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 March 31, 2014



OR



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



From the transition period ___________ to ____________.



Commission File
Number000-30371



DYNARESOURCE,
INC.

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



Delaware 94-1589426

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



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

(Address of principal executive offices)



(972) 868-9066

(Issuer's telephone number)



N/A

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



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

Yes [X] No [ ]



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

|Large Accelerated Filer	[    ]	Accelerated Filer	[    ]
|-------------------------------------------------------

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





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



Yes [ ] No [X].



As of May 13, 2014 there were 11,052,808 shares of Common
Stock of the issuer outstanding.

1





TABLE OF CONTENTS





|               |                                                           |      
|-------------- | --------------------------------------------------------- | -----
|PART I.        | FINANCIAL STATEMENTS                                      |      
|               |                                                           |      
|ITEM 1.        | Financial Statements                                      | 3    
|               | Notes to Financial Statements                             | 10-19
|               |                                                           |      
|ITEM 2.        | Management's Discussion and Analysis or Plan of Operation | 20-45
|ITEM 3.        | Quantitative and Qualitative Disclosure About Market Risk | 46   
|ITEM 4.        | Controls and Procedures                                   | 46   
|               |                                                           |      
|               |                                                           |      
|PART II.       | OTHER INFORMATION                                         |      
|               |                                                           |      
|ITEM 1.        | Legal Proceedings                                         | 47   
|               |                                                           |      
|ITEM 2.        | Unregistered Sales of Securities and Use of Proceeds      | 47   
|               |                                                           |      
|ITEM 3.        | Default Upon Senior Securities                            | 47   
|               |                                                           |      
|ITEM 4.        | Mine Safety Disclosures                                   | 47   
|               |                                                           |      
|ITEM 5.        | Other Information                                         | 48   
|               |                                                           |      
|ITEM 6.        | Exhibits and Reports on Form 8-K                          | 48   
|               |                                                           |      
|               |                                                           |      
|CERTIFICATIONS |                                                           | 49-51
|EXHIBIT 31.1   | CHIEF EXECUTIVE OFFICER CERTIFICATION                     |      
|               |                                                           |      
|EXHIBIT 31.2   | CHIEF FINANCIAL OFFICER CERTIFICATION                     |      
|               |                                                           |      
|EXHIBIT 32.1   | CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350          |      
|               |                                                           |      
|               |                                                           |      



2





DYNARESOURCE, INC.

(An Exploration Stage Company)

Consolidated Balance Sheets

March 31, 2014 and December 31, 2013



|                                                                                                                            |  | March 31, 2014 |             | December 31, 2013
|--------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ----------- | -----------------
|                                                                                                                            |  | (Unaudited)    |             | (Audited)        
|ASSETS                                                                                                                      |  |                |             |                  
|Current Assets:                                                                                                             |  |                |             |                  
|Cash and Cash Equivalents                                                                                                   |  | $              | 528,733     |                  
|Foreign Tax Receivable                                                                                                      |  |                | 392,435     |                  
|Total Current Assets                                                                                                        |  |                | 921,168     |                  
|                                                                                                                            |  |                |             |                  
|Property:                                                                                                                   |  |                |             |                  
|Mining Camp Equipment and Fixtures (Net of Accumulated Depreciation of $869,726 and $851,861)                               |  |                | 247,397     |                  
|Mining Properties (Net of Accumulated Amortization of $519,400 and $519,400)                                                |  |                | 4,183,967   |                  
|Total Property                                                                                                              |  |                | 4,431,364   |                  
|                                                                                                                            |  |                |             |                  
|Other Assets:                                                                                                               |  |                |             |                  
|Investment in Affiliate                                                                                                     |  |                | 70,000      |                  
|Receivables from Affiliate                                                                                                  |  |                | 186,828     |                  
|Other Assets                                                                                                                |  |                | 312,860     |                  
|Total Other Assets                                                                                                          |  |                | 569,688     |                  
|TOTAL ASSETS                                                                                                                |  | $              | 5,922,220   |                  
|                                                                                                                            |  |                |             |                  
|LIABILITIES AND EQUITY                                                                                                      |  |                |             |                  
|Current Liabilities:                                                                                                        |  |                |             |                  
|Accounts Payable                                                                                                            |  | $              | 81,362      |                  
|Due to Minority Shareholder                                                                                                 |  |                | 231,500     |                  
|Accrued Expenses                                                                                                            |  |                | 383,150     |                  
|                                                                                                                            |  |                | 696,012     |                  
|                                                                                                                            |  |                |             |                  
|Long-Term Liabilities:                                                                                                      |  |                |             |                  
|Notes Payable (Net of Current Portion of $0)                                                                                |  |                | 1,354,808   |                  
|                                                                                                                            |  |                |             |                  
|TOTAL LIABILITIES                                                                                                           |  | $              | 2,050,820   |                  
|                                                                                                                            |  |                |             |                  
|Equity: Preferred Stock, Series A, $.0001 par value, 1,000 shares authorized,                                               |  |                |             |                  
|1,000 and 1,000 shares issued and outstanding                                                                               |  | $              | 1           |                  
|Preferred Stock, Series B, $.0001 par value, 1,000,000 shares authorized, 564,946 and 460,446 shares issued and outstanding |  |                | 56          |                  
|                                                                                                                            |  |                |             |                  
|Preferred Stock, $.0001 par value, 19,000,000 shares authorized, no shares issued and outstanding                           |  |                | 0           |                  
|Common Stock, $0.01 par value, 25,000,000 shares authorized,                                                                |  |                |             |                  
|and 11,052,808 shares issued and outstanding, respectively                                                                  |  |                | 110,520     |                  
|Preferred Rights                                                                                                            |  |                | 40,000      |                  
|Additional Paid In Capital                                                                                                  |  |                | 43,815,236  |                  
|Treasury Stock                                                                                                              |  |                | (707,750    | )                
|Other Comprehensive Income                                                                                                  |  |                | 147,902     |                  
|Accumulated Deficit                                                                                                         |  |                | (6,002,516  | )                
|Accumulated Deficit Since Reentering the Development Stage                                                                  |  |                | (27,663,281 | )                
|Total DynaResource, Inc. Stockholders’ Equity                                                                               |  |                | 9,740,168   |                  

3







|Non-controlling Interest     |  |   | (5,868,768 | ) |  |   | (5,729,836 | )
|---------------------------- |  | - | ---------- | - |  | - | ---------- | -
|TOTAL EQUITY                 |  |   | 3,871,400  |   |  |   | 4,562,998  |  
|TOTAL LIABILITIES AND EQUITY |  | $ | 5,922,220  |   |  | $ | 6,399,026  |  



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

4









DYNARESOURCE, INC.

(An Exploration Stage Company)

Consolidated Statements of Operations

For the Three Months Ended March 31, 2014
and 2013

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

through March 31, 2014



|                                                                |  | 2014 |            | 2013 |  | Cumulative Since Reentering the Exploration Stage (January 1, 2007 through March 31, 2014)
|--------------------------------------------------------------- |  | ---- | ---------- | ---- |  | ------------------------------------------------------------------------------------------
|                                                                |  |      |            |      |  |                                                                                           
|REVENUES                                                        |  | $    | 0          |      |  | $                                                                                         
|                                                                |  |      |            |      |  |                                                                                           
|PRE-PILOT PRODUCTION EXPENSES                                   |  |      | 820,346    |      |  |                                                                                           
|EXPLORATION EXPENSES (exclusive of depreciation                 |  |      |            |      |  |                                                                                           
|and amortization shown separately below                         |  |      | 0          |      |  |                                                                                           
|GROSS PROFIT (DEFICIT)                                          |  |      | (820,346   | )    |  |                                                                                           
|                                                                |  |      |            |      |  |                                                                                           
|OPERATING EXPENSES                                              |  |      |            |      |  |                                                                                           
|Depreciation and Amortization Stock Issued for Services         |  |      | 17,865 0   |      |  |                                                                                           
|General and Administrative                                      |  |      | 331,470    |      |  |                                                                                           
|TOTAL OPERATING EXPENSES                                        |  |      | 349,335    |      |  |                                                                                           
|                                                                |  |      |            |      |  |                                                                                           
|NET OPERATING INCOME (LOSS)                                     |  |      | (1,169,681 | )    |  |                                                                                           
|                                                                |  |      |            |      |  |                                                                                           
|OTHER INCOME (EXPENSE)                                          |  |      |            |      |  |                                                                                           
|Portfolio Income                                                |  |      | 107        |      |  |                                                                                           
|Currency Translation Gain (Loss)                                |  |      | 94,042     |      |  |                                                                                           
|Interest Expense                                                |  |      | (42,338    | )    |  |                                                                                           
|Other Income                                                    |  |      | 0          |      |  |                                                                                           
|TOTAL OTHER INCOME (EXPENSE)                                    |  |      | 51,811     |      |  |                                                                                           
|                                                                |  |      |            |      |  |                                                                                           
|NET INCOME (LOSS) BEFORE INCOME TAXES                           |  |      | (1,117,870 | )    |  |                                                                                           
|                                                                |  |      |            |      |  |                                                                                           
|Provision for Income Taxes (Expense) Benefit                    |  |      | 0          |      |  |                                                                                           
|NET INCOME (LOSS)                                               |  | $    | (1,117,870 | )    |  | $                                                                                         
|Net Loss Attributable to Non-Controlling Interest               |  |      | 139,209    |      |  |                                                                                           
|NET LOSS ATTRIBUTABLE TO DYNARESOURCE, INC. COMMON SHAREHOLDERS |  |      | (978,661   | )    |  |                                                                                           
|                                                                |  |      |            |      |  |                                                                                           
|Unrealized Loss on Securities Held for Sale                     |  |      | 0          |      |  |                                                                                           
|Unrealized Currency Translation Gain (Loss)                     |  |      | 8,214      |      |  |                                                                                           
|                                                                |  |      |            |      |  |                                                                                           
|TOTAL COMPREHENSIVE INCOME (LOSS)                               |  |      | (970,447   | )    |  |                                                                                           

5







|Comprehensive (Income) Loss Attributable To Non-Controlling Interest |  |   | 267        |   |  |   | 312        |   |  |   | 83,355      |  
|-------------------------------------------------------------------- |  | - | ---------- | - |  | - | ---------- | - |  | - | ----------- | -
|                                                                     |  |   |            |   |  |   |            |   |  |   |             |  
|COMPREHENSIVE LOSS ATTRIBUTABLE TO                                   |  |   |            |   |  |   |            |   |  |   |             |  
|DYNARESOURCE, INC. COMMON SHAREHOLDERS                               |  | $ | (970,180   | ) |  | $ | (197,336   | ) |  | $ | (27,756,738 | )
|                                                                     |  |   |            |   |  |   |            |   |  |   |             |  
|EARNINGS PER SHARE, Basic and Diluted                                |  |   |            |   |  |   |            |   |  |   |             |  
|Weighted Average Shares Outstanding Basic and Diluted                |  |   | 11,052,008 |   |  |   | 10,802,008 |   |  |   |             |  
|Income (Loss) per Common Share, Basic and Diluted                    |  | $ | (0.1011    | ) |  | $ | (0.0364    | ) |  |   |             |  
|                                                                     |  |   |            |   |  |   |            |   |  |   |             |  
|                                                                     |  |   |            |   |  |   |            |   |  |   |             |  



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

6





DYNARESOURCE, INC.

(An Exploration Stage Company)

