##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2007
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number 1-11048
 DGSE Companies, Inc.
 Exact name of registrant as specified in its charter
 Nevada
    
    88-0097334(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 2817 Forest Lane
Dallas, Texas 75234
(972) 484-3662  (Address, including zip code, and telephone
number, including area code, of registrants
principal executive offices)
 NONE  (Former name, former address and former
fiscal year, if changed since last report)
  þ o
  o o þ
  o þ
  Class
    
    OutstandingCommon stock, $.01 par value per share
    
    9,899,664




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##### Table of Contents



TABLE OF CONTENTS
 Page No.PART I.
    
    FINANCIAL INFORMATIONItem 1.
    
    Consolidated Financial Statements.Consolidated Balance Sheets as of June 30, 2007 and December 31, 2006
    
    
    1Consolidated Statements of Operations for the three months ended
June 30, 2007 and 2006
    
    
    2Consolidated Statements of Operations for the six months ended
June 30, 2007 and 2006
    
    
    3Consolidated Statements of Cash Flows for the six months ended
June 30, 2007 and 2006
    
    
    4Notes to Consolidated Financial Statements
    
    
    5Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations.
    
    
    11Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk.
    
    
    15Item 4.
    
    Controls and Procedures.
    
    
    15PART II.
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings.
    
    
    16Item 1A.
    
    Risk Factors
    
    
    17Item 4.
    
    Submission of Matters to a Vote of Security Holders.
    
    
    21Item 5.
    
    Other Information.
    
    
    21Item 6.
    
    Exhibits.
    
    
    21SIGNATURESCertification Pursuant to Section 302 - Dr. L.S. SmithCertification Pursuant to Section 302 - John BensonCertification Pursuant to Section 906 - Dr. L.S. SmithCertification Pursuant to Section 906 - John Benson
 i




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Consolidated Financial Statements.
 DGSE Companies, Inc. and Subsidiaries
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 June 30,
    
    
    December 31,2007
    
    
    2006UnauditedASSETSCurrent Assets:Cash and cash equivalents
    
    $
    1,018,129
    
    
    $
    1,210,282Trade receivables
    
    
    3,083,096
    
    
    
    1,053,454Inventories
    
    
    11,895,220
    
    
    
    7,796,028Prepaid expenses
    
    
    426,560
    
    
    
    192,379Prepaid federal income tax
    
    
    
    
    
    
    97,472Total current assets
    
    
    16,423,005
    
    
    
    10,349,615Marketable securities  available for sale
    
    
    57,879
    
    
    
    57,879Property and equipment, net
    
    
    1,373,212
    
    
    
    1,024,405Deferred income taxes
    
    
    18,031
    
    
    
    7,152Goodwill
    
    
    13,211,152
    
    
    
    837,117Other assets
    
    
    309,642
    
    
    
    869,398$
    31,392,921
    
    
    $
    13,145,566LIABILITIESCurrent Liabilities:Notes payable
    
    $
    183,708
    
    
    $
    183,708Current maturities of long-term debt
    
    
    259,273
    
    
    
    259,273Accounts payable  trade
    
    
    2,122,517
    
    
    
    828,323Accrued expenses
    
    
    459,673
    
    
    
    721,305Customer deposits
    
    
    552,654
    
    
    
    171,912Federal income tax payable
    
    
    102,929
    
    
    
    Total current liabilities
    
    
    3,680,754
    
    
    
    2,164,521Long-term debt, less current maturities
    
    
    7,862,881
    
    
    
    4,303,68511,543,635
    
    
    
    6,468,206STOCKHOLDERS EQUITYCommon stock, $.01 par value;
30,000,000 shares authorized; 9,470,357 and
4,913,290 shares issued and outstanding at
the end of each period in 2007 and 2006,
respectively
    
    
    94,704
    
    
    
    49,133Additional paid-in capital
    
    
    18,374,867
    
    
    
    5,708,760Accumulated other comprehensive loss
    
    
    (132,245
    )
    
    
    (132,245
    )Retained earnings
    
    
    1,511,960
    
    
    
    1,051,71219,849,286
    
    
    
