SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. 1)
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14-12
Dallas Gold And Silver Exchange, Inc.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
1) Title of each class of securities to which transaction applies:__________
2) Aggregate number of securities to which transaction applies:_____________
3) Per unit price or other underlying value of transaction computed to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):_____________________________
4) Proposed maximum aggregate value of transaction:_________________________
5) Total fee paid: _________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filling for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:_________________________________
2) Form, Schedule or Registration No.:_____________________
3) Filing Party; __________________________________________
4) Date Filed: ____________________________________________
PRELIMINARY COPY
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DALLAS GOLD AND SILVER EXCHANGE, INC.
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held June 25, 2001
Notice is hereby given that the Annual Meeting of Shareholders of Dallas Gold
and Silver Exchange, Inc. will be held on Monday, June 25, 2001, at 6:00 P.M. at
the Company's executive offices at 2817 Forest Lane, Dallas, Texas 75234, for
the purpose of considering and voting upon:
1. The election of Directors.
2. Amending the Company's Articles of Incorporation to change the name of
the Company to DGSE Companies, Inc.
3. Transacting such other business as may properly come before the meeting.
The close of business on April 18, 2001, has been fixed as the record date for
determining the shareholders entitled to notice of and to vote at this meeting
and any adjournment thereof, and only shareholders of record on such date shall
be entitled to notice of and to vote at the meeting.
Please promptly date, sign and mail the enclosed proxy using the enclosed
address envelope which needs no postage if mailed within the United States.
By order of the Board of Directors
Dr. L.S. Smith, Ph.D
Chairman of the Board
and Secretary
Dated: April 27, 2001
PRELIMINARY COPY
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PROXY STATEMENT
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DALLAS GOLD AND SILVER EXCHANGE, INC.
2817 Forest Lane
Dallas, Texas 75234
---------------
ANNUAL MEETING OF SHAREHOLDERS
This statement is furnished to shareholders in connection with the solicitation
by the Board of Directors of Dallas Gold and Silver Exchange, Inc. (the
"Company") of proxies to be voted at the Annual Meeting of Shareholders of the
Company to be held on June 25 2001, at 6:00 P.M. at the Company's executive
offices at 2817 Forest Lane, Dallas, Texas 75234, and any adjournment thereof.
This proxy statement and the proxies solicited hereby are first being sent or
delivered to shareholders on or about April 27, 2001. Certain employees of the
Company may solicit proxies by telephone or in person. The expense of preparing,
printing and mailing the proxies will be borne by the Company. A copy of the
Company's Annual Report on Form 10-KSB (including the financial statements)
("Form 10-KSB") is enclosed herewith.
VOTING
The proxy may be revoked by the shareholder at any time prior to its use. If it
is signed properly by the shareholder and is not revoked, it will be voted at
the meeting. If a shareholder specifies how the proxy is to be voted with
respect to the election of Directors and the proposed amendment to the Company's
Articles of Incorporation to change the name of the Company to DGSE Companies,
Inc., the proxy will be voted in the manner specified on the enclosed proxy. If
no instructions are received, the proxy will be voted for the proposals as set
forth in the proxy.
At the close of business on April 18, 2001, 4,907,990 shares of the Company's
Common Stock, par value $.01 per share, were outstanding and eligible for voting
at the meeting. Each shareholder of record is entitled to one vote for each
share held in all matters to come before the meeting. Only shareholders of
record at the close of business on April 18, 2001, are entitled to notice of and
to vote at the meeting.
ELECTION OF DIRECTORS
The Company's Board of Directors at a meeting held on March 26 2001, nominated
five persons to be elected at the Annual Meeting to serve as Directors of the
Company for a term of one year and until their respective successors shall have
been elected and shall have qualified.
It is the intention of the persons named in the proxy to vote for the election
of the persons named below. If any nominee is unable or unwilling to serve,
which the Board of Directors does not anticipate, the persons named in the proxy
will vote for another person in accordance with their judgment.
