UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-K





x
            Annual
      report pursuant to section 13 or 15(d) of the Securities Exchange Act of
      1934





For
the fiscal year ended September 30, 2009




o
            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
            (I.R.S.
      Employer I.D. No.)incorporation
      or organization)





15225
      N. 49Th
      StreetScottsdale,
      AZ
            85254(Address
      of principal executive offices)
            (Zip
      Code)





Issuer’s
telephone number, including area code: (602) 595-4997





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





Securities
registered under Section 12(g) of the Exchange Act:   None





Check
whether the issuer is not required to file reports pursuant to Section 13 or
15(d) of the Exchange Act. o




Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.    Yes   ̈    No  x




Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the
Act.    Yes   ̈    No  x




Indicate
by check mark whether the registrant has (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding twelve months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90
days.    Yes  x    No   ̈




Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the registrant was
required to submit and post such
files).    Yes  x    No   ̈




Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.     ̈




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a smaller reporting company. See definition of “large
accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule
12b-2 of the Exchange Act. (Check one):




Large
accelerated filer   ̈    Accelerated
filer   ̈    Non-accelerated
filer   ̈    
Smaller reporting company  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 December 28,
2009, by non-affiliates of the issuer was approximately $7,222,139 based on the
closing market price of the registrant’s common stock of $0.09 as reported on
the OTC Bulletin Board.





As of
December 23, 2009 issuer had 88,654,036 shares of its $.001 par value common
stock issued and outstanding.





Transitional
Small Business Format: Yes o No x





Documents
incorporated by reference: None





EL
CAPITAN PRECIOUS METALS, INC.


TABLE OF
CONTENTS




PART
      IItem 1.
              
              Business
              
              
              1Item 1A.
              
              Risk
      Factors
              
              
              5Item 1B.
              
              Unresolved
      Staff Comments
              
              
              9Item 2.
              
              Properties
              
              
              9Item 3.
              
              Legal
      Proceedings
              
              
              12Item 4.
              
              Submission
      of Matters to a Vote of Security Holders
              
              
              12PART
      IIItem 5.
              
              Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
              
              
              12Item 6.
              
              Selected
      Financial Data
              
              
              14Item 7.
              
              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
              
              
              14Item 7A.
              
              Quantitative
      and Qualitative Disclosures About Market Risk
              
              
              17Item 8.
              
              Financial
      Statements and Supplementary Data
              
              
              18Item 9.
              
              Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
              
              
              36Item 9A(T).
              
              Controls
      and Procedures
              
              
              36Item 9B.
              
              Other
      Information
              
              
              37PART
      IIIItem 10.
              
              Directors,
      Executive Officers and Corporate Governance
              
              
              37Item 11.
              
              Executive
      Compensation
              
              
              38Item 12.
              
              Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
              
              
              44Item 13.
              
              Certain
      Relationships and Related Transactions, and Director
      Independence
              
              
              45Item 14.
              
              Principal
      Accounting Fees and Services
              
              
              45PART
      IVItem 15.
              
              Exhibits
      and Financial Statement Schedules
              
              
              46SIGNATURES
              
              
              
              
              48





CAUTIONARY
STATEMENT ON FORWARD-LOOKING STATEMENTS





This
report may contain certain “forward-looking” statements as such term is defined
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, commercial viability of any mineral
deposits 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 1A - 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 otherwise
required by applicable law, we undertake no obligation to publicly update or
revise any forward-looking statements or the risk factors described in this
Annual Report or in the documents we incorporate by reference, whether as a
result of new information, future events, changed circumstances or any other
reason after the date of this Annual Report on Form 10-K.





PART
I





ITEM 1.   DESCRIPTION OF
BUSINESS





Business
History





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 properties located in the southwestern United States. We are principally
engaged in the exploration of precious metals and other minerals. Our primary
asset is a 40% equity interest in El Capitan, Ltd., an Arizona corporation which
holds an interest in the El Capitan property located near Capitan, New Mexico.
Additionally, our assets include interests in the COD property located near
Kingman, Arizona. There is no assurance that a commercially viable mineral
deposit exists on any of our properties. Additional exploration will be required
before a final evaluation can be made as to the economic and legal feasibility
of any particular property. 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 and $50,000 in cash. Hereinafter, all
references to shares of our 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.





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. On April
11, 2003, we changed our 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, Limited, an Arizona corporation which owns the El Capitan deposit, an
inactive iron and related ore mine located in New Mexico, including certain
assets used to explore the property. The El Capitan property at the time of this
transaction contained four patented claims and three unpatented claims on
approximately 200 acres in the Capitan Mountains in Lincoln County, New Mexico.
The remaining 60% equity interest in El Capitan, Limited is held by Gold and
Minerals.





In August
2003, we acquired from Gold and Minerals certain assets known as the COD
property 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 property
was acquired from our then controlling stockholder, who had no monetary economic
basis in the property, in exchange for our common stock, the transaction was
accounted for as a non-monetary exchange and the COD property was recorded at no
value on our financial statements.





Contemporaneously
with the purchase of the COD property, 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 the COD property 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 the COD property on
behalf of the Company on a month-to-month basis for a management consulting fee
of $10,000 per month.





In May
2004, we executed a joint venture agreement (the “Joint Venture”) with U.S.
Canadian Minerals, Inc. (“U.S. Canadian”), a publicly-traded Nevada company, to
explore and utilize the COD property, including the recovery of any gold and
silver from the tailings of the COD Mine. The Joint Venture is to exist 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, we were
required to transfer to U.S. Canadian an 80% interest in the COD mine in
exchange for 720,000 restricted shares of U.S. Canadian common stock. Pursuant
to a stock split affected by U.S. Canadian, we subsequently held 2,160,000
shares of the U.S. Canadian stock.  On the date of the original
transaction, shares of unrestricted freely trading U.S. Canadian common stock
traded at $2.85 per share, or, adjusted for the split, at $0.95 per share. At
October 28, 2005, 2,160,000 of these shares were utilized as collateral for a
$750,000 for a convertible promissory note issued by the Company.  On
January 20, 2006, these shares also collateralized an additional $550,000
convertible note issued by the Company to the same note holder. During our
fiscal year ended September 30, 2007, the notes were converted in full to the
Company’s Common Stock. As of October 9, 2007, U.S. Canadian announced a 50 to 1
reverse split of its common stock which reduced the number of shares held to
43,200.  On August 29, 2005, we executed a Quit Claim deed in favor of
U.S. Canadian covering all of the mining claims identified in the Joint Venture
for purposes of facilitating the management of the claims by U.S. Canadian
pursuant to the Joint Venture.


1


U.S.
Canadian faced a SEC imposed temporary trading suspension in October of 2004,
which has since expired. There common stock was also restricted with respect to
sale until May 2005. U.S. Canadian’s common stock is currently traded on the
Pink Sheets under USCN.PK and closed at $0.99 per share on September 30,
2009. Effective October 1, 2009, the company announced that it had changed
its name to Noble Consolidated Industries Corp and will apply for a new trading
symbol.  We also have potentially continuing involvement (as discussed
below) related to the COD property. Based on these factors, no gain on the sale
was recorded and we ascribed a value of $2,052,000 to the common stock received
at September 30, 2004, the value on the date of the transaction, and recorded a
deferred gain on the sale of an asset and classified it as a long term
liability.  As at September 30, 2007 we ascribed a zero value to these
shares due to market conditions with a corresponding adjustment to the carrying
value of the deferred gain liability account.  There was no change to
this treatment as at September 30, 2009.





Under the
Joint Venture, we were to explore the COD site and contribute the equipment as
required. U.S. Canadian was to contribute 90 days operating capital, which
provided for three workers, fuel, necessary equipment, and equipment repair and
maintenance. The parties also agreed to share the costs and expenses of the
property in accordance with their profit participation in the property. Net
profits, if any, from the tailings and settlement pond will be split equally
among us and U.S. Canadian, and U.S. Canadian shall retain 100% of any other
profit. In November 2005, our Board of Directors approved an amendment to the
Joint Venture Agreement whereby we will contribute $50,000 for the completion of
the geological field study. As consideration for this advance, we will be
reimbursed for 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 U.S. Canadian. Due to the unknown future intentions and
financial viability of U.S. Canadian, this field study was not implemented.
Accordingly, no exploratory work has been performed as to determine the extent,
if any, of potential minerals in the tailings. In early 2009 U.S. Canadian
retained the services of geological firm to serve as a consultant to the
company, specifically to survey the COD property site. On June 2, 2009, U. S.
Canadian received a “Report on Preliminary Exploration” from the consultant. On
October 21, 2009, U.S. Canadian announced that they had transferred all of their
interest in the COD project to an unrelated party.





In July
2004, we acquired from Gold and Minerals the Weaver property 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, and as Gold and Minerals had no economic monetary
basis in the property, the transaction was accounted for as a non-monetary
exchange and the Weaver property was recorded at no value on our financial
statements as that was the basis of Gold and Minerals. The property was sold for
$20,000 during our year ended September 30, 2009 to an unrelated
party.





On August
8, 2007, we announced that we had agreed to merger terms with Gold and
Minerals.  On February 13, 2008, we entered into an Agreement and Plan
of Merger with El Capitan Acquisition Company, our wholly owned Nevada
subsidiary, Gold and Minerals and Mr. Larry Lozensky, a shareholder and
President of Gold and Minerals, pursuant to which, at the effective time of the
merger, (i) El Capitan Acquisition Company will merge with and into Gold and
Minerals and (ii) Gold and Minerals will be the surviving company to the merger
and our wholly owned subsidiary.  Pursuant to the Merger Agreement, in
consideration of 100% of the outstanding shares of capital stock of Gold and
Minerals, the shareholders of Gold and Minerals will receive an aggregate of
118,965,000 shares of our common stock at the effective time of the merger,
subject to a working capital adjustment that will be determined at the closing
of the merger. Assuming no working capital adjustment is required, based upon
our currently outstanding shares of capital stock on a fully diluted basis
(assuming the conversion or exercise of our outstanding derivative securities),
the shareholders of Gold and Minerals will hold approximately 56% of our
outstanding capital stock immediately after the effective time of the merger
(assuming we do not issue any additional shares of common stock or additional
derivative securities). Gold and Minerals’ primary asset is a 60% ownership in
El Capitan, Limited, the company that holds the El Capitan deposit and its
related assets. We currently control the remaining 40% of El Capitan, Limited.
The consummation of the merger is subject to a number of conditions, including,
without limitation, the satisfaction of due diligence by the parties, Gold and
Minerals’ shareholder approval, completion and effectiveness of a registration
statement, and other standard conditions in similar transactions.





On July
23, 2008 we announced that the proposed merger with Gold and Minerals reached
the stage at which we were ready to file a Form S-4 registration statement with
the Securities and Exchange Commission. Due to the time consuming nature of the
preparation of a Form S-4 and the uncertainty of the timing of the SEC review
process, the companies had worked with counsel to examine alternative structures
for the transaction. While alternatives were identified, none held significant
promise to be less time consuming or more cost effective for shareholders. Both
companies concluded that the Form S-4 registration process will be the optimal
path forward, and decided to continue to pursue the original merger
structure.  Both companies agreed to delay the filing of the Form S-4
until sufficient funding could be raised to cover accrued and future merger
expenses.  We had originally anticipated that the merger would be
complete during fiscal year 2008, however, we experienced numerous unexpected
delays in the due diligence process; primarily related to obtaining current
audited financial statements and documentation related to historical Gold and
Minerals’ transactions. Preparation of these due diligence documents
substantially increased the costs of the process for both parties. We believe
that Gold and Minerals management has made every effort to provide us with
appropriate documentation and we expect that the merger can now move forward
when sufficient funding becomes available.  The management and Boards
of both companies agree that primary use of funds must be dedicated to
furthering progress on the metallurgical and permitting tasks associated with
the El Capitan precious metals project.


2


On
September 16, 2008 we announced that both companies agreed to restart the merger
process as Gold and Minerals had brought its joint venture account
current.  Subsequently, Gold and Minerals’ joint venture account fell
into arrears and the merger process was again delayed.  Part of
arrearage from Gold and Minerals perspective and concern was due to the
significant increase in administrative costs of the Company beginning in
September 2008 and the continued decline of the market price of the Company’s
stock.





On April
21, 2009, the current four Board members appointed three new members to the
Company’s Board of Directors. Subsequent to their appointment, the current four
Board members informed the Board of their resignations as directors of the
Company effective on this date.





On April
30, 2009, the Board of Directors of the Company terminated the services of the
Chief Executive Officer and the Chief Financial Officer. On this same date, the
Directors appointed a new Chief Executive Officer and new Chief Financial
Officer, both of whom were officers of the Company previously.





On
September 18, 2009, Gold and Minerals gave a Notice of Termination to the
Company referencing the Agreement and Plan of Merger, dated February 12, 2008,
between the companies. The election to terminate was made pursuant to
subparagraph (d) of Paragraph 10.1 of Article X of the Agreement. The main basis
for the election to terminate was that the circumstances surrounding the Plan of
Merger had changed since the execution of the Agreement. Upon completion of the
metallurgical work, permitting and extraction process, and other current
projects Gold and Minerals is currently working on,  it is the intent
of Gold and Minerals to re-enter into a new Agreement and Plan of Merger based
on the circumstances at the time of implementation of the
Agreement.





Business
of Issuer





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





We are
concentrating on the exploration of the El Capitan deposit. After completing
further testing to determine the existence and concentration of precious metals
or other minerals at this property site, and if the results of such testing are
positive, we anticipate formalizing plans for the development of the asset by
either selling to or joint venturing with a producing mining
company.





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, 2009 to September 30, 2009 and for the years ended
December 31, 2008 and 2007 are as follows:





Gold - London Afternoon Fix
Prices - US Dollars





Period
                  
                  High
                  
                  
                  Low
                  
                  
                  AverageFor
      the nine months ended September 30, 2009
                  
                  $
                  1,018.50
                  
                  
                  $
                  810.00
                  
                  
                  $
                  930.10For
      the year ended December 31, 2008
                  
                  $
                  1,011.25
                  
                  
                  $
                  712.50
                  
                  
                  $
                  871.96For
      the year ended December 31, 2007
                  
                  $
                  841.10
                  
                  
                  $
                  608.40
                  
                  
                  $
                  695.39Data
      Source: Kitco, Inc.


3


Silver - London Fix Prices -
US Dollars





Period
                  
                  High
                  
                  
                  Low
                  
                  
                  AverageFor
      the nine months ended September 30, 2009
                  
                  $
                  17.38
                  
                  
                  $
                  10.51
                  
                  
                  $
                  13.68For
      the year ended December 31, 2008
                  
                  $
                  20.92
                  
                  
                  $
                  8.88
                  
                  
                  $
                  14.99For
      the year ended December 31, 2007
                  
                  $
                  15.82
                  
                  
                  $
                  11.67
                  
                  
                  $
                  13.38Data
      Source: Kitco, Inc.





Platinum - London Afternoon
Fix Prices - US Dollars





Period
                  
                  High
                  
                  
                  Low
                  
                  
                  AverageFor
      the nine months ended September 30, 2009
                  
                  $
                  1,399.00
                  
                  
                  $
                  918.00
                  
                  
                  $
                  1,141.44For
      the year ended December 31, 2008
                  
                  $
                  2273.00
                  
                  
                  $
                  763.00
                  
                  
                  $
                  1573.53For
      the year ended December 31, 2007
                  
                  $
                  1,544.00
                  
                  
                  $
                  1,118.00
                  
                  
                  $
                  1,303.05Data
      Source: Kitco, Inc.





Should we
be successful in our exploration and locate gold or other precious metals, our
ability to sell or develop any of our properties 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
explored, we will generate significant revenue from the sale of any precious
metals or sale of a property.





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. Additionally, due to our limited resources, we
do not intend to develop any of our properties on our own, but rather to only
perform exploration on our properties with the anticipation of selling or
developing through an appropriate joint venture any properties in which our
exploration proves successful. Given our size and financial condition, there is
no assurance we can compete with any larger companies for the acquisition of
additional potential mineral properties.





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 federal and state government regulations requires us to obtain
multiple permits for each mining property. Although the requirements may differ
slightly in each of the respective states in which we may hold claims or may
hold claims in the future, the process of permitting the claims generally
requires the filing of a “Notice of Intent to Locate Mining Claims” and the
payment of a fee of $25 to the BLM office in the state in which the claim is
located. Subsequently, we are required to file and record a New Location Notice
for each such claim within ninety days of locating the claim, the fee for which
is approximately $165. On an annual basis, we are required to pay a maintenance
fee of $140 per claim, together with payments of approximately $5 each for
annual bulk fuel and water well permits.





To the
extent we intend to take action on a property that is more than “casual use,”
which generally includes activities that cause only negligible disturbance to
the land (this would not generally include drilling or operating earthmoving
equipment on the property), we are required to prepare and file with the BLM
either a notice of operation or plan of operation identifying the activity we
intend to take on the property, including a plan of reclamation indicating how
we intend to return the land to its prior state upon completion of our
activities. For each claim that we file a notice or plan of operations, we are
required to pay a one-time reclamation bond to the BLM to be used toward
restoration of the property upon completion of our activities. The amount of the
reclamation bond is determined by the BLM based upon the scope of the activity
described in the notice or plan of operation, and will thus vary with each
property. We filed an original plan of operation on the El Capitan property. We
were required to pay a reclamation bond of $15,000 in connection with that plan
of operation, and upon payment were issued a notice to proceed from the BLM.
This allowed us to proceed with our current plan of operation on up to 5
acres.


4


On March
30, 2007, the New Mexico Energy, Minerals and Natural Resources Department
issued a Cessation Order due to un-permitted exploration
activities.  On September 17, 2007, the New Mexico Energy, Minerals
and Natural Resources Department issued their Completion of Abatement Steps for
Cessation Order confirming that the abatement steps required under the original
order had been completed.  On October 3, 2008, the New Mexico Energy,
Minerals and Natural Resources Department issued their Termination Report and
Confirmation of Completion of Work for Reclamation Activities confirming that
the reclamation activities required under the original order had been
completed.





In July
2007, we submitted a Plan of Operation for continued exploration on a 2,000 acre
parcel within our then 7,000 acre El Capitan claim block near Capitan, New
Mexico.





In order
to ensure timely and appropriate permitting, we hired an experienced, New Mexico
headquartered, environmental services firm, GL Environmental, to manage this
effort. When the permit is granted, it will provide the opportunity for a
professional and methodical investigation into the additional geologic potential
of this portion of our holdings without requiring further time-consuming
permitting efforts. The area being permitted will allow access to a number of
high-potential targets identified through previous surface sampling and remote
sensing efforts, as well as to the prospective area to the west of the existing
deposit, which remains open to geologic resource extension. This United States
Forest Service (USFS) permitting effort, governed by the National Environmental
Policy Act (NEPA) of 1972, is a robust process that can take a significant
amount of time to complete. The typical process generally takes longer than the
prescribed regulatory time frame, and is dependent upon a number of factors
outside of our control, including, without limitation, governmental approvals,
licensing and permitting, as well as potential opposition by third
parties.  Concurrently, GL Environmental has submitted a permit
application with the New Mexico Mining & Minerals Division. Both permits
must be approved prior to the commencement of drilling activity.





In July
2008, we entered into a Memorandum of Understanding with the USFS related to the
permitting of 112 exploration drill holes planned on 2,000 acres of the El
Capitan claims in Lincoln County, New Mexico. The action signals the initiation
of the Federal Environmental Assessment (EA) permitting process. Based upon
recent USFS EA completion timelines, we anticipate receipt of permits by the
first quarter of 2010 at which time exploration activity could resume should
funding be available.





Although
there is no guarantee that the regulatory agencies will approve, in a timely
manner, if at all, the necessary permits for our current and anticipated
explorations, we have no reason to believe at this time that we will not obtain
the necessary permits in due course.





Employees





We
currently have informal arrangements with two individuals who are officers and
or a director of the Company, who serve as support staff for the functioning of
all the corporate activities. There are no written agreements with these
individuals. We have two additional  non-employee directors that
devote only such time to our business as is necessary to our conduct of
administrative operations. Additionally, we use consultants for the testing and
exploration and development of property claims. As administrative requirements
expand, we anticipate hiring additional employees, and utilizing a combination
of employees and consultants as necessary to conduct of these
activities.





Available
Information





We are a
Nevada corporation with our principal offices at 15225 N. 49th Street,
Scottsdale, Arizona 85254. Our telephone number is (602) 595-4997. Our website
address is www.elcapitanpmi.com.





ITEM 1A.   RISK FACTORS





Risks
Relating to Our Common Stock





The
limited trading of our Common Stock may make it difficult to sell shares of our
Common Stock.





