SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q








(Mark
One)




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





For the
quarterly period ended June 30, 2009





OR





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





From the
transition period  ___________ to ____________.





Commission File Number0-53237





DYNARESOURCE,
INC.


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


Delaware
                
                94-1589426(State
      or other jurisdiction of incorporation or organization)
                
                (IRS
      Employer Identification No.)
 
 
 222 W LAS
COLINAS BLVD., Suite 744 EAST TOWER, Irving, Texas 75039
 (Address
of principal executive offices)
 
 (972)
868-9066
 (Issuer's
telephone number)
 
 N/A
 (Former
name, former address and former fiscal year, if changed since last
report)
 
 Indicate
by check mark whether the registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90
days:.  Yes [    ]   No [X
].
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act:
  
 Large
      Accelerated Filer
              [  ]
              
              Accelerated
      Filer
              [  ]Non-Accelerated
      Filer
              [  ]
              
              Smaller
      Reporting Company
              [X]
 
 
 Indicate
by a check mark whether the company is a shell company (as defined by Rule 12b-2
of the Exchange Act:  Yes
[    ]   No [ X ].




As of
July 31, 2009, there were 9,073,913 shares of Common Stock of the issuer
outstanding.





TABLE OF
CONTENTS








PART I
FINANCIAL STATEMENTS





Item
      1.
                Financial
      Statements
                3Notes
      to FinancialStatements
                6Item
      2.
                Management's
      Discussion and Analysis or Plan of Operation
                18Item
      4
                Controls
      and Procedures
                26





PART II
OTHER INFORMATION





Item
      1.
                Legal
      Proceedings
                28Item
      2.
                Changes
      in Securities
                28Item
      3.
                Default
      upon Senior Securities
                28Item
      4.
                Submission
      of Matters to a Vote of Security Holders
                28Item
      5.
                Other
      Information
                28Item
      6.
                Exhibits
      and Reports on Form 8-K
                28








CERTIFICATIONS
            28






















2








DYNARESOURCE,
      INC.
                (An
      Exploration Stage Company)
                Consolidated
      Balance Sheets
                June
      30, 2009 and December 31,
2008




June
      30, 2009
                                  (Unaudited)
                                
                                
                                Dec
      31, 2008
                                  (Audited)ASSETSCurrent
      Assets:Cash
      and Cash Equivalents
                                
                                $
                                1,482,072
                                
                                
                                $
                                2,339,561Foreign
      Tax Receivable
                                
                                
                                79,755
                                
                                
                                
                                163,289Accounts
      Receivable – Related Party
                                
                                
                                0
                                
                                
                                
                                50,225Other
      Current Assets
                                
                                
                                233,648
                                
                                
                                
                                138,773Total
      Current Assets
                                
                                
                                1,795,475
                                
                                
                                
                                2,691,848Fixed
      Assets:Mining
      Camp Equipment and Fixtures (Net of Accumulated Depreciation of $463,880
      and $430,110)
                                
                                
                                396,002
                                
                                
                                
                                386,075Mining
      Properties (Net of Accumulated Amortization of $390,604 and
      $343,696)
                                
                                
                                4,312,763
                                
                                
                                
                                4,359,671Total
      Fixed Assets
                                
                                
                                4,708,765
                                
                                
                                
                                4,745,746Investment
      in Affiliate
                                
                                
                                300,000
                                
                                
                                
                                0Deposits
                                
                                
                                5,832
                                
                                
                                
                                5,788Total
      Other Assets
                                
                                
                                305,832
                                
                                
                                
                                5,788TOTAL
      ASSETS
                                
                                $
                                6,810,072
                                
                                
                                $
                                7,443,382LIABILITIES
      AND EQUITYCurrent
      Liabilities:Accounts
      Payable
                                
                                $
                                17,362
                                
                                
                                $
                                96,970Accrued
      Expenses
                                
                                
                                69,073
                                
                                
                                
                                6,133Total
      Liabilities
                                
                                
                                86,435
                                
                                
                                
                                103,103DynaResource,
      Inc. Stockholders’ Equity:Preferred
      stock, $1.00 par value, 10,000 shares
                                  authorized,
      1,000 and 1,000 shares issued and outstanding
                                
                                
                                1,000
                                
                                
                                
                                1,000Common
      stock, $.01 par value, 12,500,000 shares
                                  authorized,
      9,073,913 and 9,073,913 shares issued
                                  and
      outstanding
                                
                                
                                90,739
                                
                                
                                
                                90,739Preferred
      Rights
                                
                                
                                40,000
                                
                                
                                
                                40,000Additional
      Paid In Capital
                                
                                
                                23,574,071
                                
                                
                                
                                22,774,071Treasury
      Stock
                                
                                
                                (
      135,277
                                )
                                
                                
                                ( 47,790
                                )Common
      Stock Subscription Receivable
                                
                                
                                0
                                
                                
                                
                                ( 125,000
                                )Other
      Comprehensive Income
                                
                                
                                1,434,918
                                
                                
                                
                                1,574,793Accumulated
      Deficit
                                
                                
                                (
      6,002,516
                                )
                                
                                
                                (
      6,002,516
                                )Accumulated
      Deficit  Since Reentering the Development Stage
                                
                                
                                (11,543,498
                                )
                                
                                
                                (10,375,264
                                )Total
      DynaResource, Inc. Stockholders’ Equity
                                
                                
                                7,459,437
                                
                                
                                
                                7,930,033Noncontrolling
      Interest
                                
                                
                                (735,800
                                )
                                
                                
                                (589,754
                                )TOTAL
      EQUITY
                                
                                
                                6,723,637
                                
                                
                                
                                7,340,279TOTAL
      LIABILITIES AND EQUITY
                                
                                $
                                6,810,072
                                
                                
                                $
                                7,443,382


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










3









DYNARESOURCE,
      INC.
                (An
      Exploration Stage Company)
                Consolidated
      Statement of Operations
                For
      the Three and Six Months Ended June 30, 2009 and 2008
                And
      Cumulative Since Re-entering the Development Stage (January 1,
      2007)
                (Unaudited)




Three
      Months Ended
              
              
              Six
      Months Ended
              
              
              Cumulative
      Since Re-Entering Development Stage (Jan. 1, 2007)June
      30, 2009
              
              
              June
      30, 2008
              
              
              June
      30, 2009
              
              
              June
      30, 2008REVENUES
              
              $
              0
              
              
              $
              0
              
              
              $
              0
              
              
              $
              0
              
              
              $
              0COST
      OF SALESExploration
      Costs
              
              
              447,352
              
              
              
              1,236,789
              
              
              
              858,047
              
              
              
              2,127,837
              
              
              
              7,446,323GROSS
      PROFIT (DEFICIT)
              
              
              (447,352
              )
              
              
              (1,236,789
              )
              
              
              (858,047
              )
              
              
              (2,127,837
              )
              
              
              (7,446,323
              )OPERATING
      EXPENSES:Depreciation
      and Amortization
              
              
              40,340
              
              
              
              36,598
              
              
              
              80,679
              
              
              
              73,196
              
              
              
              388,076General
      and Administrative
              
              
              336,839
              
              
              
              449,360
              
              
              
              712,824
              
              
              
              632,558
              
              
              
              3,214,328TOTAL
      OPERATING EXPENSES
              
              
              377,179
              
              
              
              485,958
              
              
              
              793,503
              
              
              
              705,754
              
              
              
              3,602,404NET
      OPERATING INCOME (LOSS)
              
              
              (824,531
              )
              
              
              (1,722,747
              )
              
              
              (1,651,550
              )
              
