Form 8-K DGSE COMPANIES INC For: May 16

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May 16, 2016 4:02 PM EDT

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 

Date of Report (Date of earliest event reported):
May 16, 2016 (May 16, 2016)

DGSE COMPANIES, INC.
(Exact name of registrant as specified in its charter)

Nevada

1-11048

88-0097334

 
(State or Other
Jurisdiction of
Incorporation) 		(Commission
File Number) 		(IRS Employer
Identification No.)

15850 Dallas Parkway, Suite 140
Dallas, Texas 75248
(Address of Principal Executive Offices) (Zip Code)

(972) 587-4049
(Registrant’s telephone number, including area code)


(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

⃞

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 

⃞

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 

⃞

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 

⃞

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On May 16, 2016, DGSE Companies, Inc. (the “Registrant”) issued a press release disclosing its financial results for the quarter ended March 31, 2016 (the “Press Release”).  The Press Release is attached hereto as Exhibit 99.1.

Item 7.01 Regulation FD Disclosure

The Registrant will hold a telephone conference regarding the Press Release on May 16, 2016 at 3:30 p.m. Central Time (4:30 p.m. Eastern Time) to discuss the Registrant’s financial results for the quarter ended March 31, 2016.  To participate in the teleconference, please dial +877-407-9039 for U.S. callers and +201-689-8470 for international callers and reference the “DGSE conference call” when prompted.  A replay will be available after completion of the call through May 23, 2016.  To access the replay, please dial +877-870-5176 (U.S. callers) or +858-384-5517 (international callers) and reference passcode 13637136.  The webcast and archived replay can also be accessed on the internet at http://public.viavid.com/index.php?id=119574.

Item 9.01 Financial Statements and Exhibits

(a) Not applicable.

(b) Not applicable.

(c) Not applicable.

(d) Exhibits.

The following exhibit is furnished as part of this report:

 

Exhibit

Number

Description of Exhibit

 
99.1 Press Release, dated May 16, 2016.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

DGSE COMPANIES, INC.

(Registrant)

 

Date: May 16, 2016

By:

/s/ MATTHEW M. PEAKES

Matthew M. Peakes

Chief Executive Officer

(Principal Executive Officer)

EXHIBIT INDEX

Exhibit

Number

Description of Exhibit

 
99.1 Press Release, dated May 16, 2016

Exhibit 99.1

DGSE Companies, Inc. Reports First Quarter 2016 Results

DALLAS--(BUSINESS WIRE)--May 16, 2016--DGSE Companies, Inc. (NYSE MKT: DGSE), a leading wholesaler and retailer of jewelry, diamonds, fine watches, and precious metal bullion and rare coin products, today announced its financial results for the quarter ended March 31, 2016.

First Quarter 2016 Summary

  • Revenues from continuing operations were $11.8 million compared to $12.9 million, an 8.5% decline compared to the same period in 2015. The decrease in revenues as compared to the prior year quarter is primarily associated with lower bullion and scrap sales and the closing of two stores in Texas during the first quarter of 2015.
  • Gross profit from continuing operations decreased by $184,000, or 7.9%, based on lower sales. Gross profit as a percent of revenue increased to 18.3% of revenues in the current quarter, compared to 18.1% in the same period last year.
  • Selling, general and administrative (“SG&A”) expenses for continuing operations was $2.6 million compared to $2.9 million in the same period last year.
  • Loss from continuing operations, net of taxes, for the quarter was $690,000 compared to a loss from continuing operations of $801,000 in the first quarter of 2015.
  • Net loss, inclusive of discontinued operations, was approximately $690,000 or $0.06 per share, compared to a net loss of approximately $798,000, or $0.07 per share, in the year-ago period.

Matthew Peakes, Chief Executive Officer and Chairman of the Board, stated, “While we are far from pleased with the loss for this quarter, we are encouraged by the increase in per store sales, increase in margin and the reduction in expenses.”

First Quarter 2016 Results

For the quarter ended March 31, 2016, revenues from continuing operations were $11.8 million, an 8.5% decrease compared to $12.9 million in the quarter ended March 31, 2015, due primarily to continued weakness in the Company’s scrap business, which is consistent with industry-wide trends, and lower bullion sales. Additionally, the decrease in revenues as compared to the prior year quarter is attributable to the closing of two stores in Texas.

Gross profit from continuing operations for the first quarter of 2016 decreased slightly by $184,000, or 7.9%, to $2.1 million compared to $2.3 million in the prior year quarter. Gross margin as a percentage of revenue increased to 18.3% for the three months ended March 31, 2016, compared to 18.1% for the same period in the prior year.

SG&A expenses decreased by $0.3 million, or 9.1%, to $2.6 million, as compared to $2.9 million during the same period in 2015. The decrease in SG&A is due to our continued efforts to reduce expenses at all levels, including store-level operating expenses, corporate overhead and advertising expense.

Depreciation and amortization decreased by $41,000, or 29.1%, to $100,000 compared to $141,000 for the same period in the prior year. This decrease was due to one-time write off of assets formerly utilized in two stores closed during first quarter of 2015.

Loss from continuing operations for the first quarter of 2016, net of taxes, was $690,000 or $0.06 per share, compared to a loss from continuing operations of $801,000, or $0.07 per share, in the first quarter of 2015.

Net loss, inclusive of discontinued operations, was approximately $690,000 or $0.06 per share, compared to a net loss of approximately $798,000, or $0.07 per share, in the year-ago period.

