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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Amendment No. 1)

þ  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2014

¨  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

(Exact name of registrant as specified in its charter)

Nevada	88-0482413
(State or Other Jurisdiction	(I.R.S. Employer
Incorporation or Organization)	Identification No.)

8390 Via de Ventura, Suite F-110
Scottsdale. Arizona	85258
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code:   (928) 515-1942

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

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

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

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

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

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Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files).   Yes  þ   No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   þ

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

Large accelerated filer  ¨    Accelerated filer  ¨    Non-accelerated filer  ¨     Smaller reporting company  þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes  ¨   No  þ

The aggregate market value of the registrant’s voting common stock held by non-affiliates of the registrant as of March 31, 2014 (the last business day of the registrant’s most recently completed second fiscal quarter), was approximately $58,142,348 based on the last trading price of the registrant’s common stock of $0.23 as reported on the OTC Bulletin Board on such date.

As of December 29, 2014, the registrant had 278,053,877 shares of its $.001 par value common stock issued and outstanding.

Documents incorporated by reference:  None.

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EXPLANATORY NOTE

El Capitan Precious Metals, Inc. is filing this Form 10-K/A (Amendment No. 1) to our Annual Report on Form 10-K for the year ended September 30, 2014 filed with the Securities and Exchange Commission on December 29, 2014, for the purpose amending certain disclosures regarding our business and properties as of such dates set forth in Part I, Items 1 and 2, Part II, Items 7 and 8, of the original Form 10-K, and to reflect exhibits filed with this Amendment No. 1.

Except as described above, this Form 10-K/A does not modify or update other disclosures in the Form 10-K, including the nature and character of such disclosure to reflect events occurring after the filing date of the original Form 10-K. Although we are amending only certain portions of the original Form 10-K, for convenience and ease of reference, we are filing the entire Form 10-K, except for certain exhibits. Accordingly, this Form 10-K/A should be read in conjunction with our filings made with the Securities and Exchange Commission. The filing of this Form 10-K/A is not an admission that the original 10-K, when filed, included any untrue statement of a material fact or omitted to state a material fact necessary to make a statement not misleading.

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EL CAPITAN PRECIOUS METALS, INC.

TABLE OF CONTENTS

		Page
Cautionary Note Regarding Exploration State Status		5
SEC Industry Guide 7 Definitions		6
Cautionary Statement on Forward-Looking Statements		7
PART I
Item 1	Business	8
Item 1A	Risk Factors	14
Item 1B	Unresolved Staff Comments	19
Item 2	Properties	19
Item 3	Legal Proceedings	29
Item 4	Mine Safety Disclosures	29
PART II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	30
Item 6	Selected Financial Data	31
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	34
Item 8	Financial Statements and Supplementary Data	35
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	58
Item 9A	Controls and Procedures	58
Item 9B	Other Information	59
PART III
Item 10	Directors, Executive Officers and Corporate Governance	60
Item 11	Executive Compensation	61
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	65
Item 13	Certain Relationships and Related Transactions, and Director Independence	67
Item 14	Principal Accountant Fees and Services	69
PART IV
Item 15	Exhibits and Financial Statement Schedules	70
SIGNATURES		72

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CAUTIONARY NOTE REGARDING EXPLORATION STAGE STATUS

We are considered an “exploration stage” company under the U.S. Securities and Exchange Commission (“SEC”) Industry Guide 7, Description of Property by Issuers Engaged or to be Engaged in Significant Mining Operations (“Industry Guide 7”), because we do not have reserves as defined under Industry Guide 7.  Reserves are defined in Guide 7 as that part of a mineral deposit which can be economically and legally extracted or produced at the time of the reserve determination.  The establishment of reserves under Guide 7 requires, among other things, certain spacing of exploratory drill holes to establish the required continuity of mineralization and the completion of a detailed cost or feasibility study.

Because we have no reserves as defined in Industry Guide 7, we have not exited the exploration stage and continue to report our financial information as an exploration stage entity as required under Generally Accepted Accounting Principles (“GAAP”).  Although for purposes of FASB Accounting Standards Codification Topic 915, Development Stage Entities, we have exited the development stage and no longer report inception to date results of operations, cash flows and other financial information, we will remain an exploration stage company under Industry Guide 7 until such time as we demonstrate reserves in accordance with the criteria in Industry Guide 7.

Because we have no reserves, we have and will continue to expense all mine construction costs, even though these expenditures are expected to have a future economic benefit in excess of one year.  We also expense our reclamation and remediation costs at the time the obligation is incurred.  Companies that have reserves and have exited the exploration stage typically capitalize these costs, and subsequently amortize them on a units-of-production basis as reserves are mined, with the resulting depletion charge allocated to inventory, and then to cost of sales as the inventory is sold.  As a result of these and other differences, our financial statements will not be comparable to the financial statements of mining companies that have established reserves and have exited the exploration stage.

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SEC INDUSTRY GUIDE 7 DEFINITIONS

The following definitions are taken from the mining industry guide entitled “Description of Property by Issuers Engaged or to be Engaged in Significant Mining Operations” contained in the Securities Act Industry Guides published by the United States Securities and Exchange Commission, as amended.

Exploration State	The term “exploration state” (or “exploration stage”) includes all issuers engaged in the search for mineral deposits (reserves) which are not in either the development or production stage.
Development Stage	The term “development stage” includes all issuers engaged in the preparation of an established commercially mineable deposit (reserves) for its extraction which are not in the production stage. This stage occurs after completion of a feasibility study.
Mineralized Material	The term “mineralized material” refers to material that is not included in the reserve as it does not meet all of the criteria for adequate demonstration for economic or legal extraction.
Probable (Indicated) Reserve	The term “probable reserve” or “indicated reserve” refers to reserves for which quantity and grade and/or quality are computed from information similar to that used for proven (measured) reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation.
Production Stage	The term “production stage” includes all issuers engaged in the exploitation of a mineral deposit (reserve).
Proven (Measured) Reserve	The term “proven reserve” or “measured reserve” refers to reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling and (b) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well-established.
Reserve	The term “reserve” refers to that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. Reserves must be supported by a feasibility study done to bankable standards that demonstrates the economic extraction. (“Bankable standards” implies that the confidence attached to the costs and achievements developed in the study is sufficient for the project to be eligible for external debt financing.) A reserve includes adjustments to the in-situ tons and grade to include diluting materials and allowances for losses that might occur when the material is mined.

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CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS 

This report may contain certain “forward-looking” statements as such term is defined by the Securities and Exchange Commission in its rules, regulations and releases, which represent the registrant’s expectations or beliefs, including but not limited to, statements concerning the registrant’s operations, economic performance, financial condition, growth and acquisition strategies, investments, and future operational plans. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,”  “believe,” “anticipate,” “intent,” “could,” “estimate,” “might,” “plan,” “predict” or “continue” or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, certain of which are beyond the registrant’s control, and actual results may differ materially depending on a variety of important factors, including uncertainty related to acquisitions, governmental regulation, managing and maintaining growth, the operations of the company and its subsidiaries, volatility of stock price, commercial viability of any mineral deposits and any other factors discussed in this and other registrant filings with the Securities and Exchange Commission.

These risks and uncertainties and other factors include, but are not limited to those set forth under Item 1A. Risk Factors of this Annual Report on Form 10-K. 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 us or to persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Except as otherwise required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statements or the risk factors described in this Annual Report or in the documents we incorporate by reference, whether as a result of new information, future events, changed circumstances or any other reason after the date of this Annual Report on Form 10-K.

Given these risks and uncertainties, readers are cautioned not to place undue reliance on our forward-looking statements.

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PART I

ITEM 1. BUSINESS

El Capitan Precious Metals, Inc., a Nevada corporation, is based in Scottsdale, Arizona. Together with its consolidated subsidiaries (collectively referred to as “El Capitan,” the “Company,” “our” or “we”), the Company is an exploration stage company as defined by the Security and Exchange Commission’s (“SEC”) Industry Guide 7, as the Company has no established reserves as required under the Industry Guide 7. We are principally engaged in the exploration of precious metals and other minerals. Our primary asset is the 100% equity interest in El Capitan, Ltd., an Arizona corporation (“ECL”), which holds an interest in the El Capitan property located near Capitan, New Mexico (the “El Capitan Property”). We have completed the research and confirmation procedures on the recovery process for the El Capitan Property mineralized material and our evaluation as to the economic and legal feasibility of the property. We have not yet demonstrated the existence of proven or probable reserves at the El Capitan Property. To date, we have not had any material revenue producing operations.  There is no assurance that a commercially viable mineral deposit exists on our property.

We have completed testing and enhancement of our recovery process and have determined the existence and concentration of commercially extractable precious metals or other minerals at the El Capitan Property. Based upon the initial results attained, we engaged an investment banker on January 31, 2012 to assist us in marketing the El Capitan Property for potential sale to a major mining company. 

During the remainder of our fiscal year ended September 30, 2012, we continued to enhance our recovery processes and also attempted to recover precious metals from previously stored concentrates using new and different recovery process developed by an outside vendor. This new process proved to be unsuccessful because our vendor’s equipment was insufficient to accomplish an acceptable result. We also undertook to develop a Recovery Demonstration that could be used for presentation purposes in connection with prospective buyers’ due diligence investigations. Dr. Clyde Smith, an internationally recognized geologist who has worked with the Company as a QP (Qualified Person) since 2005, agreed to direct and complete this Recovery Demonstration. Dr. Smith worked independently of El Capitan, directing the mining, crushing and concentration of several tons of mineralized material from the El Capitan Property, and the smelting of the mineralized material into dore’ bars. The project was completed in July 2012. In August 2012 we completed the successful testing of a process for the recovery of precious metals from these concentrates. A test run of this new process, on 700 pounds of concentrates from the El Capitan Property, yielded results consistent with those achieved for the sale last year of a dore’ bar to Gannon & Scott. We continued to make steady progress over the remainder of the 2012 fiscal year to provide our investment bank with information and tools needed to market and sell the El Capitan Property, and the news related to the processing of concentrates was a major step forward in our overall strategy.

Early in fiscal 2013, and based on recommendations made to us by our investment banker, we undertook to have our QP direct an analytic project to determine what and how much precious metals could be recovered with an “industry standard” cyanide leaching recovery method. The QP selected sample materials which were broadly representative of the property and included blanks (no precious metals) and standards (known amounts of precious metals). These were delivered, under chain of custody, to designated laboratories.

In March 2013, we disclosed that we obtained results from a well-respected metallurgical lab which used pre-treatment of mineralized material samples (“samples”) and the industry accepted method of cyanide vat leaching. The resulting assays, which were obtained under chain of custody procedures, demonstrated significant values of gold along with lesser amounts of other precious metals. In order to maximize the recovery of all precious metals, we began to work with five different independent metallurgical laboratories to develop an encompassing recovery process that included both cyanidation recovery as well as the silver-lead process. We continued to engage Dr. Clyde Smith as our QP to be responsible for monitoring and overseeing both processes for continued credibility.   The QP selected samples that were broadly representative of the property and included blanks (no precious metal) and standards (known amounts of precious metals). These were delivered, under chain of custody, to the designated laboratories.

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The initial analyses conducted to determine precious metals content at one of the labs failed to accurately describe the contents of the blanks and standards which rendered all results unreliable and unusable. This test in no way depicted anything about the El Capitan samples. Significant time, effort and related costs were expended and the QP directed that the tests be conducted again at an Arizona laboratory and were conducted and include chain of custody samples and the required blanks and standards. The tests consisted of three batches of chain of custody samples.

The primary reason for the project was to determine the recovery of precious metals that can be achieved from the El Capitan mineralized material by an industry-standard cyanide vat leach. The preliminary results were significant enough for the QP to recommend enlisting a world-class expert in cyanide leaching. To manage and support the completion of this project, a dedicated engineer was appointed by the QP to oversee the daily schedule and all activities and analytic results. The world-recognized organization chosen is able to validate the recovery of the precious metals and develop the economic model to determine the costs for such recovery in a recovery environment with the expertise that will be recognized by major mining companies. The data generated will be used to update the Major Research Report with both the recovery data and costs requested by the investment banker for presentation of the property. This process requires additional analytic runs. We decided to complete this initiative with such a high-level industry expert in order to give the project results the credibility that only a broadly recognized cyanide leaching and engineering company can convey. This project was undertaken in September 2013 under the direction of our QP and was completed in November 2013. 

In late September 2013, with the support of another technology, we began a project of production processing of El Capitan samples collected and managed under chain-of-custody guidelines. This was the first, production-scale process that we have conducted ourselves. We anticipated that the results would describe both the effectiveness of the process being used and the precious metals values recoverable, without the use of chemicals. This process involved the fine grinding of samples and separation of iron from the precious metals without the use of cyanide.

On November 7, 2013 we announced that we had recovered 1.04 ounces per ton of gold equivalent from the El Capitan Property. These results were based on samples sold in an arm’s-length transaction to an independent refinery. The chain-of-custody samples were finely milled and magnetically separated using specific gravity concentrating methodology without the use of cyanide. Parameters used to calculate the economic value were 0.22 and .60 ounces of gold from hematite and magnetite mineralized material, respectively, and 6.05 ounces of silver form the mineralized material at the current market price. This preliminary production testing represents the complete methodology ̶ from samples to final sale.

As part of this project, we processed 30 tons of concentrates that we produced approximately ten years ago stored at the mine site. This was done in order to determine the viability of the recovery of any precious metals under this technology. This initiative was important for two reasons: because it provided materials process-handling information, and because of the potential cash flow from the spot-market sale of any resulting dore’ bars. It is important to note that no direct information related to samples value was to be gained from these concentrates because they did not have a documented history. These concentrates lacked the pedigree of freshly mined and concentrated minerals. Initial testing revealed that they may yield precious metals that can be sold in the spot market.

On November 20, 2013, we announced that the new recovery method was also used on 30 tons of stored concentrates, which had been produced approximately ten years ago. After storage and possible contamination, these concentrates proved to be incompatible with this recovery process. The Company decided to discontinue processing of the stored concentrates and focus on the processing the samples and the recovery of precious metals utilizing the new technology.

“Mineralized material” as used in this Annual Report on Form 10-K, although permissible under the Securities and Exchange Commission’s (“SEC’s”) Industry Guide 7, does not indicate “reserves” by SEC standards.  We cannot be certain that any part of the El Capitan Property will ever be confirmed or converted into SEC Industry Guide 7 compliant “reserves.”  Investors are cautioned not to assume that all or any part of the mineralized material will ever be confirmed or converted into reserves or that mineralized material can be economically or legally extracted.

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Business Operations

We are considered an exploration stage company and have not established any “reserves” with respect to our exploration projects, and will remain an exploration stage company until the Company has reserves as defined in SEC Industry Guide 7. The Company may never meet the reserve requirements or enter into development with respect to any of our properties.

In March 2014, we announced the Company reached an agreement with Logistica US Terminals LLC (“Logistica”), , a Texas-based limited liability company and member of LIT Group network. The contract, which is the first of several contracts with high-profile mining industry companies, supports the New Mexico mineral exploration plan announced by the Company several months ago and represents another tactical initiative to support the sale of the El Capitan Property. Under the terms of the Master Service Agreement, Logistica, will finance and operate the extraction of iron from mineralized materials at the El Capitan mine and provide the Company with a turnkey solution that also includes shipment of the iron to ports where buyers will take delivery.

We also announced in March 2014 that we reached an agreement with GlencoreXstrata for the purchase of iron extracted from the mineralized materials at the El Capitan mine. Under the terms of the agreement, GlencoreXstrata commits to ongoing purchases of the iron from the El Capitan mine. GlencoreXstrata will issue a Letter of Credit to guarantee payment on the sale of the iron.

For additional information regarding the Glencore Purchase Contract and our agreements with Logistica, see “Note 6 – Commitments and Contingencies” of the Notes to Consolidated Financial Statements.

In late April 2014, we announced the purchase of a heavy metals separation system from AuraSource, Inc (OTCBB and OCTQB: ARAO). This state-of-the-art technology will separate hematite and magnetite from other mineral elements in the El Capitan mineral deposits. The AuraSource process leaves a rich concentrate for additional processing that will further be used by the Company to extract the precious metals. The iron extracted from the mineralized material will be transported to a port for sale, pursuant to the Company’s contract agreements with GlencoreXstrata and Logistica.

In May 2014, we announced recovery results of .40 of gold equivalent per ton of El Capitan samples. The precious metals processing was completed in China as part of testing related to the calibration and tuning of the heavy metals separation device that will be used on site at the El Capitan Property in New Mexico. After the separation of the hematite and magnetite from the El Capitan mineralized material, an independent lab processed the precious metals that yielded the .40 of gold equivalent per ton of samples. Parameters used to calculate the economic value was were 0.20, 3.2 and 0.25 ounces of gold, silver and palladium per ton, respectively, of mineralized material at the current market price. We have successfully completed the assembly and testing of the AuraSource Heavy Metals Separation System at the New Mexico mine site.

The Company has methods for both the separation of the iron and the separation and recovery of the precious metals that have repeatedly yielded consistent and commercially viable economic value results. Yet another significant aspect of these breakthrough technologies for separation and recovery is that they are environmentally friendly and do not rely on the use of caustic chemicals.

In September 2014, we announced the Company reached a final agreement for the sale of precious-metals-rich tailings from the El Capitan mine to a Hong Kong-based trading company. We anticipate seeing positive cash flow from revenues in our quarter ending December 31, 2014. The buyer will purchase between 5,000 and 10,000 tons of precious-metals-rich tailings per month, with payment guaranteed against a multimillion-dollar letter of credit.

We are in the final stages of obtaining our amended and expanded mining permits from the Mining and Minerals Division of the New Mexico Energy, Minerals and Natural Resources Department and obtaining the issuance of our required clean air permit from the New Mexico Environment Department Air Quality Bureau. The clean air permit was issued in late November 2014 and we anticipate the issuance of the expanded mining permit in late December 2014. Upon issuance, continued mineral exploration will commence at the El Capitan Property site.

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Our Company and its Subsidiaries

El Capitan Precious Metals, Inc. is a Nevada corporation, is an exploration stage company that owns 100% of the outstanding common stock of El Capitan Precious Metals, Inc., a Delaware corporation (“El Capitan Delaware”). Prior to January 19, 2011, El Capitan Delaware owned a 40% interest in ECL.  On January 19, 2011, we acquired the remaining 60% interest in ECL from Gold and Minerals Company, Inc. (“G&M”) by merging an acquisition subsidiary created by the Company with and into G&M. In connection with the merger, each share of G&M common and preferred stock outstanding was exchanged for approximately 1.414156 shares of the Company’s common stock, resulting in the issuance of an aggregate of 148,127,043 shares of the Company’s common stock to former G&M stockholders. Upon closing of the merger, G&M became a wholly-owned direct Company subsidiary and our consolidated Company acquired 100% of ECL. As a result, we now own 100% of the El Capitan Property site. 