The following table and notes thereto set forth the age, principal occupation,
period of time served as a Director of the Company, business experience, and
other directorships held by each of the five nominees for election as Directors:
Year First
Elected
Director or
Appointed
Officer of
Name Age Position Company
---- --- -------- -----------
Dr. L.S. Smith
Ph.D (1) 54 Chairman of the 1980
Board of Direc-
tors, Chief
Executive Officer
and Secretary
W.H. Oyster (2) 48 Director, Presi- 1990
dent and Chief
Operating Officer
John Benson (3) 55 Director and 1992
Chief Financial
Officer
William P. Cordeiro (4) 56 Director 1999
James Walsh (5) 50 Director 1999
Business Experience During Last Five Years
- ------------------------------------------
(1) Chairman of Board of Directors, and Chief Executive Officer and
Secretary of the Company since 1980.
(2) Director, President and Chief Operating of the Company since January
1990.
(3) Director, Chief Financial Officer of the Company since December 1992 and
member of the Audit Committee since June 1999.
(4) Director and independent member of the Audit Committee of the Company
since June 1999. Management Professor, School of Business and Economics,
California State University since June 1990. Partner, Bartik, Cordeiro &
Associates, Inc., a management consulting firm since January 1990.
(5) Director and independent member of the Audit Committee of the Company
since June 1999. Chairman of the Board and Chief Executive Officer of
Hawaiian Vintage Chocolate Company, Inc., ("HVCC") since July 1993. The
common stock of HVCC has been registered under Section 12(g) of the
Securities Exchange of 1934 since January, 2000.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table and notes thereto set forth certain information as of April
18, 2001, pertaining to securities ownership by persons known to the Company to
own 5% or more of the Company's Common Stock.
The information contained herein has been obtained from the Company's records,
from various filings made by the named individuals with the Securities and
Exchange Commission, or from information furnished directly by the individual or
entity to the Company:
Name and address Amount and nature Percent
of beneficial owner of beneficial owner(1) of class(1)
- --------------------- ---------------------- -----------
Dr. L. S. Smith, Ph.D 1,880,149 (2) 38.3%
2817 Forest Lane
Dallas, Texas 75234
Howard P. Alan-Lee 250,000 5.1%
11230 Dilling Street
North Hollywood,
California 91602
John Michael Paulson 275,000 (3)(4) 5.6%
2250 East Tropicana
# 19-121, Las Vegas,
Nevada 89119
Edward White 275,000 (3)(4) 5.6%
21700 Oxnard Street
Woodland Hills,
California 91367
- ---------------------
(1) To the best knowledge of the Company, all shares are held of record with
sole voting and investment power except as otherwise stated in footnotes
(3) and (4) below. All calculations are based on 4,907,990 shares
outstanding as of the above referenced date.
(2) Includes 50,000 shares held in trust for the benefit of third parties.
(3) Includes 275,000 shares held in the Allen E. Paulson Living Trust of
which John Michael Paulson is a co-trustee with Edward White.
(4) Includes 275,000 shares held in the Allen E. Paulson Living Trust of
which Edward White is a co-trustee with John Michael Paulson.
SECURITY OWNERSHIP OF MANAGEMENT
The following sets forth information as of April 18, 2001, with respect to the
Company's Common Stock owned beneficially by persons named therein who are
nominees for election as directors of the Company and by directors and officers
as a group.
The information contained herein has been obtained from the Company's records,
from various filings made by the named individuals with the Securities and
Exchange Commission, or from information furnished directly by the individual to
the Company:
Name and address Amount and nature Percent
of beneficial owner of beneficial owner(1) of class(1)
- ----------------------- ----------------------- ------------
Dr. L. S. Smith, Ph.D. 1,880,149 (2) 38.3%
2817 Forest Lane
Dallas, Texas 75234
W. H. Oyster 188,615 (3) 3.8%
2817 Forest Lane
Dallas, TX 75234
John Benson 110,000 (4) 2.2%
2817 Forest Lane
Dallas, TX 75234
William P. Cordeiro
1340 E. Alosta # 200
Glendora, CA 91740 7,500 (5) .2%
James Walsh
4614 Kilauea # 435
Honolou, HI 96816 2,500 (5) .1%
All directors and officers 2,188,764 (6) 44.6%
as a group (5 individuals)
- ----------------------------
(1)To the best knowledge of the Company, all shares are held of record with
sole voting and investment power. All calculationsare based on 4,907,990
shares outstanding as of the above referenced date.
