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 September 30, 2008





OR





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





From the
transition period from ___________ to ____________.





Commission File Number0-53237





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 [    ]   No [X
].





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
December 31, 2008,there
were 9,073,913 shares of Common Stock of the issuer
outstanding.





TABLE OF
CONTENTS








PART I
FINANCIAL STATEMENTS





Item
      1.
              Financial
      Statements
              
              3Item
      2.
              Management's
      Discussion and Analysis or Plan of Operation16





PART II
OTHER INFORMATION





Item
      1.
              Legal
      Proceedings
              
              21Item
      2.
              Changes
      in Securities
              
              21Item
      3.
              Default
      upon Senior Securities
              
              21Item
      4.
              Submission
      of Matters to a Vote of Security Holders
              
              21Item
      5.
              Other
      Information
              
              21Item
      6.
              Exhibits
      and Reports on Form 8-
              
              21














2


DYNARESOURCE,
INC.


(An
Exploration Stage Company)


Consolidated
Balance Sheets


September
30, 2008 and December 31, 2007








Sept
      30, 2008
                          (Unaudited)
                        
                        
                        Dec
      31, 2007
                          (Audited)ASSETSCurrent
      AssetsCash
      and Cash Equivalents
                        
                        $
                        1,850,159
                        
                        
                        $
                        2,060,665Accounts
      Receivable (Net of Allowance of $0 and $0)
                        
                        
                        0
                        
                        
                        
                        13,079Foreign
      Tax Receivable
                        
                        
                        232,049
                        
                        
                        
                        151,852Other
      Current Assets
                        
                        
                        189,864
                        
                        
                        
                        72,063Total
      Current Assets
                        
                        
                        2,272,072
                        
                        
                        
                        2,297,659Fixed
      Assets:Mining
      Camp Equipment and Fixtures (Net of Accumulated Depreciation of $345,301
      and $325,507)
                        
                        
                        354,306
                        
                        
                        
                        389,731Mining
      Properties (Net of Accumulated Amortization of $378,510 and
      $288,510)
                        
                        
                        4,376,832
                        
                        
                        
                        4,414,857Total
      Fixed Assets
                        
                        
                        4,731,138
                        
                        
                        
                        4,804,588Deposits
                        
                        
                        5,790
                        
                        
                        
                        0TOTAL
      ASSETS
                        
                        $
                        7,009,000
                        
                        
                        $
                        7,102,247LIABILITIES,
      MINORITY INTEREST AND STOCKHOLDERS’ EQUITYCurrent
      LiabilitiesAccounts
      Payable
                        
                        $
                        0
                        
                        
                        $
                        0Accrued
      Expenses
                        
                        
                        68,455
                        
                        
                        
                        40,165Total
      Liabilities
                        
                        
                        68,455
                        
                        
                        
                        40,165Minority
      Interest
                        
                        
                        (321,933
                        )
                        
                        
                        344,980Shareholders’
      Equity:Preferred
      stock, $1.00 par value, 10,000 shares
                          authorized,
      1,000 and 1,000 shares issued and outstanding
                        
                        
                        1,000
                        
                        
                        
                        1,000Common
      stock, $.01 par value, 12,500,000 shares
                          authorized,
      8,508,127 and 8,276,824 shares issued
                          and
      outstanding respectively
                        
                        
                        85,081
                        
                        
                        
                        82,768Preferred
      Rights
                        
                        
                        40,000
                        
                        
                        
                        40,000Additional
      Paid In Capital
                        
                        
                        20,611,514
                        
                        
                        
                        15,874,681Treasury
      Stock
                        
                        
                        ( 7,500
                        )
                        
                        
                        ( 7,500
                        )Other
      Comprehensive Income
                        
                        
                        (75,833
                        )
                        
                        
                        41,711Accumulated
      Deficit
                        
                        
                        (
      6,002,516
                        )
                        
                        
                        (
      6,002,516
                        )Accumulated
      Deficit  Since Reentering the Development Stage
                        
                        
                        (7,389,268
                        )
                        
                        
                        (3,313,042
                        )Total
      Shareholders’ Equity
                        
                        
                        7,261,478
                        
                        
                        
                        6,717,102TOTAL
      LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS’ EQUITY
                        
                        $
                        7,009,000
                        
                        
                        $
                        7,102,247





See
accompanying summary of accounting policies and notes to financial
statements.








3





DYNARESOURCE, INC.


(An
Exploration Stage Company)


Consolidated
Statement of Operations


For
the Three and Nine Months Ended September 30, 2008 and 2007


And
Cumulative Since Reentering the Development Stage (January 1, 2007)


(Unaudited)





CumulativeSince
      ReenteringDevelopmentThree
      Months Ended
                      
                      
                      Nine
      Months Ended
                      
                      
                      StageSept
      30, 2008
                      
                      
                      Sept
      30, 2007
                      
                      
                      Sept
      30, 2008
                      
                      
                      Sept
      30, 2007
                      
                      
                      (Jan
      1, 2007)REVENUES
                      
                      $
                      0
                      
                      
                      $
                      0
                      
                      
                      $
                      0
                      
                      
                      $
                      0
                      
                      
                      $
                      0COST
      OF REVENUE (exclusive of depreciation and amortization shown separately
      below)Exploration
      Costs
                      
                      
                      1,633,167
                      
                      
                      
                      280,312
                      
                      
                      
                      3,761,004
                      
                      
                      
                      1,081,469
                      
                      
                      
                      5,858,382GROSS
      MARGIN
                      
                      
                      (1,633,167
                      )
                      
                      
                      (280,312
                      )
                      
                      
                      (3,761,004
                      )
                      
                      
                      (1,081,469
                      )
                      
                      
                      (5,858,382
                      )OPERATING
      EXPENSES:Depreciation
      and Amortization
                      
                      
                      36,598
                      
                      
                      
                      4,671
                      
                      
                      
                      109,794
                      
                      
                      
                      14,012
                      
                      
                      
                      256,185General
      and Administrative
                      
                      
                      505,901
                      
                      
                      
                      169,079
                      
                      
                      
                      962,801
                      
                      
                      
                      484,508
                      
                      
                      
                      1,939,313TOTAL
      OPERATING EXPENSES
                      
                      
                      542,499
                      
                      
                      
                      173,750
                      
                      
                      
                      1,072,595
                      
                      
                      
                      498,520
                      
                      
                      
                      2,195,498NET
      OPERATING (LOSS)
                      
                      
                      (2,175,666
                      )
                      
                      
                      (454,062
                      )
                      
                      
                      (4,833,599
                      )
                      
                      
                      (1,579,989
                      )
                      
                      
                      (8,053,880
                      )OTHER
      INCOMEPortfolio
      Income
                      
                      
                      515
                      
                      
                      
                      873
                      
                      
                      
                      1,260
                      
                      
                      
                      5,303
                      
                      
                      
                      7,887Other
      Income
                      
                      
                      28
                      
                      
                      
                      0
                      
                      
                      
                      2,282
                      
                      
                      
                      0
                      
                      
                      
                      2,282TOTAL
      OTHER INCOME
                      
                      
                      543
                      
                      
                      
                      873
                      
                      
                      
                      3,542
                      
                      
                      
                      5,303
                      
                      
                      
                      10,169NET
      INCOME (LOSS) BEFORE MINORITY INTEREST AND TAXES
                      
                      
                      (2,175,123
                      )
                      
                      
                      (453,189
                      )
                      
                      
                      (4,830,057
                      )
                      
                      
                      (1,574,686
                      )
                      
                      
                      (8,043,711
                      )Provision
      for Income Tax Benefit
                      
                      
                      0
                      
                      
                      
