<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 June 30, 1995
----------------------------------------------
( ) 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
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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 at July 10, 1995
- ---------------------------- --------------------------------
<S> <C>
Common Stock, $.01 per value 5,873,351
</TABLE>
<PAGE> 2
PART I. FINANCIAL INFORMATION
DALLAS GOLD AND SILVER EXCHANGE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1995 1994
------------ ----------
<S> <C> <C>
Current assets:
Cash $ 114,376 $ 432,713
Marketable securities - trading 455,055 328,380
Trade receivables 152,804 141,754
Loans 37,863 41,369
Other receivables 16,952 40,475
Inventory 863,069 748,603
Prepaid expenses 50,715 23,428
------------ ----------
Total current assets 1,690,834 1,756,722
Investments in marketable securities 1,660,339 673,360
Property and equipment 1,083,264 1,070,987
Other assets 54,274 55,607
------------ ----------
Total assets $ 4,488,711 $3,556,676
============ ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 396,974 $ 153,346
Accounts payable 172,096 267,082
Accrued expenses 82,560 133,908
Customer deposits 36,439 26,282
Current maturities of long-term
debt and lease obligations 36,402 91,224
------------ ----------
Total current liabilities 724,471 671,842
Long-term debt, less current maturities 844,767 1,077,042
Capital lease obligations, less
Current maturities 47,393 52,722
------------ ----------
Total liabilities 1,616,631 1,801,606
------------ ----------
Shareholders' equity:
Common stock, $.01 par value;
authorized 10,000,000 shares;
issued and outstanding 5,873,351
shares at June 30, 1995 and
5,883,351 at December 31, 1994 58,734 58,834
Additional paid-in capital 5,273,875 5,291,345
Accumulated deficit (3,181,877) (3,461,452)
------------ ----------
2,150,732 1,888,727
Unrealized gain (loss) on securities 721,348 (133,657)
------------ ----------
Total shareholders' equity 2,872,080 1,755,070
Total liabilities and shareholders'
equity $ 4,488,711 $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
June 30,
1995 1994
------------------------------------
<S> <C> <C>
Revenues:
Sales $ 2,889,120 $2,890,165
Pawn service fees 14,100 14,500
Travel agency income 418,930 284,935
Consulting service income 30,325 60,562
Interest income 12 -0-
Realized gain on marketable securities -0- -0-
Unrealized gain on trading securities 106,095 -0-
Other income -0- 4,744
------------ ----------
3,458,582 3,254,906
Costs and expenses:
Cost of sales (exclusive of
items shown separately below) 2,430,053 2,526,573
Travel agency costs 408,088 273,912
Consulting service costs 62,083 59,232
General and administrative
expenses 436,824 310,425
Depreciation and amortization 20,166 19,622
Interest expense 40,426 33,183
------------ ----------
Total costs and expenses 3,397,640 3,222,947
------------ ----------
Net income $ 60,942 $ 31,959
============ ==========
Income per share of common stock $ .01 $ .01
============ ==========
</TABLE>
3
<PAGE> 4
DALLAS GOLD AND SILVER EXCHANGE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1995 1994
------------------------------------
<S> <C> <C>
Revenues:
Sales $ 5,357,701 $5,971,998
Pawn service fees 28,866 27,600
Travel agency income 702,916 540,501
Consulting service income 247,427 84,312
Interest income 12 571
Realized gain on marketable securities 63,516 -0-
Unrealized gain on trading securities 142,375 -0-
Other income -0- 4,744
------------ ----------
6,542,813 6,629,726
Costs and expenses:
Cost of sales (exclusive of
items shown separately below) 4,454,376 5,254,866
Travel agency costs 683,536 521,271
Consulting service costs 122,000 116,777
General and administrative
expenses 883,339 599,088
Depreciation and amortization 39,661 39,005
Interest expense 80,326 64,615
------------ ----------
Total costs and expenses 6,263,238 6,595,622
------------ ----------
Net income $ 279,575 $ 34,104
============ ==========
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>
Six Months Ended
June 30,
1995 1994
------------------------------------
<S> <C> <C>
Cash used for operating activities $ (306,529) $ (329,013)
Cash flows from investing activities:
(Increase) decrease in loans, net 3,506 (10,861)
Purchase of property, plant and
equipment (51,938) (29,013)
Sale of marketable securities 126,792
Purchase of marketable securities (23,800)
------------ ----------
Net cash provided by (used
for investing activities 54,560 (39,874)
------------ ----------
Cash flows from financing activities:
Proceeds from loan 50,000
Purchase of common stock (17,570) (17,068)
Increase (decrease) in notes payable 18,075 (11,534)
Principal payments on long-term debt (47,411) (5,866)
Principal payments on capital
lease obligations (19,462) (12,161)
------------ ----------
Net cash used for financing
activities (66,368) 3,371
------------ ----------
Decrease in cash and cash equivalents $ (318,337) $ (365,516)
============ ==========
</TABLE>
5
<PAGE> 6
DALLAS GOLD AND SILVER EXCHANGE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT
June 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 June 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.
