**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 March 31, 2008**

**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.                Employer*    |
| *incorporation                or organization)*  |   | *Identification                No.)* |

**11311      Reeder Road**

**Dallas,      Texas 75229**

**(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)*

| Large                accelerated filer o | Accelerated                filer o              |
|------------------------------------------|-------------------------------------------------|
|                                     |                                            |
| Non-accelerated                filer o   | Smaller                reporting company þ |
|                                     |                                            |

| Class                                                 |   | Outstanding |
|-------------------------------------------------------|--------|-------------|
| Common                stock, $.01 par value per share |   | 9,498,739   |

----

**TABLE      OF CONTENTS**

|                    |                                                                                                                                  | Page                No. |
|-------------------------|---------------------------------------------------------------------------------------------------------------------------------------|-------------------------|
| PART                I.  | FINANCIAL                INFORMATION                                                                                                  |                    |
|                    |                                                                                                                                  |                    |
| Item                1.  | Consolidated                Financial Statements.                                                                                     |                    |
|                    |                                                                                                                                  |                    |
|                    | Consolidated                Balance Sheets as of March 31, 2008 and December 31, 2007                                                 | 1                       |
|                    |                                                                                                                                  |                    |
|                    | Consolidated                Statements of Operations for the three months ended March 31, 2008                and                2007 | 2                       |
|                    |                                                                                                                                  |                    |
|                    | Consolidated                Statements of Cash Flows for the three months ended March 31, 2008                and                2007 | 3                       |
|                    |                                                                                                                                  |                    |
|                    | Notes                to Consolidated Financial Statements                                                                             | 4                       |
|                    |                                                                                                                                  |                    |
| Item                2.  | Management’s                Discussion and Analysis of Financial Condition and Results of                Operations.            | 8                       |
|                    |                                                                                                                                  |                    |
| Item                3.  | Quantitative                and Qualitative Disclosures About Market Risk.                                                            | 13                      |
|                    |                                                                                                                                  |                    |
| Item                4.  | Controls                and Procedures.                                                                                               | 13                      |
|                    |                                                                                                                                  |                    |
| PART                II. | OTHER                INFORMATION                                                                                                      |                    |
|                    |                                                                                                                                  |                    |
| Item                3.  | Legal                Proceedings.                                                                                                     | 14                      |
|                    |                                                                                                                                  |                    |
| Item                5.  | Other                Information.                                                                                                     | 14                      |
|                    |                                                                                                                                  |                    |
| Item                6.  | Exhibits.                                                                                                                             | 14                      |
|                    |                                                                                                                                  |
| **SIGNATURES**          |                                                                                                                                  |

