UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-KSB

[X]   Annual report  pursuant to section 13 or 15(d) of the Securities  Exchange
      Act of 1934 For the fiscal year ended September 30, 2005

|_|   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)

                       14301 North 87th Street, Suite 216
                           Scottsdale, Arizona 85260
                           -------------------------
               (Address of principal executive offices)(Zip Code)

         Issuer's telephone number, including area code: (480) 607-7093

   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 is not required to file reports  pursuant to Section 13
or 15(d) of the Exchange Act. [ ]

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. [ ]

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act. Yes [ ] No [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 January 10,
2006 by non-affiliates of the issuer was approximately $102,085,000 based on the
closing  market price of the  Registrant's  common stock of $1.65 as reported on
the OTC Bulletin Board.

As of January  10,  2006,  issuer had  72,314,813  shares of its $.001 par value
common stock issued and 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,"  "PLAN,"  "PREDICT" 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.

THESE RISKS AND UNCERTAINTIES AND OTHER FACTORS INCLUDE, BUT ARE NOT LIMITED TO,
THOSE  SET  FORTH  UNDER  ITEM  1  -  RISK   FACTORS.   GIVEN  THESE  RISKS  AND
UNCERTAINTIES,  READERS  ARE  CAUTIONED  NOT  TO  PLACE  UNDUE  RELIANCE  ON OUR
FORWARD-LOOKING  STATEMENTS.  ALL  SUBSEQUENT  WRITTEN AND ORAL  FORWARD-LOOKING
STATEMENTS  ATTRIBUTABLE  TO THE COMPANY OR TO PERSONS  ACTING ON OUR BEHALF ARE
EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THESE CAUTIONARY STATEMENTS.  EXCEPT AS
REQUIRED BY FEDERAL  SECURITIES  LAWS,  WE DO NOT INTEND TO UPDATE OR REVISE ANY
FORWARD-LOOKING  STATEMENTS,  WHETHER  AS A RESULT  OF NEW  INFORMATION,  FUTURE
EVENTS OR OTHERWISE.

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

(a)   Business Development

      El Capitan Precious  Metals,  Inc.  (hereinafter,  the "Company," "we" and
"our" refer to El Capitan Precious Metals,  Inc.) is a precious minerals company
based in  Scottsdale,  Arizona.  We are an  exploration  stage company that owns
interests in several mines located in the  southwestern  United  States.  We are
principally  engaged in the  exploration,  development  and  mining of  precious
metals,  iron ores and other minerals.  Our primary assets include  interests in
the COD Mine  located  near  Kingman,  Arizona,  the Weaver  Mine  located  near
Congress,  Arizona,  and a 40% equity  interest in El Capitan,  Ltd., an Arizona
corporation which holds an interest in the El Capitan Mine located near Capitan,
New Mexico. To date, we have not had any revenue producing operations.

      The Company was previously  organized as a Nevada  corporation on December
20, 2000 under the name DML Services,  Inc. ("DML"). DML was in the catering and
food service  business,  operating  under the name "Go  Espresso."  On March 17,
2003, we sold substantially all of the assets and the operations of the catering
and food service  business to Michael Flores and Deborah  Flores,  our executive
officers  and  directors  at  that  time,  in  exchange  for the  redemption  of
30,120,000  shares  of our  common  stock,  par  value  $.001  ("Common  Stock":
hereinafter,   all   references  to  shares  of  "Common  Stock"  shall  include
adjustments for the four for one stock split effective November 25, 2002 and the
200% stock  dividend  effective July 30, 2004, as  appropriate)  held by Michael
Flores and Deborah Flores and $50,000 in cash.


                                      -1-
<PAGE>

      On March 18, 2003,  we acquired all of the issued and  outstanding  common
stock of El Capitan Precious Metals, Inc., a Delaware corporation  ("ECPN"),  in
exchange for the issuance to ECPN's  shareholders  of  39,000,000  shares of our
Common  Stock,   which  constituted   approximately  85%  of  our  total  shares
outstanding  immediately following the exchange. ECPN constituted the accounting
acquirer  in the  transaction,  and the  transaction  was  recorded as a reverse
acquisition.  Our Company then changed its name to "El Capitan  Precious Metals,
Inc."  Immediately  after the transaction  Gold and Minerals Co., Inc., a Nevada
corporation  ("Gold  and  Minerals"),  which  then held  77.5% of  ECPN's  total
outstanding equity, became our controlling shareholder holding 30,225,000 shares
of our Common Stock, then constituting 66.1% of our outstanding Common Stock.

      After the  transaction  with  ECPN,  our  primary  asset was a 40%  equity
interest in El Capitan,  Ltd., an Arizona  corporation which owns the El Capitan
Mine, an inactive iron and related ore mine located in New Mexico, including the
assets used to explore and mine the property.  The El Capitan Mine contains four
patented claims and three unpatented  claims on  approximately  200 acres in the
Capitan Mountains in Lincoln County,  New Mexico.  The other 60% equity interest
in El Capitan, Ltd. is held by Gold and Minerals.

      In August 2003, we acquired from Gold and Minerals certain assets known as
the COD Mine  located near  Kingman,  Arizona.  The assets we obtained  included
thirteen  mining claims  granted by the United States Bureau of Land  Management
(the  "BLM"),  a  building  and  personal  property.  In  consideration  for the
purchase,  we issued  3,600,000 shares of our Common Stock to Gold and Minerals,
holding a market value at that time of approximately $1,440,000. 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.  Contemporaneously
with the  purchase  of the COD Mine,  we entered  into a  management  consulting
agreement with Mr. Larry Lozensky, the President of Gold and Minerals,  pursuant
to which Mr.  Lozensky  agreed to  continue  to manage and  operate the COD Mine
until  December 31, 2004 in exchange for a management  consulting fee of $20,000
per month and the  issuance  to Mr.  Lozensky  of  600,000  shares of our Common
Stock. Under the management consulting  agreement,  we obtained the right to pay
the management  consulting fee to Mr.  Lozensky in the form of our Common Stock.
From the expiration of the management  consulting agreement on December 31, 2004
through  March 31, 2005,  Mr.  Lozensky  continued to manage and operate the COD
Mine on  behalf  of the  Company  on a  month-to-month  basis  for a  management
consulting  fee of $10,000 per month.  Since March 31,  2005,  Mr.  Lozensky has
continued to provide management  services for the COD Mine without  compensation
from the Company.

      In May 2004,  the Company  executed a joint venture  agreement (the "Joint
Venture") with U.S.  Canadian  Minerals,  Inc.  ("USCA.PK"),  a  publicly-traded
Nevada  company,  to explore,  operate and utilize the COD Mine,  including  the
recovery of gold and silver from the tailings of the COD Mine. The Joint Venture
is to operate under the name "CanEl" until May 2020, unless  terminated  earlier
pursuant to the terms of the Joint  Venture.  Under  terms of the Joint  Venture
Agreement,  the Company was  required to transfer to USCA.PK an 80%  interest in
the COD mine in exchange for 720,000  restricted shares of USCA.PK common stock.
Pursuant to a stock split effected by USCA.PK, Company currently holds 2,160,000
shares of the USCA stock.  On the date of the  original  transaction,  shares of
unrestricted  freely trading USCA.PK common stock traded at $2.85 per share, or,
adjusted for the split, at $0.95 per share. At September 30, 2005,  1,000,000 of
these  shares  were  utilized  as  collateral  for a $300,000  debenture  of the
Company. Subsequent to the year end, the holder of the debenture and the Company
agreed to  convert  the  debenture  into a  private  placement  offering  of the
Company's  securities.  On October 28,  2005,  the Company  used these shares as
collateral  security for a convertible  promissory note issued by the Company in
the aggregate amount of $750,000.

      The USCA.PK  common  stock was  restricted  with respect to sale until May
2005.  USCA.PK's common stock is currently  traded on the Pink Sheets,  its most
recent SEC filings have not been reviewed by an  independent  registered  public
accounting  firm,  and it faced a SEC imposed  temporary  trading  suspension in
October  of 2004,  which has since  expired.  The  Company  also has  continuing
involvement  (as  discussed  below)  related  to the COD  Mine.  Based  on these
factors,  no gain on the sale was  recorded and the Company has not ascribed any
value to the common stock received.


                                      -2-
<PAGE>

      The  Company  is  currently   assessing  the  USCA.PK   common  stock  for
classification as marketable securities.  Upon completion of the assessment, the
Company intends to classify the investment as available for sale under Statement
of  Financial   Accounting  Standard  (SFAS)  No  115,  Accounting  for  Certain
Investments in Debt and Equity Securities. The Company will not record any value
associated  with the common  stock  until such time,  unless it  liquidates  its
investment earlier.

      Under the Joint  Venture,  the  Company is to  operate  the COD Mine as it
relates to the tailings and settlement pond and contribute the equipment  needed
for future  operations.  USCA.PK  contributed 90 days operating  capital,  which
provided for three workers, fuel, necessary equipment,  and equipment repair and
maintenance.  The  parties  have also  agreed  to share  the costs and  expenses
related  to  the  operation  of  the  mine  in  accordance   with  their  profit
participation in the COD Mine. Net profits, if any, from the operations tailings
and  settlement  pond  operations  will be split  equally  among the Company and
USCA.PK,  and USCA.PK  shall  retain 100% of any other  profit.  Currently  this
project is on hold as USCA.PK is focusing on bringing  current their SEC filings
and to resume trading on the Bulletin Board.

      In addition to the Joint Venture,  the Company also retained  USCA.PK as a
consultant  for a period of two years to provide  services  pertaining to, among
other things, identifying,  studying and evaluating merger,  acquisition,  joint
venture,  strategic  alliance and other proposals as well as  implementation  of
financial  public  relations  programs  for the  Company.  In  exchange  for its
services,  USCA.PK  was  issued a one-year  warrant  to acquire up to  3,000,000
shares of El Capitan common stock  exercisable at $0.14 per share.  This warrant
expired on May 15, 2005, unexercised. The total compensation cost related to the
warrants  was valued at $108,000  utilizing  the Black  Scholes  option  pricing
method; the entire amount was expensed during the year ended September 30, 2004.

      In July 2004,  we acquired  from Gold and Minerals the Weaver Mine located
near Congress, Arizona.  Consideration for this purchase was 3,000,000 shares of
our Common  Stock,  which had a market  value of $400,000  on the closing  date.
Because the Weaver Mine was acquired  from our  controlling  stockholder  at the
time in exchange for our Common Stock,  the  transaction  was accounted for as a
non-monetary  exchange  and the  Weaver  Mine  was  recorded  at no value on our
financial statements.

      In July 2004, we signed an agreement  with Mr. Bob Langguth  regarding the
operation  of  the  Rainbow  Valley  Mine,   consisting  of  claims  located  on
approximately 1,620 acres in Maricopa County,  Arizona.  Under the terms of this
agreement,  we have been paying Mr.  Langguth $2,500 per month since August 2004
for management of the testing,  permitting and further  development of the Mine.
During the quarter ended March 31, 2005,  the Company  drilled this property for
samples and performed assay tests on the samples to determine content of mineral
deposits on the mining  site.  The Company is  currently  performing  additional
testing  procedures  for the  extraction of precious  metals on samples from the
property. Upon receiving the final results, management will analyze the economic
feasibility  for  commencing  operations at the site based upon  utilization  of
various  recovery  processes,  and  depending  on such  analysis may continue to
obtain  permitting  and the  necessary  right of ways for the  property.  If the
Company is  successful  in each of these steps,  it may  mobilize  this site for
production.

      Upon the completion of successful testing and permitting,  we are required
to make a final payment of $100,000 to Mr. Langguth. In addition, we have agreed
to pay a  royalty  of $1.00  per ton for each ton of iron ore  shipped  from the
property as well as 3% of the profit before taxes for any sales of minerals from
this property.


                                      -3-
<PAGE>

(b)   Business of Issuer

      We are an  exploration  stage company that owns interests in several mines
located in the  southwestern  United States.  We are principally  engaged in the
exploration,  development  and mining of  precious  metals,  iron ores and other
minerals. At this time, we are not engaged in any revenue-producing operations.

      Currently,  the Company is structured into two operational divisions:  the
(i)  Precious  Metals  Division  and (ii) the Iron  Ore  Division.  Through  our
Precious Metals  Division,  we are continuing the exploration and development of
the El Capitan Mine, COD Mine, and Weaver Mine. As noted in more detail below in
Item 2, these mines are in various stages of exploration and development.  After
completing  final  testing to  determine  the  existence  and  concentration  of
precious metals in these mines, and if the results of such testing are positive,
the Company  anticipates  formalizing  plans to sell these  properties  to major
mining companies in 2006.

      Progress on the Iron Ore Division is currently on hold due to considerable
issues relating to rail transportation. From November 2004 to the present, there
has been a major  shortage in rail cars and the major  railways are operating at
full capacity and incurring increased  congestion at ports that would be able to
handle iron ore transport. Currently, most of the major railway carriers are not
extending quotes or new commitments,  and are not indicating when they may be in
a  position  to do so in the  future.  These  conditions  make  it  economically
unfeasible  to pursue any sale,  and therefore  production,  of iron ore at this
time.  When these  transportation  issues  subside,  if they do, the Company may
recommence its operation of the Iron Ore Division.

      Over the last year, we have also been working on a proprietary process for
the extraction of precious metals from various property interests  interest.  We
anticipate  the  results of the final  testing of this  proprietary  process and
related  products by ousted  refineries by the end of March 2006. If the results
of the outside verification indicate that the process is economically  feasible,
the Company's  intention is to build a small pilot test plant and implement this
proprietary process into production.

Price of Precious Metals

      Gold,  silver and platinum are each traded as investments 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 precious
metal  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 fix prices for gold,  silver and
platinum for the period from  January 1, 2005 to September  30, 2005 and for the
years ended December 31, 2004, 2003 and 2002 are as follows:

Gold - London Afternoon Fix Prices - US Dollars
-----------------------------------------------

                 Period                         High         Low       Average
                 ------                         ----         ---       -------
From January 1, 2005 to September 30, 2005     $473.25     $411.10     $432.00
For the year ended December 31, 2004            454.20      375.00      409.72
For the year ended December 31, 2003            416.25      328.18      363.38
For the year ended December 31, 2002            349.30      277.75      309.73
     Data Source: Kitco


                                      -4-
<PAGE>

Silver - London Afternoon Fix Prices - US Dollars
-------------------------------------------------

                 Period                         High         Low       Average
                 ------                         ----         ---       -------
From January 1, 2005 to September 30, 2005     $7.5700     $6.3900     $7.0682
For the year ended December 31, 2004            8.2900      5.4950      6.6711
For the year ended December 31, 2003            5.9650      4.3700      4.8758
For the year ended December 31, 2002            5.0975      4.2350      4.5995
     Data Source: Kitco

Platinum - London Afternoon Fix Prices - US Dollars
---------------------------------------------------

                 Period                         High         Low       Average
                 ------                         ----         ---       -------
From January 1, 2005 to September 30, 2005     $930.00     $844.00     $877.56
For the year ended December 31, 2004            936.00      744.00      845.31
For the year ended December 31, 2003            840.00      603.00      691.31
For the year ended December 31, 2002            607.00      453.00      539.13
     Data Source: Kitco

      Should we be  successful  in  developing  and  mining any of the mines and
recover appreciable amounts of gold or other precious metals, our revenues would
be highly  dependent  upon the price of these  precious  metals,  the market for
which can be highly  volatile.  There is no  assurance  that  should  any of the
properties be successfully mined, it will generate  significant revenue from the
sale of any precious metals to provide appreciable revenue to our Company.

Iron Ore

      Iron ore is a mineral  substance  which,  when heated in the presence of a
reductant, will yield metallic iron (Fe). Iron ore is the source of primary iron
for the world's iron and steel  industries,  and is essential for the production
of steel. Approximately 98% of all iron ore is used in steelmaking.  Iron ore is
mined in about 50  countries.  The seven  largest of these  producing  countries
account for about three-quarters of total world production. Australia and Brazil
together  dominate the world's iron ore exports,  each having about one-third of
total exports.

      The element  iron (Fe) is one of the most  abundant on earth,  but it does
not exist in nature in its useful metallic form. Iron ore is the term applied to
a natural  iron-bearing mineral in which the content of iron is sufficient to be
commercially  usable.  Metallic  iron,  from  which  steel is  derived,  must be
extracted  from iron ore. By  definition,  steel is a combination of iron with a
small amount of carbon.

      Thousands of products  having various  chemical  composition,  forms,  and
sizes are made of iron and steel by casting,  forging,  and  rolling  processes.
Iron and steel  comprise  about 95 percent of all the tonnage of metal  produced
annually in the United States and the world. On the average,  iron and steel are
by far the least expensive of the world's metals. In some applications  steel is
required  because the  strength of other metals is not  suitable,  such as steel
framing for large buildings.

Transportation

      In the event it is  commercially  reasonable  for us to  extract  and sell
precious metals or iron ore, we will incur material costs to transport the goods
to any eventual buyers. This will likely include a combination of transportation
by truck,  railroad and possibly  ships. We have been in discussion with various
trucking  and railroad  companies  with regard to our  potential  transportation
needs.  It is  impossible  at this  time to  adequately  estimate  the  costs of
transportation,  particularly  so with  regard to the  current  issues with rail
transportation as discussed below.


                                      -5-
<PAGE>

      Since November 2004,  there has been a major shortage in rail cars and the
major railways are operating at full capacity and incurring increased congestion
at ports that would be able to handle iron ore transport. Currently, most of the
major railway carriers are not extending quotes or new commitments,  and are not
indicating when they may be in a position to do so in the future.

Competition

      The mining  industry  has  historically  been  highly  competitive.  It is
dominated  by  multi-billion  dollar,   multi-national  companies  that  possess
resources  exponentially  greater  than  ours.  Given  our  size  and  financial
condition,  there is no assurance we can compete  with these  companies  for the
mining and sale of our products.

Government Regulation

      Mining  and  exploration  is  highly  regulated  and  subject  to  various
constantly  changing  federal  and  state  laws and  regulations  governing  the
protection  of  the   environment.   These  laws  are  becoming  more  and  more
restrictive,  and include without limitation: 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 as it pertains to both the use of hazardous  materials in
the mining and extraction  process and from the standpoint of returning the land
to a natural look once the mining process is completed.  Compliance with federal
and state environmental regulations can be expensive and time consuming.

      Compliance with the various government  regulations  requires us to obtain
multiple  permits for each mining  property,  including  without  limitation the
following: "Notice of Intent" to explore, "Plan of Operations" to explore, "Plan
of  Operations"  to mine,  "Reclamation  Permit," "Air Quality  Permit,"  "Water
Quality  Permit,"  "Industrial  Artificial  Pond Permit," and various health and
safety permits.  These permits are continually  subject to amendment or renewal.
Although there is no guarantee that the regulatory agencies will timely approve,
if at all, the necessary permits for our current and anticipated operations,  we
have no reason to believe  at this time that we will not  obtain  the  necessary
permits in due course.  The cost of permits for each property varies, and we are
unable at this time to estimate the total cost of such permits.

Employees

      We currently have five  employees.  Three of these employees also serve as
directors of the Company.  Our officers and  directors  devote only such time to
our  business  as is  necessary  to  conduct  the  operations  of  the  Company.
Additionally,  the Company uses  consultants  for the testing and  developing of
mine claims. Once we enter the operations phase, we anticipate hiring additional
employees, and utilizing a combination of employees and consultants as necessary
to conduct our mining operations.

Available Information

      We are a Nevada corporation with our principal offices at 14301 North 87th
Street,  Suite 216,  Scottsdale,  Arizona 85260.  Our telephone  number is (480)
607-7093. Our website address is www.elcapitanpmi.com.


                                      -6-
<PAGE>

ITEM 2.

DESCRIPTION OF PROPERTY

El Capitan Property

      The El Capitan property originally consisted of approximately 200 acres of
mineral  lands bounded by the Lincoln  National  Forest in Lincoln  County,  New
Mexico.  The  property is situated  in the Capitan  Mountains,  near the city of
Capitan,  in southwest  New Mexico.  The main site can be reached by going north
from  Capitan on State Road 246 for 5.5 miles,  turning  right onto an  improved
private road and proceeding for about .7 miles.

      The Company  holds a 40% equity  interest in El Capitan  Ltd.,  an Arizona
corporation  which owns the mine property.  The other 60% equity  interest in El
Capitan, Ltd. is owned by Gold and Minerals.  The Mine consists of four patented
and nine BLM lode claims with mineral deposits to a depth of  approximately  300
to 400 feet. The lode claims known as Mineral Survey  Numbers 1440,  1441,  1442
and 1443 were each located in 1902 and patented in 1911.

      During  October  and  November  2005,  the  Company  staked and claimed on
property  surrounding the El Capitan  resource  located in Lincoln  County,  New
Mexico. This increased the total claimed area to approximately 10,000 acres. The
additional  staking  and  claiming  around  our  original  site  was  done  upon
recommendations  from the Company's consulting geologist to insure protection of
our interests.

      On January 1, 2006,  El Capitan,  Ltd.  finalized the purchase of the four
patented mining claims on the Mine property, which constitute approximately 77.5
acres  in the  aggregate.  In  consideration  for the  claims,  ECL  transferred
2,100,000 shares of ECPN Common Stock owned by Gold and Minerals Co. Pursuant to
an agreement  between El Capitan,  Ltd. and the seller,  the stock was valued at
$0.82 per share, the market value of the Company's stock on November 11, 2005.

      Pursuant to an arrangement with Minerals, ECPN is obligated to Minerals to
pay $688,800 for the purchase of the patented mining claims by ECL. ECPN intends
to offset its portion of the purchase  price  against  existing  obligations  of
Minerals due ECPN.

      To our  knowledge,  the  Mine  was  last  active  in  1987,  prior  to its
acquisition by El Capitan Ltd.

      The following mining assets are located at the El Capitan Mine site:

      o     40 x 80 foot steel building;

      o     two impact mills;

      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 kilowatt generators;

      o     a magnetic separator;

      o     a 150 pound furnace;

      o     and other miscellaneous mining supplies and equipment


                                      -7-
<PAGE>

      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) the magnetite iron
ore body, and (ii) banded,  fractured  mineralized  limestone and hematite which
contains  precious  metals.  By using core holes  located  at  strategic  points
throughout the main ore body and six government  churn holes that were completed
in the 1940's,  we have been able to develop  subsurface  information and define
the ore body.

