-----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,
 IjkC1/Fdwe+Xd9KrZBCWjCvz6X9DPuLi5Fu0geNozU5m5I4/3qREjtxEB27LCG8v
 M5OsI6N9vtF3MIEY6L04dQ==

<SEC-DOCUMENT>0001144204-07-036212.txt : 20070712
<SEC-HEADER>0001144204-07-036212.hdr.sgml : 20070712
<ACCEPTANCE-DATETIME>20070712070622
ACCESSION NUMBER:		0001144204-07-036212
CONFORMED SUBMISSION TYPE:	DEF 14A
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20070727
FILED AS OF DATE:		20070712
DATE AS OF CHANGE:		20070712
EFFECTIVENESS DATE:		20070712

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			DGSE COMPANIES INC
		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:		1934 Act
		SEC FILE NUMBER:	001-11048
		FILM NUMBER:		07975295

	BUSINESS ADDRESS:	
		STREET 1:		2817 FOREST LANE
		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:	DALLAS GOLD & SILVER EXCHANGE INC /NV/
		DATE OF NAME CHANGE:	19930114

	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>v080715def14a.htm
<TEXT>
<html>
  <head>
    <title>
      Unassociated Document
</title><!-- Licensed to: vf-->
<!-- Document Created using EDGARizer HTML 3.0.4.0 -->
<!-- Copyright 2006 EDGARfilings, Ltd., an IEC company.-->
<!-- All rights reserved EDGARfilings.com -->
</head>
  <body style="FONT-SIZE: 10pt; COLOR: #000000; LINE-HEIGHT: 12pt; FONT-FAMILY: Times New Roman">
    <div style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 6.65pt; PADDING-BOTTOM: 3pt; BORDER-BOTTOM: #000000 12pt double" align="right"><br></div>
    <div style="MARGIN: 0pt" align="center"><font style="FONT-FAMILY: Times New Roman" color="#000000"><strong>UNITED
      STATES<br>SECURITIES EXCHANGE
      COMMISSION<br>Washington, D.C. 20549</strong></font></div>
    <div style="MARGIN-TOP: 13.35pt; MARGIN-BOTTOM: 0pt" align="center"><strong>SCHEDULE
      14A</strong></div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 10pt" align="center"><strong>Proxy
      Statement Pursuant to Section 14(a) of the<br>Securities Exchange Act of
      1934</strong></div>
    <div>
      <table align="center" cellspacing="0" style="FONT-SIZE: 10pt">

          <tr>
            <td width="183">
            </td>
            <td width="284">
            </td>
          </tr>
          <tr>
            <td valign="top" width="244">
              <div style="MARGIN: 0pt">Filed by the Registrant:</div>
            </td>
            <td valign="top" width="379">
              <div style="MARGIN: 0pt; FONT-FAMILY: Wingdings"><font style="FONT-FAMILY: Wingdings">&#253;</font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="244">
              <div style="MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">Filed
                by a Party other than the Registrant:</font></div>
            </td>
            <td valign="top" width="379">
              <div style="MARGIN: 0pt; FONT-FAMILY: Wingdings"><font style="FONT-FAMILY: Wingdings">&#168;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="MARGIN: 0pt">&#160;</div>
    <div>
      <table align="center" cellspacing="0" style="FONT-SIZE: 10pt">

          <tr>
            <td width="36">
            </td>
            <td width="431">
            </td>
          </tr>
          <tr>
            <td colspan="2" valign="top" width="624">
              <div style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 3.35pt">Check the appropriate
                box: </div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="48">
              <div style="MARGIN-TOP: 0.85pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Wingdings" align="center"><font style="FONT-FAMILY: Wingdings">&#168;</font></div>
            </td>
            <td valign="top" width="575">
              <div style="MARGIN-TOP: 0.85pt; MARGIN-BOTTOM: 0pt"><font style="FONT-FAMILY: Times New Roman">Preliminary
                Proxy
                Statement</font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="48">
              <div style="MARGIN-TOP: 0.85pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Wingdings" align="center"><font style="FONT-FAMILY: Wingdings">&#168;</font></div>
            </td>
            <td valign="top" width="575">
              <div style="MARGIN-TOP: 0.85pt; MARGIN-BOTTOM: 0pt"><font style="FONT-FAMILY: Times New Roman">Confidential,
                for Use of the
                Commission only (as permitted by Rule 14a-6(e)(2))</font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="48">
              <div style="MARGIN-TOP: 0.85pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Wingdings" align="center"><font style="FONT-FAMILY: Wingdings">&#253;</font></div>
            </td>
            <td valign="top" width="575">
              <div style="MARGIN-TOP: 0.85pt; MARGIN-BOTTOM: 0pt"><font style="FONT-FAMILY: Times New Roman">Definitive
                Proxy
                Statement</font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="48">
              <div style="MARGIN-TOP: 0.85pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Wingdings" align="center"><font style="FONT-FAMILY: Wingdings">&#168;</font></div>
            </td>
            <td valign="top" width="575">
              <div style="MARGIN-TOP: 0.85pt; MARGIN-BOTTOM: 0pt"><font style="FONT-FAMILY: Times New Roman">Definitive
                Additional
                Materials</font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="48">
              <div style="MARGIN-TOP: 0.85pt; MARGIN-BOTTOM: 0pt; FONT-FAMILY: Wingdings" align="center"><font style="FONT-FAMILY: Wingdings">&#168;</font></div>
            </td>
            <td valign="top" width="575">
              <div style="MARGIN-TOP: 0.85pt; MARGIN-BOTTOM: 0pt"><font style="FONT-FAMILY: Times New Roman">Soliciting
                Material Pursuant to
                &#167;240.14a-12</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="MARGIN-TOP: 18pt; FONT-SIZE: 18pt; MARGIN-BOTTOM: 0pt; LINE-HEIGHT: 20pt; FONT-FAMILY: Times New Roman Bold" align="center"><font style="FONT-FAMILY: Times New Roman Bold"><strong>DGSE
      COMPANIES, INC.</strong></font></div>
    <div style="MARGIN-TOP: 0pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: 5.35pt; LINE-HEIGHT: 10pt" align="center"><font style="FONT-FAMILY: Times New Roman">(Name
      of Registrant as
      Specified in Its Charter)</font></div>
    <div>
      <table align="center" cellspacing="0" style="FONT-SIZE: 10pt">

          <tr>
            <td width="112">
            </td>
            <td width="242">
            </td>
            <td width="113">
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="150">&#160;</td>
            <td valign="bottom" width="322" style="border-bottom: #000000 0.5pt solid;">&#160;</td>
            <td valign="bottom" width="150">&#160;</td>
          </tr>
          <tr>
            <td valign="top" width="150">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</div>
            </td>
            <td valign="top" width="322">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt" align="center">(Name
                of Person(s) Filing Proxy Statement, if Other Than the
                Registrant)</div>
            </td>
            <td valign="top" width="150">
              <div style="MARGIN: 0pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</div>
            </td>
          </tr>

      </table>
    </div>
    <div style="MARGIN: 0pt">&#160;</div>
    <div>
      <table align="center" cellspacing="0" style="FONT-SIZE: 10pt">

          <tr>
            <td width="34">
            </td>
            <td width="20">
            </td>
            <td width="413">
            </td>
          </tr>
          <tr>
            <td colspan="3" valign="bottom" width="624">
              <div style="MARGIN: 0pt">Payment of Filing Fee (Check the appropriate
                box)</div>
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="46">
              <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; FONT-FAMILY: Wingdings" align="center"><font style="FONT-FAMILY: Wingdings">&#253;</font></div>
            </td>
            <td colspan="2" valign="bottom" width="578">
              <div style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 0pt"><font style="FONT-FAMILY: Times New Roman">No
                fee required.</font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="46">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; FONT-FAMILY: Wingdings" align="center"><font style="FONT-FAMILY: Wingdings">&#168;</font></div>
            </td>
            <td colspan="2" valign="bottom" width="578">
              <div style="MARGIN-TOP: 1.65pt; MARGIN-BOTTOM: 0pt"><font style="FONT-FAMILY: Times New Roman">Fee
                computed on table below per
                Exchange Act Rules 14a-6(i)(4) and 0-11.</font></div>
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="46">&#160;</td>
            <td valign="bottom" width="27">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 6.65pt; TEXT-INDENT: -6pt">1.</div>
            </td>
            <td valign="bottom" width="551" style="border-bottom: #000000 0.5pt solid;">
              <div style="MARGIN-TOP: 1.65pt; MARGIN-BOTTOM: 6.65pt">Title of each
                class
                of securities to which transaction applies:</div>
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="46">&#160;</td>
            <td valign="bottom" width="27">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 6.65pt; TEXT-INDENT: -6pt">2.</div>
            </td>
            <td valign="bottom" width="551" style="border-bottom: #000000 0.5pt solid;">
              <div style="MARGIN-TOP: 1.65pt; MARGIN-BOTTOM: 6.65pt">Aggregate number
                of
                securities to which transaction applies:</div>
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="46">&#160;</td>
            <td valign="top" width="27">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 6.65pt; TEXT-INDENT: -6pt">3.</div>
            </td>
            <td valign="bottom" width="551" style="border-bottom: #000000 0.5pt solid;">
              <div style="MARGIN-TOP: 1.65pt; MARGIN-BOTTOM: 6.65pt">Per unit price
                or
                other underlying value of transaction computed pursuant to Exchange
                Act
                Rule 0-11 (Set forth the amount on which the filing fee is calculated
                and
                state how it was determined):</div>
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="46">&#160;</td>
            <td valign="bottom" width="27">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 6.65pt; TEXT-INDENT: -6pt">4.</div>
            </td>
            <td valign="bottom" width="551" style="border-bottom: #000000 0.5pt solid;">
              <div style="MARGIN-TOP: 1.65pt; MARGIN-BOTTOM: 6.65pt">Proposed maximum
                aggregate value of transaction:</div>
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="46">&#160;</td>
            <td valign="bottom" width="27">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 6.65pt; TEXT-INDENT: -6pt">5.</div>
            </td>
            <td valign="bottom" width="551" style="border-bottom: #000000 0.5pt solid;">
              <div style="MARGIN-TOP: 1.65pt; MARGIN-BOTTOM: 6.65pt">Total fee
                paid:</div>
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="46">
              <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; FONT-FAMILY: Wingdings" align="center"><font style="FONT-FAMILY: Wingdings">&#168;</font></div>
            </td>
            <td colspan="2" valign="bottom" width="578">
              <div style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 0pt"><font style="FONT-FAMILY: Times New Roman">Fee
                paid previously with preliminary
                materials.</font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="46">
              <div style="MARGIN-TOP: 3.35pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; FONT-FAMILY: Wingdings" align="center"><font style="FONT-FAMILY: Wingdings">&#168;</font></div>
            </td>
            <td colspan="2" valign="bottom" width="578">
              <div style="MARGIN-TOP: 3.35pt; MARGIN-BOTTOM: 0pt"><font style="FONT-FAMILY: Times New Roman">Check
                box if any part of the fee is
                offset as provided by Exchange Act Rule 0-11(a)(2) and identify the
                filing
                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.</font></div>
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="46">&#160;</td>
            <td valign="bottom" width="27">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 6.65pt; TEXT-INDENT: -6pt">1.</div>
            </td>
            <td valign="bottom" width="551" style="border-bottom: #000000 0.5pt solid;">
              <div style="MARGIN-TOP: 1.65pt; MARGIN-BOTTOM: 6.65pt">Amount Previously
                Paid:</div>
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="46">&#160;</td>
            <td valign="bottom" width="27">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 6.65pt; TEXT-INDENT: -6pt">2.</div>
            </td>
            <td valign="bottom" width="551" style="border-bottom: #000000 0.5pt solid;">
              <div style="MARGIN-TOP: 1.65pt; MARGIN-BOTTOM: 6.65pt">Form, Schedule
                or
                Registration Statement No.:</div>
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="46">&#160;</td>
            <td valign="bottom" width="27">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 6.65pt; TEXT-INDENT: -6pt">3.</div>
            </td>
            <td valign="bottom" width="551" style="border-bottom: #000000 0.5pt solid;">
              <div style="MARGIN-TOP: 1.65pt; MARGIN-BOTTOM: 6.65pt">Filing
                Party:</div>
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="46">&#160;</td>
            <td valign="bottom" width="27">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 6.65pt; TEXT-INDENT: -6pt">4.</div>
            </td>
            <td valign="bottom" width="551" style="border-bottom: #000000 0.5pt solid;">
              <div style="MARGIN-TOP: 1.65pt; MARGIN-BOTTOM: 6.65pt">Date
                Filed:</div>
            </td>
          </tr>

      </table>
    </div>
    <div style="PADDING-BOTTOM: 3pt; MARGIN: 0pt; BORDER-BOTTOM: #000000 12pt double"><br></div>
    <div style="MARGIN: 0pt"><br></div>
    <div style="MARGIN: 0pt"><br><br></div>
    <hr style="PADDING-BOTTOM: 7.2pt; PADDING-TOP: 7.2pt" noshade size="1">
    <div style="PAGE-BREAK-BEFORE: always; MARGIN: 0pt" align="center"><strong>DGSE
      COMPANIES, INC.<br>2817 Forest Lane<br>Dallas, Texas 75234<br>(972)
      484-3662</strong></div>
    <div style="MARGIN-TOP: 13.35pt; MARGIN-BOTTOM: 0pt" align="center"><strong>NOTICE
      OF ANNUAL MEETING OF STOCKHOLDERS<br>TO BE HELD ON JULY 27, 2007</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt">TO THE STOCKHOLDERS OF DGSE
      COMPANIES, INC.:</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">NOTICE
      IS
      HEREBY GIVEN that the Annual Meeting of Stockholders of DGSE COMPANIES, INC.,
      a
      Nevada corporation (the &#8220;Company&#8221;), will be held on Friday, July 27, 2007 at
      11:30 a.m. local time, at our principal offices located at 2817 Forest Lane.
      Dallas, Texas 75234.</div>
    <div style="MARGIN-TOP: 6.65pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: -12pt; TEXT-INDENT: -18pt">1.</div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt">To elect directors to the Company&#8217;s
      board of directors, to serve until their successors are elected and qualified
      or
      their earlier resignation or removal;</div>
    <div style="MARGIN-TOP: 6.65pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: -12pt; TEXT-INDENT: -18pt">2.</div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt">To ratify the selection of BKR
      Cornwell Jackson as the independent registered public accounting firm of the
      Company for its fiscal year ending December 31, 2007; and</div>
    <div style="MARGIN-TOP: 6.65pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: -12pt; TEXT-INDENT: -18pt">3.</div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt">To transact such other business
      as
      may properly come before the meeting or any adjournment or postponement
      thereof.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">The
      nominees intended to be presented for election as directors are:
&#160;Dr.&#160;L.S. Smith, Ph.D.; William H. Oyster; Dr.&#160;William P.
      Cordeiro, Ph.D.; Craig Alan-Lee; Richard M. Gozia; David Rector; and Mitchell
      T.
      Stoltz.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">The
      foregoing items of business are more fully described in the Proxy Statement
      accompanying this Notice.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 6.65pt; TEXT-INDENT: 18pt">The
      board of directors has fixed the close of business on June 27, 2007, as the
      record date for the determination of stockholders entitled to notice of and
      to
      vote at this Annual Meeting and at any adjournment or postponement
      thereof.</div>
    <div>
      <table cellspacing="0" style="FONT-SIZE: 10pt">

          <tr>
            <td width="141">
            </td>
            <td width="108">
            </td>
            <td width="181">
            </td>
          </tr>
          <tr>
            <td valign="top" width="189">&#160;</td>
            <td valign="top" width="144">&#160;</td>
            <td valign="top" width="242">
              <div style="MARGIN: 0pt">By Order of the Board of Directors,</div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="189">&#160;</td>
            <td valign="top" width="144">&#160;</td>
            <td valign="top" width="242">&#160;</td>
          </tr>
          <tr>
            <td valign="top" width="189">&#160;</td>
            <td valign="top" width="144">&#160;</td>
            <td valign="top" width="242" style="border-bottom: #000000 0.5pt solid;">
              <div style="MARGIN: 0pt">/s/ Dr.&#160;L.S. Smith</div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="189">&#160;</td>
            <td valign="top" width="144">&#160;</td>
            <td valign="top" width="242">
              <div style="MARGIN: 0pt">Dr.&#160;L.S. Smith</div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="189">&#160;</td>
            <td valign="top" width="144">&#160;</td>
            <td valign="top" width="242">
              <div style="MARGIN: 0pt">Chairman and
                Secretary</div>
            </td>
          </tr>

