Attached files
file | filename |
---|---|
EX-32.2 - EL CAPITAN PRECIOUS METALS INC | v174034_ex32-2.htm |
EX-31.1 - EL CAPITAN PRECIOUS METALS INC | v174034_ex31-1.htm |
EX-32.1 - EL CAPITAN PRECIOUS METALS INC | v174034_ex32-1.htm |
EX-31.2 - EL CAPITAN PRECIOUS METALS INC | v174034_ex31-2.htm |
U.
S. SECURITIES AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
10-Q
(Mark
One)
x
|
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
The Quarterly Period Ended December 31, 2009
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to
____________.
|
EL
CAPITAN PRECIOUS METALS, INC.
(Exact
name of small business issuer as specified in its charter)
NEVADA
|
88-0482413
|
(State of other jurisdiction of
|
(I.R.S. Employer
|
incorporation or organization)
|
Identification Number)
|
15225
North 49th
Street
Scottsdale,
AZ 85254
(Address
of Principal Executive Offices)
(303)
472-3298
(Issuer’s
Telephone Number)
(Former
name, former address and former fiscal year, if changed since last
report)
Check
whether the issuer (1) has filed all reports required to be filed by Section 13
or 15 (d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES x
NO o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer ¨
|
Accelerated
filer ¨
|
Non-accelerated filer
¨
(Do not check if a smaller reporting company)
|
Smaller reporting company
x
|
Indicate
by check mark whether the registrant is a shell company (as referred in Rule
12b-2 of the Exchange Act). YES o
NO x
State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of the latest practicable date: 88,754,036 shares of common stock, par value
$0.001, issued and outstanding as of February 10, 2010.
EL
CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
(An
Exploration Stage Company)
Form
10-Q for the Quarter Ended December 31, 2009
Table of
Contents
Page
|
|||
PART
I
|
Financial
Information
|
||
Item
1.
|
Financial
Statements
|
||
Consolidated
Balance Sheets – December 31, 2009 and September 30, 2009
(Unaudited)
|
F-1
|
||
Consolidated
Statements of Expenses – Three months ended December 31, 2009 and 2008 and
for the period from July 26, 2002 (inception) through December 31, 2009
(Unaudited)
|
F-2
|
||
Consolidated
Statements of Stockholders’ Equity (Deficit) - period from July 26, 2002,
(inception) through December 31, 2009 (Unaudited)
|
F-3
|
||
Consolidated
Statements of Cash Flows – Three months ended December 31, 2009 and 2008
and for the period from July 26, 2002 (inception) through December 31,
2009 (Unaudited)
|
F-6
|
||
Notes
to the Consolidated Financial Statements (Unaudited)
|
F-7
|
||
Management’s
Discussion and Analysis or Plan of Operations
|
1
|
||
Controls
and Procedures
|
3
|
||
Other
Information
|
3
|
||
Unregistered
Sales of Equity Securities and Use of Proceeds
|
3
|
||
Item
5.
|
Other
Information
|
3
|
|
Exhibits
|
4
|
||
SIGNATURES
|
4
|
||
5
|
CAUTIONARY
STATEMENT ON FORWARD-LOOKING STATEMENTS
This
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,” “intent,”
“could,” “estimate,” “might,” “plan,” “predict” or “continue” or the negative or
other variations thereof or comparable terminology are intended to identify
forward-looking statements. These statements by their nature involve substantial
risks and uncertainties, certain of which are beyond the registrant’s control,
and actual results may differ materially depending on a variety of important
factors, including uncertainty related to acquisitions, governmental regulation,
managing and maintaining growth, the operations of the company and its
subsidiaries, volatility of stock price, commercial viability of any mineral
deposits and any other factors discussed in this and other registrant filings
with the securities and exchange commission. 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. The following should
be read in conjunction with the information presented in the company’s annual
report on form 10-K for the year ended September 30, 2009.
Item
1 - Financial Statements
EL
CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
(An Exploration Stage
Company)
CONSOLIDATED
BALANCE SHEETS
(Unaudited)
December 31,
2009
|
September 30,
2009
|
|||||||
ASSETS
|
||||||||
CURRENT
ASSETS :
|
||||||||
Cash
|
$
|
736
|
$
|
2,348
|
||||
Prepaid
expenses and other current assets
|
16,521
|
26,189
|
||||||
Total
Current Assets
|
17,257
|
28,537
|
||||||
Furniture
and equipment net of accumulated depreciation of $24,927 and $23,495,
respectively
|
7,245
|
8,677
|
||||||
Investment
in El Capitan, Ltd.
|
788,808
|
788,808
|
||||||
Deposits
|
22,440
|
22,440
|
||||||
Total
Assets
|
$
|
835,750
|
$
|
848,462
|
||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
CURRENT
LIABILITIES:
|
||||||||
Accounts
payable
|
$
|
160,983
|
$
|
144,494
|
||||
Accrued
liabilities
|
362,544
|
357,711
|
||||||
Interest
payable
|
48,111
|
48,111
|
||||||
Due
affiliated company
|
104,165
|
47,061
|
||||||
Short
term debt
|
4,522
|
7,913
|
||||||
Total
Current Liabilities
|
680,325
|
605,290
|
||||||
STOCKHOLDERS’
EQUITY :
|
||||||||
Preferred
stock, $0.001 par value; 5,000,000 shares authorized; none issued and
outstanding
|
—
|
—
|
||||||
Common
stock, $0.001 par value; 300,000,000 shares authorized; 88,654,036 and
88,587,369 issued and outstanding, respectively
|
88,654
|
88,587
|
||||||
Additional
paid-in capital
|
18,123,486
|
18,117,553
|
||||||
Deficit
accumulated during the exploration stage
|
(18,056,715
|
)
|
(17,962,968
|
)
|
||||
Total
Stockholders’ Equity
|
155,425
|
243,172
|
||||||
Total
Liabilities And Stockholders’ Equity
|
$
|
835,750
|
$
|
848,462
|
The
accompanying notes are an integral part of these consolidated financial
statements.