Price of Precious Metals

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

High, low and average London afternoon fix prices for gold and silver for the period from January 1, 2014 to September 30, 2014 and for the last five calendar years are as follows:

Gold - London Afternoon Fix Prices - US Dollars
	High		Low		Average
Period
For the nine months ended September 30, 2014	$	1,385	$	1,214	$	1,288
For the year ended December 31, 2013		1,694		1,192		1,411
For the year ended December 31, 2012		1,750		1,540		1,669
For the year ended December 31, 2011		1,895		1,319		1,572
For the year ended December 31, 2010		1,421		1,058		1,225
For the year ended December 31, 2009		1,213		810		972
Data Source: Kitco

Silver - London Afternoon Fix Prices - US Dollars
	High		Low		Average
Period
For the nine months ended September 30, 2014	$	22.05	$	17.11	$	19.95
For the year ended December 31, 2013		32.23		18.61		23.79
For the year ended December 31, 2012		37.23		28.00		31.15
For the year ended December 31, 2011		48.70		26.16		35.12
For the year ended December 31, 2010		30.70		15.14		20.19
For the year ended December 31, 2009		19.18		10.51		14.67
Data Source: Kitco

Our ability to sell our property will be highly dependent upon the price of these precious metals, the market for which can be highly volatile. There is no assurance that we will be able to recover precious metals from the El Capitan Property or that we will generate significant revenue from the sale of the El Capitan Property.

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Competition

The mining industry has historically been highly competitive. It is dominated by multi-billion dollar, multi-national companies that possess resources significantly greater than ours. Additionally, due to our limited resources, we do not intend to develop any of our properties on our own, but rather to only perform exploration on our properties with the anticipation of selling or developing through a joint venture any properties in which our exploration proves successful. Given our size and financial condition, there is no assurance we can compete with any larger companies for the acquisition of additional potential mineral properties, and we have no current plans to do so.

Government Regulation

Mining and exploration is highly regulated and subject to various constantly changing federal and state laws and regulations. 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, and given our limited resources, such regulations may have a material effect on the success of our operations.

Compliance with the various federal and state governmental regulations requires us to obtain multiple permits for each mining property. Although the requirements may differ slightly in each of the respective states in which we may hold claims or may hold claims in the future, the process of securing such permits generally require the filing of a “Notice of Intent to Locate Mining Claims” and the payment of a fee of $25 to the Bureau of Land Management (“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 90 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 $155 per claim.

To the extent we intend to take action on a property that is more than “casual use,” which generally includes activities that cause only negligible disturbance to the land (this would not generally include drilling or operating earthmoving equipment on the property), we are required to prepare and file with the BLM either a notice of operation or plan of operation identifying the activity we intend to take on the property, including a plan of reclamation indicating how we intend to return the land to its prior state upon completion of our activities. For each claim that we file a notice or plan of operations, we are required to pay a one-time reclamation bond to the BLM to be used toward restoration of the property upon completion of our activities. The amount of the reclamation bond is determined by the BLM based upon the scope of the activity described in the notice or plan of operation, and will thus vary with each property. We filed an original plan of operation on the El Capitan Property. We were required to pay a reclamation bond of $15,000 in connection with that plan of operation, and upon payment were issued a notice to proceed from the BLM. This allowed us to proceed with our current plan of operation on up to five (5) acres.  The permit was received by the Company from the previous owners of the El Capitan Property under a grandfather clause and allows operations on five (5) acres of the property at a time. We are currently amending this permit to allow operations on forty acres (40) of property at a time. We expect the amended permit to be issued in January 2015.

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In July 2007, we submitted a Plan of Operation for continued exploration on a 2,000 acre parcel within our more than 7,000 acres, at that time, Company claim block near Capitan, New Mexico with the U.S. Forest Service (“USFS”). We hired an experienced environmental services firm to manage this effort. Having this permit in place would provide the opportunity for a professional and methodical investigation into the additional geologic potential of this portion of our holdings, without requiring further time-consuming permitting efforts. The area being permitted will allow access to a number of high-potential targets identified through previous surface sampling and remote sensing efforts, as well as to the prospective area to the west of the existing deposit, which remains open to geologic resource extension. The USFS permitting effort is governed by the National Environmental Policy Act of 1970 (“NEPA”) and under the General Mining Law of 1872, as amended. In conjunction with the USFS filing, the Company submitted an Exploration Permit with the New Mexico Mining and Minerals Division. The permitting process is a robust process that can take a significant amount of time to complete. The typical process generally takes longer than the prescribed regulatory time frame, and is dependent upon a number of factors outside of our control, including, without limitation, governmental approvals, licensing and permitting, as well as potential opposition by third parties. Both permits must be approved prior to the commencement of drilling activity. 

In July 2008, we entered into a Memorandum of Understanding with the USFS related to the permitting of 112 exploration drill holes planned on 2,000 acres of Company claims in Lincoln County, New Mexico. The action signaled the initiation of the Federal Environmental Assessment (“EA”) permitting process. It was originally anticipated that the receipt of these two permits would occur in the second or third quarter of 2009. Subsequently in late 2008, this process was put on hold due to a lack of working capital and a potential conflict of interest with the USFS by the environmental services firm we were utilizing for the permitting process.

In December 2009, we hired a new experienced environmental services firm, AMEC Environment & Infrastructure, Inc. (“AMEC”), to manage and oversee our continued permitting process. AMEC has drafted a replacement Plan of Operations (“PoO”) and submitted it to the USFS. The USFS has provided technical comments on the PoO and AMEC has responded to their comments and submitted a revised PoO for approval. AMEC has met with representatives of the USFS at the project site to review the proposed exploration locations and general discussion of the project. Subsequent to the meeting, the USFS agreed to work with AMEC to develop the third part of the National Environmental Policy Act (“NEPA”) scope of work. The USFS provided a draft NEPA scope of work template to AMEC in electronic format. AMEC revised the draft template and submitted it to the USFS for review and approval.

AMEC has also prepared the Stormwater Pollution Prevention Plan (“SWPPP”) that will be sent to the agencies upon permit approval. Informational copies of the SWPPP will be provided to the New Mexico Energy, Minerals, and Natural Resources Department Mining and Minerals Division (“MMD”), and the United States Forest Service (“USFS”).   The SWPPP is an EPA required document for construction projects that disturb more than one (1) acre of land.  Prior to field activities, coverage under the New Mexico Construction General Permit (“CGP”) will be obtained by filing a Notice of Intent (“NOI”) with EPA Region 6. Coverage under the CGP is required prior to field work.  A copy of the SWPPP must be maintained at the project site during all construction activities.  New Mexico does not have primacy over the SWPPP requirements.  EPA Region 6 is the primary agency. 

AMEC prepared and submitted a revised New Mexico Mining and Minerals Subpart 4 Exploration permit application. The revised application was submitted on September 16, 2011 and  MMD issued administrative completeness determination on October 4, 2012.  The Agency comment period closed on December 31, 2012.  MMD requested a site visit as part of the Agency review process, and the site visit was conducted on December 5, 2012. A second site visit was requested by MMD to view locations that were not accessible.  Revisions to the boring locations were made, based on the field visit, and revised boring location figures were submitted to the MMD on April 26, 2013.  To date a second site visit has not been conducted related to the drill hole sites.    

A Plan of Operations (“PoO”) was submitted to the United States Forest Service (“USFS”) in 2011.  Comments were received from the USFS and incorporated into a revised document which was resubmitted to the USFS.  In addition, at the request of the USFS, a National Environmental Policy Act (“NEPA”) scope of work (“SOW”) was prepared and submitted to the USFS in 2012.  Comments were received from the USFS and incorporated into a revised NEPA SOW.  This activity has been on hold since April 2013.  In February through April 2013, the existing mine permit (LI005 ME) for the Capitan Iron Mine and a cursory review of water rights issues were evaluated. 

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In May 2014, and in conjunction with requesting modifications to our mining permit, we submitted a revised PoP, as well as the required reclamation plan for the site. As part of the modified permit approval, we are required to post financial assurance of $74,495 to pay for the reclamation, in the event we walk away. The financial assurance was posted in January 2015.

In June 2014 we applied for an air quality permit for our operation, which is tied to the generation of dust from the mining and crushing process. This permit is in the final stages approval and the permit fees have been paid. This permit was issued by the New Mexico Environment Department Air Quality Bureau in November 2014.

Employees

We currently have informal arrangements with three individuals, two of whom are officers and Directors of the Company, who serve as support staff for the functioning of all the corporate activities. There are no written agreements with these individuals. Additionally, we use consultants for the testing and exploration of property claims. If administrative requirements expand, we anticipate that we may hire additional employees, and utilizing a combination of employees and consultants as necessary to conduct of these activities.

Available Information

The Company is a Nevada corporation with its principal executive office located at 8390 Via de Ventura, Suite F-110, Scottsdale, Arizona 85258, and its administrative office located at 5871 Honeysuckle Road, Prescott, Arizona 86305. The Company’s telephone number is (928) 515-1942.   The Company’s website address is www.elcapitanpmi.com.  Our website contains links to download free of charge our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Unless expressly noted, none of the information on our website is part of this Annual Report.

ITEM 1A. RISK FACTORS

Our common stock is thinly traded, and there is no guarantee of the prices at which the shares will trade.

Trading of our common stock is conducted on the Over-the-Counter Bulletin Board, or “OTCBB,” under the symbol “ECPN.”  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 the Company.  This may result in lower prices for your 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.  Historically, our common stock has been thinly traded, and there is no guarantee of the prices at which the shares will trade, or of the ability of stockholders to sell their shares without having an adverse effect on market prices.

Our stock price may be volatile and as a result you could lose all or part of your investment.

In addition to volatility associated with securities traded on the OTCBB in general, the value of your investment could decline due to the impact of any of the following factors upon the market price of our common stock:

• adverse changes in the worldwide prices for gold or silver;

• disappointing results from our exploration or development efforts;

• failure to meet operating budget;

• decline in demand for our common stock;

• downward revisions in securities analysts’ estimates or changes in general market conditions;

• technological innovations by competitors or in competing technologies;

• investor perception of our industry or our prospects; and

• general economic trends.

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In addition, stock markets have experienced extreme price and volume fluctuations and the market prices of securities generally have been highly volatile. These fluctuations commonly are unrelated to operating performance of a company and may adversely affect the market price of our common stock. As a result, investors may be unable to resell their shares at a fair price.

We have never paid dividends on our common stock and we do not anticipate paying any dividends in the foreseeable future.

We have not paid dividends on our common stock to date, and we may not be in a position to pay dividends in the foreseeable future. Our ability to pay dividends depends on our ability to successfully develop the El Capitan Property and generate revenue from future operations. Further, our initial earnings, if any, will likely be retained to finance our growth. Any future dividends will depend upon our earnings, our then-existing financial requirements and other factors and will be at the discretion of our Board of Directors.

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 common stock. Because of these rules, many brokers choose not to participate in penny stock transactions and there is less trading in penny stocks. Accordingly, you may not always be able to resell shares of our common stock publicly at times and prices that you feel are appropriate.

We may raise additional capital to fund our operations. The manner in which we raise any additional funds may affect the value of your investment in our common stock.

Although we have no current expectation to pursue financings beyond those contemplated by the Equity Purchase Agreement (discussed below and in Item 7 of this Annual Report on Form 10-K), we may be required to do so if our circumstances change or opportunities requiring expenditures in excess of the proceeds available under the Equity Purchase Agreement present themselves. Other than pursuant to the Equity Purchase Agreement with Southridge, as detailed below, we have no current committed sources of additional capital. We do not know whether additional financing will be available on terms favorable or acceptable to us when needed, if at all. To the extent that we raise additional capital by issuing equity securities, our stockholders may experience dilution. In addition, we may grant future investors rights superior to those of our existing stockholders. If we raise additional funds by incurring debt, we could incur significant interest expense and become subject to covenants in the related transaction documentation that could affect the manner in which we conduct our business. If adequate additional capital is not available when required, we may be forced to reduce or eliminate our marketing efforts for the sale of the El Capitan Property.

Risks Relating to the Equity Purchase Agreement

In connection with the Equity Purchase Agreement with Southridge Partners II, LP (“Southridge”), further described in Item 5 of this Annual Report on Form 10-K, the following risk factors should be taken into account by investors:

Southridge will pay less than the then-prevailing market price for our common stock under the Equity Purchase Agreement at the time of issuance of the shares.

The common stock issued to Southridge pursuant to the terms of the Equity Purchase Agreement will be purchased at a 6.0% discount to the average of the two lowest closing bid prices on the Over-the-Counter Bulletin Board, as reported by Bloomberg Finance L.P., during the five trading days following the written request of the Company to exercise its option to sell shares of its common stock to Southridge.  Southridge will have the ability to sell the shares of our common stock issuable under the Equity Purchase Agreement either in advance of or upon receiving such shares and to realize the profit equal to the difference between the discounted price and the current market price of the shares.

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We may not be able to access sufficient funds under the Equity Purchase Agreement when needed.

Our ability to put shares to Southridge and obtain funds under the Equity Purchase Agreement is limited by terms and conditions set forth in such agreement and applicable market regulations.  The terms of the Equity Purchase Agreement restrict the amount of shares we may sell to Southridge at any one time, which is determined by, among other things, the trading volume of our common stock. Accordingly, the Equity Purchase Agreement may not be available to satisfy all of our funding needs from time to time during the term of the Equity Purchase Agreement. To date, however, the Company has not encountered any funding restrictions under the Agreement.

The sale of our common stock to Southridge and any future sales of our common stock may depress our stock price.

If we elect to sell shares to Southridge under the Equity Purchase Agreement, any such sales will have a dilutive impact on our existing stockholders.  Southridge may resell some or all of the shares we issue to it pursuant to terms of the Equity Purchase Agreement and such sales could cause the market price of our common stock to decline. 

Risks Relating to Our Business

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

We anticipate that a significant portion of our future revenues will come from the sale of our El Capitan Property. Our earnings will be directly affected by the prices of precious metals believed to be located on such property. 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. Downward fluctuations in precious metal prices may adversely affect the value of any discoveries made at the site with which our Company is 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 the inability to sell our El Capitan Property.

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

With the exception of immaterial revenue from the sale of two dore’ bars, we have not yet had revenue-generating operations, and it is possible that we will not find marketable amounts of minerals on our El Capitan Property or that the property will ever be sold.  Should we fail to obtain working capital through other avenues, our ability to continue to market our El Capitan Property could be curtailed.

Until we confirm recoverable precious metals on our El Capitan Property, we may not have any potential of generating any revenue.

Our ability to sell the El Capitan Property depends on the success of our exploration programs and the development of a cost-effective process for recovering precious metals from the mineralized materials at the El Capitan Property. We have not established proven or probable mineral deposits at our El Capitan Property.  Even if exploration leads to a valuable deposit, it might take several years for us to enter into an agreement for sale or joint venture development of the property. During that time, depending on economic conditions and the underlying market values of the precious metals that may be recovered, it might become financially or economically unfeasible to extract the minerals at the property.

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We may not be able to sell the El Capitan Property or on terms acceptable to us.

We are concentrating our efforts on developing a strategic plan to sell the El Capitan Property or potentially enter into a joint venture with a major mining company to operate the mining operation. There is no guarantee that we will be able to find a potential acquirer or joint venture partner on terms that are acceptable to us or at all.

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

The El Capitan Property has transitioned from an exploration stage to operations stage during the latter part of our current fiscal year. To date, we have not established a mineral reserve on the El Capitan Property. A “reserve,” as defined by the Securities and Exchange Commission’s Industry Guide 7, is that part of a mineral deposit that can be economically and legally extracted or produced at the time of the reserve determination. A reserve requires a feasibility study demonstrating with reasonable certainty that the deposit can be economically and legally extracted and produced.  At this time it is not ascertainable or it is possible that the El Capitan Property does not contain a reserve and all resources we spend on exploration of this property may be lost. We have not received feasibility studies nor obtained necessary operating permits with regard to the El Capitan Property. As a result, we have no reserves at the El Capitan Property. In the event we are unable to establish reserves or measured resources acceptable under industry standards, we may be unable to sell or enter into a joint venture with respect to the development of the El Capitan Property, and the business of the Company may fail as a result.

Uncertainty of mineralization estimates may diminish our ability to properly value our property.

We rely on estimates of the content of mineral deposits on 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 may not be spaced close enough to one another to enable us to establish probable or proven results. These estimates may prove unreliable. Additionally, we have previously relied upon various certified independent laboratories to assay our samples, which may produce results that are not as consistent as a larger commercial laboratory might produce.  Reliance upon erroneous estimates may have an adverse effect upon the financial success of the Company.

Any loss of the industry experience of members of our Board and/or our officers may affect our ability to achieve our business objectives.

The skills of the Company’s directors span mining, business and legal expertise.  The Company relies on contractors and consultants for certain industry matters.  All of these relationships and the background of the directors would be difficult to replace.  Fulfilling the Company’s objectives might be negatively impacted or prove more costly to obtain if we were to lose the services of these directors, contractors or consultants.  The Company does not own life insurance on any of our officers, directors, contractors or consultants.

The nature of mineral exploration is inherently risky, and we may not ever discover marketable amounts of precious minerals.

Exploration for minerals is highly speculative and involves greater risk than many other businesses. Most exploration programs fail to result in the discovery of economically feasible mineralization. Our exploration and mining efforts are subject to the operating hazards and risks common to the industry, such as:

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• economically insufficient mineralized materials;

• decrease in values due to lower metal prices;

• fluctuations in production cost that may make mining uneconomical;

• unanticipated variations in grade and other geologic problems;

• unusual or unexpected formations;

• difficult surface conditions;

• metallurgical and other processing problems;

• environmental hazards;

• water conditions; and

• government regulations.

Any of these risks can adversely affect the feasibility of development of our El Capitan Property, production quantities and rates, and costs and expenditures. We currently have no insurance to guard against any of these risks. If we determine that capitalized costs associated with any of our El Capitan Property are likely not to be recovered, a write-down of our investment would be necessary. All of these factors may result in unrecoverable losses or cause us to incur potential liabilities, which could have a material adverse effect on our financial position.

The effect of these factors cannot be accurately predicted, and the combination of any of these factors may prevent us from selling or otherwise developing the El Capitan Property and receiving an adequate return on our invested capital.

Extensive government regulation and environmental risks may require us to discontinue or delay our marketing activities for the sale of El Capitan Property.

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 may affect our business. Compliance with these changing laws and regulations could require increased capital and operating expenditures and could prevent or delay the sale of the El Capitan Property.

Any failure to obtain government approvals and permits may require us to discontinue future exploration on our El Capitan Property.

We are required to seek and maintain federal and state government approvals and permits in order to conduct exploration and other activities on our El Capitan Property. The permitting requirements for our respective claims 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 $155 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 (the “BLM”), which is to be used for the reclamation 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 the current plan of operations on the El Capitan Property, the reclamation bond was $15,000, but this amount has been increased to $78,000 with the issuance of our modified mining permit in December 2014.

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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. 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 the El Capitan Property. 

As of filing this Annual Report on Form 10-K report, we were issued all our required permits.

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 that are in a better position than us 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 our El Capitan Property without a strong financial operating partner, if at all. Alternatively, we have elected to sell the El Capitan Property with the current mineralization information we have.

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

The primary 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 to make certain filings with the county in which the land or mineral is situated and annually with the Bureau of Land Management and pay an annual holding fee of $140 per claim. If we fail to make the annual holding payment or make the required filings, our mining claims would become invalid. In accordance with the mining industry practice, generally a company will not obtain title opinions until it is determined to sell a property. Also no title insurance is available for mining. Accordingly, it is possible that title to some of our claims may be defective and in that event we would not have good and valid title to the El Capitan Property, and we would be forced to curtail or cease our exploratory programs on the property site.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

El Capitan Property

Our primary asset is the 100% equity interest in El Capitan, Ltd., an Arizona corporation (“ECL”), which holds a 100% interest in the El Capitan property located near Capitan, New Mexico (the “El Capitan Property”).