      </table>
    </div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt">Dallas, Texas<br>July 12,
      2007</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt"><strong>ALL STOCKHOLDERS
      ARE
      CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT YOU EXPECT
      TO
      ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY
      AS
      PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR REPRESENTATION AT THE MEETING.
      EVEN
      IF YOU HAVE GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE
      MEETING. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A
      BROKER, BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST
      OBTAIN FROM THE RECORD HOLDER A PROXY ISSUED IN YOUR NAME.</strong></div>
    <div style="MARGIN-TOP: 13.35pt; MARGIN-BOTTOM: 0pt" align="center"><br><br></div>
    <div style="MARGIN: 0pt"><br></div>
    <div style="MARGIN: 0pt"><br></div>
    <hr style="PADDING-BOTTOM: 7.2pt; PADDING-TOP: 7.2pt" noshade size="1">
    <div style="PAGE-BREAK-BEFORE: always; MARGIN: 0pt" align="center"><strong>DGSE
      COMPANIES, INC.<br>2817 Forest Lane<br>Dallas, Texas 75234<br>(972)
      484-3662</strong></div>
    <div style="MARGIN-TOP: 13.35pt; MARGIN-BOTTOM: 0pt" align="center"><strong>PROXY
      STATEMENT<br>FOR ANNUAL MEETING OF STOCKHOLDERS</strong></div>
    <div style="MARGIN-TOP: 13.35pt; MARGIN-BOTTOM: 0pt" align="center"><strong>To
      be
      held July 27, 2007</strong></div>
    <div style="MARGIN-TOP: 13.35pt; MARGIN-BOTTOM: 0pt" align="center"><strong>INFORMATION
      CONCERNING SOLICITATION AND
      VOTING</strong></div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong>General</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">The
      enclosed proxy solicitation is being made to the holders of record on June
      27,
      2007 of common stock of DGSE Companies, Inc., a Nevada corporation, on behalf
      of
      our board of directors for use at our Annual Meeting of Stockholders to be
      held
      on July 27, 2007, at 11:30 a.m. local time, which we refer to as our annual
      meeting, or at any adjournment or postponement thereof, for the purposes set
      forth herein and in the accompanying Notice of Annual Meeting. Our annual
      meeting will be held at our principal offices located at 2817 Forest Lane,
      Dallas, Texas 75234. We intend to mail or electronically deliver this proxy
      statement, the accompanying proxy card and Notice of Annual Meeting on or about
      July 12, 2007 to all stockholders entitled to vote at our annual meeting.</div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong>Solicitation</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">We will
      bear the entire cost of solicitation of proxies, including preparation,
      assembly, printing and mailing of this proxy statement, the proxy and any
      additional information furnished to stockholders. Copies of solicitation
      materials will be furnished to banks, brokerage houses, fiduciaries and
      custodians holding in their names shares of common stock beneficially owned
      by
      others to forward to such beneficial owners. We may reimburse persons
      representing beneficial owners of common stock for their costs of forwarding
      solicitation materials to such beneficial owners. Original solicitation of
      proxies by mail may be supplemented by telephone, telegram or personal
      solicitation by directors, officers or other regular employees of our company.
      No additional compensation will be paid to directors, officers or other regular
      employees for such services.</div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong>Voting Rights and
      Outstanding Shares</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">In order
      to conduct business at our annual meeting, a quorum must be present. The holders
      of a majority of the votes entitled to be cast by holders of common stock at
      our
      annual meeting, present in person or represented by proxy, constitutes a quorum
      under our bylaws. We will treat shares of our common stock represented by a
      properly signed and returned proxy, including abstentions and broker non-votes,
      as present at our annual meeting for the purposes of determining the presence
      of
      a quorum. If a quorum is not present, we anticipate that our annual meeting
      will
      be adjourned to solicit additional proxies.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">We have
      designated a record date of June 27, 2007 for our annual meeting. Only
      stockholders of record at the close of business on the record date will be
      entitled to notice of and to vote at our annual meeting. At the close of
      business on the record date we had 9,479,003 shares of common stock outstanding
      and entitled to vote. On all matters to be voted upon at our annual meeting,
      each holder of record of common stock on the record date will be entitled to
      one
      vote for each share held.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">All votes
      will be tabulated by the inspector of election appointed for the meeting, who
      will separately tabulate affirmative and negative votes, abstentions and broker
      non votes. Abstentions and broker non-votes will be counted towards the
      tabulation of votes cast on proposals presented to the stockholders for the
      purposes of determining the presence of a quorum and will have the same effect
      as negative votes. If you sign your proxy card or broker voting instruction
      card
      with no instructions, your shares will be voted in accordance with the
      recommendations of our Board.</div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><br><br></div>
    <div style="MARGIN: 0pt"><br></div>
    <div style="MARGIN: 0pt"><br></div>
    <hr style="PADDING-BOTTOM: 7.2pt; PADDING-TOP: 7.2pt" noshade size="1">
    <div style="PAGE-BREAK-BEFORE: always; MARGIN: 0pt"><strong>Revocability of
      Proxies</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Any
      person giving a proxy pursuant to this solicitation has the power to revoke
      it
      at any time before it is voted. It may be revoked by filing a written notice
      of
      revocation or a duly executed proxy bearing a later date with our corporate
      secretary at our principal offices, 2817 Forest Lane, Dallas, Texas 75234,
      Attention: &#160;Corporate Secretary, or it may be revoked by attending the
      meeting and voting in person. Attendance at the meeting will not, by itself,
      revoke a proxy.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">If you
      have instructed your broker to vote your shares, you must follow directions
      received from your broker to change those instructions.</div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong>Stockholder
      Proposals</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt"><i>Requirements
      for Stockholder Proposals to be Brought Before an Annual Meeting</i>. For
      stockholder nominations to our board of directors or other proposals to be
      considered at an annual meeting of our stockholders, the stockholder must have
      given us timely notice of the proposal or nomination in writing to our corporate
      secretary pursuant to Rule 14a-4 (c) under the Exchange Act. To be timely for
      our 2008 annual meeting, a stockholder&#8217;s notice must be delivered to or mailed
      and received by our corporate secretary at our principal executive offices
      not
      later than May 19, 2008.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt"><i>Requirements
      for Stockholder Proposals to be Considered for Inclusion in DGSE&#8217;s Proxy
      Materials</i>. Stockholder proposals submitted pursuant to Rule 14a-8(e) under
      the Exchange Act for inclusion in our proxy materials and intended to be
      presented at our 2008 annual meeting must be received by our corporate secretary
      in writing not later than March 5, 2008 to be considered for inclusion in our
      proxy materials for that meeting. The proposal also must meet the other
      requirements of the rules of the SEC relating to stockholder proposals.</div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong>Copies of Annual
      Report</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">A copy
      of
      the our Annual Report on Form 10-K and on Form 10-K/A for our fiscal year ended
      December 31, 2006, as filed with the SEC, was previously mailed to you on or
      about April 20, 2007. We will furnish an additional copy of these reports to
      our
      stockholders without charge upon written request to the attention of our
      corporate secretary addressed to DGSE Companies, Inc., 2817 Forest Lane, Dallas,
      Texas 75234.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt"><br><br></div>
    <div style="MARGIN: 0pt" align="center">2</div>
    <div style="MARGIN: 0pt"><br></div>
    <hr style="PADDING-BOTTOM: 7.2pt; PADDING-TOP: 7.2pt" noshade size="1">
    <div style="PAGE-BREAK-BEFORE: always; MARGIN: 0pt" align="center"><strong>PROPOSAL
      ONE</strong></div>
    <div style="MARGIN-TOP: 13.35pt; MARGIN-BOTTOM: 0pt" align="center"><strong>ELECTION
      OF DIRECTORS</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">There
      are
      seven nominees for election to our board of directors. Each director to be
      elected will hold office until the next annual meeting of stockholders and
      until
      his or her successor is elected and has qualified, or until such director&#8217;s
      earlier death, resignation or removal. Each nominee listed below is currently
      a
      director of our company. Four of the directors were elected by the stockholders
      at our 2006 annual meeting. Three of the directors, Richard M. Gozia, David
      Rector, and Mitchell T. Stoltz, were elected to our board on June 1, 2007,
      pursuant to the terms of the amended and restated agreement and plan of merger
      and reorganization related to our acquisition of Superior Galleries, Inc. We
      encourage our board members to attend our annual meetings of stockholders.
      Two
      of the four nominees who were members of our board at the time of the 2006
      annual meeting of our stockholders attended that meeting.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Shares
      represented by executed proxies will be voted, if authority to do so is not
      withheld, for the election of the seven nominees named below. In the event
      that
      any nominee is unavailable for election as a result of an unexpected occurrence,
      those shares will be voted for the election of a substitute nominee proposed
      by
      our board or management. Each person nominated for election has agreed to serve
      if elected and management has no reason to believe that any nominee will be
      unable to serve.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">The seven
      candidates receiving the highest number of affirmative votes cast at the meeting
      will be elected directors.</div>
    <div style="MARGIN-TOP: 13.35pt; MARGIN-BOTTOM: 0pt" align="center"><strong>Our
      board of directors recommends a vote IN FAVOR of each named
      nominee</strong></div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong>Nominees</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 6.65pt; TEXT-INDENT: 18pt">The
      names of the nominees and certain information about them are set forth
      below:</div>
    <div>
      <table align="center" cellspacing="0" style="FONT-SIZE: 10pt">

          <tr>
            <td width="150">
            </td>
            <td width="13">
            </td>
            <td width="14">
            </td>
            <td width="13">
            </td>
            <td width="189">
            </td>
            <td width="17">
            </td>
            <td width="69">
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="200" style="border-bottom: #000000 0.5pt solid;">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt"><strong>Name</strong></div>
            </td>
            <td valign="bottom" width="18">&#160;</td>
            <td valign="bottom" width="19" style="border-bottom: #000000 0.5pt solid;">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt" align="center"><strong>Age</strong></div>
            </td>
            <td valign="bottom" width="18">&#160;</td>
            <td valign="bottom" width="253" style="border-bottom: #000000 0.5pt solid;">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt" align="center"><strong>Position
                and Offices</strong></div>
            </td>
            <td valign="bottom" width="22">&#160;</td>
            <td valign="bottom" width="92" style="border-bottom: #000000 0.5pt solid;">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt" align="center"><strong>Year
                First Elected<br>Director or<br>Appointed
                Officer<br>of Company</strong></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="200">&#160;</td>
            <td valign="top" width="18">&#160;</td>
            <td valign="top" width="19">&#160;</td>
            <td valign="top" width="18">&#160;</td>
            <td valign="top" width="253">&#160;</td>
            <td valign="top" width="22">&#160;</td>
            <td valign="top" width="92">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="top" width="200">
              <div style="MARGIN-TOP: 1.5pt; PADDING-LEFT: 6pt; FONT-SIZE: 9pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 9.5pt">Dr.&#160;L.S.
                Smith, Ph.D</div>
            </td>
            <td valign="top" width="18">
              <div style="FONT-SIZE: 9pt; MARGIN: 0pt">&#160;&#160;&#160;&#160;&#160;</div>
            </td>
            <td valign="top" width="19">
              <div style="FONT-SIZE: 9pt; MARGIN: 0pt; LINE-HEIGHT: 11pt" align="center">60</div>
            </td>
            <td valign="top" width="18">
              <div style="FONT-SIZE: 9pt; MARGIN: 0pt">&#160;&#160;&#160;&#160;&#160;</div>
            </td>
            <td valign="top" width="253">
              <div style="FONT-SIZE: 9pt; MARGIN: 0pt; LINE-HEIGHT: 11pt">Chairman
                of
                the board of directors,<br>chief executive officer, secretary and
                director</div>
            </td>
            <td valign="top" width="22">
              <div style="FONT-SIZE: 9pt; MARGIN: 0pt">&#160;&#160;&#160;&#160;&#160;</div>
            </td>
            <td valign="top" width="92">
              <div style="FONT-SIZE: 9pt; MARGIN: 0pt; LINE-HEIGHT: 11pt" align="center">1980</div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="200">
              <div style="MARGIN-TOP: 1.5pt; PADDING-LEFT: 6pt; FONT-SIZE: 9pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 9.5pt">William
                H. Oyster</div>
            </td>
            <td valign="top" width="18">&#160;</td>
            <td valign="top" width="19">
              <div style="FONT-SIZE: 9pt; MARGIN: 0pt; LINE-HEIGHT: 11pt" align="center">54</div>
            </td>
            <td valign="top" width="18">&#160;</td>
            <td valign="top" width="253">
              <div style="FONT-SIZE: 9pt; MARGIN: 0pt; LINE-HEIGHT: 11pt">Director,
                president, and chief operating officer</div>
            </td>
            <td valign="top" width="22">&#160;</td>
            <td valign="top" width="92">
              <div style="FONT-SIZE: 9pt; MARGIN: 0pt; LINE-HEIGHT: 11pt" align="center">1990</div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="top" width="200">
              <div style="MARGIN-TOP: 1.5pt; PADDING-LEFT: 6pt; FONT-SIZE: 9pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 9.5pt">Dr.&#160;William
                P. Cordeiro, Ph.D.</div>
            </td>
            <td valign="top" width="18">&#160;</td>
            <td valign="top" width="19">
              <div style="FONT-SIZE: 9pt; MARGIN: 0pt; LINE-HEIGHT: 11pt" align="center">63</div>
            </td>
            <td valign="top" width="18">&#160;</td>
            <td valign="top" width="253">
              <div style="FONT-SIZE: 9pt; MARGIN: 0pt; LINE-HEIGHT: 11pt">Director</div>
            </td>
            <td valign="top" width="22">&#160;</td>
            <td valign="top" width="92">
              <div style="FONT-SIZE: 9pt; MARGIN: 0pt; LINE-HEIGHT: 11pt" align="center">1999</div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="200">
              <div style="MARGIN-TOP: 1.5pt; PADDING-LEFT: 6pt; FONT-SIZE: 9pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 9.5pt">Craig
                Alan-Lee</div>
            </td>
            <td valign="top" width="18">&#160;</td>
            <td valign="top" width="19">
              <div style="FONT-SIZE: 9pt; MARGIN: 0pt; LINE-HEIGHT: 11pt" align="center">50</div>
            </td>
            <td valign="top" width="18">&#160;</td>
            <td valign="top" width="253">
              <div style="FONT-SIZE: 9pt; MARGIN: 0pt; LINE-HEIGHT: 11pt">Director</div>
            </td>
            <td valign="top" width="22">&#160;</td>
            <td valign="top" width="92">
              <div style="FONT-SIZE: 9pt; MARGIN: 0pt; LINE-HEIGHT: 11pt" align="center">2004</div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="top" width="200">
              <div style="MARGIN-TOP: 1.5pt; PADDING-LEFT: 6pt; FONT-SIZE: 9pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 9.5pt">Richard
                M. Gozia</div>
            </td>
            <td valign="top" width="18">&#160;</td>
            <td valign="top" width="19">
              <div style="FONT-SIZE: 9pt; MARGIN: 0pt; LINE-HEIGHT: 11pt" align="center">62</div>
            </td>
            <td valign="top" width="18">&#160;</td>
            <td valign="top" width="253">
              <div style="FONT-SIZE: 9pt; MARGIN: 0pt; LINE-HEIGHT: 11pt">Director</div>
            </td>
            <td valign="top" width="22">&#160;</td>
            <td valign="top" width="92">
              <div style="FONT-SIZE: 9pt; MARGIN: 0pt; LINE-HEIGHT: 11pt" align="center">2007</div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="200">
              <div style="MARGIN-TOP: 1.5pt; PADDING-LEFT: 6pt; FONT-SIZE: 9pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 9.5pt">David
                Rector</div>
            </td>
            <td valign="top" width="18">&#160;</td>
            <td valign="top" width="19">
              <div style="FONT-SIZE: 9pt; MARGIN: 0pt; LINE-HEIGHT: 11pt" align="center">60</div>
            </td>
            <td valign="top" width="18">&#160;</td>
            <td valign="top" width="253">
              <div style="FONT-SIZE: 9pt; MARGIN: 0pt; LINE-HEIGHT: 11pt">Director</div>
            </td>
            <td valign="top" width="22">&#160;</td>
            <td valign="top" width="92">
              <div style="FONT-SIZE: 9pt; MARGIN: 0pt; LINE-HEIGHT: 11pt" align="center">2007</div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="top" width="200">
              <div style="MARGIN-TOP: 1.5pt; PADDING-LEFT: 6pt; FONT-SIZE: 9pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 9.5pt">Mitchell
                T. Stoltz</div>
            </td>
            <td valign="top" width="18">&#160;</td>
            <td valign="top" width="19">
              <div style="FONT-SIZE: 9pt; MARGIN: 0pt; LINE-HEIGHT: 11pt" align="center">53</div>
            </td>
            <td valign="top" width="18">&#160;</td>
            <td valign="top" width="253">
              <div style="FONT-SIZE: 9pt; MARGIN: 0pt; LINE-HEIGHT: 11pt">Director</div>
            </td>
            <td valign="top" width="22">&#160;</td>
            <td valign="top" width="92">
              <div style="FONT-SIZE: 9pt; MARGIN: 0pt; LINE-HEIGHT: 11pt" align="center">2007</div>
            </td>
          </tr>