F-1
EL
CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
(An
Exploration Stage Company)
CONSOLIDATED
STATEMENTS OF EXPENSES
(Unaudited)
Three Months Ended
December 31,
|
July 26, 2002
(Inception)
Through
December 31,
|
|||||||||||
2009
|
2008
|
2009
|
||||||||||
OPERATING
EXPENSES:
|
||||||||||||
Professional
fees
|
$
|
1,005
|
$
|
24,127
|
$
|
3,251,750
|
||||||
Officer
compensation expense
|
—
|
135,000
|
2,863,833
|
|||||||||
Administrative
consulting fees
|
34,581
|
—
|
1,164,091
|
|||||||||
Management
fees, related parties
|
—
|
—
|
320,500
|
|||||||||
Legal
and accounting fees
|
17,586
|
41,967
|
1,267,641
|
|||||||||
Exploration
expenses
|
10,890
|
33,019
|
2,305,477
|
|||||||||
Warrant
and option expenses
|
—
|
139,456
|
4,076,578
|
|||||||||
Other
general and administrative
|
29,456
|
31,345
|
1,188,960
|
|||||||||
(Gain)
loss on asset dispositions
|
—
|
—
|
34,733
|
|||||||||
Total
Operating Expenses
|
93,518
|
404,914
|
16,473,563
|
|||||||||
LOSS
FROM OPERATIONS
|
(93,518
|
)
|
(404,914
|
)
|
(16,473,563
|
)
|
||||||
OTHER
INCOME (EXPENSE):
|
||||||||||||
Interest
income
|
—
|
5
|
36,250
|
|||||||||
Forgiveness
of debt
|
—
|
—
|
115,214
|
|||||||||
Interest
expense:
|
||||||||||||
Related
parties
|
—
|
—
|
(68,806
|
)
|
||||||||
Other
|
(229
|
)
|
(585
|
)
|
(308,515
|
)
|
||||||
Expenses
associated with debt issuance and conversion
|
—
|
—
|
(225,207
|
)
|
||||||||
Accretion
of notes payable discounts
|
—
|
—
|
(1,132,088
|
)
|
||||||||
Total
Other Income (Expense)
|
(229
|
)
|
(580
|
)
|
(1,583,152
|
)
|
||||||
NET
LOSS
|
$
|
(93,747
|
)
|
$
|
(405,494
|
)
|
$
|
(18,056,715
|
)
|
|||
Basic
and diluted net loss per common share
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
||||||
Weighted
average number of common shares outstanding
|
88,650,413
|
86,865,526
|
The
accompanying notes are an integral part of these consolidated financial
statements.
F-2
(An
Exploration Stage Company)
CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
July
26, 2002 (Inception) to December 31, 2009
(Unaudited)
Common
Stock Shares
|
Common
Stock
Amount
|
Stock
Subscriptions
|
Additional
Paid
in Capital
|
Deficit
Accumulated
During The
Exploration Stage
|
Total
|
|||||||||||||||||||
Initial Issuance of Common Stock
|
3,315,000
|
$
|
3,315
|
—
|
$
|
(3,306
|
)
|
$
|
—
|
$
|
9
|
|||||||||||||
Net
loss
|
—
|
—
|
—
|
-
|
(21,577
|
)
|
(21,577
|
)
|
||||||||||||||||
3,315,000
|
$
|
3,315
|
$
|
—
|
$
|
(3,306
|
)
|
$
|
(21,577
|
)
|
$
|
(21,568
|
)
|
|||||||||||
Issuance
of common stock to Gold and Minerals Company, Inc. in connection with
purchase of interests in assets of El Capitan, Ltd. In November
2002
|
35,685,000
|
35,685
|
—
|
(35,663
|
)
|
—
|
22
|
|||||||||||||||||
Acquisition
of DML Services on March 17, 2003
|
6,720,000
|
6,720
|
—
|
(56,720
|
)
|
—
|
(50,000
|
)
|
||||||||||||||||
Common
stock issued for interest expense related to a note
payable
|
525,000
|
525
|
—
|
16,975
|
—
|
17,500
|
||||||||||||||||||
Common
stock and warrants issued for services
|
150,000
|
150
|
—
|
188,850
|
—
|
189,000
|
||||||||||||||||||
Common
stock issued for compensation
|
2,114,280
|
2,115
|
—
|
847,885
|
—
|
850,000
|
||||||||||||||||||
Issuance
of common stock to Gold and Minerals Company, Inc. in connection with
purchase of COD property in August 2003, $0.00 per share
|
3,600,000
|
3,600
|
—
|
(3,600
|
)
|
—
|
-
|
|||||||||||||||||
Net
loss
|
—
|
—
|
—
|
-
|
(1,561,669
|
)
|
(1,561,669
|
)
|
||||||||||||||||
Balances
at September 30, 2003 (Unaudited)
|
52,109,280
|
$
|
52,110
|
$
|
—
|
$
|
954,421
|
$
|
(1,583,246
|
)
|
$
|
(576,715
|
)
|
|||||||||||
Cost
associated with warrants and options issued
|
—
|
—
|
—
|
108,000
|
—
|
108,000
|
||||||||||||||||||
Common
stock issued for compensation
|
3,650,164
|
3,650
|
—
|
516,350
|
—
|
520,000
|
||||||||||||||||||
Common
stock issued for services and expenses
|
2,082,234
|
2,083
|
—
|
393,682
|
—
|
395,765
|
||||||||||||||||||
Common
stock issue for notes payable
|
1,827,938
|
1,827
|
—
|
381,173
|
—
|
383,000
|
||||||||||||||||||
Beneficial
conversion of notes payable