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.


5


Because
our Common Stock is a “penny stock,” it may be difficult to sell shares of our
Common Stock at times and prices that are acceptable.





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.





Risks
Relating to Our Financial Condition





The
volatility of precious metal prices may negatively affect our potential
earnings.





We
anticipate that a significant portion of our future revenues will come from the
sale of our Capitan property or the development of the property through a joint
venture with a larger mining company with more significant resources. In either
event, our future potential earnings will be directly affected by the prices of
precious metals believed to be located on such properties. 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.





Unless we develop
or are able to sell or enter into a joint venture development agreement on one
of our properties, we will not have enough cash to fund operations through the
next fiscal year without raising additional working capital
funds.





As of
September 30, 2009, we had $2,348 of cash on hand. Additionally, as of such date
we had a current net payable amount due to Gold and Minerals for an aggregate of
$47,061 relating to expenses Gold and Minerals have paid on our behalf of El
Capitan, Limited.  We will be required to raise additional capital in
financing or equity transactions in order to satisfy our expected cash
expenditures. Based upon our monthly utilization of working capital (including
exploration costs), at September 30, 2009, we had sufficient cash to fund
operations through October 2009.  We continually evaluate
business opportunities, such as joint venture processing agreements, with the
aim of creating cash flow for working capital. Subsequent to our year end and
through December 21, 2009, the Company has received additional advances from
Gold and Minerals aggregating $32,000. Based upon current management
operational plans, we will be required to continue to raise additional capital
on terms acceptable to us. There are no assurances that we will be successful in
such endeavors, in which case we may be forced to reduce our operating
expenditures or to cease development and operations altogether.





We
have not had revenue-generating operations and may never generate
revenues.





We have
not yet had revenue-generating operations, and it is possible that we will not
find marketable amounts of minerals on our properties or that any of our
properties will ever be sold. Should we fail to obtain revenues, our ability to
continue to explore our properties or obtain any additional properties will
likely be diminished and we may be required to sell one or more of our
properties at a purchase price we do not believe to be reasonable.





Our
independent auditors have reported that conditions exists 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, 2009, and September 30,
2008, and we have an accumulated (deficit) as of September 30, 2009, of
$(17,962,968). 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.


6


Risks
Relating to Our Business





Until
we locate precious metals on one or more of our properties, we may not have any
potential of generating any revenue.





Our
ability to sell or enter into a joint venture for the development of our
properties 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 an agreement for sale or joint venture development
of a property. During that time, depending on economic conditions, it might
become financially or economically unfeasible to produce the minerals at a
particular property. A shortage of working capital would prohibit us from
further exploration of our properties.





Our
inability to establish the existence of mineral resources in commercially
exploitable quantities on any of our properties may cause our business to
fail.





All of
our mineral properties are in the exploration stage. To date, we have not
established a mineral reserve on any of these properties, and the probability of
establishing a “reserve,” as defined by the Securities and Exchange Commission’s
Industry Guide 7, is not ascertainable; it is possible that none of our
properties contain a reserve and all resources we spend on exploration of our
properties may be lost. In the event we are unable to establish our reserves or
are otherwise able to sell or joint venture the development of any of our own
properties, we will be unable to establish revenues and our business may
fail.





Uncertainty
of mineralization estimates and the use of non-conventional testing and assaying
methods may diminish our ability to properly value our properties.





We rely
on estimates of the content of mineral deposits on its properties, which
estimates are inherently imprecise and depend to some extent on statistical
inferences drawn from both limited drilling on its properties and the placement
of drill holes that may not be spaced close enough to one another to enable it
to establish probable or proven results. These estimates may prove unreliable.
Additionally, we have relied upon small independent laboratories to assay its
samples, which may produce results that are not as consistent as a larger
commercial laboratory might produce.





Through
August 2006, due to the unique nature of the mineralization of the El Capitan
property, we have at times utilized testing and assaying methods that may be
uncommon, including the use of alkali fusion assays, a more aggressive form of
assay which completely converts the sample into a water soluble salt. Some of
these methods, including the alkali fusion assay, are not, or may not be,
industry standard methods, and the results from such testing and assaying
methods may be varied and inconsistent or prove to be unreliable. This testing
may result in imprecise testing and assaying results, and we may not realize any
mineral discovery.





Because
caustic fusion is not a precious metal industry accepted assay technique, we
retained a small metallurgical R&D lab in August 2006 to assess the
potential for a modified fire assay technique that is more appropriate for the
material from the El Capitan property.  Throughout 2007,
investigations into the potential use of various industry-standard fire assay
techniques to estimate the metal content of the El Capitan mineral samples were
conducted.  Such standard fire assay techniques produced limited
improved results, and beginning in early 2008, we began investigations into
other assay techniques, including leaching, acid dissolution, and the addition
of various precious metal collecting agents during the assay
process.  As of November 2009, we continue to have analyses ongoing at
both commercial laboratories
and small, R&D-oriented facilities.  There are no assurances that
the techniques being pursued will provide more reliable analytical results, and
we may not realize any economic value from this research or the application of
the associated results.





Our
initial use of non-standard testing and assaying methods may make our properties
less marketable than had we used conventional methods.





Because
of the unique nature of the mineralization of the El Capitan property, we have
used testing and assay methods that are not conventional and are often more
expensive than conventional methods. The use of non-conventional testing and
assaying methods may also prevent us from performing conventional economic
feasibility studies on our properties to determine the commercial viability of
such properties. Additionally, the use of non-conventional testing and assaying
methods may prevent us, or any purchaser of one or more of our properties on
which we use such testing, from using conventional methods of processing such
property or properties. In the event a purchaser will be required to use a more
expensive method of processing one of our properties, the marketability of such
property will likely be reduced accordingly. As described in the preceding risk
factor, we have deployed a program to move away of the non-standard assay
methods.


7


Certain
elements of El Capitan, Limited’s preliminary testing on the El Capitan property
may question the integrity of the results of such testing and limit our ability
to rely on such results.





During
2005 and 2006, when El Capitan’s drilling samples were being analyzed, El
Capitan, Limited did not include with the drill samples either blanks or known
reference standards for quality control purposes. A blank quality control sample
is a man-made sample that incorporates the same mineral components as a sample
taken from the property in question, but absent the precious mineral components
located in the property. Reference standards are samples that include a known
quantity of precious metals.  Blank and reference standard quality
control samples are relatively common practice in the industry and are used in
the assay process to ensure the integrity, repeatability and accuracy of the
work performed by the laboratory. Our failure to use such check sample may have
some effect on the integrity of the results of such testing.





Any loss of the
industry experience of our Board may affect our ability to achieve our business
objectives.





Three of
our four prior directors had significant industry experience. With the loss
their services, we will be required to rely upon third party consultants with
respect to industry matters.





Any
inability to retain key personnel may adversely affect our business
operations.





We are
highly dependent upon the abilities and experience of our officers. The loss of
any of our existing officers could have a material effect on our business
operations. The current strong competition within the mining industry makes the
recruitment and retention of employees knowledgeable of the mining industry
difficult and crucial to success. We may not be able to replace one or more of
these individuals on terms acceptable to us. We have no life insurance on the
life of any officer.





Our
inability to obtain additional financing would diminish our ability 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, 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, and we may not ever discover
marketable amounts of precious minerals.





The
exploration for 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.





Whether a
deposit will be commercially viable depends on a number of factors: 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 selling or otherwise developing a
property and receiving an adequate return on our invested capital.





Extensive
government regulation and environmental risks may require us to discontinue
operations.





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





Any
failure to obtain government approvals and permits may require us to discontinue
exploration on one or more of our properties.





We are
required to seek and maintain federal and state governmental approvals and
permits in order to conduct exploration and other activities on its claimed
properties.


8


Obtaining
the necessary permits can be a complex and time-consuming process involving
multiple jurisdictions, and requiring annual filings and the payment of annual
fees. As we currently have no source of revenue, the payment of the costs of
continued permitting is dependent upon its ability to obtain financing.
Additionally, the duration and success of our efforts to obtain permits are
contingent upon many variables outside of its control and may increase costs of
or cause delay to its 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 of some or all of its properties.





The
approval process for certain exploration permits provides for notice to the
public and allows for the public to comment on the application. The governmental
permitting authorities are obligated to consider the comments received from the
public and to assess the merits thereof as part of the approval
process.  It is possible that public comments may ultimately be deemed
to have sufficient merit to delay or even deny our applications.





Mineral
exploration is extremely competitive, and we may not have adequate resources to
successfully compete.





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, and are thus in a better position to search for and
acquire attractive mineral properties. Additionally, due to our limited
financial and other resources, we do not anticipate developing or producing on
any of our properties without a strong financial operating
partner.  Alternatively, we may elect to sell any property on which
exploration proves successful. Accordingly, our ability to acquire properties in
the future will depend not only on our ability to explore and develop or sell
our present properties, but also on our ability to select and acquire suitable
properties or prospects for future exploration. We may not be able to compete
successfully with our competitors in acquiring such properties or
prospects.





Title to any of
our properties may prove defective, possibly resulting in a complete loss of our
rights to such properties .





A
material portion of our holdings includes unpatented mining claims. The validity
of unpatented claims is often uncertain and may be contested. These claims are
located on federal land or involve mineral rights that are subject to the claims
procedures established by the General Mining Law of 1872, as amended. We are
required make certain filings with the county in which the land or mineral is
situated and annually with the Bureau of Land Management and pay an annual
holding fee of $140 per claim. If we fail to make the annual holding payment or
make the required filings, its mining claim would become invalid. In accordance
with the mining industry practice, generally a company will not obtain title
opinions until it is determined to sell a property. Also no title insurance is
available for mining. Accordingly, it is possible that title to some of our
undeveloped properties may be defective and in the event that it does not have
good title to its properties, we would be forced to curtail or cease its
exploratory programs on the property site.





ITEM 1B.   UNRESOVED STAFF
COMMENTS





None.





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 0.7
miles.





The El
Capitan property is owned by El Capitan, Limited, an Arizona corporation. In
2002, in consideration of $100,000 and 77.5% of our issued and outstanding
shares (at which time we were a private Delaware corporation), we acquired a 40%
equity interest in El Capitan, Limited from Gold and Minerals, which holds the
other 60% equity interest.   The property consists of four patented and
nine BLM lode claims; a mineral deposit is covered by these claims. 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, we
staked and claimed on property surrounding the El Capitan site located in
Lincoln County, New Mexico. This increased the total claimed area to
approximately 10,000 acres in November 2005. The additional staking and claiming
around our original site was done upon recommendations from our consulting
geologist to ensure protection of El Capitan, Limited’s interests. In August
2006, we reduced the number of claims to approximately 7,400 acres and in August
2009 and reduced the number of claims to approximately 3,000 acres based upon
continuing geological work and recommendations by our consulting
geologist.


9


On
January 1, 2006, El Capitan, Limited finalized the purchase of the four patented
mining claims on the property, which constitute approximately 77.5 acres in the
aggregate. In consideration for the claims, El Capitan, Limited transferred to
the selling parties 2,100,000 shares of our common stock owned by Gold and
Minerals.  Pursuant to an agreement between El Capitan, Limited and
Thelma Bouldin, DMR Resources, Mike Dunn, Kingfisher Resources, Inc., M.A.R.S.
Inc., Stephanie Malone, Don Rodolph, Mike Rodolph, Norbert Rother and Steven
Rother, all of whom were selling parties, the stock was valued at an aggregate
of $1,722,000, or $0.82 per share, the market value of our stock on November 11,
2005. Pursuant to an arrangement with Gold and Minerals, as of October 1, 2004
we were obligated to pay 40% of the expenses of El Capitan, Limited (in
proportion with our equity ownership interest of El Capitan, Limited), and thus
were obligated to pay Gold and Minerals $688,800 for the purchase of the
patented mining claims by El Capitan, Limited. This arrangement also provided
that, as of October 1, 2004 we had primary responsibility for the management of
the development of the El Capitan deposit.  During the first quarter
of fiscal year 2006, we offset our portion of the purchase price against
existing obligations of Gold and Minerals to us in the aggregate amount of
$612,416 relating to past expenditures relating to El Capitan, Limited that were
paid by us.





The main
El Capitan deposit is exposed in an open-pit and outcrops within a nearly
circular 1,300 foot diameter area, with smaller bodies stretching eastward for a
distance of up to 7,000 feet. The El Capitan property includes two
magnetite-dominant bodies. The upper magnetite zone lies below a limestone cap
that is a few tens of feet thick, and that is bleached and fractured with
hematite-calcite fracture filling. Hematite is an iron oxide mineral, and
calcite is a calcium carbonate mineral. Below the limestone cap, there is a
mineral deposit which consists mainly of calc-silicate minerals, or minerals
which have various ratios of calcium, silicon and oxygen. Beneath the
calc-silicate deposit is granite rock. The El Capitan deposit has an abundance
of hematite, which occurs with calcite in later stage fracture fillings,
breccias (rock composed of sharp-angled fragments), and stockworks
(multi-directional fractured rock containing veinlets of hydrothermally
introduced materials).





To our
knowledge, prior to its acquisition by El Capitan, Limited, the property was
last active in 1988. The property was previously drilled as an iron (Fe)
resource by the U.S. Bureau of Mines in 1944 and 1948. From 1961 to 1988, to our
knowledge, an estimated 250,000 tons of iron ore were produced on the property.
Prior to December 2004, there had not been any significant exploration completed
on the property. There had only been shallow drilling of the upper magnetite
horizon, which was completed by the U.S. Bureau of Mines in 1944 and 1948, and
additionally performed by El Capitan, Limited in 2002. Additionally, there was
geologic mapping of the property at a scale of 1:3,600 by Kelley in
1952.  In addition to its annual maintenance filings and payment of an
annual maintenance fee to the BLM for the claims ($140 per year) and of bulk
fuel and water well permits ($5 each per year), El Capitan, Limited has filed a
plan of operation to conduct drilling and other exploratory work on up to 5
acres on the El Capitan site. Upon payment of a reclamation bond of $15,000 to
cover anticipate costs associated with reclamation of the property, El Capitan
Limited received from the BLM a Minimal Impact Existing Mining Operation Permit
enabling it to proceed with its exploratory programs.  On March 30,
2007, the New Mexico Energy, Minerals and Natural Resources Department issued a
Cessation Order due to un-permitted exploration activities.  On
September 17, 2007, the New Mexico Energy, Minerals and Natural Resources
Department issued their Completion of Abatement Steps for Cessation Order
confirming that the abatement steps required under the original order had been
completed.  On October 3, 2008, the New Mexico Energy, Minerals and
Natural Resources Department issued their Termination Report and Confirmation of
Completion of Work for Reclamation Activities confirming that the reclamation
activities required under the original order had been completed.





In July 2007 a new plan of
operations was submitted to the United States Forest Service.  This
plan, if approved, will encompass an exploration are of approximately 2,000
acres.  The approval process allows for public review and comment and
a final decision is not expected until the first calendar quarter of calendar
2010.  While we are awaiting approval to continue exploration
activities on the property, we are pursuing metallurgical research, continued
development of an economical feasible extraction process.





Potential
mineralization has been defined as two separate types: (i) magnetite iron, and
(ii) hematite-calcite mineralized skarn and limestone, which may contain
precious metals. By using core holes located at strategic points throughout the
property, we have been able to develop
subsurface information and define the mineralization. To date, there have been
no proven commercial precious metals reserves on the El Capitan property site.
To establish “reserves” (as defined under Industry Guide 7 issued by the SEC) on
any of our properties, we will be required to establish that the property is
commercially viable; to establish commercial viability, we will be required to
complete significant additional exploration and testing, including more
extensive drilling, obtain positive engineering results and complete an economic
feasibility study on the property. We have not completed a feasibility study on
the property, and thus cannot identify the economic significance of the
property, if any, at this time.





Over the
years, samples taken on the property, including samples taken by El Capitan,
Limited, have given low-grade precious metal results when using standard fire
assay methods.  Through August 2006, due to the unique nature of the
mineralization of the El Capitan property, we have at times utilized testing and
assaying methods that may be uncommon, including the use of alkali fusion
assays, a more aggressive form of assay which completely converts the sample
into a water soluble salt.





In
January 2005, El Capitan Limited completed a preliminary 32-sample surface
sampling and assay program on the property to determine the property’s gold and
platinum potential.  This preliminary sampling was completed by Dr.
Clyde Smith.  This preliminary sampling and assay program was followed
by three stages of diamond drilling and rotary drilling, totaling 45 holes
between April 2005 and September 2006.


10


Stage 1 of the drilling
program was completed between April and May 2005, and consisted of 1,391 feet
drilled in 12 vertical core holes, with depths ranging from 38 to 142 feet.
Between June and August 2005, we completed Stage 2 drilling, which consisted of
both drilling in areas adjacent to some of the Stage 1 drilling holes and
drilling in new target areas to the southwest of the main deposit site. Stage 2
drilling consisted of 1,204 feet of combined core and rotary footage in 10
vertical holes, ranging from 24.5 to 344.5 feet in depth. The Stage 3 drilling
program began in February 2006 and was completed in May 2006. The program
consisted of 23 vertical reverse drill holes totaling 9,685 feet and varying
depths from 270 to 710 feet. Caustic fusion assays of the drill cuttings were
conducted during 2005 and 2006.





Because
caustic fusion is not a typical precious metal industry assay technique, we
retained a small metallurgical R&D lab in August 2006 to assess the
potential for a modified fire assay technique that is more appropriate for the
material from the El Capitan deposit. Throughout
2007, investigations into the potential use of various industry-standard fire
assay techniques to estimate the metal content of the El Capitan mineral samples
were conducted.  Such standard fire assay techniques produced limited
improved results, and beginning in early 2008, we began investigations into
other assay techniques, including leaching, acid dissolution, and the addition
of various precious metal collecting agents during the assay
process.  As of December 2009, we have analyses ongoing at both
commercial laboratories and small, R&D-oriented facilities.  There
are no assurances that the techniques being pursued will provide more reliable
analytical results, and we may not realize any economic value from this research
or the application of the associated results.





We have
continued to retain the services of Dr. Clyde Smith to manage the exploration of
the property. Dr. Smith is a Consulting Geologist with over 30 years of
experience in the mining industry. Dr. Smith holds a B.A. from Carleton College,
a M.Sc. from the University of British Columbia, and a Ph.D. from the University
of Idaho. Dr. Smith also served as a member of the Industrial Associates of the
School of Earth Sciences at Stanford University for several years. The Company
has also retained the services of a Ph.D. chemist to compile the prior and
ongoing metallurgical and geological information for incorporation into a formal
presentation for then purpose of the future marketing the property





El
Capitan Limited has entered into agreements with various contractors (as
referenced above) to complete exploration of the property. Each of the
respective contractors utilizes its own equipment to complete such exploration
and testing.





COD
Property





The COD
property is an underground property located in the Cerbat mountains in Mohave
County, Arizona, approximately 11 miles north, northwest of Kingman, Arizona.
The Cerbat mountains consist mainly of pre-Cambrian metamorphic rock which is
intruded by granite, overlain by younger Tertiary-era volcanic rock. The
property 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 signs
showing the directions to the property from that point.





The
property contains 13 claims granted by the BLM. This property has previously
been mined through two underground shafts leading to seven levels, most recently
in the mid 1980’s. The COD property was originally located in 1878.





Pursuant
to a joint venture agreement with U.S. Canadian Minerals, Inc. (“U.S. Canadian”)
entered into in May 2004, where we transferred an 80% interest in the COD
property to U.S. Canadian. Pursuant to the agreement, we plan to explore the
property to determine the feasibility
of recovering gold and silver from the tailings of the COD site.  We
are to receive 50% of the profits from the gold and silver tailings, if any. We
were required to contribute the equipment necessary for such exploratory
operations. U.S. Canadian 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 property. To date, we have spent approximately
$2,500 on this project.  On August 29, 2005, we executed a Quit Claim
deed in favor of U.S. Canadian covering all of the mining claims identified in
the joint venture for purposes of facilitating the management of the claims by
U.S. Canadian pursuant to the joint venture. There has been no activity by us at
this property in the year ended September 30, 2009. We were advised by U.S.
Canadian on October 21, 2009, that they had transferred all of their interest in
the COD project to an unrelated party.