              
              (2,833,591
              )
              
              
              (11,048,727
              )OTHER
      INCOME (EXPENSE)Portfolio
      Income
              
              
              3,010
              
              
              
              185
              
              
              
              4,848
              
              
              
              745
              
              
              
              14,541Other
      income
              
              
              4,650
              
              
              
              2,254
              
              
              
              0
              
              
              
              2,254
              
              
              
              2,104TOTAL
      OTHER INCOME (EXPENSE)
              
              
              7,660
              
              
              
              2,439
              
              
              
              4,848
              
              
              
              2,999
              
              
              
              16,645NET
      INCOME (LOSS) BEFORE INCOME TAXES
              
              
              (816,871
              )
              
              
              (1,720,308
              )
              
              
              (1,646,702
              )
              
              
              (2,830,592
              )
              
              
              (11,032,082
              )Provision
      for Income Taxes (Expense)  Benefit
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              38,259NET
      LOSS
              
              
              (816,871
              )
              
              
              (1,720,308
              )
              
              
              (1,646,702
              )
              
              
              (2,830,592
              )
              
              
              (10,993,823
              )Net
      Loss Attributable to Non-Controlling Interest
              
              
              59,152
              
              
              
              177,405
              
              
              
              186,768
              
              
              
              319,810
              
              
              
              1,121,502NET
      LOSS ATTRIBUTABLE TO DYNARESOURCE, INC. COMMON
SHAREHOLDERS
              
              
              (757,719
              )
              
              
              (1,542,903
              )
              
              
              (1,459,934
              )
              
              
              (2,510,782
              )
              
              
              (9,872,321
              )COMPREHENSIVE
      INCOME (LOSS):Currency
      Translation Gain (Loss)
              
              
              597,177
              
              
              
              218,229
              
              
              
              332,422
              
              
              
              288,721
              
              
              
              (1,500,633
              )COMPREHENISVE
      LOSS BEFORE NON-CONTROLLING INTEREST
              
              
              (160,542
              )
              
              
              (1,324,674
              )
              
              
              (1,127,512
              )
              
              
              (2,222,061
              )
              
              
              (11,372,954
              )Comprehensive
      Loss (Income) Attributable to Non-Controlling Interest
              
              
              (106,911
              )
              
              
              0
              
              
              
              (40,722
              )
              
              
              0
              
              
              
              (40,722
              )COMPREHENSIVE
      LOSS ATTRIBUTABLE TO DYNARESOURCE, INC. COMMON
SHAREHOLDERS
              
              $
              (267,453
              )
              
              $
              (1,324,674
              )
              
              $
              (1,168,234
              )
              
              $
              (2,222,061
              )
              
              $
              (11,413,676
              )EARNINGS
      PER SHARE, Basic and dilutedWeighted
      Average Shares Outstanding, Basic and Diluted
              
              
              9,073,913
              
              
              
              8,282,611
              
              
              
              9,073,913
              
              
              
              8,288,067Weighted
      Average Shares Outstanding:  Basic and Diluted
              
              $
              (0.03
              )
              
              $
              (0.16
              )
              
              $
              (0.13
              )
              
              $
              (0.27
              )






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





4










DYNARESOURCE,
      INC.
                (An
      Exploration Stage Company)
                Consolidated
      Statements of Cash Flows
                For
      the Six Months Ended June 30, 2009 and 2008
                And
      Cumulative Since Re-entering the Development Stage (January 1,
      2007)
                (Unaudited)







Six
      Months Ended
                June
      30, 2009
              
              
              Six
      Months Ended
                June
      30, 2008
              
              
              Cumulative
                Since
      Re-entering
                Development
                Stage
                (Jan
      1, 2007)CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
              
              $
              (1,646,702
              )
              
              $
              (2,830,592
              )
              
              $
              (10,993,823
              )Adjustments
      to reconcile net deficit to cash used
                by
      operating activities:Issuance
      of Common Stock for Services
              
              
              0
              
              
              
              175,658
              
              
              
              539,688Issuance
      of Preferred Stock for Services
              
              
              0
              
              
              
              0
              
              
              
              1,000Depreciation
      and Amortization
              
              
              80,678
              
              
              
              73,196
              
              
              
              388,075Loss
      on Disposition of Fixed Assets
              
              
              0
              
              
              
              0
              
              
              
              28,006Change
      in assets and liabilities:Decrease
      in Accounts Receivable
              
              
              0
              
              
              
              13,079
              
              
              
              199,143Decrease
      in Accounts Receivable – Related Party
              
              
              50,225
              
              
              
              0
              
              
              
              0Decrease
      (Increase)  in Foreign Tax Receivable
              
              
              83,534
              
              
              
              (36,283
              )
              
              
              (30,551
              )(Increase)
      in Other Current Assets
              
              
              (94,875
              )
              
              
              (127,353
              )
              
              
              (156,557
              )(Increase)
      in Deposits
              
              
              (44
              )
              
              
              0
              
              
              
              (5,832
              )(Decrease)
      in Accounts Payable
              
              
              (79,608
              )
              
              
              0
              
              
              
              (24,042
              )(Decrease)
      Increase in Accrued Expenses
              
              
              62,940
              
              
              
              19,446
              
              
              
              (35,063
              )(Decrease)
      in Deferred Tax Liability
              
              
              0
              
              
              
              0
              
              
              
              (38,259
              )CASH
      FLOWS FROM (USED) OPERATING ACTIVITIES
              
              
              (1,543,852
              )
              
              
              (2,712,849
              )
              
              
              (10,128,215
              )CASH
      FLOWS USED IN INVESTING ACTIVITIESPurchase of Fixed Assets, net
              
              
              (43,697
              )
              
              
              0
              
              
              
              (255,999
              )Investment in Affiliate
              
              
              (300,000
              )
              
              
              0
              
              
              
              (300,000
              )CASH
      FLOWS USED IN INVESTING ACTIVITIES
              
              
              (343,697
              )
              
              
              0
              
              
              
              (555,999
              )CASH
      FLOWS FROM FINANCING ACTIVITIESProceeds
      from DynaMexico Earn In
              
              
              800,000
              
              
              
              2,150,000
              
              
              
              8,968,009Proceeds
      from sale of common stock
              
              
              0
              
              
              
              54,400
              
              
              
              2,832,574Repurchase
      of common stock options
              
              
              0
              
              
              
              0
              
              
              
              (10,000
              )Other
      comprehensive income (loss)
              
              
              (139,875
              )
              
              
              (291,993
              )
              
              
              1,190,773Purchase
      of treasury stock
              
              
              (183,000
              )
              
              
              0
              
              
              
              (230,790
              )Sale
      of treasury stock
              
              
              95,513
              
              
              
              0
              
              
              
              95,513Repayment
      of common stock receivable
              
              
              125,000
              
              
              
              0
              
              
              
              0CASH
      FLOWS PROVIDED BY FINANCING ACTIVITIES
              
              
              697,638
              
              
              
              1,912,407
              
              
              
              12,846,079Effect
      of exchange rate on cash
              
              
              332,422
              
              
              
              288,721
              
              
              
              (1,500,633
              )NET
      INCREASE (DECREASE) IN CASH
              
              
              (857,489
              )
              
              
              (511,721
              )
              
              
              661,232Cash,
      beginning of period
              
              
              2,339,561
              
              
              
              2,060,665
              
              
              
              820,840Cash,
      end of period
              
              $
              1,482,072
              
              
              $
              1,548,944
              
              
              $
              1,482,072SUPPLEMENTAL
      CASH FLOW INFORMATIONInterest
      paid
              
