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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934 |
From the transition period ____________ to ___________.
Commission File Number
(Exact name of small business issuer as specified in its charter) |
| ||
(State or other jurisdiction of incorporation or organization) |
| (IRS Employer Identification No.) |
(Address of principal executive offices)
(
(Issuer’s telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
OTC |
Indicate by check mark whether the registrant (1) has 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:
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐
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 | ☐ |
☐ | Smaller Reporting Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act. Yes ☐ No ☒
Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of June 30, 2022, there were
TABLE OF CONTENTS
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| 7 |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
| 26 |
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| 29 |
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| 29 |
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| 31 |
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| 32 |
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| 32 |
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CERTIFICATIONS
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| 2 |
| Table of Contents |
DYNARESOURCE, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2022, AND DECEMBER 31, 2021
(Unaudited)
|
| 2022 |
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| 2021 |
| ||
ASSETS |
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Current Assets |
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Cash and Cash Equivalents |
| $ |
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| $ |
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Accounts Receivable |
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Inventories |
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Foreign Tax Receivable |
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Other Current Assets |
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Total Current Assets |
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Mining Equipment and Fixtures (Net of Accumulated |
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Depreciation of $ |
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Operating Lease |
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Mining Concessions |
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Other Assets |
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TOTAL ASSETS |
| $ |
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| $ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |
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Current Liabilities: |
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Accounts Payable |
| $ |
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| $ |
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Accrued Expenses |
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Customer Advances |
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Derivative Liabilities |
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Convertible Notes Payable - Series I II |
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Installment Notes Payable |
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Current Portion of Operating Lease Payable |
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Total Current Liabilities |
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Operating Lease Payable, Less Current Portion |
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TOTAL LIABILITIES |
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TEMPORARY EQUITY |
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Series C Senior Convertible Preferred Stock, $ |
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Series D Senior Preferred Stock, $ |
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COMMITMENTS AND CONTINGENCIES |
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STOCKHOLDERS’ EQUITY (DEFICIT) |
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Preferred Stock, Series A, $ |
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Common Stock, $ |
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Preferred Rights |
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Additional Paid In Capital |
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Treasury Stock, |
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Accumulated Other Comprehensive Income |
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| ( | ) |
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Accumulated Deficit |
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TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) |
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| ( | ) | |
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |
| $ |
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| $ |
| ||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 3 |
| Table of Contents |
DYNA RESOURCE, INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 AND 2021
(Unaudited)
|
| Three Months June 30, 2022 |
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| Three Months June 30, 2021 |
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| Six Months June 30, 2022 |
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| Six Months June 30, 2021 |
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REVENUES |
| $ |
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| $ |
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| $ |
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| $ |
| ||||
COSTS AND EXPENSES OF MINING OPERATIONS |
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Production Costs Applicable to Sales |
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Mine Production Costs |
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Mine Exploration Costs |
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Facilities Expansion Costs |
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Exploration Drilling |
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Camp, Warehouse and Facilities |
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Transportation |
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Property Holding Costs |
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General and Administrative |
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Depreciation and Amortization |
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Total Operating Expenses |
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NET OPERATING INCOME (LOSS) |
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OTHER INCOME (EXPENSE) |
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Foreign Currency Gains (Losses) |
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Interest Expense |
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| ( | ) |
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Derivatives Adj. Mark-to-Market Gain (Loss) |
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Arbitration Award Expense |
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Other Income (Expense) |
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Total Other Income (Expense) |
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NET INCOME BEFORE TAXES |
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INCOME TAXES |
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NET INCOME |
| $ |
|
| $ |
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| $ |
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| $ |
| ||||
DEEMED DIVIDEND FOR SERIES C PREFERRED |
| $ | ( | ) |
|
| ( | ) |
|
| ( | ) |
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| ( | ) |
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS |
| $ |
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| $ |
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| $ |
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| $ |
| ||||
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EARNINGS PER SHARE DATA ATTRIBUTABLE TO THE EQUITY HOLDERS OF DYNARESOURCE, INC: |
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Basic Earnings per Common Share |
| $ |
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| $ |
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| $ |
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| $ |
| ||||
Diluted Earnings per Common Share |
| $ |
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| $ |
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| $ |
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| $ |
| ||||
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Weighted Average Shares Outstanding, Basic |
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Weighted Average Shares Outstanding, Diluted |
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OTHER COMPREHENSIVE INCOME (LOSS) |
|
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Foreign Currency Exchange Gains (Losses) |
|
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| ( | ) |
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| ( | ) | ||
TOTAL OTHER COMPREHENSIVE INCOME (LOSS) |
|
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| ( | ) |
|
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| ( | ) | ||
TOTAL COMPREHENSIVE INCOME |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 4 |
| Table of Contents |
DYNARESOURCE, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THREE AND SIX MONTHS ENDED JUNE 30, 2022, AND 2021
(Unaudited)
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| Preferred A |
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| Common |
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| Preferred |
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| Preferred |
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| Paid In |
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| Treasury |
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| Treasury |
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| Other Comp |
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| Accumulated |
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| ||||||||||||||||||
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Rights |
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| Amount |
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| Capital |
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| Shares |
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| Amount |
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| Income |
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| Deficit |
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| Totals |
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THREE MONTHS ENDED JUNE 30, 2021 |
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Balance, March 31, 2021 |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
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| $ | ( | ) |
| $ | ( | ) | |||||||||
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Other Comprehensive Income |
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Net Income (Loss) |
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Balance, June 30, 2021 |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
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| $ | ( | ) |
| $ | ( | ) | |||||||||
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THREE MONTHS ENDED JUNE 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2022 |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ |
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Stock Warrant Exercised |
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Other Comprehensive Income |
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Net Income (Loss) |
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Balance, June 30, 2022 |
|
|
|
| $ | - |
|
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| $ |
|
|
|
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| $ |
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| $ |
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| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ |
| ||||||||
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SIX MONTHS ENDED JUNE 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance January 1, 2021 |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
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| $ | ( | ) | |||||||||
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Other Comprehensive Income |
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Net Income (Loss) |
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Balance, June 30, 2021 |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
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SIX MONTHS ENDED JUNE 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance January 1, 2022 |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | ( | ) |
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| $ | ( | ) | ||||||||
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Stock Warrant Exercised |
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Other Comprehensive Income |
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Net Income (Loss) |
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Balance, June 30, 2022 |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ |
| |||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 5 |
| Table of Contents |
DYNARESOURCE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2022, AND 2021
(Unaudited)
|
| 2022 |
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| 2021 |
| ||
CASH FLOWS FROM OPERATING ACTIVITES: |
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| ||
Net income |
| $ |
|
| $ |
| ||
Adjustments to reconcile net income to cash used in operating activities |
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Change in Derivatives |
|
| ( | ) |
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| |
Depreciation and Amortization |
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Amortization of Loan Discount |
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| ||
Change in Operating Assets and Liabilities |
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Accounts Receivable |
|
| ( | ) |
|
| ( | ) |
Inventories |
|
| ( | ) |
|
| ( | ) |
Foreign Tax Receivable |
|
| ( | ) |
|
| ( | ) |
Operating Lease Assets |
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| ||
Other Assets |
|
| ( | ) |
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| |
Accounts Payable |
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| ( | ) | |
Accrued Expenses |
|
| ( | ) |
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| |
Customer Advances |
|
| ( | ) |
|
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| |
Lease Liabilities |
|
| ( | ) |
|
| ( | ) |
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES |
|
| ( | ) |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Proceeds from Exercise of Stock Warrants |
|
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| ||
Payments of Notes Payable |
|
| ( | ) |
|
| ( | ) |
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES |
|
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| ( | ) | |
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Effects of Foreign Exchange |
|
|
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| ( | ) | |
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
|
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| ||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
|
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| ||
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
| $ |
|
|
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| ||
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SUPPLEMENTAL DISCLOSURES |
|
|
|
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Cash Paid for Interest |
| $ |
|
| $ |
| ||
Cash Paid for Income Taxes |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 6 |
| Table of Contents |
DYNARESOURCE, INC.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022 AND 2021
NOTE 1 - NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Activities, History and Organization
DynaResource, Inc. (the “Company” or “DynaResource”) was organized September 28, 1937, as a California corporation under the name of West Coast Mines, Inc. In 1998, the Company re-domiciled to Delaware and changed its name to DynaResource, Inc. The Company is in the business of acquiring, investing in, and developing precious metal properties, and the production of precious metals.
