0001214659-18-000837.txt : 20180202 0001214659-18-000837.hdr.sgml : 20180202 20180202113809 ACCESSION NUMBER: 0001214659-18-000837 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 58 CONFORMED PERIOD OF REPORT: 20161231 FILED AS OF DATE: 20180202 DATE AS OF CHANGE: 20180202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EL CAPITAN PRECIOUS METALS INC CENTRAL INDEX KEY: 0001135202 STANDARD INDUSTRIAL CLASSIFICATION: METAL MINING [1000] IRS NUMBER: 880482413 STATE OF INCORPORATION: NV FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-56262 FILM NUMBER: 18569339 BUSINESS ADDRESS: STREET 1: 5871 HONEYSUCKLE ROAD CITY: PRESCOTT STATE: AZ ZIP: 86305-3764 BUSINESS PHONE: 928-515-1942 MAIL ADDRESS: STREET 1: 5871 HONEYSUCKLE ROAD CITY: PRESCOTT STATE: AZ ZIP: 86305-3764 FORMER COMPANY: FORMER CONFORMED NAME: DML SERVICES INC DATE OF NAME CHANGE: 20010216 10-Q/A 1 d13118010qa1.htm AMENDMENT NO. 1 - DECEMBER 31, 2016

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q/A
(Amendment No. 1)
 
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
For The Quarterly Period Ended December 31, 2016
 
 
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.)
 
5871 Honeysuckle Road
 
Prescott, Arizona
86305
(Address of Principal Executive Offices)
(Zip Code)

(928) 515-1942
(Registrant’s telephone number, including area code)
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 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
 
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 for such shorter period that the registrant was required to submit and post such files).  Yes þ No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or, an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
 
Large accelerated filer    
Accelerated filer    
 
 
Non-accelerated filer    
Smaller reporting company   
 
 
(Do not check if smaller reporting company)
Emerging growth company   
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
 
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).  Yes  No
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 384,476,034 shares of common stock par value $0.001, of the issuer were issued and outstanding as of February 10, 2017. 
 

 
1

 
EXPLANATORY NOTE


This Amendment No. 1 on Form 10-Q/A for the quarter ended December 31, 2016, amends the Form 10-Q that was originally filed with the U.S. Securities and Exchange Commission on February 10, 2017 (the “Original Filing”). The sole purpose of this Amendment No. 1 is to correct the consolidated balance sheet as of December 31, 2016 and the consolidated statements of operations and cash flows for the period ended December 31, 2016, for the reclassification of advances to vendor of $335,616 associated with operating costs of the pilot plant operation to operating expense for the period. Based on the Company’s reassessment of the cost reclassification, the effect of this reclassification resulted in an increase of negative working capital, an increase in the net loss for the period and a decrease net equity. The following financial statements and disclosures were impacted from the reclassification:
 
   
Restatement of the consolidated balance sheet as of December 31, 2016, and the related consolidated statements of operations and cash flows for the period then ended.
     
   
Updated Note 1 – Basis of Operation.
     
   
Updated Note 9 – Stockholders’ Equity
     
   
Updated Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
Except as described above, no other changes have been made to the Original Filing or any other exhibits. This Amendment speaks as of the filing date of the Original Filing and does not reflect events occurring after the filing date, or modify or update those disclosures that may be affected by subsequent events. As such, this form 10-Q/A should be read in conjunction with the original filing.
 
-i-

 
EL CAPITAN PRECIOUS METALS, INC.
 
Table of Contents
 
 
Page
 
 
 
 
3
 
4
 
5
 
 
 
PART I.  FINANCIAL INFORMATION
 
 
 
 
Item 1.
 
6
 
 
6
 
 
7
 
 
8
 
 
10
Item 2.
 
23
Item 3.
 
28
Item 4.
 
28
 
 
 
 
PART II.  OTHER INFORMATION
 
 
 
 
 
 
Item 1.
 
29
Item 1A.
 
29
Item 2.
 
29
Item 3.
 
29
Item 4.
 
29
Item 5.
 
29
Item 6.
 
30
 
 
 
 
 
31
 
 
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 Industry 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 Industry 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 are 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.
 
 
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.
 
 
CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS
 
 
This Quarterly Report on Form 10-Q 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,” “intend,” “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 identified in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2016, filed with the U.S. Securities and Exchange Commission on January 13, 2017, or discussed herein or in the Company’s other filings with the Securities and Exchange Commission.  The Company does not intend or undertake to update the information in this Form 10-Q if any forward-looking statement later turns out to be inaccurate. 
 
 
PART I.
FINANCIAL INFORMATION
 
Item 1.
Financial Statements
 
 EL CAPITAN PRECIOUS METALS, INC.
 
CONSOLIDATED BALANCE SHEETS
(Unaudited) 
 
 
 
 
December 31,
       
 
 
2016
   
September 30,
 
   
(As Restated)
   
2016
 
ASSETS
           
CURRENT ASSETS:
           
Cash and cash equivalents
 
$
64,060
   
$
296,619
 
Prepaid expense and other current assets
   
166,571
     
135,196
 
Inventory
   
256,250
     
252,466
 
Total Current Assets
   
486,881
     
684,281
 
 
               
Property and equipment, net of accumulated depreciation of $146,883 and $128,748,
respectively
   
566,403
     
577,883
 
Exploration property
   
1,864,608
     
1,864,608
 
Restricted cash
   
74,506
     
74,504
 
Deposits
   
22,440
     
22,440
 
Total Assets
 
$
3,014,838
   
$
3,223,716
 
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
 
               
CURRENT LIABILITIES:
               
Accounts payable
 
$
192,302
   
$
224,079
 
Notes payable, net of unamortized discounts of $507 and $1,769, respectively
   
722,740
     
857,219
 
Note payable, related party
   
30,000
     
30,000
 
Accrued compensation - related parties
   
355,000
     
500,000
 
Accrued liabilities
   
292,504
     
407,332
 
Total Current Liabilities
   
1,592,546
     
2,018,630
 
 
               
STOCKHOLDERS’ EQUITY:
               
Preferred stock, $0.001 par value; 5,000,000 shares authorized; 51 and 51 shares
issued and outstanding, respectively
   
     
 
Common stock, $0.001 par value; 500,000,000 shares authorized; 383,974,231 and
366,254,777 shares issued and outstanding, respectively
   
383,974
     
366,255
 
Additional paid-in capital
   
213,848,553
     
212,865,439
 
Accumulated deficit
   
(212,810,235
)
   
(212,026,608
)
Total Stockholders’ Equity
   
1,422,292
     
1,205,086
 
Total Liabilities and Stockholders’ Equity
 
$
3,014,838
   
$
3,223,716
 

The accompanying notes are an integral part of these unaudited consolidated financial statements.
 
 
EL CAPITAN PRECIOUS METALS, INC.
 
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
 
 
 
Three Months Ended
December 31,
 
 
 
2016
   
2015
 
   
(As Restated)
       
 
           
REVENUES
 
$
   
$
2,950
 
 
               
COSTS ASSOCIATED WITH REVENUES
   
     
3,300
 
Gross Loss
   
     
(350
)
 
               
OPERATING EXPENSES:
               
Mine and exploration costs
   
525,266
     
102,513
 
Professional fees
   
2,991
     
49,504
 
Administrative consulting fees
   
65,000
     
65,000
 
Legal and accounting fees
   
24,123
     
78,348
 
Other general and administrative
   
29,410
     
75,193
 
Total Operating Expenses
   
646,790
     
370,558
 
 
               
LOSS FROM OPERATIONS
   
(646,790
)
   
(370,908
)
 
               
OTHER INCOME (EXPENSE):
               
Interest income
   
13
     
2
 
Gain on derivative instruments
   
     
3,693
 
Loss on debt extinguishment
   
(122,110
)
   
(84,270
)
Interest expense – related party
   
(982
)
   
(2,456
)
Interest expense
   
(13,758
)
   
(100,859
)
                 
Total Other Income (Expense)
   
(136,837
)
   
(183,890
)
 
               
LOSS BEFORE PROVISION FOR INCOME TAXES
   
(783,627
)
   
(554,798
)
 
               
PROVISION FOR INCOME TAXES
   
     
 
 
               
NET LOSS
 
$
(783,627
)
 
$
(554,798
)
 
               
Basic and Diluted Per Share Data:
               
Net Loss Per Share - basic and diluted
 
$
(0.00
)
 
$
(0.00
)
 
               
Weighted Average Common Shares Outstanding:
               
Basic and diluted
   
377,048,749
     
296,586,821
 

The accompanying notes are an integral part of these unaudited consolidated financial statements.
 
 
EL CAPITAN PRECIOUS METALS, INC.
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) 
 
 
 
 
Three Months Ended
December 31,
 
 
 
2016
   
2015
 
   
(As Restated)
       
 
           
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net loss
 
$
(783,627
)
 
$
(554,798
)
Adjustments to reconcile net loss to net cash used in operating activities:
               
Warrant and option expense
   
     
22,367
 
Stock-based compensation
   
     
102,207
 
Stock issued for mining costs
   
235,616
     
 
Amortization of debt discounts
   
1,262
     
80,254
 
Depreciation
   
19,995
     
16,470
 
Loss on debt extinguishment
   
122,110
     
84,270
 
Gain on derivative instruments
   
     
(3,693
)
Net change in operating assets and liabilities:
               
Prepaid expenses and other current assets
   
(6,151
)
   
2,757
 
Inventory
   
     
(71,567
)
Accounts payable
   
(31,777
)
   
135,369
 
Accrued compensation – related parties
   
     
110,000
 
Accrued liabilities
   
46,257
     
(46,804
)
Net Cash Used in Operating Activities
   
(396,315
)
   
(123,168
)
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Purchase of furniture and equipment
   
     
(787
)
Restricted cash
   
(2
)
   
(1
)
Net Cash Used in Investing Activities
   
(2
)
   
(788
)
 
               
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Proceeds from sale of common stock
   
324,723
     
 
Proceeds from notes payable
   
     
92,000
 
Payments on notes payable
   
(150,000
)
   
 
Payments on finance contracts
   
(10,965
)
   
(5,214
)
Net Cash Provided by Financing Activities
   
163,758
     
86,786
 
 
               
NET DECREASE IN CASH AND CASH EQUIVALENTS
   
(232,559
)
   
(37,170
)
 
               
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
   
296,619
     
71,393
 
 
               
CASH AND CASH EQUIVALENTS, END OF PERIOD
 
$
64,060
   
$
34,223
 
(Continued)
The accompanying notes are an integral part of these unaudited consolidated financial statements. 
 
 
EL CAPITAN PRECIOUS METALS, INC.
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (Continued)
 
 
 
 
Three Months Ended
December 31,
 
 
 
2016
   
2015
 
   
(As Restated)
       
 
           
SUPPLEMENTAL CASH FLOW INFORMATION:
           
Cash paid for interest
 
$
6,667
   
$
10,315
 
Cash paid for income taxes
   
     
 
 
               
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:
               
Common stock issued for third party payables
   
82,000
     
217,431
 
Common stock issued for related party payables
   
145,000
     
102,849
 
Common stock issued on settlement of debt and accrued interest
   
     
307,982
 
Common stock issued for inventory
   
3,784
     
378,430
 
Common stock issued for prepayment of services and costs incurred
   
     
120,337
 
Common stock issued for accrued mining cost
   
79,085
     
 
Common stock issued for fixed assets
   
8,515
     
 
Purchase of insurance through financing contract
   
25,224
     
32,773
 
Debt discount from derivative liabilities
   
     
92,000
 
Reclassification of warrants from equity to derivative liabilities
   
     
205,526
 

The accompanying notes are an integral part of these unaudited consolidated financial statements.
 
 
EL CAPITAN PRECIOUS METALS, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
NOTE 1 – BASIS OF PRESENTATION
 
Business, Operations and Organization
 
The accompanying unaudited interim financial statements of El Capitan Precious Metals, Inc. (“El Capitan” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, the financial statements do not include all information and footnotes required by generally accepted accounting principles in the United States (“GAAP”) for complete annual financial statements. In the opinion of management, the accompanying unaudited interim financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation. Interim operating results are not necessarily indicative of results that may be expected for the fiscal year ending September 30, 2017, or for any subsequent period. These interim financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the fiscal year ended September 30, 2016, included in the Company’s Annual Report on Form 10-K, filed with the SEC on January 13, 2017 (the “2016 Form 10-K”). The consolidated balance sheet at September 30, 2016, has been derived from the audited financial statements included in the 2016 Form 10-K.
 
Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for fiscal 2016 as reported in the 2016 Form 10-K have been omitted.
 
On July 26, 2002, El Capitan Precious Metals, Inc. was incorporated as a Delaware corporation to engage in the business of acquiring properties containing precious metals, principally gold, silver, and platinum (“El Capitan Delaware”). On March 18, 2003, El Capitan 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 are presented on a consolidated basis.

El Capitan Precious Metals, Inc., a Nevada corporation, is based in Prescott, Arizona. Together with its consolidated subsidiaries (collectively referred to as the “Company,” “our” or “we”), the Company is an exploration stage company as defined by the Securities 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”). Our ultimate objective is to market and sell the El Capitan Property to a major mining company or enter into a joint venture arrangement with a major mining company to conduct mining operations. We have completed 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 commenced planned mineral exploration activity in the quarter ended December 2015 under our modified mining permit. However, 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 property are expensed as incurred. 

The Company owns 100% of the outstanding common stock of El Capitan Delaware. Prior to January 19, 2011, El Capitan Delaware owned a 40% interest in El Capitan, Ltd., an Arizona corporation (“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 subsidiary of the Company and our consolidated Company acquired 100% of ECL. As a result, we now own 100% of the El Capitan Property site (described below). 
 
 
Restatement Effect on Financial Statements

The following table illustrates the impact of the restatement of advances to vendor to the restated unaudited consolidated balance sheet, the unaudited statement of operations and unaudited statement of cash flows for the period ended December 31, 2016.

The Company has subsequently determined to expense all costs for the Pilot Plant as incurred and applying the SEC Industry Guide 7 to the Pilot Plant activity.

 
 
As Previously
Reported
   
Adjustment
   
Restated
 
Consolidated Balance Sheet at  December 31, 2016:
                 
 
                 
Advances to vendor
 
$
335,616
   
$
(335,616
)
 
$
 
Total Current Assets
 
$
822,497
   
$
(335,616
)
 
$
486,881
 
Total Assets
 
$
3,350,454
   
$
(335,616
)
 
$
3,014,838
 
 
                       
Accumulated deficit
 
$
(212,474,619
)
 
$
(335,616
)
 
$
(212,810.235
)
 
                       
Stockholders’ Equity
 
$
1,757,908
   
$
(335,616
)
 
$
1,422,292
 
Total Liabilities and Stockholders’ Equity
 
$
3,350,454
   
$
(335,616
)
 
$
3,014,838
 
 
                       
Consolidated Statements of Operations for three months
ended December 31, 2016:
                       
 
                       
Mine and exploration costs
 
$
189,650
   
$
335,616
   
$
525,266
 
Total Operating Expenses
 
$
311,174
   
$
335,616
   
$
646,790
 
Net Loss
 
$
(448,011
)
 
$
(335,616
)
 
$
(783,627
)
 
                       
Consolidated Statement of Cash Flows for three months
ended December 31, 2016:
                       
 
                       
Net loss
 
$
(448,011
)
 
$
(335,616
)
 
$
(783,627
)
Stock issued for mining costs
 
$
   
$
235,616
   
$
235,616
 
Prepaid expenses and other current assets
 
$
(31,375
)
 
$
25,224
   
$
(6,151
)
Net Cash Used in Operating Activities
 
$
(321,539
)
 
$
(74,776
)
 
$
(396,315
)
 
                       
Advance to vendor for pilot plant equipment purchases
 
$
(100,000
)
 
$
100,000
   
$
 
Net Cash Used in Investing Activities
 
$
(100,002
)
 
$
100,000
   
$
(2
)
Increase in finance contracts
 
$
25,224
   
$
(25,224
)
 
$
 
Net Cash Provided by Financing Activities
 
$
188,982
   
$
(25,224
)
 
$
163,758
 

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.
 
Basis of Presentation and Going Concern
 
The Company's consolidated financial statements are prepared using the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America ("GAAP"), and have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The Company currently has a minimum source of revenue to cover its costs. The Company has incurred a loss for the year ended September 30, 2016 and for the three months ended December 31, 2016 and the Company has a working capital deficit as of December 31, 2016. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
 
 
To continue as a going concern, the Company is dependent on achievement of cash flow and future profits from entering the production stage of operations. The Company does not have adequate liquidity to fund its current operations, meet its obligations and continue as a going concern. The Company has an “equity line” financing arrangement under a Purchase Agreement with River North Equity, LLC, as amended.  In the past the Company has secured working capital loans to assist in financing its activities for the near term. The Company may also pursue other financing alternatives from time to time, including short-term operational strategic financing or equity financing, to fund its activities until it can achieve cash flow and profits from its operations. The Company’s consolidated financial statements do not include any adjustment relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.
 
Fair Value of Financial Instruments
 
The fair values of the Company’s financial instruments, which 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.
 
Management Estimates and Assumptions
 
The preparation of the Company’s unaudited 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.
 
Cash and Cash Equivalents
 
The Company considers those short-term, highly liquid investments with maturities of three months or less as cash and cash equivalents. At times, cash in banks may be in excess of the FDIC limits. The Company has no cash equivalents.
 
Inventory
 
Inventories include mineralized material stockpile, concentrate, iron ore inventories and road base, as described below. Inventories are carried at the lower of average cost or net realizable value, in the case of mineralized material stockpile and concentrate inventories and minimal cost is attributable to the iron ore inventories. The net realizable value of mineralized material stockpile inventories represents the estimated future sales price of the product based on current and long-term metals prices, less the estimated costs to complete production and bring the product to sale. Concentrate inventories are carried at the lower of full cost of production or net realizable value based on current metals prices. Write-downs of inventory will be reported as a component of production costs applicable to sales.
 
Mineralized Material Stockpile Inventories

Mineralized material stockpile inventories represent mineralized materials that have been mined and are available for further processing. Costs are allocated to mineralized material stockpile inventories based on relative values of material stockpiled and processed using current mining costs incurred up to the point of stockpiling the mineralized material.
 
Concentrates
 
Concentrates inventory include metal concentrates located either at the Company’s El Capitan Property mine site or in transit to a customer’s port. Inventories consist of mineralized material that contains gold and silver mineralization.
 
Iron Ore
 
Iron ore material is inventoried until the market prices are reestablished at a higher market demand and are valued at approximately $20 a ton. Any proceeds from the sale of iron ore will offset the cost of mining the mineralized ore.
 
 
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.  
 
Restricted Cash
 
Restricted cash consists of two certificates of deposits in favor of the New Mexico Minerals and Mining Division for a total of $74,506. The amount is posted as a financial assurance for required reclamation work to be completed on mined acreage.
 
Exploration Property Costs
 
Exploration property costs are expensed as incurred until such time as economic reserves are quantified. To date the Company has not established any proven or probable reserves on the El Capitan Property. The Company has capitalized $1,864,608 of exploration property acquisition costs reflecting its investment in the El Capitan Property.
 
