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

                               AMENDMENT NO. 1 TO
                                  FORM 10-KSB/A

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

|_|   Transition report under section 13 or 15(d) of the Securities Exchange Act
      of 1934 For the transition period from ___________ to ____________

                        Commission File Number 333-56262

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

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

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

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

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

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

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

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

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

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act. Yes |_| No |X|

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

The aggregate market value of the issuer's voting stock held as of August 31,
2006 by non-affiliates of the issuer was approximately $102,122,881 based on the
closing market price of the Registrant's common stock of $1.61 as reported on
the OTC Bulletin Board.

As of August 31, 2006, issuer had 73,284,409 shares of its $.001 par value
common stock issued and outstanding.

Transitional Small Business Format: Yes |_| No |X|

Documents incorporated by reference: none

<PAGE>

                        EL CAPITAN PRECIOUS METALS, INC.
                                  FORM 10-KSB/A

                               EXPLANATORY COMMENT

This Amendment No. 1 to the Annual Report on Form 10-KSB for El Capitan Precious
Metals, Inc, (the "Company") for the fiscal year ended September 30, 2005 is
being filed for the purpose of correcting and restating an error in ascribing a
value to certain securities held by the Company as described in more detail in
Footnote 4 to the Consolidated Financial Statements. Additionally, the Company
has incorporated additional disclosures in Items 1 and 2 to improve the
descriptions of the Company's business and properties.

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 AND ANY OTHER FACTORS DISCUSSED IN THIS
AND OTHER REGISTRANT FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.

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


                                       -1-

<PAGE>
                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

(a) Business Development

      El Capitan Precious Metals, Inc. (hereinafter, the "Company," "we" and
"our" refer to El Capitan Precious Metals, Inc.) is a precious minerals company
based in Scottsdale, Arizona. We are an exploration stage company that owns
interests in several 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 and the Weaver property located near
Congress, 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 a 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 ("Common Stock":
hereinafter, all references to shares of "Common Stock" shall include
adjustments for the four for one stock split effective November 25, 2002 and the
200% stock dividend effective July 30, 2004, as appropriate) held by Michael
Flores and Deborah Flores and $50,000 in cash.

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

      In August 2003, we acquired from Gold and Minerals certain assets known as
the COD 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 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. Since March 31, 2005, Mr. Lozensky has continued to provide
management services for the COD property without compensation from the Company.

                                      -2-

<PAGE>

      In May 2004, the Company 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, the Company was 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 effected by U.S. Canadian, the Company
currently holds 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 September 30, 2005, 1,000,000 of these shares were utilized as collateral for
a $300,000 debenture of the Company. Subsequent to the year end, the holder of
the debenture and the Company agreed to convert the debenture into a private
placement offering of the Company's securities. On October 28, 2005, the Company
used these shares as collateral security for a convertible promissory note
issued by the Company in the aggregate amount of $750,000.

      The 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,
its most recent SEC filings have not been reviewed by an independent registered
public accounting firm, and it faced a SEC imposed temporary trading suspension
in October of 2004, which has since expired. The Company also has continuing
involvement (as discussed below) related to the COD property. Based on these
factors, no gain on the sale was recorded and the Company has 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 is classified as a long term liability. Because these securities have
no readily ascertainable value on a securities exchange or over-the-counter
market, the Company has determined that the accounting prescribed for equity
securities in Statement of Financial Accounting Standard (SFAS) No. 115,
Accounting for Certain Investments in Debt and Equity Securities does not apply.
Changes in market value of these securities are accounted for as an adjustment
to the carrying value of the securities with a corresponding adjustment to the
carrying value of the deferred gain liability account. The transaction was
recorded in accordance with current Generally Accepted Accounting Principles
("GAAP").

      When the U.S. Canadian Common Stock resumes trading on the Bulletin Board,
and once the Company's assessment of the common stock allows for classification
of the securities as marketable securities, it intends to classify the
investment as available for sale under SFAS No. 115.

      Under the Joint Venture, the Company is to explore the COD site and
contribute the equipment as required. U.S. Canadian contributed 90 days
operating capital, which provided for three workers, fuel, necessary equipment,
and equipment repair and maintenance. The parties have also agreed to share the
costs and expenses 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 the Company and U.S. Canadian, and U.S. Canadian shall
retain 100% of any other profit. Currently this project is on hold as U.S.
Canadian is focusing on bringing current their SEC filings and to resume trading
on the Bulletin Board, and, accordingly, no exploratory work has been performed
as to determine the extent, if any, of potential minerals in the tailings.

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


                                       -3-

<PAGE>

      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 Gold and Minerals had.

      In July 2004, we signed an agreement with Mr. Bob Langguth regarding the
exploration of the Rainbow Valley property, consisting of claims located on
approximately 1,620 acres in Maricopa County, Arizona. Under the terms of this
agreement, we paid Mr. Langguth $2,500 per month from August 2004 to January
2006 for management of the testing, permitting and further development of the
property. Mr. Langguth passed away in January 2006, and the Company has not made
any decisions as to the continued management of the property since such time.

      Upon the completion of successful testing and permitting, we were required
to make a final payment of $100,000 to Mr. Langguth. In addition, we have agreed
to pay a royalty of $1.00 per ton for each ton of iron ore shipped from the
property as well as 3% of the profit before taxes for any sales of minerals from
this property. Considering Mr. Langguth's passing prior to the completion of
these steps, the Company has not determined how it intends to proceed with the
property.

(b) 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.

      The Company has been structured into two divisions: the (i) Precious
Metals Division and (ii) the Iron Ore Division. Through our Precious Metals
Division, we are continuing the exploration of the El Capitan, COD, and Weaver
property sites. As noted in more detail below in Item 2, these properties are in
various stages of exploration. After completing final testing to determine the
existence and concentration of precious metals or other minerals at these
properties, and if the results of such testing are positive, the Company
anticipates formalizing plans to sell one or more of these properties to major
mining companies in 2006 or later.

      Progress on the Iron Ore Division has been halted due to considerable
issues relating to rail transportation. The Company anticipates no additional
involvement in this area at this time.

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

Price of Precious Metals

      Gold, silver and platinum are each traded as investments on various world
markets including London, New York, Zurich and Tokyo and are fixed twice daily
in London. The "fix" is the reference price on which a large number of precious
metal transactions around the world are based. The price is set by a number of
market members matching buy and sell orders from all over the world.


                                      -4-
<PAGE>

      High, low and average London afternoon fix prices for gold, silver and
platinum for the period from January 1, 2005 to September 30, 2005 and for the
years ended December 31, 2004, 2003 and 2002 are as follows:

Gold - London Afternoon Fix Prices - US Dollars

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

Silver - London Afternoon Fix Prices - US Dollars

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

Platinum - London Afternoon Fix Prices - US Dollars

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

      Should we be successful in our exploration and locate gold or other
precious metals, our ability to sell 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, it will generate significant revenue from the sale of any
precious metals to provide appreciable revenue to our Company.

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, but rather to only
perform exploration on our properties with the anticipation of selling 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.


                                       -5-
<PAGE>

      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
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 $125 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. To date, we have only filed a plan of operation on the El Capitan
property. We were required to pay a reclamation bond of $15,000 in connection
with the plan of operation, and upon payment were issued a notice to proceed
from the BLM. This allows us to proceed with or current plan of operation on up
to 5 acres. The cost of obtaining a similar notice to proceed on our other
properties, or for future plans of operation on the El Capitan property, will be
determined by the BLM and be dependent upon the scope of the related activity,
and we are thus unable at this time to estimate the total cost of such permits.

      Although there is no guarantee that the regulatory agencies will timely
approve, 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 five employees, all of whom are full-time. Three of
these employees also serve as directors of the Company. Our non-employee
directors devote only such time to our business as is necessary to conduct the
administrative operations of the Company. Additionally, the Company uses
consultants for the testing and exploration 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.


                                       -6-
<PAGE>

Available Information

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

ITEM 2. DESCRIPTION OF PROPERTY

El Capitan Property

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

      The El Capitan property is owned by El Capitan Ltd., an Arizona
corporation. In 2002, in consideration of $100,000 and all of the outstanding
shares of our common stock, we acquired a 40% equity interest in El Capitan Ltd.
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, the Company 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. The additional staking and claiming
around our original site was done upon recommendations from the Company's
consulting geologist to insure protection of El Capitan Ltd's interests.

      On January 1, 2006, El Capitan, Ltd. 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, Ltd.
transferred to the selling parties 2,100,000 shares of ECPN Common Stock owned
by Gold and Minerals. Pursuant to an agreement between El Capitan, Ltd. 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 the Company's stock on
November 11, 2005. Pursuant to an arrangement with Gold and Minerals, ECPN is
obligated to pay 40% of the expenses of El Capitan, Ltd. (in proportion with its
equity ownership interest of El Capitan, Ltd.), and thus was obligated to pay
Gold and Minerals $688,800 for the purchase of the patented mining claims by
ECL. During the first quarter of fiscal year 2006, ECPN offset its portion of
the purchase price against existing obligations of Gold and Minerals to ECPN in
the aggregate amount of $612,416 relating to past expenditures relating to El
Capitan, Ltd. that were paid by ECPN, resulting in an obligation to Gold and
Minerals of $76,384, including interest, as of December 31, 2005.

      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 Capital Ltd., 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 Ltd. in 2002. Additionally, there
was geologic mapping of the property at a scale of 1:3,600 by Kelley in 1952.


                                      -7-
<PAGE>

      El Capitan Ltd. has obtained all the required permits to enter the
property and conduct drilling and other exploratory work. In addition to its
annual maintenance filings and payment of an annual maintenance fee to the BLM
for the claims ($125 per year) and of bulk fuel and water well permits ($5 each
per year), El Capitan Ltd. 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 Ltd. received from the BLM a Minimal
Impact Existing Mining Operation Permit enabling it to perform its current
exploratory programs.

      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 was 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. The Company has not completed a feasibility
study on the property, and thus cannot identify the economic significance of the
property at this time.

      The Company has retained AuRIC Metallurgical Labs of Salt Lake City, Utah
("AuRIC") to further test the El Capitan property. AuRIC offers significant
assay and metallurgical experience in the gold and platinum group metals. AuRIC
has performed tests on samples from the El Capitan property, which have resulted
in potential commercial values. We have also retained the services of Dr. Clyde
Smith to work with AuRIC in the testing 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.

