SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-Q





(Mark One)



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



For the quarterly period ended June 30, 2012



OR



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



From the transition period ___________ to ____________.



Commission
File Number 0-53237



DYNARESOURCE,
INC.

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





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







222 W Las Colinas
Blvd., Suite 744 East Tower, Irving, Texas 75039

(Address of principal executive offices)



(972) 868-9066

(Issuer's telephone number)



N/A

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



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

Yes [X] No [ ]



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

| |                             |  |                              
| | --------------------------- |  | -----------------------------
| | Large Accelerated Filer [ ] |  | Accelerated Filer [ ]        
| | Non-Accelerated Filer [ ]   |  | Smaller Reporting Company [X]



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



Yes [ ] No [X].



As of August 17, 2012, there were 10,761,468 shares of Common Stock
of the issuer outstanding.











TABLE OF CONTENTS





|               |                                                                   |        
|-------------- | ----------------------------------------------------------------- | -------
|PART I.        | FINANCIAL STATEMENTS                                              |        
|               |                                                                   |        
|ITEM 1.        | Financial Statements                                              | 3      
|               | Notes to Financial Statements                                     | 7 – 16 
|               |                                                                   |        
|ITEM 2.        | Management's Discussion and Analysis or
    Plan of Operation     | 17 – 30
|ITEM 3.        | Quantitative and Qualitative
        Disclosure About Market Risk | 30     
|ITEM 4.        | Controls and Procedures                                           | 31     
|               |                                                                   |        
|               |                                                                   |        
|PART II.       | OTHER INFORMATION                                                 |        
|               |                                                                   |        
|ITEM 1.        | Legal Proceedings                                                 | 32     
|               |                                                                   |        
|ITEM 2.        | Unregistered Sales of Securities and Use
    of Proceeds          | 32     
|               |                                                                   |        
|ITEM 3.        | Default Upon Senior Securities                                    | 32     
|               |                                                                   |        
|ITEM 4.        | Mine Safety Disclosures                                           | 32     
|               |                                                                   |        
|ITEM 5.        | Other Information                                                 | 32     
|               |                                                                   |        
|ITEM 6.        | Exhibits and Reports on Form 8-K                                  | 32     
|               |                                                                   |        
|               |                                                                   |        
|CERTIFICATIONS |                                                                   |        
|EXHIBIT 31.1   | CHIEF EXECUTIVE OFFICER CERTIFICATION                             |        
|               |                                                                   |        
|EXHIBIT 31.2   | CHIEF FINANCIAL OFFICER CERTIFICATION                             |        
|               |                                                                   |        
|EXHIBIT 32.1   | CERTIFICATION PURSUANT TO 18 U.S.C. SECTION
    1350              |        
|               |                                                                   |        
|               |                                                                   |        



2







DYNARESOURCE, INC.

(An Exploration Stage Company)

Consolidated Balance Sheets

June 30, 2012 and December 31, 2011



|                                                                                              |  | June 30, 2012 |             | December 31, 2011
|--------------------------------------------------------------------------------------------- |  | ------------- | ----------- | -----------------
|                                                                                              |  | (Unaudited)   |             | (Audited)        
|ASSETS                                                                                        |  |               |             |                  
|Current Assets:                                                                               |  |               |             |                  
|Cash and Cash Equivalents                                                                     |  | $             | 2,078,170   |                  
|Accounts Receivable – Related Party                                                           |  |               | 46,604      |                  
|Foreign Tax Receivable                                                                        |  |               | 33,140      |                  
|Other Current Assets                                                                          |  |               | 53,825      |                  
|Total Current Assets                                                                          |  |               | 2,211,739   |                  
|                                                                                              |  |               |             |                  
|Fixed Assets:                                                                                 |  |               |             |                  
|Mining Camp Equipment and Fixtures (Net of Accumulated Depreciation of $753,685 and $705,511) |  |               | 921,274     |                  
|Mining Properties (Net of Accumulated Amortization of $508,966 and $484,842)                  |  |               | 4,194,401   |                  
|Total Fixed Assets                                                                            |  |               | 5,115,675   |                  
|                                                                                              |  |               |             |                  
|Other Assets:                                                                                 |  |               |             |                  
|Investment in Affiliate                                                                       |  |               | 70,000      |                  
|Other Assets                                                                                  |  |               | 191,623     |                  
|Total Other Assets                                                                            |  |               | 261,623     |                  
|TOTAL ASSETS                                                                                  |  | $             | 7,589,037   |                  
|                                                                                              |  |               |             |                  
|LIABILITIES AND EQUITY                                                                        |  |               |             |                  
|Current Liabilities:                                                                          |  |               |             |                  
|Accounts Payable                                                                              |  | $             | 1,560       |                  
|Accrued Expenses                                                                              |  |               | 41,329      |                  
|Total Current Liabilities 	 Long-Term Liabilities                                             |  |               | 42,889  0   |                  
|                                                                                              |  |               |             |                  
|TOTAL LIABILITIES                                                                             |  | $             | 42,889      |                  
|                                                                                              |  |               |             |                  
|Equity: Preferred Stock, $1.00 par value, 10,000 shares authorized                            |  |               |             |                  
|1,000 and 1,000 shares issued and outstanding                                                 |  | $             | 1,000       |                  
|Common Stock, $0.01 par value, 25,000,000 shares authorized                                   |  |               |             |                  
|10,758,718 and 10,602,868 shares issued and outstanding                                       |  |               | 107,567     |                  
|Preferred Rights                                                                              |  |               | 40,000      |                  
|Additional Paid In Capital                                                                    |  |               | 39,942,352  |                  
|Treasury Stock                                                                                |  |               | (25,500     | )                
|Other Comprehensive Income                                                                    |  |               | 547,693     |                  
|Accumulated Deficit                                                                           |  |               | (6,002,516  | )                
|Accumulated Deficit Since Reentering the Development Stage                                    |  |               | (23,115,279 | )                
|Total DynaResource, Inc. Stockholders’ Equity                                                 |  |               | 11,495,317  |                  
|Noncontrolling Interest                                                                       |  |               | (3,949,169  | )                
|TOTAL EQUITY                                                                                  |  |               | 7,546,148   |                  
|TOTAL LIABILITIES AND EQUITY                                                                  |  | $             | 7,589,037   |                  



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



3







DYNARESOURCE, INC.

(An Exploration Stage Company)

Consolidated Statements of Operations

For the Three and Six Months Ended June 30,
2012 and 2011

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

through June 30, 2012

(Unaudited)



|                                                                          |  | Three Months Ended |            | Six Months Ended |  | Cumulative Since Re-Entering Development Stage (Jan. 1, 2007)
|------------------------------------------------------------------------- |  | ------------------ | ---------- | ---------------- |  | -------------------------------------------------------------
|                                                                          |  | June 30, 2012      |            | June 30, 2011    |  | June 30, 2012                                                
|                                                                          |  |                    |            |                  |  |                                                              
|REVENUES                                                                  |  | $                  | 0          |                  |  | $                                                            
|COST OF SALES                                                             |  |                    |            |                  |  |                                                              
|Exploration Costs                                                         |  |                    | 338,098    |                  |  |                                                              
|GROSS PROFIT (DEFICIT)                                                    |  |                    | (338,098   | )                |  |                                                              
|                                                                          |  |                    |            |                  |  |                                                              
|OPERATING EXPENSES:                                                       |  |                    |            |                  |  |                                                              
|Depreciation and Amortization                                             |  |                    | 37,061     |                  |  |                                                              
|General and Administrative                                                |  |                    | 662,096    |                  |  |                                                              
|TOTAL OPERATING EXPENSES                                                  |  |                    | 699,157    |                  |  |                                                              
|                                                                          |  |                    |            |                  |  |                                                              
|NET OPERATING INCOME (LOSS)                                               |  |                    | (1,037,255 | )                |  |                                                              
|                                                                          |  |                    |            |                  |  |                                                              
|OTHER INCOME (EXPENSE)                                                    |  |                    |            |                  |  |                                                              
|Portfolio Income                                                          |  |                    | 213        |                  |  |                                                              
|Other Income                                                              |  |                    | 3,750      |                  |  |                                                              
|Currency Translation (Gain) Loss                                          |  |                    | (299,499   | )                |  |                                                              
|TOTAL OTHER INCOME (EXPENSE)                                              |  |                    | (295,536   | )                |  |                                                              
|                                                                          |  |                    |            |                  |  |                                                              
|NET INCOME (LOSS) BEFORE INCOME TAXES                                     |  |                    | (1,332,791 | )                |  |                                                              
|                                                                          |  |                    |            |                  |  |                                                              
|Provision for Income Taxes (Expense)  Benefit                             |  |                    | 0          |                  |  |                                                              
|NET LOSS                                                                  |  |                    | (1,332,791 | )                |  |                                                              
|Net Loss Attributable to Non-Controlling Interest                         |  |                    | 158,851    |                  |  |                                                              
|NET LOSS ATTRIBUTABLE TO DYNARESOURCE, INC. COMMON SHAREHOLDERS           |  |                    | (1,173,940 | )                |  |                                                              
|                                                                          |  |                    |            |                  |  |                                                              
|COMPREHENSIVE INCOME (LOSS):                                              |  |                    |            |                  |  |                                                              
|Unrealized loss on securities                                             |  |                    | 0          |                  |  |                                                              
|Unrealized Currency Translation Gain (Loss)                               |  |                    | (28,464    | )                |  |                                                              
|COMPREHENISVE LOSS BEFORE NON-CONTROLLING INTEREST                        |  |                    | (1,202,404 | )                |  |                                                              
|Comprehensive Loss (Income) Attributable to Non-Controlling Interest      |  |                    | 12,251     |                  |  |                                                              
|COMPREHENSIVE LOSS ATTRIBUTABLE TO DYNARESOURCE, INC. COMMON SHAREHOLDERS |  | $                  | (1,190,153 | )                |  | $                                                            
|                                                                          |  |                    |            |                  |  |                                                              
|EARNINGS PER SHARE, Basic and Diluted                                     |  |                    |            |                  |  |                                                              
|                                                                          |  |                    |            |                  |  |                                                              
|Weighted Average Shares Outstanding                                       |  |                    | 10,732,707 |                  |  |                                                              
|(Loss) per Common Share                                                   |  | $                  | (0.1109    | )                |  | $                                                            





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



4







DYNARESOURCE, INC.