In 2000, the Company formed a wholly owned subsidiary, DynaResource de México S.A. de C.V., chartered in México (“DynaMéxico”). This Company was formed to acquire, invest in and develop resource properties in México. 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 9,920 hectares (24,513 acres) on the west side of the Sierra Madre mountain range. The Company currently owns 100% of the outstanding capital of DynaMéxico. A
In 2005, the Company formed DynaResource Operaciones de San José De Gracia S.A. de C.V. (“DynaOperaciones”) and acquired control of Mineras de DynaResource, S.A. de C.V. (formerly Minera Finesterre S.A. de C.V., “DynaMineras”). The Company owns 100% of DynaMineras.
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 reporting standard widely recognized in the mining industry.
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 revenues and expenses. 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 acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal accounting control is designed to assure, among other items, that: 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods presented.
Basis of Presentation
The Company prepares its unaudited consolidated financial statements on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States.
Principles of Consolidation
The unaudited consolidated financial statements include the accounts of DynaResource, Inc., as well as DynaResource de México, S.A. de C.V. (
| 7 |
| Table of Contents |
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. As of June 30, 2022 the Company had $
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 June 30, 2022, and December 31, 2021, respectively, no allowance has been deemed necessary.
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 June 30, 2022, and December 31, 2021 are $
Inventory
Inventories are carried at the lower of cost or net realizable value and consist of mined tonnage, gravity and flotation concentrates, and gravity tailings or flotation feed material. The inventories are $
Exploration Stage Issuer (No Reserves Disclosed)
The definitions of Measured Mineral Resource, Mineral Reserve and Mineral Resource are set forth in SEC Regulation S-K, Item 1300 (“Reg. S-K, Item 1300”).
Measured mineral resource is that part of a mineral resource for which quantity and grade or quality are estimated on the basis of conclusive geological evidence and sampling. The level of geological certainty associated with a measured mineral resource is sufficient to allow a qualified person to apply modifying factors in sufficient detail to support detailed mine planning and final evaluation of the economic viability of the deposit. Because a measured mineral resource has a higher level of confidence than the level of confidence of either an indicated mineral resource or an inferred mineral resource, a measured mineral resource may be converted to a proven mineral reserve or to a probable mineral reserve.
Mineral reserve is an estimate of tonnage and grade or quality of indicated and measured mineral resources that, in the opinion of the qualified person, can be the basis of an economically viable project. More specifically, it is the economically mineable part of a measured or indicated mineral resource, which includes diluting materials and allowances for losses that may occur when the material is mined or extracted.
Mineral resource is a concentration or occurrence of material of economic interest in or on the Earth’s crust in such form, grade or quality, and quantity that there are reasonable prospects for economic extraction. A mineral resource is a reasonable estimate of mineralization, taking into account relevant factors such as cut-off grade, likely mining dimensions, location or continuity, that, with the assumed and justifiable technical and economic conditions, is likely to, in whole or in part, become economically extractable. It is not merely an inventory of all mineralization drilled or sampled.
As of June 30, 2022, the Company fits the definition of an exploration stage issuer which is defined as an issuer that has no material property with mineral reserves disclosed. An exploration stage property is a property that has no mineral reserves disclosed.
| 8 |
| Table of Contents |
Property
Substantially all mine development costs, including design, engineering, mine 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 mining 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. Office furniture and equipment are being depreciated on a straight-line method over estimated economic lives ranging from
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 Reg. S-K, Item 1300) 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, the design, construction and development costs are not capitalized at any of the Company’s properties, and accordingly, substantially all such costs are expensed as incurred, resulting in the Company reporting higher operating costs than if such expenditures had been capitalized. Additionally, the Company does not have a corresponding depreciation or amortization of these costs going forward since such costs 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.
Mineral Property Interests
Mineral property interests include acquired interests in development and exploration stage properties, and 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 José de Gracia Property, capitalized costs and mineral property interests are amortized using the straight-line method once production begins. As of June 30, 2022, 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 9,920 hectares at the San José de Gracia property, 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.
| 9 |
| Table of Contents |
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 considering 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, and silver, 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 June 30, 2022, and December 31, 2021, 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 expensed as incurred. Exploration, development, direct field costs and administrative costs are expensed in the period incurred.
Transactions in and Translations of Foreign Currency
The functional currency for the subsidiaries of the Company is the Mexican Peso. As a result, the financial statements of the subsidiaries have been translated from Mexican Pesos into U.S. dollars using (i) yearend exchange rates for balance sheet accounts, and (ii) the weighted average exchange rate of the reporting period for all income statement accounts. Foreign currency translation gains and losses are reported as a separate component of stockholders’ equity and comprehensive income (loss).
