SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-Q

(Mark One)



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



For the quarterly period ended March
31, 2017



OR



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



From the transition period ___________
to ____________.



Commission File Number 000-30371



DYNARESOURCE, INC.

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



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



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

(Address of principal executive offices)



(972) 868-9066

(Issuer's telephone number)



N/A

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



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

Yes [X] 	No [ ]



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

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

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



Yes [ ] 	No [X]



As of May 22, 2017, there were 16,722,825 shares of
Common Stock of the issuer outstanding.





1






TABLE OF CONTENTS







|                 |                                                                |     
|---------------- | -------------------------------------------------------------- | ----
|PART
    I.      | FINANCIAL
    STATEMENTS                                       |     
|                 |                                                                |     
|ITEM
    1.      | Unaudited
    Financial Statements                             | 3-5 
|                 | Notes
    to Unaudited Financial Statements                    | 6-20
|                 |                                                                |     
|ITEM
    2.      | Management's
    Discussion and Analysis and Plan of Operation | 21  
|                 |                                                                |     
|ITEM
    3.      | Quantitative
    and Qualitative Disclosure About Market Risk  | 35  
|                 |                                                                |     
|ITEM
    4.      | Controls
    and Procedures                                    | 35  
|                 |                                                                |     
|                 |                                                                |     
|PART
    II.     | OTHER
    INFORMATION                                          |     
|                 |                                                                |     
|ITEM
    1.      | Legal
    Proceedings                                          | 37  
|                 |                                                                |     
|ITEM
    2.      | Unregistered
    Sales of Securities and Use of Proceeds       | 40  
|                 |                                                                |     
|ITEM
    3.      | Default
    Upon Senior Securities                             | 40  
|                 |                                                                |     
|ITEM
    4.      | Mine
    Safety Disclosures                                    | 40  
|                 |                                                                |     
|ITEM
    5.      | Other
    Information                                          | 40  
|                 |                                                                |     
|ITEM
    6.      | Exhibits                                                       | 41  
|                 |                                                                |     
|                 |                                                                |     
|CERTIFICATIONS   |                                                                |     
|EXHIBIT
    31.1 | CHIEF
    EXECUTIVE OFFICER CERTIFICATION                      |     
|                 |                                                                |     
|EXHIBIT
    31.2 | CHIEF
    FINANCIAL OFFICER CERTIFICATION                      |     
|                 |                                                                |     
|EXHIBIT
    32.1 | CERTIFICATION
    PURSUANT TO 18 U.S.C. SECTION 1350           |     
|                 |                                                                |     
|                 |                                                                |     







2








PART I

ITEM 1.

FINANCIAL STATEMENTS

DYNARESOURCE, INC.

Consolidated
BALANCE SHEETS

MARCH
31, 2017 AND DECEMBER 31, 2016



|                                                              |  |   | March 31, 2017 |   |  |   | December 31, 2016 |  
|------------------------------------------------------------- |  | - | -------------- | - |  | - | ----------------- | -
|ASSETS                                                        |  |   |                |   |  |   |                   |  
|Current Assets:                                               |  |   |                |   |  |   |                   |  
|Cash and Cash Equivalents                                     |  | $ | 1,887,796      |   |  | $ | 2,197,005         |  
|Accounts Receivable                                           |  |   | 89,774         |   |  |   | 454,140           |  
|Inventories                                                   |  |   | 715,083        |   |  |   | 561,238           |  
|Foreign Tax Receivable                                        |  |   | 1,263,270      |   |  |   | 1,083,364         |  
|Other Current Assets                                          |  |   | 66,298         |   |  |   | 73,871            |  
|Total Current Assets                                          |  |   | 4,022,221      |   |  |   | 4,369,618         |  
|                                                              |  |   |                |   |  |   |                   |  
|Mining Equipment and Fixtures (Net of Accumulated             |  |   |                |   |  |   |                   |  
|Depreciation of $837,932 and $821,132                         |  |   | 596,620        |   |  |   | 578,743           |  
|Mining Concessions                                            |  |   | 4,132,678      |   |  |   | 4,132,678         |  
|Investments in Affiliate                                      |  |   | 70,000         |   |  |   | 70,000            |  
|Other Assets                                                  |  |   | 48,020         |   |  |   | 15,450            |  
|                                                              |  |   |                |   |  |   |                   |  
|TOTAL ASSETS                                                  |  | $ | 8,869,539      |   |  | $ | 9,166,489         |  
|                                                              |  |   |                |   |  |   |                   |  
|LIABILITIES AND EQUITY                                        |  |   |                |   |  |   |                   |  
|Current Liabilities:                                          |  |   |                |   |  |   |                   |  
|Accounts Payable                                              |  | $ | 297,523        |   |  | $ | 309,952           |  
|Convertible Notes Payable                                     |  |   | 950,625        |   |  |   | 956,250           |  
|Due to Non-Controlling Interest                               |  |   | 231,500        |   |  |   | 231,500           |  
|Accrued Expenses                                              |  |   | 1,366,766      |   |  |   | 1,198,278         |  
|Derivative Liabilities                                        |  |   | 2,758,012      |   |  |   | 5,106,090         |  
|Total Current Liabilities                                     |  |   | 5,604,426      |   |  |   | 7,802,070         |  
|                                                              |  |   |                |   |  |   |                   |  
|TOTAL LIABILITIES                                             |  | $ | 5,604,426      |   |  | $ | 7,802,070         |  
|                                                              |  |   |                |   |  |   |                   |  
|Preferred Stock, Series C, $.0001 par value, 1,733,221 shares |  |   |                |   |  |   |                   |  
|Authorized, 1,733,221 outstanding as of 2017 and 2016         |  | $ | 4,333,053      |   |  | $ | 4,333,053         |  
|Stockholders’ Equity Deficit                                  |  |   |                |   |  |   |                   |  
|Preferred Stock, Series A, $.0001 par value, 1,000 shares     |  |   |                |   |  |   |                   |  
|Authorized, 1,000 and 1,000 issued and outstanding            |  | $ | 1              |   |  | $ | 1                 |  
|Common Stock, $.01 par value, 25,000,000 shares authorized,   |  |   |                |   |  |   |                   |  
|16,722,825 shares outstanding as of 2017 and 2016             |  |   | 167,228        |   |  |   | 167,228           |  
|Preferred Rights                                              |  |   | 40,000         |   |  |   | 40,000            |  
|Additional Paid In Capital                                    |  |   | 55,083,783     |   |  |   | 55,083,783        |  
|Treasury Stock, 1,112,313 outstanding as of 2017 and 2016     |  |   | (3,175,515     | ) |  |   | (3,175,515        | )
|Accumulated Other Comprehensive Income                        |  |   | 2,121,078      |   |  |   | 3,771,532         |  
|Accumulated Deficit                                           |  |   | (50,631,491    | ) |  |   | (53,013,185       | )
|Total DynaResource, Inc. Stockholders’ Equity                 |  |   | 3,605,084      |   |  |   | 2,873,844         |  
|Non-controlling Interest                                      |  |   | (4,673,024     | ) |  |   | (5,842,478        | )
|TOTAL (DEFICIT)                                               |  | $ | (1,067,940     | ) |  | $ | (2,968,634        | )
|                                                              |  |   |                |   |  |   |                   |  
|TOTAL LIABILITIES AND EQUITY (DEFICIT)                        |  | $ | 8,869,539      |   |  | $ | 9,166,489         |  

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





3








DYNARESOURCE, INC.

Consolidated
Statements of Operations and Comprehensive Loss

|                                                                                  |  | March 31, 2017 |            | March 31, 2016
|--------------------------------------------------------------------------------- |  | -------------- | ---------- | --------------
|                                                                                  |  | (Unaudited)    |            | (Unaudited)   
|                                                                                  |  |                |            |               
|REVENUES                                                                          |  | $              | 1,341,512  |               
|COSTS AND EXPENSES OF MINING                                                      |  |                |            |               
|OPERATIONS                                                                        |  |                |            |               
|Production Costs Applicable to Sales                                              |  |                | 518,762    |               
|Mine Operating Costs                                                              |  |                | 466,162    |               
|Property Holding Costs                                                            |  |                | 46,500     |               
|General and Administrative                                                        |  |                | 538,516    |               
|Depreciation and Amortization                                                     |  |                | 16,800     |               
|Total Operating Expenses                                                          |  |                | 1,586,740  |               
|                                                                                  |  |                |            |               
|NET OPERATING INCOME (LOSS)                                                       |  |                | (245,228   | )             
|                                                                                  |  |                |            |               
|OTHER INCOME (EXPENSE)                                                            |  |                |            |               
|Foreign Currency Translation Gains                                                |  |                | 438,780    |               
|Interest Expense                                                                  |  |                | (29,613    | )             
|Change in Derivatives                                                             |  |                | 2,348,078  |               
|Other Income                                                                      |  |                | 145        |               
|Total Other Income (Expense)                                                      |  |                | 2,757,390  |               
|                                                                                  |  |                |            |               
|NET INCOME BEFORE TAXES                                                           |  |                | 2,512,162  |               
|                                                                                  |  |                |            |               
|TAXES                                                                             |  |                | —          |               
|                                                                                  |  |                |            |               
|NET INCOME                                                                        |  | $              | 2,512,162  |               
|Cumulative Dividend for Series C Preferred                                        |  |                | (42,737    | )             
|ATTRIBUTABLE TO NON-CONTROLLING INTERESTS                                         |  |                | (130,467   | )             
|ATTRIBUTABLE TO COMMON SHAREHOLDERS                                               |  |                |            |               
|                                                                                  |  | $              | 2,338,958  |               
|                                                                                  |  |                |            |               
|EARNINGS PER SHARE DATA ATTRIBUTABLE TO THE EQUITY HOLDERS OF DYNARESOURCE, INC.: |  |                |            |               
|                                                                                  |  |                |            |               
|Basic Income per Common Share                                                     |  | $              | .14        |               
|Diluted Income per Common Share                                                   |  |                | .00        |               
|                                                                                  |  |                |            |               
|Weighted Average Shares Outstanding, Basic                                        |  |                | 16,722,825 |               
|Weighted Average Shares Outstanding, Diluted                                      |  |                | 18,578,715 |               
|OTHER COMPREHENSIVE INCOME                                                        |  |                |            |               
|NET INCOME PER ABOVE                                                              |  | $              | 2,512,162  |               
|                                                                                  |  |                |            |               
|Unrealized Foreign Currency Translation Gains                                     |  |                | (861,708   | )             
|TOTAL OTHER COMPREHENSIVE INCOME                                                  |  |                | (861,708   | )             
|TOTAL COMPREHENSIVE INCOME                                                        |  | $              | 1,650,454  |               
|                                                                                  |  |                |            |               
|ATTRIBUTABLE TO:                                                                  |  |                |            |               
|Equity Holders of DynaResource, Inc.                                              |  | $              | 3,605,083  |               
|NON-CONTROLLING INTEREST                                                          |  | $              | (1,954,629 | )             
|                                                                                  |  |                | 1,650,454  |               