----

***DGSE      Companies, Inc. and Subsidiaries***

**PART      I. FINANCIAL INFORMATION**

**Item      1. Consolidated Financial Statements.**

**CONSOLIDATED      BALANCE SHEETS**

|                                                                                                                                                                                                                                   |   | **March 31,****2008** |       | **December 31, ****2007** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------|------------|-------------------------------------|--------|
|                                                                                                                                                                                                                                   |   | **Unaudited**              |       |                                |   |
| **ASSETS**                                                                                                                                                                                                                             |   |                       |       |                                |   |   |   |
| Current                Assets:                                                                                                                                                                                                         |   |                       |       |                                |   |   |   |
| Cash                and cash equivalents                                                                                                                                                                                               |   | $                          | 712,275    |                                | $      | 536,548 |   |
| Trade                receivables                                                                                                                                                                                                       |   |                       | 2,501,535  |                                |   | 3,792,474 |   |
| Auction                advances                                                                                                                                                                                                        |   |                       | 759,157    |                                |   | 747,000 |   |
| Inventories                                                                                                                                                                                                                            |   |                       | 15,584,171 |                                |   | 12,975,782 |   |
|  Prepaid                expenses                                                                                                                                                                                                  |   |                       | 657,603    |                                |   | 459,486 |   |
| Prepaid                federal income tax                                                                                                                                                                                              |   |                       | —    |                                |   | 59,341 |   |
| Total                current assets                                                                                                                                                                                                    |   |                       | 20,214,741 |                                |   | 18,570,631 |   |
|                                                                                                                                                                                                                                   |   |                       |       |                                |   |   |   |
| Marketable                securities - available for sale                                                                                                                                                                              |   |                       | 77,069     |                                |   | 61,769 |   |
| Property                and equipment, net                                                                                                                                                                                             |   |                       | 4,377,088  |                                |   | 4,193,869 |   |
| Deferred                income taxes                                                                                                                                                                                                   |   |                       | 1,761,916  |                                |   | 1,805,205 |   |
| Goodwill                                                                                                                                                                                                                               |   |                       | 8,952,181  |                                |   | 8,952,181 |   |
| Intangible                assets                                                                                                                                                                                                       |   |                       | 2,514,173  |                                |   | 2,521,340 |   |
| Other                long-term receivable                                                                                                                                                                                              |   |                       | 444,383    |                                |   | 444,383 |   |
| Other                assets                                                                                                                                                                                                            |   |                       | 292,014    |                                |   | 309,836 |   |
|                                                                                                                                                                                                                                   |   | $                          | 38,633,565 |                                | $      | 36,859,214 |   |
|                                                                                                                                                                                                                                   |   |                       |       |                                |   |   |   |
| **LIABILITIES**                                                                                                                                                                                                                        |   |                       |       |                                |   |   |   |
| Current                Liabilities:                                                                                                                                                                                                    |   |                       |       |                                |   |   |   |
| Notes                payable                                                                                                                                                                                                           |   | $                          | 187,463    |                                | $      | 187,467 |   |
| Current                maturities of long-term debt                                                                                                                                                                                    |   |                       | 501,631    |                                |   | 501,631 |   |
| Accounts                payable - trade                                                                                                                                                                                                |   |                       | 840,867    |                                |   | 1,069,194 |   |
| Federal                income tax payable                                                                                                                                                                                              |   |                       | 169,205    |                                |   | — |   |
| Accrued                expenses                                                                                                                                                                                                        |   |                       | 606,774    |                                |   | 1,018,003 |   |
| Customer                deposits                                                                                                                                                                                                       |   |                       | 1,958,684  |                                |   | 315,437 |   |
| Total                current liabilities                                                                                                                                                                                               |   |                       | 4,264,624  |                                |   | 3,091,732 |   |
|                                                                                                                                                                                                                                   |   |                       |       |                                |   |   |   |
| Long-term                debt, less current maturities                                                                                                                                                                                 |   |                       | 13,567,625 |                                |   | 13,489,901 |   |
|                                                                                                                                                                                                                                   |   |                       | 17,832,249 |                                |   | 16,581,633 |   |
|                                                                                                                                                                                                                                   |   |                       |       |                                |   |   |   |
| **STOCKHOLDERS’                EQUITY**                                                                                                                                                                                          |   |                       |       |                                |   |   |   |
| Common                stock, $.01 par value; 30,000,000 shares authorized; 9,498,729 and                9,490,357 shares issued and outstanding at the end of each period                in 2008                and 2007, respectively |   |                       | 94,987     |                                |   | 94,904 |   |
| Additional                paid-in capital                                                                                                                                                                                              |   |                       | 18,509,533 |                                |   | 18,473,234 |   |
| Accumulated                other comprehensive loss                                                                                                                                                                                    |   |                       | (87,190    | )                                   |   | (97,288 | ) |
| Retained                earnings                                                                                                                                                                                                       |   |                       | 2,283,986  |                                |   | 1,806,731 |   |
|                                                                                                                                                                                                                                   |   |                       | 20,801,316 |                                |   | 20,277,581 |   |
|                                                                                                                                                                                                                                   |   |                       |       |                                |   |   |   |
|                                                                                                                                                                                                                                   |   | $                          | 38,633,565 |                                | $      | 36,859,214 |   |

----

***DGSE      Companies, Inc. and Subsidiaries***

**CONSOLIDATED      STATEMENTS OF OPERATIONS**

|                                                                                                                                                |   | **Three                months ended March 31,** |       |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------|------------|
|                                                                                                                                                |   | **2008**                                        |       | **2007** |   |
|                                                                                                                                                |   | **Unaudited**                         |       |
| Revenue                                                                                                                                             |   |                                            |       |   |   |   |   |
| Sales                                                                                                                                               |   | $                                               | 32,603,222 |   | $ | 9,976,378 |   |
| Consumer                loan service charges                                                                                                        |   |                                            | 124,320    |   |   | 47,891 |   |
| Management                fees                                                                                                                      |   |                                            | —    |   |   | 150,000 |   |
|                                                                                                                                                |   |                                            | 32,727,542 |   |   | 10,174,269 |   |
|                                                                                                                                                |   |                                            |       |   |   |   |   |
| Costs                and expenses                                                                                                                   |   |                                            |       |   |   |   |   |
| Cost                of goods sold                                                                                                                   |   |                                            | 28,420,016 |   |   | 8,394,233 |   |
| Selling,                general and administrative expenses                                                                                         |   |                                            | 3,281,812  |   |   | 1,326,419 |   |
| Depreciation                and amortization                                                                                                        |   |                                            | 109,836    |   |   | 38,692 |   |
|                                                                                                                                                |   |                                            | 31,811,664 |   |   | 9,759,344 |   |
|                                                                                                                                                |   |                                            |       |   |   |   |   |
| Operating                income                                                                                                                     |   |                                            | 915,878    |   |   | 414,925 |   |
|                                                                                                                                                |   |                                            |       |   |   |   |   |
| Other                expense (income)                                                                                                               |   |                                            |       |   |   |   |   |
| Other                income                                                                                                                         |   |                                            | (13,216    | ) |   | — |   |
| Interest                expense                                                                                                                     |   |                                            | 185,206    |   |   | 107,240 |   |
|                                                                                                                                                |   |                                            |       |   |   |   |   |
| Earnings                before income taxes                                                                                                         |   |                                            | 743,888    |   |   | 307,685 |   |
|                                                                                                                                                |   |                                            |       |   |   |   |   |
| Income                tax expense                                                                                                                   |   |                                            | 266,633    |   |   | 104,613 |   |
|                                                                                                                                                |   |                                            |       |   |   |   |   |
| Net                earnings from continuing operations                                                                                              |   |                                            | 477,255    |   |   | 203,072 |   |
|                                                                                                                                                |   |                                            |       |   |   |   |   |
| Discontinued                operations:                                                                                                             |   |                                            |       |   |   |   |   |
| Loss                from discontinued operations (less applicable income tax benefit                of $0 and                $10,641, respectively) |   |                                            | —    |   |   | 20,657 |   |
|                                                                                                                                                |   |                                            |       |   |   |   |   |
| Net                earnings                                                                                                                         |   | $                                               | 477,255    |   | $ | 182,415 |   |
|                                                                                                                                                |   |                                            |       |   |   |   |   |
| Earnings                per common share - basic and diluted                                                                                        |   | $                                               | 0.05       |   | $ | 0.04 |   |
|                                                                                                                                                |   |                                            |       |   |   |   |   |
| Weighted                average number of common shares:                                                                                            |   |                                            |       |   |   |   |   |
| Basic                                                                                                                                               |   |                                            | 9,498,729  |   |   | 4,913,290 |   |
| Diluted                                                                                                                                             |   |                                            | 10,344,363 |   |   | 5,020,436 |   |