      Over the years, samples taken on the property, including samples taken by
El Capitan Ltd., have given low-grade precious metal results when using standard
fire assay methods. In May 2004, we commissioned AuRIC to use its proprietary
alkali fusion assay method on samples taken from the property. Alkali fusion
assays, which are a more aggressive form of assay which completely convert the
sample into water soluble salts, are not currently an industry standard assay
method.

      In January 2005, El Capitan Ltd. completed a preliminary 32-sample surface
sampling and assay program on the property to determine the property's gold and
platinum potential using AuRIC's alkali fusion assay method. This preliminary
sampling was completed by Dr. Smith. An employee of AuRIC, which completed the
assay on the samples, assisted Dr. Smith in the latter portion of the sampling
process. This preliminary sampling and assay program was followed by two stages
of diamond drilling and rotary drilling, totaling 22 holes between April 2005
and August 2005.

      Stage 1 of the drilling program was completed between April and May 2005,
and consisted of 1,082 feet drilled in 12 vertical core holes, with depths
ranging from 15 to 133 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 2,092 feet of combined core and
rotary footage in 10 vertical holes, ranging from 81.5 to 344.5 feet in
additional drilling.

      As the alkali fusion process used by AuRIC is not standard, the Company
retained Mr. Richard Daniele, a metallurgical engineer with Daniele
Metal-Mineral Services, to complete an independent third-party verification of
the AuRIC results which were performed at an independent laboratory of Mr.
Michael J. Wendell of Wendell and Company. The results of the verification were
lower than the AuRIC results, but Mr. Daniele concluded that they were
sufficient to demonstrate that the alkali fusion assay method was a valid
analytical procedure to analyze materials and that verification of the AuRIC
results had been achieved.


                                       -8-
<PAGE>
      In each of the sampling processes, El Capitan Ltd. did not provide either
AuRIC or Mr. Wendell a blank quality control sample, which 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 samples. Blank quality control samples are relatively common practice
in the industry and are used effectively as placebos in the assay process to
ensure that samples are not contaminated at the lab. The Company's failure to
use a blank quality control sample as often used in the industry may have some
effect on the integrity of the results of such testing. As part of its internal
controls, AuRIC was, however, able to test its procedures with two certified
standard samples obtained by it from the Nevada Bureau of Mines and Geology (one
for gold and silver and one for gold, platinum and palladium) and two from the
CDN Resource Laboratories Ltd. of Delta, British Columbia (both of which were
for gold, platinum and palladium); a certified standard sample is a sample that
is made available to different labs to act as a placebo and tested to determine
a standard testing result, to which the assayer's results can be compared as a
check against contamination or other flaws in the assaying process. AuRIC
processed the certified standard samples and compared its results to the
standard results, enabling it to determine that its results were within a
suitable variance of the results obtained by the certified standards. A portion
of the certified standard samples obtained by AuRIC were also provided to Mr.
Wendell when completing the independent third-party verification.

      Based on the results from the assays, El Capitan Ltd. performed Stage 3
drilling in the first two quarters of fiscal year 2006. Stage 3 consisted of 23
holes of reverse circulation drilling totaling approximately 9,625 feet. Drill
cuttings are now at Auric, and fusion assays of these holes are now being
carried out.

      El Capitan Ltd. 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. El Capitan Ltd. does, however, have located at the El Capitan site
equipment acquired by Gold and Minerals during the periods 1998 - 2001 and
transferred to El Capitan, Ltd. This equipment, all of which is in general
working condition, is located at the site but currently unused:

      o     40 x 80 foot steel building;

      o     two impact mills;

      o     a screening plant;

      o     loaders;

      o     water tanks;

      o     conveyors;

      o     7,500 pound capacity furnace;

      o     UHF concentration tables;

      o     a fine grading attrition mill;

      o     chemical reactors;

      o     laboratory and fire assay equipment;

      o     150 and 250 kilowatt generators;

      o     a magnetic separator;

      o     a 150 pound furnace;

      o     and other miscellaneous mining supplies and equipment

      In the event the Company receives suitable testing results and report from
Dr. Smith, it intends to market the property for sale to potential buyers,
including major mining companies. On September 27, 2005, the Company entered
into an Agreement with Pavlich Associates (Pavlich) which provides for Pavlich
to be the primary representative of El Capitan Precious Metals, Inc. in the sale
of the El Capitan property to all viable third party mineral companies. The
Agreement provides for consulting time charges, expenses and a success fee of
$250,000, less the sum of the consulting time charges paid under the Agreement,
for the successful sale of the Project.

                                      -9-
<PAGE>

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.

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

      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. As administrator of the COD property, we are
to receive 50% of the profits from the gold and silver tailings, if any. We are
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, the Company has spent approximately
$2,500 on this project.

      The following equipment is located on the COD Mine property:

      o     45 x 94 foot steel building

      o     20 x 24 foot steel building

      o     small steel building for equipment

      o     gravity mill and associated equipment

      o     rod mill

      o     diagonal deck table

      o     various fuel and water storage tanks

      o     crushing circuit equipment and conveyors

      o     compressors and generators

      o     hoists

      o     52' head frame including head frame, ore skip and work car

      o     miscellaneous other mining supplies and equipment

      The equipment was acquired by Gold and Minerals when they acquired the
property.


                                      -10-
<PAGE>

      To date, the only activity that has been completed at the COD property is
the preliminary improvement of the road to the site to increase access and to
the mine entrance to improve security. We have applied for permits to perform
initial exploration on the property to take samples for analysis. We have not,
however, completed any material exploration to determine whether any potential
reserves exist at the site. In the event the joint venture receives suitable
testing results, it will determine the economic feasibility of successfully
marketing the property for sale to potential buyers, including major mining
companies. Currently, the project is on hold as U.S. Canadian has been focusing
on bringing current their SEC filings and to resume trading on the Bulletin
Board. Subsequent to our current year ended, in November 2005, our Board of
Directors approved an amendment to the joint venture agreement whereby the
Company will contribute $50,000 for the completion of the geological field
study. As consideration for this advance, the Company will be reimbursed this
advance and any other incurred expenses, and all net proceeds from the sale of
the site, after deducting all incurred costs, are to be split equally with U.S.
Canadian. Until we resume work on this property, Mr. Lozensky is completing the
necessary annual filings with the BLM to enable the joint venture to retain the
interest in the property, and serves as a liaison between the Company and U.S.
Canadian.

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 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.

      The Company intends to complete additional exploration of this property,
and depending on its findings, to determine the economic feasibility of the
property to be marketed for sale to potential buyers, including major mining
companies.

Rainbow Valley Property

      The Rainbow Valley property consists of approximately 1,620 acres located
in Maricopa county, approximately 30 miles south of Phoenix near Mobile,
Arizona. In July 2004, we signed an agreement with Mr. Bob Langguth regarding
the exploration of the Rainbow Valley property, consisting of claims located on
approximately 1,620 acres in Maricopa County, Arizona. The property was
permitted and was drilled and assayed in early 2005 to determine the iron ore
content of the site. Under the terms of the agreement, Mr. Langguth was to be
paid $2,500 monthly for managing the testing, further development of the
property, necessary permitting and consulting on other properties the Company
may have an interest in. Upon completion of the successful testing and
permitting of the site, the Company would be obligated to pay the seller
$100,000.

      The payments under this arrangement ceased in January 2006 due to the
death of Mr. Langguth. The Company has determined that it does not intend to
proceed with the testing or acquisition of this property.

Executive Offices

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


                                      -11-
<PAGE>

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.

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.

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

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

Risks Relating to Our Financial Condition

The volatility of precious metal prices may affect our earnings.

      We anticipate that a significant portion of our future revenues will come
from the sale of one or more of our properties. In such an event, our 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.


                                      -12-
<PAGE>

Unless we develop or are able to sell one or our properties, we will not have
enough cash to fund operations through the next fiscal year.

      As of September 30, 2005, we had only $131,772 of cash on hand. We will be
required to raise additional capital in financing transactions in order to
satisfy our expected cash expenditures. We continually evaluate business
opportunities, such as joint venture processing agreements, with the aim of
creating cash flow for working capital. Based on our current monthly utilization
of working capital, we have sufficient cash to fund operations through October
2005. In the event that we are unable to obtain additional capital, we may be
forced to reduce our operating expenditures or to cease development and
operations altogether. 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 exist that raise
substantial doubt about our ability to continue as a going concern.

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

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

                                      -13-
<PAGE>

      Further, due to the unique nature of the mineralization of our properties,
we have at times utilized, and may continue to utilize, 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.

Certain elements of El Capitan Ltd.'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.

      In January 2005, El Capitan Ltd. completed the first of multiple samplings
on the El Capitan property, the initial sampling being 32 surface samples
prepared for assaying. This preliminary sampling was completed by Dr. Smith. An
employee of AuRIC Metallurgical Labs, which subsequently performed the assay on
the samples, assisted Dr. Smith in collecting a portion of the samples in the
latter stages of the sampling. AuRIC's participation in both the sampling
process and completion of the assay on those samples creates the potential
question as to the independence of the involved parties and the integrity of the
results.

      To date, El Capitan Ltd. has not provided AuRIC and the other assayers a
blank quality control sample at the time it provided samples from the property.
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. Blank quality control
samples are relatively common practice in the industry and are used effectively
as placebos in the assay process to ensure that samples are not contaminated at
the lab. The Company's failure to use a blank check sample as often used in the
industry may have some effect on the integrity of the results of such testing.
As part of its internal controls, however, AuRIC instead obtained two certified
standard samples from the Nevada Bureau of Mines and Geology (one for gold and
silver and one for gold, platinum and palladium) and two from CDN Resource
Laboratories Ltd. of Delta, British Columbia (both of which were for gold,
platinum and palladium); a certified standard sample is a sample that is made
available to labs to again act as a placebo and tested to determine a standard
testing result, to which the assayer's results can be compared as a check
against contamination or other flaws in the assaying process. A portion of these
certified standard samples were also provided to Michael J. Wendell with respect
to a later assay completed by Mr. Wendell.

Our 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.

Any inability to retain key personnel may negatively affect our prospects.