              $
              0
              
              
              $
              0
              
              
              $
              0Income
      taxes paid
              
              $
              0
              
              
              $
              0
              
              
              $
              0Non-cash
      dividend of property
              
              $
              0
              
              
              $
              0
              
              
              $
              129,822






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




5













DYNARESOURCE,
      INC.
              (An
      Exploration Stage Company)
              Notes to the Consolidated Financial Statements
              June 30, 2009
              (Unaudited)






NOTE
1 – NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES





Nature of Activities,
History and Organization:





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





In 2000,
the Company formed a wholly owned subsidiary, DynaResource de Mexico S.A. de
C.V. chartered in Mexico (“DynaMexico”).  This Company was formed to
acquire, invest in and develop resource properties in Mexico.  In
2005, the Company formed DynaResource Operaciones de San Jose De Gracia S.A. de
C.V. (“DynaOperaciones”) and acquired effective control of Mineras de
DynaResource S.A. de C.V. (formerly Minera Finesterre, S.A. de C.V.)
(“MinerasDyna”).  The Company owns 25% of Mineras and acquired
effective control of Mineras by acquiring the option to purchase the remaining
75% of the Shares of Mineras for seventy five pesos (approximately
$5.69  in United States dollars, as of June 30,
2009).   The Agreement also provided that the other shareholders
relinquish and forfeit any and all rights, interests and claims in and to the
Corporation and in or to any of the rights or assets owned or controlled by the
Corporation.  The Option expires at January 6,
2010.   The results of Mineras are consolidated with those of the
Company.





In
January 2008, the Company transferred 15% of the ownership of DynaMexico to
Goldgroup Resources Inc., (“Goldgroup”) in exchange for a $3,000,000 cash
contribution and exploration expenditures at the San Jose de Gracia property
(“SJG”), and in August 2008, the Company transferred an additional 10% of the
ownership of DynaMexico to Goldgroup in exchange for an additional $3,000,000
cash and exploration expenditures (See Note 5 below).  Through June
30, 2009, Goldgroup has contributed $8,968,009 to DynaMexico, and it currently
owns 25% of DynaMexico.





The
Company produced approximately $7,000,000 in revenues from production activities
during the years ended December 31, 2003 through 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 Statement of Financial Accounting
Standard (“SFAS”) No. 7, “Accounting and Reporting by
Development Stage Enterprises,”  and will continue this
presentation until it again has revenues from operations.





Unaudited Interim Financial
Statements:





The
accompanying unaudited interim financial statements have been prepared in
accordance with accounting principles generally accepted in the United States
and applicable Securities and Exchange Commission (“SEC”) regulations for
interim financial information. These financial statements are unaudited and, in
the opinion of management, include all adjustments (consisting of normal
recurring accruals) necessary to present fairly the balance sheets, statements
of operations and statements of cash flows for the periods presented in
accordance with accounting principles generally accepted in the United States.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States have been condensed or omitted pursuant to SEC rules and
regulations. It is presumed that users of this interim financial information
have read or have access to the audited financial statements and footnote
disclosure for the preceding fiscal year contained in the  Form 10,
with amendments, that was effective on July 15, 2008.   Operating
results for the interim periods presented are not necessarily indicative of the
results that may be expected for the year ending December 31, 2009.








6






Significant Accounting
Policies:





The
Company’s management selects accounting principles generally accepted in the
United States of America and adopts methods for their
application.  The application of accounting principles requires the
estimating, matching and timing of revenue and expense. It is also necessary for
management to determine, measure, and allocate resources and obligations within
the financial process according to those principles.  The accounting
policies used conform to generally accepted accounting principles which have
been consistently applied in the preparation of these financial
statements.





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





Management
believes that all adjustments necessary for a fair statement of the results of
the three and six months ended June 30, 2009and 2008 have been
made.





Basis of
Presentation:





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





Reclassification:





Certain
amounts have been reclassified to conform with current year
presentation.





Principles of
Consolidation:





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





Foreign Currency
Translation:





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





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





Relevant
exchange rates used in the preparation of the financial statements for the
subsidiary are as follows for the six months ended June 30, 2009 (Mexican pesos
per one U.S. dollar):





June
      30, 2009Current
      exchange rate
                            Pesos.
                            
                            
                            13.23160Weighted
      average exchange rate for the six months ended
                            Pesos.
                            
                            
                            13.34837












7





Cash and Cash
Equivalents:





The
Company considers all highly liquid debt instruments with a maturity of three
months or less to be cash equivalents.  At times, cash balances may be
in excess of the FDIC insurance limits.  The carrying amount
approximates fair market value.





Accounts Receivable and
Allowance 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 collectible.





Foreign Tax
Receivable:





Foreign
Tax Receivable (IVA) is comprised of recoverable value-added taxes charged by
the Mexican government on goods and services rendered.  Under certain
circumstances, these taxes are recoverable by filing a tax
return.  Amounts paid for IVA are tracked and held as receivables
until the funds are remitted.  The total amount of IVA receivable as
of June 30, 2009 and 2008 were $79,755 and $ 188,135, respectively.





Inventory:





As the
Company ceased production in 2006, there is no inventory, as of June 30, 2009
and December 31, 2008.





Fixed
Assets:





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





Mining
Properties:





The
Company is an ‘Exploration Stage’ company as defined in “SEC Industry Guide
7”.  Mining properties consist of 34 concessions at the San
Jose de Gracia property the basis of which are deferred until the properties are
brought into production, at which time they will be amortized on the unit of
production method based on estimated recoverable reserves.  If it is
determined that the deferred costs related to a property are not recoverable
over its productive life, those costs will be written down to fair value as a
charge to operations in the period in which the determination is made. The
amounts at which mineral properties and the related deferred costs are recorded
do not necessarily reflect present or future values.




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




·
            estimated
      recoverable ounces of gold, silver or other precious
    minerals;


·
            estimated
      future commodity prices;


·
            estimated
      expected future operating costs, capital expenditures and reclamation
      expenditures




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




Exploration,
development, direct field costs and administrative costs are expensed in the
period incurred.






8






The
carrying amounts of the mining concessions are reviewed at each calendar year
end to determine whether there is any indication of impairment. If such
indication of impairment exists, the asset’s recoverable amount will be reduced
to its estimated fair value. As of December 31, 2008 and no indications of
impairment existed.





Use of
Estimates:





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





Revenue
Recognition:





The
Company recognizes revenue when persuasive evidence of an arrangement exists,
delivery or service has occurred, the sale price is fixed or determinable and
receipt of payment is probable.





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





Earnings (Loss) per Common
Share:





“Earnings
(loss) per share” is calculated in accordance with SFAS No. 128, “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”
is 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.





As the
Company incurred a net loss during the six months ended June 30, 2009 and 2008,
the basic and diluted loss per common share is the same.   As discussed in
Note 8, and as of June 30, 2009, the Company had 1,809,244 stock options
outstanding that could potentially have a dilutive effect on basic earnings per
share in the future.





Comprehensive
Income:





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





Recently Issued Accounting
Pronouncements:





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





Fair Value of Financial
Instruments:





In
accordance with the reporting requirements of SFAS No. 157, Disclosures About Fair Value of
Financial Instruments, the Company calculates the fair value of its
assets and liabilities which qualify as financial instruments under this
statement and includes this additional information in the notes to the financial
statements when the fair value is different than the carrying value of those
financial instruments.  As of June 30, 2009 the Company did not have
any financial instruments other than cash and cash equivalents.






