is a
related entity, and through its subsidiary in México (DynaNevada de México), (“DynaNevada de México”),
has entered into an Option agreement with Grupo México (“IMMSA”) in México, for the exploration and
development of approximately 3,000 hectares in the State of San Luis Potosi (“the Santa Gertrudis Property”). In March
2010, DynaNevada de México completed the Option with IMMSA so that it now owns 100% of Santa Gertrudis. In June 2010, DynaNevada
de México acquired an additional 6,000 Hectares in the State of Sinaloa (“the San Juan Property”). The Company
has loaned additional funds to DynaNevada since 2010 for maintenance of concessions and other nominal required fees and expenses.
The Company had a receivable from DynaResource Nevada, Inc. of $0 and $0 at December 31, 2018 and 2017 respectively. The Company
has investment balance in DynaResource Nevada, Inc. of $70,000 and $70,000 as of December 31, 2018 and 2017, respectively.



Minority
Interest Holder in DynaMéxico Attempts to Interfere with Activities at San Jose de Gracia (2016)



Goldgroup
Mining Inc., Vancouver, BC. (“GGA.TO” – “Goldgroup Mining”), a Minority Interest Holder in DynaMéxico
through a Mexican subsidiary Goldgroup Resources Inc., issued a press release on June 27, 2016 claiming to announce a closing
of mining operations at the SJG Project, which was misleading, deceptive, and proved to be false. Goldgroup Mining issued the
June 27 press release without independently confirming the facts – and admitted its failure to confirm the facts in the
release. DynaMéxico corrected the misleading press release issued by Goldgroup Mining as described below:





1.
DynaMéxico herein states the facts:



(a)
Following an unscheduled inspection of the mining operations at the SJG Project on June 26, 2016 by a Sinaloa State governmental
agency, an order of temporary work stoppage was quickly overturned by Sinaloa State court order.



(b)
The Sinaloa State Court ruled that the unscheduled inspection and the temporary suspension of mining operations at the SJG Project,
were improper. The Sinaloa State Court further ordered the immediate removal of the temporary suspension.



(c)
Following the Sinaloa State Court Order, all mining operations at SJG promptly resumed normal activities.







47







2.
DynaMéxico herein states further facts:



(a)
Following a second unscheduled inspection of the mining and milling operations at the SJG Project on August 18, 2016 by a Sinaloa
State governmental agency, an order of temporary work stoppage was quickly overturned by a second Sinaloa State court order.



(b)
The Sinaloa State Court ruled that the unscheduled inspection and the temporary suspension of mining and milling operations at
the SJG Project, were again improper. Once again, the Sinaloa State Court further ordered the immediate removal of the temporary
suspension.



(c)
Following the second Order issued by the Sinaloa State Court, all mining and milling operations at SJG once again promptly resumed
normal activities.



3.
The award of damages in excess of $48 million USD against Goldgroup Resources Inc. (“Goldgroup Resources”, a wholly
owned subsidiary of Goldgroup Mining Inc.), by virtue of a sentence issued on October 5, 2015 by the Thirty Sixth Civil Court
of the Superior Court of Justice of the Federal District of México, remains as ordered by the court.



4.
On October 5, 2016, the Thirty-Sixth Civil Court of the Superior Court of Justice of the Federal District of Mexico (Tribunal
Superior de Justicia del Distrito Federal) approved a Lien (referred to by the court as an “Embargo”), in favor of
DynaMéxico, upon Stock Certificates in the name of Goldgroup Resources Inc. (“Goldgroup”). The Stock Certificates
subject to the Lien (“Embargo”) constitute Shares of DynaMéxico (“the Goldgroup DynaMéxico Shares”).



(a)
Goldgroup Mining Inc., the parent company (“Goldgroup Mining”), has not disclosed the $48 million award of damages,
Nor the Lien against the Shares, nor has Goldgroup Mining disclosed the unsuccessful efforts of its subsidiary to challenge the
$ 48 million damages award, in its Annual Information Form -- the equivalent of its annual report to shareholders.



(b)
An unrelated lawsuit, in which the amount in controversy was only $3 million, was disclosed by Goldgroup Mining Inc.



(c)
Goldgroup Resources currently holds a minority interest in the outstanding share capital of DynaMéxico. Goldgroup Resources
has challenged this level of ownership through the legal system, but this challenge has also been unsuccessful. The ownership
of Goldgroup Resources in the capital of DynaMéxico remains at 20%.



(d)
Goldgroup Mining, the parent company, has not disclosed the unsuccessful efforts of Goldgroup Resources to challenge this ownership
level in DynaMéxico, in its Annual Information Form.



(e)
Since 2005, the exclusive operator of the SJG Project, under contract with (and an affiliate of) DynaMéxico, is Mineras
de DynaResource S.A. de C.V. (“DynaMineras”). This operating control of the SJG Project has continued uninterrupted
since 2005, before Goldgroup Resource contributed any capital investment to DynaMéxico.



(f)
Goldgroup Mining, the parent company, has not disclosed that DynaMineras has operating control of the SJG Project, in its Annual
Information Form.



(g)
Since 2000, the President of DynaMéxico holds broad powers of attorney granted by the shareholders of DynaMéxico.
The powers of attorney give the President broad authority to act for DynaMéxico. The powers of attorney existed before
Goldgroup Resources contributed any capital investment to DynaMéxico.



(h)
Goldgroup Mining, the parent company, has not disclosed the existence of the powers of attorney held by the President of DynaMéxico,
in its Annual Information Form.



DynaMéxico’s
further clarifying statements regarding the SJG Project:



(a)
In recent years, Goldgroup Mining and Goldgroup Resources (“Goldgroup”) have continuously misrepresented ownership
interest and shareholder position related to DynaMéxico and the SJG Project;



(b)
DynaMéxico, since May 2000, owns 100% of the mining concessions and related interest comprising the SJG Project;



(c)
At no time has Goldgroup owned any interest in the SJG Project; rather its only ownership interests have been earned under agreement
as a common shares equity interest (shareholder’s interest) of DynaMéxico;



(d)
DynaResource, Inc., Irving, Texas (OTCQB: DYNR - “DynaUSA”) currently owns 80% of the outstanding share Capital of
DynaMéxico; Goldgroup currently owns 20% of the outstanding share capital of DynaMéxico;



(e)
At no time during its involvement as a common shares equity interest holder (shareholder) of DynaMéxico, has Goldgroup
been an operator at the SJG Project;





48









|(f) | There
    is no joint venture agreement with Goldgroup involving the SJG Project;
|--- | ---------------------------------------------------------------------------------





|(g) | Since
    the earning of its shareholder’s interest in DynaMéxico (March 2011), Goldgroup has continuously refused to contribute
    funds to the ongoing maintenance, advance, and further development of the SJG Project;
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------







|(h) | Consistently
    and continuously since March 2011, Goldgroup has sought to, and threatened to stop, delay, or otherwise impair and negatively
    impact the financing, maintenance, advance and further development of the SJG Project;
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





The
Company believes that no material adverse change will occur as a result of the actions taken, and the Company further believes
that there is little to no potential for the assessment of a material monetary judgment against the Company for legal actions
it has filed in México. For purposes of confidentiality, the Company does not provide more specific disclosure in this
Form 10-K.



|ITEM
    7A. | QUANTITATIVE
    AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
|------------ | -------------------------------------------------------------



Not
applicable.

49







|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, 2018 and 2017. The financial statements as of December 31, 2018 and 2017 of the Company included in this Form 10-K have been
audited by Whitley Penn LLP, an independent registered public accounting firm, as set forth in their report.



Financial
Statements included in the Form 10-K:



Report
of Independent Registered Public Accounting Firm



Consolidated
Balance Sheets as of December 31, 2018 and 2017



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



Consolidated
Statement of Changes in Stockholders’ Equity (Deficit) for the Years Ended December 31, 2018 and 2017



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



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





50







REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To
the Board of Directors and Stockholders of

DynaResource,
Inc.



Opinion
on the Financial Statements



We
have audited the accompanying consolidated balance sheets of DynaResource, Inc. and subsidiaries (the “Company”) as
of December 31, 2018 and 2017, and the related consolidated statements of income and comprehensive income, changes in stockholders’
equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the “financial
statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position
of the Company as of December 31, 2018 and 2017, and the results of their operations and their cash flows for the years then ended,
in conformity with accounting principles generally accepted in the United States of America.



As
discussed in Notes 1, 3, 7, 12 and 17 to the financial statements, the Company restated certain amounts previously reported as
of and for the years ended December 31, 2018 and 2017.



Basis
for Opinion



These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.



We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error
or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting, but
not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting.
Accordingly, we express no such opinion.



Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that our audits provide a reasonable basis for our opinion.



We
have served as the Company’s auditor since 2018.







/s/
Whitley Penn LLP

Dallas,
Texas

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





51







|DYNARESOURCE,
        INC.     
|-------------------------------
|CONSOLIDATED BALANCE
    SHEETS
|DECEMBER 31, 2018
    AND 2017 



|                                                                                                      |  | 2018 |             | 2017
|----------------------------------------------------------------------------------------------------- |  | ---- | ----------- | ----
|ASSETS                                                                                                |  |      | (Restated)  |     
|Current Assets                                                                                        |  |      |             |     
|Cash and Cash
    Equivalents                                                                         |  | $    | 2,685,576   |     
|Accounts Receivable                                                                                   |  |      | 1,074,724   |     
|Inventories                                                                                           |  |      | 1,588,778   |     
|Foreign Tax Receivable                                                                                |  |      | 845,564     |     
|Other
    Current Assets                                                                              |  |      | 372,936     |     
|Total Current Assets                                                                                  |  |      | 6,567,578   |     
|                                                                                                      |  |      |             |     
|Mining Equipment and Fixtures
    (Net of Accumulated                                                 |  |      |             |     
|Depreciation of $106,673 and $98,817)                                                                 |  |      | 12,482      |     
|Mining Concessions                                                                                    |  |      | 4,132,678   |     
|Investment in Affiliate                                                                               |  |      | 70,000      |     
|Other Assets                                                                                          |  |      | 96,409      |     
|                                                                                                      |  |      |             |     
|TOTAL ASSETS                                                                                          |  | $    | 10,879,147  |     
|                                                                                                      |  |      |             |     
|LIBILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)                                                         |  |      |             |     
|Current Liabilities:                                                                                  |  |      |             |     
|Accounts Payable                                                                                      |  | $    | 2,283,803   |     
|Accrued Expenses                                                                                      |  |      | 1,567,840   |     
|Customer Advances                                                                                     |  |      | 1,750,000   |     
|Due to Non-Controlling Interest                                                                       |  |      | 231,500     |     
|Derivative Liabilities                                                                                |  |      | 974,683     |     
|Convertible Notes Payable                                                                             |  |      | 838,125     |     
|Current
    Portion of Long-Term Debt                                                                 |  |      | 705,320     |     
|Total Current Liabilities                                                                             |  |      | 8,351,271   |     
|                                                                                                      |  |      |             |     
|Long Term Debt, Less Current Portion                                                                  |  |      | 1,097,915   |     
|                                                                                                      |  |      |             |     
|TOTAL LIABILITES                                                                                      |  |      | 9,449,186   |     
|                                                                                                      |  |      |             |     
|Preferred Stock, Series C,
    $0.0001 per value, 1,733,221 shares Authorized, issued and outstanding |  |      | 4,333,053   |     
|COMMITMENTS AND CONTINGENCIES                                                                         |  |      | —           |     
|STOCKHOLDERS'
                                         EQUITY (DEFICIT)                               |  |      |             |     
|Preferred Stock, Series A, $0.0001 par value,
    1,000 shares                                        |  |      |             |     
|authorized,
    issued and outstanding                                                                |  |      | 1           |     
|Common Stock, $0.01 par value, 25,000,000 shares
    authorized                                       |  |      |             |     
|17,722,825 and 17,722,825
    issued and outstanding                                                  |  |      | 177,228     |     
|Preferred Rights                                                                                      |  |      | 40,000      |     
|Additional Paid In Capital                                                                            |  |      | 56,622,159  |     
|Treasury Stock, 778,980 and
    778,980 shares                                                        |  |      | (2,223,891  | )   
|Accumulated Other Comprehensive
    income                                                            |  |      | 1,247,198   |     
|Accumulated
    Deficit                                                                               |  |      | (53,154,259 | )   
|Total DynaResource Inc. Stockholders'
    Equity                                                      |  |      | 2,708,436   |     
|Non-Controlling
    Interest                                                                          |  |      | (5,611,528  | )   
|TOTAL EQUITY (DEFICIT)                                                                                |  |      | (2,903,092  | )   
|                                                                                                      |  |      |             |     
|TOTAL LIABILITIES AND
    STOCKHOLDERS' EQUITY (DEFICIT)                                              |  | $    | 10,879,147  |     



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

52





DYNARESOURCE,
INC.

CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR
THE YEARS ENDED DECEMBER 31, 2018 AND 2017



|                                                         |  | 2018 (Restated) |            | 2017 (Restated)
|-------------------------------------------------------- |  | --------------- | ---------- | ---------------
|REVENUE                                                  |  | $               | 14,059,697 |                
|COSTS AND EXPENSES OF MINING OPERATION                   |  |                 |            |                
|Production Cost Applicable
    to Sales                  |  |                 | 1,716,721  |                
|Mine Production Costs                                    |  |                 | 2,807,474  |                
|Mine Exploration Costs                                   |  |                 | 3,639,791  |                
|Mine Expansion Costs                                     |  |                 | 1,466,287  |                
|Camp, Warehouse and
    Facilities                       |  |                 | 2,796,279  |                
|Transportation                                           |  |                 | 645,504    |                
|Property Holding Costs                                   |  |                 | 1,310,220  |                
|General and Administrative                               |  |                 | 2,203,366  |                
|Depreciation
    and Amortization                        |  |                 | 7,856      |                
|Total
    Operating Expenses                             |  |                 | 16,593,498 |                
|NET OPERATING (LOSS)                                     |  |                 | (2,533,801 | )              
|                                                         |  |                 |            |                
|OTHER INCOME (EXPENSE)                                   |  |                 |            |                
|Foreign Currency Gains                                   |  |                 | 51,325     |                
|Gain on Sale of Assets                                   |  |                 | 23,715     |                
|Interest Expense                                         |  |                 | (391,757   | )              
|Derivatives Mark-to-Market
    Gain                      |  |                 | 2,206,825  |                
|Other
    Income (Expense)                               |  |                 | (323,034   | )              
|Total Other Income                                       |  |                 | 1,567,074  |                
|                                                         |  |                 |            |                
|NET INCOME (LOSS) BEFORE TAXES                           |  |                 | (966,727   | )              
|PROVISION FOR INCOME TAXES                               |  |                 | —          |                
|                                                         |  |                 |            |                
|NET INCOME (LOSS)                                        |  | $               | (966,727   | )              
|                                                         |  |                 |            |                
|DEEMED DIVIDEND FOR SERIES C PREFERRED                   |  |                 | (173,320   | )              
|LOSS ATTRIBUTABLE TO NON-CONTROLLING
    INTEREST        |  |                 | 383,630    |                
|                                                         |  |                 |            |                
|NET INCOME(LOSS) ATTRIBUTABLE
    TO COMMON STOCKHOLDERS |  | $               | (756,417   | )              
|                                                         |  |                 |            |                
|EARNINGS PER SHARE ATTRIBUTABLE TO THE                   |  |                 |            |                
|EQUITY HOLDERS OF DYNARESOURCE,
    INC.                 |  |                 |            |                
|                                                         |  |                 |            |                
|Basic Earnings (Loss)
     Per Common Share              |  | $               | (0.04      | )              
|Weighted Average
    Shares Outstanding - Basic          |  |                 | 17,722,825 |                
|                                                         |  |                 |            |                
|Diluted Earnings (Loss)
    Per Common Share             |  | $               | (0.04      | )              
|Weighted Average
    Shares Outstanding - Diluted        |  |                 | 17,722,825 |                
|                                                         |  |                 |            |                
|OTHER COMPREHENSIVE INCOME (LOSS)                        |  |                 |            |                
|Foreign
    Currency Translation Gain (Loss)             |  |                 | 178,473    |                
|TOTAL OTHER COMPREHENSIVE
    INCOME (LOSS)              |  |                 | 178,473    |                
|                                                         |  |                 |            |                
|TOTAL COMPREHENSIVE INCOME
    (LOSS)                    |  | $               | (788,254   | )              
|                                                         |  |                 |            |                
|ATTRIBUTABLE TO:                                         |  |                 |            |                
|EQUITY
    HOLDERS OF DYNARESOURCE, INC.                 |  | $               | (599,293   | )              
|NON-CONTROLLING
    INTEREST                             |  | $               | (188,961   | )              





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



53











DYNARESOURCE,
INC.

CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

YEARS
ENDED DECEMBER 31, 2018 AND 2017 (RESTATED)







|DYNARESOURCE, INC.                                                                         
|-------------------------------------------------------------------------------------------
|Consolidated Statement of Changes
    in Stockholders' Equity                              
|For the Years Ended December
    31, 2018 and 2017                                         
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Balance, December 31, 2016                                                                 
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Balance, December 31, 2017                                                                 
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Balance, December 31, 2018                                                                 
|                                                                                           
|                                                                                           
|The
    accompanying notes are an integral part of these consolidated financial statements.







54





DYNARESOURCE,
INC.

CONSOLIDATED
STATEMENTS OF CASH FLOWS

FOR
THE YEARS ENDED DECEMBER 31, 2018 AND 2017



|                                                                                                  |  | 2018 (Restated) |            | 2017 (Restated)
|------------------------------------------------------------------------------------------------- |  | --------------- | ---------- | ---------------
|CASH FLOWS FROM OPERATING ACTIVITES:                                                              |  |                 |            |                
|Net Income (Loss)                                                                                 |  | $               | (966,727   | )              
|Adjustments to reconcile net income (loss) to
    cash provided by (used in) operating activities |  |                 |            |                
|Change in Derivatives                                                                             |  |                 | (2,206,825 | )              
|Depreciation and Amortization                                                                     |  |                 | 7,856      |                
|Gain on Sale of Asset                                                                             |  |                 | (23,715    | )              
|Change in Operating Assets and Liabilities                                                        |  |                 |            |                
|Accounts Receivable                                                                               |  |                 | (751,409   | )              
|Inventories                                                                                       |  |                 | (680,796   | )              
|Foreign Tax Receivable                                                                            |  |                 | (113,323   | )              
|Other Assets                                                                                      |  |                 | (369,054   | )              
|Customer Advances                                                                                 |  |                 | 1,750,000  |                
|Accounts Payable                                                                                  |  |                 | 1,480,512  |                
|Accrued
    Expenses                                                                              |  |                 | 1,342,339  |                
|CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES                                             |  |                 | (531,142   | )              
|                                                                                                  |  |                 |            |                
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                             |  |                 |            |                
|Purchase of Equipment                                                                             |  |                 | (3,931     | )              
|Disposal of Equipment                                                                             |  |                 | 23,715     |                
|CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES                                             |  |                 | 19,784     |                
|                                                                                                  |  |                 |            |                
|CASH FLOW FROM FINANCING ACTIVITIES:                                                              |  |                 |            |                
|Proceeds from Sale of
    Common Stock                                                            |  |                 | —          |                
|Payments of Promissory
    Notes - Related Parties                                                |  |                 | (112,500   | )              
|Payments
    of Long-Term Debt                                                                    |  |                 | (399,636   | )              
|CASH FLOW PROVIDED BY (USED IN) FINANCING ACTIVITIES                                              |  |                 | (512,136   | )              
|                                                                                                  |  |                 |            |                
|Effects
    of Foreign Exchange                                                                   |  |                 | 180,335    |                
|                                                                                                  |  |                 |            |                
|NET INCREASE (DECREASE) IN CASH                                                                   |  |                 | (843,159   | )              
|CASH AT BEGINNING OF PERIOD                                                                       |  |                 | 3,528,735  |                
|CASH AT END OF PERIOD                                                                             |  | $               | 2,685,576  |                
|                                                                                                  |  |                 |            |                
|SUPPLEMENTAL DISCLOSURES                                                                          |  |                 |            |                
|Cash
    Paid for Interest                                                                        |  | $               | 396,748    |                
|Cash
    Paid for Income Taxes                                                                    |  | $               | —          |                
|NON-CASH TRANSACTION                                                                              |  |                 |            |                
|Issuance of Treasury
    Shares                                                                   |  | $               | —          |                
|Conversion
    of Accounts Payable to Long-Term Debt                                              |  | $               | 1,833,698  |                



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



55





DYNARESOURCE,
INC.

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

December
31, 2018 and 2017



NOTE
1 – NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES





Nature
of Activities, History and Organization



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



In
2000, the Company formed a wholly owned subsidiary, DynaResource de México S.A. de C.V., chartered in México (“DynaMéxico”).  This
Company was formed to acquire, invest in and develop resource properties in México. DynaMéxico owns a portfolio
of mining concessions that currently includes its interests in the San José de Gracia Project (“SJG”) in northern
Sinaloa State, México. The SJG District covers 69,121 hectares (170,802 acres) on the west side of the Sierra Madre mountain
range. The Company currently owns 80% of the outstanding capital of DynaMéxico.



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., “DynaMineras”).
The Company owned 25% of DynaMineras and acquired effective control of DynaMineras by acquiring the option to purchase the remaining
75% of the Shares of DynaMineras. The Company finalized the option and acquisition of DynaMineras in January 2010, and now owns
100% of DynaMineras.  The results of these subsidiaries are consolidated with those of the Company.



From
January 2008 through March 2011, DynaMéxico issued 100 Variable Capital Series “B” shares to Goldgroup Resources,
Inc., a wholly owned subsidiary of Goldgroup Mining Inc. Vancouver BC (“Goldgroup”), in exchange for Goldgroup’s
contribution of $18,000,000 to DynaMéxico. At March 14, 2011, Goldgroup owned 50% of the outstanding capital shares of
DynaMéxico.



On
June 21, 2013, DynaResource acquired a Certificate for 300 Series “B” Variable Capital Shares of DynaMéxico,
in exchange for the settlement of accounts receivable from DynaMéxico in the amount of $31,090,710 Mexican Pesos (approximately
$2.4 million USD). After the issuance and receipt of the 300 Series B Shares, DynaUSA holds 80% of the total outstanding Capital
of DynaMéxico.



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



Reclassifications
and Adjustments



Certain
financial statement reclassifications have been made to prior period balances to reflect the current period’s presentation
format; such reclassifications had no impact on the Company’s consolidated statements of income or consolidated statements
of cash flows and had no material impact on the Company’s consolidated balance sheets.



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 presented.





56











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.



Restatement



The
Company is filing this Amendment No.2 to its Annual Report on Form 10-K for the year ended December 31, 2018, which was originally
filed with the Securities and Exchange Commission on April 8, 2019. The Company has restated its consolidated financial statements
for the years ended December 31, 2018 and December 31, 2017 to correct the manner in which the Company recorded certain expenditures.
The expenditures which were capitalized as Mining Equipment and Fixtures should have been expensed as mine expansion costs under
Generally Accepted Accounting Principles (GAAP) in the United States. The Company made the appropriate adjustment to the opening
January 1, 2017 equity balance to reflect the cumulative effect of prior periods to removecertain
expenditures for mining site improvements and equipment that were previously capitalized as fixed assets.



The
errors which were included in the December 31, 2018 Form 10-K Annual Report were incurred throughout the 2018 and 2017 fiscal
years and prior periods and were subsequently identified in the third quarter of the 2019 fiscal year. The Company will also be
filing an amended 10-Q for the quarter ended March 31, 2019.



Please
refer to Note 17 – Restatements for a complete summary of the restatement adjustments and an “As Reported” and
“As Restated” comparison of the affected balances within the financial statements. As required by Rule 12b-15 under
the Securities Exchange Act of 1934, as amended, new certifications by DynaResouce Inc.’s principal executive officer and
principal financial officer are being filed with this Form 10-K/A as Exhibits 31.1, 31.2, 32.1 and 32.2. In addition, Item 8 has
been amended to contain a currently-dated opinion of the Company’s independent registered public accounting firm.





Principles
of Consolidation



The
financial statements include the accounts of DynaResource, Inc., as well as DynaResource de México, S.A. de C.V. (80% ownership),
DynaResource Operaciones S.A. de C.V. (100% ownership) and Mineras de DynaResource S.A. de C.V. (100% ownership). All
significant inter-company transactions have been eliminated.  All amounts are presented in U.S. Dollars unless otherwise
stated.



Non-Controlling
Interest



The
Company’s subsidiary, DynaResource de México S.A. de C.V, is 20% owned by Goldgroup Mining, Inc. On May 17, 2013,
the ownership changed from 50% to 20%. The Company accounts for this outside interest as “non-controlling interest”.



Investments
in Affiliates



The
Company owns a 19.95% interest in DynaResource Nevada, Inc., a Nevada Corporation (“DynaNevada”), with one operating
subsidiary in México, DynaNevada de México, S.A. de C.V. (“DynaNevada de México”), together “DynaNevada”.
The Company accounts for this investment using the cost basis. The Company has significant influence over DynaNevada, but not
control, due to the lack of a majority voting interest in the entity. DynaNevada has been dormant for several years. DynaUSA has
no plan or intention of future funding with DynaNevada nor are any other transactions with DynaNevada contemplated at this time.
The Company therefore accounts for this investment using the cost basis. The investment was $70,000 and $70,000 at December 31,
2018 and 2017, respectively.



Cash
and Cash Equivalents



The
Company considers all highly liquid debt instruments with an original maturity of three months or less to be cash equivalents.  At
times, cash balances may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limits.



Accounts
Receivable and Allowances for Doubtful Accounts



The
allowance for accounts receivable is recorded when receivables are considered to be doubtful of collection. As of December 31,
2018, and 2017, respectively, no allowance has been made.



Foreign
Tax Receivable



Foreign
Tax Receivable is comprised of recoverable value-added taxes (“IVA”) charged by the Mexican government on goods and
services rendered.  Under certain circumstances, these taxes are recoverable by filing a tax return.  Amounts
paid for IVA are tracked and held as receivables until the funds are remitted.  The total amounts of the IVA receivable
as of December 31, 2018 and December 31, 2017 are $845,564 and $732,341, respectively.





57









Inventory



Inventories
are carried at the lower of cost or net realizable value and consist of mined tonnage, and gravity and flotation concentrates,
and gravity tailings or flotation feed material. The inventories are $1,588,778 and $907,982 as of December 31, 2018 and December
31, 2017, respectively.



Proven
and Probable Reserves (No Known Reserves)



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



As
of December 31, 2018, none of the Company's properties contain resources that satisfy the definition of proven and probable
reserves. The Company classifies the development of its properties, including the San Jose de Gracia Property, as exploration
stage projects since no proven or probable reserves have been established under Industry Guide 7.



Property



Substantially
all mine development costs, including design, engineering, mine construction, and installation of equipment are expensed as incurred
as the Company has not established proven and probable reserves on any of its properties. Only certain types of mining equipment
which has alternative uses or significant salvage value, may be capitalized without proven and probable reserves. Depreciation
is computed using the straight-line method. Office furniture, equipment and light vehicles are being depreciated on a straight-line
method over estimated economic lives ranging from 3 to 5 years. Leasehold improvements, which relate to the Company's corporate
office, are being amortized over the term of the lease of 10 years. Trailers, heavy vehicles and other site equipment are
being depreciated on a straight-line method over estimated economic lives from 5 to 15 years. Buildings are being depreciated
on straight line method over an estimated economic life of 20 years.



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



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



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



Mineral
Properties Interests



Mineral
property interests include acquired interests in development and exploration stage properties, which are considered tangible assets.
The amount capitalized relating to a mineral property interest represents its fair value at the time of acquisition. When a property
does not contain mineralized material that satisfies the definition of proven and probable reserves, such as with the San Jose
de Gracia Property, capitalized costs and mineral property interests are amortized using the straight-line method once production
begins. As of December 31, 2018, the mining interests have been in the pilot production stage and therefore, no amortization has
been expensed. Mining properties consist of 33 mining concessions covering approximately 9,919 hectares at the San Jose de Gracia
property (“SJG”), the basis of which are amortized on the unit of production method based on estimated recoverable
resources.  If it is determined that the deferred costs related to a property are not recoverable over its productive life,
those costs will be written down to fair value as a charge to operations in the period in which the determination is made.  The
amounts at which mineral properties and the related costs are recorded do not necessarily reflect present or future values.





58









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



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



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



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



|● | estimated
    future commodity prices;
|- | --------------------------------------



|● | estimated
    expected future operating costs, capital expenditures and reclamation expenditures.
|- | -------------------------------------------------------------------------------------------------



A
write-down to fair value will be recorded when the expected future cash flow is less than the net book value of the property or
when events or changes in the property indicate that carrying amounts are not recoverable.  This analysis will be completed
as needed, and at least annually. As of the date of this filing, no events have occurred that would require write-down of any
assets.  As of December 31, 2018, and 2017, no indications of impairment existed.



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



Pre-Pilot
Production Costs



During
2016, the Company has conducted rehabilitation activity at the San Pablo mine and has refurbished the Pilot Mill Facility at San
Jose de Gracia and, in general prepared for test mining and pilot milling (“Pilot Production”) Operations. The costs
associated with the rehabilitation, preparation, clean up and facilitation of this process are expensed as pre-pilot production
costs.



Property
Holding Costs



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



Exploration
Costs



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



Foreign
Currency Translation

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



59







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

Relevant
exchange rates used in the preparation of the financial statements for the subsidiaries are as follows for the years ended December
31, 2018 and 2017 (Mexican Pesos per one U.S. dollar):



|                                                        |       |  | Dec
    31, 2018 |       |  | Dec
    31, 2017 | 
|------------------------------------------------------- | ----- |  | ---------------- | ----- |  | ---------------- | 
|                                                        |       |  |                  |       |  |                  | 
|Current exchange rate                                   | Pesos |  |                  | 19.63 |  |                  | 
|                                                        |       |  |                  |       |  |                  | 
|Weighted average exchange rate for the period
    ended | Pesos |  |                  | 19.23 |  |                  | 



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



Income
Taxes



The
Company accounts for income taxes under ASC 740 “Income Taxes” using the liability method, recognizing
certain temporary differences between the financial reporting basis of liabilities and assets and the related income tax basis
for such liabilities and assets. This method generates either a net deferred income tax liability or asset for the Company, as
measured by the statutory tax rates in effect. The Company derives the deferred income tax charge or benefit by recording the
change in either the net deferred income tax liability or asset balance for the year. The Company records a valuation allowance
against any portion of those deferred income tax assets when it believes, based on the weight of available evidence, it is more
likely than not that some portion or all of the deferred income tax asset will not be realized.



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



On
December 22, 2017, the 2017 Tax Cuts and Jobs Act (the “Act”) was signed into law. Among other provisions, the Act
reduced the highest corporate tax rate from 35% to 21%. With the passage of the Act, the Company‘s deferred tax assets and
liabilities were restated as of the effective date of the law to reflect the new applicable rate. The reduction to the net deferred
tax asset was charged to tax expense in the period of the change and offset by a valuation allowance stemming from historical
net operating loss carryforwards.



Use
of Estimates



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



Comprehensive
Income (Loss)



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



Revenue
Recognition



The
Company adopted ASC 606 “Revenue from contracts with customers” on January 1, 2018 using the modified retrospective
approach. The Company generates revenue by selling gold and silver produce from its mining operations. The Company recognizes
revenue for gold and silver concentrate production, net of treatment and refining costs, when it satisfies the performance obligation
of transferring control of the concentrate to the customer. This is generally when the material is delivered to the customer facility
for treatment and processing as the customer has the ability to direct the use of and obtain substantially all the remaining benefits
from the material and the customer has the risk of loss.