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





4








DYNARESOURCE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                      |  |                |            |               
|----------------------------------------------------- |  | -------------- | ---------- | --------------
|                                                      |  | March 31, 2017 |            | March 31, 2016
|                                                      |  | (Unaudited)    |            | (Unaudited)   
|CASH FLOWS FROM OPERATING ACTIVITIES                  |  |                |            |               
|Net Income (Loss)                                     |  | $              | 2,512,162  |               
|Adjustments to reconcile net loss to cash             |  |                |            |               
|provided by (used in) Operating activities            |  |                |            |               
|Gain on Derivative Liabilities                        |  |                | (2,348,078 | )             
|Depreciation and Amortization                         |  |                | 16,800     |               
|                                                      |  |                |            |               
|Change in Operating Assets and Liabilities:           |  |                |            |               
|Accounts Receivable                                   |  |                | 379,152    |               
|Inventory                                             |  |                | (89,608    | )             
|Receivables from Affiliate                            |  |                | —          |               
|Foreign Tax Receivable                                |  |                | (64,814    | )             
|Other Assets                                          |  |                | (21,071    | )             
|Accounts Payable                                      |  |                | (20,455    | )             
|Accrued Liabilities                                   |  |                | 106,049    |               
|CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES |  |                | 470,137    |               
|                                                      |  |                |            |               
|CASH FLOWS FROM INVESTING ACTIVITIES                  |  |                |            |               
|Purchase of Equipment                                 |  |                | (34,077    | )             
|CASH FLOWS (USED IN) INVESTING ACTIVITIES             |  |                | (34,077    | )             
|                                                      |  |                |            |               
|CASH FLOWS FROM FINANCING ACTIVITIES                  |  |                |            |               
|Payment of Note Payable                               |  |                | (5,625     | )             
|CASH FLOWS PROVIDED BY FINANCING ACTIVITIES           |  |                | (5,625     | )             
|                                                      |  |                |            |               
|Effect of Foreign Exchange                            |  |                | (739,644   | )             
|                                                      |  |                |            |               
|NET DECREASE IN CASH                                  |  |                | (309,209   | )             
|                                                      |  |                |            |               
|CASH AT BEGINNING OF PERIOD                           |  |                | 2,197,005  |               
|                                                      |  |                |            |               
|CASH AT END OF PERIOD                                 |  | $              | 1,887,796  |               
|                                                      |  |                |            |               
|SUPPLEMENTAL DISCLOSURES                              |  |                |            |               
|Cash Paid for Interest                                |  | $              | 26,343     |               
|Cash Paid for Income Taxes                            |  | $              | —          |               
|                                                      |  |                |            |               
|NON CASH TRANSACTIONS                                 |  |                |            |               
|                                                      |  | $              | —          |               



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





5








DYNARESOURCE, INC.

NOTES TO THE UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS

March 31, 2017



NOTE 1 – NATURE OF ACTIVITIES
AND SIGNIFICANT ACCOUNTING POLICIES



Nature of Activities, History
and Organization

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

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

In 2005, the Company formed DynaResource
Operaciones de San Jose De Gracia S.A. de C.V. (“DynaOperaciones”), and acquired effective control of Mineras de DynaResource,
S.A. de C.V. (formerly Minera Finesterre S.A. de C.V., “DynaMineras”). The Company owned 25% of DynaMineras and acquired
effective control of DynaMineras by acquiring the option to purchase the remaining 75% of the Shares of DynaMineras. The Company
finalized the option and acquisition of DynaMineras in January 2010, and now owns 100% of DynaMineras.  The results of
these subsidiaries are consolidated with those of the Company.

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

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

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

Reclassifications

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

Significant Accounting Policies

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

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





6






Basis of Presentation

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

Principles of Consolidation

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

Non-Controlling Interest

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

Investments in Affiliates

The Company owns a 20% interest
in DynaResource Nevada, Inc., a Nevada Corporation (“DynaNevada”), with one operating subsidiary in México,
DynaNevada de México, S.A. de C.V. (“DynaNevada de México”), together “DynaNevada”. The Company
accounts for this investment using the cost basis.

Cash and Cash Equivalents

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



Accounts Receivable and Allowances
for Doubtful Accounts

The allowance for accounts receivable
is recorded when receivables are considered to be doubtful of collection. As of March 31, 2017, and 2016, respectively, no allowance
has been made.

Foreign Tax Receivable

Foreign Tax Receivable is comprised
of recoverable value-added taxes (“IVA”) charged by the Mexican government on goods and services rendered.  Under
certain circumstances, these taxes are recoverable by filing a tax return.  Amounts paid for IVA are tracked and held
as receivables until the funds are remitted.  The total amounts of the IVA receivable as of March 31, 2017 and December
31, 2016 are $1,263,270 and $1,083,364 respectively.

Inventory

Inventories are carried at the
lower of cost or fair value and consist of mined tonnage, and gravity and flotation concentrates, and gravity tailings or flotation
feed material. The inventories are $715,083 and $561,238 as of March 31, 2017 and December 31, 2016, respectively.

Proven and Probable Reserves
(No Known Reserves)

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

As of March 31, 2017, none of
the Company's properties contain resources that satisfy the definition of proven and probable reserves. The Company classifies
the development of its properties, including the San Jose de Gracia Property, as exploration stage projects since no proven or
probable reserves have been established under Industry Guide 7.



7






Property

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

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

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

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

Mining Properties Interests

Mineral property interests include
acquired interests in development and exploration stage properties, which are considered tangible assets. The amount capitalized
relating to a mineral property interest represents its fair value at the time of acquisition. When a property does not contain
mineralized material that satisfies the definition of proven and probable reserves, such as with the San Jose de Gracia Property,
capitalized costs and mineral property interests are amortized using the straight-line method once production begins. As of March
31, 2017, the mining interests have been in the pilot production stage and therefore, no amortization has been expensed. Mining
properties consist of 33 mining concessions covering approximately 69,121 hectares at the San Jose de Gracia property (“SJG”),
the basis of which are amortized on the unit of production method based on estimated recoverable resources.  If it is determined
that the deferred costs related to a property are not recoverable over its productive life, those costs will be written down to
fair value as a charge to operations in the period in which the determination is made.  The amounts at which mineral
properties and the related costs are recorded do not necessarily reflect present or future values.

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







8






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

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

|● | estimated recoverable ounces of gold, silver or other precious minerals;                     
|- | ---------------------------------------------------------------------------------------------
|● | estimated future commodity prices;                                                           
|● | estimated expected future operating costs, capital expenditures and reclamation expenditures.

A write-down to fair value will
be recorded when the expected future cash flow is less than the net book value of the property or when events or changes in the
property indicate that carrying amounts are not recoverable.  This analysis will be completed as needed, and at least annually.
As of the date of this filing, no events have occurred that would require write-down of any assets.  As of March 31,
2017 and December 31, 2016, no indications of impairment existed.

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

Property Holding Costs

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

Exploration Costs

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

Foreign Currency Translation

The functional currency for the
subsidiaries of the Company is the Mexican Peso.  As a result, the financial statements of the subsidiaries have been
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 translation gains and losses are reported as a separate component
of stockholders’ equity (comprehensive income (loss).

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





9






Relevant exchange rates used in the
preparation of the financial statements for the subsidiaries are as follows for the periods ended March 31, 2017 and December 31,
2016 (Mexican Pesos per one U.S. dollar):

|                            |       | Mar 31, 2017 | Dec 31, 2016
|--------------------------- | ----- | ------------ | ------------
|Exchange Rate at Period End | Pesos | 18.75        | 20.65       



Relevant exchange rates used in the
preparation of the income statement portion of financial statements for the subsidiaries are as follows for the periods ended March
31, 2017 and March 31, 2016 (Mexican Pesos per one U.S. dollar):

|                                                          |       | Mar 31, 2017 | Mar 31, 2016
|--------------------------------------------------------- | ----- | ------------ | ------------
|Weighted Average Exchange Rate for the Three Months Ended | Pesos | 20.30        | 18.69       



The Company recorded currency
transaction gains (losses) of $438,780 and $99,867 for the three months ended March 31, 2017 and 2016, respectively.