                      0
                      
                      
                      
                      0
                      
                      
                      
                      0
                      
                      
                      
                      38,259Minority
      (Earnings) Loss in Subsidiary
                      
                      
                      347,103
                      
                      
                      
                      0
                      
                      
                      
                      666,913
                      
                      
                      
                      0
                      
                      
                      
                      666,913NET
      LOSS
                      
                      $
                      (1,828,020
                      )
                      
                      $
                      (453,189
                      )
                      
                      $
                      (4,163,144
                      )
                      
                      $
                      (1,574,686
                      )
                      
                      $
                      (7,338,539
                      )Other
      Comprehensive Income:Currency
      Translation Gain (Loss)
                      
                      
                      (237,547
                      )
                      
                      
                      545,768
                      
                      
                      
                      86,921
                      
                      
                      
                      411,150
                      
                      
                      
                      79,096COMPREHENSIVE  LOSS
                      
                      $
                      (2,065,567
                      )
                      
                      $
                      92,579
                      
                      
                      $
                      (4,076,223
                      )
                      
                      $
                      (1,163,536
                      )
                      
                      $
                      (7,259,443
                      )Earnings
      (Loss) per share,  Basic
                      
                      $
                      (0.25
                      )
                      
                      $
                      (0.12
                      )
                      
                      $
                      ( 0.49
                      )
                      
                      $
                      (
      0.15
                      )Weighted
      Shares Outstanding, Basic
                      
                      
                      8,388,079
                      
                      
                      
                      7,875,000
                      
                      
                      
                      8,279,709
                      
                      
                      
                      7,875,000Earnings
      (Loss) per share,  Diluted
                      
                      $
                      (0.21
                      )
                      
                      $
                      (0.12
                      )
                      
                      $
                      ( 0.41
                      )
                      
                      $
                      (
      0.15
                      )Weighted
      Shares Outstanding, Diluted
                      
                      
                      9,908,886
                      
                      
                      
                      7,875,000
                      
                      
                      
                      9,967,427
                      
                      
                      
                      7,875,000








See
accompanying summary of accounting policies and notes to financial
statements.






4








DYNARESOURCE,
INC.


(An
Exploration Stage Company)


Consolidated
Statements of Cash Flows


For
the Nine Months Ended September 30, 2008 and 2007


And
Cumulative Since Reentering the Development Stage (January 1, 2007)


(Unaudited)





Nine
      Months Ended
                September
      30, 2008
              
              
              Nine
      Months Ended
                September
      30, 2007
              
              
              Cumulative
                Since
      Reentering
                Development
                Stage
                (Jan
      1, 2007)CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
              
              $
              (4,163,144
              )
              
              $
              (1,574,686
              )
              
              $
              (7,338,539
              )Adjustments
      to reconcile net deficit to cash used
                by
      operating activities:Issuance
      of common stock for services
              
              
              181,658
              
              
              
              0
              
              
              
              291,245Issuance
      of preferred stock for services
              
              
              0
              
              
              
              0
              
              
              
              1,000Depreciation
      and amortization
              
              
              109,794
              
              
              
              14,012
              
              
              
              256,185Minority
      interest
              
              
              (666,913
              )
              
              
              0
              
              
              
              (666,913
              )Change
      in assets and liabilities:Decrease
      in accounts receivable
              
              
              13,079
              
              
              
              199,143
              
              
              
              199,143(Increase)
      in foreign tax receivable
              
              
              (80,197
              )
              
              
              (39,815
              )
              
              
              (182,845
              )(Increase)
      in other current assets
              
              
              (117,801
              )
              
              
              (85,197
              )
              
              
              (112,773
              )Increase
      in deposits
              
              
              (5,789
              )
              
              
              0
              
              
              
              (5,789
              )(Decrease)/
      increase in accrued expenses
              
              
              28,290
              
              
              
              (43,057
              )
              
              
              (77,085
              )(Decrease)
      in deferred tax liability
              
              
              0
              
              
              
              (38,259
              )
              
              
              (38,259
              )CASH
      FLOWS FROM (USED IN) OPERATING ACTIVITIES
              
              
              (4,701,023
              )
              
              
              (1,567,859
              )
              
              
              (7,674,630
              )CASH
      FLOWS USED IN INVESTING ACTIVITIESPurchase
      of fixed assets
              
              
              (36,347
              )
              
              
              (48,527
              )
              
              
              (118,479
              )CASH
      FLOWS USED IN INVESTING ACTIVITIES
              
              
              (36,347
              )
              
              
              (48,527
              )
              
              
              (118,479
              )CASH
      FLOWS FROM FINANCING ACTIVITIESProceeds
      from DynaMexico Earn In
              
              
              4,050,000
              
              
              
              1,047,992
              
              
              
              7,093,004Proceeds
      from sale of common stock
              
              
              517,488
              
              
              
              223,975
              
              
              
              1,662,802Repurchase
      of common stock options
              
              
              (10,000
              )
              
              
              0
              
              
              
              (10,000
              )Other
      comprehensive income (loss)
              
              
              (117,545
              )
              
              
              96,249
              
              
              
              5,026Purchase
      of treasury stock
              
              
              0
              
              
              
              ( 7,500
              )
              
              
              ( 7,500
              )CASH
      FLOWS PROVIDED BY FINANCING ACTIVITIES
              
              
              4,439,943
              
              
              
              1,360,716
              
              
              
              8,743,332Effect
      of exchange rate on cash
              
              
              86,921
              
              
              
              411,150
              
              
              
              79,096NET
      INCREASE (DECREASE) IN CASH
              
              
              (210,506
              )
              
              
              155,480
              
              
              
              1,029,319Cash,
      beginning of period
              
              
              2,060,665
              
              
              
              820,840
              
              
              
              820,840Cash,
      end of period
              
              $
              1,850,159
              
              
              $
              976,320
              
              
              $
              1,850,159SUPPLEMENTAL
      CASH FLOW INFORMATIONInterest
      paid
              
              $
              0
              
              
              $
              0
              
              
              $
              0Income
      taxes paid
              
              $
              0
              
              
              $
              0
              
              
              $
              0Non-cash
      dividend of property
              
              $
              0
              
              
              $
              0
              
              
              $
              129,822





See
accompanying summary of accounting policies and notes to financial
statements.








5










DYNARESOURCE, INC.


(An
Exploration Stage Company)


Notes
to the Consolidated Financial Statements


September
30, 2008








NOTE 1 –
NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES





Nature
of Activities, History and Organization:





DynaResource,
Inc. (The “Company”) 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 owns 25% of Mineras and acquired
effective control of Mineras by acquiring the option to purchase the remaining
75% of the Shares of Mineras for seventy five pesos (approximately $7.00 in
United States Dollars), as of December 31, 2007.   The Agreement
also provided that the other shareholders of MinerasDyna relinquish and forfeit
any and all rights, interests and claims in and to the Corporation and in or to
any of the rights or assets owned or controlled by the
Corporation.  The Option expires at January 6,
2010.   The results of Mineras are consolidated with those of the
Company in the Company’s Financial Statements.





In
January 2008, the Company transferred 15% of the ownership of DynaMexico to
Goldgroup Resources Inc., in exchange for $3,000,000 Cash contribution and
exploration expenditures at SJG, and in August 2008, the Company transferred an
additional 10% of the ownership of DynaMexico to Goldgroup Resources Inc., in
exchange for an additional $3,000,000 Cash and exploration expenditures at SJG
(See Note 6 below).    Through September 30, 2008, Goldgroup
has contributed $ 7,093,004 to DynaMexico, and it currently owns 25% of
DynaMexico.