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Below is a map setting forth the location of the El Capitan Property.

 

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Location and Access to Deposits – El Capitan Property

 

The El Capitan Property is situated in the Capitan Mountains, near the city of Capitan, in southwest New Mexico. The main site can be reached by going north from Capitan on State Road 246 for 5.5 miles, turning right onto an improved private road and proceeding for about 0.7 miles.

Description of Interests

The El Capitan Property originally consisted of four (4) patented and nine (9) Bureau of Land Management (“BLM”) lode claims; and mineral deposits are 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. On January 1, 2006, ECL finalized the purchase of the four patented mining claims on the property, which constitute approximately 77.5 acres in the aggregate. These claims are bounded by the Lincoln National Forest in Lincoln County, New Mexico.

During October and November 2005, based upon recommendations from our consulting geologist, we staked and claimed property surrounding the El Capitan site located in Lincoln County, New Mexico, increasing the total BLM claimed area to approximately 10,000 acres.  In August 2006, we reduced the number of BLM claims to cover approximately 7,400 acres, and in August 2009, we reduced the number of BLM claims to approximately 2,800 acres based upon continuing geological work and recommendations by our consulting geologist.  In October and November 2011, at the recommendation of the Company’s geological consultant, the Company filed an additional 48 BLM claims of approximately 20 acres each on property adjacent to the Company’s existing BLM claims, aggregating an additional 960 acres.

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El Capitan has power supplied to a mobile home on the patented land by Otero County Electric Co-op, Inc.

Currently the Company transports water to the El Capitan Property in a Company-owned water truck. The Company plans to have a water well permitted and drilled on a turn-key basis and has received bids on this project. The well will be situated on our patented property.

Mineral Title

El Capitan’s holdings at the El Capitan Property as of September 30, 2014, we own four patented mining claims, covering approximately 77.5 acres, and 188 lode claims with the BLM covering approximately 3,760 acres. The four wholly-owned patented mining claims and 140 of the BLM mining claims are held in the name of El Capitan. Ltd. and 48 of the BLM claims are held in the name of ECPN Technologies, Inc. Each of El Capitan. Ltd. and ECPN Technologies, Inc. is a wholly-owned subsidiary of the Company. The BLM claims are Federal unpatented mining claims for locatable minerals and are located on public land and held pursuant to the General Mining Law of 1872, as amended. El Capitan fully owns the mining rights and believes the claims are in good standing in accordance with the mining laws of the United States.

To maintain our claims in good standing, for its patented mining claims El Capitan must pay annual property taxes to Lincoln County, and for its unpatented mining claims El Capitan must pay annual assessment fees to the Bureau of Land Management and record the payment of rental fees with Lincoln County. The current year annual assessment and recording costs for our unpatented claims total approximately $29,600. El Capitan has paid the required assessment fees for the 2014 and 2015 assessment years (September 1, 2013 through August 31, 2015).

El Capitan has no underlying agreements or royalty agreements on any of its claims.

The map set forth below shows the location of our claims on the El Capitan Property as of September 30, 2014:

 

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Permits

Pursuant to the New Mexico Mining Act, the New Mexico Mining and Minerals Division have issued Permit No. l1005ME to El Capitan, Ltd. The permit is a “minimal impact existing mining operation.” The Company is in the process of modifying the permit as necessary in order to commence expanded exploration activities at the El Capitan Property. For the issuance of the modified permit, it is necessary to increase our posted financial assurance for reclamation to $74,495.

The New Mexico Environmental Department has issued El Capitan our air quality permit, NSR permit No. 5951 in November 2014.

Previous Operations

To our knowledge, prior to its acquisition by ECL, 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 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 ECL in 2005 and 2006. Additionally, there was geologic mapping of the property at a scale of 1:3,600 by Kelley in 1952.  

There were no significant surface disturbances or contamination issues found on the surface or underground water due to the historical mining activities referred to above and no remediation has been required to be performed by the Company. However, the Company was required to provide, and has provided, a $15,000 financial assurance in connection with the issuance of our Permit No. L1005ME by the New Mexico Mining and Minerals Division.

Geology

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 Property 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). 

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), we will be required to establish that the property is commercially viable.  As of September 30, 2013, we have not completed a feasibility study on the property, and thus cannot identify the economic significance of the property, if any, at this time.

Exploration

Historical

After a preliminary sampling and assay program in early 2005, the Company implemented three stages of diamond drilling and rotary drilling, totaling 45 holes between April 2005 and September 2006.

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Stage 1 of the drilling program was completed between April and May 2005, and consisted of 1,391 feet drilled in 12 vertical core holes, with depths ranging from 38 to 142 feet. Between June and August 2005, we completed Stage 2 drilling, which consisted of both drilling in areas adjacent to some of the Stage 1 drilling holes and drilling in new target areas to the southwest of the main deposit site. Stage 2 drilling consisted of 1,204 feet of combined core and rotary footage in 10 vertical holes, ranging from 24.5 to 344.5 feet in depth. The Stage 3 drilling program began in February 2006 and was completed in May 2006. The program consisted of 23 vertical reverse drill holes totaling 9,685 feet and varying depths from 270 to 710 feet. Drill cuttings were sent to AuRIC and fusion assays of these holes were completed. The samples were collected and controlled under “Chain-of-Custody” by our outside quality control person.

Because caustic fusion is not a precious metal industry accepted assay technique, we retained M.H.S. Research of Lakewood, Colorado (“M.H.S.”) in August 2006 to research and develop a modified fire assay technique that we believe is more appropriate for the material from the El Capitan Property. Preliminary results to date by M.H.S. indicated values that meet or exceed the values obtained by AuRic. The principal of M.H.S. is Michael Thomas who had over thirty years of experience in geology and mining related area including extensive laboratory work in fire assaying, mineral processing and precious metals recovery. He also was an adjunct professor in the Mining Engineering Department at the Colorado School of Mines providing part-time instruction in mineral processing and fire assays.

We also retained the services of Dr. Clyde Smith to manage the exploration of the property. Dr. Smith is a Consulting Geologist who had 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.

After several months of investigation into the composite sample from the El Capitan Property, M.H.S. results have shown the ability to readily produce ‘metal-in-hand’ using a minor modification of standard fire assay procedures. Mr. Thomas began testing various fire assay fluxes to improve the effectiveness and repeatability of the fire assay procedure on the specific rock matrix of this material. M.H.S. worked in these areas and performed multiple replicate tests on chain of custody composite material in order to establish a benchmark head grade for the composite sample. There can be no assurance that any mineral grade or recovery determined in a small scale laboratory test can or will be duplicated in larger tests under on-site conditions or during mineral exploration.

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

The Company has worked with third parties to analyze samples from the El Capitan Property to create an economically feasible recovery model for the El Capitan Property mineralized material. We have successfully utilized a repeatable concentration and recovery procedure, which is a modified fire assay technique, to allow evaluation of the mineralized material. Results using this procedure have been positive and show potential economically feasible mineralized material. Based upon these results and part of our strategic plan, on January 31, 2012 the Company engaged an investment banking firm to assist the Company in marketing and selling the El Capitan Property to a major mining company. Given our current plans to market the property for sale, we do not currently have any timetable, budget and will continue further mineral exploration on the El Capitan Property.  The Company has not filed any geological reports on SEDAR for review by Canadian authorities and does not intend to do so.

The Company and Gold and Minerals Company, Inc. (“G&M”), a wholly owned subsidiary of the Company, have incurred a total of $10,907,023 in exploration and mine development costs associated with the El Capitan Property.  G&M incurred $5,275,916 in exploration costs from January 1, 1994 through January 19, 2011, at which time it was merged into the Company, and the Company has incurred $5,631,107 in exploration costs from its inception on July 26, 2002 through September 30, 2014.  The foregoing exploration and mine development costs include costs associated with drilling, assaying, filing fees, extraction process development, consultant, geological, metallurgical, chemist, environmental and legal fees, and other miscellaneous property exploration costs have been expensed as required under the SEC Industry Guide 7.

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Historical Sampling and Assaying

The following describes the Company’s historical extraction and analysis of samples from the El Capitan Property.

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

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

 In 2007, the Company engaged Dr. Smith to prepare a report to “provide an explanation of the work conducted on the El Capitan Project ... and to summarize the results of the geologic investigations ....” In this report, dated April 16, 2007, Dr. Smith states that “Preliminary hydrometallurgical extraction results indicate potentially acceptable levels of recovery of mineralized material.”

We have continued to utilize the services of Dr. Smith to manage the exploration of the El Capitan Property. Dr. Smith, a Consulting Geologist with over 34 years of experience in the mining industry, 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. ECL has also retained the services of a Ph.D. chemist to compile the prior and ongoing metallurgical and geological information for incorporation into a formal presentation for the purpose of the future marketing of the property.

We retained a small metallurgical research and development laboratory in August 2006 to assess the potential for a modified fire assay technique that we believe is more appropriate for the material from the El Capitan deposit. Throughout 2007, investigations into the potential use of various industry-standard fire assay techniques to estimate the metal content of the El Capitan samples were conducted.  Such standard fire assay techniques produced marginally improved results, and beginning in early 2008 and through early 2009, we conducted research into other assay techniques, including leaching, acid dissolution, and the addition of various precious metal collecting agents during the assay process.  In early 2009, we completed these research analytical projects at the commercial laboratory and small, R&D-oriented facility with which we had contracted. Although encouraging, the results obtained were inconsistent.

In May 2009, we received results from a commercial lab for additional assay tests that were comparable to the test procedures used in December 2008.  The gold values indicated average gold grades of .032 ounces per ton, which were similar to the December 2008 values and also indicated average silver grades of 1.25 ounces per ton, equating to an average gold equivalent of .05 ounces per ton at the current market price. The test representing recoverable values using standard extraction techniques. The December 2008 tests did not test for silver values. Our consultants determined that the low assay results reported in February 2009 came from an entirely different assay procedure and therefore were not comparable to the results obtained in the December 2008 and May 2009 tests.

In June 2009, we contacted Planet Resource Recovery, Inc. (“PRR”) in hopes of PRR evaluating the use of its recovery technology in recovering precious metals from concentrates produced from El Capitan Property samples. Effective May 4, 2010, we entered into a Joint Venture Agreement with PRR to process approximately 200 tons of concentrate from the El Capitan Property. As part of the Agreement, PRR was to build a production facility for this El Capitan recovery process at their Texas site. The production facility was never completed and the Joint Venture Agreement was terminated.

In March 2010, we started a separate project using a team of experienced mining chemists and metallurgists to develop an assay process and a commercial precious metals recovery process for the mineralized materials from the El Capitan Property. This team initially focused on three (3) different recovery processes. By September 2010, this team had developed processes that yielded “metal in hand” assays, which indicated the El Capitan Property contained mineralized materials that could be of commercial grade, if the recovery cost is not prohibitive.  

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In September 2010, we announced that the team of chemists and metallurgists had developed a recovery process which uses “lead collection with silver inquarting.” An independent certified analytical laboratory utilized this recovery process to recover metal from 3,000 tons of El Capitan “Chain-of-Custody” mineralized concentrates and produced a certified report of such results, indicating a value of 0.421 ounces of gold per ton. Subsequently it was determined this recovery process would not economically commercially viable.

On November 3, 2010, we engaged another qualified consulting company to analyze ten chain-of-custody core samples from the El Capitan Property, utilizing three different recovery processes. These tests were conducted in early 2011. In April 2011, we received results that indicated potential economic values of mineralized material The results differed by analytical method, and the consulting company  undertook additional testing to achieve comparable results before proceeding with analysis and process testing of additional samples.  In August 2011, we received the analytical data from work performed by the consulting company. This third party source took considerable time to perform the needed research to confirm the values of the mineralized material samples taken from “Chain-of-Custody” samples removed from the El Capitan Property. Review of the data supported El Capitan’s expectations of commercially recoverable mineralized material, and the most recent samples of the mineralized material produced dore’ bars sold on the basis of their 1.2 ounces of gold equivalent per ton. Parameters used to calculate the economic value were .19 and 41 ounces of gold and silver per ton, respectively, of mineralized material at the current market price. 

The Company’s prior results have been replicated with “Chain-of-Custody” samples of mineralized materials collected under the direction of a qualified metallurgical engineer and an independent laboratory utilized a repeatable concentration and recovery procedure, which is a modified fire assay technique, to allow evaluations of the mineralized materials. Results using this procedure show potential gold and silver deposits, which could be economically and legally extracted or produced at the time of reserve determination. The prior geological report by Dr. Smith, when updated, will be used solely for purposes of presenting the El Capitan Property to the market for sale. A final recovery process was developed for the El Capitan mineralized materials that is well in line with the current mineral values being recovered to ensure the recovery process costs are not prohibitive in comparison to the value of the mineralized materials recoverable at the El Capitan Property.

On January 31, 2012, and based upon the results received to such date, we engaged an investment banker to formalize plans for the marketing of the El Capitan Property for potential sale to a major mining company.

After the Company announced the silver-lead inquart of three dore’ bar tests of concentrates, it continued its verification of metals values with 20 chain-of-custody samples. These analyses were performed as part of our investment banker’s due diligence procedures.   These tests were concluded in September, 2012. These results are listed below. Further tests performed with material prepared by Proven Technologies, LLC, located in Houston, Texas (“Proven”), are also listed below. We have since discontinued working with Proven as they have repeatedly had significant equipment problems with the technology they utilize.

Metallurgical Data
Sample	Sample Size	(10 to 1) Cons or Mineralized Material Samples	Silver Oz/Ton of Mineralized Material Samples	Gold Oz/Ton of Mineralized Material Samples
Dore’ Bar 1 – Sold	200 lbs	Magnitite Cons	41 ozs	.19 ozs
Dore’ Bar 2 – Sold	20 lbs	Magnitite Cons	190 ozs	-0- (inquarted with silver)
El Capitan Cons	9 x 1 lbs	Magnitite Cons	158 ozs (average)	.14 ozs (average)
Hazen (chain of custody)	20 x 1 lbs	Hematite Mineralized Material Samples	77 ozs (average)	.13 ozs (average)
Proven Technology	700 lbs	Cons	179 ozs	-0-

These results are not necessarily representative of the 141,000,000 tons of mineralized material at the El Capitan Property. They are samples.

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During our fiscal year 2013 we continued work on the recovery of precious metals mainly utilizing the industry accepted method of cyanide vat leaching under chain of custody procedures. Initial results demonstrated significant values of mineralized material. We continued working with independent metallurgical labs during the year to enhance the recovery process to include both the cyanidation recovery as well as the silver–lead process. Subsequently theses recovery process were set aside in fiscal year 2014 as advancements in technology became available to effectively process the El Capitan Property mineralized material and remove the iron effectively and economically.

Current Developments in Fiscal Year 2014 

In October 2013, we announced recovery gold equivalent assay results involving the El Capitan samples, collected and managed under “Chain-of-Custody” guidelines, as follows:

		Ounces
		Per Ton
A.	Initial Cyanide Leaching, 14- day test	.12
B.	Fine Grind, Magnetically-Separated Ore	.28

Parameters used to calculate the economic value in A above were 0.077 and 0.038 ounces of gold and platinum per ton, respectively, of mineralized material at the current market price.

Parameters used to calculate the economic value in B above were 0.17, 1.34 and 0.07 ounces of gold, silver and platinum per ton, respectively, of mineralized material at the current market price.

Based upon these results we are continued the initiatives to validate the results of the fine grinding of samples and separation of iron from the mineralized material. The iron, which historically has presented challenges related to the recovery of precious metals from the El Capitan Property mineralized material, also represents an opportunity: a valuable and saleable by-product that can offset a significant portion of the mineral exploration costs. We continued to work on enhancing this technology procedure and achieve replicated results on chain of custody samples.

We utilized and verified the three recovery processes on the El Capitan mineralized material: cyanide leaching utilizing various pre-step ore processing, silver –lead inquarting and the find grind and magnetically separated ore. The final verification process is to ensure that value of the El Capitan mineralized materials is sufficient so that the costs of the recovery process are not prohibitive in comparison to the price of the precious metals recoverable at the El Capitan Property.

Based upon the test results that utilized the fine-grinding and separation method, we moved forward with our strategic plan for a limited-scale continued mineral exploration at the El Capitan Property site in New Mexico in support of the sale of that property.

The chain-of-custody samples that were finely milled and magnetically separated using specific gravity concentrating methodology from extraction testing represents the complete methodology ̶ from samples to final mineralized materials without the use of cyanide.

In March 2014, we announced that the Company had reached an agreement with Logistica US Terminals LLC (:Logistica”), a Texas-based limited liability company and member of LIT Group network. The contract represents a tactical initiative to support the sale of the El Capitan Property. Under the terms of the Master Service Agreement, Logistica will finance and operate the extraction of iron at the El Capitan Property and provide the Company with a turnkey solution that also includes shipment of the iron to ports where buyers will take delivery.

In March 2014, we also announced that we reached an agreement with GlencoreXstrata for the purchase of iron from the El Capitan mine. Under the terms of the agreement, GlencoreXstrata committed to ongoing purchases of iron from the El Capitan Property. GlencoreXstrata will issue a Letter of Credit to guarantee payment on iron sales.

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In late April 2014, we announced the purchase of a heavy metals separation system from AuraSource, Inc. that uses state-of-the-art technology to separate hematite and magnetite from other elements in the El Capitan mineralized material. The AuraSource system leaves a rich concentrate of mineralized material that we will use to extract the mineralized materials. We have successfully completed the assembly and testing of the AuraSource heavy metals separation system at the El Capitan Property. When the mineral exploration commences, the iron extracted from the mineralized material will be transported to a port for sale pursuant to the Company’s agreements with GlencoreXstrata and Logistica.

In May 2014, we announced recovery results of .40 of gold equivalent per ton of El Capitan samples. The precious metals processing was completed in China as part of testing related to the calibration and tuning of the heavy metals separation device that will be used on site at the El Capitan Property in New Mexico. After the separation of the hematite and magnetite from the El Capitan mineralized materials, an independent lab processed the precious metals that yielded the .40 of gold equivalent per ton of samples.

Parameters used to calculate the economic value were 0.20, 3.2 and 0.25 ounces of gold, silver and palladium per ton, respectively, of mineralized material at the current market price.

The Company has methods for both the separation of the iron and the separation and recovery of mineralized material that have repeatedly yielded consistent and commercially viable economic value results. Yet another significant aspect of these breakthrough technologies for separation and recovery is that they are environmentally friendly and do not rely on the use of caustic chemicals. 

In September 2014, we announced that we had reached a final agreement for the sale of mineralized tailings from the El Capitan Property to a Hong Kong-based trading company. The terms of the agreement were not disclosed, but the Company expects to see positive cash flow in the second quarter of its 2015 fiscal year (the first quarter of the 2015 calendar year). We expect that the buyer will purchase between 5,000 and 10,000 tons of mineralized tailings per month, with payment guaranteed against a letter of credit.

We have a 5-acre minimal impact mining permit that can be used on our patented land. During the current fiscal year we have modified this mining permit to encompass allowing exploration on 40 acres at a time on our patented land. We are in the final stages of obtaining our amended and expanded mining permit from the state of New Mexico and will increase our reclamation bond to $74,495. The Company’s clean air permit was issued in late November 2014 and the expanded mining permit will be issued in early 2015 upon placing the increased financial assurance bond with the New Mexico Energy, Minerals and Natural Resources Department. Upon issuance, mineral exploration will commence at the El Capitan Property site.

