SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934


   [X]   Annual report pursuant to section 13 or 15(d) of the Securities
         Exchange Act of 1934
         For the fiscal year ended SEPTEMBER 30, 2003

   [     ] Transition report under section 13 or 15(d) of the Securities
         Exchange Act of 1934 For the transition period from to

                        Commission File Number 333-56262


                        EL CAPITAN PRECIOUS METALS, INC.
                 (Name of small business issuer in its charter)

NEVADA                                                                88-0482413
------                                                                ----------
(State or other jurisdiction of                       (I.R.S. Employer I.D. No.)
incorporation or organization)

                            7315 EAST PEAKVIEW AVENUE
                            ENGLEWOOD, COLORADO 80111
               (Address of principal executive offices)(Zip Code)

         Issuer's telephone number, including area code: (303) 796-8940

    Securities registered pursuant to Section 12(b) of the Exchange Act: NONE

         Securities registered under Section 12(g) of the Exchange Act:
                          $.001 PAR VALUE, COMMON STOCK
                                (Title of class)

Check whether the Issuer (1) filed all reports required to be filed by section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such report(s), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is contained in this form, and no disclosure will be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this form 10-KSB or any
amendment to this Form 10-KSB. [X]

The issuer had no revenue for its most recent fiscal year.

The aggregate market value of the issuer's voting stock held as of February 9,
2004, by non-affiliates of the issuers was $4,189,035 based on the closing
market price of the Registrant's common stock of $0.75 as reported on the OTC
Bulletin Board.

As of February 9, 2004, issuer had 17,369,760 shares of its $.001 par value
common stock outstanding.

Transitional Small Business Format:   Yes  [ ]   No  [X]

Documents incorporated by reference: none
<PAGE>

                        EL CAPITAN PRECIOUS METALS, INC.
                                   FORM 10-KSB

This report may contain certain "forward-looking" statemenTs as such term is
defined in the private securities litigation reform act of 1995 or by the
securities and exchange commission in iTs rules, regulations and releases, which
represent the registrant's expectations or beliefs, including but not limited
to, statemenTs concerning the registrant's operations, economic performance,
financial condition, growth and acquisition strategies, investmenTs, and future
operational plans. For this purpose, any statemenTs contained herein that are
not statemenTs of historical fact may be deemed to be forward-looking
statemenTs. Without limiting the generality of the foregoing, words such as
"may", "will", "expect", "believe", "anticipate", "intent", "could", "estimate",
"might", or "continue" or the negative or other variations thereof or comparable
terminology are intended to identify forward-looking statemenTs. These
statemenTs by their nature involve substantial risks and uncertainties, certain
of which are beyond the registrant's control, and actual resulTs may differ
materially depending on a variety of important factors, including uncertainty
related to acquisitions, governmental regulation, managing and maintaining
growth, the operations of the company and iTs subsidiaries, volatility of stock
price and any other factors discussed in this and other registrant filings with
the securities and exchange commission.

                                     PART I

ITEM 1.       DESCRIPTION OF BUSINESS

(a)      Business Development

We were formed as a Nevada corporation on December 20, 2000 and operated under
the name of Go Espress until March 17, 2003. We were in the business of
providing catering and food services and focused our service in the California
Monterey Peninsula. On March 17, 2003, we sold the assets and operations of our
catering and foodservice business to Michael Flores and Deborah Flores,
executive officers and directors of DML Services, Inc., in exchange for the
return by them of 10,040,000 shares of DML Services, Inc. and cash consideration
of $50,000 paid by El Capitan Precious Metals, Inc.

On March 18, 2003, we acquired all of the issued and outstanding securities of
El Capitan Precious Metals, Inc., a Delaware corporation and changed our name to
El Capitan Precious Metals, Inc. The stockholders of El Capitan Precious Metals,
Inc. received 13,000,000 shares of our common stock which represented 85% of our
total shares outstanding immediately following the exchange. As a result of a
four share for one share stock split completed by us on November 25, 2002, and
the retirement of 10,040,000 post-reverse split shares which took place
immediately prior to closing the exchange transaction, the stockholders of DML
Services, Inc. held 2,240,000 shares of our common stock which represented 15%
of the total outstanding shares of our common stock immediately following the
exchange.

                                       1
<PAGE>

The stockholders and management of El Capitan Precious Metals, Inc. acquired
control of us at the effective time of the exchange. The transaction has been
recorded as a reverse acquisition based on factors demonstrating that El Capitan
Precious Metals, Inc. constitutes the accounting acquirer. We are managed by the
management and sole director of El Capitan Precious Metals, Inc.

In August of 2003, we acquired from our largest stockholder, Gold and Minerals
Company, Inc., certain mining claims granted by the United States Bureau of Land
Management, a building and personal property known as the COD Mine located near
Kingman, Arizona. An appraisal dated May 2001 estimated the fair market value of
the COD Mine to be $5,000,000. Consideration for this purchase consisted of 1.2
million shares of our common stock, which had a market value of $1,440,000 on
the closing date. Because the COD Mine was acquired from our controlling
stockholder in exchange for our common stock, the transaction was accounted for
as a non-monetary exchange and the COD Mine was recorded at no value on our
financial statements. As a result of this transaction, Gold and Minerals now
holds 11,275,000 shares of our common stock which represents approximately 65%
of the currently outstanding shares.

(b)         Business of Issuer

We are a nominally capitalized development stage company whose assets consist
primarily of a 40% ownership interest in the El Capitan mine located in Lincoln
county, south central New Mexico and the COD Mine. The remaining 60% of the El
Capitan mine is owned by El Capitan, Ltd, a wholly owned subsidiary of Gold and
Minerals Company, Inc.

EL CAPITAN PROPERTY

The El Capitan property consists of approximately 200 acres of mineral lands
situated in the Capitan Mountains bounded by the Lincoln National Forest. There
are four patented and nine Bureau of Land Management lode claims with mineral
deposits to a depth of approximately 300 feet. The lode claims known as Mineral
Survey Numbers 1440, 1441, 1442 and 1443 were each located in 1902 and patented
in 1911.

The mine, currently inactive, was active for 17 years prior to 1994 and our
involvement but there are no proven commercial precious metals reserves. All
mining and EPA permitting has been approved. Presently, we do not intend to
restart mining operations at the El Capitan property as we are a nominally
capitalized company and do not have the financial capability to develop and mine
the property. Our current intention is to prepare and deliver to mining
organizations throughout the United States and abroad information on the El
Capitan property and solicit proposals for the resumption of mining operations.
In July 2003, we retained the services of IBK Capital Corp. of Toronto, Ontario,
Canada, to act as an advisor for a fee of $20,605 to assist with strategic
options that may include merger, joint venture or possible sale of the El
Capitan mining property. As part of its services, IBK prepared and delivered to
a number of mining companies worldwide a comprehensive report on the El Capitan
property in an effort to generate indications of interest. As of the filing of
this report, we have not received any significant indications of interest, and
there is no assurance that any will be received.

The following mining equipment is located on site:

o        40 x 80 foot steel building
o        two impact mills

                                       2
<PAGE>

o        a screening plant
o        loaders
o        water tanks
o        conveyors
o        7,500 pound capacity furnace
o        UHF concentration tables
o        a fine grading attrition mill
o        chemical reactors
o        laboratory and fire assay equipment
o        150 and 250 watt generators
o        a magnetic separator
o        a 150 pound furnace
o        miscellaneous other mining supplies and equipment

There exists a potential for the discovery of recoverable amounts of precious
metals contained within the lode claims. A study focusing upon the iron
magnetite/hematite ore confirmed the geometry described by previous
investigations. In addition, an extensive geophysical study has shown that the
subsurface iron ore is somewhat larger than previously thought and that there is
a substantial amount of iron ore contained within the Eastern claims which had
not previously been considered. An extensive US Bureau of Mines/ USGS study
(Soule' 1947) was conducted in the 1940's focusing on the potential iron ore.

Reserves have been defined as two separate types: (i) iron ore body which has
been shown to contain precious metals and associated mineralization, and (ii)
banded, fractured mineralized limestone and other rock existing between the main
iron ore body 250 to 300 ft. below. Core holes located at strategic points
throughout the main ore body and using the six government churn holes completed
in the 1940's, developed subsurface information and defines the ore body.

In 2002, our largest stockholder, Gold and Minerals Company, Inc., which owns
60% of the El Capitan property, commissioned drilling and assay reports that
were completed by Albuquerque Geological of Albuquerque, New Mexico. The
following information was taken from the drilling and assay reports prepared for
Gold and Minerals Company, Inc.

RESERVE SUMMARY OF IN-PLACE TONS OF IRON ORE AND MINERAL:

                 PROVEN        INDICATED        INFERRED           TOTAL
                 ------        ---------        --------           -----
Iron Ore       4,674,869       2,136,494          738,742         7,550,105
Mineral              ---       8,231,696       50,021,199        58,252,895
                                                                 ----------
                                                                 65,803,000

A preliminary core-sampling program was recently completed for Gold and Minerals
Company, Inc. Below is a summary of the analytical results of modified fire
assay. In addition to the gold results shown below, the reports also showed
concentrations of silver and other precious metals (platinum group) present in
the samples.