Derivative Financial Instruments
 
The Company does not use derivative instruments to hedge exposures to cash flow or, market risks. The Company reviews the terms of convertible debt, equity instruments and other financing arrangements to determine whether there are embedded derivative instruments, including embedded conversion options that are required to be bifurcated and accounted for separately as a derivative financial instrument. Also, in connection with the issuance of financing instruments, the Company may issue freestanding options or warrants that may, depending on their terms, be accounted for as derivative instrument liabilities, rather than as equity. The Company may also issue options or warrants to non-employees in connection with consulting or other services.
 
Derivative financial instruments are initially measured at their fair value. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. For warrant-based derivative financial instruments, the Company uses the Black-Scholes Option Pricing Model to value the derivative instruments. To the extent that the initial fair values of the freestanding and/or bifurcated derivative instrument liabilities exceed the total proceeds received, an immediate charge to income is recognized, in order to initially record the derivative instrument liabilities at their fair value.
 
The discount from the face value of the convertible debt or equity instruments resulting from allocating some or all of the proceeds to the derivative instruments, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to income, using the effective interest method.
 
The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. If reclassification is required, the fair value of the derivative instrument, as of the determination date, is reclassified. Any previous charges or credits to income for changes in the fair value of the derivative instrument are not reversed. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within twelve months of the balance sheet date.

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 the Company’s quarterly period that began on October 1, 2006, the Company 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.
 
 
The Company 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.
 
The Company recognized stock-based administrative compensation aggregating $0 and $22,367 for common stock options and common stock issued to administrative personnel, directors and consultants during the three months ended December 31, 2016 and 2015, respectively.
 
Also during the three months ended December 31, 2016 and 2015, the Company paid stock-based compensation consisting of common stock issued to non-employees and mining costs aggregating $235,616 and $102,207, respectively.
 
Revenue Recognition
 
When revenue is generated from operations, it will be recognized in accordance with FASB ASC 605. In general, the Company 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 nominal revenue generated for the Company’s quarter ended December 31, 2015 and none for the quarter ended December 31, 2016.

Pilot Plant Costs
 
The Company paid to the operator of the Pilot Plant currently being prepared for the equipment in transit operating costs for site improvements and sundry equipment. Based on current information, the equipment is estimated to arrive in the third week of February 2017 and anticipated to be operational in the fourth week of the month.
 
The Company has subsequently determined to expense all costs for the Pilot Plant as incurred and applying the SEC Industry Guide 7 to the Pilot Plant activity. Any proceeds from the sale of precious metals derived from concentrates generated by the Pilot Plant will be divided on a future determined percentage split between the Company and the Pilot Plant operator. The Pilot Plant operator owns the equipment per the terms in the Agreement.

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 January 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)  2016-01, “Financial Instruments - Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10).” The amendments require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under the equity method of accounting or those that result in consolidation of the investee). The amendments also require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. In addition, the amendments eliminate the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities and the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet for public business entities. This guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company does not expect to early adopt this guidance and does not believe that the adoption of this guidance will have a material impact on its consolidated financial statements.
 
In March 2016, the FASB issued ASU No. 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting." ASU 2016-09 amends several aspects of the accounting for share-based payment transactions including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted any interim or annual period. If early adopted, an entity must adopt all of the amendments in the same period. The Company is currently evaluating the potential impact of the adoption of ASU 2016-09 on the Company's consolidated financial statements.
 
 
In August, 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force). Effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period.
 
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.
 
NOTE 2 – RELATED PARTY TRANSACTIONS
 
Consulting Agreements
 
Effective May 1, 2009, the Company has informal arrangements with an individual, currently whom is an officer, pursuant to which such individual serves as support staff for the functioning of the home office and all related corporate activities and projects. The aggregate monthly payments under the informal arrangements are $6,667. There is no written agreement with this individual. At December 31, 2016 and September 30, 2016, this individual had accrued and unpaid compensation of $40,000 respectively, recorded in accrued compensation – related parties.
 
During the three months ended December 31, 2016, the Company issued 1,768,293 of restricted common shares and 1,768,293 shares of S-8 to a former officer and currently a director of the Company as payment of accrued compensation of $145,000. The fair value of the stock was $199,110 and the Company recorded a loss on extinguishment of debt of $54,110.
 
In January 2012, the Company retained the consulting services of Management Resource Initiatives, Inc. (“MRI”), a company controlled by John F. Stapleton who served as the Chief Financial Officer and a director of the Company at that time and who currently serves as President and Chief Executive Officer and a director of the Company. The current monthly consulting fee for such services is $15,000. Total consulting fees expensed to MRI for both the three months ended December 31, 2016 and 2015 was $45,000, respectively. At December 31, 2016, MRI had accrued and unpaid compensation of $315,000 recorded in accrued compensation – related parties.
 
Total administrative consulting fees expensed under these informal arrangements for both the three months ended December 31, 2016 and 2015 was $65,000, respectively.

On February 4, 2015, the Company signed a $30,000 promissory note payable to MRI, at 18% interest per annum, due and payable on February 4, 2016. As an inducement for the loan represented by the note, the Company issued 200,000 shares of restricted common stock of the Company to MRI. The Company approved amending the note to extend the maturity date from February 4, 2016 to February 4, 2017 under the original terms of the Agreement. See Note 5.  

NOTE 3 – INVENTORY
 
The following table provides the components of inventory as of December 31, 2016 and September 30, 2016:

 
 
December 31,
   
September 30,
 
 
 
2016
   
2016
 
 
           
Mineralized material stockpile
 
$
84,153
   
$
87,840
 
Concentrate
   
154,411
     
146,738
 
Iron ore
   
17,686
     
17,888
 
     Total
 
$
256,250
   
$
252,466
 
 
 
NOTE 4 – ACCRUED LIABILITIES
 
Accrued liabilities consisted of the following as of December 31, 2016 and September 30, 2016:
 
 
 
December 31,
   
September 30,
 
 
 
2016
   
2016
 
 
           
Mining costs
 
$
   
$
60,613
 
Accounting and legal
   
223,865
     
285,025
 
Interest
   
68,639
     
61,694
 
 
 
$
292,504
   
$
407,332
 

NOTE 5 – NOTES PAYABLE
 
Agreements with Logistica U.S. Terminals, LLC
 
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 Property 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 material as part of the Company’s exploration activities. As of December 31, 2016, the outstanding balance under this note payable was $400,000 and accrued interest on the note was $51,140. 
 
On January 5, 2016, we entered into our current agreement with Logistica U.S. Terminals, LLC (“Logistica”). Under the agreement we will provide to Logistica concentrated ore to their specifications at the mine site. Logistica will transport, process, and refine the precious metals concentrates to sell to precious metals buyers. The terms of the new agreement provide for the recovery of hard costs related to the concentrates by both parties prior to the distribution of profits. The agreement also provided for the issuance of 10,000,000 shares of our restricted common stock and the elimination of a $100,000 accrued liability to Logistica for prior services rendered. When certain terms and conditions are met, the Agreement calls for Logistica to arrange for a letter of credit for working capital for the mining, processing and sale activities under the Agreement. The shares were issued in August 2016. The new agreement supersedes the previous agreements with Logistica.
 
October 17, 2014 Note and Warrant Purchase Agreement
 
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 against delivery of a promissory note (the “2014 Note”) in such amount and issued warrants to purchase 882,352 shares of our common stock pursuant to the Note and Warrant Purchase Agreement. The promissory note carries an interest rate of 8% per annum, was initially due on 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 August 24, 2015, the 2014 Note was mutually extended from July 17, 2015 to January 17, 2016. In consideration of the extension, the Company amended the common stock purchase warrant to purchase 4,714,286 shares (subject to adjustment) of our common stock at an exercise price of $0.07 per share. The warrant dated October 17, 2014 was cancelled. On January 19, 2016, the amended 2014 Note was extended from January 17, 2016 to September 19, 2016. The note is currently in default. In consideration of the extension, we issued to the investor a fully vested three year common stock purchase warrant to purchase 471,429 shares (subject to adjustment) of common stock of the Company at an exercise price of $0.051 per share, the closing price on the date of the agreed extension agreement. The fair value of the warrants was determined to be $16,775 using Black-Scholes option price model and was expensed during the three months ended March 31, 2016. The Note is currently due and principal payments are being made on the Note. During the quarter ended December 31, 2016, the outstanding principal balance of the amended 2014 Note was reduced by an additional $150,000 and related accrued interest payments have been made.  As of December 31, 2016, the outstanding balance under this note payable was $250,000 and accrued interest on the note was $1,205. 
 
 
February 4, 2015 Unsecured Promissory Notes
 
On February 4, 2015, we issued unsecured promissory notes in the aggregate principal amount of $63,000, of which $30,000 is issued to MRI, a company controlled by John F. Stapleton, who served as the Chief Financial Officer and a director of the Company at that time and who currently serves as President and Chief Executive Officer and a director of the Company. Outstanding amounts under these notes accrue interest at 18% per year, with all principal and accrued interest being due and payable on February 4, 2016. As additional consideration for the loan, we issued 200,000 shares of our restricted common stock for each note for a total of 400,000 shares. The relative fair value of the common stock was determined to be $21,211 and was recorded as discounts to the promissory notes was amortized to interest expense over the life of the notes. On February 4, 2016, one of the promissory notes was amended to extend the maturity date from February 4, 2016 to February 4, 2017 and reduced the interest rate to 10% per year. The Company also agreed to add the accrued interest on the note at February 4, 2016 of $5,940 to the principle of the note. In consideration of the amendment, the Company agreed to issue an aggregate 150,000 shares of restricted common stock of the Company to the lenders and the Board of Directors approved the issuance on April 22, 2016. One of the lenders is affiliated with the Company and provided $30,000 of the original $63,000 loaned funds and has agreed to extend the note to February 4, 2017 at the same rate of interest and the issuance of 200,000 shares of our restricted common stock. Our obligations under both notes are personally guaranteed by the Company’s director and Chief Executive Officer at the time of the original notes.
 
As of December 31, 2016, the aggregate outstanding balance under these notes was $68,940, accrued interest was $13,828 and the unamortized discount on the notes payable was $507. During the three months ended December 31, 2016 and 2015, amortization expense of $1,262 and $6,253, respectively was recognized.
 
Financing of Insurance Premiums
 
On August 15, 2016, we entered into an agreement to finance a portion of our liability insurance premiums in the amount of $28,384 at an interest rate of 7.25% with equal payments of $2,934, including interest, due monthly beginning July 14, 2016 and continuing through April 14, 2017. As of December 31, 2016, the outstanding balance under this note payable was $11,559.

On November 14, 2016, we entered into an agreement to finance director and officer insurance premiums in the amount of $25,224 at an interest rate of 5.00% with equal payments of $2,581, including interest, due monthly beginning December 21, 2016 and continuing through September 21, 2017. As of December 31, 2016, the outstanding balance under this note payable was $22,748.

The components of the notes payable, including the note payable to related party, at December 31, 2016 are as follows: 
 
 
 
Principal
   
Unamortized
       
 
 
Amount
   
Discount
   
Net
 
 
                 
Notes payable
 
$
723,247
   
$
(507
)
 
$
722,740
 
Notes payable – related party
   
30,000
     
     
30,000
 
 
 
$
753,247
   
$
(507
)
 
$
752,740
 
 
The components of the notes payable at September 30, 2016 are as follows:
 
 
 
Principal
   
Unamortized
       
 
 
Amount
   
Discount
   
Net
 
 
                 
Notes payable
 
$
858,988
   
$
(1,769
)
 
$
857,219
 
Notes payable – related party
   
30,000
     
     
30,000
 
 
 
$
888,988
   
$
(1,769
)
 
$
887,219
 
 
 
NOTE 6 – 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.
 
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, 2016 and 2015:
 
December 31, 2016:
 
Level 1
   
Level 2
   
Level 3
   
Total
 
 
                       
Assets
                       
Exploration property
 
$
   
$
   
$
1,864,608
   
$
1,864,608
 
Liabilities
                               
None
 
$
   
$
   
$
   
$
 
 
September 30, 2016:
 
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 the Company’s investment in the exploration property under U.S. GAAP. There was no change in the carrying valuation of the exploration property during the three months ended December 31, 2016.
 
 
NOTE 7 – COMMITMENTS AND CONTINGENCIES
 
Related Party
 
In January 2012, the Company retained the consulting services of Management Resource Initiatives, Inc. (“MRI”), a company controlled by John F. Stapleton who served as the Chief Financial Officer and a director of the Company at that time and who currently serves as President and Chief Executive Officer and a director of the Company. The current monthly consulting fee for such services is $15,000. Total consulting fees expensed to MRI for both the three months ended December 31, 2016 and 2015 was $45,000, respectively. At December 31, 2016, MRI had accrued and unpaid compensation of $315,000 recorded in accrued compensation – related parties.
 
On January 18, 2016, the Board of Directors of the Company appointed Stephan J. Antol as the Company’s Chief Financial Officer, replacing Mr. Stapleton in such capacity. Mr. Stapleton continued to serve as a director of the Company and as Chairman of the Board. Effective August 4, 2016, the Board of Directors of the Company appointed Mr. Stapleton to replace Charles C. Mottley as President and Chief Executive Officer of the Company. The change in senior management was proposed by Mr. Mottley, who continues to serve as a member of the Company’s Board of Directors and as President Emeritus. At December 31, 2016, Mr. Antol had accrued and unpaid compensation of $40,000 recorded in accrued compensation – related parties.
 
On February 4, 2015, the Company signed a $30,000 promissory note payable to MRI, at 18% interest per annum, due and payable on February 4, 2016. As an inducement for the loan represented by the note, the Company issued 200,000 shares of restricted common stock of the Company to MRI. The Company approved amending the note to extend the maturity date from February 4, 2016 to February 4, 2017 under the original terms of the Agreement. See Note 5, February 4, 2015 Unsecured Promissory Notes.  

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 Property 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. Because of current market iron ore prices, the contract has not been implemented or terminated.
 
Agreements with Logistica U.S. Terminals, LLC
 
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 Property 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 material as part of the Company’s exploration activities. As of December 31, 2016, the outstanding balance under this note payable was $400,000 and accrued interest on the note was $51,140. 
 
On January 5, 2016, we entered into our current agreement with Logistica U.S. Terminals, LLC (“Logistica”). Under the agreement we will provide to Logistica concentrated ore to their specifications at the mine site. Logistica will transport, process, and refine the precious metals concentrates to sell to precious metals buyers. The terms of the new agreement provide for the recovery of hard costs related to the concentrates by both parties prior to the distribution of profits. The agreement also provides for the issuance of 10,000,000 shares of our restricted common stock and the elimination of a $100,000 accrued liability to Logistica for prior services rendered. When certain terms and conditions are met, the Agreement calls for Logistica to arrange for a letter of credit for working capital for the mining, processing and sale activities under the Agreement. The shares were issued in August 2016. The new agreement supersedes the previous agreements with Logistica.
 
 
NOTE 8 – 2015 EQUITY INCENTIVE PLAN
 
On October 8, 2015, the Board of Directors of the Company approved the El Capitan Precious Metals, Inc. 2015 Equity Incentive Plan (the “2015 Plan”). The 2015 Plan enables the Board of Directors to grant to employees, directors, and consultants of the Company and its subsidiaries a variety of forms of equity-based compensation, including grants of options to purchase shares of common stock, shares of restricted common stock, restricted stock units, stock appreciation rights, other stock-based awards and performance-based awards. At the time it was adopted, the maximum number of shares of common stock of the Company that could be issued or awarded under the 2015 Plan was 15,000,000 shares. On October 14, 2015, the Company filed Form S-8 Registration Statement No. 333-207399 with the SEC registering the 15,000,000 shares of common stock authorized for issuance pursuant to the 2015 Plan. On December 15, 2015, the Board of Directors of the Company adopted Amendment No. 1 to the 2015 Plan, pursuant to which the number of shares of common stock issuable under the 2015 Plan was increased from 15,000,000 to 23,000,000. On January 14, 2016, the Company filed Form S-8 Registration Statement No. 333-208991 with the SEC registering the additional 8,000,000 shares of common stock authorized for issuance pursuant to the 2015 Plan. Effective April 22, 2016, the Board of Directors of the Company adopted Amendment No. 2 to the 2015 Plan pursuant to which the number of shares of the common stock issuable under the 2015 Plan was increased from 23,000,000 to 28,000,000. On April 27, 2016, the Company filed Form S-8 Registration Statement No. 333-210942 with the SEC registering the additional 5,000,000 shares of common stock authorized for issuance pursuant to the 2015 Plan. Effective August 4, 2016, the Board of Directors of the Company adopted Amendment No. 3 to the 2015 Plan pursuant to which the number of shares of the common stock issuable under the 2015 Plan was increased from 28,000,000 to 50,000,000. On August 8, 2016, the Company filed Form S-8 Registration Statement No. 333- 212972 with the SEC registering the additional 22,000,000 shares of common stock authorized for issuance pursuant to the 2015 Plan. Effective October 31, 2016, the Board of Directors of the Company adopted Amendment No. 4 to the Company’s 2015 Plan pursuant to which the number of shares of the common stock issuable under the 2015 Plan was increased from 50,000,000 to 75,000,000. On November 4, 2016, the Company filed Form S-8 Registration Statement No. 333- 214442 with the SEC registering the additional 25,000,000 shares of common stock authorized for issuance pursuant to the 2015 Plan.
 
NOTE 9 – STOCKHOLDERS’ EQUITY
 
Restatement Effect on Net Loss for the Three Months Ended December 31, 2016

The restatement of advances to a vendor to operating costs in the three months ended December 31, 2016,  resulted in a decrease in net equity of $335,616.

Authorized Common Shares
 
At the Company’s annual meeting of stockholders held September 28, 2016, 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 400,000,000 to 500,000,000 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 4, 2016 and was effective as of such date. 

Preferred Stock Issuances
 
During the three months ended December 31, 2016, the Company did not issue any shares of preferred stock.
 
Common Stock Issuances
 
During the three months ended December 31, 2016, the Company:
 
 
(i)
Issued 1,768,293 shares of restricted common stock and 1,768,293 shares of S-8 common stock for accrued compensation payable to an officer valued at $199,110 on the date of issuances and recorded a loss on debt extinguishment of $54,110;
 
 
(ii)
Issued 2,000,000 shares of S-8 common stock for accrued legal services at a market value of $150,000 and recorded a loss on debt extinguishment of $68,000;
 
 
 
(iii)
Issued 5,000,000 shares of S-8 common stock to our contract miners at a market value of $327,000, including payment of $79,085 for accrued mining cost and services, payment of $3,784 for inventory, payment of $8,515 for lab equipment and payment of $235,616 for pilot plant operating costs;
 
 
(iv)
Issued 7,182,868 shares of common stock under the 2016 Purchase Agreement with River North for aggregate cash proceeds of $324,723.

Options
 
During the three months ended December 31 2016 the Company did not grant any options. 
 
Warrants
 
During three months ended December 31, 2016, the Company did not issue any warrants.

The Company utilizes the Black-Scholes option pricing model to estimate the fair value of its warrant and option awards. No estimates were required during the current quarter.