Balance Sheet Summary

At March 31, 2016, we had cash and cash equivalents of $1.5 million compared to $1.8 million at December 31, 2015. Stockholders’ equity decreased by $674,000, or 17.4%, to $3.2 million at March 31, 2016 compared to $3.9 million at December 31, 2015. As of March 31, 2016 and December 31, 2015, the outstanding balance on the Company’s credit facility with NTR Metals, Inc. remained the same at $2.3 million.

Conference Call

DGSE Companies management will conduct a live teleconference to discuss its financial results:

Date:       May 16, 2016
Time: 4:30 p.m. ET/3:30 p.m. CT
Dial-in: 1-877-407-9039 if calling from the United States, or 1-201-689-8470 if dialing internationally.
Replay:

A replay will be available until midnight on May 23, 2016, which may be accessed by dialing 1-877-870-5176 within the United States and 1-858-384-5517 if dialing internationally. Please use passcode 13637136 to access the replay.

Webcast:

The call will be webcast and will be available by visiting

http://public.viavid.com/index.php?id=119574.

 

About DGSE Companies, Inc.

DGSE Companies, Inc. wholesales and retails jewelry, diamonds, fine watches, precious metal bullion and rare coin products through its Charleston Gold & Diamond Exchange, Chicago Gold & Diamond Exchange (formerly Bullion Express), and Dallas Gold & Silver Exchange operations. DGSE also owns Fairchild International, Inc., one of the largest vintage watch wholesalers in the country. In addition to its retail facilities in Illinois, South Carolina, and Texas, the Company operates websites which can be accessed at www.cgdeinc.com and www.dgse.com. Real-time price quotations and real-time order execution in precious metals are provided on another DGSE website at www.USBullionExchange.com. Wholesale customers can access the full vintage watch inventory through the restricted site at www.FairchildWatches.com. The Company is headquartered in Dallas, Texas and its common stock trades on the NYSE MKT exchange under the symbol “DGSE.”

This press release includes statements which may constitute "forward-looking" statements, usually containing the words “believe,” “estimate,” “project,” “expect” or similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, continued acceptance of the Company's products and services in the marketplace, competitive factors, dependence upon third-party vendors, and other risks detailed in the Company's periodic report filings with the Securities and Exchange Commission. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release.

 
 
DGSE COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 
    March 31,     December 31,
  2016     2015  
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 1,521,998 $ 1,752,711
Trade receivables, net of allowances 166,953 229,848
Inventories 10,250,004 9,565,506
Prepaid expenses   147,512     106,547  
 
Total current assets 12,086,467 11,654,612
 
Property and equipment, net 4,199,776 4,281,388
Intangible assets, net 10,338 13,784
Other assets 143,551 204,226
   
Total assets $ 16,440,132   $ 16,154,010  
 
LIABILITIES
Current Liabilities:
Current maturities of long-term debt $ 1,555,380 $ 1,589,522
Current maturities of capital leases 12,207 12,069
Accounts payable-trade 5,765,738 5,689,056
Accrued expenses 896,431 1,174,458
Customer deposits and other liabilities 2,508,508 1,309,648
Liabilities related to discontinued operations   190,810     190,810  
 
Total current liabilities 10,929,074 9,965,563
 
Line of credit, related party 2,303,359 2,303,359
Long-term debt, less current maturities   10,556     13,664  
 
Total liabilities 13,242,989 12,282,586
 
Commitments and contingencies
 
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value; 30,000,000 shares authorized;
12,328,956 and 12,296,446 shares issued and outstanding 123,289 122,964
Additional paid-in capital 34,283,302 34,267,577
Accumulated deficit   (31,209,448 )   (30,519,117 )
Total stockholders' equity 3,197,143 3,871,424
   
Total liabilities and stockholders' equity $ 16,440,132   $ 16,154,010  
 
 
DGSE COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
    For the Three Months Ended
March 31,
  2016       2015  
 
Revenue:
Sales $ 11,774,516 $ 12,875,149
Cost of goods sold   9,625,473     10,541,966  
Gross margin 2,149,043 2,333,183
 
Expenses:
Selling, general and administrative expenses 2,624,356 2,886,043
Depreciation and amortization   99,764     140,624  
  2,724,120     3,026,667  
 
Operating loss   (575,077 )   (693,484 )
 
Other expense (income):
Other income, net (614 ) (3,033 )
Interest expense   95,207     83,768  
  94,593     80,735  
 
Loss from continuing operations before income taxes (669,670 ) (774,219 )
 
Income tax expense   20,564     26,844  
 
Loss income from continuing operations (690,234 ) (801,063 )
 
Discontinued operations:
(Loss) income from discontinued operations, net of taxes   (97 )   2,564  
 
Net loss $ (690,331 ) $ (798,499 )
 
Basic net loss per common share:
Loss from continuing operations $ (0.06 ) $ (0.07 )
(Loss) income from discontinued operations   -     -  
Net loss per share $ (0.06 ) $ (0.07 )
 
Diluted net loss per common share:
Loss from continuing operations $ (0.06 ) $ (0.07 )
(Loss) income from discontinued operations   -     -  
Net loss income per share $ (0.06 ) $ (0.07 )
 
Weighted-average number of common shares
Basic 12,297,501 12,245,679
Diluted 12,297,501 12,245,679

CONTACT:
DGSE Companies, Inc.
Matthew M. Peakes, CEO, 972-587-4021
[email protected]


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