Dynaresource, Inc 10-Q for FY2021 Q3

Dynaresource, Inc. (DYNR)

10-Q 2021-11-04 For: 2021-09-30

Added on April 06, 2026

About this 10-Q

Dynaresource, Inc filed this 10-Q on November 4, 2021, covering the quarter ended September 30, 2021 (FY2021 Q3).

Headline figures

Quarter ended September 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $10.47M; up 116.7% from $4.83M a year earlier
Net income: $274.93K; compared with a net loss of $1.41M a year earlier
Diluted EPS: $0.01; down 87.5% from $0.08 a year earlier

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

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 and Plan of Operation	25

ITEM 3.	Quantitative and Qualitative Disclosure About Market Risk	36

ITEM 4.	Controls and Procedures	36

PART II.	OTHER INFORMATION

ITEM 1.	Legal Proceedings	37

ITEM 2.	Unregistered Sales of Securities and Use of Proceeds	44

ITEM 3.	Default Upon Senior Securities	44

ITEM 4.	Mine Safety Disclosures	44

ITEM 5.	Other Information	44

ITEM 6.	Exhibits	45

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

	2021			2020
ASSETS	(Unaudited)
Current Assets
Cash and Cash Equivalents	$	15,832,290		$	1,504,016
Accounts Receivable		965,995			840,743
Inventories		2,032,911			603,967
Foreign Tax Receivable		3,850,468			2,179,914
Appeal Bond		-			1,111,111
Other Current Assets		851,119			578,661
Total Current Assets		23,532,783			6,818,412

Mining Equipment and Fixtures (Net of Accumulated
Depreciation of $115,613 and $113,176)		3,541			5,978
Operating Lease		670,919			735,220
Mining Concessions		4,132,678			4,132,678
Other Assets		163,051			165,380

TOTAL ASSETS	$	28,502,972		$	11,857,668

LIBILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Accounts Payable	$	1,854,688		$	2,274,011
Accrued Expenses		4,766,453			3,385,093
Customer Advances		9,250,000			2,500,000
Derivative Liabilities		6,300,473			2,371,560
Current Portion of Convertible Notes Payable – Series D		3,676,721			-
Current Portion of Convertible Notes Payable – Series I & II		543,279			-
Current Portion of Long-Term Debt		1,956,079			1,984,007
Current Portion of Operating Lease Payable		95,232			82,733
Total Current Liabilities		28,442,925			12,597,404

Convertible Notes Payable – Series D, (Net of Unamortized Discount of $343,279 and $755,214), Less Current Portion		-			3,264,786
Convertible Notes Payable – Series I & II, Less Current Portion		-			543,279
Long Term Debt, Less Current Portion		8,233			97,428
Operating Lease Payable, Less Current Portion		609,375			685,951

TOTAL LIABILITIES		29,060,533			17,188,848

Preferred Stock, Series C, $0.0001 par value, 1,734,992 shares Authorized, issued and outstanding		4,337,480			4,337,480
COMMITMENTS AND CONTINGENCIES		-			-
STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred Stock, Series A, $0.0001 par value, 1,000 shares authorized, issued and outstanding		1			1
Common Stock, $0.01 par value, 40,000,000 shares authorized 17,722,825 and 17,722,825 issued and outstanding		177,228			177,228
Preferred Rights		40,000			40,000
Additional Paid In Capital		50,395,699			50,407,333
Treasury Stock, 495,513 and 516,480 shares		(1,414,628	)		(1,474,486	)
Accumulated Other Comprehensive income		136,106			438,092
Accumulated Deficit		(54,229,447	)		(59,256,828	)
TOTAL STOCKHOLDERS’ DEFICIT		(4,895,041	)		(9,668,660	)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	28,502,972		$	11,857,668

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

THREE MONTHS ENDED SEPTEMBER 30, 2020
Balance, June 30, 2020		1,000	$	1		17,722,825	$	177,228		1	$	40,000	$	50,692,821			616,480		$	(1,759,974	)	$	1,482,497		$	(59,146,076	)	$	-		$	(8,513,503	)

Treasury Stock Issued for Services														(363,917	)		(162,500	)		463,917												100,000

Other Comprehensive Income																							569,589									569,589

Net Income (Loss)																										(1,408,567	)					(1,408,567	)

Balance, September 30, 2020		1,000	$	1		17,722,825	$	177,228		1	$	40,000	$	50,328,904			453,980		$	(1,296,057	)	$	2,052,086		$	(60,554,643	)	$	-		$	(9,252,481	)

