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<SEC-DOCUMENT>0001010549-01-500027.txt : 20010430
<SEC-HEADER>0001010549-01-500027.hdr.sgml : 20010430
ACCESSION NUMBER:		0001010549-01-500027
CONFORMED SUBMISSION TYPE:	DEF 14A
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20010427
FILED AS OF DATE:		20010427

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:		DEF 14A
		SEC ACT:		
		SEC FILE NUMBER:	001-11048
		FILM NUMBER:		1613455

	BUSINESS ADDRESS:	
		STREET 1:		2817 FOREST L
		STREET 2:		STE 202
		CITY:			DALLAS
		STATE:			TX
		ZIP:			75234
		BUSINESS PHONE:		9724843662

	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
</SEC-HEADER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>dgsdef14a.txt
<TEXT>

                            SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

                                (Amendment No. )

Filed by the Registrant [x]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement

[ ] Confidential,  for  Use  of   the   Commission   Only   (as   permitted   by
    Rule 14a-6(e)(2))

[X] 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: ____________________________________________

<PAGE>

                                PRELIMINARY COPY
                                ----------------

                      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


<PAGE>

                                PRELIMINARY COPY
                                ----------------




                                 PROXY STATEMENT

                                ----------------

                      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,  4,927,990  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.

<PAGE>

                              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



<PAGE>

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)            38.2%
  2817 Forest Lane
  Dallas, Texas 75234


Howard P. Alan-Lee                   250,000                 5.1%
  11230 Dilling Street
  North Hollywood,
  California 91602

<PAGE>

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 4,927,990
          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)          38.2%
  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


<PAGE>

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)          44.4%
  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 calculations are based on 4,927,990
     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.

<PAGE>

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.
Cordeiro, 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.


<PAGE>

                             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.

<PAGE>

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.


<PAGE>

                                  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


                                              /s/  L. S. Smith
                                              ----------------------------------
                                              Dr. L. S. SMITH, Ph.D
                                              Chairman of the Board
                                              and Secretary

<PAGE>

                                  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. Cordeiro  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.

<PAGE>

                                                                      Appendix A
                                                                      ----------


                       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.




<PAGE>

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.



</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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