Consolidated Statement of Changes in Stockholders’
Equity

For the Three Months Ended March 31, 2014
and the Year Ended December 31, 2013







|                                                     |  |  | Preferred-Series A |  |  |  | Preferred-Series B |   |  | Common |          |  | Preferred |  |        |  | Additional
                                                                                Paid In |  |            |  | Treasury |  |         |  | Other
                                                                                Compre-
                                                                                hensive |  |        |  | Accumulated |  |            |  | Deficit Since
                                                                                Reentering
                                                                                the Exploration |  |          |   |  | 
|---------------------------------------------------- |  |  | ------------------ |  |  |  | ------------------ | - |  | ------ | -------- |  | --------- |  | ------ |  | -------------------------------------------------------------------------------------------------- |  | ---------- |  | -------- |  | ------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------ |  | ----------- |  | ---------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------- | - |  | 
|                                                     |  |  | Shares             |  |  |  | Amount             |   |  |        | Shares   |  |           |  | Amount |  |                                                                                                    |  | Shares     |  |          |  | Amount  |  |                                                                                                                                                                                       |  | Rights |  |             |  | Capital    |  |                                                                                                                                                                                                          |  | Stock    |   |  | 
|                                                     |  |  |                    |  |  |  |                    |   |  |        |          |  |           |  |        |  |                                                                                                    |  |            |  |          |  |         |  |                                                                                                                                                                                       |  |        |  |             |  |            |  |                                                                                                                                                                                                          |  |          |   |  | 
|Balance, January 1, 2013                             |  |  | 1,000              |  |  |  | 1,000              |   |  |        | —        |  |           |  | —      |  |                                                                                                    |  | 10,802,008 |  |          |  | 108,020 |  |                                                                                                                                                                                       |  | 40,000 |  |             |  | 40,429,500 |  |                                                                                                                                                                                                          |  | (50,750  | ) |  | 
|                                                     |  |  |                    |  |  |  |                    |   |  |        |          |  |           |  |        |  |                                                                                                    |  |            |  |          |  |         |  |                                                                                                                                                                                       |  |        |  |             |  |            |  |                                                                                                                                                                                                          |  |          |   |  | 
|Change in Par Value                                  |  |  |                    |  |  |  | (999               | ) |  |        |          |  |           |  |        |  |                                                                                                    |  |            |  |          |  |         |  |                                                                                                                                                                                       |  |        |  |             |  | 999        |  |                                                                                                                                                                                                          |  |          |   |  | 
|Sale of Series B Preferred Shares                    |  |  |                    |  |  |  |                    |   |  |        | 387,900  |  |           |  | 39     |  |                                                                                                    |  |            |  |          |  |         |  |                                                                                                                                                                                       |  |        |  |             |  | 1,939,461  |  |                                                                                                                                                                                                          |  |          |   |  | 
|Notes Payable Converted to Series B Preferred Shares |  |  |                    |  |  |  |                    |   |  |        | 68,000   |  |           |  | 7      |  |                                                                                                    |  |            |  |          |  |         |  |                                                                                                                                                                                       |  |        |  |             |  | 339,993    |  |                                                                                                                                                                                                          |  |          |   |  | 
|Notes Payable Converted to Series B Preferred Shares |  |  |                    |  |  |  |                    |   |  |        | 4,546    |  |           |  | 0      |  |                                                                                                    |  |            |  |          |  |         |  |                                                                                                                                                                                       |  |        |  |             |  | 22,734     |  |                                                                                                                                                                                                          |  |          |   |  | 
|Common Stock Issued for Services                     |  |  |                    |  |  |  |                    |   |  |        |          |  |           |  |        |  |                                                                                                    |  | 250,000    |  |          |  | 2,500   |  |                                                                                                                                                                                       |  |        |  |             |  | 560,000    |  |                                                                                                                                                                                                          |  | (562,500 | ) |  | 
|Common Stock Options Issued                          |  |  |                    |  |  |  |                    |   |  |        |          |  |           |  |        |  |                                                                                                    |  |            |  |          |  |         |  |                                                                                                                                                                                       |  |        |  |             |  | 59         |  |                                                                                                                                                                                                          |  |          |   |  | 
|Other Comprehensive Income                           |  |  |                    |  |  |  |                    |   |  |        |          |  |           |  |        |  |                                                                                                    |  |            |  |          |  |         |  |                                                                                                                                                                                       |  |        |  |             |  |            |  |                                                                                                                                                                                                          |  |          |   |  | 
|Treasury Shares Purchased                            |  |  |                    |  |  |  |                    |   |  |        |          |  |           |  |        |  |                                                                                                    |  |            |  |          |  |         |  |                                                                                                                                                                                       |  |        |  |             |  |            |  |                                                                                                                                                                                                          |  | (94,500  | ) |  | 
|Net  Income (Loss)                                   |  |  |                    |  |  |  |                    |   |  |        |          |  |           |  |        |  |                                                                                                    |  |            |  |          |  |         |  |                                                                                                                                                                                       |  |        |  |             |  |            |  |                                                                                                                                                                                                          |  |          |   |  | 
|                                                     |  |  |                    |  |  |  |                    |   |  |        |          |  |           |  |        |  |                                                                                                    |  |            |  |          |  |         |  |                                                                                                                                                                                       |  |        |  |             |  |            |  |                                                                                                                                                                                                          |  |          |   |  | 
|Balance,  December 31, 2013                          |  |  | 1,000              |  |  |  | 1                  |   |  |        | 460,446  |  |           |  | 46     |  |                                                                                                    |  | 11,052,008 |  |          |  | 110,520 |  |                                                                                                                                                                                       |  | 40,000 |  |             |  | 43,292,746 |  |                                                                                                                                                                                                          |  | (707,750 | ) |  | 
|B Preferred Shares                                   |  |  |                    |  |  |  |                    |   |  |        | 104,500  |  |           |  | 10     |  |                                                                                                    |  |            |  |          |  |         |  |                                                                                                                                                                                       |  |        |  |             |  | 522,490    |  |                                                                                                                                                                                                          |  |          |   |  | 
|Other Comprehensive Income                           |  |  |                    |  |  |  |                    |   |  |        |          |  |           |  |        |  |                                                                                                    |  |            |  |          |  |         |  |                                                                                                                                                                                       |  |        |  |             |  |            |  |                                                                                                                                                                                                          |  |          |   |  | 
|Net  Income (Loss)                                   |  |  |                    |  |  |  |                    |   |  |        |          |  |           |  |        |  |                                                                                                    |  |            |  |          |  |         |  |                                                                                                                                                                                       |  |        |  |             |  |            |  |                                                                                                                                                                                                          |  |          |   |  | 
|                                                     |  |  |                    |  |  |  |                    |   |  |        |          |  |           |  |        |  |                                                                                                    |  |            |  |          |  |         |  |                                                                                                                                                                                       |  |        |  |             |  |            |  |                                                                                                                                                                                                          |  |          |   |  | 
|Balance, March 31, 2014                              |  |  | 1,000              |  |  |  | 1                  |   |  |        | 564,946- |  |           |  | 56     |  |                                                                                                    |  | 11,052,008 |  |          |  | 110,520 |  |                                                                                                                                                                                       |  | 40,000 |  |             |  | 43,815,236 |  |                                                                                                                                                                                                          |  | (707,750 | ) |  | 
|                                                     |  |  |                    |  |  |  |                    |   |  |        |          |  |           |  |        |  |                                                                                                    |  |            |  |          |  |         |  |                                                                                                                                                                                       |  |        |  |             |  |            |  |                                                                                                                                                                                                          |  |          |   |  | 



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

7





DYNARESOURCE, INC.

(An Exploration Stage Company)

Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2014
and 2013

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

through March 31, 2014

(Unaudited)

|                                                                        |  | 2014 |            | 2013 |  | Cumulative Since Reentering the Development Stage (January 1, 2007) through March 31, 2014
|----------------------------------------------------------------------- |  | ---- | ---------- | ---- |  | ------------------------------------------------------------------------------------------
|CASH FLOWS FROM OPERATING ACTIVITIES                                    |  |      |            |      |  |                                                                                           
|Net Income (Loss)                                                       |  | $    | (1,117,870 | )    |  | $                                                                                         
|Adjustments to reconcile net loss to cash used by operating activities: |  |      |            |      |  |                                                                                           
|Issuance of Common Stock for Services                                   |  |      | 0          |      |  |                                                                                           
|Issuance of Common Stock Options                                        |  |      | 0          |      |  |                                                                                           
|Issuance of Preferred Stock for Services                                |  |      | 0          |      |  |                                                                                           
|Depreciation and Amortization                                           |  |      | 17,865     |      |  |                                                                                           
|Loss on Disposition of Assets                                           |  |      | 0          |      |  |                                                                                           
|Minority Interest                                                       |  |      | 8,481      |      |  |                                                                                           
|                                                                        |  |      |            |      |  |                                                                                           
|Change in Operating Assets and Liabilities:                             |  |      |            |      |  |                                                                                           
|Decrease in Accounts Receivable                                         |  |      | 0          |      |  |                                                                                           
|(Increase) in Foreign Tax Receivable                                    |  |      | (96,397    | )    |  |                                                                                           
|(Increase) in A/R – Related Party                                       |  |      | 0          |      |  |                                                                                           
|(Increase) Decrease in Other Current Assets                             |  |      | 0          |      |  |                                                                                           
|(Increase) in Other Assets                                              |  |      | (35,529    | )    |  |                                                                                           
|(Decrease) in Accounts Payable                                          |  |      | (33,136    | )    |  |                                                                                           
|(Decrease) Increase in Accrued Expenses                                 |  |      | 136,428    |      |  |                                                                                           
|(Decrease) in Deferred Tax Liability                                    |  |      | 0          |      |  |                                                                                           
|CASH FLOWS (USED IN) OPERATING ACTIVITIES                               |  |      | (1,120,158 | )    |  |                                                                                           
|                                                                        |  |      |            |      |  |                                                                                           
|CASH FLOWS FROM INVESTING ACTIVITIES                                    |  |      |            |      |  |                                                                                           
|Purchase of Fixed Assets                                                |  |      | (23,744    | )    |  |                                                                                           
|Retirement of Fixed Assets                                              |  |      | 0          |      |  |                                                                                           
|Conversion of Note Receivable to Equity                                 |  |      | 0          |      |  |                                                                                           
|Investment in Affiliate                                                 |  |      | 0          |      |  |                                                                                           
|Note Receivable to Affiliate                                            |  |      | 0          |      |  |                                                                                           
|CASH FLOWS (USED IN) INVESTING ACTIVITIES                               |  |      | (23,744    | )    |  |                                                                                           
|                                                                        |  |      |            |      |  |                                                                                           
|CASH FLOWS FROM FINANCING ACTIVITIES                                    |  |      |            |      |  |                                                                                           
|Proceeds from DynaMéxico Earn In                                        |  |      | 0          |      |  |                                                                                           
|Proceeds from Sale of Common Stock                                      |  |      | 0          |      |  |                                                                                           
|Repurchase of Common Stock Options                                      |  |      | 0          |      |  |                                                                                           
|Other Comprehensive Income (Loss)                                       |  |      | (104,709   | )    |  |                                                                                           
|Proceeds from Sale of Series B Preferred Stock                          |  |      | 522,500    |      |  |                                                                                           
|Proceeds from Notes                                                     |  |      | 0          |      |  |                                                                                           
|Loan from Minority Shareholder                                          |  |      | 111,500    |      |  |                                                                                           
|Purchase of Treasury Stock                                              |  |      | 0          |      |  |                                                                                           
|Sale of Treasury Stock                                                  |  |      | 0          |      |  |                                                                                           

8







|CASH FLOWS PROVIDED BY FINANCING ACTIVITIES        |  |   | 529,291   |   |  |   | 176,208   |   |  |   | 29,695,921 |  
|-------------------------------------------------- |  | - | --------- | - |  | - | --------- | - |  | - | ---------- | -
|                                                   |  |   |           |   |  |   |           |   |  |   |            |  
|NET INCREASE (DECREASE) IN CASH                    |  |   | (614,611  | ) |  |   | (376,836  | ) |  |   | (292,107   | )
|                                                   |  |   |           |   |  |   |           |   |  |   |            |  
|CASH AT BEGINNING OF PERIOD                        |  |   | 1,143,344 |   |  |   | 1,522,652 |   |  |   | 820,840    |  
|CASH AT END OF PERIOD                              |  | $ | 528,733   |   |  | $ | 1,145,816 |   |  | $ | 528,733    |  
|                                                   |  |   |           |   |  |   |           |   |  |   |            |  
|SUPPLEMENTAL DISCLOSURES                           |  |   |           |   |  |   |           |   |  |   |            |  
|Non-Cash Issuance of Common Shares for Services    |  | $ | 0         |   |  | $ | 0         |   |  | $ | 2,748,564  |  
|Non-Cash Issuance of Preferred Shares for Services |  | $ | 0         |   |  | $ | 0         |   |  | $ | 1,000      |  
|Non-Cash Conversion of Note Receivable to Equity   |  | $ | 0         |   |  | $ | 0         |   |  | $ | 750,000    |  
|Non-Cash Issuance of Stock Options                 |  | $ | 0         |   |  | $ | 0         |   |  | $ | 313,500    |  
|Non-Cash Dividend of Property                      |  | $ | 0         |   |  | $ | 0         |   |  | $ | 129,822    |  
|Cash Paid for Interest                             |  | $ | 0         |   |  | $ | 0         |   |  | $ | 0          |  
|Cash Paid for Income Taxes                         |  | $ | 0         |   |  | $ | 0         |   |  | $ | 0          |  



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







9





DYNARESOURCE, INC.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

March 31, 2014

(Unaudited)



NOTE 1 – NATURE OF ACTIVITIES
AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Activities, History and
Organization:

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

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

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

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

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

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

Unaudited Interim Financial Statements:

The accompanying unaudited interim consolidated
financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United
States of America and the rules of the Securities and Exchange Commission. 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
sheet, statement of operations, statement of stockholders’ equity and statement 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 Annual Report on Form 10-K. The results of operations for the three months ended March 31, 2014 are not necessarily
indicative of the results of operations for the full year or any other interim period.  The information included in this
Form 10-Q should be read in conjunction with Management's Discussion and Analysis and Financial Statements and notes thereto included
in the Company’s December 31, 2013 Form 10-K.

Significant Accounting Policies:

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

10





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

Basis of Presentation:

The Company prepares its 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 México, 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.

Emerging Growth Company Critical Accounting
Policy Disclosure:

The Company
qualifies as an “emerging growth company” under the 2012 JOBS Act. Section 107 of the JOBS Act provides that an emerging
growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying
with new or revised accounting standards.   As an emerging grown company, the Company can delay the adoption of certain
accounting standards until those standards would otherwise apply to private companies.  The Company may elect to
take advantage of the benefits of this extended transition period in the future.

Foreign Currency Translation:

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

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

Relevant exchange rates used in the preparation
of the financial statements for the subsidiaries are as follows for the periods ended March 31, 2014 and December 31, 2013 (Mexican
pesos per one U.S. dollar):

| |  | 
| |  | 



|                                                    |       | Mar 31, 2014 | Dec 31, 2013
|--------------------------------------------------- | ----- | ------------ | ------------
|                                                    |       |              |             
|Current exchange rate                               | Pesos | 13.04        | 13.07       
|                                                    |       |              |             
|Weighted Average exchange rate for the period ended | Pesos | 13.05        | 12.75       



Cash and Cash Equivalents:

The Company considers all highly liquid
debt instruments with a maturity of three months or less to be cash equivalents.  At times, cash balances may be in excess
of the Federal Deposit Insurance Corporation (“FDIC”) insurance limits.  At March 31, 2014, the Company had
a balance of $161,561 that was in excess of the FDIC insurance limit of $250,000. The carrying amount approximates fair market
value.

Accounts Receivable and Allowances
for Doubtful Accounts:

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

Foreign Tax Receivable:

Foreign Tax Receivable (IVA) is
comprised of recoverable value-added taxes charged by the Mexican government on goods and services rendered.  Under
certain circumstances, these taxes are recoverable by filing a tax return.  Amounts paid for IVA are tracked and
held as receivables until the funds are remitted.  The total amounts of the IVA receivable as of March 31, 2014 and
December 31, 2013 and $392,435 and $296,038, respectively.

11







Inventory:

As the Company ceased mining production
in 2006, there is no inventory as of March 31, 2014 and December 31, 2013.

Property:

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

Mining Properties:

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

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

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



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

A write-down to fair value will be recorded
when the expected future cash flow is less than the net book value of the property or when events or changes in the property indicate
that carrying amounts are not recoverable.  This analysis will be completed as needed, and at least annually.  As
of the date of this filing, no events have occurred that would require write-down of any assets.  As of March 31, 2014,
no indications of impairment existed.

Pre Pilot-Production Costs:

The Company is in the process of rehabilitating
the San Pablo mine, and refurbishing the Pilot Mill Facility and preparing for Pilot Production Operations. The costs associated
with the rehabilitation, preparation, clean up and facilitation of this process are expensed as pre pilot-production costs.

Exploration Costs:

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

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

As of March 31, 2014, no indications
of impairment existed.

Advertising Costs:

The Company incurred no advertising costs
for the three months ended March 31, 2014 and 2013.

Income Taxes:

Income from the parent company, DynaUSA,
is taxed at regular corporate rates per the Internal Revenue Code.  Although the Company has tax loss carry-forwards (see
Note 6), there is uncertainty as to utilization prior to their expiration.  Accordingly, the future income tax asset amounts
have been fully offset by a valuation allowance. Income from the subsidiaries, are taxed at applicable Mexican tax law.

Use of Estimates:

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

12





Comprehensive Income:

ASC 220 “Comprehensive Income”
establishes standards for reporting and display of comprehensive income and its components in a full set of general purpose financial
statements.    The Company’s comprehensive income consists of net income and other comprehensive income
(loss), consisting of unrealized net gains and losses on the translation of the assets and liabilities of its foreign operations. 
For the periods ended March 31, 2014 and December 31, 2013, the Company’s components of comprehensive income were foreign
currency translation adjustments and unrealized losses on securities held for sale.