Income Taxes

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

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

Use of Estimates

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

Comprehensive Income (Loss)

ASC 220 “Comprehensive
Income” establishes standards for reporting and display of comprehensive income and its components in a full set of general
purpose financial statements.    The Company’s comprehensive income consists of net income and other
comprehensive income (loss), consisting of unrealized net gains and losses on the translation of the assets and liabilities of
its foreign operations.  For the periods ended March 31, 2017 and March 31, 2016, the Company’s components of comprehensive
income were foreign currency translation adjustments.

Revenue Recognition

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

Stock-Based Compensation

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

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

Fair value of Financial Instruments

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





10






Per Share Amounts

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

The
Company had 3,593,689 warrants outstanding at March 31, 2017, in which 1,427,162 are exercisable at $2.50 and 2,166,527 are exercisable
at $2.41, which upon exercise, would result in
the issuance of 3,593,689 shares of common stock. The Company also had convertible debt instruments as of March 31, 2017 which,
upon conversion at a valuation of $2.50 per share, would result in the issuance of 337,162 shares of stock.

|                                                                      |  | Three Months         |            | Three Months        
|--------------------------------------------------------------------- |  | -------------------- | ---------- | --------------------
|                                                                      |  | Ended March 31, 2017 |            | Ended March 31, 2016
|Net income                                                            |  | $                    | 2,338,958  |                     
|Shares:                                                               |  |                      |            |                     
|Weighted average number of common shares outstanding, Basic           |  |                      | 16,722,825 |                     
|                                                                      |  |                      |            |                     
|Diluted weighted average number of common shares outstanding, Diluted |  |                      | 18,578,175 |                     
|                                                                      |  |                      |            |                     
|Basic earnings per share                                              |  | $                    | 0.14       |                     
|                                                                      |  |                      |            |                     
|Diluted earnings per share                                            |  | $                    | 0.00       |                     

Related Party Transactions

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

Recently Issued Accounting
Pronouncements

There are no recent accounting
pronouncements which expect to have a material impact on the financial statements.

NOTE 2 – INVENTORIES

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

|                         |  | 2017 |         | 2016
|------------------------ |  | ---- | ------- | ----
|Mined Tonnage Stockpiled |  | $    | 487,864 |     
|Mill Tonnage Stockpiled  |  |      | 146,343 |     
|Finished Material        |  |      | 80,876  |     
|Total Inventories        |  | $    | 715,083 |     





11






NOTE 3 – PROPERTY

Property consists of the following
at March 31, 2017 and December 31, 2016:

|                               |  | 2017 |           | 2016
|------------------------------ |  | ---- | --------- | ----
|                               |  |      |           |     
|Mining camp equipment          |  | $    | 399,180   |     
|Transportation equipment       |  |      | 282,379   |     
|Machinery and equipment        |  |      | 499,970   |     
|Office furniture and fixtures  |  |      | 78,709    |     
|Office equipment               |  |      | 174,314   |     
|Sub-total                      |  |      | 1,434,552 |     
|Less: Accumulated depreciation |  |      | (837,932  | )   
|Total Property                 |  | $    | 596,620   |     

The Company purchased equipment
of $34,077 and $145,030 in the three months ended March 31, 2017 and December 2016, respectively.

Depreciation has been provided
over each asset’s estimated useful life.  Depreciation expense was $16,800 and $47,359 for the three months ended
March 31, 2017 and 2016, respectively.

NOTE 4 – MINING CONCESSIONS

|Mining properties consist of
        the following at March 31, 2017 and December 31, 2016: | 2017       | 2016      
|------------------------------------------------------------------------------------------- | ---------- | ----------
|San Jose de Gracia (“SJG”):                                                                 |            |           
|Total Mining Concessions                                                                    | $4,132,678 | $4,132,678



Depletion expense was $nil and
$nil for the three months ended March 31, 2017 and 2016 respectively, respectively.

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

Through December 31, 2016, the
Company loaned a total of $805,760 to DynaResource Nevada, Inc. (“DynaNevada”), a Nevada Corporation, which owns 100%
of one operating subsidiary in México, DynaNevada de México, S.A. de C.V. (“DynaNevada de México”).
The terms of the Note Receivable provided for a “Convertible Loan”, repayable at 5% interest over a 3-year period,
and convertible at the Company’s option into common stock of DynaNevada at $.25 / Share.   DynaNevada is a related
entity (affiliate), and through its subsidiary, DynaNevada de México has entered into an Option agreement with Grupo México
(IMMSA) in México, for the exploration and development of approximately 3,000 hectares in the State of San Luis Potosi (“The
Santa Gertrudis Property”). DynaNevada de México exercised the Option with IMMSA in March 2010, so that DynaNevada
de México now owns 100% of the Santa Gertrudis Property. In June 2010, DynaNevada de México acquired an additional
6,000 hectares in the State of Sinaloa (the “San Juan Property”). As of March 31, 2017 and December 31, 2016 the loan
was $70,000.

NOTE 6 – CONVERTIBLE
PROMISSORY NOTES

Notes Payable – Series I

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





12






The Notes originally matured on
December 31, 2015. In April 2015, the Company received note extensions (allonges) from all Series I note holders to ensure that
all Series I Notes were in good standing and also extended the maturity date of the Series I Notes to December 31, 2016. At
December 31, 2016, one of the Series I Notes remained outstanding for a total of $5,800.78 and was paid in 2017, one of the Series
I Notes was further extended to June 30, 2017, and the remaining Series I Notes were further extended to December 31, 2017.

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

The Series I Note holder retains
the option, at any time prior to maturity or prepayment, to convert any unpaid principal and accrued interest into Common Stock
at $5.00 per share. If the Series I Note is converted into Common Stock, at the time of conversion, the holder would also receive
warrants, in the same number as the number of common shares received upon conversion, to purchase additional common shares of the
Company for $7.50 per share, with such warrants expiring on December 31, 2018.

Notes Payable – Series
II

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

The Notes originally matured on
December 31, 2015. In April 2015, the Company received allonges (note extensions) from all noteholders to ensure that all notes
were in good standing and also confirmed the maturity of the Series II notes to be December 31, 2016. At December 31, 2016, the
remaining Series II Notes were further extended to December 31, 2017.

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

The Note holder may, at any time
prior to maturity or prepayment, convert any unpaid principal and accrued interest into common stock of the Company at $5.00 per
share. At the time of conversion, the holder would receive a warrant to purchase additional common shares of the Company for $7.50
per share, such warrant expiring on December 31, 2018.

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

At March 31, 2017, the principal
and capitalized interest balance on the remaining Series I Notes was $759,375, and the principal and capitalized interest on the
Series II Notes was $191,250, for a total Note balance of $950,625. The accrued interest for these notes was $29,613 and $29,883
as of March 31, 2017 and 2016, respectively.

NOTE 7 – INCOME TAXES

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

The cumulative tax effect at the
expected tax rate of 34% (blended for U.S. and México) of significant items comprising the Company’s net deferred
tax amounts as of March 31, 2017 and December 31, 2016 are as follows:



13






Deferred Tax Asset Related to:

|                             |  | 2017 |             | 2016
|---------------------------- |  | ---- | ----------- | ----
|Prior Year                   |  | $    | 17,002,483  |     
|Tax Benefit for Current Year |  |      | 83,778      |     
|Total Deferred Tax Asset     |  |      | 17,086,261  |     
|Less: Valuation Allowance    |  |      | (17,086,261 | )   
|Net Deferred Tax Asset       |  | $    | —           |     

The net deferred tax asset and benefit
for the current year is generated primarily from the cumulative net operating loss carry-forward which is approximately $49,700,000
at March 31, 2017, and will expire in the years 2025 through 2031.

The realization of deferred tax benefits is contingent
upon future earnings and is fully reserved at March 31, 2017.

On December 11, 2013, the
Mexican government enacted a tax reform that increased the effective tax rate applicable to the Company's Mexican operations. The
law, effective January 1, 2014, increased the future corporate income tax rate to 30%, created a 10% withholding tax on dividends
paid to non-resident shareholders and created a new Extraordinary Mining duty which is equal to 0.5% of gross revenues from the
sale of gold, silver and platinum. Furthermore, the reform introduced a Special Mining Duty of 7.5%. The Special Mining Duty is
deductible for income tax purposes. The Special Mining Duty is generally applicable to earnings before income tax, depreciation,
depletion, amortization and interest. There will be no deductions related to development type costs but exploration and prospecting
costs are deductible when incurred. Certain non-deducted exploration expenditures incurred prior to January 1, 2014 are also
deductible in the calculation of the Special Mining Duty. For the three months ended March 31, 2017 and for the year ended December 31,
2016, the Company had no taxes payable under the 7.5% Special Mining Duty.

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

|United States: | 2012 to 2015
|-------------- | ------------
|México:        | 2011 to 2015

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

NOTE 8 – STOCKHOLDERS’
EQUITY

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

Series A Preferred Stock

The Company has designated 1,000
shares of its Preferred Stock as Series A, having a par value of $0.0001 per share. Holders of the Series A Preferred Stock have
the right to elect a majority of the Board of Directors of the Company. In October 2007, the Company issued 1,000 shares of
Series A Preferred Stock to its CEO. At March 31, 2017 and December 31, 2016, there were 1,000 shares and 1,000 shares of Series
A Preferred Stock outstanding, respectively.