      We are highly dependent upon the abilities and experience of our officers.
We may not be able to retain these individuals in the future, and the loss of
one or more of these individuals could have a material effect or our
administrative operations. The strong competition within the mining industry
makes the recruitment and retention of employees knowledgeable of the mining
industry difficult and crucial to success.

                                      -14-
<PAGE>

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 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 the
Company's 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
our claimed properties. The permitting requirements for our respective
properties and any future properties we may acquire will be somewhat dependent
upon the state in which the property is located, but generally will require an
initial filing and fee (of approximately $25) relating to giving notice of an
intent to make a claim on such property, followed by a one time initial filing
of a location notice with respect to such claim (approximately $165), an annual
maintenance filing for each claim (generally $125 per claim per year), annual
filings for bulk fuel and water well permits (typically $5 per year each) and,
to the extent we intend to take any significant action on a property (other than
casual, surface-level activity), a one time payment of a reclamation bond to the
Bureau of Land Management, or the BLM, which is to be used for the clean up of
the property upon completion of exploration or other significant activity. In
order to take any such significant action on a property, we are required to
provide the BLM with either a notice of operation or a plan of operation setting
forth our intentions. 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. With respect to our current plan of operations on the El Capitan
property, the reclamation bond was $15,000, but this amount will thus vary with
each property and respective notice or plan of operation.

                                      -15-

<PAGE>

      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 the Company currently has no source of revenue, the
payment of the costs of continued permitting is dependent upon our ability to
obtain financing. Additionally, the duration and success of our efforts to
obtain permits are contingent upon many variables outside of our control and may
increase costs of or cause delay to our mining endeavors. There can be no
assurance that all necessary approvals and permits will be obtained, and if they
are obtained, that the costs involved will make it economically unfeasible to
continue our exploration of some or all of our properties.

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, but rather only exploration with the intent
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 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 $125 per claim. If we fail to make the annual holding
payment or make the required filings, our mining claim would become invalid. In
accordance with the mining industry practice, generally a company will not
obtain title opinions until it's 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 that event we do not
have good title to our properties, we would be forced to curtail or cease our
business exploratory programs on the property site.

ITEM 3. LEGAL PROCEEDINGS

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

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

      None.


                                      -16-

<PAGE>

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED MATTERS

(a) Market Information

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

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

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

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

(b) Holders

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

(c) Dividends

      Effective on July 30, 2004, we paid a stock dividend equal to 200% of our
outstanding common stock on that date of 20,446,454 shares. We have not paid,
nor declared, any cash dividends since our inception and do not intend to
declare any such dividends in the foreseeable future. Our ability to pay
dividends is subject to limitations imposed by Nevada law. Under Nevada law,
dividends may be paid to the extent that a corporation's assets exceed its
liabilities and it is able to pay its debts as they become due in the usual
course of business.


                                      -17-

<PAGE>

(d) Equity Compensation Plan Information

<TABLE>
<CAPTION>
                                                                                     Number of securities
                                   Number of securities to     Weighted-average     remaining available for
                                   be issued upon exercise   price of outstanding    future issuance under
                                   of outstanding options,    options, warrants       equity compensation
                                     warrants and rights          and rights         plan (excluding (a))
                                             (a)                     (b)                      (c)
                                   -----------------------   --------------------   -----------------------
<S>                                       <C>                       <C>                    <C>
Equity compensation plans
  approved by security holders                   --                    --                         --
Equity compensation plans not
  approved by security holders            1,150,000                 $0.56                  3,558,381(1)
                                          ---------                 -----                  ---------
Total                                     1,150,000                 $0.56                  3,558,381
</TABLE>

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

(e) Recent Sales of Securities

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

      For each of the following transactions, we relied upon the exemptions from
registration provided by Sections 4(2) and/or 4(6) of the Securities Act and
Rule 506 promulgated thereunder based upon (i) the fact that each investor was
an accredited or sophisticated investor with experience in investing in
securities such that it could evaluate merits and risks related to our
securities; (ii) that no general solicitation of the securities was made by us;
(iii) the securities issued were "restricted securities" as that term is defined
under Rule 144 promulgated under the Securities Act; and (iv) we placed
appropriate restrictive legends on the certificates representing the securities
regarding the restricted nature of these securities. The shares were issued as
follows:

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

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


                                      -18-

<PAGE>

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

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

      Results of Operations. We have not yet realized any revenue from
operations, nor do we expect to realize potential revenues until late in the
second calendar quarter of 2006, if ever. Net loss increased $1,930,521 from
$1,314,320 for the year ended September 30, 2004 to $3,244,841 for the year
ended September 30, 2005. Our net loss increase in 2005 from 2004 was mainly due
to increases in: professional fees approximating $1,137,000, which consists of
legal, audit and review, finders and marketing fees; administrative consulting
fees approximating $419,000, which consist of the office support staff including
the CFO, Secretary and Vice President of Administration, Marketing and
Communication and their related duties; mine expenses approximating $676,000;
and general and administrative and other expenses approximating $115,000. These
increases were offset by decreases in officer compensation approximating
$102,000 and management fees to related parties approximating $204,000.

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

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

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

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

      Liquidity. As of September 30, 2005, we had only $131,772 of cash on hand.
We will be required to raise additional capital in financing transactions in
order to satisfy our expected cash expenditures. At September 30, 2005, based
upon the Company's current working capital utilization rate, the Company has
working capital to fund one and a quarter month's operations.

      The Company also contemplates the exercise of the call options on various
warrants, which if exercised, would provide the Company significant working
capital to continue its exploratory programs. Such warrants are callable at the
Company's option if (i) the closing sales price of the Company's common stock is
at or above $1.25 per share (subject to adjustment as appropriate for stock
splits, stock dividends, stock combinations, etc.) for a period of ten
consecutive days and (ii) the shares of common stock issuable upon exercise of
the warrants are covered under an effective registration statement. In such an
event, the Company must provide thirty days written notice of the Company's
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
the Company at a price per warrant share of $.001. 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. There are no assurances of success in Company's
ability to obtain continued financing through capital markets, joint ventures,
or other acceptable arrangements. If management's plans are not successful,
operations and liquidity may be adversely impacted. In the event that we are
unable to obtain additional capital, we may be forced to reduce our operating
expenditures or to cease development and operations altogether.


                                      -19-

<PAGE>

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

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

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

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

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


                                      -20-

<PAGE>

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

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


                                      -21-

<PAGE>

ITEM 7. FINANCIAL STATEMENTS

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

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                           Page
                                                                          ------
Reports of Independent Registered Public Accounting Firms..............      F-1

Consolidated Balance Sheet - September 30, 2005........................      F-3

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

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

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

Notes to Consolidated Financial Statements.............................     F-10


                                      -22-

<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

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

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

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

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

      As discussed in Note 4 to the accompanying consolidated financial
statements, the Company has restated the consolidated balance sheet as of
September 30, 2005.


/s/ Epstein Weber & Conover, PLC
Scottsdale, Arizona
January 6, 2006, except for Note 4, as to which the date is July 7, 2006


                                       F-1

<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

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

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of El Capitan
Precious Metals Inc. and Subsidiary for the year ended September 30, 2004 in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has no revenue producing operations, has
incurred substantial losses from operations and is in the exploration stage.
These factors raise substantial doubt about the Company's ability to continue as
a going concern. Management's plans with regard to these matters are described
in Note 1. The financial statements do not include any adjustments that might
result from the outcome of these uncertainties.


/s/ HEIN & ASSOCIATES LLP

Phoenix, Arizona
January 14, 2005


                                       F-2

<PAGE>

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

                           Consolidated Balance Sheet
                               September 30, 2005
                                   (Restated)

                              ASSETS
Current Assets:
  Cash                                                               $  131,772
  Advance to officer                                                      1,064
  Subscriptions receivable, common stock                                 68,000
  Prepaid expenses and other                                             12,123
  Due from affiliated company                                           351,946
  Note and interest receivable - affiliated company                     133,611
                                                                     ----------
    Total Current Assets                                                698,516
                                                                     ----------
Furniture and Equipment at Cost                                          69,101
  Less: accumulated depreciation                                         (7,790)
                                                                     ----------
                                                                         61,311
                                                                     ----------
Other Assets:
  Investment in exploratory properties                                  100,008
  Deposits                                                               16,445
  Note receivable net of allowance for doubtful account of $12,500           --
  Investment in common stock of USCA.PK                                 432,000
                                                                     ----------
                                                                     $1,308,280
                                                                     ==========
               LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
  Accounts payable                                                   $  293,950
  Accrued liabilities                                                   175,670
  Interest payable, other                                                18,344
  Notes payable, other                                                  300,000
                                                                     ----------
    Total Current Liabilities                                           787,964
Long-Term Note Payable, less discount of $90,758                        209,242
Deferred Gain                                                           432,000
                                                                     ----------
    Total Liabilities                                                 1,429,206
                                                                     ----------
Commitments, Contingencies and Subsequent Events (Notes 5, 8, 9
  and 13)
Stockholders' Deficit:
  Preferred stock, $0.001 par value;  5,000,000 shares
    authorized; none issued and outstanding                                  --
  Common stock, $0.001 par value; 300,000,000 shares authorized;
    69,408,749 issued and outstanding                                    69,409
  Additional paid-in capital                                          5,952,072
  Deficit accumulated during the exploration stage                   (6,142,407)
                                                                     -----------
    Total Stockholders' Deficit                                        (120,926)
                                                                     ----------
                                                                     $1,308,280
                                                                     ==========

                 See notes to consolidated financial statements.