(2) See "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS" preceding.
(3) Includes 150,000 shares currently exercisable under a stock option with
an exercise price of $2.21 per share. (4) Includes 100,000 shares
currently exercisable under stock options with an average exercise price
of $1.91 per share.
(5) Includes 2,500 shares currently exercisable under stock options with an
exercise price of $ 4.19 per share.
(6) Includes 150,000, 100,000 and 5,000 shares currently exercisable under
stock options with exercise prices of $2.21, $1.91 and $ 4.19,
respectively.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and certain officers to send reports of their ownership and of changes
in ownership of the Company's Common Stock to the Securities and Exchange
Commission. Based on the Company's review of the reports it has received, the
Company believes all of its directors and officers complied with all reporting
requirements applicable to them with respect to transactions in 2000.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The business affairs of the Company are managed by or under the direction of the
Board of Directors. During 2000, the Company's Board of Directors met six (6)
times. All members of the Board of Directors were present at each of the
meetings.
The Company does not have a nominating or compensation committee of the Board of
Directors, or any committee performing similar functions.
An audit committee of the Board of Directors was formed during June 1999, and
met twice during the year 2000. The audit committee oversees the operation of a
comprehensive system of internal controls to ensure the integrity of the
Company's financial statements and compliance with laws, regulations and
corporate policies. The audit committee has reviewed and discussed the audited
financial statements of the Company for the year ended December 31, 2000 with
senior management. The audit committee has discussed with Grant Thornton, the
independent auditors of the Company, the matters required to be discussed by the
Statement on Auditing Standards No. 61 (Communication with Audit Committees).
The audit committee has also received the written disclosures and the letter
from Grant Thornton required by Independent Standards Board Standard No. 1
(Independence Discussion with Audit Committees) and the audit committee has
discussed with Grant Thornton the independence of Grant Thornton as auditor of
the Company. Based on the foregoing, the audit committee of the Company has
recommended to the Board of Directors that the audited financial statements of
the Company be included in the Company's Annual Report on Form 10-QSB for the
year ended December 31, 2000 for filing with the United States Securities
Exchange Commission. Specific functions and responsibilities of the audit
committee are set forth in the charter adopted by the Board of Directors which
is attached as Appendix A to this proxy statement. Its members are William P.
Corediro, James Walsh and John Benson.
Compensation of Directors
Directors who are also employees of the Company do not receive any compensation
for serving as a director or as a member of a committee of the Board of
Directors. Directors who are not employees of the Company receive a fee in the
amount of $ 500 for each meeting of the Board of Directors and each committee of
the Board of Directors meeting attended. In addition these directors have each
been granted options for the purchased of 2,500 shares of the Company's Common
Stock at an exercise price equal to the then fair market value of the Company's
Common Stock.
EXECUTIVE COMPENSATION
The following information is furnished with respect to each of the most highly
compensated executive officers of the Company whose cash compensation from the
Company and its subsidiaries during the Company's last fiscal year exceeded
$100,000.
SUMMARY COMPENSATION TABLE
--------------------------
Annual Compensation
-------------------
Long-Term Compensation
Awards
Name Securities
and Under-
Principal lying
Position Year Salary Bonus Options
- -------------------------------------------------- ------------
Dr. L.S. Smith 2000 $175,000 $128,989 -
Chief Executive 1999 $175,000 $127,300 -
Officer 1998 $125,000 $153,577 -
W.H. Oyster 2000 $160,000 $86,152 -
President and 1999 $140,000 $70,438 -
Chief Operating 1998 $140,000 $15,548 -
Officer
John Benson 2000 $ 97,500 $32,288 -
Chief Financial 1999 $ 92,500 $27,642 -
Officer 1998 $ 92,500 $24,900 -
PROPOSED AMENDMENT OF ARTICLES OF INCORPORATION
TO CHANHE THE COMPANY NAME
On March 26, 2001, the Board of Directors adopted, subject to shareholder
approval, a resolution to amend Article First of the Articles of Incorporation
of the Company to change the name of the Company to DGSE Companies, Inc.