(An Exploration Stage Company)

Consolidated Statement of Changes in Stockholders’
Equity

For the Six Months Ended June 30, 2012 (Unaudited)

and the Year Ended December 31, 2011 (Audited)





|                                        |  | Preferred |        |  |  | Common |        |  |  | Preferred |            |  |  | Additional Paid In |         |  |  | Treasury |        |  |  | Other Comprehensive |            |  |  | Accumulated |         |   |  | Deficit Since Reentering the Exploration |         |   |  |   |           
|--------------------------------------- |  | --------- | ------ |  |  | ------ | ------ |  |  | --------- | ---------- |  |  | ------------------ | ------- |  |  | -------- | ------ |  |  | ------------------- | ---------- |  |  | ----------- | ------- | - |  | ---------------------------------------- | ------- | - |  | - | ----------
|                                        |  |           | Shares |  |  |        | Amount |  |  |           | Shares     |  |  |                    | Amount  |  |  |          | Rights |  |  |                     | Capital    |  |  |             | Stock   |   |  |                                          | Income  |   |  |   | Deficit   
|Stockholders’ Equity, January 1, 2011   |  |           | 1,000  |  |  | $      | 1,000  |  |  |           | 9,763,220  |  |  | $                  | 97,632  |  |  | $        | 40,000 |  |  | $                   | 31,011,472 |  |  | $           | 0       |   |  | $                                        | 405,948 |   |  | $ | (6,002,516
|                                        |  |           |        |  |  |        |        |  |  |           |            |  |  |                    |         |  |  |          |        |  |  |                     |            |  |  |             |         |   |  |                                          |         |   |  |   |           
|Sale of Common Shares                   |  |           |        |  |  |        |        |  |  |           | 565,148    |  |  |                    | 5,652   |  |  |          |        |  |  |                     | 2,220,005  |  |  |             |         |   |  |                                          |         |   |  |   |           
|Issuance of Common Shares for Services  |  |           |        |  |  |        |        |  |  |           | 274,500    |  |  |                    | 2,745   |  |  |          |        |  |  |                     | 1,158,444  |  |  |             |         |   |  |                                          |         |   |  |   |           
|Common Stock Options Issued             |  |           |        |  |  |        |        |  |  |           |            |  |  |                    |         |  |  |          |        |  |  |                     | 31,476     |  |  |             |         |   |  |                                          |         |   |  |   |           
|Other Comprehensive Income              |  |           |        |  |  |        |        |  |  |           |            |  |  |                    |         |  |  |          |        |  |  |                     |            |  |  |             |         |   |  |                                          | 169,652 |   |  |   |           
|DynaMexico Earn In                      |  |           |        |  |  |        |        |  |  |           |            |  |  |                    |         |  |  |          |        |  |  |                     | 3,999,717  |  |  |             |         |   |  |                                          |         |   |  |   |           
|Net  Income (Loss)                      |  |           |        |  |  |        |        |  |  |           |            |  |  |                    |         |  |  |          |        |  |  |                     |            |  |  |             |         |   |  |                                          |         |   |  |   |           
|Stockholders’ Equity, December 31, 2011 |  |           | 1,000  |  |  | $      | 1,000  |  |  |           | 10,602,868 |  |  | $                  | 106,029 |  |  | $        | 40,000 |  |  | $                   | 38,421,114 |  |  | $           | 0       |   |  | $                                        | 575,600 |   |  | $ | (6,002,516
|                                        |  |           |        |  |  |        |        |  |  |           |            |  |  |                    |         |  |  |          |        |  |  |                     |            |  |  |             |         |   |  |                                          |         |   |  |   |           
|Sale of Common Shares                   |  |           |        |  |  |        |        |  |  |           | 153,850    |  |  |                    | 1,538   |  |  |          |        |  |  |                     | 971,962    |  |  |             |         |   |  |                                          |         |   |  |   |           
|Common Stock Options Issued             |  |           |        |  |  |        |        |  |  |           |            |  |  |                    |         |  |  |          |        |  |  |                     | 549,276    |  |  |             |         |   |  |                                          |         |   |  |   |           
|Purchase of Treasury Shares             |  |           |        |  |  |        |        |  |  |           |            |  |  |                    |         |  |  |          |        |  |  |                     |            |  |  |             | (25,500 | ) |  |                                          |         |   |  |   |           
|Other Comprehensive Income              |  |           |        |  |  |        |        |  |  |           |            |  |  |                    |         |  |  |          |        |  |  |                     |            |  |  |             |         |   |  |                                          | (27,907 | ) |  |   |           
|Net  Income (Loss)                      |  |           |        |  |  |        |        |  |  |           |            |  |  |                    |         |  |  |          |        |  |  |                     |            |  |  |             |         |   |  |                                          |         |   |  |   |           
|Stockholders’ Equity, June 30, 2012     |  |           | 1,000  |  |  | $      | 1,000  |  |  |           | 10,756,718 |  |  | $                  | 107,567 |  |  | $        | 40,000 |  |  | $                   | 39,942,352 |  |  | $           | (25,500 | ) |  | $                                        | 547,693 |   |  | $ | (6,002,516



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



5







DYNARESOURCE, INC.

(An Exploration Stage Company)

Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2012 and
2011

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

through June 30, 2012

(Unaudited)



|                                                                        |  | 2012 |            | 2011 |  | Cumulative Since Reentering the Development Stage (January 1, 2007) through June 30, 2012
|----------------------------------------------------------------------- |  | ---- | ---------- | ---- |  | -----------------------------------------------------------------------------------------
|CASH FLOWS FROM OPERATING ACTIVITIES                                    |  |      |            |      |  |                                                                                          
|Net Income (Loss)                                                       |  | $    | (2,002,910 | )    |  | $                                                                                        
|Adjustments to reconcile net loss to cash used by operating activities: |  |      |            |      |  |                                                                                          
|Issuance of Common Stock for Services                                   |  |      | 0          |      |  |                                                                                          
|Issuance of Common Stock Options                                        |  |      | 549,276    |      |  |                                                                                          
|Issuance of Preferred Stock for Services                                |  |      | 0          |      |  |                                                                                          
|Depreciation and Amortization                                           |  |      | 72,298     |      |  |                                                                                          
|Loss on Disposition of Assets                                           |  |      | 0          |      |  |                                                                                          
|Change in Operating Assets and Liabilities:                             |  |      |            |      |  |                                                                                          
|Decrease in Accounts Receivable                                         |  |      | 0          |      |  |                                                                                          
|Decrease in Foreign Tax Receivable                                      |  |      | 1,453      |      |  |                                                                                          
|(Increase) in A/R – Related Party                                       |  |      | (46,604    | )    |  |                                                                                          
|(Increase) Decrease in Other Current Assets                             |  |      | (8,691     | )    |  |                                                                                          
|(Increase) in Other Assets                                              |  |      | (13,445    | )    |  |                                                                                          
|(Decrease) in Accounts Payable                                          |  |      | (71,706    | )    |  |                                                                                          
|(Decrease) in Accrued Expenses                                          |  |      | (10,700    | )    |  |                                                                                          
|(Decrease) in Deferred Tax Liability                                    |  |      | 0          |      |  |                                                                                          
|CASH FLOWS (USED IN) OPERATING ACTIVITIES                               |  |      | (1,531,029 | )    |  |                                                                                          
|                                                                        |  |      |            |      |  |                                                                                          
|CASH FLOWS FROM INVESTING ACTIVITIES                                    |  |      |            |      |  |                                                                                          
|Purchase of Fixed Assets                                                |  |      | (2,129     | )    |  |                                                                                          
|Retirement of Fixed Assets                                              |  |      | 0          |      |  |                                                                                          
|Conversion of Note Receivable to Equity                                 |  |      | 0          |      |  |                                                                                          
|Investment in Affiliate                                                 |  |      | 0          |      |  |                                                                                          
|Note Receivable to Affiliate                                            |  |      | 0          |      |  |                                                                                          
|CASH FLOWS (USED IN) INVESTING ACTIVITIES                               |  |      | (2,129     | )    |  |                                                                                          
|                                                                        |  |      |            |      |  |                                                                                          
|CASH FLOWS FROM FINANCING ACTIVITIES                                    |  |      |            |      |  |                                                                                          
|Proceeds from DynaMexico Earn In                                        |  |      | 0          |      |  |                                                                                          
|Proceeds from Sale of Common Stock                                      |  |      | 973,500    |      |  |                                                                                          
|Repurchase of Common Stock Options                                      |  |      | 0          |      |  |                                                                                          
|Other Comprehensive Income (Loss)                                       |  |      | (7,605     | )    |  |                                                                                          
|Purchase of Treasury Stock                                              |  |      | (25,500    | )    |  |                                                                                          
|Sale of Treasury Stock                                                  |  |      | 0          |      |  |                                                                                          
|CASH FLOWS PROVIDED BY FINANCING ACTIVITIES                             |  |      | 940,395    |      |  |                                                                                          
|                                                                        |  |      |            |      |  |                                                                                          
|NET INCREASE (DECREASE) IN CASH                                         |  |      | (592,763   | )    |  |                                                                                          
|                                                                        |  |      |            |      |  |                                                                                          
|CASH AT BEGINNING OF PERIOD                                             |  |      | 2,670,933  |      |  |                                                                                          
|CASH AT END OF PERIOD                                                   |  | $    | 2,078,170  |      |  | $                                                                                        
|                                                                        |  |      |            |      |  |                                                                                          
|SUPPLEMENTAL DISCLOSURES                                                |  |      |            |      |  |                                                                                          
|Non-Cash Issuance of Common Shares for Services                         |  | $    | 0          |      |  | $                                                                                        
|Non-Cash Issuance of Preferred Shares for Services                      |  | $    | 0          |      |  | $                                                                                        
|Non-Cash Conversion of Note Receivable to Equity                        |  | $    | 0          |      |  | $                                                                                        
|Non-Cash Issuance of Stock Options                                      |  | $    | 549,276    |      |  | $                                                                                        
|Non-Cash Dividend of Property                                           |  | $    | 0          |      |  | $                                                                                        
|Cash Paid for Interest                                                  |  | $    | 0          |      |  | $                                                                                        
|Cash Paid for Income Taxes                                              |  | $    | 0          |      |  | $                                                                                        