                                       3
<PAGE>

                                                    GOLD,
       SAMPLE #            CORE HOLE #         TROY OZ./ TON*
       --------            -----------         -------------
          1.                    2.                   .07
          2.                    2.                   .09
          3.                    3.                   .13
          4.                    5.                   .22
          5.                    5.                   .34
          6.                    5.                   .23
          7.                    5.                   .41
          8.                    4.                   .38
          9.                    4.                   .11
         10. 4. .12 11. 4 .22

*A program of significantly larger sampling and testing will be required to
accurately gauge the concentrations of recoverable amounts of precious metals on
the property, if any. As a result, until such further testing is conducted,
there is no assurance there are any recoverable commercial precious metals
reserves on the property, or that we will be successful in finding a mining
company partner to assist us in developing the El Capitan property and
determining the potential for commercial reserves.

Further testing is being completed on the property and recently completed assays
of dore bars smelted from concentrate generated from 4,000 tons of high grade
sections of the El Capitan mine ore calculate back to the high graded head ore
at 180 to 200 ounces of silver per short ton. These samples were taken from
sections of the El Capitan property known to contain high grade ore and
therefore there is no assurance these results will encompass the entire
property.

COD MINE

The COD Mine is an underground mine located in the Cerbat mountains
approximately 10 miles north, northwest of Kingman, Arizona. The property
contains 13 claims granted by the United States Bureau of Land Management. The
rock structures on the property are precambrian granites with oxide ores being
prevalent at upper levels of the mine, and sulfide ores being prevalent at the
lowest levels of the mine. This property has previously been mined through two
underground shafts leading to seven levels most recently in the mid 1980's. The
COD Mine was originally located in 1878.

The following mining equipment is located on site:

     o    45 x 94 foot steel building
     o    20 x 24 foot steel building
     o    small steel building for equipment
     o    gravity mill and associated equipment
     o    rod mill
     o    diagonal deck table
     o    various fuel and water storage tanks
     o    crushing circuit equipment and conveyors
     o    compressors and generators
     o    hoists
     o    52' head frame including head frame, ore skip and work car
     o    miscellaneous other mining supplies and equipment

                                       4
<PAGE>

MINING PROCESS

We do not have the financial capability to mine either the El Capitan property
or COD Mine. However, should we be successful in finding a partner to develop
either site, the typical mining process begins with precious metal containing
ore being dug from the surface or blasted from the rock face in underground
mines. It is then hauled to the surface where a crushing plant reduces the ore
to less than 3/4 inch in size. The ore is then milled to increasingly smaller
sizes until it is properly prepared for the smelting process. The precious
metals are then separated from the rock by smelting, or heating, enabling it to
be poured into molds. The molded metals are then dissolved and separated into
individual precious metals groups.

GOLD AND SILVER

According to the World Gold Council, in 2001, mine production amounted to 2,604
tons, or 67% of total gold demand in that year. Production decreased slightly to
2,590 tons in 2002, the most recent year for which records are available.
Generally, gold production has been growing in recent years, but the real
acceleration took place after the late 1970s, when output was in the region of
1,500 tons per year.

Gold is traded as an investment on various world markets including London, New
York, Zurich and Tokyo and are fixed twice daily in London. The "fix" is the
reference price on which a large number of gold transactions around the world
are based. The price is set by a number of market members matching buy and sell
orders from all over the world. High, low and average London afternoon gold fix
prices for the years ended December 31, 2003, 2002 and 2001 are as follows:

Gold - London Afternoon Fix Prices - US Dollars

   YEAR ENDED                    HIGH              LOW            AVERAGE
   ----------                    ----              ---            -------
December 31, 2003              $416.25           $328.18          $363.38
December 31, 2002               349.30            277.75           309.73
December 31, 2001               293.25            255.95           271.04
Data Source: Kitco

Silver is also traded as an investment on various world markets which are fixed
twice daily in London. High, low and average London afternoon silver fix prices
for the years ended December 31, 2003, 2002 and 2001 are as follows:

Silver - London Afternoon Fix Prices - US Dollars

    YEAR ENDED                    HIGH              LOW            AVERAGE
    ----------                    ----              ---            -------
December 31, 2003               $5.9650           $4.3700          $4.8758
December 31, 2002                5.0975            4.2350           4.5995
December 31, 2001                4.8200            4.0650           4.3702
Data Source: Kitco

Should we be successful in developing and mining either the COD Mine or the El
Capitan property and recovering appreciable amounts of gold or other precious
metals, our revenues would be highly dependent upon the price of gold and/or
other precious metals, the market for which can be highly volatile. There is no
assurance that should either property be successfully mined, it will generate
significant revenue from the sale of any precious metals to provide appreciable
revenue to our company.

                                       5
<PAGE>

COMPETITION

The mining industry is dominated by multi-billion dollar, multi-national
companies that possess resources exponentially greater than ours. As a result of
our financial condition, we do not intend to directly compete with these
companies but rather will solicit offers to assist us in mining the COD Mine and
El Capitan property, of which there can be no assurance.

GOVERNMENT REGULATION

Mining and exploration is highly regulated and subject to various consistently
changing federal and state laws and regulations governing the protection of the
environment. These laws, which are becoming more and more restrictive, include:
the Clean Water Act; the Clean Air Act; the Comprehensive Environmental
Response, Compensation and Liability Act; the Emergency Planning and Community
Right-to-Know Act; the Endangered Species Act; the Federal Land Policy and
Management Act; the National Environmental Policy Act; the Resource Conservation
and Recovery Act; and related state laws. The environmental protection laws
dramatically impact the mining and mineral extraction industries, both from a
standpoint of the use of hazardous materials in the mining and extraction
process and the standpoint of returning the land to a natural look after the
mining process is completed. Compliance with Environmental Protection Agency
regulations of the federal government as well as individual state environmental
laws can be expensive and time consuming.

EMPLOYEES

We currently have two employees who are our officers and director. Our officers
and director devote only such time to our business as is necessary to conduct
the operations of the company.


ITEM 2.  DESCRIPTION OF PROPERTY.

We are the 40% owner of approximately 200 acres of mineral lands situated in the
Capitan Mountains, Lincoln county, south central New Mexico. This property is
located approximately one mile from Highway 246 approximately six miles north of
the town of Capitan, New Mexico. Ingress to the property is over dirt road.

We also own 13 mining claims granted by the United States Bureau of Land
Management known as the COD Mine. The property is located in the Cerbat
Mountains approximately 10 miles north, northwest of Kingman, Arizona in Mohave
County, Arizona.

Presently, our corporate secretary provides limited office space at no cost to
us and it is anticipated this arrangement will continue for the foreseeable
future.

                                       6
<PAGE>

ITEM 3.  LEGAL PROCEEDINGS.

Our company is not a party in to any bankruptcy, receivership or other legal
proceeding, and to the best of our knowledge, no such proceedings by or against
us have been threatened.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS.

No matters were submitted during the fourth quarter of the fiscal year covered
by this report to a vote of security holders.


                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

(a)      Market Information

Our common stock is not listed on any exchange; however, market quotes for the
Company's common stock (under the symbol "ECPN") may be obtained from the OTC
Bulletin Board ("OTCBB"). The OTCBB is a regulated quotation service that
displays real-time quotes, last-sale prices and volume information in
over-the-counter ("OTC") securities. The following table sets forth, for the
indicated fiscal periods, the high and low bid prices (as reported by the OTCBB)
for the Company's common stock and all historical quotes are revised for a 4 for
1 stock split effective November 25, 2002. Our stock began trading during the
quarter ended June 30, 2002, and accordingly, no quotes are available prior to
that date.

                                                       BID PRICE
                                              HIGH                   LOW
2003
Quarter ended March 31, 2003                  $1.70                 $1.10
Quarter ended June 30, 2003                   $3.07                 $1.15
Quarter ended September 30, 2003              $1.60                 $0.90
Quarter ended December 31, 2003               $1.13                 $0.77

2002
Quarter ended June 30, 2002                   $0.70                 $0.50
Quarter ended September 30, 2002              $0.70                 $0.10
Quarter ended December 31, 2002               $1.55                 $0.07

The prices set forth in this table represent quotes between dealers and do not
include commissions, mark-ups or mark-downs, and may not represent actual
transactions.

(b)      Holders

The number of record holders of our common stock as of January 9, 2004, was 28
according to our transfer agent. This amount excludes an indeterminate number of
shareholders whose shares are held in "street" or "nominee" name.

                                       7
<PAGE>

(c)      Dividends

We have not paid, nor declared, any dividends since our inception and do not
intend to declare any such dividends in the foreseeable future. Our ability to
pay dividends is subject to limitations imposed by Nevada law. Under Nevada law,
dividends may be paid to the extent that a corporation's assets exceed its
liabilities and it is able to pay its debts as they become due in the usual
course of business.

(d)      Recent Sales of Securities

In the quarter ended September 30, 2003, we issued 1,731,760 unregistered shares
of our $.001 par value common stock in the transactions described below.

For each of the following transactions, we relied upon the exemptions from
registration provided by Section 4(6) or 4(2) of the Securities Act and Rule 506
promulgated thereunder based upon (i) representations from each investor that it
is an accredited or sophisticated investor with experience in investing in
securities such that it could evaluate merits and risks related to our
securities; (ii) that no general solicitation of the securities was made by us;
(iii) each investor represented to us that it was acquiring the securities for
its own account and not with a view towards further distribution; (iv) the
securities issued were "restricted securities" as that term is defined under
Rule 144 promulgated under the Securities Act; and (v) we placed appropriate
restrictive legends on the certificates representing the securities regarding
the restricted nature of these securities; and (vi) prior to the completion of
the transaction, each investor was informed in writing of the restricted nature
of the securities, provided with all information regarding Torpedo Sports as
required under Rule 502 of Regulation D and were given the opportunity to ask
questions of and receive additional information from us regarding our financial
condition and operations. The shares were issued as follows:

On August 25, 2003, we issued 1,200,000 shares of our $.001 par value common
stock to our majority stockholder, Gold and Minerals Company, Inc. in exchange
for the acquisition of the COD Mine. The shares had a market value of $1,440,000
on the closing date and because the COD Mine was acquired from our controlling
stockholder in exchange for our common stock, the transaction was accounted for
as a non-monetary exchange and the COD Mine was recorded at no value on our
financial statements.