----

***DGSE      COMPANIES, Inc. and Subsidiaries***

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

|                                                                                                             |   | **Three months ended March 31,** |       |
|------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------|------------|
|                                                                                                             |   | **2008**                                             |       | **2007** |   |
| **Cash flows                from operating activities**                                                     |   | **Unaudited**                                        |       |
|                                                                                                             |   |                                                 |       |   |   |
| Net                earnings                                                                                      |   | $                                                    | 477,255    |   | $ | 182,415 |   |
| Adjustments                to reconcile net earnings to net cash provided by operating                activities |   |                                                 |       |   |   |   |   |
| Depreciation                and amortization                                                                     |   |                                                 | 109,836    |   |   | 49,780 |   |
| Deferred                income taxes                                                                             |   |                                                 | 43,289     |   |   | — |   |
| Gain                on marketable securities                                                                     |   |                                                 | (15,300    | ) |   | — |   |
| (Increase)                decrease in operating assets and liabilities                                           |   |                                                 |       |   |   |   |   |
| Trade                receivables                                                                                 |   |                                                 | 1,266,568  |   |   | 97,256 |   |
| Inventories                                                                                                      |   |                                                 | (2,608,389 | ) |   | (317,718 | ) |
| Prepaid                expenses and other current assets                                                         |   |                                                 | (198,117   | ) |   | (44,006 | ) |
| Accounts                payable and accrued expenses                                                             |   |                                                 | (628,160   | ) |   | (939,845 | ) |
| Customer                deposits                                                                                 |   |                                                 | 1,643,247  |   |   | 98,632 |   |
| Federal                income taxes payable                                                                      |   |                                                 | 228,546    |   |   | 57,280 |   |
| Other                assets                                                                                      |   |                                                 | 17,822     |   |   | (22,357 | ) |
| Net                cash provided by (used in) operating activities                                               |   |                                                 | 336,597    |   |   | (838,563 | ) |
| **Cash                flows from investing activities**                                                          |   |                                                 |       |   |   |   |   |
| Pawn                loans made                                                                                   |   |                                                 | (317,580   | ) |   | (77,851 | ) |
| Pawn                loans repaid                                                                                 |   |                                                 | 160,906    |   |   | 46,988 |   |
| Recovery                of pawn loan principal through sale of forfeited                collateral               |   |                                                 | 168,888    |   |   | 20,396 |   |
| Pay                day loans made                                                                                |   |                                                 | —    |   |   | (73,866 | ) |
| Pay                day loans repaid                                                                              |   |                                                 | —    |   |   | 63,123 |   |
| Purchase                of property and equipment                                                                |   |                                                 | (285,888   | ) |   | (74,022 | ) |
| Merger                costs paid                                                                                 |   |                                                 | —    |   |   | (84,964 | ) |
| Net                cash used in investing activities                                                             |   |                                                 | (273,674   | ) |   | (180,196 | ) |
| **Cash                flows from financing activities**                                                          |   |                                                 |       |   |   |   |   |
| Proceeds                from line of credit                                                                      |   |                                                 | 750,000    |   |   | — |   |
| Payments                of capital lease                                                                         |   |                                                 | (1,986     | ) |   | — |   |
| Repayments                of notes payable                                                                       |   |                                                 | (635,210   | ) |   | (68,024 | ) |
| Net                cash provided by (used in) financing activities                                               |   |                                                 | 112,804    |   |   | (68,024 | ) |
|                                                                                                             |   |                                                 |       |   |   |   |   |
| NET                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                              |   |                                                 | 175,727    |   |   | (1,086,783 | ) |
| Cash                and cash equivalents at beginning of period                                                  |   |                                                 | 536,548    |   |   | 1,210,282 |   |
| Cash                and cash equivalents at end of period                                                        |   | $                                                    | 712,275    |   | $ | 123,499 |   |