Stock option activity, both within and outside the 2015 Plan, and warrant activity for the three months ended December 31, 2016, are as follows:
 
 
 
Stock Options
   
Stock Warrants
 
 
       
Weighted
         
Weighted
 
 
       
Average
         
Exercise
 
 
 
Shares
   
Price
   
Shares
   
Price
 
 
                       
Outstanding at September 30, 2016
   
11,137,500
   
$
0.265
     
5,332,773
   
$
0.071
 
Granted
   
             
         
Canceled
   
             
         
Expired
   
             
         
Exercised
   
             
         
 
                               
Outstanding at December 31, 2016
   
11,137,500
     
0.265
     
5,332,773
     
0.071
 
 
                               
Exercisable at December 31, 2016
   
11,137,500
     
0.265
     
5,332,773
     
0.071
 
 
The range of exercise prices and remaining weighted average life of the options outstanding at December 31, 2016 were $0.042 to $1.02 and 4.62 years, respectively. The aggregate intrinsic value of the outstanding options at December 31, 2016 was $4,550.
 
The range of exercise prices and remaining weighted average life of the warrants outstanding at December 31, 2016 were $0.051 to $0.17 and 1.65 years, respectively. The aggregate intrinsic value of the outstanding warrants at December 31, 2016 was $1,933.
 
The Company maintains its 2015 Equity Incentive Plan, as amended (the “2015 Plan”), pursuant to which the Company has reserved and registered 75,000,000 shares for stock and option grants. As of December 31, 2016, there were 22,768,268 shares available for grant under the 2015 Plan, excluding the 11,137,500 options outstanding.
 
 
NOTE 10 – SUBSEQUENT EVENTS
 
Subsequent Issuances of Common Stock
 
Subsequent to December 31, 2016, the Company issued 501,803 shares of common stock under the 2016 Purchase Agreement with River North for aggregate cash proceeds of $19,351.

Board Approval of Stock Issuances Subsequent to December 31, 2016

On January 16, 2017, the Board authorized the issuance of up to 3,000,000 S-8 common shares to our contract miner to meet current obligations for services currently being provided to the Company.  As of the date of filing this 10-Q, no shares have been advanced under this authorization.

The Board on this date also authorized a grant of 500,000, two year, fully vested warrants at the closing market price of the Board meeting, for consideration of a note extension.
 
 
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
The following management discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited interim consolidated financial statements and related notes which are included in Item 1 of this Quarterly Report on Form 10-Q, and with our audited financial statements and the “Risk Factors” section included in our Form 10-K for the fiscal year ended September 30, 2016, filed with the U.S. Securities and Exchange Commission (“SEC”) on January 13, 2017.
 
Overview of Business
 
The Company is an exploration stage company as defined by the SEC’s Industry Guide 7 as the Company has no established reserves as required under 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”). We recorded nominal revenues in the fiscal year ended September 30, 2016 consisting of revenue for test loads of iron ore to a construction contractor. 
 
We commenced planned mineral exploration activity in the quarter ended December 2015 under our modified mining permit. However, 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 property and the Pilot Plant are expensed as incurred. 
 
Basis of Presentation and Going Concern
 
The Company's consolidated financial statements are prepared using the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America ("GAAP"), and have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The Company currently has a minimum source of revenue to cover its costs. The Company has incurred a loss for the three months ended December, 2016 and has a working capital deficit as of December 31, 2016. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
 
To continue as a going concern, the Company is dependent on achievement of cash flow and future profits from entering the production stage of operations. The Company does not have adequate liquidity to fund its current operations, meet its obligations and continue as a going concern. The Company currently has an equity line of credit in place that it expects to utilize to finance its activities in the near term and, in the past, has secured working capital loans for such purpose. The Company may also pursue other financing alternatives from time to time, including short-term operational strategic financing or equity financing, to fund its activities until it can achieve cash flow and profits from its operations. The Company’s consolidated financial statements do not include any adjustment relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.
 
Results of Operations - Three Months Ended December 31, 2016 and 2015
 
We are an exploration stage company and have not yet realized any material revenue from operations through our fiscal quarter ended December 31, 2016. We realized a net increase in operating expenses of $276,232, from $370,558 for the three months ended December 31, 2015 to $646,790 for the three months ended December 31, 2016. The increase is comprised mainly of increases in mine and exploration costs of $422,753 and offset by decreases in professional fees of $46,513, legal and accounting fees of $54,225 and other general and administrative of $45,783.
 
The increase in mine and exploration costs is primarily due to increased activity associated with the concentration of mineralized ore to specifications required by various refiners and initial Pilot Plant related costs, an increase in legal fees of $33,188 associated with the mine and a credit against mine costs of $71,567 in the comparable measurement period. The decrease in legal and accounting fees resulted from decreased legal fees related to the negotiation and preparation of financial contracts and agreements during the comparable prior year period. The decrease in other general and administrative is attributable to the retirement of the former CEO and president.

Our net loss increased by $228,829 from $554,798 for the three months ended December 31, 2015 to $783,627 for the three months ended December 31, 2016. The increase in net loss is mainly attributable to the net increase in operating expenses as detailed above.
 
 
Liquidity and Capital Resources
 
As of December 31, 2016, we had cash on hand of $64,060 and a working capital deficit of $1,105,665. Based upon our budgeted burn rate, we currently have operating capital for approximately one month. The Company has historically relied on equity or debt financings to finance its ongoing operations. Our current financing arrangements are summarized below under the caption “Recent Financing Activities.” Our only current committed source of future financing is pursuant to the Purchase Agreement with River North, which is described below (the “Purchase Agreement”). Under the Purchase Agreement, we may from time to time, in our discretion, sell shares of our common stock to River North for aggregate gross proceeds of up to $5,000,000.  This arrangement is also sometimes referred to herein as the “Equity Line.”  Unless terminated earlier, River North’s purchase commitment will automatically expire on March 16, 2018.  As of December 31, 2016, approximately $3.8 million remained available to us under the Equity Line.

Currently, we intend to rely on the sale of stock under the Equity Line to fund our ongoing operations.  However, our ability to obtain proceeds from the Equity Line is subject to the various conditions and restrictions set forth in the Purchase Agreement, which are described below.  Due to these restrictions and conditions, we may not be able to obtain proceeds from the Equity Line at such times and in such amounts as needed to fund our ongoing operations. If 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 additional interest expense and become subject to covenants in the related transaction documentation that could affect the manner in which we conduct our business. Currently the Company is negotiating short term financing facilities to bridge operations until such time as the Company can generate revenue from its mineral exploration and mining activities.

 If adequate additional capital is not available when required, we may be forced to reduce or eliminate our exploration activities and our marketing efforts for the sale of the El Capitan Property, or suspend our operations entirely.
 
Recent Financing Activities
 
Agreements with Logistica U.S. Terminals, LLC
 
On January 5, 2016, we entered into our current agreement with Logistica U.S. Terminals, LLC (“Logistica”). Under the agreement we will provide to Logistica concentrated ore to their specifications at the mine site. Logistica will transport, process, and refine the precious metals concentrates to sell to precious metals buyers. The terms of the new agreement provide for the recovery of hard costs related to the concentrates by both parties prior to the distribution of profits. The agreement also provides for the issuance of 10,000,000 shares of our restricted common stock and the elimination of a $100,000 accrued liability to Logistica for prior services rendered. When certain terms and conditions are met, the Agreement calls for Logistica to arrange for a letter of credit for working capital for the mining, processing and sale activities under the Agreement. The shares were issued in August 2016. The new agreement supersedes previous agreements with Logistica entered into in March 2014.
 
October 17, 2014 Note and Warrant Purchase Agreement
 
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 against delivery of a promissory note (the “2014 Note”) in such amount and issued warrants to purchase 882,352 shares of our common stock pursuant to the Note and Warrant Purchase Agreement. The promissory note carries an interest rate of 8% per annum, was initially due on 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 August 24, 2015, the 2014 Note was mutually extended from July 17, 2015 to January 17, 2016. In consideration of the extension, the Company amended the common stock purchase warrant to purchase 4,714,286 shares (subject to adjustment) of our common stock at an exercise price of $0.07 per share. The warrant dated October 17, 2014 was cancelled. On January 19, 2016, the amended 2014 Note was extended from January 17, 2016 to September 19, 2016. The note is currently in default. In consideration of the extension, we issued to the investor a fully vested three year common stock purchase warrant to purchase 471,429 shares (subject to adjustment) of common stock of the Company at an exercise price of $0.051 per share, the closing price on the date of the agreed extension agreement. The fair value of the warrants was determined to be $16,775 using Black-Scholes option price model and was expensed during the three months ended March 31, 2016. The issuance of the new warrant 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. As of September 30, 2016, the outstanding balance under the amended 2014 Note was $400,000 and accrued interest was $1,140. During the quarter ended December 31, 2016, the outstanding principal balance of the amended 2014 Note was reduced by an additional $150,000 and related accrued interest payments have been made.  As of December 31, 2016, the outstanding balance under this note payable was $250,000 and accrued interest on the note was $1,205.
 
 
February 4, 2015 Unsecured Promissory Notes
 
On February 4, 2015, we issued unsecured promissory notes in the aggregate principal amount of $63,000, of which $30,000 is issued to MRI, a company controlled by John F. Stapleton, who served as the Chief Financial Officer and a director of the Company at that time and who currently serves as President and Chief Executive Officer and a director of the Company. Outstanding amounts under these notes accrue interest at 18% per year, with all principal and accrued interest being due and payable on February 4, 2016. As additional consideration for the loan, we issued 200,000 shares of our restricted common stock for each note for a total of 400,000 shares. The relative fair value of the common stock was determined to be $21,211 and was recorded as discounts to the promissory notes was amortized to interest expense over the life of the notes. On February 4, 2016, one of the promissory notes was amended to extend the maturity date from February 4, 2016 to February 4, 2017 and reduced the interest rate to 10% per year. The Company also agreed to add the accrued interest on the note at February 4, 2016 of $5,940 to the principal of the note. In consideration of the amendment, the Company agreed to issue an aggregate 150,000 shares of restricted common stock of the Company to the lenders and the Board of Directors approved the issuance on April 22, 2016. One of the lenders is affiliated with the Company and provided $30,000 of the original $63,000 loaned funds and has agreed to extend the note to February 4, 2017 at the same rate of interest and the issuance of 200,000 shares of our restricted common stock. Our obligations under both notes are personally guaranteed by the Company’s director and Chief Executive Officer at the time of the original notes.
 
During the fiscal year ended September 30, 2016, aggregate amortization expense of $12,065 was recognized. As of December 31, 2016, the aggregate outstanding balance under these notes was $68,940, accrued interest was $13,828 and the unamortized discount on the notes payable was $507.
 
March 16, 2016 Purchase Agreement and Registration Rights Agreement; December 9, 2016 Amendment
 
On March 16, 2016, we entered into a Purchase Agreement with River North, which was subsequently amended on December 9, 2016 by Amendment No. 1 thereto (the “Amendment”). Pursuant to the Purchase Agreement we may from time to time, in our discretion, sell shares of our common stock to River North for aggregate gross proceeds of up to $5,000,000. Unless terminated earlier, River North’s purchase commitment will automatically terminate on the earlier of the date on which River North shall have purchased Company shares pursuant to the Purchase Agreement for an aggregate purchase price of $5,000,000 or March 16, 2018. We have no obligation to sell any shares under the Purchase Agreement. This arrangement is also sometimes referred to herein as the “Equity Line.”
 
As provided in the Purchase Agreement, the Company may require River North to purchase shares of common stock from time to time by delivering a put notice to River North specifying the total purchase price for the shares to be purchased (the “Investment Amount”); provided there must be a minimum of 10 trading days between deliveries of each put notice. The minimum trading days between deliveries of put notices may be adjusted downward at the discretion of River North from time to time. Currently the minimum time between the put notices is five (5) days. We may determine the Investment Amount, provided that such amount may not be more than the average daily trading volume in dollar amount for the Company’s common stock during the 10 trading days preceding the date on which the Company delivers the applicable put notice. Additionally, such amount may not be lower than $5,000 or higher than $150,000 without prior approval of River North. 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. River north will have no obligation to purchase shares under the Purchase Agreement to the extent that such purchase would cause River North to own more than 9.99% of the Company’s common stock.
 
Prior to the Amendment, for each share of our common stock purchased under the Purchase Agreement, River North paid a purchase price equal to 85% of the Market Price, which was defined as the average of the two lowest closing bid prices on the OTCQB Marketplace, as reported by Bloomberg Finance L.P., during the five consecutive Trading Days including and immediately prior to the date on which the applicable put notice is delivered to River North (the “Pricing Period”). If, at the time of a sale, we were not deposit/withdrawal at custodian (“DWAC”) eligible, or if we were under Depository Trust Company (“DTC”) “chill” status, an additional 5.0% and 10% discount to the Market Price, respectively, applied.
 
 
On December 9, 2016, the Company and River North entered into the Amendment in order to amend the formula pursuant to which the purchase price for the Company’s shares is calculated and to make certain other amendments to the terms of the Purchase Agreement. As amended, the Pricing Period now includes the five consecutive trading days including and immediately prior to the settlement date of the sale, which in most circumstances will be the trading day immediately following the date that a put notice is delivered to River North (a “Put Date”). In addition, the Amendment provides that if either (i) the closing bid price the common stock is less than $0.10 per share on the Put Date, or (ii) the average daily trading volume in dollar amount for the common stock during the ten trading days including and immediately preceding a Put Date is less than $50,000, then an additional 10% discount to the Market Price will be taken when calculating the purchase price for the shares. The prior discounts for DWAC ineligibility and DTC chill status remain.
 
River North’s obligation to purchase shares under the Purchase Agreement is subject to customary closing conditions, including without limitation a requirement that a registration statement remain effective registering the resale by River North of the shares to be issued pursuant to the Purchase Agreement as contemplated by the Registration Rights Agreement described below. The Purchase Agreement contains covenants, representations and warranties of the Company and River North that are typical for transactions of this type. In addition, the Company and River North have granted each other customary indemnification rights in connection with the Purchase Agreement. The Purchase Agreement may be terminated by the Company at any time. The Purchase Agreement is not transferable and any benefits attached thereto may not be assigned.
 
During the three months ended December 31, 2016, we issued a total of 7,182,868 shares of common stock to River North under the Purchase Agreement for aggregate proceeds of $324,723.
 
Also on March 16, 2016, in connection with the Purchase Agreement, we entered into a Registration Rights Agreement with River North requiring the Company to prepare and file, within 45 days of the effective date of the Registration Rights Agreement, a registration statement registering the resale by River North of the shares to be issued under the Purchase Agreement, and to use commercially reasonable efforts to cause such registration statement to become effective, and to keep such registration statement effective until (i) three months after the last closing of a sale of shares under the Purchase Agreement, (ii) the date when River North may sell all the shares under Rule 144 without volume limitations, or (iii) the date on which River North no longer owns any of the shares. On April 11, 2016, we filed a Registration Statement on Form S-1 (SEC File No. 333-210686) with the SEC registering the resale of up to 25,000,000 shares of the Company’s common stock that may be issued and sold to River North pursuant to the Purchase Agreement (the “First Registration Statement”), which was declared effective by the SEC on April 20, 2016.

The foregoing description of the Purchase Agreement (including the Amendment) and the Registration Rights Agreement does not purport to be complete and is subject to and qualified in its entirety by reference to the Purchase Agreement itself (including the Amendment) and the Registration Rights Agreement.

To date we have issued a total of 20,757,307 shares to River North under the Equity Purchase Agreement for aggregate proceeds of $1,216,265. These shares have been resold by River North under the First Registration Statement. The remaining shares were removed from registration by means of a post-effective amendment filed on February 7, 2017.  We will be unable to issue and sell additional shares to River North under the Equity Purchase Agreement until we file subsequent registration statement registering the resale by River North of additional shares that may be issued and sold under the Equity Line and the SEC declares it effective.

As partial consideration for the above-mentioned agreements, on March 16, 2016, we issued to River North a “commitment” convertible promissory note (the “Commitment Note”) in the principal amount of $35,000. The Commitment Note accrued interest at a rate of 10% per annum and was scheduled to mature on March 16, 2017. Upon the registration statement contemplated by the Registration Rights Agreement being declared effective, $10,000 of the principle balance of the Commitment Note and accrued interest thereon was extinguished and deemed to have been repaid.
 
After 180 days following the date of the Commitment Note, or earlier upon the occurrence of an event of default that remains uncured, the Commitment Note may be converted into shares of the Company’s common stock at the election of River North at a conversion price per share equal 60% of the Current Market Price, which is defined as the lowest closing bid price for the common stock as reported by Bloomberg, LP for the 10 trading days ending on the trading day immediately before the conversion. The loan principal and accrued interest were paid in full prior to the note conversion date.
 
 
On March 16, 2016, we entered into a Securities Purchase Agreement with River North pursuant to which the Company issued a convertible promissory note (the “Bridge Note”) to River North, in the original principal amount of $90,000, in consideration of the payment by River North of a purchase price equal to $73,800, with $9,000 retained by River North as original issue discount and $7,200 for related legal and due diligence costs and these costs were recorded as discount to the note. The Company issued the Bridge Note on March 16, 2016. The Bridge Note accrues interest at a rate of 10% per annum and matures on March 16, 2017.The Bridge Note provides for conversion rights and events of default on substantially the same terms and conditions as the Commitment Note; provided however that an event of default under the Bridge Note will also be triggered if the Company fails to use at least 15% of the proceeds from each sale of shares under the Purchase Agreement to prepay a portion of the Bridge Note after it becomes convertible. The loan principal and accrued interest were paid in full prior to the note conversion date and for the fiscal year ended September 30, 2016 we recorded a discount expense of $16,200.
 
Financing of Insurance Premiums
 
On August 15, 2016, we entered into an agreement to finance a portion of our liability insurance premiums in the amount of $28,384 at an interest rate of 7.25% with equal payments of $2,934, including interest, due monthly beginning July 14, 2016 and continuing through April 14, 2017. As of December 31, 2016, the outstanding balance under this note payable was $11,559.

On November 14, 2016, we entered into an agreement to finance director and officer insurance premiums in the amount of $25,224 at an interest rate of 5.00% with equal payments of $2,581, including interest, due monthly beginning December 21, 2016 and continuing through September 21, 2017. As of December 31, the outstanding balance under this note payable was $22,748.

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, and loads of iron ore to a contractor 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 increases and decreases in value over the past five years.  A historical chart of their respective prices is contained in Item 1, the “Business” portion of our Annual Report on Form 10-K for the fiscal year ended September 30, 2016, filed with the U.S. Securities and Exchange Commission on January 13, 2017.  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 exploration activities and the opportunity to market the sale of the El Capitan Property and the potential future revenue derived from the sale of concentrates. The El Capitan Property is an open pit mine with lower production costs and a material increase in costs associated with the recovery 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.
 
Time delays in obtaining any necessary future approvals from the various governmental agencies, both federal and state, may also cause delays, all of which are not under our control, in achieving our strategic business plan and current plan of operation.

Off-Balance Sheet Arrangements
 
During the three months ended December 31, 2016, we did not engage in any off-balance sheet arrangements set forth in Item 303(a)(4) of Regulation S-K.
 
Contractual Obligations
 
As of December 31, 2016, we had no contractual obligations (including long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations and other long-term liabilities reflected on our balance sheet under GAAP) that are expected to have an adverse effect on our liquidity and cash flows in future periods.
 
 
Critical Accounting Policies
 
Our unaudited 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 in our Annual Report on Form 10-K for the fiscal year ended September 30, 2016, filed with the U.S. Securities and Exchange Commission on January 13, 2017, describes our significant accounting policies which are reviewed by management on a regular basis.
 
New Accounting Pronouncements
 
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.
 