The unaudited 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.
| 10 |
| Table of Contents |
Relevant exchange rates used in the preparation of the unaudited financial statements for the subsidiaries are as follows for the periods ended June 30, 2022, and December 31, 2021 (Mexican Pesos per one U.S. dollar):
|
| June 30, 2022 |
|
| Dec 31, 2021 |
| ||
Exchange Rate at Period End Pesos |
|
|
|
|
|
| ||
Relevant exchange rates used in the preparation of the income statement portion of unaudited financial statements for the subsidiaries are as follows for the periods ended June 30, 2022, and June 20, 2021 (Mexican Pesos per one U.S. dollar):
|
| June 30, 2022 |
|
| June 30, 2021 |
| ||
Weighted Average Exchange Rate for the Six Months Ended Pesos |
|
|
|
|
|
| ||
The Company recorded currency transaction gains (losses) of $
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 is taxed is accordance with applicable Mexican tax law rates.
Use of Estimates
In order to prepare unaudited consolidated financial statements in conformity with accounting principles generally accepted in the United States, management must make estimates, judgments and assumptions that affect the amounts reported in the unaudited consolidated financial statements and determines whether contingent assets and liabilities, if any, are disclosed in the unaudited consolidated 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.
Revenue Recognition
The Company follows ASC 606 “Revenue from contracts with customers”. The Company generates revenue by selling gold and silver produced from its mining operations. The Company recognizes revenue for gold and silver concentrate production, net of treatment and refining costs, when it satisfies the performance obligation of transferring control of the concentrate to the customer. This is generally when the material is delivered to the customer facility for treatment and processing, as the customer has the ability (upon such delivery) to direct the use of and obtain substantially all the remaining benefits from the material and the customer has the risk of loss.
| 11 |
| Table of Contents |
The amount of revenue recognized is initially recorded on a provisional basis based on the contract price and the estimated metal quantities based on assay data. The revenue is adjusted upon final settlement of the sale. The chief risk associated with the recognition of sales on a provisional basis is the fluctuation (if any) between the estimated quantities of precious metals base on the initial assay and the actual recovery from treatment and processing.
As of June 30, 2022, there are $
During the six months ended June 30, 2022, and the year ended December 31, 2021, there was $
We have elected to account for shipping and handling costs as fulfillment costs after the customer obtains control of the goods.
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.
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 warrants, 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 or where the average stock price was below the exercise price of the respective potentially dilutive common share, as their effect would be considered anti-dilutive.
The Company had warrants outstanding at June 30, 2022 which upon exercise, would result in the issuance of
The Company had warrants outstanding at December 31, 2021 which upon exercise, would result in the issuance of
|
| Six Months Ended June 30, 2022 |
|
| Six Months Ended June 30, 2021 |
| ||
Net income (loss) attributable to common shareholders |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding, Basic |
|
|
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| ||
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|
Diluted weighted average number of common shares outstanding, |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share |
| $ |
|
| $ |
| ||
| 12 |
| Table of Contents |
At June 30, 2022, 217,312 shares of potentially dilutive common stock related to convertible debt were excluded from the diluted earnings per share calculation because the exercise and conversion prices exceeded the average stock price and therefore their effect would be anti-dilutive.
At June 30, 2021,
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 is also a related party if it 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.
NOTE 2 - INVENTORIES
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 June 30, 2022, and December 31, 2021, respectively, were as follows:
|
| 2022 |
|
| 2021 |
| ||
Mined Tonnage |
| $ |
|
| $ |
| ||
Gold-Silver Concentrates |
|
|
|
|
|
| ||
Total Inventories |
| $ |
|
| $ |
| ||
NOTE 3 - PROPERTY
Property consists of the following at June 30, 2022 and December 31, 2021:
|
| 2022 |
|
| 2021 |
| ||
Leasehold improvements |
| $ |
|
| $ |
| ||
Office equipment |
|
|
|
|
|
| ||
Office furniture and fixtures |
|
|
|
|
|
| ||
Sub-total |
|
|
|
|
|
| ||
Less: Accumulated depreciation |
|
| ( | ) |
|
| ( | ) |
Total Property |
| $ |
|
| $ |
| ||
| 13 |
| Table of Contents |
Depreciation and amortization has been provided over each asset’s estimated useful life. Depreciation and amortization expense was $
NOTE 4 - MINING CONCESSIONS
Mining properties consist of the San José de Gracia concessions. Mining Concessions were $
NOTE 5 - 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 $
Each Series I Note holder retained the option, at any time prior to maturity or prepayment, to convert any unpaid principal and accrued interest into Common Stock at $
The Notes originally matured on
On March 31, 2020, the Company entered into agreements to extend the seven outstanding notes totaling $
As of June 30, 2022 and December 31, 2021, six Series I Notes remained outstanding with a total balance of $
Notes Payable - Series II
In 2013 and 2014, the Company entered into additional note agreements of $
Each Series II 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 $
The Series II Notes originally matured on
| 14 |
| Table of Contents |
On March 31, 2020, the Company entered into agreements to extend the two notes totaling $
As of June 30, 2022 and December 31, 2021, two Series II Notes remained outstanding with a balance of $
NOTE 6 - INCOME TAXES
The Company has adopted ASC 740-10, “Income Taxes”, which requires the use of the liability method in the computation of income tax expense and the current and deferred income taxes payable (deferred tax liability) or benefit (deferred tax asset). Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
The Company’s effective tax rate for the period ended June 30, 2022 and for the period ended June 30, 2021 varies from the statutory rate of
NOTE 7- STOCKHOLDERS’ EQUITY
The total number of shares of all classes of capital stock which the corporation has the authority to issue is
Series A Preferred Stock
The Company has designated
Series C Senior Convertible Preferred Stock
At June 30, 2022 and December 31, 2021 there were
Due to the nature of the Series C Preferred Shares as mandatorily redeemable, the Series C Preferred Shares are classified as “temporary equity” on the balance sheet.