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





60









During
the year ended December 31, 2018 there was $0 of revenue recognized during the period from customer deposit liabilities (deferred
contract revenue), and $0 of customer deposits refunded to the customer on order cancellation.



As
of December 31, 2018, there are $1,750,000 in customer deposit liabilities for payments received during the period for contracts
expected to ship in 2019. Under terms of the Company’s sales contract this amount is to be applied as payment on the customer
account at a rate of $250,000 per month throughout the year.



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



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



Prior
to the adoption of this standard the Company recognized revenue in accordance with ASC 605-10, "Revenue Recognition in
Financial Statements".   Revenue was recognized when persuasive evidence of an arrangement exists, delivery
or service has occurred, the sale price is fixed or determinable and receipt of payment is probable. Revenues earned from the
sale of precious metal concentrates are recognized when both the buyer and seller agree on the % of gold as determined by sample
assays and when it is delivered to the Buyer. Subsequently, a “final settlement” was calculated an adjustment was
recorded when any remaining balance was paid.

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

Stock-Based
Compensation



The
Company accounts for stock options at fair value as prescribed in ASC 718. The Company estimates the fair value of each stock
option at the grant date by using the Black-Scholes option-pricing model and provides for expense recognition over the service
period, if any, of the stock option.



The
Company accounts for stock options issued and vesting to non-employees in accordance with ASC Topic 505-50 “Equity -Based
Payment to Non-Employees” and accordingly the value of the stock compensation to non-employees is based upon the measurement
date as determined at either (a) the date at which a performance commitment is reached, or (b) at the date at which
the necessary performance to earn the equity instruments is complete. Accordingly, the fair value of these options is being “marked
to market” quarterly until the measurement date is determined.



Fair
Value of Financial Instruments



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



Per
Share Amounts



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



The
Company had 2,523,689 warrants outstanding at December 31, 2018 exercisable at $2.50 per share, which upon exercise, would result
in the issuance of 2,523,689 shares of common stock. The Company also had convertible debt instruments as of December 31, 2018
which, upon conversion at a valuation of $2.50 per share, would result in the issuance of 335,250 shares of stock.



The
Company had 2,523,689 warrants outstanding at December 31, 2017 exercisable at $2.50 per share, which upon exercise, would result
in the issuance of 2,523,689 shares of common stock. The Company also had convertible debt instruments as of December 31, 2017
which, upon conversion at a valuation of $2.50 per share, would result in the issuance of 380,250 shares of stock.





61









|                                                                  |  | Years
    ended December 31                                                      
|----------------------------------------------------------------- |  | ---------------------------------------------------------------------------------
|                                                                  |  | 2018
                                                                  (Restated)
|Net income
    (loss) attributable to common shareholders         |  | $                                                                                
|Shares:                                                           |  |                                                                                  
|Weighted average number of common shares outstanding,
    Basic   |  |                                                                                  
|                                                                  |  |                                                                                  
|Weighted average number of common shares outstanding,
    Diluted |  |                                                                                  
|                                                                  |  |                                                                                  
|Basic earnings (loss) per share                                   |  | $                                                                                
|                                                                  |  |                                                                                  
|Diluted earnings (loss) per share                                 |  | $                                                                                



Related
Party Transactions



FASB
ASC 850, "Related Party Disclosures" requires companies to include in their financial statements disclosures of material
related party transactions. The Company discloses all material related party transactions. A party is considered to be related
to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under
common control with the Company. Related parties also include principal owners of the Company, its management, members of the
immediate families of principal owners of the Company and its management and other parties with which the Company may deal if
one party controls or can significantly influence the management or operating policies of the other to an extent that one of the
transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence
the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties
and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully
pursuing its own separate interests is also a related party.”





Recently
Issued Accounting Pronouncements



Stock
compensation





In
May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU
2017-09). ASU 2017-09 provides clarity and reduce both (1) diversity in practice and (2) cost and complexity when applying the
guidance in Topic 718, Compensation—Stock Compensation, to a change to the terms or conditions of a share-based payment
award. The amendments in this update provide guidance about which changes to the terms or conditions of a share-based payment
award require an entity to apply modification accounting in Topic 718. The amendments in this update are effective for all entities
for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted.
As such, The Company adopted these provisions as of the fiscal year beginning on January 1, 2018. The amendments in this update
should be applied prospectively to an award modified on or after the adoption date.



Leases



In
February 2016, FASB issued ASU 2016-02— Leases (Topic 842). The update is intended to increase transparency and comparability
among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about
leasing arrangements. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including
interim periods within those fiscal years. Early application of the amendments in this update is permitted. As such, The Company
is required to adopt these provisions as of the fiscal year beginning on January 1, 2019. The Company is currently evaluating
the impact of FASB ASU 2016-02 and expects the adoption thereof will have a material effect on The Company’s presentation
of balance sheet assets and liabilities based on the present value of future lease payments but does not expect a material effect
on the presentation of expenses and cash flows.







NOTE
2 – INVENTORIES



The
Company commenced underground test mining and pilot milling activities (“pilot production”) in the 2nd quarter of
2014. Rehabilitation of the San Pablo Mine and refurbishing of the Pilot Mill Facility and construction of the adjacent tailings
pond continued through 2016. Inventories are carried at the lower of cost or fair value and consist of mined tonnage, gravity-flotation
concentrates, and gravity tailings (or, flotation feed material). Inventory balances of December 31, 2018 and December 31, 2017,
respectively, were as follows:





62









|                                                                                               |  | 2018 |           | 2017
|---------------------------------------------------------------------------------------------- |  | ---- | --------- | ----
|                                                                                               |  |      |           |     
|Mined Tonnage,
    Gold-Silver Concentrates, and/or Gravity Tailings (Flotation Feed Material) |  | $    | 1,588,778 |     
|Total Inventories                                                                              |  | $    | 1,588,778 |     





NOTE
3 – PROPERTY



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



|                                  |  | 2018
                                                                                                  (Restated) |          | 2017
                                                                                                  (Restated)
|--------------------------------- |  | ----------------------------------------------------------------------------------------------------------------- | -------- | -----------------------------------------------------------------------------------------------------------------
|                                  |  |                                                                                                                   |          |                                                                                                                  
|Leasehold improvements            |  | $                                                                                                                 | 9,340    |                                                                                                                  
|Office equipment                  |  |                                                                                                                   | 31,012   |                                                                                                                  
|Office furniture and
    fixtures |  |                                                                                                                   | 78,802   |                                                                                                                  
|Sub-total                         |  |                                                                                                                   | 119,154  |                                                                                                                  
|Less: Accumulated depreciation    |  |                                                                                                                   | (106,673 | )                                                                                                                
|Total
    Property                |  | $                                                                                                                 | 12,481   |                                                                                                                  





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



Depreciation
has been provided over each asset’s estimated useful life.  Depreciation expense was $7,856 and $5,630 for the
years ended December 31, 2018 and 2017, respectively.



NOTE
4 – MINING CONCESSIONS



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



|                            |  | 2018 |           | 2017
|--------------------------- |  | ---- | --------- | ----
|San Jose de Gracia (“SJG”): |  |      |           |     
|                            |  |      |           |     
|Total Mining Concessions    |  | $    | 4,132,678 |     
|                            |  |      |           |     



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



NOTE
5 – INVESTMENT IN AFFILIATE/RECEIVABLES FROM AFFILIATE/OTHER ASSETS



Through
December 31, 2018, the Company loaned a total of $805,760 to DynaResource Nevada, Inc. (“DynaNevada”), a Nevada Corporation,
which owns 100% of one operating subsidiary in México, DynaNevada de México, S.A. de C.V. (“DynaNevada
de México”). The terms of the Note Receivable provided for a “Convertible Loan”, repayable at 5% interest
over a 3-year period, and convertible at the Company’s option into common stock of DynaNevada at $.25 / Share.  
DynaNevada is a related entity (affiliate), and through its subsidiary, DynaNevada de México has entered into an Option
agreement with Grupo México (IMMSA) in México, for the exploration and development of approximately 3,000 hectares
in the State of San Luis Potosi (“The Santa Gertrudis Property”). DynaNevada de México exercised the Option
with IMMSA in March 2010, so that DynaNevada de México now owns 100% of the Santa Gertrudis Property. In June 2010, DynaNevada
de México acquired an additional 6,000 hectares in the State of Sinaloa (the “San Juan Property”).



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 / Share. The Company received 3,223,040 shares, which represents approximately 19.95% of the
outstanding shares of DynaNevada. At the time of the exchange, DynaNevada’s net book value was approximately $695,000, consisting
of $30,000 cash and the remainder unproven mining properties. Based upon the above, Management estimated the value of the Company’s
DynaNevada shares as of December 31, 2018 and December 31, 2017 to be $70,000 and $70,000, respectively. The loss was taken to
“other income (loss) on the income statement in previous years.



In
2016 the Company deemed $159,143 of receivable for funds, previously advanced to DynaNevada in order for DynaNevada to meets its
basis filing and reporting obligations with the Mexican authorities relating to tax returns and paying taxes on its mining concessions,
to be uncollectable and wrote them off. As of December 31, 2018, and December 31, 2017 the Company had no remaining receivable
from DynaNevada.





63









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





NOTE
6 – CONVERTIBLE PROMISSORY NOTES



Notes
Payable – Series I



In
April and May 2013, the Company entered into note agreements with shareholders in the principal amount of $1,495,000, of which
$340,000 was then converted to preferred shares within the same year, netting to proceeds of $1,155,000 (the “Series I Notes”).
The Series I Notes bear simple interest at twelve and a half percent (12.5%), accrued for twelve months, and with the accrued
interest to be added to the principal, and then interest will be paid by the Company, quarterly in arrears. The holders
of the Series I Notes (in aggregate) are also entitled to receive ten percent (10%) of the net profits received by the Company,
on the first fifty thousand tons processed through the mill facilities at San Jose de Gracia. Such net profits (if any) are to be
calculated after deducting “all expenses related to the production”, and after a prior deduction of thirty-three
percent (33%) from the net profits, to be deposited into a sinking fund cash reserve. To date, the Company has not produced any
net profits as calculated in accordance with the Series I Notes.



The
Notes originally matured on December 31, 2015. In April 2015, the Company received note extensions (allonges) from all Series
I note holders to ensure that all Series I Notes were in good standing and extended the maturity date of the Series I Notes to
December 31, 2016.  The Company paid $5,625 to one Series I debt holder during 2017.
The remaining eight of the Series I noteholders totaling $759,375 have subsequently been extended to December 30, 2019.



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



The
Series I Note holder retains the option, at any time prior to maturity or prepayment, to convert any unpaid principal and accrued
interest into Common Stock at $5.00 per share. If the Series I Note is converted into Common Stock, at the time of conversion,
the holder would also receive warrants, in the same number as the number of common shares received upon conversion, to purchase
additional common shares of the Company for $7.50 per share, with such warrants expiring on December 31, 2020.





Notes
Payable – Series II



In
2013 and 2014, the Company entered into additional note agreements of $199,808 and $250,000, respectively (the “Series II
Notes”) with similar terms as the Series I Notes. The Series II Notes bear simple interest at twelve and a half percent
(12.5%), accrued for twelve months, and with the accrued interest to be added to the principal, and then interest will
be paid by the Company, quarterly in arrears. The holders of the Series II Notes (in aggregate) are also entitled to receive
ten percent (10%) of the net profits received by the Company, on the second fifty thousand tons processed through the mill facilities
at San Jose de Gracia. Such net profits (if any) are to be calculated after deducting “all expenses related to the
production” and after a prior deduction of thirty-three percent (33%) from the net profits, to be deposited into
a sinking fund cash reserve. To date, the Company has not produced any net profits as calculated in accordance with the Series
II Notes.



The
Notes originally matured on December 31, 2015. In 2018 The Company paid off one note for $112,500. The remaining two Series II
Notes totaling $78,750 have been extended to December 30, 2019.



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



The
Note holder may, at any time prior to maturity or prepayment, convert any unpaid principal and accrued interest into common stock
of the Company at $5.00 per share. At the time of conversion, the holder would receive a warrant to purchase additional common
shares of the Company for $7.50 per share, such warrant expiring on December 31, 2020.



On
June 30, 2015, the Company entered into conversion agreements with six (6) note holders. Principal and interest in the amount
of $809,784 plus $33,120 of accrued interest (total of $842,903) was contracted to convert into 337,162 common shares. In addition,
337,162 warrants were issued which provide the option to purchase common shares at $2.50, with all warrants expiring December
31, 2017. The Company recorded $826,347 inducement expense related to these conversion transactions. On August 17, 2015, these
common shares and warrants were issued.



At
December 31, 2018, the principal and capitalized interest balance on the remaining Series I Notes was $759,375, and the principal
and capitalized interest on the Series II Notes was $78,750, for a total Note balance of $838,125. At December 31, 2017, the principal
and capitalized interest balance on the remaining Series I Notes was $759,375, and the principal and capitalized interest on the
Series II Notes was $191,250, for a total Note balance of $950,625. The accrued interest for these notes was $25,150 and $30,141
as of December 31, 2018 and 2017, respectively.





64











NOTE
7 – 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 21% and 34%, respectively (blended for U.S. and México) of significant items comprising
the Company’s net deferred tax amounts as of December 31, 2018 and December 31, 2017 are as follows:







|Deferred Tax Asset Related to:                                                                                                                                          |  |                                                                                                |                                                          |                                                                                               
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------- | -------------------------------------------------------- | ----------------------------------------------------------------------------------------------
|                                                                                                                                                                        |  | 2018
                                                                               (Restated) |                                                          | 2017
                                                                               (Restated)
|Prior Year                                                                                                                                                              |  | $                                                                                              | 12,549,746                                               |                                                                                               
|Tax (Expense) Benefit for Current Year                                                                                                                                  |  |                                                                                                | 793,388                                                  |                                                                                               
|Peranent Difference
    Due to Rate Change                                                                                                                              |  |                                                                                                | —                                                        |                                                                                               
|Total Deferred Tax Asset                                                                                                                                                |  |                                                                                                | 13,343,134                                               |                                                                                               
|Less: Valuation
    Allowance                                                                                                                                           |  |                                                                                                | (13,343,134                                              | )                                                                                             
|Net Deferred Tax Asset                                                                                                                                                  |  | $                                                                                              | —                                                        |                                                                                               
|                                                                                                                                                                        |  |                                                                                                |                                                          |                                                                                               
|                                                                                                                                                                        |  |                                                                                                |                                                          |                                                                                               
|The income tax provision for the Company
    as of December 31, 2018 and 2017 differ from those computed using the statutory rates of 21% and 34% due to the following: |  |                                                                                                |                                                          |                                                                                               
|                                                                                                                                                                        |  |                                                                                                | 2018
                                         (Restated) |                                                                                               
|Tax Expense (Benefit)  at Statutory
    Rates                                                                                                                           |  |                                                                                                | (241,682                                                 | )                                                                                             
|Peranent Difference Due to Rate Change                                                                                                                                  |  |                                                                                                | —                                                        |                                                                                               
|Other Permanent Differences                                                                                                                                             |  |                                                                                                | (551,706                                                 | )                                                                                             
|Change in Valuation Allowance                                                                                                                                           |  |                                                                                                | 793,388                                                  |                                                                                               
|Other                                                                                                                                                                   |  |                                                                                                | —                                                        |                                                                                               
|Provision for (Benefit
    from) Income Taxes, Net                                                                                                                      |  |                                                                                                | —                                                        |                                                                                               





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



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



On
December 11, 2013, the Mexican government enacted a tax reform that increased the effective tax rate applicable to the Company's
Mexican operations. The law, effective January 1, 2014, increased the future corporate income tax rate to 30%, created a
10% withholding tax on dividends paid to non-resident shareholders and created a new Extraordinary Mining duty which is equal
to 0.5% of gross revenues from the sale of gold, silver and platinum. Furthermore, the reform introduced a Special Mining Duty
of 7.5%. The Special Mining Duty is deductible for income tax purposes. The Special Mining Duty is generally applicable to earnings
before income tax, depreciation, depletion, amortization and interest. There will be no deductions related to development type
costs, but exploration and prospecting costs are deductible when incurred. Certain non-deducted exploration expenditures incurred
prior to January 1, 2014 are also deductible in the calculation of the Special Mining Duty. For the years ended December 31,
2018 and 2017, the Company had no taxes payable under the 7.5% Special Mining Duty.