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







6







DYNARESOURCE, INC.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

June 30, 2012

(Unaudited)



NOTE 1 – NATURE OF ACTIVITIES
AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Activities, History and
Organization:

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

In 2000, the Company formed a wholly
owned subsidiary, DynaResource de Mexico S.A. de C.V., chartered in Mexico (“DynaMexico”).  This Company
was formed to acquire, invest in and develop resource properties in Mexico.  In 2005, the Company formed DynaResource
Operaciones de San Jose De Gracia S.A. de C.V. (“DynaOperaciones”), and acquired effective control of Mineras de DynaResource,
S.A de C.V. (formerly Minera Finesterre S.A. De C.V., “MinerasDyna”). The Company owned 25% of MinerasDyna and acquired
effective control of MinerasDyna by acquiring the option to purchase the remaining 75% of the Shares of MinerasDyna. The Company
exercised the option and finalized the acquisition of MinerasDyna in January 2010, and now owns 100% of MinerasDyna.   The
results of DynaMexico, DynaOperaciones and MinerasDyna are consolidated with those of the Company.

In January 2008, DynaMexico issued 15%
of its outstanding common shares to Goldgroup Resources Inc. (“Goldgroup”), in exchange for $3,000,000 USD cash contribution
for exploration expenditures at the San Jose de Gracia property (“SJG”). In August 2008, DynaMexico issued an additional
10% of its outstanding common shares to Goldgroup in exchange for an additional $3,000,000 USD cash for exploration expenditures,
and in March 2011, DynaMexico issued an additional 25% of its outstanding common shares to Goldgroup in exchange for an additional
$12,000,000 USD cash for exploration expenditures (See Note 6 below).   Goldgroup has contributed $18,000,000 USD in
aggregate to DynaMexico, and it directly or indirectly, currently owns 50% of the outstanding common shares of DynaMexico.

The Company produced approximately
$7,637,150 in revenues from production activities conducted during the years ended December 31, 2003 through 2006, and suspended
this activity voluntarily to concentrate its efforts on exploration and development.  In accordance with that decision,
as of January 1, 2007, the Company reentered the Exploration Stage and has presented its cumulative results since reentering the
Exploration Stage, in accordance with Accounting Standards Codification (“ASC”) 915 “Development Stage Entities”,
and will continue this presentation until it again has revenues from operations.

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

Significant Accounting Policies:

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

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





7











Basis of Presentation:

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



Principles of Consolidation:

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



Foreign Currency Translation:

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

The financial statements of the 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 periods ended June 30, 2012 and December 31, 2011 (Mexican
pesos per one U.S. dollar):



|                                                      |               |                  
|----------------------------------------------------- | ------------- | -----------------
|                                                      | June 30, 2012
|Current exchange rate:                                | Pesos         | 13.41            
|                                                      |               |                  
|Weighted average exchange rate for the quarter ended: | Pesos         | 13.26            
|                                                      |               |                  
|                                                      |               | December 31, 2011
|Current exchange rate:                                | Pesos         | 13.97            
|                                                      |               |                  
|Weighted average exchange rate for the year ended:    | Pesos         | 12.42            





Cash and Cash Equivalents:

The Company considers all highly liquid
debt instruments with a maturity of three months or less to be cash equivalents.  At times, cash balances may be in excess
of the Federal Deposit Insurance Corporation (“FDIC”) insurance limits.   At June 30, 2012, the Company had
a balance of $1,208,260 that was in excess of the FDIC insurance limit and $500,000 which is currently insured in full under the
FDIC’s temporary unlimited coverage on non-interest bearing transactions accounts, expiring on December 31, 2012. The carrying
amount approximates fair market value.

Accounts Receivable and Allowances
for Doubtful Accounts:

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



Foreign Tax Receivable:

Foreign Tax Receivable (IVA) is comprised of
recoverable value-added taxes charged by the Mexican government on goods and services rendered.  Under certain circumstances,
these taxes are recoverable by filing a tax return.  Amounts paid for IVA are tracked and held as receivables until the
funds are remitted.  The total amounts of the IVA receivable as of June 30, 2012 and December 31, 2011 are $33,140 and
$34,593, respectively.





8







Inventory:

As the Company ceased mining production in
2006, there is no inventory as of June 30, 2012 and December 31, 2011.



Fixed Assets:

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



Mining Properties:

The Company is an ‘Exploration
Stage’ company as defined in “SEC Industry Guide 7”.  Mining properties consist of 33 mining
concessions covering approximately 69,121 hectares, at the San Jose de Gracia property, the basis of which are deferred until the
properties are brought into production, at which time they will be amortized on the unit of production method based on estimated
recoverable reserves.  The Company has elected to expense a minimal amount of amortization due to the effects of exploration
activities on the recoverable reserves.  If it is determined that the deferred costs related to a property are not recoverable
over its productive life, those costs will be written down to fair value as a charge to operations in the period in which the determination
is made.  The amounts at which mineral properties and the related deferred costs are recorded do not necessarily reflect
present or future values.

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

|• |  | estimated recoverable ounces of gold, silver or other precious minerals;
|- |  | ------------------------------------------------------------------------
|• |  | estimated future commodity prices;                                      



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

A write-down to fair value will be recorded
when the expected future cash flow is less than the net book value of the property or when events or changes in the property indicate
that carrying amounts are not recoverable.  This analysis will be completed as needed, and at least annually.  As
of the date of this filing, no events have occurred that would require write-down of any assets.  As of June 30, 2012,
no indications of impairment existed.



Exploration Costs:

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

The carrying amounts of the mining concessions
are reviewed at each calendar year end to determine whether there is any indication of impairment or at other times if indications
of impairment exist.

As of June 30, 2012, no indications of impairment
existed.



Advertising Costs:

The Company incurred no advertising costs for
the three months ended June 30, 2012 and 2011.



Income Taxes:

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







9









Use of Estimates:

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



Comprehensive Income:

ASC 220 “Comprehensive Income”
establishes standards for reporting and display of comprehensive income and its components in a full set of general purpose financial
statements.    The Company’s comprehensive income consists of net income and other comprehensive income
(loss), consisting of unrealized net gains and losses on the translation of the assets and liabilities of its foreign operations. 
For the periods ended June 30, 2012 and December 31, 2011, the Company’s components of comprehensive income were foreign
currency translation adjustments and unrealized losses on securities held for sale.



Revenue Recognition:

The Company recognizes revenue in accordance
with ASC 605-10, "Revenue Recognition in Financial Statements",”.   Revenue is recognized
when persuasive evidence of an arrangement exists, delivery or service has occurred, the sale price is fixed or determinable and
receipt of payment is probable.

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



Earnings per Common Share:

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

There were no potentially dilutive common
stock equivalents as of June 30, 2012, therefore basic earnings per share equals diluted earnings per share for the year ended
June 30, 2012.  The Company had 891,200 options and warrants outstanding at June 30, 2012. As the Company incurred a net loss
during the year ended June 30, 2012, the basic and diluted loss per common share is the same amount, as any common stock equivalents
would be considered anti-dilutive.

As the Company incurred a net loss during the
six months ended June 30, 2011, the basic and diluted loss per common share is the same amount.   As of June 30, 2011, the
Company had zero stock options outstanding that could potentially have a dilutive effect on basic earnings per share in the future.