6
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
Quarter ended June 30, 1995 vs 1994:
Sales for the second quarter of 1995 decreased $ 1,045 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 $ 60,172. Travel agency
income increased by $ 133,995 or 47.0% due to an increase in business related
travel. Consulting service income decreased by $ 30,237 as a result of the
relocation of DLS FINANCIAL SERVICES form California to Dallas during May 1995.
Unrealized gains on trading securities in the amount of $ 106,095 was the
result of an increase in the market value of the Company's investments in
trading securities. Cost of sales decreased by $ 52,940 primarily due to the
decrease in precious metals sales. Travel agency costs increased by $ 134,176
due to the 47.0% increase in income.
General and administration expenses increased by $ 126,399 primarily due to
cost associated with the new jewelry store which opened in August, 1994.
Interest expense increased by $ 7,243 or 21.8% in 1995 due to interest paid on
working capital loans issued during 1994.
Six months ended June 30, 1995 vs. 1994:
Sales for the six months ended June 30, 1995 decreased $ 614,297 or 10.3%
primarily due to a decrease in precious metals of $ 677,557. Travel agency
income increased $ 162,415 or 30.1% due to an increase in business related
travel. Consulting service income increased $ 163,115 primarily due to
$ 225,000 consulting fee earned relating to the recapitalization of an existing
client. During the first six months of 1995 the Company sold $ 126,792 of
marketable securities realizing a gain of $ 63,516. Unrealized gains on trading
securities of $ 142,375 was the result of an increase in the market value of
the Company's investment in trading securities. Cost of sales decreased by
$ 800,490 during 1995 primarily due to the $ 677,557 decrease in precious metals
sales. Travel agency costs increased by $ $ 162,265 due to the 30.1% increase
in income.
General and administrative costs increased by $ 284,251 primarily due to costs
associated with the new jewelry store which opened in August, 1994.
Interest expense increased by $ 15,711 in 1995 due to interest paid on working
capital loans issued during 1994.
7
<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 half of each year jewelry inventory is replenished
and trade receivables begin to increase. During the first half of 1995, cash
and cash equivalents decreased by $318,337 primarily as a result of increases
in inventory ($ 114,466) and net receivables ($11,050) and a decrease in trade
payable and accrued expenses ($ 146,334).
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 meet 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
27 Financial Data Schedule
Reports on Form 8-K - None
8
<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: August 3, 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: August 3, 1995
-------------------------
L. S. Smith
Chairman of the Board,
Chief Executive Officer and
Secretary
By: /s/ W. H. Oyster Dated: August 3, 1995
-------------------------
W. H. Oyster
Director, President and
Chief Operating Officer
By: /s/ John Benson Dated: August 3, 1995
-------------------------
John Benson
Chief Financial Officer
(Principal Accounting Officer)
9
<PAGE> 10
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ----------- ------------
<S> <C> <C>
27 Financial Data Schedule.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 114
<SECURITIES> 455
<RECEIVABLES> 152
<ALLOWANCES> 0
<INVENTORY> 863
<CURRENT-ASSETS> 1,691
<PP&E> 1,640
<DEPRECIATION> 557
<TOTAL-ASSETS> 4,489
<CURRENT-LIABILITIES> 724
<BONDS> 893
<COMMON> 59
0
0
<OTHER-SE> 2,813
<TOTAL-LIABILITY-AND-EQUITY> 4,489
<SALES> 5,358
<TOTAL-REVENUES> 6,543
<CGS> 4,454
<TOTAL-COSTS> 6,183
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 80
<INCOME-PRETAX> 280
<INCOME-TAX> 0
<INCOME-CONTINUING> 280
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 280
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