The
following equipment was located on the COD Mine property when it was acquired by
Gold and Minerals:


11





·
            45 x 94 foot steel
      building


·
            20 x 24 foot steel
      building


·
            small steel building for
      equipment


·
            rod
  mill


·
            diagonal deck
      table


·
            various fuel and water storage
      tanks


·
            crushing circuit equipment and
      conveyors


·
            compressors and
      generators


·
            hoists


·
            52’ head frame including head
      frame, ore skip and work car


·
            miscellaneous other mining
      supplies and equipment





Weaver
Property





The
Weaver property consists of approximately 40 acres of land located in Maricopa
County, Arizona. The Weaver mountains are made up mainly of pre-Cambrian granite
and metamorphic rock, overlain by Tertiary-era volcanic rock. 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
site is located approximately 1.5 miles northeast of Stanton, Arizona. The
Weaver property was acquired from our majority shareholder, Gold and Minerals.
Prior to the acquisition by Gold and Minerals, the site was operated by our
former President, Charles C. Mottley, and a partner of Mr. Mottley. Mr. Mottley
and his partner operated the site from 1982 to 1984, mining approximately
150,000 tons of iron ore during that period of time.





In March
2009, we sold this property to an unrelated party.





Executive
Offices





Our
executive offices are located at 15225 N. 49th Street,
Scottsdale, Arizona 85254 since May 1, 2009. The premises are contributed by an
officer of the Company. We believe that the office is adequate to meet our
current requirements. Other than our properties as described above, we do not
own any real property.





ITEM 3.   LEGAL PROCEEDINGS





None.





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





None.





PART
II





ITEM 5.   MARKET FOR COMMON EQUITY, RELATED
MATTERS SYOCKHOLDER MATTERS AND


PURCHASES OF EQUITY
SECURITIES





(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 sets forth the range
of high and low closing bid quotes of our common stock per quarter as reported
by the OTC Bulletin Board for the past two fiscal years ended September 30, 2009
and 2008, respectively. All quoted prices reflect inter-dealer prices without
retail markup, mark-down commission and may not necessarily represent actual
transactions.


12





Price RangeQuarter Ended
                  
                  High
                  
                  
                  LowSeptember
      30, 2009
                  
                  $
                  0.12
                  
                  
                  $
                  0.08June
      30, 2009
                  
                  $
                  0.13
                  
                  
                  $
                  0.02March
      31, 2009
                  
                  $
                  0.07
                  
                  
                  $
                  0.01December
      31, 2008
                  
                  $
                  0.14
                  
                  
                  $
                  0.05September
      30, 2008
                  
                  $
                  0.22
                  
                  
                  $
                  0.11June
      30, 2008
                  
                  $
                  0.23
                  
                  
                  $
                  0.08March
      31, 2008
                  
                  $
                  0.39
                  
                  
                  $
                  0.16December
      31, 2007
                  
                  $
                  0.42
                  
                  
                  $
                  0.30





(b)
Holders





The
number of record holders of our Common Stock as of December 24, 2009 was
approximately 1,179 based on information received from our transfer agent. This
does not include beneficial owners holding shares in “street” or “nominee”
name.





(c)
Dividends





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.





(d)
Equity Compensation Plan Information





The
following table sets forth, as of September 30, 2009, (i) the number of
securities to be issued upon the exercise of outstanding options, warrants and
rights issued under our equity compensation plans, (ii) the weighted average
exercise price of such options, warrants and rights, and (iii) the number of
securities remaining available for future issuance under our equity compensation
plans.  All outstanding options identified herein are governed by the
terms of the Company’s 2005 Stock Incentive Plan.  As of September 30,
2009, there are 16,000,000 shares authorized and registered under the Company’s
2005 Stock Incentive Plan.




Number of
                                        securities to be
                                        issued upon
                                        exercise of
                                        outstanding
                                        options,
                                        warrants and
                                        rights
                                        (a)
                                      
                                      Weighted-
                                        average price of
                                        outstanding
                                        options,
                                        warrantsand
                                        rights
                                        (b)
                                      
                                      Number of
                                        securitiesremaining
                                        availablefor future
                                        issuanceunder
                                        equity
                                        compensation
                                        plan excluding (a)
                                        (c)Equity
      compensation plans approved by security holders
                                      
                                      —
                                      
                                      
                                      —
                                      
                                      —Equity
      compensation plans not approved by security holders
                                      
                                      3,250,000
                                      
                                      $
                                      0.35
                                      
                                      4,740,191
                                      (1)Total
                                      
                                      3,250,000
                                      
                                      $
                                      0.35
                                      
                                      4,740,191





The
Company has registered (i) 261,444 shares on Form S-8 on June 14, 2004, (ii)
5,000,000 shares registered by the Company on Form S-8 on July 19, 2005, (iii)
3,000,000 shares registered by the Company on Form S-8 on October 18, 2007, and
(iv) 8,000,000 shares registered by the Company on Form S-8 on August 21, 2009.
Shares have been and may be issued from time to time to certain employees and
consultants as compensation for services rendered to the Company. In the event
of an issuance of common stock in lieu of salary the number of shares to be
issued to the employee 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 the most recent month’s
average daily closing price.  In the event of an issuance of common
stock in lieu of fees the number of shares to be issued to the 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 the most recent month’s average daily closing price
subject to a subsequent adjustment for a price decline, if any, as compared to
the following month’s average daily closing price.


13


(e)
Recent Sales of Securities





During
fiscal 2009, the Company issued 1,127,744 shares of its S-8 common stock
pursuant to its 2005 Stock Incentive Plan for consulting services valued at
$96,332.





During
fiscal 2009, the Company issued 725,000 shares of common stock for $36,250 to
shareholders for the exercise of warrants at $0.05 per share.





During
fiscal 2009, the Company issued 1,637,356 shares of its S-8 common stock
pursuant to its 2005 Stock Incentive Plan for severance benefits and
compensation valued at $360,411.





ITEM
6.  SELECTED FINANCIAL DATA





Not
required for a smaller reporting company.





ITEM
7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION


AND RESULTS OF
OPERATIONS





The
following discussion should be read in conjunction with the Financial Statements
of the Company and notes thereto included elsewhere in the Annual Report. See
“Financial Statements”.




Readers
are cautioned that the following discussion contains certain forward-looking
statements that involve risks, uncertainties and assumptions and should be read
in conjunction with the “Cautionary Statement On Forward-Looking Statements”
appearing at the beginning of this Annual Report.




Overview
of Business





We have
not generated any revenue from the production of gold or other metals since our
inception, and historically have relied on equity and debt financings to finance
our ongoing operations. We generated a net (loss) of $(953,501) for the year
ended September 30, 2009, and a net (loss) of $(2,387,483) for the year ended
September 30, 2008. To fund operational expenses in the fiscal years ended
September 30, 2009 and 2008, we relied on proceeds from the exercise of warrants
aggregating $214,075 and costs reimbursements on the Capitan project from Gold
and Minerals aggregating $603,291 for the two years, and a private placement of
common stock in fiscal year 2008 of $150,000.




We have a
total accumulated deficit of $(17,962,968) at September 30, 2009. To continue as
a going concern, we are dependent on continued fund raising. However, we have no
commitment from any party to provide additional capital and there is no
assurance that such funding will be available when needed, or if available, that
its terms will be favorable or acceptable to us.




We are
dependent on obtaining additional financing or equity placements to continue our
exploration, metallurgical and recovery program efforts on the Capitan project.
We have no current plans or arrangements for these additional capital
requirements, and we anticipate that we will seek the additional financing
scenarios during the first calendar quarter of 2010.




The
financial statements have been prepared on a going concern basis, which
contemplates the realization of assets and satisfaction of liabilities and
commitments in the normal course of business. Should we be unable to continue as
a going concern, we may be unable to realize the carrying value of our assets
and to meet our obligations as they become due.




Liquidity
and Capital Resources





To
address the going concern problem addressed in its financial statements, we will
require raising additional working capital. We will


also
require additional working capital funds for continuing payments for the
continued implementation of our business strategies referencing the Capitan
project, necessary corporate personnel, and related general and administrative
expenses.





As of
September 30, 2009, we had $2,348 of cash on hand. We will be required to raise
additional capital in equity or financing transactions in order to satisfy our
expected cash expenditures. At September 30, 2009, based upon our current
working capital utilization rate, we have working capital to fund one month of
operations.





Historically
we have not generated any revenues from operations and have generated interest
income on a nominal basis. Our consolidated financial statements have been
prepared on a going concern basis, which contemplates the realization of assets
and satisfaction of liabilities in the normal course of
business.


14


We
anticipate a need for approximately $625,000 over the next 15 months in order to
satisfy past obligations, pay corporate overhead costs, expand and complete the
metallurgical and recovery programs and finalize the permitting process at the
Capitan site. If we fail to procure adequate funding on acceptable terms, we may
be required to reduce or eliminate substantially all business activities until
such time as funding can be secured on a basis acceptable to us.





We can
make no assurance, however, that we will be able to have access to the capital
markets in the future, or that financing will be available on terms acceptable
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 referencing the Capitan
project and severely threaten our ability to operate as a going
concern.





In the
private placement that closed in October and November 2007, we issued 300,000
units, each consisting of one share of our common stock and one common stock
purchase warrant for aggregate gross proceeds of $150,000.





In our
fiscal year ended September 30, 2008, we raised $177,825 from the exercise of
warrants.  Such warrants are callable at our option if (i) the closing
sales price of our common stock is at or above $1.25 per share for a period of
ten consecutive days, relating to some of the warrants, or $1.99 per share for a
period of twenty consecutive days, relating to other warrants (each subject to
adjustment as appropriate for stock splits, stock dividends, stock combinations,
etc.) and (ii) the shares of common stock issuable upon exercise of the warrants
are covered under an effective registration statement. In such an event, we must
provide thirty days written notice of our exercise of such call right. In the
event the warrant holder does not exercise the warrant within such thirty-day
time period, the warrants are redeemable by us at a price per warrant share of
$.001.





In our
fiscal year ended September 30, 2009, we raised $36,250 from the exercise of
warrants.  The Company modified the terms of 725,000 warrants
previously granted. The exercise price of the warrants was reduced from $0.50 to
$0.05. The modifications resulted in additional warrant expense of
$15,457.





During
the next twelve months, we will concentrate on raising the necessary working
capital through equity financing and an acceptable debt facility to ensure its
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 may result in dilution of our current
stockholders.





Additionally,
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 and continued exploration of the El
Capitan deposit. There are no assurances of success in our 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
working capital, we may be forced to reduce our operating expenditures or to
cease development and operations altogether





Our
objective is to continue the evaluation of geologic and metallurgical
opportunities presented by the El Capitan deposit with the intent to carry on
the implementation of the previously announced strategic plan for the
development or sale of this asset.  Over the past several years there
has been a significant effort to develop an understanding of the metallurgical
properties of this deposit.  We have learned that the complex
poly-metallic nature of the rock prevents analysis by standard fire assay
techniques typically applied to gold/silver deposits.  Further, the
oxide nature of the material does not appear to respond well to nickel-sulfide
analytical techniques typically used for sulfide platinum group metal (“PGM”)
deposits.  These factors have resulted in a reduction in the level of
activity directed towards force-fitting the El Capitan gold, silver, and PGM
deposit into the traditional analytical framework of a gold & silver or
sulfide PGM deposit. We do not have “reserves” as defined by Industry Guide 7 of
the SEC, and it is possible it may never have reserves. Previous exploration
efforts have focused on private, patented land and nearby federal claims.
However, the unconventional permitting approach used in those efforts severely
limited the opportunity for exploration expansion of the deposit, and ultimately
curtailed exploration activity since March 2007.





On July
19, 2007, we announced that we had submitted a Plan of Operation for continued
exploration on a 2,000 acre parcel within our current approximate 3,000 acre El
Capitan claim block near Capitan, New Mexico.





In order
to ensure timely and appropriate permitting, we hired an experienced, New Mexico
headquartered, environmental services firm, GL Environmental, to manage this
effort. When the permit is granted, it will provide the opportunity for a
professional and methodical investigation into the additional geologic potential
of this portion of our holdings without requiring further time-consuming
permitting efforts. The area being permitted will allow access to a number of
high-potential targets identified through previous surface sampling and remote
sensing efforts, as well as to the prospective area to the west of the existing
deposit, which remains open to geologic resource extension. This United States
Forest Service (“USFS”) permitting effort, governed by the National
Environmental Policy Act (NEPA) of 1972, is a robust process that can take a
significant amount of time to complete. The typical process generally takes
longer than the prescribed regulatory time frame, and is dependent upon a number
of factors outside of our control, including, without limitation, governmental
approvals, licensing and permitting, as well as potential opposition by third
parties. Concurrently, GL Environmental has submitted a permit application with
the New Mexico Mining & Minerals Division. Both permits must be approved
prior to the commencement of drilling activity.


15


On July
14, 2008, we announced that we had entered into a Memorandum of Understanding
with the USFS related to the permitting of 112 exploration drill holes planned
on 2,000 acres of the El Capitan claims in Lincoln County, New Mexico. The
action signals the initiation of the Federal Environmental Assessment (“EA”)
permitting process. Based upon recent USFS EA completion timelines, we
anticipate receipt of permits in the first calendar quarter of 2010, at which
time exploration activity could resume.





On July
23, 2008 we announced that the proposed merger with Gold and Minerals reached
the stage at which we were ready to file a Form S-4 registration statement with
the Securities and Exchange Commission. Due to the time consuming nature of the
preparation of a Form S-4 and the uncertainty of the timing of the SEC review
process, the companies had worked with counsel to examine alternative structures
for the transaction. While alternatives were identified, none held significant
promise to be less time consuming or more cost effective for stockholders. Both
companies have concluded that the Form S-4 registration process will be the
optimal path forward, and have decided to continue to pursue the original merger
structure.





Both
companies had agreed to delay the filing of the Form S-4 until sufficient
funding was raised to cover accrued and future Merger expenses. We had
originally anticipated that the Merger would be complete by this point in time,
however, it experienced numerous unexpected delays in the due diligence process;
primarily related to obtaining current audited financial statements and
documentation related to historical Gold and Minerals’ transactions. Preparation
of these due diligence documents substantially increased the costs of the
process for both parties. Gold and Minerals’ management has made every effort to
provide us appropriate documentation and the Merger is moving forward since
sufficient funding is now available. The management and Boards of both companies
currently agree that primary use of such funds must be dedicated to furthering
progress on the metallurgical and permitting tasks associated with the El
Capitan precious metals project.





On
September 16, 2008 we announced that both companies agreed to restart the merger
process as Gold and Minerals had brought its joint venture account
current.  Subsequently, Gold and Minerals’ joint venture account fell
into arrears and the merger process was again delayed.  Part of
arrearage from Gold and Minerals perspective and concern was due to the
significant increase in administrative costs of the Company beginning in
September 2008 and the continued decline of the market price of the Company’s
stock.





On April
21, 2009, the current four Board members appointed three new members to the
Company’s Board of Directors. Subsequent to their appointment, the current four
Board members informed the Board of their resignations as directors of the
Company effective on this date.





On April
30, 2009, the Board of Directors of the Company terminated the services of the
Chief Executive Officer and the Chief Financial Officer. On this same date, the
Directors appointed a new Chief Executive Officer and new Chief Financial
Officer, both of whom were officers of the Company previously.





On
September 18, 2009, Gold and Minerals gave a Notice of Termination to the
Company referencing the Agreement and Plan of Merger, dated February 12, 2008,
between the companies. The election to terminate was made pursuant to
subparagraph (d) of Paragraph 10.1 of Article X of the Agreement. The main basis
for the election to terminate was that the circumstances surrounding the Plan of
Merger had changed since the execution of the Agreement. Upon completion of the
metallurgical work, permitting and extraction process, and other current
projects Gold and Minerals is currently working on,  it is the intent
of Gold and Minerals to re-enter into a new Agreement and Plan of Merger based
on the circumstances at the time of implementation of the
Agreement.





Results of Operations - Fiscal year
ended September 30, 2009 compared to fiscal year ended September 30,
2008.





We have
not yet realized any revenue from operations, nor do we expect to realize
potential revenues in our fiscal year 2010, if ever.





We
realized a net decrease in operating expenses of $1,547,911 from $2,501,610 for
the year ended September 30, 2008 to $953,699 for the year ended September 30,
2009. The decrease is comprised mainly of decreases in professional fees of
$129,370, officer compensation of $140,410, legal and accounting fees
aggregating $91,814, exploration expenses of $166,343 warrant and option
expenses of $906,831, a net change in asset dispositions of $62,766 and other
general and administration of $96,002. These decreases were offset by an
increase of $45,635 in administrative consulting fees.





Our net
loss decreased for the fiscal year ended September 30, 2009 by $1,433,982, from
$2,387,483 for the fiscal year ended September 30, 2008, to $953,501 for the
current fiscal year ended September 30, 2009. The decrease in the net loss is
mainly attributable to the decrease in operating expenses in the current fiscal
year.





Off-Balance Sheet
Arrangements





During
the year ended September 30, 2009, we did not engage in any transactions,
agreements or contractual that constitutes off-balance sheet
arrangements.


16





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 2, “Significant Accounting Policies” in the Notes to
the Consolidated Financial Statements in our Form 10-K describe 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:




In
December 2004, FASB issued SFAS No. 123(R), “Share-based Payment ” (“SFAS No. 123R”) and
requires companies to measure all stock compensation awards using a fair value
method and recognize the related compensation cost in its financial statements.
This statement replaces SFAS No. 123 “Accounting for Stock Based Compensation,”
and supersedes ABP Opinion No. 25, “Accounting for Stock Issued to Employees
. ”  Beginning with the
Company’s quarterly period that began on October 1, 2006, the Company adopted
the provisions of SFAS No. 123R and we expenses the fair value of employee stock
options and similar awards in the financial statements.





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, expected life of options using the Simplified
Method, expected volatility based on historical trends, a risk-free interest
rate using the appropriate term U.S. Treasury rate, and a zero percent (0%)
dividend yield. Transactions in equity instruments with non-employees for goods
and services are accounted for in accordance with EITF 96-18 “Accounting for
Equity Instruments Issued to Non-Employees for Acquiring, or in Conjunction with
Selling, Goods or Services”.





New
Accounting Pronouncements





In July
2009, the Financial Accounting Standards Board (“FASB”) issued new guidance
relating to the “FASB Accounting Standards Codification” at FASB ASC 105, as the
single source of authoritative nongovernmental U.S. generally accepted
accounting principles (GAAP). The codification is effective for interim periods
ending after September 15, 2009. All existing accounting standards are
superseded as described in FASB ASC 105. All other accounting literature not
included in the Codification is non-authoritative. The adoption of FASB ASC 105
did not impact the Company’s results of operations, financial position or cash
flows.





In May
2009, the FASB issued FASB ASC 855. FASB ASC 855 incorporates accounting and
disclosure requirements related to subsequent events into U.S. GAAP. The
requirements of FASB ASC 855 for subsequent-events accounting and disclosure are
not significantly different from those in existing auditing standards, which the
Company has historically followed for financial reporting purposes. As a result,
we do not believe this standard had any material impact on its financial
statements. El Capitan has evaluated subsequent events through the date of
issuance of these consolidated financial statements, which is December 29,
2009.





In
September 2006, the FASB issued FASB ASC 820, which defines fair value,
establishes a framework for measuring fair value, and expands disclosures about
fair value measurements. This pronouncement applies to other standards that
require or permit fair value measurements. Accordingly, this statement does not
require any new fair value measurement. The provisions of FASB ASC 820 are
effective for El Capitan during the year ending September 30, 2009. The adoption
of this pronouncement did not have an immediate impact on our operating results,
financial position or cash flows.





Other
recent accounting pronouncements issued by the FASB (including its Emerging
Issues Task Force), the AICPA, and the SEC did not, or are not believed by
management to, have a material impact on the Company’s present or future
consolidated financial statements.





ITEM
7A. QUANITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS





We are a
smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are
not required to provide the information required under this item.





17





ITEM
8. FINANCIAL STATEMENTS





EL
CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY


(An
Exploration Stage Company)





INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS




PageReport
      of Independent Registered Public Accounting Firm
                
                19Consolidated
      Balance Sheets - September 30, 2009 and September 30, 2008
                
                20Consolidated
      Statements of Expenses – Years ended September 30, 2009 and 2008 and for
      the period from July 26, 2002 (inception) through September 30,
      2009
                
                21Consolidated
      Statements of Changes in Stockholders’ Equity (Deficit) - period from July
      26, 2002, (inception) through September 30, 2009
                
                22Consolidated
      Statements of Cash Flows - Years ended September 30, 2009 and 2008 and for
      the period from July 26, 2002 (inception) through September 30,
      2009
                
                25Notes
      to Consolidated Financial Statements
                
                27





18





REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To the
Board of Directors and


Stockholders
of El Capitan Precious Metals, Inc.