Series C Senior Convertible
Preferred Shares

On June 30, 2015, the Company
issued 1,600,000 Series C Senior Convertible Preferred Shares (the “Series C Preferred Shares”) at $2.50 per share
for gross proceeds of $ 4,000,000, as well as issuing 133,221 additional Series C Preferred Shares due to anti-dilution provisions
(with no cash remuneration). Legal fees of $45,000 were deducted from the proceeds of this transaction at closing. These Series
C Preferred Shares are convertible to common shares at $2.50 per share, through February 20, 2020. The Series C Preferred Shares
may receive a 4% per annum dividend, payable if available, and in arrears. A description of the transaction which included the
issuance of the Series C Preferred Shares is included below. During 2016, the company paid Dividends of $160,000 to the holder
of Series C Convertible Preferred Stock. The Dividend is calculated at 4.0% of $4,000,000 payable annually on June 30.





14






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

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

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



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

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

In 2015, due to underlying anti-dilutive
provisions contained in the Series C Preferred Shares and the Golden Post Warrant, the Company incurred derivative liabilities
of $2,419,359 in connection with the Series C Preferred Shares, and $2,963,378 in connection with the Golden Post Warrant. Additionally,
the Company fully accreted the discount related to the Series C Preferred Shares and the Golden Post Warrant in the amount of $4,637,179,
which is reflected “below” the net income (loss) amount. Also in 2015, the Company reported $87,374 deemed dividend
for Golden Post Rail related to its 4% dividend terms. As the Company has not declared these dividends, it is required only as
an item “below” the net income (loss) amount. In 2016, the total Derivative Liability was $5,106,090 which included
$2,592,452 for the Series C Preferred Shares, and $2,513,638 in connection with the Golden Post Warrant. The Deemed Dividend for
the three months ending March 31, 2017 and March 31, 2016 was $43,331, and $43,331 respectively.

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

|                                                           | Preferred Series C
|---------------------------------------------------------- | ------------------
|Carrying Value, December 31, 2016                          | 4,333,053         
|                                                           |                   
|Issuances at Fair Value, net of issuance costs             | 0                 
|Bifurcation of Derivative Liability                        | 0                 
|Relative Fair Value of Warrants – Preferred Stock Discount | 0                 
|Accretion of Preferred Stock to Redemption Value           | 0                 
|Carrying Value, March 31, 2017                             | 4,333,053         

Preferred Stock (Undesignated)

In addition to the 1,000 shares
designated as Series A Preferred Stock and the 1,733,221 shares designated as Series C Preferred Shares, the Company is authorized
to issue an additional 16,266,779 shares of Preferred Stock, having a par value of $0.0001 per share. The Board of Directors of
the Company has authority to issue the Preferred Stock from time to time in one or more series, and with respect to each series
of the Preferred Stock, to fix and state by the resolution the terms attached to the Preferred Stock. At March 31, 2017 and December
31, 2016, there were no other shares of Preferred Stock outstanding.





15






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

Common Stock

The Company is authorized to issue
25,000,000 common shares at a par value of $0.01 per share. These shares have full voting rights. At March 31, 2017 and December
31, 2016, there were 16,722,825 shares outstanding, respectively. No dividends were paid for the periods ended March 31, 2017
December 31, 2016, respectively.

Preferred Rights

The Company issued “Preferred
Rights” for the rights to percentages of revenues generated from the San Jose de Gracia Pilot Production Plant, and received
$158,500 in 2003 and $626,000 in 2002. This has been reflected as “Preferred Rights” in stockholders’ equity.
As of December 31, 2004, $558,312 was repaid and as of December 31, 2005, an additional $186,188 was repaid, leaving a current
balance of $40,000 and $40,000 as of March 31, 2017 and March 31, 2016, respectively.

Stock Issuances

2016 Activity – None.

2017 Activity – None.

Treasury Stock

At March 31, 2017 and March 31,
2016, 1,112,313 treasury shares were outstanding.

Note Repayments

In the three months ended March
31, 2017, the Company repurchased Notes with a principal balance of $5,625.

Warrants

The Company had 3,593,689 warrants
outstanding at March 31, 2017 and December 31, 2016. There were no warrants issued or exercised in the period ending March 31,
2017 and December 31, 2016. 567,500 warrants expired in 2016.

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

| |                               | Number of Shares |  | Weighted Average Exercise Price |           | Weighted Average Remaining Contractual Life (Years) |  | Intrinsic Value
| | ----------------------------- | ---------------- |  | ------------------------------- | --------- | --------------------------------------------------- |  | ---------------
| | Balance at December 31, 2015  |                  |  |                                 | 4,161,189 |                                                     |  | $              
| | Granted                       |                  |  |                                 | —         |                                                     |  | $              
| | Exercised                     |                  |  |                                 | —         |                                                     |  | $              
| | Forfeited                     |                  |  |                                 | (567,500  | )                                                   |  | $              
| | Balance at December 31, 2016  |                  |  |                                 | 3,593,689 |                                                     |  | $              
| | Granted                       |                  |  |                                 | —         |                                                     |  | $              
| | Exercised                     |                  |  |                                 | —         |                                                     |  | $              
| | Forfeited                     |                  |  |                                 | —         |                                                     |  | $              
| | Balance at March 31, 2017     |                  |  |                                 | 3,593,689 |                                                     |  | $              
| | Exercisable at March 31, 2017 |                  |  |                                 | 3,593,689 |                                                     |  | $              





16








NOTE 9 – RELATED PARTY TRANSACTIONS

Related Party Transactions

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

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

Dynacap Group Ltd.

The Company paid $24,750 and $36,250
to Dynacap Group, Ltd. (“Dynacap”, an entity controlled by the CEO of the Company) for consulting and other fees during
the three months ended March 31, 2017 and 2016, respectively. Dynacap retains 2 individuals, who are family members of the CEO,
as independent contractors who provide administrative and executive support services to the Company. Dynacap has provided these
services to the Company for recent years.

NOTE 10 – COMMITMENTS
AND CONTINGENCIES

The Company is required to pay
taxes in México in order to maintain mining concessions owned by DynaMéxico.  Additionally, the Company
is required to incur a minimum amount of expenditures each year for all concessions held.  The minimum expenditures are
calculated based upon the land area, as well as the age of the concessions.  Amounts spent in excess of the minimum may
be carried forward indefinitely over the life of the concessions, and are adjusted annually for inflation.  Based on
management's recent business plans and Company activities at San Jose de Gracia, and considering the Company’s current and
forward plans, and considering expenditures on mining concessions since 2002-2016, the Company does not anticipate that DynaMéxico
will have any difficulties meeting the minimum annual expenditures for the concessions ($2,400 Mexican Pesos per hectare). DynaMéxico
retains sufficient carry-forward amounts to cover over 10 years of the minimum expenditure (as calculated at the 2016 minimum,
adjusted for annual inflation of 4%).

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

In August 2016, the Company entered
into a sixty-six month extension of the lease through 2021. The Company paid rent expense of $14,421 and $15,157 related to this
lease for the quarter ended March 31, 2017 and 2016, respectively.



|YEAR  | AMOUNT  
|----- | --------
|2017  | $ 54,457
|2018  | $ 80,969
|2019  | $ 82,775
|2020  | $ 84,581
|2021  | $ 86,387
|      |         
|TOTAL | $389,169





17






Other Contingencies

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

Damages Awarded to DynaMéxico
in México Litigation

On October 5, 2016, DynaResource
de México SA de C.V. (“DynaMéxico”), was awarded in excess of $48 M USD (Forty-Eight Million Dollars)
in damages from Goldgroup Resources, Inc. (the “Goldgroup Damages”) by virtue of a Sentencia Definitiva (the “Definitive
Sentence”) issued by the Thirty Sixth Civil Court of the Superior Court of Justice of the Federal District of México
(Tribunal Superior de Justicia del Distrito Federal), File number 1120/2014. The Definitive Sentence included the considerations
and resolutions by the Court, and additional Resolutions were also ordered in favor of DynaMéxico (together the Goldgroup
Damages and the additional Resolutions are referred to as, the “Oct. 5, 2015 Resolution”). The October 5, 2015 Resolution
is described in Part II, Item 1., Legal Proceedings.

Litigation

The Company believes that no
material adverse change will occur as a result of the legal actions taken, and the Company further believes that there is little
to no potential for the assessment of a material monetary judgment against the Company for legal actions it has filed in México.
Further, the Company believes there is no legal basis for which to conduct arbitration proceedings. (See Part II, Item 1. Legal
Proceedings).