**Supplemental      disclosures:**

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***DGSE      COMPANIES, Inc. and Subsidiaries***

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

| **(1)** | **Basis                of Presentation.** |
|---------|-------------------------------------------|

| **(2)** | **Inventory.** |
|---------|----------------|

|                      |   | March                31, 2008 |       | December                31, 2007 |   |
|---------------------------|--------|-------------------------------|------------|----------------------------------|--------|
| Jewelry                   |   | $                             | 9,545,537  |                             | $      | 8,118,454 |   |
| Rare                coins |   |                          | 3,184,025  |                             |   | 3,482,248 |   |
| Bullion                   |   |                          | 1,388,456  |                             |   | 486,991 |   |
| Scrap                gold |   |                          | 920,796    |                             |   | 414,099 |   |
| Other                     |   |                          | 545,357    |                             |   | 473,990 |   |
| Total                     |   | $                             | 15,584,171 |                             | $      | 12,975,782 |   |

| **(3)** | **Trade                Receivables.** |
|---------|---------------------------------------|

| **(4)** | **Earnings                per share.** |
|---------|----------------------------------------|

|                                             |   | **2008**                                                   |    | **2007**                                             |   |
|--------------------------------------------------|--------|------------------------------------------------------------|---------|------------------------------------------------------|--------|
|                                             |   | **Three months ended March 31, ** |    | **Three months ended March 31,** |   |
|                                             |   | **Net Earnings**                                      |    | **Shares**                                           |   | **Per share** |   | **Net Earnings** |   | **Shares** |   | **Per share** |   |
|                                             |   |                                                       |    |                                                 |   |   |   |   |   |   |   |   |   |
| Basic                earnings per common share   |   | $                                                          | 477,255 |                                                 |   | 9,498,729 |   | $ | 0.05 |   | $ | 182,415 |   |   | 4,913,290 |   | $ | 0.04 |   |
| Effect                of dilutive stock options  |   |                                                       | — |                                                 |   | 845,634 |   |   | — |   |   | — |   |   | 107,146 |   |   | — |   |
|                                             |   |                                                       |         |                                                 |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
| Diluted                earnings per common share |   | $                                                          | 477,255 |                                                 |   | 10,344,363 |   | $ | 0.05 |   | $ | 182,415 |   |   | 5,020,436 |   | $ | 0.04 |   |
|                                             |   |                                                       |    |                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

**DGSE      COMPANIES, Inc. and Subsidiaries**

| **(5)** | **Business                  segment information.** |
|---------|----------------------------------------------------|