On September 17, 2003, we issued 152,380 shares of our $.001 par value common
stock to our president as a component of an employment agreement. These shares
were valued at $160,000 or $1.05 per share.

On September 17, 2003, we issued 352,380 shares of our $.001 par value common
stock to a consultant for services valued at $370,000 or $1.05 per share.


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

General:

The acquisition of El Capitan Precious Metals, Inc. in March 2003 has been
recorded as a reverse acquisition based on factors demonstrating that El Capitan
constitutes the accounting acquirer. The shareholders of El Capitan received 85%
of the post-acquisition outstanding common stock of DML. In addition,
post-acquisition management personnel and the sole board member of the Company
now consist of individuals previously holding positions with El Capitan. The
historical stockholders'

                                       8
<PAGE>

equity of El Capitan prior to the exchange has been retroactively restated (a
recapitalization) for the equivalent number of shares received in the exchange
after giving effect to any differences in the par value of the DML and El
Capitan common stock, with an offset to additional paid-in capital. The restated
consolidated deficit accumulated during the development stage of the accounting
acquirer (El Capitan) has been carried forward after the exchange.

The independent auditors' report on the Company's consolidated financial
statements as of September 30, 2003, and for each of the periods ended September
30, 2003 and 2002, includes a "going concern" explanatory paragraph that
describes substantial doubt about the Company's ability to continue as a going
concern. Management's plans in regard to the factors prompting the explanatory
paragraph are discussed below and also in Note 1 to the audited consolidated
financial statements.

(a) Plan of operation

The Registrant has had no revenues from operations since its inception. Cash to
fund the Registrant's operations has come solely from loans from stockholders
which aggregated $531,500 for the year ended September 30, 2003. The Registrant
anticipates it will need to borrow additional funds from stockholders and others
to fund its operations for the next twelve months. In addition, the Registrant
may raise capital through the issuance of equity instruments including warrants
and possibly through private placements of the Registrant's common stock.

The Registrant's major expenses for the year ended September 30, 2003 consisted
primarily of professional fees, management fees, compensation expense and legal
and accounting fees equaling $1,500,764 of the Company's net loss of $1,561,669
for the fiscal year. A significant portion of these fees have been or will be
paid with shares of the Company's common stock. As discussed in Note 4 to the
financial statements, in preparing its year-end consolidated financial
statements, the Company determined that the value of certain shares issued in
connection with notes payable and recorded as expense during the quarter ended
March 31, 2003, should be reduced by $262,500. This reduction in expense was
recorded in the quarter ended September 30, 2003.

The Registrant's property management group, Gold and Minerals Company, Inc., has
prepared and delivered informational packages on the El Capitan property to be
delivered to active mining operators throughout the United States and abroad in
an effort to solicit indications of interest in the El Capitan property. In
addition, in July 2003, the Registrant signed an agreement with IBK Capital
Corp. of Toronto, Ontario, Canada, to act as an advisor to the Registrant and
assist with strategic options that may include merger, joint venture or possible
sale of the El Capitan mining property. Under the agreement, the Company has
paid IBK $20,605 which translates to a fee of Cdn$25,000 and an expense advance
of Cdn$3,500. Should IBK be successful in presenting a transaction to the
Company, the agreement calls for them to be paid a commission based on the total
value in United States dollars of the transaction equal to 5% on the first
million dollars, and declining one percentage point for each additional million
dollars to a minimum of 1%.

The Registrant will work with any prospective company to verify preliminary
geological and geophysical testing results with a view toward either developing
a working relationship in mining the El Capitan property, or to negotiate its
outright sale, the terms of which would be determined by the parties.
Ultimately, the Registrant's goal is to actively mine the El Capitan property in
conjunction with an established mining operator, or sell the property outright
should an acceptable offer be received, although there is no assurance that the
property will be mined or sold in the future.

                                       9
<PAGE>

The Registrant has not performed any research and development activities, nor
does it expect to in the near future. No significant changes in the number of
the Registrant's employees in anticipated.

Recently issued accounting pronouncements:

In May 2003, the Financial Accounting Standards Board ("FASB") issued SFAS No.
150, ACCOUNTING FOR CERTAIN FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF BOTH
LIABILITIES AND EQUITY. SFAS No.150 establishes new standards on how an issuer
classifies and measures certain financial instruments with characteristics of
both liabilities and equity. Under previous guidance, issuers could account for
many of those instruments as equity. SFAS No. 150 requires that those
instruments be classified as liabilities in statements of financial position.
SFAS No. 150 is effective for all financial instruments entered into or modified
after May 31, 2003, and otherwise is effective at the beginning of the first
interim period beginning after June 15, 2003. The Company has adopted the
applicable provisions of SFAS No. 150, however, numerous provisions have been
delayed and will be adopted in the future. Management believes that the adoption
of the delayed provisions will not have a material impact on its results of
operations or financial condition.

In January 2003, the FASB issued SFAS Interpretation No. 46, CONSOLIDATION OF
VARIABLE INTEREST ENTITIES ("FIN 46"), which changes the criteria by which one
company includes another entity in its consolidated financial statements. FIN 46
requires a variable interest entity ("VIE") to be consolidated by a company if
that company is subject to a majority of the risk of loss from the variable
interest entity's activities or entitled to receive a majority of the entity's
residual returns or both. In December 2003, the FASB approved a partial deferral
of FIN 46 along with various other amendments. The effective date for this
interpretation has been extended until the first fiscal period ending after
December 15, 2003. As the Company does not currently have an interest in a VIE,
management does not expect that the adoption of FIN 46 will have a significant
immediate impact on the financial condition or results of operations of the
Company.

In December 2002, the FASB issued SFAS No 148, ACCOUNTING FOR STOCK-BASED
COMPENSATION TRANSITION AND DISCLOSURE. This statement amends SFAS No. 123,
Accounting for Stock-Based Compensation, and establishes two alternative methods
of transition from the intrinsic value method to the fair value method of
accounting for stock-based employee compensation. In addition, SFAS No. 148
requires prominent disclosure about the effects on reported net income (loss)
and requires disclosure for these effects in interim financial information. The
provisions for the alternative transition methods are effective for fiscal years
ending after December 15, 2002, and the amended disclosure requirements are
effective for interim periods beginning after December 15, 2002. The Company
adopted SFAS No. 148 in 2003 and plans to continue accounting for stock-based
compensation under APB 25.

In November 2002, the FASB issued SFAS Interpretation No. 45 ("FIN 45"),
GUARANTOR'S ACCOUNTING AND DISCLOSURE REQUIREMENTS FOR GUARANTEES, INCLUDING
INDIRECT GUARANTEES AND INDEBTEDNESS OF OTHERS. FIN 45 elaborates on the
disclosures to be made by the guarantor in its interim and annual financial
statements about its obligations under certain guarantees that it has issued. It
also requires that a guarantor recognize, at the inception of a guarantee, a
liability for the fair value of the obligation undertaken in issuing the
guarantee. The initial recognition and measurement provisions of this
interpretation are applicable on a prospective basis to guarantees issued or
modified after December 31, 2002, while the provisions of the disclosure
requirements are effective for

                                       10
<PAGE>

financial statements of interim or annual reports ending after December 15,
2002. The adoption of FIN 45 did not have a significant impact on the
financial condition or results of operations of the Company, as the Company has
made no guarantees.

Critical accounting policies:

The discussion and analysis of our financial condition and results of operations
are based upon our consolidated financial statements, which have been prepared
in accordance with accounting principles generally accepted in the United States
of America. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses and related disclosures of contingent assets and
liabilities. On an on-going basis, we evaluate our estimates, including those
related to stock-based compensation and deferred income taxes. We base our
estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions.

We believe that the following are the more significant accounting policies and
methods used by the Company:

         -        stock-based compensation
         -        valuation of long-lived assets
         -        deferred income taxes

Stock based compensation - SFAS No. 123, Accounting for Stock Based
Compensation, defines a fair-value-based method of accounting for stock-based
employee compensation plans and transactions in which an entity issues its
equity instruments to acquire goods or services from non-employees, and
encourages but does not require companies to record compensation cost for
stock-based employee compensation plans at fair value. The Company has chosen to
account for employee stock-based compensation using the intrinsic value method
prescribed in Accounting Principles Board Opinion No. 25 (APB No. 25),
Accounting for Stock Issued to Employees, and related interpretations.
Accordingly, employee compensation cost for stock options is measured as the
excess, if any, of the estimated fair value of the Company's stock at the date
of the grant over the amount an employee must pay to acquire the stock.

Valuation of long-lived assets - We assess the carrying value of long-lived
assets for impairment when circumstances indicate such amounts may not be
recoverable from future operations. Generally, assets to be held and used are
considered impaired if the sum of expected undiscounted future cash flows is
less than the carrying amount of the asset. At September 30, 2003, the Company's
long-lived assets are carried at $0.

Deferred income taxes - We recognize deferred tax assets and liabilities based
on the differences between the financial statement carrying amounts and the tax
basis of assets and liabilities. The Company regularly reviews its deferred tax
assets for recoverability and establishes a valuation allowance, if determined
to be necessary.

(c) Off-balance sheet arrangements

The Registrant is not a party to any contract or other obligation not included
on its balance sheet that has, or is reasonably likely to have, a current or
future effect on its financial condition.