NOTE 11 – DERIVATIVE
LIABILITIES

Preferred Series C Stock

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

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

The Company considered the inputs
in this valuation to be level 3 in the fair value hierarchy under ASC 820 and used an equity simulation model to determine the
value of conversion feature of the Series C Preferred Stock based on the assumptions below for the three months ended March 31,
2017 and year ended December 31, 2016:

|                           |  | March 31, 2017 |         | December 31, 2016
|-------------------------- |  | -------------- | ------- | -----------------
|Annual volatility rate     |  |                | 100     | %                
|Risk free rate             |  |                | 1.50    | %                
|Holding Period             |  |                | 5 years |                  
|Fair Value of common stock |  | $              | 1.41    |                  







18






The below table represents the
change in the fair value of the derivative liability (Preferred Series C Stock) during the 3 months ending March 31, 2017 and the
year ending December 31, 2016:

|Period Ended                                                           |  | March 31, 2017 |            | December 31, 2016
|---------------------------------------------------------------------- |  | -------------- | ---------- | -----------------
|Fair value of derivative (Preferred Series C Stock), beginning of year |  | $              | 2,592,452  |                  
|Change in fair value of derivative (Preferred Series C Stock)          |  |                | (1,486,322 | )                
|Fair value of derivative (Preferred Series C Stock), end of period     |  | $              | 1,106,130  |                  

Preferred Series C Warrants

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

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

The Company considered the inputs in
this valuation to be level 3 in the fair value hierarchy under ASC 820 and used an equity simulation model to determine the value
of conversion feature of the Warrants based on the assumptions below for the periods ended March 31, 2017 and December 31, 2016:

|                           |  | March 31, 2017 |         | December 31, 2016
|-------------------------- |  | -------------- | ------- | -----------------
|Annual volatility rate     |  |                | 100     | %                
|Risk free rate             |  |                | 1.50    | %                
|Holding Period             |  |                | 5 years |                  
|Fair Value of common stock |  | $              | 1.41    |                  



The below table represents the
change in the fair value of the derivative liability (Preferred Series C Warrants) for the quarterly period ending March 31, 2017
and the year ending December 31, 2016.

|Period Ended                                                     |  | March 31, 2017 |           | December 31, 2016
|---------------------------------------------------------------- |  | -------------- | --------- | -----------------
|Fair value of derivative liability (Warrants), beginning of year |  | $              | 2,513,638 |                  
|Change in fair value of derivative liability (Warrants)          |  |                | (861,756  | )                
|Fair value of derivative liability (Warrants), end of period     |  | $              | 1,651,882 |                  

Total (Gain) Loss on Derivative
Liability (Preferred Series C Stock and Warrant)

The below table represents the
total (gain) or loss, of the derivative liability (Preferred Series C Stock and Warrants) for the quarterly period ending March
31, 2017 and the year ending December 31, 2016.

|Period Ended                                                                           |  | March 31, 2017 |            | December 31, 2016
|-------------------------------------------------------------------------------------- |  | -------------- | ---------- | -----------------
|Fair value of derivative liability (Preferred C Stock and Warrants), beginning of year |  | $              | 5,106,090  |                  
|Change in fair value of derivative liability (Stock and Warrants)                      |  |                | (2,348,078 | )                
|Fair value of derivative liability (Stock and Warrants), end of period                 |  | $              | 2,758,012  |                  

NOTE 12 – NON-CONTROLLING
INTEREST

The Company’s Non-Controlling
Interest recorded in the consolidated financial statements relates to an interest in DynaResource de México, S.A. de C.V.
of 50% through May 13, 2013, and 20% thereafter. Changes in Non-Controlling Interest for the periods ended March 31, 2017 and December
31, 2016, respectively were as follows:

|                                    |  | Qtr. Ended March 31, 2017 |            | Year Ended December 31, 2016
|----------------------------------- |  | ------------------------- | ---------- | ----------------------------
|Beginning balance                   |  | $                         | (5,842,478 | )                           
|Operating income (loss)             |  |                           | 130,467    |                             
|Share of Other Comprehensive Income |  |                           | 1,038,987  |                             
|Ending balance                      |  | $                         | (4,673,024 | )                           



19






The Company began allocating
a portion of other comprehensive income (loss) to the non-controlling interest with the adoption of ASC 160 as of January 1, 2009.
However, this amount is only reflected in the income statement.

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

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

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

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

Level 3 Inputs – Instruments with
primarily unobservable value drivers.

As of March 31, 2017 and December
31, 2016, the Company’s financial assets were measured at fair value using Level 3 inputs, with the exception of cash, which
was valued using Level 1 inputs. A description of the valuation of the Level 3 inputs is discussed in Note 11.

Fair Value Measurement at March 31, 2017 using:

|                                                   |  | Total Fair Market Value |           | Quoted Prices in Active Markets For Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |   | Significant Unobservable Inputs (Level 3)
|-------------------------------------------------- |  | ----------------------- | --------- | -------------------------------------------------------------- |  | --------------------------------------------- | - | -----------------------------------------
|Assets:                                            |  |                         |           |                                                                |  |                                               |   |                                          
|None                                               |  |                         | —         |                                                                |  |                                               | — |                                          
|Totals                                             |  | $                       | —         |                                                                |  | $                                             | — |                                          
|                                                   |  |                         |           |                                                                |  |                                               |   |                                          
|Liabilities:                                       |  |                         |           |                                                                |  |                                               |   |                                          
|Derivative Liabilities                             |  | $                       | 2,758,012 |                                                                |  |                                               | — |                                          
|Totals                                             |  | $                       | 2,758,012 |                                                                |  | $                                             | — |                                          
|                                                   |  |                         |           |                                                                |  |                                               |   |                                          
|Fair Value Measurement at December 31, 2016 Using: |  |                         |           |                                                                |  |                                               |   |                                          
|Assets:                                            |  |                         |           |                                                                |  |                                               |   |                                          
|None                                               |  |                         | —         |                                                                |  |                                               | — |                                          
|Totals                                             |  | $                       | —         |                                                                |  | $                                             | — |                                          
|                                                   |  |                         |           |                                                                |  |                                               |   |                                          
|                                                   |  |                         |           |                                                                |  |                                               |   |                                          
|Liabilities:                                       |  |                         |           |                                                                |  |                                               |   |                                          
|Derivative Liabilities                             |  | $                       | 5,106,090 |                                                                |  |                                               | — |                                          
|Totals                                             |  | $                       | 5,106,090 |                                                                |  | $                                             | — |                                          

NOTE 14 – REVENUE
CONCENTRATION

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

For the three months ended March
31, 2017 two customers accounted for 100% of revenue and for the three months ended March 31, 2016, one customer accounted for
100% of revenue.

At March 31, 2017, one customer
accounted for 100% of accounts receivable.  At December 31, 2016, one customer accounted for 100% of accounts receivable.





20






Item 2.
         Management’s Discussion and Analysis of Financial Condition and Results
of Operations

FORWARD-LOOKING STATEMENTS

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

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

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

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

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

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





21






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

Company

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

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

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

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

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

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

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

San Jose de Gracia - History

Historical production records
from San Jose de Gracia (“SJG”) report 1,000,000 Oz gold production from a series of underground workings. The major
areas report 471,000 Oz. produced at the La Purisima area of SJG, at an average grade of 66.7 g/t.; and 215,000 Oz. produced from
the La Prieta area, at an average grade of 27.6 g/t. Mineralization at SJG has been traced on surface and underground over 15 sq.
km.

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





22






Drilling – Exploration
Programs (1997 – 2000)

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

Structure of Company / Operations

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

Exclusive Operating Entity
at San Jose de Gracia

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

DynaMéxico General Powers
of Attorney

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

Company Ownership and Description
of Subsidiaries

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



DynaResource de México,
S.A. de C.V.:                  80% Owned by DynaResource, Inc.;

100% owner of the San Jose de
Gracia Property;



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

Exclusive Operator of the San
Jose de Gracia Project;

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

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

DynaResource
Operaciones de

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

Personnel Management Company at San Jose de Gracia;



Pilot Production Activities
(2003 – 2006)

DynaMéxico, conducting
operations through DynaMineras, mined high-grade veins at the San Pablo area of SJG from mid-2003 to June 2006. 18,250 Oz. gold
was produced and sold from mill feed tonnage of 42,000 tonnes, at an average grade of approximately 15-20 g/t. Production costs
were reported at approximately $175/Oz. gold in this small scale, pilot production operation (See results in table below). The
pilot operations at SJG consisted of the installation of a gravity/flotation processing circuit to an existing mill, and initial
test runs with tailings were completed in 2002. Actual test mining at the high-grade San Pablo area of the property commenced in
March 2003.

|Mined and Milled Tonnage           | 42,000 tonnes
|---------------------------------- | -------------
|Production (Oz Au)                 | 18,250 Oz    
|Average Grade                      | 15-20 g/t    
|Recovery Efficiency (Plant)        | 85%          
|Recovery in Concentrate (Sales)    | 90%          
|Production Cost (Average, 4 Years) | $175 / Oz    





23






Year 2006 Suspension of Test Mining and Pilot Milling
Activities

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

Drilling programs (2007 –
2011)

Drilling programs completed by
the Company’s subsidiaries produced a total of 298 drill holes covering 68,741 meters of drilling from 2007 through March
2011. Results of the drilling activity, including the results of previous drilling in 1997-1998, appear in an “SJG Drill
Intercepts Summary File through 11-298”, as Exhibit 99.1 to our Form 10-Q for the period ended June 30, 2011 filed with the
SEC on August 22, 2011, and available on EDGAR at: [http://www.sec.gov/Archives/edgar/data/1111741/000112178111000241/ex99one.htm].
Additionally, the updated Drill Summary File is posted on the Company’s web site at www.dynaresource.com.

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

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

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

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

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

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





24






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

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

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

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

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

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

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

No Known Reserves

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

Exploitation Amendment Agreement
(“EAA”)

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



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

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





25








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



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

The total unpaid advances made
by DynaMineras to DynaMéxico as of March 31, 2017 is $2,125,000. The EAA is the third and latest Amendment to the original
Contract Mining Services and Mineral Production Agreement (the “Operating Agreement”), which was previously entered
into by DynaMineras with DynaMéxico in April 2005, wherein DynaMineras was named the Exclusive Operating Entity at SJG.
The Operating Agreement was previously amended in September 2006 (the “First Amendment”), and amended again at July
15, 2011 (the “Second Amendment”). The Term of the Second Amendment is 20 years, and the EAA (Third Amendment) provides
for the continuation of the 20 Year Term from the date of the Second Amendment (July 15, 2011).

