| Law Offices Ballard Spahr Andrews & Ingersoll, llp 1735 MARKET STREET, 51ST FLOOR PHILADELPHIA, PENNSYLVANIA 19103-7599 215-665-8500 FAX: 215-864-8999 WWW.BALLARDSPAHR.COM | ATLANTA, GA BALTIMORE, MD BETHESDA, MD DENVER, CO LAS VEGAS, NV LOS ANGELES, CA PHILADELPHIA, PA PHOENIX, AZ SALT LAKE CITY, UT VOORHEES, NJ WASHINGTON, DC WILMINGTON, DE |
Securities and Exchange Commission Division of Corporation Finance 100 F Street, NE Washington, DC 20549 |
| Attention: | H. Roger Schwall, Assistant Director |
Capital Gold Corporation Form 10-K for the Fiscal Year Ended July 31, 2008 Filed October 29, 2008 Schedule 14A filed December 8, 2008 Form 10-Q for the Fiscal Quarter Ended October 31, 2008 Filed December 10, 2008 File No. 000-13078 |
| 1. | It appears from your response to our prior comment number seven that you recognize your sales of precious metal prior to the completion of the final refining process (i.e. you recognize the sale at the time of the dore precious metal content is pledged to a customer at the refinery.) At the point at which you recognize revenue, please tell us: |
| · | whether your customer is the refiner or the customer the metal is pledged to at the refinery; |
| · | why you wait until the dore precious metal content is pledged to a customer at the refinery to recognize the sale; |
| · | which gold price you use (spot or future) to determine revenue; and |
| · | whether the sale price is subject to change subsequent to the initial revenue recognition date. |
| · | which price is used to determine interim reporting dates that are prior to the final sale date; |
| · | when and how a final price is set; and |
| · | the approximate average number of days elapsed between the initial revenue recognition date and the date on which the final price is set. |
| 2. | We note your response number 14 with proposed revised language, and we note that you appear to have included the revised language on page 53 of your amended Form 10-K filed February 13, 2009. However, on page F-36 of your amended Form 10-K filed February 13, 2009, in Note 19, you continue to state that “In addition, the exercise price of all Company options would decrease to $0.01 per share.” Please remove this statement if it is no longer accurate. Also, please include disclosure in your amended Proxy Statement explaining the amendments that you are making to the employment agreements to remove the provisions to which the exercise price of options would decrease to $0.01 per share. |
RESPONSE: The statement referenced in your comment, which reads “In addition, the exercise price of all Company options would decrease to $0.01 per share,” was accurate at the time that the Company’s independent accounting firm rendered its opinion and at the time that the Company initially filed its Form 10-K for the year ended July 31, 2008. On January 20, 2009, the Company entered into (i) amended and restated employment agreements with Gifford Dieterle, President and Treasurer, and Jeffrey Pritchard, Executive Vice President and (ii) amended and restated engagement agreements with Christopher Chipman, Chief Financial Officer, John Brownlie, Chief Operating Officer, and Scott Hazlitt, Vice President of Mine Development (collectively, the “Amended Agreements”). The Amended Agreements removed a provision from the Agreement Regarding Change in Control, which is attached as an exhibit to each of the Amended Agreements, that provided that, upon a change in control of the Company, the exercise price of all issued and outstanding options would decrease to $0.01. The Company proposes to leave this statement in Note 19 of its financial statements for the year ended July 31, 2009 because such statement was true as of the date of the Company’s independent accounting firm’s report, but will remove the statement in future filings. In addition, the Company will disclose this change in Note 27 – Amendments to Employment and Engagement Agreements. Finally, in its amended Proxy Statement, the Company will include disclosure explaining the Amended Agreements and clarifying that, upon a change in control of the Company, the exercise price of options will not decrease to $0.01. |
| · | the Registrant is responsible for the adequacy and accuracy of the disclosure the Filings; |
| · | staff comments or changes to disclosure in response to Staff comments do not foreclose the Staff of the U.S. Securities and Exchange Commission (the “Commission”) from taking any action with respect to the Filing; and |
| · | the Registrant may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. |