The Company currently has operations in Dallas, Texas, Carrollton, Texas, Mt.
Pleasant, South Carolina and offers its products for sale world wide over the
internet. Accordingly, the Board of Directors believe that the name change is
appropriate and desirable to more properly reflect the broader geographical
nature of the business of the Company. In addition, the name change would
identify the Company in a manner that would correspond to the Company's current
NASDAQ trading symbol.
The Board of Directors deems it advisable and in the best interest of the
Company that the shareholders approve the proposed amendment of Article First of
the Articles of Incorporation to change the name of the Company to DGSE
Companies, Inc.
The Board of Directors recommend that shareholders entitled to vote at the
meeting vote "FOR" approval of the amendment.
Pursuant to Nevada law, approval of the proposed amendment to the Company's
Articles of Incorporation to change the name of the Company requires approval by
shareholders holding at least a majority of the outstanding shares of the Common
Stock of the Company.
AUDITORS
The Company has selected Grant Thornton LLP to be its principal accountants for
the current fiscal year.
Their fees for the fiscal year ended December 31, 2000, were as follows:
Description of Service Amount of Fee
- ---------------------- -------------
Audit Fees $ 77,500
Financial Information System
Design and Implementation Fees -0-
Other Fees 1,800(1)
- --------------------------------------------------------------------------------
(1) Fees billed for the preparation of Federal Income Tax Return for the year
ended December 31, 2000.
A representative of Grant Thornton will be present at the shareholders' meeting
and will have the opportunity to make a statement if he desires to do so.
Further, the representative of Grant Thornton will be available to respond to
appropriate questions.
SUBMISSION OF SHAREHOLDER PROPOSALS FOR THE
2002 ANNUAL SHAREHOLDERS MEETING
Any shareholder desiring to submit a proposal for action at the 2002 Annual
Meeting of Shareholders which is desired to be presented in the Company's Proxy
Statement with respect to such meeting should submit such proposal to the
Company at its principal place of business no later than December 28, 2001.
Apart from the preceding requirements, after that date any notice of a
shareholder proposal will be considered untimely for inclusion in next years
proxy statement if received after March 13, 2002. Matters pertaining to such
proposals, including the number and length thereof, eligibility of persons
entitled to have such proposal included and other respects are regulated by the
Securities and Exchange Act of 1934, Rules and Regulations of the Securities and
Exchange Commission and other laws and regulations to which interested persons
should refer.
OTHER MATTERS
The Board of Directors does not know of any other matters that will be presented
for action at the meeting. However, if any matters properly come before the
meeting or any adjournments, it is intended that the holders of the proxies
named in the accompanying proxy will have discretionary authority to vote the
shares represented by the proxies in accordance with their best judgment.
By Order of the Board of Directors
Dr. L. S. SMITH, Ph.D
Chairman of the Board
and Secretary
FORM OF PROXY
FRONT
PROXY DALLAS GOLD AND SILVER EXCHANGE, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Dr. L. S. Smith and John Benson as
Proxies, each with the power to appoint his substitute and hereby authorizes
them to represent and to vote as designed below, all the shares of Common Stock
of Dallas Gold and Silver Exchange Inc. held of record by the undersigned on
April 18, 2001, at the Annual Meeting of Shareholders to be held June 25, 2001,
or any adjournment thereof.
1. ELECTION OF DIRECTORS
FOR all nominees listed below(except WITHHOLD AUTHORITY to vote for
as marked to the contrary below) ____ all nominees listed ____
INSTRUCTION: To withhold authority to vote for any individual, cross
out the nominee's name in the List below.
Dr. L. S. Smith W. H. Oyster John Benson William P. Corediro James Walsh
2. PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION TO CHANGE THE
NAME OF THE COMPANY TO DGSE COMPANIES, INC.
___ FOR ___ AGAINST ___ ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
REVERSE
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1 and 2.