Surface Rights Agreement

On January 6, 2014 DynaMineras
entered into a 20-year surface rights agreement with the Santa Maria Ejido Community surrounding
the San Jose de Gracia Property (the “20 Year SRA”). The 20 Year SRA covers an area of 4,399 hectares surrounding the
main mineral resource areas of SJG, and provides for annual lease payments by DynaMineras of $1,359,443 Pesos (approx. $85,000
USD), commencing in 2014. The 20 year SRA provides DynaMineras with surface access to the core resource areas of SJG, and
allows for all permitted mining, pilot production and exploration activities from the owners of the surface rights (Santa Maria
Ejido community).

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

Structure of Company / Operations

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

Activities under Exploitation
Amendment Agreement

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

Competitive Advantage

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

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





26






The Company’s operating
subsidiaries, DynaMineras and DynaOperaciones, receive monthly fees for management of the SJG activities and personnel. These fee
amounts are eliminated in consolidation. Other than those intercompany fees, the Company reported revenue of $1,341,512 in 2016
and $2,008,179 in the quarter ending March 31, 2017 and March 31, 2016 respectively.

Capital Requirements

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

Gold

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

Gold Supply.    A
combination of current mine production, recycling and draw-down of existing gold stocks held by governments, financial institutions,
industrial organizations and private individuals make up the annual gold supply. Based on public information available for the
years 2008 through 2014, on average, current mine production has accounted for approximately 64% of the annual gold supply.

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

|Year                  | High   | Low    | Average
|--------------------- | ------ | ------ | -------
|2005                  | $536   | $411   | $444   
|2006                  | $725   | $525   | $604   
|2007                  | $841   | $608   | $695   
|2008                  | $1,011 | $713   | $872   
|2009                  | $1,213 | $810   | $972   
|2010                  | $1,421 | $1,058 | $1,225 
|2011                  | $1,895 | $1,319 | $1,572 
|2012                  | $1,792 | $1,540 | $1,669 
|2013                  | $1,694 | $1,192 | $1,411 
|2014                  | $1,380 | $1,140 | $1,265 
|2015                  | $1,303 | $1,057 | $1,175 
|2016                  | $1,366 | $1,077 | $1,251 
|2017 (Through May 17) | $1,284 | $1,151 | $1,230 

Source: Kitco, Reuters and the London Bullion Market
Association

On May 17, 2017, the afternoon fixing gold price on
the London Bullion Market was $1,257 per ounce and the spot market gold price on the New York Commodity Exchange was $1,257 per
ounce.

Condition of Physical Assets
and Insurance

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

Environmental Matters

Our activities are largely outside
the United States and subject to governmental regulations for the protection of the environment. We conduct our operations so as
to protect public health and the environment and believe our operations are in compliance with applicable laws and regulations
in all material respects. DynaMéxico is involved with maintaining tailings ponds and test mining and pilot production activities
(through DynaMineras) with the oversight of SEMARNAT, the federal environmental agency of México.





27






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

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

Test Underground Mining and Pilot Mill Operations
(2015)

In July 2015, The Company commenced
a capital investment program designed to increase tonnage and output from the test mining operations, and to increase volume and
output through the pilot mill facility. The Company, through DynaMineras was engaged in the implementation of this capital investment
program from July through December 2015. As a result, the Company reported test mining and pilot milling volumes in 2016 as described
below (Summary of Test Mining and Pilot Mill Operations (2015 and 2016)).

Capital Investment (2015)

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

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

Mine related costs ($290,000); including
mine plan development, permits, assays, consulting, mine supplies, and equipment items expensed;

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

Personnel Costs ($673,000); including
payroll and consulting expenses;

Equipment ($636,000);
long term equipment purchases including transportation, mine loading and hauling, generators, compressors and pumps;

Overhead ($285,000); including legal
expenses, consulting, and administration;

IVA ($272,000);
Value added taxes paid, and refundable;

Land Use and Rental ($83,000);

Summary of Test Mining and
Pilot Mill Operations (2015 and 2016)

DynaMineras
reports the following estimated summary of its test mining and pilot milling operations during 2015 and 2016:

|Year | Total
        
        Tonnes
        Mined
        &
        Processed | Reported
        Mill
        Feed
        Grade
        (g/t Au) | Reported
        Recovery
        % | Gross
                           Gold
        Concentrates
        Produced
        (Au
        oz.) | Net
                           Gold
        Concentrates
        Sold
        (Au oz.)
|---- | ----------------------------------------------------------------------- | ----------------------------------------------------------------- | ----------------------------------- | ---------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------
|2015 | 7,180                                                                   | 8.30                                                              | 78.00%                              | 1,495                                                                                                | 1,380                                                                                 
|2016 | 33,172                                                                  | 12.70                                                             | 79.7%                               | 10,836                                                                                               | 8,668                                                                                 

Test
pilot operations in 2016 yielded 33,172 tonnes mined and processed from underground mining activity and pilot mill operations;
and the production of approximately 10,863 gross Oz Au (and net of dry weights, buyer’s price discount and refining and
treatment costs, approximately 8,668 Oz. Au) contained in gold-silver concentrates, and the receipt of $9,496,105 in revenues
from the sale of gold-silver concentrates.

Test pilot operations in 2015
yielded 7,180 tonnes mined and processed from underground mining activity and pilot mill operations; and the production of approximately
1,495 gross Oz Au (and net of buyer’s price discount and refining costs approximately 1,308 Oz Au) contained in gold-silver
concentrates, and the receipt of $944,910 in revenues from the sale of gold-silver concentrates.

Summary
of Test Mining and Pilot Mill Operations for the three months ended March 31, 2017 and 2016:

|                                      | Total
                                             Tonnes
                                             Mined
                                         &
                                             Processed | Reported
                                             Mill
                                         Feed
                                             Grade
                                             (g/t Au) | Reported
                                             Recovery
                                         % | Gross
                                         Gold
                                              Concentrates
                                              Produced
                                              (Au
                                         oz.) | Net
                                         Gold
                                              Concentrates
                                              Sold
                                         (Au oz.)
|------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Three
    Months Ended March 31, 2017 | 7,805                                                                                                                                                                                                          | 11.77                                                                                                                                                                                                             | 78.0%                                                                                                     | 2,320                                                                                                                                                                                                                                                                 | 1,871                                                                                                                                                                                                            
|Three
    Months Ended March 31, 2016 | 8,591                                                                                                                                                                                                          | 13.20                                                                                                                                                                                                             | 78.6%                                                                                                     | 2,865                                                                                                                                                                                                                                                                 | 2,311                                                                                                                                                                                                            
|                                      |                                                                                                                                                                                                                |                                                                                                                                                                                                                   |                                                                                                           |                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                  





28






Test pilot operations in Q1 2017
yielded 7,805 tonnes mined and processed from underground mining activity and pilot mill operations; and the production of approximately
2,320 gross Oz Au (and net of dry weights, buyer’s price discount and refining and treatment costs, approximately 1,871 Oz.
Au) contained in gold-silver concentrates, and the receipt of $1,341,512 in revenues from the sale of gold-silver concentrates.

Test pilot operations in Q1 2016
yielded 8,591 tonnes mined and processed from underground mining activity and pilot mill operations; and the production of approximately
2,865 gross Oz Au (and net of dry weights, buyer’s price discount and refining and treatment costs, approximately 2,311 Oz.
Au) contained in gold-silver concentrates, and the receipt of $2,008,179 in revenues from the sale of gold-silver concentrates.

DynaMineras expects to continue
testing its underground mining activity and pilot milling operations in 2017; and projects the increased output of 150 tons/day
– 250 tons/day from the mine and mill in 2017.

Deliveries of Gold Concentrates
Produced in the Quarter Ending March 31, 2017, and Delivered for Sale in April, 2017

The Company reports the following
deliveries of gold concentrates in April 2017, which were produced in the quarter ending March 31, 2017

On April 5, 2017, DynaMineras reported
the delivery for sale of approximately 160 Oz. gold (exact weights in gold and silver Oz. to be determined at final settlement).

On April 12, 2017, DynaMineras reported
the delivery for sale of approximately 150 Oz. gold (exact weights in gold and silver Oz. to be determined at final settlement).

Subsequent Deliveries of Gold
Concentrates for Sale

On April 24, 2017, DynaMineras reported
the delivery for sale of approximately 390 Oz. gold (exact weights in gold and silver Oz. to be determined at final settlement).

On May 4, 2017, DynaMineras reported
the delivery for sale of approximately 350 Oz. gold (exact weights in gold and silver Oz. to be determined at final settlement).

Cash Receipts Subsequent to March
31, 2017 from the Delivery and Sale of Gold Concentrates

On April 4, 2017 DynaMineras received
$ 125,651.17 in provisional net proceeds from the sale of gold-silver concentrates.

On April 11, 2017 DynaMineras received
$174,883.47 in provisional net proceeds from the sale of gold-silver concentrates.

On April 21, 2017 DynaMineras received
$166,293.27 in provisional net proceeds from the sale of gold-silver concentrates.

On April 28, 2017 DynaMineras received
$ 337,995.73 in provisional net proceeds from the sale of gold-silver concentrates.

On May 9, 2017 DynaMineras received
$ 277,068.02 in provisional net proceeds from the sale of gold-silver concentrates.