                                       F-3

<PAGE>

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

                      Consolidated Statement of Operations

<TABLE>
<CAPTION>
                                                                            Period From
                                                                           July 26, 2002
                                                                            (Inception)
                                                Year Ended September 30,      Through
                                               -------------------------   September 30,
                                                  2005           2004           2005
                                               -----------   -----------   -------------
<S>                                            <C>           <C>            <C>
REVENUES                                       $        --   $        --    $        --
                                               -----------   -----------    -----------
GENERAL AND ADMINISTRATIVE EXPENSES:
  Professional fees                              1,497,752       360,288      2,760,649
  Officer compensation expense                     179,000       281,000        970,034
  Administrative consulting fees                   418,875            --        418,875
  Management fees, related parties                  36,000       240,000        320,500
  Legal and accounting fees                        209,108       188,399        462,490
  Exploration expenses                             691,746        15,631        707,377
  Other                                            161,747        46,800        225,071
                                               -----------   -----------    -----------
                                                 3,194,228     1,132,118      5,864,996
                                               -----------   -----------    -----------
LOSS FROM OPERATIONS                            (3,194,228)   (1,132,118)    (5,864,996)
                                               -----------   -----------    -----------
OTHER INCOME (EXPENSE):
  Interest income                                   16,313            --         16,313
  Interest expense:
    Related parties (Note 5)                          (739)      (12,623)       (28,220)
    Other                                          (44,552)      (38,329)      (112,619)
  Expenses associated with debt issuance and
    conversion                                     (21,635)     (131,250)      (152,885)
                                               -----------   -----------    -----------
                                                   (50,613)     (182,202)      (277,411)
                                               -----------   -----------    -----------
NET LOSS                                       $(3,244,841)  $(1,314,320)   $(6,142,407)
                                               ===========   ===========    ===========
Basic and diluted net loss per common
  share                                             $(0.05)       $(0.02)        $(0.11)
                                               ===========   ===========    ===========
Weighted average number of common
  shares outstanding                            67,395,928    54,707,858     53,768,274
                                               ===========   ===========    ===========
</TABLE>

                 See notes to consolidated financial statements.


                                       F-4

<PAGE>

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

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

<TABLE>
<CAPTION>
                                                                                            Deficit
                                                                                          Accumulated
                                         Common Stock                        Additional    During The
                                     --------------------      Stock           Paid-In    Exploration
                                       Shares      Amount   Subscriptions      Capital       Stage          Total
                                     ----------   -------   -------------    ----------   ------------    -----------
<S>                                   <C>         <C>            <C>          <C>         <C>            <C>
Initial issuance of common stock in
  September 2002, $0.00 per share     3,315,000   $ 3,315        $--          $ (3,306)   $        --    $         9
Net loss, period ended                       --        --         --                --        (21,577)       (21,577)
                                     ----------   -------        ---          --------    -----------     ----------
Balances at September 30, 2002        3,315,000     3,315         --            (3,306)       (21,577)       (21,568)
Issuance of common stock to Gold
  and Minerals Company, Inc. in
  connection with purchase of
  interest in assets of El Capitan,
  Ltd. in November 2002, $0.00
  per share                          30,225,000    30,225         --           (30,217)            --              8
Issuance of common stock for cash
  in November 2002, $0.00 per share   5,460,000     5,460         --            (5,446)            --             14
                                     ----------   -------        ---          --------    -----------     ----------
                                     39,000,000    39,000         --           (38,969)       (21,577)       (21,546)
Acquisition of DML Services, Inc.
  on March 17, 2003                   6,720,000     6,720         --           (56,720)            --        (50,000)
Common stock issued in connection
  with notes payable in March 2003,
  $0.03 per share                       525,000       525         --            16,975             --         17,500
Common stock and warrants issued
  for services in March 2003, $1.26
  per share                             150,000       150         --           188,850             --        189,000
Common stock issued under executive
  compensation agreement in March
  2003, $0.45 per share               1,057,140     1,057         --           478,943             --        480,000
Issuance of common stock to Gold
  and Minerals Company, Inc. in
  connection with purchase of COD
  property in August 2003, $0.00
  per share                           3,600,000     3,600         --            (3,600)            --             --
Common stock issued under
  management agreement in August
  2003, $0.35 per share               1,057,140     1,058         --           368,942             --        370,000
Net loss, year ended September 30,
  2003                                       --        --         --               --      (1,561,669)    (1,561,669)
                                     ----------   -------        ---          --------    -----------     ----------
Balances at September 30, 2003       52,109,280   $52,110        $--          $954,421    $(1,583,246)   $  (576,715)
</TABLE>

                 See notes to consolidated financial statements.


                                       F-5

<PAGE>

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

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

<TABLE>
<CAPTION>
                                                                                                   Deficit
                                                                                                 Accumulated
                                                Common Stock                        Additional    During The
                                            --------------------        Stock        Paid-In     Exploration
                                              Shares      Amount   Subscriptions     Capital        Stage          Total
                                            ----------   -------   -------------    ----------   -----------    -----------
<S>                                         <C>          <C>          <C>           <C>          <C>            <C>
Cost associated with warrants issued                --   $    --   $       --       $ 108,000    $        --    $   108,000
Common stock issued under executive
  compensation agreement in May 2004,
  $0.13 per share                            1,350,000     1,350           --         178,650             --        180,000
Common stock issued under management
  agreement in May 2004, $0.13 per share     1,350,000     1,350           --         178,650             --        180,000
Common stock issued for services in June
  2004, $0.20 per share                        836,760       837           --         163,728             --        164,565
Common stock issued in connection with
  notes payable in June 2004, $0.25
  per share                                    225,000       225           --          56,025             --         56,250
Common stock issued under executive
  compensation agreement in July 2004
  $0.14 per share                              285,714       286           --          39,714             --         40,000
Common stock issued under
  management agreement in July 2004,
  $0.14 per share                              285,714       285           --          39,715             --         40,000
Common stock issued for acquisition of
  Weaver property interest in July
  2004, $0.00 per share                      3,000,000     3,000           --          (3,000)            --             --
Common stock issued for services in
  July 2004, $0.15 per share                   703,740       704           --         105,128             --        105,832
Common stock issued for retirement of
  a note payable and accrued interest in
  July 2004, $0.13 per share                 1,343,154     1,343           --         177,744             --        179,087
Common stock issued under executive
  compensation agreement in August 2004
  $0.14 per share                              142,857       143           --          19,857             --         20,000
Common stock issued under
  management agreement in August
  2004, $0.14 per share                        142,857       143           --          19,857             --         20,000
Common stock issued for services in
  August 2004, $0.20 per share                  50,000        50           --           9,950             --         10,000
Common stock issued under executive
  compensation agreement in September
  2004, $0.43 per share                         46,511        46           --          19,954             --         20,000
Common stock issued under
  management agreement in September
  2004, $0.43 per share                         46,511        47           --          19,953             --         20,000
Common stock issued for retirement of
  notes payable and accrued interest
  in September 2004, $0.35 per share           751,518       751           --         262,280             --        263,031
Beneficial Conversion feature of Notes
  payable                                           --        --           --          75,000             --         75,000
Stock subscriptions                                 --        --       50,000              --             --         50,000
Net loss, year ended September 30, 2004             --        --          --               --     (1,314,320)    (1,314,320)
                                            ----------   -------      -------       ----------   -----------    -----------
Balances at September 30, 2004              62,669,616   $62,670      $50,000       $2,425,626   $(2,897,566)   $  (359,270)
</TABLE>

                 See notes to consolidated financial statements.


                                       F-6

<PAGE>

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

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

<TABLE>
<CAPTION>
                                                                                                  Deficit
                                                                                                Accumulated
                                                Common Stock                       Additional    During The
                                            --------------------       Stock         Paid-In    Exploration
                                              Shares      Amount   Subscriptions     Capital       Stage         Total
                                            ----------   -------   -------------   ----------   -----------   -----------
<S>                                         <C>          <C>         <C>           <C>          <C>           <C>
Subscribed stock issued                         20,000   $   200     $(50,000)     $   49,800   $        --   $        --
                                                                                                                  200,000
Common stock issued in settlement of
  accounts payable in October 2004, at
  $0.82 per share                               20,000        20            --         16,361            --        16,381
Common stock issued for professional
  in October 2004, at $0.66 per share          106,500       106            --         70,029            --        70,135
Common stock issued for consulting agree-
  ment in November 2004, $0.60 per share     1,536,859     1,537            --        920,578            --       922,115
Common stock sold in private placement
  in November 2004 at $0.50 per share        2,110,000     2,110            --      1,052,890            --     1,055,000
Common stock issued in settlement of
  Accounts payable in November 2004
  at $0.60 per share                            25,000        25            --         14,975            --        15,000
Common stock sold in private placement
  In December 2004 at $0.50 per share           50,000        50            --         24,950            --        25,000
Costs associated with warrants issued               --        --            --        135,000            --       135,000
Costs associated with stock private
  placement                                         --        --            --        (19,363)           --       (19,363)
Common stock sold in private placement
  in January 2005 at $0.50 per share           265,000       265            --        132,235            --       132,500
Common stock issued for retirement of
  notes payable and accrued interest in
  February 2004 at $0.40 per share             432,701       433            --        172,647            --       173,080
Common stock sold in private placement
  in March 2005 at $0.50 per share             200,000       200            --         99,800            --       100,000
Beneficial conversion of notes payable              --        --            --         21,635            --        21,635
Costs associated with warrants issued               --        --            --         14,000            --        14,000
Discounts associated with issuance of
  convertible debt with detachable
  warrants                                          --        --            --        113,448            --       113,448
Common stock sold in private placement
  May-June 2005 at $0.40 per share             880,000       880            --        351,120            --       352,000
Common stock sold in private placement
  In July 2005 at $0.40 per share              360,000       360            --        143,640            --       144,000
Common stock issued for consulting
  services In August 2005 at $0.57
  per share                                      8,772         9            --          4,991            --         5,000
Common stock issued for unpaid
  consulting In August 2005 at $0.38
  per share                                    544,291       544            --        207,706            --       208,250
Share rounding on affiliate share
  distribution to its shareholders                  10        --            --              4            --             4
Net loss, year ended September 30, 2005             --        --            --             --    (3,244,841)   (3,244,841)
                                            ----------   -------     ---------     ----------   -----------   -----------
Balances at September 30, 2005              69,408,749   $69,409     $      --     $5,952,072   $(6,142,407)  $  (120,926)
                                            ==========   =======     =========     ==========   ===========   ===========
</TABLE>

                 See notes to consolidated financial statements.