(An
Exploration Stage Company)


Scottsdale,
AZ




We have
audited the accompanying consolidated balance sheets of El Capitan Precious
Metals, Inc. and Subsidiary (an exploration stage company) (the “Company”) as of
September 30, 2009 and 2008, and the related consolidated statements of
expenses, stockholders’ equity (deficit), and cash flows for the years then
ended and for the period from July 26, 2002 (inception of exploration stage) to
September 30, 2009. The consolidated financial statements for the period from
July 26, 2002 (inception of exploration stage) through September 30, 2006 were
audited by other auditors whose reports expressed unqualified opinions on those
statements. The consolidated financial statements for the period from July 26,
2002 (inception of exploration stage) through September 30, 2006, include total
revenues and net loss of $0 and $10,184,209 respectively. Our opinion on the
consolidated statements of operations, stockholders’ equity (deficit), and cash
flows for the period from July 26, 2002 (inception of exploration stage) through
September 30, 2009, insofar as it relates to amounts for prior periods through
September 30, 2006, is based solely on the report of other auditors. 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 audits.




We
conducted our audits 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. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. 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 audits provide 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 the Company as of September 30,
2009 and 2008 and the results of its operations and cash flows for the years
then ended, 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 2
to the financial statements, the Company has incurred losses since inception,
which raises substantial doubt about its ability to continue as a going concern.
Management’s plans regarding those matters also are described in Note 2. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.





/s/ 
MaloneBailey, LLP




www.malonebailey.com


Houston,
Texas




December
29, 2009





19





EL
CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY




(An
Exploration Stage Company)





CONSOLIDATED
BALANCE SHEETS




September 30,2009
                
                
                2008ASSETSCURRENT
      ASSETS :Cash
                
                $
                2,348
                
                
                $
                32,456Miscellaneous
      receivable
                
                
                —
                
                
                
                2,472Prepaid
      expenses
                
                
                26,189
                
                
                
                40,643Due
      from affiliated company
                
                
                —
                
                
                
                49,370Total
      Current Assets
                
                
                28,537
                
                
                
                124,941Furniture
      and equipment net of accumulated depreciation of $23,495 and $20,599,
      respectively
                
                
                8,677
                
                
                
                18,556Investment
      in El Capitan, Limited
                
                
                788,808
                
                
                
                788,808Deposits
                
                
                22,440
                
                
                
                27,638Total
      Assets
                
                $
                848,462
                
                
                $
                959,943LIABILITIES
      AND STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIES:Accounts
      payable
                
                $
                144,494
                
                
                $
                68,499Accrued
      liabilities
                
                
                357,711
                
                
                
                45,000Interest
      payable
                
                
                48,111
                
                
                
                49,750Due
      to affiliated company
                
                
                47,061
                
                
                
                —Short
      term debt
                
                
                7,913
                
                
                
                27,362Total
      Current Liabilities
                
                
                605,290
                
                
                
                190,611STOCKHOLDERS’
      EQUITY :Preferred
      stock, $0.001 par value; 5,000,000 shares authorized; none issued and
      outstanding
                
                
                —
                
                
                
                —Common
      stock, $0.001 par value; 300,000,000 shares authorized; 88,587,369 and
      86,172,125 issued and outstanding, respectively
                
                
                88,587
                
                
                
                86,172Additional
      paid-in capital
                
                
                18,117,553
                
                
                
                17,692,627Deficit
      accumulated during the exploration stage
                
                
                (17,962,968
                )
                
                
                (17,009,467
                )Total
      Stockholders’ Equity
                
                
                243,172
                
                
                
                769,332Total
      Liabilities Stockholders’ Equity
                
                $
                848,462
                
                
                $
                959,943





The
accompanying notes are an integral part of these consolidated financial
statements.





20





EL
CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY


(An
Exploration Stage Company)





CONSOLIDATED
STATEMENTS OF EXPENSES





Year Ended
                    September 30,
                  
                  
                  July 26, 2002
                    (Inception)
                    Through
                    September 30,2009
                  
                  
                  2008
                  
                  
                  2009
                    (Unaudited)OPERATING
      EXPENSES:Professional
      fees
                  
                  $
                  50,247
                  
                  
                  $
                  179,617
                  
                  
                  $
                  3,250,745Officer
      compensation expense
                  
                  
                  315,000
                  
                  
                  
                  455,410
                  
                  
                  
                  2,863,833Administrative
      consulting fees
                  
                  
                  45,635
                  
                  
                  
                  —
                  
                  
                  
                  1,129,510Management
      fees, related parties
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  320,500Legal
      and accounting fees
                  
                  
                  140,399
                  
                  
                  
                  232,213
                  
                  
                  
                  1,250,055Exploration
      expenses
                  
                  
                  85,663
                  
                  
                  
                  252,006
                  
                  
                  
                  2,294,587Warrant
      and option expenses
                  
                  
                  249,759
                  
                  
                  
                  1,156,590
                  
                  
                  
                  4,076,578Other
      general and administrative
                  
                  
                  86,622
                  
                  
                  
                  182,624
                  
                  
                  
                  1,159,504(Gain)
      loss on asset dispositions
                  
                  
                  (19,626
                  )
                  
                  
                  43,150
                  
                  
                  
                  34,733Total
      Operating Expenses
                  
                  
                  953,699
                  
                  
                  
                  2,501,610
                  
                  
                  
                  16,380,045LOSS
      FROM OPERATIONS
                  
                  
                  (953,699
                  )
                  
                  
                  (2,501,610
                  )
                  
                  
                  (16,380,045
                  )OTHER
      INCOME (EXPENSE):Interest
      income
                  
                  
                  35
                  
                  
                  
                  555
                  
                  
                  
                  36,250Forgiveness
      of debt
                  
                  
                  1,639
                  
                  
                  
                  113,575
                  
                  
                  
                  115,214Interest
      expense:Related
      parties
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (68,806
                  )Other
                  
                  
                  (1,476
                  )
                  
                  
                  (3
                  )
                  
                  
                  (308,286
                  )Expenses
      associated with debt issuance and conversion
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (225,207
                  )Accretion
      of notes payable discounts
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (1,132,088
                  )Total
      Other Income (Expense)
                  
                  
                  198
                  
                  
                  
                  114,127
                  
                  
                  
                  (1,582,923
                  )NET
      LOSS
                  
                  $
                  (953,501
                  )
                  
                  $
                  (2,387,483
                  )
                  
                  $
                  (17,962,968
                  )Basic
      and diluted net loss per common share
                  
                  $
                  (0.01
                  )
                  
                  $
                  (0.03
                  )Weighted
      average number of common shares outstanding
                  
                  
                  88,004,276
                  
                  
                  
                  82,234,030





The
accompanying notes are an integral part of these consolidated financial
statements.





21




EL
CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY


(An
Exploration Stage Company)





CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)


July
26, 2002 (Inception) to September 30, 2009




Common
                    Stock Shares
                  
                  
                  Common
                    Stock
                    Amount
                  
                  
                  Stock
                    Subscriptions
                  
                  
                  Additional
                    Paid
                    in Capital
                  
                  
                  Deficit
                    Accumulated
                    During The
                    Exploration Stage
                  
                  
                  TotalInitial
      Issuance of Common Stock
                  
                  
                  3,315,000
                  
                  
                  $
                  3,315
                  
                  
                  
                  —
                  
                  
                  $
                  (3,306
                  )
                  
                  $
                  —
                  
                  
                  $
                  9Net
      loss
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  -
                  
                  
                  
                  (21,577
                  )
                  
                  
                  (21,577
                  )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 interests in assets of El Capitan, Ltd. In November
      2002
                  
                  
                  35,685,000
                  
                  
                  
                  35,685
                  
                  
                  
                  —
                  
                  
                  
                  (35,663
                  )
                  
                  
                  —
                  
                  
                  
                  22Acquisition
      of DML Services on March 17, 2003
                  
                  
                  6,720,000
                  
                  
                  
                  6,720
                  
                  
                  
                  —
                  
                  
                  
                  (56,720
                  )
                  
                  
                  —
                  
                  
                  
                  (50,000
                  )Common
      stock issued for interest expense related to a note
payable
                  
                  
                  525,000
                  
                  
                  
                  525
                  
                  
                  
                  —
                  
                  
                  
                  16,975
                  
                  
                  
                  —
                  
                  
                  
                  17,500Common
      stock and warrants issued for services
                  
                  
                  150,000
                  
                  
                  
                  150
                  
                  
                  
                  —
                  
                  
                  
                  188,850
                  
                  
                  
                  —
                  
                  
                  
                  189,000Common
      stock issued for compensation
                  
                  
                  2,114,280
                  
                  
                  
                  2,115
                  
                  
                  
                  —
                  
                  
                  
                  847,885
                  
                  
                  
                  —
                  
                  
                  
                  850,000Issuance
      of common stock to Gold and Minerals Company, Inc. in connection with
      purchase of COD property in August 2003, $0.00 per share
                  
                  
                  3,600,000
                  
                  
                  
                  3,600
                  
                  
                  
                  —
                  
                  
                  
                  (3,600
                  )
                  
                  
                  —
                  
                  
                  
                  -Net
      loss
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  -
                  
                  
                  
                  (1,561,669
                  )
                  
                  
                  (1,561,669
                  )Balances
      at September 30, 2003 (Unaudited)
                  
                  
                  52,109,280
                  
                  
                  $
                  52,110
                  
                  
                  $
                  —
                  
                  
                  $
                  954,421
                  
                  
                  $
                  (1,583,246
                  )
                  
                  $
                  (576,715
                  )Cost
      associated with warrants and options issued
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  108,000
                  
                  
                  
                  —
                  
                  
                  
                  108,000Common
      stock issued for compensation
                  
                  
                  3,650,164
                  
                  
                  
                  3,650
                  
                  
                  
                  —
                  
                  
                  
                  516,350
                  
                  
                  
                  —
                  
                  
                  
                  520,000Common
      stock issued for services and expenses
                  
                  
                  2,082,234
                  
                  
                  
                  2,083
                  
                  
                  
                  —
                  
                  
                  
                  393,682
                  
                  
                  
                  —
                  
                  
                  
                  395,765Common
      stock issue for notes payable
                  
                  
                  1,827,938
                  
                  
                  
                  1,827
                  
                  
                  
                  —
                  
                  
                  
                  381,173
                  
                  
                  
                  —
                  
                  
                  
                  383,000Beneficial
      conversion of notes payable
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  75,000
                  
                  
                  
                  —
                  
                  
                  
                  75,000Common
      stock issued for acquisition of Weaver property interest in July
      2004
                  
                  
                  3,000,000
                  
                  
                  
                  3,000
                  
                  
                  
                  —
                  
                  
                  
                  (3,000
                  )
                  
                  
                  —
                  
                  
                  
                  -Stock
      subscriptions
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  50,000
                  
                  
                  
                  -
                  
                  
                  
                  —
                  
                  
                  
                  50,000Net
      loss
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  -
                  
                  
                  
                  (1,314,320
                  )
                  
                  
                  (1,314,320
                  )Balances
      at September 30, 2004 (Unaudited)
                  
                  
                  62,669,616
                  
                  
                  $
                  62,670
                  
                  
                  $
                  50,000
                  
                  
                  $
                  2,425,626
                  
                  
                  $
                  (2,897,566
                  )
                  
                  $
                  (359,270
                  )Subscribed
      stock issued
                  
                  
                  200,000
                  
                  
                  
                  200
                  
                  
                  
                  (50,000
                  )
                  
                  
                  49,800
                  
                  
                  
                  —
                  
                  
                  
                  -Common
      stock issued for services
                  
                  
                  2,290,557
                  
                  
                  
                  2,290
                  
                  
                  
                  —
                  
                  
                  
                  1,254,245
                  
                  
                  
                  —
                  
                  
                  
                  1,256,535Common
      stock sold in private placement
                  
                  
                  3,865,000
                  
                  
                  
                  3,865
                  
                  
                  
                  —
                  
                  
                  
                  1,785,272
                  
                  
                  
                  —
                  
                  
                  
                  1,789,137Common
      stock issued for notes payable
                  
                  
                  383,576
                  
                  
                  
                  384
                  
                  
                  
                  —
                  
                  
                  
                  153,042
                  
                  
                  
                  —
                  
                  
                  
                  153,426Beneficial
      conversion of notes payable
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  21,635
                  
                  
                  
                  —
                  
                  
                  
                  21,635Cost
      associated with warrants and options issued
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  149,004
                  
                  
                  
                  —
                  
                  
                  
                  149,004Discounts
      on notes payable
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  113,448
                  
                  
                  
                  —
                  
                  
                  
                  113,448Net
      loss
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  -
                  
                  
                  
                  (3,244,841
                  )
                  
                  
                  (3,244,841
                  )Balances
      at September 30, 2005 (Unaudited)
                  
                  
                  69,408,749
                  
                  
                  $
                  69,409
                  
                  
                  $
                  —
                  
                  
                  $
                  5,952,072
                  
                  
                  $
                  (6,142,407
                  )
                  
                  $
                  (120,926
                  )





22





EL
CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY


(An
Exploration Stage Company)





CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)


July
26, 2002 (Inception) to September 30, 2009




Common
                      Stock Shares
                    
                    
                    Common
                      Stock
                      Amount
                    
                    
                    Stock
                      Subscriptions
                    
                    
                    Additional
                      Paid in
                      Capital
                    
                    
                    Deficit
                      Accumulated
                      During The
                      Exploration Stage
                    
                    
                    TotalCommon
      stock issued for services
                    
                    
                    310,000
                    
                    
                    
                    310
                    
                    
                    
                    —
                    
                    
                    
                    274,690
                    
                    
                    
                    —
                    
                    
                    
                    275,000Common
      stock sold in private placement
                    
                    
                    2,189,697
                    
                    
                    
                    2,190
                    
                    
                    
                    —
                    
                    
                    
                    1,158,775
                    
                    
                    
                    —
                    
                    
                    
                    1,160,965Common
      stock issued for notes payable
                    
                    
                    2,124,726
                    
                    
                    
                    2,125
                    
                    
                    
                    —
                    
                    
                    
                    1,147,875
                    
                    
                    
                    —
                    
                    
                    
                    1,150,000Beneficial
      conversion of note payable
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    128,572
                    
                    
                    
                    —
                    
                    
                    
                    128,572Discounts
      on issuance of convertible notes payable
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    1,018,640
                    
                    
                    
                    —
                    
                    
                    
                    1,018,640Costs
      associated with warrants and options issued
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    163,750
                    
                    
                    
                    —
                    
                    
                    
                    163,750Common
      stock issued for exercise of options and warrants
                    
                    
                    498,825
                    
                    
                    
                    499
                    
                    
                    
                    —
                    
                    
                    
                    256,251
                    
                    
                    
                    —
                    
                    
                    
                    256,750Common
      stock issued for compensation
                    
                    
                    364,912
                    
                    
                    
                    364
                    
                    
                    
                    —
                    
                    
                    
                    286,772
                    
                    
                    
                    —
                    
                    
                    
                    287,136Provision
      for deferred income tax  related to
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (80,322
                    )
                    
                    
                    -
                    
                    
                    
                    (80,322
                    )Net
      loss
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (4,041,802
                    )
                    
                    
                    (4,041,802
                    )Balances
      at September 30, 2006 (Unaudited)
                    
                    
                    74,896,909
                    
                    
                    $
                    74,897
                    
                    
                    $
                    —
                    
                    
                    $
                    10,307,075
                    
                    
                    $
                    (10,184,209
                    )
                    
                    $
                    197,763Stock
      issued for conversion of notes payable
                    
                    
                    1,500,000
                    
                    
                    
                    1,500
                    
                    
                    
                    —
                    
                    
                    
                    748,500
                    
                    
                    
                    —
                    
                    
                    
                    750,000Common
      stock sold in private placement
                    
                    
                    50,000
                    
                    
                    
                    50
                    
                    
                    
                    —
                    
                    
                    
                    24,950
                    
                    
                    
                    —
                    
                    
                    
                    25,000Common
      stock sold by the exercise of warrants and options
                    
                    
                    2,258,000
                    
                    
                    
                    2,258
                    
                    
                    
                    —
                    
                    
                    
                    1,121,742
                    
                    
                    
                    —
                    
                    
                    
                    1,124,000Common
      stock issued for compensation
                    
                    
                    966,994
                    
                    
                    
                    968
                    
                    
                    
                    —
                    
                    
                    
                    604,583
                    
                    
                    
                    —
                    
                    
                    
                    605,551Reverse
      provision for deferred income tax related to timing difference on debt
      discount
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    80,322
                    
                    
                    
                    —
                    
                    
                    
                    80,322Common
      stock issued for services
                    
                    
                    80,216
                    
                    
                    
                    81
                    
                    
                    
                    —
                    
                    
                    
                    52,325
                    
                    
                    
                    —
                    
                    
                    
                    52,406Cost
      associated with issuance of warrants and options
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    2,249,475
                    
                    
                    
                    —
                    
                    
                    
                    2,249,475Net
      loss
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (4,437,775
                    )
                    
                    
                    (4,437,775
                    )Balances
      at September 30, 2007
                    
                    
                    79,752,119
                    
                    
                    $
                    79,754
                    
                    
                    $
                    —
                    
                    
                    $
                    15,188,972
                    
                    
                    $
                    (14,621,984
                    )
                    
                    $
                    646,742Common
      stock sold in private placement
                    
                    
                    300,000
                    
                    
                    
                    300
                    
                    
                    
                    —
                    
                    
                    
                    149,700
                    
                    
                    
                    —
                    
                    
                    
                    150,000Common
      stock issued for exercise of cashless warrants
                    
                    
                    12,000
                    
                    
                    
                    12
                    
                    
                    
                    —
                    
                    
                    
                    (12
                    )
                    
                    
                    —
                    
                    
                    
                    —Common
      stock sold by the exercise of warrants and options
                    
                    
                    1,257,500
                    
                    
                    
                    1,257
                    
                    
                    
                    —
                    
                    
                    
                    176,568
                    
                    
                    
                    —
                    
                    
                    
                    177,825Common
      stock issued for compensation
                    
                    
                    1,637,356
                    
                    
                    
                    1,637
                    
                    
                    
                    —
                    
                    
                    
                    358,774
                    
                    
                    
                    —
                    
                    
                    
                    360,411Common
      stock issued for services
                    
                    
                    3,213,150
                    
                    
                    
                    3,212
                    
                    
                    
                    —
                    
                    
                    
                    662,035
                    
                    
                    
                    —
                    
                    
                    
                    665,247Warrant
      and option expense
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    1,156,590
                    
                    
                    
                    —
                    
                    
                    
                    1,156,590Net
      loss
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (2,387,483
                    )
                    
                    
                    (2,387,483
                    )Balances
      at September 30, 2008
                    
                    
                    86,172,125
                    
                    
                    $
                    86,172
                    
                    
                    $
                    —
                    
                    
                    $
                    17,692,627
                    
                    
                    $
                    (17,009,467
                    )
                    
                    $
                    769,332




The
accompanying notes are an integral part of these consolidated financial
statements.





23





EL
CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY


(An
Exploration Stage Company)





CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)


July
26, 2002 (Inception) to September 30, 2009





Common
                    Stock Shares
                  
                  
                  Common
                    Stock
                    Amount
                  
                  
                  Stock
                    Subscriptions
                  
                  
                  Additional
                    Paid in
                    Capital
                  
                  
                  Deficit
                    Accumulated
                    During The
                    Exploration Stage
                  
                  
                  TotalCommon
      stock issued for services
                  
                  
                  1,127,744
                  
                  
                  
                  1,127
                  
                  
                  
                  —
                  
                  
                  
                  95,205
                  
                  
                  
                  —
                  
                  
                  
                  96,332Common
      stock sold by the exercise of warrants & options
                  
                  
                  725,000
                  
                  
                  
                  725
                  
                  
                  
                  —
                  
                  
                  
                  35,525
                  
                  
                  
                  —
                  
                  
                  
                  36,250Common
      stock issued for compensation
                  
                  
                  562,500
                  
                  
                  
                  563
                  
                  
                  
                  —
                  
                  
                  
                  44,437
                  
                  
                  
                  —
                  
                  
                  
                  45,000Warrant
      and option  expense
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  249,759
                  
                  
                  
                  —
                  
                  
                  
                  249,759Net
      loss
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  -
                  
                  
                  
                  (953,501
                  )
                  
                  
                  (953,501
                  )Balances
      at September 30, 2009
                  
                  
                  88,587,369
                  
                  
                  $
                  88,587
                  
                  
                  $
                  —
                  
                  
                  $
                  18,117,553
                  
                  
                  $
                  (17,962,968
                  )
                  
                  $
                  243,172





The
accompanying notes are an integral part of these consolidated financial
statements





24





EL
CAPITAN PRECIOUS METALS, INC.


