<PAGE> 1
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, 1995
-------------------------------------------------
( ) Transition Report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from to
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Commission File Number 1-11048
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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) (214) 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.
<TABLE>
<CAPTION>
Class Outstanding on November 1, 1995
- ---------------------------- --------------------------------
<S> <C>
Common Stock, $.01 per value 5,830,451
</TABLE>
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PART I. FINANCIAL INFORMATION
DALLAS GOLD AND SILVER EXCHANGE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1995 1994
--------- ---------
<S> <C> <C>
Current assets:
Cash $ 36,176 $ 432,713
Marketable securities - trading 947,630 328,380
Trade receivables 145,235 141,754
Loans 35,453 41,369
Other receivables 16,952 40,475
Inventory 966,628 748,603
Prepaid expenses 42,596 23,428
---------- ----------
Total current assets 2,190,670 1,756,722
Investments in marketable securities 754,059 673,360
Property and equipment 1,089,245 1,070,987
Other assets 53,608 55,607
---------- ----------
Total assets $4,087,582 $3,556,676
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 445,806 $ 153,346
Accounts payable 267,502 267,082
Accrued expenses 108,172 133,908
Customer deposits 32,466 26,282
Current maturities of long-term
debt and lease obligations 30,436 91,224
---------- ----------
Total current liabilities 884,382 671,842
Long-term debt, less current maturities 844,128 1,077,042
Capital lease obligations, less
Current maturities 44,015 52,722
---------- ----------
Total liabilities 1,772,525 1,801,606
---------- ----------
Shareholders' equity:
Common stock, $.01 par value;
authorized 10,000,000 shares;
issued and outstanding 5,830,451
shares at September 30, 1995 and
5,883,351 at December 31, 1994 58,305 58,834
Additional paid-in capital 5,205,196 5,291,345
Accumulated deficit (3,171,601) (3,461,452)
---------- ----------
2,091,900 1,888,727
Unrealized gain (loss) on securities 223,157 ( 133,657)
---------- ----------
Total shareholders' equity 2,315,057 1,755,070
Total liabilities and shareholders'
equity $4,087,582 $3,556,676
---------- ----------
</TABLE>
2
<PAGE> 3
DALLAS GOLD AND SILVER EXCHANGE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1995 1994
------------------------
<S> <C> <C>
Revenues:
Sales $2,428,080 $2,477,689
Pawn service fees 13,475 16,760
Travel agency income 348,268 226,743
Consulting service income 19,812 7,913
Interest income 15 119
Realized gain on marketable securities 154 -0-
Unrealized gain on trading securities 84,331 -0-
Other income -0- -0-
---------- ----------
2,894,135 2,729,224
Costs and expenses:
Cost of sales (exclusive of
items shown separately below) 1,947,358 2,050,776
Travel agency costs 340,661 220,428
Consulting service costs 76,274 53,334
General and administrative
expenses 459,892 343,031
Depreciation and amortization 18,551 20,902
Interest expense 41,124 37,664
---------- ----------
Total costs and expenses 2,883,860 2,726,135
---------- ----------
Net income $ 10,275 $ 3,089
========== ==========
Income per share of common stock $ $
========== ==========
</TABLE>
3
<PAGE> 4
DALLAS GOLD AND SILVER EXCHANGE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1995 1994
-------------------------
<S> <C> <C>
Revenues:
Sales $7,785,781 $8,449,687
Pawn service fees 42,341 44,360
Travel agency income 1,051,184 767,244
Consulting service income 267,239 92,225
Interest income 27 690
Realized gain on marketable securities 63,670 -0-
Unrealized gain on trading securities 226,706 -0-
Other income -0- 4,744
---------- ----------
9,436,948 9,358,950
Costs and expenses:
Cost of sales (exclusive of
items shown separately below) 6,401,734 7,305,642
Travel agency costs 1,024,197 741,699
Consulting service costs 198,274 170,111
General and administrative
expenses 1,343,230 942,119
Depreciation and amortization 58,212 59,907
Interest expense 121,450 102,279
---------- ----------
Total costs and expenses 9,147,097 9,321,757
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Net income $ 289,851 $ 37,193
========== ==========
Income per share of common stock $ .05 $ .01
========== ==========
</TABLE>
4
<PAGE> 5
DALLAS GOLD AND SILVER EXCHANGE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1995 1994
----------------------
<S> <C> <C>
Cash used for operating activities $ (333,790) $(302,196)
Cash flows from investing activities:
(Increase) decrease in loans, net 5,916 (8,895)
Purchase of property, plant and
equipment (76,470) (76,512)
Sale of marketable securities 126,792
Purchase of marketable securities (23,800) (69,122)
New store organization costs (19,922)
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Net cash provided by (used
for investing activities 32,438 (174,451)
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Cash flows from financing activities:
Proceeds from loans 71,566 172,375
Purchase of common stock (86,678) (42,193)
Principal payments on loans (45,670)
Principal payments on long-term
debt (9,600) (9,248)
Principal payments on capital
lease obligations (24,803) (18,566)
---------- ---------
Net cash used for financing
activities (95,185) 102,368
---------- ---------
Decrease in cash and cash equivalents $ (396,537) $(374,279)
========== =========
</TABLE>
5
<PAGE> 6
DALLAS GOLD AND SILVER EXCHANGE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT
September 30, 1995
(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. and DLS Financial Services, 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,
1995 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1995. 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, 1994.