      To date, there have been no proven commercial  precious metals reserves on
the El Capitan  Mine site.  The Company has obtained  necessary  permits for the
Mine,  and intends to continue  testing  the  property in 2006.  The Company has
retained AuRIC  Metallurgical  Labs of Salt Lake City, Utah ("AuRIC") to further
test the El Capitan Mine. AuRIC offers significant  metallurgical  experience in
the platinum  group  metals,  and is  currently  developing a process to recover
gold,  platinum,  palladium and silver from ores.  AuRIC has performed  tests on
samples from the El Capitan Mine,  which have  resulted in commercial  values of
non-magnetic  ore. We have also retained the services of Dr. Clyde Smith to work
with AuRIC in the testing of the Mine. Dr. Smith is a Consulting  Geologist with
over 30 years of experience in the mining industry.  Dr. Smith received a Ph. D.
from the University of Idaho in Moscow,  Idaho and an M. Sc. from the University
of British  Columbia in Vancouver,  British  Columbia.  Dr. Smith also served as
Industrial  Associate at the School of Earth Sciences at Stanford University for
a period of 10 years.

      During fiscal year 2005, the Company performed  drilling on the El Capitan
mine,  and is in the process of completing  the assays on the drilling  results.
Once the assays are completed,  Dr. Smith will prepare detailed reports relating
to the precious metal and iron ore content on the Mine. In the event the Company
receives  suitable  testing  results  and report from Dr.  Smith,  it intends to
market the Mine for sale to potential buyers, including major mining companies.

      On September 27, 2005, the Company  entered into an Agreement with Pavlich
Associates (Pavlich) which provides for Pavlich to be the primary representative
of El Capitan Precious Metals, Inc. in the sale of the El Capitan Project to all
viable third party mineral companies. The Agreement provides for consulting time
charges,  expenses and a success fee of $250,000, less the sum of the consulting
time charges paid under the Agreement, for the successful sale of the Project.


                                      -8-
<PAGE>

COD Mine

      The COD Mine is an  underground  mine  located in the Cerbat  mountains in
Mohave  County,  Arizona,  approximately  11 miles north,  northwest of Kingman,
Arizona. The mine can be reached by taking Interstate 40 north out of Kingman to
the Stockton Hill Road exit. After going approximately 5 miles north on Stockton
Hill Road, there is a subdivision road extending west. Following the subdivision
road to the second  southern  extension  road,  the visitor  will see road sings
showing the directions to the mine from that point.

      The property contains 13 claims granted by the BLM. 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.

      We have taken  preliminary  samples at the COD Mine property.  In 2003, we
retained Mr. Larry Lozensky,  the President of Gold and Minerals,  to manage and
oversee the COD Mine.  Until December 31, 2004, this arrangement was governed by
a management  consulting  agreement with Mr. Lozensky,  pursuant to which he was
paid a  management  fee of $20,000  per month and issued  600,000  shares of our
Common Stock.  From the  expiration  of that  agreement in December 2004 through
March 31,  2005,  Mr.  Lozensky  continued to manage and operate the COD Mine on
behalf of the Company on a month-to-month basis for a management  consulting fee
of $10,000 per month. Since March 31, 2005, Mr. Lozensky has continued to manage
and oversee the COD Mine without any compensation from the Company.

      Pursuant to a joint venture  agreement with U.S. Canadian  Minerals,  Inc.
("USCA.PK")  entered into in May 2004,  where we  transferred an 80% interest in
the COD Mine to USCA. Pursuant to the agreement,  we plan to operate the Mine to
recover  gold and silver from the  tailings of the COD Mine.  As operator of the
COD  Mine,  we are to  receive  50% of the  profits  from the  gold  and  silver
tailings,  if any. We are required to contribute  the equipment  needed for such
operations.  UCAD has agreed to contribute 90 days operating  capital to provide
for at least three workers, fuel, necessary equipment,  and equipment repair and
maintenance.  After the 90-day  period,  the  parties are to split the costs and
expenses  related to the operation of the mine in  accordance  with their profit
participation  in the COD Mine.  To date,  the Company  has spent  approximately
$2,500 on this project.

      The following mining equipment is located on the COD Mine property:

      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

      We have conducted some  exploration at the COD Mine, and intend to conduct
further exploration and testing in 2006. In the event the joint venture receives
suitable  testing  results,  it intends to market the Mine for sale to potential
buyers, including major mining companies.


                                      -9-
<PAGE>

      This  project  has been on hold as USCA.PK  has been  focusing on bringing
current  their  SEC  filings  and  to  resume  trading  on the  Bulletin  Board.
Subsequent  to our  current  year  ended,  our Board of  Directors  approved  an
amendment to the Joint  Venture  Agreement  whereby the Company will  contribute
$50,000 for the completion of the geological field study. As  consideration  for
this advance, the Company will be reimbursed this advance and any other incurred
expenses,  and all net proceeds from the sale of the site,  after  deducting all
incurred  costs,  are to be split equally with  USCA.PK.

      Subsequent  to our year end, our Board of Directors  approved an amendment
to the Joint  Venture  agreement  pursuant to which the Company will  contribute
$50,000 for the  completion  of a geological  field  study.  The Company will be
reimbursed  by  USCA.PK  for its  proportianate  share of this  amount and other
applicable expenses incurred at the mine.

Weaver Mine

      The Weaver Mine  consists  of  approximately  40 acres of land  located in
Maricopa County,  Arizona. The property is located  approximately 75 miles north
of Phoenix,  near Congress,  Arizona.  From Congress,  Arizona,  the site can be
reached by taking State Highway 89 north out of Congress to Stanton Road, taking
Stanton Road east to Stanton,  Arizona.  The mine is located  approximately  1.5
miles northeast of Stanton, Arizona.

      The Weaver  Mine was  acquired  from our  majority  shareholder,  Gold and
Minerals.  Prior to the acquisition by Gold and Minerals,  the Mine was operated
by our President,  Charles C. Mottley, and a partner of Mr. Mottley. Mr. Mottley
and his  partner  operated  the Mine  from  1982 to 1984,  mining  approximately
150,000 tons of iron ore during that period of time.

      The  Company  intends  to  complete  some  exploration  of this  mine  and
depending  on its  findings,  to market the mine for sale to  potential  buyers,
including major mining companies.

Rainbow Valley Mine

      The Rainbow Valley Mine consists of  approximately  1,620 acres located in
Maricopa county, approximately 30 miles south of Phoenix near Mobile, Arizona.

      In July 2004, we signed an agreement  with Mr. Bob Langguth  regarding the
operation  of  the  Rainbow  Valley  Mine,   consisting  of  claims  located  on
approximately  1,620 acres in Maricopa  County,  Arizona.  The property has been
permitted  and the  property  and was  drilled  and  assayed  in  early  2005 to
determine  the  iron  ore  content  of the  mining  site.  Currently,  it is the
Company's  intent to finalize and verify the test results by an outside refinery
and based upon the results of this property and compared to other properties the
Company is in process of testing and  confirming,  management will determine the
final disposition of this site during the first calendar quarter of 2006.

      Under the terms of the agreement,  the seller is to be paid $2,500 monthly
for  managing  the  testing,  further  developing  of  the  property,  necessary
permitting and  consulting on other  properties the Company may have an interest
in. Upon  completion of the  successful  testing and permitting of the site, the
Company will be obligated to pay the seller $100,000.  At this time, the Company
is not liable for this obligation. If the transaction is consummated, additional
consideration to be paid to the seller under the agreement consists of a royalty
of $1.00 per ton of iron ore and 3% of the  before  tax  profit on any  minerals
shipped from the property.

Executive Offices

      Our executive  offices are located at 14301 North 87th Street,  Suite 216,
Scottsdale Arizona, 85260. On November 1, 2004, we entered into a two-year lease
for the space,  at a monthly  rent of $3,845.  We believe  that the  offices are
adequate to meet our  current  requirements.  Other than our mines as  described
above, the Company does not own any real property.


                                      -10-
<PAGE>

RISK FACTORS

Risks Relating to Our Common Stock

Trading of our Common Stock is limited.

      Trading of our common stock is conducted  on the National  Association  of
Securities  Dealers'  Over-the-Counter  Bulletin Board, or "OTC Bulletin Board."
This has an adverse  effect on the  liquidity of our common  stock,  not only in
terms of the number of shares that can be bought and sold at a given price,  but
also  through  delays in the timing of  transactions  and  reduction in security
analysts'  and the media's  coverage of us. This may result in lower  prices for
our common  stock than might  otherwise  be obtained  and could also result in a
larger spread between the bid and asked prices for our common stock.

Because it is a "penny  stock" it can be  difficult to sell shares of our Common
Stock.

      Our common stock is a "penny stock."  Broker-dealers who sell penny stocks
must provide  purchasers  of these stocks with a  standardized  risk  disclosure
document  prepared by the SEC. This document  provides  information  about penny
stocks and the  nature and level of risks  involved  in  investing  in the penny
stock market. A broker must also give a purchaser, orally or in writing, bid and
offer quotations and information regarding broker and salesperson  compensation,
make a written  determination that the penny stock is a suitable  investment for
the purchaser, and obtain the purchaser's written agreement to the purchase. The
penny  stock  rules may make it  difficult  for you to sell  your  shares of our
stock.  Because of the rules, there is less trading in penny stocks.  Also, many
brokers choose not to participate in penny stock transactions.  Accordingly, you
may not always be able to resell our shares of common  stock  publicly  at times
and prices that you feel are appropriate.

A significant number of shares of our Common Stock may become available for sale
and their sale could depress the price of our Common Stock.

      Future sales of a substantial  number of shares of our Common Stock in the
public market could  adversely  affect the market price for our Common Stock and
make it more  difficult for  shareholders  to sell our Common Stock at times and
prices that they believe are appropriate. As of January 10, 2006, we have issued
and outstanding 72,314,813 shares of Common Stock, warrants to purchase up to an
aggregate  amount of 7,910,000  shares of Common Stock,  a convertible  security
convertible  into an aggregate  amount of  2,600,000  shares of Common Stock and
1,250,000  shares  issuable  upon the exercise of  outstanding  options.  Of our
Common Stock issued and outstanding,  49,652,419 shares are free of restrictions
and  freely   transferable,   3,858,343  are  transferable  subject  to  trading
restrictions  under  Rule 144 of the  Securities  Act of 1933,  as  amended  and
18,804,051 are restricted  from transfer for varying time periods under Rule 144
of the Securities Act of 1933.

Risks Relating to Our Financial Condition

The volatility of precious metal prices may affect our earnings.

      We anticipate  that a significant  portion of our future  revenues to come
from the sale of platinum,  gold,  silver and other  precious  metals,  and as a
result,  our  earnings  will be directly  affected by the prices of such metals.
Demand for precious metals can be influenced by economic  conditions,  including
worldwide  production,  attractiveness  as an investment  vehicle,  the relative
strength of the U.S.  dollar and local  investment  currencies,  interest rates,
exchange rates, inflation and political stability. The aggregate effect of these
factors is not within our control and is  impossible  to predict with  accuracy.
The  price of  precious  metals  has on  occasion  been  subject  to very  rapid
short-term changes due to speculative activities. Fluctuations in precious metal
prices may adversely  affect the value of any discoveries made at the sites with
which we are  involved.  If the market  prices for these  precious  metals falls
below the mining and development costs we incur to produce such precious metals,
we will experience losses and may have to discontinue  operations at one or more
of our properties.


                                      -11-
<PAGE>

We currently do not have enough cash to fund  operations  during the next fiscal
year.

      As of September 30, 2005, we had only $131,772 of cash on hand. We will be
required  to raise  additional  capital in  financing  transactions  in order to
satisfy  our  expected  cash  expenditures.  The  Company  completed  a  private
placement  during  the  quarter  ended  December  31,  2005  (Note  10) and also
completed a placement  of a  convertible  debenture  (Note 7). The Company  also
contemplates  the  exercise of the call  options on various  warrants,  which if
exercised, would provide the Company significant working capital to continue its
exploratory  programs.  We continually  evaluate business  opportunities such as
joint venture processing  agreements with the objective of creating cash flow to
sustain the  corporation  and  provide a source of funds for  growth.  While the
Company believes it will be able to finance its continuing activities, there are
no assurances  of success in this regard or in the  Company's  ability to obtain
continued financing through capital markets, joint ventures, or other acceptable
arrangements. If management's plans are not successful, operations and liquidity
may be adversely impacted.  In the event that we are unable to obtain additional
capital,  we may be forced  to reduce  our  operating  expenditures  or to cease
development and operations altogether.

As of the end of our fiscal  year ending  September  30,  2005,  we have not had
revenue-generating operations.

      Although we anticipate  entering into the operations phase for one or more
of our  properties  during the next fiscal year, it is possible that none of our
properties will ever produce significant mineral deposits and related cash flow.

Our  independent  auditors  have  reported  that  conditions  exist  that  raise
substantial doubt about our ability to continue as a going concern.

      We have had net losses for each of the years ended  September 30, 2005 and
September 30, 2004, and we have an accumulated  deficit as of September 30, 2005
of  $6,142,407.  Since the financial  statements  for each of these periods were
prepared assuming that we would continue as a going concern,  in the view of our
independent auditors, these conditions raise substantial doubt about our ability
to  continue  as a  going  concern.  Furthermore,  since  we  may  not  generate
significant  revenues in the  foreseeable  future,  our ability to continue as a
going  concern may depend,  in large  part,  on our ability to raise  additional
capital through equity or debt financing transactions. If we are unable to raise
additional capital, we may be forced to discontinue our business.

Receivable  from Gold and  Minerals,  Inc.  dependent  upon market  price of our
common stock.

      During the year ended September 30, 2005, the Company made net payments on
behalf of Gold and Minerals  amounting to $351,946 relating to costs incurred on
the El Capitan  mine site.  Pursuant to an agreement  effective  October 1, 2004
between the two companies, costs incurred at the El Capitan mine are to be split
in accordance with their percentage ownership interest.  The Company holds a 40%
equity  interest in El Capital Ltd.,  and Gold and Minerals  holds the remaining
60% equity interest.  During the current year ended,  Gold and Minerals paid the
Company $150,000 toward its outstanding costs advanced.

      In October 2004, the Company loaned  $120,000 at 12% per annum to Gold and
Minerals,  its  majority  shareholder  at the  time  of the  loan.  The  current
obligation under this note at September 30, 2005 is $133,611,  including accrued
interest.

      To secure the  amounts  due under the note and the cost  advances  made on
behalf of Gold and Minerals by the Company, Gold and Minerals has pledged to the
Company  1,000,000 free trading shares of El Capitan Precious Metals,  Inc. that
it owns. The ability of Gold and Minerals to pay back the cost advances and loan
is dependent  upon Gold and Minerals'  ability to sell its shares in the Company
and not affect the market price of our stock.

      On January 1, 2006,  El  Capitan,  Ltd.  finalized  the  purchase  of four
patented  mining  claims,  constituting  approximately  77.5 acres in aggregate,
located on the El Capitan Mine site. In consideration for the claims, El Capitan
Ltd.  transferred  2,100,000  shares  of ECPN  common  stock  owned  by Gold and
Minerals.  Pursuant to an  agreement  between ECL and the Seller,  the stock was
valued at $0.82 per share, the market value of the stock on November 11, 2005.


                                      -12-
<PAGE>

      Pursuant to an arrangement with Minerals, ECPN is obligated to Minerals to
pay $688,800 for the purchase of the patented mining claims by ECL. ECPN intends
to offset its portion of the purchase  price  against  existing  obligations  of
Minerals due ECPN.

Risks Relating to Our Business

Our mineral exploration efforts may be unsuccessful.

      Our  ability  to produce  precious  metals  depends on the  success of our
exploration   program.   Mineral  exploration  for  precious  metals  is  highly
speculative, and is often unsuccessful.  Even if exploration leads to a valuable
deposit,  it might take several  years to enter into  production of the minerals
within  the  deposit.   During  that  time,  it  might  become   financially  or
economically  unfeasible  to produce  the  minerals.  Additionally,  the cost of
production of any of our mine interests may prohibit us from our  exploration or
development of other properties.

Uncertainty of mineralization estimates.

      Although  the Company  believes  in the  methods it uses to  estimate  the
content of mineral  deposits  in its mines,  such  figures are  estimates.  Such
estimates  are  inherently  imprecise  and depend to some extent on  statistical
inferences drawn from limited drilling,  and may prove unreliable.  Further, the
Company may utilize different testing and assaying methods, some of which may be
experimental or uncommon,  because of the nature of the sample material, and the
results from such testing and assaying methods may be varied and inconsistent or
prove to be  unreliable.  No assurances can be given that  inferences  from such
testing and assaying results will be accurate or that minerals will be realized.

We are dependent upon key personnel.

      We are highly dependent upon the abilities and experience of our officers.
There can be no assurances  that we will be able to retain these  individuals in
the  future,  and the  loss of one or more of  these  individuals  could  have a
material  effect or our  operations.  The strong  competition  within the mining
industry makes the recruitment and retention of employees  knowledgeable  of the
mining industry difficult and crucial to success.

We will require additional financing to continue to fund our current exploration
projects or acquire interests in other properties.

      Additional  financing  will be needed in order to fund  beyond the initial
exploration  of our  properties.  Our means of acquiring  investment  capital is
limited to private equity and debt transactions.  Other than the interest earned
on our short-term  investments or further financing,  we have no other source of
currently  available funds to engage in additional  exploration and development,
which will be necessary to explore our current property  interests or to acquire
interests in other mineral exploration  projects that may become available.  See
"Risks  Relating to Our  Financial  Condition - We  currently do not have enough
cash to fund operations during the next fiscal year."

The nature of mineral exploration is inherently risky.

      The  exploration  for  and  development  of  mineral   deposits   involves
significant  financial  risks,  which  even  experience  and  knowledge  may not
eliminate regardless of the amount of careful evaluation applied to the process.
While the discovery of an ore body may result in substantial  rewards,  very few
properties are ultimately developed into producing mines.


                                      -13-
<PAGE>

      Whether a  deposit  will be  commercially  viable  depends  on a number of
factors, including: financing costs; proximity to infrastructure; the particular
attributes  of the  deposit,  such  as its  size  and  grade;  and  governmental
regulations,   including  regulations  relating  to  prices,  taxes,  royalties,
infrastructure,  land use,  importing  and  exporting of gold and  environmental
protection.

      The  effect of these  factors  cannot  be  accurately  predicted,  and the
combination  of any of  these  factors  may  prevent  us from not  receiving  an
adequate return on invested capital.

We are required to obtain  government  approvals and permits in order to conduct
mining operations.

      We are  required to seek  governmental  approvals  and permits in order to
conduct  mining  operations.  Obtaining the  necessary  permits is a complex and
time-consuming  process  involving  multiple  jurisdictions.  The  duration  and
success of our efforts to obtain  permits  are  contingent  upon many  variables
outside of our  control and may  increase  costs of or cause delay to our mining
endeavors.  There can be no assurance  that all necessary  approvals and permits
will be obtained, and if they are obtained, that the costs involved will make it
economically  unfeasible to continue our exploration,  development or production
of some or all of our mines.

We face substantial government regulation and environmental risks.

      Our  business is subject to  extensive  federal,  state and local laws and
regulations governing  exploration,  development,  production,  labor standards,
occupational  health,  waste disposal,  use of toxic  substances,  environmental
regulations,  mine safety and other matters.  Additionally,  new legislation and
regulations may be adopted at any time that affect our business. Compliance with
these  changing  laws  and  regulations  could  require  increased  capital  and
operating  expenditures  and could prevent or delay some or all of the Company's
future operations.

Mineral exploration is extremely competitive.

      There is a limited supply of desirable  mineral  properties  available for
claim  staking,  lease or other  acquisition  in the areas where we  contemplate
participating  in  exploration  activities.   We  compete  with  numerous  other
companies  and  individuals,   including  competitors  with  greater  financial,
technical  and  other  resources  than we  possess,  in the  search  for and the
acquisition of attractive mineral properties.  Our ability to acquire properties
in the future  will  depend  not only on our  ability  to  develop  our  present
properties,  but also on our  ability to select and acquire  suitable  producing
properties or prospects for future  mineral  exploration.  We may not be able to
compete  successfully  with our  competitors  in acquiring  such  properties  or
prospects.

Title to some of our properties may be defective.

      A material portion of our holdings includes  unpatented mining claims. The
validity  of  unpatented  claims is often  uncertain  and may be  contested.  In
accordance with the mining industry  practice,  we generally do not obtain title
opinions until we decide to develop a property. Accordingly, it is possible that
title to some of our undeveloped properties may be defective.

ITEM 3. LEGAL PROCEEDINGS

      Our Company is not a party 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

      None.


                                      -14-
<PAGE>

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED MATTERS

(a)   Market Information

      Our common stock is quoted on the Over-the-Counter Bulletin Board, or "OTC
Bulletin  Board" under the trading  symbol "ECPN." Prior to March 17, 2003 (as a
result of the Company's name change), the Company's securities traded on the OTC
Bulletin Board under the trading  symbol  "DMSV." The following  table lists the
high and low bid information for the Company's common stock as quoted on the OTC
Bulletin Board for the past two fiscal years ended  September 30, 2003 and 2004,
respectively,  and for the fiscal  quarters ended  December 31, 2004,  March 31,
2005 and June 30,  2004 (all  historical  quotes are revised for a 4 for 1 stock
split  effective  November 25, 2002 as well as a 200% stock  dividend  effective
July 30, 2004):

                                                       Price Range
                     Quarter Ended                 High             Low
            ---------------------------------     ------          -------
            December 31, 2003                      $0.40           $0.26
            March 31, 2004                          0.32            0.18
            June 30, 2004                           0.26            0.12
            September 30, 2004                      0.75            0.13

            December 31, 2004                      $1.00           $0.43
            March 31, 2005                          0.85            0.41
            June 30, 2005                           0.57            0.41
            September 30, 2005                      0.62            0.35

The above  quotations from the OTC Bulletin Board reflect  inter-dealer  prices,
without retail mark-up,  mark-down or commission,  and may not represent  actual
transactions.

(b)   Holders

      The number of record  holders of our common  stock as of January 10, 2006,
was approximately  1,534 based on information  received from our transfer agent.
This amount excludes an  indeterminate  number of shareholders  whose shares are
held in "street" or "nominee" name.