|
—
|
—
|
—
|
75,000
|
—
|
75,000
|
||||||||||||||||||
Common
stock issued for acquisition of Weaver property interest in July
2004
|
3,000,000
|
3,000
|
—
|
(3,000
|
)
|
—
|
-
|
|||||||||||||||||
Stock
subscriptions
|
—
|
—
|
50,000
|
-
|
—
|
50,000
|
||||||||||||||||||
Net
loss
|
—
|
—
|
—
|
-
|
(1,314,320
|
)
|
(1,314,320
|
)
|
||||||||||||||||
Balances
at September 30, 2004 (Unaudited)
|
62,669,616
|
$
|
62,670
|
$
|
50,000
|
$
|
2,425,626
|
$
|
(2,897,566
|
)
|
$
|
(359,270
|
)
|
|||||||||||
Subscribed
stock issued
|
200,000
|
200
|
(50,000
|
)
|
49,800
|
—
|
-
|
|||||||||||||||||
Common
stock issued for services
|
2,290,557
|
2,290
|
—
|
1,254,245
|
—
|
1,256,535
|
||||||||||||||||||
Common
stock sold in private placement
|
3,865,000
|
3,865
|
—
|
1,785,272
|
—
|
1,789,137
|
||||||||||||||||||
Common
stock issued for notes payable
|
383,576
|
384
|
—
|
153,042
|
—
|
153,426
|
||||||||||||||||||
Beneficial
conversion of notes payable
|
—
|
—
|
—
|
21,635
|
—
|
21,635
|
||||||||||||||||||
Cost
associated with warrants and options issued
|
—
|
—
|
—
|
149,004
|
—
|
149,004
|
||||||||||||||||||
Discounts
on notes payable
|
—
|
—
|
—
|
113,448
|
—
|
113,448
|
||||||||||||||||||
Net
loss
|
—
|
—
|
—
|
-
|
(3,244,841
|
)
|
(3,244,841
|
)
|
||||||||||||||||
Balances
at September 30, 2005 (Unaudited)
|
69,408,749
|
$
|
69,409
|
$
|
—
|
$
|
5,952,072
|
$
|
(6,142,407
|
)
|
$
|
(120,926
|
)
|
F-3
(An
Exploration Stage Company)
CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
July
26, 2002 (Inception) to December 31, 2009
Common
Stock Shares
|
Common
Stock
Amount
|
Stock
Subscriptions
|
Additional
Paid in
Capital
|
Deficit
Accumulated
During The
Exploration Stage
|
Total
|
|||||||||||||||||||
Common stock issued for services
|
310,000
|
310
|
—
|
274,690
|
—
|
275,000
|
||||||||||||||||||
Common
stock sold in private placement
|
2,189,697
|
2,190
|
—
|
1,158,775
|
—
|
1,160,965
|
||||||||||||||||||
Common
stock issued for notes payable
|
2,124,726
|
2,125
|
—
|
1,147,875
|
—
|
1,150,000
|
||||||||||||||||||
Beneficial
conversion of note payable
|
—
|
—
|
—
|
128,572
|
—
|
128,572
|
||||||||||||||||||
Discounts
on issuance of convertible notes payable
|
—
|
—
|
—
|
1,018,640
|
—
|
1,018,640
|
||||||||||||||||||
Costs
associated with warrants and options issued
|
—
|
—
|
—
|
163,750
|
—
|
163,750
|
||||||||||||||||||
Common
stock issued for exercise of options and warrants
|
498,825
|
499
|
—
|
256,251
|
—
|
256,750
|
||||||||||||||||||
Common
stock issued for compensation
|
364,912
|
364
|
—
|
286,772
|
—
|
287,136
|
||||||||||||||||||
Provision
for deferred income tax related to
|
—
|
—
|
—
|
(80,322
|
)
|
-
|
(80,322
|
)
|
||||||||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
(4,041,802
|
)
|
(4,041,802
|
)
|
||||||||||||||||
Balances
at September 30, 2006 (Unaudited)
|
74,896,909
|
$
|
74,897
|
$
|
—
|
$
|
10,307,075
|
$
|
(10,184,209
|
)
|
$
|
197,763
|
||||||||||||
Stock
issued for conversion of notes payable
|
1,500,000
|
1,500
|
—
|
748,500
|
—
|
750,000
|
||||||||||||||||||
Common
stock sold in private placement
|
50,000
|
50
|
—
|
24,950
|
—
|
25,000
|
||||||||||||||||||
Common
stock sold by the exercise of warrants and options
|
2,258,000
|
2,258
|
—
|
1,121,742
|
—
|
1,124,000
|
||||||||||||||||||
Common
stock issued for compensation
|
966,994
|
968
|
—
|
604,583
|
—
|
605,551
|
||||||||||||||||||
Reverse
provision for deferred income tax related to timing difference on debt
discount
|
—
|
—
|
—
|
80,322
|
—
|
80,322
|
||||||||||||||||||
Common
stock issued for services
|
80,216
|
81
|
—
|
52,325
|
—
|
52,406
|
||||||||||||||||||
Cost
associated with issuance of warrants and options
|
—
|
—
|
—
|
2,249,475
|
—
|
2,249,475
|
||||||||||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
(4,437,775
|
)
|
(4,437,775
|
)
|
||||||||||||||||
Balances
at September 30, 2007
|
79,752,119
|
$
|
79,754
|
$
|
—
|
$
|
15,188,972
|
$
|
(14,621,984
|
)
|
$
|
646,742
|
||||||||||||
Common
stock sold in private placement
|
300,000
|
300
|
—
|
149,700
|
—
|
150,000
|
||||||||||||||||||