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	$	-		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, 2020
Balance December 31, 2019		1,000	$	1		17,722,825	$	177,228		1	$	40,000	$	56,622,159			778,980		$	(2,223,891	)	$	325,841		$	(53,952,594	)	$	(5,723,663	)	$	(4,734,919	)

Treasury Stock Issued for Services														(363,917	)		(162,500	)		463,917												100,000

Other Comprehensive Income																							1,726,245						(11,669	)		1,714,576

Net Income (Loss)																										(6,602,049	)		(61,589	)		(6,663,638	)

Elimination of Non-Controlling Interest														(5,565,421	)														5,796,921			231,500

Balance, September 30, 2020		1,000	$	1		17,722,825	$	177,228		1	$	40,000	$	50,692,821			616,480		$	(1,759,974	)	$	2,052,086		$	(60,554,643	)	$	-		$	(9,352,481	)

NINE MONTHS ENDED SEPTEMBER 30, 2021
Balance December 31, 2020		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	)

	2021			2020
CASH FLOWS FROM OPERATING ACTIVITES:
Net income (Loss)	$	5,027,381		$	(6,663,638	)
Adjustments to reconcile net loss to cash used in operating activities
Change in Derivatives		3,928,913			2,556,767
Depreciation and Amortization		2,437			2,437
Amortization of Loan Discount		411,935			205,967
Stock issued for Services		48,224			100,000
Non-Dilution Stock Issuance		-			4,427
Change in Operating Assets and Liabilities
Accounts Receivable		(125,252	)		120,012
Inventories		(1,428,944	)		446,757
Foreign Tax Receivable		(1,670,554	)		(241,708	)
Appeal Bond		1,111,111			(1,111,111	)
Operating Lease Assets		64,301			57,520
Other Assets		(270,129	)		(224,689	)
Accounts Payable		(419,323	)		(416,589	)
Accrued Expenses		1,381,360			883,010
Customer Advances		6,750,000			-
Lease Liabilities		(64,077	)		(53,083	)
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES		14,747,383			(4,333,881	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Advances from Stockholders
Proceeds from Borrowing		-			4,020,000
Payments of Convertible Notes		-			(112,500	)
Payments of Long-Term Debt		(47,936	)		(40,085	)
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES		(47,936	)		3,867,415

Effects of Foreign Exchange		(371,173	)		1,382,926

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		14,328,274			916,460
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		1,504,016			354,572
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	15,832,290			1,271,032

SUPPLEMENTAL DISCLOSURES
Cash Paid for Interest	$	391,436		$	89,396
Cash Paid for Income Taxes	$	-		$	-
NON-CASH TRANSACTION Accrued Interest Rolled into Notes Payable	$	-		$	23,934

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

	2021		2020

Mined Tonnage	$	1,864,794	$	555,608
Gold-Silver Concentrates		168,117		48,359
Total Inventories	$	2,032,911	$	603,967

	2021			2020

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		(115,613	)		(113,176	)
Total Property	$	3,541		$	5,978

	Sept. 30, 2021			December 31, 2020
Prior Year	$	13,473,000		$	13,780,490
Tax (Expense) Benefit for Current Year		(2,933,585	)		953,120
Expiration of NOL Carryforward Period		-			(1,260,610	)
Total Deferred Tax Asset		10,539,415			13,473,000
Less Valuation Allowance		(10,539,415	)		(13,473,000	)
Net Deferred Tax Asset	$	-		$	-

	2021			2020
United States	$	(9,600,150	)	$	(4,316,690	)
Foreign		14,627,531			(2,346,948	)
	$	5,027,381		$	(6,663,638	)
The expense (benefit) for taxes for the nine months ended September 30, 2021 and 2020 consist of the following: Current

Current
Federal	$	-		$	-
State		-			-
Foreign		-			-
	$	-		$	-
Deferred and Other
Federal	$	(1,094,279	)	$	(363,489	)
State		-			-
Foreign		4,027,864			(586,737	)
		2,933,585			(950,226	)

Total Tax Expense (Benefit)		2,933,585			(950,226	)
Change in Valuation Allowance		(2,933,585	)		950,226
Net Tax Expense (Benefit)	$	-		$	-

	2021			2020
Tax Expense (Benefit) at Statutory Rate	$	1,055,750		$	(1,399,364	)
Foreign Tax Rate Differential		1,316,478			(266,546	)
Permanent Differences
Stock Issued for Services		10,127			25,000
Change in Derivative Liability		825,072			639,192
Amortization of Loan Discount		86,507			51,492
Timing Differences
Depreciation & Capitalized Assets		173,409
Sales & Accounts Receivable		(128,875	)
Inventory and COGS		(404,929	)
Other		46
Change in Valuation Allowance		(2,933,585	)		950,226
Provision for Income Tax Expense (Benefit)	$	-		$	-