Revenue Recognition:

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

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

Earnings per Common Share:

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

There were no potentially dilutive common
stock equivalents as of March 31, 2014, therefore basic earnings per share equals diluted earnings per share for the period ended
March 31, 2014.  The Company had 1,151,800 options and warrants outstanding at March 31, 2014. The Company also had convertible
debt instruments as of March 31, 2014. As the Company incurred a net loss during the period ended March 31, 2014, the basic and
diluted loss per common share is the same amount, as any common stock equivalents would be considered anti-dilutive.

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 flows.

Reclassifications:

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

NOTE 2 – PROPERTY

Property consists of the following at March
31, 2014 and December 31, 2013:



|                                   |  | 2014 |           | 2013
|---------------------------------- |  | ---- | --------- | ----
|                                   |  |      |           |     
|Mining camp equipment and fixtures |  | $    | 648,866   |     
|Transportation equipment           |  |      | 262,348   |     
|Lab equipment                      |  |      | 14,306    |     
|Machinery and equipment            |  |      | 66,931    |     
|Office furniture and fixtures      |  |      | 76,894    |     
|Office equipment                   |  |      | 11,673    |     
|Computer equipment                 |  |      | 36,105    |     
|Sub-total                          |  |      | 1,117,123 |     
|Less: Accumulated depreciation     |  |      | (869,726  | )   
|Total Property                     |  | $    | 247,397   |     
|                                   |  |      |           |     

Depreciation has been provided over
each asset’s estimated useful life.  Depreciation expense was $17,865 and $20,932 for the three months ended
March 31, 2014 and 2013, respectively.

NOTE 3 – MINING PROPERTIES

Mining properties consist of the following
at March 31, 2014 and December 31, 2013:

13







|                               |  | 2014 |           | 2013
|------------------------------ |  | ---- | --------- | ----
|San Jose de Gracia (“SJG”):    |  |      |           |     
|Mining Concessions             |  | $    | 4,703,367 |     
|Less: Accumulated Amortization |  |      | (519,400  | )   
|                               |  |      |           |     
|Total Mining Properties        |  | $    | 4,183,967 |     



Amortization expense was $0 and $1,129
for the three months ended March 31, 2014 and 2013, respectively.

NOTE 4 – INVESTMENT IN AFFILIATE/RECEIVABLES
FROM AFFILIATE

Through March 31, 2014, the Company loaned
a total of $805,760 USD to DynaResource Nevada, Inc. (“DynaNevada”), a Nevada Corporation, which owns 100% of one operating
subsidiary in México, DynaNevada de México, SA de CV. (“DynaNevada de México”).  The
terms of the Note Receivable provided for a “Convertible Loan”, repayable at 5% interest over a 3 year period, and
convertible at the Company’s option into common stock of DynaNevada at $.25 / Share.  DynaNevada is a related entity
(affiliate), and through its subsidiary DynaNevada de México, has entered into an Option agreement with Grupo México
(IMMSA) in México, for the exploration and development of approximately 3,000 hectares in the State of San Luis Potosi (“The
Santa Gertrudis Property”). DynaNevada de México exercised the Option with IMMSA in March 2010, so that DynaNevada
de México now owns 100% of the Santa Gertrudis Property. In June, 2010, DynaNevada de México acquired an additional
6,000 hectares in the State of Sinaloa (the “San Juan Property”).

On December 31, 2010, the Company exercised
its option to convert the note receivable and other receivable from DynaNevada into shares of common stock at a rate of $.25 /
Share. The Company received 3,223,040 shares, which represents approximately 19.95% of the outstanding shares of DynaNevada. At
the time of the exchange, DynaNevada’s net book value was approximately $695,000, consisting of $30,000 cash and the remainder
unproven mining properties. DynaNevada has a contingent liability arising from the purchase of one of the mining properties, which
Management believes has no merit. Based upon the above, Management estimated the value of the Company’s DynaNevada shares
as of March 31, 2014 and December 31, 2013 to be $70,000. Management believes the impairment is temporary, and therefore an unrealized
loss of $735,760 has been recorded in other comprehensive income.

The Company has advanced funds to DynaNevada
on a regular basis in order for DynaNevada to meets its basis filing and reporting obligations with the Mexican authorities relating
to tax returns and paying taxes on its concessions. As of March 31, 2014 and December 31, 2013, the advances totaled $186,840 and
$186,840, respectively. The amounts are carried in “other assets”.

NOTE 5 – PROMISSORY NOTES

Notes Payable – Series I

At March 31, 2014, the Company was obligated
to repay Promissory Notes in the amount of $1,205,000 (the “Notes”). The Notes bear simple interest at twelve and a
half percent (12.5%), accrued for twelve months, and with the accrued interest to be added to the principal, and then
interest will be paid by the Company, quarterly in arrears. The holders of the Notes (In Aggregate) are also entitled to receive
ten percent (10%) of the net profits received by the Company, and generated from the bulk sampling material (if any, and up
to fifty thousand tons) processed through the existing, or improved mill facilities at San Jose de Gracia. This net profit percentage
(if any) would be paid quarterly in arrears based on the profits generated (if any) for the prior quarter. Such net profits
(if any) are to be calculated after deducting all expenses related to the processing of the bulk sample material, and
after a prior deduction of thirty three percent (33%) from the profits, to be deposited in a sinking fund cash reserve.
The Notes mature on December 31, 2015.

The Company has the right to prepay the
Notes with a ten percent (10%) penalty. The Note holder may, at any time prior to maturity or prepayment, convert any unpaid principal
and accrued interest into Series B Preferred Stock of the Company at $5.00 per share, or into Common Stock at $5.00 per share.
If the Note is converted into Common Stock, at the time of conversion, the holder would receive a warrant to purchase additional
common shares of the Company for $7.50 per share, such warrant expiring on December 31, 2015.

Notes Payable – Series II

At March 31, 2014, the Company was obligated
to repay Promissory Notes in the amount of $149,808 (the “Notes”). The Notes bear simple interest at twelve and a half
percent (12.5%), accrued for twelve months, and with the accrued interest to be added to the principal, and then interest
will be paid by the Company, quarterly in arrears. The holders of the Notes (In Aggregate) are also entitled to receive
ten percent (10%) of the net profits received by the Company, and generated from the bulk sampling material (if any, on the second fifty
thousand tons) processed through the existing, or improved mill facilities at San Jose de Gracia. This net profit percentage (if
any) would be paid quarterly in arrears based on the profits generated (if any) for the prior quarter. Such net profits
(if any) are to be calculated after deducting all expenses related to the processing of the bulk sample material, and
after a prior deduction of thirty three percent (33%) from the profits, to be deposited in a sinking fund. The Notes
mature on December 31, 2015.

14







The Company has the right to prepay the
Notes with a ten percent (10%) penalty. The Note holder may, at any time prior to maturity or prepayment, convert any unpaid principal
and accrued interest into common stock of the Company at $5.00 per share. At the time of conversion, the holder would receive a
warrant to purchase additional common shares of the Company for $7.50 per share, such warrant expiring on December 31, 2015.

No conversions occurred in the 1st
qtr.

NOTE 6 – INCOME TAXES

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

The cumulative tax effect at the expected
tax rate of 34% (blended for U.S. and México) of significant items comprising the Company’s net deferred tax amounts
as of March 31, 2014 and December 31, 2013 are as follows:

Deferred Tax Asset Related to:

|                             |  | 2014 |            | 2013
|---------------------------- |  | ---- | ---------- | ----
|Prior Year                   |  | $    | 9,500,294  |     
|Tax Benefit for Current Year |  |      | 454,458    |     
|Total Deferred Tax Asset     |  |      | 9,954,752  |     
|Less: Valuation Allowance    |  |      | (9,954,752 | )   
|Net Deferred Tax Asset       |  | $    | 0          |     
|                             |  |      |            |     



The net deferred tax asset and benefit
for the current year is generated primarily from the cumulative net operating loss carry-forward which is approximately $33,500,000
at March 31, 2014, and will expire in the years 2025 through 2031.

The realization of deferred tax benefits
is contingent upon future earnings and is fully reserved at March 31, 2014.

NOTE 8 – RELATED PARTY TRANSACTIONS

DynaResource de México (“DynaMéxico”)

In May 2013, the Company agreed to receive
a Share Certificate for 300 Series “B” Variable Capital Shares of DynaMéxico, in exchange for the settlement
of accounts receivable from DynaMéxico in the amount of $31,090,710 Mexican Pesos (approximately $2.4 M USD). After the
issuance and receipt of the 300 Series B Shares on June 21, 2013, DynaUSA holds 80% of the total outstanding Capital of DynaMéxico.
As of March 31, 2014, the Company’s wholly owned subsidiary MinerasDyna had an account receivable due from DynaMéxico
in the amount of $2,800,000.

Mineras de DynaResource (“MinerasDyna”)

As of March 31, 2014, the Company had
advanced $3,348,000 to MinerasDyna. MinerasDyna had advanced $2,800,000 to DynaMéxico as of March 31, 2014 and this amount
is carried as a receivable by MinerasDyna from DynaMéxico.

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

The receivables from MinerasDyna and
DynaMéxico have been eliminated upon consolidation.

Dynacap Group Ltd.

The Company paid $35,000 and $12,500
to Dynacap Group, Ltd. (an entity controlled by officers of the Company) for consulting and other fees during the three months
ended March 31, 2014 and 2013, respectively.

DynaNevada, Inc. and DynaNevada de
México S.A. de C.V. (together “DynaNevada”)

15





The Company advanced DynaNevada
$0 and $48,000 in the three months ended March 31, 2014 and 2013, respectively, for maintenance of its corporate obligations and
mining concessions.

NOTE 9 – STOCKHOLDERS’
EQUITY

Authorized Capital. The
total number of shares of all classes of capital stock which the corporation shall have the authority to issue is 45,001,000 shares,
consisting of (i) twenty million and one thousand (20,001,000) shares of Preferred Stock, par value $0.0001 per share (“Preferred
Stock”), of which one thousand (1,000) shares shall be designated as Series A Preferred Stock and (ii) twenty-five million
(25,000,000) shares of Common Stock, par value $.01 per share (“Common Stock”).

Series A Preferred Stock:

The Company has designated 1,000 shares
of its Preferred Stock as Series A, having a par value of $0.0001 per share. Holders of the Series A Preferred Stock have the right
to elect a majority of the Board of Directors of the Company.  In October 2007, the Company issued 1,000 shares of Series
A Preferred Stock to its CEO. At March 31, 2014 and December 31, 2013 there were 1,000 and 1,000 shares of Series A Preferred Stock
outstanding, respectively. The par value changed from $1.00 to $0.0001 in 2013.

Series B Preferred Stock:

The Company has designated 1,000,000
shares of its Preferred Stock as Series B, having a par value of $0.0001 per share.  Holders of the Series B Preferred Shares
have the right to convert into Common Stock of the Company on the following schedule:

|Date of Conversion          | # of Common Shares
        Received on Conversion
        For Each Preferred Share | # of Common Stock
        Warrants Received
        On Conversion for
        Each Preferred Share | Company
        can force the
        Option?
|--------------------------- | ---------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------- | ---------------------------------------------
|April 1 to June 30, 2014    | 2                                                                                  | 0                                                                                                  | N                                            
|July 1 to Dec 31, 2014      | 1.5                                                                                | .75                                                                                                | N                                            
|January 1 to June 30, 2015  | 1                                                                                  | 1                                                                                                  | N                                            
|July 1 to December 31, 2015 | 1                                                                                  | 0                                                                                                  | Y                                            

The holders of Series B Preferred Shares
do not have voting rights and are not entitled to receive a dividend. At March 31, 2014 and December 31, 2013 there were 564,946
and 460,446 shares of Series B Preferred Stock outstanding, respectively.

In the third and fourth quarters of 2013,
$340,000 of the promissory notes and $22,734 of accrued interest were converted to Series B Preferred Stock. No conversions occurred
in the three months ended March 31, 2014.

Preferred Stock (Undesignated):

In addition to the 1,000 shares designated
as Series A Preferred Stock and the 1,000,000 shares designated as Series B Preferred Stock, the Company is authorized to issue
an additional 19,000,000 shares of Preferred Stock, having a par value of $0.0001 per share. The Board of Directors of the Company
has authority to issue the Preferred Stock from time to time in one or more series, and with respect to each series of the Preferred
Stock, to fix and state by the resolution the terms attached to the Preferred Stock. At March 31, 2014 and December 31, 2013, there
were no other shares of Preferred Stock outstanding.

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

Common Stock:

The Company is authorized to issue 25,000,000
common shares at a par value of $0.01 per share. These shares have full voting rights. At March 31, 2014 and 2013, there were 11,052,008
and 11,052,008 shares outstanding, respectively. No dividends were paid for the three months ended March 31, 2014 and 2013.

Preferred Rights:

The Company issued “Preferred Rights”
and received $158,500 in 2003 and $626,000 in 2002, for the rights to percentages of revenues generated from the San Jose de Gracia
Pilot Production Plant. This has been reflected as “Preferred Rights” in stockholders’ equity. As of December
31, 2004, $558,312 was repaid and as of December 31, 2005, an additional $186,188 was repaid, leaving a current balance of
$40,000 and $40,000 as of March 31, 2014 and December 31, 2013, respectively.

16







Stock Issuances:

During the three months ended March 31,
2014, no common shares were issued.

During the three months ended March 31,
2014, the Company issued 104,500 Series B preferred shares for cash for $5.00 per share.

During 2013, the Company issued 387,900
Series B preferred shares for cash for $5.00 per share.

During 2013, the Company issued 68,000
Series B preferred shares for debt at $5.00 per share.

During 2013, the Company issued 4,546
Series B preferred shares for accrued interest at $5.00 per share.

During 2013, the Company issued 250,000
common shares to MinerasDyna for services. This has been reflected as treasury stock in the equity section of the financial statements.
Expense related to these services has been eliminated in consolidation.

Treasury Stock:

During the three months ended March 31,
2014, no activity in treasury stock occurred.

During 2013, the Company repurchased
28,551 shares for $94,500.

Treasury stock is accounted for by the
cost method.

Options and Warrants:

The Company had 1,151,800 options or
warrants outstanding at March 31, 2014.

During the three months ended March 31,
2014, no options or warrants were issued or exercised.

The Company had 1,151,800 options or
warrants outstanding at December 31, 2013.

During 2013, no options were issued,
none were exercised and none expired. The Company recorded expense related to the issuance of these options in accordance with
the Black Scholes option pricing model.

NOTE 10 – EMPLOYEE BENEFIT
PLANS

During the periods ended March 31, 2014
and December 31, 2013, there were no qualified or non-qualified employee pension, profit sharing, stock option, or other plans
authorized for any class of employees.

