SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-Q

(Mark One)

(X)  Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934

For the quarterly period ended June 30, 2005
                               -------------

( )  Transition Report under 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.
                              ---------------------
                         (Name of small business issuer)


     Nevada                                                 88-0097334
----------------------------                     -------------------------------
(State or other jurisdiction                     (I.R.S. Employer Identification
of incorporation or organization)                Number)



     2817 Forest Lane, Dallas, Texas                             75234
----------------------------------------                   ----------------
(Address of principal executive offices)                      (Zip Code)

(Issuer's telephone number, including area code) (972) 484-3662
                                                 --------------


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X  No
                                      ---   ---

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

           Class                                Outstanding at August 15, 2005
----------------------------                  ----------------------------------
Common Stock, $.01 per value                              4,913,290




<PAGE>
<TABLE>
<CAPTION>

PART I.   FINANCIAL INFORMATION
          Item 1. Financial Statements

                           Consolidated Balance Sheets

                                                               (Unaudited)
ASSETS                                                           June 30,      December 31,
                                                                   2005            2004
                                                               ------------    ------------
<S>                                                            <C>                  <C>
CURRENT ASSETS
         Cash and cash equivalents                             $    152,466         314,897
         Trade receivables                                          842,820         907,238
         Inventories                                              7,156,305       6,791,383
         Prepaid expenses                                           293,026         161,985
                                                               ------------    ------------

                  Total current assets                            8,444,617       8,175,503

MARKETABLE SECURITIES - AVAILABLE FOR SALE                           77,062          77,062

PROPERTY AND EQUIPMENT - AT COST, NET                               961,767         885,301

DEFERRED INCOME TAXES                                                15,944          15,994

GOODWILL                                                            837,117         837,117

OTHER ASSETS                                                        299,893         290,722
                                                               ------------    ------------

                       Total Assets                            $ 10,636,400    $ 10,281,699
                                                               ============    ============


LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
         Notes payable                                         $  2,381,457         548,093
         Current maturities of long-term debt                       371,623          76,172
         Accounts payable - trade                                   255,685         590,412
         Accrued expenses                                            93,155         513,775
         Customer deposits                                          130,727          67,173
         Federal income taxes payable                               189,638         146,210
                                                               ------------    ------------
                  Total current liabilities                       3,422,285       1,941,835


Long-term debt, less current maturities                           1,393,635       2,749,278
                                                               ------------    ------------

                            Total liabilities                     4,815,920       4,691,113

SHAREHOLDERS' EQUITY
         Common stock, $.01 par value; authorized 10,000,000
         shares; issued and outstanding 4,913,290 shares at
         The end of each period                                      49,133          49,133
         Additional paid-in capital                               5,708,760       5,708,760
         Accumulated other comprehensive  (loss)                   (122,582)       (122,582)
         Retained earnings (deficit)                                185,169         (44,725)
                                                               ------------    ------------

                          Total shareholders' equity              5,820,480       5,590,586
                                                               ------------    ------------

                                                               $ 10,636,400    $ 10,281,699
                                                               ============    ============
</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements


<PAGE>
<TABLE>
<CAPTION>

DGSE Companies, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended
(Unaudited)

                                                         June 30, 2005    June 30, 2004
                                                         -------------    -------------
<S>                                                       <C>             <C>
 Revenue
   Sales                                                 $  6,708,363    $   6,170,192
    Pawn services charges                                       92,047           47,084
                                                         -------------    -------------
                                                             6,800,410        6,217,276
Costs and expenses
    Cost of goods sold                                       5,453,742        4,988,111
    Selling, general and administrative expenses             1,105,367          896,500
    Depreciation and amortization                               49,068           37,112
                                                         -------------    -------------
                                                             6,608,177        5,921,723

Operating income                                               192,233          295,553
                                                         -------------    -------------
Other income (expense)
   Interest expense                                            (72,039)         (73,005)
                                                         -------------    -------------

          Total other income (expense)                         (72,039)         (73,005)

          Income (loss) before income taxes                    120,194          222,548

Income tax expense                                              40,866           75,666
                                                         -------------    -------------

          Net income (loss) from continuing operations          79,328          146,882

Loss from discontinued operations, net of income taxes            --            (46,106)
                                                         -------------    -------------