Currently the property has been prepared for mineral exploration upon issuance of the modified minimal impact mining permit. Leased fencing encompasses the mineral exploration area and other criteria that the New Mexico Mining and Minerals Division has required and inspected. Mineral exploration will be conducted on open pit basis and no tunneling will be involved.

We engage third party consultants and companies to provide mineral exploration and analysis of samples.  As part of its selection process, we take into account the quality assurance practices of such consultants and companies prior to engagement. Consequently, the Company has not created an independent quality assurance program.

Description of Equipment

We have purchased heavy metals separation system from AuraSource, Inc that uses state-of-the-art technology to separate hematite and magnetite from other elements in the mineralized materials collected at the El Capitan Property. The AuraSource system leaves a rich mineralized concentrate that we will use to extract mineralized materials. The system does not use any water or toxic chemicals and utilizes complete green industrial extraction of precious metals. At full capacity, the machine can process 400 tons of mineralized material per hour. The Company built various protective coverings for the AuraSource machine and for storage of small tools.

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The Company has purchased a water truck to transport water to the El Capitan Property pending the drilling on-site. We also have a mobile home situated on our patented land. The Company currently has no other material equipment or buildings on site.

From time to time, we have entered into agreements with various personnel and companies to conduct exploration projects on the El Capitan Property. Each of the respective companies utilizes its own equipment to perform contracted work at the El Capitan Property.

Other Properties

El Capitan has a 20% joint venture interest in the COD property. Based upon the events and financial condition of the 80% joint venture partner, we have determined that this joint venture is not viable and, as a result, the Company does not consider the COD property to be a material property of the Company at this time. 

Executive Offices and Administrative Offices

The executive office is at 8390 Via de Ventura, Suite F-110, Scottsdale, Arizona 85258 and the administrative office is at 5871 Honeysuckle Road, Prescott. Arizona 86305. The administrative office premises are contributed free of charge by Mr. Stephen J. Antol, Controller for the Company. We believe that the offices are adequate to meet our current operational requirements. Other than our property as described above, we do not own any real property. 

ITEM 3. LEGAL PROCEEDINGS

We are not currently subject to any legal proceedings, and to the best of our knowledge, no such proceeding is threatened, the results of which would have a material impact on our properties, results of operation, or financial condition.  Nor, to the best of our knowledge, are any of our officers or directors involved in any legal proceedings in which we are an adverse party.

ITEM 4. MINE SAFETY DISCLOSURES

None.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is quoted on the Over-the-Counter Bulletin Board, or “OTC Bulletin Board,” under the trading symbol “ECPN.” The following table sets forth the range of high and low closing bid quotes of our common stock per quarter as reported by the OTC Bulletin Board for the past two fiscal years ended September 30, 2014 and 2013, respectively. All quoted prices reflect inter-dealer prices without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

	Price Range
Quarter Ended	High		Low
September 30, 2014	$	0.23	$	0.16
June 30, 2014	$	0.24	$	0.15
March 31, 2014	$	0.39	$	0.14
December 31, 2013	$	0.41	$	0.06
September 30, 2013	$	0.13	$	0.07
June 30, 2013	$	0.19	$	0.10
March 31, 2013	$	0.23	$	0.17
December 31, 2012	$	0.47	$	0.16

Holders

As of December 26, 2014, we had approximately 1049 holders of record of our common stock, one of which was Cede & Co., a nominee for Depository Trust Company, or DTC. Shares of common stock that are held by financial institutions as nominees for beneficial owners are deposited into participant accounts at DTC, and are considered to be held of record by Cede & Co. as one stockholder. As of December 26, 2014, we had approximately 8,311 beneficial holders of our common stock.

Dividends

To date, the Company has not declared or paid any cash dividends since its inception, and does 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. 

Recent Sales of Unregistered Securities

During our fiscal year ended September 30, 2014, we issued 1,954,545 shares of common stock to four accredited investors and the Company received cash proceeds of $215,000 which was used for working capital. The issuance of such shares was exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof because such issuance did not involve a public offering.

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ITEM 6. SELECTED FINANCIAL DATA

As a smaller reporting company, we are not required to provide disclosure pursuant to this item.

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

Overview of Business

The Company is an exploration stage company as defined by the Security and Exchange Commission’s (“SEC”) Industry Guide 7 as the Company has no established reserves as required under the Industry Guide 7.We have owned interests in several properties located in the southwestern United States in the past. We are principally engaged in the exploration of precious metals and other minerals on the El Capitan property located near Capitan, New Mexico (the “El Capitan Property”). We have not engaged in any revenue-producing operations. We have accomplished significant steps in our strategic business plan in our fiscal year 2014 and expect to begin expanded mineral exploration activity in the quarter ending March 31, 2015. We have not yet demonstrated the existence of proven or probable reserves at our El Capitan Property.  As a result, and in accordance with accounting principles generally accepted in the United States for exploration stage companies, all expenditures for exploration and evaluation of our properties are expensed as incurred. 

For complete details regarding the business of the Company, see “Item 1. Business” and “Item 2. Properties,” above.

Results of Operations - Fiscal year ended September 30, 2014 compared to fiscal year ended September 30, 2013.

We are an exploration stage company and have not yet realized any revenue from operations through our fiscal year 2014. We realized a net increase in operating expenses of $1,035,357, from $1,742,864 for the year ended September 30, 2013 to $2,778,221 for the year ended September 30, 2014. The increase is comprised mainly of increases due to professional fees of $151,080, in administrative consulting fees of $45,000, exploration costs and property development of $806,275 and other general and administrative aggregating $59,828. 

The increase in professional fees in the current year is mainly attributable to increases in stock compensation for investor relations of $97,844 and costs associated with investment banker activities of $47,000. Administrative consulting costs increased in the current year due to increased compensation to the President and CEO. The increase in exploration costs and property development consist mainly of $800,000 of stock non-cash costs related to the equipment purchase, a reduction in cash related consulting costs of approximately$67,900, a reduction of approximately $136,300 in assay costs, an increase in rental equipment of approximately $61,500 and an increase of mine development costs of approximately $86,600. The increases in the rental equipment and mine developments costs are associated in preparing the El Capitan Property site to commence exploration activities to support the Logistica and GlencoreXstrata agreements. We expect such activities to commence upon issuance of the required permits. The increase in other general and administrative is mainly attributable to increased costs associated with stock options of $35,727 and stockholder meetings aggregating $29,477.

Our net loss increased by $1,111,431 from $1,742,612 for the fiscal year ended September 30, 2013 to $2,854,043 for the current fiscal year ended September 30, 2014. The increase in net loss is mainly attributable to the net increase in operating expenses detailed above. 

Liquidity and Capital Resources

Historically we have relied on equity and debt financings to finance our ongoing operations.  

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To fund our operational expenses in the fiscal years ended September 30, 2014 and 2013, we mainly relied on proceeds received from sales of our common stock pursuant to an Equity Purchase Agreement dated July 11, 2011 (the “2011 Agreement”) with Southridge Partners II, LP (“Southridge”). Under the 2011 Agreement, we had the right, but not an obligation, to sell newly-issued shares of our common stock to Southridge. The original term of the 2011 Agreement was two years, subject to the Company’s right to terminate at any time.  The purchase commitment of Southridge under the 2011 Agreement was scheduled to expire on the earlier of July 11, 2013, or the date on which aggregate purchases by Southridge under the 2011 Agreement totaled $5,000,000. On April 3, 2013, we entered into an amendment (the “Amendment”) to the 2011 Agreement pursuant to which the parties agreed to extend the purchase commitment of Southridge under the 2011 Agreement for an additional year, expiring July 11, 2014. The maximum amount of Southridge’s aggregate purchase commitment under the 2011 Agreement remained unchanged at $5,000,000. On July 11, 2014, the 2011 Agreement expired. The shares sold under the 2011 Agreement were made pursuant to our effective registration statements on Form S-3 filed with the Securities and Exchange Commission (SEC File Nos. 333-175038 and 333-193208). 

On July 30, 2014, we entered into a new Equity Purchase Agreement (the “2014 Agreement”) with Southridge, pursuant to which the Company may from time to time, in its discretion, sell newly-issued shares of its common stock to Southridge for aggregate gross proceeds of up to $1,900,000. Unless terminated earlier, Southridge’s purchase commitment will automatically terminate on the earlier of July 30, 2016, or the date on which aggregate purchases by Southridge under the 2014 Agreement total $1,900,000. The Company has no obligation to sell any shares under the Agreement.

As provided in the 2014 Agreement, the Company may require Southridge to purchase shares of our common stock from time to time by delivering a put notice to Southridge specifying the total purchase price for the shares to be purchased (the “Investment Amount”). The Company may determine the Investment Amount, provided that such amount may not be more than the lesser of (a) $500,000, or (b) 250% of the average daily trading dollar volume of the Company’s common stock for the 20 trading days preceding the date on which the Company delivers the applicable put notice. For this purpose, the trading dollar volume for each day is determined by multiplying the closing bid price of the Company’s common stock on the Over-the-Counter Bulletin Board (or such other principal market on which the Company’s stock trades) on such date by the trading volume of the Company’s common stock on the Over-the-Counter Bulletin Board (or such other principal market on which the Company’s stock trades) on such date. The number of shares issuable in connection with each put notice will be computed by dividing the applicable Investment Amount by the purchase price for such common stock. Southridge will have no obligation to purchase shares under the 2014 Agreement to the extent that such purchase would cause Southridge to own more than 9.99% of the Company’s common stock.

For each share of our common stock purchased under the 2014 Agreement, Southridge will pay a purchase price equal to 94.0% of the Market Price, which is defined as the average of the two lowest closing bid prices on the Over-the-Counter Bulletin Board, as reported by Bloomberg Finance L.P., during the five trading days following delivery of the put notice (the “Valuation Period”). After the expiration of the Valuation Period, Southridge will purchase the applicable number of shares subject to customary closing conditions.

The 2014 Agreement contains covenants, representations and warranties of the Company and Southridge that are typical for transactions of this type. In addition, the Company and Southridge have granted each other customary indemnification rights in connection with the 2014 Agreement. The 2014 Agreement may be terminated by the Company at any time.

The offering of shares under the 2014 Agreement is being made pursuant to the Company’s effective registration statement on Form S-3 (Registration Statement No. 333-193208) previously filed with the Securities and Exchange Commission, and prospectus supplements thereunder. The benefits and representations and warranties set forth in the 2014 Agreement are not intended to and do not constitute continuing representations and warranties of the Company or any other party to persons not a party thereto, including without limitation, any future or other investor.

As of September 30, 2014, we have sold shares of common stock to Southridge under the 2011 and 2014 Agreements for aggregate proceeds of $4,250,000, and have the right, subject to certain conditions, to sell to Southridge $1,650,000 of newly-issued shares of El Capitan common stock pursuant to the 2014 Agreement. Subsequent to September 30, 2014, and prior to the filing of this report, we sold no additional shares to Southridge under the 2014 Agreement. For a complete description of the 2014 Agreement, see Note 9 of the Financial Statements of the Company set forth in “Item 8. Financial Statements,” below. 

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During our fiscal year ended September 30, 2014, funding for operations was provided for under the 2011 and 2014 Agreements and we sold Southridge shares of stock for aggregate proceeds of $750,000. We also sold 1,954,545 restricted shares of our common stock during fiscal 2014 in private placement transactions for aggregate proceeds of $215,000. Following the end of fiscal 2014, on October 17, 2014, we entered into a private Note and Warrant Purchase Agreement with an accredited investor pursuant to which we borrowed $500,000 (of which $250,000 was advanced to the Company in September 2014) against delivery of a promissory note in such amount and issued warrants to purchase 735,294 shares of our common stock to the investor. The promissory note carries an interest rate of 8% per annum, is due July 17, 2015 and is secured by a first priority security interest in all right, title and interest of the Company in and to the net proceeds received by the Company from its sale of tailing separated from iron ore recovered by the Company at the El Capitan Property. The proceeds received from sales under the 2011 and 2014 Agreements and the private placement transactions were utilized by the Company for working capital and general corporate purposes, including continuing our strategic plan to during the current fiscal year to put our El Capitan Property into production on a limited basis to assist in marketing it to a producing mining company.

As of September 30, 2014, we had cash on hand of $218,513 and an accumulated deficit of $204,675,398. Based upon our budgeted burn rate we currently have operating capital for approximately 2.0 months, excluding any cash that would be received by the Company upon the sale of its shares of common stock under the terms of the 2014 Agreement.

During the fiscal year 2014, we entered into agreements with Logistica U.S. Terminals, LLC (“Logistica”) and Glencore AG (“Glencore”) to govern the extraction and sale to Glencore of iron from mineralized material at the El Capitan Property.

We expect to commence active exploration activities to support these agreements upon the issuance of our required permits in December 2014 and January 2015. We expect to realize revenues in our fiscal year 2015. However, there is no assurance that we will generate revenue on this timeframe, or at all.  

During our fiscal year 2015 we may continue to utilize the Southridge financing facility to fund our necessary operations and draw down on the facility as operating costs require. The 2014 Agreement will expire in July 2016. As mentioned above, we also anticipate funding operations from revenues from the sale of concentrates during our fiscal year 2015 and a revolving credit line associated with the Logistica Agreements. For a summary of such agreements, see “Note 6 – Commitments and Contingencies” of the Notes to Consolidated Financial Statements.

Other than pursuant to the 2014 Agreement, we have no current committed sources of additional capital. To the extent that we are required to raise additional capital, we do not know whether it will be available on terms favorable or acceptable to us when needed, if at all. To the extent that we raise additional capital by issuing equity securities, our stockholders may experience dilution. In addition, we may grant future investors rights superior to those of our existing stockholders. If we raise additional funds by incurring debt, we could incur significant interest expense and become subject to covenants in the related transaction documentation that could affect the manner in which we conduct our business. If adequate additional capital is not available when required, we may be forced to reduce or eliminate our operating activities and our marketing efforts for the sale of the El Capitan Property.

Factors Affecting Future Mineral Exploration Results

We have generated no revenues, other than interest income and miscellaneous revenue from the sale of two dore’ bars, since inception. As a result, we have only a limited history upon which to evaluate our future potential performance. Our potential must be considered by evaluation of all risks and difficulties encountered by exploration companies which have not yet established business operations and anticipated results and situations of entering active exploration activities.

The price of gold and silver has experienced an increase in value over the past five years.  A historical chart of their respective prices is contained in Item 1, the “Business” portion of this Annual Report.  A significant drop in the price of gold, silver or other precious metals may have a materially adverse effect on the future results of potential operations and the opportunity to market the sale of the El Capitan Property and the revenue derived from the sale of concentrates. The costs associated with the recovering of precious metals may also cause a material adverse effect on our gross profit and our ability to market the sale of the El Capitan Property.

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Beginning in April 2013, the price of gold and silver has experienced a downward swing. A significant permanent drop in the price of gold, silver or other precious metals may have a materially adverse effect on the future results of potential operations and the opportunity to market the sale of the El Capitan Property. The costs associated with the recovering of precious metals may also cause a material adverse effect on the financial success of the Company and our ability to market the sale of the El Capitan Property.

Off-Balance Sheet Arrangements

During the year ended September 30, 2014, we did not engage in any off balance sheet arrangements as set forth in Item 303(a)(4) of the Regulation S-K.

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 1, “Business, Basis of Presentation and Significant Accounting Policies” in the Notes to the Consolidated Financial Statements for the year ended September 30, 2014, describes our significant accounting policies which are reviewed by management on a regular basis.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Our exposure to market risks is limited to changes in interest rates. We do not use derivative financial instruments as part of an overall strategy to manage market risk. We have no debt outstanding nor do we have any investment in debt instruments other than highly liquid short-term investments. Accordingly, we consider our interest rate risk exposure to be insignificant at this time.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

EL CAPITAN PRECIOUS METALS, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm	36
Consolidated Balance Sheets - As of September 30, 2014 and 2013	37
Consolidated Statements of Expenses – Years ended September 30, 2014 and 2013	38
Consolidated Statements of Changes in Stockholders’ Equity - Years ended September 30, 2014 and 2013	39
Consolidated Statements of Cash Flows - Years ended September 30, 2014 and 2013	40
Notes to Consolidated Financial Statements	41

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of El Capitan Precious Metals, Inc.

Scottsdale, Arizona

We have audited the accompanying consolidated balance sheets of El Capitan Precious Metals, Inc. and its subsidiaries (collectively, the “Company”) as of September 30, 2014 and 2013, and the related consolidated statements of expenses, stockholders’ equity, and cash flows for each of the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of El Capitan Precious Metals, Inc. and its subsidiaries as of September 30, 2014 and 2013, and the results of their operations and their cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ MaloneBailey, LLP

www.malonebailey.com

Houston, Texas

December 29, 2014

 

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EL CAPITAN PRECIOUS METALS, INC.

CONSOLIDATED BALANCE SHEETS

	September 30,
	2014			2013
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	218,513		$	373,692
Prepaid expense and other current assets		99,086			78,526
Deferred costs		—			120,476
Total Current Assets		317,599			572,694
Property and equipment, net of accumulated depreciation of $3,017 and $33,102, respectively		567,566			930
Exploration property		1,864,608			1,864,608
Restricted cash		15,000			15,000
Deposits		22,440			22,440
Total Assets	$	2,787,213		$	2,475,672
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	132,580		$	114,877
Notes payable, net of unamortized discounts of $158,559 and $-0-, respectively		491,441			—
Accrued liabilities		149,314			40,400
Total Current Liabilities		773,335			155,277
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.001 par value; 5,000,000 shares authorized; 51 and  -0- shares issued and outstanding, respectively		—			—
Common stock, $0.001 par value; 400,000,000 shares authorized; 278,053,877 and 262,604,345 shares issued and outstanding, respectively		278,054			262,604
Additional paid-in capital		206,411,222			203,879,146
Accumulated deficit		(204,675,398	)		(201,821,355	)
Total Stockholders’ Equity		2,013,878			2,320,395
Total Liabilities and Stockholders’ Equity	$	2,787,213		$	2,475,672

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

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EL CAPITAN PRECIOUS METALS, INC.