    6,677,360$
    31,392,921
    
    
    $
    13,145,566
  1




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DGSE Companies, Inc. and Subsidiaries
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Three months ended June 30,2007
    
    
    2006UnauditedRevenueSales
    
    $
    12,351,892
    
    
    $
    12,444,265Consumer loan service charges
    
    
    125,162
    
    
    
    101,788Management fees
    
    
    100,000
    
    
    
    12,577,054
    
    
    
    12,546,053Costs and expensesCost of goods sold
    
    
    10,243,881
    
    
    
    10,760,456Selling, general and administrative expenses
    
    
    1,704,635
    
    
    
    1,261,648Depreciation and amortization
    
    
    71,939
    
    
    
    39,71512,020,455
    
    
    
    12,061,819Operating income
    
    
    556,599
    
    
    
    484,234Other expense (income)Interest expense
    
    
    137,896
    
    
    
    73,975Other income
    
    
    (2,251
    )
    
    
    Earnings before income taxes
    
    
    420,954
    
    
    
    410,259Income tax expense
    
    
    143,121
    
    
    
    139,488Net earnings
    
    $
    277,833
    
    
    $
    270,771Earnings per common share  basic
    
    $
    0.05
    
    
    $
    0.05Earnings per common share  diluted
    
    $
    0.04
    
    
    $
    0.05Weighted average number of common shares:Basic
    
    
    5,320,964
    
    
    
    4,913,290Diluted
    
    
    6,731,618
    
    
    
    5,045,242
  2




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DGSE Companies, Inc. and Subsidiaries
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Six months ended June 30,2007
    
    
    2006UnauditedRevenueSales
    
    $
    22,328,270
    
    
    $
    22,072,918Consumer loan service charges
    
    
    238,587
    
    
    
    194,132Management fees
    
    
    250,000
    
    
    
    22,816,857
    
    
    
    22,267,050Costs and expensesCost of goods sold
    
    
    18,649,272
    
    
    
    18,928,536Selling, general and administrative expenses
    
    
    3,105,640
    
    
    
    2,473,689Depreciation and amortization
    
    
    121,719
    
    
    
    79,01521,876,631
    
    
    
    21,481,240Operating income
    
    
    940,226
    
    
    
    785,810Other expense (income)Interest expense
    
    
    245,136
    
    
    
    150,581Other income
    
    
    (2,251
    )
    
    
    Earnings before income taxes
    
    
    697,341
    
    
    
    635,229Income tax expense
    
    
    237,093
    
    
    
    215,978Net earnings
    
    $
    460,248
    
    
    $
    419,251Earnings per common share  basic
    
    $
    0.09
    
    
    $
    0.09Earnings per common share  diluted
    
    $
    0.08
    
    
    $
    0.08Weighted average number of common shares:Basic
    
    
    5,117,127
    
    
    
    4,913,290Diluted
    
    
    5,876,827
    
    
    
    4,955,530
  3




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DGSE COMPANIES, Inc. and Subsidiaries
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six months ended June 30,2007
    
    
    2006UnauditedCash flows from operating activitiesNet earnings
    
    $
    460,248
    
    
    $
    419,251Adjustments to reconcile net earnings to net cash provided by operating activitiesDepreciation and amortization
    
    
    121,719
    
    
    
    79,015Change in assets and liabilities:(Increase) Decrease in trade receivables
    
    
    (787,467
    )
    
    
    (225,008
    )(Increase) Decrease in Inventories
    
    
    151,724
    
    
    
    (448,094
    )(Increase) Decrease in prepaid expenses and other assets
    
    
    (470,052
    )
    
    
    (20,956
    )(Increase) Decrease in other long term assets
    
    
    (6,574
    )
    
    
    (150,831
    )Increase (Decrease) in accounts payable and accrued expenses
    
    
    (209,052
    )
    
    
    (636,661
    )Increase (Decrease) in customer deposits
    
    
    261,929
    
    
    
    42,482Increase (Decrease) in income taxes payable
    
    
    200,401
    
    
    
    140,978Net cash provided (used) in operating activities
    
    
    (288,754
    )
    