NOTE 11 – COMMITMENTS AND
CONTINGENGIES

The Company is required to pay taxes
in México in order to maintain concessions owned by DynaMéxico.  Additionally, the Company is required
to incur a minimum amount of expenditures each year for all concessions held.  The minimum expenditures are calculated
based upon the land area, as well as the age of the concessions.  Amounts spent in excess of the minimum may be carried
forward indefinitely over the life of the concessions, and are adjusted annually for inflation.  Based on Management’s
business plans, the Company does not anticipate that DynaMéxico will have any issues in meeting the minimum annual expenditures
for the concessions, and DynaMéxico retains sufficient carry forward amounts to cover over 20 years of the minimum expenditure
(as calculated at the 2012 minimum, adjusted for annual inflation of 4%).

In September 2008, the Company entered
into a 37 month lease agreement for its corporate office.  In August, 2011 and then in August 2012, the Company entered
into a one year extensions of the lease through August 31, 2014. The Company paid rent expense of $12,499 and $11,760 related to
this lease for the three months ended March 31, 2014 and 2013, respectively.

The following is a schedule of minimum
lease payments required under the existing lease as of March 31, 2013:

|Year Ended December 31: |                 | Amount
|----------------------- | --------------- | ------
|                        |                 |       
|                        | 2014            |       
|                        | 2015 and beyond |       
|                        |                 |       

Litigation.

On December 27, 2012, the Company, and
DynaMéxico, filed an Original Petition and Application for Temporary Injunction and Permanent Injunction in the 14th
Judicial District Court of Dallas, Texas (the “Petition”) against Defendants Goldgroup Mining Inc., Goldgroup Resources
Inc., and certain individuals acting in concert with Goldgroup (collectively “Goldgroup”). The Petition alleged, among
other things, that Goldgroup has wrongfully used property, confidential information and data belonging to DynaMéxico and consistently
failed to disclose several matters of material importance to the public.

17







The Petition requested that Goldgroup
be enjoined from: (a) using or disseminating any confidential information belonging to DynaMéxico, (b) asserting that Goldgroup
owns any interest in the San Jose de Gracia Project, rather than owning a common shares equity interest in DynaMéxico, (c)
improperly disclosing that Goldgroup is the operator of the San Jose de Gracia Project, rather than Mineras de DynaResource SA
de C.V. (“MinerasDyna”), and (d) failing to properly disclose that broad powers of attorney for acting on behalf of
DynaMéxico are held by a DynaUSA senior executive.

The Petition further requested, among
other things: (a) a temporary and permanent injunction; (b) declaratory relief; (c) disgorgement of funds alleged to have been
improperly raised as a consequence of Goldgroup’s wrongful actions; (d) cancellation of shares of DynaMéxico stock
held by Goldgroup; and, (d) actual and punitive damages.

At the time of the filing, the Company
believed the Petition to be necessary in order to protect its shareholder interests in DynaMéxico and in order to protect
the property, data, and assets of DynaMéxico.

Although Goldgroup challenged the jurisdiction
of Texas to the filed litigation, Goldgroup has acknowledged that it owns no direct interest in the San Jose de Gracia Property,
and it has acknowledged that Mineras de DynaResource SA de C.V. (“Mineras”), DynaUSA’s 100% owned subsidiary,
is the exclusive operator of the San Jose de Gracia Project.  Additionally, recent developments in México in 2013,
including: (1) the signing of the Exploitation Amendment Agreement (“EAA”) between Mineras and DynaMéxico; (2)
the signing of a 20 year land lease agreement between Mineras and the Santa Maria Ejido Community surrounding the San Jose de Gracia
Project; and (3) the acquisition by DynaUSA of a majority interest in DynaMéxico; protect against Goldgroup’s wrongfully
obtaining and/or disseminating confidential data and information of DynaMéxico.

These recent developments in México
provided that the Dyna Parties non-suited the Texas action as announced by the Company on March 14, 2014, without prejudice to
asserting or consolidating claims in México, as well as to contemplate additional claims or regulatory actions against Goldgroup
in Canada.

Goldgroup files for Arbitration

On March 14, 2014 Goldgroup filed for
arbitration, citing the Earn In Agreement dated September 1, 2006. The Company filed an answer on April 10, 2104 disputing that
any issues exist which provide for arbitration.

Litigation in México –
Company is Plaintiff

The Company, and DynaMéxico have
filed several legal actions in México against Goldgroup Mining Inc., Goldgroup Resources Inc., certain individuals employed
or previously employed by Minop, S.A. de C.V. (a Company operating in México and associated with Goldgroup Mining Inc.),
and certain individuals retained as agents of Goldgroup Mining Inc. The Company and DynaMéxico are plaintiffs in the actions
filed in México and the outcomes are pending.

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

Litigation – Company and/or
Officers and Directors as Defendants

Other than the filing for arbitration
by Goldgroup described above, The Company, nor its Officers and Directors have received any formal notice of any legal actions
filed against them, nor is the Company or its Officers and Directors aware of any legal actions filed against them.

NOTE 12 – NON-CONTROLLING
INTEREST

The Company’s Non-controlling Interest
recorded in the consolidated financial statements relates to a 50% interest in DynaResource de México, S.A. de C.V. Changes
in Non-controlling Interest for the three months ended March 31, 2014 and 2013, respectively were as follows:

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





18







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

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

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

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

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

Level 3 Inputs – Instruments
with primarily unobservable value drivers.

As of March 31, 2014 and December 31, 2013,
the Company’s financial assets were measured at fair value using Level 3 inputs, with the exception of cash, which was valued
using Level 1 inputs. A description of the valuation of the Level 3 inputs is discussed in Note 4.



|                                         | Fair Value Measurement at March 31, 2014 Using: |             
|---------------------------------------- | ----------------------------------------------- | ------------
|                                         |                                                 | Mar 31, 2014
|Assets:                                  |                                                 |             
|Cash and Cash Equivalents                |                                                 | $           
|Investment in Affiliate                  |                                                 | 70,000      
|                                         |                                                 | $           
|                                         |                                                 |             
|Liabilities:                             |                                                 |             
|Accounts Payable and Accrued Liabilities |                                                 | $           
|                                         |                                                 |             
|                                         |                                                 | $           
|                                         |                                                 |             





|                          |  | Fair Value Measurement at December 31, 2013 Using:
|------------------------- |  | --------------------------------------------------
|                          |  | December 31, 2013                                 
|Assets:                   |  |                                                   
|Cash and Cash Equivalents |  | $                                                 
|Investment in Affiliate   |  |                                                   
|                          |  | $                                                 
|                          |  |                                                   



|Liabilities:                             |  |   |         |  |  |   |         |  |  |   |   |  |  |   |   | 
|---------------------------------------- |  | - | ------- |  |  | - | ------- |  |  | - | - |  |  | - | - | 
|Accounts Payable and Accrued Liabilities |  | $ | 361,220 |  |  | $ | 361,220 |  |  | $ | — |  |  | $ | — | 
|                                         |  | $ | 361,220 |  |  | $ | 361,220 |  |  | $ | — |  |  | $ | — | 



NOTE 14 – SUBSEQUENT EVENTS

The Company issued preferred Series B shares in exchange for
$675,000 at a price of $5, convertible 2 to 1 to common shares.

The Company received $250,000 for a note payable, convertible
to common shares at $2.50/share.

The Company deliveredgold product for sale for approximately $315,000
in May, 2014.





19





ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS

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

General

FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q includes
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, which we refer to in this
quarterly report as the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, which we refer to in
this quarterly report as the Exchange Act. Forward-looking statements are not statements of historical fact but rather reflect
our current expectations, estimates and predictions about future results and events. These statements may use words such as “anticipate,”
“believe,” “estimate,” “expect,” “intend,” “predict,” “project”
and similar expressions as they relate to us or our management. When we make forward-looking statements, we are basing them on
our management’s beliefs and assumptions, using information currently available to us. These forward-looking statements are
subject to risks, uncertainties and assumptions, including but not limited to, risks, uncertainties and assumptions discussed in
this quarterly report. Factors that can cause or contribute to these differences include those described under the headings “Risk
Factors” and “Management Discussion and Analysis and Plan of Operation.”

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



IMPORTANT NOTE REGARDING CANADIAN
DISCLOSURE STANDARDS

The Company is an “OTC Reporting
Issuer” as that term is defined in BC Multilateral Instrument 51-105, Issuers Quoted in the U.S. Over-the-Counter Markets,
promulgated by the British Columbia Securities Commission. Accordingly, certain disclosure in this quarterly report has been prepared
in accordance with the requirements of securities laws in effect in Canada, which differ from the requirements of United States
securities laws. In Canada, an issuer is required to provide technical information with respect to mineralization, including reserves
and resources, if any, on its mineral exploration properties in accordance with Canadian requirements, which differ significantly
from the requirements of the United States Securities and Exchange Commission (the “SEC”) applicable to registration
statements and reports filed by United States companies pursuant to the Securities Act or the Exchange Act. As such, information
contained in this quarterly report concerning descriptions of mineralization under Canadian standards may not be comparable to
similar information made public by United States companies subject to the reporting and disclosure requirements of the SEC and
not subject to Canadian securities legislation. This quarterly report may use the terms “measured mineral resources”,
“indicated mineral resources” and “inferred mineral resources”. While these terms are recognized and required
by Canadian securities legislation (under National Instrument 43-101, Standards of Disclosure for Mineral Projects), the
SEC does not recognize them. United States investors are cautioned not to assume that any part or all of the mineral deposits in
these categories will ever be converted to reserves. In addition, “inferred mineral resources” have a great amount
of uncertainty as to their existence and economic and legal feasibility. It cannot be assumed that all or any part of a measured
mineral resource, indicated mineral resource or inferred mineral resource will ever be upgraded to a higher category. Under Canadian
securities legislation, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies,
although they may form, in certain circumstances, the basis of a “preliminary economic assessment” as that term is
defined in National Instrument 43-101, Standards of Disclosure for Mineral Projects. U.S. investors are cautioned not to
assume that any part or all of any reported measured, indicated, or inferred mineral resource estimates referred to herein or in
the Technical Report are economically or legally mineable.

Company

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



20





History

The Company was incorporated
in the State of California on September 28, 1937, under the name West Coast Mines, Inc. In November 1998, the Company re-domiciled
from California to Delaware and changed its name to DynaResource, Inc. (aka “DynaUSA”).

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

Through its 80% owned Mexican subsidiary,
DynaResource de México, S.A. de C.V. (“DynaMéxico”), the Company owns a portfolio of mining concessions
that currently includes its interests in the San José de Gracia Project (“SJG”) in northern Sinaloa State, México.
The SJG District covers 69,121 hectares (170,802 acres) on the west side of the Sierra Madre mountain range.

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

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

At incorporation of DynaMéxico,
100 shares of Fixed Capital Series “A” shares were issued with DynaUSA receiving 99 shares and Koy W. Diepholz receiving
1 share.

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

On May 17, 2013, DynaResource agreed
to acquire a Certificate for 300 Series “B” Variable Capital Shares of DynaMéxico, in exchange for the settlement
of accounts receivable from DynaMéxico in the amount of $31,090,710 Mexican Pesos (approximately $2.4 M USD). After the
issuance and receipt of the 300 Series B Shares on June 21, 2013, DynaUSA holds 80% of the total outstanding Capital of DynaMéxico.
DynaMéxico owns 100% of the San Jose de Gracia Project in northern Sinaloa, México ("SJG", and the "SJG
Property"). (See table representation of the outstanding Capital of DynaMéxico below).

The exchange of shares by DynaMéxico
for amounts payable to DynaUSA was unanimously approved by attending shareholders at a meeting of the shareholders of DynaMéxico,
held on the second call for shareholder's meeting on May 17, 2013 in Mazatlan, Sinaloa, México. Of the total amount of $31,090,170
Mexican Pesos exchanged for the 300 Shares, $150,000 Mexican Pesos was accounted for at the nominal value of $500 Mexican Pesos
per share, and the remaining balance of $30,940,710 Mexican Pesos was accounted for as a premium for the subscription of the shares
agreed to be paid by DynaUSA.

The date of issuance of the 300 Series
B Share Certificate was June 21, 2013. As a result of the issuance and exchange of the 300 Variable Capital shares for amounts
owed to DynaUSA, the accounts payable amount owed by DynaMéxico to DynaUSA was retired in full. MinerasDyna, the 100 % owned
subsidiary of DynaUSA, continues to carry an amount receivable from DynaMéxico of $2,800,000 USD at March 31, 2014, and
MinerasDyna continues to make cash advances to DynaMéxico under the terms of the exploitation amendment agreement (“EAA”),
below.

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



|DynaMéxico Shareholder   |  | Fixed CapitalSeries "A" Shares |  | Variable CapitalSeries "B" Shares |  | Total Capital Shares(Series A and B)
|------------------------ |  | ------------------------------ |  | --------------------------------- |  | ------------------------------------
|DynaResource, Inc.       |  | 099                            |  | 300                               |  | 399                                 
|Koy W. Diepholz          |  | 001                            |  |                                   |  | 001                                 
|Goldgroup Resources Inc. |  |                                |  | 100                               |  | 100                                 
|Total Capital Issued     |  | 100                            |  | 400                               |  | 500                                 

DynaResource currently owns 80% of the
outstanding common shares of DynaMéxico.

On May 15, 2013, MinerasDyna entered
into an Exploitation Amendment Agreement (“EAA”) with DynaMéxico. The EAA grants to MinerasDyna the right to
finance, explore, develop and exploit the SJG Property, in exchange for: (A) Reimbursement of all costs associated with financing,
maintenance, exploration, development and exploitation of the SJG Property, which costs are to be charged and billed by MinerasDyna
to DynaMéxico; and, (B) After Item (A) above, the receipt by MinerasDyna of 75 % of gross receipts received by DynaMéxico
from the sale of all minerals produced from SJG, to the point that MinerasDyna has received 200 % of its advanced funds; and, (C)
After Items (A) and (B) above; the receipt by MinerasDyna of 50 % of all gross receipts received by DynaMéxico from the
sale of all minerals produced from SJG, and throughout the term of the EAA; and, (D) in addition to Items (A), (B), and
(C) above, MinerasDyna shall receive a 2.5 % NSR (“Net Smelter Royalty”) on all minerals sold from SJG over the term
of the EAA.

21







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

On
June 17, 2013, DynaMéxico received from the Secretaria de Medio Ambiente Y Recursos Naturales, the Federal Environmental
Authority in México ("SEMARNAT"), the approval and permission which allows for the rehabilitation and operation
of the pilot mill facility at SJG ("the Semarnat-SJG Mill Permit," and, the "Semarnat Exploitation Permit").
Under the terms of the Semarnat-SJG Mill Permit, DynaMéxico will be responsible to maintain the SJG pilot mill facility,
and including the adjacent tailings pond area, in compliance with the regulations described in la Norma Oficial Mexicana ("NOM-141-SEMARNAT-2003).