          Net income (loss)                               $     79,328    $     100,776
                                                         =============    =============

Earnings per common share
     Basic and diluted
          From continuing operations                      $        .02    $         .03
          From discontinued operations                            --               (.01)
                                                         -------------    -------------
                                                          $        .02    $         .02
                                                         =============    =============

     Weighted average number of common shares:
          Basic                                              4,913,290        4,913,290
          Diluted                                            5,069,489        5,161,616
</TABLE>



The  accompanying  notes are an integral  part of these  consolidated  financial
statements

<PAGE>
<TABLE>
<CAPTION>

DGSE Companies, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
Six  months ended
(Unaudited)


                                                         June 30, 2005    June 30, 2004
                                                         -------------    -------------
<S>                                                      <C>              <C>
Revenue
    Sales                                                $  13,346,277    $  12,921,644
    Pawn services charges                                      171,945           94,714
                                                         -------------    -------------
                                                            13,518,222       13,016,358

Costs and expenses
    Cost of goods sold                                      10,770,615       10,441,033
    Selling, general and administrative expenses             2,164,251        1,805,482
    Depreciation and amortization                               91,871           72,397
                                                         -------------    -------------

                                                            13,026,737       12,318,912
                                                         -------------    -------------

Operating income                                               491,485          697,446
                                                         -------------    -------------

Other income (expense)
   Interest expense                                           (143,163)        (145,058)
                                                         -------------    -------------

        Total other income (expense)                          (143,163)        (145,058)

        Income before income taxes                             348,322          552,388

Income tax expense                                             118,429          187,812
                                                         -------------    -------------

        Net income from continuing operations                  229,893          364,576

Loss from discontinued operations, net of income taxes            --            (78,101)
                                                         -------------    -------------


                     Net income                          $     229,893    $     286,475
                                                         =============    =============


Earnings per common share
     Basic and diluted
         From continuing operations                      $         .05    $         .07
         From discontinued operations                             --               (.01)
                                                         -------------    -------------
                                                         $         .05    $         .06

     Weighted average number of common shares:
         Basic                                               4,913,290        4,913,290
         Diluted                                             5,069,489        5,161,616
</TABLE>



The  accompanying  notes are an integral  part of these  consolidated  financial
statements

<PAGE>
<TABLE>
<CAPTION>

DGSE COMPANIES, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

                                                                          Six Months Ended
                                                                              June 30,
                                                                         2005           2004
                                                                      -----------    -----------
<S>                                                                   <C>            <C>
Cash Flows From Operations
Reconciliation of income to net cash
    used in  operating activities
        Net income                                                    $   229,893    $   286,475
        Depreciation and amortization                                      91,871         72,397
         (Increase) decrease in operating assets and liabilities
             Trade receivables                                             89,714        122,053
             Inventories                                                 (364,922)      (308,780)
            Prepaid expenses and other current assets                    (131,041)       (29,772)
            Accounts payable and accrued expenses                        (755,347)      (936,918)
            Change in customer deposits                                    63,554        (71,983)
            Federal income taxes payable                                   43,428       (152,423)
            Other assets                                                   (9,171)          (263)
                                                                      -----------    -----------

               Total net cash used in operating activities               (742,021)    (1,019,214)

Cash flows from investing activities
               Pawn loans made                                           (329,428)      (297,901)
               Pawn loans repaid                                          223,053        244,266
               Recovery of pawn loan principal through
               Sale of forfeited collateral                               111,522         35,166
               Pay day loans made                                         (51,580)          --
               Pay day loans repaid                                        21,138           --
               Purchase of property and equipment                        (168,287)       (81,519)
                                                                      -----------    -----------
                   Net cash (used) provided by investing activities      (193,582)       (99,988)

Cash flows from financing activities
                Proceeds from notes issued                              3,181,365        825,000
             Payments on notes payable                                 (2,408,193)      (121,934)
                                                                      -----------    -----------
        Net cash provided by financing activities                         773,172        703,066
                                                                      -----------    -----------

Net decrease in cash and cash equivalents                                (162,431)      (416,136)

Cash and cash equivalents at beginning of year                            314,897        735,293
                                                                      -----------    -----------

Cash and cash equivalents at end of period                            $   152,466    $   319,157
                                                                      ===========    ===========
</TABLE>

Supplemental disclosures:
Interest  paid for the six months ended June 30, 2005 and 2004 was $ 143,163 and
$ 145,058,  respectively.  Income  taxes paid for the six months  ended June 30,
2005 and 2004 was $75,000 and $300,000,  respectively.  Pawn loans forfeited and
transferred to inventory amounted to $ 184,381 and $ 41,388,  respectively,  for
the six months ended June 30, 2005 and 2004.