The
Company produced approximately $7,000,000 in revenues from production activities
during the years ended December 31, 2003 through December 31, 2006, and
suspended this activity voluntarily in June, 2006 to concentrate its efforts on
financing and exploration activities. In accordance with that decision, as of
January 1, 2007, the Company re-entered the Exploration Stage and has presented
its cumulative results since reentering the Exploration Stage, in accordance
with Statement of Financial Accounting Standard (SFAS) No. 7, “Accounting and Reporting by
Development Stage Enterprises”.  The company will continue this
presentation until it again reports revenues from operations.





Unaudited
Interim Financial Statements:





The
accompanying unaudited interim financial statements have been prepared in
accordance with accounting principles generally accepted in the United States
and applicable Securities and Exchange Commission (“SEC”) regulations for
interim financial information. These financial statements are unaudited and, in
the opinion of management, include all adjustments (consisting of normal
recurring accruals) necessary to present fairly the balance sheets, statements
of operations and statements of cash flows for the periods presented in
accordance with accounting principles generally accepted in the United States.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States have been condensed or omitted pursuant to SEC rules and
regulations. It is presumed that users of this interim financial information
have read or have access to the audited financial statements and footnote
disclosure for the preceding fiscal year contained in the Company’s Form 10 that
was effective on July 15, 2008.   Operating results for the
interim periods presented are not necessarily indicative of the results that may
be expected for the year ending December 31, 2008.








6






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. It is also necessary for
management to determine, measure and allocate resources and obligations within
the financial process according to those principles.  The accounting
policies used conform to generally accepted accounting principles which have
been consistently applied in the preparation of these financial
statements.





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





Management
believes that all adjustments necessary for a fair statement of the results of
the three month and nine month periods ending September 30, 2008 and September
30, 2007 have been made.





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.





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





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





Relevant
exchange rates used in the preparation of the financial statements for the
subsidiary are as follows for the six months ended September 30, 2008 (Mexican
pesos per one U.S. dollar):





September
      30, 2008Current
      exchange rate
              Pesos.
              10.97Weighted
      average exchange rate for the nine months ended
              Pesos.
              10.51








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 FDIC insurance limits.  The carrying amount
approximates fair market value.








7





Accounts
Receivable and Allowance for Doubtful Accounts:





The
allowance reserve 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 collectible.





Inventory:





As the
Company suspended its production activities in 2006, there is no inventory as of
June 30, 2008 and as of December 31, 2007.





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 34 concessions 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.  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.




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. If such
indication of impairment exists, the asset’s recoverable amount will be reduced
to its estimated fair value.  As of December 31, 2007 no indications
of impairment existed.





Use
of Estimates:





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








8





Revenue
Recognition:





The
Company recognizes revenue 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
(Loss) per Common Share:





Earnings
(loss) attributable to common stock is based on the weighted average number of
shares of common stock and common stock equivalents outstanding during the
year.     Diluted loss per share is computed using the
weighted average number of shares and dilutive potential common shares
outstanding.





Comprehensive
Income:





SFAS No.
130 “Reporting Comprehensive Income”, establishes standards for reporting and
display of comprehensive income and its components in a full set of general
purpose financial statements.    The Company’s comprehensive
income consists of net income and other comprehensive income (loss), consisting
of unrealized net gains and losses on the translation of the assets and
liabilities of its foreign operations.





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 10 for a discussion of new accounting
pronouncements.





Fair
Value of Financial Instruments:





In
accordance with the reporting requirements of SFAS No. 107, Disclosures About Fair Value of
Financial Instruments, the Company calculates the fair value of its
assets and liabilities which qualify as Financial Instruments under this
statement and includes this additional information in the notes to the financial
statements when the fair value is different than the carrying value of those
financial instruments.  At September 30, 2008, the Company did not
have any financial instruments other than cash and cash
equivalents.








NOTE 2 – FIXED ASSETS





Fixed
assets are stated at cost and consist of the following at September 30,
2008:





Mining
      camp equipment and fixtures
                
                $
                454,563Transportation
      equipment
                
                
                139,453Lab
      equipment
                
                
                14,306Machinery
      and equipment
                
                
                33,211Office
      furniture and fixtures
                
                
                22,376Office
      equipment
                
                
                3,448Computer
      equipment
                
                
                32,250Sub-total
                
                $
                699,607Less:
      Accumulated depreciation
                
                
                (345,301
                )Total
                
                $
                354,306





Depreciation
has been provided over each asset’s estimated useful
life.  Depreciation expense was $19,794 and $14,012 for the nine
months ended September 30, 2008 and 2007 respectively,








9





NOTE 3 – MINING
PROPERTIES





Mining
properties are carried at the lower of cost or market value and consist of the
following at September 30, 2008:





San
      Jose de Gracia:Mining
      concessions
                
                $
                4,754,648Less:
      Accumulated amortization
                
                
                (378,510
                )Total
                
                $
                4,376,138





Amortization
expense was $90,000 and $0  for the nine months ended September 30,
2008 and 2007, respectively.








NOTE 4 – INCOME
TAXES





During
the year ended December 31, 2007, the Company adopted Financial Accounting
Standards Board (FASB) Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes” (FIN 48), which supplements SFAS No. 109, “Accounting for Income
Taxes”, by defining the confidence level that a tax position must meet in order
to be recognized in the financial statements.   The
Interpretation requires that the tax effects of a position be recognized only if
it is “more-likely-than-not” to be sustained based solely on its technical
merits as of the reporting date.  The more-likely-than-not threshold
represents a positive assertion by management that a company is entitled to the
economic benefits of a tax position.  If a tax position is not
considered more-likely-than-not to be sustained based solely on its technical
merits, no benefits of the tax position are to be
recognized.  Moreover, the more-likely-than-not threshold must
continue to be met in each reporting period to support continued recognition of
a benefit.  With the adoption of FIN 48, companies are required to
adjust their financial statements to reflect only those tax positions that are
more-likely-than-not to be sustained.  Any necessary adjustment would
be recorded directly to retained earnings and reported as a change in accounting
principle.





The
Company did not provide any current or deferred U.S. federal income tax
provision or benefit for any of the periods presented, as the Company has
experienced operating losses since reentering the development
stage.   The Company provided a full valuation allowance on the
net deferred tax asset, consisting of net operating loss carry forwards, because
management has determined that it is more-likely-than-not that the Company will
not earn income sufficient to realize the deferred tax assets during the carry
forward period.





The
components of the Company’s deferred tax asset as of September 30, 2008 are as
follows:





September 30,
      2008Net
      operating loss carry forward
                
                $
                4,553,206Valuation
      allowance
                
                
                (4,553,206
                )Net
      deferred tax asset
                
                $
                0





A
reconciliation of the statutory income tax rates and the effective rate is as
follows:





September 30,
      2008Tax
      at statutory rate (blended U.S. and Mexico)
                
                
                34
                %Valuation
      allowance
                
                
                (34
                %)Effective
      rate
                
                
                -








Upon
adoption of FIN 48, the Company had no gross unrecognized tax benefits that, if
recognized, would favorably affect the effective income tax rate in future
periods.  The Company has not accrued any additional interest or
penalties as a result of the adoption of FIN 48.








10





The
Company has nominal net operating profits in DynaResource de Mexico SA. de CV.,
Mineras de DynaResource SA de CV., and DynaResource Operaciones de San Jose De
Gracia SA. de CV. and will be subject to Mexican corporate tax for any future
net revenues.