(c)   Dividends

      Effective on July 30, 2004, we paid a stock  dividend equal to 200% of our
outstanding  common stock on that date of 20,446,454  shares.  We have not paid,
nor  declared,  any cash  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.


                                      -15-
<PAGE>

(d)   Equity Compensation Plan Information

<TABLE>
<CAPTION>
                                                                                       Number of securities
                                Number of securities to        Weighted-average        remaining available for
                                be issued upon exercise        price of outstanding    future issuance under
                                of outstanding options,        options, warrants       equity compensation
                                warrants and rights            and rights              plan (excluding (a))
                                (a)                            (b)                     (c)
<S>                             <C>                            <C>                     <C>
Equity compensation
plans approved by
security holders                --                             --                      --

Equity compensation
plans not approved by           --                             --                      4,717,153 (1)
security holders
          Total                 --                             --                      4,717,153
</TABLE>

(1)   Includes (i) 261,444 shares  registered by the Company on Form S-8 on June
      14, 2004 and (ii) 4,455,709  shares  registered by the Company on Form S-8
      on July 19,  2005.  These  shares may be issued to certain  employees  and
      consultants as compensation for services rendered to the Company. Pursuant
      to,  and  subject  to,  individual   agreements  with  such  employees  or
      consultants,  the  Company  may issue  shares of its Common  Stock to such
      employees or consultants in lieu of accrued salary or fees, as applicable.
      In the event of an issuance of Common Stock in lieu of salary or fees,  as
      applicable,  the  number  of  shares  to be  issued  to  the  employee  or
      consultant is to be equal to the amount to be paid in Common Stock divided
      by a purchase  price to be not less than the most recent sale price of the
      Company's  Common Stock.  Accordingly,  it is not possible to estimate the
      number of securities to be issued (column a) or the weighted average price
      of such  securities  (column  b).  The amount in column c is the number of
      securities that remain unissued of those  registered  pursuant to the Form
      S-8, but it is not yet  determined  whether those shares will be issued in
      the future.

(e)   Recent Sales of Securities

      In addition to the sales of  unregistered  securities  that we reported in
quarterly  reports on Form 10-QSB and Current  Reports on Form 8-K during fiscal
year 2005, we made the following  sales of  unregistered  securities  during the
quarter ended September 30, 2005.

      For each of the following transactions, we relied upon the exemptions from
registration  provided by Sections  4(2) and/or 4(6) of the  Securities  Act and
Rule 506 promulgated  thereunder  based upon (i) the fact that each investor was
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) the securities issued were "restricted securities" as that term is defined
under  Rule 144  promulgated  under  the  Securities  Act;  and  (iv) we  placed
appropriate restrictive legends on the certificates  representing the securities
regarding the restricted nature of these  securities.  The shares were issued as
follows:

      In July 2005, the Company issued to certain accredited investors, pursuant
to a private  placement  under Section 4(2) and Rule 506  promulgated  under the
Securities  Act,  an  aggregate  of 360,000  shares of common  stock and 360,000
warrants to purchase common stock at an exercise price of $.50 per share for the
aggregate consideration to the Company of $144,000.

      In October  2005,  the  Company  issued to certain  accredited  investors,
pursuant to a private  placement  under  Section  4(2) and Rule 506  promulgated
under the Securities  Act, an aggregate of 2,353,333  shares of common stock and
2,353,333  warrants to purchase  common  stock at an exercise  price of $.50 per
share for the aggregate consideration to the Company of $941,333.  These amounts
included the conversion of a convertible  debenture  issued on March 30, 2005 in
the amount of  $300,000  into  750,000  shares of Common  Stock and  warrants to
purchase 750,000 shares of Common Stock at an exercise price of $0.50 per share.


                                      -16-
<PAGE>

      On October 28, 2005,  the Company issued  pursuant to a private  placement
under Section 4(2) of the Securities Act a 8% convertible  secured  debenture in
the principal  amount of $750,000,  together with a warrant to purchase  500,000
shares of the Company's common stock at an exercise price of $.60 per share. The
convertible  secured  debenture  matures on April 28, 2007. Until maturity,  and
subject to the Company's  right to prepay,  the principal and interest under the
convertible  secured  debenture  are  convertible  into shares of the  Company's
common stock at a conversion price of $.50 per share. Additionally,  the Company
granted the  purchaser  of the  debenture  an option to  purchase an  additional
debenture in the amount of $550,000,  together with warrants to purchase 366,667
shares of Common Stock at an exercise  price of $0.60 per share,  on or prior to
April 28, 2006.  The Company also issued a finder who assisted in obtaining  the
debt  facility  for the Company a warrant to purchase  225,000  shares of Common
Stock at an exercise price of $0.60 per share.

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

      Results  of  Operations.  We  have  not  yet  realized  any  revenue  from
operations,  nor do we expect to realize  potential  revenues  until late in the
second calendar  quarter of 2006. Net loss increased  $1,930,521 from $1,314,320
for the year ended September 30, 2004 to $3,244,841 for the year ended September
30, 2005. Our net loss increase in 2005 from 2004 was mainly due to increases in
professional  fees  approximating  $1,137,000,  administrative  consulting  fees
approximating  $419,000,  mine expenses approximating  $676,000, and general and
administrative and other expenses approximating  $115,000.  These increases were
offset  by  decreases  in  officer  compensation   approximating   $102,000  and
management fees to related parties approximating $204,000.

      Plan of Operation.  To address the going concern problem  addressed in our
financial  statements,  we will require additional working capital. We will also
require additional  working capital funds for continuing  payments for necessary
corporate  personnel,  related general and  administrative  expenses and for the
implementation of our business strategies.

      We can make no assurance,  however, that we will be able to have access to
the capital  markets in the future,  or that the financing  will be available on
terms  acceptable  to terms to satisfy our cash  requirements.  Our inability to
access various  capital  markets or acceptable  financing  could have a material
effect on our results of operations,  deployment of our business  strategies and
severely threaten our ability to operate as a going concern.

      During the next two quarters the Company will  concentrate  on raising the
necessary  working  capital  through  equity  financing and an  acceptable  debt
facility to insure the Company's  ability to implement its business  strategies.
To the extent that  additional  capital is raised  through the sale of equity or
equity  related  securities,  the  issuance of such  securities  would result in
dilution of our current shareholders.

      We currently intend to continue to prove up our various mining  properties
and finalize the formal  report on the El Capitan  property site with the intent
to formalize and implement the marketing  plan to sell this site. We also intend
to  finalize  the  proprietary  process  the  Company  has been  working  on for
extraction of precious metal from our other property interest.

      Liquidity. As of September 30, 2005, we had only $131,772 of cash on hand.
We will be required to raise  additional  capital in financing  transactions  in
order to satisfy our expected cash  expenditures.  The Company also contemplates
the exercise of the call options on various warrants, which if exercised,  would
provide the Company  significant  working  capital to continue  its  exploratory
programs.  We continually evaluate business  opportunities such as joint venture
processing  agreements  with the  objective of creating cash flow to sustain the
corporation and provide a source of funds for growth. While the Company believes
it will be able to finance its continuing activities, there are no assurances of
success in this regard or in the Company's ability to obtain continued financing
through capital markets,  joint ventures, or other acceptable  arrangements.  If
management's plans are not successful, operations and liquidity may be adversely
impacted.  In the event that we are unable to obtain additional  capital, we may
be forced to reduce  our  operating  expenditures  or to cease  development  and
operations altogether.


                                      -17-
<PAGE>

      In October  2005,  the  Company  issued to certain  accredited  investors,
pursuant to a private  placement  under  Section  4(2) and Rule 506  promulgated
under the Securities  Act, an aggregate of 2,353,333  shares of common stock and
2,353,333  warrants to purchase  common  stock at an exercise  price of $.50 per
share for the aggregate consideration to the Company of $941,333.  These amounts
include the  rollover  into the private  placement  of a  convertible  debenture
issued on March 30, 2005. This rollover converted the $300,000  convertible note
into  750,000  shares of common  stock and 750,000  warrants to purchase  common
stock.

      On October 28, 2005,  the Company issued  pursuant to a private  placement
under Section 4(2) of the Securities Act a 8% convertible  secured  debenture in
the principal  amount of $750,000,  together with a warrant to purchase  500,000
shares of the Company's common stock at an exercise price of $.60 per share. The
convertible  secured  debenture  matures on April 28, 2007. Until maturity,  and
subject to the Company's  right to prepay,  the principal and interest under the
convertible  secured  debenture  are  convertible  into shares of the  Company's
common stock at a conversion price of $.50 per share. Additionally,  the Company
granted the  purchaser  of the  debenture  an option to  purchase an  additional
debenture in the amount of $550,000,  together with warrants to purchase 366,667
shares of Common Stock at an exercise  price of $0.60 per share,  on or prior to
April 28, 2006.  The Company also issued a finder who assisted in obtaining  the
debt  facility  for the Company a warrant to purchase  225,000  shares of Common
Stock at an exercise price of $0.60 per share.

      Off-Balance Sheet Arrangements.  During the year ended September 30, 2005,
the Company did not engage in any off balance sheet  arrangements  as defined in
item 303(c) of the SEC's Regulation S-B.

      Uncertainties  Relating  to Forward  Looking  Statements.  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.

      Critical Accounting Policies.  Our consolidated  financial statements have
been prepared in accordance with accounting principles generally accepted in the
United States of America,  which require us to make estimates and judgments that
significantly affect the reported amounts of assets,  liabilities,  revenues and
expenses,  and related  disclosure of contingent  assets and  liabilities at the
date of the consolidated financial statements.  Note c, "Significant  Accounting
Policies"  in the Notes to the  Consolidated  Financial  Statements  in our Form
10-KSB  describes  our  significant  accounting  policies  which are reviewed by
management on a regular basis.

      An  accounting  policy is  deemed  by us as  critical  if it  requires  an
accounting  estimate  to be made based on  assumptions  about  matters  that are
uncertain at the time the  estimate is made,  and if  different  estimates  that
reasonably could have been used, or changes in the accounting estimates that are
reasonable likely to occur  periodically,  could materially impact the financial
statements.  The policies and estimates that we believe are most critical to the
preparation of our consolidated  financial  statements and that require a higher
degree of judgment are:

            Stock-based compensation; and
            Valuation of warrants under the Black Scholes option-pricing model.


                                      -18-
<PAGE>

ITEM 7. FINANCIAL STATEMENTS

                EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
                     (An Exploration Stage Mining Company)

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
                                                                                                                       Page
                                                                                                                       ----
<S>                                                                                                                    <C>
Reports of Independent Registered Public Accounting Firms...............................................................F-1

Consolidated Balance Sheets - September 30, 2005 and 2004                                                               F-3

Consolidated Statements of Operations - Years ended September 30, 2005 and 2004 and for the period July 26, 2002
     (inception) through September 30, 2005.............................................................................F-4

Consolidated Statements of Changes in Stockholders' Deficit - period from July 26, 2002 (inception) through
     September 30, 2002 and for the years ended September 30, 2003, 2004 and 2005.......................................F-5

Consolidated Statements of Cash Flows - Years ended September 30, 2005 and 2004 and for the period July 26, 2002
     (inception) through September 30, 2005.............................................................................F-8

Notes to Consolidated Financial Statements.............................................................................F-10
</TABLE>


                                      -19-
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors,
El Capitan Precious Metals, Inc.:

         We have  audited  the  accompanying  consolidated  balance  sheet of El
Capitan  Precious  Metals,  Inc. (an  exploration  stage  mining  company) as of
September  30,  2005 and the  related  consolidated  statements  of  operations,
stockholders'  deficit and cash flows for the year ended September 30, 2005, and
from July 26, 2002 (inception of exploration stage) to September 30, 2005. These
financial  statements are the responsibility of El Capitan Precious Metals, Inc.
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

         We conducted  our audit in accordance  with  auditing  standards of the
Public Company  Accounting  Oversight  Board (United  States).  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 management, as well
as evaluating the overall financial statement presentation.  We believe that our
audit provides a reasonable basis for our opinion.

         In our opinion,  the  financial  statements  referred to above  present
fairly, in all material respects,  the financial position of El Capitan Precious
Metals,  Inc. as of September 30, 2005 and the results of its operations and its
cash  flows for the year  ended  September  30,  2005,  and from  July 26,  2002
(inception  of  exploration  stage) to  September  30, 2005 in  conformity  with
accounting principles generally accepted in the United States of America.

         The accompanying  financial statements have been prepared assuming that
El Capitan Precious Metals,  Inc. will continue as a going concern. As discussed
in Note 1 to the financial  statements,  El Capitan Precious Metals,  Inc. is in
the exploration stage, has not yet generated any revenues, and is dependent upon
raising capital from investors.  Additionally,  El Capitan Precious Metals, Inc.
has incurred aggregate losses since inception of over $6,142,000 and has a total
stockholders'  deficit of over  $121,000 at September  30, 2005.  These  matters
raise  substantial  doubt  about the  Company's  ability to  continue as a going
concern.  Management's plans concerning these matters are also described in Note
1. The  financial  statements do not include any  adjustments  that might result
from the outcome of this uncertainty.

/s/ Epstein Weber & Conover, PLC
Scottsdale, Arizona
January 6, 2006


                                      F-1
<PAGE>

            REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
El Capitan Precious Metals Inc.
Scottsdale, Arizona

We have  audited  the  accompanying  consolidated  balance  sheet of El  Capitan
Precious Metals Inc. and Subsidiary (an exploration  stage mining company) as of
September  30,  2004 and the  related  consolidated  statements  of  operations,
changes  in  stockholders'  equity  (deficit)  and cash flows for the year ended
September 30, 2004.  These financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audit.

We conducted  our audit in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform an 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  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion,  the 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, 2004, and the results of their operations and
its cash flows for the year then ended 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
financial  statements,  the Company  has no revenue  producing  operations,  has
incurred  substantial  losses from operations and is in the  exploration  stage.
These factors raise substantial doubt about the Company's ability to continue as
a going concern.  Management's  plans with regard to these matters are described
in Note 1. The financial  statements do not include any  adjustments  that might
result from the outcome of these uncertainties.

/s/ HEIN & ASSOCIATES LLP

Phoenix, Arizona
January 14, 2005


                                      F-2
<PAGE>

                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
                      (An Exploration Stage Mining Company)

                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                                     September 30,
                             ASSETS                                               2005            2004
                                                                              -----------      -----------
<S>                                                                           <C>              <C>
Current Assets:
      Cash                                                                    $   131,772      $    22,404
      Advance to officer                                                            1,064               --
      Subscriptions receivable, common stock                                       68,000               --
      Prepaid expenses and other                                                   12,123               --
      Due from affiliated company                                                 351,946               --
      Note and interest receivable - affiliated company                           133,611               --
                                                                              -----------      -----------
         Total Current Assets                                                     698,516           22,404
                                                                              -----------      -----------

Furniture and Equipment at Cost                                                    69,101               --
      Less: accumulated depreciation                                               (7,790)              --
                                                                              -----------      -----------
                                                                                   61,311               --
                                                                              -----------      -----------

Other Assets:
      Investment in mining properties                                             100,008          100,008
      Deposits                                                                     16,445               --
      Note receivable net of allowance for doubtful account
         of $12,500                                                                    --               --
      Investment in common stock of USCA.PK                                            --               --
                                                                              -----------      -----------
                                                                              $   876,280      $   122,412
                                                                              ===========      ===========

                LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
      Accounts payable                                                        $   293,950      $   192,354
      Accrued liabilities                                                         175,670           50,702
      Interest payable, related parties                                                --            1,652
      Interest payable, other                                                      18,344           15,971
      Notes payable, related parties                                                   --           42,577
      Notes payable, other                                                        300,000          178,426
                                                                              -----------      -----------
            Total Current Liabilities                                             787,964          481,682

Long-Term Note Payable, less discount of $90,758                                  209,242               --
                                                                              -----------      -----------

            Total Liabilities                                                     997,206          481,682

Commitments, Contingencies and Subsequent Events
         (Notes 5, 8, 9, and 13)

Stockholders' Deficit:
      Preferred stock, $0.001 par value;  5,000,000 shares
         authorized; none issued and outstanding                                       --               --
      Common stock, $0.001 par value; 300,000,000 and 100,000,000 shares
         authorized respectively;
         69,408,749 and 62,669,616 issued and
         outstanding , respectively                                                69,409           62,670
      Common stock subscribed                                                          --           50,000
      Additional paid-in capital                                                5,952,072        2,425,626
      Deficit accumulated during the exploration stage                         (6,142,407)      (2,897,566)
                                                                              -----------      -----------
            Total Stockholders' Deficit                                          (120,926)        (359,270)
                                                                              -----------      -----------
                                                                              $   876,280      $   122,412
                                                                              ===========      ===========
</TABLE>

                 See notes to consolidated financial statements.


                                      F-3
<PAGE>

                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
                      (An Exploration Stage Mining Company)

                      Consolidated Statement of Operations

<TABLE>
<CAPTION>
                                                                                     Period From
                                                                                    July 26, 2002
                                                                                     (Inception)
                                                                                       Through
                                                    Year Ended September 30,         September 30,
                                                      2005             2004              2005
                                                 ------------      ------------      ------------
<S>                                              <C>               <C>               <C>
REVENUES                                         $         --      $         --      $         --
                                                 ------------      ------------      ------------

GENERAL AND ADMINISTRATIVE EXPENSES:
      Professional fees                             1,497,752           360,288         2,760,649
      Officer compensation expense                    179,000           281,000           970,034
      Administrative consulting fees                  418,875                --           418,875
      Management fees, related parties                 36,000           240,000           320,500
      Legal and accounting fees                       209,108           188,399           462,490
      Mine expenses                                   691,746            15,631           707,377
      Other                                           161,747            46,800           225,071
                                                 ------------      ------------      ------------
                                                    3,194,228         1,132,118         5,864,996
                                                 ------------      ------------      ------------

LOSS FROM OPERATIONS                               (3,194,228)       (1,132,118)       (5,864,996)
                                                 ------------      ------------      ------------

OTHER INCOME (EXPENSE):
      Interest income                                  16,313                --            16,313
      Interest expense:
              Related parties (Note 5)                   (739)          (12,623)          (28,220)
              Other                                   (44,552)          (38,329)         (112,619)
      Expenses associated with debt issuance
           and conversion                             (21,635)         (131,250)         (152,885)
                                                 ------------      ------------      ------------
                                                      (50,613)         (182,202)         (277,411)
                                                 ------------      ------------      ------------
NET LOSS                                         $ (3,244,841)     $ (1,314,320)     $ (6,142,407)
                                                 ============      ============      ============

Basic and diluted net loss per common
      share                                      $      (0.05)     $      (0.02)     $      (0.11)
                                                 ============      ============      ============
Weighted average number of common
      shares outstanding                           67,395,928        54,707,858        53,768,274
                                                 ============      ============      ============
</TABLE>

                 See notes to consolidated financial statements.


                                      F-4
<PAGE>

                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
                      (An Exploration Stage Mining Company)

                Consolidated Statements of Stockholders' Deficit
              From July 26, 2002 (Inception) to September 30, 2005

<TABLE>
<CAPTION>
                                                                                                      Deficit
                                                                                                    Accumulated
                                                                                       Additional    During The
                                                 Common Stock             Stock         Paid-In     Exploration
                                              Shares       Amount     Subscriptions     Capital         Stage          Total
                                           -----------   -----------   -----------    -----------    -----------    -----------
<S>                                          <C>         <C>           <C>            <C>            <C>            <C>
Initial issuance of common stock in
  September 2002, $0.00 per share            3,315,000   $     3,315   $        --    $    (3,306)   $        --    $         9

Net loss, period ended                              --            --            --             --        (21,577)       (21,577)
                                           -----------   -----------   -----------    -----------    -----------    -----------

Balances at September 30, 2002               3,315,000         3,315            --         (3,306)       (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,
  $0.00 per share                           30,225,000        30,225            --        (30,217)            --              8

Issuance of common stock for cash
  in November 2002, $0.00 per share          5,460,000         5,460            --         (5,446)            --             14
                                           -----------   -----------   -----------    -----------    -----------    -----------

                                            39,000,000        39,000            --        (38,969)       (21,577)       (21,546)
Acquisition of DML Services, Inc.
  on March 17, 2003                          6,720,000         6,720            --        (56,720)            --        (50,000)

Common stock issued in connection
  with notes payable in March 2003,
  $0.03 per share                              525,000           525            --         16,975             --         17,500

Common stock and warrants issued
  for services in March 2003, $1.26
  per share                                    150,000           150            --        188,850             --        189,000

Common stock issued under executive
  compensation agreement in March
  2003, $0.45 per share                      1,057,140         1,057            --        478,943             --        480,000

Issuance of common stock to Gold and
  Minerals Company, Inc. in connection
  with purchase of COD Mine in
  August 2003, $0.00 per share
                                             3,600,000         3,600            --         (3,600)            --             --

Common stock issued under
  management agreement in August
  2003, $0.35 per share                      1,057,140         1,058            --        368,942             --        370,000

Net loss, year ended September 30, 2003             --            --            --             --     (1,561,669)    (1,561,669)
                                           -----------   -----------   -----------    -----------    -----------    -----------

Balances at September 30, 2003              52,109,280   $    52,110   $        --    $   954,421    $(1,583,246)   $  (576,715)
</TABLE>

                 See notes to consolidated financial statements.


