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       September 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.
                              ---------------------
             (Exact name of registrant as specified in its charter)


        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 October 25, 2005
----------------------------                     -------------------------------
Common Stock, $.01 per value                               4,913,290




<PAGE>
<TABLE>
<CAPTION>

PART I.  FINANCIAL INFORMATION
         Item 1. Financial Statements

                           Consolidated Balance Sheets

                                                          (Unaudited)
                                                         September 30,     December 31,
                                                              2005             2004
                                                         -------------    -------------
<S>                                                      <C>                    <C>
ASSETS

CURRENT ASSETS
   Cash and cash equivalents                             $     310,626          314,897
   Trade receivables                                           802,318          907,238
            Inventories                                      7,385,918        6,791,383
   Prepaid expenses                                            294,986          161,985
                                                         -------------    -------------
            Total current assets                             8,793,848        8,175,503

MARKETABLE SECURITIES - AVAILABLE FOR SALE                     120,079           77,062

PROPERTY AND EQUIPMENT - AT COST, NET                          957,920          885,301

DEFERRED INCOME TAXES                                            1,206           15,994

GOODWILL                                                       837,117          837,117

OTHER ASSETS                                                   263,611          290,722
                                                         -------------    -------------

            Total Assets                                 $  10,973,781    $  10,281,699
                                                         =============    =============


LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
   Notes payable                                         $   2,601,457          548,093
   Current maturities of long-term debt                        349,003           76,172
   Accounts payable - trade                                    286,340          590,412
   Accrued expenses                                            242,735          513,775
   Customer deposits                                         1,726,721           67,173
   Federal income taxes payable                                 79,952          146,210
                                                         -------------    -------------
            Total current liabilities                        3,732,208        1,941,835


Long-term debt, less current maturities                      1,300,929        2,749,278
                                                         -------------    -------------

            Total liabilities                                5,033,137        4,691,113

SHAREHOLDERS' EQUITY
   Common stock, $.01 par value; authorized 10,000,000
   shares; issued and outstanding 4,913,290 shares              49,133           49,133
   Additional paid-in capital                                5,708,760        5,708,760
   Accumulated other comprehensive  (loss)                     (93,972)        (122,582)
   Retained earnings (deficit)                                 276,723          (44,725)
            Total shareholders' equity                       5,940,644        5,590,586
                                                         -------------    -------------

                                                         $  10,973,781    $  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 September 30,
(Unaudited)

                                                            2005           2004
                                                         -----------    -----------
<S>                                                      <C>            <C>
Revenue
    Sales                                                $ 7,129,321    $ 6,239,150
    Pawn services charges                                     85,536         68,463
                                                         -----------    -----------
                                                           7,214,857      6,307,613

Costs and expenses
    Cost of goods sold                                     5,837,846      4,973,392
    Selling, general and administrative expenses           1,124,435        987,094
    Depreciation and amortization                             46,219         35,031
                                                         -----------    -----------
                                                           7,008,500      5,995,517
                                                         -----------    -----------

Operating income                                             206,357        278,189
                                                         -----------    -----------

Other income (expense)
   Other income                                                3,895         39,098
   Interest expense                                          (71,533)       (73,005)
                                                         -----------    -----------
           Total other income (expense)                      (67,638)       (33,907)

          Income before income taxes                         138,719        278,189

Income tax expense                                            47,165         94,584
                                                         -----------    -----------

         Net income from continuing operations                91,554        183,605

Loss from discontinued operations, net of income taxes          --          (73,864)
                                                         -----------    -----------

         Net income                                      $    91,554    $   109,741
                                                         ===========    ===========

Earnings per common share
     Basic and diluted
       From continuing operations                        $       .02    $       .04
       From discontinued operations                             --             (.02)
                                                         -----------    -----------
                                                         $       .02    $       .02
                                                         ===========    ===========

     Weighted average number of common shares:
        Basic                                              4,913,290      4,913,290
        Diluted                                            5,040,148      5,155,141
</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
Nine months ended September 30,
(Unaudited)


                                                             2005            2004
                                                         ------------    ------------
<S>                                                      <C>             <C>
Revenue
    Sales                                                $ 20,475,598    $ 19,160,794
    Pawn services charges                                     257,481         163,177
                                                         ------------    ------------
                                                           20,733,079      19,323,971

Costs and expenses
    Cost of goods sold                                     16,608,461      15,414,425
    Selling, general and administrative expenses            3,288,686       2,792,576
    Depreciation and amortization                             138,090         107,428
                                                         ------------    ------------
                                                           20,035,237      18,314,429
                                                         ------------    ------------

Operating income                                              697,842       1,009,542
                                                         ------------    ------------

Other income (expense)
   Other income                                                 3,895          39,098
   Interest expense                                          (214,696)       (218,063)
                                                         ------------    ------------

