SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)

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

     For the quarterly period ended September 30, 1997

( )  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
                       ---------------------------------------------------------

                      Dallas Gold and Silver Exchange, Inc.
                      -------------------------------------
                         (Name of small business issuer)


        Nevada                                            88-0097334
----------------------------                 -----------------------------------
(State or other jurisdiction                (I.R.S. Employer Identification No.)
of incorporation or
organization)

     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 October 15, 1997
----------------------------                    -------------------------------
Common Stock, $.01 per value                              4,337,627





<PAGE>




PART I.   FINANCIAL INFORMATION

             DALLAS GOLD AND SILVER EXCHANGE, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

                                                     September 30,  December 31,
                     ASSETS                              1997           1996
                                                     ------------   ------------
Current assets:
  Cash                                                 $  461,960    $  949,586
  Marketable securities - trading                       2,235,452     1,913,656
  Trade receivables                                       183,709       147,503
  Inventory                                             1,187,350     1,111,485
  Prepaid expenses                                         18,423        31,637
                                                        ---------     ---------
   Total current assets                                 4,086,894     4,143,154

Investments in marketable securities                      429,915
Property and equipment                                  1,108,285     1,123,948
Other assets                                               37,326        31,637
  Total assets                                         $5,662,420    $5,298,739
                                                        =========     =========
                LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Notes payable                                        $  493,888    $  548,012
  Accounts payable                                        170,909       498,181
  Accrued expenses                                        145,487       256,645
  Customer deposits                                        61,887        57,770
  Current maturities of long-term
    debt and lease obligations                             48,191        45,864
                                                        ---------     ---------
    Total current liabilities                             920,362     1,406,472
Long-term debt and capital lease
    obligations, less current
    maturities                                          1,733,044     1,766,342
                                                        ---------     ---------
   Total liabilities                                    2,653,406     3,172,814
                                                        ---------     ---------

Shareholders'  equity: 
 Common  stock,  $.01 par  value; 
 authorized  10,000,000 shares;
 issued and outstanding 4,348,127
 shares at September 30, 1997 and
 4,618,193 at December 31, 1996                            43,481        46,182
 Additional paid-in capital                             3,865,517     4,126,451 
 Accumulated deficit                                   (1,140,833)   (2,046,708)
                                                        ---------     ---------
                                                        2,768,165     2,125,925
  Unrealized gain (loss) on securities                    240,849
   Total shareholders' equity                           3,009,014     2,125,925
   Total liabilities and shareholders'
    equity                                             $5,662,420    $5,298,739
                                                        =========     =========





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<PAGE>


             DALLAS GOLD AND SILVER EXCHANGE, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)


                                                           Three Months Ended
                                                              September 30,
                                                            1997        1996
                                                           ------------------
Revenues:
  Sales                                                 $2,916,869    $2,436,379
  Pawn service fees                                          7,455        11,550
  Travel agency income                                      17,680       245,871
  Consulting service income                                 28,500        25,000
  Interest income                                            5,932            89
  Realized gain on marketable securities                    36,702       226,820
  Unrealized gain on trading securities                    237,873        75,916

  Other income                                              26,651        24,026
                                                         ---------     ---------

                                                         3,277,662     3,045,651

Costs and expenses:
  Cost of sales (exclusive of
   items shown separately below)                         2,455,079     2,050,548
  Travel agency costs                                       16,680       235,599
  Consulting service costs                                  42,867        44,590
  General and administrative
   expenses                                                383,805       357,565
  Depreciation and amortization                             23,478        18,954
  Interest expense                                          57,000        40,425
                                                         ---------     ---------

    Total costs and expenses                             2,978,909     2,747,681
                                                         ---------     ---------

Net income                                              $  298,753    $  297,970
                                                         =========     =========


Income per share of common stock                        $      .07    $      .05
                                                         =========     =========











                                        3

<PAGE>



             DALLAS GOLD AND SILVER EXCHANGE, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)


                                                             Nine Months Ended
                                                                September 30,
                                                              1997       1996
                                                            -------------------
Revenues:
  Sales                                                   $8,042,488  $7,952,280
  Pawn service fees                                           21,795      34,350
  Travel agency income                                        82,018     941,885
  Consulting service income                                  199,066      25,000
  Interest income                                             17,324          89
  Realized gain on marketable securities                      9,163      459,519
  Unrealized gain on trading securities                      470,073      57,513
  Other income                                               626,168      73,048
                                                           ---------   ---------