NOTE 5 – MATERIAL
AGREEMENTS





Concessions and Interest
related to the San Jose de Gracia Property:





In March
2000, The Company entered into agreements to complete the acquisition and
consolidation of 100% of the San Jose de Gracia Property and related mining
interests.  Pursuant to these agreements, the Mining Concessions and
related interests comprising the San Jose de Gracia property were transferred to
the Company.





In March
2005, the Company issued 115,000 common shares; received a cash payment of
$15,000; and accepted a mutual release from the vending parties; to complete the
acquisition agreements.








Financing/Sale of
Stock:





On
September 1, 2006 the Company signed an “Earn In / Option Agreement” (“Earn In”)
between:  DynaResource, Inc. (“DynaResource”) and DynaResource de
Mexico S.A. de C.V. (“DynaMexico”), (“Seller”); and Goldgroup Resources, Inc.,
of Vancouver, British Columbia (“Goldgroup”), (“Buyer”), and Together, (“the
Parties”).





The Earn
In provides for the sale of up to fifty percent (50%) of the total outstanding
shares of DynaMexico, the wholly owned subsidiary of DynaResource, and the owner
of the San Jose de Gracia District in northern Sinaloa Mexico
(“SJG”);  in exchange for the total cash contributions to DynaMexico,
and expenditures related to the exploration and development of the SJG, in the
amount of $18,000,000 by Goldgroup; contributed in four (4) phases, as set forth
below:





Phase
              On
      or before
              Amount
      of Funds to be deposited to DynaMexico (For SJG
    Expenditures)
              Interest
      Earned (by Goldgroup in DynaMexico)
              Cumulative
      Interest Earned (by Goldgroup in DynaMexico)1.
              June
      15, 2007
              $1,000,000
              0%
              0%2.
              March
      15, 2008
              $2,000,000
              15%
              15%3.
              September
      15, 2009
              $3,000,000
              10%
              25%4.
              March
      15, 2011
              $12,000,000
              25%
              50%








Pursuant
to the Earn In Agreement:





DynaResource
attached the “SJG Title Opinion”, compiled by Urias Romero Y Asociados, Abraham
Urias, Mazatlan, Sinaloa, with attachments and schedules; describing the status
and position of DynaMexico and affiliates in Mexico, and confirming the
ownership and status of the Mining Concessions comprising the SJG District in
Sinaloa, Mexico;





DynaResource
attached its audited, consolidated financial statements at December 31,
2005;





The
Parties agreed to a revised setting of the Board of Directors of DynaMexico,
to:





a.
            Two
      (2) Members of DynaResource; K.D. Diepholz, Chairman/CEO of DynaResource
      as President; and, Charles E. Smith; CFO of
  DynaResource;








11





b.
            One
      (1) Member of Goldgroup; Keith Piggott, CEO of
  Goldgroup.





A
Management Committee was formed to approve budgets and expenditures made
pursuant to the Earn In.  The setting of the Management Committee
is:





a.
            Two
      (2) Members of Goldgroup;  Keith Piggott, and John Sutherland,
      CFO;





b.
            One
      (1) Member of DynaResource;  K.D.
  Diepholz;





Also, The
Parties agreed to cooperate to develop the SJG Property, in the best interests
of the SJG Project.








Operations through
Subsidiaries:





Activities
related to the exploration and development of SJG are being conducted by
MinerasDyna as the Exclusive Operator of the SJG Project; through contract from
DynaMexico, the 100 % owner of the SJG Property; with the management of
personnel being contracted by MinerasDyna through to the personnel management
subsidiary, DynaOperaciones.





Phase 2 and Phase 3
of  Earn In Completed:





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





At June
30, 2008, the Company reports total deposits to DynaMexico by Goldgroup in
excess of $ 5,500,000. USD; with total expenditures through DynaMexico of $
51,220,979.87 pesos.





On July
16, 2008, the Goldgroup completed Phase III of the Earn In Agreement through
total contributions of capital under the Earn In Agreement of $6,118,009 with
total expenditures related to the exploration of SJG of $57,252,898 pesos, with
the remainder held in cash in DynaMexico.  In August 2008, an
additional 10% of the Shares of DynaMexico were transferred to Goldgroup, so
that Goldgroup now owns 25% of DynaMexico.





Continuing
with Phase III exploration activities, at September 30, 2008 the Company
reported total deposits to DynaMexico by Goldgroup in excess of $ 7,400,000 USD,
with total expenditures through DynaMexico of 69,507,475.43 pesos.








Memorandum of Understanding,
(“MOU”):





In order
to clarify and confirm the operating structure at SJG, DynaResource, Inc.,
DynaResource de Mexico, and Goldgroup Resources Inc. (the Parties to the Earn In
/ Option Agreement); and together,  “the Parties”) entered into a
“Memorandum of Understanding” (the “MOU”), dated July 29, 2008.  The
MOU provides for:





·
            Mineras
      de DynaResource (“MinerasDyna”) as the exclusive operating entity at SJG,
      pursuant to the operating agreement with DynaResource de Mexico
      (“DynaMexico’);





·
            DynaMexico
      owns the SJG 100%, and all Records, Data and information pursuant thereto.
      Any information disseminated regarding SJG must be disclosed as
      originating from DynaMexico;





·
            The
      SJG Management Committee is not a legal entity and has no authority or
      ability to sign contracts or incur obligations or liabilities to
      DynaMexico, MinerasDyna, or
DynaOperaciones;





·
            The
      SJG Management Committee does not have the authority to act for or
      represent DynaMexico, MinerasDyna, DynaOperaciones, or the SJG
      Property;





·
            All
      personnel or consultants related to the SJG Project must be employed or
      contracted through MinerasDyna or DynaOperaciones and must be accountable
      to the employing / contracting
entity;






12





NOTE 6 – RELATED PARTY
TRANSACTIONS





In the
nine months ended September 30, 2008 and 2007, the Company paid $121,531 and
$85,497 respectively to Dynacap Group, Ltd. (an entity controlled by officers of
the Company) for consulting and other fees.








NOTE 7 – STOCKHOLDERS’
EQUITY





Preferred
Stock





The
Company is authorized to issue 10,000 Series “A” Preferred Shares at a par value
of $1.00 per share.  These shares have full voting
rights.  In October 2007, the Company issued 1,000 shares of Preferred
A shares to its CEO, K.D. Diepholz.  These Series A Preferred Shares
retain the right to elect a majority of the Board of Directors.  There
were 1,000 and 0 Series A Preferred Shares outstanding at December 31, 2007 and
2006, respectively.





Common
Stock





The
Company is authorized to issue 12,500,000 common shares at a par value of $0.01
per share.  These shares have full voting rights.  At
September 30, 2008, there were 8,508,127 shares outstanding.  At
December 31, 2007, there were 8,276,824  shares
outstanding.    As of December 31, 2007, the Company had not
paid any cash dividends; but in September 2007 made a non-cash dividend of
property totaling $129,822.





Preferred
Rights





The
Company issued “Preferred Rights” and received $158,500 in 2003 and $626,250 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, leaving a balance of $226,188.  As of December 31, 2005,
$186,188 has been repaid, leaving a balance of $40,000. At December 31, 2007 the
balance remains at $ 40,000.





Treasury
Stock





Treasury
stock is accounted for by the cost method.  The Company may from time
to time purchase and resell its own common stock.  Treasury stock
activity is presented in the consolidated statement of stockholders’
equity.





Options and
Warrants





There are
2,664,094 options outstanding at September 30, 2008.





929,348
options entitle the holder to purchase one share of the Company’s common stock
at a price of $2.50 per share. On August 31, 2007 the expiration date was
extended from November 15, 2007 to November 15, 2008.  145,235 options
have been exercised since issuance.