                                       F-7

<PAGE>

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

                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                 Period From
                                                                                July 26, 2002
                                                                                 (Inception)
                                                     Year Ended September 30,      Through
                                                    -------------------------   September 30,
                                                        2005          2004          2005
                                                    -----------   -----------   -------------
<S>                                                 <C>           <C>            <C>
Cash Flows From Operating Activities:
  Net loss                                          $(3,244,841)  $(1,314,320)   $(6,142,407)
  Adjustments to reconcile net loss to net cash
    used in operating activities:
  Costs associated with common stock and
    warrants                                          1,405,539       964,647      3,468,304
  Beneficial conversion feature of notes payable         21,635        75,000         96,635
  Amortization of discount on notes payable              22,690            --         40,190
  Provision for uncollectible note
    receivable                                           50,000            --         62,500
  Depreciation                                            7,790            --          7,790
  Changes in operating assets and liabilities:
      Increase in advance to  officer                    (1,064)           --         (1,064)
      Increase in interest receivable                   (13,611)           --        (13,611)
      Increase in prepaid expenses and other            (12,123)           --        (12,123)
      Increase in expense advances on behalf of
        affiliated company                             (351,946)           --       (351,946)
      Increase in deposits                              (16,445)           --        (16,445)
      Increase in accounts payable                      101,596       168,284        293,950
      Increase in accrued liabilities                   124,968        17,568        175,670
      (Decrease) in accrued liabilities,
        related parties                                      --       (70,500)            --
      (Decrease) increase in interest payable,
        related parties                                  (1,652)       12,968             --
      Increase in interest payable, other                 2,373        36,805         18,344
                                                    -----------   -----------    -----------
          Net Cash Used in Operating Activities      (1,905,091)     (109,548)    (2,374,213)
                                                    -----------   -----------    -----------
Cash Flows From Investing Activities:
  Purchase of property interest                              --       (14,000)      (100,000)
  Purchase of furniture and equipment                   (69,101)           --        (69,101)
  Issuance of notes receivable                         (236,930)           --       (249,430)
  Payments received on notes receivable                  66,930            --         66,930
  Cash paid in connection with acquisition of
    DLM Services, Inc.                                       --            --        (50,000)
                                                    -----------   -----------    -----------
      Net Cash Used in Investing Activities            (239,101)      (14,000)      (401,601)
                                                    -----------   -----------    -----------
Cash Flows From Financing Activities:
  Proceeds from the sale of common stock              1,740,500            --      1,740,523
  Costs associated with sale of stock                   (19,363)           --        (19,363)
  Proceeds from notes payable, related parties               --        47,400        219,900
  Proceeds of notes payable, other                      600,000        63,300      1,022,300
  Stock subscription received                                --        50,000         50,000
  Repayment of notes payable, related parties           (42,577)      (14,823)       (61,900)
  Repayment of notes payable, other                     (25,000)           --        (43,874)
                                                    -----------   -----------    -----------
      Net Cash Provided by Financing Activities       2,253,560       145,877      2,907,586
                                                    -----------   -----------    -----------
Increase in Cash                                        109,368        22,329        131,772
Cash, Beginning of Period                                22,404            75             --
                                                    -----------   -----------    -----------
Cash, Ending of Period                              $   131,772   $    22,404    $   131,772
                                                    ===========   ===========    ===========
</TABLE>

                 See notes to consolidated financial statements.


                                       F-8

<PAGE>

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

                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                  Period From
                                                                                 July 26, 2002
                                                                                  (Inception)
                                                      Year Ended September 30,      Through
                                                      ------------------------   September 30,
                                                           2005        2004          2005
                                                        ----------   --------    -------------
<S>                                                     <C>          <C>           <C>
SUPPLEMENTAL CASH FLOW INFORMATION:
    Cash paid for interest                              $      950   $  1,117      $    1,177
                                                        ==========   ========      ==========
    Cash paid for income taxes                          $       --   $     --      $       --
                                                        ==========   ========      ==========
SUPPLEMENTAL DISCLOSURE OF NON-CASH
  INVESTING AND FINANCING ACTIVITIES:
    Issuance of common stock to Gold and Minerals
      Company, Inc. in connection with the purchase
      of interest in of El Capitan, Ltd.                $       --   $      8      $        8
                                                        ==========   ========      ==========
    Issuance of common stock to Gold and Minerals
      Company, Inc. in connection with the purchase
      of the COD property (Note 1)                      $       --   $     --      $    3,600
                                                        ==========   ========      ==========
    Issuance of common stock to Gold and Minerals
      Company, Inc. in connection with the purchase
      of the Weaver property                            $       --   $  3,000      $    3,000
                                                        ==========   ========      ==========
    Costs associated with warrants issued               $  149,004   $108,000      $  257,004
                                                        ==========   ========      ==========
    Stock based compensation                            $1,205,500   $800,397      $3,044,897
                                                        ==========   ========      ==========
    Issuance of common stock for financing costs        $       --   $ 56,250      $   56,250
                                                        ==========   ========      ==========
    Issuance of common stock for interest costs         $    3,683   $     --      $   62,801
                                                        ==========   ========      ==========
    Conversion of accounts payable to equity            $   31,381   $     --      $   31,381
                                                        ==========   ========      ==========
    Conversion of accrued interest to equity            $   15,971   $     --      $   15,971
                                                        ==========   ========      ==========
    Conversion of notes payable and accrued
      interest for the issuance of common stock         $  153,426   $442,118      $  595,544
                                                        ==========   ========      ==========
</TABLE>

                 See notes to consolidated financial statements.


                                       F-9

<PAGE>

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

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2005 and 2004

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

      Business and Operations - On July 26, 2002, El Capitan Precious Metals,
      Inc. was incorporated as a Delaware corporation to engage in the business
      of acquiring 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 Company is in the exploration stage and since inception, has completed
      certain acquisitions and transactions (Note 2), but has not had any
      revenue producing operations.

      Organization - The Company was previously organized as DML Services, Inc.,
      a Nevada corporation, formed in 2000. On March 17, 2003, DML sold the
      assets and operations of its catering and food service business to the
      executive officers and directors of DML in exchange for the return of
      30,120,000 shares of DML and cash of $50,000, paid by El Capitan. On March
      18, 2003, DML acquired all of the issued and outstanding common stock of
      El Capitan in exchange for 39,000,000 shares of DML's common stock issued
      to the El Capitan stockholders, which represented 85% of the Company's
      total shares outstanding immediately following the exchange. As a result
      of a four share for one stock split completed by DML on November 25, 2002,
      and the retirement of 30,120,000 post-reverse-split shares which took
      place immediately prior to closing the transaction, the stockholders of
      DML hold 6,720,000 shares of the Company's common stock, which represents
      15% of the total outstanding shares of common stock of the Company
      immediately following the exchange.

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

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


                                      F-10

<PAGE>

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

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2005 and 2004

      The Company believes its cash requirements over the next fiscal year can
      be funded through a combination of financing activities completed and
      projected subsequent to year-end and prior to cash flow generated through
      operations. The Company has completed a private placement during the
      quarter ended December 31, 2005 (Note 13) and also completed a placement
      of a convertible debenture (Note 13). The Company also anticipates
      exercising the call option on various warrants, which, if exercised, would
      provide the Company significant working capital to continue its
      exploratory programs. We continually evaluate business opportunities such
      as joint venture processing agreements with the objective of creating cash
      flow to sustain the corporation and provide a source of funds for growth.
      While the Company believes it will be able to finance its continuing
      activities, there are no assurances of success in this regard or in the
      Company's ability to obtain continued financing through capital markets,
      joint ventures, or other acceptable arrangements. If management's plans
      are not successful, operations and liquidity may be adversely impacted.

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

NOTE 2 - ACQUISITIONS AND DIVESTITURES

      Acquisition of El Capitan Property from Gold and Minerals Company, Inc. -
      In October 2003, the Company completed the acquisition of a 40% equity
      interest in El Capitan, Ltd. ("ECL"), an Arizona corporation, which prior
      to the transaction was wholly-owned subsidiary of Gold and Minerals
      Company, Inc. ("Minerals"), a Nevada corporation. Minerals is affiliated
      with the Company in that it is a shareholder of the Company and the
      Company's CEO/President is a shareholder of Minerals. Minerals is involved
      in the exploration and testing of potential mineral properties.
      Consideration for the acquisition consisted of the issuance of 30,225,000
      shares of the Company's common stock to Minerals (which occurred in
      November 2002, and which constituted a 77.5% equity ownership in the
      Company prior to the reverse acquisition) and $100,000 cash, of which
      $86,000 was paid through September 30, 2003, and $14,000 was paid in
      October 2003. Minerals retained the remaining 60% ownership in El Capitan,
      Ltd.

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

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


                                      F-11

<PAGE>

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

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2005 and 2004

      On January 1, 2006, ECL finalized the purchase of four patented mining
      claims, constituting approximately 77.5 acres in aggregate, located in
      Lincoln County, New Mexico. The purchased claims are located on the El
      Capitan Mine property, which is owned by ECL. In consideration for the
      claims, ECL transferred 2,100,000 shares of the Company'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.

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

      Purchase of Mining Claims from Minerals - In August 2003, the Company
      acquired from Minerals certain mining claims granted by the United States
      Bureau of Land Management, buildings and personal property known as the
      COD property located near Kingman, Arizona. The COD property is an
      inactive underground mine 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 our Common
      Stock to Gold and Minerals, having a market value on the date of the
      transaction of approximately $1,440,000. Because the COD property was
      acquired from our then controlling stockholder in exchange for our 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 our consolidated financial statements.

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

      The USCA.PK common stock was restricted with respect to sale until May
      2005. USCA.PK's common stock is currently traded on the Pink Sheets, its
      most recent SEC filings have not been reviewed by an independent
      registered public accounting firm, and it faced a SEC imposed temporary
      trading suspension in October of 2004, which has since expired. The
      Company also has continuing involvement (as discussed below) related to
      the COD property. Based on these factors, no gain on the sale was recorded
      and the Company has 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 is classified as
      a long term liability. Because these securities have no readily
      ascertainable value on a securities exchange or over-the-counter market,
      the Company has determined that the accounting prescribed for equity
      securities in Statement of Financial Accounting Standard (SFAS) No 115,
      Accounting for Certain Investments in Debt and Equity Securities does not
      apply. Changes in market value of these securities are accounted for as an
      adjustment to the carrying value of the securities with a corresponding
      adjustment to the carrying value of the deferred gain liability account.
      The transaction was recorded in accordance with current GAAP.