                                                           9,468,095   9,543,684

Costs and expenses:
  Cost of sales (exclusive of
   items shown separately below)                           6,825,821   6,794,977
  Travel agency costs                                         80,216     910,754
  Consulting service costs                                   162,483      83,418
  General and administrative
   expenses                                                1,251,197   1,183,295
  Depreciation and amortization                               71,654      60,056
  Interest expense                                           170,850     121,300
                                                           ---------   ---------

    Total costs and expenses                               8,562,221   9,153,800
                                                           ---------   ---------

Net income                                                $  905,874  $  389,884
                                                           =========   =========


Income per share of common stock                          $      .21  $      .07
                                                           =========   =========










                                        4

<PAGE>



             DALLAS GOLD AND SILVER EXCHANGE, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)


                                                            Nine Months Ended
                                                               September 30,
                                                             1997        1996
                                                            ------------------

Cash used for operating activities                       $ (765,783)  $(461,114)

Cash flows from investing activities:
   Purchase of property, plant and
    equipment                                               (55,991)    (60,497)
   Sale of marketable securities                            888,606     724,319
   Purchase of marketable securities                       (203,401)    (76,704)
   Net cash provided by (used
     for investing activities                               629,214     587,118
                                                         ----------  ----------

Cash flows from financing activities:
   Purchase of common stock                                (263,635)    (21,753)
   Increase (decrease) in notes payable                     (54,124)    211,140
   Increase (decrease) in long-term
    debt and capital lease obligations                      (33,298)   (374,141)
                                                         ----------  ----------

   Net cash used for financing
    activities                                             (351,057)   (184,754)
                                                         ----------  ----------

Decrease in cash and cash equivalents                    $ (487,626)  $ (58,750)
                                                         ==========  ==========













                                        5

<PAGE>


             DALLAS GOLD AND SILVER EXCHANGE, INC. AND SUBSIDIARIES

          NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT



September 30, 1997

(1)  Basis of Presentation:

     The accompanying  unaudited condensed  consolidated financial statements of
     Dallas  Gold  and  Silver  Exchange,  Inc.  and  Subsidiaries  include  the
     financial  statements  of Dallas  Gold and Silver  Exchange,  Inc.  and its
     wholly-owned  subsidiaries,  DGSE Corporation,  Dallas Global Travel, Inc.,
     DLS  Financial  Services,  Inc.  and Eye  Media,  Inc..  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 September 30, 1997,
     are not necessarily  indicative of the results that may be expected for the
     year  ended  December  31,  1997.  For  further  information,  refer to the
     consolidated  financial  statements and footnotes  thereto  included in the
     Company's  annual  report on Form  10-KSB for the year ended  December  31,
     1997.



(2)  New Accounting Pronouncement:

     The FASB has issued  Statement of Financial  Accounting  Standards No. 128,
     Earnings Per Share,  which is effective  for  financial  statements  issued
     after  December  15,  1997.  Early  adoption  of the  new  standard  is not
     permitted.  The new standard  eliminates primary and fully diluted earnings
     per share and requires presentation of basic and diluted earnings per share
     together with  disclosure of how the per share amounts were  computed.  The
     adoption of this new standard is not expected to have a material  impact on
     the disclosure of earnings per share in the financial statements.







                                        6

<PAGE>



MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Results of Operations

Quarter ended September 30, 1997 vs 1996:

Sales increased by $ 480,490 (19.7%) during the three months ended September 30,
1997 due to a $ 479,039 increase in bullion sales. The increase in bullion sales
was the result of  increased  interest  in  precious  metals  products by retail
clientele.  Management  believes that the Company's  Internet related activities
had a  significant  impact on this sector of its  business.  Pawn  service  fees
decreased by $ 4,095  (35.5%)  during the third quarter of 1997 due to a decline
in loans  outstanding  during the period.  Management  is attempting to increase
pawn loan volume by directing additional advertising toward this activity and by
extending  larger  loans on  higher  value  merchandise.  Travel  agency  income
decreased  by $ 228,191 due to a  management  decision to decrease the amount of
low margin business  generated by outside sales agents.  Interest income was the
result of interest earned on money market accounts during the quarter.  Realized
gains on marketable  securities  were the result of  securities  sold during the
quarters.  Unrealized gains on trading  securities  during the quarters were the
result of changes in the market value of the Company's portfolio.

The Company's Internet related activities have continued to produce  encouraging
results.  All  categories  of this  activity  have enjoyed  increases  including
visitations,  bidders on the trading  floor and  auction,  and items sold.  As a
result,   the  Company   expects  to  complete  a  major  upgrade  of  its  site
(www.dgse.com) in the 4th quarter of 1997.