Common
stock issued for exercise of cashless warrants
|
12,000
|
12
|
—
|
(12
|
)
|
—
|
—
|
|||||||||||||||||
Common
stock sold by the exercise of warrants and options
|
1,257,500
|
1,257
|
—
|
176,568
|
—
|
177,825
|
||||||||||||||||||
Common
stock issued for compensation
|
1,637,356
|
1,637
|
—
|
358,774
|
—
|
360,411
|
||||||||||||||||||
Common
stock issued for services
|
3,213,150
|
3,212
|
—
|
662,035
|
—
|
665,247
|
||||||||||||||||||
Warrant
and option expense
|
—
|
—
|
—
|
1,156,590
|
—
|
1,156,590
|
||||||||||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
(2,387,483
|
)
|
(2,387,483
|
)
|
||||||||||||||||
Balances
at September 30, 2008
|
86,172,125
|
$
|
86,172
|
$
|
—
|
$
|
17,692,627
|
$
|
(17,009,467
|
)
|
$
|
769,332
|
The
accompanying notes are an integral part of these consolidated financial
statements.
F-4
(An
Exploration Stage Company)
CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
July
26, 2002 (Inception) to December 31, 2009
Common
Stock Shares
|
Common
Stock
Amount
|
Stock
Subscriptions
|
Additional
Paid in
Capital
|
Deficit
Accumulated
During The
Exploration Stage
|
Total
|
||||||||||||||||||
Common stock issued for services
|
1,127,744
|
1,127
|
—
|
95,205
|
—
|
96,332
|
|||||||||||||||||
Common
stock sold by the exercise of warrants & options
|
725,000
|
725
|
—
|
35,525
|
—
|
36,250
|
|||||||||||||||||
Common
stock issued for compensation
|
562,500
|
563
|
—
|
44,437
|
—
|
45,000
|
|||||||||||||||||
Warrant
and option expense
|
—
|
—
|
—
|
249,759
|
—
|
249,759
|
|||||||||||||||||
Net
loss
|
—
|
—
|
—
|
-
|
(953,501
|
)
|
(953,501
|
)
|
|||||||||||||||
Balances
at September 30, 2009
|
88,587,369
|
$
|
88,587
|
$
|
—
|
$
|
18,117,553
|
$
|
(17,962,968
|
)
|
$
|
243,172
|
|||||||||||
Common
stock issued for services
|
66,667
|
67
|
—
|
5,933
|
—
|
6,000
|
|||||||||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
(93,747
|
)
|
(93,747
|
)
|
|||||||||||||||
Balances
at December 31, 2009
|
88,654,036
|
$
|
88,654
|
$
|
—
|
$
|
18,123,486
|
$
|
(18,056,715
|
)
|
$
|
155,425
|
The
accompanying notes are an integral part of these consolidated financial
statements
F-5
(An
Exploration Stage Company)
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
July 27, 2002
|
||||||||||||
(Inception)
|
||||||||||||
Three Months Ended
December 31,
|
Through
December 31,
|
|||||||||||
2009
|
2008
|
2009
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net
loss
|
$
|
(93,747
|
)
|
$
|
(405,494
|
)
|
$
|
(18,056,715
|
)
|
|||
Adjustments
to reconcile net loss to net cash provided by (used in) operating
activities:
|
||||||||||||
Warrant
and option expense
|
—
|
139,456
|
4,076,578
|
|||||||||
Beneficial
conversion of notes payable
|
—
|
—
|
225,207
|
|||||||||
Non-cash
expense with affiliate
|
—
|
—
|
7,801
|
|||||||||
Share-based
compensation
|
—
|
129,332
|
5,598,383
|
|||||||||
Accretion
of discount on notes payable
|
-
|
—
|
1,132,088
|
|||||||||
(Gain)
loss on disposition of fixed assets
|
—
|
—
|
34,733
|
|||||||||
Forgiveness
of debt
|
—
|
—
|
(115,214
|
)
|
||||||||
Provision
for uncollectible note receivable
|
—
|
—
|
62,500
|
|||||||||
Depreciation
|
1,432
|
2,200
|
70,326
|
|||||||||
Changes
in operating assets and liabilities:
|
||||||||||||
Miscellaneous
receivable
|
—
|
(9,860
|
)
|
4,863
|
||||||||
Interest
Receivable
|
—
|
—
|
(13,611
|
)
|
||||||||
Prepaid
expenses and other assets
|
9,668
|
17,286
|
(18,994
|
)
|
||||||||
Expense
advances (to) from on behalf of affiliated company
|
57,104
|
1,807
|
(458,825
|
)
|
||||||||
Accounts
payable
|
22,489
|
27,142
|
161,253
|
|||||||||
Accounts
payable - related party
|
—
|
(159
|
)
|
364
|
||||||||
Accrued
liabilities
|
4,833
|
91,166
|
495,062
|
|||||||||
Interest
payable, other
|
—
|
—
|
49,750
|
|||||||||
Net
Cash Provided by (Used in) Operating Activities
|
1,779
|
(7,124
|
)
|
(6,744,451
|
)
|
|||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Purchase
of property interest
|
—
|
—
|
(100,000
|
)
|
||||||||
Purchase
of furniture and equipment
|
—
|
—
|
(148,140
|
)
|
||||||||
Proceeds
from asset dispositions