                                      F-12

<PAGE>

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

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2005 and 2004

      The value of the USCA.PK at September 30, 2005 was determined as described
      in Note 4.

      When the USCA.PK common stock resumes trading on the Bulletin Board, and
      once the Company's assessment of the common stock allows for
      classification of the securities as marketable securities, it intends to
      classify the investment as available for sale under SFAS No. 115.

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

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

      Acquisition of Weaver Mining Claims - 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. At the time the
      Weaver Mine was acquired from our controlling stockholder in exchange for
      our Common Stock, Gold & 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 our financial
      statements and was done in accordance with current GAAP.

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


                                      F-13

<PAGE>

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

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2005 and 2004

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

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

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

      Fair Value of Financial Instruments - The fair values of the Company's
      financial instruments include cash, investments, accounts payable, accrued
      expenses and notes payable approximate their carrying amounts because of
      the short maturities of these instruments or because of restrictions.

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

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

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

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


                                      F-14

<PAGE>

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

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2005 and 2004

      Net Income (Loss) Per Share - SFAS No. 128, Earnings per Share, requires
      dual presentation of basic and diluted earnings or loss per share ("EPS")
      with a reconciliation of the numerator and denominator of the basic EPS
      computation to the numerator and denominator of the diluted EPS
      computation. Diluted EPS reflects the potential dilution that could occur
      if securities or other contracts to issue common stock (were exercised or
      converted into common stock or resulted in the issuance of common stock
      that then shared in the earnings of the entity. Basic loss per common
      share is computed based on weighted average shares outstanding and
      excludes any potential dilution from stock options, warrants and other
      common stock equivalents and is computed by dividing loss available to
      common shareholders by the weighted average number of common shares
      outstanding for the period. Diluted net loss per common share reflects
      potential dilution. These dilutive securities are not considered in the
      calculation, as the impact of the potential shares would be to decrease
      loss per share. Therefore, diluted loss per share is equivalent to basic
      loss per share. The historical loss per share of El Capitan prior to the
      merger has been retroactively restated to reflect the new capital
      structure.

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

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

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

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

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


                                      F-15

<PAGE>

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

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2005 and 2004

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

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

<TABLE>
<CAPTION>
                                                         Year Ended September 30,
                                                        -------------------------
                                                            2005         2004
                                                        -----------   -----------
<S>                                                     <C>           <C>
       Net loss, as reported                            $(3,244,841)  $(1,314,320)
       Add: total stock-based employee
         compensation expense included in
         reported net loss                                1,317,636            --
       Deduct - stock-based compensation
         expense determined under the fair
         value method, net of tax effect                 (1,369,202)           --
                                                        -----------   -----------
       Pro forma net loss                               $(3,296,407)  $(1,314,320)
                                                        ===========   ===========
       Loss per share:
           Net loss per share, as reported              $     (0.05)  $     (0.02)
                                                        ===========   ===========
           Net loss per share, pro forma                $     (0.05)  $     (0.02)
                                                        ===========   ===========
</TABLE>

      Impairment of Long-Lived Assets - Management assesses the carrying value
      of long-lived assets for impairment when circumstances indicate such
      amounts may not be recoverable from future operations. Generally, assets
      to be held and used are considered impaired if the sum of expected
      undiscounted future cash flows is less than the carrying amount of the
      asset. At September 30, 2005 and 2004, long-lived assets were recorded at
      no value in the consolidated financial statements.

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

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

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


                                      F-16

<PAGE>

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

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2005 and 2004

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

NOTE 4 - RESTATEMENT AND CORRECTION OF AN ERROR

      Certain balance sheet balances at September 30, 2005, have been restated
      to reflect the accounting for U. S. Canadian Minerals, Inc. (USCA.PK)
      common stock received for the sale of the COD property in May 2004.
      Subsequent to the Company's year ended September 30, 2005, the Company
      evaluated the transaction treatment under GAAP and determined that the
      Company's original treatment of assigning no value to the shares was
      inconsistent with GAAP. The Company corrected this error and valued the
      shares at market value aggregating $2,052,000 on the date of the
      transaction, and recorded an offsetting amount as a liability classified
      as deferred gain. The Company has a continuing involvement related to the
      COD property. Based on these factors, no gain on the sale was recognized
      and any future decrease in market value of the securities, the reduction
      in value will reduce the deferred gain liability account accordance with
      current GAAP.

      Based upon the market value of the USCA.PK stock on January 6, 2006, the
      Company valued the shares at $432,000 as of September 30, 2005, and
      accordingly, recorded an impairment of the stock value of $1,620,000, with
      the offsetting amount reducing the deferred gain liability account. A
      summary of the restatement is as follows:

                       Summary Consolidated Balance Sheet
                               September 30, 2005

<TABLE>
<CAPTION>
                                        As Previously   Restatement
                                          Reported       Adjustment   Restatement
                                        -------------   -----------   -----------
<S>                                       <C>             <C>          <C>
       Current Assets                     $ 698,516                    $  698,516
       Furniture and Equipment, net          61,311                        61,311
       Other Assets (Restated)              116,453       $432,000        548,453
                                         ---------                    ----------
       Total Assets                       $ 876,280                    $1,308,280
                                         =========                    ==========
       Current Liabilities                $ 787,964                    $  787,964
       Long-Term Note payable, Net          209,242                       209,242
       Deferred Gain (Restated)                  --        432,000        432,000
       Shareholders' Deficit               (120,926)                     (120,926)
                                         ---------                    ----------
       Total Liabilities and
         Shareholders' Deficit            $ 876,280                    $1,308,280
                                         =========                    ==========
</TABLE>


                                      F-17

<PAGE>

NOTE 5 - INVESTMENTS IN USCA.PK

      At September 30, 2005 the Company owned 2,160,000 shares of U.S. Canadian
      Minerals, Inc. common stock. The market value per unrestricted share at
      the closing of the market on September 30, 2005 was $0.39 and on January
      6, 2006 was $0.20, based on the last published sales price for these
      dates. The Company originally valued the shares at $2,052,000, the market
      value on the date of the transaction and recorded and offsetting amount as
      a liability classified as deferred gain. The Company has a continuing
      involvement related to the COD property. Based on these factors, no gain
      on the sale was recognized and any future decrease in market value of the
      securities, the reduction in value will reduce the deferred gain liability
      account in accordance with current GAAP.

      Based upon the market value of the USCA.PK stock on January 6, 2006, the
      Company valued the shares at $432,000 as of September 30, 2005, and
      accordingly, recorded an impairment of the stock value of $1,620,000, with
      the offsetting amount reducing the deferred gain liability account.

      On March 30, 2005, the Company pledged 1,000,000 shares of its USCA.PK
      investment as security for a secured convertible debenture note. See Note
      7 and Note 13.

NOTE 6 - RELATED PARTY TRANSACTIONS

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

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

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


                                      F-18

<PAGE>

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

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2005 and 2004

      Employment Agreement - In March 2003, the Company executed a two-year
      employment agreement under which the Company issued 600,000 shares of
      common stock to its President and Director as incentive compensation. The
      600,000 shares of common stock granted to the president were valued at
      $320,000, which was recorded as general and administrative expense in
      March 2003. The agreement calls for the President to be paid a salary of
      $20,000 per month commencing January 1, 2003, which, at the option of the
      President, may be satisfied in shares of the Company's common stock. As of
      March 31, 2005, the Company had issued 2,282,222 shares of common stock in
      payment of $420,000 of salary.

      Terms of the employment agreement also required the Company to issue
      1,500,000 shares of common stock to the President should the Company sell
      the El Capitan property during the term of the employment agreement. The
      Agreement expired on March 18, 2005 and no shares were issued under this
      provision. On February 1, 2005, the Board of Directors amended and
      extended only the conditional option provision of employment agreement,
      which provided conditional stock options to be granted to the president if
      the El Capitan property is sold. The amended provision for conditional
      stock options provides that if the sale of the property is for a price in
      excess of $150,000,000, during the period March 18, 2005 through March 18,
      2006, the Company is required to grant the president a five-year stock
      option to purchase 1,750,000 shares of the Company's common stock at an
      exercise price of $0.75 per share.

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

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

      Management Fees - The Company agreed to pay management fees to a
      stockholder ($5,000 per month beginning August 1, 2002), and its corporate
      secretary ($1,000 per month beginning October 1, 2002, increased to $3,500
      per month beginning January 1, 2003 and reduced to $2,500 a month in
      September 2004). The agreements were on a month-to-month basis. The
      Company paid or accrued management fees pursuant to these agreements of
      $171,000 and $72,000during the years ended September 30, 2004 and 2003,
      respectively, and $275,000 during the period from July 26, 2002
      (inception) through September 30, 2004. In June 2004, $68,100 representing
      the accrued management fees payable to the stockholder where converted to
      346,260 shares of common stock of the Company. In July 2004 the
      shareholder and corporate secretary converted $105,832 of accrued
      management fees to 703,740 shares of common stock of the Company. In
      August 2004 the corporate secretary converted accrued fees of $10,000 to
      50,000 shares of the Company's common stock. Accrued management fees at
      September 30, 2004 were $40,668. All conversion prices were equal to the
      closing price of the Company's common stock on the date of conversion.


                                      F-19

<PAGE>

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

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2005 and 2004

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

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

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

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

NOTE 7 - NOTES PAYABLE OTHER

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

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

NOTE 8 - LONG-TERM NOTE PAYABLE

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


                                      F-20

<PAGE>

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

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2005 and 2004

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

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

NOTE 9 - CONSULTING AGREEMENTS

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

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

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

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

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


                                      F-21

<PAGE>

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

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2005 and 2004

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

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

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

NOTE 10 - COMMITMENTS AND CONTINGENCIES

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

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

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

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


                                      F-22

<PAGE>

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

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2005 and 2004

NOTE 11 - INCOME TAXES

      The Company has incurred no current income taxes during the period from
      July 26, 2002 (inception) through September 30, 2005. At September 30,
      2005 and 2004, the Company has Federal operating loss carry forwards
      approximating $6,142,000 and $2,900,000, respectively, to reduce future
      taxable income, if any, and expires at various dates in 2022 through 2025.
      The calculated tax benefit at September 30, 2005 and 2004 is based on a
      Federal statutory income tax rate of 34%. The difference between the
      expected tax benefit and non-recognition of a tax benefit during the
      periods is the result of a valuation allowance applied to the net deferred
      tax asset, which consists of the Company's net operating loss carry
      forwards. A valuation allowance has been provided to reduce the net
      deferred tax asset, as realization of the asset is not assured.