                                       11
<PAGE>

(d) Safe Harbor

This report may contain certain "forward-looking" statements as such term is
defined in the Private Securities Litigation Reform Act of 1995 or by the
securities and exchange commission in its rules including section 27A of the
Securities Act of 1933 and section 21E of the Securities Exchange Act of 1934,
regulations and releases, which represent the company's expectations or beliefs,
including but not limited to, statements concerning the company's operations,
economic performance, financial condition, growth and acquisition strategies,
off-balance sheet arrangements, and future operational plans including plans for
the El Capitan property, for this purpose, any statements contained herein that
are not statements of historical fact may be deemed to be forward-looking
statements. Without limiting the generality of the foregoing, words such as
"may", "will", "expect", "believe", "anticipate", "intent", "could", "estimate",
"might", or "continue" or the negative or other variations thereof or comparable
terminology are intended to identify forward-looking statements. These
statements by their nature involve substantial risks and uncertainties, certain
of which are beyond the company's control, and actual results may differ
materially depending on the variety of important factors, including uncertainty
related to the company's operations, mergers or acquisitions, governmental
regulation, the value of the company's assets and any other factors discussed in
this and other company filings with the securities and exchange commission.


ITEM 7.  FINANCIAL STATEMENTS.

The financial statements and related information required to be filed are
indexed and begin on page F-1 and are incorporated herein.


ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

         (a) On May 9, 2003, the Board of Directors of El Capitan Precious
Metals, Inc. engaged the accounting firm of Gelfond Hochstadt Pangburn, P.C. as
independent accountants for the Registrant for the newly adopted fiscal year
ending September 30, 2003. Hawkins Accounting was dismissed effective May 9,
2003.

         (b) During the two most recent fiscal years ended December 31, 2002 and
2001, and interim periods subsequent to December 31, 2002, there have been no
disagreements with Hawkins Accounting on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure or any
reportable events.

         (c) Hawkins Accounting's report on the financial statements for the
years ended December 31, 2002 and 2001, contained a going concern emphasis
paragraph, describing substantial doubt about the Registrant's ability to
continue as a going concern. With the exception of the foregoing, the report of
Hawkins Accounting contained no adverse opinion or disclaimer of opinion and was
not qualified or modified as to uncertainty, audit scope or accounting
principles.

         (d) The Registrant requested that Hawkins Accounting furnish it with a
letter addressed to the SEC stating whether it agrees with the above statements.
A copy of Hawkins Accounting letter to the SEC, dated May 15, 2003, is filed as
Exhibit 16.1 to the Form 8-K.

                                       12
<PAGE>

         (e) During the two most recent fiscal years through May 9, 2003, the
Registrant had not consulted with Gelfond Hochstadt Pangburn, P.C. regarding
either (i) the application of accounting principles to a specific transaction,
either contemplated or proposed; or the type of audit opinion that might be
rendered on the Registrant's financial statements, and either a written report
was provided to the Registrant or oral advice was provided that Gelfond
Hochstadt Pangburn, P.C. concluded was an important factor considered by the
Registrant in reaching a decision as to the accounting, auditing or financial
reporting issue; or (ii) any matter that was either the subject of a
disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K
and the related instructions to Item 304 of Regulation S-K, or a reportable
event, as that term is defined in Item 304 (a)(1)(v) of Regulation S-K.


                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

We have adopted a Code of Ethics for our financial management staff. The Code of
Ethics is attached herewith as Exhibit 99.1.

(a)      Identification of Directors and Executive Officers

The following table sets forth the name, age, position and office term of each
executive officer and director of the Company.

NAME                    AGE      POSITION                              SINCE
----                    ---      --------                              -----
Charles C. Mottley       69      President and Director              July 2002
Thomas B. Olson          38      Secretary & Treasurer              August 2002

The following is a brief biography of our officers and directors.

CHARLES C. MOTTLEY. Mr. Mottley has been president and a director of El Capitan
Precious Metals, Inc. since July 2002. Mr. Mottley has also been chairman and
chief executive officer of Gold and Minerals Co., Inc., our largest stockholder,
since 1978. Mr. Mottley has been employed in the mining industry in various
capacities from equipment sales and services to active mining operations for
over 35 years. Mr. Mottley is the author of five books, is the founder of the
Fatherhood Foundation in Scottsdale, Arizona, and is on the board of directors
of Mirror Ministries in the same community. Mr. Mottley received a Bachelor of
Arts Degree from Hampden Sydney College in 1958.

THOMAS B. OLSON. Mr. Olson has been secretary of El Capitan Precious Metals,
Inc. since August 2002. Mr. Olson has been the Secretary of Equitex, Inc., a
publicly traded financial services holding company since January 1988 and has
been a director of its wholly-owned subsidiary, Chex Services, Inc., since May
2002. Since March 2002, Mr. Olson has been the secretary of Torpedo Sports USA,
Inc., a publicly traded manufacturer and distributor of recreational equipment.
Mr. Olson has been Secretary of Equitex 2000, Inc. a holding company since its
inception in 2001. From February 1990 to February 2000, Mr. Olson was a
director, and from May 1994 to February 2000 secretary, of Immune Response, Inc.
a publicly held company in the medical services business. Mr. Olson has attended
Arizona State University and the University of Colorado at Denver.

                                       13
<PAGE>

(b)      Significant Employees

Not applicable.

(c)      Family Relationships

None

(d)      Involvement in Certain Legal Proceedings

Not applicable.

COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT

Section 16(a) of the Securities Exchange Act of 1934 ("Section 16") requires our
officers, directors and persons who own more than ten percent of our voting
securities to file reports of their ownership and changes in such ownership with
the Securities and Exchange Commission (the "Commission"). Commission
regulations also require that such persons provide us with copies of all Section
16 reports they file. Based solely upon its review of such reports received by
us, or written representation from certain persons that they were not required
to file any reports under Section 16, we believe that, during the fiscal year
ending September 30, 2003, our officers and director have complied with all
Section 16 filing requirements.


ITEM 10.  EXECUTIVE COMPENSATION

(a)      General

In March 2003, we executed a two-year employment agreement under which we issued
200,000 shares of common stock to our president and sole director as incentive
compensation to serve. We also agreed to a salary of $20,000 per month,
effective January 1, 2003, which, at the option of the president, may be
satisfied in shares of the Company's common stock. At September 30, 2003, the
Company has issued 152,380 shares of common stock in payment of $160,000 of the
salary and recorded $20,000 of accrued salary. The 200,000 shares of common
stock granted to the president were valued at $320,000, which was recorded as
general and administrative expense in March 2003.

Beginning October 1, 2003, our secretary received a management fee of $1,000 per
month. Effective January 1, 2003, that amount was increased to 3,500 per month,
which, at the option of the Secretary, may be satisfied in shares of the
Company's common stock. The secretary's total compensation for the fiscal year
ended September 30, 2003 was $34,500. Of that amount, $4,000 was paid in cash
during the fiscal year and $30,500 is accrued and remains unpaid.

The following table summarizes the compensation paid to our executive officers
for the year ended September 30, 2003, and the period from July 26, 2002
(inception) to September 30, 2002.

                                       14
<PAGE>

(b)      Summary Compensation Table

<TABLE>
<CAPTION>
                             ANNUAL COMPENSATION
                      ------------------------------------   LONG-TERM
NAME AND PRINCIPAL                                          COMPENSATION
-------------------                           OTHER ANNUAL  ------------
POSITION              YEAR  SALARY    BONUS   COMPENSATION  OPTION/SARS   ALL OTHER
--------              ----  -------   ------  ------------  -----------   ---------
                             ($)       ($)         ($)          ($)           ($)
<S>                   <C>   <C>        <C>           <C>        <C>        <C>
Charles C. Mottley    2003  180,000    -0-           -0-        -0-        320,000(1)
 President/Director
                      2002      0      -0-           -0-        -0-           -0-

Thomas B. Olson       2003   34,500    -0-           -0-        -0-           -0-
 Secretary/Treasurer
                      2002      0      -0-           -0-        -0-           -0-
</TABLE>

(1) Compensation expense for shares of common stock received for services during
fiscal year.

(c) Option/SAR grants table

Not Applicable.

(d) Aggregated option/SAR exercises and fiscal year-end option table

Not Applicable.

(e) Long-term incentive plan ("LTIP") awards table

Not Applicable.

(f) Compensation of directors

Our sole director received no compensation for his services as a director during
the year ended September 31, 2003 or the period from July 26, 2002 (inception)
through September 30, 2002.

(g) Employment contracts and termination of employment and change-in-control
arrangements

In March 2003, we executed a two-year employment agreement under which we issued
200,000 shares of common stock to our president and sole director as incentive
compensation to serve. We also agreed to a salary of $20,000 per month,
effective January 1, 2003, which, at the option of the president, may be
satisfied in shares of the Company's common stock. Terms of the employment
agreement also require us to issue 500,000 shares of common stock to our
president should we sell the El Capitan property during the term of the
employment agreement. Should we sell the El Capitan property for a price in
excess of $150 million, we are to grant the president a five-year option to
purchase up to 2 million shares of our common stock at an exercise price of
$3.00 per share.

(h) Report on repricing of options/SARs

Not Applicable.

                                       15
<PAGE>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following table sets forth as of December 31, 2003, the number and
percentage of the 17,369,760 shares of outstanding common stock which, according
to the information supplied to the Company, were beneficially owned by (i) each
person who is currently a director of the Company, (ii) each executive officer,
(iii) all current directors and executive officers of the Company as a group and
(iv) each person who, to the knowledge of the Company, is the beneficial owner
of more than 5% of the outstanding common stock. Except as otherwise indicated,
the persons named in the table have sole voting and dispositive power with
respect to all shares beneficially owned, subject to community property laws
where applicable.