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

<PAGE>
<TABLE>
<CAPTION>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

(1)  Basis of Presentation:

The accompanying  unaudited condensed  consolidated financial statements of DGSE
Companies,  Inc.  and  Subsidiaries  include the  financial  statements  of DGSE
Companies, Inc. and its wholly-owned  subsidiaries,  DGSE Corporation,  National
Jewelry Exchange,  Inc., Charleston Gold and Diamond Exchange, Inc. and American
Pay Day Centers,  Inc. In July 2004 the Company sold the goodwill and trade name
of  Silverman  Consultants,   Inc.  and  discontinued  the  operations  of  this
subsidiary.  As a  result,  operating  results  for this  subsidiary  have  been
reclassified  to  discontinued  operations  for all  periods  presented.  In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.

The Company's  operating  results for the periods  ended June 30, 2005,  are not
necessarily  indicative  of the results  that may be expected for the year ended
December 31, 2005. For further information,  refer to the consolidated financial
statements and footnotes thereto included in the Company's annual report on Form
10-K for the year ended December 31, 2004. Certain  reclassifications  were made
to the prior year's consolidated  financial statements to conform to the current
year presentation.

Pawn loans  receivable  in the amount of $ 132,811  and $ 107,562 as of June 30,
2005 and 2004,  respectively,  are included in the  Consolidated  Balance Sheets
caption trade  receivables.  The related pawn service charges  receivable in the
amount of $ 74,299 and $ 49,119 as of June 30, 2005 and 2004, respectively,  are
also included in the Consolidated Balance Sheets caption trade receivables.  Pay
day loans  receivable  in the  amount  of $ 28,142 as of June 30,  2005 are also
included in the  Consolidated  Balance Sheets caption trade  receivables.  There
were no pay day loans receivable as of June 30, 2004.

The 10-K for the year ended  December 31, 2004 and the 10-Q for the period ended
March 31, 2005 will be amended to include additional disclosures.

(2)  - Earnings per share

     A reconciliation  of the income and shares of the basic earnings per common
     share and diluted  earnings per common share for the periods ended June 30,
     2005, and 2004 is as follows:

                                                     2005                                2005
                                                  Six months                         Three months
                                                  ----------                         ------------
                                                               Per-Share                           Per-Share
                                         Income      Shares      Amount      Income      Shares      Amount
                                       ---------   ---------   ---------   ---------   ---------   ---------
<S>                                    <C>         <C>         <C>         <C>         <C>         <C>
Basic earnings per common share
    Income from operations allocable
      to common shareholders           $ 229,893   4,913,290   $     .05   $  79,328   4,913,290   $     .02

Effect of dilutive securities
    Stock  options                          --       156,199         --         --       156,199         --
                                       ---------   ---------   ---------   ---------   ---------   ---------
Diluted earnings per common share
    Income from operations available
      to common shareholders plus
      assumed  conversions             $ 229,893   5,069,489   $     .05   $  79,328   5,069,489   $     .02
                                       =========   =========   =========   =========   =========   =========

                                                     2005                                2005
                                                  Six months                         Three months
                                                  ----------                         ------------
                                                               Per-Share                           Per-Share
                                         Income      Shares      Amount      Income      Shares      Amount
                                       ---------   ---------   ---------   ---------   ---------   ---------

Basic earnings per common share
    Income from operations allocable
      to common shareholders           $ 286,475   4,913,290   $     .06   $ 100,776   4,913,290   $     .02

Effect of dilutive securities
    Stock options                           --       248,326         --         --       248,326         --
                                       ---------   ---------   ---------   ---------   ---------   ---------

Diluted earnings per common share
    Income from operations available
      to common shareholders plus
      assumed conversions              $ 286,475   5,161,616   $     .06   $ 100,776   5,161,616   $     .02
                                       =========   =========   =========   =========   =========   =========
</TABLE>