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

NOTE 12 - ADOPTION OF 2005 STOCK INCENTIVE PLAN

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

NOTE 13 - STOCKHOLDER'S DEFICIT

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

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


                                      F-23

<PAGE>

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

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2005 and 2004

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

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

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

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

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

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

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

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

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

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

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

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

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


                                      F-24

<PAGE>

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

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2005 and 2004

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

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

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

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

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

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

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

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

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

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

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


                                      F-25

<PAGE>

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

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2005 and 2004

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

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

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

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

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

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

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


                                      F-26

<PAGE>

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

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2005 and 2004

<TABLE>
<CAPTION>
                                        Warrants Outstanding         Warrants Exercisable
                                     ---------------------------   ---------------------------
                                                      Weighted                     Weighted
                                      Number of       Average       Number of      Average
                                       Shares     Exercise Price     Shares     Exercise Price
                                     ----------   --------------   ----------   --------------
      <S>                            <C>               <C>         <C>               <C>
       Balance, September 30, 2003      300,000        $1.66          300,000        $1.66
         Granted                      3,000,000        $0.14        3,000,000        $0.14
         Exercised                           --        $  --               --           --
                                     ----------                    ----------
       Balance, September 30, 2004    3,300,000        $0.28        3,300,000        $0.28
         Granted                      4,715,000        $0.57        4,715,000        $0.57
         Exercised                           --           --               --           --
         Expired                     (3,000,000)       $0.14       (3,000,000)       $0.14
                                     ----------                    ----------
       Balance, September 30, 2005    5,015,000        $0.64        5,015,000        $0.64
                                     ==========        =====       ==========        =====
</TABLE>

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

<TABLE>
<CAPTION>
                           Warrants Outstanding               Warrants Exercisable
                     --------------------------------   --------------------------------
                                   Weighted Average                   Weighted Average
                                 --------------------               --------------------
         Range of                Remaining   Exercise               Remaining   Exercise
          Prices        Number      Life       Price      Number       Life       Price
       -----------   ---------   ---------   --------   ---------   ---------   --------
      <S>            <C>            <C>        <C>      <C>            <C>        <C>
       $0.83-$2.50     300,000       .5        $1.66      300,000       .5        $1.66
          $0.75      1,335,000      2.1        $0.75    1,335,000      2.1        $0.75
          $0.50      3,380,000      2.9        $0.50    3,380,000      2.9        $0.50
                     ---------                          ---------
                     5,015,000      2.5        $0.64    5,015,000      2.5        $0.64
                     =========      ===        =====    =========      ===        =====
</TABLE>

      At September 30, 2005, the Company had 3,380,000 warrants outstanding
      having a right to call feature. These warrants are callable at the
      Company's option if (i) the closing sales price of the Company's common
      stock is at or above $1.25 per share (subject to adjustment as appropriate
      for stock splits, stock dividends, stock combinations, etc.) for a period
      of ten consecutive days and (ii) the shares of common stock issuable upon
      exercise of the warrants are covered under an effective registration
      statement. In such an event, the Company must provide thirty days written
      notice. In the event the warrant holder does not exercise does not
      exercise the warrant within such thirty day time period, the warrants are
      redeemed by the Company at the price per warrant share of $.001.

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

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


                                      F-27

<PAGE>

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

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2005 and 2004

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

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

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

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

<TABLE>
<CAPTION>
                                          Options Outstanding         Options Exercisable
                                     --------------------------   ---------------------------
                                                    Weighted                      Weighted
                                     Number of       Average      Number of       Average
                                       Shares    Exercise Price     Shares     Exercise Price
                                     ---------   --------------   ---------   ---------------
      <S>                            <C>              <C>              <C>          <C>
       Balance, September 30, 2003          --        $  --            --           $--
         Granted                            --        $  --            --           $--
         Exercised                          --        $  --            --           $--
                                     ---------                        ---
       Balance, September 30, 2004          --        $  --            --           $--
         Granted                     1,150,000        $0.56            --           $--
         Exercised                          --        $  --            --           $--
         Expired                            --        $  --            --           $--
                                     ---------                        ---
       Balance, September 30, 2005   1,150,000        $0.56            --           $--
                                     =========        =====           ===           ===
</TABLE>

      The weighted average fair value of options granted in the year ended
      September 30, 2005 was $0.56.

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

NOTE 14 - SUBSEQUENT EVENTS

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

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

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


                                      F-28
<PAGE>

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

                   Notes to Consolidated Financial Statements

                     Years Ended September 30, 2005 and 2004

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

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

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

      On January 1, 2006, El Capitan, Ltd, an Arizona corporation (`ECL") of
      which the Company owns a 40% equity interest, finalized the purchase of
      four patented mining claims, constituting approximately 77.5 acres in
      aggregate, located in Lincoln County, New Mexico. The purchased claims are
      located on the El Capitan property, which is owned by ECL. In
      consideration for the claims, ECL transferred 2,100,000 shares of the
      Company's common stock owned by Minerals, which holds the remaining 60%
      equity interest in ECL. 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.

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


                                      F-29

<PAGE>

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

            On October 25, 2004 our Board of Directors approved the dismissal of
Gelfond Hochstadt Pangburn, P.C. as our independent registered public accounting
firm.

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

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

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

      On November 25, 2005, our Board of Directors approved the dismissal of
Hein & Associates LLP as our independent registered public accounting firm. This
decision was precipitated by the future closing of the Hein & Associates LLP
Phoenix, Arizona based office.

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

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

      We made the contents of our Current Report on Form 8-K filing dated
November 25, 2005 available to Hein Associates LLP and requested it to furnish a
letter to the Securities and Exchange Commission as to whether Hein & Associates
agreed with or wished to clarify our expression of their views. A copy of Hein &
Associates LLP letter to the SEC dated November 30, 2005 is included as Exhibit
16.1 to the Form 8-K.


                                      -23-

<PAGE>

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

ITEM 8A. CONTROLS AND PROCEDURES

      We maintain "disclosure controls and procedures" (as defined in Rules
13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as
amended (the "Exchange Act")) that are designed to ensure that information
required to be disclosed by us in the reports that we file or submit under 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 is accumulated and communicated to our management as appropriate to allow
timely decisions regarding required disclosure. Under the supervision of, and
the participation of, our management, including our Chief Executive Officer and
Chief Financial Officer, we have conducted an evaluation of our disclosure
controls and procedures as of September 30, 2005. Based on this evaluation, our
Chief Executive Officer and Chief Financial Officer have concluded that our
disclosure controls and procedures are effective.

      During the quarter ended September 30, 2005, there were no changes in the
Company's internal controls over financial reporting that have materially
affected, or are reasonably likely to materially affect, our internal controls
over financial reporting.


                                      -24-

<PAGE>

PART III

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

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

(a) Identification of Directors and Executive Officers

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

NAME                 AGE   POSITION                                SINCE
----                 ---   --------                                -----
Charles C. Mottley    71   President, Chief Executive Officer
                           and Director                            July 2002
James Ricketts        67   Director and Secretary                  July 2004
Stephen J. Antol      62   Chief Financial Officer and Treasurer   November 2004
L. Ronald Perkins     60   Director and Vice President of
                           Administration, Marketing and
                           Communication                           January 2005
R. William Wilson     48   Director                                February 2005
W. Pierce Carson      62   Director                                February 2005

      Charles C. Mottley. Mr. Mottley has been President, Chief Executive
Officer and a Director of El Capitan Precious Metals, Inc. since July 2002. Mr.
Mottley also served as Chairman and Chief Executive Officer of Gold and Minerals
Co., Inc., our largest stockholder, from 1978 until July 2004, at which time he
resigned those positions. Mr. Mottley has been employed in the mining industry
in various capacities from equipment sales and services to active mining
operations for over 35 years. Mr. Mottley is the author of five books, is the
founder of the Fatherhood Foundation in Scottsdale, Arizona, and is on the board
of directors of Mirror Ministries in the same community. Mr. Mottley received a
Bachelor of Arts Degree from Hampden Sydney College in 1958.

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

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


                                      -25-

<PAGE>

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

      R. William Wilson. Mr. Wilson has been a director of our Company since
February 2005. Since 2003, Mr. Wilson has been a principal in Two Dragons Group,
LLC, a marketing and business development firm engaging in private equity and
merger and acquisition transactions. From 1999 to 2002, Mr. Wilson served as
Chief Financial Officer of Pebble Technology, Inc., and from 2002 to 2003,
served as its Chief Executive Officer. Prior to that, Mr. Wilson served as an
Executive Director and co-founder of Drexel Oceania, LLC. Mr. Wilson received
his Bachelor or Science degree in Business Administration and Finance from the
University of San Francisco in 1979.

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

(b) Significant Employees

      Not applicable.

(c) Family Relationships

      None.

(d) Involvement in Certain Legal Proceedings

      Not applicable.