456,654  options
entitle the holder to purchase one share of the Company’s common stock at a
price of $3.75 per share. On August 31, 2007 the expiration date was extended
from November 15, 2007 to November 15,
2009.  12,000  options have been exercised since
issuance.





240,917
Options entitle the holder to purchase one share of the Company’s common stock
at a price of $5.00 per share. On August 31, 2007 the expiration date was
extended from July 1, 2008 to November 15, 2009.  No options were
exercised or cancelled since issuance.








13





150,000
options entitle the holder to purchase one share of the Company’s common stock
at a price of $2.50 per share. On August 31, 2007 the expiration date was
extended from February 1, 2009 to November 15, 2009.  No options were
exercised or cancelled since issuance.





500,000
options entitle the holder to purchase one share of the Company’s common stock
at a price of $2.50 per share.  On August 31, 2007 the expiration date
was extended from  February 1, 2009 to November 15,
2009.  No options were exercised or cancelled since
issuance.





365,295
options entitle the holder to purchase one share of the Company’s common stock
at a price of $5.00 per share.  The options expire November 15, 2009.
No options were exercised or cancelled since issuance.





21,880
options entitle the holder to purchase one share of the Company’s common stock
at a price of $10.00 per share and expire November 15, 2009.   No
options were exercised or cancelled since issuance.








NOTE 8 – EMPLOYEE BENEFIT
PLANS





There is
currently no qualified or non-qualified employee pension, profit sharing, stock
option, or other plans authorized for any class of employees.








NOTE 9 – COMMITMENTS AND
CONTINGENGIES





Three
additional Mining Concessions in Mexico were applied for, and at the time that
Title of these Concessions are completed to DynaMexico, would extend the SJG
District by approximately 95,000 Hectares.








NOTE 10 - RECENTLY ADOPTED
ACCOUNTING PROUNCEMENTS





In
September 2006, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Standards (“SFAS”) No. 157, Fair Value Measurements
(“SFAS No. 157”), which defines fair value, establishes a framework for
consistently measuring fair value under GAAP and expands disclosures about fair
value measurements. SFAS No. 157 became effective for the Company on
January 1, 2008. SFAS No. 157 establishes a hierarchy in order to segregate fair
value measurements using quoted prices in active markets for identical assets or
liabilities, significant other observable inputs and significant unobservable
inputs. For assets and liabilities that are measured at fair value on a
recurring basis, SFAS No. 157 requires disclosure of information that enables
users of financial statements to assess the inputs used to determine fair value
based on the aforementioned hierarchy. See Note 11 for further information
regarding our assets and liabilities that are measured at fair value on a
recurring basis.





In
February 2008, the FASB issued FASB Staff Position (“FSP”) 157-2 “Partial
Deferral of the Effective Date of Statement 157”.  FSP 157-2
delays the effective date of SFAS No. 157 to fiscal years beginning
after November 15, 2008 for all nonfinancial assets and nonfinancial
liabilities, except those that are recognized or disclosed at fair value in the
financial statements on a recurring basis (at least annually). The Company has
adopted SFAS No. 157 as of January 1, 2008 related to financial
assets and financial liabilities. Refer to Note 11 for additional
discussion on fair value measurements. The Company is currently evaluating the
impact of SFAS No. 157 related to nonfinancial assets and nonfinancial
liabilities on the Company’s financial position, results of operations and cash
flows.





In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities – Including an Amendment of FASB Statement
No. 115(“SFAS No. 159”). SFAS No. 159 permits entities to
choose to measure eligible items at fair value at specified election dates and
report unrealized gains and losses on items for which the fair value option has
been elected in earnings at each subsequent reporting date.
SFAS No. 159 was effective for the Company on January 1, 2008.
However, the Company has not elected to apply the provisions of SFAS No. 159 to
any of our financial assets and financial liabilities, as permitted by the
Statement.






14






NOTE 11 –ACCOUNTING PRONOUNCEMENTS
NOT YET ADOPTED





In
December 2007, the FASB issued SFAS No. 141(R), Business Combinations (“SFAS
No. 141(R)”) which replaces SFAS No. 141, Business Combinations, and
requires the acquirer of a business to recognize and measure the identifiable
assets acquired, the liabilities assumed, and any non-controlling interest in
the acquiree at fair value. SFAS No. 141(R) also requires transaction costs
related to the business combination to be expensed as incurred. SFAS No. 141(R)
is effective for business combinations for which the acquisition date is on or
after fiscal years beginning after December 15, 2008. Management does not
believe that adoption of this statement will have a material impact on the
Company’s consolidated financial position or results of operations.





In
December 2007, the FASB issued SFAS No. 160, Non-controlling Interests in
Consolidated Financial Statements (“SFAS No. 160”). This Statement amends
ARB No. 51, Consolidated
Financial Statements, to establish accounting and reporting standards for
the non-controlling interest in a subsidiary and for the deconsolidation of a
subsidiary. SFAS No. 160 is effective for fiscal years beginning after December
15, 2008. We are currently evaluating the effect that the adoption of SFAS No.
160 will have on our consolidated financial position, results of operations and
cash flows.





In March
2008, the FASB issued FASB Statement No. 161, Disclosures about Derivative
Instruments and Hedging Activities.The new standard is intended to
improve financial reporting about derivative instruments and hedging activities
by requiring enhanced disclosures to enable investors to better understand their
effects on an entity’s financial position, financial performance, and cash
flows. It is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008, with early application
encouraged. The new standard also improves transparency about the location and
amounts of derivative instruments in an entity’s financial statements; how
derivative instruments and related hedged items are accounted for under
Statement 133; and how derivative instruments and related hedged items affect
its financial position, financial performance, and cash flows. Management is
currently evaluating the effect of this pronouncement on financial
statements.





In June
2008, the Securities and Exchange Commission announced that it has approved a
one-year extension of the compliance data for smaller public companies to meet
the section 404(b) auditor attestation requirement of the Sarbanes-Oxley
Act.  With the extension, small companies will now be required to
provide the attestation reports in their annual reports for the fiscal years
ending on or after December 15, 2009.








NOTE 12 – FAIR VALUE OF FINANCIAL
      INSTRUMENTS





In
September 2006, the FASB issued SFAS 157, Fair Value Measurement. SFAS
157 defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles and expands disclosures about fair
value measurements. SFAS 157 was effective for our financial assets and
liabilities on January 1, 2008. The FASB delayed the effective date of SFAS
157 for all non-financial assets and non-financial liabilities, except those
that are recognized or disclosed at fair value in the financial statements on a
recurring basis (at least annually) to fiscal years beginning after
November 15, 2008.





SFAS
157’s valuation techniques are based on observable and unobservable inputs.
Observable inputs reflect readily obtainable data from independent sources,
while unobservable inputs reflect our market assumptions. The Standard
classifies these inputs into the following hierarchy:





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
September 30, 2008, the Company had no financial instruments with Level 1, Level
2 or Level 3 Inputs.








15





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





The
Company’s majority owned subsidiary, DynaResource de Mexico, S.A. de C.V.
(“DynaMexico’), owns 100% of the mineral concessions to the San Jose de Gracia
mining property (“SJG”) covering approximately 95,000 hectares located in and
around San Jose de Gracia, Sinaloa State, Mexico. San Jose de Gracia is located
on the west side of the Sierra Madre Mountains, approximately 100 kilometers
inland from Guamuchil and approximately 200 kilometers north of Mazatlan,
Sinaloa.





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





Earlier
drill programs conducted at SJG in 1997-98, primarily at Tres Amigos at the
Northeast area of SJG, included over 6,200 Meters in 63 Drill
Holes.  The results from this ’97-‘98 Drilling are reported in the
Company’s Form 10/A.





