Dynaresource, Inc 10-Q for FY2022 Q3

Dynaresource, Inc. (DYNR)

10-Q 2022-11-02 For: 2022-09-30

Added on April 06, 2026

About this 10-Q

Dynaresource, Inc filed this 10-Q on November 2, 2022, covering the quarter ended September 30, 2022 (FY2022 Q3).

Headline figures

Quarter ended September 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $8.03M; down 23.3% from $10.47M a year earlier
Net loss: $1.58M; compared with net income of $274.93K a year earlier
Diluted EPS: -$0.08; compared with $0.01 a year earlier

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Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock	DYNR	OTC

Large Accelerated Filer	☐	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☒

PART I.	FINANCIAL STATEMENTS

ITEM 1.	Unaudited Financial Statements

	Notes to Unaudited Financial Statements	7

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	29

ITEM 4.	Controls and Procedures	29

PART II.	OTHER INFORMATION

ITEM 1.	Legal Proceedings	30

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30

ITEM 3.	Defaults Upon Senior Securities	30

ITEM 4.	Mine Safety Disclosures	31

ITEM 5.	Other Information	31

ITEM 6.	Exhibits	31

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

	2022			2021
ASSETS
Current Assets
Cash and Cash Equivalents	$	16,488,686		$	15,719,238
Accounts Receivable		942,734			577,118
Inventories		2,943,112			2,110,203
Foreign Tax Receivable		8,244,016			4,742,180
Other Current Assets		1,009,020			667,742
Total Current Assets		29,627,568			23,816,481

Mining Equipment and Fixtures (Net of Accumulated
Depreciation of $118,862 and $116,425)		292			2,729
Operating Lease		575,985			648,381
Mining Concessions		4,132,678			4,132,678
Other Assets		163,298			162,174

TOTAL ASSETS	$	34,499,821		$	28,762,443

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Accounts Payable	$	2,261,299		$	1,275,679
Accrued Expenses		5,481,107			5,440,204
Customer Advances		7,375,000			9,250,000
Derivative Liabilities		1,905,078			3,898,914
Convertible Notes Payable - Series I & II		-			543,279
Installment Notes Payable		1,914,086			1,962,525
Current Portion of Operating Lease Payable		50,461			98,169
Total Current Liabilities		18,987,031			22,468,770

Operating Lease Payable, Less Current Portion		558,914			587,782

TOTAL LIABILITIES		19,545,945			23,056,552
TEMPORARY EQUITY
Series C Senior Convertible Preferred Stock, $0.0001 par value, 1,734,992 shares designated, issued and outstanding		4,337,480			4,337,480
Series D Senior Preferred Stock, $0.0001 par value, 3,000,000 shares designated, 760,000 shares issued and outstanding		1,520,000			1,520,000

COMMITMENTS AND CONTINGENCIES		-			-
STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred Stock, Series A, $0.0001 par value, 1,000 shares designated, issued and outstanding		1			1
Common Stock, $0.01 par value, 40,000,000 shares authorized, 20,746,654 and 18,091,293 issued and outstanding		207,467			180,913
Preferred Rights		40,000			40,000
Additional Paid In Capital		56,022,782			50,632,400
Treasury Stock, 12,180 shares		(34,773	)		(34,773	)
Accumulated Other Comprehensive Income		(421,708	)		(247,665	)
Accumulated Deficit		(46,717,373	)		(50,722,465	)
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)		9,096,396			(151,589	)

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	34,499,821		$	28,762,443


	Preferred A				Common				Preferred		Preferred		Paid In			Treasury			Treasury			Other Comp			Accumulated
	Shares		Amount		Shares		Amount		Rights		Amount		Capital			Shares			Amount			Income			Deficit			Totals

THREE MONTHS ENDED SEPTEMBER 30, 2021
Balance, June 30, 2021		1,000	$	1		17,722,825	$	177,228		1	$	40,000	$	50,407,333			516,480		$	(1,474,486	)	$	66,685		$	(54,504,374	)	$	(5,287,613	)

Treasury Stock Issued for Services														(11,634	)		(20,967	)		59,858									48,224

Other Comprehensive Income																							69,421						69,421

Net Income (Loss)																										274,927			274,927

Balance, September 30, 2021		1,000	$	1		17,722,825	$	177,228		1	$	40,000	$	50,395,699			495,513		$	(1,414,628	)	$	136,106		$	(54,229,447	)	$	(4,895,041	)