      </table>
    </div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt"><strong><i>Dr.&#160;L.S.
      Smith</i></strong> has served as chairman of our board of directors, and as our
      chief executive officer and secretary, since 1980. Dr.&#160;Smith obtained a
      B.A. in political science from UCLA in 1967, an M.P.A. in public administration
      from UCLA in 1969, and an M.A., E.M.B.A. and Ph.D. in management from the Peter
      Drucker School of Management at the Claremont Graduate University in 1981,
      1984
      and 1991, respectively.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt"><strong><i>Mr.&#160;Oyster</i></strong>
      has served as a director, and as our president and chief operating officer,
      since January 1990. Mr.&#160;Oyster obtained an A.A.S. in nursing from Grayson
      County College in 1976.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt"><strong><i>Dr.&#160;Cordeiro</i></strong>
      has served as a director and an independent member and financial expert of
      our
      audit committee since June 1999. He has served as the director of the Smith
      School of Business and Economics, California State University &#8212; Channel Islands
      since June 1990. He has also been a partner of Bartik, Cordeiro &amp;
Associates, Inc., a management consulting firm, since January 1990.
      Dr.&#160;Cordeiro obtained a B.S. in biology from the University of San
      Francisco in 1966, an M.B.A. in finance from USC in 1969, an M.A. in management
      from Claremont Graduate School in 1982 and a Ph.D. in executive management
      from
      Claremont Graduate School in 1986.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt"><br><br></div>
    <div style="MARGIN: 0pt" align="center">3</div>
    <div style="MARGIN: 0pt"><br></div>
    <hr style="PADDING-BOTTOM: 7.2pt; PADDING-TOP: 7.2pt" noshade size="1">
    <div style="PAGE-BREAK-BEFORE: always; MARGIN: 0pt; TEXT-INDENT: 18pt"><strong><i>Mr.&#160;Alan-Lee</i></strong>
      has served as a director and independent member of our audit committee since
      December 2004. He has served as a senior loan consultant with Castle Funding,
      Inc., a mortgage loan company, since November 1994.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt"><strong><i>Mr.&#160;Gozia</i></strong>
      has served as the chief executive officer of Fenix Companies, a subsidiary
      of
      Union Pacific Corporation responsible for transportation-related software
      development and data management, since 2001. Prior to that, Mr.&#160;Gozia
      served as president and chief operating officer of CellStar Corporation, a
      global distributor of wireless phone products, from 1996 until 1999. Prior
      to
      that, Mr.&#160;Gozia served as executive vice president and chief financial
      officer of SpectraVision, Inc., an in-room hotel movie provider, from 1994
      until
      1996. He has also served as a director of ForeFront Holdings, Inc. (f/k/a Datrek
      Miller International, Inc.) since June 2005. Mr.&#160;Gozia obtained a B.S. in
      accounting from the University of Missouri in 1970 and is a certified public
      accountant in the State of Texas.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt"><strong><i>Mr.&#160;Rector</i></strong>
      has served as a principal of David Stephen Group, which provides enterprise
      consulting services to emerging and developing companies in a variety of
      industries, since 1985. Prior to that, he served as president, chief executive
      officer and chief operating officer of Nanoscience Technologies, Inc., a
      development stage company engaged in the development and commercialization
      of
      DNA nanotechnology, from June 2004 to December 2006. He has also served as
      a
      director of Senesco Technologies, Inc., a research and development company
      focused on genetic technologies to improve commercial agriculture and to treat
      major medical conditions in humans, since 2002, and as a director of Superior
      Galleries, Inc. from May 2003 until May 2007. Mr.&#160;Rector obtained a B.S. in
      business from Murray State University in 1969.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt"><strong><i>Mr.&#160;Stoltz</i></strong>
      has been an independent consultant to the beverage distribution industry as
      well
      as other industries since January 2001. Prior to that, he served as the
      president of NWS Illinois d/b/a Union Beverage/Hamburg Distribution, a beer
      and
      soda distributor, from 1999 to 2001. He has also served as a director of NWS
      Illinois d/b/a Union Beverage/Hamburg Distribution since 1999 and as director
      of
      Superior Galleries, Inc. from December 2005 until May 2007. Mr.&#160;Stoltz
      obtained a B.B.A. from Notre Dame University in 1972 and an M.B.A. from
      Northwestern University &#8212; J.L. Kellogg Graduate School of Management in
      1986.</div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong>Corporate Governance
      Agreement</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">In
      connection with our acquisition of Superior Galleries, Inc. (Superior), in
      May
      2007, we entered into a corporate governance agreement (the corporate governance
      agreement) with Stanford International Bank Ltd. (Stanford), our largest
      stockholder and a lender to Superior, and Dr.&#160;Smith, our second-largest
      stockholder, chairman and chief executive officer. Pursuant to the corporate
      governance agreement, subject to the applicable fiduciary duties of our board
      of
      directors and compliance with applicable law, we have agreed to recommend up
      to
      six nominees to constitute our board of directors.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Each
      of
      Dr.&#160;Smith and Mr.&#160;Oyster has the right to be nominated for election to
      our board as long as he serves as an executive officer of our company. In
      addition, Dr.&#160;Smith has the right to nominate two &#8220;independent directors&#8221;
(as defined in the corporate governance agreement) for election to our board
      as
      long as he beneficially owns at least 10% of our outstanding shares of common
      stock. Dr.&#160;Smith has exercised this right to nominate Dr.&#160;Cordeiro and
      Mr.&#160;Alan-Lee for election to our board. Stanford has the right to nominate
      two &#8220;independent directors&#8221; (as defined in the corporate governance agreement)
      for election to our board as long as it beneficially owns at least 15% of our
      outstanding shares of common stock. Stanford has exercised this right to
      nominate Messrs.&#160;Stoltz and Gozia for election to our board.</div>
    <div style="MARGIN: 0pt" align="center"><br><br></div>
    <div style="MARGIN: 0pt" align="center">4</div>
    <div style="MARGIN: 0pt"><br></div>
    <hr style="PADDING-BOTTOM: 7.2pt; PADDING-TOP: 7.2pt" noshade size="1">
    <div style="PAGE-BREAK-BEFORE: always; MARGIN: 0pt" align="center"><strong>BOARD
      AND COMMITTEE MATTERS AND CORPORATE GOVERNANCE MATTERS</strong></div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong>Corporate
      Governance</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">We
      maintain a corporate governance page on our website which includes our Code
      of
      Business Conduct and Ethics, which includes a whistleblower protection policy,
      and the charters for our committees of our board of directors. The corporate
      governance page can be found at <i>www.DGSE.com</i>, by clicking on &#8220;About Us,&#8221;
and then on the &#8220;DGSE Code of Business Conduct &amp; Ethics&#8221; link.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Our
      policies and practices reflect corporate governance initiatives that are
      designed to be compliant with the listing requirements of The NASDAQ Stock
      Market and the corporate governance requirements of the Sarbanes-Oxley Act
      of
      2002, including:</div>
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Symbol"><font style="FONT-FAMILY: Symbol">&#183;</font></div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">A
      majority of our board members are
      independent of our company and our management;</font></div>
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Symbol"><font style="FONT-FAMILY: Symbol">&#183;</font></div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">All
      members of our standing board committee
&#8212; the audit committee &#8212; are independent (within the meaning of the NASDAQ
      listing standards);</font></div>
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Symbol"><font style="FONT-FAMILY: Symbol">&#183;</font></div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">The
      independent members of our board meet
      regularly without the presence of management;</font></div>
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Symbol"><font style="FONT-FAMILY: Symbol">&#183;</font></div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">We
      have a clear code of business conduct
      and ethics that applies to our principal executive officers, our directors
      and
      all of our employees, and is monitored by our audit committee;</font></div>
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Symbol"><font style="FONT-FAMILY: Symbol">&#183;</font></div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">The
      charter of our audit committee clearly
      establishes its roles and responsibilities; and</font></div>
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Symbol"><font style="FONT-FAMILY: Symbol">&#183;</font></div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">We
      have a specific telephone number
      available to all employees, and our audit committee has procedures in place
      for
      the anonymous submission of employee complaints on accounting, internal
      accounting controls, or auditing matters.</font></div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong>Board of
      Directors</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 11pt">Our
      board of directors currently has seven directors: Dr.&#160;L.S. Smith
      (Chairman), William H. Oyster, Dr.&#160;William P. Cordeiro, Craig Alan-Lee,
      Richard M. Gozia; David Rector, and Mitchell T. Stoltz. During 2006, our board
      had five directors: &#160;Dr.&#160;Smith, Messrs.&#160;Oyster, Cordeiro and
      Alan-Lee, and Paul Hagen. On March 28, 2007, Mr.&#160;Hagen resigned as a
      director of our board and on March 30, 2007, our board appointed Alfred W.
      Slayton as an independent director. On June 1, 2007, Mr.&#160;Slayton resigned
      as a director of our board, and our board appointed Mr.&#160;Rector as an
      independent director.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Our board
      met four times and acted by unanimous written consent once during 2006. All
      members of our board were present at each meeting.</div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong>Independence of the
      Board of Directors</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 11pt">Our
      company is a &#8220;controlled company&#8221; within the meaning of the NASDAQ listing
      standards because our two largest stockholders, Dr.&#160;Smith and Stanford, who
      have entered into a corporate governance agreement with our company and have
      filed Schedule 13Ds with the SEC as a group, collectively hold approximately
      64%
      of the voting power of our company. Accordingly, we are not obligated to comply
      with the independent director requirements of the NASDAQ listing
      standards.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 11pt">Pursuant
      to the corporate governance agreement, four of the directors which Stanford
      and
      Dr.&#160;Smith have the right to nominate must be &#8220;independent&#8221; within the
      meaning of the agreement. The agreement defines as independent a nominee or
      director who, amongst other things, is an individual our board has determined,
      in the case of a director standing for re-election, or our board is reasonably
      likely to determine, in the case of a new director nominee, to be independent
      within the meaning of the applicable listing rules of our principal trading
      market (currently The NASDAQ Stock Market) and the applicable rules under the
      Exchange Act.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 11pt">After
      review of all relevant transactions or relationships between each director,
      or
      any of his or her family members, and us, our senior management and our
      independent registered public accounting firm, our board of directors has
      affirmatively determined that five of our seven directors &#8212; Dr.&#160;Cordeiro
      and Messrs.&#160;Alan-Lee, Gozia, Rector and Stoltz &#8212; are &#8220;independent&#8221; within
      the meaning of the applicable NASDAQ listing standards and our corporate
      governance agreement.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; LINE-HEIGHT: 11pt"><br><br></div>
    <div style="MARGIN: 0pt" align="center">5</div>
    <div style="MARGIN: 0pt"><br></div>
    <hr style="PADDING-BOTTOM: 7.2pt; PADDING-TOP: 7.2pt" noshade size="1">
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt; PAGE-BREAK-BEFORE: always"><strong>Executive
      Sessions</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">As
      required under the NASDAQ listing standards, during the calendar year ended
      December 31, 2006, our independent directors met at least twice in regularly
      scheduled executive sessions at which only independent directors were
      present.</div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong>Stockholder
      Communications with the Board of Directors</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">We have
      adopted a formal process by which stockholders may communicate with our board
      of
      directors. Our board recommends that stockholders initiate any communications
      with the board in writing and send them in care of the investor relations
      department by mail to our principal offices, 2817 Forest Lane, Dallas, Texas
      75234. This centralized process will assist the board in reviewing and
      responding to stockholder communications in an appropriate manner. The name
      of
      any specific intended board recipient should be noted in the communication.
      The
      board has instructed the investor relations department to forward such
      correspondence only to the intended recipients; however, the board has also
      instructed the investor relations department, prior to forwarding any
      correspondence, to review such correspondence and, in its discretion, not to
      forward certain items if they are deemed of a personal, illegal, commercial,
      offensive or frivolous nature or otherwise inappropriate for the board&#8217;s
      consideration. In such cases, that correspondence will be forwarded to our
      corporate secretary for review and possible response. This information is also
      contained on our website at <i>www.DGSE.com</i>.</div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong>Information Regarding
      the Board of Directors Committees</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">During
      2006, the only standing committee of our board of directors was the audit
      committee. Because our company is a &#8220;controlled company&#8221; under the NASDAQ
      listing standards, our board is not obligated by those listing standards to
      have, and our board does not have, a nominating committee or a compensation
      committee, or any committees performing similar functions. The audit committee
      was established in accordance with Section 3(a)(58) of the Exchange Act. The
      current charter for our audit committee is included as Annex 1 and can also
      be
      found on our website at <i>www.DGSE.com</i>.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">The audit
      committee oversees our corporate accounting and financial reporting processes.
      Among other functions, the audit committee:</div>
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Symbol"><font style="FONT-FAMILY: Symbol">&#183;</font></div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">oversees
      our financial reporting process on
      behalf of the board and reports the results of their activities to the
      board;</font></div>
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Symbol"><font style="FONT-FAMILY: Symbol">&#183;</font></div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">sets
      the overall corporate &#8220;tone&#8221; for
      quality financial reporting, sound business risk practices, and ethical
      behavior;</font></div>
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Symbol"><font style="FONT-FAMILY: Symbol">&#183;</font></div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">together
      with the board, evaluates and,
      where appropriate, replaces our independent registered public accounting
      firm;</font></div>
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Symbol"><font style="FONT-FAMILY: Symbol">&#183;</font></div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">discusses
      with our independent registered
      public accounting firm their independence from management and our company and
      the matters included in the written disclosures required by the Independence
      Standards Board;</font></div>
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Symbol"><font style="FONT-FAMILY: Symbol">&#183;</font></div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">annually
      reviews and recommends to the
      board the selection of our independent registered public accounting
      firm;</font></div>
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Symbol"><font style="FONT-FAMILY: Symbol">&#183;</font></div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">reviews
      the interim financial statements
      with management prior to the filing of our quarterly reports on Form 10-Q and
      discusses the results of the quarterly review and any other matters required
      to
      be communicated to the audit committee by the independent registered public
      accounting firm under generally accepted auditing standards; and</font></div>
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Symbol"><font style="FONT-FAMILY: Symbol">&#183;</font></div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">reviews
      with management and the independent
      registered public accounting firm the financial statements to be included in
      our
      annual report on Form 10-K (or the annual reports to our stockholders if
      distributed prior to the filing of a Form 10-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, and discusses the results of the annual audit and
      any
      other matters required to be communicated to the audit committee by the
      independent registered public accounting firm under generally accepted auditing
      standards.</font></div>
    <div style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 0pt"><br><br></div>
    <div style="MARGIN: 0pt" align="center">6</div>
    <div style="MARGIN: 0pt"><br></div>
    <hr style="PADDING-BOTTOM: 7.2pt; PADDING-TOP: 7.2pt" noshade size="1">
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; PAGE-BREAK-BEFORE: always; TEXT-INDENT: 18pt">The
      audit committee has the authority to retain special legal, accounting or other
      advisors or consultants as it deems necessary or appropriate to carry out its
      duties. The audit committee is currently composed of Dr.&#160;William P.
      Cordeiro, Ph.D. (Chairman), David Rector and Craig Alan-Lee. During 2006, it
      was
      composed of Dr.&#160;Cordeiro and Messrs.&#160;Alan-Lee and Hagen. On March 28,
      2007, Mr.&#160;Hagen resigned as a director of our board and from the audit
      committee and on March 30, 2007, our board appointed Alfred W. Slayton as an
      independent director and member of the audit committee. On June 1, 2007,
      Mr.&#160;Slayton resigned as a director of our board and from the audit
      committee, and our board appointed Mr.&#160;Rector as an independent director
      and member of the audit committee. The audit committee met four times during
      2006.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Our board
      of directors annually reviews the NASDAQ listing standards definition of
      independence for audit committee members and has determined that all members
      of
      our audit committee are independent (as independence is currently defined in
      Rule 4350(d)(2)(A) of the NASDAQ listing standards). Our board of directors
      has
      determined that each member of the audit committee is able to read and
      understand fundamental financial statements, including our company&#8217;s balance
      sheet, income statement and cash flow statement. Our board has also determined
      that Dr.&#160;Cordeiro and Mr.&#160;Rector each qualifies as an &#8220;audit committee
      financial expert,&#8221; as defined in applicable SEC rules. In making such
      determinations, the board made a qualitative assessment of Dr.&#160;Cordeiro&#8217;s
      and Mr.&#160;Rector&#8217;s level of knowledge and experience based on a number of
      factors, including each individual&#8217;s formal education and experience. See
&#8220;Report of the Audit Committee.&#8221;</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">The audit
      committee has discussed with BKR Cornwell Jackson, our independent registered
      public accounting firm, 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 BKR
      Cornwell Jackson required by Independent Standards Board Standard No. 1
      (Independence Discussion with Audit Committees) and the audit committee has
      discussed with BKR Cornwell Jackson the independence of BKR Cornwell Jackson
      as
      auditors of the Company. Based on the foregoing, the audit committee recommended
      to the board that our audited financial statements be included in our annual
      report on Form 10-K for the year ended December 31, 2006 for filing with the
      SEC.</div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong>Consideration of
      Director Nominees</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Because
      our company is a &#8220;controlled company&#8221; for purposes of the NASDAQ listing
      standards, our board is not required by those listing standards either to have
      a
      nominating committee or to have director nominees selected, or recommended
      for
      the board&#8217;s selection, either by a majority of the independent directors or a
      nominating committee comprised solely of independent directors. Our board has
      not established a standing nominating committee or a charter with respect to
      the
      nominating process. Instead, our entire board is involved in the director
      nomination process.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Our board
      is of the view that such a committee is unnecessary given that almost all
      directors are nominated pursuant to the corporate governance agreement and
      the
      fact that all directors are considered by and recommended to our stockholders
      by
      the full board, which is comprised of a majority of independent directors.
      If
      our board established such a committee, its membership would consist of the
      independent directors or a subset of them. To date, all director nominees
      recommended to the stockholders have been identified by stockholders, current
      directors or management, and we have never engaged a third party to identify
      director candidates.</div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong><i>Director
      Qualifications</i></strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Our board
      believes that new candidates for director should have certain minimum
      qualifications, including having the knowledge, capabilities, experience and
      contacts that complement those currently existing within our company; having
      the
      ability to meet contemporary public company board standards with respect to
      general governance; stewardship, depth of review, independence, financial
      certification, personal integrity and responsibility to stockholders; a genuine
      desire and availability to participate actively in the development of our
      future; and an orientation toward maximizing stockholder value in realistic
      time
      frames. The board also intends to consider such factors as ability to contribute
      strategically through relevant industry background and experience; independence
      from our company and current board members; and a recognizable name that would
      add credibility and value to our company and its stockholders. The board may
      modify these qualifications from time to time.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt"><br><br></div>
    <div style="MARGIN: 0pt" align="center">7</div>
    <div style="MARGIN: 0pt"><br></div>
    <hr style="PADDING-BOTTOM: 7.2pt; PADDING-TOP: 7.2pt" noshade size="1">
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt; PAGE-BREAK-BEFORE: always"><strong><i>Evaluating
      Nominees for Director</i></strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Most
      of
      our nominees for election as directors are nominated pursuant to the corporate
      governance agreement. With respect to these nominees, our board reviews
      candidates to ensure they are &#8220;independent&#8221;, as defined in the corporate
      governance agreement. Under that agreement, a nominee is &#8220;independent&#8221; if he or
      she (i) is not and has never been an officer or employee of DGSE or Stanford
      or
      their respective affiliates or associates, or of any entity that derived 5%
      or
      more of its revenues or earnings in any of its three most recent fiscal years
      from transactions involving DGSE or Stanford or any affiliate or associate
      of
      any of them, (ii) has no affiliation, compensation, consulting or contracting
      arrangement with DGSE or Stanford or their respective affiliates or associates
      or any other entity such that a reasonable person would regard such individual
      as likely to be unduly influenced by management of DGSE or Stanford,
      respectively, or their respective affiliates or associates, and (iii) is a
      director our board has determined, or a nominee our board is reasonably likely
      to determine, to be &#8220;independent&#8221; within the meaning of the applicable listing
      rules of our principal trading market (currently The NASDAQ Stock Market) and
      Section 10A(m)(3) of the Exchange Act and Rule 10A-3(b)(1) promulgated
      thereunder.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">With
      respect to nominees not nominated pursuant to the corporate governance
      agreement, our board reviews candidates for director nominees in the context
      of
      the current composition of our board, our operating requirements and the
      long-term interests of our stockholders. In conducting this assessment, our
      board currently considers, among other factors, diversity, age, skills, and
      such
      other factors as it deems appropriate given the current needs of our board
      and
      our company, to maintain a balance of knowledge, experience and capability.
      In
      the case of incumbent directors whose terms of office are set to expire, our
      board reviews the directors&#8217; overall service to our company during his or her
      term, including the number of meetings attended, level of participation, quality
      of performance, and any other relationships and transactions that might impair
      the director&#8217;s independence. In the case of new director candidates, our board
      also determines whether the nominee must be independent, which determination
      is
      based upon applicable NASDAQ listing standards, applicable SEC rules and
      regulations and the advice of counsel, if necessary. Our board then uses its
      network of contacts to compile a list of potential candidates, but may also
      engage, if it deems appropriate, a professional search firm. Our board conducts
      any appropriate and necessary inquiries into the backgrounds and qualifications
      of possible candidates after considering the function and needs of our board.
      Our board meets to discuss and consider such candidates&#8217; qualifications and then
      selects a nominee for recommendation to our stockholders by majority vote.
      To
      date, our board has not paid a fee to any third party to assist in the process
      of identifying or evaluating director candidates. To date, our board has not
      rejected a timely director nominee from a stockholder or group of stockholders
      that beneficially owned, in the aggregate, more than 5% of our voting
      stock.</div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong><i>Stockholder
      Nominations</i></strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">The board
      applies the same guidelines (described above) to stockholder nominees as applied
      to nominees from other sources. Any stockholder who wishes to recommend a
      prospective director nominee for the board&#8217;s consideration may do so by giving
      the candidate&#8217;s name and qualifications in writing to our chairman of the board
      at our principal executive offices at 2817 Forest Lane, Dallas, Texas 75234.
      The
      proposing stockholder should also include his or her contact information and
      a
      statement of his or her share ownership, as well as any other information
      required by our bylaws.</div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong>Executive and Director
      Compensation</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Because
      our company is a &#8220;controlled company&#8221; for purposes of the NASDAQ listing
      standards, our board is not required by those listing standards to have a
      compensation committee or to have compensation determined either by a majority
      of the independent directors or a compensation committee comprised solely of
      independent directors. Our board has not established a standing compensation
      committee or a charter with respect to the compensation process. Instead, our
      entire board is involved in the compensation process.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Until
      a
      compensation committee is established, our entire board of directors is
      responsible for reviewing all forms of compensation provided to our executive
      officers, directors, consultants and employees, including stock compensation,
      as
      described more fully under the Compensation Discussion and Analysis heading
      above. Our board does not employ compensation consultants in determining
      executive or director compensation.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt"><br><br></div>
    <div style="MARGIN: 0pt" align="center">8</div>
    <div style="MARGIN: 0pt"><br></div>
    <hr style="PADDING-BOTTOM: 7.2pt; PADDING-TOP: 7.2pt" noshade size="1">
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt; PAGE-BREAK-BEFORE: always"><strong>Compensation
      Committee Interlocks and Insider Participation</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Since
      we
      have elected to be classified as a &#8220;controlled company&#8221; within the meaning of
      the NASDAQ listing standards, we do not have a compensation committee of our
      board of directors, or any committee performing similar functions. During 2006,
      none of our directors or executive officers is known by us to have served on
      the
      board of directors or compensation (or equivalent) committee of any entity
      one
      of whose directors or officers serves on our board of directors, except that
      on
      January 6, 2007, William H. Oyster, a director and named executive officer,
      became a director and executive officer of Superior Galleries, Inc.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Dr.&#160;Smith
      and Mr.&#160;Oyster, who are executive officers identified in the Summary
      Compensation Table below, served on our board of directors in 2006 and
      participated in deliberations of the board concerning executive officer
      compensation. No other current or past executive officers of our company serves
      on our board of directors.</div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong>Code of Business
      Conduct and Ethics</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">We have
      adopted a &#8220;Code of Business Conduct and Ethics,&#8221; a code of ethics that applies
      to all employees, including our executive officers. A copy of our Code of
      Business Conduct and Ethics is posted on our internet site at
<i>www.DGSE.com</i>. In the event we make any amendments to, or grant any
      waivers of, a provision of the Code of Business Conduct and Ethics that applies
      to the principal executive officer, principal financial officer, or principal
      accounting officer that requires disclosure under applicable SEC rules, we
      intend to disclose such amendment or waiver and the reasons therefor on a Form
      8-K or on our next periodic report.</div>
    <div style="MARGIN-TOP: 13.35pt; MARGIN-BOTTOM: 0pt" align="center"><strong>AUDIT
      COMMITTEE REPORT</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt"><i>Introductory
      Note: The material in this report is not &#8220;soliciting material&#8221; and is being
      furnished to, but not deemed filed with, the SEC. This report is not deemed
      to
      be incorporated by reference by any general statement incorporating by reference
      this proxy statement into any filing under the Securities Act or under the
      Exchange Act, except to the extent that we specifically incorporate this
      information by reference, and shall not otherwise be deemed soliciting material
      or filed under such acts.</i></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">The
      following is the report of the Audit Committee with respect to our audited
      financial statements for the fiscal year ended December 31, 2006.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">The Audit
      Committee has reviewed and discussed the audited financial statements of DGSE
      Companies, Inc. with senior management. The Audit Committee has discussed with
      BKR Cornwell Jackson, our independent registered public accounting firm, the
      matters required to be discussed by Statement of Auditing Standards No. 61,
      <i>Communication with Audit Committees</i>, which includes, among other items,
      matters related to the conduct of the audit of our financial statements. The
      Audit Committee has also received written disclosures and the letter from BKR
      Cornwell Jackson required by Independence Standards Board Standard No. 1, which
      relates to the accounting firm&#8217;s independence from our company, and has
      discussed with BKR Cornwell Jackson its independence from our company.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Based
      on
      the review and discussions referred to above, the Audit Committee recommended
      to
      the board of directors that audited financial statements be included in our
      company&#8217;s Annual Report on Form 10-K for the fiscal year ended December 31,
      2006.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">The Audit
      Committee acts pursuant to the Audit Committee Charter adopted by the board
      of
      directors. Each of the members of the Audit Committee qualifies as an
      independent director under the current listing standards of the NASDAQ Stock
      Market. The Charter of the Audit Committee is attached as Annex 1 to this proxy
      statement.</div>
    <div style="MARGIN-TOP: 6.65pt; PADDING-LEFT: 37.05pt; MARGIN-BOTTOM: 0pt">AUDIT
      COMMITTEE</div>
    <div style="MARGIN-TOP: 6.65pt; PADDING-LEFT: 37.05pt; MARGIN-BOTTOM: 0pt">Dr.&#160;William
      P. Cordeiro, Ph.D. (Chairman)<br>David Rector &#160;(Mr.&#160;Rector was not a
      member of the Audit Committee during 2006)<br>Craig Alan-Lee</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt"><br><br></div>
    <div style="MARGIN: 0pt" align="center">9</div>
    <div style="MARGIN: 0pt"><br></div>
    <hr style="PADDING-BOTTOM: 7.2pt; PADDING-TOP: 7.2pt" noshade size="1">
    <div style="MARGIN-TOP: 13.35pt; MARGIN-BOTTOM: 0pt; PAGE-BREAK-BEFORE: always" align="center"><strong>COMPENSATION
      COMMITTEE REPORT</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt"><i>Introductory
      Note: The material in this report is not &#8220;soliciting material&#8221; and is being
      furnished to, but not deemed filed with, the SEC. This report is not deemed
      to
      be incorporated by reference by any general statement incorporating by reference
      this proxy statement into any filing under the Securities Act or under the
      Exchange Act, except to the extent that we specifically incorporate this
      information by reference, and shall not otherwise be deemed soliciting material
      or filed under such acts.</i></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">The
      following is the report of the board of directors with respect to the
      Compensation Discussion and Analysis set forth in this proxy statement.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">The board
      of directors does not have a compensation committee. Accordingly, the full
      board
      of directors has reviewed and discussed the Compensation Discussion and Analysis
      set forth in this proxy statement with management and based on this review
      and
      discussion has approved it for inclusion in this proxy statement.</div>
    <div style="MARGIN-TOP: 6.65pt; PADDING-LEFT: 37.05pt; MARGIN-BOTTOM: 0pt">BOARD
      OF DIRECTORS</div>
    <div style="MARGIN-TOP: 6.65pt; PADDING-LEFT: 37.05pt; MARGIN-BOTTOM: 0pt">Dr.&#160;L.S.
      Smith, Ph.D. (Chairman)<br>William H. Oyster<br>Dr.&#160;William P. Cordeiro,
      Ph.D.<br>Craig Alan-Lee<br>Richard M. Gozia<br>David Rector<br>Mitchell T.
      Stoltz</div>
    <div style="MARGIN: 0pt" align="center"><br><br></div>
    <div style="MARGIN: 0pt" align="center">10</div>
    <div style="MARGIN: 0pt"><br></div>
    <hr style="PADDING-BOTTOM: 7.2pt; PADDING-TOP: 7.2pt" noshade size="1">
    <div style="PAGE-BREAK-BEFORE: always; MARGIN: 0pt" align="center"><strong>PROPOSAL
      TWO</strong></div>
    <div style="MARGIN-TOP: 13.35pt; MARGIN-BOTTOM: 0pt" align="center"><strong>RATIFICATION
      OF SELECTION OF<br>INDEPENDENT REGISTERED
      PUBLIC ACCOUNTING FIRM</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Our audit
      committee has selected BKR Cornwell Jackson as our independent registered public
      accounting firm for the fiscal year ending December 31, 2007. BKR Cornwell
      Jackson has served as our independent registered public accounting firm since
      October 2004 and audited our financial statements for the 2006 fiscal year.
      A
      representative of BKR Cornwell Jackson is expected to be present at the annual
      meeting, will have the opportunity to make a statement if he or she desires
      to
      do so, and is expected to be available to respond to appropriate
      questions.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Stockholder
      ratification of the selection of BKR Cornwell Jackson is not required by our
      bylaws or otherwise. However, we are submitting the selection of BKR Cornwell
      Jackson to our stockholders for ratification as a matter of good corporate
      governance. If our stockholders fail to ratify the selection, our audit
      committee will consider whether or not to retain that firm. Even if the
      selection is ratified, our audit committee in its discretion may direct the
      appointment of a different independent registered public accounting firm at
      any
      time during the year if it determines that such a change would be in the best
      interest of our company and our stockholders.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">The
      affirmative vote of a majority of the votes cast at the meeting, either in
      person or by proxy, is required to ratify the selection of BKR Cornwell Jackson.
      Abstentions will be counted toward the tabulation of votes cast on proposals
      presented to the stockholders for the purpose of determining a quorum and will
      have the same effect as negative votes. Broker non votes are counted towards
      a
      quorum, but are not counted for any purpose in determining whether this matter
      has been approved.</div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong>Independent Registered
      Public Accountants Fees</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 6.65pt; TEXT-INDENT: 18pt">The
      following table presents fees billed by BKR Cornwell Jackson for professional
      services rendered for the fiscal years ended December 31, 2006 and 2005.</div>
    <div>
      <table align="center" cellspacing="0" style="FONT-SIZE: 10pt">