(An
Exploration Stage Company)





CONSOLIDATED
STATEMENTS OF CASH FLOWS




Year Ended
                  September 30,
                
                
                July 26, 2002
                  (Inception)
                  Through
                  September 30,2009
                
                
                2008
                
                
                2009
                  (Unaudited)CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                
                $
                (953,501
                )
                
                $
                (2,387,483
                )
                
                $
                (17,962,968
                )Adjustments
      to reconcile net (loss) to net cash used in operating
      activitiesWarrant
      and option expense
                
                
                249,759
                
                
                
                1,156,590
                
                
                
                4,076,578Beneficial
      conversion feature of notes payable
                
                
                —
                
                
                
                —
                
                
                
                225,207Non-cash
      expense with affiliate
                
                
                —
                
                
                
                —
                
                
                
                7,801Share-based
      compensation
                
                
                141,332
                
                
                
                1,025,658
                
                
                
                5,598,383Accretion
      of discount on notes payable
                
                
                —
                
                
                
                —
                
                
                
                1,132,088(Gain)
      loss on sale of fixed assets
                
                
                (19,627
                )
                
                
                43,150
                
                
                
                34,733Forgiveness
      of debt
                
                
                (1,639
                )
                
                
                —
                
                
                
                (115,214
                )Provision
      for uncollectible note receivable
                
                
                —
                
                
                
                —
                
                
                
                62,500Depreciation
                
                
                7,515
                
                
                
                15,950
                
                
                
                68,894Changes
      in operating assets and liabilities:Miscellaneous
      receivable
                
                
                2,472
                
                
                
                8,096
                
                
                
                4,863Interest
      receivable
                
                
                —
                
                
                
                —
                
                
                
                (13,611
                )Prepaid
      expenses and other current assets
                
                
                14,454
                
                
                
                2,415
                
                
                
                (28,662
                )Expense
      advances on behalf of affiliated company
                
                
                96,431
                
                
                
                22,900
                
                
                
                (515,929
                )Accounts
      payable
                
                
                75,995
                
                
                
                (267,519
                )
                
                
                138,764Accounts
      payable - Related Party
                
                
                —
                
                
                
                (12,489
                )
                
                
                364Accrued
      liabilities
                
                
                314,702
                
                
                
                7,669
                
                
                
                490,229Interest
      payable, other
                
                
                —
                
                
                
                —
                
                
                
                49,750Net
      Cash (Used in) Operations
                
                
                (72,107
                )
                
                
                (385,063
                )
                
                
                (6,746,230
                )CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchase
      of property interest
                
                
                —
                
                
                
                —
                
                
                
                (100,000
                )Purchase
      of furniture and equipment
                
                
                —
                
                
                
                (1,396
                )
                
                
                (148,140
                )Sale
      of fixed assets
                
                
                20,000
                
                
                
                —
                
                
                
                32,001Deposits
                
                
                5,198
                
                
                
                3,470
                
                
                
                (22,440
                )Issuance
      of notes receivable
                
                
                —
                
                
                
                —
                
                
                
                (249,430
                )Payments
      received on notes receivable
                
                
                —
                
                
                
                —
                
                
                
                66,930Cash
      paid in connection with acquisition of DLMServices,
      Inc.
                
                
                —
                
                
                
                —
                
                
                
                (50,000
                )Net
      Cash Provided by (Used in) Financing Activities
                
                
                25,198
                
                
                
                2,074
                
                
                
                (471,079
                )CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from the sale of common stock
                
                
                —
                
                
                
                150,000
                
                
                
                3,456,606Costs
      associated with the sale of stock
                
                
                —
                
                
                
                —
                
                
                
                (19,363
                )Proceeds
      from notes payable, related parties
                
                
                —
                
                
                
                —
                
                
                
                219,900Proceeds
      from warrant exercise
                
                
                36,250
                
                
                
                177,825
                
                
                
                1,338,075Proceeds
      from notes payable, other
                
                
                —
                
                
                
                —
                
                
                
                2,322,300Increase
      in finance contracts
                
                
                13,299
                
                
                
                49,651
                
                
                
                117,479Repayment
      of notes payable, related parties
                
                
                —
                
                
                
                —
                
                
                
                (61,900
                )Payments
      on finance contracts
                
                
                (32,748
                )
                
                
                (52,360
                )
                
                
                (109,566
                )Repayment
      of notes payable, other
                
                
                —
                
                
                
                —
                
                
                
                (43,874
                )Net
      Cash Provided by Financing Activities
                
                
                16,801
                
                
                
                325,116
                
                
                
                7,219,657NET
      (DECREASE) INCEASE IN CASH AND CASH EQUIVALENTS
                
                
                (30,108
                )
                
                
                (57,873
                )
                
                
                2,348CASH
      AND CASH EQUIVALENTS, BEGINNING OF PERIOD
                
                
                32,456
                
                
                
                90,329
                
                
                
                —CASH
      AND CASH EQUIVALENTS, END OF PERIOD
                
                $
                2,348
                
                
                $
                32,456
                
                
                $
                2,348




The
accompanying notes are an integral part of these consolidated financial
statements.





25





EL
CAPITAN PRECIOUS METALS, INC.


(An
Exploration Stage Company)





CONSOLIDATED
STATEMENTS OF CASH FLOWS




Year Ended
                          September 30,
                        
                        
                        July 26, 2002
                          (Inception)
                          Through
                          September 30,2009
                        
                        
                        2008
                        
                        
                        2009
                          (Unaudited)SUPPLEMENTAL
      CASH FLOW INFORMATION :Cash
      paid for interest
                        
                        $
                        1,307
                        
                        
                        $
                        2,503
                        
                        
                        $
                        172,463Cash
      paid for income taxes
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        
                        —NON-CASH
      INVESTING AND FINANCING ACTIVITIES :Fixed
      assets disposed for accrued liabilities
                        
                        $
                        1,991
                        
                        
                        
                        —
                        
                        
                        $
                        1,991Issuance
      of common stock to Gold and Minerals Company, Inc. in connection with the
      purchase of interest in of El Capitan, Limited.
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        $
                        8Issuance
      of common stock to Gold and Minerals Company, Inc. in connection with the
      purchase of the COD property
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        $
                        3,600Issuance
      of common stock to Gold and Minerals Company, Inc. in connection with the
      purchase of the Weaver property
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        $
                        3,000Net
      non-cash advances from affiliated company
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        $
                        562,990Notes
      payable and accrued interest converted to equity
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        $
                        2,495,544




The
accompanying notes are an integral part of these consolidated financial
statements.


26





EL
CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY


(An Exploration Stage
Company)





NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





NOTE
1 - BUSINESS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING
POLICIES





Business,
Operations and Organization





On July
26, 2002, El Capitan Precious Metals, Inc. was incorporated as a Delaware
corporation to engage in the business of acquiring properties containing
precious metals, principally gold, silver, and platinum. On March 18, 2003, El
Capitan Precious Metals, Inc. (Delaware) entered into a share exchange agreement
with DML Services, Inc. (“DML”), a Nevada corporation, and became the wholly
owned subsidiary of DML. On April 11, 2003, DML changed its name to El Capitan
Precious Metals, Inc. The results of El Capitan Precious Metals, Inc., a Nevada
corporation (formerly DML Services, Inc.), and its wholly owned Delaware
subsidiary of the same name (collectively “El Capitan” or the “Company”) are
presented on a consolidated basis.





The
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 El
Capitan consisted 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.





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





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.





Reclassifications





Certain
prior year amounts have been reclassified to conform to the current year
presentation.




Cash
and Cash Equivalents




El
Capitan 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 El Capitan’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 El Capitan’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.





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:





27




Office furniture and equipment
              
              3-10 yearsMine equipment
              
              7 years




Depreciation
expense for the years ended September 30, 2009 and 2008 was $7,515 and $15,950,
respectively.




Net
Income (Loss) Per Share




FASB ASC
260 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.





Stock-Based
Compensation




FASB ASC
718 requires companies to measure all stock compensation awards using a fair
value method and recognize the related compensation cost in its financial
statements. Beginning with El Capitan’s quarterly period that began on October
1, 2006, El Capitan adopted the provisions of FASB ASC 718 and expenses the fair
value of employee stock options and similar awards in the financial
statements.





El
Capitan recognized stock-based employee compensation aggregating $249,761 and
$1,156,590 for common stock options issued to employees during the years ended
September 30, 2009 and September 30, 2008, respectively.





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, expected life of options using the Simplified
Method, expected volatility based on historical trends, a risk-free interest
rate using the appropriate term U.S. Treasury rate, and a zero percent (0%)
dividend yield. Transactions in equity instruments with non-employees for goods
and services are accounted for in accordance with FASB ASC
505-50.




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. During the years ended September 30, 2009 and 2008 no impairment
of long-lived assets was recorded.




Mineral
Property Costs




Mineral
property exploration costs are expensed as incurred until such time as economic
reserves are quantified. To date El Capitan has not established any proven or
probable reserves on its mineral properties. El Capitan has capitalized $788,808
of mineral property acquisition costs reflecting its investment in El Capitan,
Limited.




Income
Taxes




El
Capitan computes deferred income taxes under the asset and liability method
prescribed by FASB ASC 740. 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.





Recently
Issued Accounting Pronouncements




In July
2009, the Financial Accounting Standards Board (“FASB”) issued new guidance
relating to the “FASB Accounting Standards Codification” at FASB ASC 105, as the
single source of authoritative nongovernmental U.S. generally accepted
accounting principles (GAAP). The codification is effective for interim periods
ending after September 15, 2009. All existing accounting standards are
superseded as described in FASB ASC 105. All other accounting literature not
included in the Codification is non-authoritative. The adoption of FASB ASC 105
did not impact El Capitan’s results of operations, financial position or cash
flows.





28





In May
2009, the FASB issued FASB ASC 855. FASB ASC 855 incorporates accounting and
disclosure requirements related to subsequent events into U.S. GAAP. The
requirements of FASB ASC 855 for subsequent-events accounting and disclosure are
not significantly different from those in existing auditing standards, which El
Capitan has historically followed for financial reporting purposes. As a result,
El Capitan does not believe this standard had any material impact on its
financial statements. El Capitan has evaluated subsequent events through the
date of issuance of these consolidated financial statements, which is December
29, 2009.





In
September 2006, the FASB issued FASB ASC 820, which defines fair value,
establishes a framework for measuring fair value, and expands disclosures about
fair value measurements. This pronouncement applies to other standards that
require or permit fair value measurements. Accordingly, this statement does not
require any new fair value measurement. The provisions of FASB ASC 820 are
effective for El Capitan during the year ending September 30, 2009. The adoption
of this pronouncement did not have an immediate impact on the operating results,
financial position or cash flows.





Other
recent accounting pronouncements issued by the FASB (including its Emerging
Issues Task Force), the AICPA, and the SEC did not, or are not believed by
management to, have a material impact on El Capitan’s present or future
consolidated financial statements.





NOTE
2 – GOING CONCERN




The
accompanying financial statements have been prepared assuming El Capitan will
continue as going concern, which contemplates the realization of assets and the
settlement of liabilities and commitments in the normal course of business. El
Capitan is an exploration stage company and as of September 30, 2009, and has
incurred recurring losses aggregating $17,962,968 accumulated during the
exploration stage. El Capitan is an exploration stage company and since its
inception has had no revenues.  In addition, El Capitan does not have a
revolving credit facility with any financial institution. These factors raise
substantial doubt about El Capitan’s ability to continue as a going concern. The
ability of El Capitan 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 El
Capitan be unable to continue as a going concern.




El
Capitan intends to continue to pursue its cash requirements over the next fiscal
year through a combination of financing activities and prior to cash flow
generated through operations. In each of September 2006, October 2007 and
November 2007 El Capitan placed a private placement of securities. In September
2007, El Capitan exercised its call option on certain warrants which realized
$45,000 in proceeds.  During the year ended September 30, 2008, El Capitan
exercised certain warrants which realized approximately $178,000 in proceeds and
received proceeds from private placements aggregating $150,000. During the
year ended September 30, 2009,  El Capitan received proceeds from the
exercise of warrants aggregating $36,250 and received payments on account and
advances from Gold & Minerals Company, Inc. (“Minerals”) aggregating
$123,276. During El Capitan’s 2010 fiscal year, El Capitan anticipates raising
working capital through “Minerals”, convertible debt and potential private
placements, depending on the market conditions. The working capital funds will
be utilized to continue the research on an economically viable alternative
extraction processes, complete the permitting on the Capitan site and continue
the assay process of various ore samples. . El Capitan will continue to evaluate
business opportunities such as joint venture processing agreements with the
objective of creating cash flow to sustain El Capitan and provide a source of
funds for growth. There are no assurances of success in this regard or in El
Capitan’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 El
Capitan’s limiting operating history, lack of revenue, and recurring operating
losses, there can be no assurance that El Capitan will be able to achieve or
maintain profitability or existence. Accordingly, these factors raise
substantial doubt about El Capitan’s ability to continue as a going concern.





NOTE
3 - ACQUISITIONS AND DIVESTITURES





Acquisition of El Capitan Property
from Gold and Minerals Company, Inc .




In
October 2003, El Capitan completed the acquisition of a 40% equity interest in
El Capitan, Limited (“ECL”), an Arizona corporation, which prior to the
transaction was a wholly-owned subsidiary of Gold and Minerals Company, Inc.
(“Minerals”), a Nevada corporation. Minerals may be considered affiliated with
El Capitan in that it is a shareholder of El Capitan. Minerals is involved
in the exploration and testing of potential mineral properties. Consideration
for the acquisition consisted of the issuance of 30,225,000 shares of El
Capitan’s common stock to Minerals (which occurred in November 2002, and which
constituted a 77.5% equity ownership in El Capitan 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 ECL.





During
the quarter ended December 31, 2005, 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 property,
which is owned by ECL. In consideration for the claims, ECL transferred
2,100,000 shares of El Capitan’s common stock owned by Minerals. Pursuant to an
agreement between ECL and the selling parties, the stock was valued at $0.82 per
share, the market value of the stock on November 11, 2005.





29





The
assets of ECL primarily consist of the El Capitan property, an inactive iron and
related mineral property located in New Mexico. At September 30, 2009, the
property contained four patented claims and 140 unpatented claims encompassing
approximately 3,000 acres in the Capitan Mountains in Lincoln County, New
Mexico. The property has no proven reserves.




El
Capitan accounts for its 40% interest in ECL using equity method of accounting.
During the years ended September 30, 2009 and 2008, El Capitan has no equity
earnings in ECL.




Purchase
of Mining Claims from Minerals




In August
2003, El Capitan acquired from Minerals certain mining claims granted by the
United States Bureau of Land Management, buildings and personal property known
as the COD property located near Kingman, Arizona. The COD property is an
inactive underground mineral property consisting of thirteen mining claims as
well as various outbuildings and other associated personal property. In
consideration for the purchase, we issued 3,600,000 shares of El Capitan’s
common stock to Minerals, having a market value on the date of the transaction
of approximately $1,440,000. Because the COD property was acquired from El
Capitan’s then controlling stockholder in exchange for El Capitan’s common
stock, and Minerals had no economic monetary basis in the property, the
transaction was accounted for as a non-monetary exchange and the COD property
was recorded, in accordance with Generally Accepted Accounting Principles
(GAAP), at no value on El Capitan’s consolidated financial
statements.




Sale
of 80% of Mining Claims and Joint Venture




In May
2004, El Capitan executed a joint venture agreement with U.S. Canadian Minerals,
Inc. (“US Canadian”), a publicly-traded Nevada company (Pink Sheets; USCA.PK),
to explore the COD property, including the recovery of gold and silver from the
tailings of the COD site. The joint venture is to operate under the name “CanEl”
until May 2020, unless terminated earlier pursuant to the terms of the joint
venture agreement. Under terms of the agreement, El Capitan was required to
transfer to US Canadian an 80% interest in the COD property in exchange for
720,000 shares of US Canadian common stock. Pursuant to a stock split affected
by U.S. Canadian, we subsequently held 2,160,000 shares of the U.S. Canadian
stock.  As of October 9, 2007 U.S. Canadian announced a 50 to 1 reverse
split of its common stock which reduced the number of shares held to
43,200.  On the date of the original transaction, shares of unrestricted
freely trading US Canadian common stock traded at $2.85 per share, or as
adjusted for the split, at $0.95 per share.





The U.S.
Canadian common stock was restricted with respect to sale until May 2005. U.S.
Canadian’s common stock is currently traded on the Pink Sheets under USCN.PK and
closed at $0.99 per share on September 30, 2009. As at September 30, 2009,
El Capitan has ascribed a zero value to these shares due to market conditions
for the security and a corresponding zero value to the carrying value of the
deferred gain liability account





Acquisition
of Weaver Mining Claims




In July
2004, El Capitan acquired from Minerals the Weaver property 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. At the
time the Weaver property was acquired from a controlling stockholder of El
Capitan in exchange for El Capitan’s common stock, Minerals had no economic
monetary basis in the property. Accordingly, the transaction was accounted for
as a non-monetary exchange and the Weaver property was recorded at no value on
El Capitan’s consolidated financial statements and was done in accordance with
current GAAP.





During
the fiscal year ended September 30, 2009, El Capitan sold the Weaver property to
a non-affiliated entity for $20,000.





NOTE
4 - INVESTMENTS IN US CANADIAN




On
September 30, 2009, El Capitan owned 43,200 shares of U.S. Canadian common
stock. El Capitan valued the shares at $0.00 per share, due to market conditions
for this stock.  El Capitan has a residual involvement related to the COD
property and accordingly no gain on the sale is recognized and any future
increase in market value of the securities, the increase in value will create a
deferred gain liability account in accordance with current GAAP.




30




NOTE
5 - RELATED PARTY TRANSACTIONS
  Due to Affiliated
Company
 
 During
the period October 2004 through September 2009, El Capitan made net payments on
behalf of Minerals aggregating to $2,478,099 relating to costs incurred by El
Capitan, Limited (“ECL”) on the El Capitan property site. Pursuant to an
agreement with Minerals effective October 1, 2004, costs incurred by ECL at the
El Capitan site are to be split between the companies in accordance with their
percentage ownership interest. El Capitan holds a 40% equity interest in ECL,
and Minerals holds the remaining 60% equity interest. Through September 30,
2009, Minerals has reimbursed or advanced El Capitan $2,525,160 of the incurred
site costs.


At
September 30, 2009, El Capitan owed Minerals $47,061.





Employment
Agreements





El
Capitan issued to Mr. Pavlich, President and CEO, on April 6, 2007, 250,000
shares of El Capitan’s common stock in payment of Mr. Pavlich’s compensation for
the remainder of calendar year 2007, valued on the date of grant at $0.70 per
share. Additionally, on April 6, 2007, Mr. Pavlich was granted an option to
purchase 2,500,000 shares of El Capitan’s common stock at an exercise price of
$0.70 per share, the fair market value of El Capitan’s stock on the date of
grant. On March 31, 2008, the board of directors amended the employment
agreement to have a minimum monthly value of $12,500, payable in El Capitan’s
common stock. On September 9, 2008, the agreement was amended by the board of
directors to incorporate a monthly cash compensation of $25,000. Additionally,
on September 9, 2008 the April 6, 2007 stock option was cancelled and Mr.
Pavlich was granted an option to purchase 2,500,000 of El Capitan’s common stock
at an exercise price of $0.14 per share, the fair market value of El Capitan’s
stock the date of the grant.  The option vests in four equal installments
with the first tranche vesting immediately. On April 30, 2009 a new board of
directors terminated the services of Mr. Pavlich.





Effective
May 7, 2007, El Capitan appointed R. William Wilson as its Chief Financial
Officer.  On May 4, 2007, El Capitan entered into an employment agreement
with Mr. Wilson relating to his service as Chief Financial Officer. 
Additionally, the Agreement provided for the issuance to Mr. Wilson of a stock
option to purchase 1,000,000 shares of El Capitan’s common stock at an exercise
price of $0.50, the closing price of El Capitan’s common stock on May 7, 2007,
the date on which Mr. Wilson commenced employment. On March 31, 2008, the board
of directors amended the employment agreement to have a minimum monthly value of
$12,500 from $10,000. On September 9, 2008, the agreement was amended to
incorporate a monthly cash compensation of $20,000, which may be paid in Company
stock subject to mutual agreement. Additionally, on September 9, 2008 the
May 7, 2007 stock option was cancelled and Mr. Wilson was granted an option to
purchase 1,000,000 of El Capitan’s common stock at an exercise price of $0.14
per share, the fair market value of El Capitan’s stock the date of the
grant.  The option vests in four equal installments with the first tranche
vesting immediately. On April 30, 2009 a new board of directors terminated
the services of Mr. Wilson.