                                                      AMOUNT AND
                                                      NATURE OF        PERCENT
                        NAME AND ADDRESS              BENEFICIAL         OF
TITLE OF CLASS         OF BENEFICIAL OWNER            OWNERSHIP         CLASS
--------------         -------------------                              -----
  Common            Gold and Minerals Co., Inc.      11,275,000(1)       64.8%
                            PO Box 5148
                         Phoenix, AZ 85261

  Common                 Charles C. Mottley             352,380          2.0%
                       7315 E. Peakview Ave.
                        Englewood, CO 80111

  Common                  Thomas B. Olson               130,000          0.9%
                        7315 E. Peakview Ave
                        Englewood, CO 80111

  Common                   Wayne W. Mills               975,000          5.6%
                         5020 Blake Road S
                          Edina, MN 55436

  Common             All Officer and Directors       11,757,380(1)       67.7%
                        as a Group (2 Persons)

(1)  Charles Mottley, who became President and is our sole Director effective
     with the acquisition of El Capitan Precious Metals, Inc. on March 18, 2003,
     is an officer and director of Gold and Minerals Co., Inc.


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

During the year ended September 30, 2003, our president loaned us a total of
$13,500, of which $3,500 was repaid prior to the fiscal year end. The remaining
balance of $10,000 is due on demand and carries an interest rate of 8% per
annum.

In August of 2003, we acquired from our largest stockholder, Gold and Minerals
Company, Inc., certain mining claims granted by the United States Bureau of Land
Management, a building and personal property known as the COD Mine located near
Kingman, Arizona. An appraisal dated May 2001 estimated the fair market value of
the COD Mine to be $5,000,000. Consideration for this purchase consisted of 1.2
million shares of our common stock, which had a market value of $1,440,000 on
the closing date. Because the COD Mine was acquired from our controlling



                                       16
<PAGE>

stockholder in exchange for our common stock, the transaction was accounted for
as a non-monetary exchange and the COD Mine was recorded at no value on our
financial statements. As a result of this transaction, Gold and Minerals now
holds 11,275,000 shares of our common stock which represents approximately 65%
of the currently outstanding shares.

In March 2003, the Company advanced $12,500 to an affiliate in which an officer
of the Company is also an officer of the affiliate, in exchange for two
unsecured, 8% promissory notes, which are due on demand. At September 30, 2003,
the Company has recorded a valuation allowance of $12,500 against this
receivable due to the uncertainty as to the ultimate collectibility of the note.

In September 2002, the Company received $120,000 from a stockholder of the
Company in exchange for two, unsecured promissory notes payable. In April 2003,
the Company received an additional $38,000 from this stockholder in exchange for
two unsecured promissory notes payable. The notes bear interest at 8% and are
due on demand.

In July 2003, the Company received $1,000 from its Secretary in exchange for an
unsecured promissory note payable bearing interest at 8% per annum. This note
was repaid in July 2003.


ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K.

REPORTS ON FORM 8-K

No reports on Form 8-K were filed during the quarter ended December 31, 2003.

EXHIBITS

        Exhibit 31 - Certification pursuant to Section 302 of the
        Sarbanes-Oxley Act of 2002

        Exhibit 32 - Certification pursuant to Section 906 of the
        Sarbanes-Oxley Act of 2002

        Exhibit 99.1 - El Capitan Precious Metals, Inc. Code of Ethics for
        Senior Financial Management


ITEM 14.  CONTROLS AND PROCEDURES

A review and evaluation was performed by the Company's management, including the
Company's Chief Executive Officer (the "CEO"), of the effectiveness of the
design and operation of the Company's disclosure controls and procedures as of a
date within 90 days prior to the filing of this annual report. Based on that
review and evaluation, the CEO has concluded that the Company's current
disclosure controls and procedures, as designed and implemented, were effective.
There have been no significant changes in the Company's internal controls or in
other factors that could significantly affect the Company's internal controls
subsequent to the date of their evaluation. There were no significant material
weaknesses identified in the course of such review and evaluation and,
therefore, no corrective measures were taken by the Company.

                                       17
<PAGE>

                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                        EL CAPITAN PRECIOUS METALS, INC.
                                        (Registrant)


Date:February 13, 2004                  By: /s/ Charles Mottley
     -----------------                     -------------------------------------
                                           Charles C. Mottley, President &
                                           Chief Executive Officer



In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.



Date:February 13, 2004                  /s/ Charles C. Mottley
     -----------------                  -------------------------------------
                                        Charles C. Mottley, President,
                                        Chief Executive Officer,
                                        Chief Financial Officer,
                                        President & Director


                                       18

<PAGE>
                        EL CAPITAN PRECIOUS METALS, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                     Page
                                                                                     ----
<S>                                                                                  <C>
Independent auditors' report                                                          F-2

Consolidated Balance Sheet - September 30, 2003                                       F-3

Consolidated Statements of Operations - Year ended September 30, 2003, and the
periods from July 26, 2002 (inception) through September 30, 2002 and 2003            F-4

Consolidated Statements of Changes in Stockholders' Deficit - period from July
26, 2002 (inception) through September 20, 2002 and the year ended September 30,
2003                                                                                  F-5

Consolidated Statements of Cash Flows - Year ended September 30, 2003, and the
periods from July 26, 2002 (inception) through September 30, 2002 and 2003            F-6

Notes to Consolidated Financial Statements                                            F-7
</TABLE>



                                      F-1
<PAGE>

                          INDEPENDENT AUDITORS' REPORT



Board of Directors
El Capitan Precious Metals, Inc.

We have audited the accompanying consolidated balance sheet of El Capitan
Precious Metals, Inc. and subsidiary (a Development Stage Company) as of
September 30, 2003, the related consolidated statements of operations and cash
flows for the year then ended, and for the periods from July 26, 2002
(inception) through September 30, 2002 and 2003, and the consolidated statements
of changes in stockholders' deficit for the year ended September 30, 2003, and
for the period from July 26, 2002 (inception) through September 30, 2002. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by the management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of El Capitan Precious
Metals, Inc. and subsidiary as of September 30, 2003, and the results of their
operations and their cash flows for the year then ended and for the periods from
July 26, 2002 (inception) through September 30, 2002 and 2003, in conformity
with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company incurred a net loss of $1,561,669
for the year ended September 30, 2003, and a deficit accumulated during the
development stage of $1,583,246 for the period from July 26, 2002 (inception)
through September 30, 2003. The Company also has a limited history and no
revenue producing operations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans with regard
to these matters are also described in Note 1. The consolidated financial
statements so not include any adjustments that might result from the outcome of
this uncertainty.




/S/ GELFOND HOCHSTADT PANGBURN, P.C.

Denver, Colorado
February 3, 2004

                                      F-2
<PAGE>

                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)

                           CONSOLIDATED BALANCE SHEET

                               SEPTEMBER 30, 2003


                                     ASSETS

Current assets:
     Cash                                                       $          75
                                                                --------------

Deposits, and related party note receivable,
     net of allowance of $12,500 (Note 3)                              86,008
                                                                --------------

                                                                $      86,083
                                                                ==============


                      LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
     Accounts payable                                           $      24,070
     Accrued liabilities                                               33,134
     Accrued liabilities, related parties                              70,500
     Interest payable, related parties                                  9,771
     Interest payable, other                                           17,197
     Notes payable, related parties (Note 3)                          168,000
     Notes payable, other (Note 4)                                    340,126
                                                                --------------

         Total liabilities (all current)                              662,798
                                                                --------------

Commitments and contingencies (Notes 4 and 5)

Stockholders' deficit (Note 7):
     Common stock, $0.001 par value; 50,000,000 shares
       authorized; 17,369,760 shares issued and outstanding            17,370
     Additional paid-in capital                                       989,161
     Deficit accumulated during the development stage              (1,583,246)
                                                                --------------

         Total stockholders' deficit                                 (576,715)
                                                                --------------

                                                                $      86,083
                                                                ==============

                See notes to consolidated financial statements.
                                      F-3
<PAGE>

                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)


                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                   Period from           Period from
                                                                  July 26, 2002         July 26, 2002
                                                                   (inception)           (inception)
                                             Year ended              through               through
                                         September 30, 2003    September 30, 2002    September 30, 2003
                                         ------------------    ------------------    ------------------
<S>                                      <C>                   <C>                   <C>
General and administrative expenses:
     Professional fees                   $        (902,609)                          $        (902,609)
     Officer compensation expense                 (510,034)                                   (510,034)
     Management fees, related
       parties (Note 3)                            (34,500)    $         (10,000)              (44,500)
     Legal and accounting fees                     (53,621)              (11,362)              (64,983)
     Other                                         (16,524)                                    (16,524)
                                         ------------------    ------------------    ------------------
                                                (1,517,288)              (21,362)           (1,538,650)
                                         ------------------    ------------------    ------------------

Other income (expense):
     Interest expense:
         Related parties (Note 3)                  (14,643)                 (215)              (14,858)
         Other                                     (29,738)                                    (29,738)
                                         ------------------    ------------------    ------------------
                                                   (44,381)                 (215)              (44,596)
                                         ------------------    ------------------    ------------------

Net loss                                 $      (1,561,669)    $         (21,577)    $      (1,583,246)
                                         ==================    ==================    ==================