    
    (799,824
    )Cash flows from investing activitiesPawn loans made
    
    
    (340,725
    )
    
    
    (266,210
    )Pawn loans repaid
    
    
    215,453
    
    
    
    218,069Recovery of pawn loan principal through sale of forfeited collateral
    
    
    58,887
    
    
    
    45,543Pay day loans made
    
    
    (155,451
    )
    
    
    (126,770
    )Pay day loans repaid
    
    
    120,335
    
    
    
    80,163Purchase of property and equipment
    
    
    (103,529
    )
    
    
    (5,374
    )Acquisition of Euless Gold & Silver
    
    
    (600,000
    )
    
    
    Deal Cost
    
    
    (395,280
    )
    
    
    Net cash used in investing activities
    
    
    (1,200,310
    )
    
    
    (54,549
    )Cash flows from financing activitiesProceeds from notes issued
    
    
    1,359,077
    
    
    
    500,000Repayments of notes payable
    
    
    (140,529
    )
    
    
    (489,964
    )Conversion of warrants
    
    
    78,363
    
    
    
    Net cash provided by financing activities
    
    
    1,296,911
    
    
    
    10,036NET DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (192,153
    )
    
    
    (844,367
    )Cash and cash equivalents at beginning of period
    
    
    1,210,282
    
    
    
    1,042,834Cash and cash equivalents at end of period
    
    $
    1,018,129
    
    
    $
    98,467
 Supplemental disclosures:
    4




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DGSE COMPANIES, Inc. and Subsidiaries
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (1) Basis of Presentation.
   (2) Inventory.
  June 30,2007
    
    
    December 31 2006Jewelry
    
    $
    8,422,682
    
    
    $
    7,022,453Rare coins
    
    
    2,587,846
    
    
    
    235,099Bullion
    
    
    343,660
    
    
    
    113,867Scrap gold
    
    
    334,571
    
    
    
    374,284Other
    
    
    206,461
    
    
    
    50,325Total
    
    $
    11,895,220
    
    
    $
    7,796,028
 (3) Trade Receivables.
  5




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DGSE COMPANIES, Inc. and Subsidiaries
 (4) Earnings per share.
  2007
    
    
    2006Three months ended June 30,
    
    
    Three months ended June 30,Net Earnings
    
    
    Shares
    
    
    Per share
    
    
    Net Earnings
    
    
    Shares
    
    
    Per shareBasic earnings per common share
    
    $
    277,833
    
    
    
    5,320,964
    
    
    $
    0.05
    
    
    $
    270,771
    
    
    
    4,913,290
    
    
    $
    0.05Effect of dilutive stock options
    
    
    
    
    
    
    1,410.654
    
    
    
    (0.01
    )
    
    
    
    
    
    
    131,952
    
    
    
    Diluted earnings per common share
    
    $
    277,833
    
    
    
    6,731,618
    
    
    $
    0.04
    
    
    $
    270,771
    
    
    
    5,045,242
    
    
    $
    0.05
 2007
    
    
    2006Six months ended June 30,
    
    
    Six months ended June 30,Net Earnings
    
    
    Shares
    
    
    Per share
    
    
    Net Earnings
    
    
    Shares
    
    
    Per shareBasic earnings per common share
    
    $
    460,248
    
    
    
    5,117,127
    
    
    $
    0.09
    
    
    $
    419,251
    
    
    
    4,913,290
    
    
    $
    0.09Effect of dilutive stock options
    
    
    
    
    
    
    759,700
    
    
    
    (0.01
    )
    
    
    
    
    
    
    42,240
    
    
    
    (.01
    )Diluted earnings per common share
    
    $
    460,248
    
    
    
    5,876,827
    
    
    $
    0.08
    
    
    $
    419,251
    
    
    
    4,955,530
    
    
    $
    0.08
 (5) Business segment information.
  Retail
    
    Wholesale
    
    
    
    
    
    Rare
    
    
    
    
    
    Corporate(In thousands)
    