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
 
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item. 

Item 4.
Controls and Procedures
 
Disclosure Controls and Procedures
 
The Company maintains disclosure controls and procedures, as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed in its periodic reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.
 
As of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act). Based upon the evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective at a reasonable assurance level to ensure that information required to be disclosed by it in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.  In addition, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective at a reasonable assurance level to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
 
Changes in Internal Control over Financial Reporting
 
There have been no changes in our internal control over financial reporting, as defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act, during the quarter ended December 31, 2016, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
 
PART II.
OTHER INFORMATION
 
Item 1.
Legal Proceedings
 
We are not a party to any material pending legal proceedings and to our knowledge, no such proceedings by or against the Company have been threatened.
 
Item 1A.
Risk Factors
 
Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described in our Annual Report on Form 10-K for the fiscal year ended September 30, 2016, filed with the U.S. Securities and Exchange Commission on January 13, 2017, in addition to the other information included in forward-looking statements made in this Quarterly Report on Form 10-Q or elsewhere by management from time to time prior to investing in our common stock.
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
 
During the three months ended December 31, 2016, we issued a total of 7,182,868 shares of common stock to River North under the Purchase Agreement for aggregate proceeds of $324,723. The issuances of shares were 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.
 
On November 7, 2016, the Company issued 1,768,293 shares of restricted common stock of the Company to an officer for accrued back compensation. The issuance of 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.

Item 3.
Defaults Upon Senior Securities
 
None.
 
Item 4.
Mine Safety Disclosures
 
During our current fiscal operating year ending September 30, 2016, the Company received various minor violations from MSHA. The proposed assessments are currently being contested by the Company and we are waiting for a requested hearing before the independent Federal Mine Safety and Health Review Commission for final resolve. The proposed assessments aggregate $1,864.

Item 5.
Other Information
 
None.
 
 
Item 6.
Exhibits
 
(a)
Exhibits
 
Exhibit No.
 
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 Amendment to Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed October 4, 2016).
3.4
 
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).
3.5
 
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).
3.6
 
Restated Bylaws (incorporated by reference to Exhibit 3.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 filed with the SEC on August 15, 2016).
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).
31.1*
   
31.2*
   
32.1*
   
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.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.
 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
EL CAPITAN PRECIOUS METALS, INC.
 
 
 
 
 
 
 
 
 
Dated:   February 2, 2018
By:
/s/  John F. Stapleton
 
 
 
John F. Stapleton
Chief Executive Officer, President and Director
(Principal Executive Officer)
 
 
 
 
 
 
Dated:   February 2, 2018
By:
/s/  Stephen  J. Antol
 
 
 
Stephen J. Antol
Chief Financial Officer
(Principal Financial Officer)
 
 
 
 
 
 
 
31

EX-31.1 2 ex31_1.htm EXHIBIT 31.1
EXHIBIT 31.1
 
RULE 13a-14(a) CERTIFICATION OF CHIEF EXECUTIVE OFFICER
 
I, John F. Stapleton, certify that:
 
1. 
I have reviewed this Amendment No. 1 to Quarterly Report on Form 10-Q of El Capitan Precious Metals, Inc.;
  
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
Date:   February 2, 2018
 
 
 
 
 
 
 
/s/ John F. Stapleton
 
 
John F. Stapleton
 
 
Chief Executive Officer, President and Director
 
 
 

EX-31.2 3 ex31_2.htm EXHIBIT 31.2
EXHIBIT 31.2
 
RULE 13a-14(a) CERTIFICATION OF CHIEF FINANCIAL OFFICER
 
I, Stephen J. Antol, certify that: 
 
1. 
I have reviewed this Amendment No. 1 to Quarterly Report on Form 10-Q of El Capitan Precious Metals, Inc.;
  
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
Date:   February 2, 2018
 
 
 
 
 
 
 
/s/ Stephen J. Antol
 
 
Stephen J. Antol
 
 
Chief Financial Officer

 

EX-32.1 4 ex32_1.htm EXHIBIT 32.1
EXHIBIT 32.1
 
 
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
 
In connection with Amendment No. 1 to the Quarterly Report of El Capitan Precious Metals, Inc. (the “Company”) on Form 10-Q for the three-month period ended December 31, 2016, filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officers of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of our knowledge:
 
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
(2)
The information contained in the Report fairly presents, in material respects, the financial condition and results of operations of the Company, as of, and for the periods presented in the Report.
 
  
Date:   February 2, 2018
 
 
/s/ John F. Stapleton
 
John F. Stapleton
Chief Executive Officer, President and Director
 
 
 
 
 
/s/ Stephen J. Antol
 
Stephen J. Antol
Chief Financial Officer
 
 


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vertical-align: bottom; text-align: left; width: 1%; background-color: #cceeff">&#160;</td> <td style="vertical-align: bottom; vertical-align: bottom; text-align: right; width: 9%; background-color: #cceeff">&#160;</td> <td nowrap="nowrap" style="vertical-align: bottom; vertical-align: bottom; text-align: left; width: 1%; background-color: #cceeff">&#160;</td> <td style="vertical-align: bottom; vertical-align: bottom; width: 1%; background-color: #cceeff">&#160;</td> <td style="vertical-align: bottom; vertical-align: bottom; text-align: left; width: 1%; background-color: #cceeff">&#160;</td> <td style="vertical-align: bottom; vertical-align: bottom; text-align: right; width: 9%; background-color: #cceeff">&#160;</td> <td nowrap="nowrap" style="vertical-align: bottom; vertical-align: bottom; text-align: left; width: 1%; background-color: #cceeff">&#160;</td> </tr> <tr> <td style="vertical-align: bottom; vertical-align: bottom; width: 64%; background-color: #ffffff"> <div style="font: 10pt Times New Roman, Times, serif; 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[Member] Officer [Member] Mr. Antol [Member] Logistica Note [Member] Note and Warrant Purchase Agreement [Member] Insurance Financing Agreement [Member] Title of Individual [Axis] Measurement Frequency [Axis] Fair Value, Measurements, Recurring [Member] Fair Value, Hierarchy [Axis] Fair Value, Inputs, Level 1 [Member] Fair Value, Inputs, Level 2 [Member] Fair Value, Inputs, Level 3 [Member] Contract Miners [Member] Nonmonetary Transaction Type [Axis] Stock Paid For Legal Fees [Member] Plan Name [Axis] 2015 Equity Incentive Plan [Member] Range [Axis] Maximum [Member] Minimum [Member] Subsequent Event Type [Axis] Subsequent Event [Member] Credit Facility [Axis] Installment Loan [Member] Working Capital Loan [Member] Document and Entity Information: Entity Registrant Name Entity Central Index Key Document Type Entity Trading Symbol Document Period End Date Amendment Flag Current Fiscal Year End Date Entity Well-known Seasoned Issuer Entity Voluntary Filers Entity Current Reporting Status Entity Filer Category Entity Public Float Entity Common Stock, Shares Outstanding Document Fiscal Year Focus Document Fiscal Period Focus Amendment Description Assets [Abstract] CURRENT ASSETS: Cash and cash equivalents Prepaid expense and other current assets Inventory Total Current Assets Property and equipment, net of accumulated depreciation of $146,883 and $128,748, respectively Exploration property Restricted cash Deposits Total Assets LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable Notes payable, net of unamortized discounts of $507 and $1,769, respectively Note payable, related party Accrued compensation - related parties Accrued liabilities Total Current Liabilities STOCKHOLDERS' EQUITY: Preferred stock, $0.001 par value; 5,000,000 shares authorized; 51 and 51 shares issued and outstanding, respectively Common stock, $0.001 par value; 500,000,000 shares authorized; 383,974,231 and 366,254,777 shares issued and outstanding, respectively Additional paid-in capital Accumulated deficit Total Stockholders' Equity Total Liabilities and Stockholders' Equity Property and equipment, accumulated depreciation Notes payable current, unamortized discounts Preferred Stock, shares authorized ( In Preferred Stock, shares issued Preferred Stock, shares outstanding Preferred Stock, par or stated value (in dollars per share) Common Stock, par or stated value (in dollars per share) Common Stock, shares authorized Common Stock, shares issued Common Stock, shares outstanding Revenues [Abstract] REVENUES COSTS ASSOCIATED WITH REVENUES Gross Loss OPERATING EXPENSES: Mine and exploration costs Professional fees Administrative consulting fees Legal and accounting fees Other general and administrative Total Operating Expenses LOSS FROM OPERATIONS OTHER INCOME (EXPENSE): Interest income Gain on derivative instruments Loss on debt extinguishment Interest expense - related party Interest expense Total Other Income (Expense) LOSS BEFORE PROVISION FOR INCOME TAXES PROVISION FOR INCOME TAXES NET LOSS Basic and Diluted Per Share Data: Net Loss Per Share - basic and diluted (in dollars per share) Weighted Average Common Shares Outstanding: Basic and diluted (in shares) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss Adjustments to reconcile net loss to net cash used in operating activities: Warrant and option expense Stock-based compensation Stock issued for mining costs Amortization of debt discounts Depreciation Loss on debt extinguishment Gain on derivative instruments Net change in operating assets and liabilities: Prepaid expenses and other current assets Inventory Accounts payable Accrued compensation - related parties Accrued liabilities Net Cash Used in Operating Activities CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of furniture and equipment Restricted cash Net Cash Used in Investing Activities CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from sale of common stock Proceeds from notes payable Payments on notes payable Payments on finance contracts Net Cash Provided by Financing Activities NET DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD CASH AND CASH EQUIVALENTS, END OF PERIOD SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest Cash paid for income taxes SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Common stock issued for third party payables Common stock issued for related party payables Common stock issued on settlement of debt and accrued interest Common stock issued for inventory Common stock issued for prepayment of services and costs incurred Common stock issued for accrued mining cost Common stock issued for fixed assets Purchase of insurance through financing contract Debt discount from derivative liabilities Reclassification of warrants from equity to derivative liabilities Organization, Consolidation and Presentation of Financial Statements [Abstract] BUSINESS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Related Party Transactions [Abstract] RELATED PARTY TRANSACTIONS Inventory, Net [Abstract] INVENTORY ACCRUED LIABILITIES [Abstract] ACCURED LIABILITIES Debt [Abstract] NOTES PAYABLE Fair Value Disclosures [Abstract] FAIR VALUE MEASUREMENTS COMMITMENTS AND CONTINGENCIES COMMITMENTS AND CONTINGENCIES 2015 EQUITY INCENTIVE PLAN 2015 EQUITY INCENTIVE PLAN STOCKHOLDERS' EQUITY STOCKHOLDERS' EQUITY Subsequent Events [Abstract] SUBSEQUENT EVENTS ACCOUNTING POLICIES (POLICIES): Business, Operations and Organization Restatement Effect on Financial Statements Principals of Consolidation Reclassification Basis of Presentation and Going Concern Fair Value of Financial Instruments Management Estimates and Assumptions Cash and Cash Equivalents Inventory Property and Equipment Restricted Cash Exploration Property Costs Derivative Financial Instruments Stock-Based Compensation Revenue Recognition Pilot Plant Costs Recently Issued Accounting Pronouncements Basis Of Presentation Tables Schedule of impact of the reclassification of advances to vendor Inventory (TABLES): Schedule of Inventory Accrued liabilities (TABLE): Schedule of Accrued Liabilities Loan Installments Schedule of Loan Installments Schedule of the Components of the Notes Payable Fair Value Hierarchy of Assets and Liabilities Black-Scholes option pricing model to estimate the fair value of its option awards(TABLE): Summary of Options Activity Statement [Table] Statement [Line Items] Consolidated Balance Sheet Advances to vendor Total Current Assets Total Assets Stockholders' Equity Total Liabilities and Stockholders' Equity Consolidated Statements of Operations Total Operating Expenses Net Loss Consolidated Statement of Cash Flows Stock issued for mining costs Prepaid expenses and other current assets Net Cash Used in Operating Activities Advance to vendor for pilot plant equipment purchases Net Cash Used in Investing Activities Increase in finance contracts Net Cash Provided by Financing Activities Business, Basis of Presentation and Significant Accounting Policies Percent of outstanding common stock of El Capitan Delaware owned by the Company (in percent) Prior to Jan. 19, 2011, percent of outstanding common stock of El Capitan, Ltd. owned by El Capitan Delaware (in percent) Percent of outstanding common stock of El Capitan Ltd. acquired by the Company pursuant to the G&M merger (in percent) Pursuant to merger, each share of G&M common and preferred stock outstanding was exchanged for approximately the number of shares of common stock of the Company (in dollars per share) Aggregate number of shares of the Company's common stock issued to former G&M stockholders (in shares) Stock-based administrative compensation Exploration property acquisition costs Restricted cash consists of two certificates of deposits in favor of New Mexico Minerals and Mining Division Recognized stock-based administrative compensation aggregating Stock-based compensation paid to non -employee consultants aggregating Working capital deficit for the period Aggregate monthly payments under the informal arrangements with officers for support services Stock issued for officer's compensation Stock issued for officer's compensation (in shares) Fair value of stock issued Gain on debt conversion Consulting fees Interest rate on note (in percent) Maturity date Shares issued in debt conversion (in shares) Components of inventory Mineralized material stockpile Concentrate Iron ore Total Accrued liabilities details Mining costs Accounting and legal Interest Accrued liabilities total CURRENT NOTES PAYABLE Notes payable Principal Amount Unamortized Discount Net Notes payable - related party Principal Amount Unamortized Discount Net Notes payable, including the note payable to related party Principal Amount Unamortized Discount Net Payments for purchase of mining equipment Amount of note payable Outstanding balance of note at end of period Accrued interest Future issuance of restricted shares under the new agreement (in 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to miners Common stock issued for services Common stock issued for inventory Common stock issued for lab equipment Common stock issued for prepayment for services Common stock issued for purchase agreement, (in shares) Common stock issued for purchase agreement Amount of decrease in net equity Exercise price range, minimum (in dollars per shares) Exercise price range, maximum (in dollars per shares) Remaining weighted average life Aggregate intrinsic value Shares available for grant Options outstanding Remaining weighted average life of warrants Aggregate intrinsic value of warrants outstanding Aggregate cash proceeds from sale of common stock to River North under 2016 Purchase Agreement Shares of common stock issued to River North under 2016 Purchase Agreement (in shares) Shares of common stock authorized for issuance as necessary to contract miner to meet current obligations (in shares) Warrants authorized (in shares) Term of warrant Fees charged for legal and accounting services. The expense charged against earnings for the period pertaining to warrant and option expense. Aggregating carrying value as of the balance sheet date of the liabilities for all accrued compensation arrangements payable to related parties within one year (or the operating cycle if longer). Represents currently earned compensation under compensation arrangements that is not actually paid until a later date. Common stock issued for third party payables Common stock issued for related party payables. Common stock issued on settlement of debt and accrued interest Common stock issued for inventory Common stock issued for prepayment of services and costs. Common stock issued for accrued mining cost. Common stock issued for fixed assets. Debt discount from derivative liabilities Reclassification of warrants from equity to derivative liabilities Business, Operations and Organization Represent information about the stock issued for mining costs. Percent of outstanding common stock of El Capitan Delaware owned by the Company (in Percent) Prior to Jan. 19, 2011, percent of outstanding common stock of El Capitan, Ltd. owned by El Capitan Delaware (in Percent) Percent of outstanding common stock of El Capitan Ltd. acquired by the Company pursuant to the G&amp;amp;M merger (in Percent) Pursuant to merger, each share of G&amp;amp;M common and preferred stock outstanding was exchanged for approximately the number of shares of common stock of the Company (Per Share) Aggregate number of shares of the Company's common stock issued to former G&amp;M stockholders. Stock-based administrative compensation expense. Restricted cash consists of two certificates of deposits in favor of New Mexico Minerals and Mining Division Recognized stock-based administrative compensation aggregating Stock-based compensation paid to non -employee consultants aggregating The amount of the reporting entity's working capital deficit for the period. MRI [Member] Management Resources Initiatives, Inc. [Member] Aggregate monthly payments under the informal arrangements with officers for support services. Amount before last-in first-out (LIFO) and valuation reserves of concentrate. Amount before last-in first-out (LIFO) and valuation reserves of iron ore stockpile material. Carrying value as of the balance sheet date of obligations incurred through that date and payable for Mining costs. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer). Sum of the carrying values as of the balance sheet date of the portions of long-term notes payable, before unamortized discount, due within one year or the operating cycle if longer. The amount for notes payable (written promise to pay), due to related parties, before unamortized discount. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer). Amount of related party debt discount to be amortized within one year or within the normal operating cycle, if longer. Including the current and noncurrent portions, aggregate carrying amount of all types of notes payable, as of the balance sheet date, with initial maturities beyond one year or beyond the normal operating cycle, if longer. Notes payable total Unamortized discount amount Including the current and noncurrent portions, aggregate carrying amount of all types of notes payable, as of the balance sheet date, with initial maturities beyond one year or beyond the normal operating cycle, if longer. Logistica Note [Member] Note and Warrant Purchase Agreement [Member] Future issuance of restricted shares under the new agreement. Elimination of accrued liability to Logistica for prior services rendered. Note was reduced by an additional and related accrued interest payments. Insurance Financing Agreement [Member] Aggregate payments for Management Resource Initiatives [Abstract] Number of shares of common stock authorized for issuance pursuant to the 2015 . Number of shares of common stock issuable under the 2015 Plan (in Shares). Number of shares of common stock issuable under the 2015 Plan was increased pursuant to Amendment No. 1 to the 2015 Plan (in Shares). Number of additional shares filed with the SEC under registration statement (in Shares) The number of shares into which fully or partially vested equity-based payment instruments, excluding stock (or unit) options, outstanding as of the balance sheet date can be currently converted under the option plan. Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Weighted Average Price Weighted average price at which grantees can acquire the shares reserved for issuance under the equity instrument plan. Weighted average per share amount at which grantees can acquire shares of common stock by exercise of equity instruments other than options. Weighted average price at which grantees could have acquired the underlying shares with respect to equity instruments other than options that were terminated. Weighted average price at which grantees could have acquired the underlying shares with respect to equity instruments other than options of the plan that expired. Weighted average price at which option holders acquired shares when converting their equity instruments other than options into shares. Weighted average price at which grantees can acquire the shares exercisable under the equity instrument plan. Contract Miners [Member] Number of shares of Preferred Stock issued during the period Common stock issued for lab equipment. Value of stock issued in lieu of cash for prepayment of services contributed to the entity. Value of the stock issued includes, but is not limited to, services contributed by vendors and founders. Aggregate value of the note and accrued interest retired for the issuance of restricted shares of the Company's common stock The fair value of the stock issued for the retired note obligation 2015 Equity Incentive Plan [Member] Remaining weighted average warrant life of warrants outstanding. Value of stock issued in lieu of cash for the purchase agreement. Number of shares of stock issued in lieu of cash for the purchase agreement. Term of warrants or rights outstanding. Disclosure of accounting policy for reporting restatement effect on financial statements. It represents as a issuance of stock for mining costs. It represents as a purchase of insurance through financing contract. Disclosure of accounting policy for reporting pilot plant costs. Tabular disclosure of the amounts that are recognized in the balance sheet as impact of reclassification of advances to vendor. It represents as a amount of decrease in net equity. 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Document and Entity Information - shares
3 Months Ended
Dec. 31, 2016
Feb. 10, 2017
Document and Entity Information:    
Entity Registrant Name EL CAPITAN PRECIOUS METALS INC  
Entity Central Index Key 0001135202  
Document Type 10-Q/A  
Entity Trading Symbol ecpn  
Document Period End Date Dec. 31, 2016  
Amendment Flag true  
Current Fiscal Year End Date --09-30  
Entity Well-known Seasoned Issuer No  
Entity Voluntary Filers No  
Entity Current Reporting Status Yes  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   384,476,034
Document Fiscal Year Focus 2017  
Document Fiscal Period Focus Q1  
Amendment Description

EXPLANATORY NOTE

This Amendment No. 1 on Form 10-Q/A for the quarter ended December 31, 2016, amends the Form 10-Q that was originally filed with the U.S. Securities and Exchange Commission on February 10, 2017 (the “Original Filing”). The sole purpose of this Amendment No. 1 is to correct the consolidated balance sheet as of December 31, 2016 and the consolidated statements of operations and cash flows for the period ended December 31, 2016, for the reclassification of advances to vendor of $335,616 associated with operating costs of the pilot plant operation to operating expense for the period. Based on the Company’s reassessment of the cost reclassification, the effect of this reclassification resulted in an increase of negative working capital, an increase in the net loss for the period and a decrease net equity. The following financial statements and disclosures were impacted from the reclassification: 

    Restatement of the consolidated balance sheet as of December 31, 2016, and the related consolidated statements of operations and cash flows for the period then ended.
     