9






NOTE
2 – FIXED ASSETS





Fixed
assets are stated at cost and consist of the following at June 30,
2009:





Mining
      camp equipment and fixtures
                
                $
                492,581Transportation
      equipment
                
                
                149,886Lab
      equipment
                
                
                14,306Machinery
      and equipment
                
                
                90,950Office
      furniture and fixtures
                
                
                75,826Office
      equipment
                
                
                4,083Computer
      equipment
                
                
                32,250Sub-total
                
                $
                859,882Less:
      Accumulated depreciation
                
                
                (463,880
                )Total
                
                $
                396,002





Depreciation
has been provided over each asset’s estimated useful life. Depreciation expense
was $33,770 and $13,196 for the six months ended June 30, 2009 and 2008
respectively,








NOTE
3 – MINING PROPERTIES





Mining
properties consist of the following at June 30, 2009:





San
      Jose de Gracia:Mining
      concessions
                
                $
                4,703,367Less:
      Accumulated amortization
                
                
                (390,604
                )Total
                
                $
                4,312,763





Amortization
expense was $46,908 and $30,000 for the six months ended June 30, 2009 and 2008,
respectively.








NOTE
4 – INCOME TAXES





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





The
Company’s deferred income taxes reflect the net tax effects of (a) temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax reporting purposes, and
(b) net operating loss carry forwards.  For Federal income tax
purposes, the Company uses the cash basis of accounting, whereas the accrual
basis is used for financial reporting purposes.  In addition, certain
assets are charged to expense when acquired under Section 179 of the Internal
Revenue Code for income tax purposes.





The
Company provided a full valuation allowance on the net deferred tax asset,
consisting primarily of net operating loss carry forward, because management has
determined that it is more-likely-than-not that the Company will not earn income
sufficient to realize the deferred tax assets during the carry forward
period.






10






The
cumulative tax effect at the expected tax rate of 34% (blended for U.S. and
Mexico) of significant items comprising the Company’s net deferred tax amounts
as of June 30, 2009 are as follows:




June 30, 2009Net
      deferred tax assets attributable to:Prior
      years
                
                $
                2,263,977Tax
      benefit (liability) for current year
                
                
                383,354Total
      Deferred Tax Benefit
                
                
                2,647,331Valuation
      Allowance
                
                
                (2,647,331
                )Net
      Deferred Tax Benefit
                
                $
                0





The
realization of deferred tax benefits is contingent upon future earnings and is
fully reserved at June 30, 2009.








NOTE
5 – MATERIAL AGREEMENTS





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





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





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





Financing/Sale of
Stock:





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





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





Phase
            On
      or before
            Amount
      of Funds to be deposited to DynaMexico (For SJG
    Expenditures)
            Interest
      Earned (by Goldgroup in DynaMexico)
            Cumulative
      Interest Earned (by Goldgroup in DynaMexico)1.
            June
      15, 2007
            $1,000,000
            0%
            0%;  Completed2.
            March
      15, 2008
            $2,000,000
            15%
            15%;  Completed3.
            September
      15, 2009
            $3,000,000
            10%
            25%;  Completed4.
            March
      15, 2011
            $12,000,000
            25%
            50%









11





Pursuant to the Earn In
Agreement:





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





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





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





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





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





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





a)
            Two
      (2) members of Goldgroup; Keith Piggott, CEO of Goldgroup as
      Chairman;  and, John Sutherland, CFO of
    Goldgroup;





b)
            One
      (1) member of DynaResource; K.D. Diepholz, Chairman/CEO of
      DynaResource;





c)
            Members
      of the Management Committee may be changed as subsequently
      agreed.





·
            The
      Parties agree to cooperate to develop the SJG Property, in the best
      interests of the Project.








Phases 1, 2 and 3 of Earn In
Completed:





Activities
related to the exploration and development of SJG are being conducted by
DynaMexico, through contract to the operating subsidiary of DynaResource, Inc.
in Mexico, 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”).





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





On July
16, 2008, the Goldgroup completed Phase III of the Earn In Agreement through
total contributions of capital under the Earn In Agreement of $6,118,009 with
total expenditures related to the exploration of SJG of $57,252,898 Mexican
pesos, with the remainder held in cash in DynaMexico, In January 2008, 15% of
the Shares of DynaMexico were transferred to Goldgroup.  In August
2008, an additional 10% of the Shares of DynaMexico were transferred to
Goldgroup, so that Goldgroup now owns 25% of DynaMexico.





Continuing
with Phase IV exploration activities, as of June 30, 2009 the Company reported
total deposits to DynaMexico by Goldgroup in excess of $8,968,000 USD, with
total expenditures through DynaMexico of approximately 84,108,175 Mexican
pesos.





MATERIAL AGREEMENT
(MOU):





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






12






·
            Mineras
      de DynaResource is the exclusive operating entity at SJG, pursuant to the
      operating agreement with DynaResource de
Mexico;





·
            DynaResource
      de Mexico owns the SJG 100%, and all Data and information pursuant
      thereto;  any information disseminated regarding SJG must be
      disclosed as from DynaResource de
Mexico;





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





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





·
            All
      personnel must be employed or contracted through Mineras or Operaciones
      and be accountable to the employing / contracting
  entity;








NOTE
6 – RELATED PARTY TRANSACTIONS





In the
six months ended June 30, 2009 and 2008, the Company paid $17,500 and $60,222
respectively to Dynacap Group, Ltd. (an entity controlled by officers of the
Company) for consulting and other fees.





In
addition, the Company issued common stock to the following related
parties:





Six
      months ended June 30, 2009
              
              
              Year
      ended December 31, 2008Consultants
              
              $
              0
              
              
              $
              238,442Totals
              
              $
              0
              
              
              $
              238,442




NOTE
7 – INVESTMENT IN AFFILIATE





In March
2009, the Company invested $ 300,000 in DynaResource Nevada, Inc., a Nevada
Corporation, with one operating subsidiary in Mexico, DynaNevada de Mexico, SA
de CV.  The terms of the investment 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 DynaResource Nevada, Inc. at $ .50 /
Share.  DynaResource Nevada, Inc. is a related entity, and through its
subsidiary in Mexico, has entered into an Option agreement with Grupo Mexico
(IMMSA) in Mexico, for the exploration and development of approximately 3,000
hectares in the State of San Luis Potosi.




NOTE
8 – STOCKHOLDERS’ EQUITY





Preferred
Stock





The
Company is authorized to issue 10,000 preferred shares at a par value of $1.00
per share.  These shares have full voting rights.  In
October 2007, the Company issued 1,000 shares of Preferred A shares to its
CEO.  These shares have the right to elect a majority of the Board of
Directors.  There were 1,000 and 1,000 shares outstanding at June 30,
2009 and December 31, 2008, respectively.





Common
Stock





The
Company is authorized to issue 12,500,000 common share stocks at a par value of
$0.01 per share.  These shares have full voting rights.  At
June 30, 2009 and at December 31, 2008, there were 9,073,913 shares
outstanding.






13





Preferred
Rights





The
Company issued “Preferred Rights” and received $158,500 in 2003 and $626,250 in
2002, for the rights to percentages of revenues generated from the San Jose de
Gracia Pilot Production Plant.  This has been reflected as “Preferred
Rights” in stockholders’ equity.  As of December 31, 2004, $558,312
was repaid, leaving a balance of $226,188.  As of December 31, 2005,
$186,188 has been repaid, leaving a balance of $40,000. At June 30, 2009 the
balance remains at $40,000.





Treasury
Stock





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





Options and
Warrants





There are
1,809,244 options outstanding at June 30, 2009.