<PAGE>
<TABLE>
<CAPTION>

(3)  - Business segment information

     Management  identifies  reportable  segments by product or service offered.
     Each segment is managed  separately.  Corporate and other includes  certain
     general and  administrative  expenses  not  allocated  to segments and pawn
     operations.  The  Company's  operations by segment for the six months ended
     June 30 were as follows:

                             (Amounts in thousands)

                    Retail       Wholesale                       Rare      Discontinued       Corporate
                   Jewelry        Jewelry        Bullion         Coins       Operations       and Other      Consolidated
                 ------------   ------------   ------------   ------------   ------------    ------------    ------------
<S>              <C>            <C>            <C>            <C>            <C>             <C>             <C>

Revenues
     2005        $      6,428   $      1,947   $      3,572   $      1,163           --      $        408    $     13,518
     2004               6,178          1,871          4,193            570           --               204          13,016
Net income
(loss)
     2005                 160             98             15             88           (131)            230
     2004                 203             96             42             27            (78)             (4)            286

Identifiable
Assets
     2005               7,781          1,735            165            174              5             776          10,636
     2004               7,739          1,715            119            149            415             783          10,920

Capital
Expenditures
     2005                 151           --             --             --             --                17             168
     2004                  81           --             --             --             --              --                81

Depreciation and
Amortization
     2005                  56             11           --             --             --                25              92
     2004                  56             11           --             --             --                 5              72

The  Company's  operations by segment for the three months ended June 30 were as
follows:


                             (Amounts in thousands)
                    Retail       Wholesale                       Rare      Discontinued        Corporate
                   Jewelry        Jewelry        Bullion         Coins       Operations        and Other      Consolidated
                 ------------   ------------   ------------   ------------   ------------     ------------    ------------

Revenues
     2005        $      3,408   $      1,007   $      1,579    $        614           --      $        192    $      6,800
     2004               3,069            977          1,796             274           --               101           6,217
Net income
(loss)
     2005                 74             43              4              41           --               (83)              79
     2004                 99             49             (1)             11            (46)            (12)             100

Identifiable
Assets
     2005              7,781          1,735            165             174              5             776           10,636
     2004              7,739          1,715            119             149            415             783           10,920

Capital
Expenditures
     2005                144           --             --              --             --                 7              151
     2004                  8           --             --              --             --              --                  8

Depreciation and
Amortization
     2005                 28              6           --              --             --                15               49
     2004                 28              6           --              --             --                 3               37
</TABLE>


<PAGE>
<TABLE>
<CAPTION>

(4) Other Comprehensive income:

Other comprehensive income is as follows:                       Tax
                                              Before Tax     (Expense)    Net-of-Tax
                                                Amount        Benefit       Amount
                                              ----------    ----------    ----------
<S>                                           <C>           <C>           <C>
Other comprehensive income at
   December 31, 2003                          $     --      $     --      $     --
Unrealized holding gains arising during the
    Three months ended March 31, 2004            106,373       (36,167)       70,206
                                              ----------    ----------    ----------
Other comprehensive income at
   March 31, 2004                                106,373       (36,167)       70,206
Unrealized holding losses during the
   Three months ended June 30, 2004              (86,020)       29,247       (56,773)
                                              ----------    ----------    ----------
Other comprehensive income at
   June 30, 2004                              $   20,353    $   (6,920)   $   13,433
                                              ==========    ==========    ==========

Other comprehensive income loss at
   December 31, 2004, March 31,2005
   And June 30, 2005                          $ (150,784)   $   28,202    $ (122,582)
                                              ==========    ==========    ==========
</TABLE>





(5) Stock-based Compensation:

The  Company  accounts  for  stock-based  compensation  to  employees  using the
intrinsic  value  method.  Accordingly,  compensation  cost for stock options to
employees is measured as the excess,  if any , of the quoted market price of the
Company's common stock at the date of the grant over the amount an employee must
pay to acquire the stock.

The following table  illustrates the effect on net income and earnings per share
if the  Company  had  applied  the fair  value  recognition  provisions  of FASB
Statement No. 123,  Accounting  for  Stock-Based  Compensation,  to  stock-based
employee compensation.