On
September 30, 2013, DynaMéxico received from the Secretaria de Medio Ambiente Y Recursos Naturales, the Federal Environmental
Authority in México ("SEMARNAT"), the approval and permission which allows for the exploitation and mining activities
at the San Pablo Area of SJG ("the Semarnat-SJG San Pablo Exploitation Permit" and the "Semarnat Exploitation Permit").
Under the terms of the Semarnat Exploitation Permit, DynaMéxico will be restricted to conducting exploitation activities
within the San Pablo Area of SJG (as defined in the Map of the San Pablo area as submitted to Semarnat).

In January, 2014, MinerasDyna entered
into a 20 Year Land Lease Agreement with the Santa Maria Ejido Community surrounding San Jose de Gracia. The Land Lease Agreement
is dated January 6, 2014 and continues through 2033. The Land Lease agreement covers an area of 4,399 hectares surrounding the
main mineral resource areas of SJG, and provides for annual lease payments by MinerasDyna of $ 1,359,443 Pesos (approx. $104,250
USD), commencing in 2014. Additionally, under the description of the 20 Year Land Lease, MinerasDyna expects to construct a Medical
Facility at SJG in year 2014, and a Community Center in year 2015.

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

Licenses and Concessions

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

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

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

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

As of the date of this Form 10-Q,
all of the 33 mining concessions comprising the SJG Property are in good standing with respect to the payment of taxes and the
filing of assessment work obligations imposed by the Mining Act of México and its Regulations.

22





Current Mining Concessions - San
José de Gracia

|Claim Name             | ClaimNumber | Staking date | Expiry     | Hectares    | Taxes / ha (pesos)
|---------------------- | ----------- | ------------ | ---------- | ----------- | ------------------
|AMPL. SAN NICOLAS      | 183815      | 22/11/1988   | 21/11/2038 | 17.4234     | 111.27            
|AMPL. SANTA ROSA       | 163592      | 30/10/1978   | 29/10/2028 | 25.0000     | 111.27            
|BUENA VISTA            | 211087      | 31/03/2000   | 30/03/2050 | 17.9829     | 63.22             
|EL CASTILLO            | 214519      | 02/10/2001   | 01/10/2051 | 100.0000    | 31.62             
|EL REAL 2              | 216301      | 30/04/2002   | 29/04/2052 | 280.1555    | 31.62             
|FINISTERRE FRACC. A    | 219001      | 28/01/2003   | 27/01/2053 | 18.7856     | 31.62             
|FINISTERRE FRACC. B    | 219002      | 28/01/2003   | 27/01/2053 | 174.2004    | 31.62             
|GUADALUPE              | 189470      | 05/12/1990   | 04/12/2040 | 7.0000      | 111.27            
|LA GRACIA I            | 215958      | 02/04/2002   | 01/04/2052 | 300.0000    | 31.62             
|LA GRACIA II           | 215959      | 02/04/2002   | 01/04/2052 | 230.0000    | 31.62             
|LA LIBERTAD            | 172433      | 15/12/1983   | 14/12/2033 | 97.0000     | 111.27            
|LA NUEVA AURORA        | 215119      | 08/02/2002   | 07/02/2052 | 89.3021     | 31.62             
|LA NUEVA ESPERANZA     | 226289      | 06/12/2005   | 05/12/2055 | 40.0000     | 7.6               
|LA UNION               | 176214      | 26/08/1985   | 25/08/2035 | 4.1098      | 111.27            
|LOS TRES AMIGOS        | 172216      | 27/10/1983   | 26/10/2033 | 23.0000     | 111.27            
|MINA GRANDE            | 163578      | 10/10/1978   | 09/10/2028 | 6.6588      | 111.27            
|NUEVO ROSARIO          | 184999      | 13/12/1989   | 12/12/2039 | 32.8781     | 111.27            
|PIEDRAS DE LUMBRE 2    | 215556      | 05/03/2002   | 04/03/2052 | 34.8493     | 31.62             
|PIEDRAS DE LUMBRE 3    | 218992      | 28/01/2003   | 27/01/2053 | 4.3098      | 31.62             
|PIEDRAS DE LUMBRE No.4 | 212349      | 29/09/2000   | 28/09/2050 | 0.2034      | 63.22             
|PIEDRAS DE LUMBRE UNO  | 215555      | 05/03/2002   | 04/03/2052 | 40.2754     | 31.62             
|SAN ANDRES             | 212143      | 31/08/2000   | 30/08/2050 | 385.0990    | 63.22             
|SAN JOSÉ               | 208537      | 24/11/1998   | 23/11/2048 | 27.0000     | 111.27            
|SAN MIGUEL             | 183504      | 26/10/1988   | 25/10/2038 | 7.0000      | 111.27            
|SAN NICOLAS            | 163913      | 14/12/1978   | 13/12/2028 | 55.5490     | 111.27            
|SAN SEBASTIAN          | 184473      | 08/11/1989   | 07/11/2039 | 40.0000     | 111.27            
|SANTA MARIA            | 218769      | 17/01/2003   | 16/01/2053 | 4.2030      | 31.62             
|SANTA ROSA             | 170557      | 13/05/1982   | 12/05/2032 | 31.4887     | 111.27            
|SANTO TOMAS            | 187348      | 13/08/1986   | 12/08/2036 | 312.0000    | 111.27            
|TRES AMIGOS 2          | 212142      | 31/08/2000   | 30/08/2050 | 54.4672     | 63.22             
|FINISTERRE 4           | 231166      | 18/01/2008   | 17/01/2058 | 2142.1302   | 5.08              
|FRANCISCO ARTURO       | 230494      | 06/09/2007   | 27/03/2057 | 62481.3815  | 5.08              
|TOTAL                  |             |              |            | 69,121.4010 |                   

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

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



23





In addition to the San Miguel Transfer
Agreements, DynaMéxico has entered into the following Promise to Sell and Purchase Agreements (the “San
Miguel Promise to Sell and Purchase Agreements”):

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

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

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

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

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

Surface Lease Rights

In
addition to the surface rights held by DynaMéxico pursuant to the Mining Act of México and its Regulations (Ley
Minera y su Reglamento), MinerasDyna maintains access and surface rights to the SJG Project pursuant to the 20 year Land Lease
Agreement (above). The 20 Year Land Lease Agreement with the Santa Maria Ejido Community
surrounding San Jose de Gracia is dated January 6, 2014 and continues through 2033. It covers an area of 4,399 hectares surrounding
the main mineral resource areas of SJG, and provides for annual lease payments by MinerasDyna of $ 1,359,443 Pesos (approx. $104,250
USD), commencing in 2014. Additionally, under the description of the 20 Year Land Lease, MinerasDyna expects to construct a Medical
Facility at SJG in year 2014, and a Community Center in year 2015.

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

Property Location

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

Access

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

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

Climate and Operating Season

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

Infrastructure and Local Resources

Power

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

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



24





Water

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

Accommodations

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

Offices – Camp Facilities

DynaMéxico maintains an administrative
and logistics office in Guamuchil, located 125 kilometers southwest of the SJG property. The SJG Project sources many of its supplies
from Guamuchil, and from Los Mochis and Culiacan. A satellite dish installed at the SJG Property provides communications from the
SJG Property to Guamuchil.

The SJG property is described in
more detail in this Form 10-Q, under Item 2, Properties.

Sierra Madre Gold-Silver Belt
in México





Historical Production

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

1997-1998 Drilling – Exploration
Programs

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

Pilot Production Activities (2003
– 2006)

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

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

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



25





Suspension of Production Activities

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

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

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

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

On June 21, 2013, DynaResource acquired
a Certificate for 300 Series “B” Variable Capital Shares of DynaMéxico, in exchange for the settlement of accounts
receivable from DynaMéxico in the amount of $31,090,710 Mexican Pesos (approximately $2.4 M USD). After the issuance and
receipt of the 300 Series B Shares, DynaUSA holds 80% of the total outstanding Capital of DynaMéxico. DynaMéxico
owns 100% of the San Jose de Gracia Project in northern Sinaloa, México.

No Known Reserves

Currently, the Company’s drilling
programs (through DynaMéxico) are exploratory in nature. The Company expects to commence pilot production activities in
2014.

The SJG Property is without known
reserves

Under U.S. standards, set forth
in SEC Industry Guide 7, mineralization may not be classified as a “reserve” unless a determination has been made that
the mineralization could be economically and legally produced or extracted at the time the reserve determination is made.

Future Drilling – Exploration
Programs

Further drilling programs at SJG are
contemplated, in view of the 2012 DynaMéxico-CAM SJG Mineral Resource Estimate and the formal National Instrument 43-101(“NI
43-101”) Technical Report for San Jose de Gracia (the “2012 DynaMéxico Luna-CAM SJG Technical Report”),
and the updated NI 43-101 Technical Report, dated December 31, 2012 (See “Updated National Instrument 43-101 Technical Report
for San Jose de Gracia”, below.)

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

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

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

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

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

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

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



26





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

The Company received from DynaMéxico
on December 31, 2012, an updated NI 43-101 compliant Technical Report for the San Jose de Gracia Project (the “Updated 2012
DynaMéxico Luna-CAM SJG Technical Report, and the “updated Technical Report”). The updated Technical Report
was approved by DynaMéxico, and filed by the Company with SEDAR on December 31, 2012.

Commissioning of an Updated Mineral
Resource Estimate

During the fourth quarter 2012, DynaMéxico,
through MinerasDyna, commissioned Chlumsky, Armbrust & Meyer LLC, Lakewood, CO. (“CAM”), Mr. Robert Sandefur, BS,
MSc, P.E., senior reserve analysis and a Qualified Person as defined under NI 43-101, for the purpose of updating the Mineral Resource
Estimate at San Jose de Gracia and to include lower grade mineralized areas of San Jose de Gracia using a .3 g/t Au cut off grade.
This work is pending until the company deems it necessary to continue.

Commissioning of Metallurgical Testing

During the fourth quarter 2012, DynaMéxico,
through MinerasDyna, engaged Kappes, Cassiday & Associates, Reno, NV. (“KCA”), for the purpose of designing a metallurgical
test program to confirm possible heap leach recoveries of specific mineralized areas of San Jose de Gracia. This work is pending
until the company deems it necessary to continue.

Company Transition from Exploration
to Mining – Production

The Company expects to transition its
business from that of a purely exploration company, to an exploration and production company in 2014. The basis for the exploration
and production activity is provided through the foundational resource for SJG as reported in the 2012 DynaMéxico-CAM SJG
Mineral Resource Estimate (and Technical Report), and supported further by the company’s successful pilot production activities
during the 2003-2006 period.

SEMARNAT Permission for Operating
Mill Facility at San Jose de Gracia

On June 17, 2013, DynaMéxico received
from the Secretaria de Medio Ambiente Y Recursos Naturales, the Federal Environmental Authority in México ("SEMARNAT"),
the approval and permission which allows for the rehabilitation and operation of the pilot mill facility at SJG ("the Semarnat-SJG
Mill Permit," and, the "Semarnat Permit"). Under the terms of the Semarnat-SJG Mill Permit, DynaMéxico will
be responsible to maintain the SJG pilot mill facility, and including the adjacent tailings pond area, in compliance with the regulations
described in la Norma Oficial Mexicana ("NOM-141-SEMARNAT-2003).

Rehabilitation of Pilot Mill Facility
at San Jose de Gracia

Under the terms of the Exploitation Amendment
Agreement (“EAA”), as described above, MinerasDyna is in process of the rehabilitating and planning the subsequent
operation of the pilot mill facility at SJG. The SJG pilot mill facility (a gravimetric-flotation circuit) is projected to process
bulk samples to be mined from selected target areas of SJG. Operations at SJG will be managed by MinerasDyna, and are projected
to be similar to those conducted by DynaMéxico during the 2003-2006 Period.

SEMARNAT Permission for Exploitation
and Mining of the San Pablo Mine Area at San Jose de Gracia

On September 30, 2013, DynaMéxico
received from the Secretaria de Medio Ambiente Y Recursos Naturales, the Federal Environmental Authority in México ("SEMARNAT"),
the approval and permission which allows for the exploitation and mining activities at the San Pablo Area of SJG ("the Semarnat-SJG
San Pablo Exploitation Permit" and, the "Semarnat Exploitation Permit").

Regional Geology & Mineral Deposits

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

Property Geology

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



27





Geologic Structure

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

Mineralization & Alteration

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

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

Six principal mineralized trends
have been identified at San José de Gracia, from south to north, consisting of:

| | 1. | La Purisima Ridge trend;
| | -- | ------------------------



| | 2. | Palos Chinos trend;
| | -- | -------------------



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



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



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



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

Lab

A field laboratory is maintained within
the camp facility. DynaMéxico utilized the lab for internal assaying services during its production activities of 2003-2006.
Assays were performed by DynaMéxico personnel for mined mineralization, feed mineralization, gravity and flotation concentrates,
and tailings. The current status of the lab and equipment is care and maintenance. The Company anticipates that MinerasDyna will
utilize the lab facility in the future for providing check assays to support ongoing exploration and bulk sampling works.

Mineral Resource Estimate - Construction
of Wireframes

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

Mineral Resource Estimate - Parameters Used to Estimate
the Mineral Resource

The data base for the San Jose de Gracia
Project consists of 372 drill holes of which 361 are diamond drill holes and the remaining 11 were reverse circulation holes, with
a total drilling of 75,878 meters. The 2012 DynaMéxico-CAM SJG Mineral Resource Estimate concentrates on four main mineralized
vein systems at SJG: Tres Amigos, San Pablo, La Union, and La Purisima. Of the 372 drill holes, 368 were drilled to test these
four main vein systems and the remaining four holes tested the Argillic Zone. Technical personnel of Minop built three dimensional
solids to constrain estimation to the interpreted veins in each swarm. The 172 holes most recently drilled (2009-2011), were allocated
as follows: Tres Amigos (64 holes), San Pablo (49 holes), La Union (24 holes), La Purisima (32 holes) and the Argillic Zone (3
holes).

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

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



28





Mineral Resource Estimate - Explanation
of Resource Estimation

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

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

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

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

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

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

No Known Reserves

The SJG property is without known reserves.
Mineral resources which are not mineral reserves do not have demonstrated economic viability. The quantity and grade of the “Indicated”
and “Inferred” mineral resources reported in the mineral resource estimate contained in this Form 10 K are estimates
only. There has been insufficient exploration to define any mineral reserves on the property, and it is uncertain if further exploration
will result in discovery of mineral reserves.

Currently, the Company’s drilling
programs are exploratory in nature. However, The Company expects to commence pilot production activities in 2014 using the foundational
resource for SJG as reported in the 2012 DynaMéxico-CAM SJG Mineral Resource Estimate (and Technical Report), and supported
further by the company’s recent pilot production activities during the 2003-2006 period.