Cost of sales  increased  by $  404,531  (19.7%)  due to the  increase  in sales
volume.  Travel  agency  costs  decreased  by $ 218,919  due to the  decrease in
volume.  Interest  expense  increased  $ 16,575  primarily  as a result of the $
875,000 note issued in December 1996.













                                        7

<PAGE>



Nine months ended September 30, 1997 vs 1996:

Sales  increased by $ 90,082  (1.1%)  during the nine months ended June 30, 1997
due to a $ 188,675  increase in bullion sales and a $ 98,593  decline in jewelry
sales.  The increase in bullion  sales was the result of  increased  interest in
precious  metals  products by retail  clientele.  Management  believes  that the
Company's Internet related activities had a significant impact on this sector of
its  business.  The  decline  in jewelry  sales was the  result of a  management
decision to  concentrate  on higher margin higher priced  jewelry.  As a result,
gross margins  increased from 14.6% in 1996 to 15.1% in 1997.  Pawn service fees
decreased by $ 12,555  (36.6%)  during the 1997 period due to a decline in loans
outstanding.  Management is attempting to increase pawn loan volume by directing
additional  advertising  toward this  activity and by extending  larger loans on
higher value  merchandise.  Travel agency income decreased by $ 859,687 due to a
management  decision to decrease the amount of low margin business  generated by
outside sales agents.  Consulting service income increased by $ 174,066 due to a
fee earned relating to the recapitalization of a new client. Interest income was
the result of  interest  earned on money  market  accounts  during  the  period.
Realized  gains on  marketable  securities  were the result of  securities  sold
during the periods.  Unrealized gains on trading  securities  during the periods
were the  result of  changes in the  market  value of the  Company's  portfolio.
During the quarter  ended June 30, 1997,  the Company  acquired the assets of an
unrelated enterprise for cash in the amount of $ 111,375. These assets were sold
to a  consulting  client for 202,500  shares of its common  stock.  Other income
increased $ 553,120  during 1997 primarily as the result of the gain on the sale
of these assets.

The Company's Internet related activities have continued to produce  encouraging
results.  All  categories  of this  activity  have enjoyed  increases  including
visitations,  bidders on the trading  floor and  auction,  and items sold.  As a
result,   the  Company   expects  to  complete  a  major  upgrade  of  its  site
(www.dgse.com) in the 4th quarter of 1997.

Cost of sales increased by $ 30,844 due to the increase in sales volume.  Travel
agency  costs  decreased  by $ 830,538  (91.2%)  due to the  decrease in volume.
Consulting  service cost  increased by $ 79,065  during the first nine months of
1997  due to  cost  associated  with  the  acquisition  and  subsequent  sale of
Performance Nutrition,  Inc.. Interest expense increased $ 49,550 primarily as a
result of the $ 875,000 note issued in December 1996.







                                        8

<PAGE>


Liquidity and Capital Resources

Due to the somewhat seasonal nature of the Company's jewelry business, inventory
and trade  receivables  are at their lowest  levels on December 31 of each year.
During the first half of each year jewelry  inventory is  replenished  and trade
receivables  begin to increase.  During the first nine months of 1997,  cash and
cash  equivalents  decreased by $ 487,626  primarily as a result of increases in
inventory  ($ 75,865),  a decrease in accounts  payable and accrued  expenses ($
438,430) and principal payments on long-term debt and notes payable ($ 87,422).

During the first nine months of 1997,  the Company sold $ 888,606 of  marketable
securities. These resources were used to purchase and retire common stock of the
Company in the amount of $ 263,635, purchase additional marketable securities in
the amount of $ 203,401 and for general corporate working capital.

Management of the Company expects capital  expenditures to total approximately $
75,000 during 1997. It is  anticipated  that these  expenditures  will be funded
from the Company's current working capital position.

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 by
the  Company,  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 unforseen working capital requirement.




PART II.   OTHER INFORMATION

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

            Exhibits - None

            Reports on Form 8-K - None










                                        9

<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.

Dallas Gold and Silver Exchange, Inc.



By:      /s/ L. S. Smith                                 Dated: October 15, 1997
         -------------------------
         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: October 15, 1997
         -------------------------
         L. S. Smith
         Chairman of the Board,
         Chief Executive Officer and
         Secretary


By:      /s/ W. H. Oyster                                Dated: October 15, 1997
         -------------------------
         W. H. Oyster
         Director, President and
         Chief Operating Officer


By:      /s/ John Benson                                 Dated: October 15, 1997
         -------------------------
         John Benson
         Chief Financial Officer
         (Principal Accounting Officer)









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