    Jewelry
    
    Jewelry
    
    Bullion
    
    Coins
    
    Auctions
    
    and Other
    
    ConsolidatedRevenues2007
    
    $
    8,056
    
    
    $
    2,843
    
    
    $
    6,287
    
    
    $
    4,622
    
    
    $
    326
    
    
    $
    683
    
    
    $
    22,8172006
    
    
    7,560
    
    
    
    2,303
    
    
    
    9,591
    
    
    
    2,518
    
    
    
    
    
    
    
    295
    
    
    
    22,267Net earnings (loss)2007
    
    
    93
    
    
    
    66
    
    
    
    69
    
    
    
    30
    
    
    
    147
    
    
    
    55
    
    
    
    4602006
    
    
    153
    
    
    
    57
    
    
    
    150
    
    
    
    166
    
    
    
    
    
    
    
    (107
    )
    
    
    419Identifiable assets2007
    
    
    11,141
    
    
    
    1,204
    
    
    
    344
    
    
    
    3,568
    
    
    
    941
    
    
    
    984
    
    
    
    31,3932006
    
    
    8,633
    
    
    
    1,944
    
    
    
    172
    
    
    
    372
    
    
    
    
    
    
    
    694
    
    
    
    11,815Goodwill2007
    
    
    
    
    
    
    837
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,374
    
    
    
    13,2112006
    
    
    
    
    
    
    837
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    837Capital Expenditures2007
    
    
    93
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    1042006
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5Depreciation and
amortization2007
    
    
    53
    
    
    
    
    
    
    
    5
    
    
    
    5
    
    
    
    5
    
    
    
    54
    
    
    
    1222006
    
    
    48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31
    
    
    
    79
 6




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DGSE COMPANIES, Inc. and Subsidiaries
 (5) Business segment information.  (continued)
  Retail
    
    Wholesale
    
    
    
    
    
    Rare
    
    
    
    
    
    Corporate(In thousands)
    
    Jewelry
    
    Jewelry
    
    Bullion
    
    Coins
    
    Auctions
    
    and Other
    
    ConsolidatedRevenues2007
    
    $
    4,105
    
    
    $
    1,507
    
    
    $
    2,944
    
    
    $
    3,336
    
    
    $
    326
    
    
    $
    359
    
    
    $
    12,5762006
    
    
    4,332
    
    
    
    1,182
    
    
    
    5,711
    
    
    
    1,184
    
    
    
    
    
    
    
    137
    
    
    
    12,546Net earnings (loss)2007
    
    
    31
    
    
    
    23
    
    
    
    16
    
    
    
    21
    
    
    
    147
    
    
    
    40
    
    
    
    2782006
    
    
    113
    
    
    
    33
    
    
    
    88
    
    
    
    98
    
    
    
    
    
    
    
    (61
    )
    
    
    271Identifiable assets2007
    
    
    11,141
    
    
    
    1,204
    
    
    
    344
    
    
    
    3,568
    
    
    
    941
    
    
    
    984
    
    
    
    31,3932006
    
    
    8,633
    
    
    
    1,944
    
    
    
    172
    
    
    
    372
    
    
    
    
    
    
    
    694
    
    
    
    11,815Goodwill2007
    
    
    
    
    
    
    837
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,374
    
    
    
    13,2112006
    
    
    
    
    
    
    837
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    837Capital Expenditures2007
    
    
    22
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    302006
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Depreciation and
amortization2007
    
    
    29
    
    
    
    
    
    
    
    5
    
    
    
    5
    
    
    
    5
    
    
    
    28
    
    
    
    722006
    
    
    24
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16
    
    
    
    40
 7




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DGSE COMPANIES, Inc. and Subsidiaries
 (6) Stock-based Compensation.
  (7) Acquisitions.
 Superior Galleries, Inc.
 Shares
    
    
    Stock Price
    
    
    Extended PriceCommon stock
    
    
    3,669,067
    
    
    $
    2.55
    
    
    $
    9,356,121A warrants
    
    
    845,634
    
    
    
    1.27
    (1)
    
    
    1,073,955B warrants
    
    
    863,000
    
    
    
    2.55
    
    
    
    2,220,650Exercise Price B warrants
    
    
    863,000
    
    
    $
    0.001
    
    
    
    (863
    )Direct transaction costs
    
    
    