On May 16, 2017 DynaMineras received
$ 43,560.42 in final net proceeds from the sale of gold-silver concentrates.

Expansion and Improvements

In the first quarter of 2017,
the Company has expended approximately $200,000 USD on the following projects which are one-time expenses. These activities have
reduced the number of pilot mill operating days in the first quarter, 2017 to approximately 60. As the tailings pond expansion
is completed, and the pilot mill capacity is increased, the Company projects test mining and pilot mill processing volumes to reach
250 tons per day in the third quarter, 2017.

Medical Clinic at San
Jose de Gracia (the “Santa Maria Anexo Clinic”)

A medical clinic at San
Jose de Gracia is being constructed by the Company and will be donated to the San Jose de Gracia Community.





29






Tailings Pond Expansion

The Company is currently
expanding the capacity of the tailings pond adjacent to the pilot mill facility. The Company expects to complete the tailings pond
expansion in the second quarter, 2017.

Camp Expansion

The Company is currently
expanding the capacity of its camp facilities at San Jose de Gracia. The Company expects to complete the camp expansion work in
the second quarter, 2017.

Mill Capacity and Efficiency

The Company is currently
conducting activities within the Pilot Mill Facility which are intended to improve processing efficiencies and to expand capacities.
The Company expects to complete these activities in the second quarter, 2017.

Competitive Advantage

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

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

The Company’s operating
subsidiaries, DynaMineras and DynaOperaciones, receive monthly fees for management of the SJG activities and personnel. These fee
amounts are eliminated in consolidation. Other than those intercompany fees, the Company reported revenue of $1,341,512 and $2,008,179
for the three months ended March 31, 2017 and March 31, 2016 respectively.

Capital Requirements

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

Condition of Physical Assets
and Insurance

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

Environmental Matters

Our activities are largely outside
the United States and subject to governmental regulations for the protection of the environment. We conduct our operations so as
to protect public health and the environment and believe our operations are in compliance with applicable laws and regulations
in all material respects. DynaMéxico is involved with maintaining tailings ponds and test mining and pilot production activities
(through DynaMineras) with the oversight of SEMARNAT, the federal environmental agency of México.

Results for the Three Months Ended March 31, 2017
and 2016

In the three months ended March
31, 2017, the Company, through its wholly owned subsidiary DynaMineras, continued full test mining and pilot mill operations at
San Jose de Gracia.



30






DynaMineras conducted test mining
and milling operations in the first quarter of 2017 and 2016. During the three months ended March 31, 2017, the test mining and
pilot milling operations have yielded the underground mining and mill processing of approx. 7,805 tonnes of mineralized material,
the production of approximately 2,320 gross oz. Au (and net of weight and value adjustment) approximately 1,871 oz. Au) contained
in gold-silver concentrates. DynaMineras realized the receipt of $1,341,512 in revenues from the delivery and sale of gold-silver
concentrates in the first quarter, 2017.

REVENUE. Revenues for the three
months ended March 31, 2017 and 2016 were $1,341,512 and $2,008,179, respectively. The Company established consistent test mining
and pilot milling operations in January 2016.

PRODUCTION COSTS RELATED TO SALES.
Production costs related to sales for the three months ended March 31, 2017 and 2016 were $518,762 and $301,995 respectively. These
are expenses directly related to the milling, packaging and shipping of gold and other precious metals product and are comparative
with the revenue figures above.

MINE OPERATING COSTS. Mine operating
costs for the three months ended March 31, 2017 and 2016 were $466,162 and $663,408, respectively. These costs are directly related
to the extraction and transportation of mine tonnage.

PROPERTY HOLDING COSTS. Property
holding costs for the three months ended March 31, 2017 and 2016 were $46,500 and $133,084, respectively. These costs are concessions
taxes, leases on land and other direct costs of maintaining the property.

OPERATING EXPENSES. Operating
expenses for the three months ended March 31, 2017 and 2016 were $1,586,740 and $1,567,686, respectively. The above expenses include
depreciation and amortization amounts of $16,800 and $13,820 for the three months ended March 31, 2017 and 2016, respectively.

OTHER INCOME (EXPENSE). Other
income, exclusive of currency transaction gain or (loss) for the three months ended March 31, 2017 and 2016 was $2,757,390 and
$274,449, respectively. Derivatives mark-to-market adjustments are the primary components of income in 2017 and 2016 of $2,348,078
and $204,279 respectively. Currency transaction gain or (loss) was $438,780 and $99,867 for the three months ended March 31, 2017
and 2016, respectively. The reason for these fluctuations is the change in valuation of the Mexican Peso.

NON-CONTROLLING INTEREST. The
non-controlling interest portion of the net loss for the three months ended March 31, 2017 and 2016 was $130,467 and $(27,781),
respectively.

COMPREHENSIVE INCOME (LOSS). Comprehensive
income (loss) includes the Company’s net income (loss) plus the unrealized currency translation gain (loss) for the period.
For the three months ended March 31, 2017 and 2016, the Company recorded a (loss) of $861,708 and $4,496, respectively, which were
made up of unrealized losses on currency translation.

Liquidity and Capital Resources

As of March 31, 2017, the Company
had a negative working capital of $(1,582,205), comprised of current assets of $4,022,221 and current liabilities of $5,604,426.
This represents a decrease of $1,852,047 from the working capital (deficit) maintained by the Company of $(3,432,452) as of December
31, 2016, due primarily to the mark to market adjustment for our derivative liabilities.

Net cash provided by operations
for the three months ended March 31, 2017 was $470,137 compared with $127,257 for the three months ended March 31, 2016.

Net cash (used) in investing activities
for the three months ended March 31, 2017 and 2016 was $(34,077) and $(17,899), respectively.

Net cash provided by financing activities
for the three months ended March 31, 2017 and 2016 was $(5,625) and $0, respectively.





31






Non-controlling Interest

Under the terms of the Earn In
Agreement (September 1, 2006 to March 15, 2011), Goldgroup Mining Inc. and its wholly owned subsidiary Goldgroup Resources, Inc.
(Goldgroup), through 2010, had contributed capital to DynaMéxico in order to acquire 25% of the outstanding shares (a shareholder
interest) of DynaResource de México, S.A. de C.V. (DynaMéxico). In March 2011, Goldgroup had contributed a total
of $18 M USD capital to DynaMéxico in order to acquire a total of 50% of the outstanding shares (a shareholder interest)
of DynaMéxico. From March 2011 through May 2013, Goldgroup owned 50% of the outstanding shares of DynaMéxico, and
since May 2013 to current date Goldgroup owns 20% of the outstanding shares of DynaMéxico. The applicable portion of the
earnings or loss attributable to Goldgroup is offset in this section. In the three months ended March 31, 2017 the attributable
portion to Goldgroup was $130,467, and $(283,333) for the year ended December 31, 2016.

Off-Balance Sheet Arrangements

As of March 31, 2017, the
Company did not have any off-balance sheet arrangements (as that phrase is defined by SEC rules applicable to this report) which
have or are reasonably likely to have a material adverse effect on our financial condition, results of operations or liquidity.

Plan of Operation

The Plan of operation for the
next twelve months includes DynaMineras continuing the improvement and expansion of the test mining and pilot milling operations
at SJG. The Company funds its general and administrative expenses in the US. The Company’s operating subsidiaries, DynaMineras
and DynaOperaciones, receive monthly fees for management of SJG activities and personnel. These amounts are eliminated in consolidation.
The Company believes that cash on hand, and including cash flow generated from its current operations, is adequate to fund its
ongoing general and administrative expenses through 2017. The Company plans to seek additional debt funding during the next 12
months depending on results of its pilot operations, market conditions, and other factors.

Capital Expenditures

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

Drilling Programs

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

Mineralization at San José de Gracia

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

No Known Reserves

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

Exploitation Amendment Agreement
(“EAA”)

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





32






Exclusive Operating Entity
at San Jose de Gracia

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

DynaMéxico General Powers
of Attorney

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

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

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

Capital Advances to Subsidiaries

DynaResource de México
(“DynaMéxico”)

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

As of March 31, 2017, the Company
had advanced $6,707,500 to DynaMineras and DynaMineras had advanced $6,125,000 to DynaMéxico. At December 31, 2014, the
Company issued 1,333,333 shares of its common stock to DynaMineras in exchange for $4,000,000 receivable it held from DynaMéxico.
The remaining $2,125,000 is a receivable owed to DynaMineras from DynaMéxico as of March 31, 2017. The total receivable
from DynaMineras to the Company is $6,707,500 as of March 31, 2017.

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

Amounts Owed to DynaUSA and
DynaMineras

As
of March 31, 2017, the Company had advanced $6,707,500 USD to DynaMineras and DynaMineras had advanced $6,125,000 USD to DynaMéxico.
On September 5, 2014, the Company issued 1,333,333 shares of its common stock to DynaMineras in exchange for the $4,000,000 receivable
from DynaMéxico. As a result of these transactions:

| | · | DynaMéxico owes $2,125,000 USD to DynaMineras;
and,
| | - | ---------------------------------------------------

| | · | DynaMéxico owes $4,000,000 USD to DynaUSA.
| | - | ------------------------------------------

DynaResource Operaciones
(“DynaOperaciones”)

The Company loaned DynaOperaciones
$225,000 in 2012, which amount remains payable to the Company as of March 31, 2017.

Mineras de DynaResource (“DynaMineras”)



The receivable from Mineras to
the Company is $6,707,500 as of March 31, 2017, as described above. All receivables and payables among all subsidiary companies
have been eliminated upon consolidation.