Recently Issued Accounting Pronouncements:

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



Reclassifications:

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



10







NOTE 2 – FIXED ASSETS

Fixed assets consist of the following at June
30, 2012 and December 31, 2011:



|                                   |  | 2012 |           | 2011
|---------------------------------- |  | ---- | --------- | ----
|                                   |  |      |           |     
|Mining camp equipment and fixtures |  | $    | 1,224,540 |     
|Transportation equipment           |  |      | 268,253   |     
|Lab equipment                      |  |      | 14,306    |     
|Machinery and equipment            |  |      | 45,316    |     
|Office furniture and fixtures      |  |      | 76,895    |     
|Office equipment                   |  |      | 11,673    |     
|Computer equipment                 |  |      | 33,976    |     
|Sub-total                          |  |      | 1,674,959 |     
|Less: Accumulated depreciation     |  |      | (753,685  | )   
|Total                              |  | $    | 921,274   |     
|                                   |  |      |           |     

Depreciation has been provided over
each asset’s estimated useful life.  Depreciation expense was $48,174 and $43,514 for the six months ended
June 30, 2012 and 2011, respectively. The Company acquired a tractor during 2011 that was not in service as of June 30, 2012, and
therefore, has not yet been depreciated.

NOTE 3 – MINING PROPERTIES

Mining properties consist of the following
at June 30, 2012 and December 31, 2011:



|                               |  | 2012 |           | 2011
|------------------------------ |  | ---- | --------- | ----
|San Jose de Gracia (“SJG”):    |  |      |           |     
|Mining Concessions             |  | $    | 4,703,367 |     
|Less: Accumulated Amortization |  |      | (508,966  | )   
|                               |  |      |           |     
|Total Mining Properties        |  | $    | 4,194,401 |     



Amortization expense was $24,124 and
$30,000 for the three months ended June 30, 2012 and 2011, respectively.

NOTE 4 – INVESTMENT IN AFFILIATE

Through
March 31, 2012 the Company loaned a total of $805,760 USD to DynaResource Nevada, Inc. (“DynaNevada”), a Nevada Corporation,
which maintains one operating subsidiary in Mexico, DynaNevada de Mexico, SA de CV. (“DynaNevada de Mexico”).
 The terms of the Note Receivable provided for a “Convertible Loan”, repayable at 5% interest over a 3 year period,
and convertible at the Company’s option into common stock of DynaNevada at $.25 / Share.  DynaNevada is a related
entity (affiliate), and through its subsidiary DynaNevada de Mexico, has entered into an Option agreement with Grupo Mexico (IMMSA)
in Mexico, for the exploration and development of approximately 3,000 hectares in the State of San Luis Potosi (“The Santa
Gertrudis Property”). DynaNevada de Mexico exercised the Option with IMMSA in March 2010, so that DynaNevada de Mexico now
owns 100% of the Santa Gertrudis Property. In June, 2010, DynaNevada de Mexico acquired an additional 6,000 hectares in the State
of Sinaloa (the “San Juan Property”).

On
December 31, 2010, the Company exercised its option to convert the note receivable and other receivable from DynaNevada into shares
of common stock at a rate of $.25 per share. The Company received 3,223,040 shares, which represents approximately 19.95% of the
outstanding shares of DynaNevada. At the time of the exchange, DynaNevada’s net book value was approximately $695,000, consisting
of $30,000 cash and the remainder unproven mining properties. DynaNevada has a contingent liability arising from the purchase
of one of the mining properties, which Management believes has no merit. Based upon the above, Management estimated the value
of the Company’s DynaNevada shares as of June 30, 2012 and December 31, 2011 to be $70,000. Management believes the impairment
is temporary, and therefore an unrealized loss of $735,760 has been recorded in other comprehensive income.



11







NOTE 5 – INCOME TAXES

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

The cumulative tax effect at the expected tax
rate of 34% (blended for U.S. and Mexico) of significant items comprising the Company’s net deferred tax amounts as of June
30, 2012 and December 31, 2011 are as follows:



Deferred Tax Asset Related to:

|                             |  | 2012 |            | 2011
|---------------------------- |  | ---- | ---------- | ----
|Prior Year                   |  | $    | 7,008,203  |     
|Tax Benefit for Current Year |  |      | 680,989    |     
|Total Deferred Tax Asset     |  |      | 7,689,192  |     
|Less: Valuation Allowance    |  |      | (7,689,192 | )   
|Net Deferred Tax Asset       |  | $    | 0          |     



The net deferred tax asset and benefit
for the current year is generated primarily from the cumulative net operating loss carry-forward which is approximately $29,000,000
at June 30, 2012, and will expire in the years 2025 through 2031.

The realization of deferred tax benefits
is contingent upon future earnings and is fully reserved at June 30, 2012.

NOTE 6 – MATERIAL AGREEMENTS

Financing/Sale of Stock of Subsidiary:

On September 1, 2006 the Company and
DynaMexico signed an “Earn In / Option Agreement” (“Option Agreement”) among DynaResource, DynaMexico
(as “Seller”) and Goldgroup Resources Inc., of Vancouver, British Columbia, which subsequently became an affiliate
of Goldgroup Mining, Inc. (Goldgroup Resources Inc. and Goldgroup Mining Inc. are together referred to as “Goldgroup”,
and as “Buyer”).

The Option Agreement provided for Goldgroup
to contribute $18,000,000 on or before March 15, 2011 in exchange for fifty per cent (50%) of the total outstanding common shares
of DynaMexico, the 100 % owner of the San Jose de Gracia Project in northern Sinaloa Mexico (“SJG”). The remaining
balance of the $18,000,000 was contributed on March 14, 2011 and Goldgroup now owns 50% of the outstanding common shares of DynaMexico.

NOTE 7 – RELATED PARTY TRANSACTIONS

The Company paid $25,000 and $30,000
to Dynacap Group, Ltd. (an entity controlled by officers of the Company) for consulting and other fees in the six months ended
June 30, 2012 and 2011, respectively.

In addition, the Company has issued its stock
to the following directors and consultants for the periods ended June 30, 2012 and December 31, 2011, respectively:

| |             | 2012 |  | 2011
| | ----------- | ---- |  | ----
| |             |      |  |     
| | Directors   |      |  | $   
| |             |      |  |     
| | Consultants |      |  | $   
| |             |      |  |     
| | Totals      |      |  | $   



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





12









As discussed in Note 4, the Company has made
an investment in DynaNevada, an entity having common management with the Company. The Company also has a $46,604 receivable from
DynaNevada for consulting work performed on the Company’s behalf.



NOTE 8 – STOCKHOLDERS’
EQUITY

Preferred Stock:

The Company is currently authorized to issue
10,000 shares of its Series A Preferred Stock, having a par value of $1.00 per share.  Holders of the Series A Preferred Stock
have the right to elect a majority of the Board of Directors of the Company.  In October 2007, the Company issued 1,000 shares
of Series A Preferred Stock to its CEO. An aggregate of 1,000 shares of Series A Preferred Stock were outstanding at June 30, 2012
and December 31, 2011, respectively.



Common Stock:

The Company is authorized to issue 25,000,000
common shares at a par value of $0.01 per share.  These shares have full voting rights.  At June 30, 2012 and December
31, 2011, there were 10,756,718 and 10,602,868 shares outstanding, respectively.



Dividends:

No dividends were paid in 2012 or 2011.



Preferred Rights:

The Company issued “Preferred
Rights” and received $158,500 in 2003 and $626,000 in 2002, for the rights to percentages of revenues generated from the
San Jose de Gracia Pilot Production Plant.  This has been reflected as “Preferred Rights” in stockholders’
equity.  As of December 31, 2004, $558,312 was repaid and as of December 31, 2005, an additional $186,188 has been repaid,
leaving a current balance of $40,000 and $40,000 as of June 30, 2012 and December 31, 2011, respectively.

Stock Issuances:

During the six months ended June 30,
2012, the Company issued 153,850 common shares for cash.

During 2011, the Company issued 565,148
common shares for cash.

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

Treasury Stock:

Treasury stock is accounted for by the cost
method.



Options and Warrants:

The Company had 891,200 options or warrants
outstanding at June 30, 2012.

During the six months ended June 30,
2012, 866,200 options or warrants were issued, none were exercised and none expired. The Company recorded expense related to the
issuance of these options in accordance with the Black Scholes option pricing model.

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



NOTE 9 – EMPLOYEE BENEFIT
PLANS

During the periods ended June 30, 2012
and December 31, 2011, there were no qualified or non-qualified employee pension, profit sharing, stock option, or other plans
authorized for any class of employees.



13









NOTE 10 – COMMITMENTS AND
CONTINGENGIES

The Company’s 50 % owned subsidiary
DynaMexico is required to pay taxes in order to maintain the several mining concessions it owns.  Additionally, DynaMexico
is required to incur a minimum amount of expenditures each year for all concessions held.  The minimum expenditures are
calculated based upon the land area, as well as the age of the concessions.  Amounts spent in excess of the minimum may
be carried forward indefinitely over the life of the concessions, and are adjusted annually for inflation.   Based
on Management’s business plans, the Company does not anticipate that DynaMexico will have any issues in meeting the minimum
annual expenditures for the concessions, and DynaMexico retains sufficient carry forward amounts to cover over 20 years of the
minimum expenditure (as calculated at the 2010 minimum, adjusted for annual inflation of 4%).