Series D Senior Convertible Preferred Stock
Financing Agreement with Golden Post Rail, LLC, a Texas Limited Liability Company, and with Shareholders of DynaResource, Inc.
| 15 |
| Table of Contents |
On May 14, 2020, the Company closed an additional financing agreement with Golden Post, and with certain individual shareholders, and related agreements. A summary of the transactions and related agreements is set forth below:
| 1. | Pursuant to the May 14, 2020 Note Purchase Agreement (the “NPA”) among the Company, Golden Post Rail, LLC (the “Lead Purchaser”), and the other parties listed on Exhibit A thereto (the “Remaining Purchasers”): |
| · | Golden Post acquired the following securities: |
|
| (a) | A convertible promissory note (the “Golden Post Note”) payable to Golden Post in the principal amount of $ |
|
|
|
|
|
| (b) | A common stock purchase warrant (the “2020 Warrant”) for the purchase of |
| · | The Remaining Purchasers acquired the following securities: |
|
| (a) | Convertible promissory notes (the “Remaining Notes”) in the aggregate principal amount of $ |
|
|
|
|
|
| (b) | Common stock purchase warrants (the “Remaining Purchasers Warrants”) for the purchase of an aggregate of |
| 2. | Also pursuant to the NPA, the Company and the Lead Purchaser agreed to amend the common stock purchase warrant dated June 30, 2015 (the “2015 Warrant”), issued to the Lead Purchaser in connection with that certain Securities Purchase Agreement dated as of May 6, 2015. The 2015 Warrant contemplates the purchase, upon exercise, of |
| 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 | |
| 16 |
| Table of Contents |
| 5. | On May 13, 2020, one business day prior to the NPA, the Company issued to the Lead Purchaser the following: (i) | |
|
|
| |
| 6. | In order to accommodate the issuance of the additional | |
|
|
| |
| 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, | |
On October 11, 2021. the Company filed an amended designation of Series D Preferred with the State of Delaware.
Retirement of Convertible Debt
On October 7, 2021, the Company paid $
The remaining ten noteholders of notes convertible into Series D Preferred elected to convert their notes totaling $
In addition, the redemption of the notes trigged an acceleration of the amortization of the original loan discount booked at the issuance of the notes (see discussion below), which discount (in the amount of $
All Series D noteholders agreed to waive the non-dilution rights contained in their original notes.
At June 30, 2022 and December 31, 2021, there were
Due to the nature of the Series D Preferred as mandatorily redeemable by the Company at the election of the Series D Preferred stock holder at any time following maturity, the Series D Preferred shares are classified as “temporary equity” on the balance sheet.
Due to the anti-dilutive provisions contained in the May 6, 2015, Securities Purchase Agreement, the Series C Preferred and the 2015 Warrant, the Company incurred derivative liabilities upon issuance of these securities. On May 14, 2020, in connection with the Series D Convertible Note financing, the expiration dates for the Series C Preferred and the 2015 Warrant were extended to June 30, 2022. In addition, a new derivative liability was incurred due to the issuance of additional warrants. At December 31, 2021, the total derivative liability was $
| 17 |
| Table of Contents |
Preferred Stock (Undesignated)
In addition to the
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 a particular 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
Preferred Rights
The Company issued “Preferred Rights” for the rights to percentages of revenues generated from the San José de Gracia Pilot Production Plant and received $
Stock Issuances
On June 28, 2022, the Company issued
On October 18, 2021, the Company issued
Treasury Stock
During the six months ended June 30, 2022 no shares of common stock held in treasury (treasury stock) were issued.
During the year ending December 31, 2021,
Outstanding treasury shares total
Warrants
2022 activity
| 18 |
| Table of Contents |
At June 30, 2022, the Company had outstanding warrants to purchase
2021 activity
At December 31, 2021, the Company had outstanding warrants to purchase
|
| Number of Shares |
|
| Weighted Average Exercise Price |
|
| Weighted Average Remaining Contractual Life (Years) |
|
| Intrinsic Value |
| ||||
Balance at December 31, 2020 |
|
|
|
| $ |
|
|
|
|
|
|
| ||||
Granted |
|
| - |
|
| $ |
|
|
| - |
|
|
|
| ||
Exercised |
|
|
|
| $ |
|
|
| - |
|
|
|
| |||
Forfeited |
|
| - |
|
| $ |
|
|
| - |
|
|
|
| ||
Balance at December 31, 2021 |
|
|
|
| $ |
|
|
|
|
|
|
| ||||
Granted |
|
| - |
|
| $ |
|
|
| - |
|
|
|
| ||
Exercised |
|
|
|
| $ |
|
|
| - |
|
|
|
| |||
Forfeited |
|
|
|
| $ |
|
|
| - |
|
|
|
| |||
Balance at June 30, 2022 |
|
|
|
| $ |
|
|
|
|
|
|
| ||||
Exercisable at June 30, 2022 |
|
|
|
| $ |
|
|
|
|
|
|
| ||||
NOTE 8 - RELATED PARTY TRANSACTIONS
Dynacap Group Ltd.
The Company paid $
NOTE 9 - COMMITMENTS AND CONTINGENCIES
Concession Taxes
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 activities and current and forward plans and considering expenditures on mining concessions since 2002-2017 and continuing expenditures in current and forward activities,
| 19 |
| Table of Contents |
Leases
In addition to the surface rights held by DynaMéxico pursuant to the Mining Actof México and its Regulations (Ley Minera y su Reglamento), DynaMineras maintains access and surface rights to the SJG Project pursuant to a
The Company leases office space for its corporate headquarters in Irving, Texas. In September 2017, the Company entered into a sixty-six-month extension of the lease through January 2023. As part of the agreement the Company received six months free rent as a finish out allowance. The Company capitalized the leasehold improvement costs and amortized them over the rent abatement period as rent expense. The Company makes tiered lease payments on the 1st of each month.
Effective January 1, 2019, the Company adopted ASC 842, which requires recognition of a right-of-use asset and lease liability for all leases at the commencement date based on the present value of lease payments over the lease term. Additional qualitative and quantitative disclosures regarding the Company’s leasing arrangements are also required. The Company adopted ASC 842 prospectively and elected the package of transition practical expedients that does not require reassessment of (1) whether any existing or expired contracts are or contain leases, (2) lease classification and (3) initial direct costs. In addition, the Company has elected other available practical expedients to not separate lease and non-lease components, which consist principally of common area maintenance charges, for all classes of underlying assets and to exclude leases with an initial term of 12 months or less.
The Company determines if a contract is or contains a lease at inception. As of June 30, 2022, the Company has two operating leases: a six and one-half year lease for office space with a remaining term of seven months, and a twenty-year ground lease in association with its México mining operations with a remaining term of thirteen years. Variable lease costs consist primarily of variable common area maintenance, storage parking and utilities. The Company’s leases do not have any residual value guarantees or restrictive covenants.
As the implicit rate is not readily determinable for most of the Company’s lease agreements, the Company uses an estimated incremental borrowing rate to determine the initial present value of lease payments. These discount rates for leases are calculated using the Company’s interest rate of promissory notes.