CONSOLIDATED STATEMENTS OF EXPENSES

	Years Ended September 30,
	2014			2013
OPERATING EXPENSES:
Professional fees	$	348,292		$	197,212
Administrative consulting fees		260,000			215,000
Legal and accounting fees		172,026			147,163
Exploration costs		1,413,405			607,130
Other general and administrative		637,750			577,922
Gain on fixed asset dispositions		—			(1,563	)
Gain on settlement of accounts payable		(53,252	)		—
Total Operating Expenses		2,778,221			1,742,864
LOSS FROM OPERATIONS		(2,778,221	)		(1,742,864	)
OTHER INCOME (EXPENSE):
Interest income		93			252
Interest expense		(75,915	)		—
Total Other Income (Expense)		(75,822	)		252
LOSS BEFORE PROVISION FOR INCOME TAXES		(2,854,043	)		(1,742,612	)
PROVISION FOR INCOME TAXES		—			—
NET LOSS	$	(2,854,043	)	$	(1,742,612	)
Basic and Diluted Per Share Data:
Net Loss Per Share - basic and diluted	$	(0.01	)	$	(0.01	)
Weighted Average Common Shares Outstanding:
Basic and diluted		271,783,390			255,575,240

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

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EL CAPITAN PRECIOUS METALS, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

									Additional
	Common Stock				Preferred Stock				Paid-In			Accumulated
	Shares		Amount		Shares		Amount		Capital			Deficit			Total
Balances at September 30, 2012		251,327,040	$	251,328		—	$	—	$	201,903,913		$	(200,078,743	)	$	2,076,498
Common stock granted for deferred costs		—		—		—		—		20,476			—			20,476
Common stock issued for services		60,000		60		—		—		15,690			—			15,750
Options expense		—		—		—		—		400,283			—			400,283
Sales of common stock		11,217,305		11,216		—		—		1,538,784			—			1,550,000
Net loss		—		—		—		—		—			(1,742,612	)		(1,742,612	)
Balances at September 30, 2013		262,604,345		262,604		—		—		203,879,146			(201,821,355	)		2,320,395
Common stock issued for services		4,350,000		4,350		—		—		845,275			—			849,625
Common stock issued with note payable		2,500,000		2,500		—		—		219,722			—			222,222
Options expense		—		—		—		—		509,604			—			509,604
Options exercised		100,000		100		—		—		21,400			—			21,500
Reversal of deferred costs		—		—		—		—		(20,476	)		—			(20,476	)
Sale of preferred stock		—		—		51		—		51			—			51
Sales of common stock		8,499,532		8,500		—		—		956,500			—			965,000
Net loss		—		—		—		—		—			(2,854,043	)		(2,854,043	)
Balances at September 30, 2014		278,053,877	$	278,054		51	$	—	$	206,411,222		$	(204,675,398	)	$	2,013,878

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

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EL CAPITAN PRECIOUS METALS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years Ended September 30,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,854,043	)	$	(1,742,612	)
Adjustments to reconcile net loss to net cash used in operating activities:
Warrant and option expense		509,604			400,283
Stock-based compensation		849,625			15,750
Amortization of debt discounts		63,663			—
Gain on fixed asset disposition		—			(1,563	)
Depreciation		2,087			1,165
Gain on settlement of accounts payable		(53,252	)		—
Net change in operating assets and liabilities:
Prepaid expenses and other current assets		(20,509	)		(14,530	)
Deferred costs		100,000			(100,000	)
Accounts payable		70,955			31,714
Accrued liabilities		108,914			(4,600	)
Net Cash Used in Operating Activities		(1,222,956	)		(1,414,393	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of furniture and equipment		(168,723	)		—
Net Cash Used in Investing Activities		(168,723	)		—
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock		965,000			1,550,000
Proceeds from option exercise		21,500			—
Proceeds from notes payable		250,000			—
Increase in finance contracts		17,439			—
Payments on finance contracts		(17,439	)		—
Net Cash Provided by Financing Activities		1,236,500			1,550,000
NET (DECREASE) INCREASE IN CASH		(155,179	)		135,607
CASH, BEGINNING OF YEAR		373,692			238,085
CASH, END OF YEAR	$	218,513		$	373,692
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	—		$	—
Cash paid for income taxes		—			—
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Debt issued for equipment purchase	$	400,000		$	—
Common stock issued with note payable		222,222			—
Reversal of common stock granted for deferred costs		20,476			—
Common stock granted for deferred costs		—			20,476

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

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EL CAPITAN PRECIOUS METALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Business, Operations and Organization

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

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

El Capitan is an exploration stage company as defined by the Security and Exchange Commission’s (“SEC”) Industry Guide 7 as the Company has no established reserves as required under the Industry Guide 7. We are principally engaged in the exploration of precious metals and other minerals on the El Capitan property located near Capitan, New Mexico (the “El Capitan Property”). The Company is in mineral exploration state activities and expanding its permitting with the State of New Mexico Minerals and Mining Division to expand the Company’s mineral exploration activities.

The Company has completed certain acquisitions and transactions prior to fiscal 2013, but has not had any revenue producing operations.  

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries El Capitan Precious Metals, Inc., a Delaware corporation; Gold and Minerals Company, Inc., a Nevada corporation; and El Capitan, Ltd., an Arizona corporation. All significant inter-company accounts and transactions have been eliminated in consolidation.

Reclassifications

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

Cash and Cash Equivalents

El Capitan considers those short-term, highly liquid investments with maturities of three months or less as cash and cash equivalents. At times, cash in banks may be in excess of the FDIC limits. The Company has no cash equivalents.

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Management Estimates and Assumptions

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

Fair Value of Financial Instruments

The fair values of El Capitan’s financial instruments include cash, investments, accounts payable, accrued expenses and notes payable approximate their carrying amounts because of the short maturities of these instruments or because of restrictions.

Property and Equipment

Property and equipment are recorded at cost less accumulated depreciation. Upon retirement or sale, the cost of the assets disposed of and the related accumulated depreciation are removed from the accounts, with any resultant gain or loss being recognized as a component of operating income or expense. Depreciation is computed over the estimated useful lives of the assets using the straight-line method. Maintenance and repairs are charged to operations as incurred.  

Net Income (Loss) Per Share

The Company calculates net income (loss) per share as required by Accounting Standards Codification subtopic 260-10, Earnings per Share (ASC 260-10”). Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings per share is calculated by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During the periods when they are anti-dilutive, common stock equivalents, if any, are not considered in the computation. For the years ended September 30, 2014 and 2013, the impact of outstanding stock equivalents has not been included as they would be anti-dilutive. 7,900,000 and 6,100,000 options were excluded during the years ended September 30, 2014 and 2013, respectively.

Stock-Based Compensation

FASB ASC 718 requires companies to measure all stock compensation awards using a fair value method and recognize the related compensation cost in its financial statements. Beginning with El Capitan’s quarterly period that began on October 1, 2006, El Capitan adopted the provisions of FASB ASC 718 and expenses the fair value of employee stock options and similar awards in the financial statements. The Company accounts for share based payments in accordance with ASC 718, Compensation - Stock Compensation, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on the grant date fair value of the award. In accordance with ASC 718-10-30-9, Measurement Objective – Fair Value at Grant Date, the Company estimates the fair value of the award using the Black-Scholes option pricing model for valuation of the share-based payments. The Company believes this model provides the best estimate of fair value due to its ability to incorporate inputs that change over time, such as volatility and interest rates, and to allow for actual exercise behavior of option holders. The simplified method is used to determine compensation expense since historical option exercise experience is limited relative to the number of options issued. The compensation cost is recognized ratably using the straight-line method over the expected vesting period.

El Capitan accounts for stock-based compensation to other than employees in accordance with FASB ASC 505-50. Equity instruments issued to other than employees are valued at the earlier of a commitment date or upon completion of the services, based on the fair value of the equity instruments and is recognized as expense over the service period.

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El Capitan recognized stock-based administrative compensation aggregating $509,604 and $400,283 for common stock options issued to administrative personnel and consultants during the years ended September 30, 2014 and 2013, respectively. Also during the years ended September 30, 2014 and 2013, the Company paid stock based compensation consisting of common stock issued to non-employees aggregating $849,625 and $15,750, respectively.

Impairment of Long-Lived Assets

The Company reviews and evaluates long-lived assets for impairment when events or changes in circumstances indicate the related carrying amounts may not be recoverable. The assets are subject to impairment consideration under ASC 360-10-35-17, Measurement of an Impairment Loss, if events or circumstances indicate that their carrying amount might not be recoverable. As of September 30, 2013, precious metals recovery process for precious metals is on target with the Company’s updated report from our independent geologist in January 2012 and no events or circumstances have happened to indicate the related carrying values of the properties may not be recoverable. When the Company determines that an impairment analysis should be done, the analysis will be performed using the rules of ASC 930-360-35, Asset Impairment, and 360-10-15-3 through 15-5, Impairment or Disposal of Long-Lived Assets.

An impairment loss is recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying amount. When impairment is identified, the carrying amount of the asset is reduced to its estimated fair value. Assets to be disposed of are recorded at the lower of net book value or fair market value less cost to sell at the date management commits to a plan of disposal. There were no impairments to long-lived assets for the Company’s fiscal years ended September 30, 2014 or 2013.

Exploration Property Costs

Exploration property costs are expensed as incurred until such time as economic reserves are quantified. To date El Capitan has not established any proven or probable reserves on the El Capitan Property. The Company has capitalized $1,864,608 of exploration property acquisition costs reflecting its investment in the El Capitan Property.

Income Taxes

El Capitan computes deferred income taxes under the asset and liability method prescribed by FASB ASC 740. Under this method, deferred tax assets and liabilities are recognized for temporary differences between the financial statement amounts and the tax basis of certain assets and liabilities by applying statutory rates in effect when the temporary differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount more likely than not to be realized.

Revenue Recognition

In June 2013, the Company signed a contract to have chain of custody mineralized material samples (“samples”) located in Denver, Colorado processed by an independent party (see Note 7). If revenue is generated under this contract, it will be recognized in accordance with FASB ASC 605. In general, El Capitan will recognize revenue when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the fee is fixed or determinable, and (iv) collectability is reasonably assured. Revenue generated and costs incurred under this agreement will be reported on a net basis in accordance with FASB ASC 605-45. There was no revenue generated under this agreement.

Gain on Settlement of Accounts Payable

During the year ended September 30, 2014, the Company recorded a gain on settlement of accounts payable of $53,252 as a result of a review of trade payables in which the statute of limitations had been exceeded and no legal liability existed. Our review included the determination of the dates of receipt of goods and services, the last activity with the vendor and the applicable statute of limitations.

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Recently Issued Accounting Pronouncements

Other than as set forth below, management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.

In May 2014, the FASB issued ASC updated No. 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09). Under the amendments in this update, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amendments in this update are effective for fiscal years and interim periods within those years beginning after December 15, 2016. Early adoption is not permitted. The new standard is required to be applied either retrospectively to each prior reporting period presented, or retrospectively with the cumulative effect of applying the update recognized at the date of initial application. The Company has not yet selected a transition method, and has not determined the impact, if any, that the new standard will have on its consolidated financial statements.

In June 2014, the FASB issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. ASU 2014-10 addresses the cost and complexity associated with the incremental reporting requirements for development stage entities, such as startup companies, without compromising the availability of relevant information and eliminates an exception provided to development stage entities in Topic 810, Consolidation, for determining whether an entity is a variable interest entity on the basis of the amount of investment equity that is at risk. The Company elected to apply ASU 2014-10 for our fiscal quarter ended June 30, 2014. ASU 2014-10 impacts financial statement presentation only and removes the requirement to present additional inception-to-date information.

In June 2014, the FASB issued ASU 2014-12, Compensation – Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period, which is effective for financial statements issued for interim and annual periods beginning on or after December 15, 2015. The guidance requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition and should not be reflected in the estimate of the grant-date fair value of the award. This standard is not expected to have an effect on the Company’s reported financial position or results of operations.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which is effective for financial statements issued for interim and annual periods beginning on or after December 15, 2016. This update contains amendments that clarify the principles for management’s assessment of an entity’s ability to continue as a going concern. This standard is not expected to have an effect on the Company’s reported financial position or results of operations.

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

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NOTE 2 – RELATED PARTY TRANSACTIONS

Consulting Agreements

Effective May 1, 2009, El Capitan has informal arrangements with two individuals, one of whom is an officer and is also director of El Capitan, pursuant to which such individuals serve as support staff for the functioning of the home office and all related corporate activities and projects. Effective June 1, 2010, El Capitan amended the aggregate monthly payments with these two individuals under the arrangements to $16,667. Effective August 1, 2013, the monthly compensation was increased to $21,667. There are no written agreements with these individuals.

Total administrative consulting fees expensed under these informal agreements for the years ended September 30, 2014 and 2013 was $260,000 and $215,000, respectively.

In January 2012, we retained Management Resource Initiatives, Inc., a company controlled by the Chief Financial Officer and Director of El Capitan, for services with a monthly consulting fee of $10,000, which monthly fee was increased to $15,000 effective August 1, 2013. (See Note 6 - Related Party.)

NOTE 3 – PROPERTY AND EQUIPMENT

Major classes of property and equipment together with their estimated useful lives, consisted of the following at September 30, 2014 and 2013:

	Useful		September 30,
	Lives		2014			2013
Computers and office equipment		3 years	$	7,389		$	33,123
Automotive equipment		5 years		15,042			—
Mine equipment		7 years		500,000			909
Equipment structures and other		7 years		48,152			—
				570,583			34,032
Less: Accumulated depreciation				(3,017	)		(33,102	)
Net property and equipment			$	567,566		$	930

Depreciation expense during the years ended September 30, 2014 and 2013 totaled $2,087 and $1,165, respectively.

NOTE 4 – NOTES PAYABLE

On November 21, 2013, the Company entered into an agreement to finance a portion of its insurance premiums in the amount of $17,440 at an interest rate of 10.0% with equal payments of $3,575.58 including interest, due monthly beginning December 21, 2013 and continuing through April 21, 2014. As of September 30, 2014, the outstanding balance under this note payable was $-0-.

Under an agreement with Logistica U.S. Terminals, LLC (“Logistica”) dated February 28, 2014, Logistica agreed to remit a $400,000 payment on the Company’s behalf that represented the remaining balance of the Company’s purchase price for a heavy ore trailing separation line to be used for processing of mineralized material at the El Capitan mine site. The Company previously remitted $100,000 toward the purchase of such equipment. In consideration for Logistica remitting such payment, the Company agreed to deliver a $400,000 promissory note to Logistica and issued 2,500,000 shares of common stock to a designee of Logistica under the Company’s 2005 Stock Incentive Plan. The promissory note accrues interest at 4.5%, with principal and accrued interest payments to be made out of the Company’s proceeds from sale of iron extracted from mineralized materials from its exploration activities. The relative fair value of the common stock was determined to be $222,222 and was recorded as a discount to the promissory note that is being amortized to interest expense over the expected life of the note through October 31, 2015. During the year ended September 30, 2014, amortization expense of $63,663 was recognized. The outstanding balance under this note payable was $400,000 and the unamortized discount on the note payable was $158,559 as of September 30, 2014.

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On September 8, 2014, the Company received an advance of $250,000 under a $500,000 Note and Warrant Purchase Agreement entered into on October 17, 2014. The Note is secured by the net proceeds received by the Company from its sale of tailings separated from iron recovered by the Company at the El Capitan Property, carries an interest rate of 8% per annum, and matures July 17, 2015. The remaining $250,000 was advanced to the Company on October 17, 2014. On October 17, 2014, the Company also issued warrants to purchase an aggregate of 882,353 shares of common stock in connection with this note of which 735,294 were issued to the lender and 147,058 were issued to a third party at a purchase price equal to $0.17 per share. The relative fair value of the 735,294 warrants was determined to be $73,053 and was recorded as a discount to the promissory note and is being amortized to interest expense over the life of the note through July 17, 2015. The fair value of the 147,058 warrants was determined to be $17,111 and was recorded as deferred financing costs and is being amortized to interest expense over the life of the note through July 17, 2015 (see Note 10). The outstanding balance under this note payable was $250,000 as of September 30, 2014.

The components of the notes payable at September 30, 2014 are as follows:

	Principal		Unamortized
	Amount		Discount			Net
Notes payable	$	650,000	$	(158,559	)	$	491,441

NOTE 5 – FAIR VALUE MEASUREMENTS

U.S. accounting standards require disclosure of a fair-value hierarchy of inputs the Company uses to value an asset or a liability. In September 2006, the FASB issued new accounting guidance, which establishes a framework for measuring fair value under generally accepted accounting principles (“GAAP”) and expands disclosures about fair value measurements. The Company previously partially adopted this guidance for all instruments recorded at fair value on a recurring basis. In the second quarter of fiscal 2010, the Company adopted the remaining provisions of the guidance for all non-financial assets and liabilities that are not re-measured at fair value on a recurring basis. The adoption of these provisions did not have an impact on the Company’s consolidated financial statements.

Fair value standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, the standards establish a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires that the Company maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of the fair-value hierarchy are described as follows:

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.

Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date.

Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

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The following table sets forth by level with the fair value hierarchy the Company’s financial assets and liabilities measured at fair value on September 30, 2014 and 2013:

September 30, 2014:	Level 1		Level 2		Level 3		Total
Assets
Exploration property	$	—	$	—	$	1,864,608	$	1,864,608
Liabilities
None	$	—	$	—	$	—	$	—

September 30, 2013:	Level 1		Level 2		Level 3		Total
Assets
Exploration property	$	—	$	—	$	1,864,608	$	1,864,608
Liabilities
None	$	—	$	—	$	—	$	—

The exploration property associated with the El Capitan Property, which the Company is intending to continue to market for sale to a major mining company, is classified as Level 3. The fair value of the exploration property is determined based upon the cost basis the of El Capitan’s investment in the exploration property under U.S. GAAP. A qualified independent third party appraisal has been done on the property. The appraised value was established based upon comparable sales of similar assets, certain assumptions regarding market demand for this asset and detailed property data input as supplied by the Company’s consulting geologist. As this valuation was based upon unobservable inputs, El Capitan classified the exploration property as Level 3. There was change in the carrying valuation of the exploration property during the years ended September 30, 2014 or 2013.

NOTE 6 – COMMITMENTS AND CONTINGENCIES

In June 2013, the Company signed a contract to have chain of custody samples located in Denver, Colorado processed by an independent party. The samples were shipped to the processing site. The contract called for a $100,000 retainer that was paid in June 2013. Upon completion of the project, if it generated a profit, the Company was to receive the profit from the sale of the recovered precious metals above and beyond the retainer amount paid. Also, the Company was to issue 500,000 shares of the Company’s common stock pursuant to our 2005 Stock Incentive Plan to the processing company. The fair value of the common shares was determined to be $35,000 as of September 30, 2013 and it was being recognized over the service period through the expected completion date of the project in November 2013. The $100,000 retainer and $20,476 of the fair value of the shares were classified as current deferred costs on the balance sheet as of September 30, 2013. In November 2013, the project was completed and a profit was not generated. Accordingly, the $100,000 retainer was expensed and the deferred costs associated with the common shares of $20,476 were reversed during the year ended September 30, 2014.

Related Party

In January 2012, the Company retained Management Resource Initiatives, Inc. (“MRI”) for managing and overseeing the process of marketing and selling the El Capitan Property and performing other services aimed at furthering the Company's strategic goals pursuant to an unwritten consulting arrangement. Under this arrangement, the Company pays MRI a monthly consulting fee of $10,000 which was increased to $15,000 effective August 1, 2013. The Company made aggregate payments of $180,000 and $130,000 to MRI during the years ended September 30, 2014 and 2013, respectively. MRI is a related party because it is a corporation that is wholly-owned by John F. Stapleton who is the Company’s Chief Financial Officer and Director.

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Purchase Contract with Glencore AG

On March 10, 2014, the Company entered into a life-of-mine off take agreement with Glencore AG (“Glencore”) for the sale of iron extracted from mineralized material at the El Capitan Property (such agreement is referred to herein as the “Glencore Purchase Contract”). Under the terms of the Glencore Purchase Contract, the Company agreed to sell to Glencore, and Glencore agreed to purchase from the Company, iron that meets the applicable specifications from the El Capitan mine. Payment for the iron is to be made pursuant an irrevocable letter of credit in favor of the Company. The purchase price is based on an index price less an applicable discount. Either party may terminate the Glencore Purchase Contract following a breach by the other party that remains uncured for a specified period after receipt of written notice.