In September 2008, the Company entered
into a 37 month lease agreement for its corporate office.  In August, 2011 the Company entered into a one year extension
of the lease through August 31, 2012. The Company paid rent expense of $23,040 and $25,612 related to this lease for the six months
ended June 30, 2012 and 2011.

The following is a schedule of minimum lease
payments required under the existing lease as of June 30, 2012:



|Year Ended December 31: |  | 
|----------------------- |  | 
|                        |  | 



| |                 |  |  |  |  |   | Amount | 
| | --------------- |  |  |  |  | - | ------ | 
| | 2012            |  |  |  |  | $ | 7,680  | 
| | 2013 and beyond |  |  |  |  |   | 0      | 
| | Total           |  |  |  |  | $ | 7,680  | 



NOTE 11 – NON-CONTROLLING
INTEREST

The Company’s Non-controlling Interest
recorded in the consolidated financial statements relates to a 50% interest in DynaResource de México, S.A. de C.V. Changes
in Non-controlling Interest for the six months ended June 30, 2012 and the year ended December 31, 2011 were as follows:

|                                  |  |  
|--------------------------------- |  | -
|                                  |  |  
|                                  |  |  
|Beginning balance                 |  | $
|Operating income (loss)           |  |  
|Other comprehensive income (loss) |  |  
|Ending balance                    |  | $



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

NOTE 12 – RECENT ACCOUNTING
PRONOUNCEMENTS

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



14







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

On January 1, 2012, the Company adopted
guidance issued by the FASB on accounting and disclosure requirements related to fair value measurements. The guidance limits the
highest-and-best-use measure to nonfinancial assets, permits certain financial assets and liabilities with offsetting positions
in market or counterparty credit risks to be measured at a net basis, and provides guidance on the applicability of premiums and
discounts.    Additionally, the guidance expands the disclosures on Level 3 inputs by requiring quantitative disclosure
of the unobservable inputs and assumptions, as well as description of the valuation processes and the sensitivity of the fair value
to changes in unobservable inputs.   Adoption of this new guidance did not have a material impact on our financial statements.

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

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

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

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

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

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

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

Level 3 Inputs – Instruments
with primarily unobservable value drivers.



As of June 30, 2012 and December 31, 2011,
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. There were no financial liabilities as of June 30, 2012. A description of the valuation of the Level 3 inputs
is discussed in Note 4.



15











|                          | Fair Value Measurement at June 30, 2012
                                                                                                                                                                                                                                                                                                                                                            Using:
|------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                          |                                                                                                                                                                                                                                                                                                                                                                                                           
|Assets:                   |                                                                                                                                                                                                                                                                                                                                                                                                           
|Cash and Cash Equivalents |                                                                                                                                                                                                                                                                                                                                                                                                           
|Investment in Affiliate   |                                                                                                                                                                                                                                                                                                                                                                                                           
|                          |                                                                                                                                                                                                                                                                                                                                                                                                           





|                          |  | Fair Value Measurement at December 31, 2011 Using:
|------------------------- |  | --------------------------------------------------
|                          |  | December 31, 2011                                 
|Assets:                   |  |                                                   
|Cash and Cash Equivalents |  | $                                                 
|Investment in Affiliate   |  |                                                   
|                          |  | $                                                 





NOTE 14 – SUBSEQUENT EVENTS

In conjunction with the preparation
of these financial statements, an evaluation of subsequent events was performed through August 17, 2012, which is the date the
financial statements were issued.   No reportable events were noted.















16











ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS



This report contains forward looking
statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange
Act of 1934, as amended. The Company’s actual results could differ materially from those set forth on the forward looking
statements as a result of the risks set forth in the Company’s filings with the Securities and Exchange Commission, general
economic conditions, and changes in the assumptions used in making such forward looking statements.



General



FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q includes
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, which we refer to in this
quarterly report as the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, which we refer to in
this quarterly 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 quarterly 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 quarterly 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 quarterly 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.



IMPORTANT NOTE REGARDING CANADIAN
DISCLOSURE STANDARDS

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. Accordingly, certain disclosure in this quarterly report has been prepared in accordance
with the requirements of securities laws in effect in Canada, which differ from the requirements of United States securities laws.
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, information contained in this quarterly
report concerning descriptions 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. This quarterly report may use the terms “measured mineral resources”, “indicated mineral resources”
and “inferred mineral resources”. While these terms are recognized and required by Canadian securities legislation
(under National Instrument 43-101, Standards of Disclosure for Mineral Projects), the SEC does not recognize them. United
States investors 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 National Instrument 43-101, Standards
of Disclosure for Mineral Projects. U.S. investors are cautioned not to assume that any part or all of any reported measured
mineral resources, indicated mineral resources, or inferred mineral resources referred to herein or in the Technical Report are
economically or legally mineable.





17









Company

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



History

The Company was incorporated in the State of
California on September 28, 1937, under the name West Coast Mines, Inc. In November 1998, the Company re-domiciled from California
to Delaware and changed its name to DynaResource, Inc. The Company is in the business of acquiring, investing in, and developing
precious metal properties, and the production of precious metals.



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



DynaResource owns a 50% common stock interest
in DynaMéxico, and the remaining 50% common stock interest is held by Goldgroup. Mineras de DynaResource S.A. de C.V. (“MinerasDyna”),
a wholly owned subsidiary of the Company, entered into an operating agreement with DynaMéxico on April 15, 2005 and, as
a consequence of that agreement, is the named exclusive operating entity for the SJG Project.



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



Licenses and Concessions

The SJG District is comprised of 33 mining
concessions covering 69,121 hectares (171,802 acres) and is located within the Sierra Madre gold-silver belt, where the majority
of hydrothermal deposits in Mexico are located. The mining concessions comprising the SJG District, all of which are formally held
by DynaMéxico (with one exception: the San Miguel mining concession –see the Note 1 immediately following the below
table), are granted by the Mexican government, or acquired from previous owners. DynaMexico’s mining 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, including the San Miguel mining concession (which DynaMexico is
in the process of acquiring).

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



Current Mining Concessions - San José
de Gracia

|Claim Name        | Claim Number | Title Issuance Date | Expiry Date | Area In Hectares | 
|----------------- | ------------ | ------------------- | ----------- | ---------------- | 
|AMPL. SAN NICOLAS | 183815       | 22/11/1988          | 21/11/2038  | 17.4234          | 
|AMPL. SANTA ROSA  | 163592       | 30/10/1978          | 29/10/2028  | 25.0000          | 
|BUENA VISTA       | 211087       | 31/03/2000          | 30/03/2050  | 17.9829          | 
|EL CASTILLO       | 214519       | 02/10/2001          | 01/10/2051  | 100.0000         | 
|EL REAL           | 212571       | 07/11/2000          | 06/11/2050  | 2037.9479        | 





18









|Claim Name             | Claim Number | Title Issuance Date | Expiry Date | Area In Hectares | 
|---------------------- | ------------ | ------------------- | ----------- | ---------------- | 
|EL REAL 2              | 216301       | 30/04/2002          | 29/04/2052  | 280.1555         | 
|FINISTERRE FRACC. A    | 219001       | 28/01/2003          | 27/01/2053  | 18.7856          | 
|FINISTERRE FRACC. B    | 219002       | 28/01/2003          | 27/01/2053  | 174.2004         | 
|GUADALUPE              | 189470       | 05/12/1990          | 04/12/2040  | 7.0000           | 
|LA GRACIA I            | 215958       | 02/04/2002          | 01/04/2052  | 300.0000         | 
|LA GRACIA II           | 215959       | 02/04/2002          | 01/04/2052  | 230.0000         | 
|LA LIBERTAD            | 172433       | 15/12/1983          | 14/12/2033  | 97.0000          | 
|LA NUEVA AURORA        | 215119       | 08/02/2002          | 07/02/2052  | 89.3021          | 
|LA NUEVA ESPERANZA     | 226289       | 06/12/2005          | 05/12/2055  | 40.0000          | 
|LA UNION               | 176214       | 26/08/1985          | 25/08/2035  | 4.1098           | 
|LOS TRES AMIGOS        | 172216       | 27/10/1983          | 26/10/2033  | 23.0000          | 
|MINA GRANDE            | 163578       | 10/10/1978          | 09/10/2028  | 6.6588           | 
|NUEVO ROSARIO          | 184999       | 13/12/1989          | 12/12/2039  | 32.8781          | 
|PIEDRAS DE LUMBRE 2    | 215556       | 05/03/2002          | 04/03/2052  | 34.8493          | 
|PIEDRAS DE LUMBRE 3    | 218992       | 28/01/2003          | 27/01/2053  | 4.3098           | 
|PIEDRAS DE LUMBRE No.4 | 212349       | 29/09/2000          | 28/09/2050  | 0.2034           | 
|PIEDRAS DE LUMBRE UNO  | 215555       | 05/03/2002          | 04/03/2052  | 40.2754          | 
|SAN ANDRES             | 212143       | 31/08/2000          | 30/08/2050  | 385.0990         | 
|SAN JOSÉ               | 208537       | 24/11/1998          | 23/11/2048  | 27.0000          | 
|SAN MIGUEL (1)         | 183504       | 26/10/1988          | 25/10/2038  | 7.0000           | 
|SAN NICOLAS            | 163913       | 14/12/1978          | 13/12/2028  | 55.5490          | 
|SAN SEBASTIAN          | 184473       | 08/11/1989          | 07/11/2039  | 40.0000          | 
|SANTA MARIA            | 218769       | 17/01/2003          | 16/01/2053  | 4.2030           | 
|SANTA ROSA             | 170557       | 13/05/1982          | 12/05/2032  | 31.4887          | 
|SANTO TOMAS            | 187348       | 13/08/1986          | 12/08/2036  | 312.0000         | 
|TRES AMIGOS 2          | 212142       | 31/08/2000          | 30/08/2050  | 54.4672          | 
|FINISTERRE 4           | 231166       | 18/01/2008          | 17/01/2058  | 2142.1302        | 
|FRANCISCO ARTURO       | 230494       | 06/09/2007          | 27/03/2057  | 62481.3815       | 
|TOTAL                  |              |                     |             | 69,121.4010      | 