5
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
Quarter ended September 30, 1995 vs 1994:
Sales for the third quarter of 1995 decreased $ 49,609 when compared to the
corresponding quarter of 1994. The decrease was primarily the result of a
decrease in precious metals sales in the amount of $ 131,664. Travel agency
income increased by $ 121,525 or 53.6% due to an increase in business related
travel. Unrealized gains on trading securities in the amount of $ 84,331 was
the result of an increase in the market value of the Company's investments in
trading securities. Cost of sales decreased by $ 103,418 primarily due to the
decrease in precious metals sales. Travel agency costs increased by $ 120,233
due to the 53.6% increase in income. Consulting service cost increased $ 22,940
due to increased travel expenses.
General and administration expenses increased by $ 116,861 primarily due to
cost associated with the new jewelry store which opened in August, 1994.
Nine months ended September 30, 1995 vs. 1994:
Sales for the nine months ended September 30, 1995 decreased $ 663,906 or
7.9% primarily due to a decrease in precious metals of $ 809,221. Travel
agency income increased $ 283,960 or 37.0% due to an increase in business
related travel. Consulting service income increased $ 175,014 primarily due to
$ 225,000 consulting fee earned relating to the recapitalization of an existing
client. During the first nine months of 1995 the Company sold $ 126,792 of
marketable securities realizing a gain of $ 63,670. Unrealized gains on trading
securities of $ 226,706 was the result of an increase in the market value of
the Company's investment in trading securities. Cost of sales decreased by $
903,908 during 1995 primarily due to the $ 809,221 decrease in precious metals
sales. Travel agency costs increased by $ 282,498 due to the 37.0% increase in
income.
General and administrative costs increased by $ 401,111 primarily due to costs
associated with the new jewelry store which opened in August, 1994.
Interest expense increased by $ 19,171 in 1995 due to interest paid on working
capital loans issued during 1994.
6
<PAGE> 8
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 nine months of each year jewelry inventory is
replenished and trade receivables begin to increase. During the first nine
months of 1995, cash and cash equivalents decreased by $ 396,537 primarily as a
result of an increase in inventory ($ 218,025) and due to the purchase of
common stock in the amount of $ 86,678.
During, 1993 and 1994, the Company borrowed a net $559,856 primarily from
individuals. The proceeds from these loans were used to purchase additional
inventory to hold for sale to retail customers and to met other working capital
requirements. In addition, in February 1994, the Company entered into a lease
agreement for a second retail jewelry store in Dallas, Texas. The new store
began operations in August, 1994.
Management believes that additional working capital loans may be required to
maintain inventory levels. The Company will attempt obtain to this financing
from commercial banks and individuals. However, their can be no assurance that
additional financing will be received.
In addition, the Company expects capital expenditures to total approximately
$75,000 during 1995. If additional financing is not obtained, the Company may
be required to adjust its inventory levels accordingly.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits - Exhibit 27
Reports on Form 8-K - None
7
<PAGE> 9
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: November 6, 1995
-------------------------
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 6, 1995
-------------------------
L. S. Smith
Chairman of the Board,
Chief Executive Officer and
Secretary
By: /s/ W. H. Oyster Dated: November 6, 1995
-------------------------
W. H. Oyster
Director, President and
Chief Operating Officer
By: /s/ John Benson Dated: November 6, 1995
-------------------------
John Benson
Chief Financial Officer
(Principal Accounting Officer)
8
<PAGE> 10
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 36
<SECURITIES> 948
<RECEIVABLES> 198
<ALLOWANCES> 0
<INVENTORY> 967
<CURRENT-ASSETS> 2,191
<PP&E> 1,665
<DEPRECIATION> 576
<TOTAL-ASSETS> 4,088
<CURRENT-LIABILITIES> 884
<BONDS> 888
<COMMON> 58
0
0
<OTHER-SE> 2,257
<TOTAL-LIABILITY-AND-EQUITY> 4,088
<SALES> 7,786
<TOTAL-REVENUES> 9,437
<CGS> 6,402
<TOTAL-COSTS> 9,026
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 121
<INCOME-PRETAX> 290
<INCOME-TAX> 0
<INCOME-CONTINUING> 290
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 290
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