The
Company or its subsidiaries file income tax returns in the United States and México. These tax returns are subject to examination
by local taxation authorities provided the tax years remain open to audit under the relevant statute of limitations. The following
summarizes the open tax years by major jurisdiction:



United
States:   2015 to 2018

México:   
        2014 to 2018



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







65











NOTE
8 – STOCKHOLDERS’ EQUITY



Authorized
Capital. The total number of shares of all classes of capital stock which the corporation shall have the authority to
issue is 45,001,000 shares, consisting of (i) twenty million and one thousand (20,001,000) shares of Preferred Stock, par value
$0.0001 per share (“Preferred Stock”), of which one thousand (1,000) shares shall be designated as Series A Preferred
Stock and (ii) twenty-five million (25,000,000) shares of Common Stock, par value $0.01 per share (“Common Stock”).



Series
A Preferred Stock



The
Company has designated 1,000 shares of its Preferred Stock as Series A, having a par value of $0.0001 per share. Holders of the
Series A Preferred Stock have the right to elect a majority of the Board of Directors of the Company. In October 2007, the
Company issued 1,000 shares of Series A Preferred Stock to its CEO. At December 31, 2018 and December 31, 2017, there were 1,000
and 1,000 shares of Series A Preferred Stock outstanding, respectively.



Series
C Senior Convertible Preferred Shares



On
June 30, 2015, the Company issued 1,600,000 Series C Senior Convertible Preferred Shares (the “Series C Preferred Shares”)
at $2.50 per share for gross proceeds of $ 4,000,000, as well as issuing 133,221 additional Series C Preferred Shares due to anti-dilution
provisions (with no cash remuneration). Legal fees of $45,000 were deducted from the proceeds of this transaction at closing.
These Series C Preferred Shares are convertible to common shares at $2.50 per share, through February 20, 2020. The Series C Preferred
Shares may receive a 4% per annum dividend, payable if available, and in arrears. A description of the transaction which included
the issuance of the Series C Preferred Shares is included below. The Dividend is calculated at 4.0% of $4,333,053 payable annually
on June 30. At December 31, 2017 and 2018 dividends of $173,320 per year were in arrears.



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



|1. | On
    May 6, 2015, the Company, Golden Post Rail, LLC, a Texas limited liability company (“Golden Post”), and Mr. Koy
    W. (“K.D.”) Diepholz, Chairman-CEO of the Company entered into a Securities Purchase Agreement (the “SPA”).
    Pursuant to the SPA, Golden Post acquired the following securities:
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|a) | 1,600,000
    shares of Series C Senior Convertible Preferred Stock (the “Series C Preferred”) at a purchase price of $2.50
    per share ($4M USD), plus an additional 133,221 shares of Series C Preferred pursuant to anti-dilution provisions. The Series
    C Preferred is entitled to receive dividends at the per share rate of four percent (4%) per annum, ranks senior (in priority)
    to the Common Stock, the Series A Preferred Stock, and each other class or series of equity security of the Company. The Series
    C Preferred is convertible into Common Stock of the Company at the price of $2.41 per share and is entitled to anti-dilution
    protection for (i) subsequent equity issuances by the Company and (ii) changes in the Company’s ownership of DynaResource
    de México SA de CV (“DynaMéxico”). The Series C Preferred is also entitled to preemptive rights,
    and the holder has the right to designate one person to the Company’s Board of Directors as a Class III director.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|b) | A
    Common Stock Purchase Warrant (the “Golden Post Warrant”) for the purchase of 2,166,527 shares of the Company’s
    Common Stock, at an exercise price of $2.50 per share, and expiring June 30, 2020. The anti-dilution protections contained
    in the terms of the Series C Preferred are essentially replicated in the Golden Post Warrant.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|2. | Pursuant
    to the SPA, the Company executed a Registration Rights Agreement pursuant to which Golden Post may require the Company to
    register the shares of Common Stock which may be issued upon the conversion of the Series C Preferred and the shares of Common
    Stock issuable upon the exercise of the Warrant, including any additional shares of Common Stock issuable pursuant to anti-dilution
    provisions.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In
2015, due to underlying anti-dilutive provisions contained in the Series C Preferred Shares and the Golden Post Warrant, the Company
incurred derivative liabilities of $1,531,789 in connection with the Series C Preferred Shares, and $2,963,378 in connection with
the Golden Post Warrant. Additionally, the Company fully accreted the discount related to the Series C Preferred Shares and the
Golden Post Warrant in the amount of $4,637,179, which is reflected “below” the net income (loss) amount. Also, in
2015, the Company reported $87,374 deemed dividend for Golden Post Rail related to its 4% dividend terms. As the Company has not
declared these dividends, it is required only as an item “below” the net income (loss) amount. At December 31, 2018
the total Derivative Liability was $974,683 which included $402,909 for the Series C Preferred Shares, and $571,774 in connection
with the Golden Post Warrant. The Deemed Dividend for 2018 and 2017 was $173,320, and $173,320 respectively.





66









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



|                                                               |  | Preferred
    Series C
|-------------------------------------------------------------- |  | ----------------------
|                                                               |  |                       
|Carrying Value, December 31,
    2016                          |  | $                     
|Issuances at Fair Value, Net of Issuance
    Costs             |  |                       
|Bifurcation of Derivative Liability                            |  |                       
|Relative Fair Value of Warrants – Preferred
    Stock Discount |  |                       
|Accretion of Preferred Stock to Redemption
    Value           |  |                       
|Carrying Value, December
    31, 2017                          |  |                       
|                                                               |  |                       
|Issuances at Fair Value, Net of Issuance
    Costs             |  |                       
|Bifurcation of Derivative Liability                            |  |                       
|Relative Fair Value of Warrants – Preferred
    Stock Discount |  |                       
|Accretion of Preferred
    Stock to Redemption Value           |  |                       
|Carrying Value, December
    31, 2018                          |  |                       



Preferred
Stock (Undesignated)



In
addition to the 1,000 shares designated as Series A Preferred Stock and the 1,733,221 shares designated as Series C Preferred
Shares, the Company is authorized to issue an additional 16,266,779 shares of Preferred Stock, having a par value of $0.0001 per
share. The Board of Directors of the Company has authority to issue the Preferred Stock from time to time in one or more series,
and with respect to each series of the Preferred Stock, to fix and state by the resolution the terms attached to the Preferred
Stock. At December 31, 2018 and December 31, 2017, there were no other shares of Preferred Stock outstanding.



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



Common
Stock



The
Company is authorized to issue 25,000,000 common shares at a par value of $0.01 per share. These shares have full voting rights.
At December 31, 2018 and December 31, 2017, there were 17,722,825 and 17,722,825 shares outstanding, respectively. No dividends
were paid for the years ended December 31, 2018 and 2017, respectively.



Preferred
Rights



The
Company issued “Preferred Rights” for the rights to percentages of revenues generated from the San Jose de Gracia
Pilot Production Plant and received $158,500 in 2003 and $626,000 in 2002. This has been reflected as “Preferred Rights”
in stockholders’ equity. As of December 31, 2004, $558,312 was repaid and as of December 31, 2005, an additional $186,188
was repaid, leaving a current balance of $40,000 and $40,000 as of December 31, 2018 and December 31, 2017, respectively.





Stock
Issuances



2018
Activity



None.





67









2017
Activity



During
the year ended December 31, 2017, the Company issued 1,000,000 common shares for the exercise of stock warrants at $2.50 a share
for total proceeds of $2,500,000. In addition, the Company issued 333,333 shares of treasury stock as additional compensation
for exercise of the warrants at above market price.



Treasury
Stock



During
the year ended December 31, 2017 the Company issued 333,333 treasury shares as additional compensation for the exercise of stock
warrants at an above market price as discussed above. No treasury stock was issued during the year ended December 31, 2018. At
December 31, 2018 and 2017, 778,980 and 778,790 treasury shares were outstanding.



Warrants



2018
activity



The
Company had 2,523,689 warrants outstanding at December 31, 2018. There were no warrants issued or exercised in 2018 and no warrants
expired in 2018.





2017
activity



The
Company had 2,523,689 warrants outstanding at December 31, 2018. 1,000,000 warrants were exercised at $2.50 a share during the
year and 70,000 warrants expired.



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



|                                     |  | Number
    of Shares |            |   | Weighted
    Average Exercise Price |   |      | Weighted
    Average Remaining Contractual Life (Years) |  |  | Intrinsic
    Value | 
|------------------------------------ |  | -------------------- | ---------- | - | ----------------------------------- | - | ---- | ------------------------------------------------------- |  |  | ------------------- | 
|Balance
    at December 31, 2016     |  |                      | 3,593,689  |   |                                     | $ | 2.45 |                                                         |  |  | 2.51                | 
|Granted                              |  |                      | -          |   |                                     | $ | -    |                                                         |  |  |                     | 
|Exercised                            |  |                      | (1,000,000 | ) |                                     | $ | 2.50 |                                                         |  |  |                     | 
|Forfeited                            |  |                      | (70,000    | ) |                                     | $ | 2.50 |                                                         |  |  |                     | 
|Balance
    at December 31, 2017     |  |                      | 2,523,689  |   |                                     | $ | 2.45 |                                                         |  |  | 1.51                | 
|Granted                              |  |                      | -          |   |                                     | $ | -    |                                                         |  |  |                     | 
|Exercised                            |  |                      | -          |   |                                     | $ | -    |                                                         |  |  |                     | 
|Forfeited                            |  |                      | -          |   |                                     | $ | -    |                                                         |  |  |                     | 
|Balance
    at December 31, 2018     |  |                      | 2,523,689  |   |                                     | $ | 2.45 |                                                         |  |  | 0.51                | 
|Exercisable
    at December 31, 2018 |  |                      | 2,523,689  |   |                                     | $ | 2.45 |                                                         |  |  | 0.51                | 



NOTE
9 – RELATED PARTY TRANSACTIONS



Related
Party Transactions



The
Company follows FASB ASC subtopic 850-10, Related Party Disclosures, for the identification of related parties and disclosure
of related party transactions. Pursuant to ASC 850-10-20, related parties include: a) affiliates of the Company; b) entities for
which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value
Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts
for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management;
d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party
controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting
parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence
the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties
and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully
pursuing its own separate interests.







68









Material
related party transactions are required to be disclosed in the consolidated financial statements, other than compensation arrangements,
expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated
in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall
include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which
no amounts or nominal amounts were ascribed, for each of the periods for which statements of operation are presented, and such
other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the
dollar amounts of transactions for each of the periods for which statements of operations are presented and the effects of any
change in the method of establishing the terms from that used in the preceding period; and d) amounts due from or to related parties
as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.



Dynacap
Group Ltd.



The
Company paid $113,750 and $165,250 to Dynacap Group, Ltd. (“Dynacap”, an entity controlled by the CEO of the Company)
for consulting and other fees during the years ended December 31, 2018 and 2017, respectively.



Advances
from Goldgroup Mining Inc. (“Goldgroup”) to DynaMéxico



In
2014, Goldgroup advanced $111,500 to DynaMéxico and in 2013 Goldgroup advanced $120,000 USD to DynaMéxico. This
total $231,500 is being carried by DynaMéxico as a Due to Non-Controlling Interest.





NOTE
10 – COMMITMENTS AND CONTINGENCIES



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



In
addition to the surface rights held by DynaMéxico pursuant to the Mining Act of México and its Regulations
(Ley Minera y su Reglamento), DynaMineras maintains access and surface rights to the SJG Project pursuant to the 20-year
Land Lease Agreement. The 20 Year Land Lease Agreement with the Santa Maria Ejido Community
surrounding San Jose de Gracia was dated January 6, 2014 and continues through 2033. It covers an area of 4,399 hectares surrounding
the main mineral resource areas of SJG and provides for annual lease payments by DynaMineras of $1,359,443 Pesos (approx. $72,000
USD), commencing in 2014. The Land Lease Agreement provides DynaMineras with surface access to the core resource areas
of SJG (4,399 hectares) and allows for all permitted mining and exploration activities from the owners of the surface rights (Santa
Maria Ejido community).



The
Company leases office space for its corporate headquarters in Irving, Texas. In September 2017, the Company entered into a sixty-six-month
extension of the lease through 2023. As part of the agreement the Company received six months free rent as a finish out allowance.
The Company capitalized the leasehold improvement costs and amortized them over the rent abatement period as rent expense The
Company incurred rent expense of $86,011 and $71,399 for the office lease in the years ended December 31, 2018 and 2017, respectively.



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



|YEAR  |  | AMOUNT |        
|----- |  | ------ | -------
|2019  |  | $      | 82,474 
|2020  |  | $      | 84,280 
|2021  |  | $      | 86,086 
|2022  |  | $      | 87,892 
|2023  |  | $      | 14,849 
|TOTAL |  | $      | 355,581





Other
Contingencies



The
Company's mining and exploration activities are subject to various laws and regulations governing the protection of the environment.
These laws and regulations are continually changing and generally becoming more restrictive. The Company conducts its operations
so as to protect public health and the environment, and believes its operations are materially in compliance with all applicable
laws and regulations. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations.





69











Damages
Awarded to DynaMéxico in México Litigation



On
October 5, 2015, DynaResource de México SA de C.V. (“DynaMéxico”), was awarded in excess of $48 M USD
(Forty-Eight Million Dollars) in damages from Goldgroup Resources, Inc. (the “Goldgroup Damages”) by virtue of a Sentencia
Definitiva (the “Definitive Sentence”) issued by the Thirty Sixth Civil Court of the Superior Court of Justice of
the Federal District of México (Tribunal Superior de Justicia del Distrito Federal), File number 1120/2014. The Definitive
Sentence included the considerations and resolutions by the Court, and additional Resolutions were also ordered in favor of DynaMéxico
(together the Goldgroup Damages and the additional Resolutions are referred to as, the “Oct. 5, 2015 Resolution”).
The October 5, 2015 Resolution is described in Part II, Item 1. Legal Proceedings. As of December 31, 2018, the decision remains
under appeal.



Litigation



The
Company believes that no material adverse change will occur as a result of the legal actions taken, and the Company further believes
that there is little to no potential for the assessment of a material monetary judgment against the Company for legal actions
it has filed in México. Further, the Company believes there is no legal basis for which to conduct arbitration proceedings.
(See Item 3. Legal Proceedings. And, see Item 7. Management’s Discussion and Analysis of Financial Conditions and Results
of Operations).



NOTE
11 – DERIVATIVE LIABILITIES



Preferred
Series C Stock



As
discussed in Note 8, the Company analyzed the embedded conversion features of the Series C Preferred Stock and determined that
the stock qualified as a derivative liability and is required to be bifurcated and accounted for as such since the host and the
embedded instrument are not clearly and closely related. The Company performed a valuation of the conversion feature. In performing
the valuation, the Company applied the guidance in ASC 820, “Fair Value Measurements”, to nonfinancial assets
and liabilities that are recognized or disclosed at fair value on a nonrecurring basis. ASC 820 defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date (exit price). To measure fair value, the Company incorporates assumptions that market participants would
use in pricing the asset or liability and utilizes market data to the maximum extent possible.



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



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





|                               | 2018        |  | 2017       
|------------------------------ | ----------- |  | -----------
|Annual volatility
    rate     | 86%         |  | 153%       
|Risk
    free rate             | 2.48%       |  | 2.20%      
|Holding
    Period             | 5
    years |  | 5
    years
|Fair
    Value of common stock | $1.13       |  | $1.11      



For
the year ended December 31, 2018, an active market for the Company’s common stock did not exist. Accordingly, the fair value
of the Company’s common stock was estimated using a valuation model with level 3 inputs.