           Total other income (expense)                      (210,801)       (178,965)

          Income before income taxes                          487,041         830,577

Income tax expense                                            165,594         282,396
                                                         ------------    ------------

         Net income from continuing operations                321,447         548,181

Loss from discontinued operations, net of income taxes           --          (151,965)
                                                         ------------    ------------

         Net income                                      $    321,447    $    396,216
                                                         ============    ============


Earnings per common share
     Basic and diluted
        From continuing operations                       $        .06    $        .11
        From discontinued operations                             --              (.03)
                                                         ------------    ------------
                                                         $        .06    $        .08
                                                         ============    ============

     Weighted average number of common shares:
        Basic                                               4,913,290       4,913,290
        Diluted                                             5,059,709       5,159,458
</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)
                                                                  Nine Months Ended
                                                                    September 30,
                                                                 2005           2004
                                                              -----------    -----------
<S>                                                           <C>            <C>
Cash Flows From Operations
Reconciliation of income to net cash
  used in  operating activities
    Net income                                                $   321,447    $   396,216
    Depreciation and amortization                                 138,090        107,428
    Gain on sale of assets                                           --          (32,529)
    Realized gain on sale of marketable securities                 (3,895)          --
    Other                                                            --            8,704
    (Increase) decrease in operating assets and liabilities
       Trade receivables                                           52,935        286,932
       Inventories                                               (594,535)      (400,533)
       Prepaid expenses and other current assets                 (133,001)       (51,102)
       Accounts payable and accrued expenses                     (575,112)    (1,116,872)
       Change in customer deposits                                105,548        (39,464)
       Federal income taxes payable                               (66,258)      (100,319)
       Other assets                                                27,111           --
                                                              -----------    -----------
           Total net cash used in operating activities           (727,670)      (941,539)
Cash flows from investing activities
       Pawn loans made                                           (469,839)      (445,024)
       Pawn loans repaid                                          338,069        312,675
       Recovery of pawn loan principal through
          Sale of forfeited collateral                            220,356         66,491
       Pay day loans made                                         100,871)          --
       Pay day loans repaid                                        64,270           --
       Purchase of property and equipment                        (210,709)       (95,039)
       Proceeds from sale of marketable securities                  4,277           --
       Proceeds from sale of assets                                  --          150,000
                                                              -----------    -----------

           Net cash (used) provided by investing activities      (154,447)       (10,897)
Cash flows from financing activities
       Proceeds from notes issued                               3,481,365      1,068,660
       Payments on notes payable                               (2,603,519)      (606,604)
                                                              -----------    -----------
Net cash provided by financing activities                         877,846        462,056
                                                              -----------    -----------

Net decrease in cash and cash equivalents                          (4,271)      (490,380)

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

Cash and cash equivalents at end of period                    $   310,626    $   244,913
                                                              ===========    ===========
</TABLE>



Supplemental disclosures:

Interest  paid for the  nine  months  ended  September  30,  2005 and 2004 was $
214,696 and $ 218,063, respectively.
Income  taxes paid for the nine  months  ended  September  30, 2005 and 2004 was
$225,000 and $304,430,  respectively.  Pawn loans  forfeited and  transferred to
inventory amounted to $ 220,356 and $ 312,675, respectively, for the nine months
ended September 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  September 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 $ 142,611 and $ 181,199 as of September
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 $ 50,433 and $ 76,136 as of September 30, 2005 and 2004, respectively,
are also included in the Consolidated  Balance Sheets caption trade receivables.
Pay day loans  receivable in the amount of $ 27,614 as of September 30, 2005 are
also included in the  Consolidated  Balance  Sheets  caption trade  receivables.
There were no pay day loans receivable as of September 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 September 30, 2005, and 2004 is as follows:


                                                       2005                              2005
                                                   Nine 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           $ 321,447   4,913,290   $     .06   $  91,554   4,913,290   $     .02

Effect of dilutive securities
    Stock options                           --       146,413         --         --       126,858         --
                                       ---------   ---------   ---------   ---------   ---------   ---------

Diluted earnings per common share
   Income from operations available
      to common shareholders plus
      assumed conversions              $ 321,447   5,059,709   $     .06   $  91,554   5,040,148   $     .02
                                       =========   =========   =========   =========   =========   =========


                                                       2004                              2004
                                                   Nine 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           $ 396,216   4,913,290   $     .08   $ 109,741   4,913,290         .02

 Effect of dilutive securities
    Stock  options                          --       246,168         --         --       241,851         --
                                       ---------   ---------   ---------   ---------   ---------   ---------

Diluted earnings per common share
   Income from operations available
      to common shareholders plus
      assumed  conversions             $ 396,216   5,159,458   $     .06   $ 109,741   5,155,141   $     .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 nine months ended September 30 were as follows:

