-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MDoyu2JdNRJR4op9avtp8bIwm/BUOejzP1ov/rXjE+OBsGDNHZfuRxQQHMFEK1c4 XHoDlFSiHJLJnx5/mtfCsQ== 0001010549-99-000117.txt : 19990517 0001010549-99-000117.hdr.sgml : 19990517 ACCESSION NUMBER: 0001010549-99-000117 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DALLAS GOLD & SILVER EXCHANGE INC /NV/ CENTRAL INDEX KEY: 0000701719 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-JEWELRY STORES [5944] IRS NUMBER: 880097334 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 001-11048 FILM NUMBER: 99623622 BUSINESS ADDRESS: STREET 1: 2817 FOREST L STREET 2: STE 202 CITY: DALLAS STATE: TX ZIP: 75234 BUSINESS PHONE: 2144843662 MAIL ADDRESS: STREET 1: 2817 FOREST LN CITY: DALLAS STATE: TX ZIP: 75234 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN PACIFIC MINT INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: CANYON STATE CORP DATE OF NAME CHANGE: 19860819 10QSB 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 March 31, 1999 ---------------------------------- ( ) 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 May 12, 1999 - ---------------------------- ----------------------------------- Common Stock, $.01 per value 4,178,912
PART I. FINANCIAL INFORMATION - ------------------------------- DALLAS GOLD AND SILVER EXCHANGE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) March 31, December 31, ASSETS 1999 1998 ------------ ------------- Current assets: Cash $ 92,813 $ 1,004,836 Marketable securities - trading 2,362,404 3,010,462 Trade receivables 96,218 166,929 Notes receivable - officers 3,200 4,001 Inventory 1,615,785 1,354,686 Prepaid expenses 60,557 27,844 ------------ ------------ Total current assets 4,230,977 5,568,758 Marketable securities - available for sale 18,000 18,000 Property and equipment 1,144,597 1,104,091 Other assets 54,169 64,220 ------------ ------------ Total assets $ 5,447,743 $ 6,755,069 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes payable $ 321,904 $ 350,713 Accounts payable - trade 229,586 457,003 Accrued expenses 143,190 596,231 Customer deposits 189,372 174,600 Federal income taxes payable 26,298 11,658 Current maturities of long-term debt and lease obligations 48,227 148,072 Deferred income taxes 376,322 591,452 ------------ ------------ Total current liabilities 1,334,899 2,329,729 Long-term debt and capital lease obligations, less current maturities 1,629,501 1,560,602 Shareholders' equity: Common stock, $.01 par value; authorized 10,000,000 shares; issued and outstanding 4,178,912 shares at March 31, 1999 and 4,144,912 at December 31, 1998 41,789 41,449 Additional paid-in capital 3,348,839 3,341,387 Accumulated other comprehensive income (4,950) (4,950) Accumulated deficit (902,335) (531,148) ------------ ------------ Total shareholders' equity 2,483,343 2,864,738 Total liabilities and shareholders' equity $ 5,447,743 $ 6,755,069 ============ ============
2 DALLAS GOLD AND SILVER EXCHANGE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended March 31, 1999 1998 -------------------------- Revenues: Sales $ 4,629,461 $ 2,887,708 Pawn service fees 13,475 10,762 Consulting service income Gain (loss) on sale of marketable securities - trading 36,477 (2,291) Unrealized gain on marketable securities - trading (632,734) 370,745 Other income 355 31,567 ----------- ------------ 4,047,034 3,298,491 ----------- ------------ Costs and expenses: Cost of sales (exclusive of items shown separately below) 3,981,379 2,375,332 Consulting service costs 52,455 48,623 Selling, general and administrative expenses 518,585 441,941 Depreciation and amortization 29,572 23,716 Interest expense 54,720 54,780 ----------- ------------ Total costs and expenses 4,636,711 2,944,392 ----------- ------------ Income (loss) before income taxes (589,677) 354,099 Income taxes expense (benefit) (200,490) 120,399 ----------- ------------ Net income (loss) $ (389,187) $ 233,700 =========== ============ Earnings(loss) per common share: Basic $ (.09) $ .06 Diluted $ (.08) $ .05 Weighted average number of common shares: Basic 4,178,912 4,160,128 Diluted 4,566,395 4,572,378 3 DALLAS GOLD AND SILVER EXCHANGE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31, 1999 1998 ----------------------- Reconciliation of net income to net cash provided by operating activities Net income (loss) $ (389,187) $ 233,700 Adjustments to reconcile net income to cash provided by operating activities Depreciation and amortization 29,572 23,716 Unrealized (gain) loss on securities 632,734 (370,745) Deferred taxes (215,130) 104,043 (Increase) decrease in operating assets and liabilities Net change in marketable securities 15,324 (8,430) Trade receivables 70,711 (15,329) Inventories (261,099) (174,649) Prepaid expenses and other assets (22,622) (19,641) Accounts payable (227,417) (194,429) Accrued expenses (453,041) (239,792) Customer deposits 14,772 26,334 Income taxes payable 14,640 ----------- ------------ Net cash used in operating activities (790,783) (635,222) Cash flows from investing activities Decrease in notes receivable - officers 801 Capital expenditures (70,078) (21,283) ----------- ------------ Net cash used in financing activities (69,277) (18,679) ----------- ------------ Cash flows from financing activities Net change in notes payable (28,809) Net change in long-term debt and capital lease obligations (30,946) (15,694) Common stock issued on conversion of debt 18,750 Common stock issued for services rendered 25,000 Purchase and retirement of common stock (35,958) (63,148) ----------- ------------ Net cash used in financing activities (51,963) (78,842) ----------- ------------ Decrease in cash (912,023) (732,743) ----------- ------------ Cash at beginning of period 1,004,836 1,258,254 ----------- ------------ Cash at end of period $ 92,813 $ 525,511 =========== ============ 4 DALLAS GOLD AND SILVER EXCHANGE, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT March 31, 1999 (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, DLS Financial Services, Inc., National Jewelry Exchange, 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 three month period ended March 31, 1999, are not necessarily indicative of the results that may be expected for the year ended December 31, 1998. 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, 1998. 5 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION Results of Operations - --------------------- Quarter ended March 31, 1999 vs 1998: Sales for the first quarter of 1999 increased $1,741,753 or 60.3% when compared to the corresponding quarter of 1998. The increase was the result of an increase in jewelry sales in the amount of $209,019 or 12.7% and an increase in precious metals sales in the amount of $1,532,734 or 123.9%. Management believes that the Company's Internet related activities had a significant impact on this sales growth. During the first quarter of 1999 Internet sales increased by 341.6%. Pawn service fees increased by 25.2% due to the acquisition of National Jewelry Exchange, Inc. (formerly Beltline Pawn) in December 1998. During the first quarter of 1998 the Company sold $51,801 of marketable securities realizing a gain of $36,477. Unrealized gains (losses) on trading securities in the amount of ($632,734) in 1999 and $370,745 in 1998 was the result of changes in the market value of the Company's investment in marketable securities. Cost of sales increased by $1,606,047 primarily due to the increase in sales. General and administration expenses increased by $76,644 primarily due to the acquisition of Beltline Pawn and payroll and related cost and higher advertising cost. Depreciation expense increased by $5,856 due to depreciation on assets placed in service during 1998. Income tax expense and benefit are provided at the corporate rate of 34% for both 1999 and 1998. 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 quarter of 1999, cash and cash equivalents decreased by $912,023 primarily as a result of decreases in accounts payable ($227,417), a decrease in accrued expenses ($453,041), and an increase in inventory ($261,099). Management of the Company expects capital expenditures to total approximately $100,000 during 1999. 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 6 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: May 14, 1999 ------------------------- 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: May 14, 1999 ------------------------- L. S. Smith Chairman of the Board, Chief Executive Officer and Secretary By: /s/ W. H. Oyster Dated: May 14, 1999 ------------------------- W. H. Oyster Director, President and Chief Operating Officer By: /s/ John Benson Dated: May 14, 1999 ------------------------- John Benson Chief Financial Officer (Principal Accounting Officer) 7 EX-27 2 FINANCIAL DATA SCHEDULE
5 0000701719 DALLAS GOLD AND SILVER EXCHANGE,INC. 1,000 US DOLLARS 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 1 93 2,362 99 0 1,616 4,231 1,948 802 5,448 1,335 1,630 42 0 0 2,441 5,448 4,623 4,047 3,981 4,582 0 0 55 (590) (200) (390) 0 0 0 (390) (.09) (.08)
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