    Updated Note 1 – Basis of Operation.
     
    Updated Note 9 – Stockholders’ Equity
     
    Updated Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

Except as described above, no other changes have been made to the Original Filing or any other exhibits. This Amendment speaks as of the filing date of the Original Filing and does not reflect events occurring after the filing date, or modify or update those disclosures that may be affected by subsequent events. As such, this form 10-Q/A should be read in conjunction with the original filing.

 
XML 13 R2.htm IDEA: XBRL DOCUMENT v3.8.0.1
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)
Dec. 31, 2016
Sep. 30, 2016
CURRENT ASSETS:    
Cash and cash equivalents $ 64,060 $ 296,619
Prepaid expense and other current assets 166,571 135,196
Inventory 256,250 252,466
Total Current Assets 486,881 684,281
Property and equipment, net of accumulated depreciation of $146,883 and $128,748, respectively 566,403 577,883
Exploration property 1,864,608 1,864,608
Restricted cash 74,506 74,504
Deposits 22,440 22,440
Total Assets 3,014,838 3,223,716
CURRENT LIABILITIES:    
Accounts payable 192,302 224,079
Notes payable, net of unamortized discounts of $507 and $1,769, respectively 722,740 857,219
Note payable, related party 30,000 30,000
Accrued compensation - related parties 355,000 500,000
Accrued liabilities 292,504 407,332
Total Current Liabilities 1,592,546 2,018,630
STOCKHOLDERS' EQUITY:    
Preferred stock, $0.001 par value; 5,000,000 shares authorized; 51 and 51 shares issued and outstanding, respectively
Common stock, $0.001 par value; 500,000,000 shares authorized; 383,974,231 and 366,254,777 shares issued and outstanding, respectively 383,974 366,255
Additional paid-in capital 213,848,553 212,865,439
Accumulated deficit (212,810,235) (212,026,608)
Total Stockholders' Equity 1,422,292 1,205,086
Total Liabilities and Stockholders' Equity $ 3,014,838 $ 3,223,716
XML 14 R3.htm IDEA: XBRL DOCUMENT v3.8.0.1
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($)
Dec. 31, 2016
Sep. 30, 2016
Assets [Abstract]    
Property and equipment, accumulated depreciation $ 146,883 $ 128,748
Notes payable current, unamortized discounts $ 507 $ 1,769
Preferred Stock, shares authorized ( In 5,000,000 5,000,000
Preferred Stock, shares issued 51 51
Preferred Stock, shares outstanding 51 51
Preferred Stock, par or stated value (in dollars per share) $ 0.001 $ 0.001
Common Stock, par or stated value (in dollars per share) $ 0.001 $ 0.001
Common Stock, shares authorized 500,000,000 500,000,000
Common Stock, shares issued 383,974,231 366,254,777
Common Stock, shares outstanding 383,974,231 366,254,777
XML 15 R4.htm IDEA: XBRL DOCUMENT v3.8.0.1
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)
3 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Revenues [Abstract]    
REVENUES   $ 2,950
COSTS ASSOCIATED WITH REVENUES   3,300
Gross Loss   (350)
OPERATING EXPENSES:    
Mine and exploration costs $ 525,266 102,513
Professional fees 2,991 49,504
Administrative consulting fees 65,000 65,000
Legal and accounting fees 24,123 78,348
Other general and administrative 29,410 75,193
Total Operating Expenses 646,790 370,558
LOSS FROM OPERATIONS (646,790) (370,908)
OTHER INCOME (EXPENSE):    
Interest income 13 2
Gain on derivative instruments   3,693
Loss on debt extinguishment (122,110) (84,270)
Interest expense - related party (982) (2,456)
Interest expense (13,758) (100,859)
Total Other Income (Expense) (136,837) (183,890)
LOSS BEFORE PROVISION FOR INCOME TAXES (783,627) (554,798)
PROVISION FOR INCOME TAXES
NET LOSS $ (783,627) $ (554,798)
Basic and Diluted Per Share Data:    
Net Loss Per Share - basic and diluted (in dollars per share) $ (0.00) $ (0.00)
Weighted Average Common Shares Outstanding:    
Basic and diluted (in shares) 377,048,749 296,586,821
XML 16 R5.htm IDEA: XBRL DOCUMENT v3.8.0.1
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)
3 Months Ended
Dec. 31, 2016
Dec. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss $ (783,627) $ (554,798)
Adjustments to reconcile net loss to net cash used in operating activities:    
Warrant and option expense   22,367
Stock-based compensation   102,207
Stock issued for mining costs 235,616  
Amortization of debt discounts 1,262 80,254
Depreciation 19,995 16,470
Loss on debt extinguishment 122,110 84,270
Gain on derivative instruments (3,693)
Net change in operating assets and liabilities:    
Prepaid expenses and other current assets (6,151) 2,757
Inventory (71,567)
Accounts payable (31,777) 135,369
Accrued compensation - related parties   110,000
Accrued liabilities 46,257 (46,804)
Net Cash Used in Operating Activities (396,315) (123,168)
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchase of furniture and equipment (787)
Restricted cash (2) (1)
Net Cash Used in Investing Activities (2) (788)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from sale of common stock 324,723  
Proceeds from notes payable   92,000
Payments on notes payable (150,000)
Payments on finance contracts (10,965) (5,214)
Net Cash Provided by Financing Activities 163,758 86,786
NET DECREASE IN CASH AND CASH EQUIVALENTS (232,559) (37,170)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 296,619 71,393
CASH AND CASH EQUIVALENTS, END OF PERIOD 64,060 34,223
SUPPLEMENTAL CASH FLOW INFORMATION:    
Cash paid for interest 6,667 10,315
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:    
Common stock issued for third party payables 82,000 217,431
Common stock issued for related party payables 145,000 102,849
Common stock issued on settlement of debt and accrued interest   307,982
Common stock issued for inventory 3,784 378,430
Common stock issued for prepayment of services and costs incurred   120,337
Common stock issued for accrued mining cost 79,085  
Common stock issued for fixed assets 8,515  
Purchase of insurance through financing contract $ 25,224 32,773
Debt discount from derivative liabilities   92,000
Reclassification of warrants from equity to derivative liabilities   $ 205,526
XML 17 R6.htm IDEA: XBRL DOCUMENT v3.8.0.1
BASIS OF PRESENTATION
3 Months Ended
Dec. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
BUSINESS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
NOTE 1 – BASIS OF PRESENTATION
 
Business, Operations and Organization
 
The accompanying unaudited interim financial statements of El Capitan Precious Metals, Inc. (“El Capitan” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, the financial statements do not include all information and footnotes required by generally accepted accounting principles in the United States (“GAAP”) for complete annual financial statements. In the opinion of management, the accompanying unaudited interim financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation. Interim operating results are not necessarily indicative of results that may be expected for the fiscal year ending September 30, 2017, or for any subsequent period. These interim financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the fiscal year ended September 30, 2016, included in the Company’s Annual Report on Form 10-K, filed with the SEC on January 13, 2017 (the “2016 Form 10-K”). The consolidated balance sheet at September 30, 2016, has been derived from the audited financial statements included in the 2016 Form 10-K.
 
Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for fiscal 2016 as reported in the 2016 Form 10-K have been omitted.
 
On July 26, 2002, El Capitan Precious Metals, Inc. was incorporated as a Delaware corporation to engage in the business of acquiring properties containing precious metals, principally gold, silver, and platinum (“El Capitan Delaware”). On March 18, 2003, El Capitan 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 are presented on a consolidated basis.

El Capitan Precious Metals, Inc., a Nevada corporation, is based in Prescott, Arizona. Together with its consolidated subsidiaries (collectively referred to as the “Company,” “our” or “we”), the Company is an exploration stage company as defined by the Securities 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”). Our ultimate objective is to market and sell the El Capitan Property to a major mining company or enter into a joint venture arrangement with a major mining company to conduct mining operations. We have completed 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 commenced planned mineral exploration activity in the quarter ended December 2015 under our modified mining permit. However, 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 property are expensed as incurred. 

The Company owns 100% of the outstanding common stock of El Capitan Delaware. Prior to January 19, 2011, El Capitan Delaware owned a 40% interest in El Capitan, Ltd., an Arizona corporation (“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 subsidiary of the Company and our consolidated Company acquired 100% of ECL. As a result, we now own 100% of the El Capitan Property site (described below). 
 
Restatement Effect on Financial Statements

The following table illustrates the impact of the restatement of advances to vendor to the restated unaudited consolidated balance sheet, the unaudited statement of operations and unaudited statement of cash flows for the period ended December 31, 2016.

The Company has subsequently determined to expense all costs for the Pilot Plant as incurred and applying the SEC Industry Guide 7 to the Pilot Plant activity.

 
 
As Previously
Reported
   
Adjustment
   
Restated
 
Consolidated Balance Sheet at  December 31, 2016:
                 
 
                 
Advances to vendor
 
$
335,616
   
$
(335,616
)
 
$
 
Total Current Assets
 
$
822,497
   
$
(335,616
)
 
$
486,881
 
Total Assets
 
$
3,350,454
   
$
(335,616
)
 
$
3,014,838
 
 
                       
Accumulated deficit
 
$
(212,474,619
)
 
$
(335,616
)
 
$
(212,810.235
)
 
                       
Stockholders’ Equity
 
$
1,757,908
   
$
(335,616
)
 
$
1,422,292
 
Total Liabilities and Stockholders’ Equity
 
$
3,350,454
   
$
(335,616
)
 
$
3,014,838
 
 
                       
Consolidated Statements of Operations for three months
ended December 31, 2016:
                       
 
                       
Mine and exploration costs
 
$
189,650
   
$
335,616
   
$
525,266
 
Total Operating Expenses
 
$
311,174
   
$
335,616
   
$
646,790
 
Net Loss
 
$
(448,011
)
 
$
(335,616
)
 
$
(783,627
)
 
                       
Consolidated Statement of Cash Flows for three months
ended December 31, 2016:
                       
 
                       
Net loss
 
$
(448,011
)
 
$
(335,616
)
 
$
(783,627
)
Stock issued for mining costs
 
$
   
$
235,616
   
$
235,616
 
Prepaid expenses and other current assets
 
$
(31,375
)
 
$
25,224
   
$
(6,151
)
Net Cash Used in Operating Activities
 
$
(321,539
)
 
$
(74,776
)
 
$
(396,315
)
 
                       
Advance to vendor for pilot plant equipment purchases
 
$
(100,000
)
 
$
100,000
   
$
 
Net Cash Used in Investing Activities
 
$
(100,002
)
 
$
100,000
   
$
(2
)
Increase in finance contracts
 
$
25,224
   
$
(25,224
)
 
$
 
Net Cash Provided by Financing Activities
 
$
188,982
   
$
(25,224
)
 
$
163,758
 

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.
 
Basis of Presentation and Going Concern
 
The Company's consolidated financial statements are prepared using the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America ("GAAP"), and have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The Company currently has a minimum source of revenue to cover its costs. The Company has incurred a loss for the year ended September 30, 2016 and for the three months ended December 31, 2016 and the Company has a working capital deficit as of December 31, 2016. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
 
To continue as a going concern, the Company is dependent on achievement of cash flow and future profits from entering the production stage of operations. The Company does not have adequate liquidity to fund its current operations, meet its obligations and continue as a going concern. The Company has an “equity line” financing arrangement under a Purchase Agreement with River North Equity, LLC, as amended.  In the past the Company has secured working capital loans to assist in financing its activities for the near term. The Company may also pursue other financing alternatives from time to time, including short-term operational strategic financing or equity financing, to fund its activities until it can achieve cash flow and profits from its operations. The Company’s consolidated financial statements do not include any adjustment relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.
 
Fair Value of Financial Instruments
 
The fair values of the Company’s financial instruments, which 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.
 
Management Estimates and Assumptions
 
The preparation of the Company’s unaudited 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.
 
Cash and Cash Equivalents
 
The Company considers those short-term, highly liquid investments with maturities of three months or less as cash and cash equivalents. At times, cash in banks may be in excess of the FDIC limits. The Company has no cash equivalents.
 
Inventory
 
Inventories include mineralized material stockpile, concentrate, iron ore inventories and road base, as described below. Inventories are carried at the lower of average cost or net realizable value, in the case of mineralized material stockpile and concentrate inventories and minimal cost is attributable to the iron ore inventories. The net realizable value of mineralized material stockpile inventories represents the estimated future sales price of the product based on current and long-term metals prices, less the estimated costs to complete production and bring the product to sale. Concentrate inventories are carried at the lower of full cost of production or net realizable value based on current metals prices. Write-downs of inventory will be reported as a component of production costs applicable to sales.
 
Mineralized Material Stockpile Inventories

Mineralized material stockpile inventories represent mineralized materials that have been mined and are available for further processing. Costs are allocated to mineralized material stockpile inventories based on relative values of material stockpiled and processed using current mining costs incurred up to the point of stockpiling the mineralized material.
 
Concentrates
 
Concentrates inventory include metal concentrates located either at the Company’s El Capitan Property mine site or in transit to a customer’s port. Inventories consist of mineralized material that contains gold and silver mineralization.
 
Iron Ore
 
Iron ore material is inventoried until the market prices are reestablished at a higher market demand and are valued at approximately $20 a ton. Any proceeds from the sale of iron ore will offset the cost of mining the mineralized ore.
 
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.  
 
Restricted Cash
 
Restricted cash consists of two certificates of deposits in favor of the New Mexico Minerals and Mining Division for a total of $74,506. The amount is posted as a financial assurance for required reclamation work to be completed on mined acreage.
 
Exploration Property Costs
 
Exploration property costs are expensed as incurred until such time as economic reserves are quantified. To date the Company has not established any proven or probable reserves on the El Capitan Property. The Company has capitalized $1,864,608 of exploration property acquisition costs reflecting its investment in the El Capitan Property.
 
Derivative Financial Instruments
 
The Company does not use derivative instruments to hedge exposures to cash flow or, market risks. The Company reviews the terms of convertible debt, equity instruments and other financing arrangements to determine whether there are embedded derivative instruments, including embedded conversion options that are required to be bifurcated and accounted for separately as a derivative financial instrument. Also, in connection with the issuance of financing instruments, the Company may issue freestanding options or warrants that may, depending on their terms, be accounted for as derivative instrument liabilities, rather than as equity. The Company may also issue options or warrants to non-employees in connection with consulting or other services.
 
Derivative financial instruments are initially measured at their fair value. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. For warrant-based derivative financial instruments, the Company uses the Black-Scholes Option Pricing Model to value the derivative instruments. To the extent that the initial fair values of the freestanding and/or bifurcated derivative instrument liabilities exceed the total proceeds received, an immediate charge to income is recognized, in order to initially record the derivative instrument liabilities at their fair value.
 
The discount from the face value of the convertible debt or equity instruments resulting from allocating some or all of the proceeds to the derivative instruments, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to income, using the effective interest method.
 
The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. If reclassification is required, the fair value of the derivative instrument, as of the determination date, is reclassified. Any previous charges or credits to income for changes in the fair value of the derivative instrument are not reversed. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within twelve months of the balance sheet date.

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 the Company’s quarterly period that began on October 1, 2006, the Company 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.
 
The Company 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.
 
The Company recognized stock-based administrative compensation aggregating $0 and $22,367 for common stock options and common stock issued to administrative personnel, directors and consultants during the three months ended December 31, 2016 and 2015, respectively.
 
Also during the three months ended December 31, 2016 and 2015, the Company paid stock-based compensation consisting of common stock issued to non-employees and mining costs aggregating $235,616 and $102,207, respectively.
 
Revenue Recognition
 
When revenue is generated from operations, it will be recognized in accordance with FASB ASC 605. In general, the Company 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 nominal revenue generated for the Company’s quarter ended December 31, 2015 and none for the quarter ended December 31, 2016.

Pilot Plant Costs
 
The Company paid to the operator of the Pilot Plant currently being prepared for the equipment in transit operating costs for site improvements and sundry equipment. Based on current information, the equipment is estimated to arrive in the third week of February 2017 and anticipated to be operational in the fourth week of the month.
 
The Company has subsequently determined to expense all costs for the Pilot Plant as incurred and applying the SEC Industry Guide 7 to the Pilot Plant activity. Any proceeds from the sale of precious metals derived from concentrates generated by the Pilot Plant will be divided on a future determined percentage split between the Company and the Pilot Plant operator. The Pilot Plant operator owns the equipment per the terms in the Agreement.

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 January 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)  2016-01, “Financial Instruments - Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10).” The amendments require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under the equity method of accounting or those that result in consolidation of the investee). The amendments also require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. In addition, the amendments eliminate the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities and the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet for public business entities. This guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company does not expect to early adopt this guidance and does not believe that the adoption of this guidance will have a material impact on its consolidated financial statements.
 
In March 2016, the FASB issued ASU No. 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting." ASU 2016-09 amends several aspects of the accounting for share-based payment transactions including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted any interim or annual period. If early adopted, an entity must adopt all of the amendments in the same period. The Company is currently evaluating the potential impact of the adoption of ASU 2016-09 on the Company's consolidated financial statements.
 
In August, 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force). Effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period.
 
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.
XML 18 R7.htm IDEA: XBRL DOCUMENT v3.8.0.1
RELATED PARTY TRANSACTIONS
3 Months Ended
Dec. 31, 2016
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS
NOTE 2 – RELATED PARTY TRANSACTIONS
 
Consulting Agreements
 
Effective May 1, 2009, the Company has informal arrangements with an individual, currently whom is an officer, pursuant to which such individual serves as support staff for the functioning of the home office and all related corporate activities and projects. The aggregate monthly payments under the informal arrangements are $6,667. There is no written agreement with this individual. At December 31, 2016 and September 30, 2016, this individual had accrued and unpaid compensation of $40,000 respectively, recorded in accrued compensation – related parties.
 