                                                 (Amounts in thousands)

                    Retail        Wholesale                       Rare         Corporate
                   Jewelry         Jewelry        Bullion         Coins        and Other      Consolidated
                 ------------   ------------   ------------    ------------   ------------    ------------
<S>              <C>            <C>            <C>             <C>            <C>             <C>
Revenues
     2005        $      9,790   $      2,962   $      5,536    $      1,895   $        550    $     20,733
     2004               9,293          2,872          5,590           1,238            331          19,324
Net income
                                                                                     (loss)
     2005                 204            144             27             145           (199)            321
     2004                 285            150             37              61           (137)            396

Identifiable
Assets
     2005               8,041          1,742            236             145            810          10,974
     2004               7,790          1,745            169              94            784          10,582

Capital
Expenditures
     2005                 169           --             --              --               42             211
     2004                  95           --             --              --             --                95

Depreciation and
Amortization
     2005                  85             16           --              --               37             138
     2004                  84             16           --              --                7             107


The Company's operations by segment for the three months ended September 30 were
as follows:
                                                 (Amounts in thousands)

                    Retail        Wholesale                       Rare         Corporate
                   Jewelry         Jewelry        Bullion         Coins        and Other      Consolidated
                 ------------   ------------   ------------    ------------   ------------    ------------
Revenues
     2005        $      3,362   $      1,015   $      1,964    $        732            142    $      7,215
     2004               3,115          1,001          1,397             668            127           6,308
Net income
                                                                                     (loss)
     2005                  44             45             12              58            (68)             91
     2004                  82             54             (5)             34            (55)            110

Identifiable
Assets
     2005               8,041          1,742            236             145            810          10,974
     2004               7,790          1,745            169              94            784          10,582

Capital
Expenditures
     2005                  18           --             --              --               26              44
     2004                  35           --             --              --             --                35


Depreciation and
Amortization
     2005                  29              5           --              --               12              46
     2004                  27              5           --              --                3              35
</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)
Unrealized holding gains arising during the
    Three months ended September 30, 2005         43,348       (14,738)       28,610
                                              ----------    ----------    ----------
Other comprehensive income at
   September 30, 2005                         $ (107,436)   $   13,464    $  (93,972)
                                              ==========    ==========    ==========
</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.
<TABLE>
<CAPTION>

                                                    Nine Months Ended September 30,
                                                    -------------------------------
                                                         2005             2004
                                                    --------------   --------------
<S>                                                 <C>              <C>
Net income as reported                              $      321,447   $      396,216
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                                $      321,447   $      396,216
                                                    ==============   ==============


Earnings per share:
     Basic - as reported                                      $.06             $.08
     Basic - pro forma                                        $.06             $.08
     Diluted - as reported                                    $.06             $.08
     Diluted pro forma                                        $.06             $.08



<PAGE>

                                                    Three Months Ended September 30,
                                                    --------------------------------
                                                         2005              2004
                                                    --------------   ---------------
Net income as reported                              $       91,554   $       109,741
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                                $       91,554   $       109,741
                                                    ==============   ===============


Earnings per share:
     Basic - as reported                                      $.02              $.02
     Basic - pro forma                                        $.02              $.02
     Diluted - as reported                                    $.02              $.02
     Diluted pro forma                                        $.02              $.02
</TABLE>

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.

(6)  Recently Issued Accounting Standards


In December 2004, the FASB issued SFAS No. 123R, "Share-Based Payment". SFAS No.
123R is a revision of SFAS No. 123,  "Accounting for Stock Based  Compensation",
and supersedes APB 25. Among other items, SFAS 123R eliminates the use of APB 25
and the  intrinsic  value  method  of  accounting,  and  requires  companies  to
recognize  the cost of employee  services  received  in  exchange  for awards of
equity  instruments,  based on the grant date fair value of those awards, in the
financial statements. The effective date of SFAS 123R had been set for the first
reporting  period beginning after June 15, 2005, which is third quarter 2005 for
calendar year companies. However, on April 14, 2005, the Securities and Exchange
Commission  (SEC)  announced the effective date of SFAS 123R was suspended until
January 1, 2006, for calendar year companies. Early adoption is allowed.

SFAS 123R permits  companies to adopt its requirements  using either a "modified
prospective" method, or a "modified  retrospective"  method. Under the "modified
prospective" method, compensation cost is recognized in the financial statements
beginning with the effective  date,  based on the  requirements of SFAS 123R for
all share-based  payments granted after that date, and based on the requirements
of SFAS 123 for all unvested  awards granted prior to the effective date of SFAS
123R. Under the "modified  retrospective"  method, the requirements are the same
as under the "modified prospective" method, but also permits entities to restate
financial  statements of previous periods based on proforma  disclosures made in
accordance with SFAS 123.