| ***(In                thousands)***          |   | **Retail ****Jewelry** |    | **Wholesale****Jewelry** |   | **Precious                Metals** |   | **Rare ****Coins** |    | **Auctions** |   | **Corporate ****and Other** |   | **Consolidated** |    |
|----------------------------------------------|--------|-----------------------------|---------|--------------------------|--------|------------------------------------|--------|-------------------------|---------|--------------|--------|---------------------------------------|--------|------------------|---------|
| Revenues                                     |   |                        |    |                     |   |                               |   |                    |    |         |   |                                  |   |             |    |   |   |   |   |   |   |   |
| 2008                                         |   | $                           | 6,514   |                     | $      | 1,358                              |   | $                       | 16,434  |         | $      | 7,306                                 |   | $                | 553     |   | $ | 563 |   | $ | 32,728 |   |
| 2007                                         |   |                        | 3,951   |                     |   | 1,336                              |   |                    | 3,343   |         |   | 1,286                                 |   |             | — |   |   | 258 |   |   | 10,174 |   |
|                                         |   |                        |    |                     |   |                               |   |                    |    |         |   |                                  |   |             |    |   |   |   |   |   |   |   |
| Net                earnings (loss)           |   |                        |    |                     |   |                               |   |                    |    |         |   |                                  |   |             |    |   |   |   |   |   |   |   |
| 2008                                         |   |                        | 208     |                     |   | 33                                 |   |                    | 404     |         |   | (70                                   | )      |             | (70     | ) |   | (28 | ) |   | 477 |   |
| 2007                                         |   |                        | 62      |                     |   | 43                                 |   |                    | 53      |         |   | 9                                     |   |             | — |   |   | 15 |   |   | 182 |   |
|                                         |   |                        |    |                     |   |                               |   |                    |    |         |   |                                  |   |             |    |   |   |   |   |   |   |   |
| Identifiable                assets           |   |                        |    |                     |   |                               |   |                    |    |         |   |                                  |   |             |    |   |   |   |   |   |   |   |
| 2008                                         |   |                        | 21,056  |                     |   | 2,074                              |   |                    | 1,383   |         |   | 4,544                                 |   |             | 1,147   |   |   | 8,430 |   |   | 38,634 |   |
| 2007                                         |   |                        | 9,094   |                     |   | 1,907                              |   |                    | 259     |         |   | 237                                   |   |             | — |   |   | 938 |   |   | 12,435 |   |
|                                         |   |                        |    |                     |   |                               |   |                    |    |         |   |                                  |   |             |    |   |   |   |   |   |   |   |
| Goodwill                                     |   |                        |    |                     |   |                               |   |                    |    |         |   |                                  |   |             |    |   |   |   |   |   |   |   |
| 2008                                         |   |                        | — |                     |   | 837                                |   |                    | — |         |   | —                               |   |             | — |   |   | 8,115 |   |   | 8,952 |   |
| 2007                                         |   |                        | — |                     |   | 837                                |   |                    | — |         |   | —                               |   |             | — |   |   | — |   |   | 837 |   |
|                                         |   |                        |    |                     |   |                               |   |                    |    |         |   |                                  |   |             |    |   |   |   |   |   |   |   |
| Capital                Expenditures          |   |                        |    |                     |   |                               |   |                    |    |         |   |                                  |   |             |    |   |   |   |   |   |   |   |
| 2008                                         |   |                        | 272     |                     |   | —                            |   |                    | — |         |   | —                               |   |             | 14      |   |   | — |   |   | 286 |   |
| 2007                                         |   |                        | 71      |                     |   | —                            |   |                    | — |         |   | —                               |   |             | — |   |   | 3 |   |   | 74 |   |
|                                         |   |                        |    |                     |   |                               |   |                    |    |         |   |                                  |   |             |    |   |   |   |   |   |   |   |
| Depreciation                and amortization |   |                        |    |                     |   |                               |   |                    |    |         |   |                                  |   |             |    |   |   |   |   |   |   |   |
| 2008                                         |   |                        | 38      |                     |   | —                            |   |                    | 14      |         |   | 14                                    |   |             | 14      |   |   | 30 |   |   | 110 |   |
| 2007                                         |   |                        | 24      |                     |   | —                            |   |                    | — |         |   | —                               |   |             | — |   |   | 26 |   |   | 50 |   |

| **(6)** | **Stock-based                Compensation.** |
|---------|----------------------------------------------|

----

**DGSE      COMPANIES, Inc. and Subsidiaries**

| **(7)** | **Acquisitions** |
|---------|------------------|

*Superior      Galleries, Inc. *

|                                     |   | Shares |      | Stock Price |   | Extended Price |   |
|------------------------------------------|--------|--------|-----------|------------------|--------|---------------------|--------|
| Common                stock              |   |   | 3,669,067 |             | $      | 2.55                |   | $ | 9,356,121 |   |
| A                warrants                |   |   | 845,634   |             |   | 1.27                | (1)    |   | 1,073,955 |   |
| B                warrants                |   |   | 863,000   |             |   | 2.55                |   |   | 2,200,650 |   |
| Exercise                Price B warrants |   |   | 863,000   |             | $      | .001                |   |   | (863 | ) |
| Direct                transaction costs  |   |   |      |             |   |                |   |   | 1,176,290 |   |
| Total                purchase price      |   |   |      |             |   |                |   | $ | 13,806,153 |   |

| (1) | $1.27                is the fair value of the warrants calculated under the Black Sholes                method                as of the acquisition date. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| Goodwill                                 |   | $      | 8,203,448  |   |
|------------------------------------------|--------|--------|------------|--------|
| Intangible                assets         |   |   | 2,521,340  |   |
| Deferred                tax asset        |   |   | 1,860,475  |   |
| Property                and other assets |   |   | 1,068,958  |   |
| Inventory                                |   |   | 3,260,766  |   |
| Liabilities                assumed       |   |   | (3,108,834 | )      |
| Total                purchase price      |   | $      | 13,806,153 |   |

----

***DGSE      COMPANIES, Inc. and Subsidiaries***

|                                                                 |   | **Quarter Ended March 31,** |   |
|----------------------------------------------------------------------|--------|--------------------------------------------|--------|
| ***(In thousands, except per share data)*** |   | **2008**                                   |   | **2007** |   |
|                                                                 |   | **(Unaudited)**                            |   |
|                                                                 |   |                                       |   | **(Pro                forma)** |   |
| Total                revenue                                         |   | $                                          | 32,728 |   | $ | 15,843 |   |
| Net                earnings (loss)                                   |   | $                                          | 477    |   | $ | (953 | ) |
| Net                earnings (loss) per share — basic      |   | $                                          | 0.05   |   | $ | (0.15 | ) |
| Net                earnings (loss) per share — diluted    |   | $                                          | 0.05   |   | $ | (0.15 | ) |
| Weighted                average shares — basic            |   |                                       | 9,499  |   |   | 6,226 |   |
| Weighted                average shares — diluted          |   |                                       | 10,344 |   |   | 6,353 |   |