|
—
|
—
|
32,001
|
|||||||||
Deposits
|
—
|
3,845
|
(22,440
|
)
|
||||||||
Issuance
of notes receivable
|
—
|
—
|
(249,430
|
)
|
||||||||
Payments
received on notes receivable
|
—
|
—
|
66,930
|
|||||||||
Cash
paid in connection with acquisition of DML Services, Inc.
|
—
|
—
|
(50,000
|
)
|
||||||||
Net
Cash Provided by (Used in) Investing Activities
|
—
|
3,845
|
(471,079
|
)
|
||||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Proceeds
from the sale of common stock
|
—
|
—
|
3,456,606
|
|||||||||
Costs
associated with the sale of stock
|
—
|
—
|
(19,363
|
)
|
||||||||
Proceeds
from notes payable, related parties
|
—
|
—
|
219,900
|
|||||||||
Proceeds
from warrant exercise
|
—
|
27,000
|
1,338,075
|
|||||||||
Proceeds
from notes payable, other
|
—
|
—
|
2,322,300
|
|||||||||
Increase
in finance contracts
|
—
|
—
|
117,479
|
|||||||||
Repayment
of notes payable, related parties
|
—
|
—
|
(61,900
|
)
|
||||||||
Payments
on finance contracts
|
(3,391
|
)
|
(14,895
|
)
|
(112,957
|
)
|
||||||
Repayment
of notes payable, other
|
—
|
—
|
(43,874
|
)
|
||||||||
Net
Cash (Used in) Provided by Financing Activities
|
(3,391
|
)
|
12,105
|
7,216,266
|
F-6
July 27, 2002
|
||||||||||||
(Inception)
|
||||||||||||
Three Months Ended
December 31,
|
Through
December 31,
|
|||||||||||
2009
|
2008
|
2009
|
||||||||||
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
(1,612
|
)
|
8,826
|
736
|
||||||||
CASH
AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
2,348
|
32,456
|
—
|
|||||||||
CASH
AND CASH EQUIVALENTS, END OF PERIOD
|
$
|
736
|
$
|
41,282
|
$
|
736
|
||||||
SUPPLEMENTAL
CASH FLOW INFORMATION:
|
||||||||||||
Cash
paid for interest
|
$
|
1,307
|
$
|
585
|
$
|
173,770
|
||||||
Cash
paid for income taxes
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||
NON-CASH
INVESTING AND FINANCING ACTIVITIES :
|
||||||||||||
Accounts
payable converted to equity
|
$
|
6,000
|
$
|
—
|
$
|
—
|
The
accompanying notes are an integral part of these consolidated financial
statements.
F-7
EL
CAPITAN PRECIOUS METALS, INC. AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2009
(Unaudited)
NOTE
1 - BASIS OF PRESENTATION
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 (the “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 condensed 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 year ending September 30,
2010, 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 year ended September 30, 2009, included in the Company’s Annual
Report on Form 10-K, filed December 30, 2009. The consolidated balance
sheet at September 30, 2009, has been derived from the audited financial
statements included in the 2009 Annual Report.
Notes to
the financial statements which would substantially duplicate the disclosure
contained in the audited financial statements for fiscal 2009 as reported in the
Form 10−K have been omitted.
Certain
prior year amounts have been reclassified to conform to the current year
presentation.
NOTE
2 - GOING CONCERN
The
accompanying financial statements have been prepared assuming El Capitan will
continue as a going concern, which contemplates the realization of assets and
the settlement of liabilities and commitments in the normal course of business.
El Capitan is an exploration stage company and since its inception has had no
revenues and through December 31, 2009, has incurred recurring losses
aggregating $18,056,715 during the exploration stage. In addition, the Company
does not have a revolving credit facility with any financial institution. These
factors raise substantial doubt about El Capitan’s ability to continue as a
going concern. The ability of the Company to continue as a going concern is
dependent on raising additional capital, negotiating adequate financing
arrangements and on achieving sufficiently profitable operations. The financial
statements do not include any adjustments relating to the recoverability and
classification of assets or the amounts and classification of liabilities that
might be necessary should the Company be unable to continue as a going
concern.