Consulting Agreements




On
October 1, 2007, El Capitan entered into a consulting agreement with Charles C.
Mottley. Pursuant to the consulting agreement, Mr. Mottley has agreed to provide
various services on a consulting basis, including strategic advisory services
and corporate financial planning. In consideration for his services, El Capitan
is required to pay Mr. Mottley a consulting fee in the aggregate amount of
$300,000 consisting of a one-time payment of $25,000 and monthly installments
thereafter, the amount of such monthly payments to be dependent upon the cash
availability of El Capitan.  This agreement was terminated in June 2008 in
exchange for 445,833 shares of El Capitan’s unregistered common stock, with a
fair market value of $0.10 per share on the date of issue, and other assets with
a value of approximately $6,000.  During the term of this agreement Mr.
Mottley received $32,500 in cash payments.





Effective
May 1 and July 1, 2009, El Capitan has informal arrangements with two
individuals, both of whom are officers and/or directors of El Capitan, 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 El Capitan currently pays an
aggregate amount approximating $11,500 per month to these individuals for their
services and related corporate expenses. One individual receives $6,000 a month
which is paid by and allocated from Minerals. Total management fees expensed
under these informal agreements for the year ended September 30, 2009 was
$45,635.





NOTE
6 - COMMITMENTS AND CONTINGENCIES




El
Capitan signed a two year lease for office space in Scottsdale, Arizona,
effective November 1, 2004 and extended it for a further two years on October 5,
2006. The lease requires monthly payments of $4,055 for October 2007 and $4,217
thereafter through October 2008, plus taxes and tenant charges.





In
June 2007, El Capitan relocated its corporate office to Reno, Nevada and entered
into a one year lease for office space and renewed the lease for an additional
year in May 2008. The lease required a monthly payment of $918 and expired on
May 31, 2009. In May 2009, El Capitan relocated its corporate back to
Scottsdale, Arizona and is utilizing office space contributed by an officer of
El Capitan.





For the
years ended September 30, 2009 and 2008, rent expense was $8,384 and $23,676,
respectively.





31





NOTE
7 - INCOME TAXES





El
Capitan has incurred no income taxes during the period from July 26, 2002
(inception) through September 30, 2009. The calculated tax deferred benefit at
September 30, 2009 and 2008 is based on a Federal statutory income tax rate of
34% applied to the loss before provision for income taxes.





The
following table accounts for the differences between the actual income tax
benefit and amounts computed for the years ended September 30:




Year Ended September 30,2009
                      
                      
                      2008Tax
      benefit at the federal statutory rate
                      
                      $
                      130,257
                      
                      
                      $
                      811,165Increase
      in valuation allowance
                      
                      
                      (130,257
                      )
                      
                      
                      (811,165
                      )Income
      tax benefit (expense)
                      
                      $
                      —
                      
                      
                      $
                      —




The
components of the deferred tax asset and deferred tax liability at September 30
are as follows:




Year Ended September30,2008
                    
                    
                    2008Deferred
      tax assets
                    
                    $
                    5,525,201
                    
                    
                    $
                    5,394,944Valuation
      allowance
                    
                    
                    (5,525,201
                    )
                    
                    
                    (5,394,994
                    )Net
      deferred tax asset after valuation allowance
                    
                    $
                    —
                    
                    
                    $
                    —




A
valuation allowance has been provided to reduce the net deferred tax asset, as
management determined that it is more likely than not that the deferred tax
assets will not be realized.





At
September 30, 2009 and 2008, El Capitan has net operating loss carry forwards
for Federal income tax purposes approximating $12,411,000 and $12,028,000
respectively. These losses expire in varying amounts between September 30, 2023
and September 30, 2029.





At
September 30, 2009 and 2008, El Capitan has State net operating loss carry
forwards for State income tax purposes approximating $8,416,000 and $9,238,000
respectively. These losses expire in varying amounts between September 30, 2010
and September 30, 2014.





NOTE
8 - 2005 STOCK INCENTIVE PLAN





On June
2, 2005, the Board of Directors adopted El Capitan’s 2005 Stock Incentive Plan
which reserved 8,000,000 shares for issuance under the Plan out of the
authorized and unissued shares of par value $0.001 common stock of El Capitan.
On July 8, 2005, the Board of Directors authorized El Capitan 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 SEC for 5,000,000 shares.
On October 18, 2007, Form S-8 was filed with the SEC for registering the
remaining 3,000,000 shares.  On July 30, 2008, the Board of Directors
increased the number of share of El Capitan’s common stock authorized for
issuance under this plan to 16,000,000 shares. On August 21, 2009, Form S-8 was
filed with the SEC to register the remaining 8,000,000 shares authorized under
the plan.





NOTE
9 - STOCKHOLDERS’ EQUITY




Issuances
of Common Stock, Warrants and Options





Common
Stock





During
fiscal 2009, El Capitan issued 1,127,744 shares of its S-8 common stock pursuant
to its 2005 Stock Incentive Plan for consulting services valued at
$96,312.





During
fiscal 2009, El Capitan issued 725,000 shares of common stock for $36,250 to
shareholders for the exercise of warrants at $0.05 per share.





During
fiscal 2009, El Capitan issued 562,500 shares of its S-8 common stock pursuant
to its 2005 Stock Incentive Plan for severance benefits and compensation valued
at $45,000.





32





During
fiscal 2008, El Capitan sold 300,000 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, for $150,000. The shares were
sold along with 300,000 common stock warrants with a term of 2 years and an
exercise price of $0.60 per share.





During
fiscal 2008, El Capitan issued 12,000 restricted common shares for the cashless
exercise of warrants.





During
fiscal 2008, El Capitan issued 1,257,500 shares of common stock for $177,825 to
shareholders for the exercise of warrants at prices from $0.11 to $0.44 per
share.





During
fiscal 2008, El Capitan issued 1,637,356 shares of its S-8 common stock pursuant
to its 2005 Stock Incentive Plan for severance benefits and compensation valued
at $360,411.





During
fiscal 2008, El Capitan issued 3,213,150 shares of its S-8 common stock pursuant
to its 2005 Stock Incentive Plan for consulting services valued at
$665,247.





In
November 2006, El Capitan issued 1,500,000 shares of common stock at $0.50 per
share pursuant to the terms of conversion of a convertible note payable of
$750,000.





In
October 2006, El Capitan sold 50,000 restricted common shares to an accredited
investor pursuant to a private placement of securities under Section 4(2) and
Rule 506 promulgated under the Securities Act, for $25,000.





During
quarter ended December 31, 2006, El Capitan issued 2,090,000 shares of common
stock for $1,045,000 to shareholders on the exercise of warrants at $0.50 per
share. The warrant conversions, pursuant to a Written Action of the Board of
Directors on September 29, 2006, also provided for each share of common stock
issued under the warrant conversion, a two-year warrant to purchase one share of
common stock at an exercise price of $1.37 per share. The warrants are callable
under certain circumstances.





During
fiscal 2007, El Capitan issued 168,000 shares of restricted common stock for
$79,000 to shareholders for the exercise of warrants at $0.50 per
share





During
fiscal 2007, El Capitan issued 966,994 shares of its S-8 common stock pursuant
to its 2005 Stock Incentive Plan for severance benefits and compensation valued
at $605,551.





During
fiscal 2007, El Capitan issued 80,216 shares of its S-8 common stock pursuant to
its 2005 Stock Incentive Plan for consulting services valued at
$52,406.





During
the year ended September 30, 2006, El Capitan issued 310,000 common shares value
at $275,000 for services, sold 2,189,697 shares of common stock in a private
placement for $1,160,965, issued 2,124,726 shares of common stock for payment of
notes payable of $1,150,000, issued 498,825 shares of common stock for the
exercise of options and warrants aggregating $256,750, and issued 364,912 shares
of common stock valued at $287,136 for compensation.





During
the year ended September 30, 2005, El Capitan issued 200,000 shares of common
stock as subscribed stock at a value of $50,000, issued 2,290,557 shares of
common stock valued at $1,256,535 for services, sold 3,865,000 shares of common
stock in a private placement for $1,789,137, and issued 383,576 shares of common
stock for payment of notes payable aggregating $153,426.





During
the year ended September 30, 2004, El Capitan issued 3,650,164 shares of common
stock valued at $520,000 for compensation, issued 2,082,234 shares of common
stock valued at $395,765 for services and expenses, issued 1,827,938 shares of
common stock for payment of notes payable of $383,000, and issued 3,000,000
shares of common stock in connection with the purchase of the Weaver
property.





During
the year ended September 30, 2003, El Capitan issued 35,685,000 shares of common
stock to Gold and Minerals Company, Inc., for the purchase of a 40% interest in
El Capitan, Limited, and issued 6,720,000 shares of common stock in connection
with the acquisition of DML Services. In addition, El Capitan issued and 525,000
shares of common stock valued at $17,500 for interest expense related to a note
payable, issued 150,000 shares of common stock valued at $189,000 for services,
issued 2,114,280 shares of common stock valued at $850,000 for compensation, and
3,600,000 shares of common stock to Gold and Minerals Company, Inc. in
connection with the purchase of the COD property





During
the year ended September 30, 2002, El Capitan issued 3,315,000 common shares at
its initial issuance.





33





Warrants




During
fiscal 2008, El Capitan granted 300,000 common stock warrants along with 300,000
common shares for $150,000. The warrants have terms of 2 years and are
exercisable at $0.60.





On May 9,
2008, El Capitan modified the terms of 150,000 warrants previously granted. The
exercise price of the warrants was reduced from $0.50 to $0.16. The modification
resulted in additional warrant expense of $9,308. The significant assumptions
used in the Black-Scholes option pricing model to compute the fair value of the
modification of these warrants include the following: remaining term of 0.6
years, expected volatility of 103.51%, risk-free interest rate of 1.66% and the
market price of El Capitan’s common stock on the modification date. The warrants
were subsequently exercised for cash.




During
July 2008, El Capitan modified the terms of 1,007,500 warrants previously
granted. The exercise price of the warrants was reduced from $0.50 to $0.11. The
modification resulted in additional warrant expense of $45,656. The significant
assumptions used in the Black-Scholes option pricing model to compute the fair
value of the modification of these warrants include the following: remaining
term of 0.8 years, expected volatility between 94.96 and 107.59%, risk-free
interest rates of 1.31% to 1.68% and the market price of El Capitan’s common
stock on the modification date. The warrants were subsequently exercised for
cash.





In
December 2008, El Capitan modified the terms of 540,000 warrants previously
granted. The exercise price of the warrants was reduced from $0.50 to $0.05. The
modification resulted in additional warrant expense of $11,516. The significant
assumptions used in the Black-Scholes option pricing model to compute the fair
value of the modification of these warrants include the following: remaining
term of 0.8 years, expected volatility of 107%, risk-free interest rate of 1.31%
and the market price of El Capitan’s common stock on the modification dates. The
warrants were subsequently exercised $27,000.





In
January 2009, El Capitan modified the terms of 185,000 warrants previously
granted. The exercise price of the warrants was reduced from $0.50 to $0.05. The
modification resulted in additional warrant expense of $3,941. The significant
assumptions used in the Black-Scholes option pricing model to compute the fair
value of the modification of these warrants include the following: remaining
term of 0.8 years, expected volatility of 107%, risk-free interest rate of 1.31%
and the market price of El Capitan’s common stock on the modification date. The
warrants were subsequently exercised for $9,250.





The
following table summarizes the warrant activity for the years ended September
30, 2009 and 2008:




Warrants Outstanding
                  
                  
                  Warrants ExercisableNumber of
                    Shares
                  
                  
                  Weighted
                    Average
                    Exercise
                    Price
                  
                  
                  Number of
                    Shares
                  
                  
                  Weighted
                    Average  Exercise
                    PriceBalance,
      September 30, 2007
                  
                  
                  7,663,364
                  
                  
                  $
                  0.75
                  
                  
                  
                  7,663,364
                  
                  
                  $
                  0.75Granted
                  
                  
                  300,000
                  
                  
                  $
                  0.60
                  
                  
                  
                  300,000
                  
                  
                  $
                  0.60Expired/Cancelled
                  
                  
                  (1,332,500
                  )
                  
                  $
                  (0.31
                  )
                  
                  
                  (1,332,500
                  
                  
                  $
                  (0.31
                  )Exercised
                  
                  
                  (1,257,500
                  )
                  
                  $
                  (0.14
                  )
                  
                  
                  (1,257,500
                  )
                  
                  $
                  (0.14
                  )Balance,
      September 30, 2008
                  
                  
                  5,373,364
                  
                  
                  $
                  0.84
                  
                  
                  
                  5,373,364
                  
                  
                  $
                  0.84Granted
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —Expired/Cancelled
                  
                  
                  (3,413,333
                  )
                  
                  $
                  (1.02
                  )
                  
                  
                  (3,413,333
                  )
                  
                  $
                  (1.02
                  )Exercised
                  
                  
                  (725,000
                  )
                  
                  $
                  (0.05
                  )
                  
                  
                  (725,000
                  )
                  
                  $
                  (0.05
                  )Balance,
      September 30, 2009
                  
                  
                  1,235,031
                  
                  
                  $
                  0.59
                  
                  
                  
                  1,235,031
                  
                  
                  $
                  0.59




The range of exercise
prices and the weighted average remaining live of the warrants outstanding at
September 30, 2009 was $0.50 to $0.60 and 0.87 years, respectively. The
aggregate intrinsic value of the outstanding warrants at September 30, 2009 was
zero.





At
September 30, 2009, El Capitan had no warrants outstanding having a right to
call feature.





Options





During
fiscal 2007, El Capitan granted employees and directors an aggregate of
4,550,000 options with terms ranging between 3 and 10 years and exercise prices
ranging from $0.41 to $1.20. The fair value of the options granted was estimated
using the Black-Scholes option pricing model. The assumptions used in the model
included the following: the exercise prices noted above, expected terms of 1.50
to 5.75 years (the options qualify as “plain vanilla” options under the
provisions of Staff Accounting Bulletin No. 107 ("SAB No. 107") and, due to
limited option exercise data available to El Capitan, the term was estimated
pursuant to the provisions of SAB No. 107), expected volatilities ranging from
119.50% to 128.91%,  risk-free interest rates of 4.62% to 5.03% and the
market price of El Capitan’s common stock on the grant dates of the options. The
fair value of these options is being expensed on a straight line basis over
their vesting periods. During the years ended September 30, 2009 and 2008,
$28,634 and $956,354, respectively, was expensed related to these
options.





34








During
fiscal 2008, El Capitan granted employees and directors an aggregate of
4,126,000 options with terms of 10 years and exercise prices ranging from $0.14
to $0.19. The fair value of the options granted was estimated using the
Black-Scholes option pricing model. The assumptions used in the model included
the following: the exercise prices noted above, expected terms of 5.25 to 5.75
years (the options qualify as “plain vanilla” options under SAB No. 107 and, due
to limited option exercise data available to El Capitan, the term was estimated
pursuant to the provisions of SAB No. 107), expected volatilities ranging from
110.88% to 117.25%,  risk-free interest rates of 3.45% to 3.62% and
the market price of El Capitan’s common stock on the grant dates of the options.
The fair value of these options is being expensed on a straight
line basis over their vesting periods. During the year ended September 30, 2009
and 2008, $205,668 and $145,269, respectively, was expensed related to these
options.




The
following table summarizes the option activity for the years ended September 30,
2009 and 2008:




Options OutstandingNumber of
                    Shares
                  
                  
                  Weighted
                    Average
                    Exercise
                    PriceBalance,
      September 30, 2007
                  
                  
                  6,029,000
                  
                  
                  $
                  0.74Vested
                  
                  
                  —
                  
                  
                  
                  —Granted
                  
                  
                  4,126,000
                  
                  
                  $
                  0.14Exercised
                  
                  
                  —
                  
                  
                  
                  —Expired/Cancelled
                  
                  
                  (3,979,000
                  )
                  
                  $
                  (0.81
                  )Balance,
      September 30, 2008
                  
                  
                  6,176,000
                  
                  
                  $
                  0.30Vested
                  
                  
                  —
                  
                  
                  
                  —Granted
                  
                  
                  —
                  
                  
                  
                  —Exercised
                  
                  
                  —
                  
                  
                  
                  —Expired/Cancelled
                  
                  
                  (2,926,000
                  )
                  
                  $
                  (0.25
                  )Balance,
      September 30, 2009
                  
                  
                  3,250,000
                  
                  
                  $
                  0.35Exercisable
      at September 30, 2009
                  
                  
                  3,250,000
                  
                  
                  $
                  0.35





The range
of exercise prices and the weighted average remaining life of the options
outstanding at September 30, 2009 were $0.14 to $0.70 and 2.8 years,
respectively. The aggregate intrinsic value of the outstanding options at
September 30, 2009 was zero. El Capitan granted no options during the year
ended September 30, 2009.





El
Capitan has a stock incentive plan under which 16,000,000 shares are reserved
and registered for stock and option grants. There were 4,478,747 shares
available for grant under the Plan at September 30, 2009, excluding the
3,250,000 options outstanding.





NOTE
10 - SUBSEQUENT EVENTS





During
October 2009, El Capitan issued 66,667 shares of common stock at $0.09 per
share, the market closing price on the date of issuance, for the settlement of
an accounts payable aggregating $6,000.





El
Capitan has evaluated events and transactions that occurred between September
30, 2009 and December 29, 2009, which is the date the consolidated financial
statements were issued, for possible disclosure or recognition in the
consolidated financial statements. El Capitan has determined that there were no
other such events or transactions that warrant disclosure or recognition in the
consolidated financial.


35





ITEM 9.
            CHANGES IN AND DISAGREEMENTS WITH
      ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
  DISCLOSURE





None.




ITEM
      9A(T).
                CONTROLS
      AND PROCEDURES




Evaluation
of Disclosure Controls and Procedures





We
maintain disclosure controls and procedures designed to provide reasonable
assurance that information required to be disclosed in our reports filed
pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission’s rules and forms, and that
such information is accumulated and communicated to our management, including
our Chief Executive Officer and Chief Financial Officer as appropriate, to allow
timely decisions regarding required disclosure.





As of
September 30, 2009, our management, with the participation of our Chief
Executive Officer and Chief Financial Officer, carried out an evaluation of the
effectiveness of our disclosure controls and procedures as such term is defined
in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. It should be noted that
in designing and evaluating the disclosure controls and procedures, management
recognized that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control
objectives, and management necessarily was required to apply its judgment in
evaluating the cost-benefit relationship of possible controls and procedures.
The Company has designed its disclosure controls and procedures to reach a level
of reasonable assurance of achieving desired control objectives and, based on
the evaluation described above, the Company's Chief Executive Officer and Chief
Financial Officer concluded that the Company's disclosure controls and
procedures were effective at reaching that level of reasonable
assurance.





Changes
in Internal Control Over Financial Reporting





During
the fiscal quarter ended September 30, 2009, there was no change in our internal
control over financial reporting (as defined in Rule 13a-15(f) under the
Exchange Act) that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.





Management’s
Report on Internal Control Over Financial Reporting





Management
of the Company is responsible for establishing and maintaining effective
internal control over financial reporting (as defined in Rules 13a-15(f) and
15d-15(f) under the Securities Exchange Act of 1934, as amended).  The
Company’s internal control over financial reporting is designed to provide
reasonable assurance to the Company’s management and board of directors
regarding the preparation and fair presentation of published financial
statements.  The Company’s internal control over financial reporting
includes those policies and procedures that:


(i)
            pertain
      to the maintenance of records that, in reasonable detail, accurately and
      fairly reflect the transactions and dispositions of the assets of the
      Company;





(ii)
            provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with U.S. generally
      accepted accounting principles, and that receipts and expenditures of the
      Company are being made only in accordance with authorizations of
      management and directors of the Company;
and





(iii)
            provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use or disposition of the Company's assets that
      could have a material effect on the financial
  statements.





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation.  Also, projections
of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may
deteriorate.





Management
assessed the effectiveness of the Company's internal control over financial
reporting as of September 30, 2009.  In making this assessment,
management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control-Integrated
Framework.  Based on its assessment, management believes that,
as of September 30, 2009, the Company's internal control over financial
reporting was effective based on those criteria.





This
Annual Report on Form 10-K does not include an attestation report of the
Company's registered public accounting firm regarding internal control over
financial reporting.  Management's report was not subject to
attestation by the Company's registered public accounting firm pursuant to
temporary rules of the Securities and Exchange Commission that permit the
Company to provide only management's report in this Annual Report on Form
10-K.


36




ITEM 9B.
            OTHER
      INFORMATION





None.