United States Expiring 2029 through	$	18,500,000
United States indefinite limited to 80% of NOL		11,300,000
Foreign expiring from 2021 to 2030		14,000,000
Total	$	43,800,000

	(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. One half of the principal amount of the Golden Post Note, or $1,250,000, has been fully funded in accordance with an agreed-upon draw summary and budget. The balance of the principal amount will also be funded in accordance with agreed-upon draw summaries and the budget. 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; and

	(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 have been fully funded. 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 Senior Convertible Preferred Stock (“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 agreed to call a special meeting of Company stockholders, to be held not later than July 14, 2020, 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 properly called and held on July 13, 2020, whereby Company stockholders confirmed approval for each item referenced in item 4 above.

	4.	Compensatory Issuances. 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 Shares. 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 (“Certificate of Increase”).

	Preferred Series C

Carrying Value, December 31, 2019	$	4,333,053
Issuances at Fair Value, Net of Issuance Costs		-
Bifurcation of Derivative Liability		-
Relative Fair Value of Warrants – Preferred Stock Discount		4,427
Accretion of Preferred Stock to Redemption Value		-
Carrying Value, December 31, 2020		4,337,480

Bifurcation of Derivative Liability		-
Issuances at Fair Value, Net of Issuance Costs		-
Relative Fair Value of Warrants – Preferred Stock Discount		-
Accretion of Preferred Stock to Redemption Value		-
Carrying Value, September 30, 2021	$	4,337,480

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Intrinsic Value
Balance at December 31, 2019		2,166,527	$	2.45		0.51
Granted		3,429,467	$	1.30		4.94		-
Exercised		-	$	-
Forfeited		2,166,527	$	-				-
Balance at December 31, 2020		3,429,467	$	1.30		4.40
Granted		-	$	-				-
Exercised		-	$	-
Forfeited		-	$	-				-
Balance at September 30, 2021		3,429,467	$	1.30		3.65
Exercisable at September 30, 2021		3,429,467	$	1.30		3.65		-

	Period Ended
	Sept. 30, 2021
Operating Lease – Office Lease	$	64,414
Operating Lease – Ground Lease		66,506
Short Term Lease Costs		8,664
Variable Lease Costs		-
TOTAL	$	139,584

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

Weighted Average Remaining Lease Term (Years) – Operating Leases		11.00
Weighted Average Discount Rate – Operating Leases		12.50	%

Estimated future minimum lease obligations are as follow for the years ending September 30:
YEAR
2022	$	178,925
2023		123,773
2024		96,896
2025		99,803
2026		102,797
Thereafter		684,885
Total	$	1,287,079
Less Imputed Interest		(582,472	)
OPERATING LEASE PAYABLE	$	704,607

	2021			2020
Annual volatility rate		156	%		156	%
Risk free rate		0.25	%		0.13	%
Remaining Term	0.75 years			1.50 years
Fair Value of common stock	$	2.00		$	0.78

Period Ended	2021		2020
Fair value of derivative (stock), beginning of period	$	601,313	$	37,038
Change in fair value of derivative		1,038,274		276,547
Fair value of derivative on the date of issuance		-		287,728
Fair value of derivative (stock), end of period	$	1,639,587	$	601,313

	2020
Beginning balance	$	(5,723,663	)
Operating income (loss)		(61,589	)
Share of Other Comprehensive Income (loss)		(11,669	)
Elimination of Non-Controlling Interest		5,796,921
Ending balance	$	-

The following is a summary of the transaction during the nine and twelve months ended September 30, 2021 and December 31, 2020:

Balance December 31, 2019	$	2,272,431
Exchange Rate Adjustment		(124,352	)
2020 Principal Payments		(66,644	)
Balance December 31, 2020		2,081,435
Exchange Rate Adjustment		(69,187	)
2021 Principal Payments		(47,936	)
Balance September 30, 2021	$	1,964,312

At September 30, 2021 future maturities of notes payable are as follows:

Year Ending September 30:
2022	$	1,956,079
2023		8,233
	$	1,964,312

	·	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;
	·	At May 1, 2021, the RCL increased to an amount equal to 80% of prior 3 month’s revenue;
	·	Each successive month, the RCL shall be adjusted according to the company’s prior 3 month’s 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.