THREE MONTHS ENDED SEPTEMBER 30, 2022
Balance, June 30, 2022		1,000	$	1		20,746,654	$	207,467		1	$	40,000	$	56,022,782			12,180		$	(34,773	)	$	(236,649	)	$	(45,138,642	)	$	10,860,186

Other Comprehensive Income																							(185,059	)					(185,059	)

Net Income (Loss)																										(1,578,731	)		(1,578,731	)

Balance, September 30, 2022		1,000	$	1		20,746,654	$	207,467		1	$	40,000	$	56,022,782			12,180		$	(34,773	)	$	(421,708	)	$	(46,717,373	)	$	9,096,396

NINE MONTHS ENDED SEPTEMBER 30, 2021
Balance January 1, 2021		1,000	$	1		17,722,825	$	177,228		1	$	40,000	$	50,407,333			516,480		$	(1,474,486	)	$	438,092		$	(59,256,828	)	$	(9,668,660	)

Treasury Stock Issued for Services														(11,634	)		(20,967	)		59,858									48,224

Other Comprehensive Income																							(301,986	)					(301,986	)

Net Income (Loss)																										5,027,381			5,027,381

Balance, September 30, 2021		1,000	$	1		17,722,825	$	177,228		1	$	40,000	$	50,395,699			495,513		$	(1,414,628	)	$	136,106		$	(54,229,447	)	$	(4,895,041	)

NINE MONTHS ENDED SEPTEMBER 30, 2022
Balance January 1, 2022		1,000	$	1		18,091,293	$	180,913		1	$	40,000	$	50,632,400			12,180		$	(34,773	)	$	(247,665	)	$	(50,722,465	)	$	(151,589	)

Stock Warrant Exercised						2,655,361		26,554						5,390,382															5,416,936

Other Comprehensive Income																							(174,043	)					(174,043	)

Net Income (Loss)																										4,005,092			4,005,092

Balance, September 30, 2022		1,000	$	1		20,746,654	$	207,467		1	$	40,000	$	56,022,782			12,180		$	(34,773	)	$	(421,708	)	$	(46,717,373	)	$	9,096,396

	2022			2021
CASH FLOWS FROM OPERATING ACTIVITES:
Net income	$	4,005,092		$	5,027,381
Adjustments to reconcile net income to cash provided by (used in) operating activities
Change in Derivatives		(1,993,836	)		3,928,913
Depreciation and Amortization		2,437			2,437
Amortization of Loan Discount		-			411,935
Stock Issued for Services		-			48,224
Change in Operating Assets and Liabilities
Accounts Receivable		(365,616	)		(125,252	)
Inventories		(832,909	)		(1,428,944	)
Foreign Tax Receivable		(3,501,836	)		(1,670,554	)
Other Assets		(342,402	)		(270,129	)
Operating Lease Assets		72,396			64,301
Appeal Bond		-			1,111,111
Accounts Payable		985,620			(419,323	)
Accrued Expenses		40,903			1,381,360
Customer Advances		(1,875,000	)		6,750,000
Operating Lease Liabilities		(76,576	)		(64,077	)
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES		(3,881,727	)		14,747,383

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Exercise of Stock Warrants		5,416,936			-
Payments of Convertible Notes Payable		(543,279	)		-
Payments of Notes Payable		(83,258	)		(47,936	)
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES		4,790,399			(47,936	)

Effects of Foreign Currency Exchange		(139,224	)		(371,173	)

NET INCREASE IN CASH AND CASH EQUIVALENTS		769,448			14,328,274
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		15,719,238			1,504,016
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	16,488,686			15,832,290

SUPPLEMENTAL DISCLOSURES
Cash Paid for Interest	$	62,729		$	391,436
Cash Paid for Income Taxes	$	-		$	-

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

	Nine Months Ended Sept. 30, 2022		Nine Months Ended Sept. 30, 2021
Net income (loss) attributable to common shareholders	$	3,829,368	$	4,897,257

Weighted average number of common shares outstanding, Basic		19,005,593		17,722,825

Diluted weighted average number of common shares outstanding		19,005,593		17,722,825