Basic and diluted net loss per common
     share                               $           (0.11)    $           (0.02)    $           (0.13)
                                         ==================    ==================    ==================
Weighted average number of common
     shares outstanding                         14,406,328             1,105,000            12,369,466
                                         ==================    ==================    ==================
</TABLE>

                See notes to consolidated financial statements.
                                      F-4
<PAGE>
                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

        PERIOD FROM JULY 26, 2002 (INCEPTION) THROUGH SEPTEMBER 30, 2002
                     AND THE YEAR ENDED SEPTEMBER 30, 2003


<TABLE>
<CAPTION>
                                                                                        Deficit
                                                                                      accumulated
                                                     Common stock       Additional     during the
                                               -----------------------   paid-in      development
                                                  Shares      Amount     capital         stage         Total
                                               ------------  ---------  ----------   ------------   -----------
<S>                                            <C>           <C>        <C>          <C>            <C>
Initial issuance of common stock in
  September 2002                                 1,105,000   $  1,105   $  (1,096)                  $        9

Net loss                                                                             $   (21,577)      (21,577)
                                               ------------  ---------  ----------   ------------   -----------

Balances at September 30, 2002                   1,105,000      1,105      (1,096)       (21,577)      (21,568)

Issuance of common stock to Gold and
  Minerals Company, Inc. in connection
  with purchase of interest in assets of
  El Capitan, Ltd. in November 2002 (Note 1)    10,075,000     10,075     (10,067)                           8

Issuance of common stock for cash
  in November 2002                               1,820,000      1,820      (1,806)                          14
                                               ------------  ---------  ----------   ------------   -----------

                                                13,000,000     13,000     (12,969)       (21,577)      (21,546)

Acquisition of DML Services, Inc.
  on March 17, 2003 (Note 1)                     2,240,000      2,240     (52,240)                     (50,000)

Common stock issued in connection with
  notes payable in March 2003 (Note 4)             175,000        175      17,325                       17,500

Common stock and warrants issued
  for services in March 2003 (Note 5)               50,000         50     188,950                      189,000

Common stock issued under executive
  compensation agreement in March
  2003 (Note 3)                                    352,380        352     479,648                      480,000

Issuance of common stock to Gold and
  Minerals Company, Inc. in connection
  with purchase of COD Mine in August
  2003  (Note 1)                                 1,200,000      1,200      (1,200)

Common stock issued under management
  agreement in August 2003 (Note 5)                352,380        353     369,647                      370,000

Net loss                                                                              (1,561,669)   (1,561,669)
                                               ------------  ---------  ----------   ------------   -----------

Balances at September 30, 2003                  17,369,760   $ 17,370   $ 989,161    $(1,583,246)   $ (576,715)
                                               ============  =========  ==========   ============   ===========
</TABLE>

                See notes to consolidated financial statements.
                                      F-5
<PAGE>
            EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
                     (A DEVELOPMENT STAGE COMPANY)

                 CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                       Period from      Period from
                                                                                      July 26, 2002    July 26, 2002
                                                                                      (inception)       (inception)
                                                                      Year ended        through           through
                                                                     September 30,    September 30,    September 30,
                                                                         2003             2002             2003
                                                                     -------------    -------------    -------------
<S>                                                                  <C>              <C>              <C>
Cash flows from operating activities:
     Net loss                                                        $ (1,561,669)    $    (21,577)    $ (1,583,246)
                                                                     -------------    -------------    -------------
     Adjustments to reconcile net loss to net cash used in
      operating activities:
         Stock-based compensation expense                               1,039,000                         1,039,000
         Amortization of discount on notes payable                         17,500                            17,500
         Provision for uncollectible related party note receivable         12,500                            12,500
         Changes in operating assets and liabilities:
            Increase in accounts payable                                   14,112            9,958           24,070
            Increase in accrued liabilities                                33,134                            33,134
            Increase in accrued liabilities, related parties               60,285           10,215           70,500
            Increase in interest payable, related parties                   9,771                             9,771
            Increase in interest payable, other                            17,197                            17,197
                                                                     -------------    -------------    -------------
            Total adjustments                                           1,203,499           20,173        1,223,672
                                                                     -------------    -------------    -------------
            Net cash used in operating activities                        (358,170)          (1,404)        (359,574)
                                                                     -------------    -------------    -------------

Cash flows from investing activities:
     Deposits in connection with proposed asset purchase                  (68,500)         (17,500)         (86,000)
     Issuance of notes receivable                                         (12,500)                          (12,500)
     Cash paid in connection with acquisition of
      DML Services, Inc.                                                  (50,000)                          (50,000)
                                                                     -------------    -------------    -------------
            Net cash used in investing activities                        (131,000)         (17,500)        (148,500)
                                                                     -------------    -------------    -------------

Cash flows from financing activities:
     Proceeds from the sale of common stock                                    14                9               23
     Issuance of notes payable, related parties                            52,500          120,000          172,500
     Issuance of notes payable, other                                     359,000                           359,000
     Repayment of notes payable, related parties                           (4,500)                           (4,500)
     Repayment of notes payable, other                                    (18,874)                          (18,874)
                                                                     -------------    -------------    -------------

            Net cash provided by financing activities                     388,140          120,009          508,149
                                                                     -------------    -------------    -------------

(Decrease) increase in cash                                              (101,030)         101,105               75
Cash, beginning                                                           101,105                -                -
                                                                     -------------    -------------    -------------
Cash, ending                                                         $         75     $    101,105     $         75
                                                                     =============    =============    =============

Supplemental disclosure of non-cash investing and financing
  activities:

     Issuance of common stock to Gold and Minerals Company, Inc.
         in connection with the purchase of interest in assets
         of El Capitan, Ltd.                                         $          8     $         -      $          8
                                                                     =============    =============    =============

     Issuance of common stock to Gold and Minerals
         Company, Inc. in connection with the purchase
         of the COD Mine (Note 1)                                    $      1,200     $         -      $      1,200
                                                                     =============    =============    =============
</TABLE>

                See notes to consolidated financial statements.
                                      F-6
<PAGE>
                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDARY
                          (A DEVELOPMENT STAGE COMPANY)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

               YEAR ENDED SEPTEMBER 30, 2003, AND THE PERIODS FROM
          JULY 26, 2002 (INCEPTION) THROUGH SEPTEMBER 30, 2003 AND 2002


1.   BUSINESS, ORGANIZATION, GOING CONCERN AND MANAGEMENT'S PLANS:

     BUSINESS:

     On July 26, 2002, El Capitan Precious Metals, Inc. ("El Capitan" or the
       "Company") was incorporated as a Delaware corporation to engage in the
       business of acquiring mining properties containing precious metals,
       principally gold, silver, and platinum. The Company is in the development
       stage, and since inception, has devoted substantially all of its efforts
       to raising capital and negotiating the acquisition of an interest in a
       mining property and certain other mining claims and assets, discussed
       below.

     ORGANIZATION:

     The Company was previously organized as DML Services, Inc. ("DML"), a
       Nevada corporation, formed in 2000. On March 17, 2003, DML sold the
       assets and operations of its catering and food-service business to the
       executive officers and directors of DML in exchange for the return of
       10,040,000 shares of DML and cash of $50,000, paid by El Capitan. On
       March 18, 2003, DML acquired all of the issued and outstanding common
       stock of El Capitan in exchange for 13,000,000 shares of the DML's common
       stock issued to the El Capitan stockholders, which represented 85% of the
       Company's total shares outstanding immediately following the exchange. As
       a result of a four share for one share stock split completed by DML on
       November 25, 2002, and the retirement of 10,040,000 post-reverse-split
       shares which took place immediately prior to closing the transaction, the
       stockholders of DML hold 2,240,000 shares of the Company's common stock,
       which represents 15% of the total outstanding shares of common stock of
       the Company immediately following the exchange.

     The El Capitan transaction has been recorded as a reverse acquisition based
       on factors demonstrating that El Capitan constitutes the accounting
       acquirer. The shareholders of El Capitan received 85% of the
       post-acquisition outstanding common stock of DML. In addition,
       post-acquisition management personnel and the sole board member of the
       Company now consist of individuals previously holding positions with El
       Capitan. The historical stockholders' equity of El Capitan prior to the
       exchange has been retroactively restated (a recapitalization) for the
       equivalent number of shares received in the exchange after giving effect
       to any differences in the par value of the DML and El Capitan common
       stock, with an offset to additional paid-in capital. The restated
       consolidated deficit accumulated during the development stage of the
       accounting acquirer (El Capitan) has been carried forward after the
       exchange.

     The consolidated financial statements include the accounts of DML and El
       Capitan. All significant intercompany transactions and balances have been
       eliminated in consolidation.

                                      F-7
<PAGE>

                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDARY
                          (A DEVELOPMENT STAGE COMPANY)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

               YEAR ENDED SEPTEMBER 30, 2003, AND THE PERIODS FROM
          JULY 26, 2002 (INCEPTION) THROUGH SEPTEMBER 30, 2003 AND 2002

1.   BUSINESS, ORGANIZATION, GOING CONCERN AND MANAGEMENT'S PLANS (CONTINUED):

     GOING CONCERN AND MANAGEMENT'S PLANS:

     The accompanying financial statements have been prepared on a going concern
       basis, which contemplates the realization of assets and the settlement of
       liabilities and commitments in the normal course of business. The Company
       reported a net loss of $1,561,669 for the year ended September 30, 2003
       and a deficit accumulated during the development stage of $1,583,246 for
       the period from July 26, 2002 (inception) through September 30, 2003. The
       Company has a limited operating history and no revenue producing
       operations. In addition, the Company does not have a revolving loan
       agreement with any financial institution. These factors raise substantial
       doubt about the Company's ability to continue as a going concern. The
       financial statements do not include any adjustments relating to the
       recoverability and classification of assets or the amounts and
       classification of liabilities that might be necessary should the Company
       be unable to continue as a going concern.