The Company’s components of lease cost are as follows:
|
| Period Ended |
| |
|
| June 30, 2022 |
| |
Operating Lease - Office Lease |
| $ |
| |
Operating Lease - Ground Lease |
|
|
| |
Short Term Lease Costs |
|
|
| |
Variable Lease Costs |
|
|
| |
TOTAL |
| $ |
| |
|
|
|
|
|
Weighted average remaining lease term and weighted average discount rate are as follows: |
|
|
|
|
|
|
|
|
|
Weighted Average Remaining Lease Term (Years) - Operating Leases |
|
|
| |
Weighted Average Discount Rate - Operating Leases |
|
| % | |
|
|
|
|
|
Estimated future minimum lease obligations are as follow for the years ending June 30: |
|
|
|
|
|
|
|
|
|
YEAR |
|
|
|
|
2022 |
| $ |
| |
2023 |
|
|
| |
2024 |
|
|
| |
2025 |
|
|
| |
2026 |
|
|
| |
Thereafter |
|
|
| |
Total |
| $ |
| |
Less Imputed Interest |
|
| ( | ) |
OPERATING LEASE PAYABLE |
| $ |
| |
| 20 |
| Table of Contents |
NOTE 10 - DERIVATIVE LIABILITIES
Series C Preferred Stock
As discussed in Note 7, 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:
|
| 2022 |
|
| 2021 |
| ||
Annual volatility rate |
|
| % |
|
| % | ||
Risk free rate |
|
| % |
|
| % | ||
Remaining Term |
|
|
|
| ||||
Fair Value of common stock |
| $ |
|
| $ |
| ||
For the six and twelve months ended June 30, 2022 and December 31, 2021, an active market for the Company’s common stock did not exist. Accordingly, the fair value of the Company’s common stock was estimated using a valuation model with level 3 inputs.
The below table represents the change in the fair value of the derivative liability during the six and twelve months ended June 30, 2022 and December 31, 2021.
Period Ended |
| 2022 |
|
| 2021 |
| ||
Fair value of derivative (stock), beginning of period |
| $ |
|
| $ |
| ||
Change in fair value of derivative |
|
| ( | ) |
|
|
| |
Fair value of derivative on the date of issuance |
|
|
|
|
|
| ||
Fair value of derivative (stock), end of period |
| $ |
|
| $ |
| ||
| 21 |
| Table of Contents |
2015 Warrant
As discussed in Note 7, the Company analyzed the embedded conversion features of the Series C Preferred Stock and determined that the 2015 Warrant (acquired at the same time as the Series C Preferred 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 2015 Warrant based on the assumptions below:
|
| 2022 |
|
| 2021 |
| ||
Annual volatility rate |
|
| % |
|
| % | ||
Risk free rate |
|
| % |
|
| % | ||
Remaining Term |
|
|
|
| ||||
Fair Value of common stock |
| $ |
|
| $ |
| ||
For the six and twelve months ended June 30, 2022, and December 31, 2021, an active market for the Company’s common stock did not exist. Accordingly, the fair value of the Company’s common stock was estimated using a valuation model with level 3 inputs.
The below table represents the change in the fair value of the derivative liability during the periods ended June 30, 2022, and December 31, 2021.
Period Ended |
| 2022 |
|
| 2021 |
| ||
Fair value of derivative (warrant), beginning of period |
| $ |
|
| $ |
| ||
Change in fair value of derivative |
|
| ( | ) |
|
|
| |
Fair value of derivative on the date of issuance |
|
|
|
|
|
| ||
Fair value of derivative (warrant), end of period |
| $ |
|
| $ |
| ||
Warrants issued with the Notes convertible into Series D Preferred
As discussed in Note 7, the Company analyzed the conversion features of the promissory notes convertible into Series D Preferred and determined that the Warrants issued with such notes qualified as a derivative liability. The fair value was required to be allocated among the notes, the notes’ conversion features, and the warrants, and then remeasured at each reporting date. 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.
| 22 |
| Table of Contents |
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 issued with the notes convertible into Series D Preferred based on the assumptions below:
|
| 2022 |
|
| 2021 |
| ||
Annual volatility rate |
|
| % |
|
| % | ||
Risk free rate |
|
| % |
|
| % | ||
Remaining Term |
|
|
|
| ||||
Fair Value of common stock |
| $ |
|
| $ |
| ||
For the six and twelve months ended June 30, 2022 and December 31, 2021, an active market for the Company’s common stock did not exist. Accordingly, the fair value of the Company’s common stock was estimated using a valuation model with level 3 inputs.
The below table represents the change in the fair value of the derivative liability during the six and twelve months ended June 30, 2022 and December 31, 2021.
Period Ended |
| 2022 |
|
| 2021 |
| ||
Fair value of derivative (warrants), beginning of period |
| $ |
|
| $ |
| ||
Fair value of derivative on the date of issuance |
|
|
|
|
|
| ||
Exercise of warrants |
|
|
|
|
| ( | ) | |
Change in fair value of derivative |
|
|
|
|
|
| ||
Fair value of derivative (warrants), end of period |
| $ |
|
| $ |
| ||
NOTE 11 - 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 June 30, 2022, and December 31, 2021, 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 10.