                                      F-5
<PAGE>

                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
                      (An Exploration Stage Mining Company)

                Consolidated Statements of Stockholders' Deficit
              From July 26, 2002 (Inception) to September 30, 2005

<TABLE>
<CAPTION>
                                                                                                           Deficit
                                                                                                         Accumulated
                                                                                           Additional     During The
                                                      Common Stock             Stock        Paid-In      Exploration
                                                   Shares        Amount    Subscriptions    Capital         Stage          Total
                                                -----------   -----------   -----------   -----------    -----------    -----------
<S>                                              <C>          <C>           <C>           <C>            <C>            <C>
Cost associated with warrants issued                     --   $        --   $        --   $   108,000    $        --    $   108,000

Common stock issued under executive
  compensation agreement in May 2004,
  $0.13 per share                                 1,350,000         1,350            --       178,650             --        180,000

Common stock issued under management
  agreement in May 2004, $0.13 per share          1,350,000         1,350            --       178,650             --        180,000

Common stock issued for services in June
  2004, $0.20 per share                             836,760           837            --       163,728             --        164,565

Common stock issued in connection with
  notes payable in June 2004, $0.25 per share       225,000           225            --        56,025             --         56,250

Common stock issued under executive
  compensation agreement in July 2004
  $0.14 per share                                   285,714           286            --        39,714             --         40,000

Common stock issued under
  management agreement in July 2004,
  $0.14 per share                                   285,714           285            --        39,715             --         40,000

Common stock issued for acquisition of
  Weaver mining interest in July 2004,
  $0.00 per share                                 3,000,000         3,000            --        (3,000)            --             --

Common stock issued for services in July
  2004, $0.15 per share                             703,740           704            --       105,128             --        105,832

Common stock issued for retirement of a
  note payable and accrued interest in
  July 2004, $0.13 per share                      1,343,154         1,343            --       177,744             --        179,087

Common stock issued under executive
  compensation agreement in August 2004
  $0.14 per share                                   142,857           143            --        19,857             --         20,000

Common stock issued under
  management agreement in August
  2004, $0.14 per share                             142,857           143            --        19,857             --         20,000

Common stock issued for services in
  August 2004, $0.20 per share                       50,000            50            --         9,950             --         10,000

Common stock issued under executive
  compensation agreement in September
  2004, $0.43 per share                              46,511            46            --        19,954             --         20,000

Common stock issued under
  management agreement in September
  2004, $0.43 per share                              46,511            47            --        19,953             --         20,000

Common stock issued for retirement of
  notes payable and accrued interest in
  September 2004, $0.35 per share                   751,518           751            --       262,280             --        263,031

Beneficial Conversion of Notes payable                   --            --            --        75,000             --         75,000

Stock subscriptions                                      --            --        50,000            --             --         50,000

Net loss, year ended September 30, 2004                  --            --            --            --     (1,314,320)    (1,314,320)
                                                -----------   -----------   -----------   -----------    -----------    -----------

Balances at September 30, 2004                   62,669,616   $    62,670   $    50,000   $ 2,425,626    $(2,897,566)   $  (359,270)
</TABLE>

                 See notes to consolidated financial statements.


                                      F-6
<PAGE>

                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
                      (An Exploration Stage Mining Company)

                Consolidated Statements of Stockholders' Deficit
              From July 26, 2002 (Inception) to September 30, 2005

<TABLE>
<CAPTION>
                                                                                                           Deficit
                                                                                                         Accumulated
                                                                                           Additional     During The
                                                      Common Stock             Stock        Paid-In      Exploration
                                                   Shares        Amount    Subscriptions    Capital         Stage          Total
                                                -----------   -----------   -----------   -----------    -----------    -----------
<S>                                              <C>          <C>           <C>           <C>            <C>            <C>
Subscribed stock issued                            200,000   $       200   $   (50,000)   $    49,800    $        --    $        --

Common stock issued in settlement of
  accounts payable in October 2004, at
  $0.82 per share                                   20,000            20            --         16,361             --         16,381

Common stock issued for professional
  in October 2004, at $0.66 per share              106,500           106            --         70,029             --         70,135

Common stock issued for consulting agree-
   ment in November 2004, $0.60 per share        1,536,859         1,537            --        920,578             --        922,115

Common stock sold in private placement
  in November 2004 at $0.50 per share            2,110,000         2,110            --      1,052,890             --      1,055,000

Common stock issued in settlement of
  Accounts payable in November 2004
  at $0.60 per share                                25,000            25            --         14,975             --         15,000

Common stock sold in private placement
  In December 2004 at $0.50 per share               50,000            50            --         24,950             --         25,000

Costs associated with warrants issued                   --            --            --        135,000             --        135,000

Costs associated with stock private
  placement                                             --            --            --        (19,363)            --        (19,363)

Common stock sold in private placement
  in January 2005 at $0.50 per share               265,000           265            --        132,235             --        132,500

Common stock issued for retirement of
  notes payable and accrued interest in
 February 2004 at $0.40 per share                  432,701           433            --        172,647             --        173,080

Common stock sold in private placement
  in March 2005 at $0.50 per share                 200,000           200            --         99,800             --        100,000

Beneficial conversion feature of notes payable          --            --            --         21,635             --         21,635

Costs associated with warrants issued                   --            --            --         14,000             --         14,000

Discounts associated with issuance of
   convertible debt with detachable warrants            --            --            --        113,448             --        113,448

Common stock sold in private placement
    May -June 2005 at $0.40 per share              880,000           880            --        351,120             --        352,000

Common stock sold in private placement
   In July 2005 at $0.40 per share                 360,000           360            --        143,640             --        144,000

Common stock issued for consulting services
     In August 2005 at $0.57 per share               8,772             9            --          4,991             --          5,000

Common stock issued for unpaid consulting
    In August 2005 at $0.38 per share              544,291           544            --        207,706             --        208,250

Share rounding on affiliate share
distribution to its shareholders                        10            --            --              4             --              4

Net loss, year ended September 30, 2005                 --            --            --             --     (3,244,841)    (3,244,841)
                                               -----------   -----------   -----------    -----------    -----------    -----------

Balances at September 30, 2005                  69,408,749   $    69,409   $        --    $ 5,952,072    $(6,142,407)   $  (120,926)
                                               ===========   ===========   ===========    ===========    ===========    ===========
</TABLE>

                 See notes to consolidated financial statements.


                                      F-7
<PAGE>

                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
                      (An Exploration Stage Mining Company)

                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                              Period From
                                                                                             July 26, 2002
                                                                                              (Inception)
                                                                                                Through
                                                             Year Ended September 30,         September 30,
                                                              2005              2004              2005
                                                          ------------      ------------      ------------
<S>                                                       <C>               <C>               <C>
Cash Flows From Operating Activities:
      Net loss                                            $ (3,244,841)     $ (1,314,320)     $ (6,142,407)
      Adjustments to reconcile net loss to net cash
         used in operating activities:
      Costs associated with common stock and
         warrants                                            1,405,539           964,647         3,468,304
      Beneficial conversion feature of notes payable            21,635            75,000            96,635
      Amortization of discount on notes payable                 22,690                --            40,190
      Provision for uncollectible note
         receivable                                             50,000                --            62,500
      Depreciation                                               7,790                --             7,790
      Changes in operating assets and liabilities:
          Increase in advance to  officer                       (1,064)               --            (1,064)
          Increase in interest receivable                      (13,611)               --           (13,611)
          Increase in prepaid expenses and other               (12,123)               --           (12,123)
          Increase in expense advances on behalf
            of affiliated company                             (351,946)               --          (351,946)
          Increase in deposits                                 (16,445)               --           (16,445)
          Increase in accounts payable                         101,596           168,284           293,950
          Increase in accrued liabilities                      124,968            17,568           175,670
          (Decrease) in accrued liabilities,
             related parties                                        --           (70,500)               --
          (Decrease) increase in interest payable,
             related parties                                    (1,652)           12,968                --
          Increase in interest payable, other                    2,373            36,805            18,344
                                                          ------------      ------------      ------------
              Net Cash Used in Operating Activities         (1,905,091)         (109,548)       (2,374,213)
                                                          ------------      ------------      ------------

Cash Flows From Investing Activities:
      Purchase of mine interest                                     --           (14,000)         (100,000)
      Purchase of furniture and equipment                      (69,101)               --           (69,101)
      Issuance of notes receivable                            (236,930)               --          (249,430)
      Payments received on notes receiveble                     66,930                --            66,930
      Cash paid in connection with acquisition of
        DLM Services, Inc.                                          --                --           (50,000)
                                                          ------------      ------------      ------------
          Net Cash Used in Investing Activities               (239,101)          (14,000)         (401,601)
                                                          ------------      ------------      ------------

Cash Flows From Financing Activities:
      Proceeds from the sale of common stock                 1,740,500                --         1,740,523
      Costs associated with sale of stock                      (19,363)               --           (19,363)
      Proceeds from notes payable, related parties                  --            47,400           219,900
      Proceeds of notes payable, other                         600,000            63,300         1,022,300
      Stock subscription received                                   --            50,000            50,000
      Repayment of notes payable, related parties              (42,577)          (14,823)          (61,900)
      Repayment of notes payable, other                        (25,000)               --           (43,874)
                                                          ------------      ------------      ------------
          Net Cash Provided by Financing Activities          2,253,560           145,877         2,907,586
                                                          ------------      ------------      ------------

Increase in Cash                                               109,368            22,329           131,772

Cash, Beginning of Period                                       22,404                75                --
                                                          ------------      ------------      ------------

Cash, Ending of Period                                    $    131,772      $     22,404      $    131,772
                                                          ============      ============      ============
</TABLE>

                 See notes to consolidated financial statements.


                                      F-8
<PAGE>

                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
                      (An Exploration Stage Mining Company)

                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                             Period From
                                                                                            July 26, 2002
                                                                                             (Inception)
                                                                                               Through
                                                              Year Ended September 30,       September 30,
                                                                2005            2004             2005
                                                           ------------     ------------     ------------
<S>                                                        <C>              <C>              <C>
SUPPLEMENTAL CASH FLOW INFORMATION:
       Cash paid for interest                              $        950     $      1,117     $      1,177
                                                           ============     ============     ============

       Cash paid for income taxes                          $         --     $         --     $         --
                                                           ============     ============     ============

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)                          $         --     $         --     $      3,600
                                                           ============     ============     ============

       Issuance of common stock to Gold and Minerals
         Company, Inc. in connection with the purchase
         of the Weaver mineral property                    $         --     $      3,000     $      3,000
                                                           ============     ============     ============

       Costs associated with warrants issued               $    149,004     $    108,000     $    257,004
                                                           ============     ============     ============

       Stock based compensation                            $  1,205,500     $    800,397     $  3,044,897
                                                           ============     ============     ============

       Issuance of common stock for financing costs        $         --     $     56,250     $     56,250
                                                           ============     ============     ============

       Issuance of common stock for interest costs         $      3,683     $         --     $     62,801
                                                           ============     ============     ============

       Conversion of accounts payable to equity            $     31,381     $         --     $     31,381
                                                           ============     ============     ============

       Conversion of accrued interest to equity            $     15,971     $         --     $     15,971
                                                           ============     ============     ============

       Conversion of notes payable and accrued
         interest for the issuance of common stock         $    153,426     $    442,118     $    595,544
                                                           ============     ============     ============
</TABLE>

                 See notes to consolidated financial statements.


                                      F-9
<PAGE>

                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
                      (An Exploration Stage Mining Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    YEARS ENDED SEPTEMBER 30, 2005 AND 2004

NOTE 1. BUSINESS, OPERATIONS, ORGANIZATION, LIQUIDITY AND BASIS OF PRESENTATION

      Business and  Operations - On July 26, 2002, El Capitan  Precious  Metals,
      Inc. 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 has a wholly owned subsidiary. The
      results of El Capitan and its  subsidiary  ("El Capitan" or the "Company")
      are presented on a consolidated basis.

      The Company is in the exploration stage and since inception, has completed
      certain  acquisitions  and  transactions  (Note  2),  but  has not had any
      revenue producing operations.

      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
      30,120,000 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 39,000,000  shares of 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 stock split completed by DML on November 25, 2002,
      and the  retirement  of  30,120,000  post-reverse-split  shares which took
      place  immediately  prior to closing the transaction,  the stockholders of
      DML hold 6,720,000 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 was recorded as a reverse acquisition based on
      factors demonstrating that El Capitan constituted 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 was 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.

      Basis of  Presentation  and  Going  Concern - The  accompanying  financial
      statements have been prepared  assuming the Company will continue as going
      concern,  which  contemplates the realization of assets and the settlement
      of  liabilities  and  commitments  in the normal  course of business.  The
      Company is an exploration stage mining company and since its inception has
      had no mining  revenues  and has  incurred  recurring  losses  aggregating
      $6,142,407  accumulated  during the exploration  stage.  In addition,  the
      Company  does not have a  revolving  credit  facility  with any  financial
      institution.  These  factors raise  substantial  doubt about the Company's
      ability to  continue  as a going  concern.  The  ability of the Company to
      continue as a going  concern is dependent on raising  additional  capital,
      negotiating adequate financing  arrangements and on achieving sufficiently
      profitable  operations.  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.

      The Company believes its cash  requirements  over the next fiscal year can
      be funded  through a  combination  of financing  activities  completed and
      projected  subsequent to year-end and prior to cash flow generated through
      operations.  The Company  has  completed  a private  placement  during the
      quarter ended  December 31, 2005 (Note 13) and also  completed a placement


                                      F-10
<PAGE>
                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
                      (An Exploration Stage Mining Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    YEARS ENDED SEPTEMBER 30, 2005 AND 2004

      of a  convertible  debenture  (Note  13).  The  Company  also  anticipates
      exercising the call option on various warrants, which, if exercised, would
      provide  the  Company   significant   working   capital  to  continue  its
      exploratory programs. We continually evaluate business  opportunities such
      as joint venture processing agreements with the objective of creating cash
      flow to sustain the  corporation and provide a source of funds for growth.
      While the  Company  believes  it will be able to  finance  its  continuing
      activities,  there are no  assurances  of success in this regard or in the
      Company's  ability to obtain continued  financing through capital markets,
      joint ventures,  or other acceptable  arrangements.  If management's plans
      are not successful, operations and liquidity may be adversely impacted.

      Given the Company's limiting operating history,  lack of revenue,  and its
      operating  losses,  there  can be no  assurance  that  it  will be able to
      achieve  or  maintain  profitability.  Accordingly,  these  factors  raise
      substantial  doubt  about the  Company's  ability to  continue  as a going
      concern.

NOTE 2. ACQUISITIONS AND DIVESTITURES

      Acquisition of El Capitan Property from Gold and Minerals Company,  Inc. -
      In October 2003,  the Company  completed the  acquisition  of a 40% equity
      interest in El Capitan, Ltd. ("ECL"), an Arizona corporation,  which prior
      to the  transaction  was  wholly-owned  subsidiary  of Gold  and  Minerals
      Company, Inc. ("Minerals"),  a Nevada corporation.  Minerals is affiliated
      with  the  Company  in that it is a  shareholder  of the  Company  and the
      Company's CEO/President is a shareholder of Minerals. Minerals is involved
      in  the  exploration,  development,  and  testing  of  mining  properties.
      Consideration for the acquisition  consisted of the issuance of 30,225,000
      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,  of which
      $86,000  was paid  through  September  30,  2003,  and $14,000 was paid in
      October 2003. Minerals retained the remaining 60% ownership in El Capitan,
      Ltd.

      The  assets of ECL  primarily  consist  of the El  Capitan  property  (the
      "Property"),  an inactive  iron and related  ore  property  located in New
      Mexico. At September 30, 2005, the Property contained four patented claims
      and three  unpatented  claims on  approximately  200 acres in the  Capitan
      Mountains  in Lincoln  County,  New  Mexico.  The  Property  has no proven
      reserves.  The Company did not assume any  liabilities  or  obligations of
      ECL.

      Subsequent to our current year-end, the Company filed additional claims on
      the  surrounding  properties  adjacent to our Property  site at El Capitan
      based upon recommendations from our consulting geologist.  The Company has
      expanded  its mining  claims for this  Property  to  approximately  10,000
      acres.

      On January 1, 2006,  ECL finalized  the purchase of four  patented  mining
      claims,  constituting  approximately  77.5 acres in aggregate,  located in
      Lincoln  County,  New Mexico.  The purchased  claims are located on the El
      Capitan Mine  property,  which is owned by ECL. In  consideration  for the
      claims,  ECL  transferred  2,100,000  shares of ECPN common stock owned by
      Gold and  Minerals.  Pursuant to an agreement  between ECL and the Seller,
      the stock was valued at $0.82 per share,  the market value of the stock on
      November 11, 2005.

      Pursuant to an arrangement with Minerals, ECPN is obligated to Minerals to
      pay $688,800 for the purchase of the patented  mining  claims by ECL. ECPN
      intends  to offset its  portion of the  purchase  price  against  existing
      obligations of Minerals due ECPN.


                                      F-11
<PAGE>
                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
                      (An Exploration Stage Mining Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    YEARS ENDED SEPTEMBER 30, 2005 AND 2004

      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,  buildings 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.  Consideration  for
      this purchase consisted of 3,600,000 shares of the Company's common stock.
      Because the COD Mine was acquired from Minerals, the Company's controlling
      stockholder at the time of the transaction,  the transaction was accounted
      for as a  non-monetary  exchange  and  was  recorded  at no  value  in the
      consolidated financial statements.

      Sale of 80% of Mining Claims and Joint Venture - In May 2004,  the Company
      executed  a joint  venture  agreement  (the  "Joint  Venture")  with  U.S.
      Canadian Minerals, Inc. ("USCA.PK"),  a publicly-traded Nevada company, to
      explore,  operate and utilize the COD Mine, including the recovery of gold
      and silver  from the  tailings  of the COD Mine.  The Joint  Venture is to
      operate under the name "CanEl" until May 2020, unless  terminated  earlier
      pursuant  to the  terms of the  Joint  Venture.  Under  terms of the Joint
      Venture Agreement,  the Company was required to transfer to USCA.PK an 80%
      interest in the COD mine in exchange for 720,000  shares of USCA.PK common
      stock.  Pursuant  to a  stock  split  affected  by  USCA.PK,  the  Company
      currently holds 2,160,000  shares of the USCA.PK common stock. On the date
      of the original transaction, shares of unrestricted freely trading USCA.PK
      common stock traded at $2.85 per share,  or as adjusted for the split,  at
      $0.95 per share.  At  September  30,  2005,  1,000,000  these  shares were
      pledged as security for the $300,000 convertible  debenture note. See NOTE
      7.

      The USCA.PK  common  stock was  restricted  with respect to sale until May
      2005.  USCA.PK's common stock is currently traded on the Pink Sheets,  its
      most recent SEC filings have not been reviewed by a registered  accounting
      firm, and it faced a SEC imposed temporary  trading  suspension in October
      of 2004  (which  has  since  expired).  The  Company  also has  continuing
      involvement (as discussed  below) related to the COD Mine.  Based on these
      factors, no gain on the sale was recorded and the Company has not ascribed
      any value to the common stock received.

      When the  USCA.PK  restriction  period  ends and  resumes  trading  on the
      Bulletin  Board,  and once the  Company's  assessment  of the common stock
      allows for classification of the securities as marketable  securities,  it
      intends to classify the  investment as available for sale under  Statement
      of Financial  Accounting  Standard  (SFAS) No 115,  Accounting for Certain
      Investments in Debt and Equity Securities. The Company will not record any
      value  associated  with the  common  stock  until  such  time,  unless  it
      liquidates its investment earlier.

      The Joint Venture  provides that the Company is to operate the COD Mine as
      it  relates  to the  tailings  and  settlement  pond  and  contribute  the
      equipment  needed for such operations,  which have not yet begun.  USCA.PK
      agreed to  contribute  90 days  operating  capital to provide for at least
      three workers,  fuel,  necessary equipment agreed upon by the parties, and
      equipment  repair and  maintenance  and paid  $12,500  in July  2004.  Net
      profits,  if  any,  from  the  operations  tailings  and  settlement  pond
      operations  will be split  equally  among the  Company and  USCA.PK.  This
      project has been on hold as USCA.PK has been  focusing on brining  current
      their SEC filings and to resume trading on the Bulletin Board.  Subsequent
      to our current year ended, our Board of Directors approved an amendment to
      the Joint Venture  Agreement  whereas the Company will contribute  $50,000
      for the completion of the geological  field study.  As  consideration  for
      this advance,  the Company will be  reimbursed  this advance and any other
      incurred expenses and all net proceeds after deducting all incurred costs,
      are to be split equally with USCA.PK.

      In addition to the Joint Venture,  the Company also retained  USCA.PK as a
      consultant  for a period of two years to provide  services  pertaining to,
      among  other  things,   identifying,   studying  and  evaluating   merger,
      acquisition, joint venture, strategic alliance and other proposals as well
      as implementation of financial public relations  programs for the Company.
      In exchange  for its  services,  USCA.PK was issued a one-year  warrant to
      acquire up to 3,000,000  shares of El Capitan common stock  exercisable at
      $0.14 per share. The total  compensation  cost related to the warrants was
      valued at $108,000 utilizing the Black Scholes  option-pricing  method and
      the entire amount was expensed  during the year ended  September 30, 2004.
      The warrants expired unexercised in May 2005.

                                      F-12
<PAGE>
                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
                      (An Exploration Stage Mining Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    YEARS ENDED SEPTEMBER 30, 2005 AND 2004

      Acquisition  of Weaver Mining Claims - In July 2004 the Company  purchased
      the Weaver mining claims from its then controlling  stockholder,  Gold and
      Minerals  Co.,  Inc.,  for the  consideration  of 3,000,000  shares of the
      Company's common stock. This acquisition consists of mining claims granted
      by the United  States  Bureau of Land  Management,  buildings and personal
      property  and located near  Wichenberg,  Arizona.  The Weaver  claims were
      acquired  from  the  Company's  controlling  stockholder  at the  time  of
      transaction  in exchange for shares of the Company's  common stock and the
      transaction was accounted for as a non-monetary  exchange and was recorded
      at a zero basis in the consolidated financial statements,  as that was the
      basis of Gold & Minerals Co., Inc.

      Purchase  Agreement for Rainbow Valley Mining  Property - In July 2004 the
      Company  signed an agreement  with an individual  for the  acquisition  of
      approximately  1,620  acres  located  in  Maricopa  County,  Arizona.  The
      property has been  permitted  and the property and was drilled and assayed
      in early  2005 to  determine  the iron ore  content  of the  mining  site.
      Currently  it is the  Company's  intent to  finalize  and  verify the test
      results by an outside refinery and based upon the results of this property
      and compared to other  properties the Company is in process of testing and
      confirming,  management will determine the final  disposition of this site
      during the first calendar quarter of 2006.

      Under the terms of the agreement,  the seller is to be paid $2,500 monthly
      to manage the testing,  further develop the property,  complete  necessary
      permitting  and  consult  on  other  properties  the  Company  may have an
      interest in. Upon  completion of the  successful  testing,  permitting and
      acceptance  by the Company of the site,  the Company  will be obligated to
      pay the seller $100,000.  At this time, the Company is not liable for this
      obligation  until all terms and conditions are met. If the  transaction is
      consummated,  additional  consideration to be paid to the seller under the
      agreement  consist  of a royalty  of $1.00 a ton of iron ore and 3% of the
      before tax profit on any minerals shipped from the property.