     To address its current cash flow concerns, the Company is in discussions
       with certain stockholders and others to raise additional funds for
       working capital. However, the Company cannot provide any assurance that
       it will be able to raise funds through a further issuance of debt or
       equity securities.

     LETTER OF UNDERSTANDING WITH GOLD AND MINERALS COMPANY, INC.:

     In September 2002, the Company entered into a letter of understanding (the
       "LOU") with Gold and Minerals Company, Inc. ("Minerals"), a Nevada
       corporation. Minerals is involved in the exploration, development, and
       testing of mining properties. Under the terms of the LOU, the Company
       completed the acquisition of a 40% interest in certain assets of El
       Capitan, Ltd. ("ECL"), an Arizona corporation, which is a wholly-owned
       subsidiary of Minerals, in exchange for the issuance of 10,075,000 shares
       of the Company's common stock to Minerals (which occurred in November
       2002, and which constituted a 77.5% equity ownership in the Company prior
       to the reverse acquisition) and $100,000 cash (the "Purchase Price").

     The assets of ECL primarily consist of the El Capitan mine (the "Mine") an
       inactive iron and related ore mine located in New Mexico. The Mine
       contains four patented claims and three unpatented claims on
       approximately 200 acres in the Capitan Mountains in Lincoln County, New
       Mexico. The Mine has no proven reserves. The Company is not to assume any
       liabilities or obligations of ECL.

     As of September 30, 2003, the Company had paid $86,000 of the $100,000 cash
       required to purchase ECL. In October 2003, the remaining $14,000 was paid
       to Minerals by the Company.

                                      F-8
<PAGE>

                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDARY
                          (A DEVELOPMENT STAGE COMPANY)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

               YEAR ENDED SEPTEMBER 30, 2003, AND THE PERIODS FROM
          JULY 26, 2002 (INCEPTION) THROUGH SEPTEMBER 30, 2003 AND 2002

1.   BUSINESS, ORGANIZATION, GOING CONCERN AND MANAGEMENT'S PLANS (CONTINUED):

     PURCHASE OF MINING CLAIMS FROM MINERALS:

     In August 2003, the Company acquired from Minerals, certain mining claims
       granted by the United States Bureau of Land Management, a building and
       personal property known as the COD Mine located near Kingman, Arizona.
       The COD Mine is an inactive underground mine consisting of thirteen
       mining claims as well as various outbuildings and other associated
       personal property. An appraisal dated May 2001 estimated the fair market
       value of the COD Mine to be $5,000,000. Consideration for this purchase
       consisted of 1.2 million shares of the Company's common stock, which had
       a market value of $1,440,000 on the closing date. Because the COD Mine
       was acquired from the Company's controlling stockholder in exchange for
       shares of the Company's common stock, the transaction was accounted for
       as a non-monetary exchange and was recorded at no value in the
       consolidated financial statements.

2.   SIGNIFICANT ACCOUNTING POLICIES:

     USE OF ESTIMATES IN THE PREPARATION OF THE FINANCIAL STATEMENTS:

     The preparation of the Company's consolidated financial statements in
       conformity with accounting principles generally accepted in the United
       States of America requires management to make estimates and assumptions
       that affect the reported amounts of assets and liabilities and disclosure
       of contingent assets and liabilities at the date of the financial
       statements and the reported amounts of revenues and expenses during the
       reporting periods. Management makes these estimates using the best
       information available at the time the estimates are made; however, actual
       results could differ materially from these estimates.

     FAIR VALUE OF FINANCIAL INSTRUMENTs:

     The fair values of cash, accounts payable and notes payable to third
       parties approximate their carrying amounts because of the short
       maturities of these instruments. The fair values of related party notes
       receivable and related party notes payable are not practicable to
       estimate based on the related party nature of the underlying
       transactions.

     CASH AND CASH EQUIVALENTS:

     The Company considers all highly liquid investments with an original
       maturity of three months or less and money market instruments to be cash
       equivalents.

                                      F-9
<PAGE>

                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDARY
                          (A DEVELOPMENT STAGE COMPANY)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

               YEAR ENDED SEPTEMBER 30, 2003, AND THE PERIODS FROM
          JULY 26, 2002 (INCEPTION) THROUGH SEPTEMBER 30, 2003 AND 2002

2.   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

     COMPREHENSIVE INCOME (LOSS):

     Statement of Financial Accounting Standards ("SFAS") No. 130, REPORTING
       COMPREHENSIVE INCOME, establishes requirements for disclosure of
       comprehensive income and its components, which include, among other
       items, unrealized gains or losses from marketable securities and foreign
       currency translation adjustments that previously were only reported as a
       component of stockholders' equity. The Company did not have any
       components of comprehensive income (loss) during the periods presented.

     NET INCOME (LOSS) PER SHARE:

     SFAS No. 128, EARNINGS PER SHARE, requires dual presentation of basic and
       diluted earnings or loss per share ("EPS") with a reconciliation of the
       numerator and denominator of the basic EPS computation to the numerator
       and denominator of the diluted EPS computation. Basic EPS excludes
       dilution. Diluted EPS reflects the potential dilution that could occur if
       securities or other contracts to issue common stock (100,000 shares at
       September 30, 2003; none at September 30, 2002) were exercised or
       converted into common stock or resulted in the issuance of common stock
       that then shared in the earnings of the entity. These dilutive securities
       are not considered in the calculation, as the impact of the potential
       shares would be to decrease loss per share. Therefore, diluted loss per
       share is equivalent to basic loss per share.

     Earnings and loss per share of common stock is computed based on the
       average number of common shares outstanding during the period. The
       historical loss per share of El Capitan prior to the merger has been
       retroactively restated to reflect the new capital structure.

     STOCK-BASED COMPENSATION:

     SFAS No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, defines a fair-value
       based method of accounting for stock-based employee compensation plans
       and transactions in which an entity issues its equity instruments to
       acquire goods or services from non-employees, and encourages but does not
       require companies to record compensation cost for stock-based employee
       compensation plans at fair value. The Company has chosen to continue to
       account for stock-based compensation using the intrinsic value method
       prescribed in Accounting Principles Board Opinion No. 25, ACCOUNTING FOR
       STOCK ISSUED TO EMPLOYEES, and guidance provided in SFAS Interpretation
       ("FIN") No. 44, ACCOUNTING FOR CERTAIN TRANSACTIONS INVOLVING STOCK
       COMPENSATION. Accordingly, compensation cost for stock options is
       measured as the excess, if any, of the quoted market price of the
       Company's stock at the date of the grant over the amount an employee must
       pay to acquire the stock.

                                      F-10
<PAGE>

                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDARY
                          (A DEVELOPMENT STAGE COMPANY)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

               YEAR ENDED SEPTEMBER 30, 2003, AND THE PERIODS FROM
          JULY 26, 2002 (INCEPTION) THROUGH SEPTEMBER 30, 2003 AND 2002

2.   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

     IMPAIRMENT OF LONG-LIVED ASSETS:

     Management assesses the carrying value of long-lived assets for impairment
       when circumstances indicate such amounts may not be recoverable from
       future operations. Generally, assets to be held and used are considered
       impaired if the sum of expected undiscounted future cash flows is less
       than the carrying amount of the asset. At September 30, 2003, long-lived
       assets were recorded at no value in the consolidated financial
       statements.

     RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:

     In May 2003, the Financial Accounting Standards Board ("FASB") issued SFAS
       No. 150, ACCOUNTING FOR CERTAIN FINANCIAL INSTRUMENTS WITH
       CHARACTERISTICS OF BOTH LIABILITIES AND EQUITY. SFAS No. 150 establishes
       new standards on how an issuer classifies and measures certain financial
       instruments with characteristics of both liabilities and equity. Under
       previous guidance, issuers could account for many of those instruments as
       equity. SFAS No. 150 requires that those instruments be classified as
       liabilities in statements of financial position. SFAS No. 150 is
       effective for all financial instruments entered into or modified after
       May 31, 2003, and otherwise is effective at the beginning of the first
       interim period after June 15, 2003. The Company has adopted the
       applicable provisions of SFAS No. 150, however, numerous provisions have
       been delayed and will be adopted in the future.  Management believes that
       the adoption of the delayed provisions will not have a material impact on
       its results of operations or financial condition.

     In January 2003, the FASB issued SFAS Interpretation No. 46, CONSOLIDATION
       OF VARIABLE INTEREST ENTITIES ("FIN 46"), which changes the criteria by
       which one company includes another entity in its consolidated financial
       statements. FIN 46 requires a variable interest entity ("VIE") to be
       consolidated by a company if that company is subject to a majority of the
       risk of loss from the variable interest entity's activities or entitled
       to receive a majority of the entity's residual returns or both. In
       December 2003, the FASB approved a partial deferral of FIN 46 along with
       various other amendments. The effective date for this interpretation has
       been extended until the first fiscal period ending after December 15,
       2003. As the Company does not currently have an interest in a VIE,
       management does not expect that the adoption of FIN 46 will have a
       significant immediate impact on the financial condition or results of
       operations of the Company.