Agreements with Logistica U.S. Terminals, LLC

In anticipation of, and in conjunction with, the Glencore Purchase Contract, the Company entered into a Master Services Agreement (the “Master Agreement”) and corresponding Iron Ore Processing Agreement (the “Processing Agreement”) with Logistica U.S. Terminals, LLC (“Logistica”), each effective as of February 28, 2014. Pursuant to these agreements, Logistica agreed to, among other things, provide the logistics required for the Company to fulfill its obligations under the Glencore Purchase Contract, to assist the Company in financing the costs of processing and delivering iron under the Glencore Purchase Contract, and to provide and/or manage the processing that iron.

Master Agreement with Logistica

Under the Master Agreement, the Company agreed that Logistica will be the exclusive logistics agent for the purpose of moving iron extracted from mineralized material at the El Capitan Property from the El Capitan Property to Glencore’s designated exporting port or final destination. Logistics services include operational supplement chain management and supervision of all logistics providers and operations from the El Capitan mine to the vessel loading port. Logistics services do not include obtaining and maintaining operating, environmental and mining permits, and land and mineral rights, which are the responsibility of the Company. Also under the Master Agreement, Logistica is required to use its best efforts to establish an operating credit line capable of funding all processing and delivery costs and, upon opening and funding such a credit line, will disburse as needed all operating costs contemplated under the Glencore Purchase Contract. The Company is required to reimburse Logistica for all such amounts, without interest, out of payments received from Glencore in respect of the purchase of the iron. 

In consideration for Logistica’s funding and logistics services, the Company will pay Logistica a percentage of the Company’s profits from the sale of iron under the Glencore Purchase Contract. If any sale of iron under the Glencore Purchase Contract results in a loss instead of a profit, as a result of a decrease in index pricing of iron or otherwise, then the Company is required to make up the shortfall out of profits from any precious metals processing and refining business, to the extent of available profits therefrom, or otherwise. If iron index prices drop below the price in place at inception of the Glencore Purchase Contract by more than 5%, then the Company will be required to provide Logistica with a greater percentage of profits commensurate with and equivalent to Logistica’s loss of profit share due to the reduction in iron index prices. At inception of the Glencore Purchase Contract, the Platts 62% FE CFR China iron index price was $121.24. In the event of a future sale of the El Capitan Property, the Company must either ensure that its agreements with Logistica are assumed by the purchaser or pay Logistica a termination fee.

Either party may terminate the Master Agreement following a breach by the other party that remains uncured for 60 days after receipt of written notice. The Master Agreement will otherwise continue indefinitely.

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Processing Agreement with Logistica

Under the Processing Agreement, Logistica has agreed to deliver iron processing equipment to the El Capitan Property and to use it best efforts to process, to contract specification, stock pile and load for delivery iron that the Company has contracted to sell to Glencore under the Glencore Purchase Contract. In order to do so, Logistica will act as the Company’s turn-key contractor for all of the Company’s iron processing and delivery activities at the El Capitan Property. In consideration for such services, the Company will pay Logistica a set price per metric ton of iron that is processed in accordance with the Glencore Purchase Contract specifications and purchased by Glencore. As additional compensation for entering into the Processing Agreement, the Company issued 4,000,000 shares of common stock to a designee of Logistica under the Company’s 2005 Stock Incentive Plan valued at $800,000. The shares vested immediately upon grant and the $800,000 was expensed in full during the year ended September 30, 2014.

Either party may terminate the Processing Agreement following a breach by the other party that remains uncured for 60 days after receipt of written notice. The Processing Agreement will otherwise continue indefinitely.

NOTE 7 – INCOME TAXES

El Capitan has incurred no income taxes during the period from July 26, 2002 (inception) through September 30, 2014. The calculated tax deferred benefit at September 30, 2014 and 2013 is based on the current Federal statutory income tax rate of 35% applied to the loss before provision for income taxes.

The following table accounts for the differences between the actual income tax benefit and amounts computed for the years ended September 30, 2014 and 2013:

	Years Ended September 30,
	2014			2013
Tax benefit at the federal statutory rate	$	797,304		$	469,691
State tax benefit		158,777			93,536
Cumulative effect of Federal tax rate change		—			—
Expiration of state operating losses		(28,216	)		—
Increase in valuation allowance		(927,865	)		(563,227	)
Income tax expense	$	—		$	—

The components of the deferred tax asset and deferred tax liability at September 30, 2014 and 2013 are as follows:

	September 30,
	2014			2013
Deferred tax assets	$	7,975,752		$	7,047,887
Valuation allowance		(7,975,752	)		(7,047,887	)
Net deferred tax asset after valuation allowance	$	—		$	—

A valuation allowance has been provided to reduce the net deferred tax asset, as management determined that it is more likely than not that the deferred tax assets will not be realized. The prior year’s net tax benefits have been restated in the current year to reflect presentation in the current year.

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At September 30, 2014, El Capitan has net operating loss carry forwards for financial statement purposes for Federal income tax approximating $21,118,000. These losses expire in varying amounts between September 30, 2022 and September 30, 2034.

At September 30, 2014, El Capitan has net operating loss carry forwards for financial statement purposes for State income tax approximating $8,384,000. These losses expire in varying amounts between September 30, 2015 and September 30, 2019.

NOTE 8 – 2005 STOCK INCENTIVE PLAN

On June 2, 2005, the Board of Directors adopted El Capitan’s 2005 Stock Incentive Plan (the “2005 Plan”) and reserved 8,000,000 shares for issuance under the 2005 Plan out of the authorized and unissued shares of par value $0.001 common stock of El Capitan. On July 8, 2005, the Board of Directors authorized El Capitan to take the steps necessary to register the 2005 Plan shares under a registration statement on Form S-8. On July 19, 2005, the Form S-8 was filed with the SEC for 5,000,000 shares. On October 18, 2007, a Form S-8 was filed with the SEC for registering the remaining 3,000,000 shares.  On July 30, 2008, the Board of Directors increased the number of shares of El Capitan’s common stock authorized for issuance under the 2005 Plan to 16,000,000 shares. On August 21, 2009, a Form S-8 was filed with the SEC to register the remaining 8,000,000 shares authorized under the 2005 Plan. On July 7, 2011, the Board of Directors increased the number of shares of El Capitan’s common stock authorized for issuance under the 2005 Plan to 30,000,000 shares. On October 20, 2011, a Form S-8 was filed with the SEC to register the 14,000,000 share increase authorized under the 2005 Plan.

At September 30, 2014, the 2005 Plan has 3,224,469 shares available for grant.

NOTE 9 – STOCKHOLDERS’ EQUITY

Authorized Common Shares

At the Company’s annual meeting of stockholders held September 25, 2014, the Company’s stockholders approved an amendment (the “Amendment”) to the Company’s Articles of Incorporation to increase the number of authorized shares of the Company’s common stock from 300,000,000 to 400,000,000 shares. The change in the authorized number of shares of common stock was effected pursuant to an Certificate of Amendment (the “Certificate of Amendment”) filed with the Secretary of State of the State of Nevada on October 1, 2014 and was effective as of such date. 

Series B Preferred Stock

Pursuant to resolutions adopted by the Board, on August 1, 2014, the Company filed a Certificate of Designation (the “Certificate of Designation”) with the Nevada Secretary of State creating a series of Preferred Stock by and designating fifty-one (51) shares of previously undesignated preferred stock as Series B Convertible Preferred Stock (the “Series B Preferred Stock”).

Liquidation. The Series B Preferred Stock, with respect to rights on liquidation, dissolution and winding-up of the Corporation, ranks on parity with each other class or series of capital stock of the Company the terms of which do not expressly provide that such class or series shall rank senior or junior to the Series B Preferred Stock. Except for distributions in the event of a liquidation, dissolution or winding-up of the Company (whether voluntary or involuntary), or a merger or consolidation by the Corporation with another corporation or other entity (in each case, other than where the Company is the surviving entity) (a “Liquidation”), holders of Series B Preferred Stock are not be entitled to receive dividends on the Series B Preferred Stock. In the event of a Liquidation, the holders of Series B Preferred Stock are be entitled to receive out of the assets of the Company, an amount equal to the $1.00 per share of Series B Preferred Stock (subject to adjustment), after any distribution or payment with respect to such Liquidation is made to the holders of any senior securities and prior to any distribution or payment with respect to such Liquidation shall be made to the holders of any junior securities.

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Voting Rights. Solely with respect to matters upon which stockholders are entitled to vote or to which stockholders are entitled to give consent and relate to Company capitalization (including, without limitation, increasing and/or decreasing the number of authorized shares of common stock and/or preferred stock, and implementing forward and/or reverse stock splits) and changes in the Company’s name, the holders of the outstanding shares of Series B Preferred Stock vote together with the holders of common stock without regard to class, except as to those matters on which separate class voting is required by applicable law or the Company’s articles of incorporation or bylaws. The holders of the outstanding shares of Series B Preferred Stock do not otherwise have the right to vote on matters brought before the Company’s stockholders. In matters on which holders of shares of Series B Preferred Stock are entitled to vote, each share of the Series B Preferred Stock has voting rights equal to (x) (i) 0.019607 multiplied by the total of (A) the issued and outstanding shares of Common Stock eligible to vote at the time of the respective vote, plus (B) the number of votes which all other series or classes of securities other than this Series B Preferred Stock are entitled to cast together with the holders of the Company’s common stock at the time of the relevant vote (the amount determined by this clause (i), the “Numerator”), divided by (ii) 0.49, minus (y) the Numerator.

Conversion. Shares of Series B Preferred Stock may, at the option of the holder, be converted into one share of common stock (subject to adjustment, the “Conversion Ratio”). In the event of any Transfer (as defined in the Certificate of Designation) of any share of Series B Preferred Stock, such share will automatically convert into common stock based upon the Conversion Ratio applicable at the time of such Transfer. If, at any time while any shares of Series B Preferred Stock remain outstanding, the Company effectuates a stock split or reverse stock split of its common stock or issues a dividend on its common stock consisting of shares of common stock, the Conversion Ratio and any other amounts calculated as contemplated by the Certificate of Designation shall be equitably adjusted to reflect such action.

Equity Purchase Agreement

On July 11, 2011, the Company entered into an Equity Purchase Agreement (the “2011 Agreement”) with Southridge Partners II, LP (“Southridge”). Under the 2011 Agreement, we had the right, but not an obligation, to sell newly-issued shares of our common stock to Southridge. Southridge had no obligation to purchase shares under the 2011 Agreement to the extent that such purchase would cause Southridge to own more than 9.99% of El Capitan’s common stock. The original term of the 2011 Agreement was two years, subject to the Company’s right to terminate at any time.  The purchase commitment of Southridge under the 2011 Agreement was scheduled to expire on the earlier of July 11, 2013, or the date on which aggregate purchases by Southridge under the 2011 Agreement totaled $5,000,000. On April 3, 2013, we entered into an amendment (the “Amendment”) to the 2011 Agreement pursuant to which the parties agreed to extend the purchase commitment of Southridge under the 2011 Agreement for an additional year, expiring July 11, 2014. The maximum amount of Southridge’s aggregate purchase commitment under the 2011 Agreement remained unchanged at $5,000,000. On July 11, 2014, the 2011 Agreement expired.  

For each share of the Company’s common stock purchased under the 2011 Agreement, Southridge paid 94.0% of the Market Price, which is defined as the average of the two lowest closing bid prices on the Over-the-Counter Bulletin Board, as reported by Bloomberg Finance L.P., during the five trading days following the date on which the Company notified Southridge of a pending sale (the “Valuation Period”).  After the expiration of the Valuation Period, Southridge purchased the applicable number of shares subject to customary closing conditions.

The offering of shares under the 2011 Agreement were made pursuant to the Company's effective registration statement on Form S-3 (Registration Statement No. 333-175038) previously filed with the Securities and Exchange Commission, and prospectus supplements thereunder. The S-3 registration statement utilized a “shelf” registration process. Under this shelf registration process, from time to time, the Company sold any combination of the securities described in a prospectus supplement in one or more offerings, up to a total dollar amount of $5,000,000.

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On July 30, 2014, we entered into a new Equity Purchase Agreement (the “2014 Agreement”) with Southridge, pursuant to which the Company may from time to time, in its discretion, sell newly-issued shares of its common stock to Southridge for aggregate gross proceeds of up to $1,900,000. Southridge will have no obligation to purchase shares under the 2014 Agreement to the extent that such purchase would cause Southridge to own more than 9.99% of the Company’s common stock. Unless terminated earlier, Southridge’s purchase commitment will automatically terminate on the earlier of July 30, 2016, or the date on which aggregate purchases by Southridge under the 2014 Agreement total $1,900,000. The Company has no obligation to sell any shares under the 2014 Agreement.

As provided in the 2014 Agreement, the Company may require Southridge to purchase shares of our common stock from time to time by delivering a put notice to Southridge specifying the total purchase price for the shares to be purchased (the “Investment Amount”). The Company may determine the Investment Amount, provided that such amount may not be more than the lesser of (a) $500,000, or (b) 250% of the average daily trading dollar volume of the Company’s common stock for the 20 trading days preceding the date on which the Company delivers the applicable put notice. For this purpose, the trading dollar volume for each day is determined by multiplying the closing bid price of the Company’s common stock on the Over-the-Counter Bulletin Board (or such other principal market on which the Company’s stock trades) on such date by the trading volume of the Company’s common stock on the Over-the-Counter Bulletin Board (or such other principal market on which the Company’s stock trades) on such date. The number of shares issuable in connection with each put notice will be computed by dividing the applicable Investment Amount by the purchase price for such common stock.

For each share of our common stock purchased under the 2014 Agreement, Southridge will pay a purchase price equal to 94.0% of the Market Price, which is defined as the average of the two lowest closing bid prices on the Over-the-Counter Bulletin Board, as reported by Bloomberg Finance L.P., during the five trading days following delivery of the put notice (the “Valuation Period”). After the expiration of the Valuation Period, Southridge will purchase the applicable number of shares subject to customary closing conditions.

The 2014 Agreement contains covenants, representations and warranties of the Company and Southridge that are typical for transactions of this type. In addition, the Company and Southridge have granted each other customary indemnification rights in connection with the 2014 Agreement. The 2014 Agreement may be terminated by the Company at any time.

The offering of shares under the 2014 Agreement has been made pursuant to registration statement on Form S-3 (Registration Statement No. 333-193208) previously filed with the Securities and Exchange Commission, and prospectus supplements thereunder. The benefits and representations and warranties set forth in the 2014 Agreement are not intended to and do not constitute continuing representations and warranties of the Company or any other party to persons not a party thereto, including without limitation, any future or other investor.

As of September 30, 2014, we have sold shares of common stock to Southridge under the 2011 and 2014 Agreements for aggregate proceeds of $4,250,000, and have the right, subject to certain conditions, to sell to Southridge $1,650,000 of newly-issued shares of El Capitan common stock pursuant to the 2014 Agreement, subject to the satisfaction of applicable closing conditions.

Preferred Stock Issuances

On August 1, 2014, Company issued fifty-one (51) shares of Series B Preferred Stock to John F. Stapleton (the “Series B Stockholder”) for a purchase price equal to $1.00 per share. The offer and sale of such shares were not registered under the Securities Act of 1933, as amended (the “Securities Act”) at the time of sale, and therefore may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. For this issuances, the Company relied on the exemption from federal registration under Section 4(2) of the Securities Act and/or Rule 506 promulgated there under, based on the Company’s belief that the offer and sale of the shares has not and will not involve a public offering as the Series B Stockholder is an “accredited investor” as defined under Section 501 promulgated under the Securities Act and no general solicitation has been involved in the offering.

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As a result of the voting rights of the Series B Preferred Stock, the Series B Stockholder holds in the aggregate approximately 51% of the total voting power of all issued and outstanding voting capital of the Company solely with respect to matters upon which stockholders are entitled to vote or to which stockholders are entitled to give consent and relate to Company capitalization (including, without limitation, increasing and/or decreasing the number of authorized shares of common stock and/or preferred stock, and implementing forward and/or reverse stock splits) and changes in the Company’s name. The Series B Stockholder does not otherwise have the right under the Certificate of Designation to vote on matters brought before the Company’s stockholders. The Company’s Board of Directors believes that the issuance of the Series B Preferred Stock to the Series B Stockholder will facilitate the Company’s ability to manage its affairs with respect to the limited matters on which the Series B Stockholder is entitled to vote.

Common Stock Issuances

During the fiscal year ended September 30, 2014, the Company:

(i) issued 6,544,987 shares of common stock under the 2011 and 2014 Agreements with Southridge and received cash proceeds of $750,000;

(ii) issued 350,000 shares of common stock for non-employee consulting services valued at $49,625;

(iii) issued 100,000 shares of common stock upon the exercise of non-statutory stock options and the Company received cash proceeds of $21,500;

(iv) issued 1,954,545 shares of common stock to four accredited investors and the Company received cash proceeds of $215,000;

(v) issued 2,500,000 shares of common stock in connection with financing the acquisition of heavy mining equipment valued at $222,222; and

(vi) issued 4,000,000 shares of common stock under the processing agreement (see Note 6) valued at $800,000 which is included as stock issued for services in the statements of stockholders’ equity.

During the fiscal year ended September 30, 2013, the Company:

(i) issued 11,217,305 shares of common stock under the terms Equity Purchase Agreement and received cash proceeds of $1,550,000; and

(ii) issued 60,000 shares of common stock for non-employee consulting services valued at $15,750.

Warrants

During the fiscal years ended September 30, 2014 and 2013, the Company did not issue any warrants and as of September 30, 2014 and 2013, there were no warrants outstanding. 

Options

Aggregate options expense recognized was $509,604 and $400,283 for the years ended September 30, 2014 and 2013, respectively related to the option grants and modifications described below. As of September 30, 2014 and 2013, there was unamortized option expense of $87,614 and $0, respectively.

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During the fiscal year ended September 30, 2014, the Company:

(i) Granted, pursuant to the 2005 Stock Incentive Plan, to each of two new directors of the Company five-year options to purchase 500,000 shares of the Company’s common stock at an exercise price of $0.3452 per share which will vest in equal monthly installments over two years, commencing on April 17, 2014. The fair value of the options was determined to be $233,638 using the Black-Scholes option pricing model and will be expensed as warrant and option costs over the vesting period. One of the new directors left the board without notice and without any options vesting. During the fiscal year ended September 30, 2014, $38,940 was expensed as warrant and option costs and $87,614 remains to be amortized over the remaining vesting period on the remaining director.

(ii) Granted, pursuant to the 2005 Stock Incentive Plan, to each of two existing directors of the Company a five-year stock option to purchase 500,000 shares of the Company’s common stock at an exercise price of $0.31 per share, all of which vested immediately. The fair value of the options was determined to be $209,896 using the Black-Scholes option pricing model and was expensed as warrant and option costs during the fiscal year ended September 30, 2014.

(iii) Granted, pursuant to the 2005 Stock Incentive Plan, to a consultant five-year stock options to purchase an aggregate of 100,000 shares of the Company’s common stock at an exercise price of $0.31 per share with the options vesting on the date of grant. The fair value of the options was determined to be $26,505 using the Black-Scholes option pricing model and was expensed as warrant and option costs during the fiscal year ended September 30, 2014.