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



|Year Ended                                              |  | 2018 |            |   | 2017 |  
|------------------------------------------------------- |  | ---- | ---------- | - | ---- | -
|Fair
    value of derivative (stock), beginning of year |  | $    | 1,531,789  |   |      | $
|Change in fair value
    of derivative                  |  |      | (1,128,880 | ) |      |  
|Fair value of derivative
    on the date of issuance    |  |      | -          |   |      |  
|Fair value of derivative(stock),
    end of year        |  | $    | 402,909    |   |      | $









70







Preferred
Series C Warrants



As
discussed in Note 8, the Company analyzed the embedded conversion features of the Series C Preferred Stock and determined that
the Warrants qualified as a derivative liability and is required to be bifurcated and accounted for as such since the host and
the embedded instrument are not clearly and closely related. The Company performed a valuation of the conversion feature. In performing
the valuation, the Company applied the guidance in ASC 820, “Fair Value Measurements”, to nonfinancial assets
and liabilities that are recognized or disclosed at fair value on a nonrecurring basis. ASC 820 defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date (exit price). To measure fair value, the Company incorporates assumptions that market participants would
use in pricing the asset or liability and utilizes market data to the maximum extent possible.



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



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





|                           |  | 2018 |                                                  | 2017
|-------------------------- |  | ---- | ------------------------------------------------ | ----
|Annual volatility rate     |  |      | 86                                               | %   
|Risk free rate             |  |      | 2.48                                             | %   
|Holding Period             |  |      | 5
                                         years |     
|Fair Value of common stock |  | $    | 1.20                                             |     



For
the year ended December 31, 2018, an active market for the Company’s common stock did not exist. Accordingly, the fair value
of the Company’s common stock was estimated using a valuation model with level 3 inputs.



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



|Year Ended                                                 |  | 2018 |            | 2017
|---------------------------------------------------------- |  | ---- | ---------- | ----
|Fair value of derivative (warrants), beginning of
    year |  | $    | 1,649,719  |     
|Change in fair value of derivative                         |  |      | (1,077,945 | )   
|Fair value of derivative on the date of
    issuance       |  |      | —          |     
|Fair value of derivative(warrants), end
    of year        |  | $    | 571,774    |     



NOTE
12 – NON-CONTROLLING INTEREST



The
Company’s Non-Controlling Interest recorded in the consolidated financial statements relates to an interest in DynaResource
de México, S.A. de C.V. of 50% through May 13, 2013, and 20% thereafter. Changes in Non-Controlling Interest for the years
ended December 31, 2018 and December 31, 2017, respectively were as follows:



|                                               |  | Year
                                         Ended December
                                         31, 2018 |            | Year
                                         Ended December
                                         31, 2017
|---------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------- | ---------- | --------------------------------------------------------------------------------------------------------------
|                                               |  | (Restated)                                                                                                     |            | (Restated)                                                                                                    
|                                               |  |                                                                                                                |            |                                                                                                               
|Beginning balance                              |  | $                                                                                                              | (5,425,026 | )                                                                                                             
|Operating
    income (loss)                    |  |                                                                                                                | (383,630   | )                                                                                                             
|Share
    of Other Comprehensive Income (loss) |  |                                                                                                                | 197,128    |                                                                                                               
|Ending
    balance                             |  | $                                                                                                              | (5,611,528 | )                                                                                                             



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





NOTE
13 – FAIR VALUE OF FINANCIAL INSTRUMENTS



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





71







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, 2018, and December 31, 2017, the Company’s financial assets were measured at fair value using Level 3 inputs,
with the exception of cash, which was valued using Level 1 inputs. A description of the valuation of the Level 3 inputs is discussed
in Note 11.



|Fair Value Measurement at December 31, 2018
    Using: |  |   |           |  | Quoted
    Prices in Active Markets For Identical Assets (Level 1) |   |   | Significant
        Other Observable Inputs (Level 2) |  |   | Significant
        Unobservable Inputs (Level 3) | 
|------------------------------------------------------ |  | - | --------- |  | ------------------------------------------------------------------ | - | - | ----------------------------------------------------- |  | - | ------------------------------------------------- | 
|                                                       |  |   |           |  |                                                                    |   |   |                                                       |  |   |                                                   | 
|Assets:                                                |  |   |           |  |                                                                    |   |   |                                                       |  |   |                                                   | 
|None                                                   |  |   | -         |  |                                                                    |   | - |                                                       |  |   | -                                                 | 
|Totals                                                 |  | $ | -         |  |                                                                    | $ | - |                                                       |  | $ | -                                                 | 
|                                                       |  |   |           |  |                                                                    |   |   |                                                       |  |   |                                                   | 
|Liabilities:                                           |  |   |           |  |                                                                    |   |   |                                                       |  |   |                                                   | 
|Derivative Liabilities                                 |  | $ | 974,683   |  |                                                                    |   | - |                                                       |  |   | -                                                 | 
|Totals                                                 |  | $ | 974,683   |  |                                                                    | $ | - |                                                       |  | $ | -                                                 | 
|Fair Value Measurement at December
    31, 2017 Using: |  |   |           |  |                                                                    |   |   |                                                       |  |   |                                                   | 
|Assets:                                                |  |   |           |  |                                                                    |   |   |                                                       |  |   |                                                   | 
|None                                                   |  |   | -         |  |                                                                    |   | - |                                                       |  |   | -                                                 | 
|Totals                                                 |  | $ | -         |  |                                                                    | $ | - |                                                       |  | $ | -                                                 | 
|                                                       |  |   |           |  |                                                                    |   |   |                                                       |  |   |                                                   | 
|                                                       |  |   |           |  |                                                                    |   |   |                                                       |  |   |                                                   | 
|Liabilities:                                           |  |   |           |  |                                                                    |   |   |                                                       |  |   |                                                   | 
|Derivative Liabilities                                 |  | $ | 3,181,508 |  |                                                                    |   | - |                                                       |  |   | -                                                 | 
|Totals                                                 |  | $ | 3,181,508 |  |                                                                    | $ | - |                                                       |  | $ | -                                                 | 



NOTE
14 – REVENUE CONCENTRATION



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



For
each of the twelve months ended December 31, 2018 and 2017, one and two customers accounted for 100% of revenue, respectively.



At
both December 31, 2018 and 2017, one customer accounted for 100% of accounts receivable.



NOTE
15 – NOTES PAYABLE



In
June 2017, the Company entered into financing agreements for unpaid mining concession taxes for the period July 1, 2014 to December
31, 2015 in the amount of $533,580. The Company paid an initial 20% payment in the amount of $106,716 and financed the balance
over 36 months at 18% interest.



In
February 2018 the Company entered into a financing agreement for unpaid mining concessions taxes for the year ended December 31,
2016 in the amount of $552,990. The Company paid an initial payment of $110,598 and financed the balance over 36 months at 18%.





72









In
June 2018 the Company entered into financing agreements for the unpaid mining concession taxes for the year ended December 31,
2017 and the period ending June 30, 2018 in the amount of $1,739,392. The Company paid an initial 20% payment of $347,826 and
financed the balance over 36 months at 21.84%







The
following is a summary of the transaction during the years ended December 31, 2018 and 2017:



|Property Holding Taxes June 1,
    2014 – December 31, 2015 |  | $ | 533,580  |  
|----------------------------------------------------------- |  | - | -------- | -
|Initial payment of 20%                                      |  |   | (106,716 | )
|2017 principal payments                                     |  |   | (59,553  | )
|Balance at December
    31, 2017                            |  |   | 367,311  |  



|Exchange Rate Adjustment                                   |  |  | 1,861     |  
|---------------------------------------------------------- |  |  | --------- | -
|Property Holding Taxes January 1, 2016 –
    June 30, 2018 |  |  | 2,292,122 |  
|Initial payment of 20%                                     |  |  | (458,423  | )
|2018 principal payments                                    |  |  | (399,636  | )
|Balance at December
    31, 2018                           |  |  | 1,803,235 |  



|At
        December 31, 2018 future maturities of notes payable are as follows
        Year
        Ending December 31: |  |   |          
|----------------------------------------------------------------------------------------------------------------------- |  | - | ---------
|2019                                                                                                                    |  | $ | 705,320  
|2020                                                                                                                    |  |   | 766,298  
|2021                                                                                                                    |  |   | 331,617  
|Total                                                                                                                   |  | $ | 1,803,235





note
16 – subsequEnt events

The
Company has evaluated events from December 31, 2018, through the date whereupon the financial statements were issued, and has
determined the below described events subsequent to the end of the period.





On
February 18, 2019 the Company entered into a financing agreement for unpaid mining concession taxes for the year ended December
31, 2018 in the amount of $382,286. The Company paid an initial 20% payment of $65,667 and financed the balance over 36 months
at an interest rate of 21%.





Legal
Rulings

May
9, 2019 Arbitration Award against DynaResource and DynaResource de Mexico S.A. de C.V.

As
is described further under Part II – Item 1. Legal Proceedings, on May 9, 2019, the United States district court for the
district of Colorado confirmed an arbitration award against DynaResource, Inc. and DynaResource de Mexico, S.A. de C.V. The district
court’s decision overruled the recommendation previously issued by the magistrate judge to sustain the DynaResource entities’
motion to vacate the arbitration award. Each of DynaResource, Inc. and DynaResource de Mexico, S.A. de C.V. intends to exercise
all its rights, as appropriate, including an appeal.

The
DynaResource entities have filed the below notices in the United State District Coutrt:

México
Circuit Court of Appeals – Notice of Intent for Final Ruling in Favor of DynaResource de México

On
May 27, 2019, The Eleventh Collegiate Court in Civil Matters of the First Circuit (“México Circuit Court”,
and the Court of Final Appeal for Goldgroup Resources Inc.) issued a written notice confirming it was ruling against the Amparo
Appeal filed by Goldgroup Resources Inc. and in Favor of DynaResource de México, S.A. de C.V.In an effort to stay
the issuance of the Ruling by the México Circuit Court, Goldgroup Resources Inc. filed a request to The Supreme Court of
México to review the Amparo Appeal decision.

Rejection
of Goldgroup Resources Inc. request to the Supreme Court of México

On
July 3, 2019 an Official Ruling from The Supreme Court of México was issued to Reject the Request of Goldgroup Resources
Inc. (the “México Supreme Court Rejection to Goldgroup”).The Justices of the First Chamber of the Supreme
Court of Justice of México issued a Rejection Notice to Goldgroup Resources Inc., “due to the lack of legitimacy
presented by Goldgroup”; and in issuing the Rejection Notice to Goldgroup, the Supreme court thereby reverted the Amparo
Appeal back to the México Circuit Court where the Official and Final Ruling from the México Circuit Court is expected
to be issued.



73









México
Circuit Court of Appeals – Notice of Intent for Final Ruling in Favor of DynaResource de México

On
May 27, 2019, The Eleventh Collegiate Court in Civil Matters of the First Circuit (“México Circuit Court”,
and the Court of Final Appeal for Goldgroup Resources Inc.) issued a written notice confirming it was ruling against the Amparo
Appeal filed by Goldgroup Resources Inc. and in Favor of DynaResource de México, S.A. de C.V.In an effort to stay
the issuance of the Ruling by the México Circuit Court, Goldgroup Resources Inc. filed a request to The Supreme Court of
México to review the Amparo Appeal decision.

Rejection
of Goldgroup Resources Inc. request to the Supreme Court of México

On
July 3, 2019 an Official Ruling from The Supreme Court of México was issued to Reject the Request of Goldgroup Resources
Inc. (the “México Supreme Court Rejection to Goldgroup”).The Justices of the First Chamber of the Supreme
Court of Justice of México issued a Rejection Notice to Goldgroup Resources Inc., “due to the lack of legitimacy
presented by Goldgroup”; and in issuing the Rejection Notice to Goldgroup, the Supreme court thereby reverted the Amparo
Appeal back to the México Circuit Court where the Official and Final Ruling from the México Circuit Court is expected
to be issued.

Advances
from Purchaser

September
17, 2019 $1M USD Advance from Purchaser

The
Purchaser of the Company’s precious metals products produced from San Jose de Gracia submitted the next advance to Mineras
de DynaResource S.A. de C.V. in the amount of $1M USD.



NOTE
17 - RESTATEMENT



The
Company has identified certain expenditures amounting to $1,039,391 in 2018, $1,260,873 in 2017 and $569,022 in prior periods
which were improperly capitalized as Mining Equipment. Because the Company has not established proven and probably reserves under
Generally Accepted Accounting Principles (GAAP) in the United States all costs associated with the exploration and development
of mining properties should be expensed including those with useful life exceeding one year. The Company has adjusted the Consolidated
Statements of income and Comprehensive Income for the years ended December 31, 2018 and 2017 and the Balance sheets as of December
31, 2018 and 2017 and the opening Balance Sheet as of January 1, 2017. The following presents the adjustments in detail:





|Equity
    (Deficit) |                                                  |   |                     |   |             |  
|-------------------- | ------------------------------------------------ | - | ------------------- | - | ----------- | -
|                     |                                                  |   |                     |   |             |  
|                     |                                                  |   | Previously          |   |             |  
|                     |                                                  |   | Reported            |   |             |  
|                     |                                                  |   | January
    1, 2017 |   | Adjustments |  
|                     |                                                  |   |                     |   |             |  
|                     | Accumulated
    Deficit                          | $ | (53,551,567)        | $ | (556,847)   | $
|                     |                                                  |   |                     |   |             |  
|                     | Total
    DynaResource Inc. Stockholders' Equity |   | 2,335,462           |   | (556,847)   |  
|                     |                                                  |   |                     |   |             |  
|                     | Non-Controlling
    Interest                     |   | (6,014,573)         |   | (12,175)    |  
|                     |                                                  |   |                     |   |             |  
|                     | TOTAL
    EQUITY (DEFICIT)                       |   | (3,679,111)         |   | (569,022)   |  
|                     |                                                  |   |                     |   |             |  
|                     |                                                  |   |                     |   |             |  