(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: María 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 DynaMexico signed with each of Miguel Lopez Medina and
Josefa Gonzalez Castro, respectively, agreements for the transfer to DynaMexico 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, DynaMexico 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, DynaMexico is required to first obtain the legal consent to such transfers,
or the written relinquishment of first rights of refusal, from María Trinidad Acosta Salazar and Otilia Tracy Vizcarra
(or court-appointed estate executor).



19







In addition to the San Miguel Transfer
Agreements, DynaMexico 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 DynaMexico 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 DynaMexico and Margarita Tracy Vizcarra, the sister of the deceased Otilia Tracy Vizcarra.



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

(a) with respect to the Promise to
Sell and Purchase Agreement signed on March 8, 2001 among DynaMexico and Maria Trinidad Acosta Salazar, to contact Ms. María
Trinidad Acosta Salazar to demand compliance with such agreement by executing the definitive transfer to DynaMexico of the 25%
undivided title to the San Miguel (t.183604) mining concession registered in her name, and

(b) with respect to the Promise
to Sell and Purchase Agreement signed on December 15, 2000 among DynaMexico 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 DynaMexico of the 25% undivided interest in the San Miguel (t.183604) mining concession registered
in the name of the deceased Otilia Tracy Vizcarra.

The San Jose de Gracia mining property
surrounds the area of San Jose de Gracia, Sinaloa State, Mexico. San Jose de Gracia is located on the west side of the Sierra Madre
Mountains in the Sierra Madre Gold-Silver Belt, approximately 100 kilometers inland from Los Mochis, Sinaloa Mexico and approximately
200 kilometers north of Mazatlan, Sinaloa.



Historical Production

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



1997-1998 Drilling – Exploration
Programs

A drill program was conducted at SJG
in 1997 - 1998 by a prior majority owner.  Approximately 6,172 meters drilling was completed in 63 core drill holes. Significant
intercepts, including bonanza grades, outlined the down dip potential of the Northeast section (150 Meter NE to SW extent of the
Drilling) of the Los Hilos to Tres Amigos Trend of SJG.

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

Pilot Production Activities

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



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



20









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



Transition to Exploration

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

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



Earn In / Option Agreement; Financing
of Drilling - Exploration Programs

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



Exercise of the Earn In / Option Agreement

Exploration and related activities at SJG,
and funded pursuant to the Option Agreement, were conducted by DynaMexico, through contract to the operating subsidiary of DynaResource,
Inc. in Mexico, Mineras de DynaResource SA de CV. (“MinerasDyna”, and the named “Exclusive Operating Entity at
the SJG Project”); with the management of personnel being contracted by MinerasDyna through to the personnel management subsidiary,
DynaResource Operaciones SA de CV., (“DynaOperaciones”). Management and administrative fees were charged by Mineras
Dyna and DynaOperaciones, which were eliminated in consolidation.



On December 28, 2007, DynaMexico reported that
Goldgroup had funded Phase II of the Option Agreement, through the contributions of Capital of $3,368,088 USD to DynaMexico and
the expenditures related to the exploration of SJG of $27,063,453 Mexican pesos, with the remainder held in cash in DynaMexico.
In January 2008, 15% of the outstanding Shares of DynaMexico were transferred to Goldgroup.



On July 16, 2008, DynaMexico reported that
Goldgroup had funded Phase III of the Option Agreement through total contributions of capital under the Earn In Agreement of $6,118,009
USD with total expenditures related to the exploration of SJG of $57,252,898 Mexican pesos, with the remainder held in cash in
DynaMexico.    In August 2008, an additional 10% of the outstanding Shares of DynaMexico were transferred to
Goldgroup, so that Goldgroup held 25% of the total outstanding shares of DynaMexico as of December 31, 2008.



At March 15, 2011, DynaMexico reported that
Goldgroup had funded its capital contributions pursuant to the Option Agreement of $18,000,000. In March 2011, an additional 25
% of the outstanding shares of DynaMexico were transferred to Goldgroup so that Goldgroup holds a total of 50 % of the outstanding
shares of DynaMexico.





21







DynaMéxico Summary of Drilling
Results

At March 31, 2011, a total of 68,741 Meters
drilling had been completed in 298 core drill holes financed pursuant to the Option Agreement. The drilling results obtained from
San Jose de Gracia through DDH SJG 10-298 confirm the extensions of mineralization, down dip of historical workings, with confirmation
of high grade gold (+ 10 g/t), and including bonanza grade ore shoots which are consistent with historical and recent production
grades. Specifically, San Pablo, Tres Amigos, La Purisima, and La Union areas have reported significant results. Further drilling
will be targeted at Tres Amigos, San Pablo, La Union and La Purisima, and at Rosario / Rudolpho, Northeast Tres Amigos, La Prieta
and Veta Tierra. Numerous additional anomalies at SJG remain virtually unexplored and undrilled.



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

The Company received from DynaMexico
on March 28, 2012 a National Instrument 43-101 (“NI 43-101”) compliant Technical Report for the San Jose de Gracia
Project (the “2012 DynaMexico Luna-CAM SJG Technical Report”, the “Technical Report”), and approved by
DynaResource de Mexico, SA de CV. (“DynaMexico”), the 100% owner of SJG. The technical report was filed in SEDAR.com
pursuant to MI 51-105.

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

2012 DynaMexico-CAM SJG 43-101 Mineral
Resource Estimate

The 2012 DynaMexico-CAM SJG Mineral Resource
Estimate (“Mineral Resource Estimate”) concentrates on four separate main vein systems at SJG: Tres Amigos, San Pablo,
La Union, and La Purisima. The Mineral Resource Estimate includes Indicated Resources at: (1) Tres Amigos of 893,000 tonnes with
an average grade of 4.46 g/t, totaling 128,000 Oz. Au; and (2) San Pablo of 1,308,000 tonnes with an average grade of 6.52 g/t,
totaling 274,000 Oz. Au. The Resource Estimate also includes an Inferred Resource of 3,953,000 tonnes in aggregate for the four
main vein systems, with an average grade of 5.83 g/t, totaling 741,000 Oz. Au. The Effective Date of the 2012 DynaMexico Luna-CAM
SJG Technical Report and including the 2012 DynaMexico-CAM SJG 43-101 Mineral Resource Estimate is February 6, 2012. The Mineral
Resource Estimate is reported using a 2.0 g/t cut off grade for underground mining (See Mineral Resource Table below). As of the
Effective Date of the Technical Report and the Mineral Resource Estimate, there is no economic assessment report completed for
SJG so the precise cutoff grade for possible underground mining has not yet been determined.

Mineral Resource and Classification
for San Jose de Gracia Project

|TRES AMIGOS INDICATED
|---------------------
|Au Cut Off (g/t)     
|1.00                 
|2.00                 
|3.00                 
|TRES AMIGOS INFERRED 
|1.00                 
|2.00                 
|3.00                 
|SAN PABLO INDICATED  
|Au Cut Off (g/t)     
|1.00                 
|2.00                 
|3.00                 
|SAN PABLO INFERRED   
|1.00                 
|2.00                 
|3.00                 
|LA UNION INFERRED    
|Au Cut Off (g/t)     
|1.00                 
|2.00                 
|3.00                 
|LA PURISIMA INFERRED 
|Au Cut Off (g/t)     
|1.00                 
|2.00                 
|3.00                 
|                     





22











|SAN JOSE DE GRACIA TOTAL INDICATED
|----------------------------------
|Au Cut Off (g/t)                  
|1.00                              
|2.00                              
|3.00                              
|SAN JOSE DE GRACIA TOTAL INFERRED 
|1.00                              
|2.00                              
|3.00                              

(Due
to rounding the numbers in the above may not check exactly. This is an estimate of in situ resources only and there is no assurance
that any part of these resources can be converted to reserves)

Mineral Resource Estimate - Construction
of Wireframes

Mineral Resources were estimated by
Mr. Sandefur within wireframes constructed by technical personnel of Minop SA de CV (“Minop”), a subsidiary of Goldgroup
Mining Inc. (“Goldgroup”). Minop was contracted by Mineras de DynaResource SA de CV. (“Mineras”).