*Euless      Gold & Silver, Inc.*

| **(8)** | **New                Accounting Pronouncements** |
|---------|--------------------------------------------------|

----

**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; |
|--|--------|-------------------------------------------------------------------------------------------------|

|  | · | the                other risks detailed from time to time in our SEC reports. |
|--|--------|-------------------------------------------------------------------------------|

**Our      Business**

** **

----

**DGSE      COMPANIES, Inc. and Subsidiaries**

**Significant      Accounting Policies**

*Inventory.*
** **

*Accounts      Receivable.*
** **

*Auction      Advances. *

*Revenue        Recognition.*

----

**DGSE      COMPANIES, Inc. and Subsidiaries**

*Exchanges      of Nonmonetary Assets - An Amendment of APB Opinion No. 29*

----

**DGSE      COMPANIES, Inc. and Subsidiaries**

**Results      of Operations**

**Three**
**      Months Ended March 31, 2008 compared to Three Months Ended March 31,      2007**

**Liquidity      and Capital Resources**

----

**DGSE      COMPANIES, Inc. and Subsidiaries**

----

**DGSE      COMPANIES, Inc. and Subsidiaries**

|                                             |   | **Payments due by period** |       |
|--------------------------------------------------|--------|-------------------------------------------|------------|
| **Contractual Cash Obligations**       |   |                                      | **Total**  |   |   | **2008** |   |   | **2009 - 2010** |   |   | **2011 - 2012** |   |   | **Thereafter** |   |
| Notes payable                          |   | $                                         | 187,463    |   | $ | 187,463 |   | $ | — |   | $ | — |   | $ | — |   |
| Long-term                debt and capital leases |   |                                      | 14,241,041 |   |   | 364,115 |   |   | 4,306,121 |   |   | 7,293,362 |   |   | 2,277,443 |   |
| Federal                income taxes         |   |                                      | 169,205    |   |   | 169,205 |   |   | — |   |   | — |   |   | — |   |
| Operating                Leases                  |   |                                      | 3,331,923  |   |   | 614,962 |   |   | 1,518,477 |   |   | 1,150,244 |   |   | 48,240 |   |
| Total                                            |   | $                                         | 17,929,632 |   | $ | 1,335,745 |   | $ | 5,824,598 |   | $ | 8,443,606 |   | $ | 2,325,683 |   |