·
            529,152
      options entitle the holder to purchase one share of the Company’s common
      stock at a price of $3.75 per share. The options expire November 15,
      2009.  24,000 options have been exercised since
      issuance.





·
            240,917
      Options entitle the holder to purchase one share of the Company’s common
      stock at a price of $5.00 per share. The options expire November 15,
      2009.  No options were exercised or cancelled since
      issuance.





·
            150,000
      options entitle the holder to purchase one share of the Company’s common
      stock at a price of $2.50 per share. The options expire November 15,
      2009.  No options were exercised or cancelled since
      issuance.





·
            500,000
      options entitle the holder to purchase one share of the Company’s common
      stock at a price of $2.50 per share. The options expire November 15,
      2009.  No options were exercised or cancelled since
      issuance.





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





·
            23,880
      options entitle the holder to purchase one share of the Company’s common
      stock at a price of $10.00 per share and expire November 15,
      2009.   No options were exercised or cancelled since
      issuance.





The
Company’s stock price was $2.40 at June 30, 2009 and none of the Company’s
options would have been considered dilutive if the Company had not incurred a
net loss.





NOTE
9 – NONCONTROLLING INTEREST





The
Company’s Noncontrolling Interest recorded in the unaudited consolidated
financial statements relates to a 25% interest in DynaResource de Mexico, S.A.
de C.V. not owned by the Company at June 30, 2009, and 15%  interest
of DynaResource de Mexico, S.A. de C.V. not owned by the Company at June 30,
2008.  Changes in Noncontrolling Interest for the six months ended
June 30, 2009 and 2008 was as follows:




For
      the Six Months
                          Ended
      June 30,2009
                        
                        
                        2008Beginning
      balance
                        
                        $
                        (589,754
                        )
                        
                        $
                        0Operating
      income (loss)
                        
                        
                        (186,768
                        )
                        
                        
                        (319,810
                        )Other
      comprehensive income (loss)
                        
                        
                        40,722
                        
                        
                        
                        0Ending
      balance
                        
                        $
                        (735,800
                        )
                        
                        $
                        (319,810
                        )





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








14






NOTE
10 – EMPLOYEE BENEFIT PLANS





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




NOTE
11 – COMMITMENTS AND CONTINGENGIES





Three (3)
additional mining concessions in Mexico have been titled to DynaMexico,
which  extend the SJG District by approximately 95,000 Hectares to a
total of 99,141 Hectares.





For all
concessions, DynaMexico is required to pay taxes in order to maintain the
concessions.  In 2008, DynaMexico paid $933,684 Mexican pesos
(approximately $83,589 in US dollars) in taxes for all mining concessions
held.  In January 2009, DynaMexico paid $755,564 Mexican Pesos
(approximately $54,440 in US dollars), and in July, 2009 DynaMexico paid
$756,194 (approximately $56,320  in US dollars) in taxes for all
mining concessions held.





Additionally,
the Company is required to incur a minimum amount of expenditures
(“Assessments”) 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.   For the year ended December 31, 2007, the
minimum expenditure was $2,921,236 pesos (approximately $267,500 in US dollars);
and the total expenditures amount e carried forward was $92,022,517 Mexican
pesos (approximately $6,677,977 US dollars).  For 2008, the DynaMexico
incurred expenditures of $48,953,168 Mexican pesos which will increase the
estimated amount   DynaMexico may carry forward to approximately
$138,104,700 Mexican Pesos (approximately $10,022,112 US dollars) as of December
31, 2008.  The minimum expenditure for 2009 has not yet been
determined, but is anticipated to be consistent with 2008, as adjusted for
inflation.   Based on Management’s business plans, they do not
anticipate any issue in meeting the minimum annual expenditures for the
concessions, and DynaMexico  retains sufficient carry forward amounts
to cover over 20 years of the minimum expenditure (as calculated at the 2008
minimum, adjusted for annual inflation of 4%).




NOTE
12 – RECENT ACCOUNTING PRONOUCEMENTS





In June
2003, the Securities and Exchange Commission (“SEC”) adopted final rules under
Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404 (b)”), as amended by
SEC Release No. 33-8760 on December 15, 2006.  Commencing with the
Company’s Annual Report for the year ending December 31, 2008, the Company is
required to include a report of management on the Company’s internal control
over financial reporting.  The internal control report must include a
statement of management’s responsibility for establishing and maintaining
adequate internal control over financial reporting for the Company; of
management’s assessment of the effectiveness of the Company’s internal control
over financial reporting as of its year-end and of the framework used by
management to evaluate the effectiveness of the Company’s internal control over
financial reporting.





In June
2008, the SEC approved a one year extension of the compliance data for smaller
public companies to meet the Section 404 (b) auditor attestation requirement of
the Sarbanes-Oxley Act regarding the Company’s internal control over financial
reporting on whether it believes that the Company has maintained, in all
material respects, effective internal control over financial
reporting.








15





In 2008,
the FASB issued the following guidance:





-
            SFAS No. 161:“Disclosures about Derivative
      Instruments and Hedging Activities”





-
            SFAS No. 162:  “The
      Hierarchy of Generally Accepted Accounting
    Principles”





-
            SFAS No.
      163:  “Accounting for Financial Guarantee Insurance
      Contracts”





In 2009,
the FASB issued the following guidance;




-
            SFAS No. 166: 
      "Accounting for Transfers of Financial Assets—an amendment of FASB
      Statement No. 140"





-
            SFAS No. 167: 
      "Accounting for Transfers of Financial
  Assets"




-
            FSP No. FAS 107-1 and APB
      28-1:   Interim Disclosures about Fair Value of Financial
      Instruments.




-
            FSP No. FAS 115-2 and FAS
      124-2:    Recognition and Presentation of
      Other-Than-Temporary
Impairments.




-
            FSP No. FAS
      157-4:   Determining Fair Value When
      the Volume and Level of Activity for the Asset or Liability Have
      Significantly Decreased and Identifying Transactions That Are Not
      Orderly.




Management
has reviewed these new standards and believes that they will have no material
impact on the financial statements of the Company.





In May
2009, the FASB issued SFAS No. 165, “Subsequent Events,” which
establishes general standards for the accounting for and the disclosures of
events that occur after the balance sheet date but before the financial
statements are issued or are available to be issued. The pronouncement requires
the disclosure of the date through which an entity has evaluated subsequent
events and the basis for that date, whether that date represents the date the
financial statements were issued or were available to be issued. SFAS 165 is
effective with interim and annual financial periods ending after June 15, 2009.
Management is currently evaluating the impact of the adoption of SFAS 165 but
does not expect the adoption of SFAS 165 to impact the Company’s results of
operations, financial position or cash flows.





In July
2009, the FASB issued SFAS No. 168, “FASB Accounting Standards
Codification” (“SFAS 168”), as the single source of authoritative
nongovernmental U.S. generally accepted accounting principles (GAAP). The
Codification is effective for interim and annual periods ending after September
15, 2009. All existing accounting standards are superseded as described in SFAS
168. All other accounting literature not included in the Codification is
non-authoritative. Therefore, beginning with the 10Q filing for September 30,
2009, all references made by the Company to GAAP in the consolidated financial
statements will be the new codification numbering system.  The
Codification does not change or alter existing GAAP and therefore, is not
expected to have any impact on the Company’s consolidated financial
statements.





NOTE
      13 – FAIR VALUE OF FINANCIAL
INSTRUMENTS





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






16





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





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





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





·
            Level 3 Inputs –
      Instruments with primarily unobservable value
  drivers.





As of
June 30, 2009, the Company had no financial instruments with Level 1, Level 2 or
Level 3 Inputs.