74











|                      |                                                                      |   |                  |   |             |   |                 
|--------------------- | -------------------------------------------------------------------- | - | ---------------- | - | ----------- | - | ----------------
|                      |                                                                      |   |                  |   |             |   |                 
|                      |                                                                      |   |                  |   |             |   |                 
|                      |                                                                      |   | Previously       |   |             |   | Restated        
|                      |                                                                      |   | Reported         |   |             |   | Balance         
|                      |                                                                      |   | Dec
    31, 2017 |   | Adjustments |   | Dec
    31, 2017
|BALANCE
    SHEET:    |                                                                      |   |                  |   |             |  
|                      |                                                                      |   |                  |   |             |   |                 
|                      | Mining
    Equipment and Fixtures (Net of Accumulated  Depreciation) | $ | 1,698,070        | $ | (1,681,663) | $ | 16,407          
|                      |                                                                      |   |                  |   |             |   |                 
|                      | Total Assets                                                         | $ | 11,493,312       | $ | (1,681,663) | $ | 9,811,649       
|                      |                                                                      |   |                  |   |             |   |                 
|                      |                                                                      |   |                  |   |             |   |                 
|                      | Accumulated
    Deficit                                              | $ | (50,898,357)     | $ | (1,672,805) | $ | (52,571,162)    
|                      |                                                                      |   |                  |   |             |   |                 
|                      | Total
    DynaResource Inc. Stockholders' Equity                     |   | 4,982,993        |   | (1,672,805) |   | 3,310,188       
|                      |                                                                      |   |                  |   |             |   |                 
|                      | Non-Controlling
    Interest                                         |   | (5,416,168)      |   | (8,858)     |   | (5,425,026)     
|                      |                                                                      |   |                  |   |             |   |                 
|                      | TOTAL
    EQUITY (DEFICIT)                                           |   | (433,175)        |   | (1,681,663) |   | (2,114,838)     
|                      |                                                                      |   |                  |   |             |   |                 
|                      | TOTAL
    LIABILITIES AND STOCKHOLDERS' EQUITY                       | $ | 11,493,312       | $ | (1,681,663) | $ | 9,811,649       
|                      |                                                                      |   |                  |   |             |   |                 
|                      |                                                                      |   |                  |   |             |   |                 
|INCOME
    STATEMENT: |                                                                      |   |                  |   |             |  
|                      |                                                                      |   |                  |   |             |   |                 
|                      | COSTS
    AND EXPENSES OF MINING OPERATIONS:                         |   |                  |   |             |   |                 
|                      | Mine
    Expansion Costs                                             | $ | 253,231          | $ | 1,260,873   | $ | 1,514,104       
|                      |                                                                      |   |                  |   |             |   |                 
|                      | Depreciation
    and Amortization                                    |   | 153,862          |   | (148,232)   |   | 5,630           
|                      |                                                                      |   |                  |   |             |   |                 
|                      | Total
    Operating Expenses                                         |   | 11,477,656       |   | 1,112,641   |   | 12,590,297      
|                      |                                                                      |   |                  |   |             |   |                 
|                      | NET
    OPERATING INCOME (LOSS)                                      |   | (627,565)        |   | (1,112,641) |   | (1,740,206)     
|                      |                                                                      |   |                  |   |             |   |                 
|                      | OTHER
    INCOME (EXPENSE)                                           |   |                  |   |             |   |                 
|                      | Gain
    on Sale of Assets                                           |   | -                |   | -           |   | -               
|                      |                                                                      |   |                  |   |             |   |                 
|                      | Total
    Other Income (Expense)                                     |   | 3,155,274        |   |             |   | 3,155,274       
|                      |                                                                      |   |                  |   |             |   |                 
|                      | NET
    INCOME (LOSS)  BEFORE TAXES                                  |   | 2,527,709        |   | (1,112,641) |   | 1,415,068       
|                      |                                                                      |   |                  |   |             |   |                 
|                      | NET
    INCOME (LOSS)                                                |   | 2,527,709        |   | (1,112,641) |   | 1,415,068       
|                      |                                                                      |   |                  |   |             |   |                 
|                      | ATTRIBUTABLE
    TO NON-CONTROLLING INTEREST                         |   | 125,501          |   | (3,317)     |   | 122,184         
|                      |                                                                      |   |                  |   |             |   |                 
|                      | NET
    INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS            | $ | 2,479,890        | $ | (1,115,958) | $ | 1,363,932       
|                      |                                                                      |   |                  |   |             |   |                 
|                      | Basic
    Earnings (Loss)  Per Common Share                          | $ | 0.15             | $ | (0.07)      | $ | 0.08            
|                      |                                                                      |   |                  |   |             |   |                 
|                      | Diluted
    Earnings (Loss) Per Common Share                         | $ | 0.14             | $ | (0.06)      | $ | 0.08            
|                      |                                                                      |   |                  |   |             |   |                 
|                      |                                                                      |   |                  |   |             |   |                 







75









|                      |                                                                      |   |                  |   |             |   |                 
|--------------------- | -------------------------------------------------------------------- | - | ---------------- | - | ----------- | - | ----------------
|                      |                                                                      |   |                  |   |             |   |                 
|                      |                                                                      |   | Previously       |   |             |   | Restated        
|                      |                                                                      |   | Reported         |   |             |   | Balance         
|                      |                                                                      |   | Dec
    31, 2018 |   | Adjustments |   | Dec
    31, 2018
|BALANCE
    SHEET:    |                                                                      |   |                  |   |             |  
|                      |                                                                      |   |                  |   |             |   |                 
|                      | Mining
    Equipment and Fixtures (Net of Accumulated  Depreciation) | $ | 2,449,354        | $ | (2,436,872) | $ | 12,482          
|                      |                                                                      |   |                  |   |             |   |                 
|                      | Total Assets                                                         | $ | 13,316,019       | $ | (2,436,872) | $ | 10,879,147      
|                      |                                                                      |   |                  |   |             |   |                 
|                      |                                                                      |   |                  |   |             |   |                 
|                      | Accumulated
    Deficit                                              | $ | (50,723,786)     | $ | (2,430,473) | $ | (53,154,259)    
|                      |                                                                      |   |                  |   |             |   |                 
|                      | Total
    DynaResource Inc. Stockholders' Equity                     |   | 5,138,909        |   | (2,430,473) |   | 2,708,436       
|                      |                                                                      |   |                  |   |             |   |                 
|                      | Non-Controlling
    Interest                                         |   | (5,605,129)      |   | (6,399)     |   | (5,611,528)     
|                      |                                                                      |   |                  |   |             |   |                 
|                      | TOTAL
    EQUITY (DEFICIT)                                           |   | (466,220)        |   | (2,436,872) |   | (2,903,092)     
|                      |                                                                      |   |                  |   |             |   |                 
|                      | TOTAL
    LIABILITIES AND STOCKHOLDERS' EQUITY                       | $ | 13,316,019       | $ | (2,436,872) | $ | 10,879,147      
|                      |                                                                      |   |                  |   |             |   |                 
|                      |                                                                      |   |                  |   |             |   |                 
|INCOME
    STATEMENT: |                                                                      |   |                  |   |             |  
|                      |                                                                      |   |                  |   |             |   |                 
|                      | COSTS
    AND EXPENSES OF MINING OPERATIONS:                         |   |                  |   |             |   |                 
|                      | Mine
    Expansion Costs                                             | $ | 426,896          | $ | 1,039,391   | $ | 1,466,287       
|                      |                                                                      |   |                  |   |             |   |                 
|                      | Depreciation
    and Amortization                                    |   | 278,815          |   | (270,959)   |   | 7,856           
|                      |                                                                      |   |                  |   |             |   |                 
|                      | Total
    Operating Expenses                                         |   | 15,825,066       |   | 768,432     |   | 16,593,498      
|                      |                                                                      |   |                  |   |             |   |                 
|                      | NET
    OPERATING INCOME (LOSS)                                      |   | (1,765,369)      |   | (768,432)   |   | (2,533,801)     
|                      |                                                                      |   |                  |   |             |   |                 
|                      | OTHER
    INCOME (EXPENSE)                                           |   |                  |   |             |   |                 
|                      | Gain
    on Sale of Assets                                           |   | 10,492           |   | 13,223      |   | 23,715          
|                      |                                                                      |   |                  |   |             |   |                 
|                      | Total
    Other Income (Expense)                                     |   | 1,553,851        |   | 13,223      |   | 1,567,074       
|                      |                                                                      |   |                  |   |             |   |                 
|                      | NET
    INCOME (LOSS)  BEFORE TAXES                                  |   | (211,518)        |   | (755,209)   |   | (966,727)       
|                      |                                                                      |   |                  |   |             |   |                 
|                      | NET
    INCOME (LOSS)                                                |   | (211,518)        |   | (755,209)   |   | (966,727)       
|                      |                                                                      |   |                  |   |             |   |                 
|                      | ATTRIBUTABLE
    TO NON-CONTROLLING INTEREST                         |   | 386,089          |   | (2,459)     |   | 383,630         
|                      |                                                                      |   |                  |   |             |   |                 
|                      | NET
    INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS            | $ | 1,251            | $ | (757,668)   | $ | (756,417)       
|                      |                                                                      |   |                  |   |             |   |                 
|                      | Basic
    Earnings (Loss)  Per Common Share                          | $ | 0.00             | $ | (0.04)      | $ | (0.04)          
|                      |                                                                      |   |                  |   |             |   |                 
|                      | Diluted
    Earnings (Loss) Per Common Share                         | $ | 0.00             | $ | (0.04)      | $ | (0.04)          







76









|STATEMENT OF CASH FLOW:                                                        |                                                     |             |             |             |              |          
|------------------------------------------------------------------------------ | --------------------------------------------------- | ----------- | ----------- | ----------- | ------------ | ---------
|                                                                               |                                                     |             |             |             | Previously   |          
|                                                                               |                                                     |             |             |             | Reported     |          
|                                                                               |                                                     |             |             |             | Dec 31, 2017 |          
|CASH FLOWS FROM OPERATING ACTIVITES:                                           |                                                     |             |             |             |              |          
|Net Income (Loss)                                                              | $                                                   | 2,527,709   | $           | (1,112,641) | $            | 1,415,068
|Adjustments to reconcile net loss
    to cash provided by operating activities |                                                     |             |             |             |              |          
|                                                                               | Change in Derivatives                               |             | (1,924,582) |             |              |          
|                                                                               | Depreciation and Amortization                       |             | 153,862     |             | (148,232)    |          
|                                                                               | Gain on Sales of Assets                             |             | -           |             |              |          
|Change in Operating Assets and Liabilities                                     |                                                     |             |             |             |              |          
|                                                                               | Accounts Receivable                                 |             | 130,825     |             |              |          
|                                                                               | Inventories                                         |             | (346,744)   |             |              |          
|                                                                               | Foreign Tax Receivable                              |             | 351,123     |             |              |          
|                                                                               | Other Assets                                        |             | (10,970)    |             |              |          
|                                                                               | Customer Advances                                   |             | -           |             |              |          
|                                                                               | Accounts Payable                                    |             | (47,906)    |             |              |          
|                                                                               | Accrued Liabilities                                 |             | 1,225,269   |             |              |          
|CASH FLOWS Provided BY OPERATING
    ACTIVITIES                                |                                                     | 2,058,586   |             | (1,260,873) |              | 797,713  
|                                                                               |                                                     |             |             |             |              |          
|CASH FLOWS FROM INVESTING ACTIVITIES:                                          |                                                     |             |             |             |              |          
|                                                                               | Purchase of Equipment                               |             | (1,273,189) |             | 1,260,873    |          
|                                                                               | Disposal of Equipment                               |             |             |             |              |          
|CASH FLOWS (USED IN) INVESTING ACTIVITIES                                      |                                                     | (1,273,189) |             | 1,260,873   |              | (12,316) 
|                                                                               |                                                     |             |             |             |              |          
|CASH FLOW FROM FINANCING ACTIVITIES:                                           |                                                     |             |             |             |              |          
|                                                                               | Proceeds from Sale of Common Stock                  |             | 2,500,000   |             |              |          
|                                                                               | Payments of Promissory Notes  -
    Related Parties |             | (5,625)     |             |              |          
|                                                                               | Payments of Long Term Debt                          |             | (166,269)   |             |              |          
|CASH FLOW (USED IN) FINANCING ACTIVITIES                                       |                                                     | 2,328,106   |             | -           |              | 2,328,106
|                                                                               |                                                     |             |             |             |              |          
|                                                                               | Effects of Foreign Exchange                         |             | (1,781,773) |             |              |          
|                                                                               |                                                     |             |             |             |              |          
|NET INCREASE (DECREASE) IN CASH                                                |                                                     | 1,331,730   |             | -           |              | 1,331,730
|                                                                               |                                                     |             |             |             |              |          
|CASH AT BEGINNING OF PERIOD                                                    |                                                     | 2,197,005   |             |             |              | 2,197,005
|                                                                               |                                                     |             |             |             |              |          
|CASH AT END OF PERIOD                                                          | $                                                   | 3,528,735   |             | -           |              | 3,528,735
|                                                                               |                                                     |             |             |             |              |          
|                                                                               |                                                     |             |             |             |              |          
|                                                                               |                                                     |             |             |             |              |          
|                                                                               |                                                     |             |             |             | Previously   |          
|                                                                               |                                                     |             |             |             | Reported     |          
|                                                                               |                                                     |             |             |             | Dec 31, 2018 |          
|CASH FLOWS FROM OPERATING ACTIVITES:                                           |                                                     |             |             |             |              |          
|Net Income (Loss)                                                              | $                                                   | (211,518)   | $           | (755,209)   | $            | (966,727)
|Adjustments to reconcile net loss
    to cash provided by operating activities |                                                     |             |             |             |              |          
|                                                                               | Change in Derivatives                               |             | (2,206,825) |             |              |          
|                                                                               | Depreciation and Amortization                       |             | 278,815     |             | (270,959)    |          
|                                                                               | Gain on Sales of Assets                             |             | (10,492)    |             | (13,223)     |          
|Change in Operating Assets and Liabilities                                     |                                                     |             |             |             |              |          
|                                                                               | Accounts Receivable                                 |             | (751,409)   |             |              |          
|                                                                               | Inventories                                         |             | (680,796)   |             |              |          
|                                                                               | Foreign Tax Receivable                              |             | (113,323)   |             |              |          
|                                                                               | Other Assets                                        |             | (369,054)   |             |              |          
|                                                                               | Customer Advances                                   |             | 1,750,000   |             |              |          
|                                                                               | Accounts Payable                                    |             | 1,480,512   |             |              |          
|                                                                               | Accrued Liabilities                                 |             | 1,342,339   |             |              |          
|CASH FLOWS Provided BY OPERATING
    ACTIVITIES                                |                                                     | 508,249     |             | (1,039,391) |              | (531,142)
|                                                                               |                                                     |             |             |             |              |          
|CASH FLOWS FROM INVESTING ACTIVITIES:                                          |                                                     |             |             |             |              |          
|                                                                               | Purchase of Equipment                               |             | (1,043,322) |             | 1,039,391    |          
|                                                                               | Disposal of Equipment                               |             | 23,715      |             |              |          
|CASH FLOWS (USED IN) INVESTING ACTIVITIES                                      |                                                     | (1,019,607) |             | 1,039,391   |              | 19,784   
|                                                                               |                                                     |             |             |             |              |          
|CASH FLOW FROM FINANCING ACTIVITIES:                                           |                                                     |             |             |             |              |          
|                                                                               | Proceeds from Sale of Common Stock                  |             | -           |             |              |          
|                                                                               | Payments of Promissory Notes  -
    Related Parties |             | (112,500)   |             |              |          
|                                                                               | Payments of Long Term Debt                          |             | (399,636)   |             |              |          
|CASH FLOW (USED IN) FINANCING ACTIVITIES                                       |                                                     | (512,136)   |             | -           |              | (512,136)
|                                                                               |                                                     |             |             |             |              |          
|                                                                               | Effects of Foreign Exchange                         |             | 180,335     |             | -            |          
|                                                                               |                                                     |             |             |             |              |          
|NET INCREASE (DECREASE) IN CASH                                                |                                                     | (843,159)   |             |             |              | (843,159)
|                                                                               |                                                     |             |             |             |              |          
|CASH AT BEGINNING OF PERIOD                                                    |                                                     | 3,528,735   |             | -           |              | 3,528,735
|                                                                               |                                                     |             |             |             |              |          
|CASH AT END OF PERIOD                                                          | $                                                   | 2,685,576   | $           | -           | $            | 2,685,576





In
evaluating whether the Company’s previously issued consolidated financial statements were materially misstated, the Company
considered the guidance in ASC Topic 250, Accounting Changes and Error Corrections, ASC Topic 250-10-S99-1, Assessing Materiality,
and ASC Topic 250-10-S99- 2, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year
Financial Statements.



77









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, 2017. This evaluation was accomplished under the supervision
and with the participation of our chief executive officer / principal executive officer and our financial consultant who concluded
that our disclosure controls and procedures are not effective to ensure that all material information required to be filed in
the annual report on Form 10-K has been made known to them. The evaluation did not include a 404A assessment. For purposes of
this section, the term disclosure controls and procedures 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.