(iv) Amended the expiration date of an aggregate of 500,000 outstanding common stock options. The options were originally scheduled to expire on January 31, 2014. The expiration date of the 500,000 options was extended to January 31, 2019. The incremental increase in the fair value of the options was determined to be $27,718 using the Black-Scholes option pricing model and was expensed as warrant and option costs during the fiscal year ended September 30, 2014.

(v) Granted, pursuant to the 2005 Stock Incentive Plan, to each of three directors of the Company a five-year stock option to purchase 500,000 of the Company’s common stock at an exercise price of $0.16 per share, all of which vested immediately. The fair value of the options was determined to be $159,456 using the Black-Scholes option pricing model and was expensed as warrant and option costs during the during the fiscal year ended September 30, 2014.

(vi) Granted, pursuant to the 2005 Stock Incentive Plan, to a consultant five-year stock options to purchase an aggregate of 100,000 shares of the Company’s common stock at an exercise price of $0.14 per share with the options vesting on the date of grant. The fair value of the options was determined to be $12,423 using the Black-Scholes option pricing model and was expensed as warrant and option costs during the fiscal year ended September 30, 2014.

(vii) Granted, pursuant to the 2005 Stock Incentive Plan, to a consultant five-year stock options to purchase an aggregate of 300,000 shares of the Company’s common stock at an exercise price of $0.13 per share with the options vesting on the date of grant. The fair value of the options was determined to be $34,666 using the Black-Scholes option pricing model and was expensed as warrant and option costs during the fiscal year ended September 30, 2014.

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During the fiscal year ended September 30, 2013, the Company:

(i) Amended the expiration date of an aggregate of 1,500,000 outstanding common stock options. The options were originally scheduled to expire on February 7, 2013. The expiration date of 1,000,000 of the options was extended to February 7, 2018 and the expiration date of 500,000 of the options was extended to June 22, 2013. The incremental increase in the fair value of the options was determined to be $65,276 using the Black-Scholes option pricing model and was expensed as stock-based compensation during the fiscal year ended September 30, 2013.

(ii) Granted, pursuant to the 2005 Stock Incentive Plan, to three directors of the Company each a five-year stock option to purchase 500,000 of the Company common stock, and to the controller a five-year stock option to purchase 100,000 shares of the Company’s common stock, all of which vested immediately, at an exercise price of $0.215 per share. The fair value of the options was determined to be $200,983 using the Black-Scholes option pricing model and was expensed as stock-based compensation during the fiscal year ended September 30, 2013. 

(iii) Granted, pursuant to the 2005 Stock Incentive Plan, two consultants five-year stock options to purchase an aggregate 350,000 shares of the Company’s common stock at an exercise price of $0.215 per share with 250,000 options vested immediately and 100,000 options were scheduled to vest in 20% annual increments beginning on January 15, 2014. The fair value of the options was determined to be $65,866 using the Black-Scholes option pricing model and was expensed as stock-based compensation during the fiscal year ended September 30, 2013.

(iv) Modified existing option awards by amending the vesting terms of 100,000 options granted on January 15, 2013 which were scheduled to vest in 20% annual increments. The options were modified to vest immediately. There was no incremental increase in the fair value of the option, which was determined using the Black-Scholes option pricing model.

The Company utilizes the Black-Scholes option pricing model to estimate the fair value of its option awards. The following table summarizes the significant assumptions used in the model during the years ended September 30, 2014 and 2013:

Year Ended September 30, 2014:
Exercise prices	$0.14 - $0.38
Expected volatilities	120.72% - 140.83%
Risk free interest rates	0.51% - 1.55%
Expected terms	2.5 - 5.0 years
Expected dividends	—
Year Ended September 30, 2013:
Exercise prices	$0.215 - $1.02
Expected volatilities	95.22% - 136.68%
Risk free interest rates	0.34% - 0.88%
Expected terms	2.5 - 5.0 years
Expected dividends	—

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The following table summarizes the stock option activity during the years ended September 30, 2014 and 2013:

	Options Outstanding
				Weighted
				Average
	Number of			Exercise
	Shares			Price
Balance, September 30, 2012	4,650,000		$	0.57
Granted	1,950,000			0.22
Expired/Cancelled	(500,000	)		1.02
Exercised	—			—
Balance September 30, 2013	6,100,000			0.42
Granted	4,000,000			0.24
Expired/Cancelled	(2,100,000	)		0.23
Exercised	(100,000	)		0.22
Balance September 30, 2014	7,900,000		$	0.38
Exercisable at September 30, 2013	6,100,000		$	0.42
Exercisable at September 30, 2014	7,525,000		$	0.38

The range of exercise prices and the weighted average exercise price and remaining weighted average life of the options outstanding at September 30, 2014 were $0.13 to $1.02 and 4.06 years, respectively. The aggregate intrinsic value of the outstanding options at September 30, 2014 was $37,000.

The range of exercise prices and the weighted average exercise price and remaining weighted average life of the options outstanding at September 30, 2013 were $0.21 to $1.02 and 4.70 years, respectively. The aggregate intrinsic value of the outstanding options at September 30, 2013 was $0.

The Company adopted its 2005 Stock Incentive Plan (the “2005 Plan”) pursuant to which the Company reserved and registered 30,000,000 shares stock and option grants. As of September 30, 2014, there were 3,224,469 shares available for grant under the 2005 Plan, excluding the 7,900,000 options outstanding.

NOTE 10 - SUBSEQUENT EVENTS

On October 17, 2014, the Company entered into a private Note and Warrant Purchase Agreement with an accredited investor pursuant to which the Company borrowed $500,000 against delivery of a promissory note in such amount. In connection with this note, on October 17, 2014, the Company issued warrants to purchase an aggregate of 882,353 shares of common stock, at a purchase price equal to $0.17 per share, of which 735,294 warrants were issued to the lender and 147,058 warrants were issued to a third party as placement fees related to the note. The promissory note carries an interest rate of 8% per annum, is due July 17, 2015 and is secured by a first priority security interest in all right, title and interest of the Company in and to the net proceeds received by the Company from its sale of tailings separated from iron recovered by the Company at the El Capitan Property.

On November 3, 2014, granted, pursuant to the 2005 Stock Incentive Plan, to the four directors of the Company ten year options to purchase an aggregate of 1,500,000 shares of the Company’s common stock at an exercise price of $0.15 per share, and to the controller a ten-year stock option to purchase 250,000 shares of the Company’s common stock at an exercise price of $0.15 per share. All the granted options vested on the date of the grant.

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On November 3, 2014, granted to a consultant of the Company, a ten year option to purchase 500,000 shares of the Company’s common stock at an exercise price of $0.15 per share with the options vesting on the date of grant.

On November 3, 2014, granted to a consultant of the Company, a ten year option to purchase 1,500,000 shares of the Company’s common stock at an exercise price of $0.15 per share and are scheduled to vest equally over six months from the grant date.

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

There have been no changes in our accountants during the last two fiscal years, and we have not had any material disagreements with our existing accountants during that time.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We conducted an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports it files or submits 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. Disclosure controls and procedures also include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2014, our disclosure controls and procedures were effective.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; providing reasonable assurance that receipts and expenditures of Company assets are made in accordance with management authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis. 

Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management conducted an evaluation of the effectiveness, as of September 30, 2014, of our internal control over financial reporting based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  Based on this evaluation, management concluded that the Company’s internal control over financial reporting was effective as of September 30, 2014.

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Changes in Internal Control Over Financial Reporting

During the fiscal quarter ended September 30, 2014, there was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Attestation Report of the Registered Public Accounting Firm

The Company’s independent registered public accounting firm is not required to issue, and has not issued, an attestation report on the Company’s internal control over financial reporting as of September 30, 2014.

ITEM 9B. OTHER INFORMATION

On December 24, 2014, Tony Burger resigned as a member of the Board of Directors of the Company, effective immediately.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Identification of Directors and Executive Officers

The following table sets forth the name, age, position and office term of each executive officer and directors of the Company as of December 24, 2014.

Name	Age		Position	Director Since
Charles C. Mottley		80	President, Chief Executive Officer, Director	April 21, 2009
John F. Stapleton		71	Chief Financial Officer, Director, Chairman of the Board, Secretary	April 21, 2009
Bradley C. Holt		60	Director	September 25, 2014

Charles C. Mottley – Mr. Mottley was Chairman of the Board of Gold and Minerals Company, Inc. since February 2009 until the merger into the Company; and was on the Board of Trustees at Hampden-Sydney College from 2007 to May 2011. Mr. Mottley was President and a Director of El Capitan Precious Metals, Inc. from July 2002 to April 2007, when he resigned as president, but continued to serve as a Director until September 2007. He also provided consulting services to our Company from June 2007 to June 2008. Mr. Mottley also served as Chairman and Chief Executive Officer of Gold and Minerals Company, Inc., from 1978 until July 2005, at which time he resigned those positions. He was on the Board of the National Mining Association from 2005 to 2007 and has been employed in the mining industry in various capacities from equipment sales and services to active mining operations for over 36 years. Mr. Mottley is the author of five books and is the founder of the Fatherhood Foundation in Scottsdale, Arizona. Mr. Mottley received a Bachelor of Arts Degree from Hampden-Sydney College in 1958. On January 20, 2012, Mr. Mottley filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code in the Unites States Bankruptcy Court in and for the District of Arizona (Case No. 10-01419 GBN). A plan of reorganization was approved by the Court in June 2013.

John F. Stapleton – Mr. Stapleton has been a Company director and Chairman of the Company’s Board of Directors since April 2009, and has served as Chief Financial Officer since February 2012. Mr. Stapleton has extensive experience with early-stage development companies and contributes a unique set of skills needed to achieve a focused strategy, early-stage funding, basic infrastructure and business model, all of which are central to creating a solid business platform to launch and scale a successful venture. Mr. Stapleton has a history of founding and supporting more than 25 emerging technology companies. As a senior officer and investor, Mr. Stapleton has been instrumental in the development and financing of several companies. Mr. Stapleton currently serves as a director on the emerging company boards of Advanced Circulatory Systems, Inc. and Visible Customer Services, LLC, and is the sole owner of the Management Resource Initiatives, Inc., a corporation that, since January 2012, has been managing and overseeing the process of marketing and selling the El Capitan Property and performing other services aimed at furthering the Company's strategic goals.

Bradley C. Holt – Mr. Holt has served as a Director of the Company since September 25, 2014. Mr. Holt was CEO/Chairman of Solar Energy Inc. from 2007 until 2010. In 1988, Mr. Holt founded and became President of Lion’s Gate Capital Ltd, a private Merchant Bank that provides merger/acquisition, venture capital, development strategy, restructuring and management advice. He continues to serves as its Chairman. From May 1998 through 2007, Mr. Holt served as Chairman of the Board of Domino’s Pizza Canada. Mr. Holt attained a BA from Bemidji State University and attended graduate school at University of Wisconsin. He was born July 20, 1954.

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Audit Committee; Financial Expert

The Company has a standing audit committee comprised of one director, John Stapleton. As set forth in the Company’s written audit committee charter, the audit committee assists the Board of Directors in fulfilling its responsibility for oversight of the quality and integrity of the accounting, auditing, and reporting practices of the Company, and such other duties as directed by the Board. The committee’s role includes a particular focus on the qualitative aspects of financial reporting to shareholders, on the Company’s processes to manage business and financial risk, and for compliance with significant applicable legal, ethical, and regulatory requirements. The committee is directly responsible for the appointment, compensation, and oversight of the public accounting firm engaged to prepare and issue an audit report on the financial statements of the Company. We have posted our audit committee charter on our website at www.elcapitanpmi.com.

Mr. Stapleton is not an “audit committee financial expert” as defined by the rules promulgated by the SEC. However, Mr. Stapleton has financial management experience and is able to read and understand fundamental financial statements, including our consolidated balance sheet, consolidated statement of expenses and consolidated statement of cash flows, and is generally knowledgeable in financial and auditing matters. Given the Company’s current lack of capital to engage an “expert,” and the knowledge of the current members of the audit committee, the Company has determined that its current member of the audit committee sufficiently operate and function without an “audit committee financial expert.”

Code of Ethics for Senior Financial Management

We have adopted a Code of Ethics that applies to our principal executive, financial and accounting officers (or persons performing similar functions). 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 Controller, El Capitan Precious Metals, Inc., 5871 Honeysuckle Road, Prescott, Arizona 86305. We have posted the Code of Ethics on our website at www.elcapitanpmi.com.

Nominating Committee

There have been no material changes to the procedures by which security holders may recommend nominees to the Company’s Board of Directors.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) requires officers, directors and persons who beneficially own more than 10% of any class of equity securities registered pursuant to Section 12 of the Exchange Act to file initial reports of ownership and reports of changes in ownership with the Securities and Exchange Commission. The Company does not have a class of equity securities registered pursuant to Section 12 of the Exchange Act.

ITEM 11. EXECUTIVE COMPENSATION

This section contains a discussion of the material elements of compensation awarded to, earned by or paid to (i) all individuals serving as our principal executive officer during fiscal 2014, regardless of compensation level, and (ii) our two most highly compensated other executive officers who were serving as executive officers at the end of fiscal 2014 (or such lesser number then serving as an executive officers) and who received in excess of $100,000 in total compensation during such fiscal year. These individuals are referred to in this report as the “named executive officers.” The named executive officers were the only individuals who served as executive officers of the Company during fiscal 2014.

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The Company’s current executive officers include Charles C. Mottley, President and Chief Executive Officer, John F. Stapleton, Chief Financial Officer since February 2012. Messrs. Mottley and Stapleton also serve as members of the Company’s Board of Directors. During fiscal 2013 and 2014, the Company elected to pay limited cash salaries and, instead, relied primarily upon stock option grants awarded to executive officers in their capacity as Company directors as a means of compensation. The Board believes that this compensation policy is warranted based in large part on the Company’s limited cash resources. The Board also believes that equity incentive compensation in the form of stock option grants aligns the interests of the Company’s executive officers with that of the Company’s stockholders, namely to maximize stockholder equity returns. In light of the Company’s current plan to market the El Capitan Property for sale to a major mining company, the Board believes that stock options provide a meaningful incentive for management to execute on this strategic goal.

During fiscal 2013 and until August 1, 2013, the Company paid Mr. Mottley, as President and Chief Executive Officer, a salary of $10,000 per month. Effective August 1, 2013, the Company increased Mr. Mottley’s monthly salary to $15,000. In addition, the Company granted 500,000 options to purchase shares of the Company’s common stock to Mr. Mottley on each of January 15, 2013, December 12, 2013 and March 14, 2014, as compensation for his services as a director. See “Director Compensation” below.

Mr. Stapleton does not receive a salary for his service as Chief Financial Officer. The Company granted 500,000 options to purchase shares of the Company’s common stock to Mr. Stapleton on each of January 15, 2013, December 12, 2013 and March 14, 2014 as compensation for his services as a director. See “Director Compensation” below.

Neither Messrs. Mottley nor Stapleton is subject to a written employment agreement.

Summary Compensation Table

The following table sets forth the compensation awarded to, earned by or paid to each named executive officer during each of the fiscal years ended September 30, 2014 and 2013. 

Name and Principal Position	Fiscal Year	Salary		Total Compensation
Charles C. Mottley (1)	2014	$	180,000	$	180,000
President, Chief Executive Officer,	2013	$	130,000	$	130,000
Director
John F. Stapleton (2)	2014	$	—	$	—
Director, Chairman of the Board	2013	$	—	$	—
Chief Financial Officer

________________

(1)

Mr. Mottley has served as President and Chief Executive Officer of the Company since April 30, 2009. During fiscal 2012 and until August 1, 2013, the Company paid Mr. Mottley a salary of $10,000 per month for his service as President and Chief Executive Officer.  Effective August 1, 2013, the Company increased Mr. Mottley’s monthly salary to $15,000.  Mr. Mottley currently has no employment contract with the Company.

(2)

Mr. Stapleton has served as Chairman of the Board since April 21, 2009 and as Chief Financial Officer since February 14, 2012.  Mr. Stapleton currently has no employment contract with the Company and receives no compensation as an officer.

Grants of Plan-Based Awards

There were no equity awards granted under our 2005 Stock Incentive Plan to any named executive officer during the year ended September 30, 2014 as compensation for services provided as executive officers. Equity awards granted as compensation for director services are discussed below under “Director Compensation.”

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Outstanding Equity Awards at Fiscal Year-End

The following table sets forth information regarding each unexercised options held by each of the Company’s named executive officers as of September 30, 2014:

Name	Number of Securities Underlying Unexercised Options Exercisable		Number of Securities Underlying Unexercised Options Unexercisable		Option Exercise Price		Option Expiration Date
Charles C. Mottley		300,000		—	$	0.56	7 /21/15
		500,000		—	$	1.02	2 /7/18
		500,000		—	$	0.21	7 /6/22
		500,000		—	$	0.215	1 /15/18
		500,000		—	$	0.16	12 /12/18
		500,000		—	$	0.31	3 /14/19
John F. Stapleton		500,000		—	$	1.02	2 /7/18
		500,000		—	$	0.38	1 /31/19
		500,000		—	$	0.21	7 /6/22
		500,000		—	$	0.215	1 /15/18
		500,000		—	$	0.16	12 /12/18
		500,000		—	$	0.31	3 /14/19

_______________

(1)  All options granted reflected in the table above were granted under to the Company’s 2005 Stock Incentive Plan, as amended.

Severance and Change of Control Arrangements

The Company has no severance or change of control agreements in place with its executive officers. The Company’s Board of Directors, or a committee thereof, serving as plan administrator of its 2005 Stock Incentive Plan, has the authority to provide for accelerated vesting of the options granted to its named executive officers and any other person in the event of an acquisition of the Company through the sale of substantially all of the Company's assets or through a merger, exchange, reorganization or liquidation of the Company or a similar event as determined by the Committee. This description constitutes only a summary of the relevant terms to the Company’s 2005 Stock Incentive Plan.

Director Compensation

On July 21, 2005, based upon recommendations from the Company’s compensation committee, the Board of Directors approved a cash compensation plan for the Board of Directors pursuant to which non-employee directors are entitled to receive an annual retainer of $5,000, plus an additional $1,000 for each Board meeting attended by each such director in person and $500 for all Board meetings attended by such director remotely. In addition, non-employee directors serving as chairman of the audit and compensation committee shall receive an additional annual retainer of $4,000. Because Messrs. Mottley and Stapleton were employees of the Company throughout fiscal 2014, and Mr. Keith W. Brogoitti became an employee of the Company on March 12, 2014 and a Director on March 17, 2014, and left the Company June 1, 2014, none were eligible to receive cash director compensation. Mr. Arly Richau, who resigned as a Director on March 17, 2014, agreed to forego his receipt of Board member cash compensation and Mr. Tony J. Burger, who became a Director on March 17, 2014, and resigned as a Director on December 24, 2014, also agreed to forego his receipt of Board member cash compensation, these expenses have not been incurred.The Board also approves grants of stock incentive awards to all directors from time to time, which are reflected in the table below, including the footnotes thereto.