NOTE
14 – SUBSEQUENT EVENT





Subsequent to June 30, 2009, on July 3,
2009, Goldgroup deposited an additional $400,000 to
DynaMexico,  pursuant to the Earn-In Agreement, which is discussed in
Note 5.   We have performed an evaluation of subsequent events
through the date of the issuance of these financial statements, which was July
31, 2009.

























17





ITEM
2.  MANAGEMENT’S DISCUSSION AND ANALYSIS





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





General





The
Company’s majority owned subsidiary (currently 75 %), DynaResource de
Mexico, S.A. de C.V. (“DynaMexico”), owns 100% of the mineral concessions and
related interest to the San Jose de Gracia mining property covering
approximately 99,500 hectares located in and around San Jose de Gracia, Sinaloa
State, Mexico (“SJG”). SJG is located on the west side of the Sierra Madre
Mountains, approximately 100 kilometers inland from Guamuchil and approximately
200 kilometers north of Mazatlan, Sinaloa.





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





Prior Drilling and
Exploration Activity / SJG




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 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 outline the presence of ore shoots
developed within the veins.  The ore shoots appear to be controlled by
dilational jogs and/or vein intersections. A total of 544 samples were collected
in 1999-2000, and assayed an average 6.51 grams/ton gold.





Acquisition and
Consolidation / SJG





In 2000,
the Company formed DynaMexico to acquire, invest in, explore and develop mining
concessions in Mexico, and to acquire the ownership and interests related to San
Jose de Gracia.  In March 2000, the Company and DynaMexico entered
into agreements to acquire and consolidate 100% of the San Jose de Gracia
Property. The Company agreed to issue 2,493,271 Shares in exchange for the
complete acquisition of the SJG and all related interest, and subject to the
complete transfer of all mining concessions.





After
resolving ownership and title issues related to SJG, the number of shares to be
issued to the prior owners of SJG was reduced to 115,000 shares from 2,493,271.
(Note:  The 115,000 shares were issued in 2006, when all matters
related to the acquisition, transfer, and consolidation, of the SJG district,
were resolved).





Recent Pilot Production
Activity





During
the period 2003 through 2006, DynaMexico 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.  DynaMexico produced 18,250 Oz. gold from Mid 2003 to June 2006;
from mined tonnage of 42,500 tons, at an average grade of approximately 20
g/t.  Production costs were reported at approx. < $ 175. /
Oz.





During
the period of production at SJG, the Company recognized it would be necessary to
conduct large scale exploration activities in order to define and confirm a + 1
M. Oz. Gold, commercially mineable ore body (s).








18





Recent Financing
Activity





As gold
prices continued to appreciate into 2006, exploration financing opportunities
increased and the Company and DynaMexico negotiated and entered into the “Earn
In / Option agreement with Goldgroup Resources, Inc., Vancouver, BC, dated
September 1, 2006.  The Terms of the Earn In / Option agreement
provides for $ 18 M. USD financing from Goldgroup to DynaMexico, over four
Phases (through March 2011), and related exploration expenditures at SJG, in
exchange for Goldgroup’s earning of 50 % of the Shares of
DynaMexico.  The terms of the Earn In / Option also provided for the
involvement of proven industry professionals in the SJG project.  (See
Material Agreements; Earn In / Option Agreement.)





Exploration / Drilling
Activity conducted Pursuant to the Earn In Agreement





·
            In
      Phase I of the Earn In Agreement,  approximately 3,400 meters
      drilling was accomplished in 22 core drill holes (SJG 07-01 to SJG 07-22);
      as well as geochemical sampling and mapping, and data consolidation into
      Surpac Software.





·
            In
      Phase II of the Earn In Agreement, approximately 5,500 meters was
      completed in 23 core drill holes (SJG 07-23 to
  07-45).





·
            In
      Phase III of the Earn In Agreement, approximately 15,150 meters was
      completed in 56 core drill holes (SJG 08-46 to SJG
  08-101).





·
            In
      Phase IV, which continues, approximately 5,950 meters have been completed
      in 25 core drill holes (through SJG 08-126). At December 31, 2008, a total
      of 30,000 meters drilling has been completed, financed pursuant to the
      Earn In Agreement. An SJG Drill Intercepts Summary File, describing the
      mineralized intercepts of all core drill holes, including the drilling
      results of 1997, and including the recent drilling of 2007-2008 can be
      viewed on the website of the SEC
at:




http://www.sec.gov/Archives/edgar/data/1111741/000112178109000078/ex99three.htm




DynaMexico Summary of Drilling
Results





The
drilling results obtained to date confirm the extension of mineralization, down
dip of historical workings at SJG, with confirmation of high grade gold (+ 10
g/t) which are consistent with historical and recent production. Specifically,
San Pablo, Tres Amigos, La Purisima, and La Union areas have reported
significant results.  (Note Drill Summary file referred to
above.)  Phase 4 drilling will be targeted at Tres Amigos, San Pablo,
La Prieta, La Union and La Purisima.





Company Interpretations and
Estimates





In some
areas of SJG, topography has prevented the drilling of holes on conventional 50
M. Spacing.  In some areas, the distance between drilled holes is +
100 M.  In these areas, DynaMexico is considering the building of new
roads in order to complete in-fill drill holes.  Nonetheless, the
Company has interpreted the results of drilling activity, and considering the
recent production activity as well; and it has calculated manually an estimate
of the mineable resource at SJG.  This manually calculated estimate
includes Oz. Au at the areas of:  San Pablo, Tres Amigos, Palos
Chinos, La Union, and La Purisima; by assuming grade and width averaging between
drill holes.  DynaMexico expects to confirm these OZ. in the future
under the guidelines and description of a 43-101 technical report.









19







Block Model in
Surpac





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





Technical Report of
Resources





In
2009-10, the Company expects DynaMexico to commission a 43-101 compliant report
of the ore “resources” defined by drilling at SJG. The Company expects this
43-101 technical report to confirm its internal work with the Block model in
Surpac at SJG, and also to confirm consistency with the company’s interpretation
and estimates.   However, additional drilling and in-fill drill
holes may be necessary in order to confirm consistency of grade and width
between drill holes as of June 30, 2009.





Structure of Company /
Operations





Activities
in Mexico are conducted by DynaMexico, through Contract 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 Mexico;
while Chairman / CEO K.D. Diepholz is the President of each of the 3
companies.





Competitive
Advantage





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





SECOND QUARTER
2009





Magnetic and IP
Surveys





In
January 2009, MinerasDyna contracted an Engineering firm in Tucson, AZ., to
conduct Magnetic and IP surveys throughout the SJG district; covering an area of
approximately 15 Sq. Km.  Preliminary analysis and reports have been
received and are under review.  Final reports are expected in
July.





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





Additional
grid lines were crossed with the initial lines, and appear to identify two
separate IP sources.