NOTE
3 - DUE FROM AFFILIATES
During
the period October 2004 through December 2009, El Capitan made net payments on
behalf of Minerals aggregating to $2,480,702
relating to costs incurred on behalf of El Capitan, Limited (“ECL”) on the El
Capitan property site. Pursuant to an agreement with Minerals effective October
1, 2004, costs incurred by ECL at the El Capitan site are to be split between
the companies in accordance with their percentage ownership interest. El Capitan
holds a 40% equity interest in ECL, and Minerals holds the remaining 60% equity
interest. Through December 31, 2009, Minerals has reimbursed or advanced El
Capitan $2,584,867 of the incurred site costs.
At
December 31, 2009, El Capitan owed Minerals $104,165.
NOTE
4 - STOCKHOLDERS’ EQUITY
Issuances
of Common Stock, Warrants and Options
Common
Stock
During
the quarter ended December 31, 2009, El Capitan issued 66,667 shares of the
Company’s common stock in payment of consulting services valued at
$6,000.
Warrants
During
the three months ended December 31, 2009, 300,000 warrants at an exercise price
of $0.60 expired.
F-8
During
the three months ended December 31, 2009, the Company did not issue any
warrants. The following table sets forth certain terms of the
Company’s outstanding warrants and exercisable warrants as of December 31,
2009.
Warrants Outstanding
|
Warrants Exercisable
|
|||||||||||||||
Number of
Shares
|
Weighted
Average Exercise
Price
|
Number of
Shares
|
Weighted
Average Exercise
Price
|
|||||||||||||
Balance, September 30, 2009
|
1,235,031
|
$ |
0.59
|
1,235,031
|
$ |
0.59
|
||||||||||
Granted
|
—
|
—
|
—
|
—
|
||||||||||||
Expired/Cancelled
|
(300,000
|
)
|
$ |
(0.60
|
) |
(300,000
|
)
|
$ |
(0.60
|
) | ||||||
Exercised
|
—
|
—
|
—
|
—
|
||||||||||||
Balance,
December 31, 2009
|
935,031
|
$ |
0.59
|
935,031
|
$ |
0.59
|
||||||||||
Weighted
average contractual life in years
|
.88
|
.88
|
||||||||||||||
Aggregate
intrinsic value
|
$ |
—
|
$ |
—
|
At
December 31, 2009, the Company had no outstanding warrants which had a right to
call feature.
Options
During
the three months ended December 31, 2009, the Company did not grant any
options.
The
following table sets forth certain terms of the Company’s outstanding options
and exercisable options as of December 31, 2009:
Options Outstanding
|
Options Exercisable
|
|||||||||||||||
Number of
Shares
|
Weighted Average
Exercise Price
|
Number of
Shares
|
Weighted Average
Exercise Price
|
|||||||||||||
Balance, September
30, 2009
|
3,250,000
|
$ |
0.35
|
3,250,000
|
$ |
0.35
|
||||||||||
Granted
|
—
|
—
|
—
|
—
|
||||||||||||
Exercised
|
—
|
—
|
—
|
—
|
||||||||||||
Expired/Cancelled
|
—
|
—
|
—
|
—
|
||||||||||||
Balance,
December 31, 2009
|
3,250,000
|
$ |
0.35
|
3,250,000
|
$ |
0.35
|
||||||||||
Weighted
average contractual life in years
|
2.55
|
2.55
|
||||||||||||||
Aggregate
intrinsic value
|
$ |
—
|
$ |
—
|
The
aggregate intrinsic value in the warrant and option tables above represents
total pretax intrinsic value (the difference between El Capitan’s closing stock
price on December 31, 2009, and the exercise price, multiplied by the number of
in-the-money warrants or options) that would have been received by the warrant
or option holders had all warrant or option holders exercised their warrants or
options on December 31, 2009. These amounts change based on the fair market
value of El Capitan’s stock.
El
Capitan has a Stock Incentive Plan under which 16,000,000 shares are reserved
and registered for stock and option grants. There were 4,285,413 shares
available for grant under the Plan at December 31, 2009, excluding the 3,250,000
options outstanding.
NOTE
5 – SUBSEQUENT EVENTS
The
Company has evaluated events and transactions that occurred between December 31,
2009 and February 12, 2010, which is the date the consolidated financial
statements were available for issue, for possible disclosure or recognition in
the consolidated financial statements. The Company has determined that there
were no such events or transactions that warrant disclosure or recognition in
the consolidated financial statements except as noted below.
F-9
In
January 2010, El Capitan issued 100,000 shares of the Company’s common stock in
payment of consulting services valued at $17,000.
In
January 2010 El Capitan received advances from its affiliated company
aggregating $20,000 for working capital purposes.
F-10
Item
2 - Management’s Discussion and Analysis and Plan of Operation
RESULTS
OF OPERATIONS
Three
Months Ended December 31, 2009 Compared to Three Months Ended December 31,
2008
Revenues
We have
not yet realized any revenue from operations, nor do we expect to realize
potential revenues until one of our properties is sold. There is no guaranty
that we will achieve proven viable precious metals at any of our property site
locations.