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Principals  of  Consolidation  -  The  consolidated  financial  statements
      include the accounts of El Capitan  Precious  Metals,  Inc. and its wholly
      owned subsidiary.  All significant inter-company accounts and transactions
      have been eliminated in the consolidated financial statements.

      Cash and Cash Equivalents - The Company considers those short-term, highly
      liquid  investments  with  maturities  of three months or less as cash and
      cash  equivalents.  At  times,  cash in banks may be in excess of the FDIC
      limits.

      Management  Estimates and  Assumptions - 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 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 the  Company's
      financial instruments include cash, investments, accounts payable, accrued
      expenses and notes payable  approximate  their carrying amounts because of
      the short maturities of these instruments or because of restrictions.


                                      F-13
<PAGE>
                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
                      (An Exploration Stage Mining Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    YEARS ENDED SEPTEMBER 30, 2005 AND 2004

      Furniture  and  Equipment - Furniture  and  equipment  are stated at cost.
      Depreciation   is   calculated   for   financial   statements   using  the
      straight-line basis over the estimated useful lives as follows:

             Automobile                                 5 years
             Office furniture and equipment          3-10 years
             Mine equipment                             7 years

      Depreciation  expense for the years ended  September 30, 2005 and 2004 was
      $7,790 and $-0-, respectively.

      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.  Diluted EPS reflects the potential dilution that could occur
      if securities or other  contracts to issue common stock (were exercised or
      converted  into common  stock or resulted in the  issuance of common stock
      that then  shared in the  earnings  of the  entity.  Basic loss per common
      share is  computed  based  on  weighted  average  shares  outstanding  and
      excludes any  potential  dilution from stock  options,  warrants and other
      common stock  equivalents  and is computed by dividing  loss  available to
      common  shareholders  by the  weighted  average  number of  common  shares
      outstanding  for the period.  Diluted net loss per common  share  reflects
      potential  dilution.  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.  The historical  loss per share of El Capitan prior to the
      merger  has  been  retroactively  restated  to  reflect  the  new  capital
      structure.

      At September 30, 2005,  potential dilutive  securities  consisted of stock
      options  representing  1,150,000  common shares were  outstanding  with an
      exercise price of $0.56 per share.  At September 30, 2005,  stock warrants
      representing 5,015,000 common shares were outstanding with exercise prices
      ranging between $0.50 and $2.50 per share.  The weighted  average exercise
      price for outstanding warrants is $0.64.

      At September  30, 2004,  potential  dilutive  securities  consisted  stock
      warrants  representing  3,300,000  common  shares  were  outstanding  with
      exercise  prices ranging  between $0.14 and $2.50 per share.  The weighted
      average exercise price for outstanding warrants was $0.28.

      Stock-Based  Compensation  - Transition  and  Disclosure - The Company has
      elected to follow  Accounting  Principles Board Opinion No. 25, Accounting
      for Stock Issued to Employees  ("APB 25") and the related  interpretations
      in accounting for its employee  stock  options.  Under APB 25, because the
      exercise  price of  employee  stock  options  equals or exceeds the market
      price  of the  underlying  stock  on the date of  grant,  no  compensation
      expense is recorded.  If the exercise  price of employee  stock options is
      under  the  market  price of the  underlying  stock on the date of  grant,
      compensation  expense is  recorded  for the price  differential  times the
      quantity of options granted.  The Company has adopted the  disclosure-only
      provisions  of Statement of Financial  Accounting  Standards  ("SFAS") No.
      123,  "Accounting  for Stock Based  Compensation,"  as amended by SFAS No.
      148, "Accounting For Stock-Based Compensation - Transition & Disclosure."


                                      F-14
<PAGE>
                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
                      (An Exploration Stage Mining Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    YEARS ENDED SEPTEMBER 30, 2005 AND 2004

      The Company  recognized no stock-based  employee  compensation for options
      issued to employees  during the years ended  September  30, 2005 and 2004.

      The fair  value of  option  grants  is  estimated  as of the date of grant
      utilizing  the  Black-Scholes  option-pricing  model  with  the  following
      weighted average  assumptions for all grants,  volatility of 87%, expected
      life of  options  of 5 years,  risk-free  interest  rates  of two  percent
      (2.25%), and a zero percent (0%) dividend yield.

      Transactions  in  equity  instruments  with  non-employees  for  goods and
      services are accounted for by the fair value method.

      The  following  table  illustrates  the pro forma effect on net (loss) and
      loss per share if the  Company  had  applied  the fair  value  recognition
      provisions  of  FASB  Statement  No.  148,   "Accounting  For  Stock-Based
      Compensation - Transition & Disclosure, An Amendment To FASB Statement No.
      123," to stock-based employee compensation.

<TABLE>
<CAPTION>
                                                                   Year Ended September 30,
                                                                    2005             2004
                                                               -------------    -------------
                                                                (Unaudited)      (Unaudited)
<S>                                                            <C>              <C>
      Net loss, as reported                                    $  (3,244,841)   $  (1,314,320)
      Add: total stock-based employee compensation expense
           included in reported net loss                           1,317,636               --
      Deduct - stock-based compensation expense determined
           under the fair value method, net of tax effect         (1,369,202)              --
                                                               =============    =============
      Pro forma net loss                                       $  (3,296,407)   $  (1,314,320)
                                                               =============    =============

      Loss per share:
           Net loss per share, as reported                     $       (0.05)   $       (0.02)
                                                               =============    =============

           Net loss per share, pro forma                       $       (0.05)   $       (0.02)
                                                               =============    =============
</TABLE>

      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, 2005 and 2004,  long-lived assets were recorded at
      no value in the consolidated financial statements.

      Mineral  Property Costs - Mineral  property  exploration  and  development
      costs are  expensed as incurred  until such time as economic  reserves are
      quantified. To date the Company has not established any proven or probable
      reserves on its mineral properties.  The Company has capitalized  $100,008
      of mineral property acquisition costs.

      Income Taxes - The Company computes  deferred income taxes under the asset
      and liability method  prescribed by the Statement of Financial  Accounting
      Standards No. 109. Under this method,  deferred tax assets and liabilities
      are recognized for temporary  differences  between the financial statement
      amounts and the tax basis of certain  assets and  liabilities  by applying
      statutory  rates in effect when the temporary  differences are expected to
      reverse.  Valuation  allowances are  established  when necessary to reduce
      deferred tax assets to the amount more likely than not to be realized.


                                      F-15
<PAGE>
                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
                      (An Exploration Stage Mining Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    YEARS ENDED SEPTEMBER 30, 2005 AND 2004

      New Accounting Pronouncements - In December 2004, the FASB issued SFAS No.
      123  (Revised  2004)  "Share  Based  Payment"  ("SFAS  123R"),  which is a
      revision to SFAS 123 and  supersedes  APB 25 and SFAS 148. This  statement
      requires that the cost resulting from all share-based payment transactions
      be recognized in the financial statements. This statement establishes fair
      value as the measurement  objective in accounting for share-based  payment
      arrangements  and  requires  all  entities  to  apply a  fair-value  based
      measurement method in accounting for share-based payment transactions with
      employees  except for equity  instruments held by employee share ownership
      plans.

      SFAS  123R  applies  to all  awards  granted  after the  required  amended
      effective date and to awards  modified,  repurchased,  or cancelled  after
      that date. As of the required  effective  date,  all public  entities that
      used the  fair-value-based  method for either  recognition  or  disclosure
      under Statement 123 will apply this Statement using a modified  version of
      prospective application.  Under that transition method,  compensation cost
      is recognized on or after the required  effective  date for the portion of
      outstanding  awards  for  which  the  requisite  service  has not yet been
      rendered,  based on the grant-date  fair value of those awards  calculated
      under Statement 123 for either recognition or pro forma  disclosures.  For
      periods before the required  effective  date,  those entities may elect to
      apply a modified  version of the  retrospective  application  under  which
      financial statements for prior periods adjusted on a basis consistent with
      the pro forma disclosures  required for those periods by Statement 123. As
      a result,  beginning in our fiscal quarter  starting October 2006, we will
      adopt SFAS 123R and begin  reflecting the stock option expense  determined
      under fair value based methods in our income  statement  rather than a pro
      forma disclosure in the notes to the financial  statements.  We expect the
      effect of adopting SFAS 123R to be similar to the effect  presented in our
      pro forma disclosure related to SFAS 123.

NOTE 4. INVESTMENTS IN USCA.PK

      At September 30, 2005 the Company owned 2,160,000 shares of U. S. Canadian
      Minerals Inc.  (USCA.PK)  common stock.  The market value per unrestricted
      share at the closing of the market on  September  30, 2005 was $0.39 based
      on the last  published  sales  price.  As discussed in Note 2, the initial
      carrying  value  of  this  investment  is  recorded  at no  value  in  the
      consolidated financial statements.  On March 30, 2005, the Company pledged
      1,000,000  shares of its  USCA.PK  investment  as  security  for a secured
      convertible debenture note. See NOTE 7 and NOTE 13.

NOTE 5. RELATED PARTY TRANSACTIONS

      Notes  Receivable  - In March  2003,  the Company  advanced  $12,500 to an
      affiliate  in which a prior  officer of the Company was also an officer of
      the affiliate,  in exchange for two unsecured,  8% promissory notes, which
      are due on  demand.  At  September  30,  2005 and 2004,  the  Company  has
      recorded a valuation  allowance of $12,500  against this receivable due to
      uncertainty as to the ultimate collectibility of these promissory notes.

      Notes  Payable - At  September  30,  2004,  the  Company  had  $34,000  of
      unsecured notes payable with two related parties.  The notes bore interest
      at 8% and 10% per annum.  The Company also had one  unsecured 8% per annum
      note  payable  to the  president  and  sole  director  of the  Company  at
      September  30,  2004.  The note  payable to the  president  of the Company
      totaled  $8,577.  All  the  aforementioned  notes  were  paid  in  full at
      September 30, 2005.


                                      F-16
<PAGE>
                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
                      (An Exploration Stage Mining Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    YEARS ENDED SEPTEMBER 30, 2005 AND 2004

      Due from  Affiliated  Company - During the year ended  September 30, 2005,
      the Company made net payments on behalf of Minerals  amounting to $351,946
      relating  to costs  incurred on the El Capitan  mine site.  Pursuant to an
      agreement  effective  October 1, 2004  between  the two  companies,  costs
      incurred at the El Capitan mine are to be split in  accordance  with their
      percentage ownership interest.  The Company holds a 40% equity interest in
      El Capitan, Ltd., and Minerals holds the remaining 60% equity interest. To
      secure the amounts due under the note and the cost advances made on behalf
      Minerals by Company,  Minerals has pledged to the Company  1,000,000  free
      trading shares of El Capitan  Precious Metals,  Inc. that it owns.  During
      the quarter ended September 30, 2005,  Minerals paid $150,000  towards its
      obligation under the Agreement. See Note 13 regarding subsequent events to
      our year end.

      Employment  Agreement  - In March 2003,  the  Company  executed a two-year
      employment  agreement  under which the Company  issued  600,000  shares of
      common stock to its President and Director as incentive compensation.  The
      agreement calls for the President to be paid a salary of $20,000 per month
      commencing January 1, 2003, which, at the option of the President,  may be
      satisfied in shares of the Company's  common stock.  As of March 31, 2005,
      the  Company  had issued  2,282,222  shares of common  stock in payment of
      $420,000 of salary.  The  600,000  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  required  the  Company to issue
      1,500,000  shares of common stock to the President should the Company sell
      the El Capitan  mine  during  the term of the  employment  agreement.  The
      Agreement  expired on March 18, 2005 and no shares were issued  under this
      provision.  On  February  1,  2005,  the Board of  Directors  amended  and
      extended only the conditional  option  provision of employment  agreement,
      which provided conditional stock options to be granted to the president if
      the El  Capitan  mining  property  is  sold.  The  amended  provision  for
      conditional  stock options  provides that if the sale of the Mine is for a
      price in excess of $150,000,000,  during the period March 18, 2005 through
      March 18, 2006, the Company is required to grant the president a five-year
      stock option to purchase 1,750,000 shares of the Company's common stock at
      an exercise price of $0.75 per share.

      At September  30, 2005, no new formal  employment  agreement was in effect
      with the President and he is currently  compensated  at $12,000 per month.
      Effective  June 1, 2005,  the  President  has agreed to take  accrued back
      compensation and monthly  compensation for June through  September 2005 in
      S-8 common stock of the Company.

      Amounts  expensed  under these  employment  agreements for the years ended
      September 30, 2005 and 2004 were $179,000 and $240,000, respectively.

      Management  Fees  -  The  Company  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 and  reduced  to $2,500 a month in
      September  2004).  The  agreements  were on a  month-to-month  basis.  The
      Company paid or accrued  management  fees pursuant to these  agreements of
      $171,000 and $72,000  during the years ended  September 30, 2004 and 2003,
      respectively,   and  $275,000   during  the  period  from  July  26,  2002
      (inception) through September 30, 2004. In June 2004, $68,100 representing
      the accrued  management fees payable to the stockholder where converted to
      346,260  shares  of  common  stock  of  the  Company.  In  July  2004  the
      shareholder  and  corporate   secretary   converted  $105,832  of  accrued
      management  fees to  703,740  shares of common  stock of the  Company.  In
      August 2004 the corporate  secretary  converted accrued fees of $10,000 to
      50,000 shares of the Company's  common stock.  Accrued  management fees at
      September 30, 2004 were $40,668.  All conversion  prices were equal to the
      closing price of the Company's common stock on the date of conversion.


                                      F-17
<PAGE>
                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
                      (An Exploration Stage Mining Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    YEARS ENDED SEPTEMBER 30, 2005 AND 2004

      The  management  fees to the  stockholder  terminated  as of September 30,
      2004.  The  Company  continued  to pay  management  fees to the  corporate
      secretary, who resigned as corporate secretary as of July 1, 2004, through
      December 31, 2004 for consulting activities.

      The Company  currently has informal  arrangements  with four  individuals,
      three of whom are officers  and/or  directors of the Company,  pursuant to
      which such  individuals  serve as support staff for the functioning of the
      home office and all related corporate  activities and projects.  There are
      no written  agreements with these  individuals,  and the Company currently
      pays an  aggregate  amount of $40,000 per month to these  individuals  for
      their  services.  Effective June 1, 2005, they agreed to take accrued back
      compensation  in  S-8  common  stock  of  the  Company  and  three  of the
      consultants agreed to take monthly compensation in S-8 common stock of the
      Company for the months of June through September 2005.

      Total  management  fees paid under  these  agreements  for the years ended
      September 30, 2005 and 2004 was $418,874 and $171,000, respectively.

      Consulting  Agreements  -  The  Company  has  entered  into  a  consulting
      agreement  with an officer of  Minerals  relating  to the El Capitan  Mine
      pursuant to which the Company issued 600,000 shares of common stock to the
      consultant and agreed to pay a fee of $20,000 per month, which may be paid
      in shares of the Company's common stock at the Company's  option.  Through
      December 31, 2004, the Company has issued  2,282,222  shares in payment of
      $420,000 of the earned  fees and the  agreement  expired on  December  31,
      2004. The Company extended the contract on a month-to-month  basis through
      March 2005 at $10,000 per month. Amounts expensed under this agreement for
      the years ended  September  30,  2005 and 2004 was  $36,000 and  $240,000,
      respectively.

NOTE 6. NOTES PAYABLE OTHER

      At September 30, 2005, the Company had two 12% unsecured  notes payable to
      two stockholders of the Company  amounting to $150,000 each, both of which
      are due September 15, 2006.

      At September 30, 2004, the Company had 8% and 12% unsecured  notes payable
      to four  stockholders  of the Company  amounting  to $153,426 and $25,000,
      respectively,  all of which  were due on demand.  During  our fiscal  year
      2005, the 12% note was paid off and the two 12% notes and related  accrued
      interest were converted into equity.

NOTE 7 - LONG-TERM NOTE PAYABLE

      On March 30, 2005, the Company issued a 10 % secured convertible debenture
      note for $300,000 to a stockholder of the Company. The note has a maturity
      of two and one-half  years and  contains a conversion  feature into common
      stock at $0.60 per share.  The note also provides for a five-year  warrant
      to be issued for the  purchase  of common  stock at an  exercise  price of
      $0.75. The note is collateralized by 1,000,000 shares of the U.S. Canadian
      Minerals Inc. shares that the Company owns. The note also provides that if
      the Company should sell any of the 2,160,000  shares of the U.S.  Canadian
      Minerals,  Inc. stock, the Company must allocate thirty-five percent (35%)
      of the net proceeds towards the retirement of the debenture note.

      The intrinsic value of the beneficial  conversion  feature of the note was
      $61,724 and the portion of the proceeds  allocated to the warrants  issued
      in connection with the debt amounted to $51,724. Accordingly, $113,448 was
      recognized  as a  discount  of the  convertible  debt and an  addition  to
      paid-in  capital.  At  September  30,  2005,  $22,690 of discount has been
      amortized.


                                      F-18
<PAGE>
                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
                      (An Exploration Stage Mining Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    YEARS ENDED SEPTEMBER 30, 2005 AND 2004

      On  October  28,  2005,  the note  holder and  Company  agreed to roll the
      secured  convertible  debenture  note into the private  placement that the
      Company was  terminating  and payment of all accrued  interest to the note
      holder.

NOTE 8 - CONSULTING AGREEMENTS

      In June 2004,  the Company  entered into a one year  consulting  agreement
      with an  unaffiliated  third  party in which  the  Company  is to  receive
      corporate planning and development services in exchange for 360,000 shares
      of the  Company's  common stock valued at $70,800 (the market price of the
      common stock at the date of  issuance).  Although the  agreement was for a
      one-year  period,  the entire  amount was  expensed  during the year ended
      September  30,  2004,  as this was the period the majority of the services
      were rendered.

      In June 2004, the Company entered into a consulting agreement in which the
      Company received  corporate  consulting  related to business  strategy and
      development  services in  exchange  for  115,500  shares of the  Company's
      common  stock  valued at $22,715  (the market price of the common stock at
      the date of  issuance),  which was expensed  during the quarter ended June
      30, 2004.

      In June 2004,  the  Company  agreed to issue  15,000  shares of its common
      stock  valued at $2,950 (the market  value of the common stock at the date
      of issuance) to a consultant in payment for developing and maintaining the
      Company's  website,  which was expensed  during the quarter ended June 30,
      2004.

      On October 19,  2004,  the Company  entered  into an  Investment  Advisory
      Agreement  with Blake  Advisors,  LLC ("Blake") for certain  financial and
      investment advisory services. The term of the Agreement expired on October
      31, 2005. Compensation under the Agreement provided for (i) the payment of
      $175,000 in cash and (ii) a monthly fee of $5,000 from November 1, 2004 to
      October  1,  2005.  Pursuant  to the  Agreement,  the  Company  granted  a
      five-year  warrant to the consultant for the purchase of 500,000 shares of
      the  Company's  common  stock at an exercise  price of $0.85 per share,  a
      cashless-exercise    provision   and   piggyback    registration   rights.
      Subsequently, the warrant exercise price was reduced to $0.50 per share in
      consideration of Blake agreeing to remove the cashless exercise  provision
      provided for in the original  warrant.  Under the terms of the  Agreement,
      the Company became obligated and paid fees amounting to $125,000 under the
      Agreement.

      On  November  4,  2004,  the  Company  entered  into an  Exclusive  Agency
      Agreement with Asia Finance Company, LLC ("AFC") pursuant to which AFC was
      engaged to source  buyers of iron ore for the Company in the Asian market.
      The  Agreement  appoints  AFC  as its  exclusive  Representative  for  the
      solicitation and sale of iron ore buyers in Asia. As partial consideration
      for such  services,  the Company  issued  1,536,859  shares of  restricted
      common stock to AFC and monetary  consideration  of $100,000.  At June 30,
      2005, the Company has expensed this amount.

      On August 22, 2005, the Company entered into a formal Agreement with Clyde
      L. Smith, PhD., P. Eng. (Smith) as consulting  geologist to the El Capitan
      Project.  The  Agreement  provides  for  Smith to  continue  acting as the
      Company's  consulting  geologist at his regular  compensation  rate and to
      receive a success fee of $250,000 for the successful  sale of the Project.
      The  Agreement  was amended on October 25, 2005,  to provide Smith with an
      option for the purchase of 150,000 shares of our common stock at $0.65 per
      share, the market price on the date of grant. The option was granted under
      provisions  of the  Company's  2005  Stock  Incentive  Plan and the option
      expires on October 25, 2006.


                                      F-19
<PAGE>
                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
                      (An Exploration Stage Mining Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    YEARS ENDED SEPTEMBER 30, 2005 AND 2004

      On September 27, 2005, the Company  entered into an Agreement with Pavlich
      Associates  (Pavlich)  which  provides  for  Pavlich  to  be  the  primary
      representative  of El Capitan Precious Metals,  Inc. in the sale of the El
      Capitan Project to all viable third party mineral companies. The Agreement
      provides  for  consulting  time  charges,  expenses  and a success  fee of
      $250,000,  less the sum of the  consulting  time  charges  paid  under the
      Agreement, for the successful sale of the Project.

      See Note 5 for a description  of the  consulting  agreement with a related
      party.

NOTE 9 - COMMITMENTS AND CONTINGENCIES

      On October 19,  2004,  the Company  entered  into an  Investment  Advisory
      Agreement  with Blake  Advisors,  LLC ("Blake") for certain  financial and
      investment advisory services. The term of the Agreement expired on October
      31, 2005. Compensation under the Agreement provided for (i) the payment of
      $175,000 in cash and (ii) a monthly fee of $5,000 from November 1, 2004 to
      October  1,  2005.  Pursuant  to the  Agreement,  the  Company  granted  a
      five-year  warrant to the consultant for the purchase of 500,000 shares of
      the  Company's  common  stock at an exercise  price of $0.85 per share,  a
      cashless-exercise    provision   and   piggyback    registration   rights.
      Subsequently,  the warrant  exercise  price was reduced to $0.50 per share
      for Blake agreeing to remove the cashless exercise  provision provided for
      in the original  warrant.  Under the terms of the  Agreement,  the Company
      became obligated and paid fees amounting to $125,000 under the Agreement.