During
the period 1998-2003, The Company focused its efforts on acquiring and
consolidating the SJG district;  and DynaMexico currently reports a
100 % ownership of the entire SJG district (currently approximately 100,000
Hectares).





From
March 2003 through June 2006, the Company conducted a “Test” / “Pilot”
production operation at SJG, at the small scale capacity of approximately 100
Tons / Day.  During this period the Company mined high grade veins at
the San Pablo area of SJG , with the below results:




Mined
      Tonnage:
                    42,000
      Tons;Production
      (Oz. Au.)
                    18,250
      Oz.;Average
      Grade:
                    20
      g/t.;Recovery
      Efficiency (Plant):
                    85
      %;Recovery
      in Concentrate (Sales):
                    90
      %Production
      Cost (Average);
                    $
      175 / Oz.
 The
Company initiated the Test Production activity at the time Gold prices were
depressed, and with exploration funding opportunities, while available, were
deemed to be too dilutive by Company Management. While the Test production was a
success (see results above), a small scale production activity was not expected
to provide the necessary capital in order to explore a project the size of
SJG.  However, The Company expects the results of the production
activity to provide significant benefits to the exploration drilling to be
conducted at San Pablo and other areas of SJG; while at the same time the
production activity confirmed production grades, efficiency of recoveries, and
production costs for this Test operation.





As Gold
prices appreciated later in 2003, and continuing upward to $ 700 / Oz. in 2006;
exploration financing opportunities increased, and the Company negotiated and
entered into the “Earn In / Option agreement” with Goldgroup Resources, Inc.,
dated September 1, 2006.  The Terms of the Earn In / Option agreement
provides for $ 18 M. USD. in exploration funding and expenditures made related
to SJG, in exchange for 50 % of the Shares of DynaMexico, while also providing
for proven industry professionals to the SJG project.  (See Earn In /
Option Agreement.)





Drilling and
Assays:





During
the Quarter ending September 30, 2008;   Approximately 4,981.78
meters drilling was accomplished in 24 drill holes (08-87 to 08-109); as well as
geochemical sampling and mapping, and data consolidation into Surpac
Software.  Drilling costs during the period were 6,945,128.46
pesos.  Assays received for the core drills holes drilled during the
quarter are shown below in Tabular form.






16





Equiv
              GOLDGold
      composites
            Ag-Cu-DH_ID
            FROM
            TO
            INTERV
            Au
      (g/t)
            
            Au
      interval
            including
            Pb-ZnSJG08-87
            91.3
            91.9
            0.6
            6.21
            
            0.60
            m
      @
            6.21
            
            
            
            6.33SJG08-87
            93
            94
            1
            0.12SJG08-87
            102
            103.7
            1.7
            0.443SJG08-87
            109
            109.6
            0.6
            0.162SJG08-87
            118.6
            120.3
            1.7
            0.637SJG08-88
            205.9
            206.4
            0.5
            2.132
            
            1.00
            m
      @
            1.22
            
            
            
            1.22SJG08-88
            206.4
            206.9
            0.5
            0.316SJG08-89
            173.8
            175.1
            1.3
            4.52
            
            3.80
            m
      @
            2.64
            
            
            
            2.64SJG08-89
            175.1
            176.3
            1.2
            0.48SJG08-89
            176.3
            177.6
            1.3
            2.746SJG08-89
            196.8
            199.2
            2.4
            0.125SJG08-89
            201.6
            202.6
            1
            1.025
            
            4.30
            m
      @
            0.55
            
            
            
            0.55SJG08-89
            202.6
            204.4
            1.8
            0.275SJG08-89
            204.4
            205.9
            1.5
            0.553SJG08-89
            207.4
            208.8
            1.4
            0.365SJG08-89
            210.8
            211.4
            0.6
            1.078
            
            3.00
            m
      @
            0.67
            
            
            
            0.67SJG08-89
            211.4
            211.6
            0.2
            0.584SJG08-89
            211.6
            213.8
            2.2
            0.56SJG08-90
            175.3
            175.5
            0.2
            0.519SJG08-90
            184.1
            186.3
            2.2
            0.15SJG08-90
            190.7
            191.3
            0.6
            17.87
            
            1.20
            m
      @
            12.54
            
            
            
            13.76SJG08-90
            191.3
            191.9
            0.6
            7.21SJG08-90
            194.1
            196.4
            2.3
            1.326
            
            3.30
            m
      @
            2.28
            
            
            
            2.49SJG08-90
            196.4
            197.4
            1
            4.46SJG08-91
            191.2
            191.4
            0.2
            17.53
            
            0.20
            m
      @
            17.53
            
            
            
            17.53SJG08-92
            124.8
            125.8
            1
            0.198
            
            4.20
            m
      @
            0.60
            
            
            
            0.60SJG08-92
            125.8
            126.8
            1
            0.442SJG08-92
            126.8
            127.9
            1.1
            0.988SJG08-92
            127.9
            129
            1.1
            0.725SJG08-92
            133.2
            134.2
            1
            0.458
            
            4.10
            m
      @
            1.38
            
            
            
            1.38SJG08-92
            134.2
            135.3
            1.1
            2.458SJG08-92
            135.3
            136.5
            1.2
            1.987SJG08-92
            136.5
            137.3
            0.8
            0.135SJG08-92
            140.1
            140.8
            0.7
            1.407
            
            4.90
            m
      @
            3.14
            
            
            
            3.14SJG08-92
            140.8
            142.7
            1.9
            0.35SJG08-92
            142.7
            143.1
            0.4
            1.648SJG08-92
            143.1
            144.6
            1.5
            0.212SJG08-92
            144.6
            145
            0.4
            31.94
            
            0.40
            m
      @
            31.94SJG08-92
            148
            150.3
            2.3
            0.124SJG08-92
            153.9
            156.1
            2.2
            0.146SJG08-92
            156.1
            158.3
            2.2
            0.106SJG08-92
            160.6
            165.5
            4.9
            0.524SJG08-92
            179
            179.5
            0.5
            14.719
            
            0.50
            m
      @
            14.72
            
            
            
            14.72SJG08-93
            35
            37.4
            2.4
            1.05SJG08-93
            125.9
            127.1
            1.2
            1.532SJG08-93
            138.4
            138.8
            0.4
            35.77
            
            0.40
            m
      @
            35.77
            
            
            
            35.77SJG08-93
            153.4
            155.2
            1.8
            1.086SJG08-93
            215.5
            217.8
            2.3
            0.378SJG08-93
            217.8
            219.6
            1.8
            0.35SJG08-93
            221.5
            223.7
            2.2
            0.124SJG08-93
            237.5
            239.3
            1.8
            0.326
            
            8.60
            m
      @
            0.38
            
            
            
            0.38SJG08-93
            239.3
            241.6
            2.3
            0.308SJG08-93
            241.6
            243.8
            2.2
            0.572SJG08-93
            243.8
            246.1
            2.3
            0.326SJG08-94
            277.6
            279.9
            2.3
            0.414SJG08-95
            137.9
            138.6
            0.7
            1.285SJG08-95
            191.7
            193.7
            2
            0.524SJG08-95
            216.8
            219.1
            2.3
            0.109SJG08-95
            219.1
            219.4
            0.2
            2.29SJG08-96
            245.5
            246.3
            0.8
            1.311
            
            2.10
            m
      @
            2.22
            
            
            
            2.36SJG08-96
            246.3
            247
            0.8
            0.945SJG08-96
            247
            247.6
            0.6
            4.75SJG08-97
            227
            227.7
            0.7
            1.023
            
            4.30
            m
      @
            7.71
            
            
            