                                                   Six Months Ended June 30,
                                                   -------------------------
                                                      2005          2004
                                                   -----------   -----------


Net income as reported                             $   229,893   $   286,475
Deduct:  Total stock-based employee compensation
Expense determined under fair value based method
For all awards, net of related tax effects                --            --
                                                   -----------   -----------
Pro forma net income                               $   229,893   $   286,475
                                                   ===========   ===========

Earnings per share:
     Basic - as reported                                  $.05          $.06
     Basic - pro forma                                    $.05          $.06
     Diluted - as reported                                $.05          $.06
     Diluted pro forma                                    $.05          $.06




<PAGE>

                                                   Three Months Ended June 30,
                                                   ---------------------------
                                                       2005           2004
                                                   -----------    ------------
Net income as reported                             $    79,328    $    100,776
Deduct:  Total stock-based employee compensation
Expense determined under fair value based method               -
For all awards, net of related tax effects                --              --
                                                   ----------- =  ------------
Pro forma net income                               $    79,328    $    100,776
                                                   ===========    ============


Earnings per share:
     Basic - as reported                                  $.02            $.02
     Basic - pro forma                                    $.02            $.02
     Diluted - as reported                                $.02            $.02
     Diluted pro forma                                    $.02            $.02

The fair value of these  options  was  estimated  at the date of grant using the
Black-Scholes   option-pricing   model  with  the  following   weighted  average
assumptions  used for grants  after  1998,  expected  volatility  of 70% to 96%,
risk-free  rate of 3.9% to 6.6%,  no dividend  yield and expected life of 5 to 8
years.


MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
---------------------

Six months ended June 30, 2005 vs 2004:


Sales  increased by $ 424,633  (3.3%) in 2005.  This  increase was primarily the
result of a $250,000  (4.0%) increase in retail jewelry sales, a $ 76,000 (4.1%)
increase in wholesale  jewelry  sales and a $ 583,000  (104.0%)  increase in the
sale of rare  coin  products.  These  increases  were the  result  of  increased
concentration in the local markets through increased advertising.  Bullion sales
decreased $ 621,000  (14.8%) due to reduced  volatility  in the bullion  market.
Pawn service fees  increased by $77,231 in 2005 due to an increase in pawn loans
outstanding  during the year.  Cost of goods as a percentage of sales was stable
during the periods at 80.7% in 2005 and 80.8% in 2004.

Selling,  general and  administrative  expenses  increased by $358,769 or 19.9%.
This increase was primarily due to an increase in staff and payroll related cost
($167,000),  higher  advertising  cost ($43,000) and $ 73,000 in cost related to
the new pay day loan stores.  The increase in staff was  necessary to maintain a
high level of customer  service as sales  increase  and the opening of three pay
day loan stores.  The increase in advertising  was necessary in order to attract
new customers in our local markets.  Depreciation and amortization  increased by
$20,000 during 2005 due to capital assets acquired for the pay day loan stores.

Historically,  changes  in the  market  prices  of  precious  metals  have had a
significant  impact  on both  revenues  and cost of  sales in the rare  coin and
precious metals segments in which the Company operates.  It is expected that due
to the  commodity  nature of these  products,  future price changes for precious
metals will  continue to be indicative  of the  Company's  performance  in these
business  segments.  Changes  in  sales  and cost of  sales  in the  retail  and
wholesale  jewelry  segments are primarily  influenced by the national  economic
environment.  It is expected  that this trend will continue in the future due to
the nature of these product.

Income taxes are provided at the corporate rate of 34% for both 2005 and 2004.


<PAGE>

Loss from  discontinued  operations during 2004 in the amount of $ 78,101 net of
income taxes is the operating results of Silverman  Consultants,  Inc. which was
sold during 2004.

Three months ended June 30, 2005 vs 2004:
-----------------------------------------


Sales  increased by $ 535,171  (8.7%) in 2005.  This  increase was primarily the
result of a $339,000 (11.0%) increase in retail jewelry sales, a $ 30,000 (3.1%)
increase in wholesale  jewelry  sales and a $ 340,000  (124.1%)  increase in the
sale of rare  coin  products.  These  increases  were the  result  of  increased
concentration in the local markets through increased advertising.  Bullion sales
decreased $ 217,000  (12.8%) due to reduced  volatility  in the bullion  market.
Pawn service fees  increased by $44,963 in 2005 due to an increase in pawn loans
outstanding  during the year.  Cost of goods as a percentage of sales was stable
during the periods at 81.6% in 2005 and 80.8% in 2004.