      The  Company  signed a lease  for  office  space in  Scottsdale,  Arizona,
      effective  November 1, 2004.  The lease has a two-year  term and  requires
      monthly  payments  of $3,845 plus taxes and tenant  charges.  For the year
      ended   September  30,  2005,  rent  expense  was  $34,118  and  remaining
      commitments  under this lease for our year ended  September  30,  2006 and
      2007 is $50,074 and $4,173, respectively.

      On August 22, 2005, the Company entered into a formal Agreement with Clyde
      L. Smith, PhD., P. Eng., (Smith) as consulting geologist to the El Capitan
      Project.  The  Agreement  provides  for  Smith to  continue  acting as the
      Company's  consulting  geologist at his regular  compensation  rate and to
      receive a success fee of $250,000 for the successful  sale of the Project.
      The  Agreement  was amended on October 25, 2005,  to provide Smith with an
      option for the purchase of 150,000 shares of our common stock at $0.65 per
      share, the market price on the date of grant. The option was granted under
      provisions  of the  Company's  2005  Stock  Incentive  Plan and the option
      expires on October 25, 2006.

      On September 27, 2005, the Company  entered into an Agreement with Palvich
      Associates  (Pavlich),  which  provides  for  Pavlich  to be  the  primary
      representative  of El Capitan Precious Metals,  Inc. in the sale of the El
      Capitan  Project.  to  all  viable  third  party  mineral  companies.  The
      Agreement provides for consulting time charges, expenses and a success fee
      of $250,000,  less the sum of the  consulting  time charges paid under the
      Agreement, for the successful sale of the Project.

NOTE 10. INCOME TAXES

      The Company has  incurred no current  income  taxes during the period from
      July 26, 2002  (inception)  through  September  30, 2005. At September 30,
      2005 and 2004,  the  Company  has Federal  operating  loss carry  forwards
      approximating  $6,142,000 and $2,900,000,  respectively,  to reduce future
      taxable income, if any, and expires at various dates in 2022 through 2025.
      The  calculated  tax benefit at September  30, 2005 and 2004 is 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 the result of a valuation allowance applied to the net deferred
      tax asset,  which  consists  of the  Company's  net  operating  loss carry
      forwards.  A  valuation  allowance  has been  provided  to reduce  the net
      deferred tax asset, as realization of the asset is not assured.


                                      F-20
<PAGE>
                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
                      (An Exploration Stage Mining Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    YEARS ENDED SEPTEMBER 30, 2005 AND 2004

                                                 Year Ended September 30,
                                                  2005             2004
                                              -----------      -----------
            Computed expected tax benefit     $ 2,088,000      $   985,000
            Valuation allowance                (2,088,000)        (985,000)
                                              -----------      -----------
            Net deferred tax asset            $        --      $        --
                                              ===========      ===========

NOTE 11. ADOPTION OF 2005 STOCK INCENTIVE PLAN

      On June 2, 2005,  the Board of Directors  adopted the Company's 2005 Stock
      Incentive Plan which reserves 5,000,000 shares for issuance under the Plan
      out of the authorized and unissued shares of par value $0.001 Common Stock
      of the Corporation. On July 8, 2005, the Board of Directors authorized the
      Company to take the steps  necessary  to register  the Plan shares under a
      Registration  Statement  on Form S-8. On July 19,  2005,  the Form S-8 was
      filed with the Securities and Exchange Commission.

NOTE 12. STOCKHOLDER'S DEFICIT

      Changes to the Company's  Capital  Structure and Dividend - In April 2004,
      the Company's  Board of Directors  authorized an increase in the number of
      shares   authorized  for  issuance  by  the  Company  from  50,000,000  to
      100,000,000.  The change was approved in writing by the Company's majority
      stockholder.  In conjunction with the increase in authorized  shares,  the
      Board of Directors authorized, and on July 23, 2004 declared, a 200% stock
      dividend for stockholders of record as of July 30, 2004. Accordingly,  the
      Company issued  40,982,908  shares of its common stock to  stockholders of
      record on July 30, 2004 resulting in total shares outstanding on that date
      of  61,474,362.  The Company  accounted for the stock  dividend as a stock
      split  effected in the form of a dividend.  All shares  presented in prior
      periods have been restated to reflect the stock dividend.

      In addition,  the Board of Directors  authorized the addition of 5,000,000
      shares of  preferred  stock,  $.001 par value,  which may be issued by the
      Company  pursuant  to  the  voting  powers,  designation,  liquidation  or
      dividend preference,  and relative participating,  option or other special
      rights, and the qualifications,  limitations or restrictions of the shares
      as may be so established  for any series issued by the board of directors.
      This  change  was also  approved  in  writing  by the  Company's  majority
      shareholder. No shares of preferred stock have been issued to date.

      On December 28, 2004,  the  Company's  Board of  Directors  authorized  an
      additional increase in the number of shares authorized for issuance by the
      Company from 100,000,000 to 300,000,000.  The Company majority shareholder
      approved  the  change  by  written  consent  on  March  11,  2005,  and  a
      Certificate of Amendment to the Articles of  Incorporation  was filed with
      the State of Nevada on April 7, 2005 to effect the amendment.

      Issuances  of Common  Stock and  Warrants - On May 18,  2004,  the Company
      issued  2,700,000  shares of common  stock in  settlement  of  $360,000 of
      executive  compensation and consulting fees. The Company  registered these
      shares for trading by way of an S-8  Registration  Statement filed on June
      15, 2004.

      On June 10, 2004, the Company  issued 346,260 shares of restricted  common
      stock in settlement of $68,100 of consulting fees.

      On June 11, 2004,  the Company  issued  490,500  shares of common stock to
      three consultants in settlement of $96,465 of consulting fees. The Company
      registered  these  shares  for  trading  by  way  of an  S-8  Registration
      Statement filed on June 15, 2004.


                                      F-21
<PAGE>
                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
                      (An Exploration Stage Mining Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    YEARS ENDED SEPTEMBER 30, 2005 AND 2004

      On June 15, 2004, the Company  issued 225,000 shares of restricted  common
      stock in consideration to two note holders as financing costs amounting to
      $56,250.

      On July 7, 2004,  the Company  issued  571,428  shares of common  stock in
      settlement of $80,000 of executive compensation and consulting fees.

      On July 14, 2004,  the Company  issued  703,740  shares of common stock in
      settlement of $105,832 of executive  compensation and consulting fees. The
      Company  has  registered  these  shares  for  trading  by  way  of an  S-8
      Registration Statement filed on June 15, 2004.

      On July 14, 2004, the Company issued 3,000,000 shares of restricted common
      stock in consideration for the acquisition of the Weaver mining claims and
      related buildings and personal property.

      On July 14, 2004, the Company issued 1,343,154 of restricted  common stock
      in  settlement  of a  note  payable  and  accrued  interest  amounting  to
      $179,087.

      On August 18, 2004,  the Company  issued 285,714 shares of common stock in
      settlement of $40,000 of executive compensation and consulting fees.

      On August 20, 2004,  the Company  issued  50,000 shares of common stock in
      settlement  of  $10,000  of  executive   compensation.   The  Company  has
      registered  these  shares  for  trading  by  way  of an  S-8  Registration
      Statement filed on June 15, 2004.

      On September  13, 2004,  the Company  issued  93,022  shares of restricted
      common  stock in  settlement  of $40,000  of  executive  compensation  and
      consulting fees.

      On September 16, 2004,  the Company  issued  751,518  shares of restricted
      common  stock to three note  holders in  settlement  of notes  payable and
      accrued  interest  amounting to  $263,031.  Because the stock price was in
      excess of the conversion  price,  the Company recorded a charge of $75,000
      to account for the beneficial conversion feature.

      On October 4, 2004, the Company issued 200,000 shares of restricted common
      stock for stock subscriptions received on September 28, 2004.

      On October 4, 2004,  the Company  issued 20,000 shares of S-8 common stock
      in settlement of $16,381 of accounts payable.

      On October 4, 2004,  the Company issued 100,000 shares of S-8 common stock
      to two consultants for consulting fees amounting to $65,000.

      On October  19,  2004,  the Company  granted a  five-year  warrant for the
      purchase of 500,000  shares of common stock at an exercise  price of $0.85
      per share for professional services rendered to the Company.

      On October 20, 2004,  the Company  issued 6,500 shares of S-8 common stock
      to a consultant for consulting fees amounting to $5,135.

      On November 4, 2004, the Company issued 1,536,859 restricted common shares
      under the terms and  conditions on an Exclusive  Agency  Agreement with an
      aggregate value of $922,115.


                                      F-22
<PAGE>
                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
                      (An Exploration Stage Mining Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    YEARS ENDED SEPTEMBER 30, 2005 AND 2004

      In November  and December  2004 the Company  issued  2,160,000  restricted
      common shares to accredited  investors  pursuant to a private placement of
      securities  under  Section  4(2)  and  Rule  506  promulgated   under  the
      Securities Act, in an aggregate  amount of $1,080,000 (the Offering).  The
      Offering  also  provided  with  each  share of common  stock a  three-year
      warrant to purchase one share of common stock at an exercise price of $.75
      per share.  The warrants are callable  under  certain  circumstances.  The
      Company has agreed to file a registration  statement  covering the sale or
      the shares of common stock and the common stock  issuable upon exercise of
      the of the  Warrants  within  ninety (90) days of the final sale under the
      Private Placement and to use commercially reasonable efforts to cause such
      registration Statement to be declared effective by the SEC and to keep the
      Registration  Statement  effective  for one year  following  the effective
      date.

      On December 3, 2004, the Company issued 25,000 shares of restricted common
      stock in settlement of $15,000 of accounts payable.

      On January 10 and 14,  2005,  the Company  issued an  aggregate of 265,000
      restricted  common shares to accredited  investors in the aggregate amount
      of $132,500 pursuant to the Offering commenced in November 2004,  together
      with three year warrants for the purchase of an additional  265,000 shares
      of common stock at an exercise price of $0.75 per share.

      On January  25,  2005,  the Company  granted a  five-year  warrant for the
      purchase of 100,000  shares of common stock at an exercise  price of $0.60
      per share for professional services rendered to the Company.

      On  February 8, 2005,  the Company  issued  432,701  shares of  restricted
      common  stock at $0.40  per  share  for the  conversion  short-term  notes
      payable of $153,426 and accrued interest of $19,654.

      On March 16, 2005, the Company issued 200,000  restricted common shares to
      an  accredited  investor  in a  private  placement  of  securities  in the
      aggregate  amount of $100,000  pursuant to the Offering,,  together with a
      three-year  warrant to purchase  an  additional  200,000  shares of common
      stock at an exercise price of $0.75 per share.

      On March 30, 2005, the Company issued a 10 % secured convertible debenture
      note  for  $300,000  to a  shareholder  of the  Company.  The  convertible
      debenture  also  provided a warrant for the purchase of 250,000  shares of
      common stock at $0.75 per share. See Note 7.

      During the period May 24, 2005 through June 30, 2005,  the Company  issued
      880,000  restricted  common shares to accredited  investors  pursuant to a
      private   placement  of  securities   under  Section  4(2)  and  Rule  506
      promulgated  under the Securities Act, in an aggregate  amount of $352,000
      (the Offering). The Offering also provided with each share of common stock
      a three-year  warrant to purchase one share of common stock at an exercise
      price  of  $.50  per  share.  The  warrants  are  callable  under  certain
      circumstances.  The  Company has agreed to file a  registration  statement
      covering  the sale or the  shares of common  stock  and the  common  stock
      issuable upon  exercise of the of the Warrants  within ninety (90) days of
      the  final  sale  under  the  Private  Placement  and to use  commercially
      reasonable  efforts to cause such  registration  Statement  to be declared
      effective by the SEC and to keep the Registration  Statement effective for
      one year following the effective date.

      During the period July 7, 2005 through July 29, 2005,  the Company  issued
      360,000  restricted  common shares to accredited  investors  pursuant to a
      private   placement  of  securities   under  Section  4(2)  and  Rule  506
      promulgated  under the Securities Act, in an aggregate  amount of $144,000
      (the Offering). The Offering also provided with each share of common stock
      a three-year  warrant to purchase one share of common stock at an exercise
      price  of  $.50  per  share.  The  warrants  are  callable  under  certain
      circumstances.  The  Company has agreed to file a  registration  statement
      covering  the sale or the  shares of common  stock  and the  common  stock
      issuable upon  exercise of the of the Warrants  within ninety (90) days of
      the  final  sale  under  the  Private  Placement  and to use  commercially
      reasonable  efforts to cause such  registration  Statement  to be declared
      effective by the SEC and to keep the Registration  Statement effective for
      one year following the effective date.


                                      F-23
<PAGE>
                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
                      (An Exploration Stage Mining Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    YEARS ENDED SEPTEMBER 30, 2005 AND 2004

      On August 3, 2005, the Company issued 8,772 shares of its S-8 Common Stock
      pursuant to its 2005 Stock Incentive Plan in  consideration  of consulting
      services to a Director of the Company aggregating $5,000.

      On August 15, 2005,  the Company  issued  544,291 shares of its S-8 Common
      Stock pursuant to its 2005 Stock Incentive Plan in consideration of unpaid
      compensation  aggregating $208,250 to the CEO and four consultants,  three
      of which are officers and/or directors of the Company.

      Warrants - The following  table  summarizes  the warrant  activity for the
      years ended September 30, 2005 and 2004:

<TABLE>
<CAPTION>
                                         Warrants Outstanding           Warrants Exercisable
                                      --------------------------     --------------------------
                                                       Weighted                       Weighted
                                                        Average                        Average
                                       Number of       Exercise      Number of        Exercise
                                         Shares          Price         Shares           Price
                                      ----------      ----------     ----------      ----------
<S>                                   <C>             <C>            <C>             <C>
      Balance, September 30, 2003        300,000      $     1.66        300,000      $     1.66
         Granted                       3,000,000      $     0.14      3,000,000      $     0.14
         Exercised                            --      $       --             --      $       --
                                      ----------                     ----------

      Balance, September 30, 2004      3,300,000      $     0.28      3,300,000      $     0.28
         Granted                       4,715,000      $     0.57      4,715,000      $     0.57
         Exercised                            --              --             --              --
         Expired                      (3,000,000)     $     0.14     (3,000,000)     $     0.14
                                      ----------                     ----------

      Balance, September 30, 2005      5,015,000      $     0.64      5,015,000      $     0.64
                                      ==========      ==========     ==========      ==========
</TABLE>

      The following table  summarizes  information for warrants  outstanding and
      exercisable at September 30, 2005:

<TABLE>
<CAPTION>
                                     Warrants Outstanding                               Warrants Exercisable
                       ----------------------------------------------     ----------------------------------------------
                                              Weighted Average                                    Weighted Average
                       ----------------------------------------------     ----------------------------------------------
        Range of                          Remaining        Exercise                          Remaining        Exercise
         Prices           Number            Life            Price            Number            Life             Price
      ------------     ------------     ------------     ------------     ------------     ------------     ------------
<S>                    <C>              <C>              <C>              <C>              <C>              <C>
      $0.83-$2.50           300,000               .5     $       1.66          300,000               .5     $       1.66
         $0.75            1,335,000              2.1     $       0.75        1,335,000              2.1     $       0.75
         $0.50            3,380,000              2.9     $       0.50        3,380,000              2.9     $       0.50
                       ------------                                       ------------

                          5,015,000              2.5     $       0.64        5,015,000              2.5     $       0.64
                       ============     ============     ============     ============     ============     ============
</TABLE>

      In  July  2005,  the  Board  of  Directors  approved  a  motion  to  offer
      shareholders  holding  warrants  with a cashless  conversion  provision at
      prices ranging from $0.60 to $0.85 per share,  to replace the warrant with
      a warrant without a cashless  provision at $0.50 per share.  Warrants with
      the cashless  provision  provided for the purchase of 3,475,000 shares, of
      which,  warrants  aggregating  2,140,000 converted to the warrants without
      the cashless provision.


                                      F-24
<PAGE>
                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
                      (An Exploration Stage Mining Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    YEARS ENDED SEPTEMBER 30, 2005 AND 2004

      Options  Granted  During Last Fiscal Year - On July 21, 2005, the Board of
      Directors, on a recommendation from the Compensation  Committee,  approved
      an initial  grant of options to all  officers,  directors and employees as
      follows:

                                                     Options
                                                     -------
                  CEO                                300,000
                  Employees/Directors                200,000
                  CFO                                150,000
                  Outside Directors                  100,000
                  Managers                           100,000

      Total options granted under this approval were 1,150,000. The option price
      was set as the closing market price of $0.56 on July 21, 2005.

      Each  initial  option  grant  has a term of ten  (10)  years  and  becomes
      exercisable  in two  equal  installments  commencing  January  1, 2006 and
      January 1, 2007.

      The following  table  summarizes  the option  activity for the years ended
      September 30, 2005 and 2004

<TABLE>
<CAPTION>
                                             Options Outstanding                   Options Exercisable
                                      ---------------------------------     ---------------------------------
                                                           Weighted                              Weighted
                                          Number            Average              Number           Average
                                         of Shares       Exercise Price        of Shares       Exercise Price
                                      --------------     --------------     --------------     --------------
<S>                                   <C>                <C>                <C>                <C>
      Balance, September 30, 2003                 --     $           --                 --     $           --
         Granted                                  --     $           --                 --     $           --
         Exercised                                --     $           --                 --     $           --
                                      --------------                        --------------

      Balance, September 30, 2004                 --     $           --                 --     $           --
         Granted                           1,150,000     $         0.56                 --     $           --
         Exercised                                --     $           --                 --     $           --
         Expired                                  --     $           --                 --     $           --
                                      --------------                        --------------

      Balance, September 30, 2005          1,150,000     $         0.56                 --     $           --
                                      ==============     ==============     ==============     ==============
</TABLE>

      The  weighted  average  fair  value of  options  granted in the year ended
      September 30, 2005 was $0.38.

      The Company has a stock  incentive plan under which  5,000,000  shares are
      reserved  for  stock  and  option  grants.  There  were  3,047,978  shares
      available for grant at September 30,2005.

NOTE 13. SUBSEQUENT EVENTS

      In October 3, 2005,  the Company issued 200,000 shares of its Common Stock
      pursuant to its 2005 Stock Incentive Plan in  consideration  of consulting
      services aggregating $82,000 and 52,731 shares of Common Stock for accrued
      compensation through September 30, 2005 aggregating $112,136.

      On October 3, 2005,  the Company  issued  146,270  shares of Common  Stock
      pursuant to its 2005 Stock Incentive Plan for accrued compensation through
      August 31, 2005 aggregating $67,636.

      On October 27, 2005,  the Company  issued  106,461  shares of Common Stock
      pursuant to its 2005 Stock Incentive Plan for accrued compensation through
      September 30, 2005 aggregating $44,500.

      In October  2005,  the  Company  issued to certain  accredited  investors,
      pursuant  to  a  private   placement  under  Section  4(2)  and  Rule  506
      promulgated  under the Securities Act, an aggregate of 2,353,333 shares of
      common  stock  and  2,353,333  warrants  to  purchase  common  stock at an
      exercise  price of $.50 per share for the aggregate  consideration  to the
      Company of $941,333.  These amounts  include the rollover into the private
      placement  of a  convertible  debenture  issued  on March 30,  2005.  This
      rollover  converted the $300,000  convertible  note into 750,000 shares of
      common stock and 750,000 warrants to purchase common stock.


                                      F-25
<PAGE>
                 EL CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
                      (An Exploration Stage Mining Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    YEARS ENDED SEPTEMBER 30, 2005 AND 2004

      On October 28, 2005,  the Company issued  pursuant to a private  placement
      under  Section  4(2)  of  the  Securities  Act  a 8%  convertible  secured
      debenture in the principal amount of $750,000,  together with a warrant to
      purchase 500,000 shares of the Company's common stock at an exercise price
      of $.60 per share. The convertible  secured debenture matures on April 28,
      2007. The note is  collateralized by 2,160,000 shares of the U.S. Canadian
      Minerals Inc. shares that the Company owns. Until maturity, and subject to
      the  Company's  right to prepay,  the  principal  and  interest  under the
      convertible secured debenture are convertible into shares of the Company's
      common stock at a conversion  price of $.50 per share.  Additionally,  the
      Company  granted the  purchaser of the  debenture an option to purchase an
      additional debenture in the amount of $550,000,  together with warrants to
      purchase  366,667 shares of Common Stock at an exercise price of $0.60 per
      share, on or prior to April 28, 2006. The Company also issued a finder who
      assisted  in  obtaining  the debt  facility  for the  Company a warrant to
      purchase  225,000 shares of Common Stock at an exercise price of $0.60 per
      share.

      During  October  and  November  2005,  the  Company  staked and claimed on
      property  surrounding the El Capitan  resource  located in Lincoln County,
      New Mexico. This increased the total claimed area to approximately  10,000
      acres.  The additional  staking and claiming  around our original site was
      done upon  recommendations  from the  Company's  consulting  geologist  to
      insure protection of our interests.

      On January 1, 2006,  El Capitan,  Ltd, an Arizona  corporation  (`ECL") of
      which  El  Capitan  Precious  Metals,  Inc.  ("ECPN")  owns  a 40%  equity
      interest,   finalized  the  purchase  of  four  patented   mining  claims,
      constituting  approximately  77.5 acres in  aggregate,  located in Lincoln
      County,  New Mexico.  The  purchased  claims are located on the El Capitan
      Mine property, which is owned by ECL. In consideration for the claims, ECL
      transferred  2,100,000  shares  of ECPN  common  stock  owned  by Gold and
      Minerals  Co,  Inc.  ("Minerals"),  which holds the  remaining  60% equity
      interest in ECL. Pursuant to an agreement between ECL and the Seller,  the
      stock was  valued at $0.82 per  share,  the  market  value of the stock on
      November 11, 2005.

      Pursuant to an arrangement with Minerals, ECPN is obligated to Minerals to
      pay $688,800 for the purchase of the patented  mining  claims by ECL. ECPN
      intends  to offset its  portion of the  purchase  price  against  existing
      obligations of Minerals due ECPN.


                                      F-26
<PAGE>

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

      On October 25, 2004 the Board of Directors of El Capitan  Precious Metals,
Inc. (the  "Registrant")  approved the dismissal of Gelfond Hochstadt  Pangburn,
P.C. as the Registrant's independent registered public accounting firm.