            8.89SJG08-97
            227.7
            228.6
            0.9
            15.28175
            
            2.10
            m
      @
            15.07SJG08-97
            228.6
            229.2
            0.6
            11.101SJG08-97
            229.2
            229.8
            0.6
            18.724SJG08-97
            229.8
            231.3
            1.6
            0.502SJG08-98
            204.6
            206.5
            1.9
            0.369
            
            3.80
            m
      @
            0.36
            
            
            
            0.60SJG08-98
            206.5
            208.4
            1.9
            0.345SJG08-98
            208.4
            210.3
            1.9
            0.214SJG08-98
            211.9
            214.4
            2.5
            0.448
            
            2.50
            m
      @
            0.448
            
            
            
            0.47SJG08-98
            222.3
            224
            1.7
            0.12SJG08-98
            227.6
            229.4
            1.8
            0.205SJG08-98
            230.7
            231.2
            0.5
            2.165
            
            0.50
            m
      @
            2.165
            
            
            
            2.32SJG08-99
            124
            125.7
            1.7
            1
            
            3.40
            m
      @
            0.84
            
            
            
            0.88SJG08-99
            125.7
            127.4
            1.7
            0.679SJG08-99
            241
            242.8
            1.8
            0.149SJG08-99
            242.8
            244.6
            1.8
            0.532
            
            3.60
            m
      @
            0.46
            
            
            
            0.47SJG08-99
            244.6
            246.4
            1.8
            0.379SJG08-100
            204.5
            206.5
            2
            0.25
            
            9.40
            m
      @
            0.49SJG08-100
            206.5
            208.6
            2.1
            0.818SJG08-100
            208.6
            210.7
            2.1
            0.519SJG08-100
            210.7
            212.3
            1.6
            0.498SJG08-100
            212.3
            213.9
            1.6
            0.298SJG08-100
            221.4
            223.2
            1.8
            0.162SJG08-100
            223.2
            225
            1.8
            0.235
            
            2.20
            m
      @
            0.23
            
            
            
            0.36SJG08-100
            225
            225.4
            0.4
            0.205SJG08-100
            225.4
            227.4
            2
            0.142SJG08-100
            227.4
            229.4
            2
            0.289
            
            9.40
            m
      @
            0.50
            
            
            
            0.55SJG08-100
            229.4
            231.4
            2
            0.958SJG08-100
            231.4
            233.4
            2
            0.715SJG08-100
            233.4
            235.1
            1.7
            0.202SJG08-100
            235.1
            236.8
            1.7
            0.25SJG08-102
            142.85
            144.8
            1.95
            0.233
            
            1.95
            m
      @
            0.233
            
            
            
            0.34SJG08-102
            154.6
            156.3
            1.7
            0.294
            
            7.87
            m
      @
            2.75
            
            
            
            3.02SJG08-102
            156.3
            158
            1.73
            0.499SJG08-102
            158.03
            158.7
            0.63
            1.164SJG08-102
            158.66
            159.4
            0.76
            5.304
            
            2.54
            m
      @
            6.49SJG08-102
            159.42
            160
            0.58
            11.527SJG08-102
            160
            161.2
            1.2
            4.804SJG08-102
            161.2
            162.5
            1.27
            2.434SJG08-102
            164.5
            166.5
            2
            0.349SJG08-102
            179.35
            180.3
            0.99
            0.265SJG08-102
            184.55
            186.4
            1.8
            0.236SJG08-102
            195.41
            195.9
            0.51
            0.958SJG08-102
            206.7
            208.2
            1.5
            7.927
            
            3.25
            m
      @
            3.91
            1.50
            m
      @
            7.927
            4.16SJG08-102
            208.2
            210
            1.75
            0.46SJG08-102
            213.5
            215.1
            1.6
            0.494
            
            6.00
            m
      @
            0.55
            
            
            
            0.63SJG08-102
            215.64
            217.6
            1.94
            1.013SJG08-102
            217.58
            219.5
            1.92
            0.282SJG08-102
            250.5
            252.1
            1.57
            0.58SJG08-103
            139.5
            140.4
            0.9
            1.234
            
            0.90
            m
      @
            1.234
            
            
            
            1.76SJG08-103
            172.6
            174.6
            2
            0.096SJG08-103
            174.6
            175.8
            1.2
            0.392
            
            20.50
            m
      @
            0.31
            
            
            
            0.46SJG08-103
            193.9
            195.1
            1.2
            4.911
            
            1.20
            m
      @
            4.911SJG08-103
            195.1
            197
            1.9
            0.055SJG08-103
            197
            198.8
            1.8
            0.138SJG08-103
            198.8
            200.3
            1.5
            0.214
            
            8.60
            m
      @
            0.35
            
            
            
            0.80SJG08-103
            200.3
            201.7
            1.4
            0.273SJG08-103
            201.7
            202.3
            0.6
            0.362SJG08-103
            202.3
            204.5
            2.2
            0.329SJG08-103
            204.5
            205.9
            1.4
            0.323SJG08-103
            205.9
            207.4
            1.5
            0.605SJG08-103
            213.3
            215.2
            1.9
            0.027SJG08-103
            215.2
            216.3
            1.1
            2.564
            
            1.10
            m
      @
            2.564SJG08-104
            67.4
            68.8
            1.4
            26.96
            
            2.80
            m
      @
            13.70
            1.40
            m
      @
            26.96
            16.24SJG08-104
            68.8
            70.2
            1.4
            0.432SJG08-104
            102.2
            103.1
            0.9
            0.169SJG08-104
            103.1
            103.9
            0.8
            0.404
            
            0.80
            m
      @
            0.404
            
            
            
            0.43SJG08-105
            103.1
            104.8
            1.7
            0.062SJG08-105
            104.8
            106.1
            1.3
            0.602
            
            1.30
            m
      @
            0.602
            
            
            
            2.86SJG08-105
            204.6
            206.4
            1.8
            0.005SJG08-105
            206.4
            208.2
            1.8
            0.657
            
            3.00
            m
      @
            0.68
            
            
            
            1.02SJG08-105
            208.2
            209.4
            1.2
            0.719SJG08-106
            174.8
            175.3
            0.5
            1.7
            
            0.50
            m
      @
            1.7
            
            
            
            3.68SJG08-106
            215.4
            217.9
            2.5
            0.829
            
            2.50
            m
      @
            0.829
            
            
            
            0.98SJG08-106
            131.4
            133
            1.6
            0.217
            
            1.60
            m
      @
            0.217
            
            
            
            2.39SJG08-107
            134.1
            136
            1.9
            0.232
            
            1.90
            m
      @
            0.232
            
            
            
            0.27SJG08-108
            217.2
            218.3
            1.1
            0.321
            
            1.10
            m
      @
            0.321
            
            
            
            1.21SJG08-108
            221.9
            223.9
            2
            0.228
            
            7.30
            m
      @
            0.80
            
            
            
            0.94SJG08-108
            223.9
            225.8
            1.9
            0.736SJG08-108
            225.8
            227.7
            1.9
            0.216SJG08-108
            227.7
            229.2
            1.5
            2.392





17


Competition





The
Company retains the rights to concessions over the area of the San Jose de
Gracia property and currently sees no competition for mining on the lands
covered by those concessions. In general, if the Company re-starts production
activity, the market for produced Gold or other precious metals products would
be subject to global market prices for those products.  Such global
market prices fluctuate daily, and the Company’s sales of any products produced
will be dependent upon such prices.  The company was successful in
selling gold concentrates produced from SJG in prior years; and the Company
expects willing buyers in the future, to purchase based upon global spot prices,
less processing charges and any deductions.