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The following table shows the compensation earned by each of the Company’s Directors for the year ended September 30, 2014:

Name	Fees Earned or Paid in Cash		Stock Awards		Option Awards (2)		Total
Charles C. Mottley (1)(3)	$	—	$	—	$	158,000	$	158,000
John F. Stapleton (1)(4)	$	—	$	—	$	185,818	$	185,818
Arly Richau (1)(5)	$	—	$	—	$	53,152	$	53,152
Keith W. Brogoitti (1)(6)	$	—	$	—	$	9,735	$	9,735
Tony J. Burger (1)(7)	$	—	$	—	$	29,205	$	29,205
Bradley C. Holt (1)	$	—	$	—	$	—	$	—

_____________

(1)	Mr. Mottley and Mr. Stapleton were appointed to the Board of Directors and Mr. Stapleton as Chairman of the Board on April 21, 2009; Mr. Richau was appointed to the Board of Directors on July 6, 2012 and resigned on March 17, 2014; and Messrs. Brogoitti and Burger were appointed to the Board of Directors on March 17, 2014 and Mr. Holt was elected to the Board of Directors on September 25, 2014. Mr. Brogoitti left the employ of the Company and resigned from the Board effective June 1, 2014. Mr. Burger resigned from the Board of Directors on December 24, 2014.
(2)	Amounts shown reflect the grant date fair value, computed in accordance with FASB ASC 718, for stock based incentives granted during the fiscal 2014.   Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. For a discussion of the assumptions relating to our valuations of the option awards, see Note 1 to the financial statements included in this Annual Report on Form 10-K. These amounts reflect our accounting expense for these stock options and do not correspond to the actual value that may be recognized by the director.
(3)	During fiscal 2014, Mr. Mottley was awarded (i) an option to purchase 500,000 shares of our common stock at $0.16 per share, which had a grant date fair value of $53,152, and (ii) .an option to purchase 500,000 shares of our common stock at $0.31 per share, which had a grant date fair value of $104,948. At September 30, 2014,, Mr. Mottley held options to purchase 2,800,000 shares at a weighted average exercise price of approximately $0.40 per share, all of which were fully vested.
(4)	During fiscal 2014, Mr. Stapleton was awarded (i) an option to purchase 500,000 shares of our common stock at $0.16 per share, which had a grant date fair value of $53,152; (ii) an option to purchase 500,000 shares of our common stock at $0.31 per share, which had a grant date fair value of $104,948; and (iii) an extension of 500,000 options at $0.38 which had an extension date fair value of $27,718. At September 30, 2014, Mr. Stapleton held options to purchase 3,000,000 shares at a weighted average exercise price of approximately $0.38 per share, all of which were fully vested.
(5)	During fiscal 2014, Mr. Richau was awarded an option to purchase 500,000 shares of our common stock at $0.16 per share, which had a grant date fair value of $53,152. At September 30, 2014. Mr. Richau held no options to purchase shares as all previously issued options had expired under the terms of grants.
(6)	During fiscal 2014, Mr. Brogoitti was awarded an option to purchase 500,000 shares of our common stock at $0.3452 per share, which had a grant date fair value of $116,820. At September 30, 2014, Mr. Brogoitti held no options to purchase shares as all previously issued options had expired under the terms of grant and had not vested at the date of expiration.
(7)	During fiscal 2014, Mr. Burger was awarded an option to purchase 500,000 shares of our common stock at $0.3452 per share, which had a grant date fair value of $116,820. At September 30, 2014, Mr. Burger held options to purchase 125,000 shares at a weighted average exercise price of approximately $0.3452 per share, all of which were fully vested.

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Compensation Committee

Pursuant to its written charter, the Compensation Committee of the Company consists of a minimum of one director. The purpose of the Committee is to carry out the Board of Directors’ overall responsibility relating to executive compensation. Members of the Committee are appointed by the Board of Directors and may be removed by the Board of Directors in its discretion. All members of the Compensation Committee are required to be independent directors, and shall satisfy the Company’s independence guidelines for members of the Compensation Committee. Until his resignation as a Director on December 24, 2014, Mr. Tony J. Burger served as the only member of the Compensation Committee. Due to Mr. Burger’s resignation, the Board intends to appoint a new independent director or directors as the member(s) of the Compensation Committee in the near future. We have posted our Compensation Committee Charter on our website at www.elcapitanpmi.com.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth, as of December 26, 2014, certain information regarding beneficial ownership of our capital stock according to the information supplied to us, that were beneficially owned by (i) each person known by the Company to be the beneficial owner of more than 5% of each class of the Company’s outstanding voting stock, (ii) each director, (iii) each named executive officer identified in the Summary Compensation Table, and (iv) all named executive officers and directors as a group. Except as otherwise indicated, the persons named in the table have sole voting and dispositive power with respect to all shares beneficially owned, subject to community property laws where applicable.

	Amount and Nature of Beneficial Ownership
	Common Stock			Series B Convertible Preferred Stock (1)
Name and Address of Beneficial Owner	Shares		% of Class (2)	Shares	% of Class (2)
Charles C. Mottley 8390 Via de Ventura, Suite F-110 Scottsdale, Arizona 85258	13,615,014	(3)	4.8%	—	—
John F. Stapleton 8390 Via de Ventura, Suite F-110 Scottsdale, Arizona 85258	7,996,031	(4)	2.8%	51	100.0%
Bradley C. Holt 8390 Via de Ventura, Suite F-110 Scottsdale, Arizona 85258	250,000	(5)	*	—	—
All officers and directors as a group (3 persons)	21,861,045	(6)	7.6%	51	100.0%

______________

*

Less than 1%

(1)

Each share of Series B Convertible Preferred Stock entitles the holder thereof to 5,692,111.66 votes solely in respect of matters that relate to Company capitalization (including, without limitation, increasing and/or decreasing the number of authorized shares of common stock and/or preferred stock, and implementing forward and/or reverse stock splits) and changes in the Company’s name.  Holders of Series B Convertible Preferred Stock do not otherwise have the right to vote such shares on matters brought before the Company’s stockholders.

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(2)	Applicable percentage of ownership is based on 278,053,877 shares of common stock and 51 shares of Series B Convertible Preferred Stock outstanding as of December 26, 2014, together with securities exercisable or convertible into shares of common stock within sixty (60) days of December  26, 2014, for each stockholder. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of common stock subject to options or warrants exercisable or convertible into shares of common stock that are currently exercisable or exercisable within sixty (60) days of December 26, 2014, are deemed to be beneficially owned by the person holding such options or warrants for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.
(3)	Mr. Mottley is President, Chief Executive Officer and a Director of the Company.  Includes (i) 3,300,000 shares issuable upon the exercise of outstanding stock options that are currently exercisable or will become exercisable within sixty (60) days following December 26, 2014; and (ii) 10,000 shares of common stock held by Mr. Mottley’s spouse.
(4)	Mr. Stapleton is the Chairman of the Board, Chief Financial Officer and Secretary of the Company. Includes (I) 3,500,000 shares issuable upon the exercise of outstanding stock options that are currently exercisable or will become exercisable within sixty (60) days following December 26, 2014, and (ii) 51 shares of common stock that are issuable upon conversion of Series B Convertible Preferred Stock held by Mr. Stapleton.
(5)	Mr. Holt is a Director of the Company. Includes 250,000 shares issuable upon the exercise of outstanding stock options that are currently exercisable or will become exercisable within sixty (60) days following December 26, 2014.
(6)	Includes 7,050,000 shares issuable upon the exercise of outstanding stock options that are currently exercisable or will become exercisable within sixty (60) days following December 26, 2014 and 51 shares of common stock that are issuable upon conversion of Series B Convertible Preferred Stock.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth, as of September 30, 2014, (i) the number of securities to be issued upon the exercise of outstanding options, warrants and rights issued under our equity compensation plans, (ii) the weighted-average exercise price of such options, warrants and rights, and (iii) the number of securities remaining available for future issuance under our equity compensation plans (excluding those securities set forth in Item (i)).

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Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)(1)		Weighted average price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding (a)) (c)(2)
Equity compensation plans approved by security holders		7,900,000	$	0.378		3,485,913
Equity compensation plans not approved by security holders		—	$	—		—
Total		7,900,000	$	0.378		3,485,913

___________

(1)

All outstanding options identified above are governed by the terms of the Company’s 2005 Stock Incentive Plan (the “2005 Plan”).  The 2005 Plan authorizes the granting of stock-based awards to purchase up to 30,000,000 shares of our common stock. Under the 2005 Plan, our Board of Directors or a committee of two or more non-employee directors designated by our Board administers the 2005 Plan. As such, the Board or compensation committee, as applicable, has the power to grant awards, to determine when and to whom awards will be granted, the form of each award, the amount of each award, and any other terms or conditions of each award consistent with the terms of the 2005 Plan. Awards may be made to employees, directors and consultants of the Company and our subsidiaries. The types of awards that may be granted under the 2005 Plan include incentive and non-statutory stock options, stock appreciation rights, stock awards, restricted stock, and performance shares. Each award agreement will specify the number and type of award, together with any other terms and conditions as determined by the Board of Directors or committee in its sole discretion. In the event of an acquisition of the Company through the sale of substantially all of the Company's assets or through a merger, exchange, reorganization or liquidation of the Company or a similar event, the Board of Directors or applicable committee may take any action with respect to outstanding awards that it deems equitable, including providing for the assumption or substitution of outstanding awards, or the acceleration or termination of unvested awards. The Board of Directors may amend or discontinue the 2005 Plan at any time.

(2)

Includes (i) 3,224,469 shares available for future issuance under the 2005 Plan, and (ii) 261,444 shares available for future issuance under a separate plan approved in 2004 that was registered on a Form S-8 registration statement filed on June 14, 2004. Shares have been and may be issued from time to time to certain employees and consultants as compensation for services rendered to the Company and may be issued outside or as part of the 2005 Plan. In the event of an issuance of common stock in lieu of compensation, the number of shares to be issued and the price of the stock at issuance will be determined by the Board of Directors.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Certain Relationships

Since January 2012, Management Resource Initiatives, Inc. (“MRI”) has been managing and overseeing the process of marketing and selling the El Capitan Property and performing other services aimed at furthering the Company's strategic goals pursuant to an unwritten consulting arrangement. Under this arrangement, the Company paid MRI a monthly consulting fee of $10,000 through July 2013. Effective August 1, 2013, the monthly consulting fee was increased to $15,000. The Company made aggregate payments of $180,000 to MRI during fiscal 2014. MRI is a corporation that is wholly-owned by John F. Stapleton.

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On August 1, 2014, Company issued fifty-one (51) shares of Series B Preferred Stock to John F. Stapleton for a purchase price equal to $1.00 per share. As a result of the voting rights of the Series B Preferred Stock, Mr. Stapleton holds in the aggregate approximately 51% of the total voting power of all issued and outstanding voting capital of the Company solely with respect to matters upon which stockholders are entitled to vote or to which stockholders are entitled to give consent and relate to Company capitalization (including, without limitation, increasing and/or decreasing the number of authorized shares of common stock and/or preferred stock, and implementing forward and/or reverse stock splits) and changes in the Company’s name. Mr. Stapleton does not otherwise have the right under the Certificate of Designation to vote the Series B Preferred Stock on matters brought before the Company’s stockholders. The Company’s Board of Directors believes that the issuance of the Series B Preferred Stock to Mr. Stapleton facilitates the Company’s ability to manage its affairs with respect to the limited matters on which the Series B Stockholder is entitled to vote.

Director Independence

Although the Company is not listed on a national securities exchange, in determining whether the members of our Board and its committees are independent, the Company has elected to use the definition of “independence” set forth by the NASDAQ Stock Market (“NASDAQ”) and the standards for independence established by NASDAQ. After review of relevant transactions or relationships between each director, or any of his family members, and the Company, its senior management and its independent registered public accounting firm, the Board has determined that Bradley C. Holt is an independent director within the meaning of the applicable listing standards of NASDAQ. John F. Stapleton and, Charles C. Mottleyare not independent directors under the NASDAQ standard based in part on their positions as executive officers and employees of the Company.

The director independence rules of NASDAQ require listed companies to have an audit committee of at least three members, each of whom (in addition to satisfying other conditions) is an independent director. The Company’s audit committee is comprised of John F. Stapleton and, therefore, would not meet this NASDAQ requirement.

The director independence rules of NASDAQ require that the compensation of the chief executive officer and other officers of a listed company be determined, or recommended to the Board for determination, either by a compensation committee comprised of independent directors or by a majority of the independent directors on its Board of Directors. Until his resignation as a Director on December 24, 2014, Mr. Tony J. Burger served as the only member of the compensation committee. Due to Mr. Burger’s resignation, the Board intends to appoint a new independent director or directors as the member(s) of the Compensation Committee in the near future. Until such appointment, the Company’s compensation committee does not meet this NASDAQ requirement.

The director independence rules of the NASDAQ require that Board of Director nominations must be either selected, or recommended for the Board's selection, by either a nominating committee comprised solely of independent directors or by a majority of the independent directors. The Company’s Board of Directors as a whole serves as the nominating committee and, therefore, would not meet this NASDAQ requirement.

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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table summarizes the aggregate fees billed to the Company by MaloneBailey, LLP in relation to the audits and quarterly reviews of the Company for the fiscal years ended September 30, 2014 and 2013:

	Year Ended September 30, 2013		Year Ended September 30, 2014
Audit Fees (1)	$	61,000	$	51,000
Audit-Related Fees (2)	$	—	$	—
Tax Fees (3)	$	—	$	—
All Other Fees (4)	$	—	$	—

_______________
(1)	Audit Fees. Audit fees include fees for professional services performed for the audit of our annual consolidated financial statements, review of quarterly consolidated financial statements included in our SEC filings, and assistance and issuance of consents associated with other SEC filings.
(2)	Audit-Related Fees. Audit-related fees are fees for assurance and related services that are reasonably related to the audit. This category includes fees related to assistance consulting on financial accounting/reporting standards.
(3)	Tax Fees. Tax fees primarily include professional services performed with respect to preparation of our federal and state tax returns for our consolidated subsidiaries.
(4)	All Other Fees. All other fees include products and services provided, other than the services reported comprising Audit Fees, Audit Related Fees and Tax Fees.

The audit committee of the Board of Directors has reviewed the services provided by MaloneBailey, LLP during the fiscal year ended September 30, 2014 and the amounts billed for such services, and after consideration, has determined that the receipt of these fees by MaloneBailey, LLP is compatible with the provision of independent audit services. The audit committee has discussed these services and fees with MaloneBailey, LLP and Company management to determine that they are appropriate under the rules and regulations concerning auditor independence promulgated by the U.S. Securities and Exchange Commission to implement the Sarbanes-Oxley Act of 2002, as well as under guidelines of the American Institute of Certified Public Accountants.

Pre-Approval Policy

The audit committee charter provides that all audit and non-audit accounting services that are permitted to be performed by the Company’s independent registered public accounting firm under applicable rules and regulations must be pre-approved by the audit committee or by designated independent members of the audit committee, other than with respect to de minimis exceptions permitted under Section 202 of the Sarbanes-Oxley Act of 2002. All services performed by MaloneBailey during the fiscal  years ending September 30, 2014 and 2013 have been pre-approved in accordance with the charter.

Prior to or as soon as practicable following the beginning of each fiscal year, a description of audit, audit-related, tax, and other services expected to be performed by the independent registered public accounting firm in the following fiscal year will be presented to the audit committee for approval. Following such approval, any requests for audit, audit-related, tax, and other services not presented and pre-approved must be submitted to the audit committee for specific pre-approval and cannot commence until such approval has been granted. Normally, pre-approval is provided at regularly scheduled meetings. However, the authority to grant specific pre-approval between meetings, as necessary, may be delegated to one or more members of the audit committee who are independent directors. In the event such authority is so delegated, the full audit committee must be updated at the next regularly scheduled meeting with respect to any services that were granted specific pre-approval by delegation. During the fiscal year ending September 30, 2014, the audit committee has functioned in conformance with these procedures.

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PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Exhibit Number	Description
2.1	Agreement and Plan of Merger between the Company, Gold and Minerals Company, Inc. and MergerCo, dated June 28, 2010 (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed July 7, 2010).
3.1	Articles of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to the Company’s Form S-4 Registration Statement #333-170281 filed on November 2, 2010).
3.2	Certificate of Amendment to Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed October 1, 2014).
3.3	Certificate of Designation of Series A Junior Participating Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed August 31, 2011).
3.4	Certificate of Designation of Series B Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed August 1, 2014).
3.5	Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Company’s Form S-4 Registration Statement #333-170281 filed on November 2, 2010).
4.1	Rights Agreement dated August 25, 2011 between the Company and OTR, Inc. (incorporated by reference to Exhibit 4.2 to the Company’s Form 8-K filed on August 31, 2011).
10.1	Equity Purchase Agreement dated July 11, 2011 between El Capitan Precious Metals, Inc. and Southridge Partners II, LP. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed July 12, 2011).
10.2	Amendment No. 1 to Equity Purchase Agreement by and between El Capitan Precious Metals, Inc. and Southridge Partners II, LP, dated April 3, 2013 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 4, 2013).
10.3	Equity Purchase Agreement dated July 30, 2014 by and between El Capitan Precious Metals, Inc. and Southridge Partners II, LP (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed July 30, 2014).
10.4	2005 Stock Incentive Plan, as amended (incorporated by reference to Exhibit 10.1 to the Company’s Form S-8 Registration Statement #333-177417 filed on October 20, 2011).
10.5	Form of Stock Option Agreement (Director) (incorporated by reference to Exhibit 10.1 to the Company’s Annual Report on Form 10-K filed December 14, 2012).
10.6	Agreement dated March 10, 2014 between the Company and Glencore AG (incorporated by reference to Exhibit 10.1 to Amendment No. 1 to the Company’s Quarterly Report on Form 10-Q filed on July 22, 2014).+
10.7	Master Services Agreement dated February 28, 2014 by and between the Company and Logistica, U.S. Terminals, LLC, including the Iron Ore Processing Agreement attached as Appendix A thereto (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on May 14, 2014). +
10.8	Note and Warrant Purchase Agreement dated October 17, 2014, including the 8% Secured Promissory Note, Common Stock Purchase Warrant and Security Agreement attached as Exhibits A, B and C thereto (incorporated by referenced to Exhibit 10.8 to the Company’s Annual Report on Form 10-K filed on December 29, 2014).
21.1	Subsidiaries of El Capitan Precious Metals, Inc. (incorporated by referenced to Exhibit 21.1 to the Company’s Annual Report on Form 10-K filed on December 29, 2014).
23.1*	Consent of Clyde L. Smith, Ph.D.
23.2*	Consent of MaloneBailey, LLP

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Exhibit Number	Description
31.1*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	XBRL Instance Document**
101.SCH*	XBRL Extension Schema Document**
101.CAL*	XBRL Extension Calculation Linkbase Document**
101.DEF*	XBRL Extension Definition Linkbase Document**
101.LAB*	XBRL Extension Labels Linkbase Document**
101.PRE*	XBRL Extension Presentation Linkbase Document**

__________________

*	Filed herewith.
**	In accordance with Rule 406T of Regulation S-T, this information is deemed not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
+	Confidential treatment has been granted as to certain portions of this exhibit pursuant to Rule 406 of the Securities Act of 1933, as amended, or Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Financial Statement Schedules

None.

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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.
Date:  February 18, 2015	By:	/s/ Charles C. Mottley
		Charles C. Mottley
		Chief Executive Officer
		(Principal Executive Officer)

Date:  February 18, 2015	By:	/s/ John F. Stapleton
		John F. Stapleton
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS

FILED PURSUANT TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE

NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT

The registrant has not sent to its security holders any annual report covering the registrant’s fiscal year ended September 30, 2014.

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