      Gelfond Hochstadt  Pangburn,  P.C.'s report on the Registrant's  financial
statements for the period from July 26, 2002 (inception)  through  September 30,
2003, contained no adverse opinion or disclaimer of opinion, nor was it modified
as to  uncertainty,  audit  scope,  or  accounting  principles,  except  for  an
explanatory paragraph regarding the Registrant's "ability to continue as a going
concern." The Registrant had no disagreements  with Gelfond Hochstadt  Pangburn,
P.C. in  connection  with its audit for the most  recent  fiscal  year,  and for
interim  periods  subsequent to September 30, 2003 through the date of dismissal
on  October  25,  2004 on any  matter of  accounting  principles  or  practices,
financial  statement   disclosure,   or  auditing  scope  or  procedure,   which
disagreements,  if  not  resolved  to  the  satisfaction  of  Gelfond  Hochstadt
Pangburn,  P.C., would have caused it to make reference to the subject matter of
the disagreements in connection with its reports.

      The  Registrant  has made the  contents of its Current  Report on Form 8-K
filing dated October 28, 2004 available to Gelfond Hochstadt Pangburn,  P.C. and
requested it to furnish a letter to the Securities and Exchange Commission as to
whether Gelfond Hochstadt Pangburn,  P.C. agrees or disagrees with, or wishes to
clarify  Registrant's  expression  of their views.  A copy of Gelfond  Hochstadt
Pangburn, P.C.'s letter to the SEC dated October 27, 2004 is included as Exhibit
16.1 to the Form 8-K.

      On October 25, 2004, the Board of Directors of the Registrant approved the
engagement of Hein & Associates LLP ("H&A") as our independent registered public
accounting  firm.  Registrant  did not consult with H&A prior to its  engagement
regarding  the  application  of any  accounting  principles or any type of audit
opinion that might be rendered by it.

      On November 25, 2004 the Board of Directors of El Capitan Precious Metals,
Inc.  approved  the  dismissal  of  Hein &  Associates  LLP  as our  independent
registered  public accounting firm. This decision was precipitated by the future
closing of the Hein & Associates LLP Phoenix, Arizona based office.

      Hein and Associates LLP report on the  Registrant's  financial  statements
for the fiscal year ended September 30, 2004 and the subsequent  interim periods
contained no adverse  opinion nor a disclaimer  of opinion and were not modified
as to uncertainty,  audit scope or accounting principles.  However, for the year
ended  September  30,  2004,  Hein &  Associates  LLP  included a going  concern
qualification in our audited financial statements.

      We had no disagreements  with Hein & Associates LLP in connection with its
audit for the most recent  fiscal year,  and for interim  periods  subsequent to
September  30, 2004  through the date of  dismissal  on November 25, 2005 on any
matter of accounting principles or practices, financial statement disclosure, or
auditing  scope  or  procedure,  which  disagreements,  if not  resolved  to the
satisfaction of Hein & Associates LLP, would have caused it to make reference to
the subject matter of the disagreements in connection with its reports.

      The  Registrant  has made the  contents of its Current  Report on Form 8-K
filing dated November 25, 2005 available to Hein Associates LLP and requested it
to furnish a letter to the Securities and Exchange Commission as to whether Hein
&  Associates  agrees or  disagrees  with,  or wishes  to  clarify  Registrant's
expression  of their views.  A copy of Hein &  Associates  LLP letter to the SEC
dated November 30, 2005 is included as Exhibit 16.1 to the Form 8-K.


                                       20
<PAGE>

      On November 25, 2005,  our Board of Directors  approved the  engagement of
Epstein  Weber &  Conover  PLC  ("EWC)"  as our  independent  registered  public
accounting  firm.  Registrant  did not consult with EWC prior to its  engagement
regarding  the  application  of any  accounting  principles or any type of audit
opinion that might be rendered by it.

ITEM 8A. CONTROLS AND PROCEDURES

      The Company's  Chief Executive  Officer and Chief  Financial  Officer have
evaluated the Registrant's  disclosure controls and procedures within 90 days of
the filing date of this annual report. Based upon this evaluation, the Company's
Chief  Executive  Officer and Chief  Financial  Officer have  concluded that the
Company's  disclosure  controls and  procedures  are  effective in ensuring that
material information required to be disclosed is included in the reports that it
files with the Securities and Exchange Commission.

      There were no changes in the Company's  internal  controls over  financial
reporting that have materially affected,  or are reasonably likely to materially
affect, these controls subsequent to the evaluation date.


                                       21
<PAGE>

                                    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 was filed as Exhibit 99.1 to our Annual Report on Form 10-KSB for
the  year  ended  September  30,  2003.  A copy of the  Code of  Ethics  will be
provided,  without charge, to any person requesting it in writing,  addressed to
the attention of the Chief Financial Officer, El Capitan Precious Metals,  Inc.,
14301 North 87th Street, Scottsdale, Arizona 85260.

(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.

<TABLE>
<CAPTION>
NAME                             AGE     POSITION                                               SINCE
----                             ---     --------                                               -----
<S>                              <C>     <C>                                                    <C>
Charles C. Mottley               71      President and Director                                 July 2002
James Ricketts                   67      Director and Secretary                                 July 2004
Stephen J. Antol                 62      Chief Financial Officer and Treasurer                  November 2004
L. Ronald Perkins                59      Director and Vice President of Administration,         January 2005
                                         Marketing and Communication
R. William Wilson                47      Director                                               February 2005
W. Pierce Carson                 62      Director                                               February 2005
</TABLE>

      Charles C. Mottley.  Mr.  Mottley has been  President and a Director of El
Capitan  Precious  Metals,  Inc.  since July 2002.  Mr.  Mottley  also served as
Chairman and Chief Executive Officer of Gold and Minerals Co., Inc., our largest
stockholder,  from  1978  until  July  2004,  at which  time he  resigned  those
positions.  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.

      James Ricketts.  Mr. Ricketts has been our Secretary and a Director of our
Company since July 2004. Mr. Ricketts has been self-employed in the area of Real
Estate  Development  since  2000.  From  1994 to 2000,  he  served  as the Chief
Executive Officer of Technology Systems  International,  Inc. From 1983 to 1985,
Mr.  Ricketts  served as a Director of the Arizona  Department of Corrections in
Phoenix,  Arizona. From 1979 to 1983, he served as the Executive Director of the
Colorado Department of Corrections in Colorado Springs,  Colorado.  From 1985 to
the present, Mr. Ricketts has been a Correctional Consultant, providing services
on a consulting  basis in the areas of safety and security in the prison system.
Mr. Ricketts  received a Ph. D. from the Ohio State University in 1971, and a M.
Ed. from Bowling Green State University in 1963.


                                       22
<PAGE>

      Stephen J. Antol.  Mr. Antol has been our Chief  Financial  Officer  since
November 2004. From Late 1992 through November 2004, Mr. Antol rendered services
as a consultant  chief  financial  officer for a number of small and medium size
businesses  requiring  technical expertise on a limited or recurring basis. From
1990 to 1992,  Mr.  Antol  served as Chief  Financial  Officer  of Lou  Register
Furniture,  a fine furniture retailer located in Phoenix,  Arizona. From 1987 to
1989,  Mr. Antol served as Director of Finance for F.S.  Inc. (dba Audio Express
and Country House  Furniture),  a retailer of furniture and stereo  equipment in
four  southwestern  states.  From  1975 to 1987,  Mr.  Antol  worked  for  Giant
Industries,  Inc., an independent refiner and marketer of petroleum products, in
such  capacities  as Corporate  Controller  and Corporate  Treasurer.  Mr. Antol
received a Bachelor of Arts degree from Michigan  State  University in 1968, and
became a licensed Certified Public Accountant in 1970. He no longer practices as
a licensed CPA.

      L.  Ronald  Perkins.  Mr.  Perkins has served as a director of the Company
since  February  2005,  and has been the Company's  Vice-President  in charge of
Administration,  Marketing and  Communication  since January 2005.  From 1989 to
2002,  Mr.  Perkins  served as President and Chief  Executive  Officer of Pebble
Technology,  Inc., an Arizona company, which marketed a product used to coat the
interior of swimming pools. Mr. Perkins received his Bachelors of Arts degree in
Business  Administration  and Management from the University of Arizona in 1967,
and his MBA from the University of Southern California in 1972.

      R. William  Wilson.  Mr.  Wilson has been a director of our Company  since
February 2005. Since 2003, Mr. Wilson has been a principal in Two Dragons Group,
LLC, a marketing and business  development  firm engaging in private  equity and
merger and  acquisition  transactions.  From 1999 to 2003,  Mr. Wilson served as
Chief Executive Officer and Chief Financial Officer of Pebble  Technology,  Inc.
Prior to that,  Mr.  Wilson  served as an Executive  Director and  co-founder of
Drexel  Oceania,  LLC. Mr.  Wilson  received  his Bachelor or Science  degree in
Business  Administration  and Finance from the  University  of San  Francisco in
1979.

      W. Pierce Carson. Dr. Carson has served as a director of our Company since
February  2005.  Since  2003,  Dr.  Carson  has served as the  President,  Chief
Executive  Officer and a director of Azco Mining Inc.  From 2001 until 2003,  he
served as a consultant to various  mining  companies,  carrying out a variety of
technical,  management and financial consulting assignments, with an emphasis on
industrial minerals and precious metals projects.  From 1997 to 2000, Dr. Carson
served as  President,  Chief  Executive  Officer and Director of Nord  Resources
Corp.  and Nord  Pacific  Ltd,  and from 1990 to 1996  served as  President  and
Director of Nord  Pacific Ltd.  Dr.  Carson holds a Bachelors  Degree in Geology
from Princeton  University and Masters of Science and Ph. D. in Economic Geology
from Stanford University.

(b)   Significant Employees

      Not applicable.

(c)   Family Relationships

      None.

(d)   Involvement in Certain Legal Proceedings

      Not applicable.


                                       23
<PAGE>

(e)   Audit Committee Financial Expert

      On March 9, 2005, the Company  established an audit  committee,  currently
consisting of one Board member,  Mr. R. William Wilson.  The audit committee has
not met since its  creation,  and the Company has not yet  established a written
charter for the audit committee.  The board of directors has determined that Mr.
Wilson is an "audit committee  financial expert" as that term is defined in Item
401(e)(2) of Regulation S-B  promulgated  under the  Securities  Exchange Act of
1934, as amended (the "Exchange Act"). Additionally,  Mr. Wilson qualifies as an
"independent  director"  as that  term is  defined  in  Section  4200(a)(15)  of
National  Association  of  Securities  Dealers'  listing  standards or under the
criteria for independence set forth in Rule 10A-3(b)(1) under the Exchange Act.

(f)   Compliance with Section 16(a) of the Exchange Act

      Section 16(a) of the  Securities  Exchange Act of 1934 requires  executive
officers and  directors  and persons who  beneficially  own more than 10% of our
common  stock to file  initial  reports of  ownership  and reports of changes in
ownership  with the  Securities  and Exchange  Commission.  Executive  officers,
directors and greater-than-10% beneficial owners are required by SEC regulations
to furnish us with copies of all Section 16(a)  reports they file.  Based solely
on a review of the copies of such forms  furnished to us during 2005 and written
representations  from the executive  officers,  directors  and  greater-than-10%
beneficial   owners  of  our  common  stock,   the  following  table  shows  the
transactions for 2005 that were not in compliance.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
                                                                                     Required                  Actual Filing
Name of Filer:                       Description of Transaction:                     Filing Date:              Date:
------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>                                             <C>                       <C>
Stephen J. Antol                     Initial filing on Form 3                        11/11/2004                3/16/2005
------------------------------------------------------------------------------------------------------------------------------
                                     Grants of Common Stock in
                                     exchange for salary - from
                                     8/17/05 to 10/27/05 and                                                   Reported by
                                     a purchase by his spouse on                     8/19/2005 to              Amendment on
                                     11/5/05                                         11/8/2005                 12/19/05
------------------------------------------------------------------------------------------------------------------------------
W. Pierce Carson                     Initial filing on Form 3                        2/28/2005                 7/19/2005
------------------------------------------------------------------------------------------------------------------------------
Gold and Minerals Co., Inc. (a       Sales on 3/9/2005 and 3/10/2005                 3/11/2005                 3/18/05
former greater than 10% holder)      -----------------------------------------------------------------------------------------
                                                                                     7/11/2005 to              7/22/2005
                                     Sales from 7/7/2005 to 7/14/2005                7/18/2005
------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Reported by
                                                                                                               Amendment on
                                     Sales on 7/15/2005                              7/19/2005                 9/7/2005
------------------------------------------------------------------------------------------------------------------------------
                                     Distribution of shares to
                                     shareholders on 9/2/2005                        9/7/2005                  9/27/2005
------------------------------------------------------------------------------------------------------------------------------
                                     Sales from 10/21/2005 to                        10/25/2005 to
                                     10/26/2005                                      10/28/2005                11/16/2005
------------------------------------------------------------------------------------------------------------------------------
L. Ronald Perkins                    Grants of Common Stock in                                                 Reported by
                                     exchange for salary  - from                     8/19/2005 to              Amendment on
                                     8/17/05 to 10/27/05                             10/31/2005                12/16/05
------------------------------------------------------------------------------------------------------------------------------
James G. Ricketts                    Award of stock options
                                     7/21/2005                                       7/25/2005                 7/28/2005
------------------------------------------------------------------------------------------------------------------------------
                                     Grants of Common Stock in                                                 Reported by
                                     exchange for salary  - from                     8/19/2005 to              Amendment on
                                     8/17/05 to 10/27/05                             10/31/2005                12/16/05
------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       24
<PAGE>

ITEM 10. Executive Compensation

(a)   General

      In March 2003, we executed a two-year employment  agreement under which we
issued 600,000  shares of Common Stock to Mr. Charles C. Mottley,  our President
and a member  of our  Board of  Directors,  as  incentive  compensation  for his
service.  We also agreed to a salary of $20,000 per month,  effective January 1,
2003,  which,  at Mr.  Mottley's  option,  may be  satisfied  in  shares  of the
Company's Common Stock. The agreement also required us to issue 1,500,000 shares
of our Common  Stock to Mr.  Mottley  if the El  Capital  Mine was sold prior to
March 18,  2005,  and in the event such sale was for  $150,000,000  or more,  we
would also be required to grant Mr. Mottley a five-year option to purchase up to
6,000,000  shares of Common  Stock at an exercise  price of $1.00 per share.  On
February 1, 2005, the Board of Directors of the Company  extended  through March
18, 2006 and amended the conditional option provision relating to the El Capitan
Mine,  pursuant  to which the  Company  agrees to grant Mr.  Mottley a five-year
option to purchase 1,750,000 shares of the Company's common stock at an exercise
price of $.75 per share in the event of a sale of the Mine for  consideration in
excess of  $150,000,000.  As of September 30, 2005,  the Company and Mr. Mottley
have not entered into a formal  employment  agreement.  Currently,  Mr.  Mottley
receives  consideration of $12,000 per month in which he serves as the Company's
CEO and  President.  Effective  June 1, 2005,  the  President has agreed to take
accrued back  compensation and monthly  compensation for June through  September
2005 in S-8 common stock of the Company.

      Beginning  October 1, 2003, Mr. Thomas Olson,  our  Secretary,  received a
management-consulting  fee of $1,000 per month.  Effective January 1, 2003, that
amount was  increased to $3,500 per month,  which,  at the option of Mr.  Olson,
could be paid in  shares  of the  Company's  Common  Stock.  Mr.  Olson'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 was accrued.
For the  fiscal  year  ended  September  30,  2004,  Mr.  Olson  received  total
compensation of $35,000 for his services as an officer of the Company as well as
$7,000 in consulting fees for services rendered  following his resignation as an
officer in July 2004. In July and August of 2004, Mr. Olson converted a total of
$44,000  of the  amounts  owed to him to 100,000  shares of Common  Stock of the
Company.

(b)   Summary Compensation Table

<TABLE>
<CAPTION>
                                       Annual Compensation                        Long-Term Compensation
                                       -------------------                        ----------------------
                                                                                                    Securities       All Other
                                                     Bonus      Other Annual    Restricted Stock    Underlying      Compensation
Name and Principal Position    Year    Salary ($)     ($)     Compensation ($)    Awards (#)        Options (#)         ($)
---------------------------    ----    ----------     ---     ----------------    ----------        -----------     ------------
<S>                            <C>       <C>           <C>           <C>            <C>                 <C>              <C>
Charles C. Mottley             2005      105,000      -0-           -0-             183,508(2)          300,000         -0-
   President/Chief             2004      240,000      -0-           -0-                                    -0-          -0-
   Executive                   2003      180,000      -0-           -0-             600,000(2)             -0-          -0-
   Officer/Director (1)

Stephen J. Antol               2005          -0-      -0-        41,739(3)          172,551(3)          150,000         -0-
   Chief Financial
   Officer/Treasurer

James G. Rickets               2005          -0-      -0-        50,000(3)          149,600(3)          200,000         -0-
   Secretary/Director

L. Ronald Perkins              2005          -0-      -0-        23,250(3)          131,356(3)          200,000         -0-
   Vice
   President/Director
</TABLE>


                                       25
<PAGE>

(1)   Mr.  Mottley was named the  President and Chief  Executive  Officer of the
      Company on March 18, 2003.  Prior to the merger of ECPN with DML Services,
      Inc.,  Mr.  Mottley served as President and Director of ECPN from November
      1, 2002 until the merger on March 18, 2003.

(2)   Issued by the Company to the  recipient in lieu of cash  compensation  for
      services  rendered  as a  President  and Chief  Executive  Officer  of the
      Company.

(3)   Received  in  consideration  of  services  rendered  to the  Company  as a
      consultant.

(c)   Option grants during last fiscal year

      The  following  table sets  forth the  information  concerning  individual
grants of stock options made by the Company to the named  executives  during the
fiscal year ended September 30, 2005.

<TABLE>
<CAPTION>
                                 Number of           Percent of Total
                                Securities          Options Granted to      Exercise of
                            Underlying Options         Employees in          Base Price       Expiration
Name                            Granted (#)             Fiscal Year          ($/share)         Date(s)
----                            -----------             -----------          ---------         -------
<S>                               <C>                      <C>                 <C>            <C>
Charles C. Mottley                300,000                  31.6%               $0.56          7/21/2015
Stephen J. Antol                  150,000                  15.8%               $0.56          7/21/2015
James G. Ricketts                 200,000                  21.1%               $0.56          7/21/2015
L. Ronald Perkins                 200,000                  21.1%               $0.56          7/21/2015
</TABLE>

      In addition to the option  grants to named  executives,  the Company  also
granted  options to purchase an aggregate  of 300,000  shares of common stock of
the Company at $0.56 per share to a consultant and two outside  directors of the
Company.  Each option grant is for a period of ten years and becomes exercisable
in two equal installments commencing on January 1, 2006 and January 1, 2007.

(d)   Aggregated option exercises in last fiscal year and fiscal year-end option
      values

      The following  table sets forth the total amount of shares acquired by the
named  executives  upon  exercises of stock options during the fiscal year ended
September 30, 2005, the aggregate dollar value realized upon such exercise,  the
total number of securities underlying unexercised options held at the conclusion
of such fiscal year (separately  identifying  then-exercisable and unexercisable
options),  and the aggregate dollar value of in-the-money,  unexercised  options
held  at  the   conclusion   of  such   fiscal  year   (separately   identifying
then-exercisable and unexercisable options).

<TABLE>
<CAPTION>
                                                                     Number of              Value of
                                                                    Unexercised         Unexercised In-
                                                                    Securities             the-Money
                                                                Underlying Options       Options at FY-
                              Shares                               at FY-End (#)            End ($)
                           Acquired on       Value Realized         Exercisable/          Exercisable/
Name                       Exercise (#)           ($)              Unexercisable        Unexercisable(1)
----                       ------------           ---              -------------        ----------------
<S>                             <C>                <C>               <C>                       <C>
Charles C. Mottley             -0-                -0-                0/300,000                -0-
Stephen J. Antol               -0-                -0-                0/150,000                -0-
James G. Ricketts              -0-                -0-                0/200,000                -0-
L. Ronald Perkins              -0-                -0-                0/200,000                -0-
</TABLE>

(1)   Value of unexercised  in-the-money  options on September 30, 2005 is based
      on a value of El Capitan  Precious  Metals,  Inc. stock equal to $0.39 per
      share,  as  determined  by the closing bid price of the  Company's  common
      stock on such date.


                                       26
<PAGE>

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

      Not Applicable.

(f)   Compensation of directors

      Our directors  received no compensation for their services as directors of
the Company during the year ended September 30, 2004.

      On  July  21,  2005,  based  upon   recommendations   from  the  Company's
Compensation  Committee,  the Board of Directors  approved the compensation plan
for the Board of Directors of the Company.  The  non-employee  directors will be
compensated  with an annual  retainer of $5,000,  plus an additional  $1,000 for
each Board meeting  attended by each such  director in person,  or $500 for each
Board meeting attended by such director by telephone. In addition,  non-employee
directors  serving as Chairman  of the Audit and  Compensation  Committee  shall
receive an additional  annual  retainer of $4,000.  Employee  directors will not
receive fees, or other  compensation  for service on the board or any committees
thereof.  All  Board  members  shall be  reimbursed  for  expenses  incurred  in
connection with Board or committee meetings.

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

      In March 2003, the Company executed a two-year employment  agreement under
which the Company  issued  600,000  shares of common stock to its  President and
Director as incentive compensation.  The agreement calls for the President to be
paid a salary of $20,000 per month  commencing  January 1, 2003,  which,  at the
option of the  President,  may be  satisfied in shares of the  Company's  common
stock. As of March 31, 2005, the Company had issued  2,282,222  shares of common
stock in payment of  $420,000  of salary.  The  600,000  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  required  the  Company to issue
1,500,000 shares of common stock to the President should the Company sell the El
Capitan mine during the term of the employment agreement.  The Agreement expired
on March 18, 2005 and no shares were issued under this provision. On February 1,
2005, the Board of Directors  amended and extended only the  conditional  option
provision of employment  agreement,  which provided conditional stock options to
be granted to the  president  if the El Capitan  mining  property  is sold.  The
amended provision for conditional stock options provides that if the sale of the
Mine is for a price in excess of $150,000,000,  during the period March 18, 2005
through  March 18,  2006,  the  Company is  required  to grant the  president  a
five-year  stock option to purchase  1,750,000  shares of the  Company's  common
stock at an exercise  price of $0.75 per share.  At September  30, 2005,  no new
formal employment agreement was in effect with the President and he is currently
compensated  at $12,000 per month.  Effective  June 1, 2005,  the  President has
agreed to take  accrued  back  compensation  and monthly  compensation  for June
through September 2005 in S-8 common stock of the Company.