Management’s
Annual Report on Internal Control Over Financial Reporting



Our
management 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 (2013 Internal Control—Integrated Framework) at December 31, 2018. Based on its evaluation, our management concluded
that, as of December 31, 2018, our internal control over financial reporting was not effective. We have identified three areas
which contain material weaknesses. First; the size of the Company and limitations inherent in companies with limited accounting
staff prevent the desired multiple checks and balances prior to processing daily operations. We need more compensating controls.
Though adequate processes are in place and functioning, subsequent reviews are deemed necessary to identify unauthorized transactions.
Secondly, the same inherent current limitation on company staffing requires specialized outside accounting assistance to implement
additional procedures that are effective, and another review to the process, to ensure that all material information required
to be filed in the annual report on Form 10-K has been made known to them. Thirdly as a result of the two previously mention weaknesses
the Company failed to properly apply United State General Accepted Accounting Principles (Gaap) in accounting for certain expenditures
as mining equipment and fixtures and depreciated them over their useful lives. Because the Company does not have proven and probable
reserves under U.S. Gaap as defined in SEC Industry Guide 7 all costs of mine development including items with a useful life greater
than one year should be expensed in the period incurred. As a result, we have restated our previously issued financial statement
as detail in Note 17 to the financial statements. 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. The material weaknesses identified
will be addressed with the implementation of revised internal control procedures to be developed and approved by the Board of
Directors.





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.





78









Changes
in Internal Controls over Financial Reporting



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



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.



ITEM
9B.    OTHER INFORMATION



None.



PART
III



ITEM
10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE



The
Company has a code of business conduct and ethics that applies to all employees, officers and directors. The code of business
conduct and ethics is available on our website at www.dynaresource.com and we will post
any amendments to, or waivers from, the code of ethics on that website.



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. All Directors
have been elected to serve through 2018. 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                           |  | 61  |  | Chairman of The
    Board                                                       |  | May 1995      
|1303 Regency Court                                    |  |     |  | CEO/President                                                                   |  | May 1997      
|Southlake, Texas
    76092                            |  |     |  | Treasurer                                                                       |  | May 1997      
|                                                      |  |     |  |                                                                                 |  |               
|Dr. Jose Vargas
    Lugo                              |  | 58  |  | Director of Operations
    - México, President - México                         |  | August 2011   
|Enrique Dunant Y5
    de Mayo #963 L-3                |  |     |  | Director;                                                                       |  | May 2013      
|Fracc, Los Parques                                    |  |     |  |                                                                                 |  | August 2013   
|Guamuchil, Sin CP
    81460                           |  |     |  |                                                                                 |  |               
|                                                      |  |     |  |                                                                                 |  |               
|Eduardo Luna                                          |  | 74  |  | Senior Advisor to
    President of Mineras de DynaResource;                     |  | February 2017 
|Sierra Grande #134                                    |  |     |  | Director                                                                        |  | February 2017 
|Fraccionamiento
    Lomas de Mazatlán                 |  |     |  |                                                                                 |  |               
|Mazatlán,
    Sinaloa México 82110                    |  |     |  |                                                                                 |  |               
|                                                      |  |     |  |                                                                                 |  |               
|Pedro Ignacio Teran
    Cruz                          |  | 59  |  | Executive Vice President,
    Director of Exploration and Resource Development; |  | 2008-2013;    
|Sierra Grande #134                                    |  |     |  | Board Member                                                                    |  | March 2016    
|Fraccionamiento
    Lomas de Mazatlán                 |  |     |  |                                                                                 |  |               
|Mazatlán,
    Sinaloa México 82110                    |  |     |  |                                                                                 |  | December 2014 
|                                                      |  |     |  |                                                                                 |  |               
|John C. Wasserman                                     |  | 79  |  | Independent Director                                                            |  | December 2015 
|222 W. Las Colinas
    Blvd.                          |  |     |  |                                                                                 |  |               
|Suite 1910 North
    Tower                            |  |     |  |                                                                                 |  |               
|Irving, TX. 75039                                     |  |     |  |                                                                                 |  |               
|                                                      |  |     |  |                                                                                 |  |               
|Dale G. Petrini                                       |  | 64  |  | Independent Director                                                            |  | December 2016 
|222 W. Las Colinas
    Blvd.                          |  |     |  |                                                                                 |  |               
|Suite 1910 North
    Tower                            |  |     |  |                                                                                 |  |               
|Irving,
                                    TX. 75039 |  |     |  |                                                                                 |  |               
|Philip K. Rose                                        |  | 30  |  | Independent Director                                                            |  | July 2015     
|222 W. Las Colinas
    Blvd.                          |  |     |  |                                                                                 |  |               
|Suite 1910 North
    Tower                            |  |     |  |                                                                                 |  |               
|Irving, TX. 75039                                     |  |     |  |                                                                                 |  |               







79









|                                      |  |    |  |                                                              |  |              
|------------------------------------- |  | -- |  | ------------------------------------------------------------ |  | -------------
|Bradford J. Saulter                   |  | 59 |  | Vice President –
    Investor Relations                      |  | May 1998     
|7618 Straits Lane                     |  |    |  |                                                              |  |              
|Rowlett, Texas 75088                  |  |    |  |                                                              |  |              
|Nicolas Miguel                        |  |    |  | Controller for Mexico
    Operations;                        |  | May 2017     
|Sierra Grande #134                    |  |    |  |                                                              |  |              
|Fraccionamiento
    Lomas de Mazatlán |  |    |  |                                                              |  |              
|Mazatlán,
    Sinaloa México 82110    |  |    |  |                                                              |  |              
|                                      |  |    |  |                                                              |  |              
|Raul Garcia Reimbert                  |  | 57 |  | Special Advisor
    to President of Mineras de DynaResource; |  | November 2016
|Sierra Grande #134                    |  |    |  |                                                              |  |              
|Fraccionamiento
    Lomas de Mazatlán |  |    |  |                                                              |  |              
|Mazatlán,
    Sinaloa México 82110    |  |    |  |                                                              |  |              





K.W.
(“K.D.”) Diepholz. Mr. Diepholz has been involved in the resource sectors, primarily as an investor/entrepreneur,
since 1980. He founded KWD Properties Corp. an Oil and Gas exploration and production company in 1983 and served as an executive
manager to this Oil and Gas concern, and as a General partner to several limited partnerships. Mr. Diepholz has served in a variety
of capacities with DynaResource, Inc. from 1994 to the present, and has served as Chairman of the Board, President, CEO and Treasurer
since 1995. Mr. Diepholz has special skills in the areas of negotiation, business development, project planning and management,
corporate financing, acquisition analysis, investment program interpretation and structuring, and executive management. Mr. Diepholz
has been instrumental to the Company in the negotiations of the following: 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 in March 2000; the acquisition
and consolidation of several outstanding Concessions at the San José de Gracia from previous Mexican owners during 2000-2003;
the direction and management of the test mining and pilot mill operations at San José de Gracia during 2003-2006; the negotiation
of the Stock Purchase/Earn In Agreement in 2006; the negotiation of the surface rights agreement with the Santa Maria Ejido in
2013; the negotiation of the financing agreement with Golden Post Rail, LLC, and the general financing of, and the general management
of the Company since inception. In addition to his roles with the Company, Mr. Diepholz serves as Chairman and CEO of DynaResource
Nevada, Inc., an affiliated company, and as President of DynaNevada de Mexico, a wholly owned subsidiary of DynaResource Nevada
Inc. Mr. Diepholz is also the current President of the following subsidiaries of the Company in Mexico: DynaResource de Mexico,
Mineras de DynaResource, and DynaResource Operaciones.



Dr.
Jose Vargas Lugo. Dr. Vargas is a licensed physician with graduate from the Universidad Nacional Autonoma de México
(UNAM) and is a 4th year law student at Universidad Autonoma de Sinaloa (UAS). Dr. Vargas commenced his involvement with the mining
business with Minera Industrial Peñoles as a Medical Assistant to the Mining Services Division of Peñoles in Fresnillo,
Zacatecas. Since 1993, Dr. Vargas has been a supplier of industrial goods and services in and around the municipalities of Sinaloa
de Leyva and Mocorito Sinaloa. Dr. Vargas has worked with companies such as Compañia Minera El Rosarito, which was conducting
operations at San Jose de Gracia during the period 1993 – 1995. Dr. Vargas later provided services and supplies to Mineras
Finesterre at San Jose de Gracia, and to Minera Pangea, which was owned by Queenstake Resources, then Nevada Pacific, and now
US. Gold. Dr. Vargas began working with DynaResource de México in spring 2000; as it commenced activities to acquire and
consolidate the San Jose de Gracia District. Over the past + 10 Years, Dr. Vargas has proven to be an integral part of the Company’s
activities at San Jose de Gracia and in Sinaloa State; involved in all facets of the Company’s business. Dr. Vargas has
proven instrumental in the areas of public relations, community relations, governmental affairs, environmental matters, and overall
management of the company’s business activities in México.



Eduardo
Luna. Mr. Luna is a respected and successful senior executive with over 40 years’ experience in the mining industry.
Mr. Luna’s experience includes serving as a Member of the Board of Directors for major mining companies which have achieved
success at the highest level of the mining industry. Mr. Luna currently serves as a member of the Board of Directors of Silver
Wheaton. Mr. Luna has also served as a Member of the Board of Directors of Goldcorp Inc., Alamos Gold Inc., and Primero Mining
Corp.



In
addition to his roles on company boards, Mr. Luna served in a variety of operational capacities. From 1991 to 2005, Mr. Luna served
as President of Luismin SA de CV in Mexico, which operated the Tayoltita Project for Goldcorp in Mexico. Mr. Luna also served
as an Executive Vice President of Goldcorp. More recently, Mr. Luna served as President of Mexican Operations for Primero Mining
from 2010-2015, the time frame during which Primero Mining operated the Tayoltita Project.



During
his distinguished career, Mr. Luna has received several mining industry recognitions and appointments, which include:



|● | National
    Mining Award, Mexico, 1997;
|- | ----------------------------------------



|● | President
    of the Mexican Chamber of Mines;
|- | ----------------------------------------------







80







|● | President
    of the Consulting Board for the School of Mines, Universidad de Guanajuato;
|- | -----------------------------------------------------------------------------------------



|● | Member
    of the Advisory Boards of the School of Mines of National University of Mexico and University of Zacatecas;
|- | ----------------------------------------------------------------------------------------------------------------------



|● | President
    of The Silver Institute 2002 – 2003.
|- | --------------------------------------------------



Mr.
Luna received a Bachelor’s degree in Mining Engineering from Universidad de Guanajuato, 1971; an MBA from Tecnológico
de Monterrey, 1979; and an Advanced Management degree from Harvard Business School.



In
1997 Mr. Luna was appointed Trustee of Fundación Pro Niños de la Calle, a charity that works with children living
on the streets of Mexico City.



Pedro
Ignacio Teran Cruz. Mr. Teran is a graduate Geologist from the Universidad de Sonora, México. He has over 28 years’
experience in mineral exploration, mine development is a successful and respected Geological Consultant in México and is
credited with defining significant resources at several projects. From 1986 to 1992, he was Project Geologist for Minera Real
de Angeles, SA de CV (Frisco/Placer Dome Inc, now Alamos Gold), in which under his participation, explored and discovered the
"Mulatos Gold Deposit" Sonora, México, and later as a Project Manager, the "San Felipe Gold Project"
BC, México, both now in production. From 1992 to 1996, Mr. Teran worked as a Mine Geologist with Hecla Mining Co and explored
and advanced into production the open pit "La Choya Gold Mine". From 1996 to 1999, Mr. Teran worked as Geology Superintendent
for Compañia Minera Lluvia de Oro (Santa Cruz Gold, Now NWM Mining Corp.) and at the open pit "Lluvia de Oro Gold
Mine", Sonora, México. From 1999 to 2001, Mr. Teran worked as a Consultant Geology performing due diligences for Tara
Gold Resources in several projects located in la Sierra Madre Occidental. From 2001 to 2005, he worked as Manager of Geology Department
for the Compañia Minera Pangea SA de CV (Queenstake Resources, Nevada Pacific and now McEwen Mining), in the "El Magistral
Gold Mine" Sinaloa, México. Under his direction of exploration, the reserves were increased substantially and formed
part of the team to put the project in production. During 2005 and part of 2006, Mr. Teran worked as Data Manager for Linear Gold
Corp. in the "Ixhuatan Project" Chiapas, México. He built the computer block model and Resources Estimation.
From 2006 to 2008, he worked as Project Manager for Pediment Exploration Ltd., now Argonaut Gold Inc. in the "San Antonio
Gold Project" located in BCS, México.



Since
2008, Mr. Teran began working as a Consultant Geologist with DynaResource, Inc. in the "San Jose de Gracia Gold Project"
located in Sinaloa, México, an advanced exploration project. Mr. Teran now is working 100% of his time with the DynaResource
Team and with full focus at San Jose de Gracia.



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).



John
C. Wasserman. Mr. Wasserman is a Partner with Wasserman, Bryan, Landry & Honold, LLP Law firm, Perrysburg Ohio. He is
a stockholder of the Company and brings the following credentials to the Board of Directors:



University
of Detroit (PHB); Ohio State University, Law School (JD) – Graduate work in business administration; University of Toledo
– Undergraduate and Graduate work in business administration; Admitted to practice before Ohio Supreme Court, U.S. Supreme
Court, U.S. District Court for Northern District of Ohio, Sixth Circuit U.S. Court of Appeals; Member, Ohio State, Lucas County,
Ohio (past President) and Toledo, Ohio Bar Associations; Board Member, Corporate and Board Secretary, Blue Water Satellite, Inc.;
Board Member, TechTol of Toledo, Inc.; Member and current chair of the City of Waterville, Ohio Planning Commission; Member of
the ten year Plan Committee of Waterville, Ohio; Member, Past Board Member, Secretary Treasurer and President of Toledo, Ohio
Rotary; Past Assistant District Governor, Area 4 of District 6600 of Rotary International; Member of Timberlake Investments, LLC,
an investment LLC; Board Member, Victory Center of Toledo, Ohio; Member, Succession Committee, DynaResource, Inc.; Member/Managing
Partner/Member, numerous LLCs/Partnerships for real estate developments and investments.



Mr.
Wasserman has been employed with the Ohio Attorney General office, as Special Counsel; and with Ohio Bureau of Unemployment, as
Hearing Officer; and as a Former Acting Judge, Maumee, Ohio, Municipal Court; Past Toledo, Ohio Exchange Club Member (President).
Mr. Wasserman was selected one of Jaycees Top Ten Young men of Toledo, Ohio; was Co Author – Management Considerations of
a Business Entity in the Environment of Chapter XI Reorganization Proceedings Under the New Federal Bankruptcy Code Effective
October 1, 1979 published in Midwest Business Administration Association; was an Expert witness in real estate mandamus case:
Lucas County Common Pleas Court, State ex rel Ad Hoc Committee of Waterville Citizens for Initiative and Referendum Petitions,
Etc., Realtor vs. City of Waterville and Dale Knepper, Clerk of Council, City of Waterville, Respondents, Case No. CI-2013-1137.





81









Dale
G. Petrini. Mr. Petrini brings over 40 years of extensive international project and manufacturing experience to the Board
of DynaResource, Inc. During his 40+ years with The Dow Chemical Company, Houston, Texas, Mr. Petrini was the engineering sponsor,
advisor and led the project development for several international mega projects totally over $50 billion USD. In his latest role
for Dow, he was responsible for the project development of mega project growth opportunities in Latin America.



Previously,
Mr. Petrini was responsible for Global Construction Management and Global Capital Procurement for Dow with offices and personnel
located throughout the world. In addition, he was the Plant Manager for several production units and led the respective business
management teams.



Mr.
Petrini earned his civil engineering degree from The University of Michigan and is a registered licensed professional engineer.
He holds dual citizenship in the US and EU.



Philip
K. Rose. Mr. Rose is the appointee to the Board of Directors by Golden Post, LLC., the holder of the Series C convertible
preferred shares. Mr. Rose is a 2011 graduate of Texas Christian University in Fort Worth, Texas.



Consultants



Nicolas
Miguel Padilla (Comptroller in México):



Mr.
Padilla received his Degree in Public Accounting from the Universidad Michoacana de San Nicolás de Hidalgo, School Generation
1978-1982. Mr. Padilla is Certificated by CENEVAL Año 2010 Professional Patent No. 7330509.