Mineral Resource Estimate - Parameters
Used to Estimate the Mineral Resource

The data base for the San Jose de Garcia
Project consists of 372 drill holes of which 361 were diamond drill holes and the remaining 11, drilled in 1992, were reverse circulation
holes, with a total drilling of 75,878 meters. The 2012 DynaMexico-CAM SJG Mineral Resource Estimate 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 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 the Argillic
Zone (3 holes).

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.



23







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 is 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 - 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 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. Mineral Resources at Tres Amigos and San Pablo were classified as Indicated
as follows:

| | 1) | they were within a vein within the swarm which contained at least 7 drill holes;
| | -- | --------------------------------------------------------------------------------

| | 2) | they are within 25 m of the nearest sample point; and,
| | -- | ------------------------------------------------------

| | 3) | they were estimated by at least three drill holes.
| | -- | --------------------------------------------------



All other Mineral Resources were classified
as Inferred. Because there are no precise quantitative definitions of measured, indicated and inferred, resource classification
is subjective and depends on the experience and judgment of the Qualified Person (“QP”) calculating the resource estimate.
CAM, Mr. Sandefur QP, allowed indicated material at Tres Amigos and San Pablo because of (1) the similarity of the variograms,
and (2) the fact of recent production by DynaMexico from San Pablo of some 42,000 tonnes plant feed at an average grade of approximately
15 g/t.  Three of the individual veins at La Purisima satisfied criterion (1) above but Mr. Sandefur elected not to include
this material in indicated because of the shorter first range at La Purisima. This Mineral Resource Estimate for SJG does not include
any ore loss or dilution outside wireframes, and as currently defined, is probably most appropriate for a highly selective, small
equipment underground operation.

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 DynaMexico 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, CAM does not believe that significant mining has occurred within the
volumes defined by the wireframes.

Mineral Resource Estimate and 43-101
Technical Report - Data Verification

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









DynaMexico Mineral Resource Estimate
vs. Goldgroup Mineral Resource Estimate (Material Differences)

The 2012 DynaMexico Luna-CAM SJG 43-101
Technical Report and the 2012 DynaMexico-CAM SJG Mineral Resource Estimate were commissioned by DynaMexico in the best interests
of DynaMexico in order to correct a previous technical report and resource estimate for SJG which were released without authorization
by Goldgroup Mining Inc. on November 23, 2011, and filed with SEDAR on January 3, 2012; and which technical report and resource
estimate were released and filed by Goldgroup without approval from DynaMexico. Goldgroup is a shareholder of DynaMexico and as
such has it no authority to independently commission or release a technical report or resource estimate for SJG.

The material differences between the
premature, non-approved resource estimate for SJG released by Goldgroup and the 2012 DynaMexico-CAM SJG Mineral Resource Estimate
are shown in the table below:

|Resources Categories
        (Indicated & Inferred) | 2012
        DynaMexico
        (“CAM SJG Mineral Resource”) | Goldgroup
        Not-approved by DynaMexico
|--------------------------------------------------- | ------------------------------------------------------------ | --------------------------------------------
|at 2 g/t Au cut off                                 | Au Ounces                                                    | Avg. Au g/t                                 
|San Pablo Indicated                                 | 274,000                                                      | 6.52                                        
|San Pablo Inferred                                  | 103,000                                                      | 6.02                                        
|SJG Total Indicated                                 | 402,000                                                      | 5.69                                        
|SJG Total Inferred                                  | 741,000                                                      | 5.83                                        

The 2012 DynaMexico Luna-CAM SJG 43-101
Technical Report and the 2012 DynaMexico-CAM SJG Mineral Resource Estimate are the current and only Technical Report and Resource
Estimate for SJG which have been approved by DynaMexico, the 100 % owner of San Jose de Gracia.

2012 DynaMexico CAM Mineral Resource
Estimate and Technical Report - Qualified Persons

Each of Mr. Luna and Mr. Sandefur is
a “Qualified Person” as that term is defined in National Instrument 43-101 and is “independent” as that
term is also defined in National Instrument 43-101.

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



DynaMexico Water Concession

The Company has been informed by DynaResource
de Mexico, SA de CV. (“DynaMexico”), the 100% owner of SJG, that DynaMexico has secured the Water Rights Concession
for the area surrounding SJG. The Director of Water Administration of the National Water Commission of Mexico (CONAGUA) formally
certified in writing the rights of DynaResource de Mexico, S.A. de C.V. to legally use, exploit and extract 1,000,000 m3 of water
per year from the DynaMexico extraction infrastructure located within the perimeter of the mining concessions comprising the San
Jose de Gracia Mining Property in Sinaloa State, Mexico. CONAGUA determined that the DynaMexico water rights are not subject to
any water rights concession or any other water extraction restriction. Water extracted by DynaMexico will be subject to applicable
levies imposed by the Mexican tax authorities in accordance with current Mexican tax laws.



Annual Meeting of Shareholders of
DynaResource de Mexico – April 23, 2012

The Annual Meeting of the Shareholders
of DynaMexico was held on April 23, 2012 in Mazatlan, Sinaloa Mexico. The meeting was attended by DynaResource, Inc. and Goldgroup
Mining Inc., as shareholders of DynaMexico. Several hours following the commencement of the meeting of shareholders, DynaResource
discovered agents of Goldgroup secretly tape recording the private meeting.

As a result of discovering the secret
and unauthorized tape recording, and with the confidentiality of the private Shareholder Meeting breeched, the shareholders of
DynaMexico unanimously agreed to the premature adjournment of the meeting, to be continued later when the conditions could be determined
to be appropriate to resume.



25









DynaResource and DynaMexico are requesting
an investigation be conducted into the secret and unauthorized actions discovered at the private Shareholder meeting.

Exclusive Operating Entity at
San Jose de Gracia

Under agreement with DynaMexico, Mineras
de DynaResource SA de CV. (“Mineras”) has been named the exclusive operating entity at the San Jose de Gracia Project.
DynaResource owns 100% of Mineras.

DynaMexico General Power of Attorney

The Chairman-CEO of DynaUSA also serves
as the President of DynaMexico and as the President of Mineras. And, the President of DynaMexico holds a broad power of attorney
granted by the shareholders of DynaMéxico which gives the current President significant and broad authority within DynaMéxico.

Preliminary Economic Assessment Report

The Company anticipates that DynaMexico will
commission at least one Preliminary Economic Assessment Report for the SJG Project in the third quarter, 2012.



Company Transition from Exploration
to Mining – Production

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



Capital Requirements

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



Gold

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

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

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



|Year |                               | High |  | Low |       | Average
|---- | ----------------------------- | ---- |  | --- | ----- | -------
|     | 2002                          |      |  | $   | 349   |        
|     | 2003                          |      |  | $   | 416   |        
|     | 2004                          |      |  | $   | 454   |        
|     | 2005                          |      |  | $   | 536   |        
|     | 2006                          |      |  | $   | 725   |        
|     | 2007                          |      |  | $   | 841   |        
|     | 2008                          |      |  | $   | 1,011 |        
|     | 2009                          |      |  | $   | 1,213 |        
|     | 2010                          |      |  | $   | 1,421 |        
|     | 2011                          |      |  | $   | 1,895 |        
|     | 2012 (through August 7, 2012) |      |  | $   | 1,781 |        








Source: Kitco, Reuters and the London Bullion Market Association





26











On August 7, 2012, the afternoon fixing gold
price on the London Bullion Market was $1,611 per ounce and the spot market gold price on the New York Commodity Exchange was $1,610
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. DynaMexico is involved with reclamation matters with the oversight of Semarnat, the federal environmental agency of Mexico.



Amendment to Certificate of Incorporation
/ Article IV

At the Company’s Annual Meeting
for year 2012, dated July 6, 2012, the shareholders of the Company voted to approve the following amendments to the Company’s
Certificate of Incorporation. The Company has not yet made a filing with the Delaware Secretary of State to formalize the amendments.

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-five million (25,000,000) shares of Common Stock, par value $.01 per share (“Common Stock”),
and (ii) 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.



Common Stock

a. Dividends. Subject to the rights,
if any, of the holders of Preferred Stock with respect to the payment of dividends and the requirements, if any, with respect to
the setting aside of sums as sinking funds or redemption or purchase accounts for the benefit of such holders and subject to any
other conditions that may be fixed in or pursuant to the provisions of this Article IV, the holders of Common Stock shall be entitled
to receive such dividends, if any, as may be declared from time to time by the Board of Directors on the Common Stock out of assets
which are legally available therefore. Any such dividends shall be divided among the holders of the Common Stock on a pro rata
basis.

b. Liquidation. In the event of
any liquidation of the corporation, after payment or provision for payment of the debts and liabilities of the corporation and
after distribution to the holders of Preferred Stock of the amounts fixed in or pursuant to the provisions of this Article IV,
the holders of the Common Stock shall be entitled to receive all the remaining assets of the corporation, tangible and intangible,
of whatever kind available for distribution to stockholders. Any such assets shall be divided among the holders of Common Stock
on a pro rata basis.

c. Voting. Except as may otherwise be
required by law and subject to the rights of the holders of Preferred Stock fixed in or pursuant to this Article IV, each holder
of Common Stock shall have one vote for each share of Common Stock held by such holder on each matter submitted to a vote of the
stockholders.