Please sign exactly as name below. When
shares are held by joint tenants, both
should sign. When signing as attorney, as
executor, administrator, trustee or
guardian, please give full title as such. If
a corporation, please sign in full corporate
name by President or other authorized
officer. If a partnership, please sign in
partnership name by authorized person.
Dated:______________________________, 2001
Signature__________________________________
Signature if held jointly__________________
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Appendix A
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Dallas Gold & Silver Exchange, INC.
Audit Committee Charter
Organization
This charter governs the operations of the Audit Committee of Dallas Gold &
Silver Exchange, Inc. The Audit Committee shall review and reassess this charter
on at least an annual basis and obtain the approval of the Board of Directors.
The Audit Committee shall be appointed by the Board of Directors and shall
consist of at least three directors, two of whom are independent of management
and the Company. Members of the Audit Committee shall be considered independent
if they have no relationship that may interfere with the exercise of their
independence from management and the Company and meet the standards of
independence required by the NASDAQ or any other exchange on which the common
stock of Dallas Gold & Silver Exchange, Inc. is traded. The members shall be
financially literate, or shall become financially literate within a reasonable
period of time after appointment to the audit committee, and at least one member
shall have accounting or related financial management expertise as required by
the rules of the NASDAQ or any other exchange on which the common stock of
Dallas Gold & Silver Exchange, Inc. is traded.
The Audit Committee shall provide assistance to the Board of Directors in
fulfilling their oversight responsibility to the shareholders, potential
shareholders, the investment community, and others relating to the Company's
financial statements and financial reporting process, the systems of internal
accounting and financial controls, the internal audit function, the annual
independent audit of the Company's financial statements, and the legal
compliance and ethics programs as established by management and the Board of
Directors. In so doing, it is the responsibility of the Audit Committee to
maintain free and open communication between the Audit Committee, independent
auditors, the internal auditors and management of the Company. In discharging
its oversight role, the audit committee is empowered to investigate any matter
brought to its attention with full access to all books, records, facilities, and
personnel of the Company and the power to retain outside counsel at the
Company's expense, or other experts for this purpose.
Responsibilities and Processes
The primary responsibility of the Audit Committee is to oversee the Company's
financial reporting process on behalf of the Board and report the results of
their activities to the Board. Management is responsible for preparing the
Company's financial statements, and the independent auditors are responsible for
auditing those financial statements. The Audit Committee, in carrying out its
responsibilities, believes its policies and procedures should remain flexible to
best react to changing conditions and circumstances. The audit committee should
take the appropriate actions to set the overall corporate "tone' for quality
financial reporting, sound business risk practices, and ethical behavior.
The following shall be the principal recurring processes of the Audit Committee
in carrying out its oversight responsibilities. The processes are set forth as a
guide with the understanding that the Audit Committee may supplement them as
appropriate.
o The Audit Committee shall have a clear understanding with
management and the independent auditors that the independent
auditors are ultimately accountable to the Board and the Audit
Committee, as representatives of the Company's shareholders.
The Audit Committee and the Board shall have the ultimate
authority and responsibility to evaluate and, where
appropriate, replace the independent auditors. The Audit
Committee shall discuss with the auditors their independence
from management and the Company and the matters included in
the written disclosures required by the Independence Standards
Board. Annually, the Audit Committee shall review and
recommend to the Board the selection of the Company's
independent auditors.
o The Audit Committee shall review the interim financial
statements with management0 prior to the filing of the
Company's Quarterly Reports on Form 1O-Q. Also, the Audit
Committee shall discuss the results of the quarterly review
and any other matters required to. be communicated to the
audit committee by the independent auditors under generally
accepted auditing standards. The chair of the Audit Committee
may represent the entire committee for the purposes of this
review.
o The Audit Committee shall review with management and the
independent auditors the financial statements to be included
in the Company's Annual Reports on Form 1O-K (or the annual
reports to shareholders if distributed prior to the filing of
Form 1O-K), including their judgment about the quality, not
just acceptability, of accounting principles, the
reasonableness of significant judgments, and the clarity of
the disclosures in the financial statements. Also, the Audit
Committee shall discuss the results of the annual audit and
any other matters required to be communicated to the audit
committee by the independent auditors under generally accepted
auditing standards.