| 23 |
| Table of Contents |
|
|
|
|
| Quoted Prices in Active Markets For Identical Assets (Level 1) |
|
| Significant Other Observable Inputs (Level 2) |
|
| Significant Unobservable Inputs (Level 3) |
| ||||
Fair Value Measurement at June 30, 2022 Using: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Derivative Liabilities |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Totals |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Fair Value Measurement at December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Liabilities |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Totals |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
NOTE 12 - REVENUE CONCENTRATION
The Company had certain customers whose revenue individually represented
For each of the six months ended June 30, 2022, and 2021, one and three customers accounted for
At June 30, 2022 and December 31, 2021, one and one customer accounted for
NOTE 13 - NOTES PAYABLE
In June 2018, the Company entered into financing agreements for the unpaid mining concession taxes on the Francisco Arturo mining concession for the year ended December 31, 2017 and the period ending June 30, 2018 in the amount of $
In February 2019, the Company entered into a financing agreement for unpaid mining concession taxes on the Francisco Arturo mining concession for the year ended December 31, 2018 in the amount of $
As of June 2019, the Company ceased making monthly payments on the above noted Francisco Arturo concession notes and has petitioned the Hacienda (Mexican federal tax authority) for a reduction in the liability which is pro-rata to the reduction in the Francisco Arturo concession above. For financial reporting purposes the Company continues to carry all notes (to finance unpaid mining concession taxes) at unpaid principal amount and accrues interest on a monthly basis. At June 30, 2022, $
In October 2019, the Company entered into a financing agreement for unpaid mining concession taxes on the core mining concessions in the amount of $
| 24 |
| Table of Contents |
The following is a summary of the transaction during the six and twelve months ended June 30, 2022 and December 31, 2021:
Balance December 31, 2020 |
| $ |
| |
Exchange Rate Adjustment |
|
| ( | ) |
2021 Principal Payments |
|
| ( | ) |
Balance December 31, 2021 |
|
|
| |
Exchange Rate Adjustment |
|
|
| |
2022 Principal Payments |
|
| ( | ) |
Balance June 30, 2022 |
| $ |
|
NOTE 14 - REVOLVING CREDIT LINE FACILITY
On February 4, 2021, the Company (through DynaMineras) entered into a Revolving Credit Line Facility and Commercial Offtake Agreement (the “RCL”), with a commercial buyer. Under the terms of the RCL:
| · | The Company will deliver |
| · | An initial RCL was established by buyer in the amount of $ |
| · | On May 1, 2021, the RCL increased to an amount equal to |
| · | Each successive month, the RCL shall be adjusted according to the Company’s prior 3 months’ revenue; |
| · | The RCL shall never be less than $ |
| · | The RCL will be interest free for |
| · | The RCL is to be repaid through deliveries of concentrates or cash within |
The RCL is included under Customer Advances on the unaudited consolidated balance sheet.
Deposits under Revolving Credit Line Facility
Under the terms of the RCL, DynaMineras received the following advances from the buyer:
(1) | $ | |
(2) | $ | |
(3) | $ | |
(4) | $ | |
(5) | $8.25M advance on August 9, 2021. Settled on | |
(6) | $ | |
(7) | $ | |
(8) | $ | |
(9) | $ | |
(10) | $ | |
(11) | $ | |
(12) | $8.75M advance on June 28, 2022 | |
NOTE 16 - SUBSEQUENT EVENTS
The Company has evaluated events commencing June 30, 2022 and through the date the financial statements were issued, and determined the following items required disclosure:
On July 1, 2022, the Company paid in full the Series I and Series II Convertible Notes Payable.
| 25 |
| Table of Contents |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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.
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”), and DynaMéxico currently holds 20% of its outstanding shares recovered from Goldgroup Resources Inc. DynaMéxico owns 100% of mining concessions, equipment, camp and related facilities which comprise the San José 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. DynaOperaciones is the exclusive management company for registered employees.
Project Improvements, Expansion and Increased Output (2017 To Present)
The Company continues its business plan of operations at San José de Gracia, which is to improve, increase and expand test mining and pilot milling operations and generally, to increase production of gold ounces. Since January 2015 startup of the test mining and milling activities, the Company has increased daily output from an initial 75 tons per 24-hour operating day, to a current 300 tons per 24-hour operating day, and during second quarter 2022 the Company expects to achieve production output of 500 tons per 24-hour operating day. (Note the Summary of Test Mining and Pilot Mill Operations for 2018 to 2022 below).
Since January 2017, the Company has expended over 23 million USD in non-operating costs, generally classified as project improvements and expansion costs which have been expensed in the company’s financial statements. These funds have been provided primarily from cash flows from operations. An itemized list of these non-operating costs is described below:
Mill Expansion: |
| $ | 5,498,000 |
|
Tailings Pond Expansion |
|
| 265,000 |
|
Machinery and Equipment |
|
| 1,963,000 |
|
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 |
|
| 1,257,000 |
|
SIG Mining Concessions |
|
| 1,542,000 |
|
Surface Rights and Permitting |
|
| 791,000 |
|
Debt Retirement |
|
| 2,985,000 |
|
Legal Fees |
|
| 3,894,000 |
|
Total |
| $ | 23,729,000 |
|
The Company is currently reporting all costs of mine operations, improvements, and expansion as expenses in accordance with United States General Accepted Accounting Principal (GAAP) requirements. The result of expensing all costs is that the Company has accumulated a net loss carry forward from México operations of $18.5 million USD which is available to offset future taxable earnings.
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Summary of Test Mining and Pilot Mill Operations for 2018 to 2022:
Year |
| Total Tonnes Mined Processed |
|
| Reported Mill Feed Grade (g/t Au) |
|
| Reported Recovery % |
|
| Gross Gold Concentrates Recovered (Au oz.) |
|
| Net Gold Concentrates Sold (Au oz.) |
| |||||
2018 |
|
| 52,038 |
|
|
| 9.82 |
|
|
| 86.11 | % |
|
| 14,147 |
|
|
| 13,418 |
|
2019 |
|
| 66,031 |
|
|
| 5.81 |
|
|
| 86.86 | % |
|
| 10,646 |
|
|
| 9,713 |
|
2020 |
|
| 44,218 |
|
|
| 5.65 |
|
|
| 87.31 | % |
|
| 7,001 |
|
|
| 5,828 |
|
2021 |
|
| 97,088 |
|
|
| 9.67 |
|
|
| 88.79 | % |
|
| 26,728 |
|
|
| 22,566 |
|
Test pilot operations in 2021 yielded 97,088 Tons mined and processed from underground test mining activity and pilot milling operations; and the production of approximately 26,728 gross Oz Au, and net of dry weight adjustments at the buyer’s facilities, the production of approximately 22,566 Oz Au. The Company reports net revenue of $35,886,046 net of buyer’s price discount and refining and treatment costs.
Summary of Test Mining and Pilot Mill Operations for the six months ended June 30, 2022 and 2021:
|
| Total Tonnes Mined Processed |
|
| Reported Mill Feed Grade (g/t Au) |
|
| Reported Recovery % |
|
| Gross Gold Concentrates Recovered (Au oz.) |
|
| Net Gold (1) Concentrates Sold (Au oz.) |
| |||||
Six Months Ended June 30, 2022 |
|
| 61,166 |
|
|
| 9.35 |
|
|
| 81.27 | % |
|
| 14,943 |
|
|
| 12,004 |
|
Six Months Ended June 30, 2021 |
|
| 41,376 |
|
|
| 8.98 |
|
|
| 86.74 | % |
|
| 10,320 |
|
|
| 9,437 |
|
(1) | Gold concentrate sold during the quarter is not equal to gold concentrate recovered during the quarter due to timing of shipments buyers discount. |
Test pilot operations in Q1 2022 yielded 27,511 tons mined and processed through mill operations (306 tons per day) ; and the recovery of 7,110 gross Oz Au resulting in sales of 6,000 gross Au Oz contained in gold-silver concentrates, and the receipt of $10,492,503 in revenues net of buyer’s price discount, refining and treatment costs.