PART
III




ITEM
      10.
            DIRECTORS,
      EXECUTIVE OFFICERS AND CORPORATE
  GOVERNANCE





Identification
of Directors and Executive Officers





The
following table sets forth the name, age, position and office term of each
executive officer and directors of the Company as of September 30,
2009.





Name
              
              Age
              
              Position
              
              Director SinceCharles
      C. Mottley
              
              75
              
              President, Chief Executive Officer, Director
              
              April
      21, 2009Stephen
      J. Antol
              
              66
              
              Chief Financial OfficerJames
      G. Ricketts
              
              70
              
              Secretary,
      Director
              
              April
      21, 2009John
      F. Stapleton
              
              66
              
              Director
              
              April
      21,2009


Charles
C. Mottley - Mr. Mottley is Chairman of the Board of Gold and Minerals Co., Inc.
and has been since February 2009; and is on the Board of Trustees at
Hampden-Sydney College (since 2007). Mr. Mottley was President and a Director of
El Capitan Precious Metals, Inc. from July 2002 to April 2007, when he resigned
as president, but continued to serve as a Director until September 2007. He also
provided consulting services to our Company from June 2007 to June 2008. Mr.
Mottley also served as Chairman and Chief Executive Officer of Gold and Minerals
Co., Inc., from 1978 until July 2005, at which time he resigned those positions.
He was on the Board of the National Mining Association from 2005 to 2007 and 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 and is the founder of the Fatherhood Foundation in
Scottsdale, Arizona. Mr. Mottley received a Bachelor of Arts Degree from Hampden
-Sydney College in 1958.
  Stephen
J. Antol - Mr. Antol was our Chief Financial Officer from November 2004 to May
2007. For the past two years and 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.
  James G.
Ricketts - Dr. Ricketts was Secretary and a Director of our Company from July
2004 to April 2007. 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.
  John F. Stapleton - Mr. Stapleton has
extensive experience with early-stage development companies and contributes a
unique set of skills needed to achieve a focused strategy, early-stage funding,
basic infrastructure and business model, all of which are central to creating a
solid business platform to launch and scale a successful venture. Mr. Stapleton
has a history of founding and supporting more than 25 emerging technology
companies. As a senior officer and investor, Mr. Stapleton has been instrumental
in the development and financing of several companies. Mr. Stapleton currently
serves as a director on the emerging company boards of Advanced Circulatory
Systems, Dermatrends and Visible Customer.
  37
 
 Audit
Committee
  On April
21, 2009, our Board member who was designated as our audit committee resigned as
a Board member. Since that time we do not have a separate audit committee and
our Board of Directors acts as our current audit committee. At a meeting of the
Board of Directors on September 5, 2006, the Board adopted the Audit Committee
Charter as presented by the Audit Committee.
 
 From
January 23, 2008, to April 21, 2009, our audit committee consisted of one Board
member, Mr. Marvin K. Kaiser.  The Board of Directors has determined
that Mr. Kaiser is an “audit committee financial expert” as that term is defined
in Item 407(d) (s) of Regulation S-B promulgated under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”). Additionally, Mr. Kaiser qualified
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.  At a meeting of the Board of Directors on September 5, 2006, the
Board adopted the Audit Committee Charter as presented by the Audit Committee
chairman.
 
 From the
time of the resignation of Mr. R. William Wilson as the sole member of the audit
committee on May 7, 2007, contemporaneous with his appointment as Chief
Financial Officer of the Company, until the appointment of Mr. Kaiser, the
entire Board served the functions of the audit committee.
  Code
of Ethics
 
 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 Corporate Secretary, El Capitan Precious Metals, Inc., 15225 N. 49th Street,
Scottsdale, Arizona 85254.
 
 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 our fiscal year ending September
30, 2008 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 Fiscal 2008 that were not in compliance.
  Name Of Filer
                
                Description Of TransactionMarvin K. Kaiser
                
                Stock issuance to independent directors granted on 2/29/08, reported on 3/6/08Bruce F. Snyder
                
                Stock issuance to independent directors granted on 2/29/08, reported on 3/6/08Donald W. Gentry
                
                Stock issuance to independent directors granted on 2/29/08, reported on 3/6/08R. William Wilson
                
                Shares issued in lieu of salary on 11/30/07, reported one day late on 12/5/07R. William Wilson
                
                Shares issued in lieu of salary on 8/31/07, reported on 10/02/07Charles C. Mottley (former CEO)
                
                Shares issued in lieu of salary on 8/31/07, reported on 10/02/07
  ITEM
      11.
                  EXECUTIVE
      COMPENSATION
  Summary
Compensation Table
  The
following table sets forth all of the compensation awarded to, earned by or paid
to (i) each individual serving as El Capitan’s principal executive officer,
principal financial officer and secretary during the fiscal years ended
September 30, 2009 and 2008. No other person who acted as an officer of the
company earned compensation exceeding $100,000 during the fiscal years ended
September 30, 2009 and 2008.
 
 38
  Name and Principal Position
                                    
                                    Fiscal
                                      Year
                                    
                                    Salary
                                    
                                    
                                    Option
                                      Awards(1)
                                    
                                    
                                    All Other
                                      Compensation
                                      (1)
                                    
                                    
                                    Total
                                      CompensationCharles C.
      Mottley  (2)
                                    
                                    2009
                                    
                                    
                                    18,000
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    18,000Chief Executive Officer
                                    
                                    2008
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -Stephen J.
      Antol  (3)
                                    
                                    2008
                                    
                                    $
                                    27,635
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    27,635Chief
      Financial Officer
                                    
                                    2008
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -James G.
      Ricketts  (4)
                                    
                                    2009
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -Secretary,
      Director
                                    
                                    2008
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -Kenneth P.
      Pavlich  (5)
                                      (former)
                                    
                                    2009
                                    
                                    $
                                    175,000
                                    (6)
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    135,214
                                    (8)
                                    
                                    $
                                    310,214President, Chief Executive Officer,
      Director
                                    
                                    2008
                                    
                                    $
                                    148,553
                                    (6)
                                    
                                    $
                                    701,729
                                    (7)
                                    
                                    $
                                    27,138
                                    (9)
                                    
                                    $
                                    877,450R. William
      Wilson  (10)
                                      (former)
                                    
                                    2009
                                    
                                    $
                                    140,000
                                    (11)
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    58,089
                                    (13)
                                    
                                    $
                                    198,089Chief Financial
      Officer, Treasurer, Secretary, Director
                                    
                                    2008
                                    
                                    $
                                    144,160
                                    (11)
                                    
                                    $
                                    230,991
                                    (12)
                                    
                                    $
                                    27,138
                                    (14)
                                    
                                    $
                                    402,289
  (1)
              Amounts shown reflect the dollar
      amount recognized for financial statement reporting purposes for the
      fiscal years ended September 30, 2009 and 2008 in accordance with SFAS
      123(R).  The fair value of option grants is estimated as of the
      date of grant utilizing the Black-Scholes option pricing model with
      utilizing the weighted average assumptions for all grants, expected life
      of options using the Simplified Method, expected volatility based on
      historical trends, a risk-free interest rate using the appropriate term
      U.S. Treasury rate, and a zero percent (0%) dividend yield (see NOTE 3 to
      the audited financial statements for the fiscal year ended September 30,
      2009, which are included elsewhere in this
  report).
 
 (2)
              Mr. Mottley was appointed to the
      Board of Directors on April 21, 2009 and was appointed El Capitan’s Chief
      Executive Officer on April 30, 2009. Mr. Mottley currently has no
      employment contract or formal compensation arrangements with the
      Company.
 
 (3)
              Mr. Antol was appointed El
      Capitan’s Chief Financial Officer on April 30, 2009. Mr. Antol currently
      has no employment contract or formal compensation arrangements with the
      Company.
 
 (4)
              Mr. Ricketts was appointed to the
      Board of Directors and El Capitan’s Secretary on April 21, 2009. Mr.
      Ricketts currently has no employment contract or formal compensation
      arrangements with the
Company.
 
 (5)
              Mr. Pavlich was appointed El
      Capitan’s President and Chief Executive Officer on April 6, 2007. On April
      21, 2009, Mr. Pavlich resigned as a director of the Company. On April 30,
      2009, the Board of Directors terminated the services of Mr. Pavlich as
      President and Chief Executive
Officer.
 
 (6)
              Beginning in January 2008, Mr.
      Pavlich’s salary was paid monthly in stock and was valued at the average
      fair market value of the Company’s common stock in the month
      earned.  Mr. Pavlich’s employment agreement was amended on March
      31, 2008 and also on September 9, 2008.  See the narrative
      disclosure below for more detail as to Mr. Pavlich’s employment agreement
      and compensation.
 
 (7)
              Reflects (i) 625,000 share
      options vested pursuant to the stock option granted to Mr. Pavlich on
      September 9, 2008 to acquire 2,500,000 shares of the Company’s common
      stock at an exercise price of $0.14, the fair market value of the
      Company’s common stock on the date of grant; and (ii) approximately 98,000
      share options pursuant to the stock option granted to Mr. Pavlich on March
      31, 2008 to acquire 98,000 shares of the Company’s common stock at an
      exercise price of $0.19, the fair market value of the Company’s common
      stock on the date of grant.  See Footnote 1
      above.
  39
 
 (8)
              Amount reflects the dollar amount
      recognized for financial statement reporting purposes for the fiscal year
      ended September 30, 2009 in accordance with SFAS 123(R), of the vesting of
      (i) 25,000 share options pursuant to the stock option granted to Mr.
      Pavlich on June 11, 2007 to acquire 50,000 shares of the Company’s common
      stock at an exercise price of $0.41, the fair market value of the
      Company’s common stock on the date of grant, in consideration of his
      services as a director; (ii) 25,000 share options pursuant to the director
      performance stock option granted to Mr. Pavlich on September 9, 2008 to
      acquire 100,000 shares of the Company’s common stock at an exercise price
      of $0.14, the fair market value of the Company’s common stock on the date
      of the grant and the option vests 25% immediately and in three equal
      installments each six months thereafter; and (iii) 625,000 share options
      pursuant to the stock option granted to Mr. Pavlich on September 9, 2008
      to acquire 2,500,000 shares of the Company’s common stock at an exercise
      price of $0.14, the fair market value of the Company’s common stock on the
      date of the grant and the option vests 25% immediately and in three equal
      installments each six months thereafter. See Footnote 1
      above.
 
 (9)
              Amount reflects the dollar amount
      recognized for financial statement reporting purposes for the fiscal year
      ended September 30, 2008 in accordance with SFAS 123(R), of the vesting of
      (i) 25,000 share options pursuant to the stock option granted to Mr.
      Pavlich on June 11, 2007 to acquire 50,000 shares of the Company’s common
      stock at an exercise price of $0.41, the fair market value of the
      Company’s common stock on the date of grant, in consideration of his
      services as a director and (ii) a 25,000 share options pursuant to the
      director performance stock option granted to Mr. Pavlich on September 9,
      2008 to acquire 100,000 shares of the Company’s common stock at an
      exercise price of $0.14, the fair market value of the Company’s common
      stock on the date of the grant.  This option vests 25%
      immediately and in three equal installments each six months
      thereafter.  Amount also includes a management performance bonus
      in the form of a stock grant of 60,000 shares valued at $0.30 per share,
      the fair market value of the Company’s common stock on the date of the
      grant, January 23, 2008 ($18,000).  See Footnote 1
      above.
 
 (10)
              Mr. Wilson was appointed El
      Capitan’s Chief Financial Officer, Treasurer and Secretary on May 7, 2007.
      On April 21, 2009, Mr. Wilson resigned as a director and secretary of the
      Company. On April 30, 2009, the Board of Directors terminated the services
      of Mr. Wilson as Chief Financial
Officer.
 
 (11)
              Pursuant to the terms of Mr.
      Wilson’s original employment agreement with the Company, Mr. Wilson’s
      salary consisted of cash and stock.  Mr. Wilson’s employment
      agreement was amended in on March 31, 2008 and also on September 9,
      2008.  Beginning in March 2008, Mr. Wilson’s salary was paid
      monthly in stock and was valued at the average fair market value of the
      Company’s common stock in the month earned. See the narrative disclosure
      below for more detail as to Mr. Wilson’s employment agreement and
      compensation.
 
 (12)
              Reflects the vesting of (i)
      approximately 250,000 share options pursuant to the stock option granted
      to Mr. Wilson on September 9, 2008 to acquire 1,000,000 shares of the
      Company’s common stock at an exercise price of $0.14, the fair market
      value of the Company’s common stock on the date of grant; and (ii)
      approximately 28,000 share options pursuant to the stock option granted to
      Mr. Wilson on March 31, 2008 to acquire 28,000 shares of the Company’s
      common stock at an exercise price of $0.19, the fair market value of the
      Company’s common stock on the date of grant. See Footnote 1
      above.
 
 (13)
              Amount reflects the dollar amount
      recognized for financial statement reporting purposes for the fiscal year
      ended September 30, 2009 in accordance with SFAS 123(R), of the vesting of
      (i) 25,000 share options pursuant to the stock option granted to Mr.
      Wilson on June 11, 2007 to acquire 50,000 shares of the Company’s common
      stock at an exercise price of $0.41, the fair market value of the
      Company’s common stock on the date of grant, in consideration of his
      services as a director; (ii) 25,000 share options pursuant to the director
      performance stock option granted to Mr. Wilson on September 9, 2008 to
      acquire 100,000 shares of the Company’s common stock at an exercise price
      of $0.14, the fair market value of the Company’s common stock on the date
      of the grant and the option vests 25% immediately and in three equal
      installments each six months thereafter; and (iii) 250,000 share options
      pursuant to the stock option granted to Mr. Wilson on September 9, 2008 to
      acquire 1,000,000 shares of the Company’s common stock at an exercise
      price of $0.14, the fair market value of the Company’s common stock on the
      date of the grant and the option vests 25% immediately and in three equal
      installments each six months thereafter. See Footnote 1
      above.
 
 (14)
              Amount reflects the dollar amount
      recognized for financial statement reporting purposes for the fiscal year
      ended September 30, 2008 in accordance with SFAS 123(R), of the vesting of
      (i) 25,000 share options pursuant to the stock option granted to Mr.
      Wilson on June 11, 2007 to acquire 50,000 shares of the Company’s common
      stock at an exercise price of $0.41, the fair market value of the
      Company’s common stock on the date of grant, in consideration of his
      services as a director and (ii) a 25,000 share options pursuant to the
      director performance stock option granted to Mr. Wilson on September 9,
      2008 to acquire 100,000 shares of the Company’s common stock at an
      exercise price of $0.14, the fair market value of the Company’s common
      stock on the date of the grant.  This option vests 25%
      immediately and in three equal installments each six months
      thereafter.  Amount also includes a management performance bonus
      in the form of a stock grant of 60,000 shares valued at $0.30 per share,
      the fair market value of the Company’s common stock on the date of the
      grant, January 23, 2008 ($18,000).  See Footnote 1
      above.
  40
 
 
 Employment Agreements with
Executives
 
 President
and Chief Executive Officer
 
 On April
6, 2007, El Capitan entered into an employment agreement with Kenneth P. Pavlich
relating to his service as its Chief Executive Officer and President. Pursuant
to the agreement, El Capitan agreed to issue Mr. Pavlich 250,000 shares of the
Company’s common stock in payment of Mr. Pavlich’s compensation for the
remainder of calendar year 2007, valued on the date of grant at $0.70 per share.
The term of the agreement is for two years, with automatic one-year extensions
unless either party provides 30 days notice of termination to the other prior to
the expiration of the initial term or an extension thereof. Commencing January
1, 2008, and for the remainder of the term of the agreement, Mr. Pavlich will be
entitled to a base salary consisting of 25,000 shares of common stock per month,
provided the fair market value of the shares issued per month shall not exceed
$100,000 based on the value of the average of the daily closing prices of the
Company’s common stock during the month of service. Additionally, upon the
completion of a sale or other transaction of the Company’s El Capitan property,
Mr. Pavlich will be entitled to bonus compensation equal to 0.5% of value
received by the Company (and its stockholders, if applicable) in such
transaction; provided that, the Company’s consummation of a merger or other
consolidation with Gold and Minerals Co., Inc. shall not constitute a
transaction whereby the bonus compensation shall apply.
 
 Additionally,
on April 6, 2007, Mr. Pavlich was granted an option to purchase 2,500,000 shares
of the Company’s common stock at an exercise price of $0.70 per share, the fair
market value of the Company’s stock on the date of grant. The option shall vest
in five equal amounts of 500,000 shares upon the initial occurrence of each of
the certain events as detailed in his employment agreement. On September 9,
2008, Mr. Pavlich and El Capitan agreed to cancel the option described above and
reissued a new ten-year option to purchase 2,500,000 shares of El Capitan common
stock at an exercise price of $0.14, the closing price of El Capitan common
stock on September 9, 2008.  The option shall vest in four equal
installments every six months, with the first tranche vesting
immediately.  The option is subject to accelerated vesting upon a
change in control of El Capitan or upon El Capitan common stock having a
volume-weighted average price exceeding $1.00 over 20 consecutive trading
days.
 
 On March
31, 2008, the Board of Directors amended the contractual terms of Mr. Pavlich’s
employment agreement dated April 30, 2007, to provide the Aggregate Value of the
Monthly Base Salary to include a minimum value of $12,500. On September 9, 2008,
Mr. Pavlich and El Capitan amended the terms of his employment agreement to
provide for a fixed monthly base salary of $25,000 in lieu of the prior variable
base salary payment that was dependent upon the monthly value of El Capitan’s
common stock and the minimum value of $12,500.  Upon agreement by El
Capitan, Mr. Pavlich may elect to receive his monthly base salary in the form of
El Capitan common stock.
 
 On April
21, 2009, Mr. Pavlich resigned as a director of the Company. On April 30, 2009,
the Board of Directors terminated the services of Mr. Pavlich as President and
Chief Executive Officer.
 
 Chief
Financial Officer and Treasurer
 
 On May 7,
2007, the Company entered into an employment agreement with Mr. Wilson relating
to his service as Chief Financial Officer. Pursuant to the agreement, Mr. Wilson
is entitled to a monthly base salary of (i) $10,000 and (ii) the issuance of
7,000 shares of the Company’s common stock; provided that the aggregate value of
the base salary for any month shall not exceed $38,000, of which the value of
the shares of common stock issued shall be determined by based on the value of
the average of the daily closing prices of the Company’s common stock during the
month of service. The term of the agreement is for two years, with automatic
one-year extensions unless either party provides 30 days notice of termination
to the other prior to the expiration of the initial term or an extension
thereof. Additionally, upon the completion of a sale or other transaction of the
Company’s El Capitan property, Mr. Wilson will be entitled to bonus compensation
equal to 0.3% of value received by the Company (and its stockholders, if
applicable) in such transaction; provided that, the Company’s consummation of a
merger or other consolidation with Gold and Minerals Co., Inc. shall not
constitute a transaction whereby the bonus compensation shall
apply.
 
 Additionally,
the Agreement provided for the issuance to Mr. Wilson of a stock option to
purchase 1,000,000 shares of the Company’s common stock at an exercise price of
$0.50, the closing price of the Company’s common stock on May 7, 2007, the date
on which Mr. Wilson commenced employment. The option shall vest in five equal
amounts of 200,000 shares upon the initial occurrence of certain provisions in
the Agreement.  On September 9, 2008, Mr. Wilson and El Capitan agreed
to cancel the option described above and reissued a new ten-year option to
purchase 1,000,000 shares of El Capitan common stock at an exercise price of
$0.14, the closing price of El Capitan common stock on September 9,
2008.  The option shall vest in four equal installments every six
months, with the first tranche vesting immediately.  The option is
subject to accelerated vesting upon a change in control of El Capitan or upon El
Capitan common stock having a volume-weighted average price exceeding $1.00 over
20 consecutive trading days.
 
 On March
31, 2008, the Board of Directors amended the contractual terms of Mr. Wilson’s
employment agreement dated may 4, 2007, to provide the Aggregate Value of the
Monthly Base Salary to include a minimum value of $13,500. On September 9, 2008,
Mr. Wilson and El Capitan amended the terms of his employment agreement to
provide for a fixed monthly base salary of $20,000 in lieu of the prior variable
base salary payment that was dependent upon the monthly value of El Capitan’s
common stock and a and the minimum value of $13,500. Upon agreement by El
Capitan, Mr. Wilson may elect to receive his monthly base salary in the form of
El Capitan common stock.
  41
 
 On April
21, 2009, Mr. Wilson resigned as a director and secretary of the Company. On
April 30, 2009, the Board of Directors terminated the services of Mr. Wilson as
Chief Financial Officer.
 