The Company  currently  utilizes a standard  option pricing model (i.e.,  Black-
Scholes) to measure the fair value of stock options granted to Employees.  While
SFAS 123R permits  entities to continue to use such a model,  the standard  also
permits the use of a "lattice"  model.  The Company has not yet determined which
model it will use to measure the fair value of employee  stock  options  granted
after the adoption of SFAS 123R.

SFAS 123R also requires that the benefits  associated with the tax deductions in
excess of  recognized  compensation  cost be reported as a financing  cash flow,
rather than as an operating cash flow as required under current literature. This
requirement will reduce net operating cash flows and increase net financing cash
flows in periods  after the  effective  date.  These  future  amounts  cannot be
estimated  because they depend on, among other things,  when employees  exercise
stock options.

The  Company  currently  expects to adopt SFAS 123R  effective  January 1, 2006,
based on the new effective  date  announced by the SEC, and plans to utilize the
modified  prospective  method.  The Company has not yet determined the financial
statement impact of adopting SFAS 123R for periods beyond 2005.



<PAGE>

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

Nine months ended September 30, 2005 vs 2004:
---------------------------------------------


Sales  increased by $ 1,314,804  (6.9%) in 2005. This increase was primarily the
result of a $497,000  (5.3%) increase in retail jewelry sales, a $ 90,000 (3.1%)
increase in wholesale jewelry sales and a $ 657,000 (53.1%) 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 $ 54,000 (1.0%) due to reduced volatility in the bullion market.  Pawn
service  fees  increased  by  $94,304 in 2005 due to an  increase  in pawn loans
outstanding  during the year.  Cost of goods as a percentage of sales  increased
from 80.4% in 2004 to 81.1% in 2005 due the  significant  increase  in rare coin
sales.

Selling,  general and  administrative  expenses  increased by $496,110 or 17.8%.
This increase was primarily due to an increase in staff and payroll related cost
($196,000),  higher  advertising cost ($81,000) and $ 145,000 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  increased 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
$30,662 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 $ 151,965 net of
income taxes is the operating results of Silverman  Consultants,  Inc. which was
sold during 2004.

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

Sales  increased by $ 890,171  (14.3%) in 2005.  This increase was primarily the
result of a  $247,000  (7.9%)  increase  in retail  jewelry  sales,  a $ 567,000
(40.6%)  increase in bullion sales and a $ 64,000 (9.6%) increase in the sale of
rare coin products.  These increases were the result of increased  concentration
in the local markets through  increased  advertising as well as a 12.4% increase
in the price of gold  bullion.  Pawn service fees  increased by $ 17,073 in 2005
due to an increase in pawn loans outstanding during the year. Cost of goods as a
percentage  of  sales  increased  from  79.7%  in 2004 to  81.9% in 2005 due the
significant increase in bullion sales.

Selling,  general and  administrative  expenses  increased by $137,341 or 13.9%.
This increase was primarily due to an increase in staff and payroll related cost
($19,000), higher advertising cost ($56,000) and $ 62,000 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
$11,188 during 2005 due to capital assets acquired for the pay day loan stores.


<PAGE>
<TABLE>
<CAPTION>

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 $ 73,005 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
$125,000  during  the  next  twelve  months.   It  is  anticipated   that  these
expenditures will be funded from working capital and its new credit facility. As
of  September  30,  2005  there  were no  commitments  outstanding  for  capital
expenditures.  The Company incurred $ 152,000 of prepaid  construction  costs in
the nine  months  ended  September  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.

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>          <C>          <C>          <C>          <C>
Notes  payable                      $2,601,457   $  186,758   $2,414,699         --           --           --           --
Long-term debt and capital leases    1,649,932      104,118      383,623   $  365,623   $  133,956   $  369,728   $  292,884
Federal income taxes                    79,952       79,952         --           --           --           --           --
Operating leases                       503,655       32,081      128,325      128,325       88,394       63,093       31,546
                                    ----------   ----------   ----------   ----------   ----------   ----------   ----------

                                    $4,803,105   $  402,909   $2,926,647   $  493,948   $  222,350   $  432,827   $  324,430
                                    ==========   ==========   ==========   ==========   ==========   ==========   ==========
</TABLE>


In addition,  the Company  estimates that it will pay approximately $ 282,000 in
interest during the next twelve months.



<PAGE>

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

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.







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.

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

         32.1     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: November 11, 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: November 11, 2005
    -------------------------
    L. S. Smith
    Chairman of the Board,
    Chief Executive Officer and
    Secretary


By:  /s/ W. H. Oyster                   Dated: November 11, 2005
    -------------------------
    W. H. Oyster
    Director, President and
    Chief Operating Officer


By:  /s/ John Benson                    Dated: November 11, 2005
    -------------------------
    John Benson
    Chief Financial Officer
    (Principal Accounting Officer)