Expenses
and Net Loss
Our
operating expenses decreased $311,396 from $404,914 for the three months ended
December 31, 2008 to $93,518 for the three months ended December 31, 2009. The
decrease is mainly attributable to decreases in professional fees of $23,122;
exploration expenses of $22,129; officer compensation of $135,000; legal and
accounting of $24,381; and warrant and option expense of $139,456. These
decreases were offset by an increase of $34,581 for administrative consulting
fees.
Our net
loss for the three months ended December 31, 2009 decreased to $93,747 from a
net loss of $405,494 incurred for the comparable three month period ended
December 31, 2008. The decrease in net loss of $311,747 for the current period
is attributable to the aforementioned decreases in operating
expenses.
PLAN
OF OPERATION
To
address the going concern problem addressed in our financial statements, we will
require raising additional working capital. We will also require additional
working capital funds for continuing payments for the continued implementation
of our business strategies, necessary corporate personnel, and related general
and administrative expenses.
We have
not generated any revenue from the production of gold or other metals since our
inception, and historically have relied on equity and debt financings to finance
our ongoing operations. We generated a net loss of $93,747 for the three months
ended December 31, 2009. We have a total accumulated deficit of $18,056,715 at
December 31, 2009. To continue as a going concern, we are dependent on continued
fund raising. However, we have no commitment from any party to provide
additional capital and there is no assurance that such funding will be available
when needed, or if available, that its terms will be favorable or acceptable to
us.
We are
dependent on obtaining additional financing or equity placements to continue our
exploration, metallurgical and recovery program efforts on the Capitan project.
We have no current plans or arrangements for these additional capital
requirements, and we anticipate that we will seek the additional financing
scenarios during the first calendar quarter of 2010.
The
financial statements have been prepared on a going concern basis, which
contemplates the realization of assets and satisfaction of liabilities and
commitments in the normal course of business. Our inability to access various
capital markets or acceptable financing could have a material effect on our
results of operations, deployment of our business strategies and severely
threaten our ability to operate as a going concern. Should we be unable to
continue as a going concern, we may be unable to realize the carrying value of
our assets and to meet our obligations as they become due.
During
the remainder of our current fiscal year, we will continue to concentrate on
raising the necessary working capital through equity financing and an acceptable
debt facility to ensure our ability to implement our business strategies. To the
extent that additional capital is raised through the sale of equity or equity
related securities, the issuance of such securities may result in dilution of
our current stockholders.
Our
objective is to continue the evaluation of geologic and metallurgical
opportunities presented by the El Capitan deposit with the intent to carry on
the implementation of the previously announced strategic plan for the
development or sale of this asset. Over the past several years there has been a
significant effort to develop an understanding of the metallurgical properties
of this deposit. We have learned that the complex poly-metallic nature of the
rock prevents analysis by standard fire assay techniques typically applied to
gold/silver deposits. Further, the oxide nature of the material does not appear
to respond well to nickel-sulfide analytical techniques typically used for
sulfide platinum group metal (“PGM”) deposits. These factors have resulted in a
reduction in the level of activity directed towards force-fitting the El Capitan
gold, silver, and PGM deposit into the traditional analytical framework of a
gold & silver or sulfide PGM deposit. We do not have “reserves” as defined
by Industry Guide 7 of the SEC, and it is possible it may never have reserves.
Previous exploration efforts have focused on private, patented land and
nearby federal claims.
1
On July
14, 2008, we announced that we had entered into a Memorandum of Understanding
with the USFS related to the permitting of 112 exploration drill holes planned
on 2,000 acres of the El Capitan claims in Lincoln County, New Mexico. The
action signals the initiation of the Federal Environmental Assessment (“EA”)
permitting process. Based upon recent USFS EA completion timelines, we
anticipate receipt of permits in the first calendar quarter of 2010, at which
time exploration activity could resume.
On July
23, 2008 we announced that the proposed merger with Gold and Minerals reached
the stage at which we were ready to file a Form S-4 registration statement with
the Securities and Exchange Commission. Due to the time consuming nature of the
preparation of a Form S-4 and the uncertainty of the timing of the SEC review
process, the companies had worked with counsel to examine alternative structures
for the transaction. While alternatives were identified, none held significant
promise to be less time consuming or more cost effective for stockholders. Both
companies have concluded that the Form S-4 registration process will be the
optimal path forward, and have decided to continue to pursue the original merger
structure.
After
numerous delays in the merger process, on September 18, 2009, Gold and Minerals
gave a Notice of Termination to the Company referencing the Agreement and Plan
of Merger, dated February 12, 2008, between the companies. The election to
terminate was made pursuant to subparagraph (d) of Paragraph 10.1 of Article X
of the Agreement. The main basis for the election to terminate was that the
circumstances surrounding the Plan of Merger had changed since the execution of
the Agreement. Upon completion of the metallurgical work, permitting and
extraction process, and other current projects Gold and Minerals is currently
working on, it is the intent of Gold and Minerals to re-enter into a new
Agreement and Plan of Merger based on the circumstances at the time of
implementation of the Agreement.
The
Company and its affiliated company are currently working on new fire assay
techniques for the Capitan ore. Upon perfecting this process we will have the
process observed on multiple samples and have the process fully documented by a
PhD chemist. Upon completion of this process, the chemist will then take the
same samples to a second commercial lab to have the results verified by having
them rerun the samples utilizing our procedure under his
observation.