Potential
Risks:





Funding of Goldgroup
Resources Inc.:





Funding
for the exploration activity at SJG is primarily due to the Capital
contributions to DynaMexico from Goldgroup Resources Inc. There is no certainty
that this funding will continue or that the Earn In / Option Agreement will be
completed.  Should the funding of Goldgroup cease, the Company would
be required to fund further exploration work through its own capital reserves,
or to obtain alternate financing sources.  Any alternate funding
sources could result in additional dilution to shareholders.





Potential Conflicts with
Shareholder:





While the
Company believes it has negotiated and authorized proper agreements for the
financing and exploration of SJG, there exist potential conflicts with Goldgroup
Resources Inc.  Goldgroup carries the majority of seats on the SJG
Management Committee, which is charged with responsibility of approving the
budgets and approving technical plans to the SJG Project.  At the Same
time, MinerasDyna has been named at the exclusive operator of the SJG Project,
and MinerasDyna is managed by officers of DynaResource.  Also,
DynaResource carries a majority of the seats on the Board of Directors of
DynaMexico, and also carries 100 % of the Seats on the Boards of MinerasDyna and
100 % of the Seats of the Board of DynaOperaciones.  Mr. K.D.
Diepholz, chairman and CEO of DynaResource, Inc.  and Mr. Charles E.
Smith, CFO of DynaResource, Inc. are the President and Secretary respectively
for DynaMexico, MinerasDyna, and DynaOperaciones.  Inherent in the
structure of Ownership and Operation of the SJG Project is the potential for
conflicts that would materially affect operations.





Mineable
Resource:





There is
no certainty that the explorations works at SJG would result in the definition
of a mineable resource at SJG.  While the company believes there is
already in place enough mineable ore at SJG to supply a commercial production
operation; there is no certainty that the Company’s opinion will be proven
correct.  If a mineable resource is not confirmed at SJG, the
Company’s investment at SJG could be lost.





Employees





The
Company employs three officers in its corporate office in Dallas, Texas and
employs approximately thirty persons through subsidiaries in
Mexico.





Governmental Regulation and
Environmental Matters





Environmental
laws that impact our operations include those relating to air quality, solid
waste management and water quality. These laws are complex and subject to
frequent change. They impose strict liability in some cases without regard to
negligence or fault. Sanctions for noncompliance may include revocation of
permits, corrective action orders, administrative or civil penalties and
criminal prosecution. Some environmental laws provide for joint and several
strict liabilities for remediation of spills and releases of hazardous
substances. In addition, businesses may be subject to claims alleging personal
injury or property damage as a result of alleged exposure to hazardous
substances, as well as damage to natural resources. These laws also may expose
us to liability for the conduct of or conditions caused by others, or for acts
that complied with all applicable laws when performed. However, we have and
continue to maintain excellent relations with the government authorities by
compliance with the laws and communication with them concerning environmental
matters.






18







RESULTS FOR THE QUARTER
ENDED September 30, 2008





REVENUE.  Revenue
for the three months ended September 30, 2008 and the three months ended
September 30, 2007 was $0 due to our decision to stop the limited production
that we were engaged in through the end of 2006 and to concentrate our efforts
on drilling the property to define an ore resource. The funds for this drilling
have come from Goldgroup Resources, Inc. under our Earn-In Agreement with them
as described elsewhere in this 10-Q. Revenue for the nine months ended September
30, 2008 was $0 compared to $0 for the nine months ended September 30,
2007.





COST OF
REVENUE - EXPLORATION COSTS were $1,633,167 and $ 280,312. for the three months
ended September 30, 2008 and 2007 respectively, the increase due to the
acceleration of exploration activities at our San Jose de Gracia property.
Exploration costs were $ 3,761,004 and $ 1,081,469 for the nine months ended
September 30, 2008 and 2007 respectively, the increase again due to the
acceleration of exploration activities.





OPERATING
EXPENSES. Total operating expenses for the three months ended September 30,
2008, were $542,499 compared to expenses for the period ended September 30, 2007
of $173,750. The above expenses include depreciation which was $36,598 and
$4,671 for the three months ended September 30, 2008 and 2007,
respectively.  Total operating expenses for the nine months ended
September 30, 2008 were $1,072,595 compared to expenses for the period ended
September 30, 2007 of $498,250.  The above expenses include
depreciation which was $109,764 and $14,012 for the nine months ended September
30, 2008 and 2007, respectively. The increase in expenses is attributed to the
increased activity of 2008 over 2007 in our exploration drilling
activities.





OTHER
INCOME (EXPENSE). Other income for the three months ended September 30, 2008 was
$543 compared to the same period ended September 30, 2007 of $873. Other income
(expense) for the nine months ended September 30, 2008 was $3,542 compared to
the same nine months ended September 30, 2007 of  $
5,303.





MINORITY
INTEREST. The minority interest portion of our loss for the three months ended
September 30, 2008 was $347,103 compared to $0 for the period ended September
30, 2007 and the minority interest portion of our loss for the nine months ended
September 30, 2008 was $666,913 compared to $0 for the same nine months ended
September 30, 2007. This is due to our minority interest holder having an
interest in 2008 and no minority interest in 2007.





NET
INCOME (LOSS). Net loss for the three months ended September 30, 2008 was
$(1,828,020) compared to net income for the period ended September 30, 2007 of
$($453,189).  Net loss for the nine months ended September 30, 2008
was $(4,163,144) compared to the same period ended September 30, 2007 of
$(1,574,686).  The decrease in net income is due to the aforementioned
change in activities.





COMPREHENSIVE
(LOSS). Comprehensive loss includes our net loss plus the currency translation
gain (loss) for the period which was $(237,547) for the three months ended
September 30, 2008 compared to $545,768 for the same period ended September 30,
2007.  Our comprehensive loss includes the currency translation gain
of $86,921 for the nine months ended September 30, 2008 compared to $411,150 for
the same period ended September 30, 2007.





LIQUIDITY
AND CAPITAL RESOURCES.  The Company has sufficient capital on hand to
fund overhead operations and some exploration activities for the next twelve
months.  Goldgroup is responsible to fund exploration activities at
SJG in accordance with the Earn-In Agreement.  In July, 2008 Goldgroup
advised that they have the funds on hand to complete the option under the
Earn-In Agreement and that they intend to complete this option.





19






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 September 30, 2008.  This
evaluation was accomplished under the supervision and with the participation of
the Company’s Chief Executive Officer / Principal Executive Officer, and its
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 September 30, 2008, the
Company’s Chief Executive and Chief Financial Officer as of September 30, 2008,
and as of the date of this Report, have identified no material weakness in
Company internal controls:




Corporate
expenses of DynaResource are 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




Company
management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in
Rules 13a-15(f) and 15d-15(f) of the Exchange Act.  The Company’s
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 December 31, 2008.   Based on its
evaluation, our management concluded that, as of September 30, 2008, 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 has materially affected, or is reasonably likely to materially
affect, its internal control over financial reporting.


20


PART
II





Item No.
1.              Not
Applicable.





Item
      No. 2.
            The
      Company issued 21,880 shares of common stock for Cash, 157,235 shares for
      the exercise of options and the Company issued 52,188 for
      services.





Items No.
3, 4, 5.    Not Applicable.





Item No.
6.              Exhibits
and Reports on Form 8-K





(a)           
None





(b)           
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 Quarterly Report to be signed on its behalf by
the undersigned, thereunto duly authorized.











DynaResource,
Inc.








By /s/  K.W. (“K.D.”)
Diepholz











/s/  K.W. (“K.D.”)
Diepholz


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











Date:
January 30, 2009


21