     In December 2002, the FASB issued SFAS No. 148, ACCOUNTING FOR STOCK-BASED
       COMPENSATION TRANSITION AND DISCLOSURE. This statement amends SFAS No.
       123, ACCOUNTING FOR STOCK-BASED COMPENSATION, and establishes two
       alternative methods of transition from the intrinsic value method to the
       fair value method of accounting for stock-based employee compensation. In
       addition, SFAS No. 148 requires prominent disclosure about the effects on
       reported net income (loss) and requires disclosure for these effects in
       interim financial information. The provisions for the alternative
       transition methods are effective for fiscal years ending after December
       15, 2002, and the amended disclosure requirements are effective for
       interim periods beginning after December 15, 2002. The Company plans to
       continue accounting for stock-based compensation under APB 25. Therefore,
       this pronouncement is not expected to impact the Company's financial
       position or results of operations.

                                      F-11
<PAGE>

                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDARY
                          (A DEVELOPMENT STAGE COMPANY)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

               YEAR ENDED SEPTEMBER 30, 2003, AND THE PERIODS FROM
          JULY 26, 2002 (INCEPTION) THROUGH SEPTEMBER 30, 2003 AND 2002

2.   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

     RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:

     In November 2002, the FASB issued SFAS Interpretation No. 45 ("FIN 45"),
       GUARANTOR'S ACCOUNTING AND DISCLOSURE REQUIREMENTS FOR GUARANTEES,
       INCLUDING INDIRECT GUARANTEES AND INDEBTEDNESS OF OTHERS. FIN 45
       elaborates on the disclosures to be made by the guarantor in its interim
       and annual financial statements about its obligations under certain
       guarantees that it has issued. It also requires that a guarantor
       recognize, at the inception of a guarantee, a liability for the fair
       value of the obligation undertaken in issuing the guarantee. The initial
       recognition and measurement provisions of this interpretation are
       applicable on a prospective basis to guarantees issued or modified after
       December 31, 2002, while the provisions of the disclosure requirements
       are effective for financial statements of interim or annual reports
       ending after December 15, 2002. The adoption of FIN 45 did not have an
       impact on the financial condition or results of operations of the
       Company, as the Company has made no guarantees.

     RECLASSIFICATIONS:

     Certain amounts reported in the prior periods' financial statements have
       been reclassified to conform to the current year presentation.

3.   RELATED PARTY TRANSACTIONS:

     NOTES RECEIVABLE:

     In March 2003, the Company advanced $12,500 to an affiliate in which an
       officer of the Company is also an officer of the affiliate, in exchange
       for two unsecured, 8% promissory notes, which are due on demand. At
       September 30, 2003, the Company has recorded a valuation allowance of
       $12,500 against this receivable due to uncertainty as to the ultimate
       collecibility of these promissory notes.

     NOTES PAYABLE:

     In September 2002, the Company received $120,000 from a stockholder of the
       Company in exchange for two, unsecured promissory notes. In April 2003,
       the Company received an additional $38,000 from this stockholder in
       exchange for two, unsecured promissory notes. The notes bear interest at
       8% and are due on demand.

     In July 2003, the Company received $13,500 from its president and sole
       director in exchange for two unsecured promissory notes. The notes bear
       interest at 8% per annum and are due on demand. In August 2003, $3,500
       was repaid by the Company.

     In July 2003, the Company received $1,000 from its corporate secretary in
       exchange for an unsecured promissory note bearing interest at 8% per
       annum. This note was repaid in July 2003.

                                      F-12
<PAGE>

                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDARY
                          (A DEVELOPMENT STAGE COMPANY)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

               YEAR ENDED SEPTEMBER 30, 2003, AND THE PERIODS FROM
          JULY 26, 2002 (INCEPTION) THROUGH SEPTEMBER 30, 2003 AND 2002

3.   RELATED PARTY TRANSACTIONS (CONTINUED):

     EMPLOYMENT AGREEMENT:

     In March 2003, the Company executed a two-year employment agreement under
       which the Company issued 200,000 shares of common stock to its president
       and sole director as incentive compensation. The Company also agreed to a
       salary of $20,000 per month, effective January 1, 2003, which, at the
       option of the president, may be satisfied in shares of the Company's
       common stock. At September 30, 2003, the Company has issued 152,380
       shares of common stock in payment of $160,000 of the salary and recorded
       $20,000 of accrued salary payable. The 200,000 shares of common stock
       granted to the president were valued at $320,000, which was recorded as
       general and administrative expense in March 2003.

     Terms of the employment agreement also require the Company to issue 500,000
       shares of common stock to the president should the Company sell the Mine
       during the term of the employment agreement. Should the Company sell the
       Mine for a price in excess of $150 million, the Company is to grant the
       president a five-year option to purchase up to 2 million shares of the
       Company's common stock at an exercise price of $3.00 per share.

     MANAGEMENT FEES:

     The Company has agreed to pay management fees to a stockholder ($5,000 per
       month beginning August 1, 2002), and its corporate secretary ($1,000 per
       month beginning October 1, 2002 increased to $3,500 per month beginning
       January 1, 2003). The agreements are on a month-to-month basis. The
       Company paid management fees pursuant to these agreements of $72,000,
       $82,000 and $10,000 during the year ended September 30, 2003 and during
       the periods from July 26, 2002 (inception) through September 30, 2003 and
       2002, respectively. Accrued management fees at September 30, 2003 are
       $53,600.

4.   NOTES PAYABLE, OTHER:

     During the period from July 26, 2002 (inception) through September 30,
       2003, the Company received $359,000 in exchange for unsecured, 8%
       promissory notes from five individuals, which are due on demand. In
       addition, in March 2003 the Company issued 175,000 shares of common stock
       in connection with certain of these notes. The portion of proceeds
       applicable to the common stock was determined to be $17,500 ($0.10 per
       share, the par value of the Company's common stock at the dates of
       issuance), which occurred prior to the reverse acquisition. Accordingly,
       $17,500 was charged to interest expense, as the notes are due on demand.
       At the date of the transaction, the Company originally determined that
       the value of the shares issued was approximately $280,000. In preparing
       its year-end consolidated financial statements, the Company re-evaluated
       the transaction and valuation of the shares issued and as a result,
       recorded an adjustment in the quarter ended September 30, 2003, to reduce
       the original amount expensed by $262,500. In December 2003, the Company
       received a demand for payment from the holder of a note in the amount of
       $50,000. The Company currently does not have funds available for payment
       of the note and therefore may be considered in default.

                                      F-13
<PAGE>

                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDARY
                          (A DEVELOPMENT STAGE COMPANY)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

               YEAR ENDED SEPTEMBER 30, 2003, AND THE PERIODS FROM
          JULY 26, 2002 (INCEPTION) THROUGH SEPTEMBER 30, 2003 AND 2002

5.   CONSULTING AGREEMENTS:

     In October 2002, the Company entered into a consulting and services
       agreement (the "Agreement") for business development and investor
       relations services. The term of the Agreement is 18 months, but may be
       terminated earlier under certain circumstances. Terms of the agreement
       require the Company to pay a total of $200,000 to the consultant, which
       was expensed during the year ended September 30, 2003, and which was paid
       as of September 30, 2003.

     In March 2003, the Company entered into a business consulting and financial
       advisory agreement. In exchange for services performed under this
       agreement, the Company issued 50,000 shares of common stock valued at
       $80,000 ($1.60 per share; the market value of the Company's common stock
       on the date of issuance) and warrants to purchase 100,000 shares of
       common stock valued at $109,000 utilizing the Black-Scholes option
       pricing model (Note 7).

     In August 2003, concurrent with the acquisition of the COD Mine, the
       Company entered into a consulting agreement with an officer of Minerals
       pursuant to which he received 200,000 shares of common stock valued at
       $210,000. In addition, the Company agreed to pay a fee of $20,000 per
       month, effective January 1, 2003, which may be paid in shares of the
       Company's common stock at the Company's option. At September 30, 2003,
       the Company has issued 152,380 shares of common stock in payment of
       $160,000 of the consulting fee and recorded $20,000 of accrued fees
       payable.

6.   INCOME TAXES:

     The Company recognizes deferred tax assets and liabilities for the expected
       future tax consequences of events that have been recognized in the
       financial statements or tax returns. Under this method, deferred tax
       assets and liabilities are determined based on the differences between
       the financial statement carrying amounts and tax bases of assets and
       liabilities using enacted tax rates in effect in the years in which the
       differences are expected to reverse.

     The Company incurred no income taxes during the period from July 26, 2002
       (inception) through September 30, 2003. The expected tax benefit for the
       period is approximately $538,000 (approximately $531,000 for the year
       ended September 30, 2003), based on a Federal statutory income tax rate
       of 34%. The difference between the expected tax benefit and
       non-recognition of a tax benefit during the periods is primarily the
       result of a valuation allowance applied to the net deferred tax asset,
       which primarily consists of the Company's net operating loss
       carryforwards. A valuation allowance has been provided to reduce the net
       deferred tax asset, as realization of the asset is not assured. At
       September 30, 2003, the Company had net operating loss carryforwards of
       approximately $1,500,000, which are available to offset future taxable
       income, if any, through 2023.

                                      F-14
<PAGE>

                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDARY
                          (A DEVELOPMENT STAGE COMPANY)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

               YEAR ENDED SEPTEMBER 30, 2003, AND THE PERIODS FROM
          JULY 26, 2002 (INCEPTION) THROUGH SEPTEMBER 30, 2003 AND 2002

7.   STOCKHOLDERS' DEFICIT:

     WARRANTS:

     In March 2003, the Company issued warrants to purchase up to 100,000 shares
       of the Company's common stock, exercisable immediately through March 2006
       (Note 5). The warrants' exercise prices are as follows:

                       SHARES UNDER WARRANT      EXERCISE PRICE PER SHARE
                              25,000                       $2.50
                              50,000                       $5.00
                              25,000                       $7.50
                              ------
                             100,000



                                      F-15