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





Correlation between ground
magnetic and IP:





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





Correlation with recent
Drilling Programs and known Mineralization:





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






20





Identification of New,
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;





Structural
Geologist





In
February 2009, DynaOperaciones retained a geological consultant, with prior
experience in Mexico, to review and Map the SJG Property with regard to Ore
Controls and structural analysis.  An area of 2.8 Km by 3.4 Km was
mapped; and a review was completed of recent (2007-2008) drill core and drill
logs through drill hole # 08-126.  Preliminary Reports and maps have
been received; and final reports are expected in July,
2009.  Information contained in the preliminary reports is described
below:






Current Dimensions of ResourceAreas at
      SJG:


San
      Pablo:
                                                                                                                  Recent
      Production of 18,250 Oz. at average grade of 20 g/t;  Strike
      length of 750 M and down dip extension of 500 M; with selected mineralized
      intercepts of:(SJG
      08-31);  8.3 M of 48.24 g/t; including 3.8 M of 104.01 g/t, and
      including 1.5 M of 233.61 g/t;(SJG
      08-51);  14.2 M of 14.79 g/t; including 9 M of 22.93 g/t, and
      including 3.5 M of 41.5 g/t;Tres
      Amigos
                                                                                                                  Strike
      Length of 365 M and down dip extension of 210 M; with selected intercepts
      of:(SJG
      97-13);  27.5 M of 9.94 g/t; including 18.6 M of 14.28 g/t, and
      including 2 M of 85.72 g/t;(SJG
      97-45); 14 M. of 5.35 g/t; including 2 M of 31.35 g/t;Orange
      Tree:
                                                                                                                  to
      be defined; with selected intercepts of:(SJG
      97-39);  6.8 M of 13.20 g/t; including 3 M of 29.5 g/t, and
      including 1.5 M of 51.46 g/t;(SJG
      08-47);  7.1 M of 7.63 g/t; including 1.6 M of 23.10
      g/t;La
      Cecena(Tres
      Amigos):
                                                                                                                  to
      be defined; with selected intercepts of:(SJG
      97-50);  11 M of 2.78 g/t; including 2 M of 5.02 g/t, and
      including 2 M of 8.53
g/t;
 
  21
   (SJG
      08-104);  2.8 M of 13.70 g/t;  including 1.4 M of
      26.96 g/t;La
      Union
                                                            Strike
      Length of 400 M and down dip extension of 350 M; with selected intercepts
      of:(SJG
      08-76);  4.8 M of 16.02 g/t; including 2 M of 37.60 g/t, and
      including .7 M of 75.56 g/t;(SJG
      08-80);  3.1 M of 4.8 g/t; including 1.5 M of 7.37
      g/t;Palos
      Chinos/Tajo
      Verde:
                                                            Strike
      Length of 270 M and down dip of 180 M; Strike of 800 M including Drill
      Hole # 97-55; with selected intercepts of:(SJG
      97-63);  27.8 M of 2.30 g/t;  including 17.3 M of 2.81
      g/t, and including .7 M of 9.25 g/t, and including 2.7 M of 8.45
      g/t;.(SJG
      07-16);  7.7 M of 1.86 g/t; including 2.1 M of 5. 18
      g/t;(SJG
      97-55);  5 M of 3.5 g/t; including 3 M of 5.24
    g/t;La
      Purisima:
                                                            Historical
      Production of 470,000 Oz. Au, at average grade of 66.7
      g/t;  Strike Length of 720 M and down dip extension of 420 M;
      with selected intercepts of:(SJG
      07-21);  8 M of 20.67 g/t;  including 6 M of 26., and
      including 2.1 M of 76.33 g/t;(SJG
      07-39);  4.2 M of 8.55 g/t;  including 1.9 M of 16.67
      g/t;La
      Prieta:
                                                            Historical
      Production of 215,000 Oz. Au., at average grade of 28
      g/t;  Dimensions of 100 M by 50 M, to be
  defined;
  Identification of New, Additional
      Resource Target Areas:
  San
      Pablo:
                                      Geological
      Mapping located a new drill target approximately 600 meters to the east –
      southeast of San Pablo.  This area was determined to be the
      northeast portion of the San Pablo Ore body; which had been displaced by a
      combination of post-mineral strike-slip and normal faulting; also
      indicating the potential for a “Pipe Feeder”.  This area will be
      expected to add significant resources to the mineable ore body at San
      Pablo;La
      Purisima /Tajo
      Verde:
                                      Transpressive
      strike-slip faults that bound this area are determined to be the same
      faults that control the mineralization in La Purisima and Tajo
      Verde.  This area also coincides with gaps left from previous
      drilling campaigns and also a gap in the underground
    workings.San
      Pablo /La
      Union:
                                      Gaps
      left from previous drilling campaigns and also a gap in the underground
      workings.
  Follow up Drilling at Major Target
      Areas;
  Tres
      Amigos:
                    Down
      dip extension; extension southwest through La Cecena, Los Hilos; Extension
      Northeast across Orange Tree;La
      Union:
                    Extension
      along strike and down dip;La
      Purisima:
                    Extension
      along strike and down dip;Palos
      Chinos:
                    Extension
      along strike and down dip;La
      Prieta:
                    to
      be defined;
   22


Drilling
Programs





Future
drilling programs at SJG are expected to commence in September, 2009, and are
being planned considering the results of the magnetic and IP surveys, and in
consideration of the recent analysis of the structure and ore controls at SJG.
The Company expects continued drilling in order to expand resources at San
Pablo, Tres Amigos, La Cecena, Palos Chinos, La Union, La Purisima, and La
Prieta. And, the company expects extensions to mineralization in all directions
and down dip from the main target areas.





Capital contributions and
Expenditures to Earn In





Goldgroup
contributed $ 400,000. USD to DynaMexico on July 3, 2009.  This
deposit will be credited in the period July 1 – September 30,
2009.  The total capital contributions pursuant to the Earn In
Agreement at June 30, 2009 are $ 8,968,000 USD.





Exploration
expenditures were $ 476,850. USD in the quarter ending June 30, 2009, bringing
the total expenditures pursuant to the Earn In Agreement of $
8,430,085.





Total
Capital contributed from Goldgroup in the 6 months ending June 30, 2009 is $
800,000.  Total exploration expenditures for the 6 month period are $
856,227.





During
the 6 months ending June 30, 2009, DynaMexico and its affiliates incurred
expenses of approximately $ 100,000. USD.; which are not allocated to the Earn
In Agreement; or have yet to be expensed to the Earn In Agreement.





Investment in
Affiliate





In March
2009, the Company invested $ 300,000 in DynaResource Nevada, Inc., a Nevada
Corporation, with one operating subsidiary in Mexico, DynaNevada de Mexico, SA.
de CV.   The terms of the investment 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 DynaResource Nevada, Inc. at $ .50 /
Share.  DynaResource Nevada, Inc. is a related entity, and through its
subsidiary in Mexico, has entered into an Option agreement with Grupo Mexico
(IMMSA) in Mexico, for the exploration and development of approximately 3,000
hectares in the State of San Luis Potosi.





There was
no additional investment in the affiliate by the Company in the second quarter
ending June 30, 2009.





Competition





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





POTENTIAL
RISKS





Funding from Goldgroup
Resources Inc.:





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








23





Potential Conflicts with
Shareholder of DynaMexico (Non-Controlling Interest Holder):





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





Mineable
Resource:





There is
no certainty that the exploration activity at SJG would result in the definition
of a mineable resource at SJG.  While the company believes there is
already in place an approximate 1 M. Oz. Au of mineable ore at
SJG;   there is no certainty that the Company’s opinion will be
proven correct.  If a mineable resource is not confirmed at SJG, the
Company’s investment at SJG could be at risk.





Company Interpretations and
Estimates




There can be no assurance that
the company’s interpretations or estimates will be proven correct, or that
future results will be consistent with past results.




Feasibility
Study





There can
be no assurance that the company will be able to complete a successful
feasibility at the SJG project.  If the company is not successful in
its plan to complete the feasibility, the company’s investment at SJG could be
at risk. Further, if the company is not able to complete a commercial
feasibility study, it may not be successful in obtaining funding for production
activities.