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

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

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

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

The Company filed the Technical Report
on SEDAR (www.sedar.com) on March 28, 2012. And, on December 31, 2012, the Company filed an updated Technical Report on SEDAR.

DynaMéxico Water Concession

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

29







Exclusive Operating Entity at
San Jose de Gracia

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

DynaMéxico General Power of
Attorney

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

Updated Mineral Resource Estimate

During the third quarter 2012, MinerasDyna
commissioned Chlumsky, Armbrust & Meyer LLC, Lakewood, CO. (“CAM”), Mr. Robert Sandefur, BS, MSc, P.E., senior
reserve analysis and a Qualified Person as defined under NI 43-101, for the purpose of updating the Mineral Resource Estimate at
San Jose de Gracia and to include lower grade mineralized areas of San Jose de Gracia using a .3 g/t Au cut off grade. This work
is pending until the company deems it appropriate to continue.

Metallurgical Testing

During the third quarter 2012, MinerasDyna
engaged Kappes, Cassiday & Associates, Reno, NV. (“KCA”), for the purpose of designing a metallurgical test program
to confirm possible heap leach recoveries of specific mineralized areas of San Jose de Gracia. This work is pending until the company
deems it appropriate to continue.

Capital Requirements

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

Gold

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

Gold Supply.    A
combination of current mine production, recycling and draw-down of existing gold stocks held by governments, financial institutions,
industrial organizations and private individuals make up the annual gold supply. Based on public information available for the
years 2008 through 2013, on average, current mine production has accounted for approximately 64% of the annual gold supply.

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

|                             |  |      |       |  |     |   |       |         |  |   |       | 
|---------------------------- |  | ---- | ----- |  | --- | - | ----- | ------- |  | - | ----- | 
|Year                         |  | High |       |  | Low |   |       | Average | 
|2002                         |  | $    | 349   |  |     | $ | 278   |         |  | $ | 310   | 
|2003                         |  | $    | 416   |  |     | $ | 320   |         |  | $ | 363   | 
|2004                         |  | $    | 454   |  |     | $ | 375   |         |  | $ | 410   | 
|2005                         |  | $    | 536   |  |     | $ | 411   |         |  | $ | 444   | 
|2006                         |  | $    | 725   |  |     | $ | 525   |         |  | $ | 604   | 
|2007                         |  | $    | 841   |  |     | $ | 608   |         |  | $ | 695   | 
|2008                         |  | $    | 1,011 |  |     | $ | 713   |         |  | $ | 872   | 
|2009                         |  | $    | 1,213 |  |     | $ | 810   |         |  | $ | 972   | 
|2010                         |  | $    | 1,421 |  |     | $ | 1,058 |         |  | $ | 1,225 | 
|2011                         |  | $    | 1,895 |  |     | $ | 1,319 |         |  | $ | 1,572 | 
|2012                         |  | $    | 1,792 |  |     | $ | 1,540 |         |  | $ | 1,669 | 
|2013                         |  | $    | 1,694 |  |     | $ | 1,192 |         |  | $ | 1,411 | 
|2014 (through April 8, 2014) |  | $    | 1,385 |  |     | $ | 1,221 |         |  | $ | 1,293 | 



Source: Kitco, Reuters and the London Bullion Market Association



30





On April 8, 2014, the afternoon fixing
gold price on the London Bullion Market was $1,302 per ounce and the spot market gold price on the New York Commodity Exchange
was $1,310 per ounce.

Condition of Physical Assets and Insurance

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

Environmental Matters

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

Exploration
and Mining Permit Requirements (México)

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

To
carry out mineral exploration activities, holders of mining concessions in México are required to file at the offices of
the Federal Secretariat of the Environment and Natural Resources (“SEMARNAT”) a “Notice of Commencement of Exploration
Activities” under the guidelines of the Mexican Official Norm 120 (“Norm 120”). SEMARNAT is the office
of the Federal Government of México responsible for the review and issuance of a CSUP (referenced below), the review of
a Technical Justification Study (referenced below) and the filing of Norm 120. Norm 120 is a notice to SEMARNAT only, and has no
processing time.

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

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

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

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

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

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

DynaMéxico
Permit Filings / Permits

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

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

31





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

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

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

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

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

- On June 17, 2013, DynaMéxico received from the Secretaria de Medio
Ambiente Y Recursos Naturales, the Federal Environmental Authority in México ("SEMARNAT"), the approval and permission
which allows for the rehabilitation and operation of the pilot mill facility at SJG ("the Semarnat-SJG Mill Permit,"
and, the "Semarnat Permit"). Under the terms of the Semarnat-SJG Mill Permit, DynaMéxico will be responsible to
maintain the SJG pilot mill facility, and including the adjacent tailings pond area, in compliance with the regulations described
in la Norma Oficial Mexicana ("NOM-141-SEMARNAT-2003).

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

| | · | On September 30, 2013,
DynaMéxico received from SEMARNAT the approval and permission which allows for mining activities and the exploitation of
the San Pablo area of San Jose de Gracia.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Subsequent to December 31, 2013, MinerasDyna
enteredinto a 20 Year Land Lease Agreement with the Santa Maria Ejido Community surrounding
San Jose de Gracia. The 20 Year Land Lease Agreement is dated January 6, 2014 and continues through 2033. It covers an area of
4,399 hectares surrounding the main mineral resource areas of SJG, and provides for annual lease payments by MinerasDyna of $ 1,359,443
Pesos (approx. $104,250 USD), commencing in 2014. Additionally, under the description of the Land Lease Agreement, MinerasDyna
expects to construct a Medical Facility at SJG in year 2014, and a Community Center in year 2015.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The
land lease agreement provides MinerasDyna with surface access to the core resource areas of SJG (4,399 hectares), and allows for
all permitted mining and exploration activities from the owners of the surface rights (Santa Maria Ejido community).

DynaMéxico
Bonding Requirements

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

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



32







Permit
Processing Times (In General)

| | · | Processing time for review
and approval of a CSUP Application and Technical Justification Study varies depending on the workload of the SEMARNAT regional
office where an application is filed, but a processing time of four months is typical.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Processing time for review
and approval of an Environmental Impact Study varies depending on the workload of the SEMARNAT regional office where an application
is filed, but a processing time of six months is typical.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Processing time for issuance
of an Explosives Permit by SEDENA is approximately six months.
| | - | -------------------------------------------------------------------------------------------

| | · | Processing time for issuance
of a water rights concession by CONAGUA is approximately six months.
| | - | -------------------------------------------------------------------------------------------------

***



San Jose de Gracia Mineral Property

DynaMéxico owns 100% of the
mineral concessions at the San Jose de Gracia Property (“SJG”), located in Sinaloa State, México, which is the
only property in which DynaMéxico retains an interest. The Company owns 80% of the outstanding shares of DynaMéxico.
DynaMéxico holds title to 33 concessions covering approximately 69,121 hectares (170,802 acres).

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

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

The SJG Property is without Known
Reserves

Under U.S. standards, mineralization
may not be classified as a “reserve” unless a determination has been made that the mineralization could be economically
and legally produced or extracted at the time the reserve determination is made.

SJG History

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

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

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

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

Drilling programs conducted from
2007 through 2011

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

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

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



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

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

33







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

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

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

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

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

The Company received from DynaMéxico
on December 31, 2012, an updated NI 43-101 compliant Technical Report for the San Jose de Gracia Project (the “Updated 2012
DynaMéxico Luna-CAM SJG Technical Report, and the “updated Technical Report”). The updated Technical Report
was approved by DynaMéxico, and filed by the Company on SEDAR on December 31, 2012.

Regional Geology & Mineral Deposits

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

Property Geology

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

Geologic Structure

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

Mineralization & Alteration

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



34





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

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



| | 1. | La Purisima Ridge trend;
| | -- | ------------------------



| | 2. | Palos Chinos trend;
| | -- | -------------------



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

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

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

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



Lab

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

Legal Proceedings

US Litigation (Dallas, Texas) –
Company as Plaintiff

On December 27, 2012, the Company, and
DynaMéxico, filed an Original Petition and Application for Temporary Injunction and Permanent Injunction in the 14th
Judicial District Court of Dallas, Texas (the “Petition”) against Defendants Goldgroup Mining Inc., Goldgroup Resources
Inc., and certain individuals acting in concert with Goldgroup (collectively “Goldgroup”). The Petition alleged, among
other things, that Goldgroup has wrongfully used property, confidential information and data belonging to DynaMéxico and
consistently failed to disclose several matters of material importance to the public.

The Petition requested that Goldgroup
be enjoined from: (a) using or disseminating any confidential information belonging to DynaMéxico, (b) asserting that Goldgroup
owns any interest in the San Jose de Gracia Project, rather than owning a common shares equity interest in DynaMéxico, (c)
improperly disclosing that Goldgroup is the operator of the San Jose de Gracia Project, rather than Mineras de DynaResource SA
de C.V. (“Mineras”), and (d) failing to properly disclose that broad powers of attorney for acting on behalf of DynaMéxico
are held by a DynaUSA senior executive.

The Petition further requested, among
other things: (a) a temporary and permanent injunction; (b) declaratory relief; (c) disgorgement of funds alleged to have been
improperly raised as a consequence of Goldgroup’s wrongful actions; (d) cancellation of shares of DynaMéxico stock
held by Goldgroup; and, (d) actual and punitive damages.

At the time of the filing, the Company
believed the Petition to be necessary in order to protect its shareholder interests in DynaMéxico and in order to protect
the property, data, and assets of DynaMéxico.

Although Goldgroup challenged the jurisdiction
to the filed litigation in Texas, Goldgroup has acknowledged that it owns no direct interest in the San Jose de Gracia Property,
and it has acknowledged that Mineras de DynaResource SA de C.V. (“MinerasDyna”), DynaUSA’s 100% owned subsidiary,
is the exclusive operator of the San Jose de Gracia Project.  Additionally, recent developments in México in 2013,
including: (1) the signing of the Exploitation Amendment Agreement (“EAA”) between MinerasDyna and DynaMéxico;
(2) the signing of a 20 year land lease agreement between MinerasDyna and the Santa Maria Ejido Community surrounding the San Jose
de Gracia Project; and (3) the acquisition by DynaUSA of a majority interest in DynaMéxico; protect against Goldgroup’s
wrongfully obtaining and/or disseminating confidential data and information of DynaMéxico.  These recent developments
in México provided that the Dyna Parties non-suited the Texas action as announced on March 14, 2014, without prejudice to
asserting or consolidating claims in México, as well as to contemplate additional claims or regulatory actions against Goldgroup
in Canada.

Previously, the Dyna Parties have filed
 claims against Goldgroup in México, including, without limitation, claims for theft of confidential data and property
of DynaMéxico, claims for issuing misleading and inaccurate disclosures and, claims related to Goldgroup's asserting that
it owns interests that it does not own.

Goldgroup files for Arbitration

On March 14, 2014 Goldgroup filed for
arbitration, citing the Earn In Agreement dated September 1, 2006. The Company filed an answer on April 10, disputing that any
issues exist which provide for arbitration.



35







Litigation(s) in México –
Company is Plaintiff

The Company, and DynaMéxico
have filed several legal actions in México against Goldgroup Mining Inc, Goldgroup Resources Inc., certain individuals
employed or previously employed by Minop, S.A. de C.V. (a Company operating in México and associated with Goldgroup
Mining Inc.), and certain individuals retained as agents of Goldgroup Mining Inc. The Company and DynaMéxico are
plaintiffs in the actions filed in México and the outcomes are pending.

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

Litigations – Company and/or
Officers and Directors as Defendants

Other than the Goldgroup claim for arbitration
above described, The Company, nor its Officers and Directors have received any formal notice of any legal actions filed against
them, nor is the Company or its Officers and Directors aware of any legal actions filed against them.

General

The Company currently holds 80%
of the outstanding shares of DynaResource de México, S.A. de C.V. (“DynaMéxico”), which owns 100% of
the mineral concessions and related interest to the San José de Gracia mining District (“SJG”). SJG is currently
comprised of 33 mining concessions covering approximately 69,121 hectares located in and around San José de Gracia, in northern
Sinaloa State, México (“SJG”). SJG is located on the west side of the Sierra Madre Mountains, approximately
250 kilometers inland from the port city of Los Mochis, Sinaloa; and approximately 500 kilometers north of Mazatlan, Sinaloa.

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

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

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

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

Recent Pilot Production Activities
(2003 – 2006)

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

Magnetic and IP Surveys

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

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

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

Correlation between ground magnetic
and IP

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



36





Correlation with recent Drilling Programs
and known Mineralization

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

Identification of Additional Resource
Target Areas

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

San Pablo; Up Dip;

San Pablo; Displacement
Zone;

Tres Amigos; Down Dip and
Northwest;

Tres Amigos; Extension
Northeast;

Orange Tree; Down Dip;

La Cecena, Los Hilos, and
Tepehauje;

Palos Chinos;

La Prieta;

La Purisima; Down dip at
Southeast end;

Argyllic Zone; +
250 M. Down;

Activity for the Year Ended December
31, 2013 and 2012

In 2013, MinerasDyna, the Company's
100% owned subsidiary, in accordance with the terms of the Exploitation Amendment Agreement, refurbished the pilot production facility
at SJG, and rehabilitated the San Pablo mine, in order to process bulk mined ore samples from San Pablo through the pilot mill
facility. DynaMéxico received permits as discussed above for the rehabilitation and operation of the mill facility and the
exploitation and mining of the San Pablo area of SJG. The basis for the mining activity and the operation of the pilot mill facility
are the NI 43-101 Mineral Resource Estimate, the Technical Report, the block models prepared as a result of the recent drilling
activity, and the recent production history of 2003-2006.

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

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

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

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

The Company received an updated NI 43-101
compliant technical report from DynaMéxico on December 31, 2012, for the San Jose de Gracia Project (the “Updated
2012 DynaMéxico Luna-CAM SJG Technical Report, and the “updated Technical Report”). The updated Technical Report
was approved by DynaMéxico, and filed by the Company with SEDAR on December 31, 2012.