**Item      3. Quantitative and Qualitative Disclosures About Market      Risk.**

**Item      4. Controls and Procedures.**

*Evaluation      of disclosure controls and procedures*

*Changes      in internal controls.*

----

**DGSE      COMPANIES, Inc. and Subsidiaries**

**PART      II- OTHER INFORMATION**

**Item      3. Legal Proceedings**

**Item      5. Other Information.**

----

**Item        6.**
**Exhibits        and Reports on Form 8-K.**

**Exhibits:**

|  | **(a)** | **Exhibits** |
|--|---------|--------------|

|        |   |                                                                                                                                                      |   |       |   |                              |   |     |   |                                  |   |        |   |   |
|-------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|--------|-----------------------------------|--------|----------|--------|---------------------------------------|--------|-------------|--------|--------|
| **Exhibit** |   |                                                                                                                                                      |   | **Filed**  |   | **Incorporated**                  |   |     |   | **Date                  Filed**       |   | **Exhibit** |
| **No.**     |   | **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 |   |        | 2.1    |   |
|        |   |                                                                                                                                                      |   |       |   |                              |   |     |   |                                  |   |        |   |   |
| 2.2         |   | Limited                  Joinder Agreement, dated as of January 6, 2007                                                                              |   |       |   | ×                            |   | 8-K      |   | January 9,                  2007 |   |        | 2.9    |   |
|        |   |                                                                                                                                                      |   |       |   |                              |   |     |   |                                  |   |        |   |   |
| 3.1         |   | Articles                  of Incorporation dated September 17, 1965                                                                                  |   |       |   | ×                            |   | 8-A12G   |   | June 23,                  1999   |   |        | 3.1    |   |
|        |   |                                                                                                                                                      |   |       |   |                              |   |     |   |                                  |   |        |   |   |
| 3.2         |   | Certificate                  of Amendment to Articles of Incorporation, dated October 14,                  1981                                      |   |       |   | ×                            |   | 8-A12G   |   | June 23,                  1999   |   |        | 3.2    |   |
|        |   |                                                                                                                                                      |   |       |   |                              |   |     |   |                                  |   |        |   |   |
| 3.3         |   | Certificate                  of Resolution, dated October 14, 1981                                                                                   |   |       |   | ×                            |   | 8-A12G   |   | June 23,                  1999   |   |        | 3.3    |   |
|        |   |                                                                                                                                                      |   |       |   |                              |   |     |   |                                  |   |        |   |   |
| 3.4         |   | Certificate                  of Amendment to Articles of Incorporation , dated July 15,                  1986                                        |   |       |   | ×                            |   | 8-A12G   |   | June 23,                  1999   |   |        | 3.4    |   |
|        |   |                                                                                                                                                      |   |       |   |                              |   |     |   |                                  |   |        |   |   |
| 3.5         |   | Certificate                  of Amendment to Articles of Incorporation, dated August 23,                  1998                                       |   |       |   | ×                            |   | 8-A12G   |   | June 23,                  1999   |   |        | 3.5    |   |
|        |   |                                                                                                                                                      |   |       |   |                              |   |     |   |                                  |   |        |   |   |
| 3.6         |   | Certificate                  of Amendment to Articles of Incorporation, dated June 26,                  1992                                         |   |       |   | ×                            |   | 8-A12G   |   | June 23,                  1999   |   |        | 3.6    |   |
|        |   |                                                                                                                                                      |   |       |   |                              |   |     |   |                                  |   |        |   |   |
| 3.7         |   | Certificate                  of Amendment to Articles of Incorporation, dated June 26,                  2001                                         |   |       |   | ×                            |   | 8-K      |   | July 3,                  2001    |   |        | 1.0    |   |
|        |   |                                                                                                                                                      |   |       |   |                              |   |     |   |                                  |   |        |   |   |
| 3.8         |   | Certificate                  of Amendment to Articles of Incorporation, dated May 22,                  2007                                               |   |       |   | x                                 |   | 8-K      |   | May                  31, 2007         |   |        | 3.1    |   |
|        |   |                                                                                                                                                      |   |       |   |                              |   |     |   |                                  |   |        |   |   |
| 3.9         |   | By-laws,                  dated March 2, 1992                                                                                                        |   |       |   | ×                            |   | 8-A12G   |   | June 23,                  1999   |   |        | 3.7    |   |
|        |   |                                                                                                                                                      |   |       |   |                              |   |     |   |                                  |   |        |   |   |
| 4.1         |   | Specimen                  Common Stock Certificate                                                                                                        |   |       |   | ×                            |   | S-4      |   | January 6,                  2007 |   |        | 4.1    |   |

----

| 10.1   |   | 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           |   |   | 10.2   |   |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|---------------------------------------|--------|--------|--------|--------|
|   |   |                                                                                                                                                                                          |   |   |   |   |   |   |   |                                  |   |   |   |   |
| 10.2   |   | Lease                  Agreement dated June 2, 2000 by and between SND Properties and                  Charleston Gold and Diamond Exchange, Inc.                                        |   |   |   | × |   | 10-KSB |   | March 29,                  2001  |   |   | 10.1   |   |
|   |   |                                                                                                                                                                                          |   |   |   |   |   |   |   |                                  |   |   |   |   |
| 10.3   |   | Lease                  agreement dated October 5, 2004 by and between Beltline Denton                  Road                  Associates and Dallas Gold & Silver Exchange                 |   |   |   | × |   | 10-K   |   | April 15,                  2005  |   |   | 10.2   |   |
|   |   |                                                                                                                                                                                          |   |   |   |   |   |   |   |                                  |   |   |   |   |
| 10.4   |   | Lease                  agreement dated December 1, 2004 by and between Stone Lewis Properties                  and                  Dallas Gold & Silver Exchange                         |   |   |   | × |   | 10-K   |   | April 15,                  2005  |   |   | 10.3   |   |
|   |   |                                                                                                                                                                                          |   |   |   |   |   |   |   |                                  |   |   |   |   |
| 10.5   |   | 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   |   |
|   |   |                                                                                                                                                                                          |   |   |   |   |   |   |   |                                  |   |   |   |   |
| 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 |   |   | 10.6   |   |
|   |   |                                                                                                                                                                                          |   |   |   |   |   |   |   |                                  |   |   |   |   |
| 10.7   |   | Sale                  agreement dated executed July 5, 2007 by and between DGSE Companies,                  Inc. and Texas Department of Transportation                                  |   |   |   | × |   | 8-K    |   | July                  11, 2007        |   |   | 10.1   |   |
|   |   |                                                                                                                                                                                          |   |   |   |   |   |   |   |                                  |   |   |   |   |
| 10.8   |   | Purchase                  agreement dated July 5, 2007 by and between DGSE Companies, Inc. and                  11311 Reeder Road Holdings, LP                                           |   |   |   | × |   | 8-K    |   | July                  11, 2007        |   |   | 10.2   |   |
|   |   |                                                                                                                                                                                          |   |   |   |   |   |   |   |                                  |   |   |   |   |
| 10.9   |   | Loan                  Agreement, dated as of December 22, 2005, between DGSE Companies,                  Inc. and Texas Capital Bank, N.A.                                               |   |   |   | × |   | 8-K/A  |   | August 17,                  2006 |   |   | 10.1   |   |