 Former
President and Chief Executive Officer
 
 On
October 1, 2007, El Capitan entered into a Consulting Agreement with Charles
Mottley, who served as chief executive officer of the Company until April 7,
2007.  This agreement was terminated in June 2008 in exchange for
445,833 shares of the Company’s unregistered common stock, with a fair market
value of $0.10 per share on the date of issue, and other assets with a value of
approximately $6,000.  During the life of this agreement Mr. Mottley
received $32,500 in cash payments.
 
 Outstanding
Equity Awards at Fiscal Year-End
 
 The
following table sets forth information regarding each unexercised options held
by each of El Capitan’s named executive officers as of September 30,
2009:
  Name
                      
                      Number of
                        Securities
                        Underlying
                        Unexercised
                        Options
                        Exercisable
                      
                      
                      Number of
                        Securities
                        Underlying
                        Unexercised
                        Options
                        Unexercisable
                      
                      
                      Option
                        Exercise
                        Price
                      
                      Option
                        Expiration
                        DateCharles
      C. Mottley
                      
                      
                      300,000
                      
                      
                      
                      -
                      
                      
                      $
                      0.56
                      
                      7/21/15Stephen
      J. Antol
                      
                      
                      150,000
                      
                      
                      
                      -
                      
                      
                      $
                      0.56
                      
                      7/21/15James
      G. Ricketts
                      
                      
                      200,000
                      
                      
                      
                      -
                      
                      
                      $
                      0.56
                      
                      7/21/15250,000
                      
                      
                      
                      -
                      
                      
                      $
                      0.70
                      
                      4/06/10
 
 (1) All
options granted are pursuant to El Capitan’s 2005 Stock Incentive Plan, as
amended.
 
 Severance and Change of Control
Arrangements
 
 See
“Employment Agreements with Executive Officers” above for a description of the
severance and change of control arrangements with Mr. Pavlich and Mr. Wilson.
Based upon the Boards actions referencing the terminations of Mr. Pavlich and
Mr. Wilson, the actions did not constitute a change of control or severance
provisions under their respective employment agreements.
 
 El
Capitan’s Board of Directors, or a committee thereof, serving as plan
administrator of its 2005 Stock Incentive Plan, has the authority to provide for
accelerated vesting of the options granted to its named executive officers and
any other person in connection with changes of control of the Company,
including: (a) the sale, lease, exchange or other transfer of substantially all
of its assets to a non-affiliate; (b) its liquidation or dissolution; (c)
subject to certain limitations, if any person becomes the beneficial owner of in
excess of 20% of the combined voting power of El Capitan’s outstanding
securities having the right to vote at elections of directors; (d) subject to
certain limitations, a merger or consolidation whereby El Capitan’s stockholders
immediately prior to effective date of such merger or consolidation have
beneficial ownership, immediately following the effective date of such merger or
consolidation, of securities of the surviving corporation representing less than
80% of the combined voting power of the surviving corporation’s then outstanding
securities ordinarily having the right to vote at elections of directors; or (e)
if after the date our securities are first sold in a registered public offering,
its then existing directors cease to constitute at least a majority of the
board. This description constitutes only a summary of the relevant terms to El
Capitan’s 2005 Stock Incentive Plan.
 
 Director
Compensation
 
 On July
21, 2005, based upon recommendations from El Capitan’s compensation committee,
the Board of Directors approved the compensation plan for the Board of
Directors. 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 plus $500 per month for all Board meetings 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 other than
participating in annual stock option awards to Board members. All Board members
shall be reimbursed for expenses incurred in connection with board or committee
meetings.  On January 23, 2008, the plan was amended to permit Board
members to receive any retainers, compensation and expense payments in all cash,
all Company common stock or half in cash and half in Company common
stock.
  42
 
 On March
24, 2006, El Capitan issued R. William Wilson an option to purchase 44,000
shares of its common stock at an exercise price of $1.99 per share as a
performance bonus provided to its outside directors. Mr. Wilson’s options vested
on September 30, 2006. Pierce Carson, a director at that time, was also issued a
similar option, but the option expired unvested upon Mr. Carson’s resignation
from the board in May 2006.  Mr. Wilson’s option expired unexercised
on March 23, 2008.
 
 On
November 13, 2006, Kenneth Pavlich was granted an option to purchase El Capitan
common stock at $0.83 per share (the closing price of El Capitan’s common stock
on the date of his appointment to the Board), such options to vest in two equal
installments on January 1, 2007 and July 1, 2007. Mr. Pavlich resigned from the
Board on April 21, 2009, and the option was cancelled unexercised on July 21,
2009.
 
 On
December 8, 2006, Bruce Snyder was granted an option to purchase 100,000 shares
of El Capitan common stock at $1.20 per share (the closing price of El Capitan’s
common stock on the date of his appointment to the Board), such option to vest
in two equal installments on January 1, 2007 and July 1, 2007. On March 11,
2009, Mr. Snyder resigned from the Board and the option was cancelled
unexercised on June 10, 2009.
 
 On June
11, 2007, El Capitan issued each of its then four directors an option to
purchase 50,000 shares of its common stock at an exercise price of $0.41 per
share as a performance bonus provided to its directors. These options vest
25,000 on January 1, 2008 and 25,000 on January 1, 2009. The four referred to
directors resigned from the Board on April 21, 2009, and these bonus options
were cancelled unexercised on July 21, 2009.
 
 On
September 26, 2007, Donald W. Gentry and Marvin K. Kaiser were each granted an
option to purchase 100,000 shares of El Capitan common stock at $.057 per share
(the closing price of El Capitan’s common stock on the date of their appointment
to the Board) such options to vest in two equal installments on January 1, 2008
and January 1, 2009. The two referred to directors resigned from the Board on
April 21, 2009, and these options were cancelled unexercised on July 21,
2009.
 
 On
September 9, 2008, El Capitan issued each of its then five directors an option
to purchase 100,000 shares of its common stock at an exercise price of $0.14 per
share as a performance bonus provided to its directors. These options vest
25,000 immediately and in three equal installments each six months thereafter.
One director resigned from the Board on March 11, 2009, and the his option was
cancelled unexercised on June 10, 2009. The remaining four directors resigned
from the Board on April 21, 2009, and their options were cancelled unexercised
on July 21, 2009.
 
 The
following table shows the compensation earned by each of El Capitan’s
non-employee directors for the year ended September 30, 2009:
  Name
                    
                    
                    Fees Earned or
                      Paid in Cash
                    
                    
                    Option
                      Awards
                    
                    
                    Fees Paid in
                      Common Stock
                    
                    
                    TotalJohn
      F. Stapleton
                    (1)
                    
                    $
                    —
                    
                    
                    $
                    —
                    
                    
                    $
                    —
                    
                    
                    $
                    —Bruce
      F. Snyder
                    (2)
                    
                    $
                    1,500
                    
                    
                    $
                    6,671
                    (4)
                    
                    $
                    2,250
                    
                    
                    $
                    10,421Donald
      W. Gentry
                    (3)
                    
                    $
                    1,750
                    
                    
                    $
                    17,164
                    (5)
                    
                    $
                    750
                    
                    
                    $
                    19,664Marvin
      K. Kaiser
                    (3)
                    
                    $
                    3,750
                    
                    
                    $
                    17,164
                    (6)
                    
                    $
                    750
                    
                    
                    $
                    21,664
  (1)
              Mr.
      Stapleton was appointed to the Board of Directors on April 21, 2009, and
      is currently agreed to defer Board member compensation as to such time the
      Company is in a stronger financial
position.
 
 (4)
              Amount reflects the dollar amount
      recognized for financial statement reporting purposes for the fiscal year
      ended September 30, 2009 in accordance with SFAS 123(R) of stock option
      awards, relating to: (i) a grant of an option on June 11, 2007 to purchase
      50,000 shares of El Capitan common stock, at an exercise price of $0.41
      the fair market value of its common stock on the date of grant pursuant to
      the terms of its director compensation plan and, (ii) approximately 25,000
      share options pursuant to a director performance stock option granted to
      Mr. Snyder on September 9, 2008 to acquire 100,000 shares of the Company’s
      common stock at an exercise price of $0.14, the fair market value of the
      Company’s common stock on the date of the grant.  Assumptions
      used in the calculation of this amount for non-employees are identified in
      Note 9 to El Capitan’s financial statements for the year ended
      September 30, 2009 included elsewhere in this
      report.
 
 43
 
 (5)
              Amount reflects the dollar amount
      recognized for financial statement reporting purposes for the fiscal year
      ended September 30, 2009 in accordance with SFAS 123(R) of stock option
      awards, relating to a grant of an option on September 26, 2007 to purchase
      100,000 shares of El Capitan common stock, at an exercise price of $0.57,
      the fair market value of its common stock on the date of grant pursuant to
      the terms of its director compensation plan and, (ii) approximately 25,000
      share options pursuant to a director performance stock option granted to
      Mr. Gentry on September 9, 2008 to acquire 100,000 shares of the Company’s
      common stock at an exercise price of $0.14, the fair market value of the
      Company’s common stock on the date of the grant. Assumptions used in the
      calculation of this amount for non-employees are identified in Note 9 to
      El Capitan’s financial statements for the year ended September 30, 2009
      included elsewhere in this
report.
 
 (6)
              Amount reflects the dollar amount
      recognized for financial statement reporting purposes for the fiscal year
      ended September 30, 2009 in accordance with SFAS 123(R) of stock option
      awards, relating to a grant of an option on September 26, 2007 to purchase
      100,000 shares of El Capitan common stock, at an exercise price of $0.57,
      the fair market value of its common stock on the date of grant pursuant to
      the terms of its director compensation plan and, (ii) approximately 25,000
      share options pursuant to a director performance stock option granted to
      Mr. Kaiser on September 9, 2008 to acquire 100,000 shares of the Company’s
      common stock at an exercise price of $0.14, the fair market value of the
      Company’s common stock on the date of the grant.  Assumptions
      used in the calculation of this amount for non-employees are identified in
      Note 9 to El Capitan’s financial statements for the year ended September
      30, 2009 included elsewhere in this
  report.
 
 ITEM 12.
              SECURITY OWNERSHIP OF CERTAIN
      BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
      MATTERS
 
 The following table sets
forth, as of December 31, 2009, certain information regarding beneficial
ownership of our common stock according to the information supplied to us, that
were beneficially owned by (i) each person who is currently a director, (ii)
each executive officer, (iii) all current directors and executive officers as a
group and (iv) each person who, to our knowledge, 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.
  Name and Address
                      of Beneficial Owner
                    
                    Amount and Nature of
                      BeneficialOwnership
                    
                    
                    Percentof
                      Class (4)Charles
      C. Mottley
                      7811
      E. Vaquero
                      Scottsdale,
      AZ 85258
                    
                    
                    4,016,758
                    (1)
                    
                    
                    4.5
                    %John
      F. Stapleton
                      3190
      Highpoint Drive
                      Chaska,
      MN 55318
                    
                    
                    1,450,500
                    
                    
                    
                    1.7
                    %James
      G. Ricketts
                      14301Scottsdale,
      AZ
                    
                    
                    3,020,536
                    (2)
                    
                    
                    3.4
                    %Stephen
      J. Antol
                      15225
      N. 49th
      Street
                      Scottsdale,
      AZ 85254
                    
                    
                    820,255
                    (3)
                    
                    
                    .0.9
                    %All
      Officers and Directors as a Group
                      (4
      Persons)
                    
                    
                    9,308,049
                    
                    
                    
                    10.4
                    %
  (1)
              Includes vested options to
      purchase 300,000 shares of common stock at an exercise price of $0.56 per
      share.
  (2)
                  Includes vested options to
      purchase (i) 200,000 shares of common stock at an exercise price of $0.56
      per share, and (ii) 250,000 shares of common stock at an exercise price of
      $0.70 per share.
 (3)
                Includes vested options to
      purchase (i) 150,000 shares of common stock at an exercise price of $0.56
      per share, and(ii) 125,000 shares of common stock held in spouse’s
      name.
 
 44
 
 (4)
              Applicable percentage of
      ownership is based on 88,654,036shares of common stock
      outstanding as of December 31, 2009, together with securities exercisable
      or convertible into shares of common stock within 60 days of December 31,
      2009, for each stockholder. Beneficial ownership is determined in
      accordance with the rules of the Commission and generally includes voting
      or investment power with respect to securities. Shares of common stock
      subject to securities exercisable or convertible into shares of common
      stock that are currently exercisable or exercisable within 60 days of
      December 31, 2009, are deemed to be beneficially owned by the person
      holding such options for the purpose of computing the percentage of
      ownership of such person, but are not treated as outstanding for the
      purpose of computing the percentage ownership of any other
      person.
  ITEM
      13.
              CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
      INDEPENDENCE
 
 Certain
Relationships
 
 El
Capitan, Gold and Minerals Co., Inc. and Pavlich Associates, a sole
proprietorship of which Kenneth Pavlich, a director, is the principal, entered
into the El Capitan Project Representation Agreement, dated June 21, 2006
whereby Pavlich Associates agreed to provide certain consulting services in
connection with a sale or certain other transactions (as defined in the
agreement) involving the El Capitan project, at a rate of $125 per hour. In
addition, upon completion of a sale or other transaction, Pavlich Associates was
to be paid the greater of one-quarter of one percent of the Total Transaction
Value (as more specifically defined in the agreement) or $250,000 (the “Success
Payment”). The total of all Success Payments under this agreement could not
exceed $3,000,000. This agreement terminated upon Mr. Pavlich entering into an
employment agreement with the El Capitan on April 6, 2007. On April 30, 2009,
the Board of Directors terminated the services of Mr. Pavlich as CEO and
president of El Capitan. The Company has had no additional relationship with
Pavlich Associates since that date.
 
 Director
Independence
 
 In
determining whether the members of our board and its committees are independent,
El Capitan has elected to use the definition of “independence” set forth by the
American Stock Exchange and the standards for independence established by the
American Stock Exchange, whereby a majority of the members of a listed company’s
Board of Directors must qualify as “independent” as determined by the Board. El
Capitan’s Board of directors consults with El Capitan’s legal counsel to ensure
that the Board’s determinations are consistent with all relevant securities and
other laws and regulations regarding the definition of “independent,” including
those set forth in the applicable listing standards of the American Stock
Exchange. Consistent with these considerations, and after review of all relevant
transactions or relationships between each director, or any of his family
members, and El Capitan Precious Metals, Inc., its senior management and its
independent registered public accounting firm, the Board has determined that
John F. Stapleton is independent director within the meaning of the applicable
listing standard of the American Stock Exchange.  Mr. Stapleton serves
as Chairman of the Board of Directors of the Company.
 
 The Board
of Directors as a whole serves as the nominating committee.  The
Company’s Chief Executive Officer and Secretary, both of whom serve as
directors, are not considered independent directors.
 
 ITEM 14.
              PRINCIPAL ACCOUNTANT FEES AND
      SERVICES
 
 The
following table summarizes the aggregate fees billed to the Company by Malone
& Bailey P.C. in relation to the audits and quarterly reviews of the Company
for the fiscal years ended September 30, 2009 and 2008:
 
 Year Ended
                      September 30,
                      2009
                    
                    
                    Year Ended
                      September 30,
                      2008Audit
      Fees (1)
                    
                    $
                    47,000
                    
                    
                    $
                    44,100Audit-Related
      Fees (2)
                    
                    $
                    -
                    
                    
                    $
                    -Tax
      Fees (3)
                    
                    $
                    -
                    
                    
                    $
                    -Total
                    
                    $
                    47,000
                    
                    
                    $
                    44,100
 
 (1)
                Audit Fees.Audit fees
      include fees for professional services performed for the audit of our
      annual consolidated financial  statements, review of quarterly
      consolidated financial statements included in our SEC filings, and
      assistance and issuance of consents associated with SEC
      filings.
  (2)
                Audit-Related
      Fees. Audit-related fees are fees for assurance and related services that
      are reasonably related to the audit. This category includes fees related
      to assistance consulting on financial accounting/reporting
      standards.
  (3)
                Tax
      Fees. Tax fees primarily include professional services performed with
      respect to preparation of our federal and state tax returns for our
      consolidated subsidiaries.
  45
  ITEM
      15.
                EXHIBITS
      AND FINANCIAL STATEMENT
SCHEDULES
 
 Exhibit
Index
 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
                  
                  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).3.3
                  
                  Restated
      Bylaws (incorporated by reference to Exhibit 3.3 to the Company’s
      Registration Statement on Form SB-2 filed on July 12,
    2006).4.1
                  
                  Form
      of Warrant issued to Blake Advisors, LLC and its 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).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).4.10
                  
                  Form
      of Agent Warrant issued to Blake Advisors, LLC (incorporated by reference
      to Exhibit 4.8 to the Company's registration statement on Form SB-2/A
      filed on August 9, 2006.)4.11
                  
                  Secured
      Convertible Promissory Note dated January 20, 2006 (incorporated by
      reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K dated
      January 26, 2006).4.12
                  
                  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
      January 26, 2006).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
                  
                  Consulting
      Agreement with Charles C. Mottley dated October 1, 2007 (incorporated by
      reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K
      filed on October 5, 2007).10.3
                  
                  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).10.4
                  
                  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).
  46
  10.5
                  
                  2005
      Stock Incentive Plan, as amended (incorporated by reference to Exhibit
      10.1 to the Company’s Quarterly Report on Form 10-QSB for the quarter
      ended June 30, 2007).10.6
                  
                  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).10.7
                  
                  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).10.8
                  
                  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).10.9
                  
                  Consulting
      Agreement dated August 22, 2005, by and between the Company and Clyde L.
      Smith (incorporated by reference to Exhibit 10.15 to the Company’s
      registration statement on Form SB-2/A filed on August 9,
      2006).10.10
                  
                  Amendment
      No. 1 to Consulting Agreement dated October 25, 2005 by and between the
      Company and Clyde Smith (incorporated by reference to Exhibit 10.16 to the
      Company's registration statement on Form SB-2/A filed on August 9,
      2006.)10.11
                  
                  El
      Capitan Project Representation Agreement dated September 27, 2005 by and
      between the Company and Pavlich Associates (incorporated by reference to
      Exhibit 10.17 to the Company's Registration Statement on Form SB-2/A filed
      on August 31, 2006).10.12
                  
                  Amendment
      to El Capitan Project Representation Agreement dated March 1, 2006
      (incorporated by reference to Exhibit 10.18 to the Company's Registration
      Statement on Form SB-2/A filed on August 31, 2006).10.13
                  
                  El
      Capitan Project Representation Agreement dated June 21, 2006 by and among
      the Company, Gold and Minerals and Pavlich Associates (incorporated by
      reference to Exhibit 10.19 to the Company's Registration Statement on Form
      SB-2/A filed on August 31, 2006).10.14
                  
                  Audit
      Committee Charter (incorporated by reference to Exhibit 99.1 to the
      Company’s Current Report on Form 8-K dated September 5,
    2006).10.15
                  
                  Compensation
      Committee Charter (incorporated by reference to Exhibit 99.2 to the
      Company’s Current Report on Form 8-K dated September 5,
    2006).10.16
                  
                  Bonus
      Program relating to the sale of the El Capitan property as adopted by the
      Board on January 25, 2007 (incorporated by reference to Exhibits 10.1 to
      the Company’s Current Report on Form 8-K dated January 31,
      2007).10.17
                  
                  Employment
      agreement dated April 30, 2007 with Kenneth P. Pavlich (incorporated by
      reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K
      filed on May 4, 2007).10.18
                  
                  Employment
      agreement with R. William Wilson dated May 4, 2007 (incorporated by
      reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K
      filed on May 10 2007).23.1
                  
                  Consent
      of Clyde Smith Provided herewith31.1
                  
                  Certification
      of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002 Provided herewith31.2
                  
                  Certification
      of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002 Provided herewith32.1
                  
                  Certification
      of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002 Provided herewith32.2
                  
                  Certification
      of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002 Provided herewith99.1
                  
                  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).
 
 Financial
Statement Schedules
 
 None.
 47
 
 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. MottleyCharles
      C. MottleyChief
      Executive Officer
 
 In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
  Name
              
              Title
              
              Date/s/ Charles C. Mottley
              
              Chief
      Executive Officer, Director
              
              December
      29, 2009Charles
      C. Mottley
              
              (Principal
      Executive Officer)/s/ Stephen J. Antol
              
              Chief
      Financial Officer
              
              December
      29, 2009Stephen
      J. Antol
              
              (Principal
      Financial and Accounting Officer)/s/ James G. Ricketts
              
              Secretary,
      Director
              
              December
      29, 2009James
      G. Ricketts/s/ John F. Stapleton
              
              Chairman
      of the Board, Director
              
              December
      29, 2009John
      F. Stapleton
  48