Basic earnings per share	$	0.20	$	0.28

Diluted earnings per share	$	0.20	$	0.28

	2022		2021
Mined Tonnage	$	2,866,094	$	2,042,633
Gold-Silver Concentrates		77,018		67,570
Total Inventories	$	2,943,112	$	2,110,203

	2022			2021
Leasehold improvements	$	9,340		$	9,340
Office equipment		31,012			31,012
Office furniture and fixtures		78,802			78,802
Sub-total		119,154			119,154
Less: Accumulated depreciation		(118,862	)		(116,425	)
Total Property	$	292		$	2,729

		(a)	A convertible promissory note (the “Golden Post Note”) payable to Golden Post in the principal amount of $2,500,000, bearing interest at 10%, and maturing two years from the date of execution. The Golden Post Note is convertible, at the option of Golden Post, into shares of Series D Senior Convertible Preferred Stock (the “Series D Preferred”) at a conversion price of $2.00 per share; and

		(b)	A common stock purchase warrant (the “2020 Warrant”) for the purchase of 783,976 shares of the Company’s common stock, at an exercise price of $0.01 per share, and maturing on the 10-year anniversary of the date of issuance. The 2020 Warrant contains anti-dilution provisions.

		(a)	Convertible promissory notes (the “Remaining Notes”) in the aggregate principal amount of $1,400,000, bearing interest at 10%, and maturing two years from the date of issuance. The Remaining Notes are convertible, at the option of each individual Remaining Purchaser, into shares of Series D Preferred at a conversion price of $2.00 per share; and

		(b)	Common stock purchase warrants (the “Remaining Purchasers Warrants”) for the purchase of an aggregate of 439,026 shares of the Company’s common stock, at an exercise price of $0.01 per share, and maturing on the 10-year anniversary of the date of issuance. The Remaining Purchasers Warrants contain anti-dilution provisions.

	3.	As part of the transaction contemplated by the NPA, the Company executed an Amended and Restated Registration Rights Agreement pursuant to which Golden Post may require the Company to register the shares of common stock which may be issued upon (i) the conversion of the Series C Preferred, (ii) the conversion of the Series D Preferred, and (iii) the shares of common stock issuable upon the exercise of the 2015 Warrant, the 2020 Warrant, and a compensatory warrant issued to the Lead Purchaser on May 13, 2020 (described below under the heading “Compensatory Issuances”), including any additional shares of common stock issuable pursuant to anti-dilution provisions of such securities.

	4.	Pursuant to the transaction contemplated by the NPA, the Company held a special meeting of Company stockholders, to solicit stockholder approval of (a) an amendment of the Company’s certificate of incorporation to increase the number of authorized shares of common stock from 25,000,000 shares to 40,000,000 shares, and (b) an amendment of the Certificate of Designations of the Series C Preferred, in order to (a) extend the maturity date of the Series C Preferred by an additional two (2) years, (ii) add an equity cap in respect of the conversion of Series C Preferred into common stock of the Company, and (iii) add certain restrictions on the ability of the Company to issue Series C Preferred. The special meeting was held on July 13, 2020, and Company stockholders approved each item referenced above.

5.	On May 13, 2020, one business day prior to the NPA, the Company issued to the Lead Purchaser the following: (i) a common stock purchase warrant for 2,306 shares, at an exercise price of $0.01 per share, and maturing on the 7-year anniversary of the date of issuance (the “Compensatory Warrant”); and (ii) 1,771 shares of Series C Preferred. These issuances were occasioned by the Company’s obligations under the Securities Purchase Agreement dated as of May 6, 2015.

6.	In order to accommodate the issuance of the additional 1,771 shares of Series C Preferred, on May 13, 2020 the Company filed with the Secretary of State of Delaware a Certificate of Increase of Series C Senior Convertible Preferred Stock, to increase the number of shares of preferred stock designated as Series C Preferred from 1,733,221 shares to 1,734,992 shares.

7.		Also on May 13, 2020, the Company filed with the Secretary of State of Delaware a Certificate of Designations of the Powers, Preferences and Relative, Participating, Optional and Other Special Rights of Preferred Stock and Qualifications, Limitations and Restrictions thereof of Series D Senior Convertible Preferred Stock, contemplating the authorization of 3,000,000 shares of Series D Preferred.