    
    
    
    
    
    
    
    965,062Total purchase price
    
    
    
    
    
    
    
    
    
    $
    13,594,925
 
 (1)
    
    The $1.27 is the fair value of the warrants calculated under
the Black Sholes method as of the acquisition date.  Goodwill
    
    $
    12,374,035Property and other assets
    
    
    1,068,958Inventory
    
    
    3,260,766Liabilities assumed
    
    
    (3,108,834
    )Total purchase price
    
    $
    13,594,925
   Three Months Ended June 30,
    
    
    Six Months Ended June 30,(In thousands, except per share data)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006(Unaudited)
    
    
    (Unaudited)Pro forma total revenue
    
    $
    14,857
    
    
    $
    22,518
    
    
    $
    30,700
    
    
    $
    47,305Pro forma net earnings
    
    
    (2,433
    )
    
    
    (1,446
    )
    
    
    (3,386
    )
    
    
    (847
    )Pro forma net earnings per share  basic
    
    $
    (0.25
    )
    
    $
    (0.15
    )
    
    $
    (0.34
    )
    
    $
    (0.09
    )Pro forma net earnings per share  diluted
    
    $
    (0.25
    )
    
    $
    (0.15
    )
    
    $
    (0.34
    )
    
    $
    (0.09
    )Pro forma weighted average shares  basic
    
    
    9,889
    
    
    
    9,889
    
    
    
    9,889
    
    
    
    9,889Pro forma weighted average shares 
diluted
    
    
    10,049
    
    
    
    10,021
    
    
    
    10,023
    
    
    
    9,931
 8




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DGSE COMPANIES, Inc. and Subsidiaries
   Euless Gold & Silver, Inc.
  (8) New Accounting Pronouncements
    9




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DGSE COMPANIES, Inc. and Subsidiaries
 (9) Recent Developments
    10




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##### Table of Contents



DGSE COMPANIES, Inc. and Subsidiaries
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Forward-Looking Statements
  
    
    uncertainties regarding price fluctuations in the price of gold and other precious metals;
    
    our ability to manage inventory fluctuations and sales;
    
    changes in governmental rules and regulations applicable to the specialty financial services industry;
    
    the results of any unfavorable litigation;
    
    interest rates;
    
    economic pressures affecting the disposable income available to our customers;
    
    our ability to maintain an effective system of internal controls;
    
    our ability to assimilate the operations of our recent acquisitions;
    
    the other risks detailed from time to time in our SEC reports.
  Our Business
     11




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DGSE COMPANIES, Inc. and Subsidiaries
 Recent Developments
    Significant Accounting Policies
 Inventory.
 Accounts Receivable.
 Revenue Recognition.
    12




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DGSE COMPANIES, Inc. and Subsidiaries
 Results of Operations
 Six Months Ended June 30, 2007 compared to Six Months Ended June 30, 2006
     Three Months Ended June 30, 2007 compared to Three Months Ended June 30, 2006
     13




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##### Table of Contents



DGSE COMPANIES, Inc. and Subsidiaries
 Liquidity and Capital Resources
       
   14




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##### Table of Contents



DGSE COMPANIES, Inc. and Subsidiaries
   
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
   
 Item 4. Controls and Procedures.
 Evaluation of disclosure controls and procedures
 Changes in internal controls.
 15




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DGSE COMPANIES, Inc. and Subsidiaries
 
 PART II- OTHER INFORMATION
 
 Item 1. Legal Proceedings
     16




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##### Table of Contents



DGSE COMPANIES, Inc. and Subsidiaries
 
 Item 1A. Risk Factors.
 Changes in customer demand for our products and services could result in a significant decrease
in revenues.
  Changes in governmental rules and regulations applicable to the specialty financial services
industry could have a negative impact on our lending activities.
  Fluctuations in our inventory turnover and sales.
  Changes in our liquidity and capital requirements could limit our ability to achieve our plans.
  Changes in competition from various sources could have a material adverse impact on our ability
to achieve our plans.
   Our earnings could be negatively impacted by an unfavorable outcome of litigation, regulatory
actions, or labor and employment matters.
  17