          <tr>
            <td width="359">
            </td>
            <td width="15">
            </td>
            <td width="6">
            </td>
            <td width="33">
            </td>
            <td width="15">
            </td>
            <td width="6">
            </td>
            <td width="33">
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="479">&#160;</td>
            <td valign="bottom" width="20">&#160;</td>
            <td colspan="2" valign="bottom" width="52" style="border-bottom: #000000 0.5pt solid;">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt" align="center"><strong>2006</strong></div>
            </td>
            <td valign="bottom" width="20">&#160;</td>
            <td colspan="2" valign="bottom" width="52" style="border-bottom: #000000 0.5pt solid;">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt" align="center"><strong>2005</strong></div>
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="479">&#160;</td>
            <td valign="bottom" width="20">&#160;</td>
            <td valign="bottom" width="8">&#160;</td>
            <td valign="bottom" width="44">&#160;</td>
            <td valign="bottom" width="20">&#160;</td>
            <td valign="bottom" width="8">&#160;</td>
            <td valign="bottom" width="44">&#160;</td>
          </tr>
          <tr>
            <td valign="bottom" width="479">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">Audit
                Fees(1)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</div>
            </td>
            <td valign="bottom" width="20">
              <div style="MARGIN: 0pt">&#160;&#160;&#160;&#160;&#160;</div>
            </td>
            <td valign="bottom" width="8">
              <div style="MARGIN: 0pt">$</div>
            </td>
            <td valign="bottom" width="44">
              <div style="MARGIN: 0pt" align="right">38,180</div>
            </td>
            <td valign="bottom" width="20">
              <div style="MARGIN: 0pt">&#160;&#160;&#160;&#160;&#160;</div>
            </td>
            <td valign="bottom" width="8">
              <div style="MARGIN: 0pt">$</div>
            </td>
            <td valign="bottom" width="44">
              <div style="MARGIN: 0pt" align="right">34,900</div>
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="479">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">Audit
                Related Fees</div>
            </td>
            <td valign="bottom" width="20">&#160;</td>
            <td valign="bottom" width="8">&#160;</td>
            <td valign="bottom" width="44">
              <div style="MARGIN: 0pt" align="right">&#8212;</div>
            </td>
            <td valign="bottom" width="20">&#160;</td>
            <td valign="bottom" width="8">&#160;</td>
            <td valign="bottom" width="44">
              <div style="MARGIN: 0pt" align="right">&#8212;</div>
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="479">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">Tax
                Fees(2)</div>
            </td>
            <td valign="bottom" width="20">&#160;</td>
            <td valign="bottom" width="8">&#160;</td>
            <td valign="bottom" width="44">
              <div style="MARGIN: 0pt" align="right">12,131</div>
            </td>
            <td valign="bottom" width="20">&#160;</td>
            <td valign="bottom" width="8">&#160;</td>
            <td valign="bottom" width="44">
              <div style="MARGIN: 0pt" align="right">9,950</div>
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="479">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">All
                Other Fees(3)</div>
            </td>
            <td valign="bottom" width="20">&#160;</td>
            <td valign="bottom" width="8" style="border-bottom: #000000 0.5pt solid;">&#160;</td>
            <td valign="bottom" width="44" style="border-bottom: #000000 0.5pt solid;">
              <div style="MARGIN: 0pt" align="right">29,169</div>
            </td>
            <td valign="bottom" width="20">&#160;</td>
            <td valign="bottom" width="8" style="border-bottom: #000000 0.5pt solid;">&#160;</td>
            <td valign="bottom" width="44" style="border-bottom: #000000 0.5pt solid;">
              <div style="MARGIN: 0pt" align="right">29,575</div>
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="479">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 18pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10pt">Total</div>
            </td>
            <td valign="bottom" width="20">&#160;</td>
            <td valign="bottom" width="8">
              <div style="MARGIN: 0pt">$</div>
            </td>
            <td valign="bottom" width="44">
              <div style="MARGIN: 0pt" align="right">79,470</div>
            </td>
            <td valign="bottom" width="20">&#160;</td>
            <td valign="bottom" width="8">
              <div style="MARGIN: 0pt">$</div>
            </td>
            <td valign="bottom" width="44">
              <div style="MARGIN: 0pt" align="right">74,425</div>
            </td>
          </tr>

      </table>
    </div>
    <div style="FONT-SIZE: 11pt; MARGIN: 0pt; LINE-HEIGHT: 13pt">&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: -12pt; TEXT-INDENT: -19.95pt">(1)</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: 2.5pt">Represents
      the aggregate fees billed by BKR Cornwell Jackson for professional services
      rendered for the audit of our annual financial statements for the fiscal year
      indicated above.</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: -12pt; TEXT-INDENT: -19.95pt">(2)</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: 2.5pt">Represents
      the aggregate fees billed by BKR Cornwell Jackson for professional services
      rendered in various tax matters during 2005 and 2006.</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: -12pt; TEXT-INDENT: -19.95pt">(3)</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: 2.5pt">Represents
      the aggregate fees billed by BKR Cornwell Jackson for professional services
      rendered for the review of quarterly reports on Form 10-Q for the periods ended
      March 31, June 30 and September 30 for the fiscal years indicated above. During
      2006, BKR Cornwell Jackson provided additional professional services for due
      diligence requirements for the Superior Galleries acquisition and consultation
      on a routine IRS audit.</div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong>Audit Committee
      Pre-Approval Policies and Procedures</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">All audit
      and non-audit services are pre-approved by our audit committee, which considers,
      among other things, the possible effect of the performance of such services
      on
      the registered public accounting firm&#8217;s independence. Our audit committee
      pre-approves the annual engagement of the principal independent registered
      public accounting firm, including the performance of the annual audit and
      quarterly reviews for the subsequent fiscal year, and pre-approves specific
      engagements for tax services performed by such firm. Our audit committee has
      also established pre-approval policies and procedures for certain enumerated
      audit and audit related services performed pursuant to the annual engagement
      agreement, including such firm&#8217;s attendance at and participation at board and
      committee meetings; services of such firm associated with SEC registration
      statements, periodic reports and other documents filed with the SEC or other
      documents issued in connection with securities offerings, such as comfort
      letters and </div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt"><br><br></div>
    <div style="MARGIN: 0pt" align="center">11</div>
    <div style="MARGIN: 0pt"><br></div>
    <hr style="PADDING-BOTTOM: 7.2pt; PADDING-TOP: 7.2pt" noshade size="1">
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; PAGE-BREAK-BEFORE: always">consents;
      such firm&#8217;s assistance in responding to any SEC comments letters; and
      consultations with such firm as to the accounting or disclosure treatment of
      transactions or events and/or the actual or potential impact of final or
      proposed rules, standards or interpretations by the SEC, Public Company
      Accounting Oversight Board (PCAOB), Financial Accounting Standards Board (FASB),
      or other regulatory or standard-setting bodies. Our audit committee is informed
      of each service performed pursuant to its pre-approval policies and
      procedures.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Our audit
      committee has considered the role of BKR Cornwell Jackson in providing services
      to us for the fiscal year ended December 31, 2006 and has concluded that such
      services are compatible with the firm&#8217;s independence.</div>
    <div style="MARGIN-TOP: 13.35pt; MARGIN-BOTTOM: 0pt" align="center"><strong>Our
      Board of Directors recommends a vote IN FAVOR of Proposal Two</strong></div>
    <div style="MARGIN: 0pt" align="center"><br><br></div>
    <div style="MARGIN: 0pt" align="center">12</div>
    <div style="MARGIN: 0pt"><br></div>
    <hr style="PADDING-BOTTOM: 7.2pt; PADDING-TOP: 7.2pt" noshade size="1">
    <div style="PAGE-BREAK-BEFORE: always; MARGIN: 0pt" align="center"><strong>ADDITIONAL
      INFORMATION</strong></div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong>Management</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 6.65pt; TEXT-INDENT: 18pt">Set
      forth below is information regarding our executive officers. All executive
      officers serve at the pleasure of our board of directors.</div>
    <div>
      <table align="center" cellspacing="0" style="FONT-SIZE: 10pt">

          <tr>
            <td width="146">
            </td>
            <td width="13">
            </td>
            <td width="14">
            </td>
            <td width="13">
            </td>
            <td width="279">
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="195" style="border-bottom: #000000 0.5pt solid;">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt"><strong>Name</strong></div>
            </td>
            <td valign="top" width="18">&#160;</td>
            <td valign="bottom" width="19" style="border-bottom: #000000 0.5pt solid;">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt" align="center"><strong>Age</strong></div>
            </td>
            <td valign="top" width="18">&#160;</td>
            <td valign="bottom" width="372" style="border-bottom: #000000 0.5pt solid;">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt" align="center"><strong>Position</strong></div>
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="195">&#160;</td>
            <td valign="top" width="18">&#160;</td>
            <td valign="bottom" width="19">&#160;</td>
            <td valign="top" width="18">&#160;</td>
            <td valign="bottom" width="372">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="bottom" width="195">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">Dr.&#160;L.S.
                Smith*</div>
            </td>
            <td valign="top" width="18">
              <div style="MARGIN: 0pt">&#160;&#160;&#160;&#160;&#160;</div>
            </td>
            <td valign="bottom" width="19">
              <div style="MARGIN: 0pt" align="center">60</div>
            </td>
            <td valign="top" width="18">
              <div style="MARGIN: 0pt">&#160;&#160;&#160;&#160;&#160;</div>
            </td>
            <td valign="bottom" width="372">
              <div style="MARGIN: 0pt">Chairman of the board, chief executive officer
                and secretary</div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="195">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">William
                H. Oyster*</div>
            </td>
            <td valign="top" width="18">&#160;</td>
            <td valign="bottom" width="19">
              <div style="MARGIN: 0pt" align="center">54</div>
            </td>
            <td valign="top" width="18">&#160;</td>
            <td valign="bottom" width="372">
              <div style="MARGIN: 0pt">President and chief operating officer</div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="bottom" width="195">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">John
                Benson</div>
            </td>
            <td valign="top" width="18">&#160;</td>
            <td valign="bottom" width="19">
              <div style="MARGIN: 0pt" align="center">61</div>
            </td>
            <td valign="top" width="18">&#160;</td>
            <td valign="bottom" width="372">
              <div style="MARGIN: 0pt">Chief financial officer</div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="195">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">S.
                Scott Williamson</div>
            </td>
            <td valign="top" width="18">&#160;</td>
            <td valign="bottom" width="19">
              <div style="MARGIN: 0pt" align="center">49</div>
            </td>
            <td valign="top" width="18">&#160;</td>
            <td valign="bottom" width="372">
              <div style="MARGIN: 0pt">Executive vice president &#8211; consumer
                finance</div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="bottom" width="195">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">Lawrence
                Fairbanks Abbott, Jr.</div>
            </td>
            <td valign="top" width="18">&#160;</td>
            <td valign="bottom" width="19">
              <div style="MARGIN: 0pt" align="center">43</div>
            </td>
            <td valign="top" width="18">&#160;</td>
            <td valign="bottom" width="372">
              <div style="MARGIN: 0pt">Executive vice president &#8211; Superior Galleries,
                Inc.</div>
            </td>
          </tr>

      </table>
    </div>
    <div style="FONT-SIZE: 11pt; MARGIN: 0pt; LINE-HEIGHT: 13pt">&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: -12pt; TEXT-INDENT: -19.95pt">*</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: 2.5pt">Biographical
      information about Dr.&#160;Smith and Mr.&#160;Oyster is set forth under Proposal
      One above.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt"><strong><i>John
      Benson</i></strong> joined our company in December 1992 as chief financial
      officer. Between January and May 2007, Mr.&#160;Benson served on the board of
      directors of Superior Galleries, Inc. Mr.&#160;Benson obtained his BBA from
      Texas A&amp;M University in 1968 and is a certified public accountant in the
      State of Texas.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt"><strong><i>S.
      Scott Williamson</i></strong> joined our company as executive vice president &#8212;
consumer finance and became president of our subsidiary American
      Pay Day
      Centers, Inc. in May 2004. Between 2002 and 2004, Mr.&#160;Williamson served as
      president of Texas State Credit Co., a finance company with 63 locations. From
      2001 to 2002, Mr.&#160;Williamson served as chief financial officer for Westgate
      Fabrics, LLC, a distributor of decorative fabrics. Before that,
      Mr.&#160;Williamson served as an executive vice president of operations for
      First Cash Financial Services, Inc., a national markets finance company.
      Mr.&#160;Williamson has also served on the board of directors of Superior
      Galleries, Inc. from January 2007 to May 2007. Mr.&#160;Williamson obtained his
      B.B.A. in accounting from the University of Oklahoma in 1980.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt"><strong><i>Lawrence
      Fairbanks Abbott, Jr.</i></strong> joined Superior Galleries, Inc., which became
      a subsidiary of our company on May 30, 2007, as executive vice president in
      June
      2005. He also served as chief operating officer of Superior from January 2006
      until January 2007. Prior to that, Mr.&#160;Abbott served as executive vice
      president of Heritage Rare Coin Galleries, a privately-held rare coin dealer
      and
      auctioneers, from May 1999 to May 2005. He also serves as a consultant to Divine
      Imaging Commodities, a Multiple Award Schedule (MAS) contractor reselling an
      array of office products and equipment to the federal government, since October
      15, 2006.</div>
    <div style="MARGIN-TOP: 13.35pt; MARGIN-BOTTOM: 0pt" align="center"><strong>SECURITY
      OWNERSHIP OF CERTAIN<br>BENEFICIAL OWNERS AND
      MANAGEMENT</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 6.65pt; TEXT-INDENT: 18pt">The
      following table sets forth certain information regarding the ownership of our
      common stock as of June 29, 2007 by: (i) each director; (ii) each of the named
      executive officers reflected in the Summary Compensation Table; (iii) all our
      executive officers and directors as a group; and (iv) all those known by us
      to
      be beneficial owners of more than five percent of our common stock.</div>
    <div>
      <table align="center" cellspacing="0" style="FONT-SIZE: 10pt">

          <tr>
            <td width="327">
            </td>
            <td width="12">
            </td>
            <td width="55">
            </td>
            <td width="36">
            </td>
            <td width="27">
            </td>
            <td width="8">
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="436" style="border-bottom: #000000 0.5pt solid;">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt"><strong>Name
                and Address of Beneficial Owner</strong></div>
            </td>
            <td valign="bottom" width="16">&#160;</td>
            <td valign="bottom" width="74" style="border-bottom: #000000 0.5pt solid;">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt" align="center"><strong>Amount
<br>and
                Nature<br>of
                Beneficial<br>&#160;&#160;Ownership(1)&#160;&#160;</strong></div>
            </td>
            <td valign="bottom" width="48">&#160;</td>
            <td valign="bottom" width="37" style="border-bottom: #000000 0.5pt solid;">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt" align="center"><strong>Percent<br>of
<br>Class(1)</strong></div>
            </td>
            <td valign="bottom" width="11">&#160;</td>
          </tr>
          <tr>
            <td valign="bottom" width="436">&#160;</td>
            <td valign="bottom" width="16">&#160;</td>
            <td valign="bottom" width="74">&#160;</td>
            <td valign="bottom" width="48">&#160;</td>
            <td valign="bottom" width="37">&#160;</td>
            <td valign="bottom" width="11">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="bottom" width="436">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">Dr.&#160;L.
                S. Smith, Ph.D.<br>Director, chairman and chief executive officer<br>519
                Interstate 30, #243<br>Rockwall, Texas &#160;75087</div>
            </td>
            <td valign="bottom" width="16">
              <div style="MARGIN: 0pt">&#160;&#160;&#160;&#160;&#160;</div>
            </td>
            <td valign="top" width="74">
              <div style="MARGIN: 0pt" align="right">6,555,392</div>
            </td>
            <td valign="top" width="48">
              <div style="MARGIN: 0pt">(2), (8)&#160;&#160;&#160;</div>
            </td>
            <td valign="top" width="37">
              <div style="MARGIN: 0pt" align="right">69.2</div>
            </td>
            <td valign="top" width="11">
              <div style="MARGIN: 0pt">%</div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="436">
              <div style="MARGIN-TOP: 12pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">William
                H. Oyster<br>Director, president and chief operating officer(3)</div>
            </td>
            <td valign="bottom" width="16">&#160;</td>
            <td valign="top" width="74">
              <div style="MARGIN-TOP: 12pt; MARGIN-BOTTOM: 0pt" align="right">290,115</div>
            </td>
            <td valign="top" width="48">
              <div style="MARGIN-TOP: 12pt; MARGIN-BOTTOM: 0pt">(4)</div>
            </td>
            <td valign="top" width="37">
              <div style="MARGIN-TOP: 12pt; MARGIN-BOTTOM: 0pt" align="right">3.1</div>
            </td>
            <td valign="top" width="11">
              <div style="MARGIN-TOP: 12pt; MARGIN-BOTTOM: 0pt">%</div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="bottom" width="436">
              <div style="MARGIN-TOP: 12pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">John
                Benson <br>Chief financial officer(3)</div>
            </td>
            <td valign="bottom" width="16">&#160;</td>
            <td valign="top" width="74">
              <div style="MARGIN-TOP: 12pt; MARGIN-BOTTOM: 0pt" align="right">161,500</div>
            </td>
            <td valign="top" width="48">
              <div style="MARGIN-TOP: 12pt; MARGIN-BOTTOM: 0pt">(5)</div>
            </td>
            <td valign="top" width="37">
              <div style="MARGIN-TOP: 12pt; MARGIN-BOTTOM: 0pt" align="right">1.7</div>
            </td>
            <td valign="top" width="11">
              <div style="MARGIN-TOP: 12pt; MARGIN-BOTTOM: 0pt">%</div>
            </td>
          </tr>

      </table>
    </div>
    <div style="MARGIN: 0pt"><br><br></div>
    <div style="MARGIN: 0pt" align="center">13</div>
    <div style="MARGIN: 0pt"><br></div>
    <hr style="PADDING-BOTTOM: 7.2pt; PADDING-TOP: 7.2pt" noshade size="1">
    <div style="FONT-SIZE: 8pt; PAGE-BREAK-BEFORE: always; MARGIN: 0pt">&#160;</div>
    <div>
      <table align="center" cellspacing="0" style="FONT-SIZE: 10pt">