Preferred Stock

a. General. Shares of the Preferred
Stock may be issued from time to time in one or more series, the shares of each series to have any designations and powers, preferences
and rights, and qualifications, limitations and restrictions thereof, as are stated and expressed in this Article IV and in any
resolution or resolutions providing for the issue of such series adopted by the Board of Directors as hereinafter prescribed (a
“Preferred Stock Designation”).





27









b. Authority of Board of Directors;
Preferred Stock Designation. In addition to the series of Preferred Stock authorized pursuant to paragraph 4 of this Article
IV, authority is hereby expressly granted to and vested in the Board of Directors to authorize the issuance of 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
or resolutions from time to time adopted providing for the issuance thereof the following:

(1) whether or not the series is
to have voting rights, full, special or limited, or is to be without voting rights, and whether or not such series is to be entitled
to vote as a separate class either alone or together with the holders of one or more other classes or series of stock;

(2) the number of shares to constitute
the series and the designations thereof;

(3) the preferences and relative,
participating, optional, or other special rights, if any, and the qualifications, limitations or restrictions thereof, if any,
with respect to any series;

(4) whether or not the shares of
any series shall be redeemable at the option of the corporation or the holders thereof or upon the happening of any specified event,
and, if redeemable, the redemption price or prices (which may be payable in the form of cash, notes, securities or other property),
and the time or times at which and the terms and conditions upon which such shares shall be redeemable and the manner of redemption;

(5) whether or not the shares of
a series shall be subject to the operation of retirement or sinking funds to be applied to the purchase or redemption of such shares
for retirement, and, if such retirement or sinking fund or funds are to be established, the periodic amount thereof, and the terms
and provisions relative to the operation thereof;

(6) the dividend rate, whether dividends
are payable in cash, stock of the corporation or other property, the conditions upon which and the times when such dividends are
payable, the preference to or the relation to the payment of dividends payable on any other class or classes or series of stock,
whether or not such dividends shall be cumulative or noncumulative, and if cumulative, the date or dates from which such dividends
shall accumulate;

(7) the preferences, if any, and
the amounts thereof which the holders of any series thereof shall be entitled to receive upon the voluntary or involuntary dissolution
of, or upon any distribution of the assets of, the corporation;

(8) whether or not the shares of
any series, at the option of the corporation or the holder thereof or upon the happening of any specified event, shall be convertible
into or exchangeable for the shares of any other class or classes or of any other series of the same or any other class or classes
of stock, securities or other property of the corporation and the conversion price or prices or ratio or ratios or the rate or
rates at which such conversion or exchange may be made, with such adjustments, if any, as shall be stated and expressed or provided
for in such resolution or resolutions; and,

(9) any other special rights and protective
provisions with respect to any series that the Board of Directors may deem advisable.



c. 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.





28









Series A Preferred Stock

There shall be authorized a series of Preferred
Stock which shall have the designation and powers, preferences and rights, and qualifications, limitations and restrictions thereof,
set forth in this Article IV. The designation of this series of Preferred Stock (“Series A Preferred Stock”)
shall be “Series A Preferred Stock”, and the total number of authorized shares of such series shall be 1,000. Subject
to the provisions of the Certificate of Incorporation, such number of shares may be increased or decreased from time to time by
resolution of the Board of Directors; provided, however, that no decrease shall reduce the number of shares of Series A
Preferred Stock to a number less than the number of shares of such series then issued and outstanding, plus the number of shares
of such series reserved for issuance upon the exercise of outstanding options, warrants or rights or the conversion or exchange
of outstanding indebtedness or other securities issued by the corporation. Shares of Series A Preferred Stock shall have no dividend,
voting or other rights except for the right to elect Class I Directors as set forth in Article V.



***



RESULTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012

REVENUE. Revenue for the three and six
months ended June 30, 2012 and 2011 was $0 and $0, respectively. The Company ceased its own production activities in 2006 in order
to focus its efforts on exploration and drilling activity, for the purpose of defining commercial ore resources.

COST OF EXPLORATION. Exploration costs
were $338,098 and $732,388 for the three months ended June 30, 2012 and 2011 respectively and $572,969 and $2,395,424 for the six
months ended June 30, 2012 and 2011 respectively. The decrease in costs was due to the decrease in exploration and drilling activity
from one year to the next.

OPERATING EXPENSES. Operating expenses
for the three months ended June 30, 2012 and 2011 were $699,157 and $400,614 respectively and $1,516,146 and $847,290 for the six
months ended June 30, 2012 and 2011 respectively. The above expenses include depreciation and amortization amounts of $72,298 and
$73,514 for the six months ended June 30, 2012, respectively.

OTHER INCOME (EXPENSE). Other income,
exclusive of currency translation gain or (loss) was $3,963 and $300 for the three months ended June 30, 2012 and 2011, respectively
and $4,213 and $597 for the six months ended June 30, 2012 and 2011 respectively. Currency translation gain or (loss) was $(299,499)
and $(148,979) for the three months ended June 30, 2012 and 2011, respectively, and $81,992 and $325,654 for the six months ended
June 30, 2012 and 2011, respectively.

NON-CONTROLLING INTEREST. The non-controlling
interest portion of our net loss for the three months ended June 30, 2012 and 2011 was $158,851 and $493,552, respectively and
for the six months ended June 30, 2012 and 2011 was $380,665 and $1,217,782, respectively. This is due to the Company reporting
a smaller year over year loss.

COMPREHENSIVE (LOSS). Comprehensive loss
includes the Company’s net loss plus the unrealized currency translation gain (loss) for the period which was a loss of $1,190,153
and a loss of $788,569 for the three months ended June 30, 2012 and 2011, respectively, and a loss of $1,590,445 and a loss of
$1,695,526 for the six months ended June 30, 2012 and 2011 respectively.

LIQUIDITY AND CAPITAL RESOURCES. The Company
has sufficient capital on hand to fund overhead operations through 2013.



PLAN OF OPERATION

Preliminary Economic Assessment Report

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

Structure of Company / Operations

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



29









Competitive Advantage

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

Drilling Programs

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

Liquidity and Capital Resources

As of June 30, 2012, the Company
maintained working capital of $2,168,850, comprised of current assets of $2,211,739 and current liabilities of $42,889. This represents
a decrease of $456,515 from the working capital maintained by the Company of $2,625,365 at December 31, 2011.

Net cash used in operations for
the six months ended June 30, 2012 was $1,531,029 compared to $2,556,932 for the six months ended June 30, 2011. The decrease was
a result of less activity on the property in the second quarter of 2012 compared to 2011.

Cash used for purchase of fixed
assets was $2,129 in the six months ended June 30, 2012 compared to $685,135 in the same period in 2011.

Cash provided by financing activities
for the six months ended June 30, 2012 was $940,394 compared to $4,375,469 for the same period in 2011. The main difference was
that in the first six months of 2011, Goldgroup contributed $4,000,000 towards its required contribution under the Earn In/Option
Agreement.





ITEM 3. Quantitative and Qualitative
Disclosure about Market Risk.

Not applicable.

30







ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The company carried out an evaluation
of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) as of June 30, 2012. This evaluation was accomplished under the supervision and with the participation of our chief
executive officer / principal executive officer, and chief financial officer / principal financial officer who concluded that the
company’s disclosure controls and procedures are effective to ensure that all material information required to be filed in
the quarterly report on Form 10-Q has been made known to them.

For purposes of this section, the term
disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information
required to be disclosed by the issuer in the reports that it files or submits under the Act (15 U.S.C. 78a et seg.) is recorded,
processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure, controls
and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed
by in our reports filed under the Securities Exchange Act of 1934, as amended (the "Act") is accumulated and communicated
to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions,
as appropriate to allow timely decisions regarding required disclosure.

Based upon an evaluation conducted for
the period ended June 30, 2012, our Chief Executive Officer and Chief Financial Officer as of June 30, 2012, and as of the date
of this Report, have concluded that as of the end of the period covered by this report, we have identified no material weakness
in our internal controls.

Corporate expenditures are processed and paid
by officers of the Company. However, the current number of transactions incurred by the Company does not justify additional accounting
staff to be retained.



Management’s Report on Internal Control Over Financial
Reporting

Management of the Company 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.

Projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate due to change in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.

Our management conducted an evaluation
of the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework at June 30, 2012. Based on
its evaluation, our management concluded that, as of June 30, 2012, our internal control over financial reporting was effective.

This quarterly 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 temporary rules of the SEC that permit the Company to provide only management’s report in this quarterly report.

Changes in Internal Controls over Financial Reporting

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



31







PART II



Item 1. 	Legal Proceedings



None.



Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds



During the six months ended June 30, 2012,
the Company issued 153,850 common shares and 358,100 common stock options for $973,500 cash. There were no underwriting discounts
or commissions paid and the Company received the full amount of the funds. The sale of these securities were exempt from registration
under Section 4(2) of the U.S. Securities Act of 1933. The funds will be used by the Company for working capital purposes.



Item 3.	Default Upon Senior Securities



Not applicable.



Item 4.	Mine Safety Disclosures



Not applicable.



Item 5.	Other Information



Not applicable.



Item 6.	Exhibits





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



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



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





SIGNATURES



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



DynaResource, Inc.



By /s/ K.W. (“K.D.”) Diepholz



K.W. (“K.D.”) Diepholz, Chairman / CEO



Date: August 17, 2012



32