Most
recently, Mr. Padilla was employed by Primero Servicios Mineros, S.A. de C.V., Primero Mining Corp., at the Unidad Tayoltita;
where he was Comptroller-Manager from February 2014 Until September 2016. Prior to serving as Comptroller for Primero, Mr.
Padilla served as Superintendent of Administration from July 2010 to July 2011, and Mr. Padilla served as Manager of Administration
and Services-Comptroller from August 2011 to January 2014.



Previous
to serving Primero, Mr. Padilla served as Chief Accountant for Los Filos S.A. de C.V., a subsidiary of Goldcorp, Inc. during the
period April 2004 to June 2010. And before serving Los Filos S.A. de C.V. as Chief Accountant, Mr. Padilla served as Superintendent
of Administration-Comptroller for Luismin, S.A. de C.V., a subsidiary of Goldcorp, Inc., during the period November 1990 to March
2004.



Mr.
Padilla joined Mineras de DynaResource S.A. de C.V., a subsidiary of DynaResource, Inc., as Comptroller-Mexico, in June 2017.



Raul
Garcia Reimbert. (Security and Risk Advisor)



Mr.
Garcia Reimbert is a graduated engineer in Mining and Metallurgist and Lawyer from the Universidad Nacional Autonoma de Mexico,
he also has a Master as a Mine Expert Engineer from the Ecole des Mines, Nancy, France and several specializations in Holistic
Risk Management, Crisis Management and Business Administration that provides over 35 years of experience in the mining industry
and risk management activities. Mr. Garcia Reimbert is the fifth generation of miners in his family.



Mr. 
Garcia Reimbert served as Plan Engineer at SICARTSA (1981 -1983) and as Corporate Risk Manager at Grupo Peñoles / Fresnillo
(1983 - 2011). From 2011 up to date, Mr. Garcia Reimbert is the CEO of Cabinet Reimbert, a company specialized in Risk Management,
Security, Environmental, Community and Legal Solutions for the Mining industry and others. His portfolio includes global and local
mining companies, global manufacturing companies, as well as governmental agencies.



Mr.
Garcia Reimbert was also a professor for 15 years at the Universidad Nacional Autonoma de Mexico, and from 2015 at Federal Governmental
agencies. Mr. Garcia Reimbert also serves as the National Treasurer of The Mexican Mines, Metallurgists, and Geologist Engineers
Society. Mr. Gracia Reimbert has received recognitions as The Best Mexican Risk Manager in 1999 and One of the Most Influential
Security Specialists in Mexico for 2016.



Mr.
Garcia Reimbert, was retained as Special Advisor to DynaResource in November 2016.



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.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





82











ITEM
11.     EXECUTIVE COMPENSATION



The
following officers received the following compensation for the years ended December 31, 2018 and 2017. These officers(*) do not
have employment contracts with the Company.



|Name
    and principal position             |  | Year |  | Salary   |  | Bonus |  | Stock
        Awards |  | Option
        Awards |  | Non-equity
        incentive
        plan compensation |  | Nonqualified
    deferred compensation |  | All
                                         other
        compensation
        *
|------------------------------------------- |  | ---- |  | -------- |  | ----- |  | -------------------- |  | --------------------- |  | ------------------------------------------------------ |  | -------------------------------------- |  | ---------------------------------------------------------------------------------
|K.W. (“K.D.”)
    Diepholz,                 |  | 2018 |  | $250,000 |  | None  |  | None                 |  | None                  |  | None                                                   |  | None                                   |  | None                                                                             
|CEO/President                               |  | 2017 |  | $251,039 |  | None  |  | None                 |  | None                  |  | None                                                   |  | None                                   |  | $45,000                                                                          
|                                            |  |      |  |          |  |       |  |                      |  |                       |  |                                                        |  |                                        |  |                                                                                  
|Dr. Jose Vargas
    Lugo; EVP., s           |  | 2018 |  | $90,000  |  | None  |  | None                 |  | None                  |  | None                                                   |  | None                                   |  | None                                                                             
|President of México
    Operation           |  | 2017 |  | $90,000  |  | None  |  | None                 |  | None                  |  | None                                                   |  | None                                   |  | None                                                                             
|                                            |  |      |  |          |  |       |  |                      |  |                       |  |                                                        |  |                                        |  |                                                                                  
|Eduardo Luna                                |  | 2018 |  | $166,670 |  | None  |  | None                 |  | None                  |  | None                                                   |  | None                                   |  | None                                                                             
|Sr. Advisor to                              |  | 2017 |  | $166,670 |  | None  |  | None                 |  | None                  |  | None                                                   |  | None                                   |  | None                                                                             
|President of Mineras
    de DynaResource    |  |      |  |          |  |       |  |                      |  |                       |  |                                                        |  |                                        |  |                                                                                  
|                                            |  |      |  |          |  |       |  |                      |  |                       |  |                                                        |  |                                        |  |                                                                                  
|*Rene L.F. Mladosich;                       |  | 2018 |  | None     |  | None  |  | None                 |  | None                  |  | None                                                   |  | None                                   |  | None                                                                             
|former GM of San
    Jose de Gracia Project |  | 2017 |  | $54,250  |  | None  |  | None                 |  | None                  |  | None                                                   |  | None                                   |  | None                                                                             
|                                            |  |      |  |          |  |       |  |                      |  |                       |  |                                                        |  |                                        |  |                                                                                  
|Pedro Ignacio Teran
    Cruz,               |  | 2018 |  | $120,000 |  | None  |  | None                 |  | None                  |  | None                                                   |  | None                                   |  | None                                                                             
|Dir. of Exp. and
    Resource Dev.          |  | 2017 |  | $120,000 |  | None  |  | None                 |  | None                  |  | None                                                   |  | None                                   |  | None                                                                             





83











|                       |  |      |  |         |  |      |  |      |  |      |  |      |  |      |  |        
|---------------------- |  | ---- |  | ------- |  | ---- |  | ---- |  | ---- |  | ---- |  | ---- |  | -------
|Bradford J. Saulter,   |  | 2018 |  | $90,000 |  | None |  | None |  | None |  | None |  | None |  | None   
|VP, Investor Relations |  | 2017 |  | $90.000 |  | None |  | None |  | None |  | None |  | None |  | $20,000



|David
    Orta          |  | 2018 |  | $125,000 |  | None |  | None |  | None |  | None |  | None |  | None
|----------------------- |  | ---- |  | -------- |  | ---- |  | ---- |  | ---- |  | ---- |  | ---- |  | ----
|Controller Dyna
    USA |  | 2017 |  | None     |  | None |  | None |  | None |  | None |  | None |  | None





*
As disclosed in the financial statements, the Company paid consulting fees to Dynacap Group, Ltd.





|                                            |  |                                                                         | Option
    Awards |                                                                            | Stock
    Awards
|------------------------------------------- |  | ----------------------------------------------------------------------- | ----------------- | -------------------------------------------------------------------------- | ----------------
|Name
    and principal position             |  | Number
    of Securities Underlying Unexercised options (#) exercisable |                   | Number
    of Securities Underlying Unexercised options (#) un-exercisable |                 
|                                            |  |                                                                         |                   |                                                                            |                 
|K.W. (“K.D.”)
    Diepholz                  |  | None                                                                    |                   | None                                                                       |                 
|CEO/President                               |  |                                                                         |                   |                                                                            |                 
|                                            |  |                                                                         |                   |                                                                            |                 
|Dr. Jose Vargas
    Lugo                    |  | None                                                                    |                   | None                                                                       |                 
|President of México
    Operations          |  |                                                                         |                   |                                                                            |                 
|                                            |  |                                                                         |                   |                                                                            |                 
|Rene L.F. Mladosich                         |  | None                                                                    |                   | None                                                                       |                 
|GM of San Jose de
    Gracia Project (2016) |  |                                                                         |                   |                                                                            |                 
|                                            |  |                                                                         |                   |                                                                            |                 
|Robert (“Chip”)
    Allender, Jr.           |  | None                                                                    |                   | None                                                                       |                 
|Director of Mining
    Operations (2016)    |  |                                                                         |                   |                                                                            |                 
|                                            |  |                                                                         |                   |                                                                            |                 
|Pedro Ignacio Teran
    Cruz; Dir. of Expl. |  | None                                                                    |                   | None                                                                       |                 
|                                            |  |                                                                         |                   |                                                                            |                 
|David Orta                                  |  | None                                                                    |                   | None                                                                       |                 
|Controller Dyna
    USA                     |  |                                                                         |                   |                                                                            |                 
|                                            |  |                                                                         |                   |                                                                            |                 
|Bradford J. Saulter                         |  | None                                                                    |                   | None                                                                       |                 
|                                            |  |                                                                         |                   |                                                                            |                 
|John C. Wasserman                           |  | None                                                                    |                   | None                                                                       |                 







84











|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 common
stock of the Company as of December 31, 2018.  The following table sets forth the information based on 17,722,825(1) common
shares issued and outstanding (1) as of December 31, 2018.



|COMMON
    STOCK                                 |  | Beneficial
    Owner                                                                            |  | Address                                                                                                                                 |  | Common
    Shares |  | Percent
    Ownership
|------------------------------------------------ |  | ----------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- |  | ---------------------
|                                                 |  |                                                                                                 |  |                                                                                                                                         |  |                   |  |                      
|Common Stock                                     |  | K.W.
                                    (“K.D.”) Diepholz
        Chairman
        / CEO       |  | 222
                                    W. Las Colinas Blvd.
        Suite
        1910 North Tower
        Irving,
        Texas 75039 |  | 1,865,100         |  | 10.50%               
|Common
                                    Stock |  | Mineras
                                    de DynaResource
        SA
        de CV.           |  | CP
                                    82110, Mazatlán, Sinaloa, Mexico                                                                 |  | 504,300           |  | 2.8%                 
|Common
                                    Stock |  | Gareth Nichol                                                                                   |  | Denver,
    Colorado                                                                                                                    |  | 2,333,333         |  | 13.16%               
|Common Stock                                     |  | Dr.
                                    Jose Vargas Lugo
        EVP,
        Director          |  | Plutarco
                                    Elías Calles 47
        Guamúchil
        Sin. Mex. 81450                                  |  | 274,508           |  | 1.5%                 
|                                                 |  |                                                                                                 |  |                                                                                                                                         |  |                   |  |                      
|Common
                                    Stock |  | Pedro
                                    I. Teran Cruz
        EVP;
        Director           |  | Hermosillo,
    Sonora Mexico                                                                                                           |  | 37,500            |  | .21%                 
|Common
                                    Stock |  | Bradford
                                    J. Saulter
        VP.,
        Investor Relations |  | 222
                                    W. Las Colinas Blvd.
        Suite
        1910 North Tower
        Irving,
        Texas 75039 |  | 124,439           |  | .70%                 
|Common
                                    Stock |  | John
                                    C. Wasserman
        Director;                         |  | Waterville,
                                    Ohio 43566                                                                              |  | 134,389           |  | .758%                
|Common
                                    Stock |  | Dale
                                    G. Petrini
        Director                            |  | Houston,
    Texas 77027                                                                                                                |  | 156,330           |  | .935%                
|Common
                                    Stoc  |  | Eduardo
                                    Luna;
        Director                              |  | Mexico
                                    City; Mexico                                                                                 |  |                   |  |                      
|**                                               |  | Philip
                                    A. Rose (2)
        Director                         |  | Westlake,
    Texas                                                                                                                     |  |                   |  |                      
|                                                 |  |                                                                                                 |  |                                                                                                                                         |  |                   |  |                      
|                                                 |  | All Officers, Directors
    and Beneficial owners as a Group (10 holders)                       |  |                                                                                                                                         |  | 5,429,899         |  | 30.64
    %          







85









|(1) | Does
    Not Include (i) 1,733,221 shares of common stock issuable upon the conversion of 1,733,221 shares of Series C Convertible
    Preferred Stock, which are currently convertible, and (ii) 2,166,527 shares of common stock issuable upon the exercise of
    a warrant, which is exercisable, and subsequent conversion into common shares.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Mr.
    Rose is a Director of the Company, elected by the holder of the Series C Preferred Shares.
|--- | --------------------------------------------------------------------------------------------------



No
officer or director holds options which are either (a) vested or (b) will vest within 60 days.



OPTIONS/WARRANTS



The
officers and directors and those 5% beneficial owners held the following options/warrants as of December 31, 2017:



None



PREFERRED
SHARES (SERIES A)



|Preferred
    Series |  | Beneficial
    Owner                                                            |  | Address                                                                                      |  | Preferred
    Shares |  | Percent
    Ownership
|-------------------- |  | ------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------- |  | -------------------- |  | ---------------------
|Series
    “A”       |  | K.W.
                                    (“K.D.”)
        Diepholz,
        CEO |  | 1303
                                    Regency Court
        Southlake,
        Texas76092 |  | 1,000                |  | 100.0%               





PREFERRED
SHARES (SERIES C)



|Preferred
    Series |  | Beneficial
    Owner |  | Address                                                                                      |  | Preferred
    Shares |  | Percent
    Ownership
|-------------------- |  | -------------------- |  | -------------------------------------------------------------------------------------------- |  | -------------------- |  | ---------------------
|Series
    “C”       |  | Golden
    Post LLC. |  | 1110
                                    Post Oak Place
        Westlake,
        Texas76262 |  | 1,733,221            |  | 100.0%               



|ITEM
    13. | CERTAIN RELATIONSHIPS
    AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|------------ | -----------------------------------------------------------------------------



Dynacap
Group Ltd.



The
Company paid $113,750 and $165,250 to Dynacap Group, Ltd. (“Dynacap”, an entity controlled by the CEO of the Company)
for consulting and other fees during the years ended December 31, 2018 and 2017, respectively. Dynacap retained two subcontractors
who provided accounting, administrative and executive support services to the Company during recent years.



Cash
Advances by Management



None



Stock
Issued to Management



None



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 and Form 10-Q(s) or services that are normally provided
by the accountant in connection with statutory and regulatory filings or engagements, for fiscal years 2018 and 2017 was $146,780
and $100,000, respectively.



(2)
Audit Related Fees



None



(3)
Tax Fees



None







86









(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.







87











PART
IV



ITEM
15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES



The
exhibits listed in the accompanying exhibit index are filed (except where otherwise indicated) as part of this report.



|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.



*
Filed herewith.



ITEM
16. 10K SUMMARY



|              
|--------------
|Not Applicable







Exhibit
Number; Name of Exhibit







|31.1 | Certification
    of Chief Executive Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley
    Act of 2002
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------







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



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























88











SIGNATURES



In
accordance with Section 13 or 15(d) of the Exchange Act, the Company caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.





|                               | DYNARESOURCE,
    INC. |                                                                                         
|------------------------------ | ---------------------- | ----------------------------------------------------------------------------------------
|                               |                        |                                                                                         
|Dated:
     September 23, 2019 | By:                    | /s/ K.W.
    (“K.D.”) DIEPHOLZ                                                          
|                               |                        | K.W.
    (K.D.) Diepholz, Chairman of the Board of Directors and Chief Executive Officer
|                               |                        |                                                                                         





In
accordance with the Exchange Act, this Report has been signed below by the following persons on behalf of the Company and in the
capacities and on the dates indicated.





|Signature                      |  | Title                                                                                            |  | Date              
|------------------------------ |  | ------------------------------------------------------------------------------------------------ |  | ------------------
|                               |  |                                                                                                  |  |                   
|/s/ K.W.
    (“K.D.”) DIEPHOLZ |  | Chairman of the Board of Directors and Chief
    Executive Officer (Principal Executive Officer) |  | September 23, 2019
|K.W. (K.D.) Diepholz           |  |                                                                                                  |  |                   
|                               |  |                                                                                                  |  |                   
|/s/ K.W.
    (“K.D.”) DIEPHOLZ |  | Acting Chief Financial Officer (Principal Financial
    and Accounting Officer)                  |  | September 23, 2019
|K.W. (K.D.) Diepholz           |  |                                                                                                  |  |                   













89