Selling,  general and  administrative  expenses  increased by $208,867 or 23.3%.
This increase was primarily due to an increase in staff and payroll related cost
($54,000), higher advertising cost ($22,000) and $ 49,000 in cost related to the
new pay day loan stores.  The increase in staff was necessary to maintain a high
level of  customer  service as sales  increase  and the opening of three pay day
loan stores.  The increase in advertising  was necessary in order to attract new
customers  in our local  markets.  Depreciation  and  amortization  increased by
$12,000 during 2005 due to capital assets acquired for the pay day loan stores.

Historically,  changes  in the  market  prices  of  precious  metals  have had a
significant  impact  on both  revenues  and cost of  sales in the rare  coin and
precious metals segments in which the Company operates.  It is expected that due
to the  commodity  nature of these  products,  future price changes for precious
metals will  continue to be indicative  of the  Company's  performance  in these
business  segments.  Changes  in  sales  and cost of  sales  in the  retail  and
wholesale  jewelry  segments are primarily  influenced by the national  economic
environment.  It is expected  that this trend will continue in the future due to
the nature of these product.

Income taxes are provided at the corporate rate of 34% for both 2005 and 2004.

Loss from  discontinued  operations during 2004 in the amount of $ 46,106 net of
income taxes is the operating results of Silverman  Consultants,  Inc. which was
sold during 2004.

Liquidity and Capital Resources

The Company's  short-term debt,  including current  maturities of long-term debt
totaled $ 624,265  as of  December  31,  2004.  During  March  2005 the  Company
re-financed its outstanding bank debt. This new credit facility in the amount of
$3,500,000 extended the maturity of its bank debt to March 31, 2006 and provided
the Company with an additional $700,000 of unused liquidity.

Management of the Company  expects capital  expenditures to total  approximately
$100,000  during  the  next  twelve  months.   It  is  anticipated   that  these
expenditures will be funded from working capital and its new credit facility. As
of June 30, 2004 there were no commitments outstanding for capital expenditures.
The Company incurred $ 105,215 of prepaid  construction  costs in the six months
ended June 30, 2005 related to its new facility in Charleston, South Carolina.

In the event of significant growth in retail and or wholesale jewelry sales, the
demand for additional working capital will expand due to a related need to stock
additional  jewelry  inventory and increases in wholesale  accounts  receivable.
Historically, vendors have offered the Company extended payment terms to finance
the need for jewelry  inventory  growth and  management of the Company  believes
that they will  continue to do so in the  future.  Any  significant  increase in
wholesale  accounts  receivable will be financed under the Company's bank credit
facility.


<PAGE>
<TABLE>
<CAPTION>

The ability of the Company to finance its operations  and working  capital needs
are dependent upon management's ability to negotiate extended terms or refinance
its debt. The Company has historically renewed,  extended or replaced short-term
debt as it matures and  management  believes that it will be able to continue to
do so in the near future.

From time to time,  management  has adjusted the Company's  inventory  levels to
meet  seasonal  demand  or  in  order  to  meet  working  capital  requirements.
Management  is of the opinion that if  additional  working  capital is required,
additional loans can be obtained from  individuals or from commercial  banks. If
necessary,  inventory  levels  may be  adjusted  or a portion  of the  Company's
investments  in  marketable  securities  may be  liquidated  in  order  to  meet
unforeseen working capital requirements.

Contractual Cash Obligations                                         Payments due by year end
----------------------------                     --------------------------------------------------------------
                                       Total        2005         2006         2007         2008         2009      Thereafter
                                    ----------   ----------   ----------   ----------   ----------   ----------   ----------
<S>                                 <C>          <C>          <C>
Notes  payable                      $2,381,457   $  266,758   $2,114,699         --           --           --           --
Long-term debt and capital leases    1,765,258      219,444      383,623   $  365,623   $  133,956   $  369,728   $  292,884
Federal income taxes                   189,638      189,638         --           --           --           --           --
Operating  leases                      516,002      127,944      118,447      108,018       88,394       73,199         --
                                    ----------   ----------   ----------   ----------   ----------   ----------   ----------
                                    $4,852,355   $  803,784   $2,616,769   $  473,641   $  222,350   $  442,927   $  292,884
                                    ==========   ==========   ==========   ==========   ==========   ==========   ==========
</TABLE>


In addition,  the Company  estimates that it will pay approximately $ 275,000 in
interest during the next twelve months.