          <tr>
            <td width="326">
            </td>
            <td width="12">
            </td>
            <td width="55">
            </td>
            <td width="38">
            </td>
            <td width="27">
            </td>
            <td width="8">
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="434" style="border-bottom: #000000 0.5pt solid;">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt"><strong>Name
                and Address of Beneficial Owner</strong></div>
            </td>
            <td valign="bottom" width="16">&#160;</td>
            <td valign="bottom" width="73" style="border-bottom: #000000 0.5pt solid;">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt" align="center"><strong>Amount
<br>and
                Nature<br>of
                Beneficial<br>&#160;&#160;Ownership(1)&#160;&#160;</strong></div>
            </td>
            <td valign="bottom" width="51">&#160;</td>
            <td valign="bottom" width="36" style="border-bottom: #000000 0.5pt solid;">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt" align="center"><strong>Percent<br>of
<br>Class(1)</strong></div>
            </td>
            <td valign="bottom" width="11">&#160;</td>
          </tr>
          <tr>
            <td valign="bottom" width="434">&#160;</td>
            <td valign="bottom" width="16">&#160;</td>
            <td valign="top" width="73">&#160;</td>
            <td valign="top" width="51">&#160;</td>
            <td valign="top" width="36">&#160;</td>
            <td valign="top" width="11">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="bottom" width="434">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">S.
                Scott Williamson<br>Executive vice president(3)</div>
            </td>
            <td valign="bottom" width="16">
              <div style="MARGIN: 0pt">&#160;&#160;&#160;&#160;&#160;</div>
            </td>
            <td valign="top" width="73">
              <div style="MARGIN: 0pt" align="right">20,000</div>
            </td>
            <td valign="top" width="51">
              <div style="MARGIN: 0pt">(6)</div>
            </td>
            <td valign="top" width="36">
              <div style="MARGIN: 0pt" align="right">*</div>
            </td>
            <td valign="top" width="11">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="434">
              <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">Dr.&#160;William
                P. Cordeiro, Ph.D.<br>Director<br>P.O. Box 6010<br>Malibu, California
                &#160;90264</div>
            </td>
            <td valign="bottom" width="16">&#160;</td>
            <td valign="top" width="73">
              <div style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 0pt" align="right">27,500</div>
            </td>
            <td valign="top" width="51">
              <div style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 0pt">(7)</div>
            </td>
            <td valign="top" width="36">
              <div style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 0pt" align="right">*</div>
            </td>
            <td valign="top" width="11">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="bottom" width="434">
              <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">Craig
                Alan-Lee<br>Director<br>11230 Dilling Street<br>North Hollywood,
                California &#160;91602</div>
            </td>
            <td valign="bottom" width="16">&#160;</td>
            <td valign="top" width="73">
              <div style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 0pt" align="right">325,000</div>
            </td>
            <td valign="top" width="51">
              <div style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 0pt">(8),(9)&#160;&#160;&#160;&#160;&#160;</div>
            </td>
            <td valign="top" width="36">
              <div style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 0pt" align="right">6.61</div>
            </td>
            <td valign="top" width="11">
              <div style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 0pt">%</div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="434">
              <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">David
                Rector<br>Director(3)</div>
            </td>
            <td valign="bottom" width="16">&#160;</td>
            <td valign="top" width="73">
              <div style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 0pt" align="right">5,462</div>
            </td>
            <td valign="top" width="51">
              <div style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 0pt">(10)</div>
            </td>
            <td valign="top" width="36">
              <div style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 0pt" align="right">*</div>
            </td>
            <td valign="top" width="11">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="bottom" width="434">
              <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">Mitchell
                T. Stoltz<br>Director(3)</div>
            </td>
            <td valign="bottom" width="16">&#160;</td>
            <td valign="top" width="73">
              <div style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 0pt" align="right">2,731</div>
            </td>
            <td valign="top" width="51">
              <div style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 0pt">(11)</div>
            </td>
            <td valign="top" width="36">
              <div style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 0pt" align="right">*</div>
            </td>
            <td valign="top" width="11">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="434">
              <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">Richard
                Matthew Gozia<br>Director<br>123 22nd Street S.<br>La Crosse, Wisconsin
                &#160;54601</div>
            </td>
            <td valign="bottom" width="16">&#160;</td>
            <td valign="top" width="73">
              <div style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 0pt" align="right">10,000</div>
            </td>
            <td valign="top" width="51">&#160;</td>
            <td valign="top" width="36">
              <div style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 0pt" align="right">*</div>
            </td>
            <td valign="top" width="11">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="bottom" width="434">
              <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">Stanford
                International Bank Ltd.<br>No. 11 Pavilion Drive<br>St. John&#8217;s, Antigua,
                West Indies</div>
            </td>
            <td valign="bottom" width="16">&#160;</td>
            <td valign="top" width="73">
              <div style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 0pt" align="right">6,555,392</div>
            </td>
            <td valign="top" width="51">
              <div style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 0pt">(12)</div>
            </td>
            <td valign="top" width="36">
              <div style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 0pt" align="right">69.2</div>
            </td>
            <td valign="top" width="11">
              <div style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 0pt">%</div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="434">
              <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">All
                directors and officers as a group (10 individuals)</div>
            </td>
            <td valign="bottom" width="16">&#160;</td>
            <td valign="bottom" width="73">
              <div style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 0pt" align="right">7,389,507</div>
            </td>
            <td valign="bottom" width="51">
              <div style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 0pt">(13)</div>
            </td>
            <td valign="bottom" width="36">
              <div style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 0pt" align="right">77.9</div>
            </td>
            <td valign="bottom" width="11">
              <div style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 0pt">%</div>
            </td>
          </tr>

      </table>
    </div>
    <div style="FONT-SIZE: 11pt; MARGIN: 0pt; LINE-HEIGHT: 13pt">&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: -12pt; TEXT-INDENT: -19.95pt">(1)</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: 2.5pt">Based
      upon information furnished to us by the directors and executive officers or
      obtained from our stock transfer books showing 9,479,003 shares of common stock
      outstanding as of July 6, 2007. We are informed that these persons hold the
      sole
      voting and dispositive power with respect to the common stock except as
      otherwise stated in the footnotes below. For purposes of computing &#8220;beneficial
      ownership&#8221; and the percentage of outstanding common stock held by each person or
      group of persons named above as of July 6, 2007, any security which such person
      or group of persons has the right to acquire within 60 days after such date
      is
      deemed to be outstanding for the purpose of computing beneficial ownership
      and
      the percentage ownership of such person or persons, but is not deemed to be
      outstanding for the purpose of computing the percentage ownership of any other
      person. A &#8220;*&#8221; indicates less than one percent.</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: -12pt; TEXT-INDENT: -19.95pt">(2)</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: 2.5pt">Includes
      577,777 and 267,857 shares currently exercisable under stock options with
      exercise prices of $2.25 and $1.12 per share, respectively; 493,282 shares
      subject to proxies pursuant to which Dr.&#160;L.S. Smith holds sole voting
      power; and 3,390,727 shares subject to a corporate governance agreement with
      Stanford International Bank Ltd., which we refer to as Stanford, and us. The
      corporate governance agreement entitles Stanford and Dr.&#160;Smith to each
      nominate two independent directors to our board of directors and entitles
      Dr.&#160;Smith and Mr.&#160;Oyster to be nominated to our board for so long as
      he remains an executive officer of our company. Pursuant to this agreement,
      Dr.&#160;Smith has shared voting power with respect to the 3,390,727 shares
      beneficially owned by Stanford. Dr.&#160;Smith disclaims beneficial ownership of
      the 3,884,009 shares subject to the proxies or the corporate governance
      agreement.</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: -12pt; TEXT-INDENT: -19.95pt">(3)</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: 2.5pt">The
      address for Messrs.&#160;Oyster, Benson, Williamson, Rector and Stoltz is 2817
      Forest Lane, Dallas, Texas &#160;75234.</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: -12pt; TEXT-INDENT: -19.95pt">(4)</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: 2.5pt">Includes
      250,000 shares currently exercisable under stock options with an average
      exercise price of $2.23 per share. In addition, W.H. Oyster has granted
      Dr.&#160;L.S. Smith a proxy to vote 38,615 of his currently outstanding
      shares.</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: -12pt; TEXT-INDENT: -19.95pt">(5)</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: 2.5pt">Includes
      150,000 shares currently exercisable under stock options with an average
      exercise price of $2.02 per share. In addition, John Benson has granted
      Dr.&#160;L.S. Smith a proxy to vote his 11,500 shares currently
      outstanding.</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: -12pt; TEXT-INDENT: -19.95pt">(6)</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: 2.5pt">Includes
      20,000 shares currently exercisable under stock options with an exercise price
      of $2.43 per share.</div>
    <div style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 2.5pt"><br><br></div>
    <div style="MARGIN: 0pt" align="center">14</div>
    <div style="MARGIN: 0pt"><br></div>
    <hr style="PADDING-BOTTOM: 7.2pt; PADDING-TOP: 7.2pt" noshade size="1">
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: -12pt; PAGE-BREAK-BEFORE: always; TEXT-INDENT: -19.95pt">(7)</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: 2.5pt">Includes
      22,500 shares currently exercisable under stock options with an exercise price
      of $2.47 per share and 5,000 shares owned by Bartik, Cordeiro &amp; Associates,
      as to which Dr.&#160;Cordeiro has shared voting and investment powers.</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: -12pt; TEXT-INDENT: -19.95pt">(8)</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: 2.5pt">Craig
      Alan-Lee has granted Dr.&#160;L.S. Smith a proxy to vote his 320,000 shares
      currently outstanding.</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: -12pt; TEXT-INDENT: -19.95pt">(9)</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: 2.5pt">Includes
      5,000 shares currently exercisable under a stock option with an exercise price
      of $2.82 per share.</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: -12pt; TEXT-INDENT: -19.95pt">(10)</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: 2.5pt">Includes
      2,731 and 2,731 shares currently exercisable under stock options with an
      exercise price of $7.32 and $10.07, respectively, per share.</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: -12pt; TEXT-INDENT: -19.95pt">(11)</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: 2.5pt">Includes
      2,731 shares currently exercisable under a stock option with an exercise price
      of $5.86 per share.</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: -12pt; TEXT-INDENT: -19.95pt">(12)</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: 2.5pt">Includes
      422,817 shares currently issuable upon the exercise of stock purchase warrants
      with an exercise price of $1.89 per share and 3,164,665 shares beneficially
      owned by Dr.&#160;Smith subject to the corporate governance agreement described
      above. James M. Davis is the chief financial officer of Stanford. R. Allen
      Stanford is a director and, indirectly, the principal shareholder of Stanford.
      Both Messrs.&#160;Stanford and Davis share voting and dispositive power with
      respect to shares held by Stanford. Pursuant to the corporate governance
      agreement, Stanford has shared voting power with respect to the 3,164,665 shares
      beneficially owned by Dr.&#160;Smith. Stanford disclaims beneficial ownership of
      the 3,164,665 shares subject to the corporate governance agreement.</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: -12pt; TEXT-INDENT: -19.95pt">(13)</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 19.95pt; MARGIN-BOTTOM: 2.5pt">Includes
      577,777, 267,857, 250,000, 150,000, 45,000, 10,000 and 20,000 shares currently
      exercisable under stock options with an exercise price or average price, as
      the
      case may be, of $2.25, $1.12, $2.23, $2.02, $2.47, $2.82 and $2.43,
      respectively, per share, and 493,282 shares subject to proxies granting
      Dr.&#160;L.S. Smith sole voting powers.</div>
    <div style="MARGIN-TOP: 13.35pt; MARGIN-BOTTOM: 0pt" align="center"><strong>SECTION
      16(a) BENEFICIAL OWNERSHIP REPORTING
      COMPLIANCE</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Section
      16(a) of the Exchange Act requires our officers, directors and persons who
      own
      more than 10% of any class of our securities registered under Section 12(b)
      of
      the Exchange Act to file reports of ownership and changes in ownership with
      the
      SEC. Officers, directors and greater than 10% stockholders are required by
      SEC
      regulations to furnish us with copies of all Section 16(a) forms which they
      file.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Based
      solely on a review of copies of such reports furnished to us and written
      representations that no other reports were required during our fiscal year
      ended
      December 31, 2006, we believe that all persons subject to the reporting
      requirements pursuant to Section 16(a) filed the required reports on a timely
      basis with the SEC, except Mr.&#160;Oyster, who filed an untimely Form 4 on
      August 7, 2006 to report a stock purchase.</div>
    <div style="MARGIN-TOP: 13.35pt; MARGIN-BOTTOM: 0pt" align="center"><strong>COMPENSATION
      OF DIRECTORS AND EXECUTIVE
      OFFICERS</strong></div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong>Compensation
      Discussion and Analysis</strong></div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong><i>Overview</i></strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Because
      our company is a &#8220;controlled company&#8221; within the meaning of the NASDAQ listing
      standards, we are not required to have, and do not have, a compensation
      committee. Instead, our board of directors has the overall responsibility for
      evaluating, approving, administering and interpreting our compensation and
      benefit policies affecting our executive officers, including:</div>
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Symbol"><font style="FONT-FAMILY: Symbol">&#183;</font></div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">the
      corporate goals and objectives relating
      to the overall compensation of executive officers,</font></div>
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Symbol"><font style="FONT-FAMILY: Symbol">&#183;</font></div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">the
      actual compensation of executive
      officers, including their annual base salaries and their annual incentive
      opportunities (which includes cash-based and equity-based
      compensation),</font></div>
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Symbol"><font style="FONT-FAMILY: Symbol">&#183;</font></div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">any
      employment agreements, severance
      arrangements and change in control agreements that affect elements of the
      executive officers&#8217; compensation and benefits,</font></div>
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Symbol"><font style="FONT-FAMILY: Symbol">&#183;</font></div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">the
      supplemental compensation and benefits
      of executive officers, and</font></div>
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Symbol"><font style="FONT-FAMILY: Symbol">&#183;</font></div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">perquisites
      provided to executive officers
      both during and after employment with us.</font></div>
    <div style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 0pt"><br><br></div>
    <div style="MARGIN: 0pt" align="center">15</div>
    <div style="MARGIN: 0pt"><br></div>
    <hr style="PADDING-BOTTOM: 7.2pt; PADDING-TOP: 7.2pt" noshade size="1">
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt; PAGE-BREAK-BEFORE: always"><strong><i>Compensation
      Philosophy</i></strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Though
      our compensation philosophy is informal, we believe compensation should include
      a mixture of a competitive base salary, bonus incentives to encourage retention
      and reward individual responsibility and productivity, equity grants to align
      the interests of officers with those of our stockholders, and case-specific
      compensation plans to accommodate individual circumstances or non-recurring
      situations. Generally, we believe that overall executive compensation should
      be
      targeted near the mean of salaries for executives in similar positions with
      similar responsibilities at comparable companies. Our board of directors uses
      its judgment and experience and works closely with our executive officers to
      determine the appropriate mix of compensation for each individual.</div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong><i>Benchmarking</i></strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">While
      we
      do not believe it is appropriate to establish compensation levels primarily
      based on benchmarking, we do believe that compensation practices at comparable
      companies serve as a useful metric for us to remain competitive in the
      marketplace. Therefore, we informally consider competitor market practices
      with
      respect to the salaries, bonuses, benefits and total compensation paid to our
      executive officers.</div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong><i>Elements of
      Compensation</i></strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Currently,
      our
      named executive officers&#8217; compensation has three primary components &#8212; base
      compensation or salary, discretionary annual cash bonuses, and equity awards.
      In
      addition, we provide our executive officers with a variety of benefits that
      are
      generally available to all salaried employees.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">We view
      the various components of compensation as related but distinct. Although our
      board of directors reviews each executive officers&#8217; total compensation, we do
      not believe that significant compensation derived from one component of
      compensation should negate or reduce compensation from other components. We
      determine the appropriate level for each compensation component based in part,
      but not exclusively, on our view of internal equity and consistency, and other
      considerations we deem relevant, such as to reward extraordinary performance
      and
      increased responsibility and commitment. Our board of directors has not adopted
      any formal or informal policies or guidelines for allocating compensation
      between long-term and short-term compensation, between cash and non-cash
      compensation or among different forms of non-cash compensation.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Our
      annual process of determining overall compensation begins with recommendations
      made by Dr.&#160;Smith, our chairman, chief executive officer, and large
      stockholder. In making his recommendation, Dr.&#160;Smith considers a number of
      factors, including the seniority of the individual, the functional role of
      the
      position, the level of the individual&#8217;s responsibility, the individual&#8217;s
      long-term commitment to our company, and the scarcity of individuals with
      similar skills. Acting with the recommendation from Dr.&#160;Smith, our board of
      directors makes the final determination of compensation for our executive
      officers, including for Dr.&#160;Smith. In making compensation decisions, our
      management and board look at various metrics of our company&#8217;s performance,
      including gross revenues, the fair market value of our common stock, and
      operating earnings (such as EBIT, EBITDA and net earnings).</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt"><i>Base
      Salary</i>. Base salary is used to recognize the experience, skills, knowledge
      and responsibilities required of executive officers, taking into account
      competitive market compensation paid by other companies for similar positions.
      Generally, we believe that executive base salaries should be targeted near
      the
      mean of salaries for executives in similar positions with similar
      responsibilities at comparable companies, in line with our compensation
      philosophy. Base salaries are reviewed annually, with the board of directors
      examining detailed compensation surveys in all markets in which we operate,
      and
      adjusted from time to time to realign salaries with market levels after taking
      into account individual responsibilities, performance and experience.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">In
      connection with the acquisition by our company of Superior, our board of
      directors re-evaluated the appropriate base salaries of our executive officers
      in light of the increased size of the combined business and the increased
      responsibilities of our executive officers. Based on this analysis, the board
      of
      directors agreed to increase the base salaries of our executive officers
      effective upon the completion of the acquisition, as more fully discussed under
      the heading &#8220;Post-Acquisition Employment Agreements&#8221; beginning on page 21.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt"><i>Discretionary
      Annual Cash Bonus</i>. Our board of directors has the authority to award
      discretionary annual cash bonuses to our executive officers. The annual
      incentive bonuses are intended to compensate our executive officers for
      achieving financial and operational goals and for achieving individual annual
      performance objectives. These </div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt"><br><br></div>
    <div style="MARGIN: 0pt" align="center">16</div>
    <div style="MARGIN: 0pt"><br></div>
    <hr style="PADDING-BOTTOM: 7.2pt; PADDING-TOP: 7.2pt" noshade size="1">
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; PAGE-BREAK-BEFORE: always">objectives
      vary depending on the individual executive, but relate generally to financial
      factors such as revenue growth, improving our results of operations and
      increasing the price per share of our capital stock, and individual performance
      factors such as responsibilities, improvement and diligence.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">The
      discretionary bonus is normally paid in a single installment in the first
      quarter following the completion of our fiscal year. The actual amount of a
      discretionary bonus was determined following a review of each executive&#8217;s
      individual performance and contribution to our strategic goals conducted during
      the first quarter in 2007. The board of directors has not fixed a maximum payout
      for any annual discretionary cash bonus.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">In
      connection with the acquisition by our company of Superior, our board of
      directors re-evaluated the bonus structure of our executive officers in light
      of
      the increased size of the combined business and increased responsibilities
      of
      our executive officers. Based on this analysis, our board of directors made
      the
      annual bonus mandatory for certain of our executive officers after the
      completion of the acquisition, with the amount of the bonus based in part on
      the
      executive serving as an officer throughout the year and in part on a specified
      increase in either the market value of our common stock or in our earnings
      before interest and taxes (EBIT), as more fully discussed under the heading
      &#8220;Post-Acquisition Employment Agreements&#8221; beginning on page 21.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Our board
      of directors has not considered whether it would attempt to recover bonuses
      paid
      based on our financial performance where our financial statements are restated
      in a downward direction sufficient to reduce the amount of bonus that should
      have been paid under any applicable bonus criteria.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt"><i>Equity
      Compensation</i>. We believe that long-term performance is achieved through an
      ownership culture that encourages such performance by our executive officers
      through the use of stock and stock-based awards. Our stock compensation plans
      have been established to provide certain of our employees, including our
      executive officers, with incentives to help align those employees&#8217; interests
      with the interests of our stockholders. Our board of directors believes that
      the
      use of stock and stock-based awards offers the best approach to achieving this
      goal. We have not adopted stock ownership requirements or guidelines. Aside
      from
      Dr.&#160;Smith, our stock compensation plans have provided the principal method
      for our executive officers and directors to acquire equity or equity-linked
      interests in our company.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Our 2006
      equity incentive plan authorizes us to grant options to purchase shares of
      common stock and stock awards to our employees (including executives), directors
      and consultants. Our board has appointed our chairman of the board,
      Dr.&#160;Smith, as the administrator of the plan. In the case of awards intended
      to qualify as &#8220;performance-based-compensation&#8221; excludable from the deduction
      limitation under Section 162(m) of the Internal Revenue Code, the administrator
      will consist of two or more &#8220;outside directors&#8221; within the meaning of Section
      162(m). The administrator has the authority, among other things, to:</div>
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Symbol"><font style="FONT-FAMILY: Symbol">&#183;</font></div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">select
      the individuals to whom awards will
      be granted and to determine the type of award to grant;</font></div>
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Symbol"><font style="FONT-FAMILY: Symbol">&#183;</font></div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">determine
      the terms of the awards,
      including the exercise price, the number of shares subject to each award, the
      exercisability of the awards, and the form of consideration payable upon
      exercise;</font></div>
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Symbol"><font style="FONT-FAMILY: Symbol">&#183;</font></div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">provide
      for a right to dividends or
      dividend equivalents; and</font></div>
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Symbol"><font style="FONT-FAMILY: Symbol">&#183;</font></div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">interpret
      the plan and adopt rules and
      procedures relating to administration of the plan.</font></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt">Except to the extent
      prohibited by any applicable law, the administrator may delegate to one or
      more
      individuals the day-to-day administration of the plan.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Stock
      option grants are made at the commencement of employment and, occasionally,
      following a significant change in job responsibilities or to meet other special
      retention or performance objectives. Stock options have an exercise price equal
      to the fair market value of our common stock on the day of grant. The plan
      permits payment in the form of cash, check or wire transfer, other shares of
      our
      common stock, cashless exercises, any other form of consideration and method
      of
      payment permitted by applicable laws, or any combination thereof.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">An option
      granted under the plan generally cannot be exercised until it vests. The
      administrator establishes the vesting schedule of each option at the time of
      grant and the option will expire at the times established by the administrator.
      After termination of the optionee&#8217;s service, he or she may exercise his or her
      option for the period stated in the option agreement, to the extent the option
      is vested on the date of termination. If termination is due to death or
      disability, the option generally will remain exercisable for twelve months
      following such termination. In all other cases, the option generally will remain
      exercisable for three months. Nevertheless, an option may never be </div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt"><br><br></div>
    <div style="MARGIN: 0pt" align="center">17</div>
    <div style="MARGIN: 0pt"><br></div>
    <hr style="PADDING-BOTTOM: 7.2pt; PADDING-TOP: 7.2pt" noshade size="1">
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; PAGE-BREAK-BEFORE: always">exercised
      later than the expiration of its term. The term of any stock option may not
      exceed ten years, except that with respect to any participant who owns 10%
      or
      more of the voting power of all classes of our outstanding capital stock, the
      term for incentive stock options must not exceed five years.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt"><i>Severance
      Payments</i>. Dr.&#160;Smith had a severance arrangement in his employment
      agreement which was in effect during our fiscal year 2006. In addition, in
      connection with the acquisition of Superior, our board of directors agreed
      to
      make severance payments to Dr.&#160;Smith and Messrs.&#160;Oyster and Benson in
      new employment agreements conditioned upon the completion of the acquisition,
      as
      more fully discussed under the heading &#8220;Post-Acquisition Employment Agreements&#8221;
beginning on page 2. Our board has agreed to these severance provisions in
      recognition of the longevity of service by these executive officers to our
      company, and to protect these executive officers after the acquisition. We
      believe that most of the severance provisions are customary and in accordance
      with market practice. The single trigger for the payment of severance in the
      event of a &#8220;change in control&#8221; of our company to some executives was to protect
      our senior executives and in consideration of the agreement by Dr.&#160;Smith to
      relinquish his majority voting power in our company.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt"><i>Impact
      on Compensation of Acquisition by Our Company of Superior</i>. Our board of
      directors has the discretion to revise, amend or add to the benefits and
      perquisites of our executive officers. Based on the review of other executive
      compensation arrangements in the equivalent industries and markets and in
      connection with the proposed acquisition by our company of Superior, our board
      of directors re-evaluated the appropriate compensation structure of our
      executive officers in light of the increased size of the combined business
      and
      the increased responsibilities and commitment required of our executive
      officers. Based on this evaluation, our board of directors agreed to add
      additional benefits, including increases in salary, increases in bonuses, and
      life and disability insurance, to certain of our executive officers upon the
      consummation of the acquisition, as more fully discussed under the heading
      &#8220;Post-Acquisition Employment Agreements&#8221; beginning on page 21</div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong><i>Tax and Accounting
      Implications</i></strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt"><i>Deductibility
      of Executive Compensation</i>. As part of its role, our board of directors
      reviews and considers the deductibility of executive compensation under Section
      162(m) of the Internal Revenue Code, which provides that we may not deduct
      compensation of more than $1,000,000 that is paid to certain individuals. Our
      board of directors believes that compensation paid to our executive officers
      are
      generally fully deductible for federal income tax purposes. However, in certain
      situations, certain of the independent members of our board of directors may
      approve compensation that will not meet these requirements in order to ensure
      competitive levels of total compensation of our executive officers.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt"><i>Nonqualified
      Deferred Compensation</i>. On October 22, 2004, the American Jobs Creation Act
      of 2004 was signed into law, changing the tax rules applicable to nonqualified
      deferred compensation arrangements. While the final regulations have not become
      effective yet, we believe the Company is operating in good faith compliance
      with
      the statutory provisions which became effective January 1, 2005.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt"><i>Accounting
      for Stock-Based Compensation</i>. Effective January 1, 2006, we began accounting
      for stock-based payments in accordance with the requirements of FASB Statement
      123(R).</div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong><i>Conclusion</i></strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Our
      compensation practices are designed to retain and motivate our senior executive
      officers and to ultimately reward them for outstanding performance.</div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong>Executive
      Compensation</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">The
      following information is furnished with respect to each of our most highly
      compensated executive officers whose cash compensation from us and our
      subsidiaries during our last fiscal year exceeded $100,000.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt"><br><br></div>
    <div style="MARGIN: 0pt" align="center">18</div>
    <div style="MARGIN: 0pt"><br></div>
    <hr style="PADDING-BOTTOM: 7.2pt; PADDING-TOP: 7.2pt" noshade size="1">
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 6.65pt; PAGE-BREAK-BEFORE: always"><strong><i>Summary
      Compensation Table</i></strong></div>
    <div>
      <table align="center" cellspacing="0" style="FONT-SIZE: 10pt">