	Period Ended
	Sept. 30, 2022
Operating Lease - Office Lease	$	65,769
Operating Lease - Ground Lease		68,501
Short Term Lease Costs		12,037
Variable Lease Costs		-
TOTAL	$	146,307

Weighted average remaining lease term and weighted average discount rate are as follows:

Weighted Average Remaining Lease Term (Years) - Operating Leases		10.12
Weighted Average Discount Rate - Operating Leases		12.50	%

Estimated future minimum lease obligations are as follow for the years ending September 30:

YEAR
2022	$	121,033
2023		94,074
2024		96,896
2025		99,803
2026		102,797
Thereafter		684,885
Total	$	1,199,488
Less Imputed Interest		(590,113	)
OPERATING LEASE PAYABLE	$	609,375

	2022			2021
Annual volatility rate		0	%		147	%
Risk free rate		4.22	%		0.73	%
Remaining Term	0.00 years			0.50 years
Fair Value of common stock	$	2.14		$	1.75

Balance December 31, 2020	$	2,081,435
Exchange Rate Adjustment		(57,504	)
2021 Principal Payments		(61,406	)
Balance December 31, 2021		1,962,525
Exchange Rate Adjustment		34,819
2022 Principal Payments		(83,258	)
Balance September 30, 2022	$	1,914,086

	·	The Company will deliver 100% of its produced concentrates to the buyer and provider of the RCL, through December 31, 2022; unless extended by the Company;
	·	An initial RCL was established by buyer in the amount of $3.75M USD;
	·	On May 1, 2021, the RCL increased to an amount equal to 80% of the prior 3 months’ revenue;
	·	Each successive month, the RCL shall be adjusted according to the Company’s prior 3 months’ revenue;
	·	The RCL shall never be less than $3.75M USD;
	·	The RCL will be interest free for 45 days;
	·	The RCL is to be repaid through deliveries of concentrates or cash within 120 days;

(1)	$2.5M advance on February 4, 2021. Settled on March 26, 2021
(2)	$3.75M advance on March 30, 2021. Settled on May 12, 2021
(3)	$3.75M advance on May 12, 2021. Settled on June 16, 2021
(4)	$6.75M advance on June 18, 2021. Settled on August 5, 2021
(5)	$8.25M advance on August 9, 2021. Settled on September 27, 2021
(6)	$8.25M advance on September 29, 2021. Settled on November 17, 2021
(7)	$8.25M advance on November 19, 2021. Settled on December 20, 2021
(8)	$9.25M advance on December 30, 2021. Settled on February 25, 2022
(9)	$8.175M advance on February 25, 2022. Settled on March 30, 2022
(10)	$7.875M advance on March 30, 2022. Settled on May 13, 2022
(11)		$8.875M advance on May 19, 2022. Settled on June 27, 2022
(12)		$8.75M advance on June 28, 2022. Settled on August 15, 2022
(13)			$7.80M advance on August 19, 2022. Settled on September 28, 2022
(14)			$7.375M advance on September 29, 2022.

Mill Expansion:	$	5,893,000
Tailings Pond Expansion		1,464,000
Machinery and Equipment		2,143,000
Mining Camp Expansion		146,000
Medical Facility		126,000
Mine Development - San Pablo		2,748,000
Mine Expansion - San Pablo East		915,000
Mine Expansion - Tres Amigos		1,599,000
Exploration Drilling		2,028,000
SIG Mining Concessions		2,014,000
Surface Rights and Permitting		792,000
Debt Retirement		3,528,000
Legal Fees		4,043,000
Total	$	27,439,000

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.

	DynaResource, Inc.

Date: November 1, 2022	By:	/s/ K.W. (“K.D.”) Diepholz
		K.W. (“KD”) Diepholz,
		Chairman / CEO

/s/ K.D. Diepholz		/s/ Rene LF Mladosich
K. D. Diepholz, Chairman		Rene LF Mladosich

/s/ Dr. Jose Vargas Lugo		/s/ Dale G. Petrini
Dr. Jose Vargas Lugo		Dale G. Petrini

/s/ John C. Wasserman		/s/ Phillip Rose
John C. Wasserman		Phillip Rose

November 1, 2022
Dated

1.	I have reviewed this report on Form 10-Q of DYNARESOURCE, INC.;

1.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

1.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15(e) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusion about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

Date: November 1, 2022

/s/ K.W. (“K.D.”) Diepholz
K.W. (“KD”) Diepholz;
Chairman and Chief Executive Officer