Test pilot operations in Q2 2022 yielded 33,655 tons mined and processed through mill operations (370 tons per day) ; and the recovery of 7,834 gross Oz Au resulting in sales of 6,004 gross Au Oz contained in gold-silver concentrates, and the receipt of $10,098,010 in revenues net of buyer’s price discount, refining and treatment costs.
Additional Test Mining and Mill Operations Disclosure
DynaMineras expects to continue its test underground mining activity and pilot milling operations in the third quarter 2022, and projects an increased output of 500 tons per 24-hour operating day from the mine and mill during the quarter.
Results for the three and six months ended June 30, 2022 and 2021
REVENUE. The Company processed 61,166 tons (306 per day) during the first six months of 2022 compared to 17,342 tons (194 per day) in 2021. Additionally, the ore process was a higher grade of 9.35 Oz Au per ton compared to 8.98 Oz Au per ton in 2021, resulting in an increase of ounces recovered from 10,320 in 2021 to 14,943 in [the first six months of] 2022. This resulted in an increase in gross ounces sold from 9,437 in 2021 to 12,004 in 2022, increasing revenues from $15,439,025 to $20,590,513 for the six months ended June 30, 2021 and 2022, respectively.
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PRODUCTION COSTS RELATED TO SALES. Production costs related to sales for the six months ended June 30, 2022 and June 30, 2021 were $1,912,730 and $1,160,151, respectively. Production cost for the three months ended June 30, 2022, and 2021 were $1,147,215 and $778,885, respectively. These are expenses directly related to the milling, packaging and shipping of gold and other precious metals product. The increase is consistent with the increase in tonnage process and ounces recovered.
MINE PRODUCTION COSTS. Mine production costs for the six months ended June 30, 2022, and 2021 were $2,839,255 and $2,249,402, respectively and $1,611,371 and $1,442,932 for the three months ended June 30, 2022 and 2021, respectively. These costs were directly related to the extraction of mine tonnage to be processed at the mill. The increase is consistent with the increase in tonnage mined. Cost per ton of ore mined was $44 a ton both years. Mine production costs as a percentage of revenue dropped from 14.6% to 13.7%.
MINE EXPLORATION COSTS. Mine exploration costs for the six months ended June 30, 2022, and 2021 were $2,456,968 and $2,285,989, respectively and $1,578,780 and $1,273,241 for the three months ended June 30, 2022 and 2021, respectively. These were the costs of extracting waste material to reach the materials to be extracted for processing. The Company allocates total mining costs between production and waste based on tonnage on a monthly basis. Mine exploration costs as a percentage of revenue dropped from 14.8% to 12.0%. The decrease in cost is a result of the decrease in waste tonnage as a percentage of total tonnage mined from 52.2% to 45.8%
FACILITIES EXPANSION COSTS: Facilities expansion costs for the six months ended June 30, 2022, and 2021 were $2,971,407 and 0, respectively. The major expense was the installation of two new Ball Mill which upon completion will increase processing capacity to 700 tons a day. The Company expects the expansion to be complete by July. These are cost which would normally be capitalized under U.S Gaap but are expensed under Reg. S-K, Item 1300 because of the Company is an exploration stage issuer lacking proven and probable reserves.
EXPLORATION DRILLING. During the 1st quarter of 2022 the Company begin an exploration drilling program for the purposes of updating the Company’s 43-101 Mineral Resource Estimate. Total cost of the exploratory drilling program in the first six months of 2022 was $1,222,190 including $734,575 in the 2nd quarter.
TRANSPORTATION. Transportation costs for the six months ended June 30, 2022, and 2021 were $1,110,214 and $593,698, respectively. Transportation cost for the three months ended June 30, 2022 and 2021 were $719,574 and $355,134, respectively. These were the costs of transporting the product to the customer for treatment and sale. The increase in reflective of the increase in fuel and transportation costs.
CAMP, WAREHOUSE AND SUPPORT FACILITIES. Camp, warehouse and support facility cost for the six months June 30, 2022 and 2021 were $2,236,028 and $1,258,722, respectively and $1,410,825 and $723,527 for the three months ended June 30, 2022 and 2021, respectively. These were the support costs of the mining facilities including housing, food, security and warehouse operations. The increases were the result of the Company’s increase in mining operations
PROPERTY HOLDING COSTS. Property holding costs for the six months ended June 30, 2022, and 2021 were $72,781 and $79,650, respectively. These costs were concessions taxes, leases on land and other direct costs of maintaining the property. These cost are relatively consistent from year to year regardless of the level of mining activity.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses for the six months ended June 30, 2022, and 2021 were $2,144,097 and $1,166,969, respectively. These were the costs of operating the Company not directly associated with the mine operations including management, accounting, and legal expenses. The increase was an increase legal fees associated ongoing legal discussed in the legal summary and an overall increase in administrative costs supporting the Companies increase in activity.
OTHER INCOME (EXPENSE). Other income (expense) for the six months ended June 30, 2022, and 2021 was 1,960,605 and $(1,890,365), respectively. Included in this category in 2022 was interest expense of $(241,505), change in derivative of $2,163,281, currency transaction gain (loss) of $37,790 and miscellaneous income of 1,039. Included in this category in 2021 was interest expense of $(730,419), change in derivative of $(185,116), currency transaction gain (loss) of $136,281 and a one-time arbitration award expense of $1,111,111. The decrease in the derivative liability was primarily due to maturity of two of the underlying securities and the Company’s common stock value remaining under the conversion terms. The decrease in interest expense was the result of a reduction in the Company’s debt. For a more detailed explanation of the 2021 arbitration award see Legal Proceedings.
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OTHER COMPREHENSIVE INCOME (LOSS). Other comprehensive income (loss) includes the Company’s net income (loss) plus the unrealized currency translation gain (loss) for the period. The Company’s other comprehensive loss for the six months ended June 30, 2022 and 2021 consisted of unrealized currency gains (losses) of $11,016 and $(371,407), respectively. The change is due to the variances in the peso exchange rates throughout the two periods.
Liquidity and Capital Resources
As of June 30, 2022, the Company had working capital of $12,378,739, comprised of current assets of $33,337,581 and current liabilities of $20,958,842. This represented an increase of $11,031,028 from the working capital of $1,347,711 maintained by the Company as of December 31, 2021. The primary reasons for the increase were funds generated from the Company’s operating profit and proceeds from the exercise of stock warrants.