During the three months ended December 31, 2016, the Company issued 1,768,293 of restricted common shares and 1,768,293 shares of S-8 to a former officer and currently a director of the Company as payment of accrued compensation of $145,000. The fair value of the stock was $199,110 and the Company recorded a loss on extinguishment of debt of $54,110.
 
In January 2012, the Company retained the consulting services of Management Resource Initiatives, Inc. (“MRI”), a company controlled by John F. Stapleton who served as the Chief Financial Officer and a director of the Company at that time and who currently serves as President and Chief Executive Officer and a director of the Company. The current monthly consulting fee for such services is $15,000. Total consulting fees expensed to MRI for both the three months ended December 31, 2016 and 2015 was $45,000, respectively. At December 31, 2016, MRI had accrued and unpaid compensation of $315,000 recorded in accrued compensation – related parties.
 
Total administrative consulting fees expensed under these informal arrangements for both the three months ended December 31, 2016 and 2015 was $65,000, respectively.

On February 4, 2015, the Company signed a $30,000 promissory note payable to MRI, at 18% interest per annum, due and payable on February 4, 2016. As an inducement for the loan represented by the note, the Company issued 200,000 shares of restricted common stock of the Company to MRI. The Company approved amending the note to extend the maturity date from February 4, 2016 to February 4, 2017 under the original terms of the Agreement. See Note 5.
XML 19 R8.htm IDEA: XBRL DOCUMENT v3.8.0.1
INVENTORY
3 Months Ended
Dec. 31, 2016
Inventory, Net [Abstract]  
INVENTORY
NOTE 3 – INVENTORY
 
The following table provides the components of inventory as of December 31, 2016 and September 30, 2016:

 
 
December 31,
   
September 30,
 
 
 
2016
   
2016
 
 
           
Mineralized material stockpile
 
$
84,153
   
$
87,840
 
Concentrate
   
154,411
     
146,738
 
Iron ore
   
17,686
     
17,888
 
     Total
 
$
256,250
   
$
252,466
 
XML 20 R9.htm IDEA: XBRL DOCUMENT v3.8.0.1
ACCRUED LIABILITIES
3 Months Ended
Dec. 31, 2016
ACCRUED LIABILITIES [Abstract]  
ACCURED LIABILITIES
NOTE 4 – ACCRUED LIABILITIES
 
Accrued liabilities consisted of the following as of December 31, 2016 and September 30, 2016:
 
 
 
December 31,
   
September 30,
 
 
 
2016
   
2016
 
 
           
Mining costs
 
$
   
$
60,613
 
Accounting and legal
   
223,865
     
285,025
 
Interest
   
68,639
     
61,694
 
 
 
$
292,504
   
$
407,332
 
XML 21 R10.htm IDEA: XBRL DOCUMENT v3.8.0.1
NOTES PAYABLE
3 Months Ended
Dec. 31, 2016
Debt [Abstract]  
NOTES PAYABLE
NOTE 5 – NOTES PAYABLE
 
Agreements with Logistica U.S. Terminals, LLC
 
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 Property 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 material as part of the Company’s exploration activities. As of December 31, 2016, the outstanding balance under this note payable was $400,000 and accrued interest on the note was $51,140. 
 
On January 5, 2016, we entered into our current agreement with Logistica U.S. Terminals, LLC (“Logistica”). Under the agreement we will provide to Logistica concentrated ore to their specifications at the mine site. Logistica will transport, process, and refine the precious metals concentrates to sell to precious metals buyers. The terms of the new agreement provide for the recovery of hard costs related to the concentrates by both parties prior to the distribution of profits. The agreement also provided for the issuance of 10,000,000 shares of our restricted common stock and the elimination of a $100,000 accrued liability to Logistica for prior services rendered. When certain terms and conditions are met, the Agreement calls for Logistica to arrange for a letter of credit for working capital for the mining, processing and sale activities under the Agreement. The shares were issued in August 2016. The new agreement supersedes the previous agreements with Logistica.
 
October 17, 2014 Note and Warrant Purchase Agreement
 
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 against delivery of a promissory note (the “2014 Note”) in such amount and issued warrants to purchase 882,352 shares of our common stock pursuant to the Note and Warrant Purchase Agreement. The promissory note carries an interest rate of 8% per annum, was initially due on 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 August 24, 2015, the 2014 Note was mutually extended from July 17, 2015 to January 17, 2016. In consideration of the extension, the Company amended the common stock purchase warrant to purchase 4,714,286 shares (subject to adjustment) of our common stock at an exercise price of $0.07 per share. The warrant dated October 17, 2014 was cancelled. On January 19, 2016, the amended 2014 Note was extended from January 17, 2016 to September 19, 2016. The note is currently in default. In consideration of the extension, we issued to the investor a fully vested three year common stock purchase warrant to purchase 471,429 shares (subject to adjustment) of common stock of the Company at an exercise price of $0.051 per share, the closing price on the date of the agreed extension agreement. The fair value of the warrants was determined to be $16,775 using Black-Scholes option price model and was expensed during the three months ended March 31, 2016. The Note is currently due and principal payments are being made on the Note. During the quarter ended December 31, 2016, the outstanding principal balance of the amended 2014 Note was reduced by an additional $150,000 and related accrued interest payments have been made.  As of December 31, 2016, the outstanding balance under this note payable was $250,000 and accrued interest on the note was $1,205. 
 
February 4, 2015 Unsecured Promissory Notes
 
On February 4, 2015, we issued unsecured promissory notes in the aggregate principal amount of $63,000, of which $30,000 is issued to MRI, a company controlled by John F. Stapleton, who served as the Chief Financial Officer and a director of the Company at that time and who currently serves as President and Chief Executive Officer and a director of the Company. Outstanding amounts under these notes accrue interest at 18% per year, with all principal and accrued interest being due and payable on February 4, 2016. As additional consideration for the loan, we issued 200,000 shares of our restricted common stock for each note for a total of 400,000 shares. The relative fair value of the common stock was determined to be $21,211 and was recorded as discounts to the promissory notes was amortized to interest expense over the life of the notes. On February 4, 2016, one of the promissory notes was amended to extend the maturity date from February 4, 2016 to February 4, 2017 and reduced the interest rate to 10% per year. The Company also agreed to add the accrued interest on the note at February 4, 2016 of $5,940 to the principle of the note. In consideration of the amendment, the Company agreed to issue an aggregate 150,000 shares of restricted common stock of the Company to the lenders and the Board of Directors approved the issuance on April 22, 2016. One of the lenders is affiliated with the Company and provided $30,000 of the original $63,000 loaned funds and has agreed to extend the note to February 4, 2017 at the same rate of interest and the issuance of 200,000 shares of our restricted common stock. Our obligations under both notes are personally guaranteed by the Company’s director and Chief Executive Officer at the time of the original notes.
 
As of December 31, 2016, the aggregate outstanding balance under these notes was $68,940, accrued interest was $13,828 and the unamortized discount on the notes payable was $507. During the three months ended December 31, 2016 and 2015, amortization expense of $1,262 and $6,253, respectively was recognized.
 
Financing of Insurance Premiums
 
On August 15, 2016, we entered into an agreement to finance a portion of our liability insurance premiums in the amount of $28,384 at an interest rate of 7.25% with equal payments of $2,934, including interest, due monthly beginning July 14, 2016 and continuing through April 14, 2017. As of December 31, 2016, the outstanding balance under this note payable was $11,559.

On November 14, 2016, we entered into an agreement to finance director and officer insurance premiums in the amount of $25,224 at an interest rate of 5.00% with equal payments of $2,581, including interest, due monthly beginning December 21, 2016 and continuing through September 21, 2017. As of December 31, 2016, the outstanding balance under this note payable was $22,748.

The components of the notes payable, including the note payable to related party, at December 31, 2016 are as follows: 
 
 
 
Principal
   
Unamortized
       
 
 
Amount
   
Discount
   
Net
 
 
                 
Notes payable
 
$
723,247
   
$
(507
)
 
$
722,740
 
Notes payable – related party
   
30,000
     
     
30,000
 
 
 
$
753,247
   
$
(507
)
 
$
752,740
 
 
The components of the notes payable at September 30, 2016 are as follows:
 
 
 
Principal
   
Unamortized
       
 
 
Amount
   
Discount
   
Net
 
 
                 
Notes payable
 
$
858,988
   
$
(1,769
)
 
$
857,219
 
Notes payable – related party
   
30,000
     
     
30,000
 
 
 
$
888,988
   
$
(1,769
)
 
$
887,219
XML 22 R11.htm IDEA: XBRL DOCUMENT v3.8.0.1
FAIR VALUE MEASUREMENTS
3 Months Ended
Dec. 31, 2016
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS
NOTE 6 – 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.
 
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, 2016 and 2015:
 
December 31, 2016:
 
Level 1
   
Level 2
   
Level 3
   
Total
 
 
                       
Assets
                       
Exploration property
 
$
   
$
   
$
1,864,608
   
$
1,864,608
 
Liabilities
                               
None
 
$
   
$
   
$
   
$
 
 
September 30, 2016:
 
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 the Company’s investment in the exploration property under U.S. GAAP. There was no change in the carrying valuation of the exploration property during the three months ended December 31, 2016.
XML 23 R12.htm IDEA: XBRL DOCUMENT v3.8.0.1
COMMITMENTS AND CONTINGENCIES
3 Months Ended
Dec. 31, 2016
COMMITMENTS AND CONTINGENCIES  
COMMITMENTS AND CONTINGENCIES
NOTE 7 – COMMITMENTS AND CONTINGENCIES
 
Related Party
 
In January 2012, the Company retained the consulting services of Management Resource Initiatives, Inc. (“MRI”), a company controlled by John F. Stapleton who served as the Chief Financial Officer and a director of the Company at that time and who currently serves as President and Chief Executive Officer and a director of the Company. The current monthly consulting fee for such services is $15,000. Total consulting fees expensed to MRI for both the three months ended December 31, 2016 and 2015 was $45,000, respectively. At December 31, 2016, MRI had accrued and unpaid compensation of $315,000 recorded in accrued compensation – related parties.
 
On January 18, 2016, the Board of Directors of the Company appointed Stephan J. Antol as the Company’s Chief Financial Officer, replacing Mr. Stapleton in such capacity. Mr. Stapleton continued to serve as a director of the Company and as Chairman of the Board. Effective August 4, 2016, the Board of Directors of the Company appointed Mr. Stapleton to replace Charles C. Mottley as President and Chief Executive Officer of the Company. The change in senior management was proposed by Mr. Mottley, who continues to serve as a member of the Company’s Board of Directors and as President Emeritus. At December 31, 2016, Mr. Antol had accrued and unpaid compensation of $40,000 recorded in accrued compensation – related parties.
 
On February 4, 2015, the Company signed a $30,000 promissory note payable to MRI, at 18% interest per annum, due and payable on February 4, 2016. As an inducement for the loan represented by the note, the Company issued 200,000 shares of restricted common stock of the Company to MRI. The Company approved amending the note to extend the maturity date from February 4, 2016 to February 4, 2017 under the original terms of the Agreement. See Note 5, February 4, 2015 Unsecured Promissory Notes.  

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 Property 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. Because of current market iron ore prices, the contract has not been implemented or terminated.
 
Agreements with Logistica U.S. Terminals, LLC
 
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 Property 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 material as part of the Company’s exploration activities. As of December 31, 2016, the outstanding balance under this note payable was $400,000 and accrued interest on the note was $51,140. 
 
On January 5, 2016, we entered into our current agreement with Logistica U.S. Terminals, LLC (“Logistica”). Under the agreement we will provide to Logistica concentrated ore to their specifications at the mine site. Logistica will transport, process, and refine the precious metals concentrates to sell to precious metals buyers. The terms of the new agreement provide for the recovery of hard costs related to the concentrates by both parties prior to the distribution of profits. The agreement also provides for the issuance of 10,000,000 shares of our restricted common stock and the elimination of a $100,000 accrued liability to Logistica for prior services rendered. When certain terms and conditions are met, the Agreement calls for Logistica to arrange for a letter of credit for working capital for the mining, processing and sale activities under the Agreement. The shares were issued in August 2016. The new agreement supersedes the previous agreements with Logistica.
XML 24 R13.htm IDEA: XBRL DOCUMENT v3.8.0.1
2015 EQUITY INCENTIVE PLAN
3 Months Ended
Dec. 31, 2016
2015 EQUITY INCENTIVE PLAN  
2015 EQUITY INCENTIVE PLAN
NOTE 8 – 2015 EQUITY INCENTIVE PLAN
 
On October 8, 2015, the Board of Directors of the Company approved the El Capitan Precious Metals, Inc. 2015 Equity Incentive Plan (the “2015 Plan”). The 2015 Plan enables the Board of Directors to grant to employees, directors, and consultants of the Company and its subsidiaries a variety of forms of equity-based compensation, including grants of options to purchase shares of common stock, shares of restricted common stock, restricted stock units, stock appreciation rights, other stock-based awards and performance-based awards. At the time it was adopted, the maximum number of shares of common stock of the Company that could be issued or awarded under the 2015 Plan was 15,000,000 shares. On October 14, 2015, the Company filed Form S-8 Registration Statement No. 333-207399 with the SEC registering the 15,000,000 shares of common stock authorized for issuance pursuant to the 2015 Plan. On December 15, 2015, the Board of Directors of the Company adopted Amendment No. 1 to the 2015 Plan, pursuant to which the number of shares of common stock issuable under the 2015 Plan was increased from 15,000,000 to 23,000,000. On January 14, 2016, the Company filed Form S-8 Registration Statement No. 333-208991 with the SEC registering the additional 8,000,000 shares of common stock authorized for issuance pursuant to the 2015 Plan. Effective April 22, 2016, the Board of Directors of the Company adopted Amendment No. 2 to the 2015 Plan pursuant to which the number of shares of the common stock issuable under the 2015 Plan was increased from 23,000,000 to 28,000,000. On April 27, 2016, the Company filed Form S-8 Registration Statement No. 333-210942 with the SEC registering the additional 5,000,000 shares of common stock authorized for issuance pursuant to the 2015 Plan. Effective August 4, 2016, the Board of Directors of the Company adopted Amendment No. 3 to the 2015 Plan pursuant to which the number of shares of the common stock issuable under the 2015 Plan was increased from 28,000,000 to 50,000,000. On August 8, 2016, the Company filed Form S-8 Registration Statement No. 333- 212972 with the SEC registering the additional 22,000,000 shares of common stock authorized for issuance pursuant to the 2015 Plan. Effective October 31, 2016, the Board of Directors of the Company adopted Amendment No. 4 to the Company’s 2015 Plan pursuant to which the number of shares of the common stock issuable under the 2015 Plan was increased from 50,000,000 to 75,000,000. On November 4, 2016, the Company filed Form S-8 Registration Statement No. 333- 214442 with the SEC registering the additional 25,000,000 shares of common stock authorized for issuance pursuant to the 2015 Plan.
XML 25 R14.htm IDEA: XBRL DOCUMENT v3.8.0.1
STOCKHOLDERS' EQUITY
3 Months Ended
Dec. 31, 2016
STOCKHOLDERS' EQUITY  
STOCKHOLDERS' EQUITY
NOTE 9 – STOCKHOLDERS’ EQUITY
 
Restatement Effect on Net Loss for the Three Months Ended December 31, 2016

The restatement of advances to a vendor to operating costs in the three months ended December 31, 2016,  resulted in a decrease in net equity of $335,616.

Authorized Common Shares
 
At the Company’s annual meeting of stockholders held September 28, 2016, 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 400,000,000 to 500,000,000 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 4, 2016 and was effective as of such date. 

Preferred Stock Issuances
 
During the three months ended December 31, 2016, the Company did not issue any shares of preferred stock.
 
Common Stock Issuances
 
During the three months ended December 31, 2016, the Company:
 
 
(i)
Issued 1,768,293 shares of restricted common stock and 1,768,293 shares of S-8 common stock for accrued compensation payable to an officer valued at $199,110 on the date of issuances and recorded a loss on debt extinguishment of $54,110;
 
 
(ii)
Issued 2,000,000 shares of S-8 common stock for accrued legal services at a market value of $150,000 and recorded a loss on debt extinguishment of $68,000;
 
(iii)
Issued 5,000,000 shares of S-8 common stock to our contract miners at a market value of $327,000, including payment of $79,085 for accrued mining cost and services, payment of $3,784 for inventory, payment of $8,515 for lab equipment and  payment of $235,616 for pilot plant operating costs;
 
 
(iv)
Issued 7,182,868 shares of common stock under the 2016 Purchase Agreement with River North for aggregate cash proceeds of $324,723.

Options
 
During the three months ended December 31 2016 the Company did not grant any options. 
 
Warrants
 
During three months ended December 31, 2016, the Company did not issue any warrants.

The Company utilizes the Black-Scholes option pricing model to estimate the fair value of its warrant and option awards. No estimates were required during the current quarter.

Stock option activity, both within and outside the 2015 Plan, and warrant activity for the three months ended December 31, 2016, are as follows:
 
 
 
Stock Options
   
Stock Warrants
 
 
       
Weighted
         
Weighted
 
 
       
Average
         
Exercise
 
 
 
Shares
   
Price
   
Shares
   
Price
 
 
                       
Outstanding at September 30, 2016
   
11,137,500
   
$
0.265
     
5,332,773
   
$
0.071
 
Granted
   
             
         
Canceled
   
             
         
Expired
   
             
         
Exercised
   
             
         
 
                               
Outstanding at December 31, 2016
   
11,137,500
     
0.265
     
5,332,773
     
0.071
 
 
                               
Exercisable at December 31, 2016
   
11,137,500
     
0.265
     
5,332,773
     
0.071
 
 
The range of exercise prices and remaining weighted average life of the options outstanding at December 31, 2016 were $0.042 to $1.02 and 4.62 years, respectively. The aggregate intrinsic value of the outstanding options at December 31, 2016 was $4,550.
 
The range of exercise prices and remaining weighted average life of the warrants outstanding at December 31, 2016 were $0.051 to $0.17 and 1.65 years, respectively. The aggregate intrinsic value of the outstanding warrants at December 31, 2016 was $1,933.
 
The Company maintains its 2015 Equity Incentive Plan, as amended (the “2015 Plan”), pursuant to which the Company has reserved and registered 75,000,000 shares for stock and option grants. As of December 31, 2016, there were 22,768,268 shares available for grant under the 2015 Plan, excluding the 11,137,500 options outstanding.
XML 26 R15.htm IDEA: XBRL DOCUMENT v3.8.0.1
SUBSEQUENT EVENTS
3 Months Ended
Dec. 31, 2016
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS
NOTE 10 – SUBSEQUENT EVENTS
 
Subsequent Issuances of Common Stock
 
Subsequent to December 31, 2016, the Company issued 501,803 shares of common stock under the 2016 Purchase Agreement with River North for aggregate cash proceeds of $19,351.

Board Approval of Stock Issuances Subsequent to December 31, 2016

On January 16, 2017, the Board authorized the issuance of up to 3,000,000 S-8 common shares to our contract miner to meet current obligations for services currently being provided to the Company.  As of the date of filing this 10-Q, no shares have been advanced under this authorization.