          <tr>
            <td width="208">
            </td>
            <td width="12">
            </td>
            <td width="21">
            </td>
            <td width="13">
            </td>
            <td width="36">
            </td>
            <td width="13">
            </td>
            <td width="36">
            </td>
            <td width="13">
            </td>
            <td width="49">
            </td>
            <td width="26">
            </td>
            <td width="36">
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="278" style="border-bottom: #000000 0.5pt solid;">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt"><strong>Name
                and Principal Position</strong></div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="29" style="border-bottom: #000000 0.5pt solid;">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt" align="center"><strong>Year</strong></div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="48" style="border-bottom: #000000 0.5pt solid;">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt" align="center"><strong>Salary<br>($)</strong></div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="48" style="border-bottom: #000000 0.5pt solid;">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt" align="center"><strong>Bonus<br>($)</strong></div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="65" style="border-bottom: #000000 0.5pt solid;">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt" align="center"><strong>All
                Other<br>Compensation<br>($)</strong></div>
            </td>
            <td valign="bottom" width="35">&#160;</td>
            <td valign="bottom" width="48" style="border-bottom: #000000 0.5pt solid;">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt" align="center"><strong>Total<br>($)</strong></div>
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="278">&#160;</td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="29">&#160;</td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="48">&#160;</td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="48">&#160;</td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="65">&#160;</td>
            <td valign="bottom" width="35">&#160;</td>
            <td valign="bottom" width="48">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="bottom" width="278">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">Dr.&#160;L.S.
                Smith</div>
            </td>
            <td valign="bottom" width="17">
              <div style="MARGIN: 0pt">&#160;&#160;&#160;&#160;&#160;</div>
            </td>
            <td valign="bottom" width="29">
              <div style="MARGIN: 0pt" align="right">2006</div>
            </td>
            <td valign="bottom" width="17">
              <div style="MARGIN: 0pt">&#160;&#160;&#160;&#160;&#160;</div>
            </td>
            <td valign="bottom" width="48">
              <div style="MARGIN: 0pt" align="right">180,000</div>
            </td>
            <td valign="bottom" width="17">
              <div style="MARGIN: 0pt">&#160;&#160;&#160;&#160;&#160;</div>
            </td>
            <td valign="bottom" width="48">
              <div style="MARGIN: 0pt" align="right">100,000</div>
            </td>
            <td valign="bottom" width="17">
              <div style="MARGIN: 0pt">&#160;&#160;&#160;&#160;&#160;</div>
            </td>
            <td valign="bottom" width="65">
              <div style="MARGIN: 0pt" align="right">30,000</div>
            </td>
            <td valign="bottom" width="35">
              <div style="MARGIN: 0pt">(1)&#160;&#160;&#160;&#160;&#160;</div>
            </td>
            <td valign="bottom" width="48">
              <div style="MARGIN: 0pt" align="right">310,000</div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="bottom" width="278">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 11.4pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">Chief
                executive officer</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="29">
              <div style="MARGIN: 0pt" align="right">2005</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="48">
              <div style="MARGIN: 0pt" align="right">178,739</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="48">
              <div style="MARGIN: 0pt" align="right">67,500</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="65">
              <div style="MARGIN: 0pt" align="right">30,000</div>
            </td>
            <td valign="bottom" width="35">
              <div style="MARGIN: 0pt">(1)</div>
            </td>
            <td valign="bottom" width="48">
              <div style="MARGIN: 0pt" align="right">276,239</div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="278">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">John
                Benson</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="29">
              <div style="MARGIN: 0pt" align="right">2006</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="48">
              <div style="MARGIN: 0pt" align="right">102,308</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="48">
              <div style="MARGIN: 0pt" align="right">30,000</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="65">
              <div style="MARGIN: 0pt" align="right">&#8212;</div>
            </td>
            <td valign="bottom" width="35">&#160;</td>
            <td valign="bottom" width="48">
              <div style="MARGIN: 0pt" align="right">132,308</div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="278">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 11.4pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">Chief
                financial officer</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="29">
              <div style="MARGIN: 0pt" align="right">2005</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="48">
              <div style="MARGIN: 0pt" align="right">98,443</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="48">
              <div style="MARGIN: 0pt" align="right">25,200</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="65">
              <div style="MARGIN: 0pt" align="right">&#8212;</div>
            </td>
            <td valign="bottom" width="35">&#160;</td>
            <td valign="bottom" width="48">
              <div style="MARGIN: 0pt" align="right">123,443</div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="bottom" width="278">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">William
                H. Oyster</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="29">
              <div style="MARGIN: 0pt" align="right">2006</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="48">
              <div style="MARGIN: 0pt" align="right">165,000</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="48">
              <div style="MARGIN: 0pt" align="right">60,000</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="65">
              <div style="MARGIN: 0pt" align="right">&#8212;</div>
            </td>
            <td valign="bottom" width="35">&#160;</td>
            <td valign="bottom" width="48">
              <div style="MARGIN: 0pt" align="right">225,000</div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="bottom" width="278">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 11.4pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">President</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="29">
              <div style="MARGIN: 0pt" align="right">2005</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="48">
              <div style="MARGIN: 0pt" align="right">163,735</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="48">
              <div style="MARGIN: 0pt" align="right">45,400</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="65">
              <div style="MARGIN: 0pt" align="right">&#8212;</div>
            </td>
            <td valign="bottom" width="35">&#160;</td>
            <td valign="bottom" width="48">
              <div style="MARGIN: 0pt" align="right">207,735</div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="278">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">S.
                Scott Williamson</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="29">
              <div style="MARGIN: 0pt" align="right">2006</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="48">
              <div style="MARGIN: 0pt" align="right">105,000</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="48">
              <div style="MARGIN: 0pt" align="right">3,500</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="65">
              <div style="MARGIN: 0pt" align="right">&#8212;</div>
            </td>
            <td valign="bottom" width="35">&#160;</td>
            <td valign="bottom" width="48">
              <div style="MARGIN: 0pt" align="right">108,500</div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="278">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 11.4pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">Executive
                vice president &#8211; consumer finance</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="29">
              <div style="MARGIN: 0pt" align="right">2005</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="48">
              <div style="MARGIN: 0pt" align="right">99,933</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="48">
              <div style="MARGIN: 0pt" align="right">2,500</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="65">
              <div style="MARGIN: 0pt" align="right">&#8212;</div>
            </td>
            <td valign="bottom" width="35">&#160;</td>
            <td valign="bottom" width="48">
              <div style="MARGIN: 0pt" align="right">102,433</div>
            </td>
          </tr>

      </table>
    </div>
    <div style="FONT-SIZE: 11pt; MARGIN: 0pt; LINE-HEIGHT: 13pt">&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 17.1pt; MARGIN-BOTTOM: -12pt; TEXT-INDENT: -17.1pt">(1)</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 17.1pt; MARGIN-BOTTOM: 2.5pt">Dr.&#160;Smith
      was provided a monthly automobile allowance and a $2,000 per month home office
      allowance.</div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong><i>Grants of
      Plan-Based Awards</i></strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">We did
      not grant any awards under any plan in fiscal year 2006.</div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong><i>Outstanding Equity
      Awards at Fiscal Year-End</i></strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 6.65pt; TEXT-INDENT: 18pt">The
      following table summarizes unexercised options to purchase shares of our common
      stock and equity plan awards outstanding at December 31, 2006 for each executive
      officer identified in the Summary Compensation Table above. All options were
      fully vested and exercisable at the time of grant and expire 180 days after
      termination of service:</div>
    <div>
      <table align="center" cellspacing="0" style="FONT-SIZE: 10pt">

          <tr>
            <td width="299">
            </td>
            <td width="13">
            </td>
            <td width="85">
            </td>
            <td width="13">
            </td>
            <td width="56">
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="399" style="border-bottom: #000000 0.5pt solid;">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt"><strong>Name
                and Principal Position</strong></div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="114" style="border-bottom: #000000 0.5pt solid;">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt" align="center"><strong>Number
                of Securities<br>Underlying
                Unexercised<br>Options (#)<br>Exercisable</strong></div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="75" style="border-bottom: #000000 0.5pt solid;">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt" align="center"><strong>Option
                Exercise<br>Price<br>($)</strong></div>
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="399">&#160;</td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="114">&#160;</td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="75">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="bottom" width="399">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">Dr.&#160;L.S.
                Smith&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</div>
            </td>
            <td valign="bottom" width="17">
              <div style="MARGIN: 0pt">&#160;&#160;&#160;&#160;&#160;</div>
            </td>
            <td valign="bottom" width="114">
              <div style="MARGIN: 0pt" align="right">577,777</div>
            </td>
            <td valign="bottom" width="17">
              <div style="MARGIN: 0pt">&#160;&#160;&#160;&#160;&#160;</div>
            </td>
            <td valign="bottom" width="75">
              <div style="MARGIN: 0pt" align="right">2.25</div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="bottom" width="399">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 11.4pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">Chief
                executive officer</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="114">
              <div style="MARGIN: 0pt" align="right">267,857</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="75">
              <div style="MARGIN: 0pt" align="right">1.12</div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="399">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">John
                Benson</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="114">
              <div style="MARGIN: 0pt" align="right">50,000</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="75">
              <div style="MARGIN: 0pt" align="right">1.625</div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="399">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 11.4pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">Chief
                financial officer</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="114">
              <div style="MARGIN: 0pt" align="right">25,000</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="75">
              <div style="MARGIN: 0pt" align="right">2.25</div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="399">&#160;</td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="114">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt" align="right">25,000</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="75">
              <div style="MARGIN: 0pt" align="right">2.125</div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="399">&#160;</td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="114">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt" align="right">50,000</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="75">
              <div style="MARGIN: 0pt" align="right">2.25</div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="bottom" width="399">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">William
                H. Oyster</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="114">
              <div style="MARGIN: 0pt" align="right">100,000</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="75">
              <div style="MARGIN: 0pt" align="right">2.25</div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="bottom" width="399">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 11.4pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">President</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="114">
              <div style="MARGIN: 0pt" align="right">50,000</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="75">
              <div style="MARGIN: 0pt" align="right">2.125</div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="bottom" width="399">&#160;</td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="114">
              <div style="MARGIN: 0pt" align="right">100,000</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="75">
              <div style="MARGIN: 0pt" align="right">2.25</div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="399">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">S.
                Scott Williamson</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="114">
              <div style="MARGIN: 0pt" align="right">20,000</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="75">
              <div style="MARGIN: 0pt" align="right">2.43</div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="399">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 11.4pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">Executive
                vice president &#8211; consumer finance</div>
            </td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="114">&#160;</td>
            <td valign="bottom" width="17">&#160;</td>
            <td valign="bottom" width="75">&#160;</td>
          </tr>