Liquidity
As of
December 31, 2009, we had $736 of cash on hand. We will be required to raise
additional working capital in equity or financing transactions in order to
satisfy our expected cash expenditures. In the event that we are unable to
obtain additional working capital, we may be forced to reduce our operating
expenditures or to cease development and operations altogether. Currently we are
dependent on our affiliated company for working capital funds.
Additionally,
we continually evaluate business opportunities such as joint venture processing
agreements with the objective of creating cash flow to sustain the Company and
provide a source of funds for growth and continued exploration of the El Capitan
deposit. There are no assurances of success in our ability to obtain continued
financing through capital markets, joint ventures, or other acceptable
arrangements. If management’s plans are not successful, operations and liquidity
may be adversely impacted. In the event that we are unable to obtain additional
working capital, we may be forced to reduce our operating expenditures or to
cease development and operations altogether.
Factors
Affecting Future Operating Results
We have
generated no revenues, other than interest income, since inception. As a result,
we have only a limited operating history upon which to
evaluate our future potential performance. Our potential must be considered by
evaluation of all risks and difficulties encountered by new companies which have
not yet established business operations.
The price
of gold has experienced an increase in value over the past three years. Any
significant drop in the price of gold, other precious metals or iron ore prices
may have a materially adverse affect on the future results of the our operations
unless we are able to offset such a price drop by substantially increased
production.
We have
no proven or probable reserves as defined by the SEC’s Guide 7 and we currently
have no ability to measure or prove our reserves on the El
Capitan mine site in New Mexico. We are currently having geological work
performed on samples from this site and having an economically feasible precious
metals recovery process developed by an outside metallurgical firm for the ore
at this site.
2
Off-Balance
Sheet Arrangements
During
the quarter ended December 31, 2009, we did not engage in any off balance sheet
arrangements as defined in item 303(c) of the SEC’s Regulation S-B.
Critical
Accounting Policies
Our
consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America, which
require us to make estimates and judgments that significantly affect the
reported amounts of assets, liabilities, revenues and expenses, and related
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements. Note 1, “Significant Accounting Policies” in the Notes to
the Consolidated Financial Statements in our Form 10-K for the year ended
September 30, 2009, describe our significant accounting policies which are
reviewed by management on a regular basis.
New
Accounting Pronouncements
We do not
expect the adoption of any recently issued accounting pronouncements to have a
significant impact on our financial position, results of operations or cash
flows.
Item
3 – Quantitative and Qualitative Disclosures About Market Risk
Not
applicable.
Item
4T - Controls and Procedures
Evaluation
of Disclosure Controls and Procedures
We
maintain disclosure controls and procedures designed to provide reasonable
assurance that information required to be disclosed in our reports filed
pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission’s rules and forms, and that
such information is accumulated and communicated to our management, including
our Chief Executive Officer and Chief Financial Officer as appropriate, to allow
timely
decisions regarding required disclosure. A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance the
objectives of the control system are met.
As of
December 31, 2009, with the participation of our Chief Executive Officer and
Chief Financial Officer, carried out an evaluation of the effectiveness of our
disclosure controls and procedures as such term is defined in Rules 13a-15(e)
and 15d-15(e) under the Exchange Act. Based on this evaluation, the Chief
Executive Officer and Chief Financial Officer concluded that the Company’s
disclosure controls and procedures were effective as of December 31,
2009.
Changes in Internal Control over
Financial Reporting
There
were no changes in our internal control over financial reporting, as defined in
Rule 13a-15(f) promulgated under the Exchange Act, during the quarter ended
December 31, 2009, that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
PART
II - OTHER INFORMATION
Item
2 - Unregistered Sales of Equity Securities and Use of Proceeds
During
the quarter ended December 31, 2009, El Capitan issued 66,667 shares of the
Company’s common stock in payment of consulting services valued at
$6,000.
Item
5 – Other Information
None
3
Item
6 - Exhibits
(a)
Exhibits
2.1
|
Agreement
and Plan of Merger by and among Gold and Minerals, Inc., Larry Lozensky,
the Company and El Capital Acquisition Company, dated February 12, 2008
(incorporated by reference to Exhibit 2.1 to the Company’s Current Report
on Form 8-K filed February 12, 2008).
|
2.2
|
Escrow
Agreement by and among the Company, Larry Lozensky and Escrow Agent
(incorporated by reference to Exhibit 2.2 to the Company’s Current Report
on Form 8-K filed February 12, 2008).
|
31.1
|
Certification
of Charles C. Mottley pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
31.2
|
Certification
of Stephen J. Antol pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
32.1
|
Certification
of Mottley pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
32.2
|
Certification
of Stephen J. Antol pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
SIGNATURES
In
accordance with the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated:
February 12, 2010
|
EL
CAPITAN PRECIOUS METALS, INC.
|
|
By:
|
/s/ Charles C. Mottley
|
|
Charles
C. Mottley
|
||
President,
Chief Executive Officer and Director
|
||
Dated:
February 12, 2010
|
By:
|
/s/ Stephen J. Antol
|
Stephen
J. Antol
|
||
Chief
Financial Officer
|
4
Exhibit No.
|
Description
|
|
31.1
|
Certification
of Charles C. Mottley pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
31.2
|
Certification
of Stephen J. Antol pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
32.1
|
Certification
of Charles C. Mottley pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
32.2
|
Certification
of Stephen J. Antol pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
5