The Board on this date also authorized a grant of 500,000, two year, fully vested warrants at the closing market price of the Board meeting, for consideration of a note extension.
XML 27 R16.htm IDEA: XBRL DOCUMENT v3.8.0.1
BASIS OF PRESENTATION (Policies)
3 Months Ended
Dec. 31, 2016
ACCOUNTING POLICIES (POLICIES):  
Business, Operations and Organization
Business, Operations and Organization
 
The accompanying unaudited interim financial statements of El Capitan Precious Metals, Inc. (“El Capitan” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, the financial statements do not include all information and footnotes required by generally accepted accounting principles in the United States (“GAAP”) for complete annual financial statements. In the opinion of management, the accompanying unaudited interim financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation. Interim operating results are not necessarily indicative of results that may be expected for the fiscal year ending September 30, 2017, or for any subsequent period. These interim financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the fiscal year ended September 30, 2016, included in the Company’s Annual Report on Form 10-K, filed with the SEC on January 13, 2017 (the “2016 Form 10-K”). The consolidated balance sheet at September 30, 2016, has been derived from the audited financial statements included in the 2016 Form 10-K.
 
Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for fiscal 2016 as reported in the 2016 Form 10-K have been omitted.
 
On July 26, 2002, El Capitan Precious Metals, Inc. was incorporated as a Delaware corporation to engage in the business of acquiring properties containing precious metals, principally gold, silver, and platinum (“El Capitan Delaware”). On March 18, 2003, El Capitan 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 are presented on a consolidated basis.

El Capitan Precious Metals, Inc., a Nevada corporation, is based in Prescott, Arizona. Together with its consolidated subsidiaries (collectively referred to as the “Company,” “our” or “we”), the Company is an exploration stage company as defined by the Securities 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”). Our ultimate objective is to market and sell the El Capitan Property to a major mining company or enter into a joint venture arrangement with a major mining company to conduct mining operations. We have completed 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 commenced planned mineral exploration activity in the quarter ended December 2015 under our modified mining permit. However, 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 property are expensed as incurred. 

The Company owns 100% of the outstanding common stock of El Capitan Delaware. Prior to January 19, 2011, El Capitan Delaware owned a 40% interest in El Capitan, Ltd., an Arizona corporation (“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 subsidiary of the Company and our consolidated Company acquired 100% of ECL. As a result, we now own 100% of the El Capitan Property site (described below). 
Restatement Effect on Financial Statements
Restatement Effect on Financial Statements

The following table illustrates the impact of the restatement of advances to vendor to the restated unaudited consolidated balance sheet, the unaudited statement of operations and unaudited statement of cash flows for the period ended December 31, 2016.

The Company has subsequently determined to expense all costs for the Pilot Plant as incurred and applying the SEC Industry Guide 7 to the Pilot Plant activity.

 
 
As Previously
Reported
   
Adjustment
   
Restated
 
Consolidated Balance Sheet at  December 31, 2016:
                 
 
                 
Advances to vendor
 
$
335,616
   
$
(335,616
)
 
$
 
Total Current Assets
 
$
822,497
   
$
(335,616
)
 
$
486,881
 
Total Assets
 
$
3,350,454
   
$
(335,616
)
 
$
3,014,838
 
 
                       
Accumulated deficit
 
$
(212,474,619
)
 
$
(335,616
)
 
$
(212,810.235
)
 
                       
Stockholders’ Equity
 
$
1,757,908
   
$
(335,616
)
 
$
1,422,292
 
Total Liabilities and Stockholders’ Equity
 
$
3,350,454
   
$
(335,616
)
 
$
3,014,838
 
 
                       
Consolidated Statements of Operations for three months
ended December 31, 2016:
                       
 
                       
Mine and exploration costs
 
$
189,650
   
$
335,616
   
$
525,266
 
Total Operating Expenses
 
$
311,174
   
$
335,616
   
$
646,790
 
Net Loss
 
$
(448,011
)
 
$
(335,616
)
 
$
(783,627
)
 
                       
Consolidated Statement of Cash Flows for three months
ended December 31, 2016:
                       
 
                       
Net loss
 
$
(448,011
)
 
$
(335,616
)
 
$
(783,627
)
Stock issued for mining costs
 
$
   
$
235,616
   
$
235,616
 
Prepaid expenses and other current assets
 
$
(31,375
)
 
$
25,224
   
$
(6,151
)
Net Cash Used in Operating Activities
 
$
(321,539
)
 
$
(74,776
)
 
$
(396,315
)
 
                       
Advance to vendor for pilot plant equipment purchases
 
$
(100,000
)
 
$
100,000
   
$
 
Net Cash Used in Investing Activities
 
$
(100,002
)
 
$
100,000
   
$
(2
)
Increase in finance contracts
 
$
25,224
   
$
(25,224
)
 
$
 
Net Cash Provided by Financing Activities
 
$
188,982
   
$
(25,224
)
 
$
163,758
 
Principals of Consolidation
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.
Reclassification
Reclassifications
 
Certain prior year amounts have been reclassified to conform to the current year presentation.
Basis of Presentation and Going Concern
Basis of Presentation and Going Concern
 
The Company's consolidated financial statements are prepared using the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America ("GAAP"), and have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The Company currently has a minimum source of revenue to cover its costs. The Company has incurred a loss for the year ended September 30, 2016 and for the three months ended December 31, 2016 and the Company has a working capital deficit as of December 31, 2016. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
 
To continue as a going concern, the Company is dependent on achievement of cash flow and future profits from entering the production stage of operations. The Company does not have adequate liquidity to fund its current operations, meet its obligations and continue as a going concern. The Company has an “equity line” financing arrangement under a Purchase Agreement with River North Equity, LLC, as amended.  In the past the Company has secured working capital loans to assist in financing its activities for the near term. The Company may also pursue other financing alternatives from time to time, including short-term operational strategic financing or equity financing, to fund its activities until it can achieve cash flow and profits from its operations. The Company’s consolidated financial statements do not include any adjustment relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.
Fair Value of Financial Instruments
Fair Value of Financial Instruments
 
The fair values of the Company’s financial instruments, which 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.
Management Estimates and Assumptions
Management Estimates and Assumptions
 
The preparation of the Company’s unaudited 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.
Cash and Cash Equivalents
Cash and Cash Equivalents
 
The Company considers those short-term, highly liquid investments with maturities of three months or less as cash and cash equivalents. At times, cash in banks may be in excess of the FDIC limits. The Company has no cash equivalents.
Inventory
Inventory
 
Inventories include mineralized material stockpile, concentrate, iron ore inventories and road base, as described below. Inventories are carried at the lower of average cost or net realizable value, in the case of mineralized material stockpile and concentrate inventories and minimal cost is attributable to the iron ore inventories. The net realizable value of mineralized material stockpile inventories represents the estimated future sales price of the product based on current and long-term metals prices, less the estimated costs to complete production and bring the product to sale. Concentrate inventories are carried at the lower of full cost of production or net realizable value based on current metals prices. Write-downs of inventory will be reported as a component of production costs applicable to sales.
 
Mineralized Material Stockpile Inventories

Mineralized material stockpile inventories represent mineralized materials that have been mined and are available for further processing. Costs are allocated to mineralized material stockpile inventories based on relative values of material stockpiled and processed using current mining costs incurred up to the point of stockpiling the mineralized material.
 
Concentrates
 
Concentrates inventory include metal concentrates located either at the Company’s El Capitan Property mine site or in transit to a customer’s port. Inventories consist of mineralized material that contains gold and silver mineralization.
 
Iron Ore
 
Iron ore material is inventoried until the market prices are reestablished at a higher market demand and are valued at approximately $20 a ton. Any proceeds from the sale of iron ore will offset the cost of mining the mineralized ore.
Property and Equipment
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.
Restricted Cash
Restricted Cash
 
Restricted cash consists of two certificates of deposits in favor of the New Mexico Minerals and Mining Division for a total of $74,506. The amount is posted as a financial assurance for required reclamation work to be completed on mined acreage.
Exploration Property Costs
Exploration Property Costs
 
Exploration property costs are expensed as incurred until such time as economic reserves are quantified. To date the Company has not established any proven or probable reserves on the El Capitan Property. The Company has capitalized $1,864,608 of exploration property acquisition costs reflecting its investment in the El Capitan Property.
Derivative Financial Instruments
Derivative Financial Instruments
 
The Company does not use derivative instruments to hedge exposures to cash flow or, market risks. The Company reviews the terms of convertible debt, equity instruments and other financing arrangements to determine whether there are embedded derivative instruments, including embedded conversion options that are required to be bifurcated and accounted for separately as a derivative financial instrument. Also, in connection with the issuance of financing instruments, the Company may issue freestanding options or warrants that may, depending on their terms, be accounted for as derivative instrument liabilities, rather than as equity. The Company may also issue options or warrants to non-employees in connection with consulting or other services.
 
Derivative financial instruments are initially measured at their fair value. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. For warrant-based derivative financial instruments, the Company uses the Black-Scholes Option Pricing Model to value the derivative instruments. To the extent that the initial fair values of the freestanding and/or bifurcated derivative instrument liabilities exceed the total proceeds received, an immediate charge to income is recognized, in order to initially record the derivative instrument liabilities at their fair value.
 
The discount from the face value of the convertible debt or equity instruments resulting from allocating some or all of the proceeds to the derivative instruments, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to income, using the effective interest method.
 
The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. If reclassification is required, the fair value of the derivative instrument, as of the determination date, is reclassified. Any previous charges or credits to income for changes in the fair value of the derivative instrument are not reversed. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within twelve months of the balance sheet date.
Stock-Based Compensation
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 the Company’s quarterly period that began on October 1, 2006, the Company 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.
 
The Company 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.
 
The Company recognized stock-based administrative compensation aggregating $0 and $22,367 for common stock options and common stock issued to administrative personnel, directors and consultants during the three months ended December 31, 2016 and 2015, respectively.
 
Also during the three months ended December 31, 2016 and 2015, the Company paid stock-based compensation consisting of common stock issued to non-employees and mining costs aggregating $235,616 and $102,207, respectively.
Revenue Recognition
Revenue Recognition
 
When revenue is generated from operations, it will be recognized in accordance with FASB ASC 605. In general, the Company 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 nominal revenue generated for the Company’s quarter ended December 31, 2015 and none for the quarter ended December 31, 2016.
Pilot Plant Costs
Pilot Plant Costs
 
The Company paid to the operator of the Pilot Plant currently being prepared for the equipment in transit operating costs for site improvements and sundry equipment. Based on current information, the equipment is estimated to arrive in the third week of February 2017 and anticipated to be operational in the fourth week of the month.
 
The Company has subsequently determined to expense all costs for the Pilot Plant as incurred and applying the SEC Industry Guide 7 to the Pilot Plant activity. Any proceeds from the sale of precious metals derived from concentrates generated by the Pilot Plant will be divided on a future determined percentage split between the Company and the Pilot Plant operator. The Pilot Plant operator owns the equipment per the terms in the Agreement.
Recently Issued Accounting Pronouncements
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 January 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)  2016-01, “Financial Instruments - Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10).” The amendments require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under the equity method of accounting or those that result in consolidation of the investee). The amendments also require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. In addition, the amendments eliminate the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities and the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet for public business entities. This guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company does not expect to early adopt this guidance and does not believe that the adoption of this guidance will have a material impact on its consolidated financial statements.
 
In March 2016, the FASB issued ASU No. 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting." ASU 2016-09 amends several aspects of the accounting for share-based payment transactions including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted any interim or annual period. If early adopted, an entity must adopt all of the amendments in the same period. The Company is currently evaluating the potential impact of the adoption of ASU 2016-09 on the Company's consolidated financial statements.
 
In August, 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force). Effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period.
 
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.
XML 28 R17.htm IDEA: XBRL DOCUMENT v3.8.0.1
BASIS OF PRESENTATION (Tables)
3 Months Ended
Dec. 31, 2016
Basis Of Presentation Tables  
Schedule of impact of the reclassification of advances to vendor

The following table illustrates the impact of the restatement of advances to vendor to the restated unaudited consolidated balance sheet, the unaudited statement of operations and unaudited statement of cash flows for the period ended December 31, 2016.

 

The Company has subsequently determined to expense all costs for the Pilot Plant as incurred and applying the SEC Industry Guide 7 to the Pilot Plant activity.

 

    As Previously
Reported
    Adjustment     Restated  
Consolidated Balance Sheet at  December 31, 2016:                  
                   
Advances to vendor   $ 335,616     $ (335,616 )   $  
Total Current Assets   $ 822,497     $ (335,616 )   $ 486,881  
Total Assets   $ 3,350,454     $ (335,616 )   $ 3,014,838  
                         
Accumulated deficit   $ (212,474,619 )   $ (335,616 )   $ (212,810.235 )
                         
Stockholders’ Equity   $ 1,757,908     $ (335,616 )   $ 1,422,292  
Total Liabilities and Stockholders’ Equity   $ 3,350,454     $ (335,616 )   $ 3,014,838  
                         
Consolidated Statements of Operations for three months
ended December 31, 2016:
                       
                         
Mine and exploration costs   $ 189,650     $ 335,616     $ 525,266  
Total Operating Expenses   $ 311,174     $ 335,616     $ 646,790  
Net Loss   $ (448,011 )   $ (335,616 )   $ (783,627 )
                         
Consolidated Statement of Cash Flows for three months
ended December 31, 2016:
                       
                         
Net loss   $ (448,011 )   $ (335,616 )   $ (783,627 )
Stock issued for mining costs   $     $ 235,616     $ 235,616  
Prepaid expenses and other current assets   $ (31,375 )   $ 25,224     $ (6,151 )
Net Cash Used in Operating Activities   $ (321,539 )   $ (74,776 )   $ (396,315 )
                         
Advance to vendor for pilot plant equipment purchases   $ (100,000 )   $ 100,000     $  
Net Cash Used in Investing Activities   $ (100,002 )   $ 100,000     $ (2 )
Increase in finance contracts   $ 25,224     $ (25,224 )   $  
Net Cash Provided by Financing Activities   $ 188,982     $ (25,224 )   $ 163,758
XML 29 R18.htm IDEA: XBRL DOCUMENT v3.8.0.1
INVENTORY (Tables)
3 Months Ended
Dec. 31, 2016
Inventory (TABLES):  
Schedule of Inventory
The following table provides the components of inventory as of December 31, 2016 and September 30, 2016:

 
 
December 31,
   
September 30,
 
 
 
2016
   
2016
 
 
           
Mineralized material stockpile
 
$
84,153
   
$
87,840
 
Concentrate
   
154,411
     
146,738
 
Iron ore
   
17,686
     
17,888
 
     Total
 
$
256,250
   
$
252,466
XML 30 R19.htm IDEA: XBRL DOCUMENT v3.8.0.1
ACCRUED LIABILITIES (Tables)
3 Months Ended
Dec. 31, 2016
Accrued liabilities (TABLE):  
Schedule of Accrued Liabilities
Accrued liabilities consisted of the following as of December 31, 2016 and September 30, 2016:
 
 
 
December 31,
   
September 30,
 
 
 
2016
   
2016
 
 
           
Mining costs
 
$
   
$
60,613
 
Accounting and legal
   
223,865
     
285,025
 
Interest
   
68,639
     
61,694
 
 
 
$
292,504
   
$
407,332
 
XML 31 R20.htm IDEA: XBRL DOCUMENT v3.8.0.1
NOTES PAYABLE (Tables)
3 Months Ended
Dec. 31, 2016
Loan Installments  
Schedule of Loan Installments
The components of the notes payable, including the note payable to related party, at December 31, 2016 are as follows: 
 
 
 
Principal
   
Unamortized
       
 
 
Amount
   
Discount
   
Net
 
 
                 
Notes payable
 
$
723,247
   
$
(507
)
 
$
722,740
 
Notes payable – related party
   
30,000
     
     
30,000
 
 
 
$
753,247
   
$
(507
)
 
$
752,740
 
Schedule of the Components of the Notes Payable
The components of the notes payable at September 30, 2016 are as follows:
 
 
 
Principal
   
Unamortized
       
 
 
Amount
   
Discount
   
Net
 
 
                 
Notes payable
 
$
858,988
   
$
(1,769
)
 
$
857,219
 
Notes payable – related party
   
30,000
     
     
30,000
 
 
 
$
888,988
   
$
(1,769
)
 
$
887,219
 
XML 32 R21.htm IDEA: XBRL DOCUMENT v3.8.0.1
FAIR VALUE MEASUREMENTS (Tables)
3 Months Ended
Dec. 31, 2016
Fair Value Disclosures [Abstract]  
Fair Value Hierarchy of Assets and Liabilities
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, 2016 and 2015:
 
December 31, 2016:
 
Level 1
   
Level 2
   
Level 3
   
Total
 
 
                       
Assets
                       
Exploration property
 
$
   
$
   
$
1,864,608
   
$
1,864,608
 
Liabilities
                               
None
 
$
   
$
   
$
   
$
 
 
September 30, 2016:
 
Level 1
   
Level 2
   
Level 3
   
Total
 
 
                       
Assets
                       
Exploration property
 
$
   
$
   
$
1,864,608
   
$
1,864,608
 
Liabilities
                               
None
 
$
   
$
   
$
   
$
XML 33 R22.htm IDEA: XBRL DOCUMENT v3.8.0.1
STOCKHOLDERS' EQUITY (Tables)
3 Months Ended
Dec. 31, 2016
Black-Scholes option pricing model to estimate the fair value of its option awards(TABLE):  
Summary of Options Activity
Stock option activity, both within and outside the 2015 Plan, and warrant activity for the three months ended December 31, 2016, are as follows:
 
 
 
Stock Options
   
Stock Warrants
 
 
       
Weighted
         
Weighted
 
 
       
Average
         
Exercise
 
 
 
Shares
   
Price
   
Shares
   
Price
 
 
                       
Outstanding at September 30, 2016
   
11,137,500
   
$
0.265
     
5,332,773
   
$
0.071
 
Granted
   
             
         
Canceled
   
             
         
Expired
   
             
         
Exercised
   
             
         
 
                               
Outstanding at December 31, 2016
   
11,137,500
     
0.265
     
5,332,773
     
0.071
 
 
                               