      </table>
    </div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong><i>Option Exercises
      and Stock Vested</i></strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">No
      executive officer identified in the Summary Compensation Table above exercised
      an option in fiscal year 2006, and no shares of stock vested with respect to
      any
      of those executive officers.</div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong><i>Pension
      Benefits</i></strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">We do
      not
      have any plan which provides for payments or other benefits at, following,
      or in
      connection with retirement.</div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong><i>Nonqualified
      Deferred Compensation</i></strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">We do
      not
      have any defined contribution or other plan which provides for the deferral
      of
      compensation on a basis that is not tax-qualified.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt"><br><br></div>
    <div style="MARGIN: 0pt" align="center">19</div>
    <div style="MARGIN: 0pt"><br></div>
    <hr style="PADDING-BOTTOM: 7.2pt; PADDING-TOP: 7.2pt" noshade size="1">
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt; PAGE-BREAK-BEFORE: always"><strong><i>Employment
      Agreements</i></strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">On July
      1, 1997, we entered into an Amended and Restated Employment Agreement with
      Dr.&#160;Smith pursuant to which Dr.&#160;Smith was employed as an executive
      officer. The agreement had an initial term of ten years. Under the agreement,
      Dr.&#160;Smith was entitled to (i) a base annual salary of $180,000, or such
      greater amount as the board of directors or the compensation committee approved,
      (ii) a discretionary cash bonus or other incentive compensation in an amount
      determined by the board of directors, (iii) participation in our employee
      benefit programs, (iv) a $5,000 annual allowance for professional legal and
      accounting services rendered to Dr.&#160;Smith personally, and (v) an allowance
      for the maintenance of a home office and an automobile. The agreement was
      terminable by DGSE at any time, with or without cause, and by Dr.&#160;Smith
      upon sixty days notice.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">During
      2006, Mr.&#160;Oyster was an at-will employee and his base salary was $165,000
      per year. Mr.&#160;Oyster participated in our bonus program and benefit and
      other incentives at the discretion of our board of directors.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">During
      2006, Mr.&#160;Benson was an at-will employee and his base salary was $110,000
      per year. Mr.&#160;Benson participated in our bonus program and benefit and
      other incentives at the discretion of our board of directors.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Mr.&#160;Williamson
      is an at-will employee and his current base salary is $105,000 per year.
      Mr.&#160;Williamson participates in our bonus program and benefit and other
      incentives at the discretion of our board of directors.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">On May
      29, 2007, in connection with our acquisition of Superior, we entered into an
      amended and restated employment agreement with Dr.&#160;Smith and into new
      employment agreements with Messrs.&#160;Oyster and Benson.</div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong><i>Post-Acquisition
      Employment Agreements</i></strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt"><i>Smith
      Employment Agreement</i>. The revised employment agreement for Dr.&#160;Smith
      sets forth the terms of his employment with us as chairman and chief executive
      officer. The agreement has an initial 3-year term, and will be automatically
      renewed thereafter for successive one-year terms unless either party provides
      at
      least 120 days notice not to renew. It provides for a signing bonus of $100,000
      upon execution of the agreement and a base annual salary of at least $425,000.
      In addition, it provides for an annual bonus in an amount not less than one-half
      of his annual salary, payable on each January 31 in respect of the prior
      calendar year, with half of the payment being contingent upon our stock price
      having increased at least 10% during that calendar year. For purposes of the
      2007 calendar year, the first day will be deemed to be May 30, 2007, the date
      of
      the closing of the acquisition of Superior, and the 10% increase requirement
      will be prorated accordingly. In addition, Dr.&#160;Smith will be entitled to
      life insurance of $2,000,000, disability insurance equal to half of his base
      salary, medical insurance and other benefits.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt"><i>Oyster
      Employment Agreement</i>. The new employment agreement for Mr.&#160;Oyster sets
      forth the terms of his employment with us as president and chief operating
      officer. The agreement has an initial 5-year term, and will be automatically
      renewed thereafter for successive one-year terms unless either party provides
      at
      least 120 days notice not to renew. It provides for a signing bonus of $50,000
      upon execution of the agreement and a base annual salary of at least $250,000.
      In addition, it provides for an annual bonus in an amount not less than one-half
      of his annual salary, payable on each April 30 in respect of the prior calendar
      year, with half of the payment being contingent upon our EBIT (earnings before
      interest and taxes) having increased at least 6% during that calendar year.
      In
      addition, Mr.&#160;Oyster will be entitled to life insurance of $1,000,000,
      disability insurance equal to half of his base salary, medical insurance and
      other benefits.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt"><i>Benson
      Employment Agreement</i>. The new employment agreement for Mr.&#160;Benson sets
      forth the terms of his employment with us as chief financial officer. The
      agreement has an initial 2-year term. It provides for a base annual salary
      of
      $175,000 and an annual bonus to be determined by our board of directors. Upon
      the termination of his employment, Mr.&#160;Benson will be entitled to, among
      other things, (1) in case of termination by DGSE during the initial term other
      than for cause, base salary for the remainder of the initial term plus six
      months; and (2) in case of termination by DGSE after the initial term other
      than
      for cause, three months of annual base salary.</div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong>Potential Payments
      Upon Termination or Change-in-Control</strong></div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong><i>Fiscal Year
      2006</i></strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Under
      Dr.&#160;Smith&#8217;s employment agreement in effect during our fiscal year 2006, in
      the event we would have terminated Dr.&#160;Smith&#8217;s employment due to death or
      incapacity, Dr.&#160;Smith (or his legal representative) would have </div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt"><br><br></div>
    <div style="MARGIN: 0pt" align="center">20</div>
    <div style="MARGIN: 0pt"><br></div>
    <hr style="PADDING-BOTTOM: 7.2pt; PADDING-TOP: 7.2pt" noshade size="1">
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; PAGE-BREAK-BEFORE: always">been
      entitled to continue receiving his current base salary for one year. If
      Dr.&#160;Smith would have been terminated for either reason on January 1, 2007,
      DGSE would have been obligated to pay him $180,000 in 26 bi-weekly installments
      of $6,923 each.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Under
      that employment agreement, in the event we had (i) not elected to renew
      Dr.&#160;Smith&#8217;s employment agreement upon the expiration of the initial term or
      a renewal term, (ii) terminated Dr.&#160;Smith other than for &#8220;due cause&#8221; and
      other than for death or incapacity, (iii) demoted Dr.&#160;Smith to a
      non-executive position, or (iv) decreased Dr.&#160;Smith&#8217;s annual salary or
      other benefits below the minimum level specified in the agreement, other than
      for amendments to or terminations of employee benefit plans applicable to all
      executives; which the agreement refers to as a constructive termination,
      Dr.&#160;Smith would have been entitled to receive (i) a lump sum payment of his
      base salary for the remainder of the current year, and (ii) subject to
      Dr.&#160;Smith complying with his non-compete obligations specified in the
      agreement, his &#8220;salary&#8221; until the date ending on the expiration of the initial
      term or, if later, 36 months from his constructive termination, payable monthly
      in 36 equal installments. If Dr.&#160;Smith would have constructively terminated
      on January 1, 2007, DGSE would have been obligated to pay him $180,000 as a
      lump
      sum payment and $6,981 per month for a period of 36 months.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Under
      that employment agreement, in the event after a &#8220;change in control&#8221; of our
      company had occurred and within one year thereafter either Dr.&#160;Smith
      voluntarily terminated his employment upon 60 days notice, or we either did
      not
      elect to renew the employment agreement upon the expiration of the initial
      term
      or a renewal term or terminated Dr.&#160;Smith other than for &#8220;due cause&#8221;, we
      would have been obligated to pay him his &#8220;salary&#8221; for the remainder of the
      current year plus five additional years (discounted at 8% per annum), payable
      at
      Dr.&#160;Smith&#8217;s option in a lump sum or in four equal installments over a
      three-year period at 8% interest. If a &#8220;change in control&#8221; were to have occurred
      and Dr.&#160;Smith&#8217;s employment were to have terminated under one of those
      circumstances on January 1, 2007, we would have been obligated to pay him,
      at
      his election, either $1.25 million as a lump sum payment, or payments of
      $314,000, $339,000, $366,000 and $395,000 on the date 30 days, 12 months, 24
      months and 36 months after the date of termination of his employment.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">For
      purposes of that employment agreement:</div>
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Symbol"><font style="FONT-FAMILY: Symbol">&#183;</font></div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">&#8220;salary&#8221;
is
      defined as Dr.&#160;Smith&#8217;s
      base salary plus his average cash bonus and other cash incentive compensation
      paid over the three most recent years;</font></div>
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Symbol"><font style="FONT-FAMILY: Symbol">&#183;</font></div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">&#8220;due
      cause&#8221; is defined as (A) an
      intentional and material misapplication by Dr.&#160;Smith of our funds, or any
      other material act of dishonesty committed by Dr.&#160;Smith, (B)
      Dr.&#160;Smith&#8217;s continued material breach or nonperformance of his employment
      agreement 30 days after notice of the breach has been provided, or<br>(C) any
      other act by Dr.&#160;Smith involving willful and material malfeasance or gross
      negligence in the performance of his duties; and</font></div>
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Symbol"><font style="FONT-FAMILY: Symbol">&#183;</font></div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">&#8220;change
      in control&#8221; is defined as (A) any
      person or group becomes the beneficial owner of shares representing 30% or
      more
      of the voting power of our company, (B) in any 12-month period, our directors
      at
      the beginning of that period cease to constitute a majority of our board of
      directors and a majority of the initial directors still in office neither
      elected all of the new directors nor nominated them all for election by our
      stockholders, or (C) a person or group acquires in any 12-month period gross
      assets of our company constituting at least 50% of the fair market value of
      all
      our gross assets.</font></div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong><i>Post-Acquisition
      Employment Agreements</i></strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Under
      the
      new employment agreements of Dr.&#160;Smith and Mr.&#160;Oyster, if the
      executive were to be terminated due to an illness, injury or other incapacity
      which prevents him from carrying out or performing fully the essential functions
      of his duties for a period of 180 consecutive days, or due to his death, the
      executive (or his legal representative) would be entitled to receive his salary
      for a period of one year following the date of termination and the pro rata
      portion of this bonus for the prior calendar year. If Dr.&#160;Smith would have
      been terminated for either reason on January 1, 2007 and his new employment
      agreement had then been in effect, we would have been obligated to pay him
      $425,000 in 26 bi-weekly installments of $16,346 each. If Mr.&#160;Oyster would
      have been terminated for either reason on January 1, 2007 and his new employment
      agreement had then been in effect, we would have been obligated to pay him
      $250,000 in 26 bi-weekly installments of $9,615 each.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">In the
      event either executive were to be terminated for &#8220;cause&#8221;, he would be entitled
      to the pro rata share of the bonus paid to him for the calendar year immediately
      preceding his termination. If either executive would have been </div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt"><br><br></div>
    <div style="MARGIN: 0pt" align="center">21</div>
    <div style="MARGIN: 0pt"><br></div>
    <hr style="PADDING-BOTTOM: 7.2pt; PADDING-TOP: 7.2pt" noshade size="1">
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; PAGE-BREAK-BEFORE: always">terminated
      for &#8220;cause&#8221; on January 1, 2007 and his new employment agreement had then been in
      effect, we would not have been obligated to pay him any additional severance
      pay.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">In the
      event either executive were to be terminated other than for &#8220;cause&#8221;, or if
      either executive resigns for &#8220;good reason&#8221;, he would be entitled to receive a
      lump sum payment of (i) his base salary for the remainder of the current year,
      plus (ii) the maximum bonus he would have been entitled to receive for the
      current year, plus (iii) three years salary based on the salary then in effect.
      If Dr.&#160;Smith would have been terminated other than for &#8220;cause&#8221; or resigned
      for &#8220;good reason&#8221; on January 1, 2007 and his new employment agreement had then
      been in effect, we would have been obligated to pay him a lump sum payment
      of
      $1.91 million. If Mr.&#160;Oyster would have been terminated other than for
&#8220;cause&#8221; or resigned for &#8220;good reason&#8221; on January 1, 2007 and his new employment
      agreement had then been in effect, we would have been obligated to pay him
      a
      lump sum payment of $1.13 million.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">In the
      event either executive were to resign other than for &#8220;good reason&#8221;, he would be
      entitled to receive a lump sum payment of (i) his base salary for the remainder
      of the current year, plus (ii) a pro rata share of the maximum bonus he would
      have been entitled to receive for the current year, plus (iii) one year salary
      based on the salary then in effect. If Dr.&#160;Smith would have resigned other
      than for &#8220;good reason&#8221; on January 1, 2007 and his new employment agreement had
      then been in effect, we would have been obligated to pay him a lump sum payment
      of $850,000. If Mr.&#160;Oyster would have resigned other than for &#8220;good reason&#8221;
on January 1, 2007 and his new employment agreement had then been in effect,
      we
      would have been obligated to pay him a lump sum payment of $500,000.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">In
      addition, in the event of the termination of Dr.&#160;Smith&#8217;s employment, DGSE
      would be required to maintain medical health benefits for Dr.&#160;Smith and his
      wife until both are covered by a comparable health insurance plan provided
      by a
      subsequent employer or their earlier death. This obligation has an estimated
      present cost to us of $32,100 (assuming payment for a 36-month period). In
      the
      event of the termination of Mr.&#160;Oyster&#8217;s employment, we would be required
      to maintain medical health benefits for Mr.&#160;Oyster and his wife for a
      period of 18 months or, if earlier, until both are covered by a comparable
      health insurance plan provided by a subsequent employer. This obligation has
      an
      estimated cost to us of $17,200.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">In the
      event of the termination of either executive&#8217;s employment, other than for
      termination by the executive for &#8220;good reason&#8221;, the executive may not for a
      period of two years compete with us in the state in which we conduct business
      during the employment term.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">For
      purposes of the two executives&#8217; new employment agreements:</div>
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Symbol"><font style="FONT-FAMILY: Symbol">&#183;</font></div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">&#8220;cause&#8221;
is
      defined as (i) conviction of the
      executive for a felony involving dishonest acts during the term of the
      agreement, (ii) any &#8220;willful&#8221; and material misapplication by the executive of
      company funds, or any other material act of dishonesty committed by him, or
      (iii) the executive&#8217;s &#8220;willful&#8221; and material breach of the agreement or
&#8220;willful&#8221; and material failure to substantially perform his duties thereunder
      (other than a failure resulting from mental or physical illness) after written
      demand for substantial performance is delivered by the our board of directors
      which specifically identifies the manner in which the board believes the
      executive has not substantially performed his duties and the executive fails
      to
      cure his nonperformance. We are obligated to provide the executive 30 days
      written notice setting forth the specific reasons for its intention to terminate
      the executive for cause and an opportunity for the executive to be heard before
      our board of directors, and to deliver to the executive a notice of termination
      from the board of directors stating that a majority of the board found, in
      good
      faith, that the executive had engaged in the &#8220;willful&#8221; and material conduct
      referred to in the notice;</font></div>
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Symbol"><font style="FONT-FAMILY: Symbol">&#183;</font></div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">an
      act or failure to act is &#8220;willful&#8221; if
      done, or omitted to be done, by the executive in bad faith and without
      reasonable belief that his action or omission was in our best
      interest;</font></div>
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Symbol"><font style="FONT-FAMILY: Symbol">&#183;</font></div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">&#8220;good
      reason&#8221; is defined as (i) a change in
      the executive&#8217;s status or positions with us that, in his reasonable judgment,
      represents a demotion, (ii) the assignment to the executive of any duties or
      responsibilities that, in the executive&#8217;s reasonable judgment, are inconsistent
      with his existing status or position, (iii) layoff or involuntary termination
      of
      the executive&#8217;s employment, except in connection with the termination of the
      executive&#8217;s employment for &#8220;cause&#8221; or as a result of his retirement, disability
      or death, (iv) a reduction by us in the executive&#8217;s base salary, (v) any &#8220;change
      in control&#8221; occurring more than one year after the effective date of the
      agreement, (vi) the failure by us to continue in effect any employee benefit
      plan in which the executive is participating at the effective date of the
      agreement, other than as a result of the normal expiration of the plan in
      accordance with its terms, except to the extent that we provide the
</font></div>
    <div style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 0pt"><br><br></div>
    <div style="MARGIN: 0pt" align="center">22</div>
    <div style="MARGIN: 0pt"><br></div>
    <hr style="PADDING-BOTTOM: 7.2pt; PADDING-TOP: 7.2pt" noshade size="1">
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PAGE-BREAK-BEFORE: always">executive
      without substantially equivalent benefits, (vii) the imposition of any
      requirement that the executive be based outside the Dallas-Fort Worth
      metropolitan area, (viii) our failure to obtain the express assumption of the
      agreement by any successor, or (ix) any violation by us of any agreement
      (including the new employment agreement) between us and the executive; and</div>
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Symbol"><font style="FONT-FAMILY: Symbol">&#183;</font></div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">&#8220;change
      in control&#8221; is defined as (A) any
      person or group becomes the beneficial owner of shares representing 20% or
      more
      of the combined outstanding voting power of our company, (B) in any 12-month
      period, our directors at the beginning of that period cease to constitute a
      majority of our board of directors and a majority of the initial directors
      still
      in office neither elected all of the new directors nor nominated them all for
      election by our stockholders, or (C) a person or group acquires in any 12-month
      period gross assets of our company constituting at least 50% of the fair market
      value of all our gross assets.</font></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Under
      the
      new employment agreement of Mr.&#160;Benson, if DGSE were to terminate
      Mr.&#160;Benson&#8217;s employment during the initial 2-year term, he would be
      entitled to receive a lump sum payment of (i) his base salary for the remainder
      of the initial term, plus (ii) six months salary based on the salary then in
      effect. If Mr.&#160;Benson would have been terminated by us on January 1, 2007
      and his new employment agreement had then been in effect, we would have been
      obligated to pay him a lump sum payment of $437,500. If we were to terminate
      Mr.&#160;Benson&#8217;s employment after the initial 2-year term, he would be entitled
      to receive a lump sum payment of three months salary based on his salary then
      in
      effect.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">In the
      event Mr.&#160;Benson were to resign upon not less than 30 days notice to us,
      and we were immediately to relieve Mr.&#160;Benson of his duties, he would be
      entitled to receive a lump sum payment of his salary until the date his
      resignation were to be effective. If Mr.&#160;Benson would have delivered a
      resignation notice to us on January 1, 2007 indicating his decision to resign
      on
      March 1, 2007, his new employment agreement had then been in effect and we
      would
      have immediately relieved him of his duties and terminated the employment
      agreement, we would have been obligated to pay him a lump sum payment of
      $29,000.</div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong>Compensation of
      Directors</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 6.65pt; TEXT-INDENT: 18pt">The
      following table sets forth information concerning the compensation of our
      directors during our 2006 fiscal year, except for directors who are also named
      executive officers and whose compensation is reflected in the Summary
      Compensation Table.</div>
    <div>
      <table align="center" cellspacing="0" style="FONT-SIZE: 10pt">

          <tr>
            <td width="326">
            </td>
            <td width="12">
            </td>
            <td width="5">
            </td>
            <td width="33">
            </td>
            <td width="12">
            </td>
            <td width="26">
            </td>
            <td width="24">
            </td>
            <td width="5">
            </td>
            <td width="22">
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="434" style="border-bottom: #000000 0.5pt solid;">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt"><strong>Name</strong></div>
            </td>
            <td valign="bottom" width="16">&#160;</td>
            <td colspan="2" valign="bottom" width="51" style="border-bottom: #000000 0.5pt solid;">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt" align="center"><strong>Fees
                Earned<br>or Paid<br>in Cash</strong></div>
            </td>
            <td valign="bottom" width="16">&#160;</td>
            <td valign="bottom" width="35" style="border-bottom: #000000 0.5pt solid;">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt" align="center"><strong>Option<br>Awards</strong></div>
            </td>
            <td valign="bottom" width="32">&#160;</td>
            <td colspan="2" valign="bottom" width="36" style="border-bottom: #000000 0.5pt solid;">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt" align="center"><strong>Total</strong></div>
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="434">&#160;</td>
            <td valign="bottom" width="16">&#160;</td>
            <td valign="bottom" width="6">&#160;</td>
            <td valign="bottom" width="44">&#160;</td>
            <td valign="bottom" width="16">&#160;</td>
            <td valign="bottom" width="35">&#160;</td>
            <td valign="bottom" width="32">&#160;</td>
            <td valign="bottom" width="6">&#160;</td>
            <td valign="bottom" width="30">&#160;</td>
          </tr>
          <tr>
            <td valign="bottom" width="434">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">William
                P.
                Cordeiro&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</div>
            </td>
            <td valign="bottom" width="16">
              <div style="MARGIN: 0pt">&#160;&#160;&#160;&#160;&#160;</div>
            </td>
            <td valign="bottom" width="6">
              <div style="MARGIN: 0pt">$</div>
            </td>
            <td valign="bottom" width="44">
              <div style="MARGIN: 0pt" align="right">2,000</div>
            </td>
            <td valign="bottom" width="16">
              <div style="MARGIN: 0pt">&#160;&#160;&#160;&#160;&#160;</div>
            </td>
            <td valign="bottom" width="35">
              <div style="MARGIN: 0pt" align="right">&#8212;</div>
            </td>
            <td valign="bottom" width="32">
              <div style="MARGIN: 0pt">(1)&#160;&#160;&#160;&#160;&#160;</div>
            </td>
            <td valign="bottom" width="6">
              <div style="MARGIN: 0pt">$</div>
            </td>
            <td valign="bottom" width="30">
              <div style="MARGIN: 0pt" align="right">2,000</div>
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="434">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">Paul
                Hagen</div>
            </td>
            <td valign="bottom" width="16">&#160;</td>
            <td valign="bottom" width="6">
              <div style="MARGIN: 0pt">$</div>
            </td>
            <td valign="bottom" width="44">
              <div style="MARGIN: 0pt" align="right">2,000</div>
            </td>
            <td valign="bottom" width="16">&#160;</td>
            <td valign="bottom" width="35">
              <div style="MARGIN: 0pt" align="right">&#8212;</div>
            </td>
            <td valign="bottom" width="32">
              <div style="MARGIN: 0pt">(2)</div>
            </td>
            <td valign="bottom" width="6">
              <div style="MARGIN: 0pt">$</div>
            </td>
            <td valign="bottom" width="30">
              <div style="MARGIN: 0pt" align="right">2,000</div>
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="434">
              <div style="MARGIN-TOP: 1.65pt; PADDING-LEFT: 6pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10.35pt">Craig
                Alan-Lee</div>
            </td>
            <td valign="bottom" width="16">&#160;</td>
            <td valign="bottom" width="6">
              <div style="MARGIN: 0pt">$</div>
            </td>
            <td valign="bottom" width="44">
              <div style="MARGIN: 0pt" align="right">2,000</div>
            </td>
            <td valign="bottom" width="16">&#160;</td>
            <td valign="bottom" width="35">
              <div style="MARGIN: 0pt" align="right">&#8212;</div>
            </td>
            <td valign="bottom" width="32">
              <div style="MARGIN: 0pt">(2)</div>
            </td>
            <td valign="bottom" width="6">
              <div style="MARGIN: 0pt">$</div>
            </td>
            <td valign="bottom" width="30">
              <div style="MARGIN: 0pt" align="right">2,000</div>
            </td>
          </tr>

      </table>
    </div>
    <div style="FONT-SIZE: 11pt; MARGIN: 0pt; LINE-HEIGHT: 13pt">&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 17.1pt; MARGIN-BOTTOM: -12pt; TEXT-INDENT: -17.1pt">(1)</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 17.1pt; MARGIN-BOTTOM: 2.5pt">Mr.&#160;Cordeiro
      has been granted options to purchase 22,500 shares of DGSE&#8217;s common stock at an
      exercise price equal to the then fair market value of DGSE&#8217;s common stock.</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 17.1pt; MARGIN-BOTTOM: -12pt; TEXT-INDENT: -17.1pt">(2)</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 17.1pt; MARGIN-BOTTOM: 2.5pt">Each
      of
      Messrs.&#160;Hagen and Alan-Lee has been granted an option to purchase 5,000
      shares of DGSE&#8217;s common stock at an exercise price equal to the then fair market
      value of DGSE&#8217;s common stock.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Directors
      who are also employees of DGSE 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 DGSE receive a fee in the amount of $500 for each meeting
      of the board of directors and each committee meeting of the board of directors
      attended.</div>
    <div style="MARGIN-TOP: 13.35pt; MARGIN-BOTTOM: 0pt" align="center"><strong>TRANSACTIONS
      WITH RELATED PERSONS, PROMOTERS AND CERTAIN
      CONTROL PERSONS</strong></div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong>Transactions with
      Related Persons</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">We have
      not entered into any transaction since the beginning of our 2006 fiscal year
      required to be disclosed in this proxy statement under the rules of the SEC,
      other than transactions described elsewhere in this proxy statement.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt"><br><br></div>
    <div style="MARGIN: 0pt" align="center">23</div>
    <div style="MARGIN: 0pt"><br></div>
    <hr style="PADDING-BOTTOM: 7.2pt; PADDING-TOP: 7.2pt" noshade size="1">
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt; PAGE-BREAK-BEFORE: always"><strong>Review,
      Approval or Ratification of Transactions with Related Persons</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">We have
      adopted a written policy regarding the review, approval or ratification of
      transactions with designated related persons, which is available from our
      website, <i>www.DGSE.com</i>. In accordance with the policy, our audit committee
      or the chairperson of our audit committee reviews transactions in which the
      amount involved exceeds $120,000 and in which any related person had, has,
      or
      will have a direct or indirect material interest. In general, the policy applies
      to the following categories of related persons: &#160;directors, nominees,
      executive officers, and stockholders owning five percent or more of our
      outstanding stock, and their respective immediate family members. The committee
      or chairperson approve or ratify only those transactions which are in, or not
      inconsistent with, the best interests of our company and our stockholders.
      The
      audit committee chairperson reviews and approves or ratifies transactions when
      it is not practicable or desirable to delay review of a transaction until our
      audit committee can meet. The chairperson reports any transactions with related
      persons he has approved or ratified to our audit committee and any transactions
      with related persons he or the audit committee has approved or ratified to
      our
      board. Our audit committee will annually review any previously approved or
      ratified related person transactions that remains ongoing.</div>
    <div style="MARGIN-TOP: 13.35pt; MARGIN-BOTTOM: 0pt" align="center"><strong>OTHER
      MATTERS</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">The board
      of directors knows of no other matters that will be presented for consideration
      at our annual meeting. If any other matters are properly brought before the
      meeting, it is the intention of the persons named in the accompanying proxy
      to
      vote on such matters in accordance with their best judgment.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">Any
      stockholder or stockholder&#8217;s representative who, because of a disability, may
      need special assistance or accommodation to allow him or her to participate
      at
      the annual meeting may request reasonable assistance or accommodation from
      us by
      contacting the corporate secretary at DGSE Companies, Inc., 2817 Forest Lane,
      Dallas, Texas &#160;75234, or at (972) 484-3662. To provide us sufficient time
      to arrange for reasonable assistance or accommodation, please submit all
      requests by July 16, 2007.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 6.65pt; TEXT-INDENT: 18pt">Whether
      you
      intend to be present at the annual meeting or not, we urge you to return your
      signed proxy card promptly.</div>
    <div>
      <table cellspacing="0" style="FONT-SIZE: 10pt">