The Updated 2012 DynaMéxico
Luna-CAM SJG Technical Report - Selected Drill Results by Target Area

Tres Amigos

Selected drill hole results for Tres
Amigos follow:

|Drill hole | Area        | From m | To m   | length (m) | Au g/t | Ag g/t | Cu%  | Pb%  | Zn% 
|---------- | ----------- | ------ | ------ | ---------- | ------ | ------ | ---- | ---- | ----
|97-002     | Tres Amigos | 42.70  | 58.20  | 15.50      | 3.99   | 15.10  | 0.38 | 0.00 | 0.00
|97-006     | Tres Amigos | 27.80  | 29.65  | 1.85       | 6.46   | 45.50  | 1.10 | 0.03 | 0.32
|97-007     | Tres Amigos | 57.00  | 67.00  | 10.00      | 3.41   | 12.20  | 0.09 | 0.00 | 0.00
|97-009     | Tres Amigos | 100.00 | 102.00 | 2.00       | 13.53  | 3.10   | 0.02 | 0.01 | 0.50
|97-012     | Tres Amigos | 24.50  | 26.20  | 1.70       | 8.57   | 34.90  | 0.39 | 1.00 | 4.30
|97-013     | Tres Amigos | 95.00  | 107.50 | 12.50      | 20.80  | 21.80  | 0.43 | 0.06 | 0.15
|97-035     | Tres Amigos | 126.00 | 132.00 | 6.00       | 8.84   | 14.20  | 0.28 | 0.00 | 0.13
|97-037     | Tres Amigos | 35.90  | 37.20  | 1.30       | 11.97  | 15.00  | 0.19 | 0.22 | 3.60
|97-039     | Tres Amigos | 40.20  | 43.20  | 3.00       | 29.50  | 44.60  | 0.58 | 0.95 | 7.45
|97-040     | Tres Amigos | 78.00  | 80.00  | 2.00       | 14.88  | 10.90  | 0.19 | 0.17 | 0.10

37







|97-040 | Tres Amigos | 92.00  | 94.00  | 2.00  | 10.81  | 16.30  | 0.38 | 0.01 | 0.78
|------ | ----------- | ------ | ------ | ----- | ------ | ------ | ---- | ---- | ----
|97-040 | Tres Amigos | 104.00 | 108.00 | 4.00  | 7.21   | 4.80   | 0.04 | 0.00 | 0.25
|97-045 | Tres Amigos | 100.00 | 106.00 | 6.00  | 11.46  | 3.40   | 0.03 | 0.02 | 0.17
|97-047 | Tres Amigos | 124.94 | 132.00 | 7.06  | 7.51   | 15.40  | 0.09 | 0.27 | 3.42
|97-050 | Tres Amigos | 78.00  | 80.00  | 2.00  | 8.53   | 10.80  | 0.05 | 0.78 | 2.00
|08-102 | Tres Amigos | 158.66 | 162.47 | 3.81  | 5.10   | 6.60   | 0.14 | 0.01 | 0.19
|08-104 | Tres Amigos | 67.45  | 68.80  | 1.35  | 26.20  | 327.90 | 1.60 | 0.23 | 0.01
|08-113 | Tres Amigos | 25.10  | 26.70  | 1.60  | 13.40  | 3.20   | 0.00 | 0.01 | 0.90
|08-115 | Tres Amigos | 153.30 | 159.00 | 5.70  | 8.31   | 8.30   | 0.17 | 0.00 | 0.07
|08-116 | Tres Amigos | 134.80 | 138.10 | 3.30  | 21.74  | 9.90   | 0.06 | 0.04 | 0.15
|08-118 | Tres Amigos | 27.84  | 31.88  | 4.04  | 5.18   | 30.50  | 0.38 | 0.80 | 5.68
|08-118 | Tres Amigos | 52.65  | 53.73  | 1.08  | 13.70  | 13.90  | 0.06 | 0.98 | 4.53
|10-150 | Tres Amigos | 285.61 | 288.49 | 2.88  | 10.93  | 14.24  | 0.32 | 0.01 | 0.03
|10-150 | Tres Amigos | 312.80 | 321.81 | 9.01  | 3.97   | 2.35   | 0.09 | 0.00 | 0.03
|10-151 | Tres Amigos | 208.38 | 216.20 | 7.82  | 22.19  | 14.70  | 0.36 | 0.01 | 0.06
|10-152 | Tres Amigos | 174.42 | 175.55 | 1.13  | 9.85   | 16.68  | 0.18 | 0.05 | 0.15
|10-153 | Tres Amigos | 207.47 | 211.10 | 3.63  | 5.36   | 12.92  | 0.33 | 0.05 | 0.23
|10-154 | Tres Amigos | 73.00  | 74.75  | 1.75  | 21.89  | 9.30   | 0.00 | 0.00 | 0.02
|10-175 | Tres Amigos | 135.93 | 140.00 | 4.07  | 3.41   | 8.34   | 0.15 | 0.28 | 0.56
|10-175 | Tres Amigos | 241.59 | 245.40 | 3.81  | 6.37   | 3.41   | 0.02 | 0.00 | 0.03
|10-176 | Tres Amigos | 221.04 | 228.91 | 7.87  | 2.00   | 7.02   | 0.18 | 0.09 | 1.02
|10-177 | Tres Amigos | 228.63 | 245.00 | 16.37 | 10.58  | 9.75   | 0.25 | 0.02 | 0.09
|10-178 | Tres Amigos | 222.55 | 233.45 | 10.90 | 4.22   | 8.11   | 0.31 | 0.01 | 0.13
|10-179 | Tres Amigos | 75.3   | 77.02  | 1.72  | 105.51 | 49.60  | 0.03 | 0.01 | 0.06
|10-179 | Tres Amigos | 174.85 | 179.52 | 4.67  | 5.70   | 15.89  | 0.11 | 0.00 | 0.16
|10-226 | Tres Amigos | 205.05 | 213.09 | 8.04  | 18.47  | 19.77  | 0.42 | 0.13 | 0.22
|10-227 | Tres Amigos | 176.95 | 186.75 | 9.80  | 8.42   | 11.92  | 0.41 | 0.04 | 0.33
|10-228 | Tres Amigos | 164.31 | 167.29 | 2.98  | 3.73   | 26.21  | 0.58 | 0.09 | 0.35
|10-230 | Tres Amigos | 244.91 | 249.45 | 4.54  | 18.09  | 15.48  | 0.53 | 0.02 | 0.03
|10-231 | Tres Amigos | 266.70 | 269.45 | 2.75  | 8.99   | 35.18  | 0.84 | 0.00 | 0.03
|10-233 | Tres Amigos | 177.00 | 179.40 | 2.40  | 5.42   | 2.87   | 0.03 | 0.04 | 0.41
|10-234 | Tres Amigos | 214.61 | 217.97 | 3.36  | 15.05  | 13.45  | 0.23 | 0.01 | 0.01
|10-235 | Tres Amigos | 147.65 | 151.15 | 3.50  | 2.95   | 0.55   | 0.01 | 0.00 | 0.01
|10-237 | Tres Amigos | 92.44  | 92.84  | 0.40  | 883.91 | 195.00 | 0.24 | 0.77 | 5.35
|11-246 | Tres Amigos | 107.30 | 108.20 | 0.90  | 63.85  | 10.10  | 0.03 | 0.01 | 0.01
|11-257 | Tres Amigos | 60.84  | 63.33  | 2.49  | 5.37   | 9.28   | 0.25 | 0.01 | 0.40
|11-257 | Tres Amigos | 92.00  | 94.66  | 2.66  | 5.00   | 6.74   | 0.25 | 0.02 | 1.16
|11-260 | Tres Amigos | 63.40  | 71.15  | 7.75  | 7.84   | 10.68  | 0.16 | 0.12 | 2.28
|11-265 | Tres Amigos | 47.95  | 52.17  | 4.22  | 3.07   | 2.14   | 0.07 | 0.00 | 0.08
|11-271 | Tres Amigos | 115.40 | 120.15 | 4.75  | 13.93  | 18.56  | 0.54 | 0.02 | 0.14
|11-278 | Tres Amigos | 66.75  | 67.40  | 0.65  | 16.34  | 2.80   | 0.02 | 0.02 | 0.08
|11-280 | Tres Amigos | 3.05   | 4.57   | 1.52  | 10.67  | 0.50   | 0.01 | 0.00 | 0.01





38







San Pablo

|           | Selected drill hole results for San Pablo follow: |       
|---------- | ------------------------------------------------- | ------
|Drill hole | Area                                              | From m
|07-007     | San Pablo                                         | 85.50 
|07-008     | San Pablo                                         | 115.80
|07-009     | San Pablo                                         | 167.40
|07-012     | San Pablo                                         | 19.70 
|07-023     | San Pablo                                         | 69.10 
|07-026     | San Pablo                                         | 65.90 
|07-027     | San Pablo                                         | 142.80
|07-029     | San Pablo                                         | 130.60
|07-031     | San Pablo                                         | 94.25 
|08-048     | San Pablo                                         | 219.46
|08-051     | San Pablo                                         | 183.55
|08-060     | San Pablo                                         | 235.70
|08-089     | San Pablo                                         | 173.80
|08-090     | San Pablo                                         | 190.70
|08-092     | San Pablo                                         | 124.80
|08-097     | San Pablo                                         | 227.69
|09-131     | San Pablo                                         | 95.55 
|09-133     | San Pablo                                         | 126.80
|09-134     | San Pablo                                         | 79.09 
|09-135     | San Pablo                                         | 75.70 
|09-137     | San Pablo                                         | 135.90
|09-137     | San Pablo                                         | 157.25
|09-138     | San Pablo                                         | 150.62
|09-139     | San Pablo                                         | 132.18
|09-140     | San Pablo                                         | 99.92 
|10-195     | San Pablo                                         | 170.67
|10-197     | San Pablo                                         | 48.15 
|10-197     | San Pablo                                         | 102.00
|10-199     | San Pablo                                         | 4.68  
|10-201     | San Pablo                                         | 23.40 
|10-203     | San Pablo                                         | 70.65 
|10-207     | San Pablo                                         | 80.15 
|10-212     | San Pablo                                         | 46.80 
|10-213     | San Pablo                                         | 171.75
|10-215     | San Pablo                                         | 186.80
|10-217     | San Pablo                                         | 182.64
|           |                                                   |       

39







|10-219 | San Pablo | 155.84 | 157.25 | 1.41 | 10.82 | 11.84 | 0.39 | 0.00 | 0.01
|------ | --------- | ------ | ------ | ---- | ----- | ----- | ---- | ---- | ----
|10-221 | San Pablo | 69.98  | 71.98  | 2.00 | 13.14 | 23.93 | 0.62 | 0.00 | 0.01
|10-224 | San Pablo | 122.82 | 125.05 | 2.23 | 5.29  | 18.70 | 0.69 | 0.02 | 0.04
|10-224 | San Pablo | 148.60 | 154.95 | 6.35 | 7.04  | 13.31 | 0.57 | 0.00 | 0.01
|10-236 | San Pablo | 112.96 | 117.03 | 4.07 | 11.38 | 22.92 | 0.68 | 0.00 | 0.01
|11-247 | San Pablo | 63.60  | 65.45  | 1.85 | 10.49 | 5.92  | 0.01 | 0.00 | 0.02
|11-247 | San Pablo | 80.00  | 83.47  | 3.47 | 5.00  | 36.71 | 0.53 | 0.01 | 0.02
|11-249 | San Pablo | 108.20 | 109.93 | 1.73 | 8.21  | 30.29 | 0.80 | 0.00 | 0.02
|11-250 | San Pablo | 101.72 | 104.81 | 3.09 | 20.15 | 53.44 | 0.88 | 0.24 | 0.54
|11-263 | San Pablo | 119.88 | 121.13 | 1.25 | 9.47  | 21.70 | 0.65 | 0.01 | 0.04
|11-264 | San Pablo | 145.21 | 146.45 | 1.24 | 21.24 | 78.80 | 0.72 | 0.04 | 0.01
|11-268 | San Pablo | 92.65  | 94.25  | 1.60 | 11.74 | 21.13 | 0.37 | 0.01 | 0.04



La Union

Selected drill hole results for La Union
follow:



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

La Purisima

Selected drill hole results for La Purisima
follow:

|Drill hole | Area        | From m | To m  | length (m) | Au g/t | Ag g/t | Cu%  | Pb%  | Zn% 
|---------- | ----------- | ------ | ----- | ---------- | ------ | ------ | ---- | ---- | ----
|97-055     | La Purisima | 24.40  | 27.40 | 3.00       | 5.24   | 28.50  | 0.63 | 0.35 | 1.83

40







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



Block Model in Surpac software

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

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

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

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

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

41





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

The Company received from DynaMéxico
on December 31, 2012, an updated NI 43-101 compliant Technical Report for the San Jose de Gracia Project (the “Updated 2012
DynaMéxico Luna-CAM SJG Technical Report, and the “updated Technical Report”). The updated Technical Report
was approved by DynaMéxico, and filed by the Company with SEDAR on December 31, 2012.

DynaMéxico Approval of
Technical Reports

DynaMéxico approved and released
the National Instrument 43-101 (“NI 43-101”) Technical Report for SJG on March 28, 2012, and DynaMéxico approved
and released the NI 43-101 Updated Technical Report for SJG on December 31, 2012.

Structure of Company / Operations

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

Competitive Advantage

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

Drilling Programs

Further drilling programs at SJG are
anticipated, but those plans will take into consideration the recent NI 43-101 2012 DynaMéxico-CAM SJG Mineral Resource
Estimate and the recommendations made in the 2012 DynaMéxico Luna-CAM SJG 43-101 Technical Report and the updated Technical
Report. The Company expects DynaMéxico to plan continued drilling programs at SJG at San Pablo, Tres Amigos, La Cecena,
Palos Chinos, La Union, La Purisima, and La Prieta. And, the Company expects DynaMéxico’s continued exploration efforts
to confirm extensions to mineralization in all directions and down dip from the main target areas.

Note Receivable – Affiliate

DynaResource Nevada, Inc., a Nevada Corporation
(“DynaNevada”), with one operating subsidiary in México, DynaNevada de México, SA de CV (“DynaNevada
de México”) have common officers, directors and shareholders. The total amount loaned by the Company to DynaNevada
at December 31, 2010 was $750,000 USD. The terms of the Note Receivable provide for a “Convertible Loan”, repayable
at 5% interest over a 3 year period, and convertible at the Company’s option into Common Stock of DynaNevada at $0.25 / Share.  DynaNevada
is a related entity, and through its subsidiary in México (DynaNevada de México), (“DynaNevada de México”),
has entered into an Option agreement with Grupo México (“IMMSA”) in México, for the exploration and development
of approximately 3,000 hectares in the State of San Luis Potosi (“the Santa Gertrudis Property”). In March, 2010, DynaNevada
de México completed the Option with IMMSA so that it now owns 100% of Santa Gertrudis. In June, 2010, DynaNevada de México
acquired an additional 6,000 Hectares in the State of Sinaloa (“the San Juan Property”). The Company has loaned additional
funds to DynaNevada since 2010 for maintenance of concessions and other nominal required fees and expenses.

Competition

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

DynaMéxico conducted mining and
milling operations at SJG from March 2003 through June, 2006. This activity was suspended in order to focus on the exploration
of the vast SJG District. The Company’s operating subsidiaries, MinerasDyna and DynaOperaciones, receive monthly fees for
management of the SJG activities and personnel. These fee amounts are eliminated in consolidation. Other than those intercompany
fees, the Company reported no revenue in 2013 and 2012. The Company expects revenues from mining and production in 2014.