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DGSE COMPANIES, Inc. and Subsidiaries
 A failure in our information systems could prevent us from effectively managing and controlling
our business or serving our customers.
  A failure of our internal controls and disclosure controls and procedures, or our inability to
comply with the requirements of section 404 of the Sarbanes-Oxley Act in a timely fashion could
have a material adverse impact on us and our investors confidence in our reported financial
information.
  Changes in general economic conditions could negatively affect loan performance and demand for
our products and services.
  Interest rate fluctuations could increase our interest expense.
  Our success depends on our ability to attract, retain and motivate management and other skilled
employees.
  The voting power in our company is substantially controlled by a small number of stockholders,
which may, among other things, delay or frustrate the removal of incumbent directors or a
takeover attempt, even if such events may be beneficial to our stockholders.
  18




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DGSE COMPANIES, Inc. and Subsidiaries
   We could be subject to sales taxes, interest and penalties on interstate sales for which we have
not collected taxes.
  We may incur losses as a result of accumulating inventory.
  If we experience an increase in the rescission of sales, our revenue and profitability could
decrease.
  Our planned expansion and enhancement of our website and internet operations may not result in
increased profitability.
  Our websites may be vulnerable to security breaches and similar threats which could result in our
liability for damages and harm to our reputation.
  19




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DGSE COMPANIES, Inc. and Subsidiaries
  Changes to financial accounting standards and new exchange rules could make it more expensive to
issue stock options to employees, which would increase compensation costs and may cause us to
change our business practices.
  We are subject to new corporate governance and internal control reporting requirements, and our
costs related to compliance with, or our failure to comply with existing and future requirements
could adversely affect our business.
  The revolving credit facilities with Stanford International Bank Ltd. and Texas Capital Bank,
N.A. is each collateralized by a general security interest in our assets. If we were to default
under the terms of either credit facility, the lender would have the right to foreclose on our
assets.
   We have not paid dividends on our common stock in the past and do not anticipate paying dividends
on our common stock in the foreseeable future.
  20




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##### Table of Contents



DGSE
COMPANIES, Inc. and Subsidiaries
 
 Item 4.Submission of Matters to a Vote of Security Holders.
   Proposal
    
    For
    
    Against
    
    AbstainTo adopt and approve the Amended and
Restated Agreement and Plan of Merger
and Reorganization
    
    
    3,275,718
    
    
    
    2,500
    
    
    
    1,520To approve an amendment to DGSEs
articles of incorporation to increase
the number of authorized shares of
common stock by 20,000,000 shares, to
a total of 30,000,000 shares
    
    
    3,267,773
    
    
    
    10,745
    
    
    
    1,220To adjourn the special meeting, if
necessary, to solicit additional
proxies if there are not sufficient
votes in favor of the proposals
    
    
    3,262,203
    
    
    
    10,011
    
    
    
    7,524
 
 Item 5. Other Information.
  
 Item 6. Exhibits and Reports on Form 8-K.
 (a) Exhibits
 Exhibit
    
    
    
    Filed
    
    Incorporated
    
    
    
    Date Filed
    
    ExhibitNo.
    
    Description
    
    Herein
    
    by Reference
    
    Form
    
    with SEC
    
    No.2.1
    
    Amended and Restated
Agreement and Plan of
Merger and Reorganization,
dated as of January 6, 2007
    
    
    
    ×
    
    8-K
    
    January 9, 2007
    
    
    2.12.2
    
    Limited Joinder Agreement,
dated as of January 6, 2007
    
    
    
    ×
    
    8-K
    
    January 9, 2007
    
    
    2.93.1
    
    Articles of Incorporation
dated September 17, 1965
    
    
    
    ×
    
    8-A12G
    
    June 23, 1999
    
    
    3.13.2
    
    Certificate of Amendment to
Articles of Incorporation,
dated October 14, 1981
    
    
    
    ×
    
    8-A12G
    
    June 23, 1999
    
    
    3.23.3
    
    Certificate of Resolution,
dated October 14, 1981
    
    
    
    ×
    
    8-A12G
    
    June 23, 1999
    
    
    3.3
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DGSE
COMPANIES, Inc. and Subsidiaries
 Exhibit
    
    
    
    Filed
    
    Incorporated
    
    
    
    Date Filed
    
    ExhibitNo.
    