(h)   Report on repricing of options/SARs

      Not Applicable.


                                       27
<PAGE>

ITEM 11. Security Ownership of Certain Beneficial Owners and Management

      The  following  table sets forth as of January  10,  2006,  the number and
percentage of the 72,314,813 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.

<TABLE>
<CAPTION>
                                                                        Amount and Nature
                                     Name and Address                    of Beneficial             Percent
      Title of Class                of Beneficial Owner                     Ownership              of Class
      --------------                -------------------                     ---------              --------
<S>                           <C>                                           <C>                    <C>
          Common                    Charles C. Mottley                       5,512,128(1)              7.6%
                              14301 N. 87th Street, Suite 216
                                   Scottsdale, AZ 85260

          Common                       James Rickets                         2,897,595(2)              4.0%
                              14301 N. 87th Street, Suite 216
                                   Scottsdale, AZ 85260

          Common                     R. William Wilson                          74,000(3)                 *
                              14301 N. 87th Street, Suite 216
                                   Scottsdale, AZ 85260

          Common                     W. Pierce Carson                           58,772(3)                 *
                              14301 N. 87th Street, Suite 216
                                   Scottsdale, AZ 85260

          Common                     L. Ronald Perkins                         943,815(4)              1.3%
                              14301 N. 87th Street, Suite 216
                                   Scottsdale, AZ 85260

          Common                       Stephen Antol                           982,551(5)              1.4%
                              14301 N. 87th Street, Suite 216
                                   Scottsdale, AZ 85260

          Common           All Officers and Directors as a Group              10,468,861              14.4%
                                        (6 Persons)
</TABLE>

(1)   Includes  options to purchase 150,000 shares of the Company's Common Stock
      at an exercise price of $0.56 per share that will vest on January 1, 2006.
      This total does not  include  (i)  unvested  options to  purchase  150,000
      shares of the  Company's  Common  Stock at an exercise  price of $0.56 per
      share which shall vest on January 1, 2007 or (ii) a five-year option to be
      issued to purchase up to  1,750,000  shares of Common Stock at an exercise
      price of $.75 per  share  should  the sale of the El  Capitan  Mine be for
      $150,000,000  or more.  Mr.  Mottley also holds  approximately  17% of the
      total common stock issued and outstanding of Gold and Minerals Co., Inc.


                                       28
<PAGE>

(2)   Includes (i) shares held by 711 Holdings  Company,  Ltd., a corporation of
      which Mr. Ricketts is a principal, (ii) options to purchase 100,000 shares
      of Common Stock at an exercise  price of $0.56 per share that will vest on
      January 1, 2006 and (iii)  warrants  to purchase  37,500  shares of Common
      Stock at an exercise price of $0.50 per share. This total does not include
      unvested  options to purchase 100,000 shares of the Company's Common Stock
      at an  exercise  price of $0.56 per share  that  shall  vest on January 1,
      2007.

(3)   Consists  of  options  to  purchase  50,000  shares of Common  Stock at an
      exercise price of $0.56 per share that will vest on January 1, 2006.  This
      total does not include  unvested  options to purchase 50,000 shares of the
      Company's  Common Stock at an exercise price of $0.56 per share that shall
      vest on January 1, 2007.

(4)   Includes  (i) options to  purchase  100,000  shares of Common  Stock at an
      exercise  price of $0.56 per share  that will vest on  January 1, 2006 and
      (ii) a warrant to purchase  100,000  shares of Common Stock at an exercise
      price of $.50 per share.  This total does not include  currently  unvested
      options to purchase  100,000  shares of the  Company's  Common Stock at an
      exercise price of $0.56 per share that shall vest on January 1, 2007.

(5)   Includes  (i)  options to  purchase  75,000  shares of Common  Stock at an
      exercise  price of $0.56 per share  that will vest on  January 1, 2006 and
      (ii) 125,000 shares and warrants to purchase an additional  125,000 shares
      of  Common  Stock at an  exercise  price of $0.50  per  share  held by Mr.
      Antol's spouse.  This total does not include  unvested options to purchase
      75,000 shares of the Company's  Common Stock at an exercise price of $0.56
      per share that shall vest on January 1, 2007.

ITEM 12. Certain Relationships and Related Transactions

      In September  2002, we borrowed  $120,000  from a  stockholder  and issued
unsecured  notes.  In April 2003,  we borrowed an  additional  $38,000 from this
stockholder and issued  unsecured  notes. The notes bore interest at 8% and were
due on demand.  On July 14,  2004,  all  principal  and interest due on the note
totaling  $179,087 was converted into 1,343,154 shares of Common Stock at $0.133
per share, the closing price of our Common Stock on that date.

      In March 2003, we executed a two-year employment  agreement under which we
issued  600,000  shares of Common Stock,  valued at $320,000 at the time, to Mr.
Charles C. Mottley,  our  President  and a member of our Board of Directors,  as
incentive  compensation  for his service.  We also agreed to a salary of $20,000
per month, effective January 1, 2003, which, at the Mr. Mottley's option, may be
paid in shares of the Company's Common Stock. The agreement requires us to issue
to Mr.  Mottley  1,500,000  shares of our Common Stock if the El Capitan Mine is
sold prior to March 18, 2005, and in the event such sale was for $150,000,000 or
more,  we would also be  required  to grant Mr.  Mottley a  five-year  option to
purchase up to 6,000,000  shares of Common  Stock at an exercise  price of $1.00
per share.  On February 1, 2005, the Board of Directors of the Company  extended
through March 18, 2006 and amended the conditional  option provision relating to
the El Capitan  Mine,  pursuant to which Mr.  Mottley  shall receive a five-year
option to purchase 1,750,000 shares of the Company's Common Stock at an exercise
price of $.75 per share in the event of a sale in excess of $150,000,000.  As of
September  30,  2005,  the Company and Mr.  Mottley  have not entered into a new
employment agreement. Mr. Mottley currently receives consideration in the amount
of $12,000 per month for his services as President and CEO.,  Effective  June 1,
2005,  the  President has agreed to take accrued back  compensation  and monthly
compensation for June through September 2005 in S-8 common stock of the Company.
As of November 4, 2005, the Company has issued  2,465,730 shares of Common Stock
to Mr. Mottley in payment of $487,000 in accrued and unpaid salary.

      During the fiscal year ended  September 30, 2003,  Mr. Mottley 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 was due on demand with an interest  rate of 8% per
annum. During the fiscal year ended September 30, 2004, Mr. Mottley loaned us an
additional  $13,400 on the same terms.  As of September 30, 2005,  all loans and
accrued interest have been paid in full.


                                       29
<PAGE>

      Beginning  October 1, 2002, Mr. Thomas Olson,  our Secretary at that time,
received a  management-consulting  fee of $1,000 per month. Effective January 1,
2003, that amount was increased to $3,500 per month, which, at the option of Mr.
Olson,  could be paid in shares of the Company's Common Stock. Mr. Olson'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 was accrued.
For the  fiscal  year  ended  September  30,  2004,  Mr.  Olson  received  total
compensation of $35,000 for his services as an officer of the Company as well as
$7,000 in consulting fees for services rendered  following his resignation as an
officer in July 2004. In July and August of 2004, Mr. Olson converted a total of
$44,000  of the  amounts  owed to him to 100,000  shares of Common  Stock of the
Company.  Mr. Olson continued to provide services to the Company on a consulting
basis through December 31, 2004 for a monthly consulting fee of $2,500.

      On September 10, 2003, we entered into a management  consulting  agreement
with Mr. Larry Lozensky,  the President of Gold and Minerals,  pursuant to which
Mr.  Lozensky  agreed to  continue  to manage  and  operate  the COD Mine  until
December  31, 2004 in exchange for a  management  consulting  fee of $20,000 per
month and the issuance to Mr.  Lozensky of 600,000  shares of our Common  Stock.
Under the  management  consulting  agreement,  we obtained  the right to pay the
management-consulting  fee to Mr. Lozensky in the form of our Common Stock. From
the expiration of the management consulting agreement on December 31, 2004 until
March 31,  2005,  Mr.  Lozensky  continued to manage and operate the COD Mine on
behalf of the Company on a month-to-month basis for a management-consulting  fee
of  $10,000  per  month.  Mr.  Lozensky  is not  currently  compensated  for the
management and operation of the COD Mine.

      In July 2004,  we  acquired  from Gold and  Minerals  the Weaver Mine near
Congress,  Arizona.  Consideration for this purchase was 3,000,000 shares of our
Common Stock,  which had a market value of $400,000 on the closing date. Because
the Weaver Mine was acquired from our  controlling  stockholder  in exchange for
our Common Stock and the controlling  shareholder's  basis in the mine was zero,
the transaction was accounted for as a non-monetary exchange and the Weaver Mine
was recorded at no value on our financial statements.

      On October 19,  2004,  the Company  entered  into an  Investment  Advisory
Agreement  with Blake  Advisors,  LLC  ("Blake"),  a limited  liability  company
principally  owned to a  significant  shareholder  of the  Company,  for certain
financial and investment advisory services. The term of the Agreement expires on
October 31, 2005.  Compensation under the Agreement provides for (i) the payment
of $175,000 in cash and (ii) a monthly fee of $5,000 beginning  November 1, 2004
and ending with the last  payment  due on October 1, 2005.  The  Agreement  also
calls for the Company to deliver a five-year  warrant to the  consultant for the
purchase of 500,000 shares of the Company's Common Stock at an exercise price of
$0.85 per share.  The  Agreement  also  provided  Blake  piggyback  registration
rights. Under the terms of the Agreement, Company became obligated and paid fees
amounting to $125,000 under the Agreement.

      In October 2004 the Company loaned $120,000 at an interest rate of 12% per
annum to Gold and Minerals Co., Inc., its majority shareholder.

      In November 2004 the Company loaned $66,930 at an interest rate of 12% per
annum to a company  affiliated  with a director  of the  Company.  This loan and
accrued interest was paid in full on January 19, 2005.


                                       30
<PAGE>

      During the year ended September 30, 2005, the Company made net payments on
behalf of Gold and Minerals Co., Inc.  approximating  $351,946 referencing costs
incurred on the El Capitan mine site. Pursuant to an agreement effective October
1, 2004 between the two companies,  costs incurred at the El Capitan mine are to
be split in accordance with their  percentage  ownership  interest.  The Company
holds a 40% interest in the El Capitan  mine,  and Gold and Minerals  Co.,  Inc.
holds a 60% interest.

      Commencing in November  2004, the Company agreed to pay Stephen J. Antol a
consulting fee of $10,000 per month, on a month-to-month basis, in consideration
of his  services to the Company as chief  financial  officer,  and as of January
2005, as treasurer of the Company.  At this time, the Company and Mr. Antol have
not entered into a formal written  agreement.  Effective June 1, 2005, Mr. Antol
has agreed to take accrued back  compensation and monthly  compensation for June
through September 2005 in S-8 common stock of the Company.

      In January 2005,  the Company agreed to pay L. Ronald Perkins a consulting
fee of $10,000 per month, on a  month-to-month  basis, in  consideration  of his
services to the Company as Vice President in charge of Administration, Marketing
and  Communication.  At this time,  the Company and Mr. Perkins have not entered
into a formal written agreement.  Effective June 1, 2005, Mr. Perkins has agreed
to take  accrued back  compensation  and monthly  compensation  for June through
September 2005 in S-8 common stock of the Company.

      Commencing September 1, 2004, Mr. James Ricketts, our Secretary,  received
a consulting  fee of $10,000 per month in  consideration  of his services to the
Company  overseeing  its iron ore business.  There is not a formal  agreement in
place with Mr. Ricketts,  and the arrangement is on a month-to-month  basis. Mr.
Ricketts  does not receive  compensation  for his  services as  Secretary of the
Company.  Effective June 1, 2005,  Mr.  Ricketts has agreed to take accrued back
compensation  and monthly  compensation  for June through  September 2005 in S-8
common stock of the Company.

ITEM 13. Exhibits and Reports on Form 8-K.

3.1       Articles of  Incorporation,  as amended  (incorporated by reference to
          Exhibit  3.1 to the  Company's  Annual  Report  on Form  10-KSB  dated
          September 30, 2004).

3.2       Bylaws  (incorporated  by  reference  to  Exhibit  3 to the  Company's
          Registration Statement on Form SB-2 filed on 2/27/2001)

3.3       Amendment to Articles of  Incorporation,  as amended  (incorporated by
          reference  to Exhibit 3.1 to the  Company's  Quarterly  Report on Form
          10-QSB dated March 31, 2005).

4.1       Form of  Warrant  issued  to Blake  Advisors,  LLC and  it's  nominees
          (incorporated  by  reference  to Exhibit 4.1 to the  Company's  Annual
          Report on Form 10-KSB dated September 30, 2004)

4.2       Form  of  Warrant   issued  in   Offering   dated   November  5,  2004
          (incorporated  by  reference  to Exhibit 4.2 to the  Company's  Annual
          Report on Form 10-KSB dated September 30, 2004).

4.3       Form of Warrant issued to John  Stapleton and other certain  investors
          (incorporated  by reference to Exhibit 4.3 to the Company's  Quarterly
          Report on Form 10-QSB dated December 31, 2004).

4.4       List of other investors  issued a Warrant  substantially  identical to
          the Warrant  referenced in Exhibit 4.3  (incorporated  by reference to
          Exhibit 4.4 to the  Company's  Quarterly  Report on Form 10-QSB  dated
          December 31, 2004).


                                       31
<PAGE>

4.5       Form of Warrant issued in 2005 Offering  (incorporated by reference to
          Exhibit 4.1 to the  Company's  Quarterly  Report on Form 10-QSB  dated
          June 30, 2005).

4.6       Secured   Convertible   Promissory   Note  dated   October   28,  2005
          (incorporated  by  reference to Exhibit 4.1 to the  Company's  Current
          Report on Form 8-K dated October 28, 2005).

4.7       Form  of  Warrant  issued  to  Whitebox  Intermarket  Partners,   L.P.
          (incorporated  by  reference to Exhibit 4.2 to the  Company's  Current
          Report on Form 8-K dated October 28, 2005).

4.8       Form  of  Warrant  issued  in  Fall  2005  Offering  (incorporated  by
          reference to Exhibit 4.3 to the Company's  Current  Report on Form 8-K
          dated October 28, 2005).

4.9       Rights  Agreement  by and  between the  Company  and OTR,  Inc.  dated
          December  28, 2005  (incorporated  by  reference to Exhibit 4.1 to the
          Company's Current Report on Form 8-K dated December 28, 2005).

10.1      Asset Purchase  Agreement  dated as of October 18, 2002 by and between
          the Company and Gold Minerals, Inc. and El Capitan, Ltd. (incorporated
          by reference to Exhibit 10.1 to the  Company's  Annual  Report on Form
          10-KSB dated September 30, 2004).

10.2      Employment  Agreement  with  Charles C.  Mottley  dated March 19, 2003
          (incorporated  by reference to Exhibit  10.2 to the  Company's  Annual
          Report on Form 10-KSB dated September 30, 2004).

10.3      Consulting  Agreement  with  Larry  Lozensky  (incorporated  herein by
          reference  to  Exhibit  4.2  to  the  Company's   Form  S-8  filed  on
          9/15/2003.)

10.4      Agreement with Robert L. Langguth dated July 26, 2004 (incorporated by
          reference  to  Exhibit  10.4 to the  Company's  Annual  Report on Form
          10-KSB dated September 30, 2004)

10.5      Exclusive  Agency  Agreement  with  Asia  Finance  Company  LLC  dated
          November 4, 2004  (incorporated  by  reference  to Exhibit 10.5 to the
          Company's Annual Report on Form 10-KSB dated September 30, 2004).

10.6      Agreement for  Consulting  Services  dated May 11, 2004 by and between
          the  Company  and  U.S.  Canadian  Minerals,   Inc.  (incorporated  by
          reference  to  Exhibit  10.6 to the  Company's  Annual  Report on Form
          10-KSB dated September 30, 2004).

10.7      Asset  Purchase  Agreement  dated  as of July  14,  2004  by Gold  and
          Minerals Co., Inc., Larry Lozensky, the Company and Charles C. Mottley
          (incorporated  by reference to Exhibit  10.7 to the  Company's  Annual
          Report on Form 10-KSB dated September 30, 2004).

10.8      Joint  Venture  Agreement  dated  May  11,  2004 by and  between  U.S.
          Canadian Minerals,  Inc. and the Company (incorporated by reference to
          Exhibit  10.8 to the  Company's  Annual  Report on Form  10-KSB  dated
          September 30, 2004).

10.9      Asset  Purchase  Agreement  dated as of August 25, 2003 by and between
          Gold and Minerals Co.,  Inc.,  Charles  Mottley and Larry Lozensky and
          the  Company  (incorporated  by  reference  to  Exhibit  10.9  to  the
          Company's Annual Report on Form 10-KSB dated September 30, 2004).


                                       32
<PAGE>

10.10     Investment  Advisory  Agreement  dated as of October  19,  2004 by and
          between the Company and Blake Advisors, LLC (incorporated by reference
          to Exhibit 10.1 to the Company's Quarterly Report on Form 10-QSB dated
          December 31, 2004).

10.11     2005 Stock Incentive Plan (incorporated by reference to Exhibit 4.1 to
          the  Company's  Registration  Statement  on Form S-8 filed on July 19,
          2005).

10.12     Purchase  Agreement  entered into as of October 28, 2005, by and among
          the Company and Whitebox Intermarket Partners,  L.P.  (incorporated by
          reference to Exhibit 10.1 to the Company's  Current Report on Form 8-K
          dated October 28, 2005).

10.13     Registration  Rights Agreement entered into as of October 28, 2005, by
          and  among  the  Company  and  Whitebox  Intermarket  Partners,   L.P.
          (incorporated  by reference to Exhibit 10.2 to the  Company's  Current
          Report on Form 8-K dated October 28, 2005).

10.14     Security  Agreement  entered into as of October 28, 2005, by and among
          the Company and Whitebox Intermarket Partners,  L.P.  (incorporated by
          reference to Exhibit 10.3 to the Company's  Current Report on Form 8-K
          dated October 28, 2005).

31.1      Certification  of Charles C.  Mottley  pursuant  to Section 302 of the
          Sarbanes-Oxley Act of 2002

31.2      Certification   of  Steve  Antol   pursuant  to  Section  302  of  the
          Sarbanes-Oxley Act of 2002

32.1      Certification  of Charles C.  Mottley  pursuant  to Section 906 of the
          Sarbanes-Oxley Act of 2002

32.2      Certification   of  Steve  Antol   pursuant  to  Section  906  of  the
          Sarbanes-Oxley Act of 2002

99.1      El Capitan Precious  Metals,  Inc. Code of Ethics for Senior Financial
          Management  (incorporated  herein by  reference to Exhibit 99.1 to the
          Company's  Form 10-KSB for the fiscal year ended  9/30/03 and filed on
          2/13/04).

IItem 14. Principal Accountant Fees and Services

      The  following  table  summarizes  the  aggregate  fees  billed by Gelfond
Hochstadt Pangburn,  P.C. to the Company for the fiscal year ended September 30,
2004;

                                                     Year Ended
                                                    September 30,
                                                         2004
                                                    -------------
            Audit Fees (1)                            $40,753
            Audit-Related Fees                        $     0
            Tax Fees (2)                              $ 1,603
                                                      -------
            Total                                     $42,356
                                                      =======

(1)  Fees for audit  services  billed in fiscal years 2005 and 2004 consisted of
     (i) audit of the Company's annual financial statements; (ii) reviews of the
     Company's quarterly financial statements; (iii) consents and other services
     related to SEC matters;  and (iv) consultations on financial accounting and
     reporting matters arising during the course of the audits and reviews.

(2)  Fees  for tax  services  billed  in  fiscal  years  2004  consisted  of tax
     compliance.

      As  explained  more  fully in Item 8.  Changes in and  Disagreements  with
Accountants on Accounting and Financial  Disclosure  above, on October 25, 2004,
our Board of Directors  approved the  dismissal of Gelfond  Hochstadt  Pangburn,
P.C. and approved the  engagement  of Hein & Associates  LLP as our  independent
registered public accountant. Also as disclosed in Item 8, on November 25, 2005,
our Board of Directors  approved the dismissal of Hein & Associates and approved
the engagement of Epstein Weber & Conover,  PLC, as our  independent  registered
public accountant.

The following table  summarizes the aggregate fees billed to the Company by Hein
& Associates LLP in fiscal year 2005 related to the audit and quarterly  reviews
of the Company for the fiscal year ended  September 30, 2005 and $22,000 accrued
to Epstein Weber and Conover, PLC, for the audit of our year ended September 30,
2005:

                                                      Year Ended
                                                  September 30, 2005
                                                 --------------------
            Audit Fees                                $56,697
            Audit-Related Fees                        $     0
            Tax Fees                                  $     0
                                                      -------
            Total                                     $56,697
                                                      =======

                                       33
<PAGE>

Fees for audit services billed in fiscal year 2005 consisted of (i) audit of the
Company's  annual  financial  statements for the year ended  September 30, 2004;
(ii) reviews of the Company's quarterly financial statements; (iii) consents and
other  services  related to SEC  matters;  and (iv)  consultations  on financial
accounting  and reporting  matters  arising  during the course of the audits and
reviews.  The  amount  also  includes  an  accrual  of  $22,000  for audit  fees
attributable to the year ended September 30, 2005.

                                   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.

                                       By: /s/ Charles C. Mottley
                                           ------------------------------------
                                           Charles C. Mottley
                                           President and Chief Executive Officer

                                POWER OF ATTORNEY

      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.

Name                                                      Title

    /s/ Charles C. Mottley         President and Chief Executive Officer
----------------------------       (Principal Executive Officer

    /s/ Stephen J. Antol           Chief Financial Officer and Treasurer
----------------------------       (Principal Financial and Accounting Officer)

    /s/ James Ricketts             Director and Secretary
----------------------------

    /s/ L. Ronald Perkins          Director
----------------------------

    /s/ R. William Wilson          Director
----------------------------

    /s/ W. Pierce Carson           Director
----------------------------


                                       34