42





RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2014 AND 2013

REVENUE. Revenue for the three months
ended March 31, 2014 and 2013 was $0 and $0. DynaMéxico ceased its production activities in 2006 in order to focus its efforts
on exploration and drilling activity, for the purpose of defining resources. The Company expects revenues from conducting production
activities in 2014.

PREPILOT-PRODUCTION EXPENSES. Pre Pilot-Production
Expenses were $820,346 and $0 for the three months ended March 31, 2014 and 2013, respectively. The increase in expenses was due
to the Company starting up operations in 2014. These expenses include refurbishment, facilitation of and cleaning of the mill and
mine operations. The Company was still in development stage in the prior year.

EXPLORATION EXPENSES. Exploration expenses
were $0 and $208,893 for the three months ended March 31, 2014 and 2013, respectively. The decrease in costs was due to the Company
starting up operations in 2014 and incurring Pre Pilot-Production Costs—see above.

OPERATING EXPENSES. Operating expenses
for the three months ended March 31, 2014 and 2013 were $346,334 and $533,178, respectively. The decrease in expenses is due primarily
to amounts previously expensed that were recovered when the Company received additional shares in DynaMexico in exchange for settlement
of accounts receivable from DynaMexico. The above expenses include depreciation and
amortization amounts of $17,865 and $22,061 for the three months ended March 31, 2014 and 2013, respectively.

OTHER INCOME (EXPENSE). Other income,
exclusive of currency translation gain or (loss) was $42,231 and $134 for the three months ended March 31, 2014 and 2013, respectively.
The increase is primarily due to interest expense in the current period of $42,338, with none in the prior period. Currency translation
gain or (loss) was $94,042 and $348,634 for the three months ended March 31, 2014 and 2013, respectively.

NON-CONTROLLING INTEREST. The non-controlling
interest portion of our net loss for the three months ended March 31, 2014 and 2013 was $139,209 and $198,420, respectively. This
is due to an increase in the net loss for the current period offset by the change in minority interest % from the prior quarter.

COMPREHENSIVE (LOSS). Comprehensive
loss includes the Company’s net loss plus the unrealized currency translation gain (loss) for the period which was a gain
of $8,214 in the current year and a loss of $2,765 in the prior year quarter.

Plan of Operation

The Plan of operation for the next
twelve months includes MinerasDyna commencing pilot production activities at SJG, while continuing drilling and exploration activities.
The amount allocated to each of these activities will depend on the results of the pilot production activities. The Company is
required to fund its general and administrative expenses in the US. The Company’s operating subsidiaries, MinerasDyna and
DynaOperaciones, receive monthly fees for management of SJG activities and personnel. These amounts are eliminated in consolidation.
The Company believes that cash on hand is adequate to fund its ongoing general and administrative expenses through 2014. The Company
plans to seek additional capital funding during the next 12 months depending on results of pilot production activities, market
conditions, results of drilling and exploration activities, and other circumstances.

Capital Expenditures

The Company’s primary activities
relate to the exploration of SJG property through its 80% owned subsidiary DynaMéxico. Drilling and other services at SJG
are contracted through MinerasDyna, the operating entity under agreement with DynaMéxico. The Company does not foresee significant
capital purchases in 2014 which would require funding from current cash reserves.

Liquidity and Capital Resources

As of March 31, 2014, the Company
maintained working capital of $614,222, comprised of current assets of $1,310,234 and current liabilities of $696,012. This represents
a decrease of $343,940 from the working capital maintained by the Company of $958,162 as of December 31, 2013, due primarily to
the continued funding of operations in the first quarter and expenses related to the refurbishment of the pilot mill facility and
the rehabilitation of the San Pablo mine at San Jose de Gracia.

Net cash used in operations for
the three months ended March 31, 2014 increased to $(1,120,158) from $(553,044) in the three months ended March 31, 2013. Again,
this was due to the increased activity relating to the refurbishing of the pilot mill facility and the rehabilitation of the San
Pablo mine, and the preparation for processing bulked mine samples through the pilot mill facility. The pilot mill facility is
now operational and we expect to produce revenue from the running bulk samples processed through the mill facility in 2014, in
order to fund continuing operations.



43





Cash used in investing activities
was primarily for purchase of fixed assets of $23,744 in the first quarter.

Cash provided by financing activities
for the year ended December 31, 2013 was $529,291 compared to $176,208 for the three months ended March 31, 2013. The significant
increase is due to the Company raising funds in order to refurbish the pilot mill facility and for rehabilitating the San Pablo
mine, and to prepare to process bulk mined samples through the mill facility. The main component was the issuance by the Company
of Series B preferred stock for cash of $522,500.

Advances to Subsidiaries

DynaResource de México (“DynaMéxico”)

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

As of December 31, 2013, the Company
has no receivable from DynaMéxico, however, the Company’s wholly owned subsidiary MinerasDyna had an accounts receivable
due from DynaMéxico in the amount of $2,800,000.

As of December 31, 2012, the Company
entered into an agreement with DynaMéxico in which DynaMéxico agreed to pay a fee of $541,915 in order to continue
to carry an amount payable to the Company. The fee was calculated as if interest had been charged at 4% interest compounded monthly
over the period in which the amounts accrued.

Mineras de DynaResource (“MinerasDyna”)

As of March 31, 2014, the Company had
advanced $3,348,000 to MinerasDyna and MinerasDyna had advanced $2,800,000 to DynaMéxico. The total amount of $2,800,000
is a receivable owed to MinerasDyna from DynaMéxico as of March 31, 2014.

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

The receivables from MinerasDyna and
DynaMéxico have been eliminated upon consolidation.

Advances from Goldgroup Mining Inc.
(“Goldgroup”)

In January 2013, Goldgroup advanced $120,000
USD to DynaMéxico. This $120,000 contribution from Goldgroup was the first contribution from Goldgroup to DynaMéxico
since March 2011. And, in January 2014, Goldgroup advanced $111,500 USD to DynaMéxico.

Future Advances to MinerasDyna and
DynaMéxico from the Company

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

Sampling Process

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

Drilling Programs

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

Mineralization at San José de Gracia

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

44





No Known Reserves

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

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

Litigation

On December 27, 2012, the Company, and
DynaMéxico, filed an Original Petition and Application for Temporary Injunction and Permanent Injunction in the 14th
Judicial District Court of Dallas, Texas (the “Petition”) against Defendants Goldgroup Mining Inc., Goldgroup Resources
Inc., and certain individuals acting in concert with Goldgroup (collectively “Goldgroup”). The Petition alleged, among
other things, that Goldgroup has wrongfully used property, confidential information and data belonging to DynaMéxico and
consistently failed to disclose several matters of material importance to the public.

The Petition requested that Goldgroup
be enjoined from: (a) using or disseminating any confidential information belonging to DynaMéxico, (b) asserting that Goldgroup
owns any interest in the San Jose de Gracia Project, rather than owning a common shares equity interest in DynaMéxico, (c)
improperly disclosing that Goldgroup is the operator of the San Jose de Gracia Project, rather than Mineras de DynaResource SA
de C.V. (“MinerasDyna”), and (d) failing to properly disclose that broad powers of attorney for acting on behalf of
DynaMéxico are held by a DynaUSA senior executive.

The Petition further requested, among
other things: (a) a temporary and permanent injunction; (b) declaratory relief; (c) disgorgement of funds alleged to have been
improperly raised as a consequence of Goldgroup’s wrongful actions; (d) cancellation of shares of DynaMéxico stock
held by Goldgroup; and, (d) actual and punitive damages.

At the time of the filing, the Company
believed the Petition to be necessary in order to protect its shareholder interests in DynaMéxico and in order to protect
the property, data, and assets of DynaMéxico.

Although Goldgroup challenged the jurisdiction
to the filed litigation in Texas, Goldgroup has acknowledged that it owns no direct interest in the San Jose de Gracia Property,
and it has acknowledged that Mineras de DynaResource SA de C.V. (“Mineras”), DynaUSA’s 100% owned subsidiary,
is the exclusive operator of the San Jose de Gracia Project.  Additionally, recent developments in México in 2013,
including: (1) the signing of the Exploitation Amendment Agreement (“EAA”) between Mineras and DynaMéxico; (2)
the signing of a 20 year land lease agreement between Mineras and the Santa Maria Ejido Community surrounding the San Jose de Gracia
Project; and (3) the acquisition by DynaUSA of a majority interest in DynaMéxico; protect against Goldgroup’s wrongfully
obtaining and/or disseminating confidential data and information of DynaMéxico.  These recent developments in México
provided that the Dyna Parties non-suited the Texas action as announced by the Company on March 14, 2014, without prejudice to
asserting or consolidating claims in México, as well as to contemplate additional claims or regulatory actions against Goldgroup
in Canada.

Goldgroup files for Arbitration

On March 14, 2014 Goldgroup filed for
arbitration, citing the Earn In Agreement dated September 1, 2006. The Company filed an answer on April 10, 2104 disputing that
any issues exist which provide for arbitration.

Litigation in México –
Company is Plaintiff

The Company, and DynaMéxico have
filed several legal actions in México against Goldgroup Mining Inc., Goldgroup Resources Inc., certain individuals employed
or previously employed by Minop, S.A. de C.V. (a Company operating in México and associated with Goldgroup Mining Inc.),
and certain individuals retained as agents of Goldgroup Mining Inc. The Company and DynaMéxico are plaintiffs in the actions
filed in México and the outcomes are pending.

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

Litigation – Company and/or
Officers and Directors as Defendants

Other than the Arbitration claim of
Goldgroup described above, The Company, nor its Officers and Directors have received any formal notice of any legal actions filed
against them, nor is the Company or its Officers and Directors aware of any legal actions filed against them.

45





ITEM 3. Quantitative and Qualitative
Disclosure about Market Risk.

Not applicable.

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 March 31, 2014. This evaluation was accomplished under the supervision and with the participation of our chief
executive officer / principal executive officer, and chief financial officer / principal financial officer who concluded that the
company’s disclosure controls and procedures are effective to ensure that all material information required to be filed in
the quarterly report on Form 10-Q has been made known to them.

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

Based upon an evaluation conducted for
the period ended March 31, 2014, our Chief Executive Officer and Chief Financial Officer as of March 31, 2014, and as of the date
of this Report, have concluded that as of the end of the period covered by this report, we have identified no material weakness
in our internal controls.

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

Management’s Report on Internal Control Over Financial
Reporting

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

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

Our management conducted an evaluation
of the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework at March 31, 2014. Based on
its evaluation, our management concluded that, as of March 31, 2014, our internal control over financial reporting was effective.

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

Changes in Internal Controls over Financial Reporting

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

46





PART II

Item 1. 	Legal Proceedings

On December 27, 2012,
the Company, and DynaMéxico, filed an Original Petition and Application for Temporary Injunction and Permanent Injunction
in the 14th Judicial District Court of Dallas, Texas (the “Petition”) against Defendants Goldgroup Mining
Inc., Goldgroup Resources Inc., and certain individuals acting in concert with Goldgroup (collectively “Goldgroup”).
The Petition alleged, among other things, that Goldgroup has wrongfully used property, confidential information and data belonging
to DynaMéxico and consistently failed to disclose several matters of material importance to the public.

The Petition requested that Goldgroup
be enjoined from: (a) using or disseminating any confidential information belonging to DynaMéxico, (b) asserting that Goldgroup
owns any interest in the San Jose de Gracia Project, rather than owning a common shares equity interest in DynaMéxico, (c)
improperly disclosing that Goldgroup is the operator of the San Jose de Gracia Project, rather than Mineras de DynaResource SA
de C.V. (“MinerasDyna”), and (d) failing to properly disclose that broad powers of attorney for acting on behalf of
DynaMéxico are held by a DynaUSA senior executive.

The Petition further requested, among
other things: (a) a temporary and permanent injunction; (b) declaratory relief; (c) disgorgement of funds alleged to have been
improperly raised as a consequence of Goldgroup’s wrongful actions; (d) cancellation of shares of DynaMéxico stock
held by Goldgroup; and, (d) actual and punitive damages.

At the time of the filing, the Company
believed the Petition to be necessary in order to protect its shareholder interests in DynaMéxico and in order to protect
the property, data, and assets of DynaMéxico.

Although Goldgroup challenged the jurisdiction
to the filed litigation in Texas, Goldgroup has acknowledged that it owns no direct interest in the San Jose de Gracia Property,
and it has acknowledged that Mineras de DynaResource SA de C.V. (“Mineras”), DynaUSA’s 100% owned subsidiary,
is the exclusive operator of the San Jose de Gracia Project.  Additionally, recent developments in México in 2013,
including: (1) the signing of the Exploitation Amendment Agreement (“EAA”) between Mineras and DynaMéxico; (2)
the signing of a 20 year land lease agreement between Mineras and the Santa Maria Ejido Community surrounding the San Jose de Gracia
Project; and (3) the acquisition by DynaUSA of a majority interest in DynaMéxico; protect against Goldgroup’s wrongfully
obtaining and/or disseminating confidential data and information of DynaMéxico.  These recent developments in México
provided that the Dyna Parties non-suited the Texas action as announced by the Company on March 14, 2014, without prejudice to
asserting or consolidating claims in México, as well as to contemplate additional claims or regulatory actions against Goldgroup
in Canada.

Goldgroup files for Arbitration

On March 14, 2014 Goldgroup filed for
arbitration, citing the Earn In Agreement dated September 1, 2006. The Company filed an answer on April 10, 2104 disputing that
any issues exist which provide for arbitration.

Litigation in México –
Company is Plaintiff

The Company, and DynaMéxico have
filed several legal actions in México against Goldgroup Mining Inc., Goldgroup Resources Inc., certain individuals employed
or previously employed by Minop, S.A. de C.V. (a Company operating in México and associated with Goldgroup Mining Inc.),
and certain individuals retained as agents of Goldgroup Mining Inc. The Company and DynaMéxico are plaintiffs in the actions
filed in México and the outcomes are pending.

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

Litigation – Company and/or
Officers and Directors as Defendants

Other than the Arbitration claim of
Goldgroup described above, The Company, nor its Officers and Directors have received any formal notice of any legal actions filed
against them, nor is the Company or its Officers and Directors aware of any legal actions filed against them.

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

None.

Item 3.	Default Upon Senior Securities

Not applicable.

Item 4.	Mine Safety Disclosures

Not applicable.

47







Item 5.	Other Information

Not applicable.

Item 6.	Exhibits

Exhibit Number; Name of Exhibit

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

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

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









SIGNATURES



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



DynaResource, Inc.



By /s/ K.W. (“K.D.”) Diepholz







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



Date: May 13, 2014

48