Future Advances to DynaMineras
and DynaMéxico from the Company

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



33








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

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

| | 1. | DynaMéxico herein states the facts:
| | -- | -----------------------------------

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

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

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

| | 2. | DynaMéxico herein states further facts:
| | -- | ---------------------------------------

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

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

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

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



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

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

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

| | 5. | Goldgroup Resources currently holds a minority interest in the outstanding
share capital of DynaMéxico. Goldgroup Resources has challenged this level of ownership through the legal system, but this
challenge has also been unsuccessful. The ownership of Goldgroup Resources in the capital of DynaMéxico remains at 20%.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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





34






| | 6. | Since 2005, the exclusive operator of the SJG Project, under contract with (and an affiliate of)
DynaMéxico, is Mineras de DynaResource S.A. de C.V. (“DynaMineras”). This operating control of the SJG Project
has continued uninterrupted since 2005, before Goldgroup Resource contributed any capital investment to DynaMéxico.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | 7. | Since 2000, the President of DynaMéxico holds broad powers
of attorney granted by the shareholders of DynaMéxico. The powers of attorney give the President broad authority to act
for DynaMéxico. The powers of attorney existed before Goldgroup Resources contributed any capital investment to DynaMéxico.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

DynaMéxico’s further clarifying statements
regarding the SJG Project:

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

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

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

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

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

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

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

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

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

ITEM 3.           QUANTITATIVE
AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Not applicable.

Item 4.           Controls
and Procedures

Evaluation of Disclosure Controls and Procedures

The company carried out an evaluation
of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) as of March 31, 2017. 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 not 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.





35






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

Based upon an evaluation conducted
for the period ended March 31, 2017, our Chief Executive Officer and Chief Financial Officer as of March 31, 2017, and as of the
date of this Report, have concluded that as of the end of the period covered by this report, our internal control over financial
reporting was not effective. We have identified two areas which contain material weaknesses. First, the size of the Company and
inherent limitations in companies with limited accounting staff prevent the desired multiple checks and balances prior to processing
daily operations. We need more compensating controls. Though adequate processes are in place and functioning, subsequent reviews
are deemed necessary to identify unauthorized transactions. Secondly; the same inherent current limitation on company staffing
requires specialized outside accounting assistance to implement additional procedures that are effective, and another review to
the process, to ensure that all material information required to be filed in the quarterly report on Form 10-Q has been made known
to them. The material weaknesses identified will be addressed with the implementation of revised internal control procedures to
be developed and approved by the Board of Directors and the Companies external auditors. A material weakness is a deficiency, or
a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility
that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely
basis.

Changes in Internal Controls over Financial Reporting

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









36










PART II

ITEM 1. Legal
Proceedings

Arbitration filed by Goldgroup
/ DynaMéxico Complaint against Goldgroup

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

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

| | (a) | wrongfully using and disseminating confidential information and data
belonging to DynaMéxico;
| | --- | ---------------------------------------------------------------------------------------------

| | (b) | asserting that Goldgroup owns any interest in the San Jose de Gracia
Project in northern Sinaloa, México, rather than accurately disclosing that Goldgroup owns a common shares equity interest
(shareholder’s interest) in DynaMéxico;
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) | improperly disclosing the percentage of common shares equity interest
(shareholder’s interest) owned by Goldgroup in DynaMéxico;
| | --- | --------------------------------------------------------------------------------------------------------------------------------

| | (d) | improperly disclosing or implying
that Goldgroup is the operator of the San Jose de Gracia Project;
| | --- | ---------------------------------------------------------------------------------------------------

| | (e) | attempting to delay, stop, or otherwise impair the financing of,
and further development of, the SJG Project;
| | --- | -------------------------------------------------------------------------------------------------------------

| | (f) | making numerous threats against DynaMéxico management and
officers;
| | --- | -------------------------------------------------------------------

| | (g) | failing to properly disclose that broad powers of attorney for acting
on behalf of DynaMéxico are held by an individual not affiliated with Goldgroup.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | (a) | The AAA must “cease and desist” from the arbitration
proceeding;
| | --- | ----------------------------------------------------------------

| | (b) | The AAA does not have jurisdiction to hear any conflict and/or interpretation
arising from the Earn In/Option Agreement, dated September 1, 2006; and
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) | The AAA does not have jurisdiction to hear disputes arising between
shareholders of DynaMéxico, which disputes do not arise directly and immediately from the Earn In/Option Agreement, dated
September 1, 2006.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

$48 M Damages Award to DynaMéxico

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

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

FIRST:	The action and
litigation based on commercial law filed by DynaMéxico is valid and enforceable, and where Goldgroup and the American Arbitration
Association were found to be in default, was proper.

SECOND:Goldgroup
is declared in breach of its corporate duties, for failure to refrain from claiming direct ownership of 50% of the San José
de Gracia Mining Project.

THIRD:Goldgroup is
condemned and ordered to pay to DynaMéxico the amount of USD $20,000,000 (Twenty Million Dollars) in damages caused by Goldgroup
to DynaMéxico, deriving from its breach of obligations in refraining from claiming direct ownership of 50% of the San Jose
de Gracia Mining Project; which amount should be paid within five days upon execution of this order and resolution.





37






FOURTH:Goldgroup is
condemned and ordered to pay to DynaMéxico the amount of USD $28,280,808.34 (Twenty Eight Million Two Hundred and Eighty
Thousand Eight Hundred and Eight and 34/100 Dollars), for breach of its corporate duty and covenants with regards to the San Jose
de Gracia mining project, as a result of depriving profits from DynaMéxico which DynaMéxico could have earned for
the sale of gold produced and extracted during the years 2013 and 2014; amounts that should be paid within five days upon execution
of this order and resolution.

FIFTH:Goldgroup is
condemned and ordered to pay losses and damages to DynaMéxico, which Goldgroup continues to cause, until full payment of
the above-mentioned amounts has been made, which damages and losses shall be calculated by an expert opinion in a corresponding
legal procedure related to this litigation.

SIXTH: 	Pursuant
to Article 1424 of the Commercial Code of México, the arbitration provision established under clause 8.16 of the Earn In/Option
Agreement, dated as of September 1, 2006, is ineffective and impossible to execute.

SEVENTH:  	This
Court declares that any controversy arising from the Earn In/Option Agreement must be brought and resolved under Mexican Law and
by competent Mexican Courts with proper jurisdiction, in recognition of the waiver and exclusion of the arbitration clause (contained
in the Earn In/Option Agreement) by both parties.

EIGHT: 	This Court
declares that the American Arbitration Association must abstain from hearing arbitration procedure number 50 501 T 00226 14, or
any other ongoing and/or future arbitration proceeding already filed or that may be filed by the co-defendant Goldgroup against
DynaResource.

NINTH:This
Court declares that the American Arbitration Association does not have jurisdiction to hear any conflict and/or interpretation
arising from the Earn In/Option Agreement, dated September 1, 2006.

TENTH:This
Court declares, that the American Arbitration Association does not have jurisdiction to hear disputes arising between shareholders
of DynaMéxico, which disputes do not arise directly and immediately from the Earn In/Option Agreement, dated September
1, 2006.

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

TWELFTH:The expenses
and costs associated with these proceedings are hereby waived.

THIRTEENTH:LET IT
SO BE PUBLISHED. A Copy of this Order and Sentence shall be found in the corresponding record.

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

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

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

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

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





38






Arbitration Ruling

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

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

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

(c) DynaMéxico will
pursue all legal remedies in order to obtain a full dismissal of the Arbitration Ruling.

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

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

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

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

Key Excerpts from the Definitive
Sentence ($48 M Damages Award to DynaMéxico)

SIXTH: Pursuant to Article
1424 of the Commercial Code of México, the arbitration provision established under clause 8.16 of the Earn In/Option Agreement,
dated as of September 1, 2006, is ineffective and impossible to execute.

SEVENTH: This Court declares
that any controversy arising from the Earn In/Option Agreement must be brought and resolved under Mexican Law and by competent
Mexican Courts with proper jurisdiction, in recognition of the waiver and exclusion of the arbitration clause (contained in the
Earn In/Option Agreement) by both parties.

EIGHT: This Court declares
that the American Arbitration Association must abstain from hearing arbitration procedure number 50 501 T 00226 14, or any other
ongoing and/or future ongoing arbitration already filed or to be filed by the defendant Goldgroup, based on the Earn In/Option
Agreement dated September 1, 2006.





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NINTH: This Court declares
that the American Arbitration Association does not have jurisdiction to hear any conflict and/or interpretation arising from the
Earn In/Option Agreement, dated September 1, 2006.

TENTH: This Court declares,
that the American Arbitration Association does not have jurisdiction to hear disputes arising between shareholders of DynaMéxico,
which disputes do not arise directly and immediately from the Earn In/Option Agreement, dated September 1, 2006.

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

DynaUSA and DynaMéxico
filed Motion to Vacate Arbitration Ruling

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

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

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

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

Litigation(s) in México
– Company as Plaintiff

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

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

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

None.

ITEM 3.          Default
Upon Senior Securities

None.

ITEM 4.          Mine
Safety Disclosures

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

ITEM 5.
         Other Information

None.





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ITEM 6.
         Exhibits

Exhibit Number; Name of Exhibit

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



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



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

SIGNATURES

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

DynaResource, Inc.

By /s/ K.W. (“K.D.”) Diepholz



K.W. (“KD”) Diepholz, Chairman / CEO

Date: May 22, 2017









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