Claim Name	Claim Number	Staking date	Expiry	Hectares	Taxes / ha (pesos)
AMPL. SAN NICOLAS	183815	22/11/1988	21/11/2038	17.4234	111.27
AMPL. SANTA ROSA	163592	30/10/1978	29/10/2028	25.0000	111.27
BUENA VISTA	211087	31/03/2000	30/03/2050	17.9829	63.22
EL CASTILLO	214519	02/10/2001	01/10/2051	100.0000	31.62
EL REAL	212571	07/11/2000	07/11/2052	2038.0000	31.62
EL REAL 2	216301	30/04/2002	29/04/2052	280.1555	31.62
FINISTERRE FRACC. A	219001	28/01/2003	27/01/2053	18.7856	31.62
FINISTERRE FRACC. B	219002	28/01/2003	27/01/2053	174.2004	31.62
GUADALUPE	189470	05/12/1990	04/12/2040	7.0000	111.27
LA GRACIA I	215958	02/04/2002	01/04/2052	300.0000	31.62
LA GRACIA II	215959	02/04/2002	01/04/2052	230.0000	31.62
LA LIBERTAD	172433	15/12/1983	14/12/2033	97.0000	111.27
LA NUEVA AURORA	215119	08/02/2002	07/02/2052	89.3021	31.62
LA NUEVA ESPERANZA	226289	06/12/2005	05/12/2055	40.0000	7.6
LA UNION	176214	26/08/1985	25/08/2035	4.1098	111.27
LOS TRES AMIGOS	172216	27/10/1983	26/10/2033	23.0000	111.27
MINA GRANDE	163578	10/10/1978	09/10/2028	6.6588	111.27
NUEVO ROSARIO	184999	13/12/1989	12/12/2039	32.8781	111.27
PIEDRAS DE LUMBRE 2	215556	05/03/2002	04/03/2052	34.8493	31.62
PIEDRAS DE LUMBRE 3	218992	28/01/2003	27/01/2053	4.3098	31.62
PIEDRAS DE LUMBRE No.4	212349	29/09/2000	28/09/2050	0.2034	63.22
PIEDRAS DE LUMBRE UNO	215555	05/03/2002	04/03/2052	40.2754	31.62
SAN ANDRES	212143	31/08/2000	30/08/2050	385.0990	63.22
SAN JOSÉ	208537	24/11/1998	23/11/2048	27.0000	111.27
SAN MIGUEL (1)	183504	26/10/1988	25/10/2038	7.0000	111.27
SAN NICOLAS	163913	14/12/1978	13/12/2028	55.5490	111.27
SAN SEBASTIAN	184473	08/11/1989	07/11/2039	40.0000	111.27
SANTA MARIA	218769	17/01/2003	16/01/2053	4.2030	31.62
SANTA ROSA	170557	13/05/1982	12/05/2032	31.4887	111.27
SANTO TOMAS	187348	13/08/1986	12/08/2036	312.0000	111.27
TRES AMIGOS 2	212142	31/08/2000	30/08/2050	54.4672	63.22
FINISTERRE 4	231166	18/01/2008	17/01/2058	2142.1302	5.08
FRANCISCO ARTURO	230494	06/09/2007	27/03/2057	3,279.56
TOTAL				9,920.00

Mill Expansion:	$	2,506,000
Tailings Pond Expansion		265,000
Machinery and Equipment		1,134,000
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
SIG Mining Concessions		1,407,000
Surface Rights and Permitting		468,000
Debt Retirement		484,000
Legal Fees		3,247,000
Total	$	15,045,000

	a)	Wrongfully using and disseminating confidential information and data belonging to DynaMéxico;
	b)	Asserting that Goldgroup owns any interest in the San Jose de Gracía 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 Gracía 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.

	(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.

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 Gracía 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 Gracía Mining Project; which amount should be paid within five days upon execution of this order and resolution.

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 Gracía 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 Ear 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 records.

	1.	The $48,280,808.34 USD damages award (dated October 05, 2015) in favor of DynaMéxico and against Goldgroup Resources Inc. is now Final. Goldgroup Resources’ challenge(s) to that award have been fully denied and the damages award is Final.

	2.	The Lien against the Shares of DynaMéxico owned by Goldgroup Resources Inc. (established October 5, 2016, the “Lien against Goldgroup Shares”) is now fully confirmed, Final, and enforceable.

	3.	Ownership of the shares of DynaMéxico currently held by Goldgroup Resources (currently representing 20% of the outstanding shares of DynaMéxico) are subject to the Lien against Goldgroup Shares.

	a)	On December 5, 2020, DynaUSA and DynaMéxico filed an Original Petition for Recognition of the $48M USD Foreign Judgment in US. District Court in Dallas County Texas.

	b)	On February 4, 2021, DynaUSA and DynaMéxico filed a First Amended Petition for Recognition of the $48M USD Foreign Judgment in US. District Court, 134th Judicial District, Dallas County, Texas.

	(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. remained in full force and effect as issued. DynaMéxico was 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).