50 % of the Interest In and
Revenue from DynaResource de Mexico May be Owned by Goldgroup Resources
Inc.:





Goldgroup
has completed Phases I, II, and III of the Earn In / Option Agreement, and as a
result has been transferred 25 % of the Shares and ownership of DynaResource de
Mexico.  Should Goldgroup complete Phase IV of the Earn In / Option
Agreement (through the contribution and expenditure of an additional $ 8,632,000
USD.); Goldgroup would receive an additional 25 % of the shares and ownership of
DynaResource de Mexico (Total of 50 %).  In such case DynaResource,
Inc. and its shareholders will only retain 50 % of the shares and ownership of
DynaResource de Mexico.  Investors in the Company’s shares should be
aware that any benefits to be derived from the ownership of DynaResource de
Mexico would be shared 50 % with Goldgroup.





Employees





The
Company has four employees in its corporate office in Dallas, Texas, three of
which are officers, and it employs approximately thirty persons through its
subsidiaries in Mexico.





Governmental Regulation and
Environmental Matters





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








24





RESULTS FOR THE THREE AND
SIX MONTHS ENDED June 30, 2009





REVENUE.  Revenue
for the three months ended June 30, 2009 and the three months ended June 30,
2008 was $0. The company ceased its production activities in 2006 in order to
focus its efforts on exploration and drilling activity, for the purpose of
defining commercial ore resources. The funds for current exploration activity
are contributed by Goldgroup Resources, Inc., pursuant to the  Earn-In
Agreement,  as described  in this 10-Q (See Earn In and
Option Agreement / Material Agreements).





COST OF
EXPLORATION. Exploration costs were $447,352 and $1,236,789 for the three months
ended June 30, 2009 and 2008 respectively.  The decrease in costs was
due to the decrease in drilling activity while conducting Magnetic and IP survey
studies, and while conducting structural and ore control analysis. Exploration
costs were $858,047 and $2,127,837 for the six months ended June 30, 2009 and
2008 respectively.





OPERATING
EXPENSES. Operating expenses for the three months ended June 30, 2009, were
$377,179 compared to expenses for the three months ended June 30, 2008 of
$485,958. The above expenses include depreciation and amortization amounts of
$40,340 and $36,598 for the three months ended June 30, 2009 and 2008,
respectively. The decrease in operating expense is predominantly due to
non-recurring professional fees incurred in the three months ended June 30,
2008. Operating expenses for the six months ended June 30, 2009 were $793,503
compared to expenses for the six months ended June 30, 2008 of $705,754. The
above expenses include depreciation and amortization amounts of $80,679 and
$73,196 for the six months ended June 30, 2009 and 2008,
respectively.





OTHER
INCOME (EXPENSE). Other income for the three months ended June 30, 2009 was
$7,660 compared $2,439 for the same period ended June 30, 2008. Other income for
the six months ended June 30, 2009 was $9,498 compared $2,999 for the same
period ended June 30, 2008.





NON-CONTROLLING
INTEREST. The non-controlling interest portion of our net loss for the three
months ended June 30, 2009 was $59,152 compared to $177,405 for the three months
ended June 30, 2008. The non-controlling interest portion of our net loss for
the six months ended June 30, 2009 was $186,768 compared to $319,810 for the six
months ended June 30, 2008.   This is due to the company’s
reporting a smaller loss than in 2008 and therefore a smaller portion allocated
to our minority interest holder.





COMPREHENSIVE
(LOSS). Comprehensive loss includes the company’s net loss plus the currency
translation gain (loss) for the period which was $597,177 for the three months
ended June 30, 2009 compared to $218,229 for the same period ended June 30,
2008.  Comprehensive loss for the six months ended June 30, 2009 and
2008 includes the company’s net loss plus the currency translation gain (loss)
for the period which was $332,422 and $288,721 respectively.





LIQUIDITY
AND CAPITAL RESOURCES. The Company has sufficient capital on hand to fund
overhead operations for the next two years.   Goldgroup is
funding the exploration activities at SJG in accordance with the Earn-In
Agreement.  In December, 2008, Goldgroup advised the Company that they
have funds on hand to complete their option under the Earn-In
Agreement.





PLAN OF
OPERATION





Future Capital Contributions
and Expenditures





Pursuant
to the terms of the Earn In / Option Agreement, Goldgroup is to contribute and
expend a total of $18 M. USD, to DynaMexico, on or before March 15,
2011.  As of June 30, 2009, the balance in capital to be contributed
by Goldgroup is $9,031,991 USD.  The company expects these funds to be
contributed by Goldgroup over the next 21 months, and with subsequent
exploration expenditures by DynaMexico at SJG.  While this future
contribution of Capital to DynaMexico would dilute the shares of DynaMexico; it
will not dilute the shares of DynaResource, Inc.








25





Drilling
Programs





Future
drilling programs at SJG are expected to commence in September, 2009, and are
being planned considering the results of the magnetic and IP surveys, and in
consideration of the recent analysis of the structure and ore controls at SJG.
The Company expects continued drilling in order to expand resources at San
Pablo, Tres Amigos, La Cecena, Palos Chinos, La Union, La Purisima, and La
Prieta. And, the company expects extensions to mineralization in all directions
and down dip from the main target areas.





Mineable “Resource” at San
Jose de Gracia





The
Company believes that DynaMexico has outlined significant mineable Gold deposits
from drilling activity; at San Pablo, Tres Amigos, Palos Chinos, La Union, and
La Purisima areas of SJG.  Further drilling is expected to outline
additional mineable ore at these target areas, while mineable ore deposits 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 ore
deposits as well.





Technical Report of
Resources





In
2009-10, the Company expects DynaMexico to commission a 43-101 compliant report
of the ore “resources” defined by drilling at SJG. The Company expects this
43-101 technical report to confirm its internal work with the Block model in
Surpac at SJG, and also to confirm consistency with the company’s interpretation
and estimates.   However, additional drilling and in-fill drill
holes may be necessary in order to confirm consistency of grade and width
between drill holes as of June 30, 2009.





Future Feasibility
Study





Considering
the results of the recent production operation, and the results of the drilling
activity to date; and considering the Block model in Surpac being developed; and
considering the Company’s manual estimate of resource at SJG;  the
Company recognizes the potential for  a + 100,000 Oz. gold per year
production operation at SJG in the future.  At the completion of the
Earn In Agreement (defined by agreement at March 2011), and at the completion of
the drilling programs funded pursuant to the Terms of the Earn In Agreement, the
Company expects DynaMexico to complete a Feasibility Study to confirm and define
the full scale production plans at SJG.








ITEM
4.  Controls and Procedures





Evaluation of Disclosure
Controls and Procedures





The
company carried out an evaluation of the effectiveness of the design and
operation of its disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) as of June 30, 2009.  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.








26







Based
upon an evaluation conducted for the period ended June 30, 2009, our Chief
Executive Officer and Chief Financial Officer as of June 30, 2009, 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
expenses are paid by officers of the Company.  However, the current
number of transactions incurred by the Company does not justify additional
accounting staff to be retained.





Management’s Report on
Internal Control Over Financial Reporting





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





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





Our
management conducted an evaluation of the effectiveness of our internal control
over financial reporting using the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in Internal
Control—Integrated Framework at June 30, 2009.   Based on its
evaluation, our management concluded that, as of June 30, 2009, our internal
control over financial reporting was effective.





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





Changes in Internal Controls
over Financial Reporting





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


27




PART
II





Item No.
1, - Not Applicable.





Item
2.     None





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





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





(a)  None





(b)   Exhibits








Exhibit
Number;  Name of Exhibit





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





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





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











SIGNATURES





In
accordance with the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this 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:
July 31, 2009


28