This  report  contains  forward-looking  statements  which  reflect  the view of
Company's management with respect to future events. Although management believes
that  the  expectations   reflected  in  such  forward-looking   statements  are
reasonable,  it can give no assurance that such  expectations will prove to have
been  correct.  Important  factors  that could  cause  actual  results to differ
materially from such  expectations  are a down turn in the current strong retail
climate and the  potential  for  fluctuations  in precious  metals  prices.  The
forward-looking  statements  contained  herein  reflect the current views of the
Company's  management  and the  Company  assumes  no  obligation  to update  the
forward-looking  statements or to update the reasons actual results could differ
from those contemplated by such forward-looking statements.


ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.

The following  discussion about the Company's  market risk disclosures  involves
forward-looking  statements.  Actual results could differ  materially from those
projected in the  forward-looking  statements.  The Company is exposed to market
risk related to changes in interest  rates and gold values.  The Company also is
exposed to regulatory risk in relation to its payday loans. The Company does not
use derivative financial instruments.

The Company's earnings and financial position may be affected by changes in gold
values and the resulting  impact on pawn lending and jewelry sales. The proceeds
of scrap sales and the Company's  ability to liquidate excess jewelry  inventory
at an  acceptable  margin  are  dependent  upon gold  values.  The impact on the
Company's  financial position and results of operations of a hypothetical change
in gold values cannot be reasonably estimated.


ITEM 4. Controls and Procedures

Under the supervision and with the  participation  of the Company's  management,
including its Chief Executive Officer and Chief Financial  Officer,  the Company
has evaluated the effectiveness of its disclosure controls and procedures, as of
the end of the period  covered by this  report.  Based on that  evaluation,  the
Chief Executive  Officer and Chief  Financial  Officer have concluded that these
disclosure  controls  and  procedures  are  effective in enabling the Company to
record, process, summarize and report information required to be included in its
periodic SEC filings  within the required time period.  There has been no change
in the Company's internal control over financial  reporting that occurred during
the Company's  most recent fiscal quarter that has  materially  affected,  or is
reasonably  likely to materially  affect,  the Company's  internal  control over
financial reporting.

<PAGE>

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

Exhibits:

31.1     Certificate   of  L.S.   Smith   pursuant   to  Section   3026  of  the
         Sarbanes-Oxley Act of 2002, Chief Executive Officer.

32.2     Certificate   of  John   Benson   pursuant   to  Section   302  of  the
         Sarbanes-Oxley Act of 2002, Chief Financial Officer .

32.2     Certificate of L.S. Smith pursuant to Section 906 of the Sarbanes-Oxley
         Act of 2002, Chief Executive Officer.

32.2     Certificate   of  John   Benson   pursuant   to  Section   906  of  the
         Sarbanes-Oxley Act of 2002, Chief Financial Officer.





Reports on Form 8-K:

         None






<PAGE>

                                   SIGNATURES


         In  accordance  with  Section  13 and 15(d) of the  Exchange  Act,  the
Registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.

DGSE Companies, Inc.


By:      /s/ L. S. Smith                    Dated: August 15, 2005
         -------------------------
         L. S. Smith
         Chairman of the Board,
         Chief Executive Officer and
         Secretary

         In accordance  with the Exchange Act, this report has been signed below
by the following  persons on behalf of the  Registrant and in the capacities and
on the date indicated.


By:      /s/ L. S. Smith                    Dated: August 15, 2005
         -------------------------
         L. S. Smith
         Chairman of the Board,
         Chief Executive Officer and
         Secretary


By:      /s/ W. H. Oyster                   Dated: August 15, 2005
         -------------------------
         W. H. Oyster
         Director, President and
         Chief Operating Officer


By:      /s/ John Benson                    Dated: August 15, 2005
         -------------------------
         John Benson
         Chief Financial Officer
         (Principal Accounting Officer)