----

| 10.10  |   | 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          |   |   | 3.0    |   |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|---------------------------------------|--------|--------|--------|--------|
|   |   |                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |                                  |   |   |   |   |
| 10.11  |   | Support                  Agreement, DGSE stockholders, dated as of January 6,                  2007                                                                                                                               |   |   |   | × |   | 8-K    |   | January 9,                  2007 |   |   | 99.1   |   |
|   |   |                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |                                  |   |   |   |   |
| 10.12  |   | Securities                  Exchange Agreement, dated as of January 6, 2007                                                                                                                                                       |   |   |   | × |   | 8-K    |   | January 9,                  2007 |   |   | 99.2   |   |
|   |   |                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |                                  |   |   |   |   |
| 10.13  |   | Warrant                  to DiGenova, issued January 6, 2007                                                                                                                                                                      |   |   |   | × |   | 8-K    |   | January 9,                  2007 |   |   | 99.3   |   |
|   |   |                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |                                  |   |   |   |   |
| 10.14  |   | Support                  Agreement, Superior stockholders, dated as of January 6,                  2007                                                                                                                           |   |   |   | × |   | 8-K    |   | January 9,                  2007 |   |   | 99.5   |   |
|   |   |                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |                                  |   |   |   |   |
| 10.15  |   | Asset                  purchase agreement, dated May 9, 2007, by and between DGSE Companies,                  Inc.                  and Euless Gold & Silver, Inc.                                                                 |   |   |   | × |   | 8-K    |   | May                  9, 2007          |   |   | 1.0    |   |
|   |   |                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |                                  |   |   |   |   |
| 10.16  |   | Subordinated                  Promissory Note dated May 9, 2007                                                                                                                                                                        |   |   |   | × |   | 8-K    |   | May                  9, 2007          |   |   | 2.0    |   |
|   |   |                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |                                  |   |   |   |   |
| 10.17  |   | Registration                  Rights Agreement with Stanford International Bank Ltd., dated as                  of May                  30, 2007                                                                                       |   |   |   | × |   | 8-K    |   | May                  31, 2007         |   |   | 99.1   |   |
|   |   |                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |                                  |   |   |   |   |
| 10.18  |   | 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   |   |
|   |   |                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |                                  |   |   |   |   |
| 10.19  |   | 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         |   |   | 99.3   |   |
|   |   |                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |                                  |   |   |   |   |
| 10.20  |   | Form                  of Warrants                                                                                                                                                                                                      |   |   |   | × |   | 8-K    |   | May                  31, 2007         |   |   | 99.4   |   |
|   |   |                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |                                  |   |   |   |   |
| 10.21  |   | 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         |   |   | 99.5   |   |
|   |   |                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |                                  |   |   |   |   |
| 10.22  |   | Employment                  Agreement with L.S. Smith, dated as of May 30, 2007                                                                                                                                                        |   |   |   | × |   | 8-K    |   | May                  31, 2007         |   |   | 99.6   |   |

----

| 10.23  |   | Employment                  Agreement with William H. Oyster, dated as of May 30, 2007                                                                                                                                    |   |   |   | × |   | 8-K    |   | May                  31, 2007 |   |   | 99.7   |   |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|-------------------------------|--------|--------|--------|--------|
|   |   |                                                                                                                                                                                                                      |   |   |   |   |   |   |   |                          |   |   |   |   |
| 10.24  |   | Employment                  Agreement with John Benson, dated as of May 30, 2007                                                                                                                                          |   |   |   | × |   | 8-K    |   | May                  31, 2007 |   |   | 99.8   |   |
|   |   |                                                                                                                                                                                                                      |   |   |   |   |   |   |   |                          |   |   |   |   |
| 31.1   |   | 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                         |   | × |   |   |   |   |   |                          |   |   |   |   |

**Reports      on Form 8-K :**

----

**SIGNATURES**

| DGSE                Companies, Inc. |                                       |   |
|-------------------------------------|--------------------------------------------|--------|
|                                |                                       |   |   |
| By:                                 | /s/                L. S. Smith             |   | Dated:                May 12, 2008 |
|                                | L.                S. Smith                 |   |   |
|                                | Chairman                of the Board,      |   |   |
|                                | Chief                Executive Officer and |   |   |
|                                | Secretary                                  |   |   |

| By:    | /s/                L. S. Smith                |   | Dated:                May 12, 2008 |
|--------|-----------------------------------------------|--------|------------------------------------|
|   | L.                S. Smith                    |   |                               |
|   | Chairman                of the Board,         |   |                               |
|   | Chief                Executive Officer and    |   |                               |
|   | Secretary                                     |   |                               |
|   |                                          |   |                               |
| By:    | /s/                W. H. Oyster               |   | Dated:                May 12, 2008 |
|   | W.                H. Oyster                   |   |                               |
|   | Director,                President and        |   |                               |
|   | Chief                Operating Officer        |   |                               |
|   |                                          |   |                               |
| By:    | /s/                John Benson                |   | Dated:                May 12, 2008 |
|   | John                Benson                    |   |                               |
|   | Chief                Financial Officer        |   |                               |
|   | (Principal                Accounting Officer) |   |                               |

----