          <tr>
            <td width="141">
            </td>
            <td width="108">
            </td>
            <td width="181">
            </td>
          </tr>
          <tr>
            <td valign="top" width="189">&#160;</td>
            <td valign="top" width="144">&#160;</td>
            <td valign="top" width="242">
              <div style="MARGIN: 0pt">By Order of the Board of Directors,</div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="189">&#160;</td>
            <td valign="top" width="144">&#160;</td>
            <td valign="top" width="242">&#160;</td>
          </tr>
          <tr>
            <td valign="top" width="189">&#160;</td>
            <td valign="top" width="144">&#160;</td>
            <td valign="top" width="242" style="border-bottom: #000000 0.5pt solid;">
              <div style="MARGIN: 0pt">/s/ Dr.&#160;L.S. Smith</div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="189">&#160;</td>
            <td valign="top" width="144">&#160;</td>
            <td valign="top" width="242">
              <div style="MARGIN: 0pt">Dr.&#160;L.S. Smith</div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="189">&#160;</td>
            <td valign="top" width="144">&#160;</td>
            <td valign="top" width="242">
              <div style="MARGIN: 0pt">Chairman of the
                Board</div>
            </td>
          </tr>

      </table>
    </div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt">July 12, 2007</div>
    <div style="MARGIN: 0pt" align="center"><br><br></div>
    <div style="MARGIN: 0pt" align="center">24</div>
    <div style="MARGIN: 0pt"><br></div>
    <hr style="PADDING-BOTTOM: 7.2pt; PADDING-TOP: 7.2pt" noshade size="1">
    <div style="PAGE-BREAK-BEFORE: always; MARGIN: 0pt" align="center"><strong>ANNEX
      1</strong></div>
    <div style="MARGIN-TOP: 13.35pt; MARGIN-BOTTOM: 0pt" align="center"><strong>DGSE
      COMPANIES, INC.<br>BOARD OF DIRECTORS<br>AUDIT COMMITTEE CHARTER</strong></div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong>Organization</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">This
      charter governs the operations of the Audit Committee of Dallas Gold &amp;
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 &amp; 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 &amp; Silver Exchange, Inc. is traded.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">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&#8217;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&#8217;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&#8217;s expense, or other experts
      for this purpose.</div>
    <div style="MARGIN-TOP: 10pt; MARGIN-BOTTOM: 0pt"><strong>Responsibilities
      and
      Processes</strong></div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">The
      primary responsibility of the Audit Committee is to oversee the Company&#8217;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&#8217;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 &#8220;tone&#8217; for quality
      financial reporting, sound business risk practices, and ethical behavior.</div>
    <div style="MARGIN-TOP: 6.65pt; MARGIN-BOTTOM: 0pt; TEXT-INDENT: 18pt">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.</div>
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Symbol"><font style="FONT-FAMILY: Symbol">&#183;</font></div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">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&#8217;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&#8217;s independent auditors.</font></div>
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Symbol"><font style="FONT-FAMILY: Symbol">&#183;</font></div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">The
      Audit Committee shall review the
      interim financial statements with management prior to the filing of the
      Company&#8217;s Quarterly Reports on Form 10-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 </font></div>
    <div style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 0pt"><br><br></div>
    <div style="MARGIN: 0pt" align="center">25</div>
    <div style="MARGIN: 0pt"><br></div>
    <hr style="PADDING-BOTTOM: 7.2pt; PADDING-TOP: 7.2pt" noshade size="1">
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; MARGIN-BOTTOM: 0pt; PAGE-BREAK-BEFORE: always">independent
      auditors under generally accepted auditing standards. The chair of the Audit
      Committee may represent the entire committee for the purposes of this
      review.</div>
    <div style="MARGIN-TOP: 5pt; PADDING-LEFT: 36pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Symbol"><font style="FONT-FAMILY: Symbol">&#183;</font></div>
    <div style="PADDING-LEFT: 36pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">The
      Audit Committee shall review with
      management and the independent auditors the financial statements to be included
      in the Company&#8217;s Annual Reports on Form 10-K (or the annual reports to
      shareholders if distributed prior to the filing of Form 10-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.</font></div>
    <div style="MARGIN-TOP: 5pt; MARGIN-BOTTOM: 0pt"><br><br></div>
    <div style="MARGIN: 0pt" align="center">26</div>
    <div style="MARGIN: 0pt"><br></div>
    <hr style="PADDING-BOTTOM: 7.2pt; PADDING-TOP: 7.2pt" noshade size="1">
    <div style="MARGIN-TOP: 75pt; FONT-SIZE: 9pt; MARGIN-BOTTOM: 0pt; PAGE-BREAK-BEFORE: always; LINE-HEIGHT: 11pt" align="center"><strong>DGSE
      COMPANIES, INC.</strong></div>
    <div style="MARGIN-TOP: 9pt; FONT-SIZE: 9pt; MARGIN-BOTTOM: 0pt; LINE-HEIGHT: 11pt" align="center"><strong>THIS
      PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
      DIRECTORS</strong></div>
    <div style="MARGIN: 0pt" align="center"><br><br><br></div>
    <div style="FONT-SIZE: 9pt; MARGIN: 0pt; LINE-HEIGHT: 11pt" align="center"><strong>ANNUAL
      MEETING OF STOCKHOLDERS</strong></div>
    <div style="FONT-SIZE: 9pt; MARGIN: 0pt; LINE-HEIGHT: 11pt" align="center"><strong>JULY
      27, 2007</strong></div>
    <div style="MARGIN: 0pt" align="center"><br></div>
    <div style="MARGIN-TOP: 27pt; MARGIN-BOTTOM: 0pt" align="center"><br><br><br></div>
    <div style="MARGIN-TOP: 145.85pt; FONT-SIZE: 7pt; MARGIN-BOTTOM: 0pt; LINE-HEIGHT: 9pt; FONT-FAMILY: Arial" align="center"><font style="FONT-FAMILY: Arial"><strong>FOLD
      AND DETACH
      HERE</strong></font></div>
    <div style="MARGIN-TOP: 2.65pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; LINE-HEIGHT: 10pt" align="center"><font style="FONT-FAMILY: Times New Roman"><strong>REVOCABLE
      PROXY
&#8211; DGSE COMPANIES, INC.</strong></font></div>
    <div style="MARGIN-TOP: 1.35pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; LINE-HEIGHT: 8pt" align="justify">The
      undersigned, a stockholder of DGSE Companies, Inc., a Nevada
      corporation, hereby appoints DR. L.S. SMITH and WILLIAM H. OYSTER, or any of
      them, the proxies of the undersigned, each with the power to appoint his
      substitute, and hereby authorizes them to represent and to vote for the
      undersigned all the shares of DGSE Companies, Inc. common stock held of record
      on June 27, 2007 by the undersigned at the Annual Meeting of Stockholders to
      be
      held on July 27, 2007 or any adjournment or postponement thereof as follows.
      <strong>Unless a contrary direction is indicated, this proxy will be voted
      for
      all nominees listed in Proposal 1 and for Proposals 2 and 3, as recommended
      by
      management and as more specifically described in the proxy statement. If
      specific instructions are indicated, this proxy will be voted in accordance
      therewith.</strong></div>
    <div style="MARGIN-TOP: 1.35pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; LINE-HEIGHT: 8pt" align="justify">&#160;</div>
    <div style="MARGIN-TOP: 1.35pt; PADDING-LEFT: 12.2pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: -10pt; TEXT-INDENT: -11.5pt; LINE-HEIGHT: 10pt" align="justify">1.
</div>
    <div style="MARGIN-TOP: 0pt; PADDING-LEFT: 12.2pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: 1.35pt; LINE-HEIGHT: 10pt" align="justify">ELECTION
      OF DIRECTORS</div>
    <div>
      <table cellspacing="0" style="FONT-SIZE: 10pt">

          <tr>
            <td width="12">
            </td>
            <td width="7">
            </td>
            <td width="6">
            </td>
            <td width="478">
            </td>
          </tr>
          <tr>
            <td valign="top" width="16">
              <div style="PADDING-LEFT: 6pt; FONT-SIZE: 8pt; MARGIN: 0pt; TEXT-INDENT: -6pt">&#160;&#160;&#160;&#160;&#160;&#160;</div>
            </td>
            <td valign="top" width="9">
              <div style="PADDING-LEFT: 6pt; FONT-SIZE: 8pt; MARGIN: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Wingdings"><font style="FONT-FAMILY: Wingdings">&#168;</font></div>
            </td>
            <td valign="top" width="8">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">&#160;&#160;&#160;</font></div>
            </td>
            <td valign="top" width="638">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt"><strong>VOTE
                FOR</strong> all nominees listed below (except WITHHOLD AUTHORITY to
                vote
                for as marked to the contrary below)</div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="16">&#160;</td>
            <td valign="top" width="9">&#160;</td>
            <td valign="top" width="8">&#160;</td>
            <td valign="top" width="638">
              <div style="MARGIN-TOP: 2.65pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; LINE-HEIGHT: 10pt">INSTRUCTION:
                To <strong>withhold authority to vote for any individual</strong>, cross
                out the nominee&#8217;s name in the list below.</div>
            </td>
          </tr>

      </table>
    </div>
    <div style="FONT-SIZE: 4pt; MARGIN: 0pt; LINE-HEIGHT: 4pt">&#160;</div>
    <div>
      <table cellspacing="0" style="FONT-SIZE: 10pt">

          <tr>
            <td width="33">
            </td>
            <td width="51">
            </td>
            <td width="16">
            </td>
            <td width="62">
            </td>
            <td width="16">
            </td>
            <td width="78">
            </td>
            <td width="16">
            </td>
            <td width="54">
            </td>
          </tr>
          <tr>
            <td valign="top" width="44">
              <div style="FONT-SIZE: 7pt; MARGIN: 0pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</div>
            </td>
            <td valign="top" width="69">
              <div style="FONT-SIZE: 7pt; MARGIN: 0pt; LINE-HEIGHT: 9pt">Dr. L.S.
                Smith</div>
            </td>
            <td valign="top" width="21">
              <div style="FONT-SIZE: 7pt; MARGIN: 0pt">&#160;&#160;&#160;</div>
            </td>
            <td valign="top" width="83">
              <div style="FONT-SIZE: 7pt; MARGIN: 0pt; LINE-HEIGHT: 9pt">William
                H.
                Oyster</div>
            </td>
            <td valign="top" width="21">
              <div style="FONT-SIZE: 7pt; MARGIN: 0pt">&#160;&#160;&#160;</div>
            </td>
            <td valign="top" width="104">
              <div style="FONT-SIZE: 7pt; MARGIN: 0pt; LINE-HEIGHT: 9pt">Dr. William
                P.
                Cordeiro</div>
            </td>
            <td valign="top" width="21">
              <div style="FONT-SIZE: 7pt; MARGIN: 0pt">&#160;&#160;&#160;</div>
            </td>
            <td valign="top" width="72">
              <div style="FONT-SIZE: 7pt; MARGIN: 0pt; LINE-HEIGHT: 9pt">Craig
                Alan-Lee</div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="44">&#160;</td>
            <td valign="top" width="69">
              <div style="FONT-SIZE: 7pt; MARGIN: 0pt; LINE-HEIGHT: 9pt">David
                Rector</div>
            </td>
            <td valign="top" width="21">&#160;</td>
            <td valign="top" width="83">
              <div style="FONT-SIZE: 7pt; MARGIN: 0pt; LINE-HEIGHT: 9pt">Richard
                M.
                Gozia</div>
            </td>
            <td valign="top" width="21">&#160;</td>
            <td valign="top" width="104">
              <div style="FONT-SIZE: 7pt; MARGIN: 0pt; LINE-HEIGHT: 9pt">Mitchell
                T.
                Stoltz</div>
            </td>
            <td valign="top" width="21">&#160;</td>
            <td valign="top" width="72">&#160;</td>
          </tr>

      </table>
    </div>
    <div style="FONT-SIZE: 2pt; MARGIN: 0pt; LINE-HEIGHT: 2pt">&#160;</div>
    <div>
      <table cellspacing="0" style="FONT-SIZE: 10pt">

          <tr>
            <td width="12">
            </td>
            <td width="7">
            </td>
            <td width="6">
            </td>
            <td width="485">
            </td>
          </tr>
          <tr>
            <td valign="top" width="16">
              <div style="PADDING-LEFT: 6pt; FONT-SIZE: 8pt; MARGIN: 0pt; TEXT-INDENT: -6pt">&#160;&#160;&#160;&#160;&#160;&#160;</div>
            </td>
            <td valign="top" width="9">
              <div style="PADDING-LEFT: 6pt; FONT-SIZE: 8pt; MARGIN: 0pt; TEXT-INDENT: -6pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Wingdings"><font style="FONT-FAMILY: Wingdings">&#168;</font></div>
            </td>
            <td valign="top" width="8">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman">&#160;&#160;&#160;</font></div>
            </td>
            <td valign="top" width="647">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt"><strong>VOTE
                WITHHELD</strong> from all nominees</div>
            </td>
          </tr>

      </table>
    </div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">2.&#160; To
      ratify the selection of BKR Cornwell Jackson as the independent registered
      public accounting firm of the Company for its fiscal year ending December 31,
      2007.</div>
    <div>
      <table cellspacing="0" style="FONT-SIZE: 10pt">

          <tr>
            <td valign="top" width="16">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt"><strong>&#160;&#160;&#160;&#160;&#160;&#160;</strong></div>
            </td>
            <td valign="top" width="50">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Wingdings"><strong><font style="FONT-FAMILY: Wingdings">&#168;</font><font style="FONT-FAMILY: Times New Roman">&#160;&#160;&#160;FOR</font></strong></div>
            </td>
            <td valign="top" width="48">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman"><strong>&#160;&#160;&#160;&#160;&#160;</strong></font></div>
            </td>
            <td valign="top" width="98">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Wingdings"><strong><font style="FONT-FAMILY: Wingdings">&#168;</font><font style="FONT-FAMILY: Times New Roman">&#160;&#160;&#160;AGAINST</font></strong></div>
            </td>
            <td valign="top" width="23">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman"><strong>&#160;&#160;&#160;&#160;&#160;</strong></font></div>
            </td>
            <td valign="top" width="85">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt; FONT-FAMILY: Wingdings"><font style="FONT-FAMILY: Wingdings"><strong>&#168;</strong></font><font style="FONT-FAMILY: Times New Roman"><strong>&#160;&#160;&#160;ABSTAIN</strong></font></div>
            </td>
            <td valign="top" width="350">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt"><font style="FONT-FAMILY: Times New Roman"><strong>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</strong></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>&#160;</div>
    <div>3.&#160; In their discretion, the Proxies are authorized to vote upon such
      other business as may properly come before the meeting.</div>
    <div style="MARGIN-TOP: 2.65pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; LINE-HEIGHT: 8pt">&#160;</div>
    <div style="MARGIN-TOP: 2.65pt; FONT-SIZE: 8pt; MARGIN-BOTTOM: 0pt; LINE-HEIGHT: 8pt"><strong>(Continued,
      and to be marked, dated and signed on the other side) </strong></div>
    <div style="MARGIN-TOP: 2.65pt; MARGIN-BOTTOM: 0pt; LINE-HEIGHT: 8pt"><br><br></div>
    <div style="MARGIN: 0pt; LINE-HEIGHT: 8pt"><br></div>
    <div style="MARGIN: 0pt"><br></div>
    <hr style="PADDING-BOTTOM: 7.2pt; PADDING-TOP: 7.2pt" noshade size="1">
    <div style="MARGIN-TOP: 75pt; MARGIN-BOTTOM: 0pt; PAGE-BREAK-BEFORE: always" align="center"><br></div>
    <div style="MARGIN-TOP: 9pt; MARGIN-BOTTOM: 0pt" align="center"><br><br><br><br></div>
    <div style="MARGIN-TOP: 9pt; MARGIN-BOTTOM: 0pt" align="center"><br><br></div>
    <div style="MARGIN-TOP: 9pt; MARGIN-BOTTOM: 0pt" align="center"><br><br><br></div>
    <div style="MARGIN-TOP: 27pt; MARGIN-BOTTOM: 0pt" align="center"><br></div>
    <div style="MARGIN-TOP: 75pt; FONT-SIZE: 7pt; MARGIN-BOTTOM: 0pt; LINE-HEIGHT: 9pt; FONT-FAMILY: Arial" align="center"><font style="FONT-FAMILY: Arial"><strong>FOLD
      AND DETACH
      HERE<br></strong></font></div>
    <div>
      <table cellspacing="0" style="FONT-SIZE: 10pt">

          <tr>
            <td width="503">
            </td>
          </tr>
          <tr>
            <td valign="top" width="671">
              <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 8pt"><font style="FONT-FAMILY: Times New Roman"><strong>PLEASE
                MARK BOX IF YOU PLAN
                TO ATTEND THE MEETING&#160;</strong></font>&#160;&#160;<font style="FONT-FAMILY: Wingdings">&#168;<br></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="MARGIN: 0pt"><br></div>
    <div style="MARGIN: 0pt"><br></div>
    <div style="FONT-SIZE: 8pt; MARGIN: 0pt; LINE-HEIGHT: 10pt">IF
<strong><i>NO</i></strong>
      DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR ALL
      NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3.</div>
    <div style="MARGIN-TOP: 2.35pt; PADDING-LEFT: 316.1pt; FONT-SIZE: 7pt; MARGIN-BOTTOM: 0pt; LINE-HEIGHT: 8pt" align="justify">Date:
&#160;___________________________________________,
      2007</div>
    <div style="MARGIN-TOP: 2.35pt; PADDING-LEFT: 316.1pt; FONT-SIZE: 7pt; MARGIN-BOTTOM: 0pt; LINE-HEIGHT: 8pt" align="justify">Stockholder:
      &#160;__________________________________________</div>
    <div style="MARGIN-TOP: 2.35pt; PADDING-LEFT: 316.1pt; FONT-SIZE: 7pt; MARGIN-BOTTOM: 0pt; LINE-HEIGHT: 8pt" align="justify">Co-Holder
      (if any):
&#160;_____________________________________</div>
    <div style="MARGIN-TOP: 2.35pt; PADDING-LEFT: 316.1pt; FONT-SIZE: 7pt; MARGIN-BOTTOM: 0pt; LINE-HEIGHT: 8pt" align="justify">Note:
      Please sign exactly as your name or names appear on this
      Proxy. When shares are held jointly, each holder should sign. When signing
      as
      attorney, as executor, administrator, trustee or guardian, please give full
      title as such. If the signer is a corporation, please sign in full corporate
      name by duly authorized officer giving full title as such. If signer is a
      partnership, please sign in partnership name and by authorized person.
<strong>Please act promptly. Sign, date and mail your proxy card
      today.</strong></div>
    <div style="MARGIN-TOP: 1.15pt; PADDING-LEFT: 316.1pt; FONT-SIZE: 7pt; MARGIN-BOTTOM: 0pt; LINE-HEIGHT: 8pt" align="justify">If
      your address has changed, please correct the address in the
      space provided below and return this portion with the proxy in the envelope
      provided.</div>
    <div style="MARGIN-TOP: 1.15pt; PADDING-LEFT: 316.1pt; FONT-SIZE: 12pt; MARGIN-BOTTOM: 0pt; LINE-HEIGHT: 8pt" align="justify">&#160;</div>
    <div style="MARGIN-TOP: 1.15pt; MARGIN-BOTTOM: 0pt; LINE-HEIGHT: 8pt" align="justify"><br><br></div>
    <div style="MARGIN: 0pt; LINE-HEIGHT: 8pt"><br></div>
    <div style="MARGIN: 0pt"><br></div>
  </body>
</html>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