Net cash provided by (used in) operations for the six months ended June 30, 2022 and 2021 was $(176,600) and $8,271,206, respectively. The decrease in the funds provided from operations was a result of the operating profits being applied to reduce payables and other debt.
Net cash provided by (used in) investing activities for the six months ended June 30, 2022 and 2021 was $0 and $0, respectively. Expenditures necessary for the expansion of mining operations totaled $2,971,407 and $0 in the six months ended June 30, 2022 and 2021, respectively, which would normally have been included in this category were expenses due to the company’s being an exploration stage issuer as defined in SEC Reg. S-K, Item 1300.
Net cash provided by (used in) financing activities for the six months ended June 30, 2022 and 2021 was $5,357,921 and $(36,460), respectively. The 2021 usage represented principal payments on long-term debt. The 2022 source of funds was proceeds from the exercise of stock warrants, offset by payments to reduce debt.
Off-Balance Sheet Arrangements
As of June 30, 2022, we did not have any off-balance sheet arrangements, 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 commenced its testing activities in fall 2015 at the rate of approximately 100 tons per 24-hour operating day from the mine and approximately the same output from the processing plant. Over the past five years, the Company has gradually increased its output to approximately 300 tons per 24-hour operating day from the mines and processing plant. In 2022 the Company anticipates completion of expansion to reach a capacity of 700 tons per 24-hour operating days from the processing plant. The Company expects to operate at approximately 500 tons per day in the second half of 2022.
The Company funds its general and administrative expenses in the US, from the Company’s operating subsidiaries, DynaMineras and DynaOperaciones. 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 the subsequent twelve months.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
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Evaluation of Disclosure Controls and Procedures
We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2022. This evaluation was accomplished under the supervision and with the participation of our chief executive officer / principal executive officer and our financial consultant, who concluded that our disclosure controls and procedures are not effective as of the end of the period covered by this Form 10-Q. For purposes of this section, the term disclosure controls and procedures mean 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 Exchange Act 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 in our reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
The Company has not made any change in its internal control over financial reporting that occurred during the period covered by this report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.
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PART II
ITEM 1. LEGAL PROCEEDINGS
2014 Arbitration Proceeding filed by Goldgroup Resources Inc.
On March 14, 2014, Goldgroup filed for arbitration in the United States with the American Arbitration Association (“AAA”), seeking monetary and nonmonetary relief, and citing the Earn In/Option Agreement as the basis for its filing. On August 25, 2016, the AAA issued a ruling in favor of Goldgroup against the Company and DynaMéxico (the “Arbitration Award”). On May 9, 2019, the United States District Court for the District of Colorado (the “Colorado U.S. District Court”) confirmed the Arbitration Award.
On May 20, 2021, the Company and DynaMéxico agreed to release the $1.111 million bond that had been posted, and paid an additional $4,054 in interest, in full satisfaction of the monetary portion of the Arbitration Award. Since that time, the Company has fully performed the non-monetary portion of the Arbitration Award, which included the election of a Goldgroup designee to the board of DynaMéxico, yet Goldgroup continues to challenge the Company’s actions before the Colorado U.S. District Court.
2014 Court filing by DynaMéxico, in Mexico
On December 9, 2014, DynaMéxico filed a commercial lawsuit against Goldgroup, its parent company Goldgroup Mining Inc., and the AAA, in the Thirty Sixth Civil Court in the Federal District of México (the “Trial Court”), under file 1120 number / 2014 (the “DynaMéxico Trial”). In the DynaMéxico Trial, DynaMéxico sought to terminate the U.S.-based arbitration proceedings, and requested that substantial damages (in the amount of US $50 million) be awarded to DynaMéxico against Goldgroup. On October 5, 2015, the Trial Court awarded DynaMéxico damages in excess of US $48 million.
Goldgroup has appealed the $48 million damages award on multiple occasions, yet the award stands and has been affirmed by a variety of Mexican courts, including the highest court in the land. Even in the face of multiple rejections of its arguments before Mexican courts, Goldgroup continues to raise baseless and unfounded objections to the award.
On October 5, 2016, the Trial Court (the same court which made the $48 million damages award) approved a grant to DynaMéxico of a lien (referred to by the court as an “Embargo”) upon the shares of DynaMéxico held by Goldgroup in certificate form. On February 20, 2020, a México City court issued a final judgment, effectively foreclosing on all shares of DynaMéxico formerly held by Goldgroup, and awarding those shares to DynaMéxico. Those shares are now legally owned, and physically held, by DynaMéxico. Consequently, Goldgroup currently owns no shares of DynaMéxico under Mexican law, which requires physical possession of shares to evidence ownership.
The award to DynaMéxico of the shares formerly owned by Goldgroup, does not satisfy the $48 million damages award in favor of DynaMéxico.
2020 Petition for Recognition of the $48M Damages Award
On December 5, 2020, the Company and DynaMéxico filed an Original Petition for Recognition of the $48 million damages award in favor of DynaMéxico, in US. District Court in Dallas County, Texas (the “Texas U.S. District Court”), under principles of international comity. On May 12, 2021, The Texas U.S. District Court issued a ruling stating the Court was not obligated to recognize the $48 million damages award in the United States. On May 14, 2021, the Company and DynaMéxico filed a Notice of Appeal of that ruling.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On June 28, 2022, Golden Post Rail, LLC exercised its warrant to acquire 2,655,361 shares of the Company’s common stock at a price of $2.04 per share, for a total exercise price of $5,416,936. The warrant was granted on May 6, 2015 with an original maturity date of June 30, 2020, and the period of exercise was extended for two years in 2020.
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
Exhibit Number; |
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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. | ||
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Date: July 29, 2022 | By: | /s/ K.W. (“K.D.”) Diepholz | |
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| K.W. (“KD”) Diepholz, |
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| Chairman / CEO |
|
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrants have duly caused this report to be signed on their behalf by the undersigned, thereunto duly authorized. The signature for each undersigned Registrant shall be deemed to relate only to matters having reference to such Registrant and any subsidiaries thereof.
/s/ K.D. Diepholz |
| /s/ Rene LF Mladosich |
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K. D. Diepholz, Chairman |
| Rene LF Mladosich |
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/s/ Dr. Jose Vargas Lugo |
| /s/ Dale G. Petrini |
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Dr. Jose Vargas Lugo |
| Dale G. Petrini |
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/s/ John C. Wasserman |
| /s/ Phillip Rose |
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John C. Wasserman |
| Phillip Rose |
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July 28, 2022 |
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Dated |
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