Exercisable at December 31, 2016
   
11,137,500
     
0.265
     
5,332,773
     
0.071
 
XML 34 R23.htm IDEA: XBRL DOCUMENT v3.8.0.1
BASIS OF PRESENTATION (Details) - USD ($)
3 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Sep. 30, 2016
Consolidated Balance Sheet      
Advances to vendor    
Total Current Assets 486,881   $ 684,281
Total Assets 3,014,838   3,223,716
Accumulated deficit (212,810,235)   (212,026,608)
Stockholders' Equity 1,422,292   1,205,086
Total Liabilities and Stockholders' Equity 3,014,838   $ 3,223,716
Consolidated Statements of Operations      
Mine and exploration costs 525,266 $ 102,513  
Total Operating Expenses 646,790 370,558  
Net Loss (783,627) (554,798)  
Consolidated Statement of Cash Flows      
Net loss (783,627) (554,798)  
Stock issued for mining costs 235,616    
Prepaid expenses and other current assets 6,151 $ (2,757)  
Net Cash Used in Operating Activities (396,315)    
Advance to vendor for pilot plant equipment purchases    
Net Cash Used in Investing Activities (2)    
Increase in finance contracts    
Net Cash Provided by Financing Activities 163,758    
As Previously Reported [Member]      
Consolidated Balance Sheet      
Advances to vendor 335,616    
Total Current Assets 822,497    
Total Assets 3,350,454    
Accumulated deficit (212,474,619)    
Stockholders' Equity 1,757,908    
Total Liabilities and Stockholders' Equity 3,350,454    
Consolidated Statements of Operations      
Mine and exploration costs 189,650    
Total Operating Expenses 311,174    
Net Loss (448,011)    
Consolidated Statement of Cash Flows      
Net loss (448,011)    
Stock issued for mining costs    
Prepaid expenses and other current assets (31,375)    
Net Cash Used in Operating Activities (321,539)    
Advance to vendor for pilot plant equipment purchases (100,000)    
Net Cash Used in Investing Activities (100,002)    
Increase in finance contracts 25,224    
Net Cash Provided by Financing Activities 188,982    
Adjustment [Member]      
Consolidated Balance Sheet      
Advances to vendor (335,616)    
Total Current Assets (335,616)    
Total Assets (335,616)    
Accumulated deficit (335,616)    
Stockholders' Equity (335,616)    
Total Liabilities and Stockholders' Equity (335,616)    
Consolidated Statements of Operations      
Mine and exploration costs 335,616    
Total Operating Expenses 335,616    
Net Loss (335,616)    
Consolidated Statement of Cash Flows      
Net loss (335,616)    
Stock issued for mining costs 235,616    
Prepaid expenses and other current assets 25,224    
Net Cash Used in Operating Activities (74,776)    
Advance to vendor for pilot plant equipment purchases 100,000    
Net Cash Used in Investing Activities 100,000    
Increase in finance contracts (25,224)    
Net Cash Provided by Financing Activities $ (25,224)    
XML 35 R24.htm IDEA: XBRL DOCUMENT v3.8.0.1
BASIS OF PRESENTATION (Details Narrative) - USD ($)
3 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Jan. 19, 2011
Business, Basis of Presentation and Significant Accounting Policies      
Percent of outstanding common stock of El Capitan Delaware owned by the Company (in percent) 100.00%    
Prior to Jan. 19, 2011, percent of outstanding common stock of El Capitan, Ltd. owned by El Capitan Delaware (in percent)     40.00%
Percent of outstanding common stock of El Capitan Ltd. acquired by the Company pursuant to the G&M merger (in percent)     60.00%
Pursuant to merger, each share of G&M common and preferred stock outstanding was exchanged for approximately the number of shares of common stock of the Company (in dollars per share)     $ 1.414156
Aggregate number of shares of the Company's common stock issued to former G&M stockholders (in shares)     148,127,043
Exploration property acquisition costs $ 1,864,608    
Restricted cash consists of two certificates of deposits in favor of New Mexico Minerals and Mining Division 74,506    
Recognized stock-based administrative compensation aggregating 0 $ 22,367  
Stock-based compensation paid to non -employee consultants aggregating 235,616 102,207  
Net loss $ (783,627) $ (554,798)  
XML 36 R25.htm IDEA: XBRL DOCUMENT v3.8.0.1
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended
Feb. 04, 2016
Feb. 04, 2015
Jan. 31, 2012
Dec. 31, 2016
Dec. 31, 2015
Sep. 30, 2016
May 01, 2009
Aggregate monthly payments under the informal arrangements with officers for support services             $ 6,667
Gain on debt conversion       $ (122,110) $ (84,270)    
Consulting fees       65,000 65,000    
Accrued compensation - related parties       355,000   $ 500,000  
Proceeds from notes payable         $ 92,000    
Management Resources Initiatives Inc. [Member]              
Consulting fees     $ 15,000        
Accrued compensation - related parties       315,000      
Officer [Member]              
Accrued compensation - related parties       40,000      
Restricted Stock [Member] | Officer [Member]              
Stock issued for officer's compensation       $ 145,000      
Stock issued for officer's compensation (in shares)       1,768,293      
Fair value of stock issued       $ 199,110      
Gain on debt conversion       $ 54,110      
Unsecured Promissory Notes [Member]              
Proceeds from notes payable $ 30,000 $ 63,000          
Interest rate on note (in percent) 10.00% 18.00%          
Maturity date Feb. 04, 2017 Feb. 04, 2016          
Shares issued in debt conversion (in shares)   400,000          
Unsecured Promissory Notes [Member] | MRI [Member]              
Proceeds from notes payable   $ 30,000          
Interest rate on note (in percent)   10.00%          
Maturity date   Feb. 04, 2016          
Unsecured Promissory Notes [Member] | Restricted Stock [Member]              
Shares issued in debt conversion (in shares) 150,000 200,000          
Unsecured Promissory Notes [Member] | Restricted Stock [Member] | MRI [Member]              
Shares issued in debt conversion (in shares)   200,000          
XML 37 R26.htm IDEA: XBRL DOCUMENT v3.8.0.1
INVENTORY (Details) - USD ($)
Dec. 31, 2016
Sep. 30, 2016
Components of inventory    
Mineralized material stockpile $ 84,153 $ 87,840
Concentrate 154,411 146,738
Iron ore 17,686 17,888
Total $ 256,250 $ 252,466
XML 38 R27.htm IDEA: XBRL DOCUMENT v3.8.0.1
ACCRUED LIABILITIES (Details) - USD ($)
Dec. 31, 2016
Sep. 30, 2016
Accrued liabilities details    
Mining costs $ 60,613
Accounting and legal 223,865 285,025
Interest 68,639 61,694
Accrued liabilities total $ 292,504 $ 407,332
XML 39 R28.htm IDEA: XBRL DOCUMENT v3.8.0.1
NOTES PAYABLE (Details) - USD ($)
Dec. 31, 2016
Sep. 30, 2016
Notes payable    
Principal Amount $ 723,247 $ 858,988
Unamortized Discount (507) (1,769)
Net 722,740 857,219
Notes payable - related party    
Principal Amount 30,000 30,000
Unamortized Discount 0 0
Net 30,000 30,000
Notes payable, including the note payable to related party    
Principal Amount 753,247 888,988
Unamortized Discount (507) (1,769)
Net $ 752,740 $ 887,219
XML 40 R29.htm IDEA: XBRL DOCUMENT v3.8.0.1
NOTES PAYABLE (Details Narrative) - USD ($)
1 Months Ended
Feb. 28, 2014
Dec. 31, 2016
Sep. 30, 2016
Jan. 05, 2016
Payments for purchase of mining equipment $ 100,000      
Accrued interest   $ 68,639 $ 61,694  
Logistica Note [Member]        
Payments for purchase of mining equipment 400,000      
Amount of note payable $ 400,000      
Shares issued in debt conversion (in shares) 2,500,000      
Interest rate on note (in percent) 4.50%      
Outstanding balance of note at end of period   400,000    
Accrued interest   $ 51,140    
Future issuance of restricted shares under the new agreement (in shares)       10,000,000
Elimination of accrued liability to Logistica for prior services rendered       $ 100,000
XML 41 R30.htm IDEA: XBRL DOCUMENT v3.8.0.1
NOTES PAYABLE (Details Narrative 1) - USD ($)
Dec. 31, 2016
Sep. 30, 2016
Jan. 19, 2016
Aug. 24, 2015
Oct. 17, 2014
Fair value of warrants $ 1,933        
Accrued interest 68,639 $ 61,694      
Note and Warrant Purchase Agreement [Member]          
Amount of note payable 250,000       $ 500,000
Interest rate on note (in percent)         8.00%
Warrants issued in connection with notes (in shares)     471,429 4,714,286 882,352
Exercise price of warrants (in dollars per share)     $ 0.051 $ 0.07  
Fair value of warrants     $ 16,775    
Accrued interest 1,205        
Note was reduced by an additional and related accrued interest payments $ 150,000        
XML 42 R31.htm IDEA: XBRL DOCUMENT v3.8.0.1
NOTES PAYABLE (Details Narrative 2) - USD ($)
3 Months Ended
Feb. 04, 2016
Feb. 04, 2015
Dec. 31, 2016
Dec. 31, 2015
Sep. 30, 2016
Proceeds from notes payable       $ 92,000  
Shares issued as incentive (in shares)     7,182,868    
Accrued interest     $ 68,639   $ 61,694
Amortization expense     1,262 80,254  
Notes payable current, unamortized discounts     507   $ 1,769
Unsecured Promissory Notes [Member]          
Proceeds from notes payable $ 30,000 $ 63,000      
Interest rate on note (in percent) 10.00% 18.00%      
Maturity date Feb. 04, 2017 Feb. 04, 2016      
Shares issued in debt conversion (in shares)   400,000      
Amount of debt conversion   $ 21,211      
Accrued interest $ 5,940   13,828    
Amortization expense     1,262 $ 6,253  
Outstanding balance of note at end of period     68,940    
Notes payable current, unamortized discounts     $ 507    
Unsecured Promissory Notes [Member] | MRI [Member]          
Proceeds from notes payable   $ 30,000      
Interest rate on note (in percent)   10.00%      
Maturity date   Feb. 04, 2016      
Unsecured Promissory Notes [Member] | Restricted Stock [Member]          
Shares issued in debt conversion (in shares) 150,000 200,000      
Unsecured Promissory Notes [Member] | Restricted Stock [Member] | MRI [Member]          
Shares issued in debt conversion (in shares)   200,000      
XML 43 R32.htm IDEA: XBRL DOCUMENT v3.8.0.1
NOTES PAYABLE (Details Narrative 3) - USD ($)
1 Months Ended 3 Months Ended
Apr. 16, 2015
Dec. 31, 2016
Dec. 31, 2015
Sep. 30, 2016
Loss on debt extinguishment   $ 122,110 $ 84,270  
Accrued interest   68,639   $ 61,694
Amortization of debt discounts   1,262 80,254  
Installment Loan [Member]        
Installment loan amount $ 200,000      
Maturity date Apr. 17, 2016      
Interest rate on installment loan (in percent) 10.00%      
Loss on debt extinguishment     7,923  
Accrued interest     7,500  
Aggregate value of the note and accrued interest retired     $ 207,500  
Installment Loan [Member] | Restricted Stock [Member]        
Shares issued in debt conversion (in shares) 3,000,000   3,772,728  
Accrued interest   $ 2,466    
Amortization of debt discounts     $ 72,619  
Fair value of stock issued for the retired note obligation     $ 215,423  
XML 44 R33.htm IDEA: XBRL DOCUMENT v3.8.0.1
NOTES PAYABLE (Details Narrative 4) - USD ($)
1 Months Ended 3 Months Ended
Aug. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Loss on debt extinguishment   $ 122,110 $ 84,270
Working Capital Loan [Member]      
Amount of note payable $ 100,000    
Shares returned to treasury (in shares) 2,000,000    
Interest rate on note (in percent) 2.00%    
Payment of gross revenues (in percent) 5.00%    
Shares issued in debt conversion (in shares) 3,500,000    
Amount of debt conversion $ 100,482    
Fair value of stock issued for the retired note obligation 187,250    
Loss on debt extinguishment $ 86,768    
XML 45 R34.htm IDEA: XBRL DOCUMENT v3.8.0.1
NOTES PAYABLE (Details Narrative 5) - Insurance Financing Agreement [Member] - USD ($)
Nov. 14, 2016
Aug. 15, 2015
Dec. 31, 2016
Insurance premiums   $ 28,384  
Interest rate on note (in percent)   7.25%  
Monthly payments   $ 2,934  
Outstanding balance of note at end of period     $ 11,559
Officer [Member]      
Insurance premiums $ 25,224    
Interest rate on note (in percent) 5.00%    
Monthly payments $ 2,581    
Outstanding balance of note at end of period     $ 22,748
XML 46 R35.htm IDEA: XBRL DOCUMENT v3.8.0.1
FAIR VALUE MEASUREMENTS (Details) - Fair Value, Measurements, Recurring [Member] - USD ($)
Dec. 31, 2016
Sep. 30, 2016
Assets    
Exploration property $ 1,864,608 $ 1,864,608
Liabilities    
None 0 0
Fair Value, Inputs, Level 1 [Member]    
Assets    
Exploration property 0 0
Liabilities    
None 0 0
Fair Value, Inputs, Level 2 [Member]    
Assets    
Exploration property 0 0
Liabilities    
None 0 0
Fair Value, Inputs, Level 3 [Member]    
Assets    
Exploration property 1,864,608 1,864,608
Liabilities    
None $ 0 $ 0
XML 47 R36.htm IDEA: XBRL DOCUMENT v3.8.0.1
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended
Feb. 04, 2016
Feb. 04, 2015
Feb. 28, 2014
Aug. 31, 2013
Dec. 31, 2016
Dec. 31, 2015
Sep. 30, 2016
Jan. 05, 2016
Consulting fees         $ 2,991 $ 49,504    
Accrued compensation - related parties         355,000   $ 500,000  
Proceeds from notes payable           92,000    
Payments for purchase of mining equipment     $ 100,000          
Accrued interest         68,639   $ 61,694  
Management Resources Initiatives Inc. [Member]                
Consulting fees       $ 15,000        
Accrued compensation - related parties         315,000      
MRI [Member]                
Consulting fees         45,000 $ 45,000    
Accrued compensation - related parties         135,000      
Mr. Antol [Member]                
Accrued compensation - related parties         40,000      
Unsecured Promissory Notes [Member]                
Proceeds from notes payable $ 30,000 $ 63,000            
Interest rate on note (in percent) 10.00% 18.00%            
Shares issued in debt conversion (in shares)   400,000            
Maturity date Feb. 04, 2017 Feb. 04, 2016            
Outstanding balance of note at end of period         68,940      
Accrued interest $ 5,940       13,828      
MRI [Member] | Unsecured Promissory Notes [Member]                
Proceeds from notes payable   $ 30,000            
Interest rate on note (in percent)   10.00%            
Maturity date   Feb. 04, 2016            
Logistica Note [Member]                
Interest rate on note (in percent)     4.50%          
Shares issued in debt conversion (in shares)     2,500,000          
Payments for purchase of mining equipment     $ 400,000          
Amount of note payable     $ 400,000          
Outstanding balance of note at end of period         400,000      
Accrued interest         $ 51,140      
Future issuance of restricted shares under the new agreement (in shares)               10,000,000
Elimination of accrued liability to Logistica for prior services rendered               $ 100,000
Restricted Stock [Member] | Unsecured Promissory Notes [Member]                
Shares issued in debt conversion (in shares) 150,000 200,000            
Restricted Stock [Member] | MRI [Member] | Unsecured Promissory Notes [Member]                
Shares issued in debt conversion (in shares)   200,000            
XML 48 R37.htm IDEA: XBRL DOCUMENT v3.8.0.1
2015 EQUITY INCENTIVE PLAN (Details Narrative) - shares
Nov. 04, 2016
Oct. 31, 2016
Aug. 08, 2016
Aug. 04, 2016
Apr. 27, 2016
Apr. 22, 2016
Jan. 14, 2016
Dec. 15, 2015
Oct. 14, 2015
Oct. 08, 2015
2015 Stock Incentive Plan                    
Shares reserved for issuance (in shares)                   15,000,000
Number of shares of common stock authorized for issuance pursuant to the 2015 Plan (in shares)                 15,000,000  
Number of shares of common stock issuable under the 2015 Plan (in shares)   50,000,000   28,000,000   23,000,000   15,000,000    
Number of shares of common stock issuable under the 2015 Plan was increased pursuant to Amendment No. 1 to the 2015 Plan (in shares)   75,000,000   50,000,000   28,000,000   23,000,000    
Number of additional shares filed with the SEC under registration statement (in shares) 25,000,000   22,000,000   5,000,000   8,000,000      
XML 49 R38.htm IDEA: XBRL DOCUMENT v3.8.0.1
STOCKHOLDERS' EQUITY (Details)
3 Months Ended
Dec. 31, 2016
$ / shares
shares
Shares  
Outstanding 11,137,500
Granted 0
Canceled 0
Expired 0
Exercised 0
Outstanding 11,137,500
Exercisable 11,137,500
Weighted Average Price  
Outstanding | $ / shares $ 0.265
Outstanding | $ / shares 0.265
Exercisable | $ / shares $ 0.265
Shares  
Outstanding 5,332,773
Granted 0
Canceled 0
Expired 0
Exercised 0
Outstanding 5,332,773
Exercisable 5,332,773
Weighted Average Price  
Outstanding | $ / shares $ 0.071
Outstanding | $ / shares 0.071
Exercisable | $ / shares $ 0.071
XML 50 R39.htm IDEA: XBRL DOCUMENT v3.8.0.1
STOCKHOLDERS' EQUITY (Details Narrative) - USD ($)
3 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Number of shares of Preferred Stock issued during the period 0  
Common Stock Issuances    
Loss on debt extinguishment $ (122,110) $ (84,270)
Common stock issued for inventory $ 235,616  
Common stock issued for purchase agreement, (in shares) 7,182,868  
Common stock issued for purchase agreement $ 324,723  
Amount of decrease in net equity $ 335,616  
Officer [Member]    
Common Stock Issuances    
Restricted stock issued, (in shares) 1,768,293  
Common stock issued for accrued compensation payable, (in shares) 1,768,293  
Common stock issued for accrued compensation payable $ 199,110  
Loss on debt extinguishment $ 54,110  
Contract Miners [Member]    
Common Stock Issuances    
Common stock issued to miners, (in shares) 5,000,000  
Common stock issued to miners $ 327,000  
Common stock issued for services 79,085  
Common stock issued for inventory 3,784  
Common stock issued for lab equipment 8,515  
Common stock issued for prepayment for services 235,616  
Stock Paid For Legal Fees [Member]    
Common Stock Issuances    
Loss on debt extinguishment $ 68,000  
Common stock issued for services, (in shares) 2,000,000  
Common stock issued for services $ 150,000  
XML 51 R40.htm IDEA: XBRL DOCUMENT v3.8.0.1
STOCKHOLDERS' EQUITY (Details Narrative 1) - USD ($)
3 Months Ended
Dec. 31, 2016
Sep. 30, 2016
Oct. 08, 2015
Exercise price range, minimum (in dollars per shares) $ 0.042    
Exercise price range, maximum (in dollars per shares) $ 1.02    
Remaining weighted average life 4 years 7 months 13 days    
Aggregate intrinsic value $ 4,550    
Shares reserved for issuance (in shares)     15,000,000
Options outstanding 11,137,500 11,137,500  
2015 Equity Incentive Plan [Member]      
Shares reserved for issuance (in shares) 75,000,000    
Shares available for grant 22,768,268    
Options outstanding 11,137,500    
XML 52 R41.htm IDEA: XBRL DOCUMENT v3.8.0.1
STOCKHOLDERS' EQUITY (Details Narrative 2)
3 Months Ended
Dec. 31, 2016
USD ($)
$ / shares
Remaining weighted average life of warrants 1 year 7 months 24 days
Aggregate intrinsic value of warrants outstanding | $ $ 1,933
Maximum [Member]  
Exercise price of warrants (in dollars per share) $ 0.17
Minimum [Member]  
Exercise price of warrants (in dollars per share) $ 0.051
XML 53 R42.htm IDEA: XBRL DOCUMENT v3.8.0.1
SUBSEQUENT EVENTS (Details Narrative) - Subsequent Event [Member] - USD ($)
Feb. 10, 2017
Jan. 16, 2017
Aggregate cash proceeds from sale of common stock to River North under 2016 Purchase Agreement $ 19,351  
Shares of common stock issued to River North under 2016 Purchase Agreement (in shares) 501,803  
Shares of common stock authorized for issuance as necessary to contract miner to meet current obligations (in shares)   3,000,000
Warrants authorized (in shares)   500,000
Term of warrant   2 years
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