(e) Audit Committee Financial Expert

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


                                      -26-

<PAGE>

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

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

<TABLE>
<CAPTION>
                                                                              Required        Actual Filing
Name of Filer:                          Description of Transaction:           Filing Date:     Date:
--------------                          ---------------------------           -------------   -------------
<S>                                     <C>                                   <C>             <C>
Stephen J. Antol                        Initial filing on Form 3              11/11/2004      3/16/2005
                                        Grants of Common Stock in exchange
                                        for salary  - from 8/17/05 to                         Reported by
                                        10/27/05 and a purchase by his        8/19/2005 to    Amendment on
                                        spouse on 11/5/05                     11/8/2005       12/19/05

W. Pierce Carson                        Initial filing on Form 3              2/28/2005       7/19/2005
Gold and Minerals Co., Inc. (a former   Sales on 3/9/2005 and 3/10/2005       3/11/2005       3/18/05
greater than 10% holder)                                                      7/11/2005 to
                                        Sales from 7/7/2005 to 7/14/2005      7/18/2005       7/22/2005
                                                                                              Reported by
                                                                                              Amendment on
                                        Sales on 7/15/2005                    7/19/2005       9/7/2005
                                        Distribution of shares to
                                        shareholders on 9/2/2005              9/7/2005        9/27/2005
                                                                              10/25/2005 to
                                        Sales from 10/21/2005 to 10/26/2005   10/28/2005      11/16/2005

L. Ronald Perkins                       Grants of Common Stock in exchange                    Reported by
                                        for salary - from 8/17/05 to          8/19/2005 to    Amendment on
                                        10/27/05                              10/31/2005      12/16/05

James G. Ricketts                       Award of stock options 7/21/2005      7/25/2005       7/28/2005
                                        Grants of Common Stock in exchange                    Reported by
                                        for salary  - from 8/17/05 to         8/19/2005 to    Amendment on
                                        10/27/05                              10/31/2005      12/16/05
</TABLE>


                                      -27-

<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

(a) General

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

      Beginning October 1, 2003, Mr. Thomas Olson, our Secretary at that time,
received a management-consulting fee of $1,000 per month. Effective January 1,
2003, that amount was increased to $3,500 per month, which, at the option of Mr.
Olson, could be paid in shares of the Company's Common Stock. Mr. Olson's total
compensation for the fiscal year ended September 30, 2003 was $34,500. Of that
amount, $4,000 was paid in cash during the fiscal year and $30,500 was accrued.
For the fiscal year ended September 30, 2004, Mr. Olson received total
compensation of $35,000 for his services as an officer of the Company as well as
$7,000 in consulting fees for services rendered following his resignation as an
officer in July 2004. In July and August of 2004, Mr. Olson converted a total of
$44,000 of the amounts owed to him to 100,000 shares of Common Stock of the
Company.

(b) Summary Compensation Table

<TABLE>
<CAPTION>
                                                                                                All Other
                                                                                              Compensation
                                  Annual Compensation              Long-Term Compensation           ($)
                         -------------------------------------   --------------------------   ------------
                                                  Other Annual    Restricted    Securities
Name and Principal              Salary    Bonus   Compensation   Stock Awards   Underlying
Position                 Year     ($)      ($)         ($)            (#)       Options (#)
----------------------   ----   -------   -----   ------------   ------------   -----------
<S>                      <C>    <C>        <C>      <C>            <C>            <C>              <C>
Charles C. Mottley       2005   105,000    -0-          -0-        183,508(2)     300,000          -0-
  President/Chief
  Executive              2004   240,000    -0-          -0-                            -0-         -0-
  Officer/Director (1)
                         2003   180,000    -0-          -0-        600,000(2)          -0-         -0-
Stephen J. Antol         2005        -0-   -0-      41,739(3)      172,551(3)     150,000          -0-
  Chief Financial
  Officer/Treasurer
James G. Rickets         2005        -0-   -0-      50,000(3)      149,600(3)     200,000          -0-
  Secretary/Director
L. Ronald Perkins        2005        -0-   -0-      23,250(3)      131,356(3)     200,000          -0-
   Vice
  President/Director
</TABLE>


                                      -28-

<PAGE>

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

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

(3)   Received in consideration of services rendered to the Company as a
      consultant for the performance of duties commensurate with such person's
      executive office.

(c)   Option grants during last fiscal year

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

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

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

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

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

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

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


                                      -29-

<PAGE>

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

      Not Applicable.

(f) Compensation of directors

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

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

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

      In March 2003, the Company executed a two-year employment agreement under
which the Company issued 600,000 shares of common stock to its President and
Director as incentive compensation. The 600,000 shares of common stock granted
to the president were valued at $320,000, which was recorded as general and
administrative expense in March 2003. The agreement calls for the President to
be paid a salary of $20,000 per month commencing January 1, 2003, which, at the
option of the President, may be satisfied in shares of the Company's common
stock. As of March 31, 2005, the Company had issued 2,282,222 shares of common
stock in payment of $420,000 of salary.

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

(h) Report on repricing of options/SARs

      Not Applicable.


                                      -30-

<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The following table sets forth as of January 10, 2006, the number and
percentage of the 72,314,813 shares of outstanding Common Stock which, according
to the information supplied to the Company, were beneficially owned by (i) each
person who is currently a director of the Company, (ii) each executive officer,
(iii) all current directors and executive officers of the Company as a group and
(iv) each person who, to the knowledge of the Company, is the beneficial owner
of more than 5% of the outstanding common stock. Except as otherwise indicated,
the persons named in the table have sole voting and dispositive power with
respect to all shares beneficially owned, subject to community property laws
where applicable.

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

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

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

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

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

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

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

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


                                      -31-

<PAGE>

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

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

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

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

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      In September 2002, we borrowed $120,000 from Wayne Mills, a stockholder
who then held in excess of a 5% of our outstanding securities, and issued
unsecured notes to Mr. Mills in consideration thereof. In April 2003, we
borrowed an additional $38,000 from Mr. Mills and again issued unsecured notes.
The notes bore interest at 8% and were due on demand. On July 14, 2004, all
principal and interest due on the note totaling $179,087 was converted into
1,343,154 shares of Common Stock at $0.133 per share, the closing price of our
Common Stock on that date. The Company believes the terms of our loan from Mr.
Mills were as good or better than those we would have received from an
unaffiliated third party.

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


                                      -32-

<PAGE>

      During the fiscal year ended September 30, 2003, Mr. Mottley loaned us a
total of $13,500, of which $3,500 was repaid prior to the fiscal year end. The
remaining balance of $10,000 was due on demand with an interest rate of 8% per
annum. During the fiscal year ended September 30, 2004, Mr. Mottley loaned us an
additional $13,400 on the same terms. As of September 30, 2005, all loans and
accrued interest have been paid in full. The Company believes the terms of our
loan from Mr. Mottley were as good or better than those we would have received
from an unaffiliated third party.

      Beginning October 1, 2002, Mr. Thomas Olson, our Secretary at that time,
received a management-consulting fee of $1,000 per month. Effective January 1,
2003, that amount was increased to $3,500 per month, which, at the option of Mr.
Olson, could be paid in shares of the Company's Common Stock. Mr. Olson's total
compensation for the fiscal year ended September 30, 2003 was $34,500. Of that
amount, $4,000 was paid in cash during the fiscal year and $30,500 was accrued.
For the fiscal year ended September 30, 2004, Mr. Olson received total
compensation of $35,000 for his services as an officer of the Company as well as
$7,000 in consulting fees for services rendered following his resignation as an
officer in July 2004. In July and August of 2004, Mr. Olson converted a total of
$44,000 of the amounts owed to him to 100,000 shares of Common Stock of the
Company. Mr. Olson continued to provide services to the Company on a consulting
basis through December 31, 2004 for a monthly consulting fee of $2,500.

      On September 10, 2003, we entered into a management consulting agreement
with Mr. Larry Lozensky, the President of Gold and Minerals, pursuant to which
Mr. Lozensky agreed to continue to manage and oversee 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 until
March 31, 2005, Mr. Lozensky continued to manage the COD Mine on behalf of the
Company on a month-to-month basis for a management-consulting fee of $10,000 per
month. Mr. Lozensky is not currently compensated for the management and
oversight of the COD property. The Company believes the terms of our agreement
with Mr. Lozensky were similar to those would have received from an unaffiliated
third party.

      In July 2004, we acquired from Gold and Minerals the Weaver property 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 property was acquired from our controlling stockholder in exchange
for our Common Stock and the controlling shareholder's basis in the property was
zero, the transaction was accounted for as a non-monetary exchange and the
Weaver property was recorded at no value on our financial statements.

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


                                      -33-

<PAGE>

      In October 2004 the Company loaned $120,000 at an interest rate of 12% per
annum to Gold and Minerals Co., Inc., its majority shareholder. Gold and
Minerals pledged the Company 1,000,000 shares of the Company's common stock held
in Gold and Minerals name to secure the loan. The Company believes the terms of
this loan to Gold and Minerals were similar to or better than terms it would
have provided to an unaffiliated third party.

      In November 2004 the Company loaned $66,930 at an interest rate of 12% per
annum to Castle Canyon Townhomes, LLC, a limited liability company of which
James G. Ricketts, one or our directors, was a member. This loan and accrued
interest was paid in full on January 19, 2005. The Company believes the terms of
this loan were similar to or better than terms it would have provided to an
unaffiliated third party.

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

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

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

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

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

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

3.2   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 By Laws (incorporated by reference to Exhibit 3.3 of the
      Company's Registration Statement on Form SB-2 filed on July 11, 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)


                                      -34-

<PAGE>

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).

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

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

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

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

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

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

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


                                      -35-

<PAGE>

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

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

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

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

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

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

10.14 Security Agreement entered into as of October 28, 2005, by and among the
      Company and Whitebox Intermarket Partners, L.P. (incorporated by reference
      to Exhibit 10.15 to the Company's Registration Statement on Form SB-2/A
      filed on August 9, 2006).

10.15 Consulting Agreement dated August 22, 2005 by and between the Company and
      Clyde L. Smith.

10.16 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).

10.17 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 or around August 30, 2006).

23.1  Consent of Clyde Smith

23.2  Consent of AuRIC Metallurgical Labs

23.3  Consent of Richard Daniele

23.4  Consent of Michael J. Wendell

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

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

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

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


                                      -36-

<PAGE>

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

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

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

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

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

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

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

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

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

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


                                      -37-

<PAGE>

                                   SIGNATURES

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

                                    EL CAPITAN PRECIOUS METALS, INC.


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

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

<TABLE>
<CAPTION>
 Name                                   Title                                     Date
------                                 -------                                   ------
<S>                                    <C>                                       <C>
      /s/ Charles C. Mottley           President and Chief Executive Officer     September 12, 2006
------------------------------------   (Principal Executive Officer
          Charles C. Mottley

                                       Chief Financial Officer and Treasurer     September 12, 2006
      /s/ Stephen J. Antol             (Principal Financial and Accounting
------------------------------------   Officer)
          Stephen J. Antol

      /s/ James Ricketts               Director and Secretary                    September 12, 2006
------------------------------------
          James Ricketts

      /s/ L. Ronald Perkins            Director                                  September 12, 2006
------------------------------------
          L. Ronald Perkins

      /s/ R. William Wilson            Director                                  September 12, 2006
------------------------------------
          R. William Wilson
</TABLE>

                                      -38-