    Description
    
    Herein
    
    by Reference
    
    Form
    
    with SEC
    
    No.3.4
    
    Certificate of Amendment to
Articles of Incorporation ,
dated July 15, 1986
    
    
    
    ×
    
    8-A12G
    
    June 23, 1999
    
    
    3.43.5
    
    Certificate of Amendment to
Articles of Incorporation,
dated August 23, 1998
    
    
    
    ×
    
    8-A12G
    
    June 23, 1999
    
    
    3.53.6
    
    Certificate of Amendment to
Articles of Incorporation,
dated June 26, 1992
    
    
    
    ×
    
    8-A12G
    
    June 23, 1999
    
    
    3.63.7
    
    Certificate of Amendment to
Articles of Incorporation,
dated June 26, 2001
    
    
    
    ×
    
    8-K
    
    July 3, 2001
    
    
    1.03.8
    
    Certificate of Amendment to
Articles of Incorporation,
dated May 22, 2007
    
    
    
    x
    
    8-K
    
    May 31, 2007
    
    
    3.13.9
    
    By-laws, dated March 2, 1992
    
    
    
    ×
    
    8-A12G
    
    June 23, 1999
    
    
    3.74.1
    
    Specimen Common Stock
Certificate
    
    
    
    ×
    
    S-4
    
    January 6, 2007
    
    
    4.110.1
    
    Renewal, Extension And
Modification Agreement
dated January 28, 1994, by
and among DGSE Corporation
and Michael E. Hall And
Marian E. Hall
    
    
    
    ×
    
    10-KSB
    
    March 1995
    
    
    10.210.2
    
    Lease Agreement dated June
2, 2000 by and between SND
Properties and Charleston
Gold and Diamond Exchange,
Inc.
    
    
    
    ×
    
    10-KSB
    
    March 29, 2001
    
    
    10.110.3
    
    Lease agreement dated
October 5, 2004 by and
between Beltline Denton
Road Associates and Dallas
Gold & Silver Exchange
    
    
    
    ×
    
    10-K
    
    April 15, 2005
    
    
    10.210.4
    
    Lease agreement dated
December 1, 2004 by and
between Stone Lewis
Properties and Dallas Gold
& Silver Exchange
    
    
    
    ×
    
    10-K
    
    April 15, 2005
    
    
    10.310.5
    
    Lease agreement dated
November 18, 2004 by and
between Hinkle Income
Properties LLC and American
Pay Day Centers, Inc.
    
    
    
    ×
    
    10-K
    
    April 15, 2005
    
    
    10.4
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DGSE
COMPANIES, Inc. and Subsidiaries
 Exhibit
    
    
    
    Filed
    
    Incorporated
    
    
    
    Date Filed
    
    ExhibitNo.
    
    Description
    
    Herein
    
    by Reference
    
    Form
    
    with SEC
    
    No.10.6
    
    Lease Agreement dated
January 17, 2005 by and
between Belle-Hall
Development Phase III
Limited Partnership and
DGSE Companies, Inc.
    
    
    
    ×
    
    S-4
    
    January 6, 2007
    
    
    10.610.7
    
    Loan Agreement, dated as of
December 22, 2005, between
DGSE Companies, Inc. and
Texas Capital Bank, N.A.
    
    
    
    ×
    
    8-K/A
    
    August 17, 2006
    
    
    10.110.8
    
    Third Amendment to Loan Agreement, dated as
of May 10, 2007, by and between DGSE
Companies, Inc. and Texas Capital Bank,
N.A.
    
    
    
    ×
    
    8-K
    
    May 9, 2007
    
    
    3.010.9
    
    Support Agreement, DGSE stockholders, dated
as of January 6, 2007
    
    
    
    ×
    
    8-K
    
    January 9, 2007
    
    
    99.110.10
    
    Securities Exchange Agreement, dated as of
January 6, 2007
    
    
    
    ×
    
    8-K
    
    January 9, 2007
    
    
    99.210.11
    
    Warrant to DiGenova, issued January 6, 2007
    
    
    
    ×
    
    8-K
    
    January 9, 2007
    
    
    99.310.12
    
    Support Agreement, Superior stockholders,
dated as of January 6, 2007
    
    
    
    ×
    
    8-K
    
    January 9, 2007
    
    
    99.510.13
    
    Asset purchase agreement, dated May 9,
2007, by and between DGSE Companies, Inc.
and Euless Gold & Silver, Inc.
    
    
    
    ×
    
    8-K
    
    May 9, 2007
    
    
    1.010.14
    
    Subordinated Promissory Note dated May 9,
2007
    
    
    
    ×
    
    8-K
    
    May 9, 2007
    
    
    2.010.15
    
    Registration Rights Agreement with Stanford
International Bank Ltd., dated as of May
30, 2007
    
    
    
    ×
    
    8-K
    
    May 31, 2007
    
    
    99.110.16
    
    Corporate Governance Agreement with Dr.
L.S. Smith and Stanford International Bank
Ltd., dated as of May 30, 2007
    
    
    
    ×
    
    8-K
    
    May 31, 2007
    
    
    99.2
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##### Table of Contents



DGSE
COMPANIES, Inc. and Subsidiaries
 Exhibit
    
    
    
    Filed
    
    Incorporated
    
    
    
    Date Filed
    
    ExhibitNo.
    
    Description
    
    Herein
    
    by Reference
    
    Form
    
    with SEC
    
    No.10.17
    
    Escrow Agreement with American Stock
Transfer & Trust Company and Stanford
International Bank Ltd., as stockholder
agent, dated as of May 30, 2007
    
    
    
    ×
    
    8-K
    
    May 31, 2007
    
    
    99.310.18
    
    Form of Warrants
    
    
    
    ×
    
    8-K
    
    May 31, 2007
    
    
    99.410.19
    
    Amended and Restated Commercial Loan and
Security Agreement, by and between Superior
Galleries Inc. and Stanford International
Bank Ltd., dated as of May 30, 2007
    
    
    
    ×
    
    8-K
    
    May 31, 2007
    
    
    99.510.20
    
    Employment Agreement with L.S. Smith, dated
as of May 30, 2007
    
    
    
    ×
    
    8-K
    
    May 31, 2007
    
    
    99.610.21
    
    Employment Agreement with William H.
Oyster, dated as of May 30, 2007
    
    
    
    ×
    
    8-K
    
    May 31, 2007
    
    
    99.710.22
    
    Employment Agreement with John Benson,
dated as of May 30, 2007
    
    
    
    ×
    
    8-K
    
    May 31, 2007
    
    
    99.831.1
    
    Certification pursuant to Rule 13a-14(a) of
the Securities Exchange Act of 1934
implementing Section 302 of the
Sarbanes-Oxley Act of 2002 by Dr. L.S.
Smith
    
    ×31.2
    
    Certification pursuant to Rule 13a-14(a) of
the Securities Exchange Act of 1934
implementing Section 302 of the
Sarbanes-Oxley Act of 2002 by John Benson
    
    ×32.1
    
    Certification pursuant to 18 U.S.C. Section
1350 as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 by Dr. L.S.
Smith
    
    ×32.2
    
    Certification pursuant to 18 U.S.C. Section
1350 as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 by John
Benson
    
    ×
 (b) Reports on Form 8-K :
  24




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##### Table of Contents



SIGNATURES
   By:
    
    /s/ L. S. Smith
    
    
    
    Dated: August 14, 2007L. S. SmithChairman of the Board,Chief Executive Officer andSecretary
  By:
    
    /s/ L. S. Smith
    
    
    
    Dated: August 14, 2007L. S. SmithChairman of the Board,Chief Executive Officer andSecretaryBy:
    
    /s/ W. H. Oyster
    
    
    
    Dated: August 14, 2007W. H. OysterDirector, President andChief Operating OfficerBy:
    
    /s/ John Benson
    
    
    
    Dated: August 14, 2007John